To the Members of KPT Industries Limited Report on Audit of the Indian AccountingStandards (Ind AS) Financial Statements
I have audited the Ind AS Financial Statements of KPT Industries Limited ("theCompany") which comprise the Balance Sheet as at 31st March 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 FinancialStatements including a summary of Significant Accounting Policies and other explanatoryinformation (hereinafter referred to as "the Ind AS Financial Statements")
In my opinion and to the best of my information and according to the explanations givento me the aforesaid Financial Statements give the information required by the CompaniesAct 2013 (the Act) in the manner so required and give a true and fair view inconformity with the accounting principles generally accepted in India of the statement ofaffairs of the Company as at 31st March 2021 and its profit (including OtherComprehensive Income) changes in equity and its cash flows for the year ended on thatdate.
Basis for Opinion
I conducted my audit in accordance with the Standards on Auditing (SAs) specified undersection 143(10) of the Act. My responsibilities under those Standards are furtherdescribed in the Auditors Responsibilities for the Audit of the Ind AS FinancialStatements section of my report. I am 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 my audit of the Ind AS Financial Statementsunder the provisions of the Act and the Rules there under and I have fulfilled my otherethical responsibilities in accordance with these requirements and the Code of Ethics.
I believe that the audit evidence I have obtained is sufficient and appropriate toprovide a basis for my opinion. Key Audit Matters
Key audit matters are those matters that in my professional judgment were of mostsignificance in my audit of the Ind AS financial statements of the current period. Thesematters were addressed in the context of my audit of the Ind AS Financial Statements as awhole and in forming my opinion thereon and I do not provide a separate opinion on thesematters. Following is the Key Audit Matter identified which is of most significance:
The company has significant trade receivables at year end which comprises of almost29.46% of Total Assets of the company. Given the size of the balances and the risk thatsome of the trade receivables may not be recoverable judgement is required to evaluatewhether any provision should be made to reflect the risk. Assessment of the recoverabilityof trade receivables is inherently subjective and requires significant managementjudgement (which includes repayment history and financial position of entities from whomthese balances are recoverable terms of underling arrangements overdue balances marketconditions etc.).
Audit Procedure Performed:
My audit procedure for above Key Matter
Obtaining an understanding of and assessing the design implementation andoperating effectiveness of the Companys key internal controls over the policy ofestimating the loss allowance for trade receivables including adherence to therequirements of the relevant accounting standards.
Assessing the companys methodology for provisioning towards tradereceivables.
Understanding the key inputs used in the provisioning methodology by the companysuch as repayment history terms of underlining arrangements overdue balances marketconditions experts opinion etc.
Obtaining an understanding and assessing the reasonableness of the key outputsderived from provisioning methodology as well as key judgements and assumptions used bythe management.
Disclosure requirements as per schedule III of the companies act were verified.
Obtaining balance confirmation from debtors and matching payable balances inthis confirmation with the receivable balances of the company and addressing thereconciliation item.
Performed subsequent receipt testing of trade receivable balances post year end.
Discussion with management about status and prospects of suits filled forreceivables and assessment of requirement for provisioning.
The Companys Board of Directors is responsible for the other information. Theother information comprises the information included in the Annual report but does notinclude the Ind AS Financial Statements Secretarial Report and my auditors reportthereon which is expected to be made available to me after the date of thisAuditors Report.
My opinion on the Ind AS Financial Statements does not cover the other information andI do not express any form of assurance conclusion thereon.
In connection with my audit of the Financial Statements My responsibility is to readthe other information and in doing so consider whether the other information ismaterially inconsistent with the Ind AS Financial Statements or my knowledge obtained inthe audit or otherwise appears to be materially misstated.
If later when the other information is made available to me I find any misstatementI shall be required to report that fact.
