To the Members of -
Lakhotia Polyesters (India) Limited
Report on the Audit of the Standalone Financial Statements
We have audited the standalone financial statements of Lakhotia Polyesters (India)Limited ("the Company") which comprise the balance sheet as at 31st March 2019and the statement of Profit and Loss statement of changes in equity and statement of cashflows for the year then ended and notes to the financial statements including a summaryof significant accounting policies and other explanatory information.
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 Act in the manner so required and give a true and fair view in conformity with theaccounting principles generally accepted in India of the state of affairs of the Companyas at March 31 2019 and loss changes in equity and its cash flows for the year ended onthat 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 Companies Act 2013 and the Rulesthereunder and we have fulfilled our other ethical responsibilities in accordance withthese requirements and the Code of Ethics. We believe that the audit evidence we haveobtained is sufficient and appropriate to provide a basis for our opinion.
Key Audit Matters
Key audit matters are those matters that in our professional judgment were of mostsignificance in our audit of the financial statements of the current period. These matterswere addressed in the context of our audit of the financial statements as a whole and informing our opinion thereon and we do not provide a separate opinion on these matters.
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 financial statements that give a true and fair view of the financialposition financial performance changes in equity and cash flows of the Company inaccordance with6 the accounting principles generally accepted in India including theaccounting Standards specified under section 133 of the Act. 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 statement that givea 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.
Paragraph 40(b) of this SA explains that the shaded material below can be located in anAppendix to the auditor's report. Paragraph 40(c) explains that when law regulation orapplicable auditing standards expressly permit reference can be made to a website of anappropriate authority that contains the description of the auditor's responsibilitiesrather than including this material in the auditor's report provided that the descriptionon the website addresses and is not inconsistent with the description of the auditor'sresponsibilities below.
As part of an audit in accordance with SAs we exercise professional judgment andmaintain professional skepticism throughout the audit. We also -
Identify and assess the risks of material misstatement of the 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 control relevant to the audit in order todesign audit procedures that are appropriate in the circumstances. Under section 143(3)(i)of the Companies Act 2013 we are also responsible for expressing our opinion on whetherthe company has adequate internal financial controls system in place and the operatingeffectiveness of such controls.
Evaluate the appropriateness of accounting policies used and the reasonablenessof accounting estimates and related disclosures made by management.
Conclude on the appropriateness of management's use of the going concern basisof accounting and based on the audit evidence obtained whether a material uncertaintyexists related to events or conditions that may cast significant doubt on the Company'sability to continue as a going concern. If we conclude that a material uncertainty existswe are required to draw attention in our auditor's report to the related disclosures inthe 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 auditor'sreport. However future events or conditions may cause the Company to cease to continue asa 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
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 statement on the matters specified inparagraphs 3 and 4 of the Order to the extent applicable.
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 and the Cash Flow Statementdealt with by this Report are in agreement with the books of accounts.
(d) In our opinion the aforesaid standalone financial statements comply with theAccounting Standards specified under Section 133 of the Act read with Rule 7 of theCompanies (Accounts) Rules 2014
(e) On the basis of the written representations received from the directors as on 31stMarch 2019 taken on record by the Board of Directors none of the directors isdisqualified as on 31st March 2019 from being appointed as a director in terms of Section164(2) of the Act.
(f) With respect to the adequacy of the internal financial controls over financialreporting of the Company and the operating effectiveness of such controls refer to ourseparate Report in "Annexure A".
(g) With respect to the other matters to be included in the Auditor's Report inaccordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014 in our opinionand to the best of our information and according to the explanations given to us :
1. The Company has disclosed the impact of pending litigations on its financialposition in its financial statements - Refer Note 1(13) to the financial statements.
2. The Company did not have any long-term contracts including derivative contracts forwhich there were any material foreseeable.
3. There has been no delay in transferring amounts required to be transferred to theInvestor Education and Protection Fund by the Company
| ||For R R GUJRATHI & CO. |
| ||Chartered Accountants |
| ||Firm Registration No. 103382W |
|Nashik ||Rohit Rajmal Bafana Partner |
|31.05.2019 ||Membership No. 113955 |
ANNEXURE TO AUDITOR'S REPORT
Annexure referred to in paragraph "Report on Other Legal and RegulatoryRequirements" of Our Report of even date to the members of Lakhotia Polyesters(India) Limited on the accounts of the company for the year ended 31st March 2019.
On the basis of such checks as we considered appropriate and according to theinformation and explanations given to us during the course of our audit we report that-
(i) (a) The Company is maintaining proper records showing full particulars includingquantitative details and situation of fixed assets;
(b) As explained to us fixed assets have been physically verified by the management atregular intervals; as informed to us no material discrepancies were noticed on suchverification. But the record relating to physical verification of fixed assets has notbeen maintained;
(c) The title deeds of the immovable properties are held in the name of the company.
(ii) The inventories at all business places have been physically verified by themanagement from time to time. In our opinion the frequency of verification is reasonable.As explained to us there were no material discrepancies noticed on physical verificationof inventories as compared to the books of accounts. But the record relating to physicalverification of inventories has not been maintained.
(iii) (a) The company has granted loans to the 2 parties covered in the registermaintained under section 189 of the Companies Act 2013. Based upon the managementrepresentations as made to us we report that these advances are towards businesstransactions and in the normal course of business activity of the company.
(b) These loans are repayable on demand and hence no schedule of repayment isprepared. Interest has not been charged on these loans/advances.
