To the Members of PBM Polytex Limited
Report on the Audit of the Standalone Financial Statements
We have audited the accompanying standalone financial statements of PBM PolytexLimited (the Company') which comprise the Balance Sheet as at March 31 2020and the statement of Profit and Loss (including other comprehensive income) Statement ofchanges in equity and Statement of cash flows for the year then ended and notes to thefinancial 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 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 Indian Accounting Standards prescribed under Section133 of the Act read with the Companies (Indian Accounting Standards) Rules2015 as amended("Ind AS") and other accounting principles generally accepted in India of thestate of affairs of the Company as at March 312020 and its loss total comprehensiveincome the changes in equity and its cash flows for the year then ended on that date.
Basis for Opinion
We conducted our 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 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 obtained by us is sufficient and appropriate to provide abasis for our opinion on the standalone financial statements.
Emphasis of Matter
We draw attention to Note 47 of the standalone financial statements which describesthat the potential impact of COVID-19 pandemic on the operations and financial statementsof the company is dependent on future developments which are uncertain. Our opinion isnot modified in respect of the above 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 thereon and we do not provide aseparate opinion on these matters.
|Key Audit Matter ||Auditor's Response |
|Physical Verification of Inventories ||Principal Audit Procedures |
|The company's inventories include raw materials work in progress finished goods and stores & spares. Company has its inventories located at its manufacturing units (Petlad and Boregaon) and at depot(Calcutta). ||We have carried out alternative audit procedures to obtain sufficient appropriate audit evidence regarding the existence and condition of inventories which include the followings: |
|The company has adequate inventory records and internal control systems over inventory movements. The company has established procedures to carry out physical inventory during the year and at the year-end. || Evaluated the control design in respect of physical inventory verification process and verified whether such controls have operated effectively during verification process. |
|However due to various restrictions imposed under COVID 19 outbreak physical verification could not be carried out at the year-end but the same was carried out subsequent to the year-end. At the time of such subsequent verification it was impracticable for us as auditors to physically attend the inventory counting and hence alternative audit procedures were performed. || Obtained sufficient and appropriate audit evidences of existence and condition of physical inventories as carried out by the management during the year and subsequent to the year- end. |
| || Rollback procedures were applied to the inventories verified by the company at subsequent of the year-end to arrive inventories at the year-end. |
|Measurement of provisions for employee emoluments and benefits ||Principal Audit Procedures |
|The company has made provisions for employee benefits and revision of wages. The estimates made by the management regarding the existence of an obligation as well as the forecast of future cash outflows in connection with these obligations directly impact the recognition and measurement of provisions. The management also make use of their judgements for provisions concerning the legal disputes under negotiations. ||We examined the processes and controls set up to prevent or detect and correct errors relating to the complete recognition and measurements of provisions involving the use of judgement. |
| ||External actuaries were engaged to determine the amounts of provisions of gratuity and leave encashment. We examined the data made available to actuaries for completeness and accuracy. We reviewed the assumptions including the discount rate expected return on plan assets escalation rate etc. |
| ||In respect of provision for wage revision we conducted a critical review of internal analysis notes for the likelihood and potential impact examining the available documents |
Information other than Financial Statements& Auditors Report thereon.
The Company's Board of Directors is responsible for the Other Information. The OtherInformation comprises the information included in the Board's Report including Annexuresto Board's Report and Management Discussion and Analysis (but does not include thestandalone financial statements consolidated financial statements and our auditor'sreports thereon). Our opinion on the standalone financial statements does not cover theOther Information and we do not express any form of assurance conclusion thereon. Inconnection with our audit of the standalone financial statements our responsibility is toread the other information identified above and in doing so consider whether the otherinformation is materially inconsistent with the standalone financial statements or ourknowledge obtained in the audit or otherwise appears to be materially misstated. Ifbased on the work we have performed we conclude that there is a material misstatement ofthis Other Information we are required to report that fact. We have nothing to report inthis 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 includingother comprehensive income changes in equity and cash flows of the Company in accordancewith the Ind AS and accounting principles generally accepted in India. This responsibilityalso includes maintenance of adequate accounting records in accordance with the provisionsof the Act for safeguarding the assets of the Company and for preventing and detectingfrauds and other irregularities; selection and application of appropriate accountingpolicies; making judgement and estimates that are reasonable and prudent; and designimplementation and maintenance of adequate internal financial controls that wereoperating effectively or ensuring accuracy and completeness of the accounting recordsrelevant to the preparation and presentation of the standalone financial statements thatgive a true and fair view and are free from material misstatement whether due to fraud orerror. 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 are also responsible for overseeing the Company's financialreporting process.
