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Mold-Tek Packaging Ltd.

BSE: 533080 Sector: Industrials
NSE: MOLDTKPAC ISIN Code: INE893J01029
BSE 00:00 | 07 Aug 273.65 7.95
(2.99%)
OPEN

266.70

HIGH

280.25

LOW

266.70

NSE 00:00 | 07 Aug 276.40 10.95
(4.13%)
OPEN

267.70

HIGH

280.00

LOW

266.50

OPEN 266.70
PREVIOUS CLOSE 265.70
VOLUME 10926
52-Week high 322.00
52-Week low 145.80
P/E 24.45
Mkt Cap.(Rs cr) 759
Buy Price 273.65
Buy Qty 949.00
Sell Price 273.65
Sell Qty 1.00
OPEN 266.70
CLOSE 265.70
VOLUME 10926
52-Week high 322.00
52-Week low 145.80
P/E 24.45
Mkt Cap.(Rs cr) 759
Buy Price 273.65
Buy Qty 949.00
Sell Price 273.65
Sell Qty 1.00

Mold-Tek Packaging Ltd. (MOLDTKPAC) - Auditors Report

Company auditors report

To the Members of Mold-Tek Packaging Limited

Report on the Audit of the Standalone Financial Statements

Opinion

We have audited the standalone financial statements of Mold-Tek Packaging Limited("the Company") which comprise the Standalone Balance Sheet as at 31stMarch 2019 and the Standalone Statement of Profit and Loss (including Other ComprehensiveIncome) the Standalone Statement of Changes in Equity and Standalone 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 Companies Act 2013 ("the Act") in the manner so required and give a trueand fair view in conformity with the Indian Accounting Standards prescribed under section133 of the Act read with the Companies (Indian Accounting Standards) Rules 2015 asamended ("Ind AS") and other accounting principles generally accepted in Indiaof the state of affairs of the Company as at March 31 2019 and its profit totalcomprehensive income changes in equity and its cash flows for the year ended on thatdate.

Basis for Opinion

We conducted our audit of the standalone financial statements in accordance with theStandards on Auditing (SAs) specified under section 143(10) of the Act. Ourresponsibilities under those Standards are further described in the Auditor'sResponsibilities for the Audit of the Standalone Financial Statements section of ourreport. We are independent of the Company in accordance with the Code of Ethics issued bythe Institute of Chartered Accountants of India ("ICAI") together with theethical requirements that are relevant to our audit of the standalone financial statementsunder the provisions of the Act and the Rules thereunder and we have fulfilled our otherethical responsibilities in accordance with these requirements and the ICAI's Code ofEthics. We believe that the audit evidence we have obtained is sufficient and appropriateto provide a basis for our opinion on the standalone financial statements.

Key Audit Matters

Key audit matters are those matters that in our professional judgement were of mostsignificance in our audit of the standalone financial statements of the current period.These matters were addressed in the context of our audit of the standalone financialstatements as a whole and in forming our opinion thereon and we do not provide aseparate opinion on these matters. We have determined the matters described below to bethe key audit matters to be communicated in our report.

