TO THE MEMBERS OF CHAMAN LAL SETIA EXPORTS LIMITED
1. REPORT ON THE AUDIT OF THE INDIAN ACCOUNTING STANDARDS (IND AS)FINANCIALSTATEMENTS
We have audited the accompanying financial statements of CHAMANLAL SETIA EXPORTSLTD.("the Company") which comprises of Balance Sheet as at March 31st2020 the Statement of Profit and Loss (including other comprehensive income) Statementof Changes in Equity and Cash Flow Statement for the year then ended and a summary of thesignificant accounting policies and other explanatory information.
In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid standalone financial statements give the information requiredby the Companies Act2013 (the Act)in the mannerso required and give a true and fair viewin conformity with the Indian Accounting Standards prescribed under section 133 of the Actread with Companies (Indian Accounting Standards) Rules 2015 as amended ("IndAS") and other accounting principles generally accepted in India of the state ofaffairs of the Company as at 31st March 2020 its profits (including other comprehensiveincome) changes in equity and its cash flows for the year ended on that date.
Key Audit Matters:-
2. Key Audit matters are those matters that in our professional judgment were ofmost significant in our audit of the financial statements of the current period.
These matters were addressed in the context of our audit of the financial statements asa whole and in forming our opinion thereon and we do not provide a separate opinion onthese matters.
3. We have determined the matters described below to be the key audit matters to becommunicated in our report.
|Key audit matter ||How our audit addressed the key audit matter |
|Revenue recognition Sale of Goods || |
|Refer Note 4 in the Summary of significant accounting policies and other explanatory information The Company recognised an amount of Rs. 79769.34 lacs revenue for the year ended 31st March 2020 as disclosed in Note 17 to the standalone financial statements. ||Our audit work included but was not limited to the following procedures: |
|Revenue for the Company primarily comprises of revenue from sale of manufactured goods (rice) traded goods and by products. ||Obtained an understanding of the process of each revenue stream particularly of sale of rice and by products; |
|In accordance with Standards on Auditing there is a presumed fraud risk relating to revenue recognition. ||Evaluated the design and implementation and tested the operating effectiveness of controls over revenue recognition including around quantity sold pricing and accounting of revenue transactions; |
|Accordingly occurrence and existence of revenue is a key focus area on account of the multiplicity of Company's products multiple channels for sales various categories of customers having varying terms of contracts and the volume of the sales made to them. ||Performed substantive analytical procedures on revenue which includes ratio analysis and region wise analysis; |
|Due to the above factors we have identified testing of revenue recognition as a key audit matter. ||Evaluated the terms and conditions of the contracts including incoterms with customers to ensure that the revenue recognition criteria are assessed by the management in accordance with the accounting standards; |
| ||On a sample basis tested revenue transactions recorded during the year and revenue transactions recorded in the period before and after year-end with supporting documents such as invoices agreements with customers proof of deliveries and subsequent collection of payment; |
| ||Performed other substantive audit procedures including obtaining debtor confirmations on a sample basis reviewed the subsequent collection of payment and proof of deliveries document of such selected debtors. Further reconciling revenue recorded during the year with statutory returns; |
| ||Tested on sample basis manual journal entries recorded in revenue accounts credit notes and claims to the relevant approvals and the supporting documents; |
| ||Evaluated disclosures made in the financial statements for revenue recognition from sale of goods for appropriateness in accordance with the accounting standards. |
|Inventory existence and valuation || |
|Refer Note 15 in the Summary of significant accounting policies and other explanatory information. Inventory of the Company consists primarily of variety of rice paddy and their by-products manufactured during the process of conversion of paddy into rice. verification management process/ inventory physical and tested The Company held inventories amounting to Rs. 21308.33 as at 31st March 2020. The inventory primarily comprises of Paddy as raw material packing material and finished goods in the form of rice and by-products.c ||Our audit work included but was not limited to the following procedures: Existence: |
|Inventory holding is generally significant considering the finished goods are aged for 6-9 months and also due to seasonality of the purchase of paddy. Such inventory is stored in plants warehouses silos and storage bags. ||Obtained an understanding of the management's process of inventory management and inventory physical verification performed subsequent to year-end; |
|High quantity of inventory makes inventory physical an extensive procedure for the management at the year end. ||Evaluated the design effectiveness of controls over inventory key controls for their operating effectiveness; |
|The valuation of finished rice and by products is a comprehensive exercise and is carried out manually. ||Reviewed the instructions given by senior management to stock count teams including ensuring proper segregation of stock use of calibration scales/charts identification of damaged inventory if any etc.; |
|The valuation process involves estimation around determination of Allocable overheads and their absorption rates; ||Obtained inventory records and results of management conducted count; |
