TO THE MEMBERS OF
HITECH CORPORATION LIMITED
Report on the Audit of the Financial Statements
We have audited the accompanying financial statements of Hitech Corporation Limited("the Company") which comprise the Balance Sheet as at March 312021 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 (Indian 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 312021 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.
|Key Audit Matter ||Auditor's Response |
|Inventory Existence and Valuation ||To address the risk of material misstatement on inventories our audit procedures included amongst others: |
|As at March 312021 the Company held Inventory amounting to Rs. 3870.29 lakhs. ||- assessing the Company's accounting policy for inventory |
|The Company's major part of inventory comprises raw materials and work-in-progress which are spread across multiple factories. ||- assessing the inventory valuation processes and testing the key controls around inventory existence and valuation assertions. |
|These inventories are counted by management on a quarterly basis. Inventories are valued at lower of cost and Net realisable value. ||- As attendance of inventory counts during the year end was not possible at certain locations due to COVID-19 related travel restrictions health and safety measures we have appointed independent firms of Chartered Accountants to attend the physical verification at certain locations. |
|There is significant management judgement involved in estimating the net realisable value of items held as well as assessing which items may be non-moving or obsolete. ||We have relied on their reports submitted to us. |
|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. ||- challenging judgements of the management regarding estimates of net realisable value and the methodology used for provisioning for non-moving or obsolete stock. |
|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. || |
|Based on above existence and valuation of inventories has been identified as a key audit matter. || |
|Refer Notes 2.4 (9) 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.
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 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 with reference to financial statements inplace and the operating effectiveness 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 the usersof the financial statements may be influenced. We consider quantitative materiality andqualitative 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 March312021 taken on record by the Board of Directors none of the directors is disqualifiedas on March 312021 from being appointed as a director in terms of Section 164 (2) of theAct.
f) With respect to the adequacy of the internal financial controls with reference tofinancial statements 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 the Auditor's Report inaccordance with the requirements of section 197(16) of the Act as amended in our opinionand to the best of our information and according to the explanations given to us theremuneration paid by the Company to its directors during the year is in accordance withthe 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 34 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 |
Firm Registration No. 104607W/W100166
|Mumbai. May 212021. ||Roshni R. Marfatia |
Partner M. No.: 106548
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 312021.
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 except:
(Rs. in lakhs)
|Sr. No Nature of Asset ||Block of asset ||No. of cases ||Gross Block as on March 31 2021 ||Net block as on March 31 2021 |
|1 Freehold land ||Property Plant & Equipment ||2 ||75.06 ||75.06 |
|2 Building ||Property Plant & Equipment ||3 ||494.84 ||353.25 |
|3 Leasehold land ||Right of use asset ||1 ||7.50 ||7.11 |
|4 Leasehold land ||Investment Property ||1 ||265.51 ||248.09 |
|5 Building ||Investment Property ||1 ||761.00 ||536.77 |
|6 Freehold land ||Non-current asset held for sale ||1 ||511.03 ||511.03 |
|7 Leasehold land ||Non-current asset held for sale ||1 ||16.30 ||15.44 |
|8 Building ||Non-current asset held for sale ||2 ||33.36 ||29.21 |
The title deeds of the property are in the name of erstwhile merged entities and theCompany is in the process of transferring the property in their name.
ii) The Management has conducted physical verification of inventory (excludinggoods-in-transit and stocks with third parties) at reasonable intervals. In respect ofinventory lying with third parties these have substantially been confirmed by them. Inour opinion the frequency of verification is reasonable. The discrepancies reported onsuch verification are not material and have been properly dealt with in the books ofaccount.
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) According to the information and explanations given to us the Company has notaccepted deposits during the year and does not have any unclaimed deposits as at March312021 and therefore the provisions of the clause 3 (v) of the Order are not applicableto the Company.
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 duesincluding dues pertaining to provident fund employees' state insurance income-tax goodsand service tax duty of customs cess and other statutory dues with the appropriateauthorities wherever applicable and there are no such outstanding dues as at March312021 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 the records of theCompany examined by us dues of income tax sales tax and excise duty not deposited onaccount 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 tax Act 1956 and Value Added Tax Act ||Excise duty disputes ||63.51 ||FY 2012-13 to 2015-16 ||Commissioner Excise |
| ||Sales Tax dues Non submission of C Forms and Mismatch in VAT Input Credit ||1.65 ||FY 2009-10 ||Commissioner Appeal vat |
| ||Sales Tax dues Non submission of C Forms Mismatch in VAT Input Credit and Penalty on Late payment ||22.64 ||FY 2012-13 to 2014-15 ||Commissioner VAT |
|Income Tax Act 1961 ||Demand based on the order of regular assessment u/s 143(3) of the Act. ||444.50 ||AY 2011-12 to 201516 and AY 2017-18 ||Commissioner of Income Tax (Appeals) |
| || ||187.62 ||AY 2016-17 and AY 2010-11 ||Income Tax Appellate Tribunal |
| || ||0.30 ||AY 2003-04 ||High Court Mumbai |
| || ||4.88 ||AY 2007-08 and AY 2018-19 ||Income Tax Officer |
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.
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.
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 212021. ||UDIN: 21106548AAAABR5472 |
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 312021.
Report on the Internal Financial Controls with reference to Financial Statements underClause (i) of Sub-section 3 of Section 143 of the Companies Act 2013 ("theAct")
We have audited the internal financial controls with reference to the financialstatements of Hitech Corporation Limited ("the Company") as of March 312021 inconjunction with our audit of the financial statements of the Company for the year endedon 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 financial controls with reference to financialstatements criteria established by the Company considering the essential components 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 maintenanceof adequate internal financial controls that were operating effectively for ensuring theorderly and efficient conduct of its business including adherence to company's policiesthe safeguarding 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 Companies Act 2013.
Our responsibility is to express an opinion on the Company's internal financialcontrols with reference to financial statements based on our audit. We conducted our auditin accordance with the Guidance Note on Audit of Internal Financial Controls overFinancial Reporting (the "Guidance Note") and the Standards on Auditing issuedby ICAI and deemed to be prescribed under section 143(10) of the Act 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 with reference to financial statements wereestablished and maintained and if such controls operated effectively in all materialrespects.
Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal financial controls with reference to financial statements and their operatingeffectiveness. Our audit of internal financial controls with reference to financialstatements included obtaining an understanding of internal financial controls withreference to financial statements assessing the risk that a material weakness exists andtesting and evaluating the design and operating effectiveness of internal control based onthe assessed risk. The procedures selected depend on the auditor's judgment including theassessment of the risks of material misstatement of the financial statements whether dueto 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 with reference to Financial Statements
A Company's internal financial control with reference to financial statements is aprocess 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 withreference to financial statements 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 with reference to FinancialStatements
Because of the inherent limitations of internal financial controls with reference tofinancial statements 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 withreference to financial statements to future periods are subject to the risk that theinternal financial controls with reference to financial statements may become inadequatebecause of changes in conditions or that the degree of compliance with the policies orprocedures 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 controlswith reference to financial statements and such internal financial controls were operatingeffectively as at March 312021 based on the internal controls with reference tofinancial statements criteria established by the Company considering the essentialcomponents of internal control stated in the Guidance Note.
| ||For KALYANIWALLA & MISTRY LLP |
| ||Chartered Accountants |
| ||Firm Registration No. 104607W/W100166 |
| ||Roshni R. Marfatia |
| ||Partner |
| ||M. No.: 106548 |
|Mumbai. May 212021. ||UDIN: 21106548AAAABR5472 |