Key Audit Matter Auditor's Response
1. Revenue Recognition Principal Audit Procedures
Revenue from the sale of goods (hereinafter referred to as "Revenue") is recognised when the Company performs its obligation to its customers and the amount of revenue can be measured reliably and recovery of the consideration is probable. The timing of such recognition is when the control over goods is transferred to the customer which is mainly upon delivery. Our audit approach was a combination of test of internal controls and substantive procedures including:
The timing of revenue recognition is relevant to the reported performance of the Company. The management considers revenue as a key measure for evaluation of performance. There is a risk of revenue being recorded before the control over goods is transferred. • Assessing the appropriateness of Company's revenue recognition in line with Ind AS 115 - Revenue from Contracts with Customers.
Refer Note 2 to the standalone financial statements - Significant Accounting Policies. • Evaluating the design and implementation of Company's controls in respect of revenue recognition.
• Testing the effectiveness of such controls over revenue cut off the year end.
• Testing the supporting documentation for sales transactions recorded during the period closer to the year-end and subsequent to the year-end including examination of credit notes issued after the year end to determine whether revenue was recognised in the correct period.
2. Appropriateness of capitalisation of costs as per Ind AS 16 Property Plant and Equipment Principal Audit Procedures
During the year the Company capitalised Rs.3297.62 lakhs as Property plant and equipment in respect of its plants at Mysuru and Vizag. We have performed the following procedures in relation to testing of capitalization of costs:
Given the significance of the capital expenditure there is a risk that elements of costs that are ineligible for capitalization in accordance with the recognition criteria provided in Ind AS 16 - Property Plant and Equipment are capitalized. • Understood evaluated and tested the design and operating effectiveness of key controls relating to capitalization of various costs incurred in relation to Property Plant and Equipment.
Refer Note 2 to the standalone financial statements - Significant Accounting Policies. • Performed test of details with focus on those items that we considered significant due to their amount or nature and tested a number of items capitalized during the year against underlying supporting documents to ascertain nature of costs and whether they meet the recognition criteria provided in Ind AS 16 in this regard.
• Reviewed the other costs which are debited to Statement of Profit and Loss to ascertain whether these meet the criteria for capitalization.
3. Adequacy of the provision made for the impairment losses of equity investment and expected credit losses on other financial assets which are due from wholly owned subsidiary. Principal Audit Procedures
The management has decided to substantially wind down the operations of the wholly owned subsidiary "Mold-Tek Packaging FZE UAE in view of the reduced viability. We have performed the following audit procedures:
Given the significance of the matter there is a risk that adequate provision is not made in accordance with Ind AS 109 - Financial Instruments. • Reviewed the future cash flows from realisation of net assets of the subsidiary which are estimated by the management.
• Reviewed the available net asset position to the Company after repayment of all outside liabilities like bank loans trade payables and statutory liabilities etc.
• Ensured that the net receivable (after provision) from the subsidiary shown in books is adequately covered by the expected cash flows.

Other Information

The Company's Board of Directors is responsible for the other information. The otherinformation in in the annual report does not include the standalone financial statementsconsolidated financial statements and our auditor's report thereon. The other informationis expected to be made available to us after the date of this auditor's report.

Our opinion on the standalone financial statements does not cover the other informationand we will not express any form of assurance conclusion thereon.

In connection with our audit of the standalone financial statements our responsibilityis to read the other information and in doing so consider whether the other informationis materially inconsistent with the standalone financial statements or our knowledgeobtained in the audit or otherwise appears to be materially misstated.

When we read the other information included in the annual report if we conclude thatthere is a material misstatement therein we are required to communicate the matter tothose charged with governance.

Emphasis of Matter

In view of the substantial winding down of the operations of the wholly ownedsubsidiary "Mold-Tek Packaging FZE UAE the Company has provided Rs.1003.20 Lakhstowards impairment of the investment and provision of Rs.146.83 Lakhs is made towardsexpected credit loss on the realization of the trade receivables. We draw attention to theimpairment and expected credit loss and our opinion is not modified in respect of thismatter. (Refer Note 30 of the standalone financial statements)

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 Act with respect to the preparation of these standalone financial statementsthat give a true and fair view of the financial position financial performance totalcomprehensive income changes in equity and cash flows of the Company in accordance withthe Ind AS and other accounting principles generally accepted in India. 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 appropriateimplementation and maintenance of accounting policies; making judgments and estimates thatare reasonable and prudent; and design implementation and maintenance of adequateinternal financial controls that were operating effectively for ensuring the accuracy andcompleteness of the accounting records relevant to the preparation and presentation ofthe financial statements that give a true and fair view and are free from materialmisstatement whether due to fraud or error.

In preparing the standalone financial statements management is responsible forassessing the Company's ability to continue as a going concern disclosing as applicablematters related to going concern and using the going concern basis of accounting unlessmanagement either intends to liquidate the Company or to cease operations or has norealistic alternative but to do so.

The Board of Directors are also responsible for overseeing the Company's financialreporting process.

