To the Members of MANGALAM TIMBER PRODUCTS LIMITED
Report on the Audit of the Ind AS financial statements
We have audited the Ind AS financial statements of Mangalam Timber Products Limited("the Company") which comprise the Balance Sheet as at 31st March 2019 thestatement of Profit and Loss statement of changes in equity and statement of cash flowsfor the year then ended and notes to the Ind AS 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 Ind AS financial statements give the information required bythe 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 2019loss changes in equity and its cash flows for the year ended on thatdate.
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 the IndAS financial 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 the Ind ASfinancial 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 Ind AS financial statements of the current period. Thesematters were addressed in the context of our audit of the Ind AS financial statements as awhole and in forming our opinion thereon and we do not provide a separate opinion onthese matters.
We have determined that there are no Key audit matters to communicate in our report.
Management's Responsibility for the Ind AS 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 Ind AS financial statements that give a true and fair view of the financialposition financial performance changes in equity and cash flows of the Company inaccordance with 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 implementationand maintenance of accounting policies; making judgments and estimates that are reasonableand prudent; 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 financialstatement that give a true and fair view and are free from material misstatement whetherdue to fraud or error.
In preparing the Ind AS financial statements management is responsible for assessingthe Company'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 Ind AS financial statements
Our objectives are to obtain reasonable assurance about whether the Ind AS 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 Ind AS financial statements.
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 Ind AS financialstatements whether due to fraud or error design and perform audit procedures responsiveto those risks and obtain audit evidence that is sufficient and appropriate to provide abasis for 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 Ind AS 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 Ind AS financialstatements including the disclosures and whether the Ind AS financial statementsrepresent the underlying transactions and events in a manner that achieves fairpresentation.
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 Ind AS financial statements ofthe current period and are therefore the key audit matters. We describe these matters inour auditor's report unless law or regulation precludes public disclosure about the matteror when 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 Companies (Auditors Report) Order 2016("the order") issued bythe Central Government of India in terms of Sub Section (11) of Section 143 of the Act onthe matters specified in paragraph 3 and 4 of the said order we further report that-
i) a) The Company is maintaining proper records showing full particulars includingquantitative details and situation of Fixed Assets.
b) The Company has a regular programme of physical verification of its fixed assets bywhich fixed assets are verified in a phased manner over a period of three years. Inaccordance with this programme certain fixed assets were verified during the year and nomaterial discrepancies were noticed on such verification. In our opinion this periodicityof physical verification is reasonable having regard to the size of the Company and thenature of its assets.
c) The title deeds of immovable properties as disclosed in Note no 1 on Fixed Assetsto the financial statements are held in the name of the Company except for
|Total number of cases ||Whether leasehold/ freehold ||Gross Block (Rs. in lacs) ||Net Block (Rs.in lacs) ||Remarks |
|1 ||Freehold ||1.94 ||1.94 ||- |
ii) The management has conducted physical verification of inventory during the year atreasonable intervals. The discrepancies between the physical stock and book records whichwere material in respect of certain items of inventories have been properly dealt in thebooks of account.
iii) a) The Company has not granted any loans secured or unsecured to companies firmsLimited Liability Partnership or other parties covered in the register maintained undersection 189 of Companies Act 2013.
b) Clause (iii)(a) (b) (c) of the aforesaid order are not applicable.
iv) In our opinion and according to information and explanations given to us theCompany has not granted any loan or provided any guarantee or security to the partiescovered under section 185 of the Act. In our opinion and according to information andexplanations given to us the Company has complied with provisions of section 186 of theAct in respect of investment made and guarantee or security provided.
v) The Company has not accepted any deposits from the public within the provisions ofsection 73 to 76 or any other relevant provisions of the Act and rules framed there under.
vi) The Central Government of India has not specified the maintenance of cost recordsunder sub-section (1) of Section 148 of the Act for the products of the Company.
