The Members of
CENTURY PLYBOARDS INDIA LIMITED
Independent Auditor's Report on the Audit of the Standalone Financial StatementsOpinion
1. We have audited the accompanying standalone Financial statements of CenturyPlyboards (India) Limited ("the Company") which comprise the balance sheet asat March 31 2020 the statement of profit and loss (including the statement of othercomprehensive income) the cash flow statement and the statement of changes in equity forthe year then ended and notes to the standalone Financial statements including a summaryof significant accounting policies and other explanatory information's (hereinafterreferred to as "the Standalone Financial statements"). In our opinion and to thebest of our information and according to the explanations given to us the aforesaidstandalone Financial statements give the information required by the Companies Act 2013("the Act") in the manner so required and give a true and fair view inconformity with the accounting principles generally accepted in India of the state ofafiairs of the Company as at March 31 2020 its profit including other comprehensiveloss its cash flows and the changes in equity for the year ended on that date.
Basis for Opinion
2. We conducted our audit of the standalone Financial statements in accordance with theStandards on Auditing (SAs) specified under section 143(10) of the Act. Ourresponsibilities under those standards are further described in the auditor'sresponsibilities for the audit of the standalone Financial statements' section of ourreport. We are independent of the Company in accordance with the Code of Ethics'issued by the Institute of Chartered Accountants (ICAI) of India together with the ethicalrequirements that are relevant to our audit of the standalone Financial statements underthe provisions of the Act and the Rules there under and we have fulfilled our otherethical responsibilities in accordance with these requirements and the ICAI's Code ofEthics. We believe that the audit evidence we have obtained is sufficient and appropriateto provide a basis for our audit opinion on the standalone Financial statements.
Key Audit Matters
3. Key audit matters are those matters that in our professional judgment were of mostsignificance in our audit of the standalone Financial statements for the Financial yearended March 31 2020. These matters were addressed in the context of our audit of thestandalone Financial statements as a whole and in forming our opinion thereon and we donot provide a separate opinion on these matters. For each matter below our description ofhow our audit addressed the matter is provided in that context.
|Descriptions of Key Audit Matter ||How we addressed the matter in our audit |
|A. Valuation of inventories ||We obtained assurance over the appropriateness of the management's assumptions applied in calculating the value of the inventories and related provisions by: |
|Refer to note 9 to the Financial statements. The Company is having Inventory of H35410.37 lacs as on 31st March 2020. Inventories are to be valued as per Ind AS 2. As described in the accounting policies in note 2.2(j) to the Financial statements inventories are carried at the lower of cost and net realisable value. As a result the management applies judgment in determining the appropriate provisions against inventory of Stores Raw Material Finished goods and Work in progress based upon a detailed analysis of old inventory net realisable value below cost based upon future plans for sale of inventory. || Completed a walkthrough of the inventory valuation process and assessed the design and implementation of the key controls addressing the risk. |
| || Verifying the effectiveness of key inventory controls operating over inventories; including sample based physical verification. |
| || Reviewing the document and other record related to physical verification of inventories done by the management during the year. |
| || Verifying for a sample of individual products that costs have been correctly recorded. |
| || Comparing the net realisable value to the cost price of inventories to check for completeness of the associated provision. |
| || Reviewing the historical accuracy of inventory provisioning and the level of inventory write-ofis during the year. |
| || Recomputing provisions recorded to verify that they are in line with the Company policy. |
| ||Our Observation: Based on the audit procedures performed we did not identify any material exceptions in the Inventory valuation. |
|B. Revenue Recognition- ||As part of our audit we understood the Company's policies and processes control mechanisms and methods in relation to the revenue recognition and evaluated the design and operative effectiveness of the Financial controls from the above through our test of control procedures. |
|The accuracy of amounts recorded as revenue is an inherent risk due to the complexity involve. || Tested a sample of sales transactions for compliance with the Company's accounting principles to assess the completeness occurrence and accuracy of revenue recorded |
|The application of revenue recognition accounting standards Ind AS 115 is complex and involves a number of judgments and estimates. Refer note no 2.4 (Rs.)-to Critical accounting judgments including those involving estimations and Revenue recognition. In view of the complexity of the revenue recognition and the judgments and estimates involved the recognition of revenue was a matter of most significance to our audit. || Performing procedures to ensure that the revenue recognition criteria adopted by Company for all major revenue streams is appropriate and in line with the Company's accounting policies. |
| || We tested the company's system generated reports based on which revenue is accrued at the year end and performed tests of details on the accrued revenue and accounts receivable balances recognized in the balance sheet at the year end. Our tests of detail focused on transactions occurring within proximity of the year end and obtaining evidence to support the appropriate timing of revenue recognition based on terms and conditions set out in sales contracts and delivery documents or system generated reports. We considered the appropriateness and accuracy of any cut-ofi adjustments |
| || Traced disclosure information to accounting records and other supporting documentation. |
| ||Our Observation: Based on the audit procedures performed we did not identify any material exceptions in the revenue recognition. |
Information Other than the Standalone Financial statements and Auditor's Report Thereon
4. The Company's Board of Directors is responsible for the preparation of the otherinformation. The other information comprises the information included in the annualreports but does not include the standalone Financial statements and our auditor's reportthereon.
