TO THE MEMBERS OF EMMBI INDUSTRIES LIMITED.
Report on the Financial Statements Opinion
We have audited the accompanying financial statements of Emmbi Industries Limited("the Company") which comprise the Balance Sheet as at March 31 2019 theStatement of Profit and Loss (including Other Comprehensive Income) the Statement ofChanges in Equity and the Statement of Cash Flows for the year ended on that date and asummary of the significant accounting policies and other explanatory information(hereinafter referred to as "the financial statements"). In our opinion and tothe best of our information and according to the explanations given to us the aforesaidfinancial statements give the information required by the Companies Act 2013 ("theAct") in the manner so required and give a true and fair view in conformity with theIndian Accounting Standards prescribed under section 133 of theAct read with the Companies(Indian Accounting Standards) Rules 2015 as amended ("Ind AS") and otheraccounting principles generally accepted in India of the state of affairs of the Companyas at March 31 2019 the profit and total comprehensive income changes in equity and itscash flows for the year ended on that date.
Basis for Opinion
We conducted our audit of the financial statements in accordance with the Standards onAuditing specified under section 143(10) of the Act (SAs). Our responsibilities underthose Standards are further described in the Auditor's Responsibilities for the Audit ofthe Standalone Financial Statements section of our report. We are independent of theCompany in accordance with the Code of Ethics issued by the Institute of CharteredAccountants of India (ICAI) together with the independence requirements that are relevantto our audit of the standalone financial statements under the provisions of the Act andthe Rules made 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 ouraudit opinion on the financial statements.
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 following matter to be the key audit matter to be communicated in ourReport.
|Key Audit Matter ||Auditor's Response |
|Evaluation of uncertain tax position || |
|The company has material uncertain tax positions including matters under dispute which involves significant judgement to determine the possible outcome of these disputes. ||Our audit procedures include the following :- |
|Refer Note 27 to the Standalone Financial Statements. ||- Gained an understanding of the process of identification of claims litigations and contingent liabilities and identified key controls in the process. For selected controls we have performed tests of controls. |
| ||- Obtained the summary of Company's legal and tax cases and critically assessed management's position through discussion with the Legal Counsel on both the probability of success in significant cases and the magnitude of any potential loss. |
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 Board's Report including Annexures to Board's Report BusinessResponsibility Report Corporate Governance and Shareholder's Information but does notinclude the financial statements and our auditor's report thereon. Our opinion on thefinancial statements does not cover the other information and we do not express any formof assurance conclusion thereon. In connection with our audit of the financial statementsour responsibility is to read the other information and in doing so consider whether theother information is materially inconsistent with the financial statements or ourknowledge obtained during the course of our audit or otherwise appears to be materiallymisstated. If based on the work we have performed we conclude that there is a materialmisstatement of this other information we are required to report that fact. We havenothing to report in this regard.
Management's Responsibility for the Financial Statements
The Company's Board of Directors is responsible for the matters stated in section134(5) of the 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 thefinancial statements management is responsible for assessing the Company's ability tocontinue as a going concern disclosing as applicable matters related to going concernand using the going concern basis of accounting unless management either intends toliquidate the Company or to cease operations or has no realistic alternative but to doso. The Board of Directors are responsible for overseeing the Company's financialreporting process.
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 weexercise professional judgment and maintain professional scepticism throughout the audit.
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 financialstatements including the disclosures and whether the financial statements represent theunderlying transactions and events in a manner that achieves fair presentation.
Materiality is the magnitude of misstatements in the financial statements thatindividually or in aggregate makes it probable that the economic decisions of areasonably knowledgeable user of the financial statements maybe 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 withthose charged with governance we determine those matters that were of most significancein the audit of the financial statements of the current period and are therefore the keyaudit matters.
We describe these matters in our auditor's report unless law or regulation precludespublic disclosure about the matter or when in extremely rare circumstances we determinethat a matter should not be communicated in our report because the adverse consequences ofdoing so would reasonably be expected to outweigh the public interest benefits of suchcommunication.
Report on Other Legal and Regulatory Requirements
1. As required by Section 143(3) of the Act based on our audit we report that:
a) We have sought and obtained all the information and explanations which to the bestof our knowledge and belief were necessary for the purposes of our audit.
b) In our opinion proper books of account as required by law have been kept by theCompany so far as it appears from our examination of those books.
c) The Balance Sheet the Statement of Profit and Loss 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 2014.
e) On the basis of the written representations received from the directors as on March31 2019 taken on record by the Board of Directors none of the directors is disqualifiedas on March 31 2019 from being appointed as a director in terms of Section 164 (2) of theAct.
f) With respect to the adequacy of the internal financial controls over financialreporting of the Company and the operating effectiveness of such controls refer to ourseparate Report in "Annexure A". Our report expresses an unmodified opinion onthe adequacy and operating effectiveness of the Company's internal financial controls overfinancial reporting.
g) With respect to the other matters to be included in the Auditor's Report inaccordance with the requirements of section 197(16) of the Act as amended:
In our opinion and to the best of our information and according to the 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 as amended inour opinion and to the best of our information and according to the explanations given tous:
1. The Company has disclosed the impact of pending litigations on its financialposition in its financial statements.
ii. The Company doesn't have any long term contracts including derivative contractsrequiring provision for 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.
