We have audited the standalone financial statements of RR Metal makersIndia Limited ("the Company") which comprise the standalone balance sheet as at31 March 2020 and the standalone statement of profit and loss (including othercomprehensive income) standalone statement of changes in equity and standalone statementof cash flows for the year then ended and notes to the standalone financial statementsincluding a summary of the significant accounting policies and other explanatoryinformation. In our opinion and to the best of our information and according to theexplanations given to us the aforesaid standalone financial statements give theinformation required by the Companies Act 2013 ("Act") in the manner sorequired and give a true and fair view in conformity with the accounting principlesgenerally accepted in India of the state of affairs of the Company as at 31 March 2020and loss and other comprehensive income changes in equity and its cash flows for the yearended on that date.
Basis for Opinion
We conducted our audit in accordance with the Standards on Auditing(SAs) specified under section 143(10) of the Act. Our responsibilities under those SAs arefurther described in the Auditor's Responsibilities for the Audit of the StandaloneFinancial 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 thestandalone financial statements under the provisions of the Act and the Rules thereunderand we have fulfilled our other ethical responsibilities in accordance with theserequirements and the Code of Ethics. We believe that the audit evidence we have obtainedis sufficient and appropriate to provide a basis for our opinion on the standalonefinancial statements.
Emphasis of Matter
We draw attention to
1. Note No 34(a) to the standalone financial statements in respect ofDebit or credit balances on whatever account are subject to confirmation from the parties/authorities concerned.
2. Note 34(c) to the standalone financial statements which explainsCOVID-19 that has caused significant disruptions in the business operations of companiesacross India and has caused significant accounting and auditing challenges. One suchchallenge being inability for the Company to conduct a physical verification ofinventories for the year-end 31st March 2020 due to Government having imposedrestrictions during the lockdown on account of health travel and safety concerns. TheCompany's management however conducted physical verification of inventories ondates other than the date of financial statements but prior to the date of the boardmeeting to be held for the purpose of adopting the financial results at certain locations(factories and warehouses) and has made available the documents in confirmation thereof.Inventories being material to the financial statements/results of the Company theStandard on Auditing (SA) 501 Audit Evidence - Specific Considerations for Selecteditems cast a duty on us to obtain sufficient appropriate audit evidence regarding theexistence and condition of inventories. We have performed alternate audit procedures basedon documents and other information made available to us to audit the existence ofinventories as per the Guidance provided by the Standard on Auditing (SA) 501 AuditEvidence - Specific Considerations for Selected items and have obtained sufficientappropriate audit evidence to issue our unmodified opinion on these standalone financialresults
Our opinion is not modified in respect of the above matters.
Key audit matters
Key audit matters are those matters that in our professional judgmentwere of most significance in our audit of the standalone financial statements of thecurrent period. These matters were addressed in the context of our audit of the standalonefinancial statements as a whole and in forming our opinion thereon and we do not providea separate opinion on these matters.
Description of Key audit matter
1. Taxes including recognition of deferred taxes
> The Key audit matters
The Company has recorded Rs. 132 crores of tax savings on loss for theyear ended 31 March 2020. The Company is subject to periodic tax challenges by taxauthorities leading to minor litigations. As such accounting for taxes involves judgmentin developing estimates of tax exposures and contingencies in order to assess the adequacyof tax provision. Further during the year the Company elected not to apply theconcessional tax regime specified under Section 115 BAA of the Income tax Act. The companyhas an available Minimum Alternate Tax (MAT) credit of Rs. 79 Lakhs which it will have toforego if it applies for the concessional tax regime. The Company has unused tax losses onwhich it assesses recognition of deferred tax assets. This involves significant judgmentincluding assessment of future taxable profits. Refer note 2(r) of significant accountingpolicies.