Auditor's Responsibilities for the Audit of the Standalone Financial Statements

Our objectives are to obtain reasonable assurance about whether the standalonefinancial statements as a whole are free from material misstatement whether due to fraudor error and to issue an auditor's report that includes our opinion. Reasonable assuranceis a high level of assurance but is not a guarantee that an audit conducted in accordancewith SAs will always detect a material misstatement when it exists. Misstatements canarise from fraud or error and are considered material if individually or in theaggregate they could reasonably be expected to influence the economic decisions of userstaken on the basis of these standalone 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 standalonefinancial statements whether due to fraud or error design and perform audit proceduresresponsive to those risks and obtain audit evidence that is sufficient and appropriate toprovide a basis for our opinion. The risk of not detecting a material misstatementresulting from fraud is higher than for one resulting from error as fraud may involvecollusion forgery intentional omissions misrepresentations or the override of internalcontrol.

• 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 onwhether the company has adequate internal financial controls system in place and theoperating effectiveness 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 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 standalonefinancial statements including the disclosures and whether the standalone financialstatements represent the underlying transactions and events in a manner that achieves fairpresentation.

Materiality is the magnitude of misstatements in the standalone financial statementsthat individually or in aggregate makes it probable that the economic decisions of areasonably knowledgeable user of the standalone financial statements may be influenced. Weconsider quantitative materiality and qualitative factors in (i) planning the scope of ouraudit work and in evaluating the results of our work; and (ii) to evaluate the effect ofany identified misstatements in the standalone financial statements.

We communicate with those charged with governance regarding among other matters theplanned scope and timing of the audit and significant audit findings including anysignificant deficiencies in internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have compliedwith relevant ethical requirements regarding independence and to communicate with themall relationships and other matters that may reasonably be thought to 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 standalone financial statementsof the current period and are therefore the key audit matters. We describe these mattersin our auditor's report unless law or regulation precludes public disclosure about thematter or 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

1. As required by Section 143(3) of the Act based on our audit 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 including Other ComprehensiveIncome Statement of Changes in Equity and the Cash Flow Statement dealt with by thisreport are in agreement with the books of account.

d) In our opinion the aforesaid standalonefinancial statements comply with the IndianAccounting Standards prescribed under Section 133 of the Act read with Rule 7 of Companies(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 the requirements of section 197(16) of the Act as amended:

In our opinion and to the best of our information and according to the explanationsgiven to us the remuneration paid by the Company to its directors during the year is inaccordance with the provision 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 itsstandalone financial statements(Refer Note 32);

ii. The Company did not have any long-term contracts including derivative contracts forwhich there were any material foreseeable losses;

iii. There were no amounts which were required to be transferred to the InvestorEducation and Protection Fund by the Company.

2. As required by the Companies (Auditor's Report) Order 2016 ("the Order")issued by the Central Government of India in terms of Section 143 (11) of the Act we givein "Annexure B" a statement on the matters specified in paragraphs 3 and 4 ofthe Order.

For M.Anandam & Co.
Chartered accountants
(Firm Registration No.000125S)
( M.R.Vikram
Place: Hyderabad Partner
Date: 27th May 2019 Membership No.021012

Annexure - A to the Independent Auditors' Report

(Referred to in paragraph 1(f) under 'Report on Other Legal Regulatory Requirements'section of our report to the Members of the Company of even date)

Report on the Internal Financial Controls Over Financial Reporting under Clause (i) ofSub-section 3 of Section 143 of the Companies Act 2013 ("the Act")

We have audited the internal financial controls over financial reporting of Mold-TekPackaging Limited ("the Company") as of 31 March 2019 in conjunction with ouraudit of the standalone financial statements of the Company for the year ended on thatdate.

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.

Auditor's Responsibility

Our responsibility is to express an opinion on the Company's internal financialcontrols over financial reporting based on our audit. We conducted our audit in accordancewith the Guidance Note on Audit of Internal Financial Controls over Financial Reporting(the "Guidance Note") and the Standards on Auditing issued by ICAI andprescribed under section 143(10) of the Companies Act 2013 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 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 standalone financial statements whether due to fraud orerror.

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 thattransactions 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 standalone financial statements.

