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 ("theCompany") which comprise the Standalone Balance sheet as at 31 March 2020 and theStandalone Statement of Profit and Loss (including Other Comprehensive Income) theStandalone Statement of Changes in Equity and Standalone Statement of Cash Flows for theyear then ended and notes to the financial statements including a summary of significantaccounting policies and other explanatory information (hereinafter referred to as"the standalone financial statements").
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 accounting principles generally accepted in India of thestate of affairs of the Company as at 31 March 2020 and its profit (including othercomprehensive income) 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 Act. Our responsibilities under those Standards arefurther described in the Auditor's Responsibilities for the Audit of the StandaloneFinancial 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 thestandalone financial statements under the provisions of the Act and the Rules thereunderand we have fulfilled our other ethical responsibilities in accordance with theserequirements and the Code of Ethics issued by the Institute of Chartered
Accountants of India. We believe that the audit evidence we have obtainedissufficientand appropriate to provide a basis for our opinion.
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.
|Sr. No. 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 customers which is mainly upon delivery. ||Our audit approach was a combination of tests of internal controls and substantive procedures including: Assessing the appropriateness of Company's revenue recognition in line with Ind AS 115 Revenue from Contracts with Customers. |
| ||Evaluating the design and implementation of Company's controls in respect of revenue recognition. |
| ||Testing the effectiveness of such controls over revenue cut off at the year end. |
|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. || |
| ||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. |
|Refer Note 2 to the standalone financial statements Significant Accounting Policies. || |
|2. 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 |
| ||We have performed the following audit procedures: |
| ||Reviewed the future cash flows from realisation of net assets of the subsidiary which are estimated by the management. |
|During the year the operations of wholly owned subsidiary "Mold-Tek Packaging FZE UAE" were shut down. || |
|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 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 the books is adequately covered by the expected cash flows. |
The Company's Board of Directors is responsible for the other information. The otherinformation 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 do 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 theother information included in the annual report if we conclude that there is a materialmisstatement therein we are required to communicate the matter to those charged withgovernance.
Emphasis of Matter
The management has closed down the operations of the wholly owned subsidiary Mold-TekPackaging FZE UAE pending winding up formalities. The entire machinery was withdrawn fromthe subsidiary and installed in Indian facilities of the Company. The Company has made anadditional provision of Rs286.10 lakhs towards loan given (Refer Note 30 of the standalonefinancial statements). Our opinion is not modified in respect of this
Responsibilities of Management and Those Charged with Governance for the StandaloneFinancial 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 changesin equity and cash flows of the Company in accordance with the accounting principlesgenerally accepted in India including the accounting standards specified under section133 of the Act. This responsibility also includes maintenance of adequate accountingrecords in accordance with the provisions of the Act for safeguarding of the assets of theCompany and for preventing and detecting frauds and other irregularities; selection andapplication of appropriate accounting policies; making judgments and estimates that arereasonable and prudent; and design implementation and maintenance of adequate internalfinancial controls that were operating effectively for ensuring the accuracy andcompleteness of the accounting records relevant to the preparation and presentation ofthe standalone financial statements that give a true and fair view and are free frommaterial misstatement whether due to fraud or error.
In preparing the standalone financial statements the Board of Directors is responsiblefor assessing the Company's ability to continue as a going concern disclosing asapplicable matters related to going concern and using the going concern basis ofaccounting unless the Board of Directors either intends to liquidate the Company or tocease operations or has no realistic alternative 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 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 standalone financial statements.
As part of an audit in accordance with SAs we exercise professional judgement andmaintain professional skepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of the standalone financialstatements whether due to fraud or error design and perform audit procedures responsiveto those risks and obtain audit evidence that is to provide a basis for our opinion. Therisk of not detecting a material misstatement resulting from fraud is higher than for oneresulting from error as fraud may involve collusion forgery intentional omissionsmisrepresentations or the override of internal control.
