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Padmanabh Industries Ltd.

BSE: 526905 Sector: Industrials
NSE: N.A. ISIN Code: INE743D01011
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NSE 05:30 | 01 Jan Padmanabh Industries Ltd
OPEN 4.86
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VOLUME 85
52-Week high 6.99
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Sell Price 0.00
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OPEN 4.86
CLOSE 4.86
VOLUME 85
52-Week high 6.99
52-Week low 3.75
P/E
Mkt Cap.(Rs cr) 3
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Padmanabh Industries Ltd. (PADMANABHINDS) - Auditors Report

Company auditors report

To the Members of Padmanabh Industries Limited

Report on the Audit of Standalone Financial Statements

Qualified Opinion

We have audited the accompanying standalone Ind AS financial statements of PadmanabhIndustries Limited ("the Company") which comprise the balance sheet as at March31 2020 and the Statement of Profit and Loss statement of changes in equity andstatement of cash flows for the year then ended and notes to the standalone Ind ASfinancial statements including a summary of significant accounting policies and otherexplanatory information.

In our opinion and to the best of our information and according to the explanationsgiven to us except for the possible effects of the matter described in the Basis forQualified Opinion section of our report the aforesaid standalone Ind AS financialstatements give the information required by the Companies Act 2013 (‘Act') in themanner so required and give a true and fair view in conformity with the accountingprinciples generally accepted in India of the state of affairs of the Company as at March31 2020 its profit (or Loss) statement of changes in equity and cash flows for the yearended on that date.

Basis for Qualified Opinion

• Refer to Note 3in the standalone financial statements the Company has madeinvestment in one of its wholly owned Subsidiary namely Padmanabh Sport Private Limitedand the said investment is carried at cost Rs. 100000 on the balance sheet as at March 312020. Net worth of Investee Company has fully eroded as on balance sheet date and there ispermanent diminution in the value of investment The Management has stated the saidinvestment at cost amount which constitutes a departure from the Ind AS AccountingStandards prescribed under section 133 of the companies act 2013.

• Refer to standalone financial statements all the value with regards tofinancial assets and financial liabilities in the financial statements has been stated athistorical cost only irrespective of the fair value of the same which is departure fromrequirement of an Ind AS 113 (Fair value measurement) and Ind AS 109 (FinancialInstruments).

We conducted our audit in accordance with the standards on auditing specified undersection 143 (10) of the Companies Act 2013. Our responsibilities under those Standardsare further described in the auditor's responsibilities for the audit of the standaloneInd AS financial 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 thefinancial statements under the provisions of the Act and the rules thereunder and we havefulfilled our other ethical responsibilities in accordance with these requirements and thecode of ethics.

We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our qualified opinion.

Emphasis of Matter

• We draw attention to Other disclosures forming part of the standalone Ind ASFinancial Statements which describes the uncertainties and the impact of Covid-19pandemic on the Company's operations and results as assessed by the management. Ouropinion is not modified in respect of this matter.

• We draw attention to exceptional items stated in the statement of profit &loss account amounting Rs. 4.21 crores. The company has written off its financial andnon-financial assets during year including the advance for capital assets.

• The Company have granted interest free Unsecured loans and advances to itswholly owned subsidiary outstanding amount of Rs 7.14 crores as on balance sheet. The Networth of the said subsidiary has fully eroded and having negative net worth of Rs 6.26crores. Such loans and receivables are tested for impairment annually. If impairmentexists the recoverable amounts of the loans and receivables are estimated in order todetermine the extent of the impairment loss if any. Determination of whether there existsany impairment in the value of loans is subject to a significant level of judgment. Thereis therefore a risk that the value of loans may be misstated.

