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Ridhi Synthetics Ltd.

BSE: 504365 Sector: Others
NSE: N.A. ISIN Code: INE07LK01010
BSE 05:30 | 01 Jan Ridhi Synthetics Ltd
NSE 05:30 | 01 Jan Ridhi Synthetics Ltd

Ridhi Synthetics Ltd. (RIDHISYNTHETICS) - Auditors Report

Company auditors report


Report on the audit of the financial statements


We have audited the accompanying standalone financial statements of RIDHI SYNTHETICSLimited ("the Company") which comprise the Balance Sheet as at March 31 2019the Statement of Profit and Loss (including Other Comprehensive Income) the Statement ofChanges in Equity and the Statement of Cash Flows for the year ended on that date and asummary of the significant accounting policies and other explanatory information(hereinafter referred to as "the standalone financial statements").

In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid standalone financial statements give the information requiredby the Companies Act 2013 ("the Act") in the manner so required and give a trueand fair view in conformity with the Indian Accounting Standards prescribed under section133 of the Act read with the Companies (Indian Accounting Standards) Rules 2015 asamended ("Ind AS") and other accounting principles generally accepted in Indiaof the state of affairs of the Company as at March 31 2019 the profit and totalcomprehensive income changes in equity and its cash flows for the year ended on thatdate.

Basis for opinion

We conducted our audit of the standalone financial statements in accordance with theStandards on Auditing specified under section 143(10) of the Act (SAs). Ourresponsibilities under those Standards are further described in the Auditor'sResponsibilities for the Audit of the Standalone Financial Statements section of ourreport. We are independent of the Company in accordance with the Code of Ethics issued bythe Institute of Chartered Accountants of India (ICAI) together with the independencerequirements that are relevant to our audit of the standalone financial statements underthe provisions of the Act and the Rules made thereunder and we have fulfilled our otherethical responsibilities in accordance with these requirements and the ICAI's Code ofEthics. We believe that the audit evidence we have obtained is sufficient and appropriateto provide a basis for our audit opinion on the standalone financial statements.

Key audit matters

Key audit matters are those matters that in our professional judgment were of mostsignificance in our audit of the standalone financial statements of the current period.These matters were addressed in the context of our audit of the standalone financialstatements as a whole and in forming our opinion thereon and we do not provide aseparate opinion on these matters. We have determined the matters described below to bethe key audit matters to be communicated in our report.

Key Audit Matter

1 Accuracy of recognition measurement presentation and disclosures of revenues andother related balances in view of adoption of Ind AS 115 "Revenue from Contracts withCustomers" [new revenue accounting standard)

The application of the new revenue accounting standard involves certain key judgementsrelating to identification of distinct performance obligations determination oftransaction price of the identified performance obligations the appropriateness of thebasis used to measure revenue recognized over a period. Additionally new revenueaccounting standard contains disclosures which involves collation of information inrespect of disaggregated revenue and periods over which the remaining performanceobligations will be satisfied subsequent to the balance sheet date.

Refer to Notes to the Standalone Financial Statements

Auditor's Response

Principal Audit Procedures We assessed the Company's process to identify the impact ofadoption of the new revenue accounting standard. Our audit approach consisted testing ofthe design and operating effectiveness of the internal controls and substantive testing asfollows :

Evaluated the design of internal controls relating to implementation of the new revenueaccounting standard.

Selected a sample of continuing and new contracts and tested the operatingeffectiveness of the internal control relating to identification of the distinctperformance obligations and determination of transaction price. We carried out acombination of procedures involving enquiry and observation re-performance and inspectionof evidence in respect of operation of these controls.

Tested the relevant information technology systems' access and change managementcontrols relating to contracts and related information used in recording and disclosingrevenue in accordance with the new revenue accounting standard.

Selected a sample of continuing and new contracts and performed the followingprocedures :

- Read analysed and identified the distinct performance obligations in thesecontracts. -Compared these performance obligations with that identified and recorded bythe Company.

