To The Members of Hindustan Composites Limited
Report on the Audit of Standalone Financial Statements
We have audited the accompanying standalone financial statements of HindustanComposites Limited ("the Company") which comprises of Balance Sheet as atMarch 31 2021 the Statement of Profit and Loss Other Comprehensive Income theStatement of Changes in Equity and the Statement of Cash Flow 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 theexplanations given to us the aforesaid standalone financial statements give theinformation required by the Companies Act 2013 (the Act)in the manner so required andgive a true and fair view in conformity with the Indian Accounting Standards prescribedunder section 133 of the Act read with Companies (Indian Accounting Standards) Rules2015 as amended ("Ind AS") and other accounting principles generally acceptedin India of the state of affairs of the Company as at 31st March 2021 its profits othercomprehensive income changes in equity and its cash flows for the year ended on thatdate.
Basis for Opinion
We conducted our audit in accordance with the Standards on Auditing(SAs) specified under Section 143(10) of the Act. Our responsibilities under thoseStandards 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 ethical requirements that are relevant to our audit of thestandalone financial statements under the provisions of the Act and the Rules madethereunder and we have fulfilled our other ethical responsibilities in accordance withthese requirements and the Code of Ethics.
We believe that the audit evidence we have obtained is sufficient andappropriate to provide a basis for our audit opinion on the standalone financialstatements.
Emphasis of Matter
We draw your attention to note no 45(d) of the standalone financialstatements with regard to Management's assessment of realisability of assetsincluding financial Investments due to recent surge in Covid -19 pandemic outbreak. Themanagement apart from considering the internal and external information up to the date ofapproval of these standalone financial statements expects to recover the carrying amountof these assets including financial investments. Considering the continuinguncertainties the management will continue to closely monitor any material changes tofuture economic conditions and does not anticipate any material financial or operationalissues in the short term as well as on a long-term basis.
Our opinion on the standalone financial statements is not modified inrespect of this matter.
Key Audit Matters
Key audit matters are those matters that in our professional judgmentwere of most significance in our audit of the financial statements of the current period.These matters were addressed in the context of our audit of the financial statements as awhole and in forming our opinion thereon and we do not provide a separate opinion onthese matters:
|Key Audit Matters ||Auditor's response |
|Valuation and Impairment of unquoted equity instruments /Debt Investments: ||Principal Audit Procedures |
|We focused on the valuation of unquoted Equity/Debt Instruments due to the materiality of the investments and the nature of their valuation which involve the use of judgmental assumptions. As disclosed in Note no 40 and 41 as at 31 March 2021 the Company has unquoted equity /debt Investments of Rs. 26208.17 Lakhs. ||We assessed and tested the design and the operating effectiveness of the key controls that management has established to support the review and approval of the model design key model inputs and valuation. |
|These Investments are classified and measured at fair value through other comprehensive income. ||We assessed the appropriateness of the valuation method used by management by verifying the key inputs used in determining the assumptions as also corroborating the information. |
Information Other than the Standalone Financial Statements andAuditor's report thereon
The Company's Board of Directors is responsible for thepreparation of other information. The Other information comprises the information includedin the Management Discussion and Analysis Board's Report including Annexures to theBoard report Corporate Governance report and Shareholder's information but does notinclude the standalone financial statement and our auditor's report thereon.
Our opinion on the standalone financial statements does not cover theother information and we do not express any form of assurance conclusion thereon.
In connection with our audit of the standalone financial statementsour responsibility is to read the other information and in doing so consider whether theother information is materially inconsistent with the standalone financial statements orour knowledge obtained during the course of our audit or otherwise appears to bematerially misstated. If based on the work we have performed we conclude that there is amaterial misstatement of this other information we are required to report that fact. Wehave nothing to report in this regard.
Responsibilities of Management and those charged with Governance forthe Standalone Financial Statements
The Company's Board of Directors is responsible for the mattersstated in Section 134(5) of the Act with respect to the preparation of these standalonefinancial statements that give a true and fair view of the financial position financialperformance other comprehensive income changes in equity and cash flows of the Companyin accordance with the accounting principles generally accepted in India including theaccounting Standards specified under Section 133 of the Act read with Rule 7 of theCompanies (Account) Rules 2014.
This responsibility also includes maintenance of adequate accountingrecords in accordance with the provisions of the Act for safeguarding of the assets of theCompany and for preventing and detecting frauds and other irregularities; selection andapplication of appropriate accounting policies; making judgments and estimates that arereasonable and prudent; and design implementation and maintenance of adequate internalfinancial controls that were operating effectively for ensuring the accuracy andcompleteness of the accounting records relevant to the preparation and presentation ofthe financial statements that give a true and fair view and are free from materialmisstatement whether due to fraud or error.
