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Evexia Lifecare Ltd.

BSE: 524444 Sector: Industrials
NSE: N.A. ISIN Code: INE313M01022
BSE 15:04 | 18 Jan 9.69 -0.27
(-2.71%)
OPEN

10.08

HIGH

10.08

LOW

9.65

NSE 05:30 | 01 Jan Evexia Lifecare Ltd
OPEN 10.08
PREVIOUS CLOSE 9.96
VOLUME 5811417
52-Week high 33.60
52-Week low 9.20
P/E 193.80
Mkt Cap.(Rs cr) 300
Buy Price 9.68
Buy Qty 3438.00
Sell Price 9.69
Sell Qty 5022.00
OPEN 10.08
CLOSE 9.96
VOLUME 5811417
52-Week high 33.60
52-Week low 9.20
P/E 193.80
Mkt Cap.(Rs cr) 300
Buy Price 9.68
Buy Qty 3438.00
Sell Price 9.69
Sell Qty 5022.00

Evexia Lifecare Ltd. (EVEXIALIFECARE) - Auditors Report

Company auditors report

To the Members of Kavit Industries Limited

Report on the Audit of the Standalone Financial Statements

Opinion

We have audited the accompanying standalone financial statements of Kavit IndustriesLimited ("the Company") which comprise the Balance Sheet as at 31st March 2020the Statement 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 andnotes to the financial statements including a summary of significant accounting policiesand other explanatory information.

In our opinion and to the best of our information and according to the explanationsgiven to us except for the effects of matter described in the Emphasis of matterparagraph section of our report the aforesaid standalone financial statements give theinformation required by the Act in the manner so required and give a true and fair view inconformity with the accounting principles generally accepted in India of the state ofaffairs of the Company as at March 31 2020 and profit/loss and other comprehensiveincome changes in equity and its cash flows 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 Companies Act 2013. Our responsibilities under thoseStandards are further described in the Auditor's Responsibilities for the Audit of theFinancial 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 together with the ethical requirements that are relevant to our audit of thefinancial statements under the provisions of the Companies Act 2013 and the Rules thereunder and we have fulfilled our other ethical responsibilities in accordance with theserequirements and the Code of Ethics. We believe that the audit evidence we have obtainedis sufficient and appropriate to provide a basis for our opinion on the StandaloneFinancial Statements.

Emphasis of Matters

1. We draw attention that the company has not complied with the provision of theSection 185 of the Companies Act 2013 pertaining to the loans and advances granted tothe Subsidiaries (Refer Note Number 43).

2. During the year the Company has written off balances of certain Trade Receivable andPayable the net effect of the same is Rs. 395.41 Lakhs shown under the Other Income. Hadthe same was not written off the profit of the Company would have been lower by Rs. 395.41Lakhs. (Refer Note Number 27 and 45).

3. The Company has not filed the requisite form with Registrar of Companies for theincrease of the authorized capital of the Company as a result of the same there isdifference in the authorized and paid up capital of the Company and also no provision forstamp duty payable on the increase of authorized capital is provided in the books ofaccounts. The stamp duty and late filling fees would be amounting Rs. 30 Lakhs which theCompany has not provided for the same in the Books of Account. (Refer Note Number 16).

Key Audit Matters

Key audit matters are those matters that in our professional judgment were of mostsignificance in our audit of the standalone financial statements of the current period.These matters were addressed in the context of our audit of the standalone financialstatements as a whole and in forming our opinion thereon and we do not provide aseparate opinion on these matters. We have determined the matters described below to bethe key audit matters to be communicated in our report.