Our opinion on the standalone Financial statements does not cover the other informationand we do not express any form of assurance conclusion thereon.
In connection with our audit of the standalone Financial statements our responsibilityis to read the other information and in doing so consider whether the other informationis materially inconsistent with the standalone Financial statements or our knowledgeobtained during the course of our audit or otherwise appears to be materially misstated.If based on the work we have performed we conclude that there is a material misstatementof this other information; we are required to report that fact. We have nothing to reportin this regard.
Management's Responsibility for the Standalone Financial Statements
5. The Company's Board of Directors is responsible for the matters stated in section134(5) of the Act with respect to the preparation of these standalone Financial statementsthat give a true and fair view of the Financial position Financial performance includingother comprehensive income cash flows and changes in equity of the Company in accordancewith the accounting principles generally accepted in India including the IndianAccounting Standards (Ind AS) specified under section 133 of the Act read with theCompanies (Indian Accounting Standards) Rules 2015 as amended. This responsibility alsoincludes maintenance of adequate accounting records in accordance with the provisions ofthe Act for safeguarding the assets of the Company and for preventing and detecting fraudsand other irregularities; selection and application of appropriate accounting policies;making judgments and estimates that are reasonable and prudent; and the designimplementation and maintenance of adequate internal Financial controls that wereoperating effectively for ensuring the accuracy and completeness of the accountingrecords relevant to the preparation and presentation of the standalone Financialstatements that give a true and fair view and are free from material misstatement whetherdue to fraud or error.
In preparing the standalone Financial statements management is responsible forassessing the Company's ability to continue as a going concern disclosing as applicablematters related to going concern and using the going concern basis of accounting unlessmanagement either intends to liquidate the Company or to cease operations or has norealistic alternative but to do so.
Those charged with governance are also responsible for overseeing the Company'sFinancial reporting process.
Auditor's Responsibilities for the Audit of the Standalone Financial Statements
6. Our objectives are to obtain reasonable assurance about whether the standaloneFinancial statements as a whole are free from material misstatement whether due to fraudor error and to issue an auditor's report that includes our opinion. Reasonable assuranceis a high level of assurance but is not a guarantee that an audit conducted in accordancewith SAs will always detect a material misstatement when it exists. Misstatements canarise from fraud or error and are considered material if individually or in theaggregate they could reasonably be expected to influence the economic decisions of userstaken on the basis of these Financial statements. As part of an audit in accordance withSAs we exercise professional judgment and maintain professional scepticism throughout theaudit. We also:
Identify and assess the risks of material misstatement of the Financialstatements whether due to fraud or error design and perform audit procedures responsiveto those risks and obtain audit evidence that is sufficient and appropriate to provide abasis for our opinion. The risk of not detecting a material misstatement resulting fromfraud is higher than for one resulting from error as fraud may involve collusionforgery intentional omissions misrepresentations or the override of internal control.
Obtain an understanding of internal control relevant to the audit in order todesign audit procedures that are appropriate in the circumstances. Under section 143(3)(i) of the Act we are also responsible for expressing our opinion on whether the companyhas adequate internal Financial controls system in place and the operating effectivenessof such controls.
Evaluate the appropriateness of accounting policies used and the reasonablenessof accounting estimates and related disclosures made by management.
Conclude on the appropriateness of management's use of the going concern basisof accounting and based on the audit evidence obtained whether a material uncertaintyexists related to events or conditions that may cast significant doubt on the Company'sability to continue as a going concern. If we conclude that a material uncertainty existswe are required to draw attention in our auditor's report to the related disclosures inthe standalone Financial statements or if such disclosures are inadequate to modify ouropinion. Our conclusions are based on the audit evidence obtained up to the date of ourauditor's report. However future events or conditions may cause the Company to cease tocontinue as a going concern.
