To the Members of DUROPLY INDUSTRIES LIMITED
(Formerly Sarda Plywood Industries Limited)
Report on the Audit of the Financial Statements
We have audited the financial statements of Duroply Industries Limited (Formerly Sarda Plywood Industries Limited) (the Company) which comprises the Balance sheet as at 31st March 2019 and the Statement of Profit and Loss (Including Other Comprehensive Income) Cash Flow Statement and the Statement of changes in equity for the year then ended and notes to the financial statements including a summary of significant accounting policies and other explanatory information for the year ended on that date (hereinafter referred to as financial statements).
In our opinion and to the best of our information and according to the explanations given to us the aforesaid financial statements give the information required by the Companies Act 2013 (the Act) in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India of the state of affairs of the Company as at 31st March 2019 and its Profit (including other comprehensive income) and its cash flows and the changes in equity for the year ended on that date.
Basis for Opinion
We conducted our audit in accordance with the Standards on Auditing (SAs) specified under section 143(10) of the Act. Our responsibilities under those Standards are further described in the Auditor's Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Company in accordance with the Code of Ethics issued by the Institute of Chartered Accountants of India together with the ethical requirements that are relevant to our audit of the financial statements under the provisions of the Companies Act 2013 and the Rules made thereunder and we have fulfilled our other ethical responsibilities in accordance with these requirements and the Code of Ethics. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion on financial Statements.
Key Audit Matters
Key audit matters are those matters that in our professional judgment were of most significance in our audit of the financial statements of the current period. These matters were addressed in the context of our audit of the financial statements and in forming our opinion thereon and we do not provide a separate opinion on these matters.
|S. No||Key Audit Matter||Auditor's Response|
|1.||Business Combination||Our procedures included:|
|Accuracy of recognition measurement presentation and disclosures of Business combination as per IndAS 103. A business combination is a transaction in which the acquirer obtains control of another business (the acquire) (Refer Note No.37)|| Accounting policies: The amalgamation was accounted under the pooling of interest method prescribed under Ind AS 103 - Business Combinations as prescribed by the Scheme.|
| Control testing: Testing the effectiveness of the company controls over the calculation of capital reserve and Goodwill.|
| Tests of details: Obtaining supporting documentation for :-|
| The assets and liabilities of the combining entities are reflected at their carrying amounts.|
| No adjustments are made to reflect fair values or recognise any new assets or liabilities. The only adjustments that are made are to harmonise accounting policies.|
| The financial information in the financial statements in respect of prior periods should be restated as if the business combination had occurred from the beginning of the preceding period in the financial statements irrespective of the actual date of the combination. However if business combination had occurred after that date the prior period information shall be restated only from that date|
| The balance of the retained earnings appearing in the financial statements of the transferor is aggregated with the corresponding balance appearing in the financial statements of the transferee. Alternatively it is transferred to General Reserve if any.|
| The identity of the reserves shall be preserved and shall appear in the financial statements of the transferee in the same form in which they appeared in the financial statements of the transferor.|
| The difference if any between the amounts recorded as share capital issued plus any additional consideration in the form of cash or other assets and the amount of share capital of the transferor shall be transferred to capital reserve and should be presented separately from other capital reserves with disclosure of its nature and purpose in the notes.|
| Assessing disclosures: Considering the adequacy of the Group's disclosures in respect of Business combination. Our results|
| The results of our testing were satisfactory and we considered that the `polling of interest method' in the scheme of Arrangement recognized to be acceptable and recorded in the correct period.|
|Direct Tax provision||Our procedures included:|
|In the normal course of business Income Taxes as the amount|| Control testing: Testing the effectiveness of the Group's controls around the recording and re-assessment of tax provisions.|
|of income taxes payable (recoverable) in respect of the taxable profit (tax loss) for a period.|| Our tax expertise: Use of our own tax specialists to perform an assessment of the Group's related correspondence to consider the computation of tax provisions.|
| Challenging the assumptions using our own expectations based on our knowledge of the Group considering relevant judgments passed by authorities as well as assessing relevant opinions from third parties.|
| Assessing disclosures: Considering the adequacy of the Group's disclosures in respect of tax and uncertain tax positions.|
| Our results : The results of our testing were satisfactory and we found the level of tax provisioning to be acceptable.|
Information Other than the Financial Statements and Auditor's Report Thereon
The Company's Board of Directors is responsible for the other information. The other information comprises the information included in the Management Discussion and Analysis Board's Report including Annexures to Board's Report Business Responsibility Report Corporate Governance and Shareholder's Information but does not include the financial statements and our auditor's report thereon
Our opinion on the financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.
