TO THE MEMBERS OF
FLEX FOODS LIMITED
Report on the Audit of the Financial Statements
We have audited the accompanying Financial Statements of FLEX FOODSLIMITED("The Company") which comprise the Balance Sheet as at 31stMarch 2020 the Statement of Profit and Loss (including other comprehensive income) theStatement of Changes in Equity and the Statement of Cash Flows for the year ended on thatdate and a summary of significant accounting policies and other explanatory information.
In our opinion and to the best of our information and according to theexplanations given to us the aforesaid Financial Statements give the information requiredby the Companies Act 2013 ("the Act") in the manner so required and give a trueand fair view in conformity with the Indian Accounting Standards prescribed under section133 of the Act read with the Companies (In-dian Accounting Standards) Rules 2015 asamended ("Ind AS") and other accounting principles generally accepted in Indiaof the state of the a airs of the Company as at 31st March 2020 and the profit and totalcomprehensive income changes in equity and its cash flows for the year ended on thatdate.
Basis for Opinion
We conducted our audit of the financial statements in accordance withthe Standards on Auditing (SAs) specified under section 143(10) of the Companies Act2013. Our responsibilities under those Standards are further described in theAuditor's Responsibilities for the Audit of the Financial Statements section of ourreport. We are independent of the Company in accordance with the Code of Ethics issued bythe Institute of Chartered Accountants of India (ICAI) together with the independencerequirements that are relevant to our audit of the financial statements under theprovisions of the Act 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 is sufficient and appropriate toprovide a basis for our audit opinion on the financial statements.
Key Audit Matters
Key audit matters are those matters that in our professional judgmentwere 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 as awhole and in forming our opinion thereon and we do not provide a separate opinion onthese matters. We have determined the matters described below to be the key audit mattersto be communicated in our report.
|Key Audit Matters ||Auditor response |
|1. Evaluation of uncertain tax positions ||Principal Audit Procedures |
|The Company has material uncertain tax positions including matters under dispute which involves significant judgment to determine the possible outcome of these disputes. Refer Notes 32 to the Financial Statements ||Obtained details of completed tax assessments and demands for the year ended March 31 2020 from management. |
| ||We also considered legal precedence and other rulings in evaluating management's position on these uncertain tax positions. Additionally we considered the effect of new information in respect of uncertain tax positions as at April 1 2019 to evaluate whether any change was required to management's position on these uncertainties. |
|2. Assessment of the Impact of Corona Virus Disease (COVID-19) on the financial statement. ||Principal Audit Procedures |
|On account prevalent nancial economic and health crisis caused due to global pandemic-COVID-19 the Company has not been materially impacted by the corona virus as of now. Since Company's business falls within the category of manufacturing of essential commodities therefore company has not seen any material impacts on its business activities for the financial year under report. Refer Note No. 1 (II) B of the Financial Statement. ||As part of the audit we have carried out following procedures:- |
| ||1. We have reviewed the turnover and the Profitability of the company as at end of the current financial statements and upto the date of signing of financial statements. |
| ||2. Obtained an understanding of the process and testing of the operating effectiveness of the internal controls over the impairment. |
| ||3. We have also evaluated the recoverability of the trade receivables. |
| ||4. We evaluated disclosures related to management assessment on impact of COVID-19 for the continuity of operations. |
Information Other than the Financial Statements and Auditor'sReport Thereon
The Company's Board of Directors is responsible for thepreparation of the other information. The other information comprises the informationincluded in the Management Discussion and Analysis Board's Report includingAnnexures to Board's Report Business Responsibility Report Corporate Governance andShareholder's Information but does not include the financial statements and ourauditor's report thereon.
Our opinion on the financial statements does not cover the otherinformation and we do not express any form of assurance conclusion thereon.
In connection with our audit of the financial statements ourresponsibility 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 amaterial misstatement of this other information we are required to report that fact. Wehave nothing to report in this regard.
