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Kingfa Science & Technology (India) Ltd.

BSE: 524019 Sector: Industrials
NSE: KINGFA ISIN Code: INE473D01015
BSE 00:00 | 19 Feb 631.10 55.45
(9.63%)
OPEN

573.50

HIGH

670.00

LOW

570.05

NSE 00:00 | 19 Feb 635.85 62.05
(10.81%)
OPEN

589.90

HIGH

654.00

LOW

552.55

OPEN 573.50
PREVIOUS CLOSE 575.65
VOLUME 2953
52-Week high 770.00
52-Week low 540.00
P/E 20.96
Mkt Cap.(Rs cr) 764
Buy Price 590.00
Buy Qty 50.00
Sell Price 631.10
Sell Qty 10.00
OPEN 573.50
CLOSE 575.65
VOLUME 2953
52-Week high 770.00
52-Week low 540.00
P/E 20.96
Mkt Cap.(Rs cr) 764
Buy Price 590.00
Buy Qty 50.00
Sell Price 631.10
Sell Qty 10.00

Kingfa Science & Technology (India) Ltd. (KINGFA) - Auditors Report

Company auditors report

To the Members of

Kingfa Science & Technology (India) Limited

Report on the Audit of the Standalone Indian Accounting Standards (Ind AS) FinancialStatements

Opinion

We have audited the standalone Ind AS financial statements of Kingfa Science &Technology (India) Limited ("the Company") which comprise the balance sheet asat 31 March 2019 and the statement of Profit and Loss (including Other ComprehensiveIncome) statement of changes in equity and statement of cash flows for the year thenended and notes to the financial statements including a summary of significantaccounting policies and other explanatory information.(hereinafter referred to as"the Standalone IndAS Financial Statements")

In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid standalone Ind AS financial statements give the informationrequired by the Act in the manner so required and give a true and fair view in conformitywith the accounting principles generally accepted in India of the standalone state ofaffairs of the Company as at 31 March 2019 and its standalone profit (including OtherComprehensive Income) standalone changes in equity and its standalone cash flows for theyear ended on that date.

Basis for Opinion

We conducted our audit in accordance with the Standards on Auditing (SAs) specifiedunder section 143(10) of the Companies Act 2013. Our responsibilities under thoseStandards are further described in the Auditor 's Responsibilities for theAudit of theStandalone IndAS Financial Statements section of our report. We are independent of theCompany in accordance with the Code of Ethics issued by the Institute of CharteredAccountants of India together with the ethical requirements that are relevant to our auditof the standalone Ind AS financial statements under the provisions of the Companies Act2013 and the Rules thereunder and we have fulfilled our other ethical responsibilities inaccordance with these requirements and the Code of Ethics. We believe that the auditevidence we have obtained is sufficient and appropriate to provide a basis for ouropinion.

Key Audit Matters

Key audit matters are those matters that in our professional judgment were of mostsignificance in our audit of the standalone Ind AS financial statements of the currentperiod. These matters were addressed in the context of our audit of the standalone Ind ASfinancial statements as a whole and in forming our opinion thereon and we do not providea separate opinion on these matters.

Key Audit Matters How our audit addressed the key audit matters
Valuation of Trade Receivable
As outlined in Note 6 there were trade receivables as at 31 March 2019 more than 180 days past dues. The collectability of the Companies trade receivables and the valuation of the allowance for impairment of the trade receivables is a key audit matter due to the judgement involved. - We have evaluated and tested the Company's process for trade receivables including the provisioning and collection process.
- We tested on sample basis that trade receivables were subsequently collected.
- Where there were indicators that the trade receivables were unlikely to be collected within contracted payment terms we assessed the adequacy of the allowance for impairment of trade receivables. To do this:
a. We assessed the aging of trade receivables quantum of claims with and from the customers.
b. We have evaluated the independent confirmations from customers and performed alternate audit procedures on sample basis.
c. We considered the historical accuracy of forecasting the allowance for impairment of trade receivables.
Valuation of Inventory
AAt the 31 March 2019 the value of inventory amounted to Rs 10256.24 lakhs representing 31.61% of total equity and 18.60% of total assets. Inventories have been considered key audit matter due to the size of the balance nature of the product price volatility of raw material and finished product process of manufacture and management judgements involved. Refer note 33.4.12 to the Standalone Ind AS Financial Statements for accounting policy for valuation of inventories. - We have evaluated and tested the design of internal controls relating to the process of inventory recording and valuation.
- We have conducted physical verification of inventory on a sample basis at the year-end in order to test the assertion of existence.
- We have conducted analysis of net realisable value (NRV) and cost of inventory on a sample basis in order to ascertain that inventory is carried at lower of NRV and Cost.
- We have evaluated on a test check basis the process followed by the management to identify non-moving slow moving obsolete inventory and we have evaluated on a test check basis the appropriateness of the estimates for impairment (if any) accounted for on such inventory.
- We have conducted cut off procedures on a test check basis to ensure completeness of inventory recorded in the books of account.
- We have tested on a sample basis compliance of the cost formulae as specified in the accounting policy adopted by the company.

