To The Members of Pearl Global Industries Limited
Report on the Audit of the Standalone Financial Statements Opinion
We have audited the accompanying standalone financial statements of Pearl GlobalIndustries Limited ("the Company") which comprise the balance sheet as atMarch 31 2021 and the Statement of Profit and Loss (including Other ComprehensiveIncome) Statement of Changes in Equity and Statement of Cash Flows for the year thenended and notes to the standalone financial statements including a summary ofsignificant accounting policies and other explanatory information (hereinafter referred toas "the standalone financial statements").
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 Act 2013 ("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) Rules 2015 asamended ("Ind AS") and accounting principles generally accepted in India ofthe state of affairs of the Company as at March 31 2021 the Profit (financialperformance including other comprehensive income) changes in equity and its cash flowsfor the year 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 Standalone Financial Statements sectionof our report. We are independent of the Company in accordance with the Code of Ethicsissued by the Institute of Chartered Accountants of India (ICAI) together with the ethicalrequirements that are relevant to our audit of the standalone financial statements underthe provisions of the Act and the Rules made thereunder and we have fulfilled our otherethical responsibilities in accordance with these requirements and the ICAI's Code ofEthics. We believe that the audit evidence we have obtained is sufficient and appropriateto provide a basis for our opinion on the standalone financial statements.
Emphasis of Matter
We draw attention to Note 27 of the financial statements which states that exportincentives under the Remission of Duties and Taxes on Export Products (RoDTEP) Schemeapplicable with effect from January 1 2021 amounting to Rs 421.16 Lakh has beenrecognized on the basis of certain assumptions including previous applicable rates as therates are yet to be notified under the said scheme. Our opinion is not modified in respectof 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 thereon and we do not provide aseparate opinion on these matters. We have determined the matters described below to bethe key audit matters to be communicated in our report w.r.t the Company:
|Key Audit Matters ||How our audit addressed the key audit matter |
|Assessment of impairment of investments in subsidiaries ||In view of the significance of the matter we applied the following audit procedures in this area among others to obtain sufficient appropriate audit evidence: |
|As disclosed in note 8 of standalone financial statements the Company has investments in subsidiaries of Rs 11578 Lakh (March 31 2020: Rs 11728.05 Lakh). The said investments are carried at cost less allowance for impairment. || Obtained an understanding of Management's process for identification of impairment indicators. |
|The Company analyses regularly for indicators of impairment of the said investments by reference to the requirements under relevant Ind AS. ||Assessed design implementation and operating effectiveness of key controls in respect of impairment allowance process. |
|Key Audit Matters ||How our audit addressed the key audit matter |
|We identified the annual impairment assessment as a key audit matter because carrying value of these investments is significant assessment process is complex judgmental by nature significant changes in business environment specifically due to outbreak of COVID-19 and further is based on assumptions on projected future cash inflows expected growth rate discount rate etc. || Inquired from the Management of the business plans for the subsidiary companies. We also referred to the economic conditions prevalent in the jurisdiction in which the subsidiary company operates. |
| || In cases where such indicators of impairment of investments existed |
| ||- Tested the estimates and assumption made by the Company in calculation of the recoverable amounts and the allowance for impairment for these investments. |
| ||- Tested the arithmetical accuracy of the computation of recoverable amounts of investments |
| ||- Evaluated the forecast of future cash flows used by the management in the model to compute the recoverable value. |
| ||- Assessment of accuracy of historical forecasting by comparing previously forecasted cash flows to actual. |
| || Discussed with the component auditors to develop an understanding of the operating performance and net worth position of the subsidiaries. |
| ||Based on our procedures we also considered the adequacy of disclosures in respect of investment in the said subsidiaries in Note 8 to the standalone financial statements including whether the disclosures on key judgements assumptions and quantitative data with respect to impairment loss allowance in the financial statements are appropriate and sufficient. |
