The Members of
Nandan Denim Limited
Report on the Audit of the Financial Statements
1. We have audited the financial statements of Nandan Denim Limited ("theCompany") which comprise the Balance Sheet as at 31stMarch 2021 and the Statementof Profit and Loss the Statement of Changes in Equity and Statement of Cash Flows for theyear then ended and notes to the financial statements including a summary of thesignificant accounting policies and other explanatory information.
2. In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid financial statements give the information required by theCompanies Act 2013 (the Act') in the manner so required and give a true and fairview in conformity with the accounting principles generally accepted in India includingIndian Accounting Standards (Ind AS') specified under Section 133 of the Act of thestate of a!airs of the Company as at 31 March 2021 and its Loss total comprehensiveincome its cash flows and the changes in equity for the year ended on that date.
Basis for Opinion
3. We conducted our audit in accordance with the Standards on Auditing specified undersection 143(10) of the Act. Our responsibilities under those Standards are furtherdescribed in the Auditor's Responsibilities for the Audit of the Financial Statementssection of our report. We are independent of the Company in accordance with the Code ofEthics issued by the Institute of Chartered Accountants of India together with the ethicalrequirements that are relevant to our audit of the financial statements under theprovisions of the Companies Act 2013 and the Rules there under and we have fulfilled ourethical responsibilities in accordance with these requirements and the Code of Ethics. Webelieve that the audit evidence we have obtained is su"cient and appropriate toprovide a basis for our opinion.
Emphasis of Matter
4. (a) As described in Note 46 to the Financial Statement the extent to which theCOVID-19 pandemic will impact the company's operations and financial performance isdependent on future developments which are highly uncertain.
(b) As described in Note 42(a) to the Financial Statement there was a major fire atthe factory premises of the Company on 08th August 2020. Since the assets destroyed werefully insured the Company has recognised the loss of property plant and equipment andinventory in the statement of Profit & Loss and has also recognised income frominsurance claim separately in the Statement of Profit and Loss.
(c) As described in Note 42(b) to the Financial Statement earlier there was a fire atthe factory premises of the Company on 08th February 2020. Since the property plant andequipment and inventory destroyed were fully insured.As informed to us said loss onaccount of fire is fully covered by Insurance. The Company has accounted for this amountas amount receivable from the Insurance Company disclosed under "Other CurrentFinancial Asset". The Company has already filed the claim for the same with theinsurance company and the claim settlement in respect of the same is pending till date.
Our opinion is not modified in respect of the above matters.
Key Audit Matters
5. Key audit matters are those matters that in our professional judgment were of mostsignificance in our audit of the financial statements of the current period. These matterswere addressed in the context of our audit of the financial statements as a whole and informing our opinion thereon and we do not provide a separate opinion on these matters.
6. Key audit matter identified in our audit is on assessment of Recoverability andReorganisation of Receivables from Government Grants :
|Key audit matter ||How our audit addressed the key audit matter |
|Recoverability and Reorganisation of Receivables from Government Grants ||We evaluated the accounting treatment of the government grant in terms of Ind AS -20. In respect of the same our audit procedures included the following: |
|The Company receives government grants as part of the Gujarat Textile Policy2012 Programme and under Technology Upgradation Fund Scheme-Non-SSI Textile Sector. In applying the Gujarat Textile Policy& Technology Upgradation Fund Scheme-Non-SSI Textile Sector government grants were recognised on the basis of compliance with their conditions and meeting the envisaged obligations. During the current financial year the Company recognised the Technology Upgradation Fund Scheme of Rs.846.05 Lakhs and State Government Grant of Rs.2217.00 Lakhs out of which Government Grant of Rs.525.68 Lakhs pertaining to Interest Subsidy on Term Loan and Government Grant of Rs.314.17 Lakhs of Power Subsidy have been reduced from the corresponding Expenditure and Grant in respect of GST Amounting to Rs.1377.15 Lakhs is treated as other operating revenue. Further as on balance sheet date the Company has total Receivables of Rs.7715.60 Lakhs from Statutory Authorities in respect of above government grants.We considered this to be a matter of most significance to our audit due to the: || Assessed the appropriateness of the accounting policy for government grants as per the relevant accounting standard. |
|Significant level of Management Judgement involved in respect of reliable measurement of government grants; || On a sample basis verified the claims lodged by the Company and its approval by the concerned Government Authorities; |
|The quantum of the government grant recognised. || In respect of claims pending for approval at year end we verified the empirical evidence on the claims lodged vis--vis claims approved to satisfy as regards the reliable measurement of government grant receivable. |
| || Based on discussion with the management & opinion obtained from the Consultants of the company we are of the view that grants receivable as presented under Note. 6 results in fair presentation. |
Information other than the Financial Statements and Auditors' Report thereon
7. The Company's Board of Directors is responsible for the other information. The otherinformation comprises the information included in the Annual Report but does not includethe financial statements and our auditor's report thereon.