Management's Responsibility for the Financial Statements
The Company's Board of Directors is responsible for the mattersstated in Section 134(5) of the Companies Act2013 ("the Act") with respect tothe preparation of these Financial Statements that give a true and fair view of thefinancial position financial performance total comprehensive income changes in equityand cash flows of the Company in accordance with the accounting principles generallyaccepted in India including the Indian Accounting Standards (Ind AS) prescribed underSection 133 of the Act read with Rule 7 of the Companies (Accounts) Rules 2015.
This responsibility also includes maintenance of adequate accountingrecords in accordance with the provisions of the Act for safeguarding of the assets of theCompany and 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 Financial Statements that give a true and fair view and are free from materialmisstatement whether due to fraud or error.
In preparing the financial statements management is responsible forassessing the Company's ability to continue as a going concern disclosing asapplicable matters related to going concern and using the going concern basis ofaccounting unless management either intends to liquidate the Company or to ceaseoperations or has no realistic alternative but to do so. The Board of Directors areresponsible for overseeing the Company's financial reporting process.
Our objectives are to obtain reasonable assurance about whether thefinancial statements as a whole are free from material misstatement whether due to fraudor error and to issue an auditor's report that includes our opinion. Reasonableassurance is a high level of assurance but is not a guarantee that an audit conducted inaccordance with SAs will always detect a material misstatement when it exists.Misstatements can arise from fraud or error and are considered material if individuallyor in the aggregate they could reasonably be expected to influence the economic decisionsof users taken on the basis of these financial statements.
As part of an audit in accordance with SAs we exercise professionaljudgment and maintain professional skepticism throughout the audit. We also: Identify andassess the risks of material misstatement of the financial statements whether due tofraud or error design and perform audit procedures responsive to those risks and obtainaudit evidence that is sufficient and appropriate to provide a basis for our opinion. Therisk of not detecting a material misstatement resulting from fraud is higher than for oneresulting from error as fraud may involve collusion forgery intentional omissionsmisrepresentations or the override of internal control. Obtain an understanding ofinternal control relevant to the audit in order to design audit procedures that areappropriate in the circumstances. Under section 143(3)(i) of the Companies Act 2013 weare also responsible for expressing our opinion on whether the company has adequateinternal financial controls system in place and the operating effectiveness of suchcontrols. Evaluate the appropriateness of accounting policies used and the reasonablenessof accounting estimates and related disclosures made by management. Conclude on theappropriateness of management's use of the going concern basis of accounting andbased on the audit evidence obtained whether a material uncertainty exists related toevents or conditions that may cast significant doubt on the Company's ability tocontinue as a going concern. If we conclude that a material uncertainty exists we arerequired to draw attention in our auditor's report to the related disclosures in thefinancial statements or if such disclosures are inadequate to modify our opinion. Ourconclusions are based on the audit evidence obtained up to the date of our auditor'sreport. However future events or conditions may cause the Company to cease to continue asa going concern.
Evaluate the overall presentation structure and content of thefinancial statements including the disclosures and whether the financial statementsrepresent the underlying transactions and events in a manner that achieves fairpresentation. Materiality is the magnitude of misstatements in the standalone financialstatements that individually or in aggregate makes it probable that the economicdecisions of a reasonably knowledgeable user of the financial statements may be in uenced.We consider quantitative materiality and qualitative factors in
(i) planning the scope of our audit work and in evaluating the resultsof our work; and
(ii) to evaluate the effect of any identified misstatements in thefinancial 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 we havecomplied with relevant ethical requirements regarding independence and to communicatewith them all relationships and other matters that may reasonably be thought to bear onour independence and where applicable related safeguards. From the matters communicatedwith those charged with governance we determine those matters that were of mostsignificance in the audit of the financial statements of the current period and aretherefore the key audit matters. We describe these matters in our auditor's reportunless law or regulation precludes public disclosure about the matter or when inextremely rare circumstances we determine that a matter should not be communicated in ourreport because the adverse consequences of doing so would reasonably be expected tooutweigh 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 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 othercomprehensive income the Statement of Changes in Equity and the Statement of Cash Flowsdealt with by this Report are in agreement with the relevant Books of Account.
