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Garg Furnace Ltd.

BSE: 530615 Sector: Metals & Mining
NSE: N.A. ISIN Code: INE194E01015
BSE 00:00 | 07 Jul 43.30 1.80
(4.34%)
OPEN

41.50

HIGH

43.40

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41.50

NSE 05:30 | 01 Jan Garg Furnace Ltd
OPEN 41.50
PREVIOUS CLOSE 41.50
VOLUME 32
52-Week high 56.65
52-Week low 15.35
P/E 2.75
Mkt Cap.(Rs cr) 17
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 41.50
CLOSE 41.50
VOLUME 32
52-Week high 56.65
52-Week low 15.35
P/E 2.75
Mkt Cap.(Rs cr) 17
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Garg Furnace Ltd. (GARGFURNACE) - Auditors Report

Company auditors report

TO

THE MEMBERS OF

GARG FURNACE LIMITED

Report on the Audit of the Financial Statements

Opinion

We have audited the accompanying financial statements of Garg Furnace Limited("the Company") which comprise the Balance Sheet as at March 31 2021 theStatement of Profit and Loss (including Other Comprehensive Income) the Statement ofChanges in Equity and the Statement of Cash Flows for the year ended on that date and asummary of the significant accounting policies and other explanatory information(hereinafter referred to as "the financial statements").

In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid financial statements give the information required by theCompanies Act 2013 ("the Act") in the manner so required and give a true andfair view in conformity with the Indian Accounting Standards prescribed under section 133of the Act read with the Companies (Indian Accounting Standards) Rules 2015 as amended("Ind AS") and other accounting principles generally accepted in India of thestate of affairs of the Company as at March 31 2021 and total comprehensive loss(comprising of loss and other comprehensive loss) changes in equity and its cash flowsfor the year ended on that date.

Basis for Opinion

We conducted our audit of the financial statements in accordance with the Standards onAuditing specified under section 143(10) of the Act (SAs). Our responsibilities underthose Standards are further described in the Auditor's Responsibilities for the Audit ofthe Financial 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 (ICAI) together with the independence requirements that are relevant to our audit ofthe financial statements under the provisions of the Act and the Rules made thereunderand we have fulfilled our other ethical responsibilities in accordance with theserequirements and the ICAI's Code of Ethics. We believe that the audit evidence we haveobtained is sufficient and appropriate to provide a basis for our audit opinion on theFinancial Statements.

Key Audit Matters

Key audit matters are those matters that in our professional judgment were of mostsignificance in our audit of the Financial Statements ofthe current period. These matterswere addressed in the contextof our auditof 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

