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MSTC Ltd.

BSE: 542597 Sector: Others
NSE: MSTCLTD ISIN Code: INE255X01014
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OPEN 357.00
PREVIOUS CLOSE 361.95
VOLUME 5495
52-Week high 542.00
52-Week low 193.70
P/E 21.35
Mkt Cap.(Rs cr) 2,549
Buy Price 360.75
Buy Qty 1.00
Sell Price 361.30
Sell Qty 50.00
OPEN 357.00
CLOSE 361.95
VOLUME 5495
52-Week high 542.00
52-Week low 193.70
P/E 21.35
Mkt Cap.(Rs cr) 2,549
Buy Price 360.75
Buy Qty 1.00
Sell Price 361.30
Sell Qty 50.00

MSTC Ltd. (MSTCLTD) - Auditors Report

Company auditors report

To the Members of MSTC Limited

Report on the Audit of the Standalone Financial Statements

Opinion

1. We have audited the accompanying standalone Financial Statements ofMSTC Limited ("the Company") which comprise the Balance Sheet as at 31st March2021 and the Statement of Profit and Loss (including Other Comprehensive Income)Statement of Changes in Equity Statement of Cash Flows for the year then ended and notesto the Financial Statements including a summary of Significant Accounting Policies andother explanatory information.

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 Act in the manner so required and give a true and fair view inconformity with the accounting principles generally accepted in India of the state ofaffairs of the Company as at 31st March 2021 Profit and Other Comprehensive Incomechanges in Equity and its Cash Flows for 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 Companies Act 2013. Our responsibilitiesunder those Standards are further described in the 'Auditor's Responsibilities for theAudit of the Standalone Financial Statements' section of our report. We are independent ofthe Company in accordance with the Code of Ethics issued by the Institute of CharteredAccountants of India (ICAI) together with the ethical requirements that are relevant toour audit of the standalone Financial Statements under the provisions of the CompaniesAct 2013 and the Rules made thereunder and we have fulfilled our other ethicalresponsibilities in accordance with these requirements and the ICAI's Code of Ethics. Webelieve that the audit evidence we have obtained is sufficient and appropriate to providea basis for our opinion.

Emphasis of Matter

2. Without qualifying our opinion we draw attention to the following:

(a) With reference to Note 8.4 for Trade Receivables- Credit Impairedrepresenting pledged stocks held by the Company in the premises of the Customers on behalfof them under "Cash & Carry" model of business now discontinued theCompany does not have appropriate internal control system in place for inventory due towhich substantial amounts have had to be provided for /written off in the past as well asduring the year.

Further with reference to the said Note last Volumetric Analysis wasdone during the year with quantity and Market Value of stocks in respect of few Customerswhile in rest of the cases such exercise was not undertaken for either the Stocksheld are reported to be "Nil" or access was denied by the concerned Customer.

(b) With reference to Note No. 36 of the standalone FinancialStatements there is a non-Provision of Deferred Tax Asset of Rs 1188.96 millions onProvision for Doubtful Debts of Rs 3402.48 millions since 1st April 2018.

(c) The Title Deed of a freehold flat in Mumbai having Gross Block ofRs 0.74 million as at 31st March 2021 was not available for verification.

Key Audit Matters

3. Key audit matters are those matters that in our professionaljudgement were of most significance in our audit of the standalone Financial Statementsof the current period. These matters were addressed in the context of our audit of thestandalone Financial Statements as a whole and in forming our opinion thereon and we donot provide a separate opinion on these matters. We have determined the matters describedbelow to be the key audit matters to be

 

