TO THE MEMBERS OF CONTINENTAL CONTROLS LIMITED
Report on the Audit of the Ind AS Financial Statements Qualified Opinion
We have audited the accompanying IndAS financial statements of Continental ControlLimited ("the Company") which comprise the Balance Sheet as at March 312019 the Statement of Profit and Loss (including Other Comprehensive Income) theStatement of Changes in Equity and the Statement of Cash Flows for the year ended on thatdate and notes to the financial statements including a summary of the significantaccounting policies and other explanatory information (hereinafter referred to as"the financial statements")
In our opinion and to the best of our information and according to the explanationsgiven to us except for the effects of the matter described in the Basis for QualifiedOpinion section of our report the aforesaid financial statements give the informationrequired by the Companies Act 2013 ("the Act") in the manner so required andgive a true and fair view in conformity with the accounting principles generally acceptedin India of the state of affairs of the Company as at March 31 2019 the profit andtotal comprehensive income changes in equity and its cash flows for the year ended onthat date.
Basis of Qualified Opinion
Reference is invited Note no. 36 regarding various balances of debtors creditors andassets and liabilities and relating to various tax related accounts pending forreconciliation and subsequent adjustments if any and also Note no 37 regarding pendingcompliance of Ind-As 19 on employee benefits. The precise impact of which has not beenascertained. The Internal controls including internal audit in the company also requiredfurther strengthening.
The Overall impact of the above on the financial statements has remained unascertained.
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. Wehave determined the matters described below to be the key audit matters to be communicatedin our report:
1 Non Current Term loan
As at March 31 2019 the Company has non-current Liabilities amounting to Rs. 310.59Lakhs which represent outstanding buyers credit converted into Term Loan by the Bank. Asinformed the repayment schedule and term of sanction for the this term loan were yet to becommunicated by the Bank and hence current maturity of long term borrowings have not beenidentified by the company. Having regard to the operating results of the company thecompany may be exposed to the liquidity risk once the repayment schedule of the long termborrowings is communicated by the lender.
Principal Audit Procedures
We have carried out our audit procedures for the outstanding loan based on availabledata/information. Since as at the year-end the repayment schedule was yet to be fixedimpact on the liquidity of the company as at the Balance Sheet date has not beenconsidered. The management of the company has expressed its ability to serve the repaymentobligations as and when the same do arise.
Information Other than the Financial Statements and Auditor's Report Thereon
The Company's Board of Directors is responsible for the preparation of the otherinformation. The other information comprises the information included in the ManagementDiscussion and Analysis Directors' Report including Annexures to Directors' ReportCorporate Governance and Shareholder's Information but does not include the financialstatements and our auditor's report thereon. The Other information is expected to be madeavailable to us after the date of this Auditors' report.
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 identified above when it becomes available and in doing soconsider whether the other information is materially inconsistent with the financialstatements or our knowledge obtained in the audit or otherwise appears to be materiallymisstated. When we read the other information if we conclude that there is a materialmisstatement therein we are required to communicate the matter to those charged withgovernance and the members of the company.
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 shall bereporting separately if any such situation arises.
Management's Responsibility for the Financial Statements
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 financial statements that givea true and fair view of the financial position financial performance total comprehensiveincome changes in equity and cash flows of the Company in accordance with the Ind AS andother accounting principles generally accepted in India. This responsibility also includesmaintenance of adequate accounting records in accordance with the provisions of the Actfor safeguarding the assets of the Company and for preventing and detecting frauds andother irregularities; 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 Responsibilities 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 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 decisions of users taken on thebasis of these 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 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(3)(i) 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 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 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 financial statementsincluding the disclosures and whether the financial statements represent the underlyingtransactions 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 areasonably 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 reasonablybe expected to outweigh the public interest benefits of such communication.
Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditor's Report) Order 2016 ('the Order') issued bythe Central Government of India in terms of section 143(11) of the Act we give in theAnnexure- I a statement on the matters specified in paragraph 3 and 4 of the Order tothe extent applicable.