In preparing the financial statements the Management is responsiblefor assessing the Company's ability to continue as a going concern disclosing asapplicable matters related to going concern and using the going concern basis ofaccounting unless management either intends to liquidate the Company or to ceaseoperations or has no realistic alternative but to do so.
The Board of Directors is also responsible for overseeing theCompany's financial reporting process.
Auditor's Responsibilities for the Audit of the StandaloneFinancial Statements
Our objectives are to obtain reasonable assurance about whether thefinancial statements are free from material misstatement whether due to fraud or errorand to issue an auditor's report that includes our opinion. Reasonable assurance is ahigh level of assurance but is not a guarantee that an audit conducted in accordance withSAs will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are considered materialif individually or in the aggregate they could reasonably be expected to influence theeconomic decisions of users taken on the basis of these standalone financial statements.
As part of an audit 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 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 control system in place and the operatingeffectiveness of such controls.
Evaluate the appropriateness of accounting policies used and thereasonableness of accounting estimates and related disclosures made by the management.
Conclude on the appropriateness of Management's use of the goingconcern basis of accounting and based on the audit evidence obtained whether a materialuncertainty exists related to events or conditions that may cast significant doubt on theentity's ability to continue as a going concern. If we conclude that a materialuncertainty exists we are required to draw attention in our auditor's report to therelated disclosures in the standalone financial statements or if such disclosures areinadequate to modify our opinion.
Our conclusions are based on the audit evidence obtained up to the dateof our auditor's report. However future events or conditions may cause the entity tocease to continue as a going concern.
Evaluate the overall presentation structure and content of thestandalone financial statements including the disclosures and whether the financialstatements represent the underlying transactions and events in a manner that achieves fairpresentation.
Materiality is the magnitude of misstatements in the standalonefinancial statements that individually or in aggregate makes it probable that the economicdecisions of a reasonably knowledgeable user of the financial statements may beinfluenced. We consider quantitative materiality and qualitative factors in
(i) planning the scope of our audit work and in evaluating the resultsof our work and
(ii) to evaluate the effect of identified misstatements in thefinancial statements.
We communicate with those charged with governance regarding amongother matters the planned scope and timing of the audit and significant audit findingsincluding any significant deficiencies in internal control that we identify during ouraudit.
We also provide those charged with governance with a statement that wehave complied with relevant ethical requirements regarding independence and tocommunicate with them all relationships and other matters that may reasonably be thoughtto bear on our independence and where applicable related safeguards.
From the matters communicated with those charged with governance wedetermine those matters that were of most significance in the audit of the financialstatements of the current period and are therefore the key audit matters. We describethese matters in our auditor's report unless law or regulation precludes publicdisclosure about the matter or when in extremely rare circumstances we determine that amatter should not be communicated in our report because the adverse consequences of doingso would reasonably be expected to outweigh the public interest benefits of suchcommunication.
Report on Other Legal and Regulatory Requirements
1. Pursuant to the Companies (Auditor's Report) Order 2016 ("theOrder") issued by the Central Government of India in terms of subsection (11) ofSection 143 of the Act we give in the Annexure "A" a statement on the mattersspecified in paragraphs 3 and 4 of the Order.
2. As required by Section 143(3) of the Act we report that:
(a) We have sought and obtained all the information and explanationswhich to the best of our knowledge and belief were necessary for the purposes of ouraudit.
(b) In our opinion proper books of account as required by law havebeen kept by the Company so far as it appears from our examination of those books andrecords.
(c) The Balance sheet the Statement of Profit & Loss OtherComprehensive Income Statement of Changes in Equity and the Cash Flow Statement dealtwith by this Report are in agreement with the books of account.
(d) In our opinion the aforesaid standalone financial statementscomply with the Accounting Standards specified under Section 133 of the Act read withRule 7 of the Companies (Account) Rules 2014.
(e) On the basis of the written representation received from thedirectors as on March 31 2021 taken on record by the Board of Directors none of thedirectors is disqualified as on March 31 2021 from being appointed as a Director in termsof Section 164(2) of the Act.
(f) With respect to the adequacy of the internal financial controlsover financial reporting of the Company and the operating effectiveness of such controlsrefer to our separate Report in Annexure "B".
(g) With respect to the other matters to be included in theAuditor's Report in accordance with the requirements of Section 197(16) of the Actas amended:
In our opinion and to the best of our information and according to theexplanations given to us the remuneration paid by the Company to its directors during theyear is in accordance with the provisions of Section 197 of the Act.
