TO THE MEMBERS OF
CHANDRA BHAGAT PHARMA LIMITED .
We have audited the accompanying financial statements of CHANDRA BHAGAT PHARMALIMITED ("the Company") which comprise the Balance Sheet as at March 312021the Statement of Profit and Loss for the year ended on March 31 2021 theCash flow statement for the year ended & and a summary of significant accountingpolicies and other explanatory information.
In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid financial statements give the information required by the Actin the manner so required and give a true and fair view in conformity with the accountingprinciples generally accepted in India of the state of affairs of the Company as at March31 2021 its Profit/(loss) and its cash flows for the year ended on that date.
BASIS FOR OPINION
We conducted our audit of the financial statements in accordance with the standards onAuditing specified under section 143(10) of the Act (SAs). Our responsibilities underthose standards are further described in the Auditor's responsibilities for the audit ofthe Financial Statements section of our report. We are independent of the Company inaccordance with the Code of Ethics issued by the Institute of Chartered Accountants ofIndia (ICAI) together with the independence requirements that are relevant to our audit ofthe financial statements under the provision of the Act and the Rules made thereunderand we have fulfilled our other ethical responsibilities in accordance with theserequirements and the ICAI's Code of Ethics. We believe that the audit evidence we haveobtained is sufficient and appropriate to provide a basis for our opinion on the financialstatements.
KEY AUDIT MATTERS
Key audit matters are those matters that in our professional judgment were of mostsignificance in our audit of the financial statements of the current period. These matterswere addressed in the context of our audit of the financial statements as a whole and informing our opinion thereon and we do not provide a separate opinion on these matters.
|We have determined the matters described below to be the key audit matters to be communicated in our report. . |
|1. Inventories: |
|Inventory consisting of Stock of Raw Materials. Work in Progress & Finished Goods form a significant portion of the Assets. This year due to the COVID-19 Pandemic the Auditors could not be physically present to inspect at the time of stock taking. Inventory is valued by the company at lower of cost or Net realisable value as given in Notes to the financial statements. |
|Auditors' Response to the Key Audit Matter: |
|Principal Audit Procedure: |
|Our audit procedures relating to the carrying value of inventories included the following: |
| We understood and tested the design and operating effectiveness of controls as established by the management in determination and valuation of the inventory; |
| We have verified the subsequent sale of inventory on test check basis to confirm the existence and valuation of inventory and performed rollback procedures to confirm the existence of inventory as at March 312021.; |
| Assessed the appropriateness of Company's accounting policy for valuation of inventory and compliance of the policy with the requirements of the prevailing accounting standard AS 2 and the actual cost determination was done correctly and considered various factors including the actual selling price prevailing around and subsequent to the year-end to ensure that the Realizable value was estimated correctly. |
| Compared the cost of the finished goods with the estimated net realizable value and checked if the finished goods were recorded at net realizable value where the cost was higher than the net realizable value the inventory was written down. |
|2. Assessing the impact of Pandemic COV1D 19 on the financial statements: |
|The pandemic has created huge uncertainties on the operations of many established businesses and exposed them to several new risks. Due to this organizations have had to make significant changes to their normal processes to adapt to this sudden and unexpected turn of situation. These changes could impact the measurement of assets and liabilities on varying degree. |
|Due to COVID-19 the Company is also exposed to various risks such as assessment of counter parties' risks for receivables operational controls compliance and several other risks. |
|Auditors' Response to the Key Audit Matter: |
|Principal Audit Procedure: |
|Our audit procedures relating to the impairment of assets & other operational controls compliances & several other risk are as follows: |
| Looked at the company's exhaustive risk identification and mitigation analysis using its well established enterprise risk management framework to understand the implications assessment projysserjwd the company's current mitigation plans. |
| assessment of risks of counter party defaults by examining external credit rating movements if any and the process of identification of risky receivables and making suitable provisions in the financial statements. |
| Assessment of the temporary changes made to the internal control framework over financial reporting and carrying suitable tests for the effectiveness of key controls on the balance sheet date. |
| Evaluating the overall presentation of the financial statements and ensuring the appropriateness and adequacy of the disclosures. |
|Checking the compliance against the various regulatory prescriptions applicable to the .company to the extent those are relevant in the preparation of financial statement. |
EMPHASIS OF MATTER:
Attention is invited to the following notes of Financial Statements:
During the Financial year 2020-21 the company has Approximately to 87.30% ofits total turnover from Top Five Customers only which are subject to third partyconfirmation.
