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Hitech Corporation Ltd.

BSE: 526217 Sector: Industrials
NSE: HITECHCORP ISIN Code: INE120D01012
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VOLUME 1
52-Week high 126.50
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P/E
Mkt Cap.(Rs cr) 167
Buy Price 92.15
Buy Qty 10.00
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OPEN 96.95
CLOSE 96.95
VOLUME 1
52-Week high 126.50
52-Week low 41.40
P/E
Mkt Cap.(Rs cr) 167
Buy Price 92.15
Buy Qty 10.00
Sell Price 101.40
Sell Qty 51.00

Hitech Corporation Ltd. (HITECHCORP) - Auditors Report

Company auditors report

TO THE MEMBERS OF HITECH CORPORATION LIMITED Report on the Audit of the FinancialStatements Opinion

We have audited the accompanying financial statements of Hitech Corporation Limited("the Company") which comprise the Balance Sheet as at March 312019 theStatement of Profit and Loss (including Other Comprehensive Income) the Statement of CashFlows and the Statement of Changes in Equity for the year then ended and a summary ofsignificant accounting policies and other explanatory information (hereinafter referred toas ‘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 (India Accounting Standard) Rules 2015 as amended("Ind AS") and other accounting principles generally accepted in India of thestate of affairs of the Company as at March 312019 the profit and total comprehensiveincome its cash flows and the changes in equity for the year ended on that date.

Basis of Opinion

We conducted our audit of the financial statements in accordance with the Standards onAuditing (SAs) specified under section 143(10) of the Act. Our responsibilities underthose Standards are further described in the ‘Auditor's Responsibilities for theAudit of the 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 are relevant toour audit of the financial statements under the provisions of the Act and the Rulesthereunder and we have fulfilled our other ethical responsibilities in accordance withthese requirements and the ICAI's Code of Ethics. We believe that the audit evidence wehave obtained is sufficient and appropriate to provide a basis for our opinion on thefinancial statements

Key Audit Matters

Key audit matters are those matters that in our professional judgment were of mostsignificance in our audit of the financial statements 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. Wehave determined the matters described below to be the key audit matters to be communicatedin our report.

Sr. No Key Audit Matter Auditor's Response
1. Inventory Valuation
As at March 31 2019 the Company held Inventory amounting to Rs. 3991.63 lakhs. Inventories were considered as a key audit matter due to the amounts involved and because inventory valuation involves management judgement. There is significant management judgement in estimating the net realisable value of items held as well as assessing which items may be non-moving or obsolete. To address the risk of material misstatement on inventories our audit procedures included amongst others: - assessing the compliance of company's accounting policy over inventory with applicable accounting standards. - assessing the inventory valuation processes and practice and testing the key controls around inventory verification and valuation. - verifying the existence and condition of inventory by attending inventory counts across various locations. - challenging judgements of the management regarding estimates of net realisable value and the methodology used for provisioning for non-moving or obsolete stock.
Inventories are valued at lower of cost and Net realisable value. The management's estimates of net realisable value are based on the most reliable evidence available at the time the estimates are made of the amount the inventories are expected to realise. The management also provides for non-moving or obsolete stock on the basis of age of inventory. Such methodology relies upon certain assumptions made in determining appropriate provisioning for such stock.
Refer Notes 2.5 (7) and 10 to the Financial Statements.

 

Information Other than the Financial Statements and Auditor's Report Thereon

The Company's Board of Directors is responsible for the other information. The otherinformation comprises the information in the Management Discussion and Analysis Board'sReport including Annexures to Board's Report Report on Corporate Governance andShareholder's Information but does not include the financial statements and our auditor'sreport thereon. The other information as specified above is expected to be made availableto us after the date of this auditor's report.

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.

When we read the other information as specified above if we conclude that there is amaterial misstatement therein we are required to communicate the matter to those chargedwith governance.

Management's Responsibility for the Financial Statements

The Company's Board of Directors is responsible for the matters in Section 134(5) ofthe Act with respect to the preparation of these financial statements that give a true andfair view of the financial position financial performance total comprehensive incomechanges in equity and cash flows of the Company in accordance with the Ind AS and otheraccounting principles generally accepted in India. This responsibility also includesmaintenance of adequate accounting records in accordance with the provision 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 themanagement either intends to liquidate the Company or to cease operations or has norealistic alternative but to do so.

