To The Members of Pilani Investment and Industries Corporation Limited
Report on the Audit of the Standalone Financial Statements
We have audited the accompanying standalone financial statements of Pilani Investmentand Industries Corporation Limited ("the Company") which comprise the BalanceSheet as at 31st March 2019 the Statement of Profit and Loss (including OtherComprehensive Income) the Statement of Cash Flows and the Statement of Changes inEquityfor the year then ended and notes to the financial statements including a summaryof significant accounting policies 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 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) Rules2015 asamended ("Ind AS") and other accounting principles generally accepted in Indiaof the state of affairs of the Company as at 31st March 2019and its profit totalcomprehensive incomeits cash flows and the changes in equityfor the year ended on thatdate.
Basis for Opinion
We conducted our audit of the standalone financial statements in accordance with theStandards on Auditing specified under section 143(10) of the Act (SAs). Ourresponsibilities under those Standards are further described in the Auditor'sResponsibilty for the Audit of the Standalone Financial Statements section of our report.We are independent of the Company in accordance with the Code of Ethics issued by theInstitute of Chartered Accountants of India (ICAI) together with the ethical requirementsthat are relevant to our audit of the standalone financial statements under the provisionsof the Act 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 audit opinion on the standalone financial statements.
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.
|Key Audit Matter ||Auditor's Response |
|Transition date accounting policies Refer to the accounting policies in the standalone financial statements: Significant Accounting Policies Basis of preparation' and Note to the standalone financial statements: Explanation of transition to Ind AS' Effective 1st April2018 the Company has adopted the Indian Accounting Standards (Ind AS') notified by the Ministry of Corporate Affairs with the transition date of 1st April2017. The following are the major impact areas for the Company upon transition: || |
| ||Our key audit procedures included: |
| ||Design / controls |
| || Assessing the design implementation and operating effectiveness of key internal controls over management's evaluation of transition date choices and exemptions availed in line with the principles under Ind AS 101. |
| Business model assessment. || |
| Classification and measurement of financial assets and financial liabilities. || |
| || We have also confirmed the approval of Audit Committee for the choices and exemptions made by the Company for compliance / acceptability under Ind AS 101. Substantive tests |
| Accounting for actuarial gain / loss on post -employment benefit. || |
|Migration to the new accounting framework (Ind AS) is a complicated process involving multiple decision points upon transition. || Evaluated management's transition date choices and exemptions for compliance / acceptability under Ind AS 101. |
|Ind AS 101 First Time Adoption prescribes choices and exemptions for first time application of Ind AS principles at the transition date. || Understood the methodology implemented by management to give impact on the transition and tested the computation. |
|We identified transition date accounting as a key audit matter because of significant degree of management judgment and application on the areas noted above. || Assessed areas of significant estimates and management judgment in line with principles under Ind AS. |
| || Evaluated the adequacy of the disclosure required by Ind AS 101. |
|Classification and measurement of financial assets ||Our key audit procedures included: |
|-Business model assessment Ind AS 109 Financial Instruments contains three principal measurement categories for financial assets i.e. : || |
| ||Design / controls Assessing the design implementation and operating effectiveness of key internal controls over management's intent of purchasing a such stated intent and classification of such financial assets on the basis of management's intent (business model). |
|Amortised cost; || |
| Fair Value through Other Comprehensive || |
| Income (FVTOCI'); and || |
| Fair Value through Profit and Loss (FVTPL'). || |
|A financial asset is classified into a measurement category at inception and is reclassified only in rare circumstances. || For financial assets classified at amortised cost we tested controls over the classification of such assets and subsequent measurement of assets at amortised cost. Further we tested key internal controls over monitoring of such financialassets to check whether there have been any subsequent sales of financial assets classified at amortised cost. |
|The assessment as to how an asset should be classified is made on the basis of both the Company's business model for managing the financial asset and the contractual cashflow characteristics of the financial asset. || |
|The term business model' refers to the way in which the Company manages its financial assets in order to generate cash flows. That is the Company's business model determines whether cash flows will result from collecting contractual cash flows selling the financial assets or both. || For financial assets classified at FVTOCI we tested controls over the classification of such assets and subsequent measurement of assets at fair value. |
| ||Substantive tests |
|Amortised cost classification and measurement category is met if the financial asset is held within a business model whose objective is to hold financial assets in order to collect contractual cash flows. || Test of details over classification and measurement of financial assets in accordance with management's intent (business model). |
