The Members of
GTN Industries Limited
Report on the Audit of the Financial Statements
We have audited the accompanying financial statements of GTN Industries Limited("the Company") which comprise the Balance Sheet as at March 312021 theStatement of Profit and Loss Other Comprehensive Income the Statement of Changes inEquity and the Statement of Cash Flows for the year ended on that date and a summary ofthe significant accounting policies and other explanatory information (hereinafterreferred 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 312021 the loss and total comprehensiveincome changes in equity and its cash flows for the year ended on that dae.
Basis for Opinion
We conducted our audit of the financial statements in accordance with the S'.ndards onAuditing specified under section 143(10) of the Act (SAs). Our responsibilities underth'se Standards are further described in the Auditor's Responsibilities for the Audit ofthe Standalone Financia1 Statements cation 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 independence requirements that are .e'evantto our audit of the financial statements under the provisions of the Act and the Rulesmade thereunder and we hav~ lufilled our other ethical responsibilities in accordancewith these requirements and the ICAI's Code of Ef-rus. We el:e that the audit evidence wehave obtained is sufficient and appropriate to provide a basis for our audit opinion ofinancial statements.
Key Audit Matters
Key audit matters are those matters that in our professional judgment were of mostsignificant 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.
|Key Audit Matters ||Auditor's response |
|1. Textile Upgradation Fund (TUF') Interest Rebate receivable ||Audit Procedure performed: |
|Other current assets include interest rebate receivables of Rs. 213.89 lakhs (previous year) Rs. 408.91 lakhs) on term loans taken by the Company in earlier years under the "Textile Upgradation Fund" scheme of the Ministry of Textile Government of India. ||Our procedures for recognition and in response to the risk of timely recovery of the accruals in the financial statements included the following: |
|These receivables include amounts which have not been disbursed to the Company on account of certain disputes regarding eligibility raised by the Ministry of Textiles inter alia including eligibility of rebate on second restructuring of loans and condonation of delay in filing of claims with the Ministry. These disputes are under resolution and the Ministry has appointed a third-party consultant for the same. || Examining the eligibility criteria for receipt of rebate obtained a list of year wise break- up of the interest rebate receivables by the Company for all the financial years and discussing the status of the assessment of rebates receivable for all the financial years and the Management view on the expected time frame by which the rebates will be received. |
|Management judgement is involved in assessing the accounting for interest rebates and particularly in considering the probability of a rebate being released and we have accordingly designated this as a focus area of the audit. || Considering the status of the rebates received from other banks in the consortium and the adjustments if any done by the respective banks or financial institutions based on the report of the third-party consultant while granting the rebate for similar or previous financial years. |
| ||Based on the above procedures performed we did not find any significant exceptions to the accrual of Interest rebate receivables on TUF loans. |
|2. Power Subsidy Receivable ||Audit Procedure performed: |
|Other current assets include power subsidy receivable of Rs. 384.19 lakhs as at 31st March 2021 (Previous Year Rs. 384.19 lakhs) from the states of Telangana and Maharashtra as per the notifications issued by the aforesaid State Governments. ||Our procedures in response to the risk of completeness of the accruals in the financial statements included the following: |
|Management judgement is involved in assessing the accounting for subsidies and particularly in considering the probability of a subsidy being released and we have accordingly designated this as a focus area of the audit. ||We have examined the eligibility criterion for the availment of power subsidy and obtained a list of year |
| ||wise break- up of the receivables by the Company for all the financial years. |
| ||We had dismissed the status of the assessment of subsidy i'ceivable for all the financial years and the Management view on the expected time frame by which the subsidies will be released. |
| ||Additionally we have considered the status of the previous assessments and the adjustments if any done by the respective concerned authorities. |
| ||Based on the procedures performed those gave us a sufficient evidence to conclude that the subsidies have been accounted in terms of the notifications issued by various state governments. |
Information Other than the Financial Statements and Auditor's Report thereon
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 andShareholder's Information but does not include the financial statements and our auditor'sreport thereon.
Our opinion on the financial statements does not cover the other information and we donot express any form of assurance conclusion thereon.
In connection with our audit of the financial statements our responsibility is to readthe other information and in doing so consider whether the other information ismaterially inconsistent with the financial statements or our knowledge obtained during thecourse 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.
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 responsible for overseeing the Company's financial reportingprocess.
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 aud conducted in accordance with SAswill always detect a material misstatement when it exists. Misstatements car an'e fromfraud or error and are considered material if individually or in the aggregate theycould reasonably be expected 'o influence the economic decisions of users taken on thebasis of these financial statements.
