THE MEMBERS OF
GUJARAT COTEX LIMITED
(Formerly known as OCTAGON INDUSTRIES LIMITED)
Report on Audit of the Standalone Financial Statements Opinion
We have audited the accompanying standalone financial statements of GUJARAT COTEXLIMITED ("the Company") which comprise the Balance Sheet as at March 31 2021the Statement of Profit and Loss (including other comprehensive income) Statement ofChanges in Equity and Cash Flow Statement for the year then ended and notes to thestandalone financial statements including a summary of significant accounting policies andother 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 ("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 (Indian Accounting Standards) Rules 2015 asamended ("Ind AS") and other accounting principles generally accepted in Indiaof the state of affairs of the Company as at March 31 2021 and profit (including othercomprehensive income) changes in equity and its cash flows for the year ended on thatdate.
Basis of Opinion
We conducted our audit in accordance with the Standards on Auditing ("SA's)specified under section 143(10) of the Companies Act 2013. Our responsibilities underthose Standards are further described in the Auditor's Responsibilities for the Audit ofthe Standalone Financial Statements section of our report. We are independent of theCompany in accordance with the Code of Ethics issued by the Institute of CharteredAccountants of India ("ICAI") together with the ethical requirements that arerelevant to our audit of the standalone financial statements under the provisions of theAct and the Rules made thereunder and we have fulfilled our other ethicalresponsibilities in accordance with these requirements and the ICAI's Code of Ethics. Webelieve that the audit evidence obtained by us is sufficient and appropriate to provide abasis for our audit opinion on the standalone financial statements.
Key Audit Matters
Key audit matters are those matters that in our professional judgment were of mostsignificance in our audit of the standalone financial statements of the current period.These matters were addressed in the context of our audit of the standalone financialstatements as a whole and in forming our opinion thereon and we do not provide aseparate opinion on these matters. We have determined the matters described below to bethe key audit matters to be communicated in our report.
|The key audit matters ||How our audit addressed the key audit matter |
|The principal products of the Company comprise of textile fabrics that are mainly sold in domestic market. Further the Company is also engaged in business of purchase and sale of non-agricultural plots of land. Revenue is recognised when the customer obtains control of the goods and in case of non-agricultural plots of land on registration of sale deed. We identified revenue recognition as a key audit matter because the Company and its shareholders focus on revenue as a key performance indicator. ||In view of the significance of the matter we applied the following audit procedures in this area among others to obtain sufficient appropriate audit evidence: |
| ||1. We assessed the appropriateness of the revenue recognition accounting policies by comparing with applicable accounting standards. |
| ||2. We evaluated the design of key controls and operating effectiveness of the relevant key controls with respect to revenue recognition on all transactions. |
| ||3. We performed substantive testing by selecting samples of revenue transactions recorded during the- year by testing the underlying documents using statistical sampling. |
| ||4. We carried out analytical procedures on revenue recognised during the year to identify unusual variances. |
| ||5. We tested on a sample basis revenue transactions recorded before and after the financial year end date to determine whether the revenue had been recognised in the appropriate financial period. |
Litigations provisions and contingencies
|The key audit matters ||How our audit addressed the key audit matter |
|The Company recognises a provision when it has a present obligation (legal or constructive] as a result of a past event it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. A disclosure for contingent liabilities is made where there is a possible obligation or a present obligation that may probably not require an outflow of resources. When there is a possible or a present obligation where the likelihood of outflow of resources is remote no provision or disclosure is made. We have identified litigations provisions and contingencies as a key audit matter because it requires the Company to make judgements and estimates in relation to the exposure arising out of litigations. The key judgement lies in the estimation of provisions where they may differ from the future obligations. ||In view of the significance of the matter we applied the following audit procedures in this area among others to obtain sufficient appropriate audit evidence: |
| ||1. We tested the effectiveness of key controls around the recording and assessment of litigations provisions and contingent liabilities. |
| ||2. We obtained Company's assessment of the open casesif any and compared the same to the assessment of subject matter experts wherever necessary to assess the reasonableness of the provision or contingency. |
| ||3. We considered the adequacy of the Company's disclosures made in relation to related provisions and contingencies in the financial statements. |
The Company's Management and Board of Directors are responsible for the preparation ofthe other information. The other information comprises the information included in theManagement Discussion and Analysis Board's Report including Annexures to Board's ReportBusiness Responsibility Report Corporate Governance and Shareholder's Information butdoes not include the standalone financial statements and 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 statements 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.
