To The Members of
M/S KAPIL COTEX LIMITED
Report on the Financial Statements
We have audited the accompanying financial statements of KAPIL COTEX LIMITED(the company ) which comprises Balance Sheet as at 31st Mar 2018 the Statement of Profitand Loss account and Cash Flow Statement for the year then ended and a Summary ofsignificant accounting policies and other explanatory information.
Managements Responsibility for the Financial Statements
1. The Company s Board of Directors is responsible for the matters stated in Section134(5) of the Companies Act 2013 ("the Act") with respect to the preparation ofthese financial statements that give a true and fair view of the financial positionfinancial performance and cash flows of the Company in accordance with the accountingprinciples generally accepted in India including the Accounting Standards specified underSection 133 of the Act read with Rule 7 of the Companies (Accounts) Rules2014. Thisresponsibility also includes maintenance of adequate accounting records in accordance withthe provision of the Act for safeguarding of the assets of the Company and for preventingand detecting frauds and other irregularities; selection and application of appropriateaccounting policies; making judgments and estimates that are reasonable and prudent; anddesign implementation and maintenance of adequate internal financial controls that wereoperating effectively for ensuring the accuracy and completeness of the accountingrecords relevant to the preparation and presentation of the financial Statements thatgive a true and fair view and are free from materials misstatement whether due to fraudor error.
Our responsibility is to express an opinion on these standalone financial statementsbased on our audit. We have taken into account the provision of the Act the accountingand auditing standards and matters which are required to be included in the audit reportunder the provisions of the Act and the Rules made there under.
We conducted our audit in accordance with the Standards on Auditing specified underSection 143(10) of the Act. Those Standards require that we comply with ethicalrequirements and plan and perform the audit to obtain reasonable assurance about whetherthe financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts andthe disclosures in the financial statements. The procedure selected depends on the auditors judgment including the assessment of the risks of material misstatement of thefinancial statements whether due to fraud or error. In making those risk assessment theauditor considers internal financial control relevant to the Company s preparation of thefinancial statements that give a true and fair view in order to design audit proceduresthat are appropriate in the circumstances but not for the purpose of expressing anopinion on whether the Company has in place an adequate internal financial controls systemand the operating effectiveness of such control. An audit also includes evaluating theappropriateness of the accounting policies used and the reasonableness of the accountingestimates made by the Company s Directors as well as evaluating the overall presentationof the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the standalone financial statements.
2. 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 the Actin the manner so required and give a true and fair view in conformity with the accountingprinciples generally accepted in India of the state of affairs of the Company as at 31stMarch 2018 and its Profit and its cash flow for the year ended on that date.
Report on Other Legal and Regulatory Requirements
3. As required by the Companies (Auditor s Report) Order 2016 (the Order) issued bythe Central Government in terms of Section 143 (11) of the Act we enclosed in the AnnexureA statement on matters specified in paragraph 3 & 4 of the said order.
4. 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 purpose 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 and the Statement of Profit and Loss and Cash Flow Statement dealtwith by this Report are in agreement with the books of account.
d) In our opinion the aforesaid standalone financial statements comply with theAccounting Standards specified under Section 133 of the Act read with Rule 7 of theCompanies (Accounts) Rules 2014.
e) In our opinion there are no observations or comments on the financial transactionswhich may have an adverse effect on the functioning of the Company.
f) On the basis of the written representations received from the directors as on 31stMar 2018 and taken on record by the Board of Directors we report that none of thedirectors is disqualified as on 31st Mar 2018 from being appointed as a director in termsof section 164(2) of the Act.
g)Report on the Internal Financial Controls under Clause (1) of Sub-section 3 ofsection 143 of the companies Act 2013 ("the Act") - is enclosed an AnnexureBto this report.
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) As informed to us the Company has pending litigations which would impact itsfinancial position
ii) The Company did not have any long-term contracts including derivative contracts forwhich there were any material foreseeable losses
iii) There were no amounts which were required to be transferred to the InvestorEducation and Protection Fund by the Company.
iv) Based on audit procedures and representations provided to us by the management wereport that the disclosures are in accordance with the books of accounts maintained by thecompany and as produced to us by the Management
For R. K. Somani & Associates.