(h) With respect to the matters to be included in the Auditor'sreport in accordance with the rule 11 of the Companies (Audit and Auditors) Rules 2014in our opinion and to the best of our information and according to the explanations givento us:
i. The Company has disclosed the impact of pending litigations on itsfinancial position in its standalone financial statements. [Refer Note No. 33]
ii. The Company did not have any long-term contracts includingderivative contracts for which there were any material foreseeable losses.
iii. There has been no delay in transferring amounts required to betransferred to the Investor Education and Protection Fund by the Company.
Annexure "A" referred to in "Report on Other Legal andRegulatory Requirements" section of our report to the Members of Hindustan CompositesLimited of even date
On the basis of such checks as we considered appropriate and accordingto the information and explanations given to us during the course of our audit we statethat:
i) a) The Company has maintained proper records showing fullparticulars including quantitative details and situation of Property Plant andEquipment.
b) During the year the Company has carried out physical verificationof its Property Plant and Equipment. The verification was in accordance with a phasedprogramme which in our opinion is considered reasonable having regard to the size of theCompany and nature of its assets. As explained no material discrepancies were noticed onsuch verification.
c) According to the information and explanations given to us and on thebasis of our examination of the records of the Company the title deeds of immovableproperties are held in the name of the Company.
ii) According to the information and explanations given to us theinventories have been physically verified during the year by the management at reasonableintervals and no material discrepancies were noticed on such verification.
iii) According to the information and explanations given to us theCompany has granted secured loans to a company covered in the register maintained underSection 189 of the Act. The terms and conditions of such loan are not prejudicial to theCompany's interest and schedule of repayment of principal and payment of interest hasbeen stipulated and repayments are regular.
iv) In our opinion and according to the information and explanationsgiven to us the Company has not entered into any transactions referred in Section 185 ofthe Act. The Company has complied with the provisions of 186 of the Act with respect tothe loans and investments made.
v) No deposits within the meaning of directives issued by RBI (ReserveBank of India) and Sections 73 to 76 or any other relevant provisions of the Act and rulesframed there under have been accepted by the Company.
vi) We have broadly reviewed the books of account maintained by theCompany pursuant to the rules made by the Central Government of India regarding themaintenance of cost records under sub-section (1) of Section 148 of the Act and are of theopinion that prima facie the prescribed accounts and records have been maintained. Wehave however not made a detailed examination of the records with a view to determinewhether they are accurate or complete.
vii) a) According to the information and explanations given to us andon the basis of our examination of the records the Company is regular in depositingundisputed statutory dues including Provident Fund Employees' State InsuranceIncome Tax Duty of Customs Cess Goods and Service Tax and other material statutory duesapplicable to the Company with the appropriate authorities. No undisputed amounts inrespect of the aforesaid statutory dues were outstanding as at the last day of thefinancial year for a period of more than six months from the date they became payable.
b) According to the information and explanations given to us and on thebasis of our examination of the records of the Company there are no dues of Income TaxGoods and Service Tax and Duty of Customs which have not been deposited on account of anydispute.
viii) In our opinion and according to the information and explanationsgiven to us during the year the Company has not defaulted in the repayment of dues tothe banks and government. The Company has not taken any loan from financial institution ordebenture holders during the year or in the recent past.
ix) The Company has not raised any money by way of initial public offeror further public offer (including debt instruments) or term loan during the year or inthe recent past.
x) According to the information and explanations given to us we havenot come across any instance of material fraud by officers or employees of the Companynoticed or reported during the year nor have we been informed of such case by themanagement.
xi) According to the information and explanations given to us and basedon the examination of the records the Company has paid / provided for managerialremuneration in accordance with the requisite approvals mandated by the provisions ofSection 197 read with Schedule V to the Act.
xii) The provisions of Nidhi Company are not applicable to the Company.Therefore Para 3 (xii) of the Order is not applicable to the Company.
xiii) According to the information and explanations given to us theprovision of Section 177 and 188 of Act to the extent applicable in respect oftransactions with the related parties have been complied by the Company and the detailshave been disclosed in the Ind AS Financial Statements as required by the applicableaccounting standards in note no. 47 of the Standalone Financial Statements.
xiv) During the year the Company has not made any preferentialallotment or private placement of shares or fully or partly convertible debentures.Therefore Para 3 (xiv) of the Order is not applicable to the Company.
xv) According to the information and explanations given to us duringthe year the Company has not entered into any non-cash transactions with directors orpersons connected with him under Section 192 of the Act.
xvi) The Company is not required to be registered under Section 45 IAof the Reserve Bank of India Act 1934.