> How the matter was addressed by us in our audit
Our audit procedures for the above included the following:
a. We assessed the design implementation and operating effectivenessof key controls in respect of the Company's process for recognition of tax expenseincluding uncertain tax positions and deferred taxes;
b. We enquired about the completeness of uncertain tax positions inconjunction with our tax specialists by considering changes to business and taxlegislation through inquiries with the Company and also by
reading the correspondence of the company with authorities. We havealso considered relevant recent judicial pronouncements and judgments in similar mattersand outcome of past litigations;
c. We have also assessed the Company's judgements on therecognition and recoverability of the deferred tax assets including the deferred taxesarising on unused tax losses. We have also assessed the reasonability of management'soptimistic hope of future profit and recoverability of deferred tax assets.
d. We also had a combined discussion with the management and thecompany's tax specialists with regard to the electing for concessional tax regime asper Section 115BAA of the income tax Act. Based on the facts and figures we concludedthat it is not in the company's best interests to opt for the concessional tax regimespecified under Section 115BAA in the current financial year as the company has unused MATcredit to the tune of Rs. 79 Lakhs which it will have to forego if it opts for theconcessional tax regime specified under Section 115BAA. The company may think of optingfor the concessional tax regime specified under Section 115BAA in the future years basedon a similar analysis.
e. We have also assessed the adequacy of the disclosures in thefinancial statements relating to impact on income taxes and deferred taxes.
2. Impairment assessment of tangible assets and development expenditurecapitalized and currently under development
> The Key audit matters
The Company has aggregate tangible assets of Rs. 3.86 crores as at 31March 2020. Changes in business environment including the economic uncertainty created byCOVID-19 could have a significant impact on the valuation of the tangible assets as wellas intangible assets. As such tangible and intangible assets are tested for any triggersfor impairment. If triggers are identified the recoverable amounts of the tangible andintangible assets are determined and if the amount is lower than the carrying value of theassets impairment loss is recognized in the statement of profit and loss. The recoverableamount is determined as higher of value in use (VIU) or fair value less cost to sell ofthe asset or the cash generating unit (CGU) to which the asset belongs. Refer note 2(g) -significant accounting policy for impairment of tangible and intangible assets.
> How the matter was addressed by us in our audit
Our audit procedures included the following:
a. We assessed the design implementation and operating effectivenessof key controls in respect of the Company's impairment assessment process includingthe approval of forecasts and valuation models. We also obtained an understanding of theidentification of CGU process;
b. We tested the key VIU assumptions used in estimating future cashflows such as sales volumes and prices operating costs inflation and growth rates bycomparing these inputs with externally derived data past performances consistency withthe board approved investment plans and knowledge of the industry;
c. We have evaluated past performances where relevant and assessedhistorical accuracy of the forecast used in VIU calculations;
d. We have evaluated the stage of development of the intangible assetsjudgments used for expected probable economic benefits and associated expenditures andtheir assessment of feasibility of the projects; and
e. We have assessed the adequacy of disclosures in the financialstatements on key judgements assumptions and quantitative data with respect to impairmentlosses.
The Company's management and Board of Directors are responsiblefor the other information. The other information comprises the information included in theCompany's annual report but does not include the financial statements and ourauditors' report thereon. Our opinion on the standalone financial statements does notcover the other information and we do not express any form of assurance thereon. Inconnection with our audit of the standalone financial statements our responsibility is toread the other information and in doing so consider whether the other information ismaterially inconsistent with the standalone financial statements or our knowledge obtainedin the audit or otherwise appears to be materially misstated. If based on the work wehave performed we conclude that there is a material misstatement of this otherinformation we are required to report that fact. We have nothing to report in thisregard.
Management's and Board of Directors' Responsibility for theStandalone Financial Statements
The Company's Management and Board of Directors are responsiblefor the matters stated in section 134(5) of the Act with respect to the preparation ofthese standalone financial statements that give a true and fair view of the state ofaffairs profit/loss and other comprehensive income changes in equity and cash flows ofthe Company in accordance with the accounting principles generally accepted in Indiaincluding the Indian Accounting Standards (Ind AS) specified under section 133 of the Act.This responsibility also includes maintenance of adequate accounting records in accordancewith the provisions of the Act for safeguarding of the assets of the Company and forpreventing and detecting frauds and other irregularities; selection and application ofappropriate 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 accuracy and completeness of theaccounting records relevant to the preparation and presentation of the standalonefinancial statements that give a true and fair view and are free from materialmisstatement whether due to fraud or error.
In preparing the standalone financial statements the Management andBoard of Directors are responsible for assessing the Company's ability to continue asa going concern disclosing as applicable matters related to going concern and using thegoing concern basis of accounting unless the Board of Directors either intends toliquidate the Company or to cease operations or has no realistic alternative but to doso.
The Board of Directors is also responsible for overseeing theCompany's financial reporting process.