|Determination of net realisable value of by products such as husk bran etc and Determination of net realisable value of the different variety of finished product. ||Reviewed reconciliation of differences if any between management physical count and inventory records and tested the necessary adjustment made in the inventory records by the management; |
|Due to outbreak of the COVID-19 there has been a lockdown enforced in the country near year end and several restrictions were imposed by the government on travel and movement considering public health and safety measures which resulted into complexities for us to observe the physical of inventory conducted by the management. This necessitated using alternate audit techniques as further described in our audit procedures. ||Reviewing the Stock Auditor Report of an Independent Chartered |
|Accordingly existence and valuation of the yearend inventory balance which is significant with respect to the total assets held by the Company is considered to be one of the areas which required significant auditor attention owing to the complexity and judgements involved in the process of physical count and valuation. ||Accountant M/s A.K Govil and Co As on 30.11.2019 along with its valuation . |
| ||Verified movement of the recounted inventory on sample basis between the period between the date of stock take and |
| ||31 March 2020 with the supporting documents which includes purchase invoice internal transfer document for production for manufactured goods sales invoice dispatch register gate inward/outward register etc. to substantiate the existence of inventory as at the reporting date; Valuation: |
| ||Obtained an understanding of management process of inventory valuation; |
| ||Evaluated design effectiveness of controls over inventory valuation process and tested key controls for their operating effectiveness; |
| ||Tested inputs into the valuation process from source documents general ledger accounts; |
| ||Tested reconciliation of opening inventory purchase/ production sales and year-end inventory to validate the amount of yield during the year and to identify any abnormal production loss; |
| ||Compared key estimates including those involved in computation of allocable overheads and their absorption rate to prior years and enquired reasons for any significant variations |
| ||Checked net realisable value of by-products from actual sale proceeds near/ subsequent to the year-end; Tested arithmetical accuracy of valuation calculations; and |
| ||Evaluated appropriateness of disclosure of inventory year-end balance in the financial statements. |
4. MANAGEMENT'S RESPONSIBILITY FOR THE IND AS FINANCIAL STATEMENTS
The Company's Board of Directors is responsible for the matters stated in sub-section(5) of Section 134 of the Companies Act 2013 ("the Act") with respect to thepreparation and presentation of these Ind AS Financial Statements that give a true andfair view of the State of affairs profit (including other comprehensive income) changesin equity and cash flows of the Company in accordance with the accounting principlesgenerally accepted in India including the Indian Accounting Standards prescribed underSection 133 of the Act.
This responsibility also includes maintenance of adequate accounting records inaccordance with the provisions of the Act; for safeguarding the assets of the Company andfor preventing and detecting frauds and other irregularities; selection and application ofappropriate accounting policies; making judgments and estimates that are reasonable andprudent; and design implementation and maintenance of adequate internal financialcontrols that were operating effectively for the ensuring the accuracy and completenessof the accounting records relevant to the preparation and presentation of the Ind ASfinancial statements that give a true and fair view and are free from materialmisstatement whether due to fraud or error.
In preparing the financial statements the Management and Board of Directors areresponsible for assessing the Company's ability to continue as a going concerndisclosing as applicable matters related to going concern and using the going concernbasis of accounting unless the Board of Directors either intends to liquidate the Companyor to cease operations or has no realistic alternative but to do so.
The Board of Directors is also responsible for overseeing the Company's financialreporting process.
5. AUDITORS' RESPONSIBILITY FOR THE AUDIT OF THE FINANCIAL STATEMENTS
Our objectives are to obtain reasonable assurance about whether the financialstatements as a whole are free from material misstatement whether due to fraud or errorand to issue an auditor's report that includes our opinion. Reasonable assurance is a highlevel of assurance but is not a guarantee that an audit conducted in accordance withStandards on Auditing will always detect a material misstatement when it exists.Misstatements can arise from fraud or error and are considered material if individuallyor in the aggregate they could reasonably be expected to influence the economic decisionsof users taken on the basis of these financial statements.
As part of an audit in accordance with Standards on Auditing we exercise professionaljudgment and maintain professional skepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of the financial statementswhether due to fraud or error design and perform audit procedures responsive to thoserisks and obtain audit evidence that is sufficient and appropriate to provide a basis forour opinion. The risk of not detecting a material misstatement resulting from fraud ishigher than for one resulting from error as fraud may involve collusion forgeryintentional omissions misrepresentations or the override of internal control.