Our opinion on the financial statements does not cover the other information and we donot express any form of assurance conclusion thereon.
In connection with our audit of the financial statements our responsibility is to readthe other information identified above when it becomes available and in doing so considerwhether the other information is materially inconsistent with the financial statements orour knowledge obtained in the audit or otherwise appears to be materially misstated.
When we read the Annual Report if we conclude that there is a material misstatementtherein we are required to communicate the matter to those charged with governance and asmay be legally advised.
Responsibilities of Management and Those Charged with Governance for the FinancialStatements
8. 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 financial statements that givea true and fair view of the financial position financial performance changes in equityand cash flows of the Company in accordance with the accounting principles generallyaccepted in India including the Indian Accounting Standards (Ind AS) specified undersection 133 of the Act. This responsibility also includes maintenance of adequateaccounting records in accordance with the provisions of the Act for safeguarding theassets of the Company and for preventing and detecting frauds and other irregularities;selection and application of appropriate implementation and maintenance of accountingpolicies; making judgments and estimates that are reasonable and prudent; and designimplementation and maintenance of adequate internal financial controls that wereoperating effectively for ensuring the accuracy and completeness of the accountingrecords relevant to the preparation and presentation of the financial statements thatgive a true and fair view and are free from material misstatement whether due to fraud orerror.
9. In preparing the financial statements management is responsible for assessing theCompany's ability to continue as a going concern disclosing as applicable mattersrelated to going concern and using the going concern basis of accounting unless managementeither intends to liquidate the Company or to cease operations or has no realisticalternative but to do so.
10. Those Board of Directors are also responsible for overseeing the Company'sfinancial reporting process.
Auditors' Responsibilities for the Audit of the Standalone Financial Statements
11. Our objectives are to obtain reasonable assurance about whether the financialstatements as a whole are free from material misstatement whether due to fraud or errorand to issue an auditor's report that includes our opinion. Reasonable assurance is a highlevel of assurance but is not a guarantee that an audit conducted in accordance with SAswill always detect a material misstatement when it exists. Misstatements can arise fromfraud or error and are considered material if individually or in the aggregate theycould reasonably be expected to influence the economic decisions of users taken on thebasis of these financial statements.
12. 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 financialstatements whether due to fraud or error design and perform audit procedures responsiveto those risks and obtain audit evidence that is su"cient and appropriate to providea basis of opinion. The risk of not detecting a material misstatement resulting from fraudis higher than for our resulting from error as fraud may involve collusion forgeryintentional omissions misrepresentations or the override of internal control.
Obtain an understanding of internal control relevant to the audit in order todesign audit procedures that are appropriate in the circumstances. Under section 143(3)(i)of the Act we are also responsible for expressing our opinion on whether the company hasadequate internal financial control system in place and the operating effectiveness ofsuch controls.
Evaluate the appropriateness of accounting policies used and the reasonablenessof accounting estimates and related disclosures made by the 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 financial statements or if such disclosures are inadequate to modify our opinion.Our conclusions are based on the audit evidence obtained up to the date of our auditor'sreport. However future events or conditions may cause the Company to cease to continue asa going concern.
Evaluate the overall presentation structure and content of the financialstatements including the disclosures and whether the financial statements represent theunderlying transactions and events in a manner that achieves fair presentation.
13. We communicate with those charged with governance regarding among other mattersthe planned scope and timing of the audit and significant audit findings including anysignificant deficiencies in internal control that we identify during our audit.
14. We also provide those charged with governance with a statement that we havecomplied with relevant ethical requirements regarding independence and to communicate withthem all relationships and other matters that may reasonably be thought to bear on ourindependence and where applicable related safeguards.
15. From the matters communicated with those charged with governance we determinethose matters that were of most significance in the audit of the financial statements ofthe current period and are therefore the key audit matters. We describe these matters inour auditor's report unless law or regulation precludes public disclosure about the matteror when in extremely rare circumstances we determine that a matter should not becommunicated in our report because the adverse consequences of doing so would reasonablybe expected to outweigh the public interest benefits of such communication.
Report on Other Legal and Regulatory Requirements
16. As required by the Companies (Auditor's Report) Order2016 ("theOrder") issued by the Central Government of India in terms of sub-section (11) ofSection 143 of the Act we give in "Annexure A"a statement on the mattersspecified in paragraphs 3 and 4 of the Order to the extent applicable.