Evaluate the overall presentation structure and content of the standaloneFinancial statements including the disclosures and whether the Standalone Financialstatements represent the underlying transactions and events in a manner that achieves fairpresentation.
7. Materiality is the magnitude of misstatements in the standalone Financial statementsthat individually or in aggregate makes it probable that the economic decisions of areasonably knowledgeable user of the standalone Financial statements may be influenced. Weconsider quantitative materiality and qualitative factors in
(i) planning the scope of our audit work and in evaluating the results of our work; and
(ii) to evaluate the effect of any identified misstatements in the standalone Financialstatements.
8. We communicate with those charged with governance regarding among other mattersthe planned scope and timing of the audit and significant audit findings including anysignificant deficiencies in internal control that we identify during our audit.
9. We also provide those charged with governance with a statement that we have compliedwith relevant ethical requirements regarding independence and to communicate with themall relationships and other matters that may reasonably be thought to bear on ourindependence and where applicable related safeguards.
10. From the matters communicated with those charged with governance we determinethose matters that were of most significance in the audit of the standalone Financialstatements of the current period and are therefore the key audit matters. We describethese matters in our auditor's report unless law or regulation precludes public disclosureabout the matter or when in extremely rare circumstances we determine that a mattershould not be communicated in our report because the adverse consequences of doing sowould reasonably be expected to outweigh the public interest benefits of suchcommunication.
Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditor's report) Order 2016 ("the Order")issued by the Central Government of India in terms of sub-section (11) of section 143 ofthe Act we give in the "Annexure A" a statement on the matters specified inparagraphs 3 and 4 of the Order.
2. As required by section 143 (3) of the Act we report that:
(a) We have sought and obtained all the information and explanations which to the bestof our knowledge and belief were necessary for the purposes of our audit;
(b) In our opinion proper books of account as required by law have been kept by theCompany so far as it appears from our examination of those books;
(c) The balance sheet the statement of profit and loss including the statement ofother comprehensive income the cash flow statement and statement of changes in equitydealt with by this Report are in agreement with the books of account;
(d) In our opinion the aforesaid Standalone Financial statements comply with theAccounting Standards specified under Section 133 of the Act read with Companies (IndianAccounting Standards) Rules 2015 as amended from time to time;
(e) On the basis of the written representations received from the directors as on March31 2020 taken on record by the Board of Directors none of the directors is disqualifiedas on March 31 2020 from being appointed as a director in terms of Section 164(2) of theAct;
(f) With respect to the adequacy of the internal Financial controls with reference tostandalone Financial statement of the Company and the operating effectiveness of suchcontrols refer to our separate Report in "Annexure B".
(g) In our opinion the managerial remuneration for the year ended March 31 2020 hasbeen paid/ provided by the Company to its directors in accordance with the provisions ofsection 197 read with Schedule V to the Act; and (Rs.) With respect to the other mattersto be included in the Auditor's Report in accordance with Rule 11 of the Companies (Auditand Auditors) Rules 2014 as amended in our opinion and to the best of our informationand according to the explanations given to us:
I. The Company has disclosed the impact of pending litigations on its Financialposition in its Standalone Financial statements Note 33 (ii) to the Financialstatements;
II. The Company did not have any long-term contracts including derivative contracts forwhich there were any material foreseeable losses.
III. There has been no delay in transferring amounts required to be transferred tothe Investor Education and Protection Fund by the Company.
Annexure A' to the Independent Auditor's Report
(Referred to in paragraph 1 under Report on Other Legal and RegulatoryRequirements' section of our report to the Members of Century Plyboards (India)Limited India Limited of even date)
i. In respect of the Company's fixed assets:
a. The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets.
b. As explained to us fixed assets have been physically verified during the year bythe management as per phased program of verification and no material discrepancies havebeen noticed on such physical verification. In our opinion this periodicity of physicalverification is reasonable having regard to the size of the company and the nature of itsassets.
c. According to the information and explanations given to us and on the basis of ourexamination of the records of the Company the title deeds of immovable properties areheld in the name of the Company.
ii. The physical verification of inventory excluding inventories in transit has beenconducted at reasonable intervals by the Management during the year. The discrepanciesnoted on physical verification of inventory as compared to book records were not material.
iii. The Company has not granted any loan to parties covered in the register maintainedunder section 189 of the Companies Act 2013. Thus paragraph 3(iii) of the Order is notapplicable.
