TO THE MEMBERS OF
Report on the audit of the Financial Statements
We have audited the accompanying Financial Statements of IP RINGSLIMITED (the Company) which comprise the Balance Sheet as at March 31 2021the Statement of Profit and Loss(including Other Comprehensive Income) Statement ofChanges in Equity and Statement of Cash flows for the year then ended and a summary ofthe significant accounting policies and other explanatory information.
In our opinion and to the best of our information and according to theexplanations given to us the aforesaid 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 Indian Accounting Standards prescribed under Section133 of the Act read with the Companies (Indian Accounting Standards) Rules 2015 asamended (IND AS) and other Accounting principles generally accepted in Indiaof the state of affairs of the Company as at March 31 2021 the profit and totalcomprehensive income changes in equity and its cash flows for the year ended on thatdate.
Basis for Opinion
We conducted our audit of the financial statements in accordance withthe Standards on Auditing (SAs) specified under section 143(10) of the Companies Act2013. Our responsibilities under those Standards are further described in theAuditor's Responsibilities for the Audit of the Financial Statements section of ourreport. We are independent of the Company in accordance with the Code of Ethics issued bythe Institute of Chartered Accountants of India (ICAI) together with the ethicalrequirements that are relevant to our audit of the financial statements under theprovisions of the Act and the Rules thereunder and we have fulfilled our other ethicalresponsibilities in accordance with these requirements and the ICAI's Code of Ethics.We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our opinion on the financial statements.
Emphasis of Matter
We draw your attention to Note 43 of the Financial Statements whichexplains the uncertainties and the management's assessment of the potential impactdue to lock-downs and other restrictions and conditions related to the COVID-19 pandemicsituation and consequently the Company's financial statements are highly dependentupon future developments which are uncertain.
Our opinion is not modified in respect 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. We have determined the matters described below to be the key audit mattersto be communicated in our report.
|Key Audit Matter Description ||Response to Key Audit Matter |
|Revenue Recognition ||Principal Audit Procedures |
|Reference may be made to Note 47(10) of significant accounting policies and Note 20 and 27 to the financial statements of the Company. ||Our audit procedures relating to revenue comprised of test of controls and substantive procedures including the following: |
|Revenue recognition is inherently an area of audit risk which we have focused on mainly covering the aspects of cut off. ||i. We performed procedures to assess the design and internal controls established by the management and tested the operating effectiveness of relevant controls related to the recognition of revenue. |
|Considering the above impact of Ind AS 115 and cut-off are considered by us as key audit matters. ||ii. Selected a sample of continuing and new contracts and tested the operating effectiveness of the internal control relating to identification of the distinct performance obligations and determination of transaction price. We carried out a combination of procedures involving enquiry and observation reperformance and inspection of evidence in respect of operation of these controls. |
| ||iii. We have tested on a sample basis whether specific revenue transactions around the reporting date has been recognised in the appropriate period by comparing the transactions selected with relevant underlying documentation including goods delivery notes customer acknowledgement/proof of acceptance and the terms of sales. |
| ||iv. We have also validated subsequent credit notes and sales returns up to the date of this Report to ensure the appropriateness and accuracy of the revenue recognition. |
| ||v. We tested journal entries on a sample basis to identify any unusual or irregular items. |
| ||vi. We also considered the adequacy of the disclosures in Company's financial statements in relation to Ind AS 115 and were satisfied they meet the disclosure requirements. |
| ||Conclusion |
| ||Based on the procedures performed above we did not find any material exceptions with regards to timing of revenue recognition and disclosure requirement of Ind AS 115 in the financial statements. |
|Impairment in Trade Receivables ||Principal Audit Procedures |
|Reference may be made to Note 5 to the financial statements of the Company. ||We have performed the following procedures in relation to the recoverability of trade receivables and computing allowance for credit losses : |
|The Company is exposed to potential risk of financial loss when there is the risk of default on receivables from the customers for which the Management would make specific provision against individual balances with reference to the recoverable amount. Such provision/allowance for credit losses is based on historical experience adjusted to reflect current and estimated future economic conditions. ||Tested the effectiveness of the control over the methodology for computing the allowance for credit losses including consideration of the economic conditions and completeness and accuracy of information used in the estimation of probability of default. |
|For the purpose of impairment assessment significant judgements and assumptions including the credit risks of customers the timing and amount of realization of these receivables are required for the identification of impairment events and the determination of the impairment charge. ||Tested the accuracy of aging of trade receivables at year end on a sample basis. |
