TO THE MEMBERS OF RAJ RAYON INDUSTRIES LIMITED
We have audited the standalone financial statements of Raj Rayon Industries Limited(the Company) which comprise the Balance Sheet as at 31 March 2019 theStatement of Profit and Loss the Statement of Changes in Equity and the Statement of CashFlows for the year then ended and notes to the financial statements including a summaryof the significant accounting policies and other explanatory information. In our opinionand to the best of our information and according to the explanations given to us exceptfor the possible effect of the matters described in Basis for Qualified Opinion section ofour report the aforesaid standalone financial statements give the information required bythe 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 31 March 2019 and its loss (including other comprehensive income) changes inequity and its cash flows for the year ended on that date.
Basis of Qualified Opinion:
1. Due to defaults in payments of bank loans the company's accounts have beenclassified as Non-Performing Assets (NPA) by the lenders under Consortium advance. Thelenders have not charged interest on the company's borrowings / loan since April 2016.Therefore no provision has been made for such Interest in the books of accounts of thecompany and to that extent finance cost and total loss is estimated to be understated byRs. 12114.63 Lakhs for the financial year ended 31 March 2019.
2. The Company's account s tands exited from CDR Mechanism. Pursuant to provisions ofSecuritization and Reconstruction of Financial Assets and Enforcement of security Interestact 2002 State Bank of India has taken over the possession of the properties which isgiven in the possession notice dated 31 July 2018 published in free press journalnewspaper. There has been no production activity carried out since then.
3. We draw attention to the note no. 42 of the attached statement regarding thefinancial results of the company having been prepared on the going concern basis whichcontemplates the realization of assets and satisfaction of liabilities in the normalcourse of business. The Company has been continuously incurring losses past many years andits net worth stands fully eroded. These conditions indicate the existence of materialuncertainty that cast significant doubt about company's ability to continue as goingconcern.
4. The properties of the company including Plant & Machineries has been taken intopossession by the State Bank of India on 31 July 2018 hence physical verification ofinventories and fixed assets could not be carried out by the management and by us. Hencewe are unable to comment on the actual physical existence of the same.
5. The company has not complied with Ind AS 19 with respect to employee benefits. TheCompany has made provision for gratuity and leave encashment for the year under audit onan estimated basis and actuarial valuation has not been done. In the absence of suchvaluation relevant disclosures as per Ind AS 19 have not been provided. We are unable todetermine consequential impact of the same on the Audited Financial Statements.
6. The company has obtained unsecured loans amounting to Rs. 1000.00 Lakhs the sameis outstanding from previous year and has been shown under Long-Term Borrowings in theBalance Sheet. However loan agreement in respect of these loans have not been furnishedand in absence of the same the terms of repayment chargeability of interest and otherterms are not verifiable.
7. Balances under sundry debtors and sundry creditors loans and advances given by thecompany and parties from whom unsecured loans have been taken are subject to confirmationsand adjustments if any. In the absence of s uch pending confirmations andreconciliations consequential impact of the same on financial statements of the companycannot be ascertained.
8. In view of pending confirmations / reconciliations from banks lender liabilitiestrade payables and any other liabilities including contingent we are unable to comment onthe impact if any on the financial statement arising out of such pending confirmations /reconciliations. In the absence of such pending confirmations and reconciliationsconsequential impact of the same on financial statements of the company cannot beascertained.
We conducted our audit in accordance with the standards on auditing specified undersection 143 (10) of the Companies Act 2013. Our responsibilities under those Standardsare further described in the auditor's responsibilities for the audit of the financialstatements section of our report. We are independent of the Company in accordance with thecode of ethics issued by the Institute of Chartered Accountants of India together with theethical requirements that are relevant to our audit of the financial statements under theprovisions of the Act and the rules thereunder and we have fulfilled our 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 qualified opinion.
Material Uncertainty Related to Going Concern:
We draw attention to the Note No. 42 accompanying the financial statements regardingpreparation of financial statements on going concern basis notwithstanding the fact thatthe company continue to incurred the cash losses defaulted to repayment of principal andinterest to its lenders resulting into impairment for non-current assets and substantialerosion of its net-worth also its current liability exceeds current assets by Rs.72170.79 Lakhs. These conditions coupled with weakened internal controls and othermatters set forth in notes to the financial statements indicate that a materialuncertainty exists that may cast significant doubt on the Company's ability to continue asa going concern. The appropriateness of the assumptions of the going concern is criticallydepended upon the Company's ability to raise finance and generate cash flows in future tomeet its obligation and to restructure its borrowing with the lenders. Our opinion is notmodified in respect of this matter.