Auditor's Responsibilities for the Audit of the StandaloneFinancial Statements
Our objectives are to obtain reasonable assurance about whether thestandalone financial statements as a whole are free from material misstatement whetherdue to fraud or error and to issue an auditor's report that includes our opinion.Reasonable assurance is a high level of assurance but is not a guarantee that an auditconducted in accordance with SAs will always detect a material misstatement when itexists. Misstatements can arise from fraud or error and are considered material ifindividually or in the aggregate they could reasonably be expected to influence theeconomic decisions of users taken on the basis of these standalone financial statements.
As part of an audit in accordance with SAs we exercise professionaljudgment and maintain professional skepticism throughout the audit.
Identify and assess the risks of material misstatement of thestandalone financial statements whether due to fraud or error design and perform auditprocedures responsive to those risks and obtain audit evidence that is sufficient andappropriate to provide a basis for our opinion. The risk of not detecting a materialmisstatement resulting from fraud is higher than for one resulting from error as fraudmay involve collusion forgery intentional omissions misrepresentations or the overrideof internal control.
Obtain an understanding of internal control relevant to theaudit in order to design audit procedures that are appropriate in the circumstances. Undersection 143(3)(i) of the Act we are also responsible for expressing our opinion onwhether the company has adequate internal financial controls with reference to financialstatements in place and the operating effectiveness of such controls.
Evaluate the appropriateness of accounting policies used and thereasonableness of accounting estimates and related disclosures in the standalone financialstatements made by the Management and Board of Directors.
Conclude on the appropriateness of the Management and Board ofDirectors use of the going concern basis of accounting and based on the audit evidenceobtained whether a material uncertainty exists related to events or conditions that maycast significant doubt on the Company's ability to continue as a going concern. If weconclude that a material uncertainty exists we are required to draw attention in ourauditor's report to the related disclosures in the standalone financial statementsor if such disclosures are inadequate to modify our opinion. Our conclusions are basedon the audit evidence obtained up to the date of our auditor's report. Howeverfuture events or conditions may cause the Company to cease to continue as a going concern.
Evaluate the overall presentation structure and content of thestandalone financial statements including the disclosures and whether the standalonefinancial statements represent the underlying transactions and events in a manner thatachieves fair presentation.
We communicate with those charged with governance regarding amongother matters the planned scope and timing of the audit and significant audit findingsincluding any significant deficiencies in internal control that we identify during ouraudit. We also provide those charged with governance with a statement that we havecomplied with relevant ethical requirements regarding independence and to communicatewith them all relationships and other matters that may reasonably be thought to bear onour independence and where applicable related safeguards. From the matters communicatedwith those charged with governance we determine those matters that were of mostsignificance in the audit of the standalone financial statements of the current period andare therefore the key audit matters. We describe these matters in our auditors'report unless law or regulation precludes public disclosure about the matter or when inextremely rare circumstances we determine that a matter should not be communicated in ourreport because the adverse consequences of doing so would reasonably be expected tooutweigh the public interest benefits of such communication.
Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditors' Report) Order 2016("the Order") issued by the Central Government in terms of section 143 (11) ofthe Act we give in the "Annexure A" a statement on the matters specified inparagraphs 3 and 4 of the Order to the extent applicable.
2. (A) As required by section 143(3) of the Act 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 purposes of ouraudit.
b. In our opinion proper books of account as required by law have beenkept by the Company so far as it appears from our examination of those books;
c. The standalone balance sheet the standalone statement of profit andloss (including other comprehensive income) the standalone statement of changes in equityand the standalone statement of cash flows dealt with by this Report are in agreement withthe books of account;
d. In our opinion the aforesaid standalone financial statements complywith the Ind AS specified under section 133 of the Act.
e. On the basis of the written representations received from thedirectors as on 31 March 2020 taken on record by the Board of Directors none of thedirectors is disqualified as on 31 March 2020 from being appointed as a director in termsof section 164(2) of the Act;
f. With respect to the adequacy of the internal financial controls withreference to financial statements of the Company and the operating effectiveness of suchcontrols refer to our separate Report in "Annexure B".
