TO THE MEMBERS OF KSHITIJ POLYLINE LIMITED
Report on the Audit of the Financial Statements
We have audited the financial statements of Kshitij Polyline Limited (`the Company') which comprise the Balance Sheet as at 31st March 2019 the Statement of Profit and Loss the statement of Cash Flow for the year then ended and a summary of significant accounting policies and other explanatory information.
In our opinion and to the best of our information and according to the explanations given to usexcept for the effects of the matter described in the Basis for Qualified Opinion section of our report the aforesaid financial statements give a true and fair view in conformity with the accounting principles generally accepted in India of state of affairs of the Company as at 31st March2019 and profit and its cash flows for the year ended on that date.
Basis for Qualified Opinion
The Company is liable to provide for gratuity as per the provisions of the Gratuity Act 1972 and the Accounting Standard 15 Employee Benefits as prescribed under section 133 of the Companies Act 2013. However the Company has not created any provision towards the Gratuity liability based on the estimation. Accordingly the profits of the Company are overstated to the extent of such provision.
We conducted our audit in accordance with Standards on Auditing (SAs) specified under section 143(10) of the Companies Act 2013 (`the Act'). Our responsibilities under those Standards are further described in the Auditor's Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Company in accordance with the Code of Ethics issued by the Institute of Chartered Accountants of India together with the ethical requirements that are relevant to our audit of the financial statements under the provisions of the Act and we have fulfilled our other ethical responsibilities in accordance with these requirements and the ICAI's Code of Ethics. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our qualified opinion.
Management's Responsibility for the Financial Statements
The Company's Board of Directors is responsible for the matters stated in section 134(5) of the Act with respect to the preparation of these financial statements that give a true and fair view of the financial position financial performance and cash flows of the Company in accordance with the accounting principles generally accepted in India including the Accounting Standards specified under section 133 of the Act read with Rule 7 of the Companies (Accounts) Rules 2014. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the accuracy and completeness of accounting records relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement whether due to fraud or error.
In preparing the financial statements management and Board of Directors are responsible for assessing the Company's ability to continue as a going concern disclosing as applicable matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations or has no realistic alternative but to do so.
Those Board of Directors are also responsible for overseeing the Company's financial reporting process.
Auditor's Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement whether due to fraud or error and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with SAs will 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 they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
As part of an audit in accordance with SAs we exercise professional judgment and maintain professional scepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of the financial statements whether due to fraud or error design and perform audit procedures responsive to those risks and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error as fraud may involve collusion forgery intentional omissions misrepresentations or the override of internal control.
Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances. Under Section 143(3)(i) of the Act we are also responsible for expressing our opinion on whether the company has adequate internal financial controls with reference to financial statements in place and the operating effectiveness of such controls.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
Conclude on the appropriateness of management's use of the going concern basis of accounting and based on the audit evidence obtained whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company's ability to continue as a going concern. If we conclude that a material uncertainty exists we are required to draw attention in our auditor's report to the related disclosures in the financial statements or if such disclosures are inadequate to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors' report. However future events or conditions may cause the Company to cease to continue as a going concern.
Evaluate the overall presentation structure and content of the financial statements including the disclosures and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
We communicate with those charged with governance regarding among other matters the planned scope and timing of the audit and significant audit findings including any significant deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence and where applicable related safeguards.
From the matters communicated with those charged with governance we determine those matters that were of most significance in the audit of the financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditors' report unless law or regulation precludes public disclosure about the matter or when in extremely rare circumstances we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be 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 give in Annexure A a statement on the matters specified in 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 except for the matter described in the Basis for Qualified Opinion paragraph all the information and explanations which to the best of 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 the Company so far as it appears from our examination of those books.
c. The Balance Sheet the Statement of Profit and Loss and the Cash Flow Statement dealt with by this Report are in agreement with the books of account;
d. In our opinion and according to the information and explanations given to us the remuneration paid by the Company to its directors during the current year is in accordance with the provisions of Section 197 of the Act. The remuneration paid to any director is not in excess of the limit laid down under Section 197 of the Act. The Ministry of Corporate Affairs has not prescribed other details under Section 197(16) which are required to be commented upon by us.