Key Audit Matters

Key audit matters are those matters that in our professional judgment were of mostsignificance in our audit of the financial statements for the year ended March 31 2020.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 be the key audit matters to becommunicated in our report:

Key Audit Matter How our audit addressed the key audit matter
1 Investment in Subsidiary
During the year the company holds investment in subsidiaries. Investment in subsidiaries are carried at cost in the accompanying Standalone Financial Statement which as at March 31 2020 reflected equity investment balance of Rs. 15840000/-. The recoverability of the investments in subsidiaries was assessed by the management based on certain assumption professional judgments expectation of future events which are believed to be reasonable under the circumstances & other factors. We have verified the permission license and relevant compliance before appropriate authority and found to be in order. Based on the impairment test performed carrying amount of investment in subsidiaries do not exceed their recoverable amount on the basis that the current business plans of the subsidiaries will materialize without material adverse effects. We have reviewed the main assumption & the professional judgments made by the management in performing the impairment tests & we have found them reasonable under the current circumstances.
2 Reasonableness of carrying value of investments made in subsidiary company
There is a risk in respect of the possible impairment of Investments made in subsidiary due to its substantial amount of accumulated losses in Retained Earnings as at 31st March 2020 which might affect the recoverable amounts of investments made in & loans given to the subsidiary company. Our audit procedures inter alia included following:
- Assessed the process for identifying impairment indicators and obtained an understanding of impairment assessment process performed by the management;
- Obtained understanding of management' future plans about subsidiary's operations
Conclusion:
Based on procedures described above we did not find any material exceptions to conclusion arrived by the management based on procedures performed by it in the recoverability assessment of investments in subsidiary companies.

Other Information

The Company's board of directors is responsible for the preparation of the otherinformation. The other information comprises the information included in the Board'sReport including Annexures to Board's Report Business Responsibility Report but does notinclude the financial statements and our auditor's report thereon.

Our qualified opinion on the standalone Ind AS financial statements does not cover theother information and we do not express any form of assurance conclusion thereon.

In connection with our audit of the financial statements our responsibility is to readthe other information and in doing so consider whether the other information ismaterially inconsistent with the standalone Ind AS financial statements or our knowledgeobtained during the course of our audit or otherwise appears to be materially misstated.

If based on the work we have performed we conclude that there is a materialmisstatement of this other information; we are required to report that fact. We havenothing to report in this regard.

Management's Responsibility for the Standalone Ind AS financial statements

The Company's Board of Directors is responsible for the matters stated in Section134(5) of the Companies Act 2013 ("the Act") with respect to the preparationand presentation of these Ind AS financial statements that give a true and fair view ofthe financial position financial performance and cash flows of the Company in accordancewith the accounting principles generally accepted in India including the IndianAccounting Standards (Ind AS) specified under Section 133 of the Act read with theCompanies (Indian Accounting Standards) Rules 2015 as amended.

This responsibility also includes maintenance of adequate accounting records inaccordance with the provisions of the Act for safeguarding the assets of the Company andfor preventing and detecting frauds and other irregularities; selection and application ofappropriate accounting policies; making judgments and estimates that are reasonable andprudent; and design implementation and maintenance of adequate internal financialcontrols that were operating effectively for ensuring the accuracy and completeness ofthe accounting records relevant to the preparation and presentation of the Ind ASfinancial statements that give a true and fair view and are free from materialmisstatement whether due to fraud or error.

In preparing the standalone Ind AS 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 responsible for overseeing the company's financial reportingprocess.

Auditor's Responsibility for the audit of Standalone Ind AS financial statements

Our responsibility is to express an opinion on these Ind AS financial statements basedon our audit. We have taken into account the provisions of the Act the accounting andauditing standards and matters which are required to be included in the audit report underthe provisions of the Act and the Rules made thereunder. We conducted our audit inaccordance with the Standards on Auditing specified under Section 143(10) of the Act.Those Standards require that we comply with ethical requirements and plan and perform theaudit to obtain reasonable assurance about whether the Ind AS financial statements arefree from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts andthe disclosures in the Ind AS financial statements. The procedures selected depend on theauditor's judgment including the assessment of the risks of material misstatement of theInd AS financial statements whether due to fraud or error. In making those riskassessments the auditor considers internal financial control relevant to the Company'spreparation of the Ind AS financial statements that give a true and fair view in order todesign audit procedures that are appropriate in the circumstances. An audit also includesevaluating the appropriateness of the accounting policies used and the reasonableness ofthe accounting estimates made by the Company's Directors as well as evaluating theoverall presentation of the Ind AS financial statements. We believe that the auditevidence we have obtained is sufficient and appropriate to provide a basis for our auditopinion on the Ind AS financial statements.

