To the Members of PTC Industries Limited Opinion
1. We have audited the accompanying financial statements of PTC Industries Limited(the Company') which comprise the Balance Sheet as at 31 March 2019 the Statementof Profit and Loss (including Other Comprehensive Income) the Cash Flow Statement theStatement of Changes in Equity for the year then ended and a summary of the significantaccounting policies and other explanatory information.
2. In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid financial statements give the information required by theCompanies Act 2013 (Act') in the manner so required and give a true and fair viewin conformity with the accounting principles generally accepted in India including IndianAccounting Standards (Ind AS') specified under section 133 of the Act of the stateof affairs (financial position) of the Company as at 31 March 2019 its profit (financialperformance including other comprehensive income) its cash flows and the changes inequity for the year ended on that date.
Basis for Opinion
3. We conducted our audit in accordance with the Standards on Auditing specified undersection 143(10) of the Act. Our responsibilities under those standards are furtherdescribed in the Auditor's Responsibilities for the Audit of the Financial Statementssection of our report. We are independent of the Company in accordance with the Code ofEthics issued by the Institute of Chartered Accountants of India (ICAI') togetherwith the ethical requirements that are relevant to our audit of the financial statementsunder the provisions of the Act and the rules thereunder and we have fulfilled our otherethical responsibilities in accordance with these requirements and the Code of Ethics. Webelieve that the audit evidence we have obtained is sufficient and appropriate to providea basis for our opinion.
Key Audit Matter
4. 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.
5. We have determined the matter described below to be the key audit matters to becommunicated in our report.
|Key audit matter ||How our audit addressed the key audit matter |
|Valuation of capital work in progress comprising of capitalization of new plant |
|Refer note 4 (d) for the accounting policy and note 6 for the ||Our audit procedures included but were not limited to the |
|related disclosures. ||following: |
|The Company has constructed its new plant i.e. the Advanced || Obtained an understanding of the management's process of |
|Manufacturing and Technology Centre (AMTC) at Banthra. As ||recording the transactions pertaining to capital expenditure |
|at 31 March 2019 the Company has incurred a total sum of Rs. ||incurred by the company as capital work-in-progress. |
|19003.83 lakhs towards cost of construction of the new plant. || |
|Out of this till 31 March 2019 the Company has capitalised || Evaluated the design and tested the operating effectiveness |
|Rs. 9351.54 lakhs pertaining to the initial phase of the plant as ||of internal controls implemented by the Company over such |
|property plant and equipment based on completion of such ||process including for approvals payments budgets etc. |
|portion of the project as per recognition criteria given under || |
|Ind AS 16 Property plant and equipment. || Evaluated the appropriateness of the accounting policy in |
| ||accordance with the Indian accounting standards. |
|An amount of Rs. 9652.29 lakhs has been disclosed as capital || |
|work-in-progress in note 6 to the financial statements which || Tested the amounts capitalized on a sample basis to supporting |
|primarily comprises of plant and machinery that is not ready ||documents and evaluating whether assets capitalised satisfies |
|for its commercial use as at 31 March 2019. ||the recognition criteria. |
|Further as per principles of Ind AS 23 - Borrowing Costs || Tested the amounts allocated to capital-work-in-progress on |
|borrowing cost pertaining to the loans taken by the Company ||a sample basis to supporting documents. Tested the allocation |
|for construction of the new plant has also been included in ||of pre-operative expenses employee benefits expenses and |
|the above project cost being capitalized. ||finance cost to evaluate whether they are directly attributable |
| ||to the assets and satisfy the recognition criteria under the |
|Apart from the non-routine nature of transactions involved ||respective applicable accounting standards. |
|in construction of the plant there are complexities involved || |
|in the allocation and valuation of finance costs pre-operative || Assessed the appropriateness and adequacy of the related |
|expenses and employee benefits expenses totaling to Rs. ||disclosures in the financial statements in accordance with the |
|842.45 lakhs which have been apportioned to capital work-in ||applicable accounting standards. |
|progress. || |
|Considering the overall significance of the amounts involved || |
|complexity and judgement involved in determination || |
|and allocation of related costs valuation accounting and || |
|disclosure of capital work-in-progress was determined to be || |
|a key audit matter for the current year. || |
Information other than the Financial Statements and Auditor's Report thereon
6. 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 financial statements and our auditor's report thereon. The Annual Report is expectedto be made available to us after the date of this auditor's report.
