To the members of
Khemani Distributors & Marketing Limited
We have audited the standalone financial statements of Khemani Distributors &Marketing Limited ("the Company") which comprise the balance sheet as at 31stMarch 2020 and the statement of Profit and Loss (statement of changes in equity) andstatement of cash flows for the year then ended and notes to the financial statementsincluding a summary of significant accounting policies and other explanatory information.
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 Act in the manner so required and give a true and fair view in conformity with theaccounting principles generally accepted in India of the state of affairs of the Companyas at March 31 2020 and profit (changes in equity) and its cash flows for the yearended on that date.
Basis for Opinion
We conducted our audit in accordance with the Standards on Auditing (SAs) specifiedunder section 143(10) of the Companies Act 2013. Our responsibilities under thoseStandards are further described in the Auditor's Responsibilities for the Audit of theFinancial Statements section of our report. We are independent of the Company inaccordance with the Code of Ethics issued by the Institute of Chartered Accountants ofIndia together with the ethical requirements that are relevant to our audit of thefinancial statements under the provisions of the Companies Act 2013 and the Rulesthereunder and we have fulfilled our other ethical responsibilities in accordance withthese requirements and the Code of Ethics. We believe that the audit evidence we haveobtained is sufficient and appropriate to provide a basis for our opinion. .
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.
Management's Responsibility for the Standalone Financial Statements
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 standalone financial statements that give a true and fair view of the financialposition financial performance (changes in equity)i and cash flows of the Company inaccordance withii the accounting principles generally accepted in India including theaccounting Standards specified under section 133 of the Act. This responsibility alsoincludes maintenance of adequate accounting records in accordance with the provisions ofthe Act for safeguarding of the assets of the Company and for preventing and detectingfrauds and other irregularities; selection and application of appropriate implementationand maintenance of accounting policies; making judgments and estimates that are reasonableand prudent; and design implementation and maintenance of adequate internal financialcontrols that were operating effectively for ensuring the accuracy and completeness ofthe accounting records relevant to the preparation and presentation of the financialstatement that give a true and fair view and are free from material misstatement whetherdue 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 managementeither intends to liquidate the Company or to cease operations or has no realisticalternative but to do so. Those Board of Directors are also responsible for overseeing theCompany's financial reporting process.
Auditor's Responsibilities 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.
An audit involves performing procedures to obtain audit evidence about the amounts anddisclosures in the financial statements. The procedures selected depend on the auditor'sjudgment including the assessment of the risks of material misstatement of financialstatements whether due to fraud or error. In making those risk assessments the auditorconsiders 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 circumstances. An audit also includes evaluating theappropriateness of 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 issufficient and appropriate to provide a basis for our audit opinion on financialStatements.
Report on Other Legal and regulatory Requirements
1. As required by required by the Companies (Auditor's Report) Order2016 ("theOrder") issued by Central Government of India in terms of sub-section (11) of section143 of the Act we give in the Annexure-A a statement on the matters specified inparagraph 3 & 4 of the Order.
2. As required by section 143(3) of the Act we further 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 appears from our examination of those books;
(c) The Balance Sheet Statement of Profit and Loss Account Cash Flow Statement andStatement of changes in Equity dealt with this report are in agreement with the books ofAccounts;
(d) In our opinion the aforesaid financial statements comply with the applicableAccounting Standards specified under Section 133 of the Act read with relevant rulesthereunder as amended;
(e) On the basis of written representation received from the directors as on March 312020 and taken on record by the Board of Directors none of the directors is disqualifiedas on March 31 2020 from being appointed as the directors in terms of Section 164(2) ofthe Act;
(f) With respect to the adequacy of the internal financial control over financialreporting of the Company and the operating effectiveness of such controls refer to ourseparate report in "Annexure B";
(g)According to information and explanations given to us and based on our examinationof the records of the Company the Company had not paid/provided managerial remunerationhence requisite approvals mandated by the provisions of Sec 197 of the Act is notapplicable;
(h) In our opinion and to the best of our information and according to the explanationsgiven to us we report as under with respect to other matters to be included in theAuditor's Report in accordance with Rule 11 of the Companies (Audit & Auditors) Rules2014:
1. The Company has pending litigation which is pending before Appellant Authorities.
2. The company did not have any long-term contracts including derivative contracts; assuch the question of commenting on any material foreseeable losses thereon does not arise.
