To the Members of Cosmo Films Limited
Report on the Audit of the Standalone Financial Statements
We have audited the accompanying standalone financial statements of Cosmo Films Limited("the Company") which comprise the Balance Sheet as at 31 March 2021 theStatement of Profit and Loss including Other Comprehensive Income Statement of Changes inEquity and Statement of Cash Flows for the year then ended and notes to the standalonefinancial statements including a summary of significant accounting policies and otherexplanatory 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 Act 2013 ("the Act") in the manner so required and give a trueand fair view in conformity with the Indian Accounting Standards prescribed under Section133 of the Act read with the Companies (Indian Accounting Standards) Rules 2015 asamended and other accounting principles generally accepted in India of the state ofaffairs of the Company as at 31 March 2021 and its profit (including other comprehensiveincome) changes in equity and its cash flows and for the year ended 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 Standards are furtherdescribed in the Auditor's Responsibilities for the Audit of the Standalone Ind ASFinancial 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 ("the ICAI") together with the ethical requirements that are relevant toour audit of the standalone Ind AS financial statements under the provisions of the Actand the Rules thereunder and we have fulfilled our other ethical responsibilities inaccordance with these requirements and the ICAI's Code of Ethics. We believe that theaudit evidence we have obtained is sufficient and appropriate to provide a basis for ouropinion.
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 standalone financial statements as awhole and in forming our opinion thereon and we do not provide a separate opinion onthese matters.
We have determined the matter described below to be the key audit matters to becommunicated in our report:
|Key audit matter ||How our audit addressed the key audit matter |
|Derivative financial instruments || |
|The Company has entered into various derivative contracts including foreign exchange forward contracts currency options cross currency swaps and interest rate swaps which are used to manage and hedge foreign currency exchange risks and interest rate risks. ||We assessed the design and implementation and tested the operating effectiveness of the key controls over management's processes for valuation of derivative financial instruments. Our audit procedures included but were not limited to the following substantive procedures: |
|The Company has reported net derivative financial assets at fair value of Rs 6.05 crores and net derivative financial liabilities at fair value of Rs 2.87 crores as of 31 March 2021. || Obtained independent direct confirmations from banks to confirm the outstanding financial instruments in order to verify existence and rights. |
|The Company's accounting policy on derivatives is disclosed in note 1 (iii) k) (iii) and related disclosures are included in note 45. The Company's significant judgements in applying accounting policy are disclosed in note 1 (iv). || Reviewed the hedging strategy of the Company economic relationship and hedge ratio between hedged items and hedging instruments to assess the hedge effectiveness of derivative contracts to the extent hedge accounting is applied. |
|The fair value of the derivative financial instruments is based on year-end quotes received from counterparty banks. In respect of designated hedging relationships the Company measures the effectiveness thereof using valuation models such as hypothetical derivative method. || Inspected the underlying agreements and deal confirmations for the derivatives. |
| || Assessed whether the accounting policy is consistent with the requirements of Ind AS 109 Financial Instruments'. |
|Testing the fair valuation of derivative instruments and effectiveness of hedging relationships where applicable are complex exercises and hence required substantial involvement of senior personnel on the audit engagement with relevant experience. || Evaluated the appropriateness of disclosures in relation to financial risk management derivative financial instruments and hedge accounting. |
|Accordingly valuation of the derivative financial instruments and hedge accounting is determined to be a key audit matter. ||We have also obtained written representations from management and those charged with governance on whether the significant assumptions used in valuation of derivatives are considered reasonable. |
Information Other than the Standalone Financial Statements and Auditor's Report Thereon
The Company's Board of Directors is responsible for the other information. The otherinformation comprises the information included in the Annual Report but does not includethe standalone financial statements and our auditor's 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 ouraudit of the standalone financial statements our responsibility is to read the otherinformation and in doing so consider whether the other information is materiallyinconsistent with the standalone 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 Standalone 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 standalone financial statementsthat give a true and fair view of the financial position financial performance totalcomprehensive income changes in equity and cash flows of the Company in accordance withthe accounting principles generally accepted in India including the Indian AccountingStandards specified under Section 133 of the Act. This responsibility also includesmaintenance of adequate accounting records in accordance with the provisions of the Actfor safeguarding of 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 standalone financial statements that give a true andfair view and are free from material misstatement whether due to fraud or error.