2. As required by the Companies (Auditor's Report) Order 2016 ("the Order")issued by the Central Government in terms of Section 143(11) of the Act we give in"Annexure B" a statement on the matters specified in paragraphs 3and 4 of theOrder.
| ||For R DALIYA & ASSOCIATES |
| ||Chartered Accountants |
| ||(ICAI FRN: 102060W) |
| ||K. Daliya |
|Place : Mumbai ||Partner |
|Date : 24.05.2019 ||(M No. 166874) |
Annexures to the
Independent Auditor's Report
Annexure A to the Independent Auditors' Report
(Referred to in Paragraph 1 of the Report on Other Legal and Regulatory Requirements'in our report of even date)
Report on the Internal Financial Controls Over Financial Reporting under Clause (i) ofSub Section 3 of Section 143 of the Companies Act 2013 ("the Act")
1. We have audited the internal financial controls over financial reporting of EmmbiIndustries Ltd. ("the Company") as of 31 March 2019 in conjunction with ouraudit of the Ind AS financial statements of the Company for the year ended on that date.
Management's Responsibility for Internal Financial Controls
2. The Company's management is responsible for establishing and maintaining internalfinancial controls based on internal controls over financial reporting criteriaestablished by the company considering the essential components of internal controlsstated in the Guidance Note on Audit of Internal Financial Controls over FinancialReporting issued by the Institute of Chartered Accountants of India ("ICAI").These responsibilities include design implementation and maintenance of adequate internalfinancial controls that were operating effectively for ensuring the orderly and efficientconduct of its business including adherence to Company's policies the safeguarding ofits assets the prevention and detection of frauds and errors the accuracy andcompleteness of the accounting records and the timely preparation of reliable financialinformation as required under the Companies Act 2013 (" the Act").
3. Our responsibility is to express an opinion on the Company's internal financialcontrols over financial reporting based on our audit. We conducted our audit with theGuidance Note on Audit of Internal Financial Controls over Financial Reporting (the"Guidance Note") and the Standards on Auditing deemed to be prescribed underSection 143 (10) of the Act to the extent applicable to an audit of internal financialcontrols both applicable to an audit of internal financial controls and both issued byICAI. Those Standards and the Guidance Note require that we comply with the ethicalrequirements and plan and perform the audit to obtain reasonable assurance about whetheradequate internal financial controls over financial reporting was established andmaintained and if such controls operated effectively in all material respects.
4. Our audit involves performing procedures to obtain audit evidence about the adequacyof the internal financial controls system over financial reporting and their operatingeffectiveness. Our audit of internal financial controls over financial reporting includedobtaining an understanding of internal financial controls over financial reportingassessing the risk that a material weakness exists and testing and evaluating the designand operating effectiveness of internal control based on the assessed risk. The proceduresselected depend on the auditor's judgment including the assessment of the risk ofmaterial misstatement of the Ind AS financial statements whether due to fraud or error.
5. 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 control systemover financial reporting.
Meaning of Internal Financial Controls Over Financial Reporting
6. A company's internal financial controls over financial reporting is a processdesigned to provide reasonable assurance regarding the reliability if financial reportingand the preparation of financial statements for external purposes in accordance withgenerally accepted accounting principles. A company's internal financial control overfinancial reporting includes those policies and procedures that (1) pertain to themaintenance of records that in reasonable detail accurately and fairly reflect thetransactions and dispositions of the assets of the company; (2) provide reasonableassurance that transactions are recorded as necessary to permit preparation of financialstatements in accordance with generally accepted accounting principles and that receiptsand expenditures of the company are being made only in accordance with authorizations ofmanagement and directors of the company; and (3) provide reasonable assurance regardingprevention or timely detection of unauthorized acquisition use or disposition of thecompany's assets that could have a material effect on the financial statements.
Inherent Limitations of Internal Financial Controls over Financial Reporting
7. Because of the inherent limitations of internal financial controls over financialreporting including the possibility of collusion or improper management override ofcontrols material misstatements due to error or fraud may occur and not be detected.Also projections of any evaluation of the internal financial controls over financialreporting to future periods are subject to the risk that the internal financial controlsover financial reporting may become inadequate because of changes in conditions or thatthe degree of compliance with the policies or procedures may deteriorate.