Our opinion on the financial statements does not cover the other information and wewill not express any form of assurance conclusion thereon.
In connection with our audit of the financial statements our responsibility is to readthe other information identified above when it becomes available and in doing soconsider whether the other information is materially inconsistent with the 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 material misstatementtherein we are required to communicate the matter to those charged with governance.
Responsibilities of Management and Those Charged with Governance for the FinancialStatements
7. 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 financial statements that givea true and fair view of the state of affairs (financial position) profit or loss(financial performance including other comprehensive income) changes in equity and cashflows of the Company in accordance with the accounting principles generally accepted inIndia including the Ind AS specified under section 133 of the Act. This responsibilityalso includes maintenance of adequate accounting records in accordance with the provisionsof the 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 the preparation and presentation of the financial statements thatgive a true and fair view and are free from material misstatement whether due to fraud orerror.
8. 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.
9. Those Board of Directors are also responsible for overseeing the Company's financialreporting process.
Auditor's Responsibilities for the Audit of the Financial Statements
10. 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 withStandards on Auditing will always detect a material misstatement when it exists.Misstatements can arise from fraud or error and are considered material if individuallyor in the aggregate they could reasonably be expected to influence the economic decisionsof users taken on the basis of these financial statements.
11. As part of an audit in accordance with Standards on Auditing we exerciseprofessional judgment and maintain professional scepticism 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 and appropriate to provide a basis forour opinion. The risk of not detecting a material misstatement resulting from fraud ishigher than for one resulting from error as fraud may involve collusion forgeryintentional omissions misrepresentations 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 theAct we are also responsible for explaining our opinion on whether the company hasadequate internal financial controls system in place and the operating effectiveness ofsuch 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.
12. We communicate with those charged with governance regarding among other mattersthe planned scope and timing of the audit and significant audit findings including anysignificant deficiencies in internal control that we identify during our audit. 13. Wealso provide those charged with governance with a statement that we have complied withrelevant ethical requirements regarding independence and to communicate with them allrelationships and other matters that may reasonably be thought to bear on ourindependence and where applicable related safeguards.
14. From the matters communicated with those charged with governance we determinethose matters that were of most significance in the audit of the financial statements ofthe current period and are therefore the key audit matters. We describe these matters inour auditor's report unless law or regulation precludes public disclosure about the matteror 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
15. As required by section 197(16) of the Act we report that the Company has paidremuneration to its directors during the year in accordance with the provisions of andlimits laid down under section 197 read with Schedule V to the Act.
16. As required by the Companies (Auditor's Report) Order 2016 (the Order')issued by the Central Government of India in terms of section 143(11) of the Act we givein the Annexure I a statement on the matters specified in paragraphs 3 and 4 of theOrder. 17. Further to our comments in Annexure I as required by section 143(3) of theAct we report that: a) we have sought and obtained all the information and explanationswhich to the best of our knowledge and belief were 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 and proper returnsadequate for the purposes of our audit have been received from the branches not visited byus; c) the financial statements dealt with by this report are in agreement with the booksof account; d) in our opinion the aforesaid financial statements comply with Ind ASspecified under section 133 of the Act; e) on the basis of the written representationsreceived from the directors and taken on record by the Board of Directors none of thedirectors is disqualified as on 31 March 2019 from being appointed as a director in termsof section 164(2) of the Act; f) we have also audited the internal financial controls overfinancial reporting (IFCoFR) of the Company as on 31 March 2019 in conjunction with ouraudit of the financial statements of the Company for the year ended on that date and ourreport dated 27 May 2019 as per Annexure II expressed an unmodified opinion; g) withrespect to the other matters to be included in the Auditor's Report in accordance withrule 11 of the Companies (Audit and Auditors) Rules 2014 (as amended) in our opinion andto the best of our information and according to the explanations given to us: i. theCompany as detailed in note 43 to the financial statements has disclosed the impact ofpending litigations on its financial position as at 31 March 2019; ii. the Company did nothave any long-term contracts including derivative contracts for which there were anymaterial foreseeable losses as at 31 March 2019; iii. there were no amounts which wererequired to be transferred to the Investor Education and Protection Fund by the Companyduring the year ended 31 March 2019; and iv. the disclosure requirements relating toholdings as well as dealings in specified bank notes were applicable for the period from 8November 2016 to 30 December 2016 which are not relevant to these financial statements.Hence reporting under this clause is not applicable.