As part of an audit in accordance with SAs we exercise professional judgment andmaintain professional skepticism throughout the audit. We also:
Identify and assess the risks of material misstatement o the financialstatements whether due to fraud or error design and perform audit procedures responsivetL those risks and obtain audit evidence that is sufficient and appropriate to provide abasis for our opinion. The risk of no 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 financial con'r s relevant to the audit inorder to design audit procedures that are appropriate in the circumstances. Under section143(3)(i) of the Act we are also responsible for expressing our opinion on whether theCompany 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 Company'sability to continue as a going concern. If we conclude that a material uncertainty existswe are required to draw attention in our auditor's report to the related disclosures inthe financial statements or if such disclosures are inadequate to modify our opinion.Our conclusions are based on the audit evidence obtained up to the date of our auditor'sreport. However future events or conditions may cause the Company to cease to continue asa going concern.
Evaluate the overall presentation structure and content of the financialstatements including the disclosures and whether the financial statements represent theunderlying transactions and events in a manner that achieves fair presentation.
Materiality is the magnitude of misstatements in the 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 safeguards.
From the matters communicated with those charged with governance we determine thosematters that were of most significance in the audit of the financial statements of thecurrent period and are therefore the key audit matters. We describe these matters in ourauditor's report unless law or regulation precludes public disclosure about the matter orwhen in extremely rare circumstances we determine that a matter should not becommunicated in our report because the adverse consequences of doing so would reasonablybe expected to outweigh the public interest benefits of such communication.
Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditor's Report) Order 2016 ("the Order")issued by the Central Government in terms of Section 143(11) of the Act we give in"Annexure A" a statement on the matters specified in paragraphs 3 and 4 of theOrder.
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 teen kept by theCompany so far as it appears from our examination of those books.
c) The Balance Sheet the Statement of Profit and Loss wing Other ComprehensiveIncome Statement of Changes in Equity and the Statement of Cash Flow dealt with by thisReport are in agreement with the relevant 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 f'rom the directors as on March312021 taken on record by the Board of Directors none of the Sectors - disqualified ason March 312021 from being appointed as a director in terms of Section 164 (2) of theAct.
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 37 to the financial statements.
ii. The Company did not have any long-term contracts including derivative contracts forwhich there were material foreseeable losses.
iii. There were no amounts required to be transferred to the Investor Education andProtection Fund by the Company.
ANNEXURE A' TO THE AUDITORS' REPORT
ANNEXURE A REFERRED TO IN PARAGRAPH 1 UNDER THE HEADING "REPORT ON OTHER LEGAL ANDREGULATORY REQUIREMENTS" OF OUR REPORT OF EVEN DATE TO THE MEMBERS OF GTN INDUSTRIESLIMITED FOR THE YEAR ENDED 31st MARCH 2021.
On the basis of our examination of the books and records of the Company carried out inaccordance with the auditing standards generally accepted in India and according to theinformation and explanations given to us we state that:
i) a) The Company has maintained proper records showing full particulars includingquantitative details and situation of property plant and equipment.
b) The property plant and equipment are physically verified by the managementaccording to a phased programme designed to cover all the items over a period of threeyears which in our opinion is reasonable having regard to the size of the Company andthe nature of its assets. Pursuant to the programme the specified property plant andequipment have been physically verified by the Management during the year and no materialdiscrepancies were noticed on such verification.
c) According to the information and explanations given to us and on the basis of ourexamination of the records of the Company the title deeds of immovable properties areheld in the name of the Company.
ii) According to the information and explanations given to us the managem.nt hasconducted physical verification of inventory at reasonable intervals during the year.Inventory lying with third parties and in-transit have been verified by the managementwith reference to the subsequent receipt of goods. The discrepancies noticed onverification between the physical stock and book records were not material in relation tothe operations of the Company and have been properly dealt with in the books of account.
iii) In our opinion and according to the informa/ci and explanations given to us theCompany has not granted any loans secured or unsecured to companies firms LimitedLiability Partnerships or other parties covered in the register maintained under Section18o of the At. Accordingly the reporting requirements of clause 3(iii) of the Order arenot applicable to the Company.
iv) In our opinion and according to the information and explanations given to us theCompany has not made investments issued guarantees given loans or issued any security towhich the provisions of Section 185 and Section 186 are applicable and accordinglyreporting requirements of paragraph 3(iv) of the Order are not applicable to the Company.
v) In our opinion and according to the information and explanations given to us nodeposits within the meaning of directives issued by RBI (Reserve Bank of India) andSections 73 to 76 or any other relevant provisions of the Act and rules framed thereunderhave been accepted by the Company. Accordingly reporting requirements of paragraph 3(v)of the Order are not applicable to the Company.
vi) 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(1) of the Act in respect of Company's products and are of the opinion that primafacie the prescribed accounts and records have been made and maintained. We are howevernot required to and have not made a detailed examination of the cost records with a viewto determine whether they are accurate or complete.