3. There has not been an occasion in case of the Company during the year under reportto transfer any sums to the Investor Education & Protection Fund. The question ofdelay in transferring such sums does not arise.
IMPACT OF COVID-19 ON FINANCIAL STATEMENTS
Due to outbreak of Covid-19 globally and in India the Company had to partially slowdown its operations from March 2020 to May 31 2020. The operations of the Company wereimpacted in the second half of March April 2020 and May 2020. Company is dealing inFMCG consumer goods hence due Covid-19 consumer's demand was expected to be lower in theshort term though we are unable to ascertain the overall impact of it on a long term.Further the Management believes that there may be negative impact of Covid-19 pandemic onthe financial position and performance of the Company in the short term.
|FOR C.P.Jaria& Co |
|Chartered Accountants |
|PLACE: Surat |
|DATE: 29/07/2020 |
ANNEXURE 'A' TO THE AUDITOR'S REPORT
Annexure referred to in paragraph 1 of our report of even date to the members ofKhemani Distributors & Marketing Limited on the accounts of the company for the yearended 31.03.20. On the basis of such checks as we considered appropriate andaccordingly to the information and explanations given to us during the course of ouraudit we report that:
|S. No. Particulars ||Auditors Remark |
|(i) (a) Whether the company is maintaining proper records showing full particulars including quantitative details and situation of fixed assets; ||Yes |
|b) Whether these fixed assets have been physically verified by the management at reasonable intervals; whether any material discrepancies were noticed on such verification and if so whether the same have been properly dealt with in the books of account; ||Yes |
|(c) Whether the title deeds of immovable properties are held in the name of the company. If not provide the details thereof; ||NA |
|(ii) Whether physical verification of inventory has been conducted at reasonable intervals by the management and whether any material discrepancies were noticed and if so whether they have been properly dealt with in the books of account; ||Yes |
|(iii) Whether the company has granted any loans secured or unsecured to companies firms Limited Liability Partnerships or other parties covered in the register maintained under section 189 of the Companies Act 2013. If so ||NA |
|(a) whether the terms and conditions of the grant of such loans are not prejudicial to the company's interest; ||No |
|(b) Whether the schedule of repayment of principal and payment of interest has been stipulated and whether the repayments or receipts are regular; ||NA |
|(c) If the amount is overdue state the total amount overdue for more than ninety days and whether reasonable steps have been taken by the company for recovery of the principal and interest; ||N.A. |
|(iv) In respect of loans investments guarantees and security whether provisions of section 185 and 186 of the Companies Act 2013 have been complied with. If not provide the details thereof. ||Yes |
|(v) In case the company has accepted deposits whether the directives issued by the Reserve Bank of India and the provisions of sections 73 to 76 or any other relevant provisions of the Companies Act 2013 and the rules framed thereunder where applicable have been complied with? If not the nature of such contraventions be stated; If an order has been passed by Company Law Board or National Company Law Tribunal or Reserve Bank of India or any court or any other tribunal whether the same has been complied with or not? ||No |
|(vi) Whether maintenance of cost records has been specified by the Central Government under sub-section (1) of section 148 of the Companies Act 2013 and whether such accounts and records have been so made and maintained. ||No |
|(vii) (a) Whether the company is regular in depositing undisputed statutory dues including provident fund employees' state insurance income-tax sales-tax service tax duty of customs duty of excise value added tax cess and any other statutory dues to the appropriate authorities and if not the extent of the arrears of outstanding statutory dues as on the last day of the financial year concerned for a period of more than six months from the date they became payable shall be indicated; ||Yes |
|(b) Where dues of income tax or sales tax or service tax or duty of customs or duty of excise or value added tax have not been deposited on account of any dispute then the amounts involved and the forum where dispute is pending shall be mentioned. (A mere representation to the concerned Department shall not be treated as a dispute). ||Company has filed against Income Tax Departme nt against pending litigation |
|(viii) Whether the company has defaulted in repayment of loans or borrowing to a financial institution bank Government or dues to debenture holders? If yes the period and the amount of default to be reported (in case of defaults to banks financial institutions and Government lender wise details to be provided). ||No |