(B) With respect to the other matters to be included in theAuditors' Report in accordance with Rule 11 of the Companies (Audit and Auditors)Rules 2014 in our opinion and to the best of our information and according to theexplanations given to us:
i. The Company has disclosed the impact of pending litigations as at 31March 2020 on its financial position in its standalone financial statements - Refer Note32 to the standalone financial statements;
ii. The Company has made provision as required under the applicablelaw or accounting standards for material foreseeable losses if any on long-termcontracts including derivative contracts- Refer Note 17 to the standalone financialstatements;
iii. There has been no delay in transferring amounts if any to theInvestor Education and Protection Fund by the Company;
iv. The disclosures in the standalone financial statements regardingholdings as well as dealings in specified bank notes during the period from 8 November2016 to 30 December 2016 have not been made in these financial statements since they donot pertain to the financial year ended 31 March 2020.
(C) With respect to the matter to be included in the Auditors'Report under section 197(16):
In our opinion and according to the information and explanations givento us the remuneration paid by the Company to its directors during the current year is inaccordance with the provisions of section 197 of the Act. The remuneration paid to anydirector is not in excess of the limit laid down under section 197 of the Act. TheMinistry of Corporate Affairs has not prescribed other details under section 197(16) whichare required to be commented upon by us.
Previous year figures have been regrouped / rearranged in order toconfirm to the current year presentation.
For MA CHAVAN & CO Chartered Accountants FRN: 115164W
CA JAGRUTI PATIL Partner M No: 159522 UDIN no : 20159522AAAAAW7633 30thJuly 2020
Annexure A to the Independent Auditors' report on the standalonefinancial statements of RR Metalmakers India Limited for the year ended 31 March 2020
With reference to the Annexure A referred to in the IndependentAuditors' report to the members of RR METALMAKERS INDIA Limited (theCompany') on the standalone financial statements for the year ended 31 March 2020 wereport the following:
(a) The Company has maintained proper records showing full particularsincluding quantitative details and situation of fixed assets.
(b) the Company has a program of physical verification of its fixedassets by which all fixed assets are verified once in three years pursuant to which thefixed assets were physically verified in the financial year ended 31 March 2019 and nomaterial discrepancies were noticed on such verification. All discrepancies have beendealt with in the books of account.
(c) With respect to immovable properties of acquired land and buildingsthat are freehold according to
the information and explanations given to us and the records examinedby us and based on the
examination of the registered sale deed / transfer deed / conveyancedeed / court orders approving
schemes of arrangements / amalgamations provided to us we report thatthe title deeds of such immovable properties are held in the name of the Company as at theBalance Sheet date.
ii. The inventory has been physically verified by the management atreasonable intervals during the year. In our opinion the frequency of such verificationis reasonable. The discrepancies noticed on verification between the physical stocks andthe book records were not material and have been suitably adjusted in the books ofaccounts.
iii. The Company has not granted any loans secured or unsecured tocompanies firms Limited Liability
Partnerships or other parties covered in the register maintained underSection 189 of the Act. Accordingly
paragraphs 3 (iii) of the Order are not applicable to the Company.
iv. According to the information and explanations given to us and basedon the audit procedures conducted by us the Company has complied with provisions ofSection 185 and 186 of the Companies Act 2013 (the Act') with respect togranting of loans making investment and providing guarantees and securities.
v. According to the information and explanations given to us theCompany has not accepted any deposit during the year and accordingly the compliance withSection 73 and 76 of the Act is not applicable. In respect of unclaimed deposits theCompany has complied with the provisions of Sections 74 and 75 or any other relevantprovisions of the Act. According to the information and explanations given to us no orderhas been passed by the Company Law Board or the National Company Law Tribunal or theReserve Bank of India or any Court or any other Tribunal on the Company.
vi. vi. We have broadly reviewed the books of accounts maintained bythe Company pursuant to the rules prescribed by the Central Government for the maintenanceof cost records under Section 148(1) of the Act and are of the opinion that prima faciethe prescribed accounts and records have been made and maintained.
(a) According to the information and explanations given to us and onthe basis of our examination of the records of the Company amounts deducted / accrued inthe books of account in respect of undisputed statutory dues including Provident FundEmployees' State Insurance Income tax Duty of Customs Duty of Excise Cess Goodsand Service Tax and other material statutory dues have been generally regularly depositedduring the period by the Company with the appropriate authorities except for certain minordelays. According to the information and explanations given to us there are no undisputedamounts payable in respect of Provident Fund Employees' State Insurance Income taxDuty of Customs Duty of Excise Cess Goods and Service Tax and other material statutorydues that have remained outstanding for more than six months from the date it becamepayable except for the following below.