|Adequacy and completeness of disclosures of Related Party Transactions ||Our procedures included the following steps: |
|Refer Note 47 to the accompanying standalone financial statements as at March 31 2021 for the disclosure of related parties and transactions with them. || Obtaining an understanding of the Company's policies and procedures in respect of identification of related parties and transactions with them. We also traced the related parties from declaration given by directors wherever applicable. |
|The Company has related party transactions which include among others sale/purchase of goods to its subsidiaries and other related parties. This area was significant to our audit due to the following reasons: || Read the minutes of the meetings of Board of Directors and Audit Committee and verified that the transactions are approved in accordance with internal procedures and the applicable regulations to the Company. |
|K ey Audit Matters ||How our audit addressed the key audit matter |
|- the significance of transactions with related parties during the year ended March 31 2021; and || Tested on a sample basis the arrangements between the related parties along with supporting documents to evaluate the management's assertions that the transactions were at arm's length and in the ordinary course of business. |
|- related party transactions are subject to compliance requirement under the Companies Act 2013 and SEBI (listing and Obligation Disclosure Requirement) 2015. || Evaluated and tested on a sample basis the rights and obligations of the related parties and assessed whether the transactions were recorded appropriately and disclosed in accordance with IND AS 24 Companies Act 2013 and SEBI (LODR) 2015. |
| || Wherever appropriate our substantive work was supplemented by controls testing work which encompassed understanding evaluating and testing key controls in respect of Related Party Transactions. |
| ||Our procedures as mentioned above did not identify any findings that are significant for the financial statements as whole in respect of accounting presentation and disclosure of Related Party Transactions. |
Information Other than the Standalone Financial Statements and Auditor's Report Thereon
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 standalone financial statements and our auditor's report thereon. The Annual Report isexpected to be made available to us after the date of this auditor's report.
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 when it becomes available and in doing so considerwhether the other information is materially inconsistent with the standalone financialstatements or our knowledge obtained in the audit or otherwise appears to be materiallymisstated. When we read the Annual Report if we conclude that there is a materialmisstatement therein we are required to communicate the matter to those charged withgovernance.
Responsibility of Management and Those Charged with Governance for the StandaloneFinancial 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 totalcomprehensive income changes in equity and cash flows of the Company in accordance withthe Ind AS and other accounting principles generally accepted in India. Thisresponsibility also includes maintenance of adequate accounting records in accordance withthe provisions of the Act for safeguarding of the assets of the Company and for preventingand detecting frauds and other irregularities; selection and application of appropriateaccounting policies; making judgments and estimates that are reasonable and prudent; anddesign implementation 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 standalone financialstatements that give a true and fair view and are free from material misstatement whetherdue to fraud or error.
In preparing the standalone financial statements the Board of Directors is responsiblefor assessing the Company's ability to continue as a going concern disclosing asapplicable matters related to going concern and using the going concern basis ofaccounting unless Board of Directors either intends to liquidate the Company or to ceaseoperations or has no realistic alternative but to do so.
Those 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 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 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 with reference to financial statements in place andthe operating effectiveness of such 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 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 standalonefinancial statements including the disclosures and whether the standalone financialstatements represent the underlying transactions and events in a manner that achieves fairpresentation.
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
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 "Annexure A" a statement on the matters specified inparagraphs 3 and 4 of the Order to the extent applicable.
