TO THE MEMBERS OF
LAKSHMI FINANCE & INDUSTRIAL CORPORATION LIMITED HYDERABAD.
Report on the Audit of the Financial Statements Opinion
We have audited the financial statements of LAKSHMI FINANCE & INDUSTRIALCORPORATION LIMITED ("the Company") which comprise the balance sheet as at31st March 2021 the statement of Profit and Loss (including Other Comprehensive Income)statement of changes in equity statement of cash flows for the year then ended and notesto the financial statements including a summary of significant accounting policies andother explanatory information.
In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid financial statements give the information required by theCompanies Act 2013 ("the Act") in the manner so required and give a true andfair view in conformity with the accounting principles generally accepted in Indiaincluding the Indian Accounting Standards prescribed under section 133 of the Act readwith the Companies (Indian Accounting Standards) Rules 2015 as amended (Ind AS) of thestate of affairs of the Company as at March 312021 its profit the total comprehensiveincome changes in equity and its cash flows for the year 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 the Audit of theFinancial Statements section of our report. We are independent of the Company inaccordance with the Code of Ethics issued by the Institute of Chartered Accountants ofIndia together with the ethical requirements that are relevant to our audit of thefinancial statements under the provisions of the Act and the Rules thereunder and we havefulfilled our other ethical responsibilities in accordance with these requirements and theCode of Ethics. We believe that the audit evidence we have obtained is sufficient andappropriate to provide a basis for our opinion on the financial statements.
Key Audit Matters
Key Audit Matters (KAM') are those matters that in our professional judgementwere of most significance in our audit of the financial statements of current period.These matters were addressed in the context of our audit of the financial statements as awhole and in forming our opinion thereon and we do not provide a separate opinion onthese matters. We have determined the matters described below to be the key audit mattersto be communicated in our report
Deferred Tax Assets KAM Description
As per Ind AS 12 on Income Taxes' the company has recognised deferred tax assetin respect of deductible temporary differences. However the deferred tax asset has notbeen recognised for unused tax losses as the utilisation of deferred tax assets isdependent on the company's ability to generate future taxable profits sufficient toutilise tax losses before they expire. We determined this to be a key audit matter due tothe inherent limitations in estimation and uncertainty in forecasting the amount andtiming of future taxable profits and the utilisation of tax losses. Management is of theopinion that utilisation of the deferred tax assets arising on unused tax losses mainlydepends on future taxable income generated by the company. The future taxable incomeprojections contain estimates and tax strategies which may be significantly impacted bychanges in the Regulations industrial scenario the business and market conditions.Hence not recognised the deferred tax asset on unused tax losses.
Our audit procedures included among others evaluating the future estimated businessprojections and projected tax computations prepared by the company to assess therecognition and measurement of the current tax and deferred tax assets and liabilities andevaluate the compliance with the tax legislation. We paid attention to the long-termforecasts and critically assessed the assumptions and judgments underlying these forecastsby considering the historical accuracy of forecasts and the sensitivities of the profitforecasts. We assessed the adequacy and the level of estimation involved.
KAM Title Unused MAT Credit KAM Description
The company is not recognizing such MAT Credit Entitlement in respect of Tax paid onbook profits in earlier years as the utilisation of MAT Credit Entitlement is dependent onthe company's ability to generate future normal taxable profits sufficient to utilise theavailable MAT Credit before they expire which depends on the country's fiscal policies tobe announced in future years. We determined this to be a key audit matter due to theinherent limitations in estimation and uncertainty in forecasting the amount and timing offuture taxable profits changes in fiscal policies and utilisation of MAT credit.
Management is of the opinion that utilisation of the MAT credit mainly depends onfuture taxable income generated by the company. The future taxable income projectionscontain estimates and tax strategies which may be significantly impacted by changes in theregulations industrial scenario the business and its markets and therefore has notrecognised the MAT credit entitlement.
Our audit procedures included among others evaluating the projected tax computationsprepared by the company to assess the recognition and measurement of the current tax andevaluate the compliance with the tax legislation. We paid attention to the long-termforecasts and critically assessed the assumptions and judgments underlying these forecastsby considering the historical accuracy of forecasts and the sensitivities of the profitforecasts. We assessed the adequacy and the level of estimation involved.
Emphasis of Matter
We draw attention to Note 42 to the financial statements which explains themanagement's assessment of the internal and external information in respect of the ongoingglobal COVID-19 pandemic and its financial impact. The actual impact may be different fromthat is considered in assessing the Company's financial performance as the same is highlydependent on future global economic development indicators.
