To the Members of
Dhabriya Polywood Limited
Report on the consolidated Ind AS Financial Statements
We have audited the accompanying consolidated Ind AS financial statements of DHABRIYAPOLYWOOD LIMITED (hereinafter referred to as the Holding Company) and itsSubsidiaries (the Holding Company and its subsidiaries together referred to as theGroup) which comprise the Consolidated Balance Sheet as at 31st March2019 the Consolidated Statement of Profit and Loss (including other comprehensiveincome) the Consolidated Statement of Changes in Equity and the Consolidated Cash FlowStatement for the year then ended and a summary of the significant accounting policiesand other explanatory information (hereinafter referred to as the consolidated IndAS financial statements).
In our opinion and to the best of our information and according to the explanationsgiven to us and based on the consideration of reports of other auditors on separate Ind ASnancial statements and on the other nancial information of the subsidiaries the aforesaidconsolidated Ind AS nancial statements give the information required by the Companies Act2013 (the Act) in the manner so required and give a true and fair view inconformity with the accounting principles generally accepted in India including the IndianAccounting Standards (Ind AS) of the consolidated state of affairs of theGroup as at March 31 2019 their consolidated pro t including other comprehensive incomeconsolidated changes in equity and their consolidated cash ows for the year ended on thatdate.
Basis for Opinion
We conducted our audit in accordance with the standards on auditing as specified undersection 143 (10) of the Act. Our responsibilities under those Standards are furtherdescribed in the auditor's responsibilities for the audit of the consolidated Ind ASfinancial statements section of our report. We are independent of the Group in accordancewith the code of ethics issued by the Institute of Chartered Accountants of India togetherwith the ethical requirements that are relevant to our audit of the consolidated Ind ASfinancial statements under the provisions of the Act and the rules thereunder and we havefulfilled our other ethical responsibilities in accordance with these requirements and thecode of ethics. We believe that the audit evidence we have obtained is sufficient andappropriate to provide a basis for our audit opinion on the consolidated Ind AS financialstatements.
Key Audit Matters
Key audit matters are those matters that in our professional judgment were of mostsignificance in our audit of the consolidated Ind AS financial statements for thefinancial year ended March 31 2019. These matters were addressed in the context of ouraudit of the consolidated Ind AS financial statements as a whole and in forming ouropinion thereon and we do not provide a separate opinion on these matters. We havedetermined the matters described below to be the key audit matter to be communicated inour report:
A. Revenue Recognition Key Audit Matter Description
The Group's revenue is principally derived from sale of products of PVC-uPVC ProfileSections Doors Windows Modular Furniture Products and others. Revenue from sale ofgoods is recognized when the control of the goods has passed which is usually ondispatch/delivery of the goods. We identified revenue recognition as a key audit matterbecause the Group and its external stakeholders focus on revenue as a key performanceindicator.
Response to Key Audit Matter
We have planned & performed the following procedures: Assessed the appropriatenessof the revenue recognition accounting policies by comparing them with applicableaccounting standards.
Evaluated the process followed by the management for revenue recognition includingunderstanding and testing of key controls related to recognition of revenue in correctperiod.
Performed substantive testing on samples selected using statistical sampling of revenuetransactions recorded during the year by testing the underlying documents to determinewhether revenue has been recognized correctly and timely.
B. Inventory Existence and Valuation Key Audit Matter Description
There are complexities and manual process involved in determining inventory quantitieson hand and valuation of the same due to the
Group's presence across different locations within the country diverse & numerousinventory products and work in progress at different stages of the processes at variousmanufacturing units. Accordingly inventory quantities and valuation is identi ed as a keyaudit Matter.
Response to Key Audit Matter
We have planned & performed the following procedures: Attended inventory countswhich we selected based on nancial signi cance and risk observed management's inventorycount procedures to assess the effectiveness selected a sample of inventory products andcompared the quantities counted to the quantities recorded and ensured inventoryadjustments if any are recorded in the books of accounts.
Assessed whether the management's internal controls relating to inventory's valuationare appropriately designed and implemented.
Discussed with the management on the management's process of identifying the stages ofcompletion and valuing work in progress stock at the time of book closure process.