Key Audit Matters Response to Key Audit Matters
1. Revenue Recognitions. Revenue for the company consists primarily of sale of products. Our procedures in respect of recognition of revenue included the following
Revenue from sale of Product is recognized when the control over the products have been transferred to the customer based on the terms and conditions of the sales contracts entered into with the customers across geographies. a) Assessing the appropriateness of the revenue recognition accounting policies by comparing with applicable accounting standards.
We have identified recognition of revenue as a key audit matter as revenue is a key performance indicator and there is a risk of revenue being fraudulently overstated arising from pressure to achieve performance targets as well as meeting external expectations. b) Testing the design implementation and operating effectiveness of the Company's general IT controls and manual controls over the Company's systems which govern recording of revenue in the general ledger accounting system.
c) Performing substantive testing (including year-end cutoff testing) by selecting samples of revenue transactions recorded during the year (and before and after the financial year) and verifying the underlying documents which includes sales invoices/contracts and shipping documents.
d) Assessing manual journals posted to revenue to identify unusual items other than already identified.
e) Evaluating the adequacy of the standalone financial statement disclosures including disclosures of key assumptions judgments and sensitivities.
2. Impairment of Trade Receivables:
Trade Receivables net of impairment allowance amounts to Rs. 153.16 Crores as on 31st March 2020 which constitutes about 70% of the total Assets of the Company. We have performed the following processes in relation to Management's Judgment in identification of impairment of value of Receivables and adequacy of impairment provision:
Out of the total Trade Receivables around 54% of total Trade Receivable are classified as having high risk of credit impairment. We have referred to the defined policy in place stipulating the methodology of making impairment provision in respect of overdue Receivable amounts.
Due to significance of Trade Receivables and the complexity involved in the ECL calculation this was considered as key audit matter. We have also reviewed age-wise analysis in respect of Receivables and ensured that the provisioning is made according to such policy. The above referred provisioning policy stipulates different provisioning norms for Receivables with confirmations and without confirmations.
Management's judgment is involved in identifying impairment in the value of the receivable which has an adverse impact on the profits of the Company. We have sought information and explanations from the department Heads regarding the status of receivable for the purpose of ensuring adequate impairment provisions.

Information other than the 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 financial statements and our auditor's report thereon.

Our opinion on the financial statements does not cover the other information and we donot express any form of assurance conclusion thereon.

In connection with our audit of the financial statements our responsibility is to readthe other information and in doing so consider whether the other information ismaterially inconsistent with the financial statements or our knowledge obtained in theaudit 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.

Responsibility of Management for Standalone Financial Statements

The Company's Board of Directors is responsible for the matters stated in section134(5) of the Companies Act 2013 ("the Act") with respect to the preparation ofthese standalone financial statements that give a true and fair view of the state ofaffairs (financial position) profit or loss (financial performance including othercomprehensive income) changes in equity and cash flows of the Company in accordance withthe accounting principles generally accepted in India including the accounting Standardsspecified under section 133 of the Act. This responsibility also includes maintenance ofadequate accounting records in accordance with the provisions of the Act for safeguardingof the assets of the Company and for preventing and detecting frauds and otherirregularities; 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 statement that give a true and fair view andare free from material misstatement whether due to fraud or error.

In preparing the financial statements management is responsible for assessing theCompany's ability to continue as a going concern disclosing as applicable mattersrelated to going concern and using the going concern basis of accounting unless managementeither intends to liquidate the Company or to cease operations or has no realisticalternative but to do so.

Those Board of Directors are also 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 Standards on Auditing we exercise professionaljudgment and maintain professional skepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the financialstatements whether due to fraud or error design and perform audit procedures responsiveto those risks and obtain audit evidence that is sufficient and appropriate to provide abasis for our opinion. The risk of not detecting a material misstatement resulting fromfraud is higher than for one resulting from error as fraud may involve collusionforgery intentional omissions misrepresentations or the override of internal control.

• Obtain an understanding of internal 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 explaining our opinion on whether the Companyhas adequate internal financial controls system in place and the operating effectivenessof 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 standalone financial statementsthat individually or in aggregate makes it probable that the economic decisions of areasonably knowledgeable user of the financial statements may be influenced. We considerquantitative materiality and qualitative factors in (i) planning the scope of our auditwork and in evaluating the results of our work; and (ii) to evaluate the effect of anyidentified misstatements in the financial statements.

We communicate with those charged with governance regarding among other matters theplanned scope and timing of the audit and significant audit findings including anysignificant deficiencies in internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have compliedwith relevant ethical requirements regarding independence and to communicate with themall relationships and other matters that may reasonably be thought to bear on ourindependence and where applicable related safeguards.

From the matters communicated with those charged with governance we determine thosematters that were of most significance in the audit of the financial statements of thecurrent period and are therefore the key audit matters. We describe these matters in ourauditor's report unless law or regulation precludes public disclosure about the matter orwhen in extremely rare circumstances we determine that a matter should not becommunicated in our report because the adverse consequences of doing so would reasonablybe expected to outweigh the public interest benefits of such communication.