Other Information

The Company's Board of Directors is responsible for the other information. The otherinformation comprises the information included in the Management Discussion and AnalysisShareholder Information and Director's Report but does not include the standalone Ind ASfinancial statements and our auditor's report thereon.

Our opinion on the standalone Ind AS 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 our responsibility is to readthe other information and in doing so consider whether the other information ismaterially inconsistent with the standalone Ind AS financial statements or our knowledgeobtained in the audit or otherwise appears to be materially misstated.

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 have nothing to report in this regard.

Responsibilities of Management and Those Charged with Governance for the Standalone IndAS 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 Ind AS financial statements that give a true and fair view of thestandalone financial position standalone financial performance standalone changes inequity and standalone cash flows of the Company in accordance with the accountingprinciples generally accepted in India including the Indian Accounting Standardsspecified in the Companies (Indian Accounting Standards) Rules 2015 (as amended) undersection 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 Ind AS financial statements that give a true and fair viewand are free from material misstatement whether due to fraud or error.

In preparing the standalone Ind AS financial statements management is responsible forassessing the Company's ability to continue as a going concern disclosing as applicablematters related to going concern and using the going concern basis of accounting unlessmanagement either intends to liquidate the Company or to cease operations or has norealistic alternative but to do so.

Those Board of Directors are also responsible for overseeing the Company's financialreporting process.

Auditor's Responsibilities for the Audit of the Standalone Ind AS Financial Statements

Our objectives are to obtain reasonable assurance about whether the standalone Ind ASfinancial 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 Ind AS financial statements.

As part of an audit in accordance with SAs we exercise professional judgment andmaintain professional skepticism throughout the audit.

We also :

• Identify and assess the risks of material misstatement of the standalone Ind ASfinancial 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 order todesign audit procedures that are appropriate in the circumstances. Under section 143(3)(i)of the Companies Act 2013 we are also responsible for expressing our opinion on whetherthe Company has adequate internal financial controls system in place and the operatingeffectiveness of such controls.

• Evaluate the appropriateness of accounting policies used and the reasonablenessof accounting estimates and 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 Ind AS 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 the Companyto cease to continue as a going concern.

• Evaluate the overall presentation structure and content of the standalone IndAS financial statements including the disclosures and whether the standalone Ind ASfinancial statements represent the underlying transactions and events in a manner thatachieves 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 Ind AS financialstatements of the current period and are therefore the key audit matters.We describe thesematters in our auditor's report unless law or regulation precludes public disclosure aboutthe matter or when in extremely rare circumstances we determine that a matter should notbe communicated in our report because the adverse consequences of doing so wouldreasonably be expected to outweigh the public interest benefits of such communication.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor's Report) Order 2016 ("the Order")issued by the Central Government of India in terms of sub-section (11) of section 143 ofthe Companies Act 2013 we give in the Annexure A; a statement on the matters specifiedin paragraphs 3 and 4 of the Order to the extent applicable.

2. As required by Section 143(3) of the Act we report that:

a) We have sought and obtained all the information and explanations which to the bestof our knowledge and belief were necessary for the purposes of our audit.

b) In our opinion proper books of account as required by law have been kept by theCompany so far as it appears from our examination of those books.

c) The Balance Sheet the Statement of Profit and Loss (including other comprehensiveincome) standalone changes in equity and the Cash Flow Statement dealt with by thisReport are in agreement with the books of account.

d) In our opinion the aforesaid standalone Ind AS financial statements comply with theAccounting Standards specified under Section 133 of the Act read with the Companies(Accounts) Rules 2014.

e) On the basis of the written representations received from the directors as on 31March 2019 taken on record by the Board of Directors none of the directors isdisqualified as on 31 March 2019 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 over financialreporting of the Company and the operating effectiveness of such controls refer to ourseparate Report in "Annexure B".

g) With respect to the other matters to be included in the Auditor's Report inaccordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014 in our opinionand to the best of our information and according to the explanations given to us:

(i) The Company has disclosed the impact of pending litigations on its financialposition in its financial statements – Refer Note 33.5.1 to the financial statements;

(ii) The Company did not have any long-term contracts including derivative contractsfor which there were any material foreseeable losses.