In connection with our audit of the financial statements our responsibility is to read the other information and in doing so consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If based on the work we have performed we conclude that there is a material misstatement of this other information we are required to report that fact. We have nothing to report in this regard.
Responsibility of the Management for the Ind AS financial statements
The Company's Board of Directors is responsible for the matters stated in section 134(5) of the Act with respect to the preparation of these financial statements that gives a true and fair view of the financial position financial performance changes in equity and cash flows of the Company in accordance with the accounting principles generally accepted in
India including the Indian Accounting Standards (Ind AS) prescribed under section 133 of the Act. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the accuracy and completeness of the accounting records relevant to the preparation and presentation of the financial statements that gives a true and fair view and are free from material misstatement whether due to fraud or error.
In preparing the financial statements management is responsible for assessing the Company's ability to continue as a going concern disclosing as applicable matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations or has no realistic alternative but to do so.
The Board of Directors are also responsible for overseeing the company's financial reporting process.
Auditor's Responsibilities for the Audit of Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement whether due to fraud or error and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with SAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if individually or in the aggregate they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
As part of an audit in accordance with SAs we exercise professional judgment and maintain professional skepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of the Ind AS financial statements whether due to fraud or error design and perform audit procedures responsive to those risks and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error as fraud may involve collusion forgery intentional omissions misrepresentations or the override of internal control.
Obtain an understanding of internal financial controls relevant to the audit in order to design audit procedures that are appropriate in the circumstances.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
Conclude on the appropriateness of management's use of the going concern basis of accounting and based on the audit evidence obtained whether a material uncertainty exists related to events or conditions that may cast significant doubt on the ability of the Company to continue as a going concern. If we conclude that a material uncertainty exists we are required to draw attention in our auditor's report to the related disclosures in the 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's report. However future events or conditions may cause the Company to cease to continue as a going concern.
Evaluate the overall presentation structure and content of the Ind AS financial statements including the disclosures and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
We communicate with management regarding among other matters the planned scope and timing of the audit and significant audit findings including any significant deficiencies in internal control that we identify during our audit.
We also provide management with a statement that we have complied with relevant ethical requirements regarding independence and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence and where applicable related safeguards.
From the matters communicated with management we determine those matters that were of most significance in the audit of the financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor's report unless law or regulation precludes public disclosure about the matter or when in extremely rare circumstances we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.
We did not audit the financial statements/ information of Delhi branch included in the stand alone financial statements of the Company whose financial statements/financial information reflect total assets of Rs 1977.01 Lakhs as at 31st March 2019 and the total revenue of Rs. 9005.18 Lakhs for the year ended on that date as considered in the standalone financial statements/ information of these branches have been audited by the branch auditors whose reports have been furnished to us and our opinion in so far as it relates to the amounts and disclosures included in respect of branches is based solely on the report of such branch auditors.
We draw attention to Note 37 of the financial statements regarding Scheme of Arrangement for merger of P. S. Plywood Products Private Limited with Duroply Industries Limited w.e.f. 1st April 2016 the appointed date approved by the Hon'ble National Company Law Tribunal Kolkata vide Order dated 10th August 2018. The NCLT order overrides the requirements under Ind AS 103 Business Combination and hence the Company has considered the date of acquisition as 1st April 2016 and accordingly the effects have been given in these financial statements.
We also draw attention that audit of financial statements for the Financial year 2016-17 and 2017-18 of P. S. Pltwood Products Private Limited were done by other auditors.
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 of the Act we give in the Annexure A a statement on the matters specified in paragraphs 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 best of 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 the Company so far as appears from our examination of those books;
c. The Balance Sheet the Statement of Profit and Loss including Other Comprehensive Income the Statement of Changes in Equity and the Statements of Cash Flows dealt with by this report are in agreement with the books of account;
d. In our opinion the Balance sheet the Statement of Profit and Loss including Other Comprehensive Income the Statement of changes in Equity and the Statement of Cash flows comply with the Indian Accounting Standards (Ind AS) specified under section 133 of the Act;
e. On the basis of the written representations received from the directors as on 31st March 2019 and taken on record by the Board of Directors none of the directors is disqualified as on 31st March 2019 from being appointed as a director in terms of section 164 (2) of the Act;
f. With respect to the adequacy of the internal financial controls over financial reporting of the Company and the operating effectiveness of such controls refer to our separate Report in Annexure B. Our report expresses an unmodified opinion on the adequacy and operating effectiveness of the Company's internal financial controls over financial reporting;
g. With respect to the other matters to be included in the Auditor's Report in accordance 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 explanations given to us the remuneration paid by the Company to its directors during the year is in accordance with the provisions of section 197 of the Act.
