THE MEMBERS OF GUJARAT HY-SPIN LIMITED.
Report on the Financial Statements
We have audited the accompanying financial statements of GUJARAT HY-SPIN LIMITED("the Company") which comprise the balance sheet as at March 31 2020 theStatement of Profit and Loss and statement of cash flows for the year then ended andnotes to the financial statements including a summary of significant accounting policiesand other explanatory information.
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 accounting principles generally accepted in India of thestate of affairs of the Company as at 31st March 2020 and profit/loss and its cashflows for the year ended on that date.
Basis for opinion
We conducted our audit in accordance with the Standards on Auditing specified undersection 143(10) of the Act. Our responsibilities under those Standards are furtherdescribed in the Auditor's Responsibilities for the Audit of the Financial Statementssection of our report. We are independent of die Company in accordance with the Code ofEthics issued by the Institute of Chartered Accountants of India (ICAI) together with theethical requirements that are relevant to our audit of the financial statements under theprovisions of the Act and the Rules made thereunder and we have fulfilled our otherethical responsibilities in accordance with these requirements and the ICAI's Code ofEthnics.
We believe that the audit evidence we ha\e obtained is sufficient and appropriate toprovide a basis for our audit 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.
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. CorporateGovernance and Shareholder's Information but does not include the financial statementsand our auditor's report 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 workwe have performed we conclude that there is a material misstatement of this otherinformation; we are required to report that fact. We have nothing to report in thisregard.
Management's responsibility for the financial statements
The Company's Board of Directors is responsible for the matters stated in section134(3) of the Act with respect to the preparation of these financial statements that givea true and fair view of the financial position financial performance of the companyincluding the Accounting Standards specified under Section 133 of the Act read with Rule7 of the Companies (Accounts) Rules 2014. This responsibility also includes maintenanceof adequate accounting records in accordance with the provisions of the Act forsafeguarding 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 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 the)'could reasonably be expected to 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 of the financial statementswhether due to fraud or error design and perform audit procedures responsive to thoserisks and obtain audit evidence that is sufficient and appropriate to provide a basis forour opinion. The risk of not detecting a material misstatement resulting from fraud ishigher than for one resulting from error as fraud may involve collusion forgeryintentional omissions misrepresentations or the override of internal control.
* 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) of theCompanies Act 2013 we are also responsible for expressing our opinion on whether thecompany has adequate internal financial controls system in place and the operatingeffectiveness of such control.
* Evaluate the appropriateness of accounting policies used and the reasonableness ofaccounting estimates and related disclosures made by management.
* 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 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 financial statement including the disclosures and whether the financial statements represent the underlungtransactions and events in a manner that achieves fair presentation.
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.
We draw attention to note 38 in the financial statements; during the year company isregularly paying its loan installments of loan taken from State Bank of India now theloan account is standard. The company is also in process of claim government subsidy.These factors raise hope that the company will be able to continue as a going concern. Inview of the above the financial statements have been prepared on a going concern basis.Our report is not qualified m respect of this matter.
On account of the Covid-19 related lockdown restrictions management has performed thephysical verification. But we are not able to physically observe the stock verificationwhere carried out by the management. Consequently we have performed alternate auditprocedure to audit the existence of inventory as per the guidance provide in SA 301"Audit Evidence-Specific Considerations for selected items" which includesinspection of supporting documentation relating to purchase sales results of cyclicalcount performed by the management through the year and such other third party' evidenceswhere applicable and have obtained sufficient appropriate audit evidence to issue ourunmodified opinion on these financial results. Our report on the statement is not modifiedin respect of this matter.
Report on other legal and regulatory' requirements
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 Annexure "A" a statement on the mattersspecified in paragraphs 3 and 4 of the Order.
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 financial statements comply with the accountingstandards specified under 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 March31 2020 taken on record by the board of directors none of the directors is disqualifiedas on March 31 2020 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 ouropinion and to the best of our information and according to the explanations given to usthe remuneration paid by the Company to its directors during the year is in accordancewith the provisions of section 197 of the Act; and
(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 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 derivative contracts forwhich there were any material foreseeable losses; and
iii. There has been no delay in transferring amounts required to be transferred tothe Investor Education and Protection Fund by the Company.
For FINAVA & ASSOCIATES Chartered Accountants FRN- 117362W
Annexure A to the Independent Auditors' Report
(Referred to in paragraph 1 under Report on Other Legal and Regulator)'Requirements' section of our
report to the Members of Gujarat Hy-spin Limited of even date)
i) In respect of the Company's property plant and equipment:
(a) The Company has maintained proper records showing full particulars includingquantitative details and situation of property plant and equipment.
(b) These fixed assets have been physically verified by the management at reasonableIntervals.
(c) According to the information and explanations given to us and on the basis of ourexamination of
the records of the company company has taken land on lease on which building has beenconstructed. Lease deeds of immovable properties are in the name of the company.