Auditor's Responsibilities for the Audit of the Standalone Financial Statements: -
Our objectives are to obtain reasonable assurance about whether the standalonefinancial statements as a whole are free from material misstatement whether due to fraudor error and to issue an auditor's report that includes our opinion. Reasonable assuranceis a high level of assurance but is not a guarantee that an audit conducted in accordancewith SAs will always detect a material misstatement when it exists. Misstatements canarise from fraud or error and are considered material if individually or in theaggregate they could reasonably be expected to influence the economic decisions of userstaken on the basis of 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 standalone 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 financial 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 controls system in place and the operating effectiveness ofsuch controls.
Evaluate the appropriateness of accounting polices used and the reasonableness ofaccounting estimates and related disclosures made by the management.
Conclude on the appropriateness of management's use of the going concern basis ofaccounting and based on the audit evidence obtained whether a material uncertaintyexists related to events or conditions that may cast significant doubt on the Company'sability to continue as a going concern. If we conclude that a material uncertainty existswe are required to draw attention in our auditor's report to the related disclosures inthe standalone financial statements or if such disclosures are inadequate to modify ouropinion. Our conclusions are based on the audit evidence obtained up to the date of ourauditor's report. However future events or conditions may cause the Company to cease tocontinue as a going concern.
Evaluate the overall presentation structure and content of the standalone financialstatements including the disclosures and whether the standalone financial statementsrepresent the underlying transactions and events in a manner that achieves fairpresentation.
Materiality is the magnitude of misstatements in the standalone financial statementsthat individually or in aggregate makes it probable that the economic decisions of areasonably knowledgeable user of the standalone financial statements may be influenced. Weconsider quantitative materiality and qualitative factors in (i) planning the scope of ouraudit work and in evaluating the results of our work; and (ii) to evaluate the effect ofany identified misstatements in the standalone financial statements.
We communicate with those charged with governance regarding among other matters theplanned scope and timing of the audit and significant audit findings including anysignificant deficiencies in internal control that we identify during our 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 about thematter or 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
I. 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 Companies Act2013 we give in the "Annexure A" a statement on thematters specified in paragraphs 3 and 4 of the Order to the extent applicable.
II. 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 including other comprehensiveincome and the Cash Flow Statement Statement of changes in Equity dealt with by thisReport are in agreement with the books of account.
d. In our opinion the aforesaid Standalone financial statements comply with the IndianAccounting 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 2020 taken on record by the Board of Directors none of the directors isdisqualified as on 31st March 2020 from being appointed as a director in termsof Section 164(2) of the Act.
f. With respect to the adequacy of internal financial controls over financial reportingof the Company and the operating effectiveness of such controls refer to or separatereport 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 39to the financial statements;
II. The Company did not have any long-term contracts including derivative contracts forwhich there were any material foreseeable losses.
III. There has been no delay in transferring amounts required to be transferred tothe Investor Education and Protection Fund by the Company.
"Annexure A" to the Independent Auditors' Report
Referred to in paragraph I under the heading Report on Other Legal &Regulatory Requirements' of our report of even date to the financial statements of theCompany for the year ended March 31 2020:
1. (a) The Company is maintaining proper records showing full particulars includingquantitative details and situation of fixed assets;
(b) The Fixed Assets have been physically verified by the management in a phasedmanner designed to cover all the items over a period of three years which in ouropinion is reasonable having regard to the size of the company and nature of itsbusiness. According to information and explanation given to us no material discrepancieswere noticed on such verification.