S. No. Key Audit Matter Auditors' Response
1- Allowance for Credit Losses as per Ind AS 109 on ‘Financial Instruments': Principal Audit Procedures:
The Company determines the allowance for credit losses on the following basis: - Our audit procedures related to the allowance for credit losses for trade receivables included the following among others:
We tested the effectiveness of controls over the : -
a) Historical loss experience which is adjusted to reflect current and estimated future economic conditions. a) Development of the methodology for the allowance for credit losses including consideration of the current and estimated future economic conditions.
b) Consideration of Current and anticipated future economic conditions relating to the industries the Company deals with and the countries in which its suppliers and customers are situated. b) Completeness and accuracy of information used in the estimation of probability of default and
c) Consideration of credit reports and other related credit information for its customers to estimate the probability of default in future. c) Computation of the allowance for credit losses in accordance with Ind AS 109.
d) For the current year estimates of possible effect from the pandemic relating to COVID-19. For a sample of customers:
We identified allowance for credit losses as a key audit matter because of possible effects of COVID-19 pandemic. We tested the input data such as credit reports and other credit related information used in estimating the probability of default by comparing them to external and internal sources of information.
(Refer Note 2 and Note 43(b)(iii) of the Financial Statements.)
2- Derecognition of carrying value of property plant and equipment: Principal Audit Procedures:
Property plant and equipment totaling 1425.33 lakhs (2019-20: 1865.29 lakhs) as disclosed in Note 3 represent significant balances recorded in the statement of financial position. The Company describes the significant accounting policies in respect of property plant and equipment in Note 2 to the financial statements. Our audit procedures related to derecognition of carrying value of property plant and equipment included the following among others:
The derecognition of carrying amount of property plant and equipment is done on i) disposal; or ii) when no future economic benefits are expected from its use or disposal a) We have evaluated the analysis made by the management in determination of carrying value of property plant and equipment to be derecognized and ensure that these are consistent with the principles of Ind AS 16 on 'Property Plant and Equipment'.
This requires significant judgement of the management to determine whether any future economic benefit is expected from use or disposal of property plant and equipment. b) We assessed whether indicators of derecognition existed as at 31 March 2021 based on our knowledge of the business and the industry.
During the year the management has derecognised carrying amount of property plant and equipment amounting to 315.13 lakhs in the financial statements as no future economic benefits are expected from its use or disposal (refer note no. 32). c) We tested the effectiveness of controls in place over the property plant and equipment and evaluated the appropriateness of accounting policies laid down in this regard performed tests of details on carrying amount derecognized and its disposal proceeds if any. In performing these substantive procedures we assessed the judgements made by management including its decision that no future economic benefit are expected to flow from use or disposal of these properly plant and equipment
Since judgment of the management is required to determine derecognition of carrying value of property plant and equipment we have considered it to be a key audit matter. d) We tested the mathematical accuracy and computation of the carrying value of property plant and equipment derecognised by using the same input data used by the Company.
We found management's assessment in determining the carrying value of the property plant and equipment to be reasonable.

Other Information

The Company's Board of Directors is responsible for the preparation of the otherinformation. The other information comprises the information included in the ManagementDiscussion and Analysis Board's Report including Annexures to Board's Report BusinessResponsibility Report Corporate Governance and Shareholder's Information but does notinclude the Financial Statements and our auditor's report thereon. The other informationis expected to be made available to us after the date of this auditor's report.

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

In connection with our audit of the financial statements our responsibility is to readthe other information identified above when it becomes available and in doing soconsider whether the other information is materially inconsistent with the financialstatements or our knowledge obtained in the audit or otherwise appears to be materiallymisstated.

When we read the other information if we conclude that there is a materialmisstatement therein we are required to communicate the matter to those charged withgovernance and describe actions applicable in the applicable laws and regulations.

Management's Responsibility for the Financial Statements

The Company's Board of Directors is responsible for the matters stated in section134(5) of the Act with respect to the preparation of these financial statements that givea true and fair view of the financial position financial performance total comprehensiveincome changes in equity and cash flows of the Company in accordance with the Ind AS andother accounting principles generally accepted in India. This responsibility also includesmaintenance of adequate accounting records in accordance with the provisions of the Actfor safeguarding the assets of the Company and for preventing and detecting frauds andother irregularities; selection and application of appropriate accounting policies; makingjudgments and estimates that are reasonable and prudent; and design implementation andmaintenance of adequate internal financial controls that were operating effectively forensuring the accuracy and completeness of the accounting records relevant to thepreparation and presentation of the financial statements that give a true and fair viewand are free from material misstatement whether due to fraud or error.

In preparing 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.

The 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 our audit procedures in accordance with SAs 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 Companies Act 2013 we are also responsible for expressing our opinion on whetherthe company has adequate internal financial controls system in place and the operatingeffectiveness of such controls.

• Evaluate the appropriateness of accounting policies used and the reasonablenessof accounting estimates and related disclosures made by management.