|Also during the year the company had to consider credit reports and other related credit information of its customers on the possible effect of the pandemic relating to COVID-19. ||Obtained a list of outstanding receivables and identified any debtors with financial difficulty through discussion with management. |
|In view of the above we identified allowance for credit losses as a key audit matter since significant judgment is exercised in calculating the expected credit losses/impairment charge. ||Assessed the recoverability of the unsettled receivables on a sample basis through our evaluation of management's assessment with reference to the credit profile of the customers historical payment pattern of customers publicly available information and latest correspondence with customers and to consider if any additional provision should be made; |
| ||Tested subsequent settlement of trade receivables after the balance sheet date on a sample basis. |
| ||Conclusion |
| ||Based on the above procedures we found the key judgements and assumptions used by management in the recoverability assessment of trade receivables to be supportable based on the available evidence and consequently are satisfied on the sufficiency of provisions/allowance for credit losses. |
|Allowance for inventory obsolescence ||Our audit procedures in respect of this matter included: |
|Refer to note 47(8)(b) of the financial statements. ||Understood management policy and process for identification of providing of obsolete inventory including performing testing of controls to assess the effectiveness of the same. Reviewed the management's judgement applied in calculating the value of inventory obsolescence taking into consideration the expected changes in auto industry and management assessment of the present and future condition of the inventory. Assessed the adequacy of the relevant disclosure in the notes to the financial statements. |
|The Company holds significant inventories and records allowance for identified and estimated inventory obsolescence. ||Conclusion |
|As at 31st March 2021 the Company had inventories of Rs.4720.67 lakhs. ||Based on the above procedures performed we consider the provision for inventory obsolescence to be reasonable. |
|The Company provides for obsolescence of Inventory considering the inventory on hand existing/probable customer orders the production plan expected utilization in production and expected sales. Further the estimates are validated by technological changes/legislative changes in the auto business and trends of the obsolescence in the past. The obsolescence covers inventory under Raw material work-in-progress and finished goods. Given the significant judgment involved in management's assessment the allowance for inventory obsolescence is identified as a key audit matter || |
Information Other than the Financial Statements and Auditor's ReportThereon
The Company's Board of Directors is responsible for thepreparation of other information in their Report to members etc. The other informationcomprises the information included in the Annual report but does not include the financialstatements and our auditor's report thereon.
Our opinion on the 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 financial statements ourresponsibility is to read the other information and in doing so consider whether theother information is materially inconsistent with the financial statements or ourknowledge obtained during the course of our audit or otherwise appears to be materiallymisstated. If based on the work we have performed we conclude that there is a materialmisstatement of this other information we are required to report that fact. We havenothing to report in this regard.
Management's Responsibility for the Financial Statements.
The Company's Board of Directors is responsible for the mattersstated in section 134(5) of the Companies Act 2013 (the Act) with respect tothe preparation of these financial statements that give a true and fair view of thefinancial position financial performance total comprehensive income changes in equityand cash flows of the Company in accordance with the IND AS and other accountingprinciples generally accepted in India. This responsibility also includes maintenance ofadequate accounting records in accordance with the provisions of the Act for safeguardingof 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 forassessing 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 FinancialStatements
Our objectives are to obtain reasonable assurance about whether thefinancial 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. Reasonableassurance is a high level of assurance but is not a guarantee that an audit conducted inaccordance with SAs will always detect a material misstatement when it exists.Misstatements can arise from fraud or error and are considered material if individuallyor in the aggregate they could reasonably be expected to influence the economic decisionsof users taken on the basis of these 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 in order to design auditprocedures that are appropriate in the circumstances. Under section 143(3)(i) of theCompanies Act 2013 we are also responsible for expressing our opinion on whether thecompany has adequate internal financial controls system in place and the operatingeffectiveness of such controls. Evaluate the appropriateness of accounting policies usedand the reasonableness of accounting 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 theCompany'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 financial statements or if such disclosures are inadequate tomodify our opinion. Our conclusions are based on the audit evidence obtained up to thedate of our auditor's report. However future events or conditions may cause theCompany to cease to continue as a going concern. Evaluate the overall presentationstructure and content of the financial statements including the disclosures and whetherthe financial statements represent the underlying transactions and events in a manner thatachieves fair presentation.