(ii) As explain to us management was perform the physical verification of inventories.But on account of the Covid-19 related lockdown restrictions we are not able tophysically observe the stock verification where carried out by the management.Consequently we have performed alternate audit procedure to audit the existence ofinventory as per the guidance provide in SA 501 "Audit Evidence SpecificConsiderations for selected items" which includes inspection of supportingdocumentation relating to purchase sales results of cyclical count performed by themanagement through the year and such other third party evidences where applicable andhave obtained sufficient appropriate audit evidence to issue our unmodified opinion onthese financial statements. Our report on the statement is not modified in respect of thismatter.
As explained to us the inventories were physically verified during the year by theManagement at reasonable intervals and no material discrepancies were noticed on physicalverification between the physical stock and the books of accounts.
(iii) According to information and explanation given to us the company has not grantedany loan secured or unsecured to companies firms limited liability partnerships orother parties covered in the register required under section 189 of the Companies Act2013. Accordingly paragraph 3 (iii) of the order is not applicable.
(iv) 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.
(v) According to the information and explanations given to us the Company has notaccepted any deposits during the year and does not have any unclaimed deposits as at March31 2020 and hence the provisions of the clause 3 (v) of the Order is not applicable tothe Company.
(vi) The Central Government has prescribed the maintenance of cost records undersub-section (1) of Section 148 of the Act for products of the company. As explain to ussuch records have been so made & maintained however such records were not produced tous for verification.
(vii) According to the information and explanations given to us in respect ofstatutory dues:
(a) The Company has been generally regular in depositing undisputed statutory duesincluding Provident Fund Employees' State Insurance Income-tax Goods and Service Taxcess and other material statutory dues applicable to it to the appropriate authorities.
According to the information and explanations given to us no undisputed amountspayable in respect of provident fund employees' state insurance income-tax sales taxgoods and service tax cess and other material statutory dues were in arrears as at March31 2020 for a period of more than six months from the date they became payable exceptProfessional Tax details as under;
|Name of Statue ||Nature of the Dues ||Amount in Rs. ||Period to which amount relates ||Due Date ||Date of Payment |
|The Gujarat Professional Tax ||Professional Tax ||161806/- ||Up to September 2019 ||Up to 15th day of subsequent month ||Not Yet Paid |
Further in respect of payment of VAT we draw your kind attention to Note no 37 of thefinancial statement describing requirement of payment of VAT to avail benefit of subsidyas per Gujarat Textile Policy 2012.
(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 sales- tax goods and service taxand value added tax which have not been deposited on account of any dispute.
(viii) In our opinion and according to the information and explanations given to usthe Company has not defaulted in the repayment of loans or borrowings to financialinstitutions and banks and dues to debenture holders. The Company has borrowed funds fromthe Banks and regularly repays its installments and interest thereon. The company hasavailed benefit of moratorium period due to Covid-19 on its loan taken from SBI as per theterms and conditions of SBI.
(ix) During the year the Company did not raise any money by way of initial publicoffer or further public offer (including debt instrument) and term loans during the year.Accordingly paragraph 3(ix) to the information and opinion given to us all of the moneyhas been applied for the purpose for which it was raise. The company has not raised anyterm loan during the year.
(x) To the best of our knowledge and according to the information and explanationsgiven to us no fraud by the Company or no material fraud on the Company by its officersor employees has been noticed or reported during the year.
(xi) In our opinion and according to the information and explanations given to us theCompany has not paid3 provided managerial remuneration. Accordingly reporting for section197 of Companies Act 2013 is not required.
(xii) The Company is not a Nidhi Company and accordingly paragraph 3 (xii) of theorder is not applicable to the Company.
(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 arc incompliance with section 177 and 188 of the Act. where applicable the details of suchtransactions have been disclosed in the financial statements as required by the applicableaccounting standards.
(xiv) According to the information and explanations given to us. Company has not madeany private placement or preferential allotment during the year.
(xv) 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 with him and hence provisions of section 192 of the Act isnot applicable to the Company.
(xvi) The Company is not required to be registered under section 45-LA of the ReserveBank of India Act 1934.
Annexure B' to the Independent Auditors' Report
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 GujaratHy-spin limited (the Company') as of March 31 2020 in conjunction with our audit ofthe financial statements of the Company for the rear 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 (ICAI'). 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 company's policies safeguarding of itsassets prevention and detection of frauds and errors accuracy and completeness of theaccounting records and the timely preparation of reliable financial information asrequired under the Companies Act 2013.
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 Financial Reporting(the Guidance Note) and the Standards on Auditing issued by ICAI and deemed to beprescribed under section 143 (10) of the Companies Act 2013 to the extent applicable toan audit of internal financial controls both applicable to an audit of Internal 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 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 auditors' judgment 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 authorisations of management and directors of the company; and
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 controlover financial reporting were operating effectively as at March 31 2020 based on theinternal control over financial reporting criteria established by the Company consideringthe essential components of internal control stated in the Guidance Note on Audit ofInternal Financial Controls over Financial Reporting issued by the Institute of CharteredAccountants of India.
For FINAVA & ASSOCIATES
Chartered Accountants FRN- 117362W