(iii) There has been no delay in transferring amounts required to be transferred tothe Investor Education and Protection Fund by the Company.

For M/s P G Bhagwat
Firm Registration Number: 101118W
Chartered Accountants
Pritam Prajapati
Partner
Membership Number 135734
Pune
28 May 2019

Annexure A to Independent Auditors' Report

Referred to in paragraph 1 of the Independent Auditors' Report of even date to themembers of Kingfa Science & Technology (India) Limited on the standalone Ind ASfinancial statements as of and for the year ended 31 March 2019

i. (a) The Company is maintaining proper records showing full particulars includingquantitative details and situation of fixed assets.

(b) The fixed assets of the Company have not been physically verified by the Managementduring the year. Accordingly the discrepancies if any could not be ascertained andtherefore we are unable to comment on whether the discrepancies if any have beenproperly dealt with in the books of account.

(c) The title deeds of immovable properties as disclosed in Note 3 on fixed assets tothe financial statements are held in the name of the Company.

ii. The physical verification of inventory have been conducted at reasonable intervalsby the Management during the year. The discrepancies noticed on physical verification ofinventory as compared to book records were not material.

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 Act. Therefore the provisions of Clause 3(iii) (iii)(a) (iii)(b) and(iii)(c) of the said Order are not applicable to the Company.

iv. The Company has not granted any loans or made any investments or provided anyguarantees or security to the parties covered under Section 185 and 186. Therefore theprovisions of Clause 3(iv) of the said Order are not applicable to the Company.

v. The Company has not accepted any deposits from the public within the meaning ofSections 73 74 75 and 76 of the Act and the Rules framed there under to the extentnotified.

vi. Pursuant to the rules made by the Central Government of India the Company isrequired to maintain cost records as specified under Section 148(1) of the Act in respectof its products.

We have broadly reviewed the same and are of the opinion that prima facie theprescribed accounts and records have been made and maintained. We have not however madea detailed examination of the records with a view to determine whether they are accurateor complete.

vii. (a) According to the information and explanations given to us and the records ofthe Company examined by us in our opinion the Company is generally regular in depositingundisputed statutory dues in respect of Income Tax duty of Customs and Goods and ServiceTax though there has been a slight delay in a few cases and is regular in depositingundisputed statutory dues including provident fund employees' state insurance cess andother material statutory dues as applicable with the appropriate authorities.

(b) According to the information and explanations given to us and the records of theCompany examined by us there are no Duty of Customs and Goods and Services Tax which havenot been deposited on account of any dispute. The particulars of dues of Income-TaxSales-Tax Excise Duty and Service Tax as at 31 March 2019 which have not been depositedon account of a dispute are as follows:

Name of the statute Nature of dues Amount Period to which the amount relates Forum where the dispute is pending
( Rs in Lakhs)
Income Tax Act 1961 Income Tax 44.36 AY 2007-08AY 2008-09 AY 2010-11 and AY 2011-12 Appeal to Commissioner of Income Tax
Sales Tax Act and VAT Laws Sales Tax 29.83 FY 2014-15 Joint Excise and Taxation Commissioner Appeal
Transit pass 14.57 FY 2005-06 to FY 2014-15 First Appellate Authority issue
Central Excise Act 1944 Excise Duty 4.17 FY 2012-13 Assistant Commissioner of Central Excise
Excise Duty 8.06 FY 2009-15 and FY 2016-17 Commissioner (Appeals) of Central Excise
Finance Act 1994 Service Tax 5.78 FY 2015-16 Commissioner(Appeals) of Service Tax
Service Tax 6.73 FY 2015-16 to June 2017 Assistant Commissioner of GST and Central Excise

viii. According to the records of the Company examined by us and the information andexplanation given to us the Company has not defaulted in repayment of loans or borrowingsto any financial institution or bank or Government or dues to debenture holders. ix. TheCompany has not raised any moneys by way of initial public offer further public offer(including debt instruments) and term loans during the year.

Accordingly the provisions of Clause 3(ix) of the Order are not applicable to theCompany.

x. During the course of our examination of the books and records of the Companycarried out in accordance with the generally accepted auditing practices in India andaccording to the information and explanations given to us we have neither come across anyinstance of material fraud by the Company or on the Company by its officers or employeesnoticed or reported during the year nor have we been informed of any such case by theManagement.

xi. The Company has paid/ provided for managerial remuneration in accordance with therequisite approvals mandated by the provisions of Section 197 read with Schedule V to theAct.

xii. As the Company is not a Nidhi Company and the Nidhi Rules 2014 are not applicableto it the provisions of Clause 3(xii) of the Order are not applicable to the Company.

xiii. The Company has entered into transactions with related parties in compliance withthe provisions of Sections 177 and 188 of the Act. The details of such related partytransactions have been disclosed in the financial statements as required under Ind AS 24Related Party Disclosures specified under Section 133 of the Act read with the Companies(Accounts) Rules 2014.

xiv. The Company has not made any preferential allotment or private placement of sharesor fully or partly convertible debentures during the year under review.