|TYPE OF STATUTORY DUE ||PARTICULARS ||AMOUNT |
|TDS ||Interest u/s 220(2) ||62520.00 |
|TDS ||Late filing fees u/s 234E of IT Act 1961 ||202000.00 |
|TDS ||Interest u/s 201 of the IT Act 1961 ||20902.00 |
|TDS ||TDS default ||3243.00 |
|TOTAL UNDISPUTED DUES UNDER INCOME TAX ACT 1961 ||288665.00 |
(b) According to the information and explanations given to us thereare no dues of Income tax Sales tax Service tax Duty of Customs Duty of Excise Valueadded tax Goods and Service Tax and other material statutory dues which have not beendeposited with the appropriate authorities on account of any dispute.
viii. In our opinion and according to the information and explanationsgiven to us the Company has not defaulted in repayment of loans or borrowings tofinancial institutions banks and government and outstanding dues to debenture holdersduring the year.
ix. The Company did not raise any money by way of initial public offeror further public offer (including debt instruments) during the year.
x. In our opinion and according to the information and explanationsgiven to us the term loans taken by the Company has been applied for the purpose forwhich they were raised.
xi. During the course of our examination of the books and records ofthe Company carried out in accordance with the generally accepted auditing practices inIndia and according to the information and explanations given to us we have neither comeacross any instance of fraud by the Company or any material instances of fraud on theCompany by its officers or employees noticed or reported during the year nor have webeen informed of any such case by the management.
xii. In our opinion and according to the information and explanationsgiven to us the Company has paid/provided managerial remuneration in accordance with therequisite approvals mandated by the provisions of Section 197 read with Schedule V to theAct.
xiii. In our opinion and according to the information and explanationsgiven to us the Company is not a Nidhi Company and Nidhi Rules 2014 are not applicableto it. Accordingly paragraph 3 (xii) of the Order is not applicable to the Company
xiv. In our opinion and according to the information and explanationsgiven to us the Company has entered into transactions with the related parties incompliance with provision of Section 177 and 188 of the Act. The details of such relatedparty transactions have been disclosed in standalone Ind AS financial statements asrequired under applicable Ind AS.
xv. According to the information and explanations given to us and basedon our examination of the records of the Company the Company has not made anypreferential allotment or private placement of shares or fully or partly convertibledebentures during the year. Accordingly paragraph 3 (xiv) of the Order is not applicableto the Company.
xvi. According to the information and explanations given to us andbased on our examination of the records of the Company the Company has not entered intoany non-cash transactions with directors or persons connected with him. Accordinglyparagraph 3 (xv) of the Order is not applicable to the Company.
xvii. According to the information and explanations given to us andbased on our examination of the records of the Company the Company is not required to beregistered under Section 45 IA of the Reserve Bank of India Act 1934. Accordinglyparagraph 3 (xvi) of the Order is not applicable to the Company.
For MA CHAVAN & CO Chartered Accountants FRN: 115164W
CA JAGRUTI PATIL Partner M No:159522
Annexure B to the Independent Auditors' report on the standalonefinancial statements of RR METALMAKERS INDIA LIMITED for the year ended 31 March 2020.
Report on the internal financial controls with reference to theaforesaid standalone financial statements under Clause (i) of Sub-section 3 of Section 143of the Companies Act 2013
(Referred to in paragraph 2(A)(f) under Report on Other Legal andRegulatory Requirements' section of our report of even date)
We have audited the internal financial controls with reference tofinancial statements of RR METALMAKERS INDIA LIMITED ("the Company") as of 31March 2020 in conjunction with our audit of the standalone financial statements of theCompany for the year ended on that date. In our opinion the Company has in all materialrespects adequate internal financial controls with reference to financial statements andsuch internal financial controls were operating effectively as at 31 March 2020 based onthe internal financial controls with reference to financial statements 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 (the "Guidance Note").
Management's Responsibility for Internal Financial Controls
The Company's management and the Board of Directors areresponsible for establishing and maintaining internal financial controls based on theinternal financial controls with reference to financial statements criteria established bythe Company considering the essential components of internal control stated in theGuidance Note. These responsibilities include the design implementation and maintenanceof adequate internal financial controls that were operating effectively for ensuring theorderly and efficient conduct of its business including adherence to Company'spolicies the safeguarding of its assets the prevention and detection of frauds anderrors the accuracy and completeness of the accounting records and the timelypreparation of reliable financial information as required under the Companies Act 2013(hereinafter referred to as "the Act").
