TO THE MEMBERS OF R. J. SHAH & COMPANY LIMITED Report on the Audit of theStandalone Financial Statements
We have audited the accompanying standalone financial statements of R.J.Shah &Company Limited ("the Company") which comprise the Balance Sheet as atMarch 31 2020 the Statement of Profit and Loss (statement of changes in equity) andstatement of Cash Flow for the year then ended and notes to the financial statementsincluding a summary of 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 31st March 2020 and profit changes in equity and its cash flows for the year endedon 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 and the Rulesthereunder and we have fulfilled our other ethical responsibilities in accordance withthese requirements and the Code of Ethics. We believe that the audit evidence we haveobtained is sufficient and appropriate to provide a basis for our opinion.
Key Audit Matters
Key Audit Matters are these matters that in our professional judgment were of mostsignificance in our Audit of Standalone financial statement of the current period. Thesematters were addressed in the context of our Audit of Standalone financial statement as awhole and in forming our opinion thereon and we do not provide a separate opinion onthese matters. There are no significant key audit matters observed by us except thematters reported in the notes to accounts.
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 management discussion & analysis and director's reportincluded in the annual report but does not include the financial statements and ourauditor's report thereon.
Our opinion on the financial statements does not cover the other information and we donot express any form of assurance conclusion thereon.
In connection with our audit of the financial statements our responsibility is to readthe other information and in doing so consider whether the other information ismaterially inconsistent with the financial statements or our knowledge obtained in theaudit 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.
Responsibility of Management for the Standalone Financial 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 the assets of the Company and for preventing and detecting fraudsand other irregularities selection and application of appropriate implementation andmaintenance of accounting policies making judgments and estimates that are reasonable andprudent and design implementation and maintenance of adequate internal financialcontrols that were operating effectively for ensuring the accuracy and completeness ofthe accounting records relevant to the preparation and presentation of the FinancialStatements that give a true and fair view and are free from material misstatement whetherdue to fraud or error. In preparing the financial statements management 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 management either intends to liquidate the Company or to ceaseoperations or has no realistic alternative but to do so. Those Board of Directors arealso responsible for overseeing the Company's financial reporting process.
Auditors Responsibility for the audit of Standalone 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:
a) Identify and assess the risks of material misstatement of the standalone financialstatements whether due to fraud or error design and perform audit procedures responsiveto those risks and obtain audit evidence that is sufficient and appropriate to provide abasis for our opinion. The risk of non detecting a material misstatement resulting fromfraud is higher than for one resulting from error as fraud may involve collusionforgery intentional omissions misrepresentations or the override of internal control.
b) Obtain an understanding of internal financial control relevant to the audit in orderto design audit procedures that are appropriate in the circumstances. Under section143(3)(I) of the Act 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.
c) Evaluate the appropriateness of accounting policies used and the reasonableness ofaccounting estimates and related disclosures made by management.
d) 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 ability ofthe group to continue as a going concern. If we conclude that a material uncertaintyexists we are required to draw attention in our Auditors' Report to the relateddisclosures in the standalone financial statement or if such disclosures are inadequateto modify our opinion. Our conclusion are based on the audit evidence obtained upto thedate of our Auditors' Report. However future events or conditions may cause the group tocease to continue as a going concern.
e) Evaluate the overall presentation structure and content of the standalone financialstatement including the disclosure and whether the standalone financial statementsrepresent the underline 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 decision of areasonably knowledgeable user of the financial statements may be influenced. We considerquantitative materiality and qualitative factor in
(I) planning the scope of our audit work and in evaluating the results of our work and
(II) to evaluate the effect of any identified misstatements in the financialstatements.
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 compiledwith 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 Auditors' Report unless law or regulation precludes public disclosure about thematter or when in extremely rare circumstances we determine that matter should not becommunicated in our report because the adverse consequences of doing so would reasonablybe expected to outweigh 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 bythe Central Government of India in terms of sub-section (11) of section 143 of theCompanies Act 2013 we give in the Annexure "A" 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 accounts 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 and the Cash Flow Statementdealt with by this Report are in agreement with the books of account.
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 theCompanies (Accounts) Rules 2014.
e) On the basis of the written representations received from the directors as on 31stMarch 2020 taken on record by the board of directors none of the directors isdisqualified as on 31st March 2020 from being appointed as a director in terms of section164(2) of the Act.
f) With respect to the adequacy of the internal financial controls over financialreporting of the company and operating effectiveness of such controls refer to ourseparate report in "Annexure B".
g) With respect to the other matters to be included in the Auditor's Report inaccordance with the requirements of section 197(16) of the Act as amended:
In our opinion and to the best of our information and according to the explanationsgiven to us the remuneration paid by the Company to its directors during the year is inaccordance with the provisions of section 197 of the Act. h) With
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) Rules2014 in our Opinionand to the best of our information and according to the explanations given to us:
1) The Company has disclosed the impact of pending litigations on its financialposition in its Financial Statements refer to Note 27 to the Financial Statements.