Emphasis of Matter:
1. One operational creditor (Khanna & Khanna Ltd.) has gone into CorporateInsolvency Resolution Process (CIRP) under the provisions of Insolvency & BankruptcyCode 2016 (Insolvency Code) in terms of order dated 29 May 2019 passed by Hon'ble NCLTAhmedabad Bench. However the same stands withdrawn dated 28 June 2019 due to mutualconsent.
2. The company has not carried out detailed assessment of the useful life of Company'sassets and hence depreciation has not been adjusted as per the notification to ScheduleII of the Companies Act 2013. We are unable to comment on the impact on statement ofProfit & Loss Account.
3. In our opinion securities provided to banks are not adequate to cover the amountsoutstanding to them as on the date of Balance Sheet.
4. During the year Company has received notice of demand from the income taxdepartment for the Assessment Year 2011 2012 and 2012 2013 for Rs. 12524480/- & Rs.16068990/- respectively liability for which is not provided for as the company haspreferred an appeal against the same.
5. Due to resignation of the Board of Directors the Board was not as per the CompaniesAct 2013 and Securities and Exchange Board of India (Listing Obligations and DisclosureRequirements) Regulations 2015 (LODR).
6. The management has appointed the Board Members at the Board meeting dated 28 January2019 due to which the AGM was not scheduled and conducted within the time limit ofCompanies Act 2013 and the Company didn't received any extension for the same.
7. The Company was not able to conduct Board meeting as per the Companies Act 2013 andSecurities and Exchange Board of India (Listing Obligations and Disclosure Requirements)Regulations 2015 and Exchange compliance for the quarter ended 30th September 2018 and31st December 2018 was not as per the time line of LODR and company has received thenotice for suspension of trading form exchanges on January 2019. The Company has paid thepenalty and completed the compliances with exchanges for the quarter ended 30th September2018 and 31st December 2018 and pursuant to which the suspension of trading was revoked.
Our opinion is not modified in respect of these matters.
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. Wehave determined the matters described below to be the key audit matters to be communicatedin our report.
1. Non-Verification of Fixed Assets and Inventories:
Refer Note No 3.5 and 8.2 wherein it is stated by the management that due to possessionof factory premises by lenders the company was unable to physically verify Fixed Assetsand Inventories of the company. We have considered the same as a Key Audit Matter due tofollowing reasons:
As at 31 March 2019 value of Net Block of Fixed Assets of Rs. 19828.93 Lakhs andInventories of Rs. 60.38 Lakhs is significant item which was not verified physically andno assurance could have been provided for physical existence of the same.
Our procedures included the following:
We have approached with alternate method of analysing the fixed asset register whichagain was not available with the company leading us to qualify the matter. In case ofInventories since physical verification was not done we were unable to confirm itsexistence thereby leading us to qualify the matter. These issues were discussed with themanagement.
2. Non conduct of Internal Audit and Non availability of Internal Financial Controls:
We were not provided with copy of Internal Audit Report and Risk Control Matrixincluding Standard Operating Procedures of the company which we consider to be significantkey matter.
Our procedures included the following:
In the absence of Internal Financial Controls we have discussed the issues with themanagement at length and to conclude have qualified the report.
The Company's board of directors is responsible for the preparation of the otherinformation. The other information comprises the information included in the Board'sReport including Annexures to Board's Report Business Responsibility Report but does notinclude the financial statements and our auditor'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 standalone financial statements or our knowledge obtainedduring 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 except for matters described in the Basis forQualified Opinion' and Emphasis of Matters' para stated above.
Management's Responsibility for the Standalone Financial Statements:
The Company's board of directors are responsible for the matters stated in section 134(5) of the Act with respect to the preparation of these financial statements that give atrue and fair view of the financial position financial performance and cash flows of theCompany in accordance with the accounting principles generally accepted in Indiaincluding the accounting standards specified under section 133 of the Act. Thisresponsibility also includes maintenance of adequate accounting records in accordance withthe provisions of the Act for safeguarding of the assets of the Company and for preventingand detecting frauds and other irregularities; selection and application of appropriateaccounting policies; making judgments and estimates that are reasonable and prudent; anddesign implementation and maintenance of adequate internal financial controls that wereoperating effectively for ensuring the accuracy and completeness of the accountingrecords relevant to the preparation and presentation of the financial statement that givea true and fair view and are free from material misstatement whether due to fraud orerror.
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.
The 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 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 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 not 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.
Obtain an understanding of internal control relevant to the audit in order todesign audit procedures that are appropriate in the circumstances. Under section 143(3)(i)of the Companies Act 2013 we are also responsible for expressing our opinion on whetherthe company has adequate internal financial controls system in place and the operatingeffectiveness of such controls
Evaluate the appropriateness of accounting policies used and the reasonablenessof accounting estimates and related disclosures made by management.
