TO THE MEMBERS OF
KINETIC ENGINEERING LIMITED
We have audited the standalone financial statements of Kinetic Engineering Limited("the Company") which comprise the Balance Sheet as at March 31 2021 and theStatement of Profit and Loss (including other comprehensive income) Statement of Changesin Equity and Statement of Cash Flows for the year then ended and notes to the standalonefinancial statements including summary of significant accounting policies and otherexplanatory information (hereinafter referred to as "the standalone financialstatements").
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 Indiaincluding Indian Accounting Standards (Ind AS') specified under section 133 of theAct of the state of affairs (financial position) of the Company as at March 31 2021 andits loss (financial performance including other comprehensive income) its changes inequity and cash flows for the year ended on that date.
Emphasis of Matter
We draw attention to the following matters in the Notes to the Standalone FinancialStatements: Refer Note- 44 describing the basis of company's ability to continue as aGoing Concern. Our opinion is not modified in respect of the above mentioned matters.
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 SAs 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 there under and we have fulfilled our otherethical responsibilities in accordance with these requirements and the Code of Ethics. Webelieve that the audit evidence we have obtained is sufficient and appropriate to providea basis for our opinion.
Key Audit Matters
Key audit matters (KAM') are those matters that in our professional judgmentwere of most significance in our audit of the standalone financial statements of thecurrent period. These matters were addressed in the context of our audit of the standalonefinancial statements as a whole and in forming our opinion thereon and we do not providea separate opinion on these matters.
We have determined the matter described below to be the key audit matters to becommunicated in our report.
|The key audit matters ||How our audit addressed the key audit matter |
|Revenue recognition: ||Principal audit procedures: |
|The Company is engaged in manufacture and supply of automotive components to its customers both in domestic and international markets. Effective April 01 2018 company has applied Ind As-115 accordingly Revenue is recognised upon transfer of control of promised products and services to customers. (refer note- 2.6 to standalone financial statements). ||Our audit included but was not limited to the following activities: |
| ||Control testing: |
| || Mapped and evaluated selected systems and processes for revenue recognition and tested a sample of key controls. |
| ||Test of details: |
|Ind AS 115 has been implemented starting from 1 April 2018. As a consequence the Company has analysed its various sales contracts and concluded on the principles for determining the point of time for recognition of revenue from the Company's sales transactions. || Evaluated the Company's procedure in place for implementing Ind AS 115 and assessed whether Company's accounting principles comply with the new accounting standard. |
|In view of the comprehensive change of the accounting standard applicable for the revenue and the re-evaluation of all contracts in this light this aspect has been identified for enhanced attention in the audit. || Tested a sample of sales transactions for compliance with the Company's accounting principles. |
| || Performed data analytical procedures to identify and evaluate a sample of manual journal entries. |
| || Traced disclosure information to accounting records and other supporting documentation. |
The Company's management and Board of Directors are responsible for the otherinformation. The other information comprises the information included in the Company'sannual report but does not include the standalone financial statements and our auditors'report thereon.
Our opinion on the standalone financial statements does not cover the other informationand we do not express any form of assurance/conclusion thereon. In connection with ouraudit of the standalone financial statements our responsibility is to read the otherinformation and in doing so consider whether the other information is materiallyinconsistent with the standalone financial statements or our knowledge obtained in theaudit or otherwise appears to be materially misstated. If based on the work we haveperformed we conclude that there is a material misstatement of this other information weare required to report that fact. We have nothing to report in this regard.
Management's Responsibility for the Standalone Financial Statements
The Company's management and Board of Directors are responsible for the matters statedin Section 134(5) of the Act with respect to the preparation of these standalone financialstatements that give a true and fair view of the state of affairs (financial position)profit or loss (financial performance including other comprehensive income) changes inequity and cash flows of the Company in accordance with the accounting principlesgenerally accepted in India including the Indian Accounting Standards (Ind AS) specifiedunder Section 133 of the Act. This responsibility also includes maintenance of adequateaccounting records in accordance with the provisions of the Act for safeguarding of theassets of the Company and for preventing and detecting frauds and other irregularities;selection and application of appropriate accounting policies; making judgments andestimates that are reasonable and prudent; and design implementation and maintenance ofadequate internal financial controls that were operating effectively for ensuring theaccuracy and completeness of the accounting records relevant to the preparation andpresentation of the standalone financial statements that give a true and fair view and arefree from material misstatement whether due to fraud or error.