In preparing the standalone financial statements management is responsible forassessing the Company's ability to continue as a going concern disclosing as applicablematters related to going concern and using the going concern basis of accounting unlessmanagement either intends to liquidate the Company or to cease operations or has norealistic alternative but to do so.
The Board of Directors are 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 standalonefinancial statements whether due to fraud or error design and perform audit proceduresresponsive to those risks and obtain audit evidence that is sufficient and appropriate toprovide a basis for our opinion. The risk of not detecting a material misstatementresulting from fraud is higher than for one resulting from error as fraud may involvecollusion forgery intentional omissions misrepresentations or the override of internalcontrol.
Obtain an understanding of internal control relevant to the audit in order todesign audit procedures that are appropriate in the circumstances. Under Section 143(3)(i)of the Act we are also responsible for expressing our opinion on whether the 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 reasonablenessof accounting estimates and related disclosures made by management.
Conclude on the appropriateness of management's use of the going concern basisof accounting and based on the audit evidence obtained whether a material uncertaintyexists related to events or conditions that may cast significant doubt on the Company'sability to continue as a going concern. If we conclude that a material uncertainty existswe are required to draw attention in our auditor's report to the related disclosures inthe standalone financial statements or if such disclosures are inadequate to modify ouropinion. Our conclusions are based on the audit evidence obtained up to the date of ourauditor's report. However future events or conditions may cause the Company to cease tocontinue as a going concern.
Evaluate the overall presentation structure and content of the standalonefinancial statements including the disclosures and whether the standalone financialstatements represent the underlying transactions and events in a manner that achieves fairpresentation.
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 auditor's 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.
The standalone financial statements of the Company for the year ended 31 March 2020were audited by predecessor auditor who expressed an unmodified opinion on those financialstatements on 04 June 2020.
Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditor's Report) Order 2016 ("the Order")issued by the Central Government of India in terms of sub-section (11) of Section 143 ofthe Act we give in the "Annexure A" a statement on the matters specified inparagraphs 3 and 4 of the Order 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 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 Statement of Changes in Equity and the Statement of Cash Flows dealt with by thisReport are in agreement with the books of account.
(d) In our opinion the aforesaid standalone financial statements comply with theIndian Accounting Standards (Ind AS') specified under Section 133 of the Act readwith Rule 7 of the Companies (Accounts) Rules 2014.
(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 is disqualifiedas on 31st March 2021 from being appointed as a director in terms of Section 164 (2) ofthe 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".
(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 explanationsgiven to us the remuneration paid by the Company to its directors during the year is inaccordance with the provisions of Section 197 of 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) 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 on its financialposition in its standalone financial statements Refer Note 38 to the standalonefinancial statements;
ii. The Company did not have any long-term contracts including derivative contracts forwhich there were any material foreseeable losses.
iii. There has been no delay in transferring amounts required to be transferred tothe Investor Education and Protection Fund by the Company.
For S.N. Dhawan & CO LLP
Firm Registration No.: 000050N/N500045
Rajeev Kumar Saxena
Membership No.: 077974
Date: 20 May 2021
Annexure A to the Independent Auditor's Report
(Referred to in paragraph 1 under Report on Other Legal and RegulatoryRequirements' section of the Independent Auditor's Report of even date to the members ofCosmo Films Limited on the standalone financial statements as of and for the year ended 31March 2021)
(i) a) The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets (comprising of property plant andequipment and other intangible assets)
b) The fixed assets comprising of property plant and equipment have been physicallyverified by the management during the previous year by engaging the outside expert andaccording to the information and explanations given to us no material discrepancies werenoticed on such verification. In our opinion the frequency of verification of the fixedassets is reasonable having regard to the size of the Company and the nature of itsassets.
c) According to the information and explanations given to us and based on theexamination of the title deeds and mortgage deed provided to us we report that the titledeeds of all the immovable properties (which are included under the head of propertyplant and equipment) are held in the name of the Company.
(ii) In our opinion the management has conducted physical verification of inventory atreasonable intervals during the year except for goods in transit and according to theinformation and explanations given to us no material discrepancies between physicalinventory and book records were noticed on physical verification.
(iii) According to the information and explanations given to us the Company has notgranted any loan secured or unsecured to companies firms Limited Liability Partnerships(LLPs) or other parties covered in the register maintained under Section 189 of the Act.Accordingly the provisions of clauses 3(iii)(a) 3(iii)(b) and 3(iii)(c) of the Order arenot applicable.