e. In our opinion the aforesaid financial statements comply with the Accounting Standards specified under Section 133 of the Act read with Rule 7 of the Companies (Accounts) Rules 2014.
f. On the basis of written representations received from the directors as on 31st March 2019 and taken on record by the Board of Directors none of the directors is disqualified as on 31st March 2019 from being appointed as a director in terms of section 164(2) of the Act; and
g. With respect to the adequacy of the internal financial controls over financial reporting of the Company and the operating effectiveness of such controls refer to our separate Report in Annexure B.
h. With respect to the other matters to be included in the Auditors' Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014 in our opinion and to the best of our information and according to the explanations given to us:
i) the Company does not have any pending litigations which would impact its financial position;
ii) the Company did not have any long-term contracts including derivative contracts for which there were any material foreseeable losses;
iii) there were no amounts which were required to be transferred to Investors Education and Protection Fund by the Company.
For R. M. Ajgaonkar& Associates.
Firm's Registration Number: 117247W
Membership Number: 143685
ANNEXURE `A TO INDEPENDENT AUDITORS' REPORT
Re: Kshitij Polyline Ltd.
The Annexure referred to in our Independent Auditors' Report to the members of the Company on the Financial Statements for the year ended 31st March 2019 we report the following:
1) (a) The Company has maintained proper records showing full particulars including quantitative details and situation of the fixed asset.
(b) As explained to us the fixed assets have been physically verified by the management during the year which in our opinion is reasonable having regards to the nature of the assets. No material discrepancies have been noticed on such verification.
(c) According to the information and explanations given to us and on the basis of our examination of the records of the Company the title deeds of the immovable properties are held in the name of the Company which is hypothecated against secured loan.
2) The management has conducted physical verification of Inventories at reasonable intervals during the year. In our opinion the frequency of such verification is reasonable. As explained to us the material discrepancies noticed during verification have been properly dealt with in the books of accounts.
3) According to the information and explanations given to us the Company has not 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 Act. Accordingly the provisions of paragraph 3(iii) (a) (b) and (c) of the Order are not applicable to the Company.
4) In our opinion and according to the information and explanations given to us the Company has complied with the provisions of Section 185 and 186 of the Act with respect to the loans given investments made guarantees and securities given.
5) The Company has not accepted any deposits from the public within the meaning of the directives issued by the Reserve Bank of India provisions of Section 73 to 76 of the Act any other relevant provisions of the Act and the relevant rules framed thereunder.
6) On the basis of the information and explanations given to us the Central Government has not prescribed maintenance of cost records under sub-section (1) of section 148 of the Companies Act 2013 for the activities of the Company. Therefore the provisions of paragraph 3(vi) of the Order are not applicable to the Company.
7) (a) As per the information and explanations given to us the Company is generally regular in depositing undisputed statutory dues including provident fund income tax duty of customs goods and service tax cess and any other statutory dues with the appropriate authorities wherever applicable during the year. As per the information and explanations given to us and the records examined by us there are no undisputed arrears of statutory dues which are outstanding as at the last day of the financial year for more than six months from the date they became payable.
(b)As explained to us and according to the records of the Company there are no disputed dues outstanding on account of income tax sales tax service tax or goods and service tax or duty of customs or duty of excise or value added tax.
8) As per the information and explanations given to us and on the basis of records examined by us the Company has not defaulted in repayment of the loansor borrowings from banks and financial institutions. The Company has taken borrowing from Government and has not issued any debentures.
9) According to the information and explanation given to us during the year the Company has completed the Initial public Offer and raised a total capital of Rs.87500000/- comprising a fresh issue of 2500000 equity shares of face value of Rs.10/- each for cash at a premium of Rs.25/- per share. The equity shares of the Company were listed on NSE SME platform effective from 8thOctober 2018. The proceeds from IPO have been utilised for the purpose of the objects as stated in the prospectus dated 07thSeptember 2018 as follows.
|Particulars||Proposed amount as per prospectus||Amount Utilized||Amount Un utilized|
|To purchase of Machineries and Equipment's to manufacture the Laminated sheet Wiro and PP Sheet suitable for stationery and office products||42845000||38246994||4598006|
|To meet working capital requirement||32500000||32500000||-|
|General Corporate Expenses||4500000||4500000||-|
10) To the best of our knowledge and belief and according to the information and explanations given to us no fraud by the Company or no material fraud on the Company by its officers on employees have been noticed or reported during the year.