2. 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 and proper returnsadequate for the purposes of our audit have been received from branches not visited by us.
c) The Balance Sheet the Statement of Profit and Loss including Other ComprehensiveIncome Statement of Changes in Equity and the Statement of Cash Flow dealt with by thisReport are in agreement with the relevant books of account.
d) In our opinion the aforesaid financial statements comply with the Ind AS specifiedunder Section 133 of the Act read with Rule 7 of the Companies (Accounts) Rules 2015 asamended
e) On the basis of the written representations received from the directors as on 31stMarch 2019 taken on record by the Board of Directors none of the directors aredisqualified as on31st March 2019 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 and the operating effectiveness of such controls refer to ourseparate Report in "Annexure II".
g) With respect to the other matters to be included in the Auditor's Report inaccordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014 as amended inour opinion and to the best of our information and according to the explanations given tous:
i. The Company has disclosed the impact of pending litigations on its financialposition in its financial statements.
ii. The Company did not have any long-term contracts including derivative contracts forwhich there were any material foreseeable losses.
iii. There were no amounts which were required to be transferred to the InvestorEducation and Protection Fund by the Company.
For R. Devendra Kumar & Associates
Firm Registration No. 114207W
Membership No. 074392
Date: 30th May 2019
ANNEXURE 'I' TO THE INDEPENDENT AUDITOR'S REPORT
(Referred to in paragraph 1 under 'Report on Other Legal and Regulatory Requirements'section of our report of even date to the Members of Continental Control Limited)
1. In respect of its fixed assets:
a) The Company has maintained records showing particulars including quantitativedetails and situation of fixed assets on the basis of available information which areunder updation .
b) As explained to us all the fixed assets have been physically verified by themanagement in a phased periodical manner which in our opinion is reasonable havingregard to the size of the Company and nature of its assets. The report of suchverification is explained to be under compilation. No material discrepancies wereexplained to have been noticed on such physical verification by the management.
c) According to the documents provided to us we confirm that the title deeds ofimmovable properties are held in the name of the company. Except
|Particular ||No. of cases ||Gross block as on 31st March 2019 ||Net Block as on 31st March 2019 ||Remarks |
|Land and Quarter ||01 ||52.90 ||52.90 ||Title document / other evidence are not available for verification |
2. In respect of its inventories:
In our opinion and according to the information and explanations given to us physicalverification of inventory has been conducted by the management at reasonable intervals bythe management .The report of such verification is explained to be under compilation. Nomaterial discrepancies were explained to have been noticed on such physical verificationby the management.
3. The Company has granted loan to one body corporate covered in the registermaintained under section 189 of the Companies Act.
a) In our opinion terms and conditions on which the loan had been granted to the bodycorporate listed in the register maintained under Section 189 of the Act was not primafacie prejudicial to the interest of the Company.
b) The loan granted is interest free the principal amount is granted and receivedduring the year and there is no outstanding at the end of the year.
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 Act with respectto the loans and investments made.
5. The Company has not accepted any deposits from the public.
6. The Central Government has not prescribed the maintenance of cost records undersection 148(1) of the Act for any of the services rendered by the Company.
7. According to the information and explanations given to us in respect of statutorydues:
a) Undisputed statutory dues in respect of sales tax service tax withholding taxesprovident fund and employees' state insurance cess as applicable and any other statutorydues have been regularly deposited with the appropriate authorities. There were noundisputed amounts payable in respect of Income-tax Custom Duty Good and Service TaxCess and other material statutory dues in arrears as at 31st March 2019 for a period ofmore than six months from the date they became payable except for an amount of Rs. 66220relating to TDS demand at TRACES Portal which is being evaluated by the Company .
b) There are no statutory dues pending to be deposited on account of disputes pendingwith various forums .
8. The Company taken a term loan from Bank against collateral security of Premises ofthe Company for which repayment terms are yet to be communicated to the company as at theyear end . However there are no reported defaults in repayment of such loans.
9. The Company did not raise any money by way of initial public offer or further publicoffer (including debt instruments) and term loans during the year. Accordingly paragraph3 (ix) of the Order is not applicable.
10. According to the information and explanations given to us no material fraud by theCompany or on the Company by its officers or employees has been noticed or reported duringthe course of our audit.
11. The Company has paid/provided for managerial remuneration in the books of accountsin accordance with the requisite approvals mandated by the provisions of section 197 readwith Schedule V to the Companies Act.
12. 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.
13. According to the information and explanations given to us and based on ourexamination of the records of the Company transactions with the related parties are incompliance with sections 177 and 188 of the Act where applicable and details of suchtransactions have been disclosed in the financial statements as required by the applicableaccounting standards.
14. According to the information and explanations give to us and based on ourexamination of the records of the Company the Company has not made any preferentialallotment during the year.
