TO THE MEMBERS OF THE INDIAN CARD CLOTHING COMPANY LIMITED Report on the Audit of theStandalone Financial Statements Opinion
We have audited the Standalone Financial Statements of The Indian Card Clothing CompanyLimited ("the Company") which comprise the Balance Sheet as at March 312021the Statement of Profit and Loss (including Other Comprehensive Income) theStatement of Changes in Equity and the Statement of Cash Flows for the year then endedand notes to the Standalone Financial Statements including a summary of significantaccounting policies and other explanatory information(hereinafter referred to as "theStandalone Financial Statements").
In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid Standalone Financial Statements give the information requiredby the Companies Act 2013 ("the Act") in the manner so required and give a trueand fair view in conformity with the accounting principles generally accepted in India ofthe state of affairs of the Company as at March 31 2021 its loss and other comprehensiveincome its changes in equity and its cash flows for the year ended on that date.
Basis for Opinion
We conducted our audit in accordance with the Standards on Auditing (SAs) specifiedunder section 143(10) of the Act. Our responsibilities under those Standards are furtherdescribed in the Auditor's Responsibilities for the Audit of the Standalone FinancialStatements section of our report. We are independent of the Company in accordance with theCode of Ethics issued by the Institute of Chartered Accountants of India together with theethical requirements that are relevant to our audit of the Standalone Financial Statementsunder the provisions of the Act and the Rules thereunder and we have fulfilled our otherethical responsibilities in accordance with these requirements and the Code of Ethics.
We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our opinion.
Key Audit Matters
Key Audit matters are those matters that in our professional judgement were of mostsignificance in our audit of Standalone Financial Statements of the current period. Thesematters were addressed in the context of our audit of Standalone Financial Statements as awhole and in forming our opinion thereon and we do not provide a separate opinion onthese matters. We have determined the matters described below to be key audit matters tobe communicated in our report.
1) Valuation of Investments
Description of Key Audit Matters
The company has total investments of Rs. 994.94 Lakhs which constitutes about 9.17% oftotal assets of the company. During the year fair valuation gain is Rs. 124.15 Lakhsaccounted for under other income in the statement of Profit and loss. In terms of Ind AS109 "Financial Instruments" Investments which are financial assets arerequired to be fair valued. Improper fair valuation of investments would have adverseeffect on profit/ loss for the year or other comprehensive income for the year.Considering the quantum of investment and fair valuation gain we have considered the sameas Key Audit Matter.
Description of Auditor's Response
We have performed the following audit procedures in relation to the audit ofinvestments and its fair valuation:
a) Verification of Demat account and statement of account in respect of mutual fundsfor confirming existence of investments as on 31st March 2021.
b) In respect of investments in mutual funds which are fair valued through profit orloss fair value for the same is verified from statement of NAV from mutual funds.
c) Gain/loss is verified from the sale consideration and the fair value of investmentas on the date of sale
2) Trade Receivables
Description of Key Audit Matters
Trade Receivables as on 31st March 2021 are Rs.1055.79 Lakhs and impairmentprovision against the same is Rs. 67.90 Lakhs.
Management's judgment is involved in identifying impairment in the value of thereceivable as well as in formulating a policy for creating provisioning against impairmentwhich has an adverse effect on the profits / loss of the Company.
Description of Auditor's Response
We have performed the following audit procedures in relation to Management's Judgmentin identification of impairment of value of Receivables and adequacy of impairmentprovision:
a) We have verified age wise analysis of receivables.
b) We have sought information and explanation from the management regarding status ofreceivables in respect of overdue receivables for the purpose of ensuring adequacy ofprovision.
c) We have also tested subsequent collections made from the overdue receivables.
Our Audit process did not identify any material inadequate provisioning for impairmentin the value of Receivables.
The Company's Board of Directors is responsible for the Other Information. The OtherInformation comprises the Management Discussion and Analysis; Board of Directors' Reportalong with its Annexures and Corporate Governance Report included in the Annual Reportbut does not include theStandalone Financial Statements and our auditor's reportthereon.Our opinion on the Standalone Financial Statements does not cover the OtherInformation and we do not express any form of assurance conclusion thereon.
In connection with our audit of the Standalone Financial Statements our responsibilityis to read the Other Information and in doing so consider whether the Other Informationis materially inconsistent with theStandalone Financial Statements or our knowledgeobtained in the audit or otherwise appears to be materially misstated. If based on thework we 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.