Our report is not modified in respect of this matter.
The Company's Board of Directors is responsible for the other information. The otherinformation comprises the information included in the company's annual report but does notinclude the financial statements and our auditor's report thereon.
Our opinion on the financial statements does not cover the other information and we donot 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 such other information ismaterially inconsistent with the financial statements or our knowledge obtained in theaudit or otherwise appears to be materially misstated. If based on the work we haveperformed we conclude that there is a material misstatement of this other information weare required to report that fact. We have nothing to report in this regard.
Responsibilities of Management and Those Charged with Governance for the FinancialStatements
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 financial statements that give a true and fair view of the financial positionfinancial performance total comprehensive income changes in equity and cash flows of theCompany in accordance with the accounting principles generally accepted in Indiaincluding the Indian Accounting Standards specified under section 133 of the Act. Thisresponsibility also includes maintenance of adequate accounting records in accordance withthe provisions of the Act for safeguarding of the assets of the Company and for preventingand detecting frauds and other irregularities; selection and application of appropriateaccounting policies; making judgments and estimates that are reasonable and prudent; anddesign implementation 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 management is responsible for assessing theCompany's 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 Company's financialreporting process. Auditor's Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financialstatements as a whole are free from material misstatement whether due to fraud or errorand to issue an auditor's report that includes our 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 fromfraud 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 Standards on Auditing we exercise professionaljudgment and maintain professional skepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of the 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 override of internal control.
Obtain an understanding of internal controls relevant to the audit in order todesign 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 hasadequate internal financial controls system in place and the operating effectiveness ofsuch 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 financial statements or if such disclosures are inadequate to modify ouropinion. Our conclusions are based on the audit evidence obtained up to the date of 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 financialstatements including the disclosures and whether the financial statements represent theunderlying transactions and events in a manner that achieves fair presentation.
We communicate with those charged with governance regarding among other matters theplanned scope and timing of the audit and significant audit findings including anysignificant deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have compliedwith relevant ethical requirements regarding independence and to communicate with themall relationships and other matters that may reasonably be thought to bear on ourindependence and where applicable related safeguards.
From the matters communicated with those charged with governance we determine thosematters that were of most significance in the audit of the financial statements of thecurrent period and are therefore the key audit matters. We describe these matters in ourauditor's report unless law or regulation precludes public disclosure about the matter orwhen in extremely rare circumstances we determine that a matter should not becommunicated in our report because the adverse consequences of doing so would reasonablybe expected to outweigh the public interest benefits of such communication.
Report on Other Legal and Regulatory Requirements:
1. As required by the Companies (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 mattersspecified 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 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 the statement of Changes inequity and the Cash Flow Statement dealt with by this Report are in agreement with thebooks of account.
(d) In our opinion the aforesaid financial statements comply with the AccountingStandards specified under Section 133 of the Act read with Rule 7 of the Companies(Accounts) Rules 2014.
(e) On the basis of the written representations received from the directors as on 31stMarch 2021 taken on record by the Board of Directors none of the directors isdisqualified as on 31st March 2021 from being appointed as a director in terms of Section164 (2) of the Act.
(f) With respect to the adequacy of the internal financial controls with reference tofinancial statements of the Company and the operating effectiveness of such controlsrefer to our separate Report in "Annexure B".
(g) With respect to the other matters to be included in the auditor's report inaccordance with the requirements of section 197(16) of the Act as amended in our opinionand to the best of our information and according to the explanations given to us theremuneration paid by the company to its Managing Director during the year is in accordancewith the provisions of Section 197 of the Act.
(h) 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 19 to the financial statements
ii. The Company did not have any longterm contracts including derivative contracts forwhich 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 K.S. Rao & Co. Chartered Accountants Firms' Registration Number: 003109S |
|Place: Hyderabad Date: 29.06.2021 ||Sd/- (T. SUKESH KUMAR) Partner Membership Number: 229963 UDIN:21229963AAAAAX4977 |
Annexure -A to the Auditor's Report:
The Annexure referred to in Para 1 under the heading of "Report on Other Legal andRegulatory Requirements" of our report of even date to the members of LAKSHMIFINANCE & INDUSTRIAL CORPORATION LIMITED HYDERABAD for the year ended March 312021.