|FVTOCI classification and measurement category is met if the financial asset is held in a business model in which assets are managed both in order to collect contractual cash flows and for sale. Such financial assets are subsequently measured at fair value with changes in fair value recognized in other comprehensive income. || We selected a sample of financial assets to test whether their classification as at the balance sheet date is in accordance with management's intent. |
| || We selected a sample (based on quantitative thresholds) of financial assets sold during the year to check whether there have been any sales of financial assets classified at amortised cost. |
|FVTPL classification and measurement category is met if the financial asset does not meet the criteria for classification and measurement at amortised cost or at FVTOCI. Such financial assets are subsequently measured at fair value with changes in fair value recognized in profit or loss. || We have also checked that there have been no reclassifications of assets in the current period. |
|We identified business model assessment as a key audit matter because of the management judgement involved in determining the intent for purchasing and holding a financial asset which could lead to different classification and measurement outcomes of the financial assets and its significance to the standalone financial statements of the Company. || |
Information Other than the 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 for exampleCorporate Overview Key Highlights Board Report Report on Corporate GovernanceManagement Discussion and Analysis Report Business Responsibility Report etc. but doesnot include the consolidated financial statements standalone financial statements and ourauditor's report 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 and in doing so consider whether the other informationis materially inconsistent with the standalone 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 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 cash flows and changes in equity of the Company in accordancewiththe 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 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 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.
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 thesestandalone 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.
Obtainan understanding of internal financial control relevant to the auditin order to design audit procedures that are appropriate in the circumstances. Undersection 143(3)(i) of the Companies Act 2013 we are also responsible for expressing ouropinion on whether the Company has adequate internal financial controls system in placeand the operating effectiveness of such controls.
Evaluate the appropriateness of accounting policies used and thereasonableness of 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 conditions maycause 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 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 withthose charged with governance regarding among other matters the planned scope and timingof the audit and significant audit findings including any significant deficiencies ininternal 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.
The previously issued comparative financial information of the Company for the yearended March 31 2018 included in this standalone financial statement has been preparedafter adjusting the impact of applying recognition and measurement principles of Ind-AS tothe previously issued statutory standalone financial statement which was prepared inaccordance Accounting Standards notified under the Companies (Accounting Standards) Rules2006. These adjustments have been audited by us. The previously issued comparativefinancial information of the Company for the transition date opening balance sheet as at1st April 2017 are based on the previously issued statutory financial statements preparedin accordance with the Companies (Accounting Standards) Rules 2006 audited by thepredecessor auditors whose report for the year ended 31st March2017 dated May 30 2017expressed a modified opinion on those standalone financial statements as adjusted for thedifferences in the accounting principles adopted by the Company on transition to Ind ASwhich have been audited by us.
Report on Other Legal and Regulatory Requirements
1. As required by Section 143(3) of the Act based on our audit we report that:
(a) We have sought and obtained all the information and explanations which to the bestof our knowledge and belief were necessary for the purposes of our audit; (b) In ouropinion proper books of accounts as required by law have been kept by the Company so faras it appears from our examination of those books; (c) The Balance Sheet the Statement ofProfit and Loss including Other Comprehensive Incomethe Statement of Cash Flowsand theStatement of Changes in Equity dealt with by this Report are in agreement with therelevant books of account;
(d) In our opinion the aforesaid standalone financial statements comply with theIndian Accounting Standards specified under Section 133 of the Act.
(e) On the basis of the written representations received from the directors as on 31stMarch 2019taken on record by the Board of Directors none of the directors is disqualifiedas on 31stMarch 2019 from being appointed as a director in terms of Section 164(2) of theAct; (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 "AnnexureA". Our report expresses an unmodified opinion onthe adequacy and operating effectiveness on the Company's internal financial control overfinancial reporting.