Responsibilities of Management and Those Charged with Governance for the StandaloneFinancial Statements
The Company's Board of Directors is responsible for the matters stated in section134(5) of the Act with respect to the preparation of these Standalone Financial Statementsthat give a true and fair view of the financial position financial performance (includingother comprehensive income) changes in equity and cash flows of the Company in accordancewith the accounting principles generally accepted in India including the IndianAccounting Standards (Ind AS)specified under section 133 of the Act read with theCompanies (Indian Accounting Standards) Rules 2015 as amended.
This responsibility also includes maintenance of adequate accounting records inaccordance with the provisions of the Act for safeguarding of the assets of the Companyand 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 Standalone Financial Statements that give a true and fair view and are free frommaterial misstatement whether due to fraud or error.
In preparing the Standalone Financial Statements the management is responsible forassessing the Company's ability to continue as a going concern disclosing as applicablematters related to going concern and using the going concern basis of accounting unlessmanagement either intends to liquidate the Company or to cease operations or has norealistic alternative but to do so.
Those Board of Directors are also responsible for overseeing the Company's financialreporting process.
Auditor's Responsibilities for the Audit of the Standalone Financial Statements
Our objectives are to obtain reasonable assurance about whether the StandaloneFinancial Statements as a whole are free from material misstatement whether due to fraudor error and to issue an auditor's report that includes our opinion. Reasonable assuranceis a high level of assurance but is not a guarantee that an audit conducted in accordancewith SAs will always detect a material misstatement when it exists. Misstatements canarise from fraud or error and are considered material if individually or in theaggregate they could reasonably be expected to influence the economic decisions of userstaken on the basis of these Standalone Financial Statements.
As part of an audit in accordance with SAs we exercise professional judgment andmaintain professional skepticism throughout the audit.
? Identify and assess the risks of material misstatement of the Standalone FinancialStatements whether due to fraud or error design and perform audit procedures responsiveto those risks and obtain audit evidence that is sufficient and appropriate to provide abasis for our opinion. The risk of not detecting a material misstatement resulting fromfraud is higher than 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 in order to designaudit procedures that are appropriate in the circumstances. Under section 143(3)(i) of theAct we are also responsible for expressing our opinion on whether the Company has adequateinternal financial controls system in place and the operating effectiveness of suchcontrols.
? 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 Standalone Financial Statements or if such disclosures are inadequate to modify ouropinion. Our conclusions are based on the audit evidence obtained up to the date of ourauditor's report. However future events or conditions may cause the Company to cease tocontinue as a going concern.
? Evaluate the overall presentation structure and content of the Standalone FinancialStatements including the disclosures and whether the Standalone Financial Statementsrepresent the underlying transactions and events in a manner that achieves fairpresentation.
We communicate with those charged with governance regarding among other matters theplanned scope and timing of the audit and significant audit findings including anysignificant deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have compliedwith relevant ethical requirements regarding independence and to communicate with themall relationships and other matters that may reasonably be thought to bear on ourindependence and where applicable related safeguards.
From the matters communicated with those charged with governance we determine thosematters that were of most significance in the audit of the Standalone Financial Statementsof the current period and are therefore the key audit matters. We describe these mattersin our auditor's report unless law or regulation precludes public disclosure about thematter or when in extremely rare circumstances we determine that a matter should not becommunicated in our report because the adverse consequences of doing so would reasonablybe expected to outweigh the public interest benefits of such communication.
Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditor's Report) Order 2016 ("the Order")issued by the Central Government of India in terms of sub-section (11) of section 143 ofthe Act we give in the Annexure A; a statement on the matters specified in paragraphs 3and 4 of the Order to the extent applicable.
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 Changes in Equity and the Cash Flow Statement dealt with by thisReport are in agreement with the books of account.
d) In our opinion the aforesaid Standalone Financial Statements comply with the IndianAccounting Standards specified under Section 133 of the Act read with Companies (IndianAccounting Standards) Rules 2015 as amended.
e) On the basis of the written representations received from the directors as on March31 2021 taken on record by the Board of Directors none of the directors is disqualifiedas on March 31 2021 from being appointed as a director in terms of Section 164 (2) of theAct.
f) With respect to the adequacy of the internal financial controls over financialreporting of the Company and the operating effectiveness of such controls refer to ourseparate Report in Annexure B.
g) As required by section 197 (16) of the Act; in our opinion and according toinformation and explanation provided to us the remuneration paid by the Company to itsdirectors is in accordance with the provisions of section 197 of the Act and remunerationpaid to directors is not in excess of the limit laid down under this section.