In our opinion the Company has in all material respects an adequate internalfinancial controls system over financial reporting and such internal financial controlsover financial reporting were operating effectively as at 31 March 2019 based on theinternal controls over financial reporting criteria established by the Company consideringthe essential components of internal controls stated in the Guidance Note on Audit ofInternal Financial Controls Over Financial reporting issued by ICAI
| ||For and on behalf of |
| ||R Daliya & Associates |
| ||Chartered Accountants |
|Place :- Mumbai ||FRN :. 102060W. |
|Date : 24.05.2019 ||K. Daliya |
| ||Partner |
| ||Membership No. :- 166874 |
Annexure - B
(Referred to in Paragraph 2 of the Report on Other Legal and Regulatory Requirements'in our report of even date)
(i) (a) The Company has maintained proper records showing full particulars includingquantitative details and situation of its fixed assets on the basis of availableinformation.
(b) As explained to us fixed assets have been physically verified by the managementduring the year at regular intervals and no material discrepancies were noticed on suchverification.
(c) According to the information and explanations given to us and on the basis of ourexamination of the records of the Company the title deeds of Immovable Properties asdisclosed in Note 5 on Fixed Assets to the Ind AS financial statements are held in thename of the Company.
In respect of immovable properties been taken on lease and disclosed as property plantand equipment in the Ind AS financial statements the lease agreements are in the name ofthe Company.
(ii) The management has conducted physical verification of inventory at reasonableintervals. No material discrepancies were noticed on physical verification.
(iii) As informed to us during the year the Company has granted any loans secured orunsecured to companies firms or other parties covered in the register maintained underSection 189 of the Act. The company has granted loan to Limited Liability Partnership theterms and conditions of the grant of such loans are in our opinion prima facie notprejudicial to the Company's interest. Details of the same have been mentioned in Note 39.
(iv) 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 given investments made guarantees and securities given.
(v) The company has not accepted any deposits from the public within the meaning ofdirectives issued by the Reserve Bank of India provisions of Section 73 to 76 of theCompanies Act 2013 any other relevant provisions of the Act and the rules framed thereunder to the extent notified.
(vi) As informed to us the Central Government has not prescribed maintenance of costrecords under sub-section (1) of Section 148 of the Act.
(vii) (a) According to the records information and explanation provided to us thecompany is regular in depositing with appropriate authorities undisputed amount ofProvident Fund Employees' State Insurance Income Tax Sales Tax Wealth Tax CustomDuty Excise Duty Value Added Tax Service Tax Goods and Service Tax Cess and otherstatutory dues applicable to it and no undisputed amounts payable were outstanding as at31st March 2019 for a period of more than six months from the date they became payable.
(b) According to the information and explanation given to us and as per ourverification of records of the company the disputed amounts of Income Tax which are notdeposited with appropriate authorities as at 31st March 2019 are as follows:
Amount is due under Income Tax Act 1961 as Income Tax amounting Rs. 39005030/-forthe period 01.04.2010 to 31.03.2011 which is reduced by ITAT to Rs 5850760/-. Appealwith H'ble Bombay High Court is preferred for the remaining part. Amount is due underIncome Tax Act 1961 as Income Tax Penalty amounting Rs. 3947758/-for the A.Y.:2011-2012 which is pending with CIT Appeal.
(viii) Based on our audit procedures and on the information and explanation given tous the company has not defaulted in repayment of dues or borrowings to any financialinstitution or bank or Government or dues to Debenture holders as at the balance sheetdate.
(ix) The company has not raised any money by way of initial public offer furtherpublic offer (including debt instruments) money raised by term loans have been applied bythe company during the year for the purpose for which those are raised.
(x) To the best of our knowledge and accordingly to the information and explanationsgiven no material fraud by the company or on the company by its officers has been noticedor reported during the course of our audit.
(xi) The Company has paid / provided for Managerial Remuneration in accordance with therequisite approvals mandated by the provisions of Section 197 read with Schedule V of theAct.
(xii) According to the information and explanations given to us in our opinion thecompany is not a Nidhi Company as prescribed under Section 406 of the Act.
(xiii) According to the information and explanations given to us and based on ourexamination of the records of the Company all transactions with the related parties arein compliance with section Sections 177 and 188 of the Act where applicable and detailsof such transactions have been disclosed in the Ind AS financial statements as required bythe applicable accounting standards.
(xiv) During the year the company has not made any preferential allotment of shares toparties and companies covered in the register maintained u/s 42 of the Companies Act2013. Accordingly the provisions of Clause 3(xiv) of the Order are not applicable to theCompany.
(xv) In our opinion and according to information and explanation given to us theCompany has not entered into any Non Cash Transactions with the Directors or personconnected with him during the year. Accordingly the provisions of Clause 3(xv) of theOrder are not applicable to the Company.
(xvi) The company is not required to be registered under section 45-IA of the ReserveBank of India Act 1934. Accordingly the provisions of Clause 3(xvi) of the Order are notapplicable to the Company.
| ||For and on behalf of |
| ||R Daliya & Associates |
| ||Chartered Accountants |
|Place :- Mumbai ||FRN :. 102060W |
|Date : 24.05.2019 ||K. Daliya |
| ||Partner |
| ||Membership No. :- 166874 |