The Members of
Pranavaditya Spinning Mills Limited
Report on the Audit of the Standalone Financial Statements
We have audited the standalone financial statements of Pranavaditya Spinning MillsLimited ("the Company") which comprise the Balance Sheet as at 31st March 2021and the Statement of Profit and Loss Statement of Changes in Equity and Statement of CashFlows for 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 Act in the manner so required and give a true and fair view in conformity with theaccounting principles generally accepted in India of the state of affairs of the Companyas at March 31
2021 and loss changes in equity and its cash flows for the year ended on that date.
Basis for Opinion
We conducted our audit in accordance with the Standards on Auditing (SAs) specifiedunder section 143(10) of the Companies Act 2013. Our responsibilities under thoseStandards are further described in the Auditor's Responsibilities for the Audit of theFinancial Statements section of our report. We are independent of the Company inaccordance with the Code of Ethics issued by the Institute of Chartered Accountants ofIndia together with the ethical requirements that are relevant to our audit of thefinancial statements under the provisions of the Companies Act 2013 other ethicalresponsibilities in accordance with these requirements and the Code of Ethics. We believethat the audit evidence we have obtained is sufficient and appropriate to provide a basisfor our opinion.
Key Audit Matters
Key audit matters are those matters that in our professional judgment were of mostsignificance in our audit of the financial statements of the current period. These matterswere addressed in the context of our audit of the financial statements as a whole and informing our opinion thereon and we do not provide a separate opinion on these matters.
The plant operations were temporarily shut down in April and May 2020 with lockdowndeclared by the Government pursuant to outbreak of Covid 19 pandemic. The Board approvedVRS/Separation Scheme on July 15 2020 which resulted in production stoppage. Thereafterthe Board at its meeting held on 21st October 2020 approved the Scheme of Amalgamation ofthe Company with M/s Indo Count Industries Limited the Holding Company from the AppointedDate i.e. 1st October2020 or such other date as directed by the Mumbai Bench of theNational Company Law Tribunal (NCLT). The Company has received
No-objection to the said scheme from BSE Limited and SEBI. The Company is in theprocess of filing application with NCLT.
Consequently the accounts have been prepared without giving effect of amalgamation ona going concern basis. (refer notes
15 31 and 41 to the financial statements).
As on 31st March 2021 current tax assets and other current assets includes amountsrecoverable from government department for which efforts for recovery are being made(refer note 12 and 13 to the financial statements). Our audit procedures consisted ofevaluating whether any change was required to management's position on these uncertaintiesand the likelihood of recoverability.
Information Other than the Standalone Financial Statements and Auditor's Report Thereon
The Company's Board of Directors is responsible for the preparation of the otherinformation. The other information comprises the information included in the ManagementDiscussion and Analysis Board's Report including Annexures to Board's Report BusinessResponsibility Report Corporate Governance and Shareholder's Information but does notinclude the standalone financial statements and our auditor'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.
Responsibilities 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 Companies Act 2013 ("the Act") with respect to the preparation ofthese standalone financial statements that give a true and fair view of the financialposition financial performance changes in equity and cash flows of the Company inaccordance with the accounting principles generally accepted in India including theAccounting Standards specified under section 133 of the Act. This responsibility alsoincludes maintenance of adequate accounting records in accordance with the provisions ofthe Act for safeguarding of the assets of the Company and for preventing and detectingfrauds and other irregularities; selection and application of appropriate accountingpolicies; making judgments and estimates that are reasonable and prudent; and designimplementation and maintenance of adequate internal financial controls that wereoperating effectively for ensuring the accuracy and completeness of the accountingrecords relevant to thepreparation financialstatement that give a true andpresentationofthe fair view and are free from material misstatement whether due to fraudor 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.
Those Board of Directors are also responsible for overseeing the Company's financialreporting process.
Auditor's Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financialstatements as a whole are free from material misstatement whether due to fraud or errorand to issue an auditor's report that includes our opinion. Reasonable assurance is a highlevel of assurance but is not a guarantee that an audit conducted in accordance with SAswill always detect a material misstatement when it exists. Misstatements can arise fromfraud or error and are considered material if individually or in the aggregate theycould reasonably be expected to influence the economic decisions of users taken on thebasis of these 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 financial statementswhether due to fraud or error design and perform audit procedures responsive to thoserisks and obtain audit evidence that is sufficient provide a basis for our opinion. Therisk of not detecting a material misstatement resulting from fraud is higher than for oneresulting from error as fraud may involve collusion forgery intentional omissionsmisrepresentations or the override of internal control.