|(ix) Whether moneys raised by way of initial public offer or further public offer (including debt instruments) and term loans were applied for the purposes for which those are raised. If not the details together with delays or default and subsequent rectification if any as may be applicable be reported; ||N.A. |
|(x) Whether any fraud by the company or any fraud on the Company by its officers or employees has been noticed or reported during the year; If yes the nature and the amount involved is to be indicated; ||No |
|(xi) Whether managerial remuneration has been paid or provided in accordance with the requisite approvals mandated by the provisions of section 197 read with Schedule V to the Companies Act Rs. If not state the amount involved and steps taken by the company for securing refund of the same; ||Yes |
|(xii) Whether the Nidhi Company has complied with the Net Owned Funds to Deposits in the ratio of 1: 20 to meet out the liability and whether the Nidhi Company is maintaining ten per cent unencumbered term deposits as specified in the Nidhi Rules 2014 to meet out the liability; ||N.A. |
|(xiii) Whether all transactions with the related parties are in compliance with sections 177 and 188 of Companies Act 2013 where applicable and the details have been disclosed in the Financial Statements etc. as required by the applicable accounting standards; ||Yes |
|(xiv) Whether the company has made any preferential allotment or private placement of shares or fully or partly convertible debentures during the year under review and if so as to whether the requirement of section 42 of the Companies Act 2013 have been complied with and the amount raised have been used for the purposes for which the funds were raised. If not provide the details in respect of the amount involved and nature of non- compliance; ||N.A. |
|(xv) Whether the company has entered into any non-cash transactions with directors or persons connected with him and if so whether the provisions of section 192 of Companies Act 2013 have been complied with ||No |
|(xvi) Whether the company is required to be registered under section 45-IA of the Reserve Bank of India Act 1934 and if so whether the registration has been obtained. ||N.A |
|FOR C.P.Jaria& Co |
|Chartered Accountants |
|PLACE :Surat |
|DATE :29/07/2020 |
ANNEXURE-B TO THE AUDITOR'S REPORT
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 KhemaniDistributors & Marketing Limited("the Company") as on 31stMarch 2020 in conjunction with our audit of the financial statements of the Company forthe year ended on that date.
MANAGEMENT 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 (ICAI'). Theseresponsibilities include the designs 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 safeguarding ofits 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 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 FinancialControlling(the "Guidance Note") and the Standards on Auditing issued by ICAIand deemed to be prescribed under section 143 (10) of the Companies Act 2013 to theextent applicable to an audit of internal financial controls-both applicable to an audit oInternal 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 responsible 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 reporting assessing the risk that a material weakness exists testing and evaluating and design andoperating effectiveness of internal control based on the assessed risk. The proceduresselected depend on the auditor's judgment including the assessment of the risks ofmaterial misstatement of the financial statements whether due to fraud or error.
We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the Company's internal financial controls systemover financial reporting.
MEANING OF INTERNAL FINANCIAL CONTROLS OVER FINANCIAL REPORTING
A company's internal financial control over financial reporting is a process designedto provide reasonable assurance regarding the reliability of financial reporting and thepreparation of financial statements for external purposes in accordance with generallyaccepted accounting principles. A company's internal financial control over financialreporting includes those policies and procedures that (1) pertain to the maintenance ofrecords that in reasonable detail accurately and fairly reflect the transactions anddisposition of the assets of the Company. (2) provide reasonable assurance thattransaction are recorded as necessary to permit preparation of financial statements inaccordance with generally accepted accounting principles and that receipts andexpenditures of the company are being made only in accordance with authorizations ofmanagement and directors of the company ; and (3) provide reasonable assurance regardingprevention or timely detection of unauthorised acquisition use or disposition of thecompany's assets that could have a material 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 internal financial control overfinancial reporting may become inadequate because of changes in conditions or that thedegree 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 31st March 2020 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 C.P.Jaria& Co |
|Chartered Accountants |
|DATE: 29/07/2020 |