As part of an audit in accordance with SAs we exercise professional judgment andmaintain professional scepticism 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 sufficient and appropriate to provide abasis for our opinion. The risk of not detecting a material misstatement resulting fromfraud is higher than for one resulting from error as fraud may involve collusionforgery intentional 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 entity hasadequate internal financial controls 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 management.

• Conclude on the appropriateness of management's use of the going concern basisof accounting in preparation of consolidated financial statements and based on the auditevidence obtained whether a material uncertainty exists related to events or conditionsthat may cast significant doubt on the appropriateness of this assumption. If we concludethat a material uncertainty exists we are required to draw attention in our auditors'report to the related disclosures in the consolidated financial statements or if suchdisclosures are inadequate to modify our opinion. Our conclusions are based on the auditevidence obtained up to the date of our auditors' report.

• 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.

• Obtain sufficient appropriate audit evidence regarding the financial informationof such entities or business activities within the Group to express an opinion on thefinancial statements.

We are responsible for the direction supervision and performance of the audit offinancial information of such entities.

We believe that the audit evidence obtained by us is sufficient and appropriate toprovide a basis for our audit opinion on the financial statements.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor's Report) Order 2016 ("the Order")issued by the Central Government of India in terms of sub-section (11) of section 143 ofthe Act we give in the "Annexure A" a statement on the matters specifiedin the paragraph 3 and 4 of the order.

2. As required by Section 143 (3) of the Act we report that:

(a) we have sought all the information and explanations which to the best of ourknowledge and belief were necessary for the purposes of our audit except

 

The confirmations of the balances outstanding as on the reporting date with customerssuppliers unsecured borrowings deposits and loans and advances are subject toconfirmation with books of the counter parties.

(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 except for the mattersstated otherwise in the report;

(c) the balance sheet the statement of profit and loss including other comprehensiveincome the cash flow statement and statement of changes in equity dealt with by thisReport are in agreement with the books of account except for the matters stated otherwisein the report;

(d) in our opinion the aforesaid Ind AS financial statements comply with theAccounting Standards specified under Section 133 of the Act read with the companies(Indian Accounting Standards) Rules 2015 as amended except for the matters statedotherwise in the report;

(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 2020from being appointed as a director in terms of Section 164(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"; and

(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 does not have any pending litigations which would impact its financialposition;

ii. The Company is not required to make provision as required under the applicable lawor accounting standards for material foreseeable losses if any on long-term contractsincluding derivative contracts as the company did not have any long-term contractsincluding derivative contracts for which there were any material foreseeable losses.

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

iv. The reporting on disclosures relating to Specified Bank Notes is not applicable tothe Company for the year ended March 31 2020.

f) With respect to the matter to be included in the Auditors' Report under section197(16): In our opinion and according to the information and explanations given to us theremuneration paid by the Company to its directors during the current year is in accordancewith the provisions of Section 197 of the Act. The remuneration paid to any director isnot in excess of the limit laid down under Section 197 of the Act. The Ministry ofCorporate Affairs has not prescribed other details under Section 197(16) which arerequired to be commented upon by us.

For Sunil Poddar & Co.
Chartered Accountants
FRN: 110603W
CA Pankaj Agrawal
Place: Ahmedabad Partner
Date: 30.07.2020 M.No: 443450
UDIN: 20443450AAAALL5852

Annexure - A to the Auditors' Report

The Annexure referred to in Independent Auditors' Report to the members of the Companyon the standalone financial statements for the year ended 31 March 2020 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 of the Company have been physically verified at regular intervalsby the management and no material discrepancies were noticed during such verification. Theperiodicity of physical verification is reasonable considering the size of the company andthe nature of its assets.

(c) According to the information and explanations given to us and based on ourexamination of the records of the Company the lease deeds of mining rights had not madeavailable for our verification.

(ii) (a) The stock of Inventories has been fully written off during the year and noinventory is there as on balance sheet date hence reporting under clause "b"and clause "c" regardingthe procedures for physical verification and reasonablerecords for inventories respectively is not applicable.

(iii) Register maintained under section 189 of the companies' act were not madeavailable to us for our verification therefore we cannot comment whether company hasgranted unsecured loans to the companies firm or other parties covered in the registermaintained under section 189 of the Companies Act.