Responsibilities of Management and Those Charged with Governance for the Stand aloneInd AS Financial Statements
The Companys Board of Directors is responsible for the matters stated in section134(5) of the Act with respect to the preparation of these Ind AS Financial Statementsthat give a true and fair view of the financial position financial performance (includingother comprehensive income) changes in equity and cash flows of the Company in accordancewith the accounting principles generally accepted in India including the IndianAccounting Standards (Ind AS) specified under section 133 of the Act read with theCompanies (Indian Accounting Standards) Rules 2015 as amended. 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 accountingpolicies; making judgments and estimates that are reasonable and prudent; and designimplementation 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 material misstatement whether due to fraud orerror.
In preparing the Financial Statements the management is responsible for assessing theCompanys 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 the Companysfinancial reporting process. Auditors Responsibilities for the Audit of theFinancial Statements
My objective is to obtain reasonable assurance about whether the Financial Statementsas a whole are free from material misstatement whether due to fraud or error and toissue an auditors report that includes my 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 from
fraud 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.
As part of an audit in accordance with SAs I exercise professional judgment andmaintain professional skepticism throughout the audit.
1. Identify and assess the risks of material misstatement of the Ind AS FinancialStatements whether due to fraud or error design and perform audit procedures responsiveto those risks and obtain audit evidence that is sufficient and appropriate to provide abasis for my opinion. The risk of not detecting a material misstatement resulting fromfraud is higher than for one resulting from error as fraud may involve collusionforgery intentional omissions misrepresentations or the override of internal control.
2. Obtain an understanding of internal control relevant to the audit in order to designaudit procedures that are appropriate in the circumstances. Under section 143(3)(i) of theAct. I am also responsible for expressing my opinion on whether the Company has adequateinternal financial controls system in place and the operating effectiveness of suchcontrols.
3. Evaluate the appropriateness of accounting policies used and the reasonableness ofaccounting estimates and related disclosures made by management.
4. Conclude on the appropriateness of managements 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 theCompanys ability to continue as a going concern. If I conclude that a materialuncertainty exists I am required to draw attention in my auditors report to therelated disclosures in the Financial Statements or if such disclosures are inadequate tomodify my opinion. My conclusions are based on the audit evidence obtained up to the dateof my auditors report. However future events or conditions may cause the Company tocease to continue as a going concern.
5. Evaluate the overall presentation structure and content of the FinancialStatements including the disclosures and whether the Financial Statements represent theunderlying transactions and events in a manner that achieves fair presentation.
I 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 were identified during audit.
I also provide those charged with governance with a statement that I have complied withrelevant ethical requirements regarding independence and to communicate with them allrelationships and other matters that may reasonably be thought to bear on my independenceand where applicable related safeguards.
From the matters communicated with those charged with governance I determine thosematters that were of most significance in the audit of the Ind AS Financial Statements ofthe current period and are therefore the key audit matters. I describe these matters in myauditors report unless law or regulation precludes public disclosure about thematter or when in extremely rare circumstances I determine that a matter should not becommunicated in my report because the adverse consequences of doing so would reasonably beexpected 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 ("theOrder") issued by the Central Government of India in terms of sub-section (11) ofsection 143 of the Act I gave in the Annexure A; a statement on the matters specified inparagraphs 3 and 4 of the Order to the extent applicable.
2. As required by Section 143(3) of the Act I report that:
a) I have sought and obtained all the information and explanations which to the best ofmy knowledge and belief were necessary for the purposes of my audit.
b) In my opinion proper books of account as required by law have been kept by theCompany so far as it appears from my 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 Cash Flow Statement dealt with by thisReport are in agreement with the books of account.
d) I n my opinion the aforesaid Financial Statements comply with the Indian AccountingStandards specified under Section 133 of the Act read with Companies (Indian AccountingStandards) Rules 2015 as amended.
e) On the basis of the written representations received from the directors as on March312021 taken on record by the Board of Directors none of the directors is disqualifiedas on March 312021 from being appointed as a director in terms of Section 164 (2) of theAct.