Sl. Key Audit Matters Auditor's Response
i. Recoverability of Trade Receivables:
As at 31st March 2021 Trade Receivables-Gross is Rs 15502.93 millions (Net Rs 7237.64 millions) with Rs 8265.29 millions being considered as Credit Impaired for which a provision for bad and doubtful debts for similar amount is held in the Books. While examining details of Receivables and transactions during the year ended 31st March 2021.
In the event of reference of each case of debt with impaired credit to NCLT and/or other forums for adjudication the Company is exposed to potential risk of financial loss when the recoveries become subjected to long processes of litigations and eventually doubtful. if any we have observed the nature of the Trade Receivables the sustainability and the likelihood of recoverability of Receivables. In terms of an Accounting Policy all such debts as considered doubtful of recovery have been provided for in the Books as at 31st March 2021.
The recoverable amounts are estimated by management based on their specific recoverability assessment on individual debtor as well as consideration and application of a provisioning policy. Since Company's obtaining of balance confirmations from Parties is an ongoing process (as referred to in Note 42) substantive audit procedures have been followed to en sure accuracy of balances.
The disclosures related to Trade Receivables of the Company are provided in Note 8.1 to the accompanying standalone We have assessed the recoverability of the unsettled receivables on a sample basis through our evaluation of management's assessment with reference to the credit profile of the customers and their historical payment pattern wherever applicable along with the latest correspondences with the customers as available read with the Company's existing Risk Management Policy.
ii. IT Systems & Control:
Preparation and presentation of Financial Statements are dependent on Company's supporting software and hardware controls involving risk management exercise for maximum elimination of erroneous data. We have planned designed and carried out the desired audit procedures and sample checks which in our opinion are adequate to pro vide reason able assurance on the adequacy of IT controls in place.
Thus quality of audit outcome and its authenticity are dependent on the extent of IT controls and systems.
iii. Assessment of allowance for Bad and Doubtful Advances and Contingent Liabilities:
Assessment of allowance for Bad and Doubtful Advances made during the year and Contingent liabilities require assessment of probable outcomes and cash flows. We have carried out the validation of the information provided by the management by performing the following procedures:
The identification and quantification require estimation and judgment by the management. The disclosure related to allowance for Bad and Doubtful Advances during the year and Contingent liabilities are provided in Note No 30 & 35 (a) to the accompanying Standalone Financial Statements. - Evaluating reasonableness of the underlying assumptions.
- Understanding the current status of the litigations.
- Examining the relevant documents on available records.
- Reviewing legal opinion/ industry practices wherever necessary.
- Verification of various disclosures made by the management.
- Obtaining Management's Representation as per guidelines of the ICAI.
- Company's Accounting Policy.
iv. Impact of continuing COVID-2019 pandemic : As a result of continuing COVID-19 pandemic situation prevailing in the country we had to encounter difficulties / delay in the process of collection of data and analysing the same in respect of Branches which could not be physically visited.
Accordingly the audit of the Branches was carried out based on remote access of the data in respect of the Branches as provide by the management of the Company to enable us to come to an audit conclusion without compromising the maintenance of quality of audit as desired by the regulatory authorities.

 

Information Other than the Standalone Financial Statements andAuditor's Report Thereon

4. The Company's Board of Directors is responsible for the preparationof other information. The other information comprises the information included in theManagement Discussions and Analysis Board's Report including Annexure to Board's ReportCorporate Governance and Shareholder's Information but does not include the standaloneFinancial Statements and our auditor's report thereon.

Our opinion on the standalone Financial Statements does not cover theother information and we do not express any form of assurance and conclusion thereon.

In connection with our audit of the standalone Financial Statementsour responsibility is to read the other information identified above and in doing soconsider whether the other information is materially inconsistent with the standaloneFinancial Statements or our knowledge obtained during the course of our audit orotherwise appears to be materially misstated. If based on the work we have performed weconclude that there is a material misstatement of this other information we are requiredto report that fact. We have nothing to report in this regard.

Responsibility of Management and Those Charged with Governance forStandalone Financial Statements

5. The Company's Board of Directors are responsible for the mattersstated in Section 134(5) of the Companies Act 2013 ("the Act") with respect tothe preparation of these standalone Financial Statements that give a true and fair view ofthe financial position financial performance total comprehensive income changes inequity and cash flows of the Company in accordance with the accounting principlesgenerally accepted in India including the Ind AS's specified under Section 133 of theAct. This responsibility also includes maintenance of adequate accounting records inaccordance with the provisions of the Act for safeguarding of the assets of the Companyand for preventing and detecting frauds and other irregularities; selection andapplication of appropriate Accounting Policies; making judgements 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 management isresponsible for assessing the Company's ability to continue as a Going Concerndisclosing as applicable matters related to Going Concern and using the Going Concernbasis of accounting unless management either intends to liquidate the Company or to ceaseoperations or has no realistic alternative but to do so.

The Board of Directors are also responsible for overseeing theCompany's financial reporting process.