Management's Responsibilities for the Standalone Financial Statements
The Company's Management and Board of Directors are responsible for the matter statedin section 134(5) of the Companies Act 2013 ("the Act") with respect to thepreparation of these standalone financial statements that give a true and fair view of thefinancial position financial performance including other comprehensive income cash flowsand changes in equity of the Company in accordance with the Indian Accounting Standards(Ind AS) prescribed under section 133 of the Act read with the Companies (IndianAccounting Standards) Rules 2015 as Amended and other accounting principles generallyaccepted in India. This responsibility also includes maintenance of adequate accountingrecords in accordance with the provisions of the Act for safeguarding assets of theCompany and for preventing and detecting frauds and other irregularities selection andapplication of appropriate accounting policies making judgements and estimates that arereasonable and prudent and the design implementation and maintenance of adequateinternal financial controls that were operating effectively for ensuring the accuracy andcompleteness of the accounting records relevant to the preparation and presentation ofthese standalone financial statements that give a true and fair view and are free frommaterial 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 liquidated the Company or to cease operations or has no realisticalternative but to do so.
The Board of Directors is also responsible for overseeing the Company's financialreporting process.
Auditor's Responsibilities for the Audit of the Standalone Financial Statements
Our objectives are to obtain reasonable assurance about whether the standalonefinancial 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. Reasonable assuranceis a high level of assurance; but is not a guarantee that an audit conducted in accordancewith SAs will always detect a material misstatement when it exists. Misstatements canarise from fraud or error and are considered material if individually or in theaggregate they could reasonably be expected to influence the economic decisions of userstaken on the basis of these standalone financial statements.
As part of an audit in accordance with SAs we exercise professional judgment andmaintain professional scepticism throughout the audit. We also:
1. Identify and assess the risks of material misstatement of the standalone 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 one resulting from error as fraud may involve collusion forgeryintentional omissions misrepresentations or the override of internal control.
2. Obtain an understanding of internal control relevant to the audit in order to designaudit procedures that are appropriate in the circumstances. Under Section 143 [3) (i) ofthe Act we are also responsible for expressing our opinion on whether the company hasadequate internal financial controls with reference to standalone financial statements inplace and operating effectiveness of such controls.
3. Evaluate the appropriateness of accounting policies used and the reasonableness ofaccounting estimates and related disclosures made by the management.
4. Conclude on the appropriateness of management's use of the going concern basis ofaccounting 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 standalone financial statements or if such disclosures are inadequate to modify ouropinion. Our conclusions are based on the audit evidence obtained up to the date of ourauditor's report. However future events or conditions may cause the Company to cease tocontinue as a going concern.
5. Evaluate the overall presentation structure and content of the standalone financialstatements including the disclosures and whether the standalone financial statementsrepresent the underlying transactions and events in a manner that achieves fairpresentation.
Materiality is the magnitude of misstatements in the standalone financial statementsthat individually or in aggregate makes it probable that the economic decisions of areasonably knowledgeable user of the standalone financial statements may be influenced. Weconsider quantitative materiality and qualitative factors in (i) planning the scope of ouraudit work and in evaluating the results of our work; and (ii) to evaluate the effect ofany identified misstatements in the standalone 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 standalone financial statementsof the current period and are therefore the key audit matters. We describe these mattersin our auditors' report unless law or regulation precludes public disclosure about thematter or when 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 of India in terms of sub-section (11) of section 143 ofthe Act we give in the "Annexure - A" a statement on the matters specified inparagraphs 3 and 4 of the 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 purpose of our audit;
b. In our opinion proper books of account as required by law have been kept by theCompany so far as appears from our examination of those books;
c. The Balance Sheet Statement of Profit and Loss Statement of Changes in Equity andCash Flow Statement dealt with by this Report are in agreement with the books of accountmaintained for the purpose of preparation of these standalone financial statements;
d. In our opinion the aforesaid standalone financial statement comply with the IndianAccounting Standards specified under section 133 of the Act read with Rule 7 of theCompanies (Accounts) Rules 2014;
e. On the basis of written representations received from the directors as on March 312021 taken on record by the Board of Directors none of the directors is disqualified ason March 31 2021 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 oneffectiveness of such controls and operating effectiveness of the Company's internalfinancial controls over financial 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 Company has not paid any remuneration to its directors during the year.
h. With respect to the other matters to be included in the Auditor's Report inaccordance with Rule 11 of the Company's (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.
ii. The Company did not have any long-term contracts including derivatives contractsfor which there were any material foreseeable losses;
iii. There were no amounts which were required to be transferred to the InvestorEducation and Protection Fund by the Company.