(iv) In our opinion and according to the information and explanations given to us theCompany has complied with the provisions of Sections 185 and 186 of the Act in respect ofloans investments guarantees and security as applicable.
(v) In our opinion and according to the information and explanations given to us theCompany has not accepted any deposits during the year and had no unclaimed deposits at thebeginning of the year within the meaning of Sections 73 to 76 of the Act and the Companies(Acceptance of Deposits) Rules 2014 (as amended). Accordingly the provisions of clause3(v) of the Order are not applicable.
(vi) We have broadly reviewed the books of account maintained by the Company pursuantto the Rules made by the Central Government for the maintenance of cost records undersub-section (1) of Section 148 of the Act in respect of Company's products and are of theopinion that prima facie the prescribed accounts and records have been made andmaintained. However we have not made a detailed examination of the cost records with aview to determine whether they are accurate or complete.
(vii) (a) According to the information and explanations given to us the Company isgenerally regular in depositing undisputed statutory dues including provident fundemployees' state insurance income-tax duty of customs duty of excise cess goods andservices tax and other material statutory dues as applicable to the appropriateauthorities. Further no undisputed amounts payable in respect thereof were outstanding atthe year-end for a period of more than six months from the date they become payable.
(b) According to the information and explanations given to us the dues outstanding inrespect of income-tax duty of excise and service tax on account of any dispute are asfollows:
|Name of the statute Income-tax Act 1961 ||Nature of dues ||Amount ||Amount paid under Protest ||Period to which the amount relates (FY) ||Forum where dispute is pending |
| || ||(Rs in crores) ||(Rs in crores) || || |
| ||Income tax ||3.47 ||1.02 ||2012-13 ||Income Tax Appellate Tribunal |
| ||Income tax ||1.00 ||1.00 ||2011-12 ||Income Tax Appellate Tribunal |
| ||Income tax ||1.22 ||0.60 ||2010-11 ||Income Tax Appellate Tribunal |
| ||Income tax ||5.57 ||2.92 ||2009-10 ||Income Tax Appellate Tribunal |
| ||Income tax ||2.98 ||2.98 ||2008-09 ||Income Tax Appellate Tribunal |
| ||Income tax ||5.18 ||- ||2007-08 ||Income Tax Appellate Tribunal |
| ||Income tax ||5.67 ||- ||2006-07 ||Income Tax Appellate Tribunal |
| ||Income tax ||1.76 ||- ||2005-06 ||High Court |
| ||Income tax ||0.68 ||- ||2005-06 ||Income Tax Appellate Tribunal |
| ||Income tax ||0.82 ||- ||2004-05 ||Income Tax Appellate Tribunal |
| ||Income tax ||0.61 ||- ||2003-04 ||Income Tax Appellate Tribunal |
| ||Income tax ||4.71 ||4.71 ||2002-03 ||Hon'ble Supreme Court of India |
| ||Income tax ||1.40 ||- ||1997-98 ||High Court |
|Central Excise Act 1944 ||Excise duty ||16.10 ||1.83 ||2005-06 to 2017-18 ||Appellate Tribunal |
| ||Excise duty ||0.75 ||- ||2015-16 to 2017-18 ||Assistant Commissioner |
| ||Service tax ||1.37 ||0.19 ||2006-07 2012-13 to 2017-18 ||Appellate Tribunal |
| ||Service tax ||1.27 ||0.03 ||2009-10 to 2014-15 ||Assistant Commissioner |
(viii) In our opinion and according to the information and explanations given to usthe Company has not defaulted in repayment of loans or borrowings to any bank or financialinstitution during the year.
The Company did not have any outstanding debentures or dues to government during theyear.
(ix) In our opinion and according to the information and explanations given to us theCompany did not raise moneys by way of initial public offer or further public offer(including debt instruments) during the year and the term loans taken by the Company havebeen applied for the purpose for which they were raised.
(x) To the best of our knowledge and according to the information and explanationsgiven to us no fraud by the Company or on the Company by its officers or employees hasbeen noticed or reported during the period covered by our audit.
(xi) In our opinion and according to the information and explanations given to usmanagerial remuneration has been paid and provided by the Company in accordance with therequisite approvals mandated by the provisions of Section 197 of the Act read withSchedule V to the Act.
(xii) The Company is not a Nidhi Company. Accordingly provisions of clause 3(xii) ofthe Order are not applicable.