Obtain an understanding of internal control relevant to the audit in order to designaudit procedures that are appropriate in the circumstances. Under section 143(3)(i) of theCompanies Act 2013 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 policies used and the reasonableness ofaccounting estimates and related disclosures made by 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 financial statements or if such disclosures are inadequate to modify our opinion.Our conclusions are based on the audit evidence obtained up to the date of our auditor'sreport. However future events or conditions may cause the Company to cease to continue asa going concern.
Evaluate the overall presentation structure and content of the financial statementsincluding the disclosures and whether the financial statements represent the underlyingtransactions and events in a manner that achieves fair presentation.
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 financial statements may be influenced. We considerquantitative materiality and qualitative factors in (i) planning the scope of our auditwork and in evaluating the results of our work; and (ii) to evaluate the effect of anyidentified misstatements in the 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
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 financial statements of thecurrent period and are therefore the key audit matters. We describe these matters in ourauditor's report unless law or regulation precludes public disclosure about the matter orwhen 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
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 Act 2013 we give in the "Annexure A" statement on the mattersspecified in paragraphs 3 and 4 of the Order to the extent applicable.
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 were necessary for the purposes 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 Statement of Changes in Equityand the Cash Flow Statement dealt with by this Report are in agreement with the books ofaccount.
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 the Companies (Accounts) Rules 2014.
e) On the basis of the written representations received from the directors as on 31stMarch 2021 taken on record by the
Board of Directors none of the directors is disqualified as on 31st March 2021 frombeing appointed as a director in terms of Section 164 (2) of the Act. f) With respect tothe adequacy of the internal financial controls over financial reporting of the Companyand the operating effectiveness of such controls refer to our separate Report in"Annexure B". Our report expresses an unmodified opinion on the adequacy andoperating effectiveness of the Company's internal financial controls over financialreporting.
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 opinion and to the best of our information and according to the explanationsgiven to us during the year the Company has not paid/provided any remuneration to itsdirectors.
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 in our opinion and to the best of our information andaccording to the explanations given to us:
i. The Company has disclosed the impact of pending litigations on its financialposition in its standalone Financial Statements - refer notes 22 and 32 to the financialstatements.
ii. The Company does not have any pending litigations which would impact its financialposition.
iii. The Company did not have any long-term contracts including derivative contractsfor which there were any material foreseeable losses.
iv. There were no amounts which were required to be transferred to the InvestorEducation and Protection Fund by the Company.
ANNEXURE A REFERRED TO IN PARAGRAPH (I) UNDER THE HEADING OF "REPORT ON OTHERLEGAL AND REGULATORY REQUIREMENTS" OF OUR REPORT OF EVEN DATE TO THE MEMBERS OFPRANAVADITYA SPINNING MILLS LIMITED ON THE STANDALONE IND AS FINANCIAL STATEMENTS FOR THEYEAR ENDED 31ST MARCH 2021.
|(i) (a) ||The Company has maintained proper records showing full particulars including quantitative details and situation of fixed assets. |
|(b) ||The fixed assets have been physically verified by the management during the year as per the phased program designed to cover all the fixed assets over a period which in our opinion is reasonable having regard to the size of the Company and nature of its assets. Discrepancies noticed on such verification which are not material have been properly dealt with in the books of accounts. |
|(c) ||The title deeds of immovable properties are held in the name of the Company. |
|(ii) ||As explained to us the inventories have been physically verified by the management during the year except stocks lying with third parties in respect of whom confirmations have been obtained and the discrepancies noticed on physical verification as compared to book record which are not material have been properly dealt with in the books of account. In our opinion the frequency of such verification is reasonable. |
|(iii) ||As explained to us the Company has not granted any loans secured or unsecured to companies firms limited liability partnerships or other parties covered in the register maintained under section 189 of the Companies Act 2013 and as such clauses (iii) (a) (b) and (c) of the order are not applicable to the Company. |
|(iv) ||In our opinion and according to the information and explanations given to us no loans investments guarantees and security covered under section 185 and 186 of the Companies Act 2013 has been given by the Company. Therefore the provisions of clause (iv) of the order are not applicable to the Company. |
|(v) ||According to the information and explanation given to us the Company has not accepted any deposit from the public. Therefore the provisions of clause (v) of the order are not applicable to the Company. |
|(vi) ||We have broadly reviewed the books of account maintained by the Company pursuant to the order made by the Central Government for the maintenance of cost records under section 148(1) of the Act and we are of the opinion that prima facie the prescribed accounts and records have been made and maintained. However we are neither required to carry out nor have carried out detailed examination of such cost accounting records with a view to determine whether they are accurate or complete. |