ANNEXURE-A TO INDEPENDENT AUDITORS' REPORT
The Annexure Referred to in Paragraph 1 under Report on other Legal and RegulatoryRequirements of Independent Auditor's Report to the members of the Company on thestandalone financial statements for the year ended 31st March 2021 we reportthat:
1. In respect of the Company's fixed assets:
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 were physically verified during the year by theManagement in accordance with regular programme of verification which in our opinionprovides for physical verification of all property plant and equipment at reasonableintervals. According to the information and explanations given to us no materialdiscrepancies were noticed on such verification.
c) According to the information and explanations given to us and the records examinedby us and based on the examination of the conveyance deed / registered sale deed providedto us we report that the title deeds comprising all the immovable properties of landand buildings which are freehold are held in the name of the Company as at the balancesheet date.
2. In respect of the Company's inventories:
a) The inventory has been physically verified by the management during the year. In ouropinion the frequency of verification is reasonable.
b) The procedures of physical verification of inventory followed by the management arereasonable and adequate in relation of the size of the Company and the nature of itsbusiness.
c) The Company is maintaining proper records of inventory and no material discrepancieswere noticed on physical verification carried out at the end of the year.
3. According to the information and explanations given to us the Company has notgranted any loans secured or unsecured to companies firms limited liabilitypartnerships or other parties covered under register maintained under section 189 of theAct. Accordingly the provisions of clause 3 (iii) (a) to (c) of the Order are notapplicable to the Company and hence not commented upon.
4. In our opinion and according to the information and explanations given to us theCompany has complied with the provisions of Sections 185 and 186 of the Act in respect ofgrant of loans making investments and providing guarantees and securities as applicable.
5. The company has not accepted deposits during the year and does not have anyunclaimed deposits as at March 31 2021 and therefore the provisions of the clause 3 (v)of the Order are not applicable to the Company.
6. As informed to us the maintenance of Cost Records has not been specified by theCentral Government under Section 148(1) of the Act in respect of activities carried on bythe Company.
7. According to the information & explanations given to us in respect of statutorydues:
a) The Company has generally been regular in depositing undisputed statutory duesincluding Provident Fund Employee's State Insurance Income-tax Sales-tax Service TaxCustom Duty Excise Duty Value Added Tax Goods and Service Tax Cess and other materialstatutory dues applicable to it with appropriate authorities.
b) There were no undisputed amounts payable in respect of Provident Fund Employee'sState Insurance Income-tax Sales-tax Service Tax Custom Duty Excise Duty Value AddedTax Goods and Service Tax Cess and other material statutory dues in arrears as at31-03-2021 for a period of more than six months from the date they became payable.
c) According to the information and explanation given to us there are no dues ofIncome Tax Sales Tax Service Tax Customs Duty Excise Duty Value Added Tax Goods andService Tax outstanding on account of any dispute.
8. In our opinion and according to the information and explanations given to us theCompany has not made any default in repayment of loans or borrowings due to banksfinancial institutions and debenture holders.
9. In our opinion and according to the information and explanations given to us theCompany has not raised moneys by way of initial public offer or further public offerincluding debt instruments and term loans. Accordingly the provisions of clause 3 (ix) ofthe Order are not applicable to the Company.
10. To the best of our knowledge and according to the information and explanationsgiven to us no fraud by the Company and no fraud on the Company by its officers oremployees has been noticed or reported during the year.
11. In our opinion and according to the information and explanations given to us theCompany has not paid or provided any sum of managerial remuneration and hence provisionsof section 197 read with Schedule V to the Companies Act.
12. In our opinion and according to the information and explanations given to us theCompany is not a Nidhi Company. Accordingly the provisions of clause 3(xii] of the Orderare not applicable to the Company.
13. In our opinion all transactions with the related parties are in compliance withsection 177 and 188 of Companies Act 2013 and the details have been disclosed in theFinancial Statements as required by the applicable accounting standards
14. In our opinion and according to the information and explanations given to us andbased on our examination of the records the Company has not made any preferentialallotment or private placement of shares or fully or partly convertible debentures duringthe year and hence reporting under clause 3[xiv) of the Order is not applicable to theCompany.