Accordingly the provisions of Clause 3(xiv) of the Order are not applicable to theCompany.

xv. The Company has not entered into any non-cash transactions with its directors orpersons connected with him. Accordingly the provisions of Clause 3(xv) of the Order arenot applicable to the Company.

xvi. The Company is not required to be registered under Section 45-IA of the ReserveBank of India Act 1934.

Accordingly the provisions of Clause 3(xvi) of the Order are not applicable to theCompany.

For M/s. P. G. Bhagwat
Firm Registration Number: 101118W
Chartered Accountants
Pritam Prajapati
Partner
Membership Number 135734
Pune
28 May 2019

Annexure B to the Independent Auditors' Report

Referred to in paragraph 2 (f) of the Independent Auditors' Report of even date to themembers of Kinfga Science & Technologies (India) Limited on the standalone Ind ASfinancial statements for the year ended 31 March 2019 Report on the Internal FinancialControls under Clause (i) of Sub-section 3 of Section 143 of the Act

We have audited the internal financial controls with reference to financial statementsof Kingfa Science & Technologies (India) Limited ("the Company") as of 31March 2019 in conjunction with our audit of the standalone Ind AS financial statements ofthe Company for the year ended on that date.

Management's Responsibility for Internal Financial Controls

The Company's management is responsible for establishing and maintaining internalfinancial controls based on the internal controls with reference to financial statementscriteria established by the Company considering the essential components of internalcontrols 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 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.

Auditors' Responsibility

Our responsibility is to express an opinion on the Company's internal financialcontrols with reference to financial statements based on our audit. We conducted our auditin accordance with the Guidance Note on Audit of Internal financial controls overfinancial reporting (the "Guidance Note") and the Standards on Auditing to theextent applicable to an audit of internal financial controls both issued by the Instituteof Chartered Accountants of India. Those Standards and the Guidance Note require that wecomply with ethical requirements and plan and perform the audit to obtain reasonableassurance about whether adequate internal financial controls with reference to financialstatements was established and maintained and if such controls operated effectively in allmaterial respects.

Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal financial controls with reference to financial statements and their operatingeffectiveness. Our audit of internal financial controls with reference to financialstatements included obtaining an understanding of internal financial controls withreference to financial statements assessing the risk that a material weakness exists andtesting and evaluating the design and operating effectiveness of internal controls basedon the assessed risk. The procedures selected depend on the auditor's judgement includingthe assessment of the risks of material misstatement of the financial statements whetherdue to fraud or error.

We believe that the audit evidence we have obtained and the audit evidence obtained bythe other auditor in terms of their report referred to in the Other Matter paragraphbelow is sufficient and appropriate to provide a basis for our audit opinion on theCompany's internal financial controls with reference to financial statements.

Meaning of Internal financial controls with reference to financial statements

A Company's internal financial controls with reference to financial statements 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 controlswith reference to financial statements includes those policies and procedures that (1)pertain to the maintenance of records that in reasonable detail accurately and fairlyreflect the transactions and dispositions of the assets of the Company; (2) providereasonable assurance that transactions are recorded as necessary to permit preparation offinancial statements in accordance with generally accepted accounting principles and thatreceipts and expenditures of the Company are being made only in accordance withauthorisations of management and directors of the Company; and (3) provide reasonableassurance regarding prevention or timely detection of unauthorised acquisition use ordisposition of the Company's assets that could have a material effect on the financialstatements.

Inherent Limitations of Internal financial controls with reference to financialstatements

Because of the inherent limitations of internal financial controls with reference tofinancial statements 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 withreference to financial statements to future periods are subject to the risk that theinternal financial controls with reference to financial statements may become inadequatebecause of changes in conditions or that the degree of compliance with the policies orprocedures may deteriorate.

Opinion

In our opinion the Company has in all material respects an adequate internalfinancial controls with reference to financial statements and such internal financialcontrols with reference to financial statements were operating effectively as at 31 March2019 based on the internal controls with reference to financial statements criteriaestablished by the Company considering the essential components of internal controlsstated in the Guidance Note on Audit of Internal financial controls over financialreporting issued by the Institute of Chartered Accountants of India.

For M/s. P. G. Bhagwat
Firm Registration Number: 101118W
Chartered Accountants
Pritam Prajapati
Partner
Membership Number 135734
Pune
28 May 2019