Ganga Forgings Limited
Vill. Shapar (Veraval)
Report on the Audit of the Standalone Financial Statements:
We have audited the standalone financial statements of Ganga Forgings Limited("the Company") which comprise the Balance Sheet as at 31st March2020 the Statement of Profit and Loss and statement of Cash Flows for the year thenended and notes to the financial statements including a summary of significantaccounting policies and other explanatory information.
In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid standalone financial statements give the information requiredby the Companies Act 2013 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 31st 2020 its profit and its cash flowsfor 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 Rulesthereunder and we have fulfilled our other ethical responsibilities in accordance withthese requirements and the Code of Ethics. We believe that the audit evidence we haveobtained is sufficient and appropriate to provide a basis for our opinion.
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 matters described below to be the key audit matters to be communicatedin our report.
|Sr. No. Key Audit Matter ||Auditor's Response |
|1 Recoverability of Trade Receivables Rs. 94.45 Lakhs classified as doubtful under Note 16 to the Audited Financial Statement. ||i. Obtained an understanding of the determination of recoverability and assessed and tested the reasonableness of the significant judgements applied by the management. |
| ||ii. Evaluated the design of internal controls relating to the trade receivable and also tested the operating effectiveness of the aforesaid controls. |
| ||iii. Performed analytical procedure and test of details for reasonableness of efforts by the management. |
|2 Inventory Valuation and existence Inventory valuation and existence was an audit focus area because of number of locations that inventory was held at and judgement applied in the valuation of inventory to incorporate inventory shrinkage. As described in notes to financial statements inventories are carried at the lower of cost and net realizable value on weighted average basis. ||Our Audit procedures for assessing the valuation of inventories as per Company's policy included but were not limited to the following. |
| ||i. Understood the management process for determining valuation of inventories and tested whether the same is consistency applied; |
| ||ii. Evaluated and tested on a sample basis the design and operating effectiveness of key controls around inventory valuation operating within the Company. |
| ||iii. Inquired with the management about the slow moving and obsolete inventories as at 31 March 2020 and evaluated the assessment prepared by the management including forecasted uses of these inventories on a test check basis. |
| ||iv. Assessed the appropriateness of disclosures in the financial statements in accordance with the applicable accounting standards. |
Information Other than the Financial Statements and Auditor's Report Thereon:
The Company's Board of Directors are responsible for the other information. The otherinformation comprises the information included in the Annual Report for exampleCorporate Overview Key Highlights Board's Report Report on Corporate GovernanceManagement Discussion & Analysis Report Business Responsibility Report etc. butdoes not include the consolidated financial statements standalone financial statementsand our auditor's report thereon.
Our opinion on the standalone financial statements does not cover the other informationand we do not express any form of assurance conclusion thereon.
In connection with our audit of the standalone financial statement our responsibilityis to read the other information and in doing so consider whether the other informationis materially inconsistent with the standalone financial statements or our knowledgeobtained during the course of our audit 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.
Responsibilities of Management for the 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 financialposition financial performance and cash flows of the Company in accordance with theaccounting 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 statements that give a true and fair viewand are free from material misstatement whether due to fraud or error.
In preparing the financial statements the Board of Directors is responsible forassessing the Company's ability to continue as a going concern disclosing as applicablematters related to going concern and using the going concern basis of accounting unlessthe Board of Directors either intends to liquidate the Company or to cease operations orhas no realistic alternative 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.
Report on Other Legal and Regulatory Requirements :
1. As required by the Companies (Auditor's Report) Order 2016 ("the Order")issued by the Central Government of India in terms of sub-section (11) of section 143 ofthe Companies Act 2013 we give in the Annexure "A" a statement on the mattersspecified in paragraphs 3 and 4 of the Order to the extent applicable.
2. As required by Section 143(3) of the Act we report that;
(a) We have sought and obtained all the information and explanations which to the 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 and the Cash Flow Statementdealt with by this Report 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.
(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 termsof Section 164(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 B". 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 does not have any pending litigations which would impact its financialposition except Para vii(b) of Annexure "A" of our Report;
ii. The Company did not have any long-term contracts including derivative contracts forwhich there were any material foreseeable losses.
iii. The company is not required to transfer any amounts to the Investor Education andProtection Fund by the Company.
Annexure A to the Independent Auditor's Report
Referred to in paragraph 1 under "Report on other Legal and Regulatoryrequirements"
section our report of even date;
i (a) The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets.
(b) The Company has a regular program of physical verification of its fixed assets bywhich all fixed assets are verified in a phased manner over a period of three years. Inour opinion this periodicity of physical verification is reasonable having regard to thesize of the Company and the nature of its assets. In accordance with this program certainfixed assets were physically verified by the management during the year. As informed tous no material discrepancies 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. In respect of immovable properties of land and buildingsthat have been taken on lease and disclosed as fixed asset in the financial statementsthe lease agreements are in the name of the Company where the Company is the lessee inthe agreement.
ii Inventories except for goods-in-transit and stocks lying with third parties ifany have been physically verified by the management.