For Walker Chandiok & Associates
Firm's Registration No.: 001329N
Membership No.: 517273
Place: Gurugram Date: 27 May 2019
Based on the audit procedures performed for the purpose of reporting a true and fairview on the financial statements of the Company and taking into consideration theinformation and explanations given to us and the books of account and other recordsexamined by us in the normal course of audit and to the best of our knowledge and beliefwe report that: (i) (a) The Company has maintained proper records showing fullparticulars including quantitative details and situation of fixed assets.
(b) The Company has a regular program of physical verification of its fixed assetsunder which fixed assets are verified in a phased manner over a period of three yearswhich in our opinion is reasonable having regard to the size of the Company and thenature of its assets. In accordance with this program certain fixed assets were verifiedduring the year and no material discrepancies were noticed on such verification. (c) Thetitle deeds of all the immovable properties (which are included under the headProperty plant and equipment') are held in the name of the Company.
(ii) In our opinion the management has conducted physical verification of inventory atreasonable intervals during the year except for goods lying with third parties. For stocklying with third parties at the year end written confirmations have been obtained by themanagement. No material discrepancies were noticed on the aforesaid verification.
(iii) The Company has granted interest free unsecured loans to a party covered in theregister maintained under Section 189 of the Act; and with respect to the same: (a) in ouropinion the terms and conditions of grant of such loans are not prima facie prejudicialto the company's interest.
(b) the schedule of repayment of principal and payment of interest has been stipulatedand the repayment/receipts of the principal amount and the interest are regular; (c) thereis no overdue amount in respect of loans granted to such companies firms LLPs or otherparties.
(iv) In our opinion the Company has complied with the provisions of Sections 185 and186 of the Act in respect of loans investments guarantees and security.
(v) In our opinion the Company has not accepted any deposits within the meaning ofSections 73 to 76 of the Act and the Companies (Acceptance of Deposits) Rules 2014 (asamended). Accordingly the provisions of clause 3(v) of the Order are not applicable.
(vi) We have broadly reviewed the books of account maintained by the Company pursuantto the Rules made by the Central Government for the maintenance of cost records undersub-section (1) of Section 148 of the Act in respect of Company's products and are of theopinion that prima facie the prescribed accounts and records have been made andmaintained. However we have not made a detailed examination of the cost records with aview to determine whether they are accurate or complete.
(vii) (a) Undisputed statutory dues including provident fund employees' stateinsurance income-tax sales-tax service tax duty of customs duty of excise valueadded tax cess and other material statutory dues as applicable have generally beenregularly deposited to the appropriate authorities though there has been a slight delayin a few cases. Further no undisputed amounts payable in respect thereof were outstandingat the year-end for a period of more than six months from the date they became payable.
(b) The dues outstanding in respect of income-tax sales-tax service-tax duty ofcustoms duty of excise and value added tax on account of any dispute are as follows:
Statement of Disputed Dues
|Name of the statute ||Nature of dues ||Amount (`) ||Amount paid under Protest (`) ||Period to which the amount relates ||Forum where dispute is pending |
|Central Excise Act 1944 ||Excise duty ||1.71 ||- ||October 2015 to December 2016 ||Commissioner of Excise Tax |
|Central Excise Act 1944 ||Excise duty ||1.12 ||- ||Financial year 2013- 2014 ||Assessing Authority of Excise Tax |
|Finance Act 1994 ||Service Tax ||12.87 ||- ||Financial year 2014-15 and 2015-16 ||Commissioner of Service Tax |
(viii) The Company has not defaulted in repayment of loans or borrowings to anyfinancial institution or a bank during the year. (ix) The Company did not raise moneys byway of initial public offer or further public offer (including debt instruments). In ouropinion the term loans were applied for the purposes for which the loans were obtainedthough idle funds which were not required for immediate utilisation have been kept in thecurrent accounts of banks.