• Conclude on the appropriateness of management's use of the going concern basisof accounting and based on the audit evidence obtained whether a material uncertaintyexists related to events or conditions that may cast significant doubt on the ability ofthe Company to continue as a going concern. If we conclude that a material uncertaintyexists we are required to draw attention in our auditor's report to the relateddisclosures in the Financial statements or if such disclosures are inadequate to modifyour opinion. Our conclusions are based on the audit evidence obtained up to the date ofour auditor's report. However future events or conditions may cause the Company to ceaseto continue as a going concern.

• Evaluate the overall presentation structure and content of the Financialstatements including the disclosures and whether the Financial statements represent theunderlying transactions and events in a manner that achieves fair presentation.

Materiality is the magnitude of misstatements in the financial statements thatindividually or in aggregate makes it probable that the economic decisions of areasonably knowledgeable user of the financial statements 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 safeguard.

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 Companies (Auditor's Report) Order 2016 (‘the Order') issued byCentral Government of India in terms of sub-section (11) of section 143 of the Act wegive in ‘Annexure A' a statement on the matters specified in paragraphs 3 and 4 ofthe Order to the extent applicable.

2. As required by Section 143(3) of the Act based on our audit we report that:

a) We have sought and obtained all the information and explanations which to the bestof our knowledge and belief were necessary for the purposes of our audit.

b) In our opinion proper books of account as required by law have been kept by theCompany so far as it appears from our examination of those books.

c) The Balance Sheet the Statement of Profit and Loss (including Other ComprehensiveIncome/ Loss) Statement of Changes in Equity and the Statement of Cash Flow dealt with bythis Report are in agreement with the books of account

d) In our opinion the aforesaid financial statements comply with the Ind AS specifiedunder Section 133 of the Act read with Rule 7 of the Companies (Accounts) Rules 2014.

e) On the basis of the written representations received from the directors as on 31stMarch 2021 taken on record by the Board of Directors none of the directors isdisqualified as on March 31 2021 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 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 the requirements of section 197(16) of the Act as amended:

In our opinion and to the best of our information and according to the explanationsgiven to us the remuneration paid by the Company to its directors during the year is inaccordance with the provisions of section 197 of the Act.

h) With respect to the other matters to be included in the Auditor's Report inaccordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014 as amended inour opinion and to the best of our information and according to the explanations given tous:

i. The Company has disclosed the impact of pending litigations on its financialposition in its Financial Statements - Refer Note 36

ii. The Company did not have any long-term contracts including derivative contracts forwhich there were any material foreseeable losses.

iii. There has been no delay in transferring amounts required to be transferred ifany to the Investor Education and Protection Fund by the company.

ANNEXURE 'A' TO THE INDEPENDENT AUDITOR'S REPORT

(Referred to in paragraph 1 under 'Report on Other Legal and Regulatory Requirements'section of our report to the Members of Garg Furnace Limited of even date)

On the basis of such checks as we considered appropriate and according to theinformation and explanations given to us during the course of our audit we report that:

1. In respect of Fixed Assets:

a) The Company is maintaining proper records showing full particulars Includingquantitative details and situation of fixed assets.

b) The Company has a regular program of physical verification of the fixed assets atreasonable intervals. In accordance with this program certain fixed assets were verifiedduring the year and no material discrepancies were noticed on such verification.However the Company has derecognised carrying amount of property plant and equipmentamounting to 315.13 lakhs in the financial statements as no future economic benefits areexpected from its use or disposal.

c) The Company has all the original title deeds of immovable properties in its ownname.

2. The inventory has been physically verified by the management during the year. In ouropinion the frequency of verification is reasonable and the discrepancies noticed onphysical verification of inventory were not material.

3. The Company has not granted any loans secured or unsecured to Companies firms orother parties covered in the register maintained under Section 189 of the Act. Thereforethe provisions of Clause 3(iii) (iii)(a) (iii)(b) and (iii)(c) of the said Order are notapplicable to the Company.

4. According to the information and explanations given to us

a. during the year the Company has not given any loans any guarantees or provided anysecurities therefore the Company has complied with the provisions of the Section 185 ofthe Act.

b. the Company has complied with the provisions of Section 186 of the Act in respect ofthe loans and investments made and guarantees and security provided by it.