Materiality is the magnitude of misstatements in the financialstatements 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 any 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. As required by Section143 (3) of the Companies Act 2013 based onour audit we report that:
p >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 have beenkept by the Company so far as it appears from our examination of those books.
c. The Balance Sheet the Statement of Profit and Loss including otherComprehensive income the Statement of Cash Flows and the Statement of Changes in Equitydealt with by this report are in agreement with the books of account.
d. In our opinion the aforesaid Financial Statements comply with theIndian Accounting Standards prescribed under Section 133 of the Act read with the relevantrules issued thereunder.
e. On the basis of the written representations received from thedirectors as on March 31 2021 taken on record by the Board of Directors none of thedirectors is disqualified as on March 312021 from being appointed as a director in termsof Section164(2) of the Companies Act 2013.
f. With respect to the adequacy of the Internal Financial Controls OverFinancial Reporting of the Company and the operating effectiveness of such controls referto our separate report in Annexure A. Our report expresses an unmodifiedopinion on the adequacy and operating effectiveness of the company's internalfinancial controls over financial reporting.
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 remuneration paid by the company to it's directors duringthe year is in compliance with the provisions of Section 197 read with Schedule V of theAct.
h. With respect to the other matters to be included in theAuditor's Report in accordance with Rule 11 of the Companies (Audit andAuditor's) Rules 2014 as amended in our opinion and to the best of our informationand according to the explanation given to us:
The Company has disclosed the impact of pending litigations on itsfinancial position in its Financial Statements. (Refer Note 28)
The company has long-term contracts including derivative contracts forwhich there were no material foreseeable losses as at March 31 2021.
There were no amount which were required to be transferred to theInvestor Education and Protection Fund by the Company.
2.As required by the Companies (Auditor's Report) Order2016(the Order) issued by the Central Government in terms of Section 143(11) ofthe Act we give in Annexure B a statement on the matters specified inparagraphs 3 and 4 of the Order.
ANNEXURE A TO THE INDEPENDENT AUDITOR'S REPORT
(Referred to in paragraph 1(f) under Report on Other Legal andRegulatory Requirements' section of our report of even date to the members of IPRINGS LIMITED)
Report on the Internal Financial Controls Over Financial Reportingunder Clause (i) of Sub-section 3 of Section 143 of the Companies Act 2013 (theAct)
We have audited the Internal Financial Controls Over FinancialReporting of IP RINGS LIMITED (the Company) as of March 31 2021 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 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 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. Theseresponsibilities include the design implementation and maintenance of adequate internalfinancial controls that were operating effectively for ensuring the orderly and efficientconduct of its business including adherence to company's policies the safeguardingof its assets the prevention and detection of frauds and errors the accuracy andcompleteness of the accounting records and the timely preparation of reliable financialinformation as required under the Companies Act 2013.
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) issued by the Institute of Chartered Accountantsof India and the Standards on Auditing prescribed under Section 143(10) of the CompaniesAct 2013 to the extent applicable to an audit of internal financial controls. ThoseStandards and the Guidance Note require that we comply with ethical requirements and planand perform the audit to obtain reasonable assurance about whether adequate internalfinancial controls over financial reporting was established and maintained and if suchcontrols operated effectively in all material respects. Our audit involves performingprocedures to obtain audit evidence about the adequacy of the internal financial controlssystem over financial reporting and their operating effectiveness. Our audit of internalfinancial controls over financial reporting included obtaining an understanding ofinternal financial controls over financial reporting assessing the risk that a materialweakness exists and testing and evaluating the design and operating effectiveness ofinternal control based on the assessed risk. The procedures selected depend on theauditor's judgement including the assessment of the risks of material misstatementof the Financial Statements whether due to fraud or error. We believe that the auditevidence we have obtained is sufficient and appropriate to provide a basis for our auditopinion on the Company's internal financial controls system over financial reporting.