(c)The title deeds of immovable properties are held in the name of the company.
2. 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 not grantedany loans secured or unsecured to companies firms Limited Liability partnerships orother parties covered in the Register maintained under section 189 of the Act.Accordingly the provisions of clause 3(iii)(a) to (C) of the Order are not applicable tothe Company and hence not commented upon.
4. In our opinion and according to the information and explanations given to us thecompany has complied with provisions of section 185 and 186 of the Companies Act 2013 inrespect of making investments. The company has not granted loan or given guarantee orprovided security as provided in section 185 and 186 of the Companies Act 2013.
5. According to information and explanation given to us the Company has not acceptedany deposits from the public and hence the directives issued by the Reserve Bank of Indiaand the provisions of Sections 73 to 76 or any other relevant provisions of the Act andthe Companies (Acceptance of Deposit) Rules 2015 with regard to the deposits acceptedfrom the public are not applicable.
6. The Central Government has prescribed maintenance of Cost Records under section148(1) of the Companies Act 2013 in respect of manufacturing activities of the company.We have broadly reviewed the accounts and the records of the company in this connectionand are of opinion that prima facie the prescribed accounts and records have been madeand maintained. We have not however made a detailed examination of the same.
7. According to information and explanations given to us in respect of statutory duesand on the basis of our examination of the books of account and records (a) The Companyhas been generally regular in depositing undisputed statutory dues including ProvidentFund Employees State Insurance Income-Tax GST Duty of Customs and any other statutorydues with the appropriate authorities. According to the information and explanations givento us no undisputed amounts payable in respect of the above were in arrears as at March31 2020 for a period of more than six months from the date on when they 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 except the following dues have not beendeposited by the company on account of disputes according to information and explanationgiven to us:
|Name of statue ||Nature of Dues ||Amount (in Lakhs) ||Period to which amount relates ||Forum where the dispute is pending |
|Entry Tax ||Assessment dues ||2.16 ||--do-- ||Commercial Tax Authorities |
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 the companyhas not raised moneys by way of initial public offer or further public offer includingdebt instruments and term Loans during the year. Accordingly the provisions of clause3(ix) of the Order are not applicable to the Company.
10.According to the information and explanations given by the management we reportthat no fraud by the Company or on the company by its officers or employees has beennoticed 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 provisions ofclause 3 (xii) of the Order are not applicable to the Company.
13.In our opinion all transactions with the related parties are in compliance withsection 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 the companyhas not made any preferential allotment or private placement of shares or fully or partlyconvertible debentures during the year under review. Accordingly the provisions of clause3(xiv) of the Order are not applicable to the Company and hence not commented upon.
15.According to the information and explanations given by the management the companyhas not entered into any non-cash transactions with directors or persons connected withhim. Accordingly the provisions of clause 3(xv) of the Order are not applicable to theCompany and hence not commented upon.
16.In our opinion the company is not required to be registered under section 45 IA ofthe Reserve Bank of India Act 1934 and accordingly the provisions of clause 3(xvi) ofthe Order are not applicable to the Company and hence not commented upon.
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 PBM PolytexLimited ("the Company") as of March 31 2020 in conjunction with our audit ofthe standalone financial statements 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 efficient conduct of its businessincluding adherence to company's policies the safeguarding of its assets the preventionand detection of frauds and errors the accuracy and completeness of the accountingrecords and the timely preparation of reliable financial information as required underthe Act.
Our responsibility is to express an opinion on the Company's internal financialcontrols over financial reporting based on our audit. We conducted our audit in accordancewith the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting(the "Guidance Note") and the Standards on Auditing issued by ICAI and deemedto be prescribed under section 143(10) of the Act to the extent applicable to an 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 system overfinancial 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 purpose 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 of procedures may deteriorate.
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 2020 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.
| ||For Chandulal M. Shah & Co. |
| ||Chartered Accountants |
| ||FRN101698W |
| ||CA Chetan S. Panchal |
|Date: 31.07.2020 ||Partner |
|Place: Ahmedabad ||Mem. No. 147415 |
| ||UDIN: 20147415AAAABR1449 |