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 myseparate Report in "Annexure B".
g) As required by section 197 (16) of the Act; in my opinion and according toinformation and explanation provided to me the remuneration paid by the company to itsdirectors is in accordance with the provisions of section 197 of the Act and remunerationpaid to its directors is not in excess of the limit laid down under this section.
h) 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 my opinionand to the best of my information and according to the explanations given to me:
(i) The Company has disclosed the impact of pending litigations on its financialposition in its Financial Statements - Refer Note no.27 to the financial statements;
(ii) The Company did not have any long-term contracts including derivative contractsfor which there were any material foreseeable losses as at 31st March 2021.
(iii) There has been no delay in transferring amounts required to be transferred tothe Investor Education and Protection Fund by the Company.
Dharmendra R. Prabhukhot
Membership No: 219438
Place : Belagavi
Date : June 30 2021
Annexure - A to the Auditors Report
Referred to in paragraph 1 of my report on Other Legal and Regulatory Requirements ofeven date to
the Members of KPT Industries Limited
(i) (a) The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets.
(b) The fixed assets of the Company are physically verified by the Management duringthe year. The discrepancies noticed on such verification were not material and have beenproperly dealt with in the books of accounts. Also company has policy of verifying oneblock of asset every year as per policy. In my opinion the frequency of verification isreasonable.
(c) The title deeds of immovable properties as disclosed in Note 1 on Property Plant& Equipment to the financial statements are held in the name of the Company.
(ii) The physical verification of inventory [including stocks with third parties] havebeen conducted at reasonable intervals by the Management during the year. In respect ofinventory lying with third parties these have substantially been confirmed by them. Thediscrepancies noticed on physical verification of inventory as compared to book recordswere and properly dealt with in books of accounts.
(iii) According to information and explanations given to me The Company has notgranted any loans secured or unsecured to companies firms Limited LiabilityPartnerships or other parties covered in the register maintained under Section 189 of theAct. Accordingly the reporting under Clause 3 (iii) of the Companies (Auditorsreport) Order 2016 is not applicable to the Company.
(iv) According to information & explanations given to me in my opinion in respectof loan investment guarantees and security provisions of Sections 185 and 186 of theCompanies Act 2013 has been complied with.
(v) According to information and explanation given to me the Company has not acceptedany deposits from public accordingly the reporting under Clause 3 (v) of the Companies(Auditors report) Order 2016 is not applicable to the Company.
(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. I have broadly reviewed the same and is of the opinion that primafacie the prescribed accounts and records have been made and maintained. I have nothowever made a detailed examination of the records with a view to determine whether theyare accurate or complete.
(vii) (a) According to information and explanation given to me the Company is regularin depositing undisputed statutory dues with appropriate authorities including ProvidentFund Employees State Insurance Income Tax Duty of Customs Goods and Service tax Cessand any other statutory dues applicable to it.
(b) According to information and explanations provided to me no disputed amountspayable in respect of Provident Fund Employees' state insurance Income Tax Goods andService Tax Duty of Custom Cess and Other Statutory Dues were outstanding at the yearend for a period of more than six months from the date they became payable.
(c) According to information and explanations given to me there are no dues of Incometax Sales Tax Service Tax Duty of Custom Duty of Excise Goods and Service tax andCess which have not been deposited on account of any dispute.
(viii) According to the records of the Company examined by me and the information andexplanation given to me the Company has not defaulted in repayment of loans or borrowingsto any financial institution or bank. Also according to information and explanation givento me in my opinion the Company neither has any loans or borrowings from Government norissued any debentures.
(ix) According to the information and explanation given to me in my opinion theCompany has not raised money by way of initial public offer. However during the yearcompany has taken term loan from bank. In my opinion they were utilised for the purposefor which they raised the funds.
(x) According to information and explanation given to me no fraud by the Company orany fraud on the Company by its officers or employees has been noticed or reported duringthe year.