2. As required by Section 143(3) of the Act based on our audit we report that: a) Wehave sought and obtained all the information and explanations which to the best of ourknowledge and belief were necessary for the purposes of our audit. b) In our opinionproper books of account as required by law have been kept by the Company so far as itappears from our examination of those books. c) The Balance Sheet the Statement of Profitand Loss (including Other Comprehensive Income) Statement of Change in Equity and theStatement of Cash Flows dealt with by this Report are in agreement with the books ofaccount. d) In our opinion the aforesaid standalone financial statements comply with theInd AS specified under Section 133 of the Act. e) On the basis of the writtenrepresentations received from the directors as on March 31 2021 taken on record by theBoard of Directors none of the directors is disqualified as on March 31 2021 from beingappointed as a director in terms of Section 164 (2) of the Act. f ) With respect to theadequacy of the internal financial controls with reference to standalone financialstatements of the Company and the operating effectiveness of such controls refer to ourseparate Report in "Annexure B". g) With respect to the other matters tobe included in the Auditor's Report in accordance with Rule 11 of the Companies (Audit andAuditors) Rules 2014 in our opinion and to the best of our information and according tothe explanations given to us: i. The Company has disclosed the impact of pendinglitigations on its financial position in its standalone financial statements. referNote No. 46 of the Standalone financial statements. ii. The Company did not have anylong-term contracts including derivative contracts for which there were any materialforeseeable losses. refer Note No. 41 of the Standalone financial statements. iii.There has been no delay in transferring amounts required to be transferred to theInvestor Education and Protection Fund by the Company.
3. With respect to the matter to be included in the Auditors' report under Section197(16):
In our opinion and according to the information and explanation given to us theCompany has paid remuneration to its directors during the year is in accordance with theprovisions of and limit laid down under section 197 read with Schedule V of the Act.
For B.R. Gupta & Co.
Firm's Registration Number 008352N
Membership Number 073696
Place of Signature: New Delhi
Annexure A' to the Independent Auditors' Report of even date on the standalonefinancial statements of Pearl Global Industries Limited
The Annexure referred to in independent Auditors' Report to the members of the Companyon the standalone financial statements for the year ended March 31 2021; we report that:i) In respect of fixed assets comprising property plant and equipment: a) The Company hasmaintained proper records showing full particulars including quantitative details andsituation of fixed assets. b) The Company has a program of verification to coverall the items of fixed assets in a phased manner which in our opinion is reasonablehaving regard to the size of the Company and the nature of its assets. Pursuant to theprogram certain fixed assets were physically verified by the Management during the year.According to the information and explanations given to us no material discrepancies werenoticed on such verification. c) According to the information and explanations given to usand the records examined by us the title deeds of immovable properties (which areincluded under the head property plant and equipment' and investmentproperty') are held in the name of the Company. However certain deeds of immovableproperties that are mortgaged with the banks for securing borrowings were not availablefor verification. Further in respect of immovable properties taken on lease and disclosedas right of-use-assets in the standalone financial statements the lease agreements are inthe name of the Company. ii) In respect of its inventory: a) On the basis of informationand explanation provided by the Management inventories have been physically verified bythe Management during the year. In our opinion the frequency of physical verificationfollowed by the Management is reasonable. b) No material discrepancies were noticed onverification between the physical stocks and the book records. iii) a) According tothe information and explanation given to us during the year Company has not granted anyloan secured or unsecured to companies firms Limited Liability Partnerships (LLPs) orother parties covered in the register maintained under Section 189 of the Act.Accordingly the provisions of clauses 3(iii) (a) of the Order are not applicable.b)&c) In respect of loans granted in earlier financial years the schedule ofrepayment of principal and interest is stipulated and there is no overdue amount as atyear end. The terms and conditions of grant of such loans are not prejudicial to theinterest of the Company iv) In our opinion and according to the information andexplanations given to us the Company has neither advanced any loans nor has made anyinvestments during the year. Also the Company has not provided any security in connectionwith a loan to any other body corporate or person and accordingly compliance underSections 185 and 186 of the Act in respect of loans investments and securities is notapplicable to the Company. Further the Company has complied with Section 186 of the Actin respect of corporate guarantee provided by the Company. v) In our opinion and accordingto the information and explanation given to us the Company has not accepted any depositsfrom the public within the meaning of the directives issued by the Reserve Bank of Indiaprovisions of Section 73 to 76 of the Act any other relevant provisions of the Act andthe relevant rules framed thereunder.