Obtain an understanding of internal control relevant to the audit in order to designaudit procedures that are appropriate in the circumstances. Under section 143(3)(i) of theAct we are also responsible for expressing our opinion on whether the company hasadequate internal financial controls with reference to financial statements in place andthe operating effectiveness of such controls.
Evaluate the appropriateness of accounting policies used and the reasonableness ofaccounting estimates and related disclosures in the financial statements made by theManagement and Board of Directors.
Conclude on the appropriateness of the Management and Board of Directors use of thegoing concern basis of accounting and based on the audit evidence obtained whether amaterial uncertainty exists related to events or conditions that may cast significantdoubt on the Company's ability to continue as a going concern. If we conclude that amaterial uncertainty exists we are required to draw attention in our auditor's report tothe related disclosures in the financial statements or if such disclosures areinadequate to modify our opinion. Our conclusions are based on the audit evidenceobtained up to the date of our auditor's report. However future events or conditions maycause the Company to cease to continue as a going concern.
Evaluate the overall presentation structure and content of the financial statementsincluding the disclosures and whether the financial statements represent the underlyingtransactions and events in a manner that achieves fair presentation.
We communicate with those charged with governance regarding among other matters theplanned scope and timing of the audit and significant audit findings including anysignificant deficiencies in internal control that we identify during our audit.
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.
From the matters communicated with those charged with governance we determine thosematters that were of most significance in the audit of the financial statements of thecurrent period and are therefore the key audit matters. We describe these matters in ourauditors' report unless law or regulation precludes public disclosure about the matter orwhen in extremely rare circumstances we determine that a matter should not becommunicated in our report because the adverse consequences of doing so would reasonablybe expected to outweigh the public interest benefits of such communication.
We conducted our audit in accordance with the Standards on Auditing specified undersection 143(10) of the Act. Our responsibilities under those standards are furtherdescribed in the Auditor's Responsibilities for the Audit of the Financial Statementssection of our report. We are independent of the Company in accordance with the Code ofEthics issued by the Institute of Chartered Accountants of India (ICAI') togetherwith the ethical requirements that are relevant to our audit of the financial statementsunder the provisions of the Act and the rules thereunder and we have fulfilled our otherethical responsibilities in accordance with these requirements and the Code of Ethics. Webelieve that the audit evidence we have obtained is sufficient and appropriate to providea basis for our opinion.
In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid Ind AS financial statements give the information required bythe Act in the manner so required and give a true and fair view in conformity with the IndAS and other accounting principles generally accepted in India.
(a) In the case of the Balance sheet of the state of affairs of the Company as atMarch 312020
(b) In the case of the Statement of profit and loss of the profit for the year endedon that date (including other comprehensive income)
(c) Changes in equity for the year ended on that date.
(d) In the case of Cash Flow Statement of the cash flows for the year ended on thatdate.
7. 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 mattersspecified in paragraphs 3 and 4 of the Order to the extent applicable
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 purpose 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 other comprehensiveincome) Statement of changes in Equity and the Cash Flow Statement and dealt with by thisReport are in agreement with the books of account;
d. In our opinion the aforesaid Ind AS financial statements comply with the Ind ASprescribed under section 133 of the Act read with relevant rules issued thereunder;
e. On the basis of written representations received from the Directors as on March 312020 taken on record by the Board of Directors none of the Directors are disqualified ason 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 over the financialreporting of the Company with reference to these standalone Ind AS financial statementsand operating effectiveness of such controls refer to our separate report in "AnnexureB" to this report; g. In our opinion the managerial remuneration for the yearended 31.03.2020 has been paid/provided by the Company to its directors in accordance withthe provisions of section 197 read with Schedule V to the Act.
h. With respect to the other matters to be included in the Auditor's Report inaccordance with Rule 11 of the Companies (Audit and Auditors) 2014 as amended in ouropinion and to the best of our information and according to the explanations given to us;
i. The Company has disclosed the impact of pending litigations as at 31.03.2020 on itsfinancial position in its financial statements. Refer Note No. 8 to Notes of Accounts.
ii. In our opinion and as per the information and explanations provides to us theCompany has not entered into any long-term contracts including derivative contractsrequiring provision under applicable laws or accounting standards for materialforeseeable losses;
iii. There have been no delay in transferring the amounts required to be transferredto the Investor Education and Protection Fund by the Company during the year ended 31stMarch 2020;
iv. The disclosure requirements relating to holdings as well as dealings in specifiedbank notes were applicable for the period from 8 November 2016 to 30 December 2016 whichare not relevant to these standalone financial statements. Hence reporting under thisclause is not applicable.