(xiii) In our opinion and according to the information and explanations given to usall transactions with the related parties are in compliance with Sections 177 and 188 ofAct where applicable and the requisite details have been disclosed in the financialstatements etc. as required by the applicable accounting standards.
(xiv) During the year the Company has not made any preferential allotment or privateplacement of shares or fully or partly convertible debentures. Accordingly provisions ofclause 3(xiv) of the Order are not applicable.
(xv) In our opinion and according to the information and explanations given to us theCompany has not entered into any non-cash transactions with the directors or personsconnected with them covered under Section 192 of the Act. Accordingly provisions ofclause 3(xv) of the Order are not applicable.
(xvi) The Company is not required to be registered under Section 45-IA of the ReserveBank of India Act
1934. Accordingly provisions of clause 3(xvi) of the Order are not applicable.
For S.N. Dhawan & CO LLP
Firm Registration No.: 000050N/N500045
Rajeev Kumar Saxena
Membership No.: 077974
Date: 20 May 2021
Annexure B to the Independent Auditor's Report
(Referred to in paragraph 2(f) under Report on Other Legal and RegulatoryRequirements' section of the Independent Auditor's Report of even date to the members ofCosmo Films Limited on the standalone financial statements as of and for the year ended 31March 2021)
Independent Auditor's report on the Internal Financial Controls with reference tofinancial statements under Clause (i) of Sub-section 3 of Section 143 of the CompaniesAct 2013 ("the Act")
We have audited the internal financial controls with reference to financial statementsof Cosmo Films Limited ("the Company") as of 31 March 2021 in conjunctionwith our audit of the standalone 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 based on internal control with reference to the financial statementscriteria established by the Company considering the essential components of internalcontrol stated in the Guidance Note on Audit of Internal Financial Controls Over FinancialReporting issued by the Institute of Chartered Accountants of India. Theseresponsibilities include the design implementation and maintenance of adequate internalfinancial controls that were operating effectively for ensuring the orderly and efficientconduct of the company's business including adherence to company's policies thesafeguarding of its assets the prevention and detection of frauds and errors theaccuracy and completeness of the accounting records and the timely preparation ofreliable financial information as required under the Act.
Our responsibility is to express an opinion on the Company's internal financialcontrols with reference to financial statements based on our audit. We conducted our auditin accordance with the Guidance Note on Audit of Internal Financial Controls OverFinancial Reporting (the "Guidance Note") and the Standards on Auditing issuedby the Institute of Chartered Accountants of India ("the ICAI") and deemed to beprescribed under section 143(10) of the Act to the extent applicable to an audit ofinternal financial controls both applicable to an audit of Internal Financial Controlsand both issued by the ICAI. 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 with reference to financial statementswere 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 with reference to financial statements and their operatingeffectiveness. Our audit of internal financial controls with reference to financialstatements included obtaining an understanding of internal financial controls withreference to financial statements assessing the risk that a material weakness exists andtesting and evaluating the design and operating effectiveness of internal control based onthe assessed risk. The procedures selected depend on the auditor's judgement includingthe assessment of the risks of material misstatement of the financial statements whetherdue 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 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 financial statements for external purposes in accordancewith generally accepted accounting principles. A company's internal financial controlswith reference to financial statements includes those policies and procedures that (1)pertain to the maintenance of records that in reasonable detail accurately and fairlyreflect the transactions and dispositions of the assets of the company; (2) providereasonable assurance that transactions are recorded as necessary to permit preparation offinancial statements in accordance with generally accepted accounting principles and thatreceipts and expenditures of the company are being made only in accordance withauthorisations of management and directors of the company; and (3) provide reasonableassurance regarding prevention or timely detection of unauthorised acquisition use ordisposition of the company's assets that could have a material effect on the financialstatements.
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 controls with reference to financial statements may become inadequatebecause of changes in conditions or that the degree of compliance with the policies orprocedures may deteriorate.
In our opinion the Company has in all material respects adequate internal financialcontrols with reference to financial statements and such internal financial controls withreference to financial statements were operating effectively as at 31 March 2021 based onthe internal control with reference to the financial statements criteria established bythe Company considering the essential components of internal control stated in theGuidance Note on Audit of Internal Financial Controls over financial reporting issued bythe Institute of Chartered Accountants of India.
For S.N. Dhawan & CO LLP
Firm Registration No.: 000050N/N500045
Rajeev Kumar Saxena
Membership No.: 077974
Date: 20 May 2021