To the Members of MODISON METALS LIMITED
Report on the Audit of the Standalone Financial Statements
We have audited the Standalone Financial Statements of MODISON METALSLIMITED ("the Company") which comprise the Balance Sheet as at March 31 2020and the Statement of Profit and Loss (including Other Comprehensive Income) Statement ofChanges in Equity and Statement of Cash Flows for the year then ended and notes to theStandalone Financial Statements including a summary of the significant accountingpolicies and other explanatory information (hereinafter referred to as "StandaloneFinancial Statements").
In our opinion and to the best of our information and according to theexplanations given to us the aforesaid Standalone Financial Statements give theinformation required by the Companies Act 2013 ("the Act") in the manner sorequired and give a true and fair view in conformity with the accounting principlesgenerally accepted in India of the state of affairs of the Company as at March 31 2020and its profit including other comprehensive income changes in equity and its cash flowsfor the year ended on that date.
Basis for Opinion
We conducted our audit in accordance with the Standards on Auditing(SAs) specified under Section 143(10) of the Act. Our responsibilities under thoseStandards are further described in the Auditor's Responsibilities for the Audit ofthe Standalone Financial Statements Section of our report. We are independent of theCompany in accordance with the Code of Ethics issued by the Institute of CharteredAccountants of India together with ethical requirements that are relevant to our audit ofthe Standalone Financial Statements under the provisions of the Companies Act 2013 andthe Rules there under and we have fulfilled our other ethical responsibilities inaccordance with these requirements and the Code of Ethics. We believe that the auditevidence we have obtained is sufficient and appropriate to provide a basis for ouropinion.
Key Audit Matters
Key audit matters are those matters that in our professional judgmentwere of most significance in our audit of the Standalone Financial Statements of thecurrent period. These matters were addressed in the context of our audit of the StandaloneFinancial Statements as a whole and in forming our opinion thereon and we do not providea separate opinion on these matters.
|Sr No. Key Audit Matter ||Response to Key Audit Matter |
|1 Inventory Valuation ||Principle Audit Procedures |
|As at March 31 2020 the Company held Rs. 6056.78 Lakhs of inventory representing 31.75% of total assets (out of which inventory amounting to Rs. 634.57 Lakhs is in transit). Given the size of the inventory balance relative to the total assets of the Company and the estimates and judgments described below the valuation of inventory required significant audit attention. ||We have performed the following procedures over the valuation of inventory:- |
| ||? For sample inventory items re-performed the weighted average cost calculation; |
|As disclosed in Note No. 2(F) inventories are held at the lower of cost or net realisable value determined by using the weighted average cost method except for inventories that are booked by customers for their process work which are valued at the rates at which the same is booked by them. ||? We tested that the ageing report used by management by verifying a sample of aged inventory with the last recorded invoice; |
|Management undertake the following procedure for determining valuation of closing inventory: || |
| Use Inventory ageing report to check slow moving & non-moving inventory to evaluate write down if any required; ||? On a sample basis we tested the net realizable value of inventory of raw material lines with recent selling prices of finished goods wherein these raw materials are used; |
| Perform a line-by-line analysis of remaining inventory to ensure it is stated at the lower of cost or net realizable value and a specific write down is recognized if required. || |
| For valuing inventory work in progress the Company follows norm based on management's estimates and judgments. ||? Held discussions with management to understand and corroborate the assumptions applied in estimating the inventory norms used for valuation of the inventory held as work in progress. |
| ||We also made enquiries with the management and considered the results of our testing above to determine whether any specific write downs were further required. |
| ||From the procedures performed we have no matters to report. |
|2 Derivative Hedging of Commodity Price Risk ||Principle Audit Procedures |
|The Company uses derivative financial instruments to hedge commodity price risks. These instruments are typically used to hedge prices of silver which is the main raw material used by the Company for production of its finished products. Due to estimates and judgments involved in entering to derivative contract it requires significant audit attention. ||We have performed the following procedures to verify the accounting of derivative financial instruments. |
| ||? Obtaining an understanding of the risk management policies and testing key controls for the use and the measurement of derivative financial instruments |
|Management undertakes the following procedure for accounting of derivative contract: || |
| Perform reconciliation of derivative financials instrument with third party confirmation || |
| Checking of minimum margin money required to keep with third party. || |
| Booking of hedging gain / loss on daily basis ||? Reconciling derivative financial instruments data to third party confirmations. |
|(For the year ended March 31 2020 the Company has net hedging loss of Rs.281.93 Lakhs and had net hedging profit of Rs.293.05 Lakhs for the year ended March 31 2019 Shown under exceptional item.) ||? Reconciling hedging gain / loss with third party confirmations Considering the appropriateness of disclosures in relation to derivative financial instruments. |
The Company's management and Board of Directors are responsiblefor the other information. The other information comprises the information included in theCompany's annual report but does not include the Standalone Financial Statements andour auditors' report thereon.