|(vii) ||According to the records of the Company examined by us and information and explanations given to us: |
|(a) ||The Company is generally regular in depositing with the appropriate authorities undisputed statutory dues including provident fund employees' state insurance income tax sales tax service tax duty of customs duty of excise value added tax cess and others as applicable. There are no undisputed amounts payable in respect of aforesaid dues outstanding as at 31st March 2021 for a period of more than six months from the date they became payable. |
|(b) ||There are no disputed dues of income tax or sales tax or service tax or duty of customs or duty of excise or value added tax or goods and service tax outstanding as at 31st March 2021 except: |
| ||Sl. Name of the statute Nature of the dues Amount Period to which Forum where |
| ||No. (Rs in lakh) the amount relates dispute is pending |
| ||1. MVAT Act Reversal of input tax 39.48 2012-2013 Maharashtra Sales credit and interest Tax Tribunal thereon |
|(viii) ||In our opinion and according to the information and explanations given to us the Company has no outstanding loans or borrowings from financial institutional bank or government hence provisions of clause (viii) of the order are not applicable to the Company. |
|(ix) ||In our opinion during the year no money has been raised by way of initial public offer or further public offer (including debt instruments) or term loans hence provisions of clause (ix) of the order are not applicable to the Company. |
|(x) ||According to the information and explanations given to us no fraud by the Company or on the Company by its officers or employees has been noticed or reported during the year. |
|(xi) ||In our opinion and according to the information and explanation given to us during the year the Company has not paid/provided any managerial remuneration and hence provisions of clause (xi) of the order are not applicable to the Company. |
|(xii) ||The Company is not a nidhi company and hence provisions of clause (xii) of the order are not applicable to the Company |
|(xiii) ||According to the records examined by us and information and explanations given to us all transactions with the related parties are in compliance with Sections 188 and 177 of the Act and necessary details as required by the accounting standards have been disclosed in the standalone financial statements. |
|(xiv) ||The Company has not made any preferential allotment / private placement of shares or fully or partly convertible debentures during the year ended 31st March 2021. |
|(xv) ||The Company has not entered into any non cash transactions with directors or persons connected with him. |
|(xvi) ||The Company is not required to be registered under section 45-1A of the Reserve Bank of India Act 1934 |
ANNEXURE B REFERRED TO IN PARAGRAPH (II)(F) UNDER THE HEADING OF "REPORT ON OTHERLEGAL AND REGULATORY REQUIREMENTS" OF OUR REPORT OF EVEN DATE TO THE MEMBERS OFPRANAVADITYA SPINNING MILLS LIMITED ON THE STANDALONE IND AS FINANCIAL STATEMENTS FOR THEYEAR ENDED 31ST MARCH 2021.
Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section143 of the Companies Act 2013 ("the Act")
We have audited the internal financial controls over financial reporting ofPranavaditya Spinning Mills Limited ("the Company") as of March 31st2021 in conjunction with our audit of the Standalone Ind AS Financial Statements of theCompany 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 Reporting (the"Guidance Note") issued by the Institute of Chartered Accountants of India(ICAI)". These responsibilities include the design implementation and maintenance ofadequate internal financial controls that were operating effectively for ensuring theorderly and efficient conduct of its business including adherence to company's policiesthe safeguarding of its assets the prevention and detection of frauds and errors theaccuracy and completeness of the accounting records and the timely preparation ofreliable financial information as required under the 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 and the Standards on Auditing issued by ICAI and deemed to beprescribed under section 143(10) of the Acttotheextentapplicableto financialcontrols auditofinternalboth applicable to an audit of Internal Financial Controls and both issued by the ICAI.Those Standards and the Guidance Note require that we comply with ethical requirements andplan and perform the audit to obtain reasonable assurance about whether adequate internalfinancial controls over financial reporting was established and maintained and if suchcontrols operated effectively in all material respects.
Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal financial controls system over financial reporting and their operatingeffectiveness. Our audit of internal financial controls over financial reporting includedobtaining an understanding of internal financial controls over financial reportingassessing the risk that a material weakness exists and testing and evaluating the designand operating effectiveness of internal control based on the assessed risk. The proceduresselected depend on the auditor's judgement 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:
a) pertain to the maintenance of records that in reasonable detail accurately andfairly reflect the transactions and dispositions of the assets of the Company; b) providereasonable assurance that transactions are recorded as necessary to permit preparation offinancial statements in accordance with generally accepted accounting principles and thatreceipts and expenditures of the Company are being made only in accordance withauthorizations of management and directors of the Company; and
c) 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 or procedures may deteriorate.
In our opinion the Company has in all material respects an adequate internalfinancial controls system over financial reporting and such internal financial controlsover financial reporting were operating effectively as at 31 March 2021 based on"the reporting criteria established by the Company considering the essentialcomponents of internal internal control overfinancial control stated in the Guidance Noteissued by the ICAI".
For Suresh Kumar Mittal & Co.
Firm Registration No.: 500063N
Membership No.: 521915
Place : New Delhi
Date : 23.04.2021
UDIN : 21521915AAAABY3314