-Considered the terms of the contracts to determine the transaction price including anyvariable consideration to verify the transaction price used to compute revenue and to testthe basis of estimation of the variable consideration.

-Samples in respect of revenue recorded for time and material contracts were testedusing a combination of approved time sheets including customer acceptances subsequentinvoicing and historical trend of collections and disputes.

-Sample of revenues disaggregated by type and service offerings was tested with theperformance obligations specified in the underlying contracts.

-In respect of samples relating to fixed-price contracts progress towards satisfactionof performance obligation used to compute recorded revenue was verified with actual andestimated efforts from the time recording and budgeting systems. We also tested the accessand change management controls relating to these systems.

-Sample of revenues disaggregated by type and service offerings was tested with theperformance obligations specified in the underlying contracts.

-Performed analytical procedures for reasonableness of revenues disclosed by type andservice offerings.

-We reviewed the collation of information and the logic of the report generated fromthe budgeting system used to prepare the disclosure relating to the periods over which theremaining performance obligations will be satisfied subsequent to the balance sheet date.

2 Key Audit Matter

Accuracy of revenues and onerous obligations in respect of fixed-price contractsinvolves critical estimates

Estimated effort is a critical estimate to determine revenues and liability for onerousobligations. This estimate has a high inherent uncertainty as it requires consideration ofprogress of the contract efforts incurred till date and efforts required to complete theremaining contract performance obligations.

Refer Notes to the Standalone Financial Statements.

Auditor's Response

Principal Audit Procedures

Our audit approach was a combination of test of internal controls and substantiveprocedures which included the following :

Evaluated the design of internal controls relating to recording of efforts incurred andestimation of efforts required to complete the performance obligations.

Tested the access and application controls pertaining to time recording allocation andbudgeting systems which prevents unauthorised changes to recording of efforts incurred.Selected a sample of contracts and through inspection of evidence of performance of thesecontrols tested the operating effectiveness of the internal controls relating to effortsincurred and estimated.

Selected a sample of contracts and performed a retrospective review of efforts incurredwith estimated efforts to identify significant variations and verify whether thosevariations have been considered in estimating the remaining efforts to complete thecontract.

Reviewed a sample of contracts with unbilled revenues to identify possible delays inachieving milestones which require change in estimated efforts to complete the remainingperformance obligations.

Performed analytical procedures and test of details for reasonableness of incurred andestimated efforts.

3. Key Audit Matter

Evaluation of uncertain tax positions

The Company has material uncertain tax positions including matters under dispute whichinvolves significant judgment to determine the possible outcome of these disputes.

Refer Notes to the Standalone Financial Statements

Auditor's Response

Principal Audit Procedures

Obtained details of completed tax assessments and demands for the year ended March 312019 from management. We involved our internal experts to challenge the management'sunderlying assumptions in estimating the tax provision and the possible outcome of thedisputes. Our internal experts also considered legal precedence and other rulings inevaluating management's position on these uncertain tax positions. Additionally weconsidered the effect of new information in respect of uncertain tax positions as at April1 2018 to evaluate whether any change was required to management's position on theseuncertainties.

4 Key Audit Matter

Recoverability of Indirect tax receivables

As at March 31 2019 non-current assets in respect of withholding tax and othersincludes Cenvat recoverable amounting to Rs. 00 cross which are pending adjudication.

Refer Note to the Standalone Financial Statements.

Auditor's Response

Principal Audit Procedures

We have involved our internal experts to review the nature of the amounts recoverablethe sustainability and the likelihood of recoverability upon final resolution.

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.

Management's Responsibility for the Standalone Financial Statements

The Company's Board of Directors is responsible for the matters stated in section134(5) of the Act with respect to the preparation of these standalone financial statementsthat give a true and fair view of the financial position financial performance totalcomprehensive income changes in equity and cash flows of the Company in accordance withthe Ind AS and other accounting principles generally accepted in India. Thisresponsibility also includes maintenance of adequate accounting records in accordance withthe provisions of the Act for safeguarding the assets of the Company and for preventingand detecting frauds and other irregularities; selection and application of appropriateaccounting policies; making judgments and estimates that are reasonable and prudent; anddesign implementation and maintenance of adequate internal financial controls that wereoperating effectively for ensuring the accuracy and completeness of the accountingrecords relevant to the preparation and presentation of the standalone financialstatements that give a true and fair view and are free from material misstatement whetherdue to fraud or error.

