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Pashupati Cotspin Ltd.

BSE: 535005 Sector: Industrials
NSE: PASHUPATI ISIN Code: INE124Y01010
BSE 05:30 | 01 Jan Pashupati Cotspin Ltd
NSE 05:30 | 01 Jan Pashupati Cotspin Ltd

Pashupati Cotspin Ltd. (PASHUPATI) - Auditors Report

Company auditors report

To the Membersof

PASHUPATI COTSPIN LIMITED

Report on the Audit of the Standalone Financial Statements

Opinion

We have audited the accompanying standalone financial statements of Pashupati CotspinLimited (the ‘Company’) which comprise the Balance Sheet as at March 31 2021and the statement of Profit and Loss and Statement of cash flows for the year then endedand notes to the financial statements including a summary of significant accountingpolicies and other explanatory information.

In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid standalone financial statements give the information requiredby the Companies Act2013 (the "Act") in the manner so required and give a trueand fair view in conformity with the Accounting Standards prescribed under Sec. 133 of theAct read with Rule 7 of the Companies (Accounts) Rules 2014 and other accountingprinciples generally accepted in India of the state of affairs of the Company as at March312021 its profit and its cash flows for the year ended on that date.

Basis for Opinion

We conductedour audit of the standalone financial statements in accordance with theStandards on Auditing (SAs) specified under section 143(10) of the Act. Ourresponsibilities under those Standards are further described in the Auditor’sResponsibilities for the Audit of the Financial Statements section of our report. We areindependent of the Company in accordance with the Code of Ethics issued by Institute ofChartered Accountants of India (ICAI) together with the ethical requirements that arerelevant to our audit of the standalone financial statements under the provisions of theAct and the Rules made there under and we have fulfilled our other ethicalresponsibilities in accordance with these requirements and the ICAI’s Code of Ethics.We believe that the audit evidence obtained by us is sufficient and appropriate to providea basis for our opinion on the standalone financial statements.

Emphasis of Matter

We draw attention to note no. 14 of the financial statement wherein management whileconcluding no significant impact due to COVID-19 on current year’s finance resultshas considered internal and external source of information relating to economic forecastsand estimates on realisablity of various classes of assets and expects to recover thecarrying amount of these assets. However the assessment of impact of the COVID-19 iscontinuing process given the uncertainties associate with its nature and duration. TheCompany will continue to closely monitor any material changes to future economicconditions. Our opinion is not modified in respect of this matter.

Key Audit Matters

Key audit matters are those matters that in our professional judgment were of mostsignificance in our audit of the standalone financial statements of the current period.These matters were addressed in the context of our audit of the standalone financialstatements as a whole and in forming our opinion there on and we do not provide aseparate opinion on these matters.

KEY AUDIT MATTER RESPONSE TO KEY AUDIT MATTER
Measurement and Recognition of State Subsidy Receivable Principal Audit Procedures
In terms of the Textile Policy of Government of Gujarat (GOG) the company is eligible for subsidy in the form of refund of state tax(SGST) on sales made from its plant located at Kadi for eligible products. We have performed the following procedures in relation to the Recognition of State Subsidy Receivable with respect to State Tax (SGST):
The Government of Gujarat made certain amendments to modalities for sanction and disbursement of the refund of such taxes under the new GST regime. Evaluating the design and testing the operating effectiveness of the relevant controls over recognition and assessment of recoverability of the grant recognized under the Textile Policy of GOG.
Discussion with company’s legal team management and external legal counselas applicable for their assessment of entitlement of benefits under such scheme.
Engaging our internal specialists to assess relevant historical and recent update passed by the relevant authorities to evaluate the appropriateness of the conclusion reached by the management.
Our tests of detail focused on transactions occurring within proximity of the year end in eligible products obtaining evidence to support the appropriate timing of revenue recognition based on terms and conditions set out in Textile Policy by GOG.

Informationother than Financial Statements & Auditors Report thereon.

The Company’s Board of Directors is responsible for the Other Information. TheOther Information comprises the information included in the Board’s Report includingAnnexure to Board’s Report (but does not include the standalone financial statementsand our auditor’s reports thereon).