Accordingly the provisions of paragraph 3 (v) of the Order are not applicable to theCompany. vi) On the basis of available information and explanation provided to us theCentral Government has not prescribed maintenance of cost records under sub-section (1) ofsection 148 of the Companies Act 2013 read with Companies (Cost Records and Audit)Amendment Rules 2016 dated July 14 2016 to the current operations carried out by the
Company. Accordingly the provisions of paragraph 3(vi) of the Order are not applicableto the Company. vii) In respect of Statutory Dues: a) The Company is generally regular indepositing undisputed statutory dues including Provident Fund Employees' State InsuranceIncome Tax Goods and Service Tax Cess and any other material statutory dues applicableto it with the appropriate authorities. There were no undisputed amounts payable inrespect of Provident Fund Employees' State Insurance Income Tax Goods and Service TaxCess and any other material statutory dues in arrears as at March 31 2021 for a period ofmore than six months from the date they became payable. b) According to the records of theCompany examined by us and the information and explanations given to us there were nodues of Sales tax or Service tax or Goods and Services tax or duty of Customs or duty ofExcise or Value added tax which have not been deposited by the Company on account ofdisputes except for the following:
|S. No. ||Name of the Statute ||Nature of Dues ||Amount in Rs Lakh ||Period to which amount relates ||Forum where dispute is pending |
|a) ||Income Tax Act 1961 ||Income Tax Demand ||8.30 ||A.Y 2015-16 ||Appeal Pending before ITAT |
|b) ||Income Tax Act 1961 ||Income Tax Demand ||0.036 ||A.Y 2015-16 ||Rectification U/s 154 - Assessing Officer |
|c) ||Income Tax Act 1961 ||Income Tax Demand ||38.83 ||A.Y 2016-17 ||Appeal pending before ITAT. Appeal effect of CIT Order is pending before AO. |
|d) ||Income Tax Act 1961 ||Income Tax Demand ||16.61 ||A.Y 2017-18 ||Demand U/s 143(1)(a) |
|e) ||Income Tax Act 1961 ||Income Tax Demand ||6.06 ||Upto A.Y. 2020-21 ||Demand as per traces Portal. |
|f ) ||Income Tax Act 1961 ||Income Tax Demand ||2.65 ||A.Y. 21-22 ||Demand as per traces Portal. |
viii) On the basis of information and explanation provided to us the Company has notdefaulted in repayment of loans and borrowings to financial institution and bank. Howeverthe Company has availed the facility of rescheduling of loans from banks during thelockdown period amid COVID-19 pandemic. The Company has not taken any loan from Governmentor has not issued any debentures. ix) The Company did not raise any money by the way ofinitial public or further public offer (including debt instruments) during the year. Theterm loan taken during the year were applied for the purpose for which the same has beentaken. x) According to the information and explanations given to us no fraud by theCompany or on the Company by its officers or employees has been noticed or reported duringthe year. xi) The Company has paid/provided managerial remuneration in accordance withprovisions of section 197 read with Schedule V to the Companies Act 2013 as applicable tothe Company. xii) The Company is not a Nidhi Company and hence the provisions ofparagraph 3(xii) of the Order are not applicable to the Company. xiii) In our opinion andaccording to the information and explanations given to us all transactions with therelated parties are in compliance with Section 177 and 188 of the Companies Act 2013where applicable and the details of such transactions have been disclosed in thefinancial statements etc. as required by the applicable accounting standards. xiv) TheCompany has not made any preferential allotment or private placement of shares or fully orpartly convertible debentures during the year under review. Accordingly the provisions ofparagraph 3(xiv) of the Companies (Auditor's Report) Order 2016 are not applicable to theCompany.
xv) The Company has not entered into any non-cash transactions with directors orpersons connected with him.
Accordingly provisions of clause 3 (xv) of the Order are not applicable. xvi) TheCompany is not required to be registered under section 45-IA of the Reserve Bank of IndiaAct 1934. Accordingly the provisions of paragraph 3(xvi) of the Order are not applicableto the Company.