In preparing the standalone financial statements management is responsible forassessing the Company's ability to continue as a going concern disclosing as applicablematters related to going concern and using the going concern basis of accounting unlessmanagement either intends to liquidate the Company or to cease operations or has norealistic alternative but to do so.

The Board of Directors are responsible for overseeing the Company's financial reportingprocess.

Auditor's Responsibilities for the Audit of the Standalone Financial Statements

Our objectives are to obtain reasonable assurance about whether the standalonefinancial statements as a whole are free from material misstatement whether due to fraudor error and to issue an auditor's report that includes our opinion. Reasonable assuranceis a high level of assurance but is not a guarantee that an audit conducted in accordancewith SAs will always detect a material misstatement when it exists. Misstatements canarise from fraud or error and are considered material if individually or in theaggregate they could reasonably be expected to influence the economic decisions of userstaken on the basis of these standalone financial statements.

As part of an audit in accordance with SAs we exercise professional judgment andmaintain professional skepticism throughout the audit We also :

• Identify and assess the risks of material misstatement of the standalonefinancial statements whether due to fraud or error design and perform audit proceduresresponsive to those risks and obtain audit evidence that is sufficient and appropriate toprovide a basis for our opinion. The risk of not detecting a material misstatementresulting from fraud is higher than for one resulting from error as fraud may involvecollusion forgery intentional omissions misrepresentations or the override of internalcontrols.

• Obtain an understanding of internal financial controls relevant to the audit inorder to 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.

• 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 standalone financial statements or if such disclosures are inadequate to modify ouropinion. Our conclusions are based on the audit evidence obtained up to the date of ourauditor's However future events or conditions may cause the Company to ceaseto continue as a going concern.

• Evaluate the overall presentation structure and content of the standalonefinancial statements including the disclosures and whether the standalone financialstatements represent the underlying transactions and events in a manner that achieves fairpresentation.

Materiality is the magnitude of misstatements in the standalone financial statementsthat individually or in aggregate makes it probable that the economic decisions of areasonably knowledgeable user of the 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 audit.

We also provide those charged with governance with a statement that we have compliedwith relevant ethical requirements regarding independence and to communicate with themall relationships and other matters that may reasonably be thought to bear on ourindependence and where applicable related safeguards.

From the matters communicated with those charged with governance we determine thosematters that were of most significance in the audit of the standalone financial statementsof the current period and are therefore the key audit matters. We describe these mattersin our auditor's report unless law or regulation precludes public disclosure about thematter or when in extremely rare circumstances we determine that a matter should not becommunicated in our report because the adverse consequences of doing so would reasonablybe expected to outweigh the public interest benefits of such communication.

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 Section 143 ofthe Act we give in the Annexure a statement on the matters specified in paragraph 3 and 4of the Order to the extent applicable.

2. 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 [including total comprehensiveincome] and the cash flow statement dealt with by this Report are in agreement with thebooks of account;

[d] In our opinion the aforesaid Standalone Ind AS Financial Statements comply withthe Accounting Standards specified under section 133 of the Act read with relevant rulesissued thereunder.

[e] On the basis of the written representations received from the directors as on 31March 2019 taken on record by the Board of Directors none of the directors isdisqualified as on 31 March 2019 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 the operating effectiveness of such controls refer to ourseparate Report in Annexure.

[g] 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 opinionand to the best of our information and according to the explanations given to us:

[i] The Company has No impact of pending litigations on its financial position in itsStandalone Ind AS Financial Statements as referred to in Note no. 20 to the financialstatements.

(ii) . The Company does not have long term contracts including derivative contracts forwhich there were any material foreseeable losses.

Chartered Accountants
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