In preparing the standalone financial statements management and Board of Directors areresponsible for assessing the Company's ability to continue as a going concerndisclosing as applicable matters related to going concern and using the going concernbasis of accounting unless management either intends to liquidate the Company or to ceaseoperations or has no realistic alternative but to do so. Board of Directors is alsoresponsible for overseeing the Company's financial reporting 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 inaccordance with SAs we exercise professional judgment and maintain professionalscepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of the standalonefinancial statements whether due to fraud or error design and perform audit proceduresresponsive to those risks and obtain audit evidence that is sufficient and appropriate toprovide a basis for our opinion. The risk of not detecting a material misstatementresulting from fraud is higher than for one resulting from error as fraud may involvecollusion forgery intentional omissions misrepresentations or the override of internalcontrol. Obtain an understanding of internal control relevant to the audit in orderto design audit procedures that are appropriate in the circumstances. Under Section143(3)(i) of the Act we are also responsible for expressing our opinion on whether thecompany has adequate internal financial controls with reference to standalone financialstatements in place and the operating effectiveness of such controls. Evaluate theappropriateness of accounting policies used and the reasonableness of accounting estimatesand related disclosures made by management.
Conclude on the appropriateness of management's use of the going concern basisof accounting and based on the audit evidence obtained whether a material uncertaintyexists related to events or conditions that may cast significant doubt on the Company'sability to continue as a going concern. If we conclude that a material uncertainty existswe are required to draw attention in our auditor's report to the related disclosures inthe 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 ourauditors' report. However future events or conditions may cause the Company to cease tocontinue as a going concern. Evaluate the overall presentation structure andcontent of the standalone financial statements including the disclosures and whether thestandalone financial statements represent the underlying transactions and events in amanner that achieves fair presentation.
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 auditors' 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 (Auditors' Report) Order 2016 ("the Order")issued by the Central Government of India in terms of Section 143(11) of the Act we givein "Annexure A" a statement on the matters specified in paragraphs 3 and 4 ofthe Order to the extent applicable.
A. 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 Statement of Cash Flows dealtwith by this Report are in agreement with the books of account.
(d.) In our opinion the aforesaid standalone financial statements comply with the IndAS specified under Section 133 of the Act.
(e.) On the basis of the written representations received from the directors as onMarch 31 2021 taken on record by the Board of Directors none of the directors isdisqualified as on March 31 2021 from being appointed as a director in terms of Section164(2) of the Act.
(f.) With respect to the adequacy of the internal financial controls with reference tofinancial statements of the Company and the operating effectiveness of such controlsrefer to our separate Report in "Annexure B".
(g.) With respect to the other matters to be included in the Auditors' 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 as at March 31
2021 on its financial position in its standalone financial statements - Refer Note 38;
ii. The Company did not have any long-term contracts including derivative contractsfor which there were any material foreseeable losses as at 31 March 2021;
iii. There has been no amount required to be transferred to the Investor Education andProtection Fund by the Company during the year ended 31 March 2021;
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For Pawan Jain and Associates
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| ||Firm's ||Registration ||No.: |
| ||0107867W || || |
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|Pune ||Partner || || |
|June 29 2021 || |
Membership No.: 032900
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UDIN: - 21032900AAAADF6146
Annexure "A" to the Independent Auditor's Report
(Referred to in paragraph 1 under the heading "Report on Other Legal andRegulatory Requirements" of our report on even date)
Based on the audit procedures performed for the purpose of reporting a true and fairview on the financial statements of the Company and taking into consideration theinformation and explanations given to us and the books of account and other recordsexamined by us in the normal course of audit and to the best of our knowledge and beliefwe report that:
i. (a) The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets.