vii) a) According to the records of the Company examined by us and according to theinformation and explanations given to us in our opinion the Company has not been regularin depositing undisputed statutory dues including Provident Fund employees stateinsurance income tax GST duty of customs duty of excise and any other materialstatutory dues as may be applicable with the appropriate authorities. The extent ofarrears of statutory dues outstanding as at the 31st March 2019 for a period of more thansix months from the date they become payable is as follows:
|Particulars ||Amount |
| ||(Rs. In Lacs) |
|P.F. ||23.21 |
|GST ||177.25 |
|TDS ||56.63 |
|SERVICE TAX ||20.02 |
b) According to the records of the Company examined by us and according to informationand explanations given to us there are no dues in respect of income tax sales taxservice tax duty of customs duty of excise value added tax which have not beendeposited on account of any dispute except as detailed hereunder:
|Name of Statute ||Nature of Dues ||Year ||Amount (Rs. in Lacs) ||Forum where dispute is pending |
|Central Excise Act 1944 ||Central Excise ||1993-94 ||3.49 ||Assistant Commissioner Central Excise Customs & Service Tax |
| ||Central Excise ||1988-92 ||126.57 ||Customs Excise & Service Tax Appellate Tribunal |
|Finance Act 1994 ||Service Tax ||2009-10 ||52.21 ||Customs Excise & Service Tax Appellate Tribunal |
|Bihar & Orissa Excise Act 1915 ||State Excise ||2002-03 ||21.39 ||Odisha High Court |
| ||State Excise ||2003-04 ||135.75 ||Odisha High Court |
| ||State Excise ||2004-05 ||170.90 ||Odisha High Court |
| ||State Excise ||2005-06 ||251.58 ||Odisha High Court |
| ||State Excise ||2006-07 ||267.53 ||Odisha High Court |
| ||State Excise ||2007-08 ||120.37 ||District Magistrate & Collector Nabarangpur |
| ||State Excise ||2008-09 ||103.20 ||District Magistrate & Collector Nabarangpur |
| ||State Excise ||2009-10 ||96.60 ||District Magistrate & Collector Nabarangpur |
| ||State Excise ||2010-11 ||57.60 ||District Magistrate & Collector Nabarangpur Odisha |
|Central Sales Tax Act 1956 ||Sales Tax ||1994-95 ||0.72 ||Deputy Commissioner Commercial Taxes Odisha |
| ||Sales Tax ||2000-01 ||93.56 ||Sales Tax Tribunal Odisha-Remanded to AO |
| ||Sales Tax ||2001-02 ||110.00 ||Sales Tax Tribunal Odisha-Remanded to AO |
| ||Sales Tax ||2002-03 ||70.12 ||Sales Tax Tribunal Odisha- Remanded to AO |
| ||Sales Tax ||2003-04 ||135.66 ||CST Appellate Authority Delhi. |
| ||Sales Tax ||2004-05 ||30.22 ||Sales Tax Tribunal Odisha- Remanded to AO |
| ||Sales Tax ||2012-13 ||195.57 ||Orissa High Court |
| ||Sales Tax ||1.10.15to31.3.16 ||4.61 ||Jt.Commissioner (Appeal)Odisha |
| ||Sales Tax ||1.04.16 to 30.06.17 ||13.94 ||Jt.Commissioner (Appeal)Odisha |
| ||Sales Tax ||2010-11 to 2014-15 ||24.65 ||Delhi Sales Tax |
| ||Entry Tax ||2000-01 ||8.11 ||Sales Tax Tribunal Odisha |
| ||Entry Tax ||2002-03 ||12.20 ||Jt.Commissioner(Appeal) Odisha |
| ||Sales Tax ||2002-03 ||1.85 ||Sales Tax Tribunal Odisha |
| ||VAT ||2005-06 ||17.20 ||Sales Tax Tribunal Odisha |
| ||VAT ||2007-09 ||14.96 ||Sales Tax Tribunal Odisha |
| ||VAT ||01.10.15 to 31.03.16 01.04.16 to 30.06.17 ||8.61 ||Jt.Commissioner(Appeal) Odisha |
| ||VAT || ||4.34 ||Jt.Commissioner(Appeal) Odisha |
viii) According to the information and explanations given to us the Company has notdefaulted in repayment of any loans or borrowings to financial institutions banks.Government or dues to debenture holders as at the Balance Sheet date.