Auditor's Responsibilities for the Audit of the Standalone

Financial Statements

6. 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 scepticism 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 forexpressing our opinion on whether the Company has adequate internal financial controlsystems in place and 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 the GoingConcern basis of accounting and based on the audit evidence obtained whether a materialuncertainty exists related to events or conditions that may cast significant doubt on theCompany's ability to continue as a Going Concern. If we conclude that a materialuncertainty exists we are required to draw attention in our auditor's report to therelated disclosures in the standalone Financial Statements or if such disclosures areinadequate to modify our opinion. Our conclusions are based on the audit evidenceobtained up to the date of our auditor's report. However future events or conditions maycause 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.

Materiality is the magnitude of misstatement in the standaloneFinancial Statement that individually or in aggregate makes it probable that theeconomic decision of a reasonably knowledgeable user of the Financial Statement may beinfluenced. We consider quantitative materiality and qualitative factors in (i) planningthe scope of our audit work and in evaluating the results of our work; and (ii) toevaluate the effect of any identified misstatements in the standalone FinancialStatements.

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 precludes publicdisclosure about the matter or when in extremely rare circumstances we determine that amatter should not be communicated in our report because the adverse consequences of doingso would reasonably be expected to outweigh the public interest benefits of suchcommunication.

Other Matter

7. The following other matters are mentioned.

(a) With reference to Note 42 confirmation of balances were notavailable in many cases of Trade and other Receivables Trade and other Payables Loansand Advances Deposits made and received and the impact of consequent adjustmentsrequired if any is not ascertained.

(b) The continued spreading of COVID -19 across India has resulted inrestriction on physical visit to the Branches and the need for carrying out alternativeaudit procedures as per the Standards on Auditing prescribed by the Institute of CharteredAccountants of India (ICAI). As a result of the above the audit was carried out based onremote access of the data in respect of the Branches as provided by the management of theCompany. This has been carried out based on the advisory on "Specific Considerationswhile conducting Distance Audit/ Remote Audit/ Online Audit under current Covid-19situation" issued by the Auditing and Assurance Standards Board of ICAI. We have beenrepresented by the management of the Company that the data provided for our audit purposesis correct complete reliable and are generated by the accounting system of the Company.

Our audit opinion is not modified in respect of the above.

Report on Other Legal and Regulatory Requirements

8. As required by the Companies (Auditor's Report) Order 2016("the Order") issued by Government of India in terms of Sub-section (11) ofSection 143 of the Companies Act 2013 we give in the" Annexure A" a statementon the matters specified in paragraphs 3 and 4 of the Order to the extent applicable.

9. 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 ouraudit.

(b) In our opinion proper Books of Accounts as required by law havebeen kept by the Company so far as it appears from our examination of those Books.

(c) The Balance Sheet the Statement of Profit and Loss (includingother Comprehensive Income) the statement of changes in Equity and the Cash FlowStatement dealt with by this Report are in agreement with the Books of Accounts.

(d) In our opinion the aforesaid standalone Financial Statementscomply with the Indian Accounting Standards (Ind AS) specified under Section 133 of theAct read with relevant Rules thereto.

(e) Notification no. G.S.R 463(E) dated 5th June 2015 issued byMinistry of Corporate Affairs Section 164(2) of the Companies Act 2013 regardingdisqualification of the Director is not applicable to the Company since it is aGovernment Company.

(f) With respect to the adequacy of the internal financial controlsover financial reporting of the Company and the operating effectiveness of such controlsrefer to our separate Report in "Annexure B".

(g) The Company being a Government Company provisions of Section 197(16) of the Companies Act 2013 regarding managerial remuneration is not applicable to theCompany as per notification no. G.S.R. 463(E) dated 5 th June 2015 issued by Ministry ofCorporate Affairs.

(h) With respect to the other matters to be included in the Auditor'sReport in accordance with Rule11 of the Companies (Audit and Auditors) Rules 2014 (asamended) 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 35(a) to thestandalone Financial Statements.

(ii) The Company did not have any long-term contracts includingderivative contracts for which there were any foreseeable material losses.

10. As required by Section 143(5) of the Act the directions andsub-directions issued by the Comptroller & Auditor General of India we give ourcomments on the standalone Financial Statements in "Annexure-C" annexedherewith.

Annexure-A to the Independent Auditor's Report

(Referred to in paragraph 8 under 'Report on Other Legal &Regulatory Requirement' of our report of even date)

(i) (a) The Company has maintained proper records showing fullparticulars including quantitative details and situation of fixed assets.

(b) The Company has carried out physical verification of its fixedassets during the year. According to the information and explanations no materialdiscrepancies were noticed on such verification.