Our responsibility is to express an opinion on the Company'sinternal financial controls with reference to financial statements based on our audit. Weconducted our audit in accordance with the Guidance Note and the Standards on Auditingprescribed under section 143(10) of the Act to the extent applicable to an audit ofinternal financial controls with reference to financial statements. Those Standards andthe Guidance Note require that we comply with ethical requirements and plan and performthe audit to obtain reasonable assurance about whether adequate internal financialcontrols with reference to financial statements were established and maintained andwhether such controls operated effectively in all material respects.
Our audit involves performing procedures to obtain audit evidence aboutthe adequacy of the internal financial controls with reference to financial statements andtheir operating effectiveness. Our audit of internal financial controls with reference tofinancial statements included obtaining an understanding of such internal financialcontrols assessing the risk that a material weakness exists and testing and evaluatingthe design and operating effectiveness of internal control based on the assessed risk. Theprocedures selected depend on the auditor's judgement including the assessment ofthe risks of material misstatement of the standalone financial statements whether due tofraud or error. We believe that the audit evidence we have obtained is sufficient andappropriate to provide a basis for our audit opinion on the Company's internalfinancial controls with reference to financial statements.
Meaning of Internal Financial controls with Reference to FinancialStatements
A Company's internal financial controls with reference tofinancial statements is a process designed to provide reasonable assurance regarding thereliability of financial reporting and the preparation of financial statements forexternal purposes in accordance with generally accepted accounting principles. Acompany's internal financial controls with reference to financial statements includethose policies and procedures that (1) pertain to the maintenance of records that inreasonable detail accurately and fairly reflect the transactions and dispositions of theassets of the company; (2) provide reasonable assurance that transactions are recorded asnecessary to permit preparation of financial statements in accordance with generallyaccepted accounting principles and that receipts and expenditures of the company arebeing made only in accordance with authorizations of management and directors of thecompany; and (3) provide reasonable assurance regarding prevention or timely detection ofunauthorized acquisition use or disposition of the Company's assets that could havea material effect on the financial statements.
Inherent Limitations of Internal Financial controls with Reference toFinancial Statements
Because of the inherent limitations of internal financial controls withreference to financial statements including the possibility of collusion or impropermanagement override of controls material misstatements due to error or fraud may occurand not be detected. Also projections of any evaluation of the internal financialcontrols with reference to financial statements to future periods are subject to the riskthat the internal financial controls with reference to financial statements may becomeinadequate because of changes in conditions or that the degree of compliance with thepolicies or procedures may deteriorate.
For MA CHAVAN & CO Chartered Accountants FRN: 115164W
CA JAGRUTI PATIL Partner M No:159522
RR METALMAKERS INDIA LIMITED
Notes forming part of the Financial Statements for the year ended31.03.2020
1. Corporate Information
RR Metalmakers India Limited (Formerly known as Shree SurgovindTradelink Limited) (the Company') is a limited company incorporated in India.The Ordinary (Equity) shares of the Company are listed on the National Stock Exchange ofIndia Limited ("NSE") the BSE Limited ("BSE") in India.
This company which was known as Shree Surgovind Tradelinks Limitedchanged its name on 10th April 2019 to RR Metalmakers India Limited. Also theregistered office of the company which was originally at Ahmedabad was changed to Mumbai.
2. Significant accounting policies:
1. Statement of compliance and basis of preparation and presentation
These financial statements are prepared in accordance with IndianAccounting Standard (Ind AS) under the historical cost convention on the accrual basisexcept for certain financial instruments which are measured at fair values the provisionsof the Companies Act 2013 ('the Act') (to the extent notified) and guidelines issued bythe Securities and Exchange Board of India (SEBI). The Ind AS are prescribed under Section133 of the Act read with Rule 3 of the Companies (Indian Accounting Standards) Rules 2015and relevant amendment rules issued thereafter.
Accounting policies have been consistently applied except where a newlyissued accounting standard is initially adopted or a revision to an existing accountingstandard requires a change in the accounting policy hitherto in use These standalone orseparate financial statements were approved by the Company's Board of Directors andauthorised for issue on 02.09.2020
2. Basis of measurement
The financial statements have been prepared on the historical costbasis except for certain financial instruments which are measured at fair values.