15. In our opinion and according to the information and explanations given to usduring the year the Company has not entered into any non-cash transactions with itsDirectors or persons connected to its Directors and hence provisions of clause 3(xv) ofthe Order is not applicable to the Company.
16. In our opinion the Company is not required to be registered under section 45-IA ofthe Reserve Bank of India Act 1934 and accordingly the provisions of clause 3(xvi) ofthe Order are not applicable to the Company.
ANNEXURE-B TO INDEPENDENT AUDITOR'S REPORf
Report on the Internal Financial Controls Over Financial Reporting under Clause (i) ofSubsection 3 of Section 143 of the Companies Act 2013 ("the Act")
We have audited internal financial controls over financial reporting of GUJARAT COTEXLIMITED ("the Company") as of March 31 2021 in conjunction with our audit ofthe standalone financial statements of the Company for the year ended and as on that date.
Management's Responsibility for Internal Financial Controls
The Management and the Board of Directors of the Company are responsible forestablishing and maintaining internal financial controls 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 (the Guidance Note'). These responsibilities include the designimplementation and maintenance of adequate internal financial controls that were operatingeffectively for ensuring the orderly and efficient conduct of its business includingadherence to Company's policies the safeguarding of its assets the prevention anddetection of frauds and errors the accuracy and completeness of the accounting recordsand the timely preparation of reliable 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 Standards on Auditing prescribed under Section 143(10) of the Act and theGuidance Note to the extent applicable to an audit of internal financial controls. ThoseStandards and the Guidance Note require that we comply with the 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 control 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 authorisations ofmanagement and directors of the company; and (3) provide reasonable assurance regardingprevention or timely detection of unauthorised 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 controlsover 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 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 2020 based on the internal controlover financial reporting criteria established by the Company considering the essentialcomponents of internal control stated in the Guidance Note issued bythelCAl.
AUDITOR S CERTIFICATE OF COMPLIANCE WITH THE CORPORATE GOVERNANCE
Independent Auditor's Certificate on compliance with Corporate Governance Requirementsunder SEBI fListine Obligations and Disclosure Requirements) Regulations. 2015.
THE MEMBERS OF
GUJARAT COTEX LIMITED (Formerly known as OCTAGON INDUSTRIES LIMITED)
We have examined the compliance of conditions of Corporate Governance by Gujarat CotexLimited for the year ended on March 31 2021.
The compliance of conditions of corporate governance is the responsibility of themanagement. This responsibility includes the design implementation and maintenance ofinternal control and procedure to ensure the compliance with the conditions of thecorporate governance stipulated in the SEBI Listing Regulations.
Our examination is limited to procedures and implementation thereof adopted by theCompany for ensuring the compliance of the conditions of the Corporate Governance. It isneither an audit nor an expression of opinion on the financial statements of the Company.
We have examined the books of accounts and other relevant records and documentsmaintained by the company for the purpose of providing reasonable assurance on thecompliance with corporate governance requirements by the company.
We have carried out an examination of the relevant records of the company in accordancewith the Guidance Note on Certification of Corporate Governance issued by the ICAI theStandards on Auditing specified under Section 143 (10) of the Companies Act 2013 in sofar as applicable for the purpose of this certificate and as per the Guidance Note onReport or Certificates for Special Purposes issued by the ICAI which requires the wecomply with the ethical requirements of the Code of Ethics issued by the ICAI.
In our opinion and to the best of our information and according to the explanationsgiven to us we certify that the Company has complied with the conditions of CorporateGovernance as stipulated in the above-mentioned SEBI Listing Agreement.
We state that such compliance is neither an assurance as to the future viability of theCompany nor the efficiency of effectiveness with which the management has conducted theaffairs of the Company.
The certificate is addressed and provided to the members of the company solely for thepurpose to enable the company to comply with the requirement of the SEBI ListingRegulations and it should not be used by any other person or for any other purpose.Accordingly we do not accept or assume any liability or any duty of care for any otherpurpose or to any other person to whom this certificate is shown or into whose hands itmay come without our prior consent in writing.
|FOR M KAPADIA & CO ||(MEHUL G. KAPADIA - PARTNER) MEMBERSHIP NO.: 126250 |
|CHARTERED ACCOUNTANTS ||SURAT.29 JUNE 2021. |
|FRN - 133572W ||UDIN: 21126250AAAAEF2832 |