Chandni Machines Limited
(Formerly known as Chandni Machines Private Limited)
Report on the Audit of the Standalone Financial Statements
We have audited the standalone financial statements of Chandni Machines Limited("the Company") which comprise the Balance Sheet as at 31st March2021 and the Statement of Profit and Loss (including other comprehensive income)Statement of Changes in Equity and Statement of Cash Flows for the year then ended andnotes to the standalone financial statements including a summary of significantaccounting policies and other explanatory information (hereinafter referred to as"the standalone financial statements").
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 Act 2013 ("the Act") in the manner so required and give a trueand fair view in conformity with the Indian Accounting Standard prescribed under section133 of the Act read with the Companies (Indian Accounting Standard) Rules 2015 asamended ("Ind AS") and other accounting principles generally accepted in Indiaof the state of affairs of the Company as at 31st March 2021 and its profit(including other comprehensive income) changes in equity and its cash flows for the yearended on that date.
Basis for Opinion
We conducted our audit in accordance with the Standards on Auditing (SAs) specifiedunder Section 143(10) of the Act. Our responsibilities under those SAs are furtherdescribed in the Auditor's Responsibilities for the Audit of the Standalone FinancialStatements section of our report. We are independent of the Company in accordance withthe Code of Ethics issued by the Institute of Chartered Accountants of India together withthe ethical requirements that are relevant to our audit of the standalone financialstatements under the provisions of the Act and the Rules thereunder and we have fulfilledour other ethical responsibilities in accordance with these requirements and the Code ofEthics. We believe that the audit evidence we have obtained is sufficient and appropriateto provide a basis for our opinion.
Key audit matters ('KAM') are those matters that in our professional judgment were ofmost significance in our audit of the standalone financial statements of the currentperiod. These matters were addressed in the context of our audit of the standalonefinancial statements as a whole and in forming our opinion thereon and we do not providea separate opinion on these matters. We have determined the matters described below to bethe key audit matters to be communicated in our report.
External confirmations request perpetrated pursuant to SA 505
|The key audit matters ||How our audit addressed the key audit matter |
|COVID-19 has impacted the procedure of external confirmation request to vendors and customers. ||We revised our assessed risk and have modified our audit procedures to mitigate these risks. We have obtained a reliable assurance pertaining to transactions with confirming parties in the sense for accurate and complete processing of routine and significant classes of transactions such as revenue and purchases. |
|In view of statewide lockdowns many offices were not functioning at the year and in the subsequent period. We had sent positive external confirmation requests through electronic modes. || |
|However due to suspension of business activities of many confirming parties there are few confirmations not received till the date of the audit report. ||We selected samples and tested the effectiveness of controls relating to accuracy and completeness of transactions in totality considering the frequency and regularity of transactions. |
|In such events in accordance with SA auditors have to revise the assessed risk of material misstatement at the assertion level and modify the planned audit procedures. SA also directs the auditors to perform alternative audit procedures. ||We performed alternative audit procedures like follow-up confirmation requests verification of subsequent payments and receipts to verify part of the balances appearing in the original confirmation requests. |
Allowance for credit losses in respect of advances to foreign vendors
|The Company determines the allowance for credit losses based on historical loss experience adjusted to reflect current and estimated future economic conditions. The Company had given advances to foreign vendors against import of engineering goods. The Company considered current and anticipated future economic conditions relating to industries the Company deals with and the countries where these foreign vendors are located. In calculating expected credit losses in respect of these advances the Company also considered the relevant credit information ||Our audit procedures related to the allowance for credit losses for the advances to the foreign vendors and contract assets included the following among others: We tested the effectiveness of controls over the (1) development of the methodology for the allowance for credit losses including consideration of the current and estimated future economic conditions (2) completeness and accuracy of information used in the estimation of probability of default and (3) computation of the allowance for credit losses. |
|for its vendors to estimate the probability of default in future and has taken into account estimates of possible effect from the pandemic relating to COVID-19. ||For a sample of foreign vendors we tested the input data such as credit reports and other credit related information used in estimating the probability of default by comparing them to external and internal sources of information. |
|We identified allowance for credit losses as a key audit matter because of the significant judgement involved in calculating the expected credit losses. This required a high degree of auditor judgment and an increased extent of effort when performing audit procedures to evaluate the reasonableness of management's estimate of the expected credit losses. ||We evaluated the incorporation of the applicable assumptions into the estimate of expected credit losses and tested the mathematical accuracy and computation of the allowances by using the same input data used by the Company. |
| ||We evaluated the qualitative adjustment to the historical loss rates including assessing the basis for the adjustments and the reasonableness of the significant assumptions. |
Measurement and valuation of inventory
|As at 31st March 2021 the Company has inventory amounting to Rs.36815364/-. (Refer Note no.8) This was determined a key audit matter as the measurement and valuation of the inventory at the year-end involves significant judgement and estimate. ||Our audit procedures relating to the measurement of inventory included the following: |
|The Company uses internal and external experts to perform volumetric assessments basis which the quantity for these inventories is estimated. ||Understanding and evaluating the design and operating effectiveness of controls over physical count and measurement of such inventory; |
| ||Evaluation of competency and capabilities of management's experts; Observing physically or through remote access inventory measurement and count procedures carried out by management using experts to ensure its appropriateness and completeness; |
| ||Obtaining and inspecting inventory measurement and physical count results for such inventories including assessing and evaluating the results of analysis performed by management in respect of differences between book and physical quantities. |
| ||Based on the above procedures performed we did not identify any material exceptions in the measurement of inventory quantities. |
Emphasis of Matter paragraph
We draw attention to note no. 43 forming part of the standalone financial statementswhich describes the management's assessment of uncertainties related to COVID-19 and itsconsequential financial impact on its assets as at 31st March 2021 and operations of theCompany. Our opinion is not modified in respect of this matter.