1. a. The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets.
b. As explained to us the management has physically verified the fixed assets duringthe year and there is a regular programme of physical verification which in our opinionis reasonable having regard to the size of the Company and the nature of the assets. Nodiscrepancies were noticed on such verification.
c. According to the information and explanations given to us and on the basis of ourexamination of the records of the Company the title deeds of immovable properties areheld in the name of the Company except that Pattadar Pass books in respect of Landadmeasuring 40.86 acres situated at Adoni Kurnool Dist. (A.P.) are yet to obtained inthe name of the company.
2. The Company does not carry any inventory during the year. Therefore the provisionsof paragraph 3(ii)of the of the Companies (Auditor's Report) Order 2016 are not applicableto the Company.
3. a. During the year the Company has not granted any loans secured or unsecured toCompanies firms limited liability partnerships or other parties covered in the registermaintained under Section 189 of the Companies Act 2013.
b. In view of our comment in para (a) above Clause (III) (a) (b) and (c) of paragraph3 of the Companies (Auditor's Report) Order 2016 are not applicable to the Company.
4. In our opinion and according to the information and explanations given to us theCompany has not advanced any loan to any Director and no investments were made during theyear as referred to in sections 185 and 186 of the Act.Therefore the provisions ofparagraph 3(iv)of the Companies (Auditor's Report) Order 2016 are not applicable to theCompany.
5. The Company has not accepted any deposits from the public. Hence the provisions ofSections 73 to 76 or any other relevant provisions of the Companies Act 2013 and therules framed there under do not apply to this Company.
6. The Central Government has not prescribed the maintenance of cost records undersub-section (1) of 148 section of the Companies Act 2013 for the activities of theCompany.
7. a. According to the records the company is regular in depositing undisputedstatutory dues including provident fund employees state insurance income- taxsales-tax service tax duty of customs duty of excise value added tax cess and allother material statutory dues with the appropriate authorities and there were no arrearsof statutory dues as at March 312021 for a period of more than six months from the datethey became payable. b. According to the records of the Company and the information andexplanations given to us there were no dues of income tax or sales tax or service tax orduty of customs or duty of excise or value added tax have not been deposited on account ofany dispute.
8. As the Company has no borrowings the provisions of paragraph 3(viii) of theCompanies (Auditor's Report) Order 2016 are 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 theprovisions of paragraph 3 (ix) of the Companies (Auditor's Report) Order 2016 are notapplicable.
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 give to us and based on ourexamination of the records of the Company the Company has paid/provided for managerialremuneration in accordance with the requisite approvals mandated by the provisions ofsection 197 read with Schedule V to the Act.
12. In our opinion and according to the information and explanations given to us theCompany is not a Nidhi Company. Accordingly the provisions of paragraph 3(xii) of theCompanies (Auditor's Report) Order 2016 are not 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 given 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 the provisions ofparagraph 3(xv) of the Companies (Auditor's Report) Order 2016 are not applicable.
16. According to the information and explanations given to us and based on ourexamination of the records of the Company the Company is required to be registered undersection 45-IA of the Reserve Bank of India Act 1934 and such registration has beenobtained.
| ||for K.S. Rao & Co. Chartered Accountants Firms' Registration Number: 003109S |
|Place: Hyderabad |
|Sd/- (T. SUKESH KUMAR) |
Partner Membership Number: 229963
Annexure - B to the Auditors' Report
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 internal financial controls over financial reporting of LAKSHMIFINANCE & INDUSTRIAL CORPORATION LIMITED HYDERABAD ("the Company") as of 31March 2021 in conjunction with our audit of the financial statements of the Company forthe 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 (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 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.
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 applicable to an audit of Internal FinancialControls and both issued by the Institute of Chartered Accountants of India. ThoseStandards and the Guidance Note require that we comply with ethical requirements and planand perform the audit to obtain reasonable assurance about whether adequate internalfinancial controls over financial reporting was established and maintained and if suchcontrols operated effectively in all material respects. Our audit involves performingprocedures to obtain audit evidence about the adequacy of the internal financial controlssystem over financial reporting and their operating effectiveness. Our audit of internalfinancial controls over financial reporting included obtaining an understanding ofinternal financial controls over financial reporting assessing the risk that a materialweakness exists and testing and evaluating the design and operating effectiveness ofinternal control based on the assessed risk. The procedures selected depend on theauditor's judgment including the assessment of the risks of material misstatement of thefinancial 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.
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 authorisations of management and directors of the company; and
3. provide reasonable assurance regarding prevention or timely detection ofunauthorised 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.
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 31 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.
| ||for K.S. Rao & Co. Chartered Accountants Firms' Registration Number: 003109S |
|Place: Hyderabad |
|Sd/- (T. SUKESH KUMAR) |
Partner Membership Number: 229963