Meaning of Internal Financial Controls Over Financial Reporting
A company's internal financial control over financial reporting 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 overfinancial reporting includes those policies and procedures that
(i) pertain to the maintenance of records that in reasonable detailaccurately and fairly reflect the transactions and disposition of the assets of thecompany;
(ii) 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 company arebeing made only in accordance with authorizations of management and directors of thecompany; and
(iii) provide reasonable assurance regarding prevention or timelydetection of unauthorized acquisition use or disposition of the company's assets thatcould have a material effect on the Financial Statements.
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 considering the remediation measures taken by thecompany to the best of our information and according to the explanations given to us theCompany has maintained in all material respects an adequate internal financial controlssystem over financial reporting and such internal financial controls over financialreporting were operating effectively as of March 31 2021 based on the internal controlover financial reporting criteria established by the Company considering the essentialcomponents of internal control stated in the Guidance Note on Audit of Internal FinancialControls Over Financial Reporting issued by the Institute of Chartered Accountants ofIndia.
ANNEXURE B TO THE INDEPENDENT AUDITORS' REPORT
(Referred to in paragraph 2 under Report on Other Legal andRegulatory Requirements' section of our report of even date to the members of IPRINGS LIMITED (the Company) for the year ended March 31 2021).
1. In respect of the Company's fixed assets:
a) The company has maintained proper records showing full particularsincluding quantitative details and situation of fixed assets but the situation of theassets need to be updated in certain cases.
b) The Company has a programme of verification to cover all the itemsof fixed assets in a phased manner which in our opinion is reasonable having regard tothe size of the Company and the nature of its assets. Pursuant to the programme certainfixed assets were physically verified by the management during the year. According to theinformation and explanation given to us no material discrepancies were noticed during theyear on such verification.
c) According to the information and explanations given to us and therecords examined by us we report that title deeds of all freehold immovable propertybelonging to the Company are held in the name of the Company as at the end of the year. Inrespect of the Immovable property taken on lease and disclosed as Right-Of-Use Asset inthe Financial Statements the lease arrangements is in the name of the Company.
2. As explained to us the inventories other than the Goods intransit have been physically verified at reasonable intervals by the management anddiscrepancies noticed during the year on such verification as compared to the records weregiven effect to in the books of account.
3. According to information and explanation given to us theCompany has not granted any loans secured or unsecured to firms Limited LiabilityPartnerships or other parties covered in the register maintained under section 189 of theCompanies Act 2013.
4. According to information and explanation given to us theCompany has not granted during the year any loans secured or unsecured furnishedguarantees or provided security to any party covered by provisions of sections 185 and 186of the Companies Act 2013.Hence reporting on whether there is a compliance with the saidprovisions does not arise. In respect of Investments at the beginning of the year theprovisions of Section 186 of the Companies Act 2013 has been complied with.
5. According to information and explanations given to us theCompany has not accepted any deposits during the year and there are no unclaimed depositsas at March 312021 to which the provisions of section 73 to 76 or any other relevantprovisions of the Companies Act are applicable. Accordingly the provisions of clause (v)of paragraph 3 of the Order is not applicable to the Company.
6. As per the information and explanation given to us themaintenance of the cost records has been specified by the Central Government under Section148(1) of the Act in respect of certain products of the Company. We have broadly reviewedthe cost records maintained by the company pursuant to the Companies (Cost Records andAudit) Rules 2014 as amended and prescribed by the Central Government under Section148(1) of the Act and are of opinion that prima facie the prescribed accounts and recordshave been made and maintained. We have however not made a detailed examination of Costrecords with a view to determine whether they are accurate and complete.