Report on Other Legal and Regulatory Requirements

1. As required by 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 Cash Flow Statement dealt with by thisReport are in agreement with the books of account.

d) In our opinion the aforesaid standalone financial statements comply with theAccounting Standards specified under Section 133 of the Act read with Rule 7 of theCompanies (Accounts) Rules 2014 except as stated in Basis of Qualified opinion.

e) On the basis of the written representations received from the directors as on 31stMarch 2020 taken on record by the Board of Directors none of the directors isdisqualified as on 31st March 2020 from being appointed as a director in terms of Section164 (2) of the Act.

f) With respect to the adequacy of the internal financial controls 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 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 financial statements.

ii. The Company has made provision as required under the applicable law or accountingstandards for material foreseeable losses if any on long-term contracts includingderivative contracts.

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 of India in terms of sub-section (11) of section 143 ofthe Companies Act 2013 we give in the "Annexure B" a statement on the mattersspecified in paragraphs 3 and 4 of the Order to the extent applicable.

For M Sahu & Co
Chartered Accountants
Firm Registration No: 130001W
Partner (Manojkumar Sahu) Date: 16/07/2020
Membership No: 132623 Place: Vadodara
UDIN: 20132623AAAABD5567

ANNEXURE A TO THE INDEPENDENT AUDITOR'S REPORT

(Referred to in paragraph 1(f) under ‘Report on Other Legal and RegulatoryRequirements' section of 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")

We have audited the internal financial controls over financial reporting of KAVITINDUSTRIES LIMITED ("the Company") as of March 31 2020 in conjunction withour audit of the standalone financial statements of the Company for the year ended on thatdate.

Management's Responsibility for Internal Financial Controls

The Board of Directors of the Company is responsible for establishing and maintaininginternal financial controls based on the internal control over financial reportingcriteria 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 its business including adherence to respective 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 Companies Act 2013.

Auditor's Responsibility

Our responsibility is to express an opinion on the internal financial controls overfinancial reporting of the Company based on our audit. We conducted our audit inaccordance with the Guidance Note on Audit of Internal Financial Controls Over FinancialReporting (the "Guidance Note") issued by the Institute of Chartered Accountantsof India and the Standards on Auditing prescribed under Section 143(10) of the CompaniesAct 2013 to the extent applicable to an audit of internal financial controls. ThoseStandards and the Guidance Note require that we comply with ethical requirements and planand perform the audit to obtain reasonable assurance about whether adequate internalfinancial controls over financial reporting was established and maintained and if suchcontrols operated effectively in all material respects.

Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe 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 judgement including the assessment of the risks ofmaterial misstatement of the financial statements whether due to fraud or error. Webelieve that the audit evidence we have obtained is sufficient and appropriate to providea basis for our audit opinion on the internal financial controls system over financialreporting of the Company.

Meaning of Internal Financial Controls Over Financial Reporting

A company's internal financial control over financial reporting is a process designedto provide reasonable assurance regarding the reliability of financial reporting and thepreparation of financial statements for external purposes in accordance with generallyaccepted accounting principles. A company's internal financial control over financialreporting includes those policies and procedures that (1) pertain to the maintenance ofrecords that in reasonable detail accurately and fairly reflect the transactions anddispositions of the assets of the company; (2) provide reasonable assurance thattransactions are recorded as necessary to permit preparation of financial statements inaccordance with generally accepted accounting principles and that receipts andexpenditures of the company are being made only in accordance with authorisations ofmanagement and directors of the company; and (3) provide reasonable assurance regardingprevention or timely detection of unauthorised acquisition use or disposition of thecompany's assets that could have a material effect on the financial statements.

Limitations of Internal Financial Controls Over Financial Reporting

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 controlover financial reporting may become inadequate because of changes in conditions or thatthe degree of compliance with the policies or procedures may deteriorate.

Opinion

In our opinion to the best of our information and according to the explanations givento us the Company has in all material respects an adequate internal financial controlssystem over financial reporting and such internal financial controls over financialreporting were operating effectively as at March 312020 based on the internal controlover financial reporting criteria established by the Company considering the essentialcomponents of internal control stated in the Guidance Note on Audit of Internal FinancialControls Over Financial Reporting issued by the Institute of Chartered Accountants ofIndia.

For M Sahu & Co
Chartered Accountants
Firm Registration No: 130001W
Partner (Manojkumar Sahu) Date: 16/07/2020
Membership No: 132623 Place: Vadodara

ANNEXURE B TO THE INDEPENDENT AUDITOR'S REPORT

(Referred to in paragraph 2 under ‘Report on Other Legal and RegulatoryRequirements' section of our report of even date)

1. In respect of Fixed Assets

a. The company has maintained proper records showing full particulars includingquantitative details and situation of its Fixed Assets.

b. According to the information and explanations given to us though physicalverification of fixed assets has not been carried out during the year the Company haspolicy to verify its fixed assets in a phased manner so as to cover the verification ofthe entire fixed asset. According to information and explanation given to us no materialdiscrepancies were noticed on such verification.