Inherent Limitations of Internal Financial Controls over Financial Reporting

Because of the inherent limitations of internal financial controls over financialreporting including the possibility of collusion or improper management override ofcontrols material misstatements due to error or fraud may occur and not be detected.Also projections of any evaluation of the internal financial controls over financialreporting to future periods are subject to the risk that the internal financial controlover financial reporting may become inadequate because of changes in conditions or thatthe degree of compliance with the policies or procedures may deteriorate.

Opinion

In our opinion to the best of our information and according to the explanations givento us the Company has in all material respects an adequate internal financial controlssystem over financial reporting and such internal financial controls over financialreporting were operating effectively as at 31 March 2019 based on the internal controlover financial reporting criteria established by the Company considering the essentialcomponents of internal control stated in the Guidance Note on Audit of Internal FinancialControls Over Financial Reporting issued by the Institute of Chartered Accountants ofIndia.

For M.Anandam & Co.
Chartered accountants
(Firm Registration No.000125S)
M.R.Vikram
Place: Hyderabad Partner
Date: 27th May 2019 Membership No.021012

Annexure "B" to the Independent Auditor's Report

Annexure - B to the Independent Auditors' Report

(Referred to in paragraph 2 under "Report on Other Legal and RegulatoryRequirements" section of our report of even date)

(i) (a) The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets.

(b) As explained to us the fixed assets have been physically verified by themanagement in a periodical manner which in our opinion is reasonable having regard tothe size of the Company and the nature of its business. No material discrepancies werenoticed 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.

(ii) The inventories have been physically verified during the year by the management.The discrepancies noticed on verification between the physical stocks and book recordswere not material.

(iii) The Company has granted unsecured loan to wholly owned subsidiary covered in theregister maintained under section 189 of the Act.

a) In our opinion and according to the information given to us the term and conditionsof the loan given by the Company are prima facie not prejudicial to the interest of theCompany.

b) The schedule of repayment of principal and payment of interest has been stipulatedand repayments of principal amounts and / or receipts of interest have been regular.

c) There are no overdue amounts as at the year-end in respect of both principal andinterest.

(iv) In our opinion and according to the information and explanations given to us theCompany has complied with the provisions of Section 185 and 186 of the Act in respect ofgrant of loans making investments and providing guarantees and securities as applicable.

(v) According to the information and explanations given to us the Company has notaccepted deposits within the meaning of Sections 73 to 76 of the Act and the rules framedthereunder.

(vi) Maintenance of cost records has not been specified by the Central Government undersub-section (1) of Section 148 of the Act.

(vii) (a) According to the information and explanations given to us and the records ofthe Company examined by us the Company is regular in depositing undisputed statutory duesincluding Provident fund Employees' state insurance Income-tax Goods and Services TaxCustoms duty cess and any other statutory dues as applicable with the appropriateauthorities and there were no arrears of outstanding statutory dues as at the last day ofthe financial year concerned for a period of more than six months from the date theybecame payable.

(b) According to the information and explanations given to us and records of theCompany examined by us the particulars of income tax sales tax/value added tax goodsand service tax wealth tax service tax customs duty excise duty or cess as at 31stMarch 2019 which have not been deposited on account of any dispute pending are as under:

Name of the statute Nature of the dues Amount (Rs. in lakhs) Period to which the amount relates Forum where the dispute is pending
Income-tax Act 1961 Income tax 24.11 AY 2012-13 ITAT Hyderabad
Income-tax Act 1961 Income tax 4.83 AY 2014-15 Commissioner of Income Tax (Appeals)
Income-tax Act 1961 Income tax 2.56 AY 2015-16 Assistant Commissioner of Income Tax (Appeals)
Income-tax Act 1961 Income tax 11.96 AY 2016-17 Assistant Commissioner of Income Tax - Circle 16(2)
AP Value Added Tax Act 2005 Value Added Tax 2.60 FY 2006-07 Sales Tax Appellate Tribunal Hyderabad
AP Value Added Tax Act 2005 Value Added Tax 1.34 FY 2007-08 Appellate Deputy Commissioner (CT) Punjagutta Division Hyderabad
For M.Anandam & Co.
Chartered accountants
(Firm Registration No.000125S)

M.R.Vikram

Place: Hyderabad Partner
Date: 27th May 2019 Membership No.021012