Our opinion on the Standalone Financial Statements does not cover theother information and we do not express any form of assurance conclusion thereon.
In connection with our audit of the Standalone Financial Statementsour responsibility is to read the other information and in doing so consider whether theother information is materially inconsistent with the Standalone Financial Statements orour knowledge obtained in the audit or otherwise appears to be materially misstated. Ifbased on the work we have performed we conclude that there is a material misstatement ofthis other information; we are required to report that fact. We have nothing to report inthis regard.
Responsibilities of Management and Those charged with Governance forthe Standalone Financial Statements
The Company's management and Board of Directors is responsible forthe matters stated in Section 134(5) of the Act with respect to the preparation of theseStandalone Financial Statements that give a true and fair view of financial positionfinancial performance changes in equity and cash flows of the Company in accordance withthe accounting principles generally accepted in India including the Indian AccountingStandards (Ind AS) 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 were operatingeffectively for ensuring the accuracy and completeness of the accounting records relevantto the preparation and presentation of the Standalone Financial Statements that give atrue and fair view and are free from material misstatement whether due to fraud or error.
In preparing the Standalone Financial Statements management and Boardof Directors are responsible for assessing the Company's ability to continue as agoing concern disclosing as applicable matters related to going concern and using thegoing concern basis of accounting unless management either intends to liquidate theCompany or to cease operations or has no realistic alternative but to do so.
Board of Directors is also responsible for overseeing theCompany's financial reporting process.
Auditor's Responsibilities for the Audit of the StandaloneFinancial Statements
Our objectives are to obtain reasonable assurance about whether theStandalone Financial Statements as a whole are free from material misstatement whetherdue to fraud or error and to issue an auditor's report that includes our opinion.Reasonable assurance is a high level of assurance but is not a guarantee that an auditconducted in accordance with SAs will always detect a material misstatement when itexists. Misstatements can arise from fraud or error and are considered material ifindividually or in the aggregate they could reasonably be expected to influence theeconomic decisions of users taken on the basis of these Standalone Financial Statements.
As part of an audit in accordance with SAs we exercise professionaljudgment and maintain professional skepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of theStandalone Financial Statements whether due to fraud or error design and perform auditprocedures responsive to those risks and obtain audit evidence that is sufficient andappropriate to provide a basis for our opinion. The risk of not detecting a materialmisstatement resulting from fraud is higher than for one resulting from error as fraudmay involve collusion forgery intentional omissions misrepresentations or the overrideof internal control.
Obtain an understanding of internal control relevant to theaudit in order to design audit procedures that are appropriate in the circumstances. Undersection 143(3)(i) of the Companies Act 2013 we are also responsible for expressing ouropinion on whether the company has adequate internal financial controls system in placeand the operating effectiveness of such controls.
Evaluate the appropriateness of accounting policies used and thereasonableness of accounting estimates and related disclosures made by management.
Conclude on the appropriateness of management's use of thegoing concern basis of accounting and based on the audit evidence obtained whether amaterial uncertainty exists related to events or conditions that may cast significantdoubt on the Company's ability to continue as a going concern. If we conclude that amaterial uncertainty exists we are required to draw attention in our auditor'sreport to the related disclosures in the Standalone Financial Statements or if suchdisclosures are inadequate to modify our opinion. Our conclusions are based on the auditevidence obtained up to the date of our auditor's report. However future events orconditions may cause the Company to cease to continue as a going concern.