Our opinion on the standalone financial statements does not cover the Other Informationand we do not express any form of assurance conclusion thereon.

In connection with our audit of the standalone financial statements our responsibilityis to read the other information identified above and in doing so consider whether theother information is materially inconsistent with the standalone financial statements orour knowledge obtained in the 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 Financial Statements

The Company’s Board of Directors is responsible for the matters stated in section134(5) of the Act with respect to the preparation of these standalone financial statementsthat give a true and fair view of the financial position financial performance and cashflows of the Company in accordance with the Accounting Standard and accounting principlesgenerally accepted in India. 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 accounting policies; making judgement andestimates that are reasonable and prudent; and design implementation and maintenance ofadequate internal financial controls that were operating effectively or ensuring accuracyand completeness of the accounting records relevant to the preparation and presentationof the standalone financial statements that give a true and fair view and are free frommaterial misstatement whether due to fraud or error.

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.

The Board of Directors arealso responsible for overseeing the Company’s financialreporting process.

Auditor’s Responsibilities for the Audit of the Standalone Financial Statements:-

Our objectives are to obtain reasonable assurance about whether the standalonefinancial statements as a whole are free from material misstatement whether due to fraudor error and to issue an auditor’s report that includes our opinion. Reasonableassurance is a high level of assurance but is not a guarantee that an audit conducted inaccordance with SAs will always detect a material misstatement when it exists.Misstatements can arise from fraud or error and are considered material if individuallyor in the aggregate they could reasonably be expected to influence the economic decisionsof users taken on the basis of these standalone financial statements.

As part of an audit in accordance with SAs we exercise professional judgment andmaintain professional skepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the standalonefinancial statements whether due to fraud or error design and perform audit proceduresresponsive to those risks and obtain audit evidence that is sufficient and appropriate toprovide a basis for our opinion. The risk of not detecting a material misstatementresulting from fraud is higher than for one resulting from error as fraud may involvecollusion forgery intentional omissions misrepresentations or the override of internalcontrol.

• Obtain an understanding of internal financial control relevant to the audit inorder to design audit procedures that are appropriate in the circumstances. Under section143(3)(i) of the Act we are also responsible for expressing our opinion on whether theCompany has adequate internal financial controls system in place and the operatingeffectiveness of such controls.

• Evaluate the appropriateness of accounting polices used and the reasonablenessof accounting estimates and related disclosures made by the management.

• Conclude on the appropriateness of management’s use of the going concernbasis 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 conditionsmay cause the Company to cease to continue as a going concern.

• Evaluate the overall presentation structure and content of the standalonefinancial statements including the disclosures and whether the standalone financialstatements represent the underlying transactions and events in a manner that achieves fairpresentation.

Materiality is the magnitude of misstatements in the standalone financial statementsthat individually or in aggregate makes it probable that the economic decisions of areasonably knowledgeable user of the standalone financial statements may be influenced. Weconsider quantitative materiality and qualitative factors in

(i) planning the scope of our audit work and in evaluating the results of our work; and

(ii) to evaluate the effect of any identified misstatements in the standalone financialstatements.

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

We also provide those charged with governance with a statement that we have compliedwith relevant ethical requirements regarding independence and to communicate with themall relationships and other matters that may reasonably be thought to bear on ourindependence and where applicable related safeguards.

From the matters communicated with those charged with governance we determine thosematters that were of most significance in the audit of the standalone financial statementsof the current period and are therefore the key audit matters. We describe these mattersin our auditor’s report unless law or regulation precludes public disclosure aboutthe matter or when in extremely rare circumstances we determine that a matter should notbe communicated in our report because the adverse consequences of doing so wouldreasonably be expected to outweigh the public interest benefits of such communication.

Report on Other Legal and Regulatory Requirements

As required by the Companies (Auditor’s Report) Order 2016 (the"Order") issued by the Central Government of India in terms of subsection (11)of section 143 of the Companies Act2013 we give in the "Annexure A" astatement on the matters specified in paragraphs 3 and 4 of the Order to the extentapplicable .