As on March 31 2021 the company has outstanding Unsecured Loan which has beenavailed from Directors Relatives from Directors Shareholders & Others.
During the year 2020-21 the company has not been regular in repayment ofloans/Installments due to Banks & other financial Institutions.
During the Previous Financial Year 2019-20 the company has given Advance forRaw Material Purchase to its suppliers but the same are still remains unsettled as onMarch 312021.
Our Opinion is not modified in respect of these matters.
INFORMATION OTHER THAN THE FINANCIAL STATEMENTS AND AUDITOR'S REPORT THEREON
The company's board is responsible for the preparation of the other information. Theother information comprises the information included Board's Report including Annexures toBoard's Report Business Responsibility Report but does not include the financialstatements and our auditor's report thereon.
Our opinion on the financial statements does not cover the other information and we donot express any form of assurance conclusion thereon.
In connection with our audit of the financial statements our responsibility is to readthe other information and in doing so consider whether the other information ismaterially inconsistent with the financial statements or our knowledge obtained during thecourse of our audit or otherwise appears to be materially misstated.
If based on the work we have performed we conclude that there is a materialmisstatement of this other information we are required to report that fact. We havenothing to report in this regard.
MANAGEMENT'S RESPONSIBILITY FOR THE FINANCIAL STATEMENTS
The Company's Board of Directors is responsible for the matters stated in Section134(5) of the Companies Act 2013 ("the Act") with respect to the preparation ofthese financial statements to give a true and fair view of the financial positionfinancial performance & cash flows of the Company in accordance with accountingprinciples generally accepted in India. This responsibility also includes maintenance ofadequate accounting records in accordance with the provisions of the Act for safeguardingof the assets of the Company and for preventing and detecting frauds and otherirregularities; selection and application of appropriate accounting policies; makingjudgments and estimates that are reasonable and prudent; and design implementation andmaintenance of adequate internal financial controls that were operating effectively forensuring the accuracy and completeness of the accounting records relevant to thepreparation and presentation of the financial statements that give a true and fair viewand are free from material misstatement whether due to fraud or error.
In preparing the financial statements management is responsible for assessing thecompany's ability to continue as a going concern disclosing as applicable mattersrelated to going concern and using the going concern basis of accounting unless managementeither intends to liquidate the company or to cease operations or has no realisticalternative but to do so.
The board of directors are responsible for overseeing the company's financial reportingprocess.
AUDITOR'S RESPONSIBILITY FOR THE AUDIT OF 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 with SAswill always detect a material misstatement when it exists. Misstatements can arise fromfraud or error and are considered material if individually or in the aggregate theycould reasonably be expected to influence the economic decision of users taken on thebasis of these financial statements.
As part of an audit in accordance with SAs we exercise professional judgement andmaintain professional skepticism throughout the audit. We also:
identify and assess the risks of material misstatements 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 financial controls relevant to the audit inorder to design audit procedures that are appropriate in the circumstances. Under section143(3X0 of the Act we are also responsible for expressing our opinion on whether theCompany has adequate internal financial controls system in place and the operatingeffectiveness of 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 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 financial statements or if such disclosures are inadequate to modify our opinion.Our conclusions are based on the audit evidence obtained up to the date of our auditor'sreport. However future events or conditions may cause the company to cease to continue asa going concern.
Evaluate the overall presentation structure and content of the financialstatements including the disclosures and whether the financial statements represent theunderlying transactions and events in a manner that achieves fair presentation.
Materiality is the magnitude of misstatements in the financial statements thatindividually or in aggregate makes it probable that the economic decisions of areasonable knowledgeable user of the financial statements may be influenced. We considerquantitative materiality and qualitative factors in (i) planning the scope of our auditwork and in evaluating the results of our work; and (ii) to evaluate the effect of anyidentified misstatements in the 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 financial statements of thecurrent period and are therefore the key audit matters. We describe these matters in ourauditor's 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 reasonablebe expected to outweigh the public interest benefits of such communications.
REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS
1. As required by Section 143(3) of the Act based on our audit 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 & Cash Flow Statement dealtwith by this Report are in agreement with the books of account;
d) In our opinion the aforesaid financial statements comply with the accountingstandards specified under Section 133 of the Act read with Rule 7 of the Companies(Accounts) Rules 2014;
e) On the basis of the written representations received from the directors as on March31 2021 taken on record by the Board of Directors none of the directors is disqualifiedas on March 31 2021 from being appointed as a director in terms of Section 164 (2) ofthe Act;
f) With respect to the adequacy of internal financial control over financial reportingof the company & the operating effectiveness of such controls refer to our separatereport in Annexure "A". Our report expresses an unmodified opinion on theadequacy and operating effectiveness of the company's internal financial controls overfinancial reporting.
g) With respect to the other matters to be included in the Auditor's Report inaccordance with the requirements of Section 197( 16) of the Act as amended:
In our opinion and to the best of our information and according to the explanationgiven to us the remuneration paid by the company to its directors during the year is inaccordance with the provision of Section 197 of the Act.
h) With respect to other matters to be included in the Auditor's Report in accordancewith Rule 11 of the companies (Audit and Auditors) Rules 2014 as amended in our opinionand to the best of our information and according to the explanation given to us:
(i) The Company has disclosed the impact of pending litigations on its financialposition in its standalone financial statements.
(ii) The Company has made provision as at March 31 2021 as required under theapplicable law or accounting standards for material foreseeable losses if any onlong-term contracts including derivative contracts.
(iii) The Company is not liable to transfer any amounts to the Investor Education andProtection Fund during the year ended March 31 2021.
2. As required by the Companies (Auditors Report) Order 2016' issued by theCentral Government of India in terms of sub-section (11) of section 143 of the Act(hereinafter referred to as the "Order") and on the basis of such checks of thebooks and records of the Company as we considered appropriate and according to theinformation and explanation given to us we give in the Annexure "B" a statementon the matters specified in paragraph 3 and 4 of the Order.
ANNEXURE "A" TO THE AUDITOR'S REPORT
Report on the Internal Financial Control under clause (i) of sub section 3 of Section143 of companies Act 2013 (The Act')
We have audited the internal financial control over financial reporting of ChandraBhagat Pharma Limited ('the company') as of 31st March 2021 in conjunction with our auditof the financial statement of the company for the year ended on that date.
Management 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 Control over Financial Reportingissued by the Institute of Chartered Accountants of India. These responsibilities includethe design implementation and maintenance of adequate internal financial controls thatwere operating effectively for ensuring the orderly and efficient conduct of its businessincluding adherence to 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 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") issued by ICA1 and the standards on auditing prescribedunder section 143( 10) of the Companies Act 2013 to the extent applicable to an audit ofinternal financial controls. Those Standards and the Guidance Note require that we complywith ethical requirements and plan and perform the audit to obtain reasonable assuranceabout whether adequate internal financial controls over financial reporting wasestablished 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 auditor's 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 fmancia. reporting is a process designed toprovide 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 of records that in reasonable detail accurately andfairly reflect 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 authorizations of management and directors of the company; and
(3) provide reasonable assurance regarding prevention or timely detection ofunauthorized acquisition use or disposition of the company's assets that could have amaterial 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.
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 March 31 2021 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 Control Over Financial Reporting issued by the Institute of CharteredAccountants of India.
ANNEXURE "B" TO THE AUDITOR'S REPORT
Referred to in Paragraph 2 Under "Report on Other Legal and RegulatoryRequirements'1 of Our
Report of Even Date
On the basis of such checks as we considered appropriate and according to theinformation and explanations given to us during the course of our audit we report that:
1) a) The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets;
(b) The Fixed Assets have been physically verified by the management in a phasedmanner designed to cover all the items over a period of three years which in ouropinion is reasonable having regard to the size of the company and nature of itsbusiness. Pursuant to the program a portion of the fixed asset has been physicallyverified by the management during the year and no material discrepancies between the booksrecords and the physical fixed assets have been noticed.
(c) The title deeds of immovable properties are held in the name of the company.
2) (a) The management has conducted the physical verification of inventory atreasonable intervals.
b) The discrepancies noticed on physical verification of the inventory as compared tobooks records which has been properly dealt with in the books of account were notmaterial.