Evaluate the overall presentation structure and content of theStandalone Financial Statements including the disclosures and whether the StandaloneFinancial Statements represent the underlying transactions and events in a manner thatachieves fair presentation.
We communicate with those charged with governance regarding amongother matters the planned scope and timing of the audit and significant audit findingsincluding any significant deficiencies in internal control that we identify during ouraudit.
We also provide those charged with governance with a statement that wehave complied with relevant ethical requirements regarding independence and tocommunicate with them all relationships and other matters that may reasonably be thoughtto bear on our independence and where applicable related safeguards.
From the matters communicated with those charged with governance wedetermine those matters that were of most significance in the audit of the StandaloneFinancial Statements of the current period and are therefore the key audit matters. Wedescribe these matters in our auditor's report unless law or regulation precludespublic disclosure about the matter or when in extremely rare circumstances we determinethat a matter should not be communicated in our report because the adverse consequences ofdoing so would reasonably be expected to outweigh the public interest benefits of suchcommunication.
Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditors' Report) Order 2016("the Order") issued by the Central Government of India in terms of Section 143(11) of the 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 explanationswhich to the best of our knowledge and belief were necessary for the purposes of our auditof the aforesaid Standalone Financial Statements.
b) In our opinion proper books of account as required by law relatingto preparation of the aforesaid Standalone Financial Statements 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 (including othercomprehensive income) the Statement of Changes in Equity and the Cash Flow Statementdealt with by this Report are in agreement with the books of account maintained for thepurpose of preparation of the Standalone Financial Statements.
d) In our opinion the aforesaid Standalone Financial Statements complywith the Accounting Standards specified under Section 133 of the Act read with Rule 7 ofthe Companies (Account) Rules 2014.
e) On the basis of the written representations received from thedirectors as on March 31 2020 taken on record by the Board of Directors none of thedirectors is disqualified as on March 31 2020 from being appointed as a director in termsof Section 164(2) of the Act.
f) With respect to the adequacy of the internal financial controls overfinancial reporting of the Company and the operating effectiveness of such controls referto our separate Report in "Annexure B"
g) With respect to the other matters to be included in theAuditors' Report in accordance with Rule 11 of the Companies (Audit and Auditors)Rules 2014 in our opinion and to the best of our information and according to theexplanations given to us:
i. The Company has disclosed the impact of pending litigations on itsfinancial position in its Standalone Financial Statements (Refer Note. 29(a) to the Ind AsStandalone Financial Statements).
ii. The Company did not have any material foreseeable losses onlong-term contracts including derivatives contracts.
iii. There has been no delay in transferring amounts required to betransferred to the Investor Education and Protection Fund by the company.
For Kanu Doshi Associates LLP Chartered Accountants FRN. No. 104746W/W100096
Kunal Vakharia Partner
Membership no. 148916 UDIN:
Place: Mumbai Date: 20th July 2020
ANNEXURE A TO THE AUDITOR'S REPORT
Referred to in paragraph 2 of Report on other Legal and RegulatoryRequirements' in our Report of even date on the accounts of MODISON METALS LIMITEDfor the year ended March 312020
i. (a) The Company is maintaining proper records showing fullparticulars including quantitative details and situation of fixed assets.
(b) The fixed assets of the company are physically verified by theManagement according to a phased programme designed to cover all the items over a periodof three years which in our opinion is reasonable having regard to the size of thecompany and the nature of its assets. Pursuant to the programme a portion of the fixedassets has been physically verified by the management during the year and discrepanciesnoticed between the book records and the physical inventories were not material and havebeen properly dealt with in the accounts.
