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Kumaka Industries Ltd.

BSE: 526923 Sector: Health care
NSE: ASHOKORG ISIN Code: N.A.
BSE 05:30 | 01 Jan Kumaka Industries Ltd
NSE 05:30 | 01 Jan Kumaka Industries Ltd

Kumaka Industries Ltd. (ASHOKORG) - Auditors Report

Company auditors report

TO THE MEMBERS OF KUMAKA INDUSTRIES LIMITED Report on the Standalone Ind AS FinancialStatements

We have audited the accompanying standalone Ind AS financial statements of KUMAKAINDUSTRIES LIMITED (‘the Company') which comprise the Balance Sheet as at 31March 2020 the Statement of Profit and Loss (including other comprehensive income) theStatement of Cash Flows and the Statement of Changes in Equity for the year then ended anda summary of the significant accounting policies and other explana tory information(herein after referred to as "Standalone Ind AS Financial Statements").

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 c onformity with the Indian Accounting Standards prescribed under section133 of the Act read with the Companies (Indian Accounting Standards) Rules 2015 asamended ("Ind AS") and other accounting principles generally accepted in Indiaof the state of affairs of the Company as at March 31 2020the loss and totalcomprehensive income changes in equity and its cash flows for the year ended on that date

Basis for Opinion

We conducted our audit of the standalone financial statements in accordance with theStandards on Auditing specified undersection143 (10) of the Act (SAs). Ourresponsibilities under those Standards are further described in the Auditor'sResponsibilities for the Aud it of the Standalone Financial Statements section of ourreport. We are independent of the Company in accordance with the Code of Ethics issued bythe Institute of Chartered Accountants of India (ICAI) together with the independencerequirements that are relevant to our audit of the standalone financial statements underthe provisions of the Act and the Rules made thereunder and we have fulfilled our otherethical responsibilities in accordance with these requirements and the ICAI's Code ofEthics. We believe that the audit evidence we have obtained is sufficient and appropriateto provide a basis for our audit opinion on the standalone financial statements.

Emphasis of Matter

We draw attention to Note 32 to the standalone financial results which describes thatthe extent to which the COVID -19 Pandemic will impact the Company's results will dependon future developments which are highly uncertain. Our opinion is not modified in respectof this matter.

Key Audit Matters

Key audit matters are those matters that in our professional judgment were of mostsignificance in our audit of the standalone financial statements of the current period.These matters were addressed in the context of our audit of the standalone financialstatements as a whole and informing our opinion thereon and we do not provide a separateopinion on these matters. We have determined that there are no key audit matters tocommunicate in our report.

Information Other than the Standalone Ind AS Financial Statements and Auditor's ReportThereon

The Company's Board of Directors is responsible for the preparation of the otherinformation. The other information comprises the information included in the ManagementDiscussion and Analysis Board's Report including Annexures to Board's Report BusinessResponsibility Report Corporate Governance and Shareholder's Information but does notinclude the standalone financial statements and our auditor's report thereon.

Our opinion on the standalone financial statements does not cover the other informationand we do not express any form of assurance inclusion 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 during thecourse of our audit or otherwise appears to be materially misstated. If based on the workwe have performed we conclude that there is a material misstatement of this otherinformation; we are required to report that fact. We have nothing to report in thisregard.

Management's Responsibility for the Standalone Financial Statements

The Company's Board of Directors is responsible for the matters stated in Section134(5) of the Companies Act 2013 ("the Act") with respect to the preparation ofthese standalone Ind AS financial statements that give a true and fair view of thefinancial position financial performance including other comprehensive income cash flowsand changes in equity of the Company in accordance with the accounting principlesgenerally accepted in India including the Indian Accounting Standards (Ind AS) prescribedunder Section 133 of the Act read with relevant rules issued thereunder.

This responsibility also includes maintenance of adequate accounting records inaccordance with the provisions of the Act for safeguarding the assets of the Company andfor preventing and detecting frauds and other irregularities; selection and application ofappropriate accounting policies; making judgments and estimates that are reasonable andprudent; and design implementation and maintenance of adequate internal financialcontrols that were operating effectively for ensuring the accuracy and completeness ofthe accounting records relevant to the preparation and presentation of the standalone IndAS financial statements that give a true and fair view and are free from materialmisstatement 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.

The Board of Directors are responsible for overseeing the Company's financial reportingprocess.

Auditor's Responsibility

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 useras taken 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 standalone 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 our 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 over-ride of internal control.

Obtain an understanding of internal financial controls relevant to the audit in orderto design audit procedures that are appropriate in the circumstances. Undersection143(3)(i)of the Act 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 reasonableness ofaccounting estimates and related disclosures made by management.