vii) a) According to the information and explanations given to us and on the basis ofour examination of records of the Company amounts deducted / accrued in the books ofaccount in respect of undisputed statutory dues including provident fund employees' stateinsurance income-tax goods and services tax sales- tax service tax duty of customsduty of excise value added tax cess and any other statutory dues have been regularlydeposited with the appropriate authorities. According to the information and explanationsgiven to us there were no outstanding statutory dues as on 31st March 2021 for a periodof more than six months from the date they became payable.
b) According to the information and explanations give to us and the records of theCompany there are no dues of income tax or goods and services tax or sales tax or wealthtax or service tax or duty of customs or duty of excise or value added tax which have notbeen deposited with the appropriate authorities on account of any dispute.
viii) According to the records maintained by the Company and information andexplanations given to us the Company has not defaulted in repayment of loans to banks andfinancial institutions. The Company does not have any loans from Government or dues todebenture holders.
ix) 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) during the year. In our opinion the term loans have beenapplied for the purpose for which they were taken.
x) During the course of our examination of the books and records of the Companycarried out in accordance with the generally accepted auditing standards in India andaccording to the information and explanations given to us we have neither come across anyinstance of fraud by the Company or on the Company by its officers or employees noticedor reported during the year nor have we been inf i-med of such case by the management.
xi) According to the information and explanations given to us and bastn on ourexamination of the records of the Company the Company has paid/provided for managerialremuneration in accordance with the requisite approvals mandated by the provisions ofSection 197 read with Schedule V of the Act.
xii) The Company is not a Nidhi Company and hence repo ting un ei clause 3(xii) of theOrder is not applicable.
xiii) According to the information and explanations gi'e. to us a>d based onour examination of the records of the Company transactions with the related parti's an incompliance with Sections 177 and 188 of the Act where applicable and details of suchtransactions ha ve bet disclosed in the financial statements as required by the applicableaccounting standards. Refer Note 39 to the financial statements.
xiv) In our opinion and according to the information and explanations given to us andon an overall examination of the balance sheet the Company has not made any preferentialallotment or private placement of shares or fully or partly convertible debentures duringthe year under review and accordingly reporting requirements under paragraph 3(xiv) arenot applicable to the Company.
xv) According to the information and explanations given to us and based on ourexamination of the records of the Company the Company has not entered into non- cashtransactions with directors or persons connected with them as per the provisions ofSection 192 of the Act. Accordingly reporting requirements under paragraph 3(xv) of theOrder are not applicable to the Company.
xvi) The Company is not required to be registered under Section 45-IA of the ReserveBank of India Act 1934.
ANNEXURE B' TO THE AUDITORS' REPORT
ANNEXURE B REFERRED TO IN PARAGRAPH 2(f) UNDER THE HEADING "REPORT ON OTHER LEGALAND REGULATORY REQUIREMENTS" OF OUR REPORT OF EVEN DATE TO THE MEMBERS OF GTNINDUSTRIES LIMITED FOR THE FINANCIAL YEAR ENDED 31st MARCH 2021.
Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section143 of the Companies Act 2013 ("the Act")
We have audited the internal financial controls over financial reporting of GTNIndustries Limited ("the Company") as of March 312021 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 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 Reportingissued by the Institute of Chartered Accountants of India. These responsibilities includethe design implementation and maintenance of adequate internal financial controls thatwere operating effectively for ensuring the orderly and efficient conduct of its businessincluding adherence to company's policies the safeguarding of its assets the preventionand detection of frauds and errors the accuracy and c'mpletent-s of the accountingrecords and the timely preparation of reliable financial information as required indethe Companies Act 2013.
Our responsibility is to express an opinion on the Company's inie. nal financialcontrols over financial reporting based on our audit. We conducted our audit in accordancewit iie Guidance Note on Audit of Internal Financial Controls Over Financial Reporting(the "Guidance Note') rid the Standards on Auditing issued by ICAI and deemed to beprescribed under section 143(10) of the C-mpacies Act 2013 to the extent applicable toan audit of internal financial controls both applicable to an audit of Kegel FinancialControls and both issued by the Institute of Chartered Accountants of India. 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 includesobtaining 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 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 financial reporting includes those policiesand procedures that
1) pertain to the maintenance of records that in reasonable detail accurately andfairly reflect the transactions and dispositions of the assets of the company;
2) provide reasonable assurance that transactions are recorded as necessary to permitpreparation of financial statements in accordance with generally accepted accountingprinciples and that receipts and expenditures of the company are being made only inaccordance with authorizations of management and directors of the company; and
3) provide reasonable assurance regarding prevention or timely detection ofunauthorised acquisition use or disposition of the company's assets that could have amaterial 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 broadly in all material respects an a'equate internalfinancial controls system over financial reporting and such internal financial controlsover financial reporting were operating effectively as at March 312021 based on theinternal control over financial reporting criteria established by the Company consideringthe essential components of internal control stated in the GirJanje Nre on Audit ofInternal Financial Controls Over Financial Reporting issued by the Institute of CharteredAccountants of India".