(c) The title deed of the Company's immovable properties have beenfound to be held in the name of the Company except a flat at Mumbai (Book Value : Gross /Net Rs. 0.74 / Rs. 0.42 million respectively) for which no title deed could be madeavailable for verification.

(ii) The Company does not hold any Inventory as at the year end.Therefore the provisions of Clause 3(ii) of the order are not applicable to the Company.

(iii) As per information and explanations given to us the Company hasnot granted any loan secured or unsecured to Companies Firms Limited LiabilityPartnerships or other parties covered in the Register maintained under section 189 of theAct. Accordingly the provisions of Clause 3 (iii) of the order are not applicable to theCompany.

(iv) According to the information and explanations given to us theCompany has not granted any loan or provided any guarantee/security and hence Section 185of the Act is not applicable. The company has not made any investment during the yearunder section 186 of the Act. Accordingly the provisions of Clause 3 (iv) of the orderare not applicable to the Company.

(v) According to the information and explanations given to us theCompany has not accepted any deposits from the public and hence the directives issued bythe Reserve Bank of India and the provisions of Sections 73 to 76 or any other relevantprovisions of the Companies Act 2013 and the rules framed thereunder therefore theprovision of Clause 3(v) of the Order is not applicable on the Company

(vi) As informed to us the maintenance of Cost Records has not beenspecified by the Central Government under sub-section (1) of Section 148 of the Act.Therefore the provision of Clause 3(vi) of the Order is not applicable on the Company

(vii) (a) The company is generally regular in depositing undisputedstatutory dues including Provident Fund Employees' State

Insurance Income Tax Goods and Service Tax Cess and any otherstatutory dues as applicable with the appropriate authorities. According to theinformation and explanation given to us no undisputed amount payable in respect ofaforesaid dues were outstanding as at 31st march 2021 for a period of more than sixmonths from the date of becoming payable.

(b) According to the information and explanations given to us and therecords of the Company examined by us the particulars of dues of Income Tax Service TaxSales Tax Value Added Tax Duty of Customs etc as at 31st March 2021 which has not beendeposited on account of a dispute are as follows:

Sl No Name of the Statute Nature of Dues Period to which the amount relates (FY) Amount (Rs in Million) Forum where the dispute is pending
1 UP VAT Act 2008 Claim by Sales Tax Authority 2001-02 0.19 High Court Allahabad
UP VAT Act 2008 2004-05 0.17 Commercial Tax Tribunal Bench Ghaziabad.
2 WB VAT Act 2003 Claim by Sales Tax Authority 2009-10 42.63 Appellate Revision Board Kolkata
WB VAT Act 2003 2012-13 51.72 Senior Joint Commissioner Commercial Taxes Kolkata
3 AP VAT Act 2005 Claim by Sales Tax Authority 1998-99 2.25 Sales Tax Appellate Tribunal (STAT) Visakhapatnam
AP VAT Act 2005 1999-00 4.11 CTO-Suryabag Circle
AP VAT Act 2005 2004-05 0.91 Sales Tax Appellate Tribunal (STAT) Visakhapatnam
AP VAT Act 2005 2005-06 0.37 Sales Tax Appellate Tribunal (STAT) Visakhapatnam
AP VAT Act 2005 2006-07 0.08 Sales Tax Appellate Tribunal (STAT) Visakhapatnam
AP VAT Act 2005 2008-13 7.93 High Court of Judicature at Hyderabad
AP VAT Act 2005 2008-13 5.62 Appellate Joint Commissioner (Appeals)Vijayawada
4 Delhi Value Added Tax Act2004 Claim by Sales Tax Authority 2010-11 0.02 VATO-KCS DVAT
5 J&K Sales Tax Act 1962 Claim by Sales Tax Authority 2015-16 0.03 Commercial Tax Circle-N Jammu
6 CST (CENTRAL SALES TAX ACT) Claim by Sales Tax Authority 2009-10 24.90 Sales Tax Appellate Tribunal (STAT) Visakhapatnam
CST(CENTRAL SALES TAX ACT) 2015-16 1.43 CTO-Suryabagh circle
7 Jharkhand Value Added Tax Act 2005 Claim by Sales Tax Authority 2015-16 0.45 Commissioner of Commercial Tax Govt. of Jharkhand
Jharkhand Value Added Tax Act 2005 2016-17 0.79 Commissioner of Commercial Tax Govt. of Jharkhand
8 Orissa Sales Tax Act Claim by Sales Tax Authority 1986-87 26.90 High Court Orissa
9 Gujarat VAT Act 2003 Claim by Sales Tax Authority 2002-03 5.22 Pre-Audit Deptt. Ahmedabad
Gujarat VAT Act 2003 2004-05 21.80 Gujarat Value Added Tax Tribunal against DC (Appeal Order)
Total of Sales Tax Dues 197.52
10 Customs Act 1962 Claim by Custom Department 1995-96 26.63 Madras High Court
Customs Act 1962 2001-02 20.38 High Court Calcutta
Customs Act 1962 2012-13 63.57 CESTAT Bangalore or CESTAT Chennai
Customs Act 1962 2013-14 8.35 CESTAT Bangalore or CESTAT Chennai
Total of Custom Dues 118.93
11 Finance Act 1994 (Service Tax) Service Tax Demand 2005-07 149.01 CESTAT Kolkata
Total oF Service Tax Dues 149.01
12 Income Tax Act 1961 (TDS) 2015-16 0.99 Commissioner Appeals Kolkata
Total Income Tax Dues 0.99
TOTAL TAX DUES 466.45