15. 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 non-cashtransactions with directors or persons connected with him. Accordingly paragraph 3(xv) ofthe Order is not applicable.
16. The Company is not required to be registered under section 45-IA of the ReserveBank of India Act 1934.
For R. Devendra Kumar & associates
Firm Registration No. 114207W
Membership No. 074392
Date: 30th May 2019
Annexure II - referred to in paragraph 2(f) under "Report on Other Legal andRegulatory Requirements" of our report of even date
Report on the Internal Financial Controls with reference to Financial Statements underclause (i) of sub-section 3 of section 143 of the Companies Act 2013 ("theAct")
We have audited the Internal Financial Controls with reference to Financial Statementsof CONTINENTAL CONTROL LIMITED (the Company') as of March 31 2019 in conjunctionwith our audit of the Ind AS financial statements of the Company for the year ended onthat date.
Management's Responsibility for Internal Financial Controls
The Company's management is responsible for establishing and maintaining InternalFinancial Controls with reference to Financial Statements established by the Companyconsidering the essential components of internal control stated in the Guidance Note onAudit of Internal Financial Controls Over Financial Reporting issued by the Institute ofChartered Accountants of India (ICAI). These responsibilities include the designimplementation and maintenance of adequate internal financial controls that were operatingeffectively for ensuring the orderly and efficient conduct of its business includingadherence to company's policies the safeguarding of its assets the prevention anddetection of frauds and errors the accuracy and completeness of the accounting recordsand the timely preparation of reliable financial information as required under the Act
Our audit of Internal Financial Controls with reference to Financial Statementsincludes assessing the risk that a material weakness exists and testing and evaluating thedesign and operating effectiveness of internal control based on the assessed risk. Theprocedures selected depend on the auditor's judgement including the assessment of therisks of material misstatement of the Ind AS financial statements whether due to fraud orerror.
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 withreference to Financial Statements.
Meaning of Internal Financial Controls with reference to Financial Statements
A Company's Internal Financial Controls with reference to Financial Statements is aprocess designed to provide reasonable assurance regarding the reliability of financialreporting and the preparation of Ind AS Financial Statements for external purposes inaccordance with generally accepted accounting principles. A company's Internal FinancialControl over Financial Reporting includes those policies and procedures that (1) pertainto the maintenance of records that in reasonable detail accurately and fairly reflectthe transactions and dispositions of the assets of the company; (2) provide reasonableassurance that transactions are recorded as necessary to permit preparation of Ind ASFinancial Statements in accordance with generally accepted accounting principles and thatreceipts and expenditures of the company are being made only in accordance withauthorizations of management and directors of the company; and (3) provide reasonableassurance regarding prevention or timely detection of unauthorized acquisition use ordisposition of the company's assets that could have a material effect on the Ind ASFinancial Statements.
Inherent Limitations of Internal Financial Controls with reference to FinancialStatements
Because of the inherent limitations of Internal Financial Controls with reference toFinancial Statements including the possibility of collusion or improper managementoverride of controls material misstatements due to error or fraud may occur and not bedetected. Also projections of any evaluation of the Internal Financial Controls withreference to Financial Statements to future periods are subject to the risk that theInternal Financial Control with reference to Financial Statements may become inadequatebecause of changes in conditions or that the degree of compliance with the policies orprocedures may deteriorate.
The company's internal controls in the area of inventory accounting and recording ofexpenses and receipts needs to be strengthened . The company is yet to implement a formalinternal audit process.
On the basis of our broad review of entity level controls the internal controlweaknesses as stated above have been identified.
A material weakness' is a deficiency or a combination of deficiencies ininternal financial control over financial reporting such that there is a reasonablepossibility that a material misstatement of the company's financial statement will not beprevented or detected on a timely basis.
In our opinion except for the possible effects of the internal control weaknessesdescribed above on the achievements of the objectives of the control criterion thecompany has maintained in all material respects adequate internal financial controlover financial reporting and such internal financial controls over financial reportingwere operating effectively as of March 312019 based on "the internal control overfinancial reporting 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".
We have considered the material weaknesses identified and reported above in determiningthe nature timing and extent of audit tests applied in our audit of the March 312019financial statements of the Company and these material weaknesses do not affect ouropinion on the financial statements of the Company except to the extent of ourqualification as contained in our separate report on the financial statements of thecompany.
For R. Devendra Kumar & Associates
(Firm Registration No. 207114W )
Membership No. 074392
Date: 30th May 2019