(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 by the Company to its directors during the year is in accordance withthe provisions of Section 197of 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) Rules 2014 as amendedinour opinion and to the best of our information and according to the explanations given tous: i. The Company has disclosed the impact of pending litigations on its financialposition in its standalone financial statements Refer Note to the standalone Ind ASfinancial statements. ii. The Company did not have any long-term contracts includingderivative contracts for which there were any material foreseeable losses; iii. There hasbeen no delay in transferring amounts required to be transferred to the InvestorEducation and Protection Fund by the Company.
2. 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 B" a statement on the matters specified inparagraphs 3 and 4 of the Order to the extent applicable.
For Vidyarthi & Sons
Amit S. Vidyarthi
Kolkata May 30 2019
ANNEXURE A' TO THE INDEPENDENT AUDITOR'S REPORT
(Referred to in paragraph 1(f) under Report on Other Legal and RegulatoryRequirements' sectionof our Report of even date)
Report on the Internal Financial Controls Over Financial Reporting under Clause (i) ofSubsection 3 of Section 143 of the Companies Act 2013 ("the Act")
We have audited the Internal Financial Controls Over FinancialReporting of PilaniInvestment and Industries Corporation Limited ("the Company") as of 31st March2019 in conjunction with our audit of the standalone Ind AS financial statements of theCompany for the year ended on that date which includes Internal Financial Controls OverFinancial Reporting.
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.
Our responsibility is to express an opinion on the Company's internal financialcontrols over financial reporting of the Company based on our audit. We conducted ouraudit in accordance with the Guidance Note on Audit of Internal Financial Controls OverFinancial Reporting (the "Guidance Note") issued by the ICAI and the Standardson Auditing prescribed under section 143(10) of the Companies Act 2013 to the extentapplicable to an audit of internal financial controls. Those Standards and the GuidanceNote require that we comply with ethical requirements and plan and perform the audit toobtain reasonable assurance about whether adequate internal financial controls overfinancial reporting was established and maintained and if such controls operatedeffectively 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 authorisations 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.
In our opinion to the best of our information and according to the explanations givento us the Company has in all material respects an adequate internal financial controlssystem over financial reporting and such internal financial controls over financialreporting were operating effectively as at 31st March 2019 based on the criteria forinternal financial control over financial reporting 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 Vidyarthi & Sons Chartered Accountants Firm Registration No. 000112C
Amit S. Vidyarthi
Membership No. F-078296
Kolkata May 30 2019
Annexure B'to the Independent Auditor's Report
(Referred to in paragraph 2 under Report on Other Legal and RegulatoryRequirements' section of our report of even date to the members of PILANI INVESTMENT ANDINDUSTRIES CORPORATION LIMITED as at and for the year ended March 31 2019.)
1) In respect of the Company's fixed assets we report that:
a. The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets.
b. Fixed Assets have been physically verified by the management during the year and nomaterial discrepancies were noticed on such verification.
c. According to the information and explanation given to us by the management and onthe basis of our examination of records of the company the title deeds of immovableproperties are held in the name of the Company.
2) The Company's business does not involve inventories and accordingly therequirements under clause (ii) of paragraph 3 of the Order are not applicable to thecompany.
3) According to the information and explanations given to us and on the basis of ourexamination of the books of account the company has during the year not granted anyloans secured or unsecured to Companies Limited liability partnerships Firms or otherparties covered in the register maintained under Section 189 of the Companies Act 2013.Accordingly the provisions of clause (iii) (a) (b) and (c) of paragraph 3 of the Orderare not applicable to the Company and hence not commented upon.
4) In our opinion and according to the information and explanations given to us theCompany has complied with the provisions of Sections 185 and 186 of the Act in respect ofgrant of loans making investments and providing guarantees and securities as applicable.
5) The company has not accepted any deposits from the public covered under Section 73to 76 of the Act and the Companies (Acceptance of Deposits) Rules 2014 (as amended).Hence the provisions of clause (v) of paragraph 3 of the Order are not applicable to theCompany.