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 areheld in the name of the Company.

2. In respect of Inventories

a. According to the information and explanations given to us the inventories have beenphysically verified at reasonable intervals by the management and no materialdiscrepancies were noticed on such verification.

3. According to the information and explanations given to us the Company has grantedinterest free advances to its associate concerns covered under Section 189 of theCompanies Act 2013 (‘the Act').

As regards interest free advances to the associate concerns and others the termsand conditions of the loans including repayment thereof have not been stipulated.Accordingly we are unable to comment on clause 3(iii)(b) of the Order regardingregularity of the receipt of principal amount and interest and Clause 3(iii)(c) of theOrder regarding steps for recovery of overdue amount of more than rupees one lakh.

4. In our opinion and according to the information and explanation given to us theCompany has not complied with the provisions of Section 185 and moreover made aninvestment and given loan more than sixty percent of its paid-up capital free reserve andsecurities premium or one hundred percent of its free reserves and securities premiumaccount whichever is more

5. The Company has not accepted any deposits from the public in accordance with theprovisions of Sections 73 to 76 of the Act and the rules framed there under.

6. The Central Government has not prescribed for maintenance of Cost Records underSection 148 (1) of the Act for any of the product/service of the Company.

7. According to information and explanation given to us in respect of statutory dues

a. The Company has generally been irregular in depositing undisputed statutory duesincluding provident fund employees' state insurance income-tax sales tax wealth taxservice tax customs duty excise duty value added tax cess and other material statutorydues applicable to it with the appropriate authorities.

b. According to the information and explanations given to us there are no undisputedamounts payable in respect of provident fund employees' state insurance income-taxsales tax wealth tax service tax customs duty excise duty value added tax cess andother material statutory dues in arrears as at 31st March 2020 for a period of more thansix months from the date they became payable.

c. Details of dues of Income Tax Sales Tax Service Tax Excise Duty and Value addedTax which have not been deposited as at 31st March 2020 on account of disputeare given below:

Nature of the Statute Nature of dues Forum where dispute pending Period to which the amount relates Amount (Rs. in Lakhs)
Income Tax Act 1961 Income Tax ITAT* 2014-2015 2183.83/-

*The Company has got the order from CIT Appeal in favour of the Company during the yearbut the department has made an appeal to appellate authority against the Company due tothis the demand has been shown as disputed and the same is being disclosed as contingentliabilities.

8. Based on our examination of documents and records and the information andexplanation given to us the Company has not defaulted in repayment of loans or borrowingto a financial institution or a bank. The Company does not have any loans or borrowingsfrom government or has not issued any debentures.

9. Based on our audit procedures performed for the purpose of reporting the true andfair view of the financial statements and according to the information and explanationsgiven by the management we report that during the year the Company has not raised anymoney by way of initial public offer or further public offer.

10. According to the Information and explanations given to us no material fraud by theCompany or on the Company by its officers or employees has been noticed or reported duringthe course of our audit.

11. According to the Information and explanations given to us and based on ourexamination of the records of the Company the Company has paid/provided managerialremuneration in accordance with the requisite approvals mandate by the provisions ofsection 197 read with schedule V to the Act.

12. The Company is not a Nidhi Company and hence clause 3(xii) of the Order is notapplicable.

13. According to the Information and explanation given to us and based on ourexamination of the records of the Company transactions with the related parties are incompliance with Sections 177 and 188 of the Act wherever applicable and details of suchtransactions have been disclosed in the financial statement as required by the applicableaccounting standard.

14. According to the information and explanations given to us and overall examinationof the balance sheet the Company has not made any preferential allotment or privateplacement of shares or fully or partly convertible debentures during the year.

15. Based on our audit procedures performed for the purpose of reporting the true andfair view of the financial statements and according to the information and explanationsgiven by the management the Company has not entered into any non-cash transactions withdirectors or persons connected with the directors. Accordingly paragraph 3 (xv) of theOrder is not applicable.

16. The Company is not required to be registered under Section 45-IA of the ReserveBank of India Act 1934.

For M Sahu & Co.
Chartered Accountants
Firm Registration No: 130001W
Partner (Manojkumar Sahu) Date: 16/07/2020
Membership No: 132623 Place: Vadodara

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