h. With respect to the other matters to be included in the Auditor's Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014 in our opinion and to the best of our information and according to the explanations given to us:
i. The company has disclosed the impact of pending litigations which would impact financial position. (Refer Note 37.3 to the financial statement)
ii. The Company did not have any long-term contracts including derivative contracts for which there were any material foreseeable losses;
iii. There has been no delay in transferring amounts which were required to be transferred to the Investor Education and Protection Fund by the Company.
|For S. K. AGRAWAL AND CO.|
|Firm's Registration No. 306033E|
|(CA VIVEK AGARWAL)|
|Place : Kolkata||Partner|
|Date: 30th May 2019||Membership No. 301571|
Annexure -A to the Independent Auditors' Report
The Annexure referred to in our Independent Auditor's Report to the members of Duroply Industries Limited (Formerly Sarda Plywood Industries limited) (the Company') on the financial statements for the year ended on 31st March 2019. We report that:
i. In respect of the Company's fixed Assets:
(a) The Company has maintained proper records showing full particulars including quantitative details and situation of fixed assets.
(b) According to information and explanation given to us all the fixed assets have been physically verified by the management in a phased periodical manner which in our opinion is reasonable having regard to the size of the company and nature of the assets. No material discrepancies were noticed on such physical verification.
(c) According to information and explanation given to us and the records examined by us including registered title deeds we reports that the title deeds comprising all the immovable properties of land and building are held in the name of company as at balance sheet date.
ii. The inventories have been physically verified during the year by the management at regular intervals. In our opinion and according to the information and explanations given to us no material discrepancies were noticed on physical verification.
iii. The Company has not granted any loans secured or unsecured to companies firms Limited Liability Partnerships or other parties covered in the register maintained under section 189 of the Companies Act 2013 (`the Act'). Accordingly paragraph 3(iii)(a) 3(iii)(b) and 3(iii)(c) of the Order is not applicable to the Company.
iv. In our opinion and according to the information and explanations given to us the Company has not given any loans guarantees or security or made any investments to which provisions of sections 185 and 186 of the Companies Act 2013 is applicable and accordingly reporting under clause (iv) of the Order is not applicable.
v. According to the information and explanations given to us the Company has not accepted any deposits under the provisions of Sections 73 to Section 76 of the Companies Act 2013 during the year. Hence the provisions of Clause (v) of the Order are not applicable to the Company.
vi. According to the information and explanation given to us the Central Govt. of India has not specified the maintenance of cost records under sub section (1) of section 148 of the Act for the product of the company.
vii. According to the information and explanations given to us in respect of statutory dues:
(a) The Company has been regular in depositing undisputed statutory dues including Provident Fund Employees State Insurance Income Tax Service Tax Sales Tax Value Added Tax duty of Custom duty of Excise Cess Goods and Service Tax and other statutory dues with the appropriate authorities during the year. According to the information and explanations given to us no undisputed amounts payable in respect of the aforesaid dues were outstanding as at 31st March 2019 for a period of more than six months from the date they became payable.
(b) According to the information and explanations given to us there are no material dues of duty of customs goods and service tax value added tax which have not been deposited with the appropriate authorities on account of any dispute. However according to the information and explanation give to us the following dues of income tax sales tax duty of excise service tax have not been deposited by the company on account of disputes:
|Nature of the Statute||Nature of dues||Amount (Rs. in Lakhs)||Period to which the matter pertains||Forum where matter is pending|
|Delhi Sales Tax Act 1975||Sales Tax||77.87||1990-91||Additional Commissioner of sales tax|
|Central Sales Tax Act 1956||Sales Tax||47.52||1990-91||Additional Commissioner of sales tax|
|Income Tax Act 1961||Income Tax||0.87||1985-86||Income Tax Appellate Tribunal|
|Central Excise Act 1944||Excise Duty||1198.78||April 2010 to Dec 2016||Assistant Commissioner of Central Excise|
viii. In our opinion and according to information and explanations given by the management we are of the opinion that the Company has not defaulted in the repayment of dues to financial institution and banks. The Company does not have any loans or borrowings from Government and has not issued any debentures.