6) To the best of our knowledge and as per information and explanation given to us bythe management the Company is not in the business of sale of any goods. Therefore in ouropinion maintenance of cost records as prescribed by the Central Government undersubsection (1) of Section 148 of the Act is not applicable to the company. Hence clause(vi) of paragraph 3 of the Order is not applicable to the company.
7) a. According to the information and explanation given to us and the records of thecompany examined by us in our opinion the Company is generally regular in depositingundisputed statutory dues with appropriate authorities including Provident Fund IncomeTax Goods and Service Tax Cess and any other statutory dues applicable to it. Theprovisions relating to Employees' State Insurance Sales Tax Value Added Tax Duty ofCustoms and Duty of Excise are not applicable to the Company.
b. According to the information and explanations given to us no undisputed amountspayable in respect of Provident Fund Income Tax Service Tax Goods and Service Tax Cessand other material statutory dues were outstanding as at the year end for a period of morethan six months from the date they became payable. The provisions relating to Employees'State Insurance Value Added Tax Sales Tax Duty of Customs and Duty of Excise are notapplicable to the Company.
c. According to the information and explanations given to us and the records of theCompany examined by us there are no dues in respect of Service Tax Goods and ServiceTax Cess which have not been deposited on account of any dispute. The provisions relatingto Employees' State Insurance Value Added Tax Sales Tax Duty of Customs and Duty ofExcise are not applicable to the Company. The particulars of dues of Income Tax as atMarch 31 2019 which have not been deposited on account of a dispute are as follows :
|Name of the Statue ||Nature of dues ||Amount ( in Lakhs) ||Period to which the amount relates ||Forum where Dispute is pending |
|Income Tax Act 1961 ||Income tax on certain disallowances etc. ||59.15 ||2007-08 ||Deputy Commissioner |
| || ||61.25 ||2010-11 ||Income Tax Appellate Tribunal Kolkata |
8) In our opinion and according to the information and explanations given to us theCompany has not defaulted in the repayment of loans or borrowings to financialinstitutions banks and government. The Company has not issued any debentures.
9) According to the information and explanation given to us by the management thecompany has not raised any money by way of initial public offer or further public offerincluding debt instruments and term loans. Hence clause (ix) of paragraph 3 of the Orderis not applicable to the Company and is not commented upon.
10) Based upon the audit procedures performed for the purpose of reporting the true andfair view of the financial statements and according to the information and explanationsgiven to us we have neither come across any instance of fraud by the Company or on theCompany by its officers or employees noticed or reported during the year nor have webeen informed of any such case by the management.
11) According to the information and explanations given by the management themanagerial remuneration has been paid / provided in accordance with the requisiteapprovals mandated by the provisions of section 197 read with Schedule V to the CompaniesAct 2013.
12) In our opinion the Company is not a Nidhi Company and the Nidhi Rules 2014 arenot applicable to it. Hence clause (xii) of paragraph 3 of the Order is not applicable andis not commented upon.
13) 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 Section 177 and 188 of the Companies Act 2013 where applicable anddetails of such transactions have been disclosed in the notes to Standalone FinancialStatements as required by the applicable accounting standards.
14) According to the information and explanations given to us the company has not madeany preferential allotment or private placement of shares or fully or partly convertibledebentures during the year under review and hence clause (xiv) of paragraph 3 of the Orderis not applicable to the company and is not commented upon.
15) According to the information and explanations given to us by the management theCompany has not entered into any non-cash transactions with the directors or personsconnected with him as referred to in Section 192 of the Companies Act 2013. Accordinglyclause (xv) of paragraph 3 of the Order is not applicable.
16) According to the information and explanations given to us we report that theCompany is registered as required under Section 45-IA of the Reserve Bank of India Act1934.
For VIDYARTHI & SONS
Chartered Accountants Firm Registration No. 000112C
AMIT S. VIDYARTHI
Partner Membership No. F-078296
Kolkata May 30 2019