TO THE MEMBERS OF FILATEX INDIA LIMITED
Report on the Audit of Standalone Financial Statements Opinion
We have audited the accompanying standalone financial Statements ofFilatex India Limited (the Company') which comprise the Balance
Sheet as at March 31 2019 the Statement of Profit and Loss (includingother comprehensive income) the Cash Flow Statement and the Statement of Changes inEquity for the year ended on that date and a summary of the significant accountingpolicies and other explanatory information (hereinafter referred to as the standalonefinancial statements).
In our opinion and to the best of our information and according to theexplanations given to us the aforesaid standalone financial statements give theinformation required by the Companies Act2013 ("the Act") in the manner sorequired and give a true and fair view in conformity with the Companies( Indian AccountingStandards) Rules 2015 as amended ("IND AS") and other accounting principlesgenerally accepted in India of the state of affairs of the Company as at March 31 2019the profit and total comprehensive income changes in equity and its cash flows for theyear 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 Companies
Act 2013. Our responsibilities under those Standards are furtherdescribed in the Auditor's Responsibilities for the Audit of the
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 ethical requirements that are relevant toour audit of the standalone financial statements under the provisions of the CompaniesAct 2013 and the Rules thereunder and we have fulfilled our other ethicalresponsibilities in accordance with these requirements and the ICAI's
Code of Ethics. We believe that the audit evidence we have obtained issufficient and appropriate to provide a basis for our opinion on the standalone financialstatements.
Key Audit Matters
Key audit matters are those matters that in our professional judgmentwere of most significance in our audit of the standalone financial statements of thecurrent period. These matters were addressed in the context of our audit of the standalonefinancial statements as a whole and in forming our opinion thereon and we do not providea separate opinion on these matters. We have determined the matters described below to bethe key audit matters to be communicated in our report.
|Sr. No. ||Key Audit Matters ||Auditors Response |
|1 ||Evaluation of Minimum Alternate Tax(MAT) credits ||Principal Audit Procedures |
| ||The Company has material uncertain tax position regarding set off of MAT credit which involves significant judgment to determine the possible utilization of tax assets amounting to Rs. 7068 lakhs (approx.) refer note No. 23 of financial Statements. ||In assessing the realisability of MAT credit entitlement management considered whether some portion or all of the MAT credits will not be realized. The ultimate realization of MAT Credits is dependent upon the generation of future taxable income during the periods taxable incomes exceeds the book profit as per the provisions of the income tax act. This requires the significant judgement. The management considered the scheduled adjustment of MAT credit projected future taxable income and tax planning strategies in making this assessment. We have considered the projections of the future profitability of the company as appraised by the Company's bankers for assessing credit limits and the relevant provisions of the income tax act as amended from time to time to test the probability of expected future economic benefit in respect of MAT credit. |
| ||Allowance for Inventories || |
| ||The Company holds significant inventories and records allowance for identified obsolete inventories. As at 31 March 2019 the Company's inventories amounted to Rs. 17268 lakhs representing 12.20 % of the Company's total assets. ||Our audit procedures to assess allowance for inventories included the following: |
| ||Refer Note No. 10 of financial statements. || |
| ||At the end of each reporting period management assesses whether there is any objective evidence that certain inventories which are stated at cost are above their net realizable value. If so these inventories are written down to their net realizable value. Assessing the net realizable value is an area of significant judgment with specific consideration to slow moving and obsolete inventory and hence considered to be a Key Audit Matter. || We checked the management process for identification of slow moving non-moving or obsolete inventories and ensured that the same is reasonable and consistently applied. |
| ||Management undertakes the following procedures for determining the level of write down required. || We checked that the allowance for slow-moving non-moving and obsolete inventories is appropriately computed basis the underlying working/supporting. |
| || Specific identification procedures are performed periodically by the management to ascertain the slow moving nonmoving or obsolete inventories. || We tested the net realizable value of inventory properties selected on a sample basis to recent selling price. |
| || Adequate allowance is created for non-moving and slowmoving inventories basis market realizable value and need of incremental re-processing cost. || We compared the actual utilization/liquidation of inventories to the status of inventories previously assessed as per specific identification method. |
| || Perform a line-by-line analysis of remaining item of finished inventory (Inventory properties) to ensure it is stated at the lower of cost and net realizable value and a specific write down is recognized if required. || We also checked inventory aging and inquiries for non-moving inventories which are not considered for inventory provisioning. |
Information Other than the Standalone Financial Statements andAuditor's Report Thereon
The Company's Board of Directors is responsible for the otherinformation. The other information comprises the information included in the ManagementDiscussion and Analysis Board's Report including Annexures to Board's ReportBusiness Responsibility Report Corporate Governance and Shareholder's Informationbut does not include the standalone financial statements and our auditor's reportthereon. The above mentioned report is expected to be made available to us after the dateof this auditor's report.
Our opinion on the financial statements does not cover the otherinformation and we will not express any form of assurance conclusion thereon.
In connection with our audit of the financial statements ourresponsibility is to read the other information identified above when it becomes availableand in doing so consider whether the other information is materially inconsistent withthe financial statements or our knowledge obtained in the audit or otherwise appears tobe materially misstated.
Management's Responsibility for the standalone FinancialStatements
The Company's Board of Directors is responsible for the mattersstated in Section 134(5) of the Companies Act 2013 (the Act') with respect tothe preparation of these standalone financial statements to give a true and fair view ofthe financial position financial performance (including other comprehensive income) cashflows and changes in equity of the Company in accordance with the accounting principlesgenerally accepted in India including the
Indian Accounting Standards specified in the Companies (Indian
Accounting Standards) Rules 2015 (as amended) under Section 133 of theAct. This responsibility also includes maintenance of adequate accounting records inaccordance with the provisions of the Act for safeguarding of the assets of the Companyand for preventing and detecting frauds and other irregularities; selection andapplication of appropriate accounting policies; making judgments and estimates that arereasonable and prudent; and design implementation and maintenance of adequate internalfinancial controls that were operating effectively for ensuring the accuracy andcompleteness of the accounting records relevant to the preparation and presentation ofthe standalone financial statements that give a true and fair view and are free frommaterial misstatement whether due to fraud or error.