3. Measurement of fair values
A number of Company's accounting policies and disclosures requirethe measurement of fair values for both financial and non-financial assets andliabilities. The Company has established policies and procedures with respect to themeasurement of fair values.
Fair values are categorised into different levels in a fair valuehierarchy based on the inputs used in the valuation techniques as follows:
Level 1: Quoted prices (unadjusted) in active markets foridentical assets and liabilities.
Level 2: Inputs other than quoted prices included in Level 1that are observable for the asset or liability either directly or indirectly.
Level 3: Inputs for the asset or liability that are not based onobservable market data (unobservable inputs).
4. Use of estimates and judgments
The preparation of the financial statements in conformity with Ind ASrequires the management to make estimates judgments and assumptions. These estimatesjudgments and assumptions affect the application of accounting policies and the reportedamounts of assets and liabilities the disclosures of contingent assets and liabilities atthe date of the financial statements and reported amounts of revenues and expenses duringthe period. Accounting estimates could change from period to period. Actual results coulddiffer from those estimates. Appropriate changes in estimates are made as managementbecomes aware of changes in circumstances surrounding the estimates. Changes in estimatesare reflected in the financial statements in the period in which changes are made and ifmaterial their effects are disclosed in the notes to the financial statements.
5. Property Plant & Equipment
a. Property plant and equipment are stated at cost less accumulateddepreciation. When an asset is scrapped or otherwise disposed off the cost and relateddepreciation are removed from the books of account and resultant profit (including capitalprofit) or loss if any is reflected in the Statement of Profit and Loss.
b. Depreciation on Property plant and equipment is provided on thewritten- own-value over the useful lives of assets estimated by the Management.Depreciation for assets purchased / sold during a period is proportionately charged.Property plant and equipment are amortized over their respective individual estimateduseful lives on a written down value method commencing from the date the asset isavailable to the Company for its use. The Management estimates the useful lives for theother assets as follows:
Buildings-30 years; Office equipment-5 years; Computer equipment-3-6years; Furniture and fixtures-10 years; Vehicles-8 years.
For the purpose of such estimation the management considers a salvagevalue of 5% for each asset although the real salvage value may differ.
6. Intangible assets
Intangible assets are stated at acquisition cost net of accumulatedamortization and accumulated impairment losses if any. Intangible assets are amortized ona straight-line basis over the estimated useful
lives. Gains or losses if any arising from the retirement or disposalproceeds and the carrying amount of the asset are recognized as income or expense in theStatement of Profit and loss.
7. Impairment of assets
At the end of each reporting period the Company reviews the carryingamounts of its property plant & equipment and intangible assets to determine whetherthere is any indication that those assets have suffered an impairment loss. If any suchindication exists the recoverable amount which is the higher of the value in use or fairvalue less cost to sell of the asset or cash-generating unit as the case may be isestimated and impairment loss (if any) is recognised and the carrying amount is reduced toits recoverable amount. In assessing the value in use the estimated future cash flows arediscounted to their present value using a pre-tax discount rate that reflects currentmarket assessments of the time value of money and the risks specific to the asset forwhich the estimates of future cash flows have not been adjusted. When it is not possibleto estimate the recoverable amount of an individual asset the Company estimates therecoverable amount of the cash-generating unit to which the asset belongs. When animpairment loss subsequently reverses the carrying amount of the asset or acash-generating unit is increased to the revised estimate of its recoverable amount sothat the increased carrying amount does not exceed the carrying amount that would havebeen determined had no impairment loss been recognised for the asset (or cash-generatingunit) earlier. Intangible assets with indefinite useful lives and intangible assets notyet available for use are tested for impairment at least annually and whenever there isan indication that the asset may be impaired.
8. Investments and Assets held for sale
Non-current assets and Disposal Group are classified as held for saleif their carrying amount is intended to be recovered principally through sale rather thanthrough continuing use. The condition for classification of held for sale is met when thenon-current asset or the Disposal Group is available for immediate sale and the same ishighly probable of being completed within one year from the date of classification as heldfor sale. Non-current assets and Disposal Group held for sale are measured at the lower ofcarrying amount and fair value less cost to sell. Non-current assets and Disposal Groupthat ceases to be classified as held for sale shall be measured at the lower of carryingamount before the noncurrent asset and Disposal Group was classified as held for saleadjusted for any depreciation/ amortization and its recoverable amount at the date whenthe Disposal Group no longer meets the "Held for sale" criteria. Currentinvestments are valued at the lower of cost and fair value determined by category ofinvestment.