d) In our opinion the aforesaid Financial Statements comply with theIndian Accounting Standards prescribed under Section 133 of the Act read with relevantrules issued thereunder.
e) On the basis of the written representations received from thedirectors as on 31stMarch 2020 taken on record by the Board of Directors none of thedirectors is disqualified as on 31st March 2020 from being appointed as a director interms of Section 164 (2) of the Act.
f) There is no matter or transaction that in our opinion may have anyadverse effect on the functioning of the Company;
g) 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";
h) With respect to the other matters to be included in theauditor's Report in accordance with the requirements of section 197(16) of the Actas 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 director during theyear is in accordance with the provisions of section 197 of the Act; and
i) 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 in our opinion and to the best of our information and according to theexplanations given to us:
i. The Company has disclosed the impact of pending litigations on itsfinancial position in its Financial Statements Refer Note 32 to the Financial Statements;
ii. The Company did not have any long-term contracts includingderivative contracts for which there were any material foreseeable losses; and
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 of India in terms of sub-section(11) of Section 143 of the Act we give in the Annexure "B" a statement on thematters specified in paragraphs 3 and 4 of the Order.
ANNEXURE "A" TO THE INDEPENDENT AUDITOR'S REPORT OF"FLEX FOODS LIMITED" FOR THE YEAR ENDED 31ST MARCH 2020
Referred to in paragraph1(g) under Report on Other Legal andRegulatory Requirements' section of our report to the Members of Flex Foods Limitedof even date.
Report on the Internal Financial Controls under Clause (i) ofSub-Section 3 of the Section 143 of the Companies Act 2013.
Report on the Internal Financial Controls
We have audited the Internal Financial Controls over financialreporting of "FLEX FOODS LIMITED" ("the Company") as of 31stMarch 2020 in conjunction with our audit of the financial statements of the Company forthe year ended on that date.
Management's Responsibility for Internal Financial Controls
The Board of Directors of the Company is responsible for establishingand maintaining internal financial controls based on the internal control over financialreporting criteria established by the Company considering the essential components ofinternal control stated in the Guidance Note on Audit of Internal Financial Controls overFinancial Reporting issued by the Institute of Chartered Accountants of India(ICAI'). These responsibilities include the design implementation andmaintenance of adequate internal financial controls that were operating effectively forensuring the orderly and efficient conduct of its business including adherence tocompany's policies the safeguarding of its assets the prevention and detection offrauds and errors the accuracy and completeness of the accounting records and the timelypreparation of reliable financial information as required under the Companies Act 2013.
Our responsibility is to express an opinion on the Company's internalfinancial controls over financial reporting based on our audit. We conducted our audit inaccordance with the Guidance Note on Audit of Internal Financial Controls over FinancialReporting (the "Guidance Note") and the Standards on Auditing issued by ICAIand deemed to be prescribed under section 143(10) of the Companies Act 2013 to theextent applicable to an audit of internal financial controls. Those Standards and theGuidance Note require that we comply with ethical requirements and plan and perform theaudit to obtain reasonable assurance about whether adequate internal financial controlsover financial reporting was established and maintained and if such controls operatedeffectively in all material respects. Our audit involves performing procedures to obtainaudit evidence about the adequacy of the internal financial controls system over financialreporting and their operating effectiveness. Our audit of internal financial controls overfinancial reporting included obtaining an understanding of internal financial controlsover financial reporting assessing the risk that a material weakness exists and testingand evaluating the design and operating effectiveness of internal control based on theassessed risk. The procedures selected depend on the auditor's Judgment includingthe assessment of the risks of material misstatement of the financial statements whetherdue to fraud or error. We believe that the audit evidence we have obtained is sufficientand appropriate to provide a basis for our audit opinion on the Company's internalfinancial controls system over financial reporting.