17. 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 and the Cash Flow Statementdealt with by this Report are in agreement with the books of account.
d) In our opinion the aforesaid financial statements comply with the Ind AS Specifiedunder section 133 of the Act read with Rule 7 of the Companies (Accounts) Rules 2014.
e) On the basis of the written representations received from the directors as on 31stMarch 2021 taken on record by the Board of Directors none of the directors isdisqualified as on 31st March 2021 from being appointed as a director in terms ofSection164(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 B".
g) 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 the financial statements- Refer Note -34 to the Financial Statement;
ii. The Company has made provision as required under the applicable law or accountingstandards for material foreseeable losses if any on long-term contracts includingderivative contracts;
iii. There has been a delay of 100 days in transferring the amount of Rs.6.87 Lakhs tothe Investor Education and Protection Fund by the Company.
Annexure "A" to the Independent Auditors' Report of even date on theFinancial Statements of Nandan Denim Limited
Referred to in paragraph 16 of our Report of even date to the Members of Nandan DenimLimited for the year ended 31st March 2021.
1. In respect of Fixed Assets :
(a) The Company has maintained proper records showing full particulars includingquantitative details and situation of Fixed Assets on the basis of available information.
(b) As per the information and explanations given to us the management at reasonableintervals during the year in accordance with a programme of physical verificationphysically verified the fixed assets and no material discrepancies were noticed on suchverification as compared to the available records.
(c) As explained to us the title deeds of all the immovable properties are held in thename of the Company's name.
2. In respect of Inventories :
As per the information and explanations given to us inventories were physicallyverified during the year by the management at reasonable intervals. No materialdiscrepancy was noticed on such physical verification.
3. As regards the loans the Company has not granted any loans secured or unsecuredduring the year under audit to the Companies firms and other parties covered in theregister maintained under section 189 of the Companies Act 2013 and therefore theclauses (iii) (a) to (c) of the Companies (Auditor's Report) Order 2016 are notapplicable.
4. Loans Investments and guarantees:
In our opinion and according to information and explanations given to us the Companyhas complied with provisions of Section 185 and 186 of the Companies Act2013 in respectof loans investments guarantees and security provided by the company.
5. Acceptance of Deposits:
During the year the Company has not accepted any deposits and hence the directivesissued by the Reserve Bank of India and the provisions of sections 73 to 76 or any otherrelevant provisions of the Companies Act2013 and the rules framed there under are notapplicable to the Company. Therefore clause (v) of Companies (Auditor's Report) Order2016 is not applicable.
6. Cost Records:
Pursuant to the rules made by the central government of India the Company is requiredto maintain cost records as specified under section 148(1) of the Act.
We have broadly reviewed the same and are of the opinion that prima facie theprescribed accounts and records have been made and maintained. However we have not made adetailed examination of the cost records with a view to determine whether they areaccurate or complete.
7. In respect of Statutory Dues :
(a) According to the records of the Company the Company is generally regular indepositing with appropriate authorities undisputed statutory dues including providentfund employees' state insurance income tax Value added taxCentral Sales TaxGoods andService Tax service tax customs duty excisedutycess and any other statutory dues withthe appropriate authorities applicable to it. According to the information andexplanations given to us no undisputed amounts payable in respect of statutory dues wereoutstanding as at 31st March 2021 for a period of more than six months from the date theybecame payable.
(b) According to the records of the Company the dues of income tax service taxcustoms duty excise duty value added tax central sales tax or cess which have not beendeposited as on 31st March2021 on account of disputes and the forum where the dispute ispending are as under:
|Name of the Statute ||Nature of the Dues ||Financial Year ||Amount (Rs. in Lakhs) ||Forum where dispute is pending |
|Income Tax Act1961 ||Income Tax Demand& Interest ||2011-12 ||11.84 ||Commissioner of Income Tax (Appeals) |
| ||Income Tax Demand& Interest ||2014-15 ||663.86 ||Commissioner of Income Tax (Appeals) |
| ||Income Tax Demand& Interest ||2015-16 ||396.12 ||Commissioner of Income Tax (Appeals) |
|Value Added Tax Income Tax Act1961 ||Value Added Tax Demand ||2010-11 ||27.16 ||Joint Commissioner (Appeals) |
| ||Value Added Tax Interest & Penalty ||2010-11 ||40.02 ||Joint Commissioner (Appeals) |
|ESIC Act ||ESIC Demand ||2013-14 ||26.04 ||ESIC Court |
8. Based on our audit procedure and according to the information and explanation givento us we are of the opinion that the Company has not defaulted in repayment of dues toBanks or Government. The Company has no debenture holder or any financial institutionalborrowing during the year.