Conclude on the appropriateness of management's use of the going concern basis ofaccounting 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 in adequate to modify ouropinion. Our conclusions are based on the audit evidence obtained up to the date of ourauditor's report. However future events or conditions may cause the Company to cease tocontinue as a going concern.

Evaluate the overall presentation structure and content of the standalone financialstatements including the disclosures and whether the Standalone Ind AS FinancialStatements represent the underlying transactions and event s in a manner that achievesfair presentation.

Materiality is the magnitude of misstatements in the standalone financial statementsthat individually or in aggregate makes it probable that the economic decisions of areason ably knowledgeable user of the financial statements may be influenced. We co nsiderquantitative materiality and qualitative factors in (i) planning the scope of our auditwork and in evaluating the results of our work; and (ii) to ev aluate the effect of anyidentified misstatements in the financial statements.

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 be on our independence and where applicable related safeguards.

From the matters communicated with those charged with governance we determine thosematters that were of most significance i n the audit of the standalone financialstatements of the current period and are therefore the key audit matters. We describethese matters in our auditor's report unless law or regulation precludes public disclosureabout the matter or when in extremely rare circumstances we det ermine that a mattershould not be communicated in our report because the adverse consequences of doings wouldreasonably be expected to outweigh the public interest benefits of such communication.

Report on Other Legal and Regulatory Requirements

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

1. As required by the Companies (Auditor's Report) Order 2016 ("Order")issued by the Central Government of India in terms of sub-section (11) of section 143 ofthe Act We give in the "Annexure A" a statement of the matters specified inparagraphs 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 appears from our examination of those books.

c) the balance sheet the statement of profit and loss the statement of cash flows andthe statement of changes in equity dealt with by this Report are in agreement with thebooks 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 relevant rulesissued there under;

e) on the basis of the written representations received from the directors as on 31March 2020 taken on record by the Board of Directors none of the directors isdisqualified as on 31 March 2020 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 myseparate Report in "Annexure B".

g) With respect to the other matters included in the Auditor's Report in accordancewith Rule 11 of the Companies (Audit and Auditors) Rules 2014 and to best of myinformation and according to the explanations given to us: -

a. The Company has disclosed the impact of pending litigations on its financialposition in its standalone Ind AS financial statements Refer Note 21to the financialstatements.

b. The Company does not have any long-term contracts including derivatives contractsfor which there were any material foreseeable losses.

c. There has been no delay in transferring amounts required to be transferred to theInvestor Education and Protection Fund by the Company during the year ended.

Annexure "A" to the Independent Auditor's Report

Re: Kumaka Industries Limited

The Annexure referred to in our Independent Auditor's Report to the members of thecompany on the standalone Ind AS financial statements for the year ended 31stMarch 2020 we report that: -

1. a. The Company has maintained proper records to show full particularsincluding quantitative details and situation of its fixed assets.

b. The fixed assets of the Company have been physically verified by the Managementduring the year and no material discrepancies between the book records and the physicalinventory have been noticed. In our opinion this periodicity of physical verification isreasonable having regard to the size of the company and the nature of its assets.

c. According to the information and explanations given to us and on the basis ofour examination of the records of the Company the title deeds of immovable properties areheld in the name of the Company.

2. Since the company is having only intellectual property rights as its inventorytherefore the Para 3(ii) of the order relating to physical verification of inventories isnot applicable.

3. The Company has granted loans secured or unsecured to companies firms or otherparties covered in the register maintained under Section 189 of the Companies Act. As perthe explanation given by the company because of the stringent financial condition of theformer subsidiary and firm. Company has neither charged nor received any interest. In ouropinion the terms and conditions are prejudicial to the interest of the company. Scope ofrecovery is also remote. There is neither recovery of principal amount nor interest duringthe year. No steps for recovery of principal amount and interest have been taken by thecompany during the year.

4. In our opinion and according to the information and explanations given to us theCompany has complied with the provisions of Section 186 of the Companies Act 2013 inrespect of loans given. The Company has not granted any loans or made any investments orprovided any guarantees or security to the parties covered under Section 185 of the Act.However in the past years the company had given unsecured loan and had acquired equityshares in former subsidiary company in which the key managerial personnel are directorsand has given advance in the past years to a partnership firm in which relatives of adirector are partners within the meaning of section 185 and 186 of the Companies Act2013.

5. The company has not accepted the deposits from public as per the provisions ofsections 73 to 76 or any other relevant provisions of the Companies Act and the rulesframed there under.

6. The Central Government has not prescribed the maintenance of cost records undersub-section (1) of section 148 of the Companies Act for any activities of the Company.

7. (a) In our opinion and according to explanation given to us the company is regularin depositing undisputed statutory dues including provident fund employees' stateinsurance income-tax sales-tax wealth tax service tax duty of customs duty ofexcise value added tax cess and any other statutory dues with the appropriateauthorities. There is no arrears of outstanding statutory dues as at the last day of thefinancial year concerned for a period of more than six months from the date they becamepayable.