(b) As informed to us the fixed assets are been physically verified by the managementat regular intervals based on the programme of verification which in our opinion isreasonable. All the major fixed assets have been verified by the management in the currentyear and discrepancies noticed on such physical verification were not material and thesame have been properly dealt with in the books of account.
(c) According to the information and explanations given to us and the records examinedby us and based on the examination of the registered sale deed / transfer deed /conveyance deed provided to us we report that the title deeds comprising all theimmovable properties of land and buildings which are freehold are held in the name of theCompany as at the balance sheet date. In respect of immovable properties been taken onlease and disclosed as property plant and equipment in the standalone financialstatements the lease agreements are in the name of the Company where the Company is thelessee in the agreement.
ii. Physical verification of inventory has been conducted by the management during thecurrent year. In our opinion the interval of such verification is reasonable. As informedto us discrepancies noticed on physical verification were not material and the same havebeen properly dealt with in the books of account.
iii. The company has not granted any loans secured or unsecured to Companies FirmsLimited
Liability Partnerships or other parties covered in the register maintained undersection 189 of the Companies Act 2013. Therefore clause (iii) a b and c of the Orderare not applicable to the Company.
iv. According to the information and explanations provided to us in respect of loansinvestments guarantees and security; provisions of section 185 and 186 of the CompaniesAct 2013 have been complied with wherever applicable.
v. According to information and explanation provided to us the Company has notaccepted deposits hence the directives issued by the Reserve Bank of India and theprovisions of sections 73 to 76 or any other relevant provisions of the Companies Act andthe rules framed there under are not applicable to the Company. According to informationand explanation provided to us no order has been passed by Company Law Board or NationalCompany Law Tribunal or Reserve Bank of India or any court or any other tribunal.
vi. As informed to us the cost records pursuant to the rules made by the CentralGovernment for the maintenance of cost records under sub-section (1) of section 148 of theCompanies Act 2013 are not applicable to the company.
vii. (a) According to the records of the company it is generally regular in depositingundisputed statutory dues of provident fund employees' state insurance income-taxgoods and service tax duty of customs cess and any other statutory dues with theappropriate authorities except depositing dues of Provident Fund where there are delays.
According to the information and explanation provided to us undisputed amounts payablein respect of Provident Fund amounting to Rs. 5.93 Lakhs was in arrears as at March 312021 for a period of more than six months from the date they became payable.
(b) According to the information and explanation provided to us there are no dues ofIncome-tax or Sales tax or Service tax or Goods and Service tax or duty of Customs or dutyof Excise or Value added tax or entry tax which have not been deposited by the Company onaccount of disputes except for the following:
|Nature of Dues ||Amount in (Rs) Lacs ||Forum where dispute is pending |
|Income Tax 2000-01 ||1.29 ||ITAT Pune |
|Income Tax 2011-12 ||0.24 ||CIT Appeals Pune |
|CST 1994-95 99-00 00-01 02-03 03-04 08-09 07-08 09-10 ||56.58 ||Appellate Dy. Commissioner commercial Tax Indore |
|CST 1998-99 2001-02 ||27.27 ||Appellate Dy. Commissioner commercial Tax Indore |
|CST (Pune) 2014-15 ||7.76 ||Dy. Commissioner Sales tax Pune |
|Entry Tax 1994-95 95-96 2007-08 ||8.41 ||Dy. Commissioner Commercial Tax Indore |
|MP Commercial Tax 1998-99 ||1.88 ||Appellate Dy. Commissioner commercial Tax Indore |
|MP Commercial Tax 1999-00 2007-08 2008-09 ||9.16 ||Appellate Dy. Commissioner commercial Tax Indore |
|VAT (Pune) 2014-15 ||32.61 ||Dy. Commissioner Sales tax Pune |
|Excise Duty ||171.19 ||CESTAT Mumbai and Nagpur |
viii. Based on our Audit procedures and according to the information and explanationprovided to us the Company has not defaulted in repayment of dues to a financialinstitution bank or government except an amount of Rs 152 lakhs payable to Council ofScientific and Industrial Research (CSIR) which was due on 16th November 2020.We are informed that company's request for restructuring the same in view of Covidpandemic is under consideration with CSIR. The Company does not have any debentureholders.