Information Other than the Standalone Financial Statements and Auditors Reportthereon
The Company's management and Board of Directors are responsible for the otherinformation. The other information comprises the information included in the Company'sannual report but does not include the standalone financial statements and our auditors'report thereon.
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 in the audit or otherwise appears to be materially misstated. If based on thework we have performed we conclude that there is a material misstatement of this otherinformation we are required to report that fact. We have nothing to report in thisregard.
Management's Responsibility for the Standalone Financial Statements
The Company's management and Board of Directors are responsible for the matters statedin Section 134(5) of the Act with respect to the preparation of these standalone financialstatements that give a true and fair view of the state of affairs profit / loss(including other comprehensive income) changes in equity and cash flows of the Company inaccordance with the accounting principles generally accepted in India including theIndian Accounting Standards (Ind AS) specified under Section 133 of the Act. Thisresponsibility also includes maintenance of adequate accounting records in accordance withthe provisions of the Act for safeguarding of the assets of the Company and for preventingand detecting frauds and other irregularities; selection and application of appropriateaccounting policies; making judgments and estimates that are reasonable and prudent; anddesign implementation 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 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 management either intends to liquidate the Company or to ceaseoperations or has no realistic alternative but to do so.
The Board of Directors is also responsible for overseeing the Company's financialreporting process.
Auditor's Responsibilities for the Audit of the Standalone Financial Statements
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 standalone financial statements.
As part of an audit in accordance with SAs we exercise professional judgment andmaintain professional skepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of the standalone 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 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 standalone financial statements inplace and the operating effectiveness of such controls.
Evaluate the appropriateness of accounting policies used and the reasonableness ofaccounting estimates and related disclosures made by management.
Conclude on the appropriateness of management's use of the going concern basis ofaccounting 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 ourauditors' 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 standalone financialstatements including the disclosures and whether the standalone financial statementsrepresent the underlying transactions and events in a manner that achieves fairpresentation.
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 ouraudit work and in evaluating the results of our work; and (ii) to evaluate the effect ofany identified misstatements in the standalone financial statements.
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 standalone financial statementsof the current period and are therefore the key audit matters. We describe these mattersin our auditors' report unless law or regulation precludes public disclosure about thematter or when 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.
Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditors' Report) Order 2016 ("the Order")issued by the Central Government of India in terms of Section 143(11) of the Act we givein "Annexure A" a statement on the matters specified in paragraphs 3 and 4 ofthe Order to the extent applicable.
(A) 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 other comprehensiveincome) the Statement of Changes in Equity and the Statement of Cash Flows dealt with bythis Report are in agreement with the books of account.
(d) In our opinion the aforesaid standalone financial statements comply with the IndAS specified under Section 133 of the Act.
(e) On the basis of the written representations received from the directors as on 31March 2021 taken on record by the Board of Directors none of the directors isdisqualified as on 31 March 2021 from being appointed as a director in terms of Section164(2) of the Act.
(f) With respect to the adequacy of the internal financial controls with reference tofinancial statements of the Company and the operating effectiveness of such controlsrefer to our separate Report in "Annexure B".
(B) With respect to the other matters to be included in the Auditors' Report inaccordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014 in our opinionand 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 on its financialposition in its standalone financial statements as mentioned in Note no. 42;
ii. The Company did not have any long-term contracts including derivative contracts forwhich there were any material foreseeable losses; and
iii. There has been no amount required to be transferred to the Investor Education andProtection Fund by the Company.
(C) With respect to the matter to be included in the Auditors' Report under section197(16) as amended:
According to the information and explanations given to us the Company haspaid/provided for managerial remuneration in accordance with the provisions of section 197read with Schedule V to the Act.