Annexure "B" referred to in "Report on Other Legal andRegulatory Requirements" section of our report to the members of Hindustan CompositesLimited of even date
Report on the Internal Financial Controls over Financial Reportingunder Clause (i) of Sub-section 3 of Section 143 of the Act
We have audited the internal financial controls over financialreporting of Hindustan Composites Limited ("the Company") as of March 31 2021in conjunction with our audit of the standalone financial statements of the Company forthe year ended on that date.
Management's Responsibility for Internal Financial Controls
The Board of Directors of the Company is responsible for establishingand maintaining internal financial controls based on the internal control over financialreporting criteria established by the Company considering the essential component ofinternal control stated in the Guidance Note on Audit of Internal Financial Controls overFinancial Reporting issued by the Institute of Chartered Accountants of India (ICAI).These responsibilities include the design implementation and maintenance of adequateinternal financial controls that were operating effectively for ensuring the orderly andefficient conduct of its business including adherence to 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 Act.
Our responsibility is to express an opinion on the Company's internalfinancial controls over financial reporting based on our audit. We conducted our audit inaccordance with the Guidance Note on Audit of Internal Financial Controls Over FinancialReporting (the "Guidance Note") and the Standards on Auditing deemed to beprescribed under section 143(10) of the Act to the extent applicable to an audit ofinternal financial controls both applicable to an audit of internal financial controlsand both issued by the ICAI. Those Standards and the Guidance Note require that we complywith ethical requirements and plan and perform the audit to obtain reasonable assuranceabout whether adequate internal financial controls over financial reporting wasestablished and maintained and if such controls operated effectively in all materialrespects.
Our audit involves performing procedures to obtain audit evidence aboutthe adequacy of the internal financial controls system over financial reporting and theiroperating effectiveness. Our audit of internal financial controls over financial reportingincluded obtaining an understanding of internal financial controls over financialreporting assessing the risk that a material weakness exists and testing and evaluatingthe design and operating effectiveness of internal control based on the assessed risk. Theprocedures selected depend on the auditor's judgment including the assessment of therisks of material misstatement of the financial statements whether due to fraud or error.
We believe that the audit evidence we have obtained is sufficient andappropriate to provide a basis for our audit opinion on the Company's internalfinancial controls system over financial reporting.
Meaning of Internal Financial Controls Over Financial Reporting
A Company's internal financial control over financial reporting isa process designed to provide reasonable assurance regarding the reliability of financialreporting and the preparation of financial statements for external purposes in accordancewith generally accepted accounting principles. A Company's internal financial control overfinancial reporting includes those policies and procedures that
(1) pertain to the maintenance of records that in reasonable detailaccurately and fairly reflect the transactions and dispositions of the assets of thecompany;
(2) provide reasonable assurance that transactions are recorded asnecessary to permit preparation of financial statements in accordance with generallyaccepted accounting principles and that receipts and expenditures of the entity are beingmade only in accordance with authorisations of management;
(3) provide reasonable assurance regarding prevention or timelydetection of unauthorised acquisition use or disposition of the entity's assets thatcould have a material effect on the financial statements and
(4) also provide us reasonable assurance by the internal auditorsthrough their internal audit reports given to the Company from time to time.
Inherent Limitations of Internal Financial Controls Over FinancialReporting
Because of the inherent limitations of internal financial controls overfinancial reporting including the possibility of collusion or improper managementoverride of controls material misstatements due to error or fraud may occur and not bedetected. Also projections of any evaluation of the internal financial controls overfinancial reporting to future periods are subject to the risk that the internal financialcontrol over financial reporting may become inadequate because of changes in conditionsor that the degree of compliance with the policies or procedures may deteriorate.
In our opinion and to the best of our information and according to theexplanations given to us the Company has broadly in all material respects an adequateinternal financial controls system over financial reporting and such internal financialcontrols over financial reporting were operating effectively as at March 31 2021 basedon the internal control over financial reporting criteria established by the Companyconsidering the essential Component of internal control stated in the Guidance Note onAudit of Internal Financial Controls Over Financial Reporting issued by the Institute ofChartered Accountants of India.
| ||For Bagaria & Co. LLP |
| ||Chartered Accountants |
| ||Firm Registration No: 113447W/W-100019 |
| ||Vinay Somani |
| ||Partner |
|Place : Mumbai ||Membership No: 143503 |
|Date : 26 th May 2021 ||UDIN:21143503AAAAIT3682 |