(viii) In our opinion and according to the information and explanationsgiven to us the Company has not defaulted in the repayment of dues to banks exceptsub-judice cases of loans from Indian Overseas Bank Rs. 13.80 million and StandardChartered Bank Rs. 1436.20 million as mentioned in Note No. 20(a) and 20(b) of the Notesrespectively to the standalone Financial Statements.

The Company did not have any loans or borrowings from financialinstitutions or Government and has not issued any debentures.

(ix) Based on the information and explanations given by the managementthe Company has not raised any money by way of Initial Public Offer or further PublicOffer including Debt Instruments. Further Money raised by way of term loan was applied forthe purpose for which it was raised.

(x) During the course of our examination of the books and record of theCompany carried out in accordance with the generally accepted auditing practices inIndia and according to the information and explanations given to us we report that nofraud on or by the Company or no fraud by the officers and employees of the company hasbeen noticed or reported during the year nor have we been informed of any such case bythe management.

(xi) Section 197 of the Act regarding managerial remuneration is notapplicable to the Company by virtue of Notification No. G.S.R 463(E) dated 05 June 2015issued by the Ministry of Corporate Affairs Govt. of India.

(xii) As per information and explanations given to us the Company isnot a Nidhi Company. Therefore the provision of clause 3 (xii) of the Order is notapplicable to the Company.

(xiii) As per information and explanations given to us transactionswith the related parties are in compliance with section 177 and 188 of Companies Act 2013and the details have been disclosed in the Note No 39 to the Standalone FinancialStatements as required by the applicable Indian Accounting Standards.

(xiv) Based upon the audit procedures performed and according to theinformation and explanations given by the management the Company has not made anypreferential allotment or private placement of shares or fully/partly convertibledebentures during the year. Accordingly the provision of clause 3 (xiv) of the Order isnot applicable to the Company.

(xv) Based upon the audit procedures performed and according to theinformation and explanations given by the management the Company has not entered into anynon-cash transactions with directors or persons connected with them as referred to inSection 192 of Companies Act 2013. Accordingly the provision of clause 3 (xv) of CARO isnot applicable to the Company.

(xvi) In our opinion and according to the information and explanationsgiven to us the company is not required to be registered under section 45 IA of theReserve Bank of India Act 1934 and accordingly the provision of clause 3 (xvi) of theOrder is not applicable to the Company.

Annexure -B to the Independent Auditor's Report

Referred to in paragraph 9(f) of the Independent Auditor's Report ofeven date to the members of MSTC Limited on the Standalone Financial Statements forthe year ended 31st March 2021.

Report on the Internal Financial Controls over Financial Reportingunder Clause (i) of Sub-section 3 of Section 143 of the Companies Act 2013("the Act")

1. We have audited the internal financial controls over FinancialReporting of MSTC Limited as at 31st March 2021 in conjunction with our audit of thestandalone Financial Statements of the Company for the year ended on that date.

Management's Responsibility for Internal Financial Controls

2. The Company's Management is responsible for establishing andmaintaining 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 and maintenance of adequateinternal financial controls that were operating effectively for ensuring the orderly andefficient conduct of its business including adherence to Company's policies thesafeguarding of its assets the prevention and detection of frauds and errors theaccuracy and completeness of the accounting records and the timely preparation ofreliable financial information as required under the Companies Act 2013.