(c) According to information and explanations given to us and on thebasis of our examination of the records of the Company the title deeds of immovableproperties are held in the name of the Company.
ii. During the year the inventories have been physically verified bythe management. In our opinion the frequency of verification is reasonable. Thediscrepancies noticed on physical verification of inventories as compared to the bookrecords have been properly dealt with in the books of accounts.
iii. As informed to us the Company has not granted loans secured orunsecured to companies firms limited liability partnerships or other parties covered inthe register maintained under Section 189 of the Act. Hence sub clauses (a) to (c) ofclause 3(iii) are not applicable to the Company.
iv. The company has complied with provisions of Section 186 of theCompanies Act 2013 in respect of investments made and Section 185 of the Companies Act2013 is not applicable as there were no such loans securities or guarantees providedduring the year.
v. The Company has not accepted any deposits from the public within themeaning of Sections 73 74 75 and 76 of the Act and the rules framed there under to theextent notified and therefore clause 3(v) is not applicable.
vi. The Central Government has prescribed maintenance of cost recordsfor the company under sub Section (1) of Section 148 of the Companies Act 2013 and suchaccounts and records have been made and maintained by the Company. However no detailedexaminations of such records have been carried out by us.
vii. (a) The Company is regular in depositing with appropriateauthorities undisputed statutory dues including Provident Fund Employees' StateInsurance Income Tax Customs Duty Cess Goods & Service Tax and any other materialstatutory dues applicable to it.
(b) According to the records of the Company there are no dues ofIncome Tax Sales Tax and Excise Duty which have not been deposited on account of anydispute except disclosed below:
The disputed amounts that have not been deposited in respect of IncomeTax Sales Tax and Excise Duty are as under:
|Sr. No. Name of the Statute ||Nature of the dues ||Forum where the dues is pending ||Rs. In Lakhs |
|1. Central Excise Act 1944 ||Demand of Excise Duty on Sales ||Customs Excise & Service Tax Appellate Tribunal ||937.41 |
|2. Income tax Act 1961 ||Income tax (AY 17-18) ||Commissioner of Income Tax (Appeals) ||8.74 |
| ||Income tax (AY 16-17) ||Commissioner of Income Tax (Appeals) ||12.74 |
| ||Income tax (AY 14-15) ||Tribunal ||1.74 |
| ||I ncome tax (AY 10-11) ||High Court ||25.11 |
|3. Gujarat Value Added tax Act 2003. ||Sales Tax (FY 15-16) ||Dy. Commissioner of State Tax 1st Appeals ||5.40 |
viii. According to the records of the Company examined by us andinformation and explanation given to us the Company has not defaulted in repayment ofdues to banks during the year. The company has not taken any loan or borrowing fromgovernment financial institution and has not issued debentures during the year.
ix. The Company has not raised any money by way of public issue/further offer (including debt instruments) and through term loans during the year.Accordingly clause 3(ix) of the order is not applicable to the Company.
x. Based upon the audit procedures performed and information andexplanation given by the management we report that no fraud by the Company and no fraudon the Company by its officers or employees has been noticed or reported during the year.
xi. In our opinion and according to the information and explanationsgiven to us the managerial remuneration has been paid or provided in accordance with therequisite approvals mandated by the provisions of Section 197 read with schedule V to theCompanies Act 2013.
xii. In our opinion and according to the information and explanationsgiven to us the nature of the activities of the company does not attract any specialstatue applicable to Nidhi Company. Accordingly clause 3(xii) of the order is notapplicable to the company.
xiii. According to the information and explanation given to us andbased on our examination of the records of the Company transactions with the relatedparties are in compliance with Sec 177 and 188 of Companies Act 2013 where applicable anddetails of such transactions have been disclosed in the Standalone Financial Statements asrequired by the applicable accounting standards.
xiv. In our opinion and according to the information and explanationsgiven to us and based on our examination of the records of the Company the company hasnot made any preferential allotment or private placement of shares or fully or partlyconvertible debentures during the year. Accordingly clause 3 (xiv) of the Order is notapplicable to the Company.
xv. In our opinion and according to the information and explanationsgiven to us and based on our examination of the records of the Company the company hasnot entered into any non-cash transactions with directors or persons connected with him.Accordingly clause 3 (xv) of the Order is not applicable to the Company.
xvi. The company is not required to be registered under Sec 45-IA ofthe Reserve Bank of India Act 1934. Accordingly clause 3 (xvi) of the Order is notapplicable to the Company.