Membership No: 104927
ANNEXURE TO INDEPENDENT AUDITORS REPORT
Referred to in Paragraph 1 under the heading of "Report on other Legal andRegulatory Requirements" of our report of even date
On the basis of such checks as we considered appropriate and in terms of theinformation and explanations given to us we state that: -
i. a. The company has maintained proper records showing full particulars includingquantitative details and situation of its fixed assets.
b. As explained to us fixed assets have been physically verified by the management atreasonable intervals; no material discrepancies were noticed on such verification.
c. The title deeds of immovable properties are held in the name of the company.
ii. As explained to us inventories have been physically verified during the year bythe management at reasonable intervals. No material discrepancy was noticed on physicalverification of stocks by the management as compared to book records.
iii. According to the information and explanations given to us and on the basis of ourexamination of the books of account the Company has not granted any loans secured orunsecured to companies firms Limited Liability Partnerships or other parties listed inthe register maintained under Section 189 of the Companies Act 2013.Consequently theprovisions of clauses iii (a) (b) and (c)of the order are not applicable to the Company.
iv. In our opinion and according to the information and explanations given to uscompany has complied with the provision of section 185 and 186 of the Companies Act 2013In respect of loans investment guarantees and security.
v. The company has not accepted any deposits from the public and hence the directivesissued by the Reserve Bank of India and the provision of sections 73 to 76 or any otherrelevant provisions of the Act and the Companies (Acceptance of Deposit) Rules2015 withregards to the deposits accepted from the public are not applicable.
vi. As per information & explanation given by the management maintenance of costrecords has not been specified by the Central Government under sub-section (1) of section148of the Companies Act 2013.
vii. According to information and explanations given to us and on basis of ourexamination of the books of account and records the company has been generally regularin depositing undisputed statutory dues including Income-tax Sales-tax Service TaxCustom Duty Excise Duty value added taxcess and any other statutory dues with theappropriate authorities. According to the information and explanations given to us therewere no outstanding statutory dues as on 31st of March 2018 for a period of more than sixmonths from the date they became payable.
viii. In our opinion and according to the information and explanations given by themanagement we are of the opinion that the Company has not defaulted in repayment of duesto a financial institution or bank. The Company has not taken any loan either fromfinancial institutions or from the government and has not issued any debentures.
ix. Based on our audit procedures and according to the information given by themanagement the company has not raised any money by way of initial public offer or furtherpublic offer (including debt instruments) or taken any term loan during the year.
x. According to the information and explanations given to us we report that no fraudby the company or any fraud on the Company by its officers or employees has been noticedor reported during the year.
xi. According to the information and explanations given to us we report thatmanagerial remuneration has been paid or provided in accordance with the requisiteapprovals mandated by the provisions of section 197 read with Schedule V to the CompaniesAct.
xii. The company is not a Nidhi Company. Therefore clause (xii) of the order is notapplicable to the company.
xiii. According to the information and explanations given to usall transactions withthe related parties are in compliance with sections 177 and 188 of Companies Act 2013where applicable and the details have been disclosed in the Financial Statements etc. asrequired by the applicable accounting standards.
xiv. Based upon the audit procedures performed and the information and explanationsgiven by the management the company has made preferential allotment during the year underreview.
xv. Based upon the audit procedures performed and the information and explanationsgiven by the management the company has not entered into any non-cash transactions withdirectors or person connected with him. Accordingly the provision of clause 3 (xv) of theOrder are not applicable to the Company and hence not commented upon. xvi. In our opinionthe company is not required to be registered under section 45-IA of the Reserve Bank ofIndia Act 1934. And accordingly the provisions of clause 3 (xvi) of the Order are notapplicable to the Company and hence not commented upon.
For R. K. Somani & Associates.
Membership No: 104927
Annexure B to Independent Auditors Report
REPORT ON INTERNAL FINANCIAL CONTROLS OVER FINANCIAL REPORTING
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 XYZLIMITED("the Company") as of March 31 2018 in conjunction with our audit of thefinancial statements of the Company for the year ended on that date.
Management s Responsibility for Internal Financial Controls
The Companys 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 companys 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.
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 GuidanceNote 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 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 auditors 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 Companys internal financial controlssystem over 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.
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 2018 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 R. K. Somani & Associates.
Membership No: 104927