For B.R. Gupta & Co.
Firm's Registration Number 008352N
Membership Number 073696
Place of Signature: New Delhi
Annexure B' to the Independent Auditors' Report of even date on the StandaloneFinancial Statements of Pearl Global Industries Limited Report on the Internal FinancialControls under Clause (i) of Sub-section 3 of Section 143 of the Companies Act 2013("the Act")
We have audited the internal financial controls with reference to financial statementsof Pearl Global Industries Limited ("the Company") as of March 31 2021in conjunction with our audit of the standalone financial statements of the Company forthe 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 with reference to financial statementscriteria established by the Company considering the essential components of internalcontrol stated in the Guidance Note on Audit of Internal Financial Controls Over FinancialReporting issued 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 Act.
Our responsibility is to express an opinion on the Company's internal financialcontrols with reference to financial statements based on our audit. We conducted our auditin accordance with the Guidance Note on Audit of Internal Financial Controls OverFinancial Reporting (the "Guidance Note") and the Standards on Auditing issuedby ICAI and deemed to be prescribed under section 143(10) of the Companies Act 2013 tothe extent applicable to an audit of internal financial controls both applicable to anaudit of Internal Financial Controls and both issued by the Institute of CharteredAccountants of India. Those Standards and the Guidance note require that we comply withethical requirements and plan and perform the audit to obtain reasonable assurance aboutwhether adequate internal financial controls with reference to financial statements wasestablished & maintained and if such controls operated effectively in all materialrespects.
Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal financial controls system with reference to financial statements and theiroperating effectiveness. Our audit of internal financial controls with reference tofinancial statements included obtaining an understanding of internal financial controlswith reference to financial statements assessing the risk that a material weaknessexists and testing and evaluating the design and operating effectiveness of internalcontrol based on the assessed risk. The procedures selected depend on the auditor'sjudgement including the assessment of the risks of material misstatement of the financialstatements 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 systemwith reference to financial statements.
Meaning of Internal Financial Controls with reference to financial statements
A company's internal financial control with reference to financial statements is aprocess designed to provide reasonable assurance regarding the reliability of financialreporting and the preparation of financial statements for external purposes in accordancewith generally accepted accounting principles. A company's internal financial control withreference to financial statements includes those policies and procedures that (1) pertainto the maintenance of records that in reasonable detail accurately and fairly reflectthe transactions and dispositions of the assets of the company; (2) provide reasonableassurance that transactions are recorded as necessary to permit preparation of financialstatements in accordance with generally accepted accounting principles and that receiptsand expenditures of the company are being made only in accordance with authorisations ofmanagement and directors of the company; and (3) provide reasonable assurance regardingprevention or timely detection of unauthorised acquisition use or disposition of thecompany's assets that could have a material effect on the standalone financial statements.
Inherent Limitations of Internal Financial Controls with reference to financialstatements
Because of the inherent limitations of internal financial controls with reference tofinancial statements including the possibility of collusion or improper managementoverride of controls material misstatements due to error or fraud may occur and not bedetected. Also projections of any evaluation of the internal financial controls withreference to financial statements to future periods are subject to the risk that theinternal financial control with reference to financial statements may become inadequatebecause of changes in conditions or that the degree of compliance with the policies orprocedures may deteriorate.
In our opinion the Company has in all material respects an adequate internalfinancial controls system with reference to financial statements and such internalfinancial controls with reference to financial statements were operating effectively as atMarch 31 2021 based on the internal control with reference to financial statementscriteria established by the Company considering the essential components of internalcontrol stated in the Guidance Note on Audit of Internal Financial Controls Over FinancialReporting issued by the Institute of Chartered Accountants of India.
For B.R. Gupta & Co.
Firm's Registration Number 008352N
Membership Number 073696
Place of Signature: New Delhi