The Board of Directors are also responsible for overseeing the Company's financialreporting process.

Auditor's Responsibility for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the financialstatements as a whole are free from material misstatement whether due to fraud or errorand to issue an auditor's report that includes our opinion. Reasonable assurance is a highlevel of assurance but is not a guarantee that an audit conducted in accordance with SAswill always detect a material misstatement when it exists. Misstatements can arise fromfraud or error and are considered material if individually or in the aggregate theycould reasonably be expected to influence the economic decisions of users taken on thebasis of these financial statements.

As part of 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 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 financial 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 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 audit work and in evaluating the results of our work; and

(ii) to evaluate the effect of any identified misstatements in the financialstatements.

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 of India in terms of subsection (11) of section 143 ofthe Act we give in the Annexure A a statement on the matters specified in the paragraph3 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 explanations which to the bestof our knowledge and belief were necessary for the purposes of our audit.

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

c) The Balance Sheet the Statement of Profit and Loss (including other comprehensiveincome) the Statement of Cash Flows and the Statement of Changes in Equity dealt with bythis Report are in agreement with the books of account.

d) In our opinion the aforesaid financial statements comply with the Ind AS prescribedunder section 133 of the Act read with relevant rules issued thereunder.

e) On the basis of the written representations received from the directors as on March312019 taken on record by the Board of Directors none of the directors is disqualifiedas on March 312019 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.

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 in our opinionand to the best of our information and according to the explanations given to us:

i. The Company has disclosed the impact of pending litigations on its financialposition in its financial statements - Refer Note 32 to the financial statements.

ii. The Company did not have any material foreseeable losses on long term contractsincluding derivative contracts requiring provision under the applicable law or accountingstandards.

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

For KALYANIWALLA & MISTRY LLP
Chartered Accountants
Firm Registration No. 104607W/W100166
Roshni R. Marfatia
Partner
M. No.: 106548
Mumbai: May 13 2019

 

Annexure A to the Independent Auditor's Report

Referred to in Para 1 ‘Report on Other Legal and Regulatory Requirements' in ourIndependent Auditors' Report to the members of the Company on the financial statements forthe year ended March 31 2019.

Statement on Matters specified in paragraphs 3 & 4 of the Companies (Auditor'sReport) Order 2016:

i) a) The Company has generally maintained proper records showing particularsincluding quantitative details and situation of fixed assets.

b) As explained to us the Company has a program for physical verification of fixedassets at periodic intervals. In our opinion the period of verification is reasonablehaving regard to the size of the Company and the nature of its assets. The discrepanciesreported on such verification are not material and have been properly dealt with in thebooks of account.

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) The Management has conducted physical verification of inventory (excluding stockswith third parties) at reasonable intervals. In respect of inventory lying with thirdparties these have substantially been confirmed by them. In our opinion the frequency ofverification is reasonable. The discrepancies reported on such verification are notmaterial and have been properly dealt with in the books of account.

iii) The Company has not granted any loans secured or unsecured to companies firmslimited liability partnerships or other parties listed in the register maintained undersection 189 of the Companies Act. Accordingly the provisions of sub-clause (a) (b) and(c) of paragraph 3

(iii) of the Order are not applicable to the Company.

iv) The Company has not granted any loans or made any investments or provided anyguarantees or security to the parties covered under Section 185 and 186. Thereforeprovisions of Clause 3(iv) of the said Order are not applicable to the Company.

v) In our opinion and according to the information and explanations given to us theCompany has complied with the provisions of 73 to 76 or any other relevant provisions ofthe Companies Act and the rules framed there under. According to the information andexplanations given to us no order has been passed by the Company Law Board or NationalCompany Law Tribunal or Reserve Bank of India or any Court or any other Tribunal inrespect of the aforesaid deposits.

vi) We are informed that the maintenance of cost records has not been prescribed by theCentral Government of India under section 148(1) of the Act in respect of the Company'sproduct.

vii) a) According to the information and explanation given to us and the recordsexamined by us the Company is generally regular in

depositing undisputed statutory dues including dues pertaining to provident fundemployees' state insurance income-tax wealth tax goods and service tax duty ofcustoms cess and any other statutory dues with the appropriate authorities whereverapplicable and there are no such outstanding dues as at March 312019 for a period ofmore than six months from the date they became payable.