In preparing the standalone financial statements management isresponsible for assessing the Company's ability to continue as a going concerndisclosing as applicable matters related to going concern and using the going concernbasis of accounting unless management either intends to liquidate the Company or to ceaseoperations or has no realistic alternative but to do so.
The Board of Directors are responsible for overseeing theCompany's financial reporting process.
Auditor's Responsibility for the Audit of the Standalone FinancialStatements
Our objectives are to obtain reasonable assurance about whether thestandalone financial statements as a whole are free from material misstatement whetherdue 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 auditconducted in accordance with SAs will always detect a material misstatement when itexists. Misstatements can arise from fraud or error and are considered material ifindividually or in the aggregate they could reasonably be expected to influence theeconomic decisions of users taken on the basis of these standalone financial statements.As part of an audit in accordance with SAs we exercise professional judgment and maintainprofessional skepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of thestandalone financial statements whether due to fraud or error design and perform auditprocedures responsive to those risks and obtain audit evidence that is sufficient andappropriate to provide a basis for our opinion. The risk of not detecting a materialmisstatement resulting from fraud is higher than for one resulting from error as fraudmay involve collusion forgery intentional omissions misrepresentations or the overrideof internal control.
Obtain an understanding of internal financial controls relevant tothe audit in order to design audit procedures that are appropriate in the circumstances.Under section 143(3)(i) of the Act we are also responsible for expressing our opinion onwhether the
Company has adequate internal financial controls system in place andthe operating effectiveness of such controls.
Evaluate the appropriateness of accounting policies used and thereasonableness of accounting estimates and related disclosures made by management.
Conclude on the appropriateness of management's use of thegoing concern basis of accounting and based on the audit evidence obtained whether amaterial uncertainty exists related to events or conditions that may cast significantdoubt on the Company's ability to continue as a going concern. If we conclude that amaterial uncertainty exists we are required to draw attention in our auditor'sreport to the related disclosures in the standalone financial statements or if suchdisclosures are inadequate to modify our opinion. Our conclusions are based on the auditevidence obtained up to the date of our auditor's report. However future events orconditions may cause the Company to cease to continue as a going concern.
Evaluate the overall presentation structure and content of thestandalone financial statements including the disclosures and whether the standalonefinancial statements represent the underlying transactions and events in a manner thatachieves fair presentation.
Materiality is the magnitude of misstatements in the standalonefinancial statements that individually or in aggregate makes it probable that theeconomic decisions of a reasonably knowledgeable user of the financial statements may beinfluenced. We consider quantitative materiality and qualitative factors in (i) planningthe scope of our audit work and in evaluating the results of our work; and (ii) toevaluate the effect of any identified misstatements in the financial statements.
We communicate with those charged with governance regarding amongother matters the planned scope and timing of the audit and significant audit findingsincluding any significant deficiencies in internal control that we identify during ouraudit.
We also provide those charged with governance with a statement that wehave complied with relevant ethical requirements regarding independence and tocommunicate with them all relationships and other matters that may reasonably be thoughtto bear on our independence and where applicable related safeguards.
From the matters communicated with those charged with governance wedetermine those matters that were of most significance in the audit of the standalonefinancial statements of the current period and are therefore the key audit matters. Wedescribe 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 wereport that:
a) We have sought and obtained all the information and explanationswhich to the best of our knowledge and belief were necessary for the purposes of ouraudit.
b) In our opinion proper books of account as required by law have beenkept by the Company so far as it appears from our examination of those books.
c) The Balance Sheet the Statement of Profit and Loss including
Other Comprehensive Income Statement of Changes in Equity and theStatement of Cash Flow dealt with by this Report are in agreement with the relevant booksof account.
d) In our opinion the aforesaid standalone financial statements complywith the Ind AS specified under 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 thedirectors and taken on record by the Board of Directors none of the directors isdisqualified as on March 31 2019 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 overfinancial reporting of the Company and the operating effectiveness of such controls referto our separate Report in "Annexure A". Our report expresses an unmodifiedopinion on the adequacy and operating of the Company's internal financial controlsover financial reporting. g) With respect to the other matters to be included in theAuditor's
Report in accordance with the requirements of section 197(16) of theAct as amended:
In our opinion and to the best of our information and according to theexplanations given to us the remuneration paid by the Company to its directors during theyear is in accordance with the provisions of section 197 of the Act.
h) With respect to the other matters to be included in theAuditor's
Report in accordance with Rule 11 of the Companies (Audit and Auditors)Rules 2014 as amended in our opinion and to the best of our information and according tothe explanations given to us:
i. The Company has disclosed the impact of pending litigations on itsfinancial position in its standalone financial statements- Refer Note-40A to thestandalone financial statement.
ii. The Company has made provision as required under the applicablelaw or accounting standards for material foreseeable losses if any on long-termcontracts including derivative contracts.
iii. There has been no delay in transferring amounts required to betransferred to the 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) ofthe Act we give in "Annexure B" a statement on the matters specified inparagraphs 3 and 4 of the Order.
| ||For Arun K Gupta & Associates |
| ||Chartered Accountants |
| ||Firm Registration No.000605N |
|Place: New Delhi ||GIREESH KUMAR GOENKA |
|Dated: 30-04-2019 ||Partner |
| ||Membership No. - 096655 |