(x) No fraud by the Company or on the company by its officers or employees has beennoticed or reported during the period covered by our audit. (xi) Managerial remunerationhas been provided by the company in accordance with the requisite approvals mandated bythe provisions of Section 197 of the Act read with Schedule V to the Act. (xii) In ouropinion the Company is not a Nidhi Company. Accordingly provisions of clause 3(xii) ofthe Order are not applicable. (xiii) In our opinion all transactions with the relatedparties are in compliance with Sections 177 and 188 of Act where applicable and therequisite details have been disclosed in the financial statements etc. as required by theapplicable Ind AS. (xiv) During the year the company has not made any preferentialallotment or private placement of shares or fully or partly convertible debentures. (xv)In our opinion the company has not entered into any non-cash transactions with thedirectors or persons connected with them covered under Section 192 of the Act. (xvi) Thecompany is not required to be registered under Section 45-IA of the Reserve Bank of IndiaAct 1934.
For Walker Chandiok & Associates
Firm's Registration No.: 001329N
Membership No.: 517273
Place: Gurugram Date: 27 May 2019
Independent Auditor's Report on the Internal Financial Controls under Clause (i) ofSub-section 3 of Section 143 of the Companies Act 2013 (the Act')
1. In conjunction with our audit of the financial statements of PTC Industries Limited(the Company') as at and for the year ended 31 March 2019 we have audited theinternal financial controls over financial reporting (IFCoFR') of the Company as atthat date.
Management's Responsibility for Internal Financial Controls
2. The Company's Board of Directors is responsible for establishing and maintaininginternal financial controls based on the IFCoFR criteria established by the Companyconsidering the essential components of internal financial controls stated in the GuidanceNote on Audit of Internal Financial Controls over Financial Reporting (the GuidanceNote') 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 the Company's business including adherence to the Company's policies thesafeguarding 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.
3. Our responsibility is to express an opinion on the Company's IFCoFR based on ouraudit. We conducted our audit in accordance with the Standards on Auditing issued by theICAI and deemed to be prescribed under Section 143(10) of the Act to the extentapplicable to an audit of IFCoFR and the Guidance Note issued by the ICAI. ThoseStandards and the Guidance Note require that we comply with ethical requirements and planand perform the audit to obtain reasonable assurance about whether adequate IFCoFR wereestablished and maintained and if such controls operated effectively in all materialrespects.
4. Our audit involves performing procedures to obtain audit evidence about the adequacyof the IFCoFR and their operating effectiveness. Our audit of IFCoFR includes obtaining anunderstanding of IFCoFR assessing the risk that a material weakness exists and testingand evaluating the design and operating effectiveness of internal control based on theassessed risk. The procedures selected depend on the auditor's judgement including theassessment of the risks of material misstatement of the financial statements whether dueto fraud or error.
5. We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the Company's IFCoFR.
Meaning of Internal Financial Controls over Financial Reporting
6. A company's IFCoFR is a process designed to provide reasonable assurance regardingthe reliability of financial reporting and the preparation of financial statements forexternal purposes in accordance with generally accepted accounting principles. A company'sIFCoFR include 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 unauthorised 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
7. Because of the inherent limitations of IFCoFR including the possibility ofcollusion or improper management override of controls material misstatements due to erroror fraud may occur and not be detected. Also projections of any evaluation of the IFCoFRto future periods are subject to the risk that the IFCoFR may become inadequate because ofchanges in conditions or that the degree of compliance with the policies or proceduresmay deteriorate.
8. In our opinion the Company has in all material respects adequate internalfinancial controls over financial reporting and such controls were operating effectivelyas at 31 March 2019 based on the IFCoFR criteria established by the Company consideringthe essential components of internal financial controls stated in the Guidance Note issuedby the ICAI.
For Walker Chandiok & Associates
Firm's Registration No.: 001329N
per Arun Tandon
Membership No.: 517273
Date: 27 May 2019