Veri cation of the correctness of valuation made by the management on a sample basiswith regard to the cost and net realizable value of inventory.
Information Other than the Consolidated Ind AS Financial Statements and Auditor'sReport Thereon
The Holding Company's Board of Directors are responsible for the other information. Theother information comprises the information included in the Annual report 2018-19 of theCompany but does not include the consolidated Ind AS financial statements and ourauditor's report thereon. Our opinion on the consolidated Ind AS financial statements doesnot cover the other information and we do not express any form of assurance conclusionthereon. In connection with our audit of the consolidated Ind AS financial statements ourresponsibility is to read the other information and in doing so consider whether suchother information is materially inconsistent with the consolidated Ind AS financialstatements or our knowledge obtained during the course of the audit or otherwise appearsto be materially misstated. If based on the work we have performed we conclude thatthere is a material misstatement of this other information we are required to report thatfact. We have nothing to report in this regard.
Responsibilities of Management for the Consolidated Ind AS Financial Statements
The Holding Company's Board of Directors is responsible for the matters stated insub-section 5 of Section 134 of the Act with respect to the preparation of theseconsolidated Ind AS financial statements that give a true and fair view of the financialposition financial performance (including other comprehensive income) changes in equityand cash flows of the Group in accordance with the accounting principles generallyaccepted in India including the Indian Accounting Standards (Ind AS) specified underSection 133 of the Act read with the Companies (Indian accounting standards) Rules 2015as amended from time to time. This responsibility also includes maintenance of adequateaccounting records in accordance with the provisions of the Act for safeguarding theassets of the Group and for preventing and detecting frauds and other irregularitiesselection and application of appropriate accounting policies making judgments andestimates that are reasonable and prudent and design implementation and maintenance ofadequate internal financial controls that were operating effectively for ensuring theaccuracy and completeness of the accounting records relevant to the preparation andpresentation of the consolidated Ind AS financial statements that give a true and fairview and are free from material misstatement whether due to fraud or error.
In preparing the consolidated Ind AS financial statements the respective Board ofDirectors of the companies included in the Group responsible for assessing the ability toGroup to continue as a going concern disclosing as applicable matters related to goingconcern and using the going concern basis of accounting unless management either intendsto liquidate the Group or to cease operations or has no realistic alternative but to doso.
The respective Board of Directors of the Companies included in the Group are alsoresponsible for overseeing the financial reporting process of the Group.
Auditor's Responsibility for the audit of Consolidated Ind AS financial statements
Our objectives are to obtain reasonable assurance about whether the consolidated Ind ASfinancial 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 consolidated Ind AS financial statements. As part of an auditin accordance with SAs we exercise professional judgment and maintain professionalskepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of the consolidated Ind ASfinancial 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 HoldingCompany and its subsidiaries which are companies incorporated in India have adequateinternal financial controls system in place and the operating effectiveness of suchcontrols. Evaluate the appropriateness of accounting policies used and the reasonablenessof accounting estimates and related disclosures made by management. Conclude on theappropriateness of management's use of the going concern basis of accounting and based onthe audit evidence obtained whether a material uncertainty exists related to events orconditions that may cast significant doubt on the Group's ability to continue as a goingconcern. If we conclude that a material uncertainty exists we are required to drawattention in our auditor's report to the related disclosures in the consolidated Ind ASfinancial statements or if such disclosures are inadequate to modify our opinion. Ourconclusions are based on the audit evidence obtained up to the date of our auditor'sreport. However future events or conditions may cause the Group to cease to continue as agoing concern.
Evaluate the overall presentation structure and content of the consolidated Ind ASfinancial statements including the disclosures and whether the consolidated Ind ASfinancial statements represent the underlying transactions and events in a manner thatachieves fair presentation. Obtain suf cient appropriate audit evidence regarding thenancial information of the entities or business activities within the Group to express anopinion on the consolidated Ind AS nancial statements. We are responsible for thedirection supervision and performance of the audit of the Ind AS nancial statements ofsuch entities included in the consolidated Ind AS nancial statements of which we are theindependent auditors. For the other entities included in the consolidated Ind AS nancialstatements which have been audited by other auditors such other auditors remainresponsible for the direction supervision and performance of the audits carried out bythem. We remain solely responsible for our audit opinion.