Obtain an understanding of internal control relevant to the audit in order to designaudit procedures that are appropriate in the circumstances. Under section 143(3)(i) of theAct we are also responsible for expressing our opinion on whether the Company hasadequate internal financial controls system in place and the operating effectiveness ofsuch controls.
Evaluate the appropriateness of accounting policies used and the reasonableness ofaccounting estimates and related disclosures made by management.
Conclude on the appropriateness of management's use of the going concern basis ofaccounting 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 standalone financialstatements including the disclosures and whether the standalone financial statementsrepresent 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 ouraud it 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
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 withthose charged with governance we determine those matters that were of most significancein the audit of the standalone financial statements of the current period and aretherefore the key audit matters. We describe these matters in our auditor's report unlesslaw or regulation precludes public disclosure about the matter or when in extremely rarecircumstances we determine that a matter should not be communicated in our report becausethe adverse consequences of doing so would reasonably be expected to outweigh the publicinterest benefits of such communication.
Report on Other Legal and Regulatory Requirements
1. 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 (including Other ComprehensiveIncome) Statement of Changes in Equity and the Statement of cash flows dealt. with bythis report are in agreement with the books of account
d) In our opinion the aforesaid standalone financial statements comply with the IndianAccounting Standards prescribed under Section 133 of the Act.
e) On the basis of the written representations received from the directors as on 31March 2020 taken on record by the Board of Directors none of the directors isdisqualified as on 31 March 2020 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) In our opinion and to the best of ourinformation and according to the explanations given to us the remuneration paid by theCompany to its directors during the year is in accordance with the provision of section197 of the Act. h) With respect to the other matters to be included in the Auditor'sReport in accordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014 inour opinion and to the best of our information and according to the explanations given tous: i. The Company has disclosed the impact of pending litigations on its financialposition in its standalone financial statements(Refer Note 32 of the standalone financialstatements); ii. The Company did not have any long-term contracts including derivativecontracts for which there were any material foreseeable losses; iii. There has been nodelay in transferring 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 give specifiedin paragraphs 3 "AnnexureB" statement the matters and 4 of the Order.
Annexure - A to the Independent Auditors' Report
(Referred to in paragraph 1(f) under Report on Other Legal and RegulatoryRequirements' section of our report 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 reporting of controlsover Mold-TekPackaging Limited ("the Company") as of 31 March 2020 in conjunction withour audit 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 financialas required under the Act.
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 Act to the extent applicable to an auditof internal financial controls both applicable to an audit of Internal Financial Controlsand both issued by the Institute of Chartered Accountants of India. Those Standards andthe Guidance Note require that we comply with ethical requirements and plan and performthe audit to obtain reasonable assurance about whether adequate internal financialcontrols over financial reporting was established and maintained and if such controlsoperated effectively in all material respects. Our audit involves performing procedures toobtain audit evidence about the adequacy of the internal financial controls system overfinancial reporting and their operating effectiveness. Our audit of internal financialcontrols over financial reporting included obtaining an understanding of internalfinancial controls over financial reporting assessing the risk that a material weaknessexists and testing and evaluating the design and operating effectiveness of internalcontrol based on the assessed risk. The procedures selected depend on the auditor'sjudgment including the assessment of the risks of material misstatement of the standalonefinancial statements whether due to fraud or error. We believe that the audit evidence wehave obtained is sufficient and appropriate to provide a basis for our audit opinion onthe Company's internal financial controls system over 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 policies and proceduresthat
(1) pertain to the maintenance of records that in reasonable detail accurately andfairly reflect the transactions and dispositions of the assets of the Company;
(2) provide reasonable assurance that transactions are recorded as necessary to permitpreparation of financial statements in accordance with generally accepted accountingprinciples and that receipts and expenditures of the Company are being made only inaccordance with authorisations of management and directors of the Company; and
(3) provide reasonable assurance regarding prevention or timely detection ofunauthorised acquisition use or disposition of the Company's assets that could have amaterial effect on the financial statements.