(c) The due date for repayment of these advances is not fixed and hence the loan isnot overdue.
(iv) The company has complied with the provisions of section 186 of the Act. But hasnot complied with the provisions of section 185 by advancing a sum to 2 parties havingsubstantial interest of the Managing Director of the company.
(v) The Company has accepted deposits from its directors and relatives and has compliedwith the provisions of the Companies Act 2013.
(vi) As informed to us the Central Government has not prescribed maintenance of costrecords under sub-section (1) of Section 148 of the Act.
(vii) (a) According to the information and explanations given to us and based on therecords of the company examined by us the company is not regular in depositing theundisputed statutory dues including Provident Fund Employees' State Insurance Income-tax(TDS) Profession Tax as applicable with the appropriate authorities in India. Followingare the amounts due for more than six months but not paid -
|Particulars ||Amount Rs. |
|Profession Tax ||78875/- |
|Service Tax ||5038/- |
|Income Tax - TDS ||1033570/- |
|GST - Reverse Charge ||20030/- |
|TDS - Late Fees & Interest ||640810/- |
(b) According to the information and explanations given to us and based on the recordsof the company examined by us there are following disputed unpaid amounts -
|Particulars ||Amount Rs. in Lakhs ||Forum where dispute is pending |
|Customs Duty ||220.91 ||CESTAT Mumbai |
(viii) According to the records of the company examined by us and as per theinformation and explanations given to us the company has not defaulted in repayment ofdues to the banks. No debentures have been issued by the company and hence compliancewith the said clause is not applicable.
(ix) In our opinion and according to the information and explanations given to us thecompany has neither raised any term loan nor collected money by way of initial or furtherpublic offer during the financial year.
(x) During the course of our examination of the books and records of the companycarried in accordance with the auditing standards generally accepted in India we haveneither come across any instance of fraud on or by the Company noticed or reported duringthe course of our audit nor have we been informed of any such instance by the Management.
(xi) The company has paid managerial remuneration in accordance with the provisions ofsection 197 of the Act.
(xii) The company is not a nidhi company.
(xiii) All transactions with the related parties are in compliance with sections 177and 178 of the Act and the details have been disclosed in the Financial Statements asrequired by the applicable Accounting Standards.
(xiv) The company has not made any preferential allotment or private placement ofshares or fully or partly convertible debentures during the year under review.
(xv) The company has not entered into non - cash transactions with directors or personsrelated to them in the nature prescribed under section 192 of the Act.
(xvi) The company is not required to be registered under section 45 - IA of the ReserveBank of India Act 1934.
| ||For R R GUJRATHI & Co. |
| ||Chartered Accountants |
| ||FRN - 103382W |
|Nashik ||Rohit Rajmal Bafna FCA |
|31.05.2019 ||Membership No. 113955 |
Annexure B to the Independents Auditor's Report of even date on the standalonefinancial statements of M/s. Lakhotia Polyester (India) 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 internal financial controls over financial reporting of GrainotchIndustries Limited ("the Company") as of 31st March 2019 inconjunction with our audit of the standalone financial statements of the company for theyear ended on that date.
Managements 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 Reporting("the Guidance Note") issued by the Institute of Chartered Accountants of India(ICAI'). These responsibilities include the design implementation and maintenanceof adequate internal financial controls that were operating effectively for ensuring theorderly and efficient conduct of the business including adherence to the Company'spolicies the safeguarding of its assets the prevention and detection of frauds anderrors the accuracy and completeness of the accounting records and the timely preparationof reliable financial information as required under the Act.
Our responsibility is to express an opinion on the company's internal financialcontrols over financial reporting based upon our audit. We have conducted our audit inaccordance with the Guidance Note and the Standards on Auditing issued by the ICAI anddeemed to be prescribed under section 143(10) of the Act to the extent applicable to anaudit of Internal Financial Controls both Applicable to an audit of Internal FinancialControls and both issued by the ICAI. Those standards and the Guidance Note require thatwe comply with ethical requirements and plan and perform the audit to obtain reasonableassurance about whether adequate internal financial controls over financial reporting wasestablished and maintained and if such controls operated effectively in all materialrespects.
Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal financial controls systems over financial reporting and their operatingeffectiveness. Our audit of internal financial controls over financial reporting includedobtaining an understanding of internal financial controls over financial reportingassessing the risk that a material weakness exists and testing and evaluating the designand operating effectiveness of internal control based on the assessed risk. The proceduresselected depend on the auditor's judgment including the assessment of the risks ofmaterial misstatement of the financial statement 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 the generallyaccepted accounting principles. A company's internal financial control over financialreporting includes those policies and procedures that -
(i) Pertain to the maintenance of records that in reasonable detail accurately andfairly reflect the transactions and dispositions of the assets of the company.
(ii) Provide reasonable assurance that the transactions are recorded as necessary topermit preparation of financial statements in accordance with generally acceptedaccounting principles and that receipts and expenditures of the company are being madeonly in accordance with authorizations of the management and directors of the company; and
(iii) 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.
In our opinion the Company has in all material respect an adequate internalfinancial controls system over financial reporting and such internal financial controlsover financial reporting were operating effectively as at 31st March 2019based on the internal control over financial reporting criteria established by the Companyconsidering the essential components of internal control stated in the Guidance Noteissued by ICAI.
| ||For R R GUJRATHI & Co. |
| ||Chartered Accountants |
| ||FRN - 103382W |
|Nashik ||Rohit Rajmal Bafna FCA |
|31.05.2019 ||Membership No. 113955 |