11) In our opinion and according to the information and explanations given to us and based on examination of the records of the Company the Company has paid / provided managerial remuneration in accordance with the requisite approvals mandated by the provisions of Section 197 read with Schedule V to the Act.
12) As per the information and explanation given to us the nature of activities of the Company does not attract any provisions of special statute applicable to a Nidhi Company as prescribed under section 406 of the Act. Therefore the provisions of paragraph 3(xii) of the Order are not applicable to the Company.
13) According to the information and explanations given to us and based on our examination of the records of the Company all transactions with the related parties are in compliance with sections 177 and 188 of Act where applicable and the details have been disclosed in the financial statements as required by the applicable accounting standards.
14) As per the information and explanation given to us the Company has not made preferential allotment / private placement of shares. Therefore the requirements under paragraph 3 (xiv) is not applicable to the Company.
15) According to the information and explanations given to us the Company has not entered into any non-cash transactions with directors or persons connected with him as specified under section 192 of the Act. Therefore the provisions of paragraph 3(xv) of the Order are not applicable to the Company.
16) According to the information and explanations given to us the Company is not required to be registered under section 45-IA of the Reserve Bank of India Act 1934.
For R. M. Ajgaonkar& Associates
Firm's Registration No:117247W
Membership No. 143685
REPORT ON THE INTERNAL FINANCIAL CONTROLS UNDER CLAUSE (i) OF SUB-SECTION 3 OF SECTION 143 OF THE COMPANIES ACT 2013 (THE ACT').
We have audited the internal financial controls over financial reporting of Kshitij Polyline Limited (`the Company') as of 31stMarch 2019 in conjunction with our audit of the financial statements of the 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 internal financial controls based on the internal financial control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls over Financial Reporting issued by the Institute of Chartered Accountants of India (`ICAI'). These responsibilities include the design implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the orderly and efficient conduct of its business including adherence to Company's policies the safeguarding of its assets the prevention and detection of frauds and errors the accuracy and completeness of the accounting records and the timely preparation of reliable financial information as required under the Act.
Our responsibility is to express an opinion on the Company's internal financial controls over financial reporting based on our audit. We conducted our audit in accordance with the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting (`the Guidance Note') and the Standard on Auditing issued by ICAI and deemed to be prescribed under section 143(10) of the Act to the extent applicable to an audit of internal financial controls both applicable to an audit of Internal Financial Controls and both issued by the ICAI. Those Standards and the Guidance Note require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether adequate internal financial controls over financial reporting was established and maintained and if such controls operated effectively in all material respects.
Our audit involves performing procedures to obtain audit evidence about the adequacy of the internal financial controls system over financial reporting and their operating effectiveness. Our audit of internal financial controls over financial reporting included obtaining an understanding of internal financial controls over financial reporting assessing the risk that a material weakness exists and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. The procedures selected depend on the auditors' judgment including the assessment of the risks of material misstatement of the financial statements whether due to fraud or error.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the Company's internal financial controls system over financial reporting.
MEANING OF INTERNAL FINANCIAL CONTROLS OVER FINANCIAL REPORTING
A Company's internal financial control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A Company's internal financial control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the Company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles and that receipts and expenditures of the Company are being made only in accordance with authorisations of the management and directors of the Company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorised acquisition use or disposition of the Company'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 financial reporting including the possibility of collusion or improper management override of controls material misstatement due to error or fraud may occur and not be detected. Also projections of any evaluation of the internal financial controls over financial reporting to future periods are subject to the risk that the internal financial controls over financial reporting may become inadequate because of changes in conditions or that the degree of compliance with the policies or procedures may deteriorate.
In our opinion the Company has in all material respects an adequate internal financial controls system over financial reporting and such internal financial controls over financial reporting were operating effectively as at 31st March 2019 based on the internal financial control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note issued by the ICAI.
For R.M. Ajgaonkar& Associates.
Firm Registration No. 117247W
Membership No. 143685