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 Standalone Financial Statements Refer Note 33
(ii) The Company did not have any long-term contracts including derivative contracts asat 31st March 2021for which there were any material foreseeable losses for whichprovision was required.
(iii) There has been no delay in transferring amounts required to be transferred tothe Investor Education and Protection Fund by the Company.
For P G BHAGWAT LLP
Firm Registration Number: 101118W/W100682
Pune : 24th June2021
Annexure A to the Independent Auditors' Report
Referred to in paragraph 1 under the heading "Report on Other legal andRegulatory Requirements" of our report on even date:
i. (a) The Company is maintaining proper records showing full particulars includingquantitative details and situation of fixed assets which is under reconciliation thoughnot having material differences.
(b) The fixed assets of the Company have been physically verified by the Managementduring the year and no material discrepancies have been noticed on such verification. Inour opinion the frequency of verification is reasonable.
(c) The title deeds of immovable properties as disclosed in Note 2 on Property Plant& Equipment to the financial statements are held in the name of the Company.
ii. According to the information and explanations given by the management physicalverification of inventory has been conducted at reasonable intervals by the Managementduring the year. The discrepancies noticed on physical verification of inventory ascompared to book records were not material and the same have been appropriately dealt within the books of accounts.
iii. The Company has granted loan of Rs. 28 Lakhs to a party covered in the registermaintained under Section 189 of the Act.
(a) In our opinion the terms and condition of such loan granted are not prejudicial tothe interest of the company.
(b) As per schedule of stipulated repayment no repayment is due up to 31st March 2021
(c) As per para (b) no amount is overdue.
iv. In our opinion and according to the information and explanations given to us theCompany has complied with the provisions of Section 185 and 186 of the Companies Act 2013in respect of the loans and investments made and guarantees and security provided by itwherever applicable.
v. The Company has not accepted any deposits from public within the meaning of Sections73 74 75 and 76 or any other relevant provisions of the Act and the Rules framed thereunder to the extent notified. According to the information and explanations given to usno order has been passed by the Company Law Board or National Company Law Tribunal orReserve Bank of India or any Court or any other Tribunal.
vi. As informed to us pursuant to the rules made by the Central Government of Indiathe Company is required to maintain cost records as specified under Section 148(1) of theAct in respect of its products. We have broadly reviewed the same and are of the opinionthat prima facie the prescribed accounts and records have been made and maintained. Wehave not however 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 and the records ofthe Company examined by us in our opinion the Company is regular in depositing theundisputed statutory dues including provident fund employees' state insurance incometax sales tax service tax duty of customs duty of excise value added tax Goods andService Tax cess and other material statutory dues as applicable with the appropriateauthorities. According to the information and explanation provided to us no undisputedamounts payable in respect of statutory dues were in arrears as at March 31 2021 for aperiod 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 there are no dues of income-tax service-tax duty of customsduty of excise value added tax Goods and Service Tax which have not been deposited onaccount of any dispute. The particulars of dues of Sales taxas at balance sheet date whichhave not been deposited on account of a dispute are as follows:
|Name of the statute ||Nature of dues ||Amount Rs. Lakhs ||Period to which the amount relates ||Forum where the dispute is pending |
|Income Tax Act 1961 ||TDS disputes appearing on Income tax portal ||0.31 ||Various Years ||As per CPC. |
|Entry Tax ||Octroi Audit due payable ||0.18 ||FY 1996 -97 ||Octroi Department |
|CST Act 1956 ||CST payable as per assessment order. ||164.12 ||FY 2016 -17 ||Dy Commissioner Sales Tax. |
viii. According to the records of the Company examined by us and the information andexplanation given to us the
Company has not defaulted in repayment of loans or borrowings to any financialinstitution or bank or Government. The company does not have any debentures holders.
ix. The Company has not raised any moneys by way of initial public offer furtherpublic offer (including debt instruments). The company has raised an ECB during the yearand the same was applied for the purpose for which it was raised.
x. During the course of our examination of the books and records of the Companycarried out in accordance with the generally accepted auditing practices in India andaccording to the information and explanations given to us we have neither come across anyinstance of fraud by the Company or on the Company by its officers or employees nor havewe been informed of such case by the Management.