5. The Company has not accepted any deposits from the Public. Therefore the provisionsof Clause 3(v) of the said Order is not applicable to the Company.

6. We have broadly reviewed the books of account maintained by the Company pursuant tothe Rules made by the Central Government for the maintenance of Cost records under section148 of the Companies Act 2013 and are of the opinion that prima facie the prescribedaccounts and records have been made and maintained. We have however not made a detailedexamination of such records with a view to determine whether they are accurate orcomplete.

7. (a) According to the information and explanations given to us and the records of theCompany examined by us in our opinion the Company is generally regular in depositing theundisputed statutory dues including provident fund employees' state insurance incometax goods and services tax sales tax service tax excise duty customs duty valueadded tax cess and other material statutory dues with the appropriate authorities theextent of the arrears of outstanding statutory dues as on the last day of the financialyear concerned for a period of more than six months from the date they became payable areas follows:

Sr. No Name of the Statute Nature of the Dues Amount (in Rs.) Period to which amount relates
1. The Punjab Labour Welfare Fund Act 1965 Punjab Labour Welfare Fund 174409/- Upto the year 2020-21
2. Punjab State Development Tax Act 2018 Professional Tax 3000/- 2019-20

(b) According to the information and explanations given to us and the records of theCompany examined by us there are no dues of income-tax cess goods and services taxsales tax service tax value added tax customs duty and excise duty which have not beendeposited on account of a dispute.

8. In our opinion and according to the information and explanations given to us theCompany has not defaulted in repayment of loans or borrowing to a financial institutiongovernment Bank or dues to debenture holders.

9. In our opinion and according to the information and explanations given to us theCompany has not raised any money by way of initial public offer or further public offer(Including Debt instruments) and term loans.

10. 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 acrossany instance of fraud by the Company or any fraud on the company by its officers oremployees noticed or reported during the year nor have we been informed of such case bythe management.

11. The Company has paid/provided for managerial remuneration in accordance with therequisite approvals mandated by the provisions of section 197 read with Schedule V to theAct.

12. The Company is not a Nidhi Company. Therefore the provision of clause 3(xii) ofthe said Order is not applicable to the Company.

13. The Company has entered into transactions with related parties in compliance withthe provisions of sections 177 and 188 the Act. The details of such related partytransactions have been disclosed in the financial statements as required by Ind AS-24'Related Party Disclosures'.

14. According to the information and explanations given to us and based on ourexamination of the records the Company has not made any preferential allotment or privateplacement of shares or fully or partly convertible debentures during the year. .Therefore the provisions of Clause 3(xiv) of the said Order are not applicable to theCompany

15. In our opinion and according to the information and explanations given to us theCompany has not entered into any non-cash transaction with directors or persons connectedwith them. . Therefore the provisions of Clause 3(xv) of the said Order are notapplicable to the Company.

16. In our opinion and according to the information and explanations given to us theCompany is not required to be registered under section 45-IA of the Reserve Bank of IndiaAct 1934. Therefore the provisions of Clause 3(xvi) of the said Order are not applicableto the Company.

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 Garg Furnace Limited of even date)

Report on the Internal Financial Controls Over Financial Reporting under Clause (i) ofSub-section 3 of Section 143 of the Act

We have audited the internal financial controls over financial reporting of GargFurnace Limited ("the Company") as of March 31 2021 in conjunction with ouraudit of the financial statements of the Company for the year ended on that date.

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.

We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the internal financial controls system overfinancial reporting 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 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.

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 31 2021 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 and on behalf of Ashwani & Associates
Chartered Accountants
Firm Registration Number: 000497N
by the hand of
Arvind Jain Partner
Place: Ludhiana Membership No.: 097549
Dated: June 30th 2021 U Dl N :21097549AAAACU3852

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