For Ambavat Jain & Associates LLP
ICAI Firm Registration No: 109681W
Ashish J Jain
Date: 24 June 2021
ICAI UDIN No: 21111829AAAAJH3218
Annexure A to the Auditors' Report
(Referred to in paragraph 1 under Report on other Legal & RegulatoryRequirements' Section of our report of even date)
[i] (a) The company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets.
(b) These fixed assets have been physically verified by the management at reasonableintervals during the year and no material discrepancies were noticed on such verification.
(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] As informed to us the inventory in the company's possession has been physicallyverified at reasonable intervals during the year by the management. The discrepanciesnoticed on verification between physical stock and book records were not material.
[iii] The company has not granted any loans secured or unsecured to companies firmslimited liability partnership or other parties covered in the register maintained u/s.189of the Companies Act 2013. Accordingly clause 3(iii) of the Order is not applicable.
[iv] As informed to us the Company has neither given any loans nor made any investmentor provided guarantee or security during the year. Accordingly clause 3(iv) of the Orderis not applicable.
[v] The company has not accepted any deposits from the public.
[vi] As informed to us maintenance of cost records has not been prescribed by theCentral Government under sub-section (1) of section 148 of the Companies Act 2013 for anyof the product of the Company.
[vii] (a) In our opinion and according to the information and explanations given to usthe company has generally been regular in depositing with the appropriate authorities theundisputed statutory dues applicable to it. There were no arrears of outstandingundisputed statutory dues as at the last day of the financial year concerned for a periodof more than six months from the date they became payable.
(b) According to the information and explanations given to us there are no dues ofincome tax sales tax goods and service tax custom duty service tax excise duty valueadded tax which have not been deposited on account of any dispute.
[viii] According to the information and explanations given to us the company has notobtained any loans or borrowings from any banks financial institutions government ordebenture holders during the year. Accordingly clause 3(viii) of the order is notapplicable.
[ix] The Company did not raise any money by way of initial public offer or furtherpublic offer (including debt instruments) and term loans during the year. Accordinglyparagraph 3 (ix) of the Order is not applicable.
[x] According to the information and explanations given to us no fraud by the Companyor on the Company by its officers or employees has been noticed or reported during thecourse of our audit
[xi] According to the information and explanations given to us the Company haspaid/provided for managerial remuneration in accordance with the requisite approvalsmandated by the provisions of section 197 read with Schedule V to the Act.
[xii] In our opinion and according to the information and explanations given to us theCompany is not a nidhi company. Accordingly paragraph 3(xii) of the Order is notapplicable.
[xiii] According to the information and explanations given to us transactions with therelated parties are in compliance with sections 177 and 188 of the Act where applicableand details of such transactions have been disclosed in the financial statements asrequired by the applicable accounting standards.
[xiv] According to the information and explanations give to us the Company has notmade any preferential allotment or private placement of shares or fully or partlyconvertible debentures during the year.
[xv] According to the information and explanations given to us the Company has notentered into non-cash transactions with directors or persons connected with him.Accordingly paragraph 3(xv) of the Order is not applicable.
[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 Ambavat Jain & Associates LLP
ICAI Firm Registration No: 109681W
Ashish J Jain
Date: 24 June 2021
ICAI UDIN No: 21111829AAAAJH3218
Annexure - B to the Auditors' Report
(Referred to in paragraph 2 (f) under Report on other Legal & RegulatoryRequirements' Section of 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 internal financial controls over financial reporting of ChandniMachines Limited
("the Company") as of 31st March 2021 in conjunction with our audit of thestandalone Ind AS financial 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.
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 issued by ICAI and deemed to be prescribed under section 143(10)of the Companies Act 2013 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 adequate internal financial controls over financialreporting 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 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 auditor's judgment 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 financial statements for external purposes in accordance with generallyaccepted accounting principles. A company's internal financial control over financialreporting includes those policies and procedures that (1) pertain to the maintenance ofrecords that in reasonable detail accurately and fairly reflect the transactions anddispositions of the assets of the company; (2) provide reasonable assurance thattransactions are recorded as necessary to permit preparation of financial statements inaccordance with generally accepted accounting principles and that receipts andexpenditures 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 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.
Considering the size of the company and nature of its business in our opinion theCompany has in all material respects an adequate internal financial controls system overfinancial reporting and such internal financial controls over financial reporting wereoperating effectively as at 31st March 2021 based on the internal control over financialreporting criteria established by the Company considering the essential components ofinternal control stated in the Guidance Note on Audit of Internal Financial Controls OverFinancial Reporting issued by the Institute of Chartered Accountants of India.
For Ambavat Jain & Associates LLP
ICAI Firm Registration No: 109681W
Ashish J Jain
Date: 24 June 2021