(xi) According to information & explanation given to me and based on my examinationof the records of the Company managerial remuneration has been paid or provided inaccordance with the requisite approvals mandated by the provisions of section 197 readwith schedule V to the Companies Act 2013.
(xii) The Company is not a Nidhi Company accordingly the reporting under Clause 3(xii) of the Companies (Auditors report) Order 2016 is not applicable to theCompany.
(xiii) According to information & explanation given to me in my opinion alltransactions with related parties are in compliance with sections 177 & 188 ofCompanies Act 2013 wherever applicable and the details have been disclosed in notes toaccounts of Financial Statements as per Indian Accounting Standard 24 - Related PartyDisclosures. (Refer Note no. 32)
(xiv) According to Information & Explanation given to me the Company has notissued shares by way of preferential allotment/private placement of shares or fully orpartly convertible debentures during the year under review accordingly provisions ofsection 42 of the Companies Act 2013 are not applicable to the Company.
(xv) According to information & explanation given to me the Company has notentered into non-cash transactions with directors or persons connected with him;accordingly provisions of section 192 are not applicable to the Company.
(xvi) According to information & explanation given to me the Company is notrequired to be registered under section 45-IA of the Reserve Bank of India Act 1934.
Dharmendra R. Prabhukhot
Membership No: 219438
Place : Belagavi
Date : June 30 2021
Annexure - B to the Auditors Report
Referred to in paragraph 2(f) of my Report on Other Legal and Regulatory Requirementsof even date
to the Members of KPT Industries Limited
Report on the Internal Financial Controls with reference to Ind AS Financial Statementsunder Clause (i) of Sub-section 3 of Section 143 of the Companies Act 2013 ("theAct")
I have audited the internal financial controls with reference to Ind AS FinancialStatements of KPT Industries Limited ("the Company") as of 31stMarch 2021 in conjunction with my audit of the Ind AS financial statements of the Companyfor the year ended on that date.
Managements 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 (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 Companys policies the safeguardingof its assets the prevention and detection of frauds and errors the accuracy andcompleteness of the accounting records and the timely preparation of reliable financialinformation as required under the Companies Act 2013.
My responsibility is to express an opinion on the Company's internal financial controlswith reference to financial statements based on my audit. I conducted my audit inaccordance with the Guidance Note on Audit of Internal Financial Controls over FinancialReporting (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 auditof Internal Financial Controls and both issued by the Institute of Chartered Accountantsof India. Those Standards and the Guidance Note require that I comply with ethicalrequirements and plan and perform the audit to obtain reasonable assurance about whetherinternal financial controls with reference to Financial Statements were established andmaintained and if such controls operated effectively in all material respects.
My audit involves performing procedures to obtain audit evidence about the existence ofthe internal financial controls with reference to financial statements and their operatingeffectiveness. My 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 control based onthe assessed risk. The procedures selected depend on the auditors judgmentincluding the assessment of the risks of material misstatement of the financialstatements whether due to fraud or error.
I believe that the audit evidence I have obtained is sufficient and appropriate toprovide a basis for my audit opinion on the Companys internal financial controlswith reference to financial statements.
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 with reference to the Ind AS Financial Statements including the possibility ofcollusion or improper management override of controls material misstatements due to erroror fraud may occur and not be detected. Also projections of any evaluation of theinternal financial controls over financial reporting with reference to Ind AS FinancialStatements to future periods are subject to the risk that the internal financial controlover financial reporting with reference to the Ind AS Financial Statements may becomeinadequate because of changes in conditions or that the degree of compliance with thepolicies or procedures may deteriorate.
In my opinion the Company has in all material respects an adequate internalfinancial controls with reference to financial statements and such internal financialcontrols were operating effectively as at 31st March 2021 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.
Dharmendra R. Prabhukhot
Membership No: 219438
Place : Belagavi
Date : June 30 2021