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 are necessary for the purpose 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 Standalone financial statements comply with theAccounting Standards specified under Section 133 of the Act read with Rule 7 of theCompanies (Accounts) Rules 2014.

(e) On the basis of the written representations received from the directors as on 31stMarch 2021taken on record by the Board of Directors none of the directors isdisqualified as on 31st March 2021from being appointed as a director in termsof Section 164(2) of the Act.

(f ) With respect to the adequacy of internal financial controls over financialreporting of the Company and the operating effectiveness of such controls refer to orseparate report in "Annexure B".

(g) With respect to the other matters to be included in the Auditor’s Report inaccordance with the requirements of section 197(16) of the Act as amended in our opinionand to the best of our information and according to the explanations given to us theremuneration paid/provided by the Company to its directors during the year is inaccordance with the provisions of section 197 of the Act.

(h) With respect to the other matters to be included in the Auditor’s Report inaccordance with Rule 11 of the Companies (Audit and Auditors) Rule 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 the financialposition of its financial statements – Refer Note (1) of Part B to Notes to accounts;

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

iii. Therehas been no delay in transferring amounts required to be transferred to theInvestor Education and Protection Fund by the Company.

Mahendra N. Shah & Co.
Chartered Accountants
Firm’s Registration No.-105775W
CA. Chirag M. Shah
Partner
Place: Ahmedabad Membership No.-F045706
Date:21/06/2021 UDIN:21045706AAAAIJ1822

"Annexure A" to the Independent Auditors’ Report

Referred to in paragraph 1 under the heading ‘Report on Other Legal &Regulatory Requirements’ of our report of even date to the financial statements ofthe Company for the year ended March 31 2021:

1. In respect of Fixed Assets :

(a) The Company is in the process of maintaining proper records which show fullparticulars including quantitative details and situation of fixed assets;

(b) The Fixed Assets have been physically verified by the management in a phasedmanner designed to cover all the items over a period of five years which in our opinionis reasonable having regard to the size of the company and nature of its business.According to information and explanation given to us no material discrepancies werenoticed on such verification.

(c) According to the audit process and based on records of the company the title deedsof immovable properties are held in the name of the company.

2. In respect of Inventories:

According to information and explanation given to us Physical verification ofinventories has been conducted at reasonable interval by the Management and no materialdiscrepancies were noticed on physical verification during the year.

3. According to information and explanation given to us the Company has grantedUnsecured Loans to Limited Liability partnerships which are covered in the Registermaintained under section 189 of the Act. In this respect

(a) In our opinion and according to the information given to us the terms andconditions of the loans given by the Company are not prima facie prejudicial to theinterest of the company.

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

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

4. In our opinion and according to the information and explanations given to usthe company has complied with provisions of section 185 and 186 of the Companies Act 2013in respect of loans investments guarantees and security.

5. According to information and explanation given to us the Company has notaccepted any deposits from the public and hence the directives issued by the Reserve Bankof India and the provisions of Sections 73 to 76 or any other relevant provisions of theAct and the Companies (Acceptance of Deposit) Rules 2015 with regard to the depositsaccepted from the public are not applicable.

6. According to the information and explanation given to us the central governmenthas prescribed maintenance of cost records under sub section (1) of section 148 of theCompanies Act2013. We are of the opinion that prima facie the company has maintainedprescribed accounts and records. However we have not made a detailed examination of thesame.

7. According to information and explanations given to us in respect of statutorydues and on the basis of our examination of the books of account and records

(a) the Company has been generally regular in depositing undisputed statutory duesincluding Provident Fund Employees State Insurance Income-Tax GST Duty of Customs andany other statutory dues with the appropriate authorities. According to the informationand explanations given to us no undisputed amounts payable in respect of the above werein arrears as at March 31 2021 for a period of more than six months from the date on whenthey become payable.

(b) According to the information and explanations given to us there are no materialdues of income tax GST and duty of customs which have not been deposited with theappropriate authorities on account of any dispute.