Conclude on the appropriateness of management's use of the going concern basisof accounting and based on the audit evidence obtained whether a material uncertaintyexists related to events or conditions that may cast significant doubt on the Company'sability to continue as a going concern. If we conclude that a material uncertainty existswe are required to draw attention in our auditor's report to the related disclosures inthe 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 financialstatements including the disclosures and whether the financial statements represent theunderlying transactions and events in a manner that achieves fair presentation.
We communicate with those charged with governance regarding among other matters theplanned scope and timing of the audit and significant audit findings including anysignificant deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have compliedwith relevant ethical requirements regarding independence and to communicate with themall relationships and other matters that may reasonably be thought to bear on ourindependence and where applicable related safeguards.
From the matters communicated with those charged with governance we determine thosematters that were of most significance in the audit of the 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
1. As required by the Companies (Auditor's Report) Order 2016 (the Order')issued by the Central Government of India in terms of sub-section (11) of the Act we givein Annexure A' to this Report a statement on the matters specified in paragraph 3and 4 of the said Order to the extent applicable.
2. 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 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 except for mattersdescribed in the Basis for Qualified Opinion' and Emphasis of Matters' parastated above;
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 financial statements comply with the accountingstandards specified under section 133 of the Act read with rule 7 of the Companies(Accounts) Rules 2014 except for matters described in the Basis for QualifiedOpinion' and Emphasis of Matters' para stated above;
e. In our opinion the matter described in the Basis for Qualified Opinion paragraphabove may have an adverse effect on the functioning of the Company.
f. On the basis of the written representations received from the directors as on March31 2019 taken on record by the board of directors none of the directors are disqualifiedas on March 31 2019 from being appointed as a director in terms of Section 164 (2) of theAct;
g. 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 Annexure B.
h. 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 ouropinion and to the best of our information and according to the explanations given to usthe Company has not paid any remuneration to its directors during the year; and
i. 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 amended inour 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.
ii. The Company has made provision as required under the applicable law or accountingstandards for material foreseeable losses if any on long-term contracts includingderivative contracts if any.
iii. There is no amount outstanding which needs to be transferred to investor educationand protection fund.
For Chaturvedi & Patel
CA Deepak Karwa
Dated: 27 July 2019
ANNEXURE A' TO THE INDEPENDENT AUDITOR'S REPORT
(Referred to in paragraph 2 under Report on Other Legal and RegulatoryRequirements' section of our report to the Members of RAJ RAYON INDUSTRIES LIMITED of evendate)
(i). (a) As per the information and explanation given by the management the Companyhas not maintained proper records showing full particulars including quantitative detailsand situation of fixed assets;
(b) As per the information and explanation given by the management the Fixed Assetshave not been physically verified by the management during the year due to possession ofpremises by the lenders. In the absence of such physical verification we are unable tocomment on the physical existence of such fixed assets and relied on managementcertificate in this regards.
(c) According to the information and explanation given to us and the records examinedby us and based on the examination of the scanned copies of the title deeds of theimmovable properties pledged with the bankers as security against borrowings we reportthat the title deeds of the immovable properties that have been pledged as securityagainst borrowings and other facilities availed by the Company are held in the name ofthe Company as at the balance sheet date.
(ii) As per the information and explanation given by the management the management hasnot conducted the physical verification of inventory at year end due to possession ofpremises by the lenders. In the absence of such physical verification we are unable tocomment on the physical existence of such inventories and relied on management certificatein this regards.
(iii) As per the information and explanation given by the management the Company hasnot granted any loans secured or unsecured to companies firms Limited Liabilitypartnerships or other parties covered in the Register maintained under section 189 of theAct. Accordingly the provisions of clause 3 (iii) (a) to (C) of the Order are notapplicable to the Company and hence not commented upon.
(iv) In our opinion and according to the information and explanations given to us thecompany has complied with the provisions of section 185 and 186 of the Companies Act 2013In respect of loans investments guarantees and security.
(v) As per the information and explanation given by the management the Company has notaccepted any deposits from the public and hence the directives issued by the Reserve Bankof India and the provisions of Sections 73 to 76 or any other relevant provisions of theAct and the Companies (Acceptance of Deposit) Rules 2015 with regard to the depositsaccepted from the public are not applicable.
(vi) As informed to us the maintenance of Cost Records has been specified by theCentral Government under sub-section (1) of Section 148 of the Act in respect of theactivities carried on by the company. We have broadly reviewed the same and are of theopinion that prima facie the prescribe accounts and records have been made andmaintained. We have not however made detailed examination of the records with a view todetermine whether they are accurate and complete.