We communicate with those charged with governance of the Holding Company and such otherentities included in the consolidated Ind AS nancial statements of which we are theindependent auditors regarding among other matters the planned scope and timing of theaudit and significant audit findings including any significant deficiencies in internalcontrol 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 consolidated Ind AS financialstatements of the current period and are therefore the key audit matters. We describethese matters in our auditor's report unless law or regulation precludes public disclosureabout the matter or when in extremely rare circumstances we determine that a mattershould not be communicated in our report because the adverse consequences of doing sowould reasonably be expected to outweigh the public interest benefits of suchcommunication.
We did not audit the Ind AS financial statements of one of the subsidiary whosefinancial statements reflect total assets of Rs. 1049.28 Lacs as at March 31 2019 totalrevenues of Rs. 2588.47 Lacs total net profit (including other comprehensive income)after tax of Rs. 191.37 Lacs for the year ended on that date as considered in theconsolidated Ind AS financial statements. These Ind AS financial statements have beenaudited by other auditors whose reports have been furnished to us by the Management andour opinion on the consolidated Ind AS financial statements in so far as it related tothe amounts and disclosures included in respect of these subsidiary and our report interms of section 143(3) of the Act in so far as it relates to aforesaid subsidiary isbased solely on the reports of the other auditors. Our opinion on the consolidated Ind ASfinancial statements and our report on the Other Legal and Regulatory Requirements belowis not modified in respect of above matters with respect to our reliance on the work doneand the reports of the other auditors and financial information certified by themanagement.
Report on Other Legal and Regulatory Requirements
As required by Section 143(3) of the Act we report to the extent applicable 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 of the aforesaidconsolidated Ind AS financial statements. (b) In our opinion proper books of account asrequired by law relating to preparation of the aforesaid consolidated Ind AS nancialstatements have been kept so far as it appears from our examination of those books and thereports of the other auditors. (c) The Consolidated Balance Sheet the ConsolidatedStatement of Profit and Loss (including Other Comprehensive Income) the Consolidated CashFlow Statement and Consolidated Statement of Changes in Equity dealt with by this Reportare in agreement with the books of account maintained for the purpose of preparation ofthe consolidated Ind AS nancial statements. (d) In our opinion the aforesaid consolidatedInd AS financial statements comply with the Indian Accounting Standards prescribed underSection 133 of the Act read with relevant rules issued there under.
(e) On the basis of the written representations received from the Directors of theHolding Company as on 31st March 2019 taken on record by the Board ofDirectors of the Holding Company and the reports of the statutory auditors of itssubsidiary companies incorporated in India none of the directors of the Group companiesin India is disqualified as on 31st March 2019 from being appointed as aDirector in terms of Section 164(2) of the Act. (f) With respect to the adequacy of theinternal financial controls with reference to financial statements of the Holding Companyand its subsidiary companies incorporated in India and the operating effectiveness of suchcontrols we give our separate Report in Annexure.
(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 ouropinion and to the best of our information and according to the explanations given to usthe remuneration paid / provided by the holding Company to its directors during the yearis in accordance with the provisions of section 197 read with Schedule V of the Act. (h)With respect to the 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 explanations given to us: i. Theconsolidated Ind AS financial statements discloses the impact of pending litigations onits consolidated financial position of the Group; ii. The Group did not have any long-termcontracts including derivative contracts for which there were any material foreseeablelosses; iii. There were no amounts required to be transferred to the Investor Educationand Protection Fund by the Holding Company and its subsidiary companies.
|For NARENDRA SHARMA & CO. ||Chartered Accountants |
| ||(Firm Regn No. 004983C) |
| ||(YOGESH GAUTAM) |
| ||Partner |
|Jaipur 30th May 2019 ||Membership No. 072676 |
ANNEXURE TO THE INDEPENDENT AUDITOR'S REPORT
(Referred to under Report on Other Legal and Regulatory Requirements of ourreport of even date to the members of Dhabriya Polywood Limited on the consolidated Ind ASnancial statements for the year ended March 31 2019)
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)
In conjunction with our audit of the consolidated Ind AS financial statements of theCompany as of and for the year ended March 31 2019 we have audited the internalfinancial controls with reference to nancial statements of DHABRIYA POLYWOOD LIMITED (hereinafterreferred to as the Holding Company) and its subsidiaries (the Holding Companyand in subsidiaries together referred to as the Group) as of that date.