For R Chopra & Associates
(Rakesh Chopra) Prop.
FRN No.:- 022992N
Annexure A to the Independent Auditors' Report
With reference to the Annexure referred to in Independent Auditors' Report to themembers of the Company on the Ind AS financial statements for the year ended 31 March2020 we report the following :-(i) (a) The company has maintained proper records showingfull particulars including quantitative details and situation of its fixed assets.
(b) All the fixed assets have not been physically verified by the management duringthe year and there is a regular programme of verification which in our opinion isreasonable having regard to the size of the company and the nature of its assets and noserious discrepancies have been noticed in respect of those assets which have beenphysically verified.
(c) According to the information and explanation gives to us and on the basis ofexamination of the records of the company the title deeds of immovable properties areheld in the name of the Company based on the confirmation received from the Company.
(ii) (a) Inventory has been physically verified by the management at reasonableintervals during the year.
(b) In our opinion and according to the information and explanations given to us theprocedures of physical verification of inventory followed by the management are reasonableand adequate in relation to the size of the company and the nature of its business.
(c) The company is maintaining proper records of inventory. No material discrepancieswere noticed on physical verification.
(iii) According to the information and explanations given to us during the yearCompany has not granted any loans secured or unsecured to companies firms LimitedLiability Partnerships or other parties covered in the register maintained under Section189 of the Companies Act 2013 (the Act'). Accordingly paragraphs 3(iii) of theOrder is not applicable to the Company.
(iv) In our opinion and according to the information and explanations given to us theCompany has not granted any loans made any investments or provided any guarantees andsecurities covered under section 185 and 186 of the Companies Act 2013.
i) In our opinion and according to the information and explanations given to us theCompany is not required to maintain the cost records under sub-section (1) of Section 148of the Companies Act 2013.
(v) According to the information and explanations given to us the Company has notaccepted any deposits from the public during the year.
(vi) (a) According to the information and explanations given to us and according to thebooks and records as produced and examined by us in accordance with the generallyaccepted auditing practices in India the company is generally regular in depositingundisputed statutory dues including Provident Fund Employees State Insurance Income taxSales tax Service tax Goods and Services Tax Value added tax duty of excise duty ofcustom cess and any other statutory dues as applicable with the appropriate authoritiesand we have been informed that there are no arrears of outstanding statutory dues as atthe last day of the financial year under audit for a period of more than six months fromthe date they became payable.
(b) As explained to us as at 31st March 2020 the amounts of taxes cess duty etc.which have been disputed by the Company have been duly shown under the notes to accountsalong with the name of departments.
|Name of the statute || |
Nature of dues
Amount paid under protest(in lacs)
Period to which relates(Financial Year)
Forum which dispute is pending
|Punjab Value Added Tax Act2005 || |
Value Added Tax/Cental sale Tax
Commissioner Excise and Taxation
|Punjab Value Added Tax Act2005 || |
Value Added Tax/Cental sale Tax
Commissioner Excise and Taxation
|Punjab Value Added Tax Act 2005 || |
Value Added Tax/Cental sale Tax
| || |
Hon'ble Punjab and Haryana High Court
|Custom Act1962 || |
| || |
(vii) In our opinion and according to the information and explanations given to us the company during the year has not defaulted in repayment of dues to the Government. TheCompany did not have any outstanding dues to its bankers and financial institution. TheCompany has no debenture holders.
(viii) According to the information and explanations given to us and based on ourexamination of the records of the Company the Company has not raised any moneys by way ofinitial public offer or further public offer (including debt instruments) and term loansduring the year. Accordingly paragraph 3(ix) of the Order is not applicable to theCompany.
(ix) According to the information and explanations given to us during the year nomaterial fraud on or by the company by its officers or employees has been noticed orreported during the course of our audit.
(x) According to the information and explanations given to us and based on ourexamination of the records of the Company the Company has not entered into any non-cashtransactions with directors or persons connected with them. Accordingly paragraph 3(xv)of the Order is not applicable to the Company.
(xi) In our opinion and according to the information and explanations given to us theCompany has entered into transactions with related parties in compliance with theprovisions of Sections 177 and 188 of the Act where applicable. The details of suchrelated party transactions have been disclosed in the Ind AS financial statements asrequired by applicable Accounting Standards.
(xii) In our opinion and according to the information and explanations given to us theCompany is not a Nidhi company and the Nidhi Rules 2014 are not applicable to it.Accordingly paragraph 3(xii) of the Order is not applicable to the Company.