iv. The Company has complied with the provisions of section 185 and 186 of the Actwith respect to the loans investments made and providing guarantees and securities asapplicable.
v. The Company has not accepted deposits from public within the meaning of section 7374 75 76 of the Act and the Rules framed there under to the extent notified.
vi. The Central Government has not prescribed the maintenance of cost records undersection 148(1) of the Act for any of the product & services rendered by the Company.
vii. According to the information and explanations given to us and on the basis of ourexamination of the books of account:
a. The Company is generally regular in depositing undisputed statutory dues includingProvident Fund Employee's State Insurance Income Tax Customs Duty Goods and Servicetax Cess and other statutory dues with the appropriate authorities. According to theinformation and explanations given to us and the records of the Company examined by us noundisputed statutory dues as above were outstanding as at March 31 2020 for a period ofmore than six months from the date they became payable.
b. According to the information and explanation given to us the dues of sales taxValue added tax income tax and duty of excise which have not been deposited on accountof any dispute and the forum where the dispute is pending as on March 31 2020 are asunder:
|Name of the statute ||Nature of dues ||Amount (Rs. In Lakh) ||Year ||Forum where dispute is pending |
|West Bengal VAT Act 2005 ||WBST CST & VAT ||872.76 ||1999-00 to 2017-18 ||Commissioner of Commercial Tax West Bengal |
|Andhra Pradesh VAT Act ||Sales tax and CST ||24.02 ||2005- 06 to 2012-13 ||CTO Ofice |
|Odisha VAT Act 2004 ||VAT ||19.03 ||2011-2012 & 2012-2013 ||Pending at Tribunal |
|Other States (including Sharon) ||VAT ||8.89 ||1990-91 to 2013-14 ||Joint Commissioner of Commercial Taxes |
| || ||12.36 ||AY 2011-12 ||Commissioner of Income Tax (Appeals) Kolkata |
| || ||584.15 ||AY 2012-13 ||Commissioner of Income Tax (Appeals) Kolkata |
|Income Tax Act 1961 ||Income Tax ||26.65 ||AY 2015-16 ||Commissioner of Income Tax (Appeals) Kolkata |
| || ||1619.73 ||AY 2016-17 ||Commissioner of Income Tax (Appeals) Kolkata |
| || ||16.44 ||AY 2015-16 ||Commissioner of Income Tax (Appeals) Kolkata |
|The Central Excise Act 1944 ||Duty of Excise ||1055.20 ||2008-09 to 2018-19 ||Customs Excise & Service Tax Appellate Tribunal |
viii. According to the information and explanations given to us and based on ourexamination of the records of the Company the Company has not defaulted in repayment ofloans or borrowings to any Financial institution and bank. The Company did not have anyborrowing from Government and dues to debenture holders as at balance sheet date.
ix. The Company did not raise any money by way of initial public officer or furtherpublic officer (including debt instruments) during the year. Further the company has nottaken any fresh term loan during the year.
x. Based upon the audit procedure performed for the purpose of reporting the true andfair view of the Financial statements and according to the information and explanationsgiven to us no material fraud by the Company or on the Company by its officers oremployees has been noticed or reported during the year.
xi. The Company has paid/provided managerial remuneration in accordance with therequisite approvals mandated by the provisions of section 197 read with Schedule V to theAct.
xii. The Company is not a Nidhi Company and hence reporting under clause 3 (xii) of theOrder is not applicable to the Company.
xiii. The Company has entered into transactions with related parties in compliance withthe provisions of Sections 177 and 188 of the Act. The details of such related partytransactions have been disclosed in the standalone Financial statements as required underIndian Accounting Standard (Ind AS) 24 Related Party Disclosures specified under Section133 of the Act.
xiv. During the year the Company has not made any preferential allotment or privateplacement of shares or fully or partly paid convertible debentures and hence reportingunder clause 3 (xiv) of the Order is not applicable to the Company.
xv. The Company has not entered into any non cash transactions with its directors orpersons connected with them to which Section 192 of the Act applies. Accordingly theprovisions of Clause 3(xv) of the Order are not applicable to the Company.
xvi. The Company is not required to be registered under section 45-IA of the ReserveBank of India Act 1934. Accordingly the provisions of Clause 3(xvi) of the Order are notapplicable to the company.