7. According to the information and explanations given to us andthe books of account examined by us in respect of statutory dues:
a) The company is generally regular in depositing amounts of undisputedstatutory dues including Goods and Service tax Customs duty cess and other materialstatutory dues as applicable with the appropriate authorities during the year. In respectof dues towards provident fund employees' state insurance and income tax deducted atsource delays were noticed in the remittances of such remittances during the periodApril'20 to September'20. However there were no material undisputed amountspayable in respect of the aforesaid statutory dues outstanding as at March 31 2021 for aperiod of more than six months from the date they became payable.
b) There are no dues of Excise Duty Goods and Services tax Sales taxor Customs Duty which have not been deposited on account of any dispute with the relevantauthorities. Details of Income tax Service tax Provident fund dues and Value added taxthat have not been deposited on account of disputes are as under:
|Name of the Statute ||Nature of Dues ||Amount (In Rs. Lakhs) of Disputed dues ||Period to which the amount relates ||Forum where dispute is pending |
|Income Tax Act 1961 ||Interest on Income tax ||10.59* ||AY1999-00 ||High court of Madras |
|Income Tax Act 1961 ||Interest on Income tax ||12.53* ||AY2000-01 ||High court of Madras |
|Income Tax Act 1961 ||Interest on Income tax ||6.14* ||AY2004-05 ||High court of Madras |
|Income Tax Act 1961 ||Interest on Income tax ||21.10 ||AY 2018-19 ||CIT (Appeals) |
|Employees` Provident Funds and Miscellaneous ProvisionsAct1952 ||Interest/ Damages ||22.44 ||FY 2014-15 ||Employees` Provident Fund Tribunal Tamil Nadu. |
|The Tamil Nadu Value Added Tax Act 2006 ||Value Added Tax ||1.30 ||FY 2007-08 ||Appellate Deputy Commissioner |
*These demands have subsequent to the yearend been settled under theVivad se Vishwas Scheme2020
8. In our opinion and according to information and explanationgiven to us the Company has not defaulted in repayment of dues to any financialInstitution. The Company does not have any borrowings from Government or by way ofDebentures. In respect of the borrowings from HDFC Bank the company has opted for theMoratorium under COVID-19 Scheme for the amount of Rs 62.5 lakhs due for repayment in May2020. Accordingly there is no default in repayment of dues to the bank.
9. In our opinion and according to the information andexplanations given to us the moneys raised by way of term loans have been applied for thepurposes for which they were obtained. The Company has not raised any moneys by way ofinitial public offer or further public offer (including debt instruments).
10. During the course of our examination of the books of account andrecords of the company carried out in according with the generally accepted auditingpractices in India and according to the information and explanations given to us we haveneither come across any instance of fraud by the Company or material fraud on the Companyby its officers or employees been noticed or reported during the year nor have we havebeen informed of any such case by the Management.
11. The Managerial Remuneration has been paid/provided by the Companyin accordance with the requisite approvals mandated by the provisions of Section 197 readwith Schedule V of the Companies Act 2013.
12. The Company is not a Nidhi Company and accordingly the provisionsof Clause 3(xii) of the Order are not applicable to the Company.
13. In our opinion and according to the information and explanationsgiven to us all transactions with the related parties are in compliance with sections 177and 188 of the Companies Act 2013 where applicable. The details of the transactionsduring the year have been disclosed in the Financial Statements as required by theapplicable Accounting Standards. (Refer Note 45 to Financial Statements).
14. During the year the Company has not made any preferentialallotment or private placement of shares (covered by section 42 of the Companies Act2013) or fully or partly convertible debentures and hence reporting under clause 3(xiv)of the Order is not applicable.
15. In our opinion and according to the information and explanationsgiven to us the Company has not entered into any non-cash transactions during the yearwith directors or persons connected with them. Hence reporting on whether there iscompliance with provisions of section 192 of the Companies Act 2013 does not arise.
16. The Company is not required to be registered under section 45-IA ofthe Reserve Bank of India Act 1934.
|For M.S. Krishnaswami & Rajan |
|Chartered Accountants- |
|Registration No. 01554S |
|M.S. Murali Partner |
|Membership No. 26453 |
|UDIN: 21026453AAAAHK3505 |
|June21 2021 |