ix. The Company has not raised moneys by way of initial public offer or further public offer (including debt instruments). To the best of our knowledge and belief and according to the information and explanations given to us term loans availed by the Company were applied for the purpose for which the loans were obtained.
x. According to the information and explanations given to us no material fraud by the Company or on the Company by its officers or employees has been noticed or reported during the year.
xi. According to the information and explanations given to us the company has paid or provided for managerial remuneration in accordance with requisite approvals mandated by the provisions for managerial remunerations of Section 197 read with Schedule V to the Companies Act.
xii. In our opinion and according to the information and explanations given to us the Company is not a Nidhi company. Accordingly paragraph 3(xii) of the Order is not applicable.
xiii. According to the information and explanations given to us and based on our examination of the records of the Company transactions with the related parties are in compliance with sections 177 and 188 of the Act where applicable and details of such transactions have been disclosed in the financial statements as required by the applicable Indian Accounting Standards.
xiv. According to the information and explanations give to us and based on our examination of the records the Company has not made any preferential allotment or private placement of shares or fully or partially convertible debentures during the year.
xv. According to the information and explanations given to us and based on our examination of the records of the Company the Company has not entered into non-cash transactions with directors or persons connected with them. Accordingly paragraph 3(xv) of the Order is not applicable.
xvi. The Company is not required to be registered under section 45-IA of the Reserve Bank of India Act 1934.
|For S.K. AGRAWAL AND CO.|
|Firm's Registration No. 306033E|
|(CA VIVEK AGARWAL)|
|Place : Kolkata||Partner|
|Date: 30th May 2019||Membership No. 301571|
Annexure - B to the Auditors' Report
Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section 143 of the Companies Act 2013 (the Act)
We have audited the internal financial controls over financial reporting of Duroply Industries Limited (Formerly Sarda Plywood Industries Limited) (the Company) as of 31st March 2019 in conjunction with our audit of the financial statements of the Company for the year ended on that date.
Management's Responsibility for Internal Financial Controls
The Company's management is responsible for establishing and maintaining internal financial controls based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls over Financial Reporting issued by the Institute of Chartered Accountants of India (`ICAI'). These responsibilities include the design implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the orderly and efficient conduct of its business including adherence to company's policies the safeguarding of its assets the prevention and detection of frauds and errors the accuracy and completeness of the accounting records and the timely preparation of reliable financial information as required under the Companies Act 2013.
Our responsibility is to express an opinion on the Company's internal financial controls over financial reporting based on our audit. We conducted our audit in accordance with the Guidance Note on Audit of Internal Financial Controls over Financial Reporting (the Guidance Note) and the Standards on Auditing issued by ICAI and deemed to be prescribed under section 143(10) of the Companies Act 2013 to the extent applicable to an audit of internal financial controls both applicable to an audit of Internal Financial Controls and both issued by the Institute of Chartered Accountants of India. Those Standards and the Guidance Note require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether adequate internal financial controls over financial reporting was established and maintained and if such controls operated effectively in all material respects.
Our audit involves performing procedures to obtain audit evidence about the adequacy of the internal financial controls system over financial reporting and their operating effectiveness. Our audit of internal financial controls over financial reporting included obtaining an understanding of internal financial controls over financial reporting assessing the risk that a material weakness exists and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. The procedures selected depend on the auditor's judgment including the assessment of the risks of material misstatement of the financial statements whether due to fraud or error.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the Company's internal financial controls system over financial reporting.
Meaning of Internal Financial Controls Over Financial Reporting
A company's internal financial control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal financial control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles and that receipts and expenditures of the company are being made only in accordance with authorisation of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorised acquisition use or disposition of the company's assets that could have a material effect on the financial statements.
Inherent Limitations of Internal Financial Controls Over Financial Reporting
Because of the inherent limitations of internal financial controls over financial reporting including the possibility of collusion or improper management override of controls material misstatements due to error or fraud may occur and not be detected. Also projections of any evaluation of the internal financial controls over financial reporting to future periods are subject to the risk that the internal financial control over financial reporting may become inadequate because of changes in conditions or that the degree of compliance with the policies or procedures may deteriorate.
In our opinion to the best of our information and according to the explanations given to us the Company has in all material respects an adequate internal financial controls system over financial reporting and such internal financial controls over financial reporting were operating effectively as at 31 March 2019 based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issued by the Institute of Chartered Accountants of India.
|For S. K AGRAWAL AND CO.|
|Firm's Registration No.306033E|
|(CA VIVEK AGARWAL)|
|Date: 30th May 2019||Membership No. 301571|