(vii) a) According to the information and explanations given to us and the records ofthe Company examined by us in our opinion the Company is generally regular in depositingundisputed statutory dues of provident fund income-tax sales tax value added tax cessand professional tax during the year with appropriate authorities and there have not beenserious delays in a large number of cases.
b) According to the information and explanations given to us and the records of theCompany examined by us the particulars of income tax sales tax service tax duty ofcustoms duty of excise value added tax as at 31 March 2019 which have not been depositedwith statutory authorities on account of a dispute pending are given as below:
|Name of the Statute ||Nature of the Dues ||Amount in Lakhs Excluding penalties and interest if any except otherwise stated) ||Period to which the amount relate* ||Forum where dispute is Pending |
|Central Excise Duty ||Excise Duty ||23.89 ||1995-1996 ||Additional Directorate of Anti Evasion |
| || ||32.09 ||1996-1997 || |
| || ||38.30 ||1997-1998 || |
| || ||25.82 ||1998-1999 || |
| || ||7.40 ||1999-2000 || |
| || ||127.50 || || |
| || ||0.09# ||1999-2000 ||The company is in the process of refund |
| || ||2.95 ||2003-2004 ||Appellate tribunal of central excise |
| || ||3.35 ||2003-2004 & 2004-2005 ||the company has filed reply to show cause notice received from superintendent of central excise |
| || ||2.84# ||2003-2004 ||The company has filed the appeal in the customs excise & service tax appeallate tribunal Ahmedabad |
| || ||174.57 ||2012-2013 || |
| || ||283.52 (**) ||2005-2006 & 2006-2007 || |
|Textile Committee Act ||Cess ||0.35 ||1997-1998 ||Textile Cess Appellate Tribunal |
| || ||0.88 ||1998-1999 || |
| || ||2.13 ||1999-2000 || |
| || ||3.10 ||2000-2001 || |
| || ||1.37 ||2001-2002 || |
| || ||7.82 || || |
|Gujarat Tax on Entry of Specified Goods into Local area Tax2001 (including penalties & interest ||Entry Tax ||308.83 (Net of 250.00 Lakhs being amount recovered by the Department) ||01-04-2012 to 31.01.2014 ||The company is in the process of filing reply to the show cause notice issued by the commercial tax officer Ahmedabad |
|State Bank of India ||Loan ||100808.99 ||2017-2018 ||- |
|Phoenix ARC Pvt Ltd ||Loan ||6548.21 ||2018-2019 ||- |
|Income Tax Department ||Income Tax ||125.24 ||2011-2012 ||- |
|Income Tax Department ||Income Tax ||160.69 ||2012-2013 ||- |
# Payment made under protest
* Assessment year
** Represents penalty demand
(viii) In our opinion and according to the information and explanations given to us andrecords of the Company examined by us the Company has defaulted in repayment of loans orborrowings to banks and financial institutions for which the lender wise details are asfollows. The Company has not taken loan from the government and has not issued anydebentures.
Default in Repayment of dues to Bank towards Term Loan (Rs. In Lakhs)
|Particulars ||Period of Default ||As at 31/03/2019 |
| || ||Principal ||Interest |
|State Bank of India ||Since 2015-16 ||26449.57 ||13209.60 |
|State Bank of Hyderabad ||Since 2015-16 ||12801.50 ||7794.22 |
|State Bank of Mysore ||Since 2015-16 ||5040.89 ||2757.19 |
|State Bank of Travancore ||Since 2015-16 ||4862.46 ||2541.82 |
|State Bank of Bikaner & Jaipur ||Since 2015-16 ||2698.80 ||1272.67 |
|State Bank of Patiala ||Since 2015-16 ||3023.16 ||1782.57 |
|Phoenix ARC Private Limited (*) ||Since 2015-16 ||4063.03 ||1863.04 |
|Total || ||58939.42 ||31221.11 |
The Facilities being classified as Non-Performing Assets (NPAs) hence entireoutstanding amount is considered as a Short Term Loan by the Company.
(*) Phoenix ARC Pvt. Ltd. (an Assets Reconstruction Company) has acquired the loansfrom South Indian Bank.