Annexure B' to the Independent Auditor's Report
(Referred to in paragraph 2 (f) under Report on Other Legal and RegulatoryRequirements' section of our Independent Auditor's Report of even date to the Members ofCentury Plyboards (India) Limited on the standalone Financial statements as of and for theyear ended March 312020 of even date)
Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section143 of the Companies Act 2013 ("the Act")
We have audited the internal Financial controls over Financial reporting with referenceto standalone Financial statements of Century Plyboards (India) Limited ("theCompany") as of March 31 2020 in conjunction with our audit of the StandaloneFinancial statements of the Company for the year ended on that date.
Management's Responsibility for Internal Financial Controls
The Board of Directors of the company is responsible for establishing and maintaininginternal Financial controls based on the internal Financial control over Financialreporting with reference to standalone Financial statements criteria established by theCompany considering the essential components of internal control stated in the GuidanceNote on Audit of Internal Financial Controls Over Financial Reporting issued by theInstitute of Chartered Accountants of India. These responsibilities include the designimplementation and maintenance of adequate internal Financial controls that were operatingeffectively for ensuring the orderly and eficient conduct of its business includingadherence to respective company's policies the safeguarding of its assets the preventionand detection of frauds and errors the accuracy and completeness of the accountingrecords and the timely preparation of reliable Financial information as required underthe Companies Act 2013.
Our responsibility is to express an opinion on the internal Financial controls overFinancial reporting with reference to standalone Financial statements based on our audit.We conducted our audit in accordance with the Guidance Note on Audit of Internal FinancialControls Over Financial Reporting (the "Guidance Note") issued by the Instituteof Chartered Accountants of India and the Standards on Auditing prescribed under Section143(10) of the Companies Act 2013 to the extent applicable to an audit of internalFinancial controls. Those Standards and the Guidance Note require that we comply withethical requirements and plan and perform the audit to obtain reasonable assurance aboutwhether adequate internal Financial controls with reference to standalone Financialstatements was established and maintained and if such controls operated effectively in allmaterial respects.
Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal Financial controls over Financial reporting system with reference tostandalone Financial statements and their operating effectiveness. Our audit of internalFinancial controls over Financial reporting with reference to standalone Financialstatements included obtaining an understanding of internal Financial controls overFinancial reporting with reference to standalone Financial statements assessing the riskthat a material weakness exists and testing and evaluating the design and operatingeffectiveness of internal control based on the assessed risk. The procedures selecteddepend on the auditor's judgement including the assessment of the risks of materialmisstatement of the Financial statements whether due to fraud or error.
We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the Company's internal Financial controls overFinancial reporting system with reference to standalone Financial statements.
Meaning of Internal Financial Controls with reference to Standalone FinancialStatements
A company's internal Financial control over Financial reporting with reference tostandalone Financial statements is a process designed to provide reasonable assuranceregarding the reliability of Financial reporting and the preparation of Financialstatements for external purposes in accordance with generally accepted accountingprinciples. A company's internal Financial control over Financial reporting with referenceto standalone Financial statements includes those policies and procedures that
(1) pertain to the maintenance of records that in reasonable detail accurately andfairly reffect the transactions and dispositions of the assets of the company;
(2) provide reasonable assurance that transactions are recorded as necessary to permitpreparation of Financial statements in accordance with generally accepted accountingprinciples and that receipts and expenditures of the company are being made only inaccordance with authorisations of management and directors of the company; and
(3) provide reasonable assurance regarding prevention or timely detection ofunauthorised acquisition use or disposition of the company's assets that could have amaterial effect on the Financial statements.
Limitations of Internal Financial Controls with reference to standalone Financialstatements
Because of the inherent limitations of internal Financial controls over Financialreporting with reference to standalone Financial statements including the possibility ofcollusion or improper management override of controls material misstatements due to erroror fraud may occur and not be detected. Also projections of any evaluation of theinternal Financial controls over Financial reporting with reference to standaloneFinancial statements to future periods are subject to the risk that the internal Financialcontrol over Financial reporting with reference to Financial statements may becomeinadequate because of changes in conditions or that the degree of compliance with thepolicies or procedures may deteriorate.
In our opinion the Company has in all material respects an adequate internalFinancial controls over Financial reporting system with reference to standalone Financialstatements and such internal Financial controls over Financial reporting with reference tostandalone Financial statements were operating effectively as at March 31 2020 based onthe internal Financial control over Financial reporting with reference to standaloneFinancial statements criteria established by the Company considering the essentialcomponents of internal control stated in the Guidance Note on Audit of Internal FinancialControls Over Financial Reporting issued by the Institute of Chartered Accountants ofIndia.