(b) According to the information and explanations given to us and the records of thecompany of the company examined by us ther e are no dues in respect of income-tax salestax wealth tax service tax gst excise duty custom duty and cess as at March 31 2020which have not been deposited on account of any dispute. The particulars of dues of valueadded tax and service tax as at March 31 2020 which has not been deposited on account ofdispute is as follows : -

(c) According to the information and explanations given to us and the records of thecompany of the company examined by us there are no dues in respect of income-tax salestax wealth tax service tax gst excise duty custom duty and cess as at March 31 2020which have not been deposited on account of any dispute. The particulars of dues of valueadded tax and service tax as at March 31 2020 which has not been deposited on account ofdispute is as follows: -

Nature of Dues Amount (Rs.) Period to which amount related Forum where the dispute is pending
Income Tax 3697936 AY 1995-96 Mumbai High Court
Income Tax 714567 AY 1996-97 ITAT
Income Tax 3051500 AY 2012-13 DY. Commissioner of Income Tax
Excise Matters 9000000 1996-97 CESTAT
Income Tax 4451160 AY 2014-15 CIT (APPEALS)

8. As per the Information & explanation given to us the company has not borrowedmoney from banks/financial institutions nor issued any debentures and hence the questionof default in repayment of dues does not arise. Accordingly clause (viii) of paragraph 3of the Order is not applicable.

9. The Company did not raise any money by way of initial public offer or further publicoffer (including debt instruments) and term loans during the year. Accordingly clause(ix) of paragraph 3 of the Order is not applicable.

10. According to the information and explanations given to us no material fraud by theCompany or on the Company by its officers or employees has been noticed or reported duringthe course of our audit.

11. According to the information and explanations given to us and on the basis of ourexamination of the records of the Company the company has not paid/provided formanagerial remuneration.

12. In our opinion and according to the information and explanations given to us theCompany is not a nidhi company. Accordingly clause (xii) of paragraph 3 of the Order isnot applicable.

13. According to the information and explanations given to us and based on ourexamination of the records of the Company transactions with the related parties are incompliance with sections 177 and 188 of the Act where applicable and details of suchtransactions have been disclosed in the financial statements as required by the applicableaccounting standards.

14. According to the information and explanations give to us and based on ourexamination of the records of the Company the Company has not made any preferentialallotment or private placement of shares or fully or partly convertible debentures duringthe year.

15. According to the information and explanations given to us and based on ourexamination of the records of the Company the Company has not entered into non-cashtransactions with directors or persons connected with him. Accordingly clause (xv) ofparagraph 3 of the Order is not applicable.

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

Annexure "B" to the Independent Auditor's Report of even date on theStandalone Financial Statements of Kumaka Industries Limited

Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section143 of the Companies Act 2013 ("the Act") We have audited the internalfinancial controls over financial reporting of Kumaka Industries Limited ("theCompany") as of March 31 2020 in conjunction with my audit of the financialstatements 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 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". These responsibilitiesinclude the design implementation and maintenance of adequate internal financial controlsthat were operating effectively for ensuring the orderly and efficient conduct of itsbusiness including adherence to company's policies the safeguarding of its assets theprevention and detection of frauds and errors the accuracy and completeness of theaccounting records and the timely preparation of reliable financial information asrequired under the Companies Act 2013.

Auditors' Responsibility

Our responsibility is to express an opinion on the Company's internal financialcontrols over Financial reporting based on our audit. We conducted our audit in accordancewith the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting(the "Guidance Note") and the Standards on Auditing to the extent applicable toan audit of internal financial controls both issued by the Institute of CharteredAccountants of India. Those Standards and the Guidance Note require that We comply withethical requirements and plan and perform the audit to obtain reasonable assurance aboutwhether adequate internal financial controls over financial reporting was established andmaintained and if such controls operated effectively in all material respects.

Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal financial controls system over financial reporting and their operatingeffectiveness.

Our audit of internal financial controls over financial reporting included obtaining anunderstanding of internal financial controls over financial reporting assessing the riskthat a material weakness exists and testing and evaluating the design and operatingeffectiveness of internal control based on the assessed risk. The procedures selecteddepend on the auditor's judgment including the assessment of the risks of materialmisstatement 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 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 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.

Opinion

In our opinion the Company has in all material respects an adequate internalfinancial controls system over financial reporting and such internal financial controlsover financial reporting were operating effectively as at March 31 2020 based on"the internal control over financial reporting criteria established by the companyconsidering the essential components of internal control stated in the Guidance Note onAudit of Internal Financial Controls Over Financial Reporting issued by the Institute ofChartered Accountant of India.

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