2) The Company did not have any long term contracts including derivative contracts forwhich there were any material foreseeable losses.
3) There has been no delay in transferring amounts required to be transferred to theinvestor education and protection fund by the company except as mentioned in Note 16 ofFinancial Statements.
Annexure A to the Independent Auditor's Report (Referred to in paragraph (1) of ourreport of even date)
I a) The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets except that of Furniture and Fixtureand scientific Apparatus.
b) A major portion of the fixed assets have been physically verified by themanagement during the year. In our opinion the frequency of verification of the fixedassets by the management is reasonable having regards to size of the company and thenature of its assets. As reported by the management no material discrepancies were noticedon such verifications.
c) As per the information and explanations given to us the Title Deeds ofImmovable Properties are held in the name of company.
II The Inventory has been physically verified by the management at reasonable intervalsduring the year and as per the information and explanations given to us and according tothe records produced to us no material discrepancies noticed on such physicalverification as compared to book records.
III As per the information and explanations given to us the Company has not grantedany loans secured or unsecured to any Companies firms or other parties covered in theregister maintained under section 189 of the Companies Act 2013.
IV As per the information and explanations given to us the company has complied withthe provisions of section 185 and 186 of the Companies Act 2013 wherever is applicable.
V The Company has not accepted any deposits from public within the meaning of section73 and 74 of the Act and the rules framed thereunder to the extent notified.
VI As per the information and explanations given by the management the CentralGovernment has not prescribed for the maintenance of Cost records under section 148(1) ofthe Companies Act 2013 therefore the provision under this clause are not applicable tothe Company.
VII a) As per the information and explanations given to us and records of the companyexamined by us in our opinion the Company is regular in depositing the undisputedstatutory dues including Provident Fund Employees State Insurance Income Tax Goods andServices Tax Custom Duty and Other Statutory dues applicable to it with the appropriateauthorities.
b) According to the information and explanations given to us there are no dues ofIncome Tax Wealth Tax Sales Tax Service Tax Custom Duty and Cess which has not beendeposited on account of any dispute.
VIII In our opinion and according to information and explanations given to us thecompany has not defaulted in the repayment of dues to financial institutions banks anddebentures holders at the balance sheet date.
IX The Company has not raised any money by way of Initial Public Offer or FurtherPublic Offer (including debt instruments) and term loans during the year.
X To the best of our knowledge and beliefs and according to the information andexplanations given to us no fraud by the company or any fraud on the company by itsofficers or employees has been noticed or reported during the year under review.
XI To the best of our knowledge and beliefs and according to the information andexplanations given to us the managerial remuneration has been paid or provided inaccordance with the requisite approvals mandated by the provisions of section 197 readwith schedule V to the Companies Act 2013.
XII The Company is not a Nidhi Company as per the provisions of section 406 of theCompanies Act 2013.
XIII As per the information and explanations given to us all the transactions with therelated parties are in compliance with section 177 and 188 of the Companies Act 2013 andthe details have been disclosed in the note no.32 on financial statements as required bythe applicable accounting standards.
XIV The Company has not made any preferential allotment or private placement of sharesor fully or partly convertible debentures during the year under review.
XV As per the information and explanations given to us the company has not entered intoany non cash transactions with directors or person connected with him.
XVI As per the information and the examination of the financial statements the companyis not required to be register under section 45-1A of the Reserve Bank of India Act 1934.
Annexure - B to the Independent Auditor's Report
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 of R.J.Shah& Company Limited ("the Company") as of 31 March 2020 in conjunction withour audit of the standalone financial statements of the Company for the year ended on thatdate.
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 based on our audit. We conducted our audit in accordancewith the Guidance Note on Audit of Internal Financial Controls over Financial Reporting(the "Guidance Note") and the Standards on Auditing issued by ICAI and deemedto be prescribed under section 143(10) of the Companies Act 2013 to the extentapplicable to an audit of internal financial controls both applicable to an audit ofInternal Financial Controls and both issued by the Institute of Chartered Accountants ofIndia. Those Standards and the Guidance Note require that we comply with ethicalrequirements and plan and perform the audit to obtain reasonable assurance about whetheradequate internal financial controls over financial reporting was established andmaintained and if such controls 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 judgment including the assessment of the risks ofmaterial misstatement of the statement of the standalone Ind AS financial statementswhether 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 standalone Ind ASfinancial 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 (3) provide reasonableassurance regarding prevention or timely detection of unauthorized acquisition use ordisposition of the company's assets that could have a material effect on the standaloneInd AS financial statements.
Inherent Limitations of Internal Financial Controls over Financial Reporting Becauseof the inherent limitations of internal financial controls over financial reportingincluding the possibility of collusion or improper management override of controlsmaterial misstatements due to error or fraud may occur and not be detected. Alsoprojections of any evaluation of the internal financial controls over financial reportingto future periods are subject to the risk that the internal financial control overfinancial reporting may become inadequate because of changes in conditions or that thedegree 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 2020 based on theinternal control over financial reporting criteria 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.