9. According to the information and explanations given to us the Company had notraised any money by way of public issue during the year. According to the information andexplanations given to us and on an overall examination of the balance sheet of theCompany in our opinion the term loans taken during the year were applied for the purposefor which they were obtained.
10. Based upon the audit procedures performed and information and explanations given bythe management we report that no fraud by the Company or any fraud on the Company by it'sofficer or employees has been noticed or reported during the course of our audit.
11. In our opinion and according to the information and explanations given to us theCompany had paid managerial remuneration which is in accordance with the requisiteapprovals mandated by the provisions of section 197 read with schedule V of The CompaniesAct 2013.
12. In our opinion and according to the information and explanations given to us theprovisions of special statute applicable to chit funds and nidhi / mutual benefit funds /societies are not applicable to the Company. Hence Clause 3(xii) of the Company's(Auditor's Report) Order 2016 is not applicable.
13. In our opinion and according to the information and explanations given to us thetransactions entered by the Company with related parties are in compliance with theprovisions of section 177 and 188 of the Companies Act 2013 and details thereof areproperly disclosed in the financial statements as required by the applicable accountingstandard.
14. During the year the company has not made any preferential allotment or privateplacement of shares or fully or partly convertible debentures during the year underreview. Hence clause (xiv) of the Company's (Auditor's Report) Order 2016 is notapplicable.
15. The Company had not entered in to any non-cash transactions with the directors orpersons connected with him during the year hence section 192 of the Companies Act 2013is not applicable hence clause (xv) of Company's (Auditor's Report) Order 2016 is notapplicable.
16. According to information and explanation given to us the Company is not requiredto register under section 45-IA of Reserve Bank of India Act 1934 hence clause (xvi) ofCompany's (Auditor's Report) Order 2016 is not applicable.
Annexure "B" To Independent Auditors' Report
Referred to in paragraph 16(f) of "Report on Other Legal and RegulatoryRequirements" of our Report of even date to the Members of Nandan Denim Limited forthe year ended 31st March 2021.
Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section143 of the Companies Act 2013 ("the Act")
We have audited the internal financial controls over financial reporting of NandanDenim Limitedas of 31st March 2021 in conjunction with our audit of the financialstatements of the Company for the year ended on that date.
Management's Responsibility for Internal Financial Controls
The Company's management is responsible for establishing and maintaining internalfinancial controls based on the internal control over financial reporting criteriaestablished by the Company considering the essential components of internal control statedin the Guidance Note on Audit of Internal Financial Controls over Financial Reportingissued by the Institute of Chartered Accountants of India. These responsibilities includethe design implementation and maintenance of adequate internal financial controls thatwere operating effectively for ensuring the orderly and e"cient conduct of itsbusiness including adherence to company's policies the safeguarding of its assets theprevention and detection of frauds and errors the accuracy and completeness of theaccounting records and the timely preparation of reliable financial information asrequired under the Companies Act 2013.
Our responsibility is to express an opinion on the Company's internal financialcontrols over financial reporting based on our audit. We conducted our audit in accordancewith the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting(the "Guidance Note") and the Standards on Auditing issued by ICAI and deemedto be prescribed under section 143(10) of the Companies Act 2013 to the extentapplicable to an audit of internal financial controls both applicable to an audit ofInternal Financial Controls and both issued by the Institute of Chartered Accountants ofIndia. Those Standards and the Guidance Note require that we comply with ethicalrequirements and plan and perform the audit to obtain reasonable assurance about whetheradequate internal financial controls over financial reporting was established andmaintained and if such controls operated effectively in all material respects.
Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal financial controls system over financial reporting and their operatingeffectiveness. Our audit of internal financial controls over financial reporting includedobtaining an understanding of internal financial controls over financial reportingassessing the risk that a material weakness exists and testing and evaluating the designand operating effectiveness of internal control based on the assessed risk. The proceduresselected depend on the auditor's judgment including the assessment of the risks ofmaterial misstatement of the financial statements whether due to fraud or error.
We believe that the audit evidence we have obtained is su"cient 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 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 authorizations of management and directors of the company; and
(3) provide reasonable assurance regarding prevention or timely detection ofunauthorized 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 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 2021 based on theinternal control over financial reporting criteria established by the Company consideringthe essential components of internal control stated in the Guidance Note on Audit ofInternal Financial Controls Over Financial Reporting issued by the Institute of CharteredAccountants of India.
| ||For Samir M. Shah & Associates |
| ||Chartered Accountants |
| ||[Firm Regd. No. 122377W] |
| ||(S. M. Shah) |
| ||Partner |
|Place : Ahmedabad ||[M. No. 111052] |
|Date :29/06/2021 ||UDIN: 21111052AAAASM7214 |