3) As informed to us & according to the information and explanation provided to usThe Company has granted loans secured or unsecured to companies firms Limited Liabilitypartnerships or other parties covered in the Register maintained under section 189 of theAct.
(a) The Terms of Such Loans are not prejudicial to interest of companies
(b) The Repayment & Receipt of Such Loans are proper.
(c) There are no loans whose repayment is outstanding for more than 90 days from thedate of due.
4) In our opinion and according to the information and explanations given to us thecompany has complied with the provisions of section 185 and 186 of the Companies Act 2013in respect of loans investments guarantees and security except some irregularitieswhich have been observed during the year with regard to non-compliance of section 185& 186 & rules made there under.
5) The Company has not accepted any deposits from the public and hence the directivesissued by the Reserve Bank of India and the provisions of Sections 73 to 76 or any otherrelevant provisions of the Act and the Companies (Acceptance of Deposit) Rules 2016 withregard to the deposits accepted from the public are not applicable except someirregularities which have been observed during the year with regard to non-compliance ofsection 73 & rules made there under.
6) As informed to us the maintenance of Cost Records has not been specified by theCentral Government under sub-section (1) of Section 148 of the Act in respect of theactivities carried on by the company.
7) (a) According to information and explanations given to us and on the basis of ourexamination of the books of account and records the Company has not been regular indepositing undisputed statutory dues including Provident Fund Employees State InsuranceIncome-Tax Goods & Service Tax Duty of Customs Cess and any other statutory dueswith the appropriate authorities. According to the information and explanations given tous undisputed amounts payable in respect of the above were in arrears as at March 312021 for a period of more than six months from the date on when they become payable are asfollows:
|Tax Deducted at Source Payable ||1462436.00 |
|Provident Fund Payable ||6406505.00 |
|ESI Payable ||52909.00 |
|Provision for Income tax A.Y. 2019-20 ||2209291.00 |
|Professional Tax ||97450.00 |
b) According to the information and explanation given to us there are no dues ofincome tax Goods & service tax & duty of customs outstanding on account of anydispute.
8) In our opinion and according to the information and explanations given to us theCompany has made defaults in the repayment of dues to banks. The Company has not taken anyloan either from financial institutions or from the government and has not issued anydebentures.
9) Based upon the audit procedures performed and the information and explanations givenby the management the company has raised moneys by way of initial public offer & theproceeds has been applied for the purpose for which they are actually raised. Furthercompany has not availed any fresh term loan during the year.
10) Based upon the audit procedures performed and the information and explanationsgiven by the management we report that no fraud by the Company or on the company by itsofficers or employees has been noticed or reported during the year.
11) Based upon the audit procedures performed and the information and explanationsgiven by the management the managerial remuneration has been paid or provided inaccordance with the requisite approvals mandated by the provisions of section 197 readwith Schedule V to the Companies Act;
12) In our opinion the Company is not a Nidhi Company. Therefore the provisions ofclause 3 (xii) of the Order are not applicable to the Company.
13) In our opinion all transactions with the related parties are in compliance withsection 177 and 188 of Companies Act 2013 and the details have been disclosed in theFinancial Statements as required by the applicable accounting standards.
14) Based upon the audit procedures performed and the information and explanationsgiven by the management the company has not made any preferential allotment or privateplacement of shares or fully or partly convertible debentures during the year underreview. Accordingly the provisions of clause 3 (xiv) of the Order are not applicable tothe Company and hence not commented upon.
15) Based upon the audit procedures performed and the information and explanationsgiven by the management the company has not entered into any non-cash transactions withdirectors or persons connected with him. Accordingly the provisions of clause 3 (xv) ofthe Order are not applicable to the Company and hence not commented upon.
16) In our opinion the company is not required to be registered under section 45 IA ofthe Reserve Bank of India Act 1934 and accordingly the provisions of clause 3 (xvi) ofthe Order are not applicable to the Company and hence not commented upon.
|Arplt Gupta Partner |
|M.NO.: 421544 |
|UDIN : 21421544AAAABI1653 |
|Place : Mumbai |
|Date : 29.06.2021 |
|For A Y & Company |
|Chartered Accountants |
|FRN: 020829C |