(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 with respectto the loans and investments made except section 186(7) of the companies act. Details ofthe same are as under:

Total no. of parties 4
Balance outstanding as on 31.03.2020 Rs. 76970429

More so company has not provided us with the list of persons related to director asdefined under section 185 of the companies act therefore no comments can be maderegarding the fact that whether any loans has been advanced to such persons incontravention of the act.

The amount of loans advanced and investment acquired has exceeded the limit as definedunder section 186 of companies act 2013 as on 31st March 2020.

(v) In our opinion and according to the information and explanations given to us thethe Company has not complied with the directives issued by Reserve Bank of India and theprovision of Chapter V of the Companies Act 2013 or any other relevant provisions of theCompanies Act 2013 and the Rules framed thereunder under as the company has accepted anyloans from the parties mentioned therein.

Total no. of parties 2
Balance outstanding as on 31.03.2020 Rs. 400000

(vi) The Central Government has not prescribed the maintenance of cost records undersection 148(1) of the Act for any of the goods or services rendered by the Company.

(vii) (a) According to the information and explanations given to us no undisputedamounts payable in respect of provident fund income tax sales tax value added tax dutyof customs service tax cess and other material statutory dues were in arrears as at 31stMarch 2020 for a period of more than six months from the date they became payable exceptfollowing:

Particulars Amount (Rs.) Financial Year
GST 53830 2018-19
TDS 44791 2018-19 & 2019-20

According to the information and explanations given to us there are no material duesof (b) income tax sales tax service tax duty of customs duty of excise value addedtax which have not been deposited with the appropriate authorities on account of anydispute.

(x) According to the information and explanations given to us no material fraud by theCompany or on the Company by its officers or employees has been noticed or reported duringthe course of our audit.

(xi) According to the information and explanations give to us and based on ourexamination of the records of the Company the Company has paid/provided for managerialremuneration in accordance with the requisite approvals mandated by the provisions ofsection 197 read with Schedule V to the Companies Act 2013.

(xii) In our opinion and according to the information and explanations given to us theCompany is not a nidhi company. Accordingly paragraph 3(xii) of the Order is notapplicable.

(xiii) According to the information and explanations given to us and based on ourexamination of the records of the Company transactions with the related parties are incompliance with sections 177 and 188 of the Act where applicable and details of suchtransactions have been disclosed in the financial statements as required by the applicableaccounting standards.

(xiv) According to the information and explanation given to us and based on ourexamination of the records of the company the company has not made any preferentialallotment or private placement of shares or fully or partly convertible debentures duringthe year.

(xv) According to the information and explanations given to us and based on ourexamination of the records of the Company the Company has entered into non-cashtransactions with directors. Accordingly paragraph 3(xv) of the Order is not applicable.

However company has provided us with the list of persons connected to director asdefined under companies act therefore no comments can be made regarding the fact thatwhether any non-cash transactions has done with the persons connected to the director.

(xvi) The Company is not required to be registered under section 45-IA of the ReserveBank of India Act 1934.

For Sunil Poddar & Co.
Chartered Accountants
FRN: 110603W
CA Pankaj Agrawal
Place: Ahmedabad Partner
Date: 30.07.2020 M.No: 443450
UDIN: 20443450AAAALL5852

Annexure - B to the Auditors' Report

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 PadmanabhIndustries Limited ("the Company") as of 31stMarch 2020 inconjunction with our audit of the standalone financial statements of the Company for theyear ended on that date.

Management's Responsibility for Internal Financial Controls

The Company's 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.

Auditors' 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 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 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 authorizations ofmanagement and directors of the company; and (3) provide reasonable assurance regardingprevention or timely detection of unauthorized acquisition use or disposition of thecompany's assets that could have a material 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.

Opinion

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 31 March 2020 based on theinternal control over financial reporting criteria established by the Company consideringthe essential components of internal control stated in the Guidance Note on Audit ofInternal Financial Controls Over Financial Reporting issued by the Institute of CharteredAccountants of India.

For Sunil Poddar & Co.
Chartered Accountants
FRN: 110603W
CA Pankaj Agrawal
Place: Ahmedabad Partner
Date: 30.07.2020 M.No: 443450
UDIN: 20443450AAAALL5852

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