8. The company has not defaulted in repayment of dues to Financial Institutions orbanks or debenture holders.

9. According to the information and explanations given by the management thecompany has not raised moneys by way of initial public offer or further public offerincluding debt instruments and term Loans during the year. Accordingly the provisions ofclause 3 (ix) of the Order are not applicable to the Company.

10. According to the information and explanations given by the management wereport that no fraud by the Company or on the company by its officers or employees hasbeen noticed or reported during the year.

11. According to the information and explanations given by the management themanagerial remuneration has been paid or provided in due compliance of section 197 readwith Schedule V to the Companies Act;

12. In our opinion the Company is not a Nidhi Company. Therefore the provisionsof clause 4 (xii) of the Order are not applicable to the Company.

13. In our opinion all transactions with the related parties are in compliancewith section 177 and 188 of Companies Act 2013 and the details have been disclosed in theFinancial Statements as required by the applicable accounting standards.

14. According to the information and explanations given by the management thecompany has made preferential allotment or 43 private placement of 4050000 sharesthrough conversion of convertible share warrants amounting to `238950000 during theyear under review. The funds raised have been utilised for the object for which it wasraised.

15. According to the information and explanations given by the management thecompany has not entered into any non-cash transactions with directors or persons connectedwith him. Accordingly the provisions of clause 3(xv) of the Order are not applicable tothe Company and hence not commented upon.

16. In our opinion the company is not required to be registered under section 45IA of the Reserve Bank of India Act 1934 and accordingly the provisions of clause 3(xvi)of the Order are not applicable to the Company and hence not commented upon.

Mahendra N. Shah & Co.
Chartered Accountants
Firm’s Registration No.-105775W
CA. Chirag M. Shah
Partner
Place: Ahmedabad Membership No.-F045706
Date:21/06/2021 UDIN:21045706AAAAIJ1822

Annexure ‘B’

Report on the Internal Financial Controls under Clause (1) of Sub-section 3 of Section143 of the Companies Act 2013("the Act")

We have audited the internal financial controls over financial reporting of PASHUPATICOTSPIN LIMITED ("the Company") as of March 31 2021 in conjunction with ouraudit of the standalone financial statements of the Company for the year ended on thatdate.

Management’s Responsibility for Internal Financial Controls

The Company’s management is responsible for establishing and maintaining internalfinancial controls based on the internal control over financial reporting criteriaestablished by the Company considering the essential components of internal control statedin the Guidance Note on Audit of Internal Financial controls over Financial Reportingissued by the Institute of Chartered Accountants of India. These responsibilities includethe design implementation and maintenance of adequate internal financial controls thatwere operating effectively for ensuring the orderly and efficient conduct of its businessincluding 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 Act.

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 Act to the extent applicable to an audit ofinternal financial controls both applicable to an audit of internal Financial Controlsand both issued by the Institute of Chartered Accountants of India. Those Standards andthe Guidance Note require that we comply with ethical requirements and plan and performthe audit to obtain reasonable assurance about whether adequate internal financialcontrols over financial reporting was established and maintained and if such controlsoperated effectively in all material respects.

Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal financial controls systems 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.Webelieve that the audit evidence we have obtained is sufficient and appropriate to providea 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 processdesigned to provide reasonable assurance regarding the reliability of financial reportingand the preparation of financial statements for external purpose in accordance withgenerally accepted 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 havea 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 of procedures may deteriorate.

Opinion

In our opinion to the best of our information and according to explanations given tous the Company has in all material respects an adequate internal financial controlsystem over financial reporting and such internal financial controls over financialreporting were operating effectively as on March 31 2021 based on the internal controlover financial reporting criteria established by the Company considering the essentialcomponents of internal controls stated in the Guidance Note on Audit of Internal FinancialControls Over Financial Reports issued by the Institute of Chartered Accountants of India.

Mahendra N. Shah & Co.
Chartered Accountants
Firm’s Registration No.-105775W
CA. Chirag M. Shah
Partner
Place: Ahmedabad Membership No.-F045706
Date:21/06/2021 UDIN:21045706AAAAIJ1822

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