Meaning of Internal Financial Controls over Financial Reporting
A company's internal financial control over financial reporting is aprocess designed to provide reasonable assurance regarding the reliability of financialreporting and the preparation of financial statements for external purposes in accordancewith generally accepted accounting principles. A company's internal financial control overfinancial reporting includes those policies and procedures that
(1) pertain to the maintenance of records that in reasonable detailaccurately and fairly reflect the transactions and dispositions of the assets of thecompany;
(2) provide reasonable assurance that transactions are recorded asnecessary to permit preparation of financial statements in accordance with generallyaccepted accounting principles and that receipts and expenditures of the company arebeing made only in accordance with authorizations of management and directors of thecompany; and
(3) provide reasonable assurance regarding prevention or timelydetection of unauthorized acquisition use or disposition of the company's assets thatcould have a material effect on the financial statements.
Inherent Limitations of Internal Financial Controls over FinancialReporting
Because of the inherent limitations of internal financial controls overfinancial reporting including the possibility of collusion or improper managementoverride of controls material misstatements due to error or fraud may occur and not bedetected. Also projections of any evaluation of the internal financial controls overfinancial reporting to future periods are subject to the risk that the internal financialcontrol over financial reporting may become inadequate because of changes in conditionsor that the degree of compliance with the policies or procedures may deteriorate.
In our opinion the Company has in all material respects an adequateinternal financial controls system over financial reporting and such internal financialcontrols over financial reporting were operating effectively as at 31stMarch 2020 basedon the internal control over financial reporting criteria established by the Companyconsidering the essential components of internal control stated in the Guidance Note onAudit of Internal Financial Controls Over Financial Reporting issued by the Institute ofChartered Accountants of India.
ANNEXURE "B" TO THE INDEPENDENT AUDITOR'S REPORT OF"FLEX FOODS LIMITED" ON THE FINANCIAL STATEMENTFOR THE YEAR ENDED 31STMARCH 2020
Referred to in paragraph 2 under Report on Other Legal andRegulatory Requirements' section of our report of even date of "FLEX FOODSLIMITED" (the Company') for the year Ended on 31st March2020 we report that:
i. In respect of Fixed Assets of the Company:
a) According to information and explanation given to us the Companyhas maintained proper records showing full particulars including quantitative details andsituation of fixed assets.
b) According to information and explanation given to us the fixedassets of the Company have been physically verified by the Management at reasonableintervals and no material discrepancies were noticed on such verification as compared tobooks of accounts.
c) According to the information and explanations given to us and on thebasis of our examination of the records of the Company the title deeds of immovableproperties are held in the name of the Company.
ii. In respect of Inventories of the Company:
According to the information and explanation given to us Physicalverification of inventory has been conducted at reasonable intervals by the Management ofthe Company and no material discrepancies were noticed on physical verification conductedby the management.
iii. The company has granted interest bearing unsecured loans to thecompany covered in the register maintained under section 189 of the Companies Act 2013during the year.
a) The terms and conditions of the grant of such loans are in ouropinion prima facie not prejudicial to the Company's interest.
b) The schedule of repayment of principal and payment of interest hasbeen stipulated and repayments or receipts of principal amounts and interest have beenregular as per stipulations.
c) The amount of Rs.100 lacs is outstanding as on 31.03.2020. Howeverthe amount is not overdue.
iv. In our opinion and according to the information and explanationsgiven to us the Company has complied with the provisions of Sections 185 and 186 of theAct in respect of grant of loans making investments and providing guarantees andsecurities as applicable.
v. The company has not accepted any deposits. Therefore the provisionof clause (v) of Para 3 of the Companies (Auditor's Report) Order 2016 is notapplicable to the company.