Default in Repayment of dues to Bank towards Working Capital Facilities (Rs. In Lakhs)
|Particulars ||Period of Default ||As at 31/03/2019 |
| || ||Principal ||Interest |
|State Bank of India ||Since 2015-16 ||4611.06 ||3850.06 |
|State Bank of Hyderabad ||Since 2015-16 ||1689.99 ||674.46 |
|State Bank of Mysore ||Since 2015-16 ||491.61 ||231.59 |
|State Bank of Travancore ||Since 2015-16 ||820.13 ||337.52 |
|State Bank of Bikaner & Jaipur ||Since 2015-16 ||1415.77 ||570.14 |
|Phoenix ARC Private Limited (*) ||Since 2015-16 ||1010.73 ||385.27 |
|Total || ||10039.30 ||6049.04 |
The Facilities being classified as Non-Performing Assets (NPAs) the lenders havereduced the Drawing Power to 'NIL'' hence entire outstanding amount is consideredas default by the Company.
(*) Phoenix ARC Pvt. Ltd. (an Assets Reconstruction Company) has acquired the loansfrom South Indian Bank.
(ix) Based upon the audit procedures performed and the information and explanationsgiven by the management the company has not raised moneys by way of initial public offeror further public offer including debt instruments and term Loans. Accordingly theprovisions of clause 3 (ix) of the Order are not applicable to the Company and hence notcommented upon.
(x) Based upon the audit procedures performed and the information and explanationsgiven by the management we report that no fraud by the Company or on the company by itsofficers or employees has been noticed or reported during the year.
(xi) In our opinion the Company is not a Nidhi Company. Therefore the provisions ofclause 4 (xii) of the Order are not applicable to the Company.
(xii) In our opinion and explanation given to us all transactions with the relatedparties if any are in compliance with section 177 and 188 of Companies Act 2013 and thedetails have been disclosed in the Financial Statements as required by the applicableaccounting standards.
(xiii) Based upon the audit procedures performed and the information and explanationsgiven by the management the company has not made any preferential allotment or privateplacement of shares or fully or partly convertible debentures during the year underreview. Accordingly the provisions of clause 3 (xiv) of the Order are not applicable tothe Company and hence not commented upon.
(xiv) Based upon the audit procedures performed and the information and explanationsgiven by the management the company has not entered into any non-cash transactions withdirectors or persons connected with him. Accordingly the provisions of clause 3 (xv) ofthe Order are not applicable to the Company and hence not commented upon.
(xv) In our opinion and explanation given to us the company is not required to beregistered under section 45 IA of the Reserve Bank of India Act 1934 and accordingly theprovisions of clause 3 (xvi) of the Order are not applicable to the Company and hence notcommented upon.
For Chaturvedi & Patel
CA Deepak Karwa
Dated: 27 July 2019
ANNEXURE B TO THE INDEPENDENT AUDITOR'S REPORT
(Referred to in paragraph 1(f) under Report on Other Legal and RegulatoryRequirements' section of our report to the Members of RAJ RAYON INDUSTRIES LIMITED of evendate)
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 financial reporting of RAJ RAYONINDUSTRIES LIMITED (the Company) as of March 31 2019 in conjunction with ouraudit of the standalone financial statements of the Company for the year ended on thatdate.
Management's Responsibility for Internal Financial Controls
The Board of Directors of the Company is responsible for establishing and maintaininginternal financial controls based on the internal control over financial reportingcriteria established by the Company considering the essential components of internalcontrol stated in the Guidance Note on Audit of Internal Financial Controls over FinancialReporting issued by the Institute of Chartered Accountants of India. 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 respective 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 Companies Act 2013.
Our responsibility is to express an opinion on the internal financial controls overfinancial reporting of the Company based on our audit. We conducted our audit inaccordance with the Guidance Note on Audit of Internal Financial Controls Over FinancialReporting (the Guidance Note) issued by the Institute of Chartered Accountantsof India and the Standards on Auditing prescribed under Section 143(10) of the CompaniesAct 2013 to the extent applicable to an audit of internal financial controls. ThoseStandards and the Guidance Note require that we comply with ethical requirements and planand 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 internal financial controls system overfinancial reporting of the Company.
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 authorizations 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.
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.
Disclaimer of Opinion:
The system of Internal Financial Control Over Financial Reporting with regard to thecompany were not made available to us to enable us to determine if the company hasestablished adequate internal financial control over financial reporting and whether suchinternal financial control was operating effectively. Because of this reason we areunable to obtain sufficient appropriate audit evidence to provide a basis for our opinionwhether the Company had adequate internal financial controls over financial reporting andwhether such internal financial controls were operating effectively as at March 31 2019.
We have considered the disclaimer reported above in determining the nature timing andextent of audit tests applied in our audit of the financial statements of the Company andthe disclaimer does not affect our opinion on the financial statements of the Company.
For Chaturvedi & Patel
CA Deepak Karwa
Dated: 27 July 2019