Auditors' Responsibility

3. Our responsibility is to express an opinion on the Company'sinternal financial controls over financial reporting based on our audit. We conducted ouraudit in accordance with the Guidance Note on Audit of Internal Financial Controls overFinancial Reporting (the "Guidance Note") issued by the Institute of CharteredAccountants of India ("ICAI") and the Standards on Auditing prescribed undersection 143(10) of the Companies Act 2013 to the extent applicable to an audit ofinternal financial controls. Those Standards and the Guidance Note require that we complywith the ethical requirements and plan and perform the audit to obtain reasonableassurance about whether adequate internal financial controls over financial reporting wasestablished and maintained and if such controls operated effectively in all materialrespects.

Our audit involves performing procedures to obtain audit evidence 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 internal financial controlssystem over financial reporting of the Company.

Meaning of Internal Financial Controls over Financial Reporting

4. 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 Financial Statements for external purposes in accordancewith generally accepted accounting principles. A company's internal financial control overfinancial reporting includes those policies and procedures that :

(1) pertain to the maintenance of records that in reasonable detailaccurately and fairly reflect the transactions and dispositions of the assets of theCompany;

(2) provide reasonable assurance that transactions are recorded asnecessary to permit preparation of Financial Statements in accordance with generallyaccepted accounting principles and that receipts and expenditures of the Company arebeing made only in accordance with authorisations of management and Directors of theCompany; and

(3) provide reasonable assurance regarding prevention or timelydetection of unauthorised acquisition use or disposition of the Company's Assets thatcould have a material effect on the Financial Statements.

Inherent Limitations of Internal Financial Controls over FinancialReporting

5. Because of the inherent limitations of internal financial controlsover financial 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.

Qualified Opinion

6. According to the information and explanations given to us and basedon our audit the following weaknesses have been identified as at 31st March 2021:

In the process of maintaining safe custody with the Company appointedCustodian of Pledged Stock of materials held in the premises of the Customers procured bythe Company on behalf of them under Cash & Carry Model of Business now discontinued.

However the Company had a separate Audit for Audit of its InternalFinancial Control System carried out and the report has been considered by its AuditCommittee during 2020-21.

In our opinion except for the possible effects of the weaknessesdescribed herein above the Company has maintained in all material respects an adequateinternal financial controls system over financial reporting and such internal financialcontrols over financial reporting were operating effectively as at 31st March 2021 basedon the internal control over financial reporting criteria established by the Companyconsidering the essential components of internal control stated in the Guidance Note onAudit of Internal Financial Controls Over Financial Reporting issued by the Institute ofChartered Accountants of India.

Annexure - C to the Independent Auditors' Report

Directions issued by the Comptroller and Auditor General of India undersection 143(5) of the Companies Act 2013 based on the verification of records of theCompany and according to information and explanation given to us we report as under:

Directions Auditor's Reply
1. Whether the Company has system in place to process all the accounting transactions through IT systemRs If yes the implications of processing of accounting transactions outside IT system on the integrity of the accounts along with the financial implications if any may be stated. The matter has been adequately dealt with in our report of even date. [Para 3 (ii) of Key Audit Matter]
2. Whether there is any restructuring of an existing loan or cases of waiver/write off of debts/loans/interest etc. made by a lender to the Company due to the company's inability to repay the loanRs If yes the financial impact may be stated. Whether such cases are properly accounted forRs ( In case lender is a Government Company then this direction is also applicable for statutory auditor of lender Company). There is no instance of restructuring of an existing loan or cases of waiver / write off of debts/ loans / interest etc. made by a lender to the Company due to Company's inability to repay the loan during the financial year 2020-21.
3. Whether funds (grants /subsidy etc.) received / receivable for specific schemes from Central / State Governments or its agencies were properly accounted for / utilised as per its term and conditionsRs List the cases of deviation. There is no case of funds received/receivable during the financial year 2020-21 for specific schemes from Central/State Government or its agencies.
For S. Ghose & Co LLP
Chartered Accountants
FRN- 302184E/E300007
CA Pradip Kumar Mitra
Partner
Place: Kolkata M.No.052183
Date: June 25 2021 UDIN : 21052183AAAAAC2933

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