vi. The Provisions of maintenance of cost records specified by theCentral Government under sub-section (1) of section 148 of the Companies Act 2013 for theproducts dealt / manufactured by the company are not applicable to the company. Thereforethe provisions of clause (vi) of Para 3 of the Companies (Auditor's Report) Order2016 are not applicable to the company.
vii. a) According to the information and explanations given to us andthe records of the Company examined by us in our opinion the Company is generally regularin depositing undisputed statutory dues including Provident Fund Employee's StateInsurance Income Tax Goods and Service Tax Customs duty Cess and any other materialstatutory dues as applicable with the appropriate authorities.
And according to the information and explanations given to us noundisputed amounts payable in respect of provident fund Employees' state insuranceincome tax duty of customs Cess Goods and Service Tax and other applicable statutorydues were in arrears as at 31stMarch 2020 for a period of more than six monthsfrom the date they became payable.
b) According to the information and explanations given to us there areno pending dues in respect of Sales Tax Service tax Value added tax Goods and ServiceTax and Cess which has not been deposited on account of any dispute except dues of Customsand central excise which have not been deposited as at March 31 2020 on account ofdispute are given below: Disputed Customs and Central Excise Dues: Aggregate Duty ofRs679.46 Lakhs pending before (a)CESTAT Delhi(Rs. 658.46 Lakhs) and (b)Asst.commissioner CGST division Rishikesh ( Rs 21 Lakhs).
viii. According to the information and explanations given to us and therecords of the Company examined by us the Company has not defaulted in repayment of duesto the bank as on the Balance Sheet date considering the impact of option exercised by thecompany as provided by Reserve Bank of India Please refer to Note No. 13 (c )of financialstatements.
ix. According to the information and explanations given to us and therecords of the Company examined by us the Company has not raised any money by way ofinitial public offer or further public offer (including debt instruments) or term loansduring the year.
x. During the course of our examination of the books and records of theCompany carried out in accordance with the generally accepted auditing practices in Indiaand according to the information and explanations given to us we have neither come acrossany instances of material fraud by the Company or on the Company by its officers oremployees noticed or reported during the year under audit nor we have been informed ofany such case by the Management.
xi. According to the information and explanations given to us and therecords of the Company examined by us the Company has paid/provided for managerialremuneration in accordance with the requisite approvals mandated by the provisions ofsection 197 read with Schedule V to the Act.
xii. In our opinion and according to the information and explanationsgiven to us the Company is not a Nidhi Company. Therefore the provisions of clause (xii)of Para 3 of the Companies (Auditor's Report) Order 2016 are not applicable to theCompany.
xiii. According to the information and explanations given to us andbased on our examination of the records of the Company transactions with the relatedparties are in compliance with sections 177 and 188 of the Act wherever applicable anddetails of such transactions have been disclosed in the Financial Statements as requiredby the applicable Accounting Standards.
xiv. According to the information and explanations given to us andbased on our examination of the records of the Company the Company has not made anypreferential allotment or private placement of shares or fully or partly convertibledebentures during the year.
xv. According to the information and explanations given to us and basedon our examination of the records of the Company the Company has not entered intonon-cash transactions with Directors or persons connected with him. Therefore theprovisions of clause (xv) of Para 3 of the Companies (Auditor's Report) Order 2016are not applicable to the Company.
xvi. According to the information and explanations given to us andbased on our examination of the records of the Company the Company is not required to beregistered under section 45-IA of the Reserve Bank of India Act 1934.
| ||FOR MJMJ & ASSOCIATES LLP |
| ||CHARTERED ACCOUNTANTS |
| ||FIRM REGISTRATION NO. 027706N/C400013 |
| ||MEGHA JAIN |
| ||PARTNER |
|PLACE:- NOIDA ||MEMBERSHIP NO. 415389 |
|DATED: - 27.06.2020 ||UdinNo.20415389AAAABP1260 |