Management's Responsibility for Internal Financial Controls
The respective Board of Directors of the Holding Company and its subsidiary companieswhich are companies incorporated in India are responsible for establishing andmaintaining internal financial controls 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 (the Guidance Note) issued by the Institute of CharteredAccountants of India. These responsibilities include the design implementation andmaintenance of adequate internal financial controls that were operating effectively forensuring the orderly and efficient conduct of its business including adherence to therespective 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 theCompanies Act 2013.
Our responsibility is to express an opinion on the Group's internal financial controlswith reference to the financial statements of Holding Company and its subsidiarycompanies which are companies incorporated in India based on our audit. We conducted ouraudit in accordance with the Guidance Note and the Standards on Auditing prescribed underSection 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 with reference to nancial statementswas established and maintained and if such controls operated effectively in all materialrespects.
Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal financial controls system with reference to nancial statements and theiroperating effectiveness. Our audit of internal financial controls with reference tonancial statements included obtaining an understanding of internal financial controls withreference to nancial 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 obtained by us and the audit evidence obtained bythe other auditors of the subsidiary company in terms of their reports referred to in theOther Matters paragraph below is sufficient and appropriate to provide a basis for ouraudit opinion on the Group's internal financial controls with reference to financialstatements.
Meaning of Internal Financial Controls with reference to Financial Statements
A Group's internal financial controls with reference to nancial statements is a processdesigned to provide reasonable assurance regarding the reliability of financial reportingand the preparation of financial statements for external purposes in accordance withgenerally accepted accounting principles. A Group's internal financial controls withreference to nancial statements includes those policies and procedures that (1) pertain tothe maintenance of records that in reasonable detail accurately and fairly reflect thetransactions and dispositions of the assets of the Group; (2) provide reasonable assurancethat transactions are recorded as necessary to permit preparation of financial statementsin accordance with generally accepted accounting principles and that receipts andexpenditures of the Group are being made only in accordance with authorizations ofManagement and Directors of the respective company in the Group; and (3) providereasonable assurance regarding prevention or timely detection of unauthorized acquisitionuse or disposition of the Group's assets that could have a material effect on thefinancial statements.
Inherent Limitations of Internal Financial Controls with reference to FinancialStatements
Because of the inherent limitations of internal financial controls with reference tonancial statements including the possibility of collusion or improper management overrideof controls material misstatements due to error or fraud may occur and not be detected.Also projections of any evaluation of the internal financial controls with reference tonancial statements to future periods are subject to the risk that the internal financialcontrol with reference to nancial statements may become inadequate because of changes inconditions or that the degree of compliance with the policies or procedures maydeteriorate.
In our opinion to the best of our information and according to the explanations givento us and based on the consideration of reports of the other auditors as referred to inthe Other Matters below the Holding Company and its subsidiary Companies which areCompanies incorporated in India have in all material respects an adequate internalfinancial controls with reference to nancial statements and such internal financialcontrols with reference to nancial statements were operating effectively as at March 312019 based on the internal control with reference to nancial statements criteriaestablished by the Group considering the essential components of internal control statedin the Guidance Note issued by ICAI.
Our aforesaid report under section 143(3)(i) of the Act on the adequacy and operatingeffectiveness of the internal financial controls with reference to nancial statementsinsofar as it relates to one subsidiary company which is company incorporated in Indiais based on the corresponding report of the auditors of such company incorporated inIndia.
|For NARENDRA SHARMA & CO. ||Chartered Accountants |
| ||(Firm Regn No. 004983C) |
| ||(YOGESH GAUTAM) |
| ||Partner |
|Jaipur 30th May 2019 ||Membership No. 072676 |