b) According to the information and explanations given to us and the records of theCompany examined by us dues of income tax goods and service tax customs duty notdeposited on account of dispute are as follows:

Name of Statute

Nature of Dues

Amount (Rs. in lakhs)

Period

Forum where Dispute is pending

Central Excise Act 1944 Central Sales

Excise duty disputes

72.23

FY 2012-13 to 2015-16

Commissioner Excise

tax Act 1956 and Value Added Tax Act

Excise duty disputes

35.06

FY 2011-12 to 2016-17

Commissioner of Excise and Service Tax Appellate Tribunal

Sales Tax dues Non submission of C Forms and Mismatch in VAT Input Credit

47.05

FY 2006-07 2011-12 2013-14

Commissioner VAT

Income Tax Act 1961

Demand based on the order of regular assessment u/s 143(3) of the Act.

585.25

AY 2007-08 AY 2011-12 to 2015-16

Commissioner of Income Tax (Appeals)

181.27

AY 2010-11

Income Tax Appellate Tribunal

0.30

AY 2003-04

High Court Mumbai

 

viii) According to the information and explanations given to us and based on thedocuments and records produced before us there has been no default in repayment of loansor borrowings to financial institutions banks or debenture holders. There were no loansor borrowings taken from the government during the year.

ix) According to the information and explanations given to us and the records examinedby us the term loans obtained by the Company were applied for the purpose for which theloans were obtained. The Company did not raise any money by way of initial public offer orfurther public offer (including debt instruments) during the year.

x) Based upon the audit procedures performed by us to the best of our knowledge andbelief and according to the information and explanations given to us by the Management nomaterial fraud on or by the Company has been noticed or reported during the year.

xi) According to the information and explanations give to us and based 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 to the Act.

xii) In our opinion and according to the information and explanations given to us theCompany is not a Nidhi company. Accordingly paragraph 3(xii) of the Order is notapplicable.

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 are incompliance with sections 177 and 188 of the Act where applicable and 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 and based on ourexamination of the records of the Company the Company has not made any preferentialallotment or private placement of shares or fully or partly convertible debentures duringthe year.

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 him. Accordingly paragraph 3(xv) ofthe Order is not applicable.

xvi) The Company is not required to be registered under section 45-IA of the ReserveBank of India Act 1934 and hence the provisions of paragraph 3(xvi) of the Order is notapplicable.

For KALYANIWALLA & MISTRY LLP
Chartered Accountants
Firm Registration No. 104607W /W100166
Roshni R. Marfatia
Partner
M. No.: 106548
Mumbai: May 13 2019

 

Annexure B to the Independent Auditor's Report

Referred to in Para 2 (f) ‘Report on Other Legal and Regulatory Requirements' inour Independent Auditor's Report to the members of the Company on the financial statementsfor the year ended March 31 2019.

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 HitechCorporation Limited ("the Company") as of March 312019 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 responsibilitiesinclude the design implementation and maintenance of adequate internal financial controlsthat were operating effectively for ensuring the orderly and efficient conduct of itsbusiness including adherence to company's policies the safeguarding of its assets theprevention and detection of frauds and errors the accuracy and completeness of theaccounting records and the timely preparation of reliable financial information asrequired under the Companies Act 2013.

Auditors' Responsibility

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 deemedto be prescribed under section 143(10) of the Companies Act 2013 to the extentapplicable to an audit of Internal Financial Controls both applicable to an audit ofInternal Financial Controls and both issued by the Institute of Chartered Accountants ofIndia. Those Standards and the Guidance Note require that we comply with ethicalrequirements and plan and perform the audit to obtain reasonable assurance about whetheradequate internal financial controls over financial reporting was established andmaintained and if such controls 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 system 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 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 financialreporting includes those policies and 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 ofunauthorized 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.

Opinion

In our opinion the Company has in all material respects an adequate internalfinancial controls system over financial reporting and such internal financial controlsover financial reporting were operating effectively as at March 31 2019 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 KALYANIWALLA & MISTRY LLP
Chartered Accountants
Firm Registration No. 104607W/W100166
Roshni R. Marfatia
Partner
M. No.: 106548
Mumbai: May 13 2019