(xiii) In our opinion and according to the information and explanations given to usthe managerial remuneration has been paid or provided in accordance with the requisiteapprovals mandated by the provisions of Section 197 read with Schedule V to the CompaniesAct 2013.
(xv) According to the information and explanations given to us and based on ourexamination of the records of the Company the Company has not made any preferentialallotment or private placement of shares or fully or partly convertible debentures duringthe year.
(xvi) According to the information and explanations given to us the Company is notrequired to be registered under Section 45-IA of the Reserve Bank of India Act 1934.
For R Chopra & Associates
(Rakesh Chopra) Prop.
FRN No.:- 022992N
ANNEXURE B TO THE INDEPENDENT AUDITORS' REPORT 31ST MARCH 2020
(Refer to in our report 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 internalfinancial controls over financial reporting of Chaman Lal Setia Exports Ltd. ("theCompany") as of 31st March 2020 in conjunction with our audit of the Ind ASfinancial statements of the Company for the year ended on that date.
Management's Responsibility for Internal Financial Controls
The Company's management is responsible for establishing and maintaining internalfinancial controls based on the internal control over financial reporting criteriaestablished by the Company considering the essential components of internal control statedin the Guidance Note on Audit of Internal Financial Controls over Financial Reportingissued by the Institute of Chartered Accountants of India (ICAI'). Theseresponsibilities include the design implementation and maintenance of adequate internalfinancial controls that were operating effectively for ensuring the orderly and efficientconduct of its business including adherence to company's policies the safeguarding ofits assets the prevention and detection of frauds and errors the accuracy andcompleteness of the accounting records and the timely preparation of reliable financialinformation as required under the Companies Act 2013.("the Act").
Our responsibility is to express an opinion on the Company's internal financialcontrols over financial reporting based on our audit. We conducted our audit in accordancewith the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting(the "Guidance Note") and the Standards on Auditing as specified under Section143 (10) of the Companies Act 2013 issued by ICAI and deemed to be prescribed underSection 143(10) of the Act to the extent applicable to an audit of internal financialcontrols both applicable to an audit of Internal Financial Controls and both issued bythe Institute of Chartered Accountants of India. Those Standards and the Guidance Noterequire that we comply with ethical requirements and plan and perform the audit to obtainreasonable assurance about whether internal financial controls over financial reportingwas established and maintained and if such controls operated effectively in all materialrespects.
Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal financial controls system over financial reporting and their operatingeffectiveness. Our audit of internal financial controls over financial reporting includedobtaining an understanding of internal financial controls over financial reportingassessing the risk that a material weakness exists and testing and evaluating the designand operating effectiveness of internal control based on the assessed risk. The proceduresselected depend on the auditors' judgement including the assessment of the risks ofmaterial misstatement 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 systemover financial reporting.
Meaning of Internal Financial Controls Over Financial Reporting
A company's internal financial control over financial reporting is a process designedto provide reasonable assurance regarding the reliability of financial reporting and thepreparation of IND AS financial statements for external purposes in accordance withgenerally accepted accounting principles. A company's internal financial control overfinancial reporting includes those policies and procedures that (1) pertain to themaintenance of records that in reasonable detail accurately and fairly reflect thetransactions and dispositions of the assets of the Company; (2) provide reasonableassurance that transactions are recorded as necessary to permit preparation of financialstatements in accordance with generally accepted accounting principles and that receiptsand expenditures of the company are being made only in accordance with authorisations ofmanagement and directors of the company; and (3) provide reasonable assurance regardingprevention or timely detection of unauthorised acquisition use or disposition of thecompany's assets that could have a material effect on the Ind AS financial statements.
Inherent Limitations of Internal Financial Controls Over Financial Reporting
Because of the inherent limitations of internal financial controls over financialreporting including the possibility of collusion or improper management override ofcontrols material misstatements due to error or fraud may occur and not be detected.Also projections of any evaluation of the internal financial controls over financialreporting to future periods are subject to the risk that the internal financial controlover financial reporting may become inadequate because of changes in conditions or thatthe degree of compliance with the policies or procedures may deteriorate.
In our opinion the Company has in all material respects an adequate internalfinancial controls system over financial reporting and such internal financial controlsover financial reporting were operating effectively as at 31 March 2020 based on theinternal control over financial reporting criteria established by the Company consideringthe essential components of internal control stated in the Guidance Note on Audit ofInternal Financial Controls Over Financial Reporting issued by the ICAI.
For R Chopra & Associates
sd/- (Rakesh Chopra) Prop.
FRN No.:- 022992N