ix. According to information and explanation provided to us the Company has not raisedmoneys by way of initial public offer or further public offer (including debtinstruments). The Company has raised moneys by way of term loans from the bank during theyear and were applied for the purposes for which those are raised.
x. Based upon the Audit procedures performed by us and according to the information andexplanations provided to us by the management no fraud by the Company or any fraud on theCompany by its officers or employees has been noticed or reported to us during the year.
xi. In our opinion and according to the information and explanations given to us andbased on examination of the records of the Company the Company has paid / providedmanagerial remuneration in accordance with the requisite approvals mandated by theprovisions of Section 197 read with Schedule V to the Act.
xii. The Company is not a Nidhi Company and accordingly Clause (xii) of the Order isnot applicable to the Company.
xiii. According to the information and explanation provided to us all transactionswith the related parties are in compliance with sections 177 and 188 of Companies Act2013 wherever applicable and the details have been disclosed in the Standalone FinancialStatements as required by the applicable Indian Accounting Standards.
xiv. During the year the Company has not made any preferential allotment or privateplacement of shares or fully or partly convertible debentures and hence reporting underclause (xiv) of the Order is not applicable to the Company.
xv. According to the information and explanation provided to us the Company has notentered into any non-cash transactions with directors or persons connected with him.
xvi. According to the information and explanation provided to us the Company is notrequired to be registered under section 45-IA of the Reserve Bank of India Act 1934.
| ||For Pawan Jain And Associates |
| ||Chartered Accountants |
| ||Firm's Registration No.: 0107867W |
| ||Pawan Jain |
|Pune ||Partner |
|June 29 2021 ||Membership No.: 032900 |
| ||UDIN: - 21032900AAAADF6146 |
Annexure "B" to the Independent Auditor's Report
(Referred to in paragraph 1(A) (f) under the heading "Report on Other Legal andRegulatory Requirements" of our report on even date)
Report on the Internal Financial Controls Over Financial Reporting under Clause (i) ofSubsection 3 of Section 143 of the Companies Act 2013 ("the Act")
We have audited the internal financial controls over financial reporting of KineticEngineering Limited (the "Company") as of March 31 2021 in conjunction withour audit of the Standalone Financial Statements of the Company for the year ended on thatdate.
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 ("ICAI"). 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 respective company's policies thesafeguarding of its assets the prevention and detection of frauds and errors theaccuracy and completeness of the accounting records and the timely preparation ofreliable financial information as required under the Act.
Our responsibility is to express an opinion on the Company's internal financialcontrols over financial reporting of the Company based on our audit. We conducted ourAudit in accordance with the Guidance Note on Audit of Internal Financial Controls OverFinancial Reporting (the "Guidance Note") issued by the Institute of CharteredAccountants of India and the Standards on Auditing prescribed under Section 143(10) of theCompanies Act 2013 to the extent applicable to an Audit of internal financial controls.Those Standards and the Guidance Note require that we comply with ethical requirements andplan and 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 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 Auditor's judgement 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 anddispositions of the assets of the company; (2) provide reasonable assurance thattransactions 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 authorisations 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 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 to the best of our information and according to the explanations givento us the Company has in all material respects an adequate internal financial controlssystem over financial reporting and such internal financial controls over financialreporting were operating effectively as at March 31 2021 based on the criteria forinternal financial control over financial reporting established by Company considering theessential components of internal control stated in the Guidance Note on Audit of InternalFinancial Controls Over Financial Reporting issued by the ICAI.
| ||For Pawan Jain And Associates |
| ||Chartered Accountants |
| ||Firm's Registration No.: 0107867W |
| ||Pawan Jain |
|Pune ||Partner |
|June 29 2021 ||Membership No.: 032900 |
| ||UDIN: - 21032900AAAADF6146 |