Inherent Limitations of Internal Financial Controls over Financial Reporting
Because of the inherent limitations of internal financial controls over financialreporting including the possibility of collusion or improper management override ofcontrols material misstatements due to error or fraud may occur and not be detected.
Also projections of any evaluation of the internal financial controls over financialreporting to future periods are subject to the risk that the internal financial controlover financial reporting may become inadequate because of changes in conditions or thatthe degree of compliance with the policies or procedures may deteriorate.
In our opinion 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 at31 March 2020 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.
Annexure - B to the Independent Auditors' Report
Annexure - B to the Independent Auditors' Report
With reference to Paragraph 2 under Report on Other Legal and RegulatoryRequirements' section of our report to the
Members of the Company we report that
(i) (a) The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets.
(b) The fixed assets have been physically verified by the management in a periodicalmanner which in our opinion is reasonable having regard to the size of the Company andthe nature of its business. No material discrepancies were noticed on such verification.
(c) According to the information and explanations given to us and on the based on 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 verifi -cation 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 theinformation given to us the terms and conditions of the loan given by the Company areprima facie not prejudicial to the interest of the Company. b) The management has closeddown the operations of the wholly owned subsidiary pending winding up formalities. TheCompany has made provision of Rs395.77 lakhs (including transfer of provision of Rs109.67lakhs which was made against trade receivables during the financial year 2018-19) as on 31March 2020. The Company has not charged any interest on loan granted during the year.Reference is invited to "Emphasis of Matter" paragraph of the report. c) In viewof clause (iii) (b) above clause (iii) (c) of the Order is not applicable.
(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 ofloans except for not charging interest on loan as stated in clause (iii) (b) aboveinvestments and 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 framedthere under.
(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 services tax customs duty or cess as at 31 March 2020 which have not been depositedon 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 ||- ||AY 2014-15 ||Assessing officer |
|Income-tax Act 1961 ||Income tax ||2.56 ||AY 2015-16 ||Assessing officer |
|Income-tax Act 1961 ||Income tax ||11.96 ||AY 2016-17 ||Centralised Processing Centre (CPC) |
|Income-tax Act 1961 ||Income tax ||6.70 ||AY 2017-18 ||Commissioner of Income tax Appeals Hyderabad |
|Income-tax Act 1961 ||Income tax ||48.18 ||AY 2017-18 ||Commissioner of Income tax Appeals Hyderabad |
|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 |
(viii) In our opinion and according to the information and explanations given to usthe Company has not defaulted in repayment of loans or borrowings to financialinstitutions banks and government. The Company has not issued any debentures.
(ix) The Company has not raised moneys by way of initial public offer or further publicoffer (including debt instruments) during the year. In our opinion and according to theinformation and explanations given to us the term loans have been applied for the purposefor which the loans were obtained.
(x) To the best of our knowledge and belief and according to the information andexplanations given to us no fraud on or by the Company was noticed or reported during theyear.
(xi) In our opinion and according to the information and explanations give to us theCompany has paid / provided managerial remuneration in accordance with the requisiteapprovals mandated by the provisions of section 197 read with Schedule V to the Act.
(xii) The Company is not a Nidhi Company and hence reporting under clause (xii) of theOrder is not applicable.
(xiii) In our opinion and according to the information and explanations given to us andbased on our examination of the records of the Company transactions with the relatedparties are in compliance with section 177 and 188 of the Act where applicable and detailsof such transactions have been disclosed in the standalone financial statements asrequired by the applicable Indian accounting standards.
(xiv) The Company has not made any preferential allotment or private placement ofshares or fully or partly convertible debentures during the year and hence reporting underclause (xiv) of the Order is not applicable.
(xv) In our opinion and according to the information and explanations given to us andbased on our examination of the records of the Company the Company has not entered intoany non-cash transactions with directors or persons connected with him and henceprovisions of section 192 of the Act are not applicable.
(xvi) The Company is not required to be registered under section 45-IA of the ReserveBank of India Act 1934.