For Kanu Doshi Associates LLP
Firm registration No: 104746W/W100096
Kunal Vakharia Partner
Membership No: 148916 UDIN:
Place: Mumbai Date: 20th July 2020
ANNEXURE B TO THE AUDITORS' REPORT
(Referred to in paragraph 2(f) of Report on Other Legal andRegulatory Requirements' section of our report of even date)
Report on the Internal Financial Controls under Clause (i) ofSub-Section 3 of Section 143 of the Companies Act 2013 ("the Act")
We have audited the internal financial controls over financialreporting of MODISON METALS LIMITED ("the Company") as of March 31 2020 inconjunction with our audit of the Standalone Financial Statements of the Company for theyear ended on that date.
Management's Responsibility for Internal Financial Controls
The Company's Board of Directors are responsible for establishingand maintaining internal financial controls based on the internal control over financialreporting criteria established by the Company considering the essential components ofinternal control stated in the Guidance Note on Audit of Internal Financial Controls overFinancial Reporting issued by the Institute of Chartered Accountants of India(ICAI'). These responsibilities include the design implementation andmaintenance of adequate internal financial controls that were operating effectively forensuring the orderly and efficient conduct of its business including adherence toCompany's policies the safeguarding of its assets the prevention and detection offrauds and errors the accuracy and completeness of the accounting records and the timelypreparation of reliable financial information as required under the Companies Act 2013.
Our responsibility is to express an opinion on the Company's internalfinancial controls over financial reporting based on our audit. We conducted our audit inaccordance with the Guidance Note on Audit of Internal Financial Controls over FinancialReporting (the "Guidance Note") and the Standards on Auditing issued by ICAIand deemed to be prescribed under Section 143(10) of the Companies Act 2013 to theextent applicable to an audit of internal financial controls both issued by the ICAI.Those Standards and the Guidance Note require that we comply with ethical requirements andplan and 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 performing procedures to obtain audit evidence aboutthe adequacy of the internal financial controls system over financial reporting and theiroperating effectiveness. Our audit of internal financial controls over financial reportingincluded obtaining an understanding of internal financial controls over financialreporting assessing the risk that a material weakness exists and testing and evaluatingthe design and operating effectiveness of internal control based on the assessed risk. Theprocedures selected depend on the auditor's judgment including the assessment of therisks of material misstatement of the Standalone Financial Statements whether due tofraud or error.
We believe that the audit evidence we have obtained is sufficient andappropriate to provide a basis for our audit opinion on the Company's internalfinancial controls system over financial reporting.
Meaning of Internal Financial Controls over Financial Reporting
A Company's internal financial control over financial reporting is aprocess designed to provide reasonable assurance regarding the reliability of financialreporting and the preparation of Standalone Financial Statements for external purposes inaccordance with generally accepted accounting principles. A Company's internal financialcontrol over financial reporting includes those policies and procedures that (1) pertainto the maintenance of records that in reasonable detail accurately and fairly reflectthe transactions and dispositions of the assets of the Company; (2) provide reasonableassurance that transactions are recorded as necessary to permit preparation of StandaloneFinancial Statements in accordance with generally accepted accounting principles and thatreceipts and expenditures of the Company are being made only in accordance withauthorizations of management and directors of the Company; and (3) provide reasonableassurance regarding prevention or timely detection of unauthorized acquisition use ordisposition of the Company's assets that could have a material effect on the StandaloneFinancial Statements.
Inherent Limitations of Internal Financial Controls over FinancialReporting
Because of the inherent limitations of internal financial controls overfinancial reporting including the possibility of collusion or improper managementoverride of controls material misstatements due to error or fraud may occur and not bedetected. Also projections of any evaluation of the internal financial controls overfinancial reporting to future periods are subject to the risk that the internal financialcontrol over financial reporting may become inadequate because of changes in conditionsor that the degree of compliance with the policies or procedures may deteriorate.
In our opinion to the best of our information and according to theexplanations given to us 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 2020 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 ICAI.
For Kanu Doshi Associates LLP
Firm registration No: 104746W/W100096
Kunal Vakharia Partner
Membership No: 148916 UDIN:
Place: Mumbai Date: 20th July 2020