In our opinion the frequency of such verification is reasonable. Discrepancies noticedon such verification between physical stocks and the book records were not material andthese have been properly dealt with in the- books of account.
iii. The Company has not granted unsecured loan to a company covered in the registermaintained under Section 189 of the Act; hence Para iii (a) (b) and (c) are notapplicable.
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 in respect ofloans/ guarantees given investments made and securities provided by it.
v. The Company has not accepted any deposits from the public within the meaning ofSections 73 to 76 of the Act.
vi. The company is not required to maintain cost records as prescribed by the CentralGovernment under Section 148(1) of the Act.
vii) According to the records of the Company examined by us and information andexplanations given to us:
(a) Undisputed statutory dues including provident fund employees' state insuranceincome tax sales tax service tax duty of customs duty of excise value added taxgoods and services tax cess and others as applicable have generally been.regularlydeposited with the appropriate authorities except delay in few cases. There are noundisputed amounts payable in respect of aforesaid dues outstanding as at 31 March 2020for a period of more than six months from the date they became payable except Income TaxPayable Rs. 1342501 GST Payable Rs. 1505307 and Gratuity Payable Rs. 1711100 outstandingas at 31st March 2020 for a period more than six month from the date theybecame payable.
(b) We have been informed by the management that there are no disputed dues underIncome Tax GST and Excise Duty.
viii. According to the records of the Company examined by us and the information andexplanations given to us the Company has not defaulted in repayment of loans orborrowings to financial institutions banks government or dues to debenture holders.
ix. According to the records of the Company examined by us and the information andexplanations given to us the company has not raised during the year money by way ofinitial public offer and term loans which were applied for the purpose for which those areraised.
x. During the course of our examination of the books and records of the Companycarried out in accordance with the generally accepted auditing practices in India andaccording to the information and explanations given to us we have neither come across anyinstance of material fraud by the Company or on the Company by its officers or employeesnoticed or reported during the year nor have been informed of any such case by theManagement.
xi. According to the records of the Company examined by us and information andexplanations given to us the Company has paid/provided for managerial remuneration inaccordance with the requisite approvals mandated by the provisions of Section 197 readwith Schedule V to the Act.
xii. In our opinion and according to the information and explanations given to us theCompany is not a Nidhi company and the Nidhi Rules 2014 are not applicable to it.
xiii. According to the information and explanations 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 where applicable and details of suchtransactions have been disclosed in the standalone financial statements as required by theapplicable Indian Accounting Standards.
xiv. According to the records of the Company examined by us and information andexplanations given to us the company has not made any preferential allotment or privateplacement of shares during the year under review.
xv. According to the records of the Company examined by us and information andexplanations given to us the Company has not entered into non-cash transactions withdirectors or persons connected with him.
xvi. The Company is not required to be registered under Section 45-IA of the ReserveBank of India Act 1934.
Annexure "B" to the Independent Auditor's Report
(Referred to in paragraph 2(f) under 'Report on Other Legal and RegulatoryRequirements' section of our report to the Members of Ganga Forging Limited of even date)
Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section143 of the Companies Act 2013 ("the Act") as referred to in paragraph 6(ll)(f)under "Report on other Legal and Regulatory requirements" of our report of evendate to the members of Ganga Forgings Limited on the standalone financial statements forthe year ended 31stMarch 2020 We have audited the internal financial controlsover financial reporting of Ganga Forgings Limited ("the Company") as of 31stMarch 2020 in conjunction with our audit of the standalone financial statements of theCompany for the year ended on that date.
Management's Responsibility lot Internal Financial Controls:
The Company's management is responsible for establishing and maintaining internalfinancial controls based on the internal control over financial reporting criteriaestablished by the Company considering the essential components of internal control statedin the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting (the"Guidance Note") issued by the Institute of Chartered Accountants of India(ICAI). These responsibilities include the design implementation and maintenance ofadequate internal financial controls that were operating effectively for ensuring theorderly and efficient conduct of its business including adherence to company's policiesthe safeguarding 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 Act.
Our responsibility is to express an opinion on the Company's internal financialcontrols over financial reporting based on our audit. We conducted our audit in accordancewith the Guidance Note on "Audit of Internal Financial Controls over FinancialReporting" (the "Guidance Note") issued by the Institute of CharteredAccountants of India and the Standards on Auditing prescribed under Section 143(10) of theCompanies Act 2013 to the extent applicable to an audit of internal financial controls.Those Standards and the Guidance Note require that we comply with ethical requirements andplan and 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 judgment including the assessment of the risks ofmaterial misstatement of the standalone financial statements whether due to fraud orerror.
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 controls systemover financial reporting.
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 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:
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.
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 2020 based on theinternal control over financial reporting criteria established by the Company consideringthe essential components of internal control stated in the Guidance Note issued by theInstitute of Chartered Accountants of india.
| ||For Nitesh A. Joshi & Co. Chartered Accountants |
|Date : 29-June-2020 ||F.R.N. 127578W |
|Place: Rajkot ||(Nitesh A Joshi) Partner Membership No. 124272 UDIN: 20124272AAAADM6052 |