xi. The Company has paid/ provided for managerial remuneration in accordance with therequisite approvals mandated by the provisions of Section 197 read with Schedule V to theAct.
xii. As the Company is not a Nidhi Company and the Nidhi Rules 2014 are not applicableto it the provisions of Clause 3(xii) of the Order are not applicable to the Company.
xiii. The Company has entered into transactions with related parties in compliance withthe provisions of Sections 177 and 188 of the Act. The details of such related partytransactions have been disclosed in the financial statements as required under Ind AS 24Related Party Disclosures specified under Section 133 of the Act read with Rule 7 of theCompanies (Accounts) Rules 2014.Refer Note No.32.
xiv. The Company has made preferential allotment or private placement of equity sharesduring the year under review. The requirement of section 42 of the Companies Act 2013 havebeen complied with in respect of the preferential allotment and as informed to us theproceeds of preferential allotment are being utilised for the purpose for which the samewere raised. Pending utilisation the said amount is maintained in the bank accounts.
xv. The Company has not entered into any non-cash transactions with its directors orpersons connected with him. Accordingly the provisions of Clause 3(xv) of the Order arenot applicable to the Company.
xvi. The Company is not required to be registered under Section 45-IA of the ReserveBank of India Act 1934.
Accordingly the provisions of Clause 3(xvi) of the Order are not applicable to theCompany.
For P G BHAGWAT LLP
Firm's Registration Number: 101118W/ W100682
Membership Number: 47235
Pune: 24th June 2021
Annexure B to the Independent Auditors' Report
Referred to in paragraph 2 (f) under the heading "Report on Other legal andRegulatory Requirements" of our report on even date:
Report on the Internal Financial Controls
Under Clause (i) of Sub-section 3 of Section 143 of the Companies Act 2013 ("theAct")
We have audited the internal financial controls over financial reporting of TheIndia Card Clothing Company Limited ("the Company") as of March 31 2021 inconjunction with our audit of the Standalone Financial Statements of the Company for theyear 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 responsibilities includethe design implementation and maintenance of adequate internal financial controls thatwere operating effectively for ensuring the orderly and efficient conduct of its businessincluding adherence to company's policies the safeguarding of its assets the preventionand detection of frauds and errors the accuracy and completeness of the accountingrecords and the timely preparation of reliable financial information as required underthe Act.
Our responsibility is to express an opinion on the Company's internal financialcontrols over financial statements 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 to the extentapplicable to an audit of internal financial controls both issued by the Institute ofChartered Accountants of India. Those Standards and the Guidance Note require that wecomply with ethical requirements and plan and perform the audit to obtain reasonableassurance about whether adequate internal financial controls over financial statements wasestablished 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 system over financial statements and their operatingeffectiveness. Our audit of internal financial controls over financial statements includedobtaining an understanding of internal financial controls over financial statementsassessing 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 judgement including the assessment of the risks ofmaterial misstatement of the Standalone Financial Statements whether due to fraud orerror.
We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the Company's internal financial controls systemover financial statements.
Meaning of Internal Financial Controls Over Financial Statements
A company's internal financial control over financial statements is a process designedto provide reasonable assurance regarding the reliability of financial reporting and thepreparation of Standalone Financial Statements for external purposes in accordance withgenerally accepted accounting principles. A company's internal financial control overfinancial 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 Standalone Financial Statements in accordance with generally acceptedaccounting principles and that receipts and expenditures of the company are being madeonly in accordance with authorisations of management and directors of the company; and
(3) provide reasonable assurance regarding prevention or timely detection ofunauthorised acquisition use or disposition of the company's assets that could have amaterial effect on the Standalone Financial Statements.
Inherent Limitations of Internal Financial Controls Over Financial Statements
Because of the inherent limitations of internal financial controls over financialstatements 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 financialstatements to future periods are subject to the risk that the internal financial controlover financial statements may become inadequate because of changes in conditions or thatthe degree of compliance with the policies or procedures may deteriorate.
Though the Company has maintained in all material respects internal financialcontrols system over financial statements and such internal financial controls overfinancial statements were operating effectively as of 31st March 2021 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 we are of the opinion that formal documentation to substantiatecontrols needs to be strengthened.
We have considered the opinion expressed above in determining the nature timing andextent of audit test applied in our audit of Ind AS financial statements of the companyand the same does not affect our opinion on the Ind AS financial statements of theCompany.
For P G BHAGWAT LLP
Firm's Registration Number:101118W/ W100682
Pune: 24th June2021