ix) The Company has not raised any moneys by way of initial public offer furtherpublic offer (including debt instruments) and term loans. Accordingly the provisions ofClause 3(ix) of the Order are not applicable to the Company.
x) During the course of our examination of the books and records of the Companycarried out in accordance with the generally accepted auditing practices in India andaccording to the information and explanations given to us we have neither come across anyinstance of material fraud by the Company or on the Company by its officers or employeesnoticed or reported during the year nor have we been informed of any such case by theManagement.
xi) The Company has not paid/provided for managerial remuneration except sitting feeshence in accordance with the requisite approvals mandated by the provisions of section 197read with Schedule V to the Act is not applicable.
xii) As the Company is not a Nidhi Company and the Nidhi Rules 2014 are not applicableto it the provisions of Clause 3(xii) of the Order are not applicable to the Company.
xiii) According to the information and explanations given to us and based on ourexamination of the records of the Company the Company has entered into transactions withrelated parties in compliance with the provisions of Sections 177 and 188 of the Act. Thedetails of such related party transactions have been disclosed in the financial statementsas required under Accounting Standard (AS) 18 Related Party Disclosures specified underSection 133 of the Act read with Rule 7 of the Companies (Accounts) Rules 2014.
xiv) 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 under review. Accordingly the provisions of Clause 3(xiv) of the Order are notapplicable to the Company.
xv) The Company has not entered into any non-cash transactions with its directors orpersons connected with him. Accordingly the provisions of Clause 3(xv) of the Order arenot applicable to the Company.
xvi) The Company is not required to be registered under Section 45-IA of the ReserveBank of India Act 1934. Accordingly the provisions of Clause 3(xvi) of the Order are notapplicable to the Company.
As required by Section 143 (3) of the Act we report that:
1. 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.
2. 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.
3. The Balance Sheet the Statement of Profit and Loss the Cash Flow Statement andStatement of Changes in Equity dealt with by this Report are in agreement with the booksof account.
4. In our opinion the aforesaid Ind AS financial statements comply with the AccountingStandards specified under Section 133 of the Act read with Rule 7 of the Companies(Accounts) Rules 2014.
5. 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.
6. 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"; and
7. 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:
a) The Company has disclosed the impact of pending litigations on its financialposition in its Ind AS financial statements.
b) The Company did not have any long term contracts including derivative contracts forwhich there were any material foreseeable losses.
c) There is no amount required to be deposited/ transferred to the Investor Educationand Protection Fund by the Company during the year ended 31st March 2019.
Annexure A to Independent Auditors' Report Referred to in the Independent Auditor'sReport of even date to the member of Mangalam Timber Products Limited on the financialstatements for the year ended 31st March 2019
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 MangalamTimber Products Limited ("the Company") as at 31st March 2019 in conjunctionwith our audit of the standalone financial statements of the Company for the year ended onthat 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'). 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.
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 issued by ICAI and deemedto be prescribed under section 143(10) of the Companies Act 2013 to the extentapplicable to an audit of internal financial controls both applicable to an audit ofInternal Financial Controls and both issued by the Institute of Chartered Accountants ofIndia. Those Standards and the Guidance Note require that we comply with ethicalrequirements and plan and perform the audit to obtain reasonable assurance about whetheradequate 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 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 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 ofrecords that in reasonable detail accurately and fairly reflect the transactions anddispositions of the assets of the Company; (2) provide reasonable assurance that thetransactions are recorded as necessary to permit preparation of financial statements inaccordance with generally accepted accounting principles and that receipts andexpenditures of the Company are being made only in accordance with authorisations ofmanagement and directors of the Company; and (3) provide reasonable assurance regardingprevention or timely detection of unauthorised acquisition use or disposition of theCompany'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 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 31st March 2019 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 Manish Goyal & Associates
Firm Registration No. 007152C
Membership Number: 076096
Date: 1st May 2019