9. Valuation of inventories
Inventories consist of Finished Goods which are stated at cost ornet realizable value whichever is lower'. Cost comprises all cost of purchase costof conversion and other costs incurred in bringing the inventories to their presentlocation and condition. Cost of raw materials components and stores and spares isdetermined on a FIFO basis. Cost of finished goods includes direct materials and labourand a proportion of manufacturing overheads based on normal operating capacity. Dueallowance is estimated and made for defective and obsolete items wherever necessarybased on the past experience of the Company.
10. Foreign currency transactions
All transactions in foreign currency are recorded at the rates ofexchange prevailing on the dates when the relevant transactions take place. Monetary itemsin form of current assets and current liabilities in foreign currency outstanding at theclose of the year are converted in Indian Currency at the appropriate rates of exchangeprevailing on the date of the Balance Sheet.
11. Derivative Instruments and Hedge Accounting
At present no accounting policy is formulated for DerivativeInstruments and Hedge Accounting as there are no such transactions.
12. Revenue recognition
i) Revenues including interest/incomes and Costs/Expenditures aregenerally accounted on accrual basis as they are earned or incurred.
ii) Revenue from sale of Goods is recognized on transfer of significantrisks and rewards of ownership which is generally on the dispatch of the goods.
iii) Dividend income is recognized when the Company's right toreceive dividend is established.
iv) Recognition of revenue is postponed in circumstances where anuncertainty regarding its collection exists.
13. Government Grants
No government grant or any incentives from government authorities arereceivable by the company till date and hence no accounting policy is formulated for thesame.
14. Employee benefits
a. Short-term obligations
Liabilities for wages and salaries including other monetary andnon-monetary benefits that are expected to be settled wholly within 12 months after theend of the reporting period are recognized and measured at the undiscounted amountsexpected to be paid when the liabilities are settled.
b. Post-employment obligations (Defined Benefit Obligations)
The liability or asset recognized in the balance sheet in respect ofgratuity is the present value of the defined benefit obligation at the end of thereporting period as per actuarial valuation.
15. Borrowing costs
All borrowing costs are charged to profit and loss account except thoseborrowing costs if any that are attributable to the acquisition or construction ofqualifying tangible and intangible assets that necessarily take a substantial period oftime to get ready for their intended use which are capitalized as part of the cost ofsuch assets.
Some borrowing costs are added to the value of the receivable partiesas those are the borrowing costs incurred by the company on their behalf.
16. Provisions and Contingent liabilities
A provision is recognized if as a result of a past event the Companyhas a present legal obligation that is reasonably estimable and it is probable that anoutflow of economic benefits will be required to settle the obligation. Provisions aredetermined by the best estimate of the outflow of economic benefits required to settle theobligation at the reporting date. Where no reliable estimate can be made a disclosure ismade as contingent liability. A disclosure for a contingent liability is also made whenthere is a possible obligation or a present obligation that may but probably will notrequire an outflow of resources. Where there is a possible obligation or a presentobligation in respect of which the likelihood of outflow of resources is remote noprovision or disclosure is made.
The company's significant leasing arrangements are in respect ofoperating leases for premises (godowns office spaces etc.). The leasing arrangementswhich are not non-cancellable range between eleven months and five years generally andare usually renewable by mutual consent on agreed terms. The aggregate lease rentals forthe year payable are charged as rent.
18. Taxes on income
Current Tax is determined as the amount of tax payable in respect oftaxable income for the year. Deferred Tax is recognized subject to consideration ofprudence on timing differences being the difference between taxable incomes andaccounting income that originate in one period and are capable of reversal in one or moresubsequent periods. Deferred Tax Assets arising on account of unabsorbed depreciation orcarry forward of tax losses are recognized only to the extent that there is virtualcertainty supported by convincing evidence that sufficient future taxable income will beavailable against which such Deferred Tax Assets can be realized.
Minimum Alternate Tax (MAT) if any paid in accordance with the taxlaws which gives future economic benefits in the form of adjustment to future income taxliability is considered as an asset if there is convincing evidence that the Company willpay normal income tax against which the MAT paid will be adjusted.
19. Segment Reporting
The company had only a single segment i.e. Trading upto FY 2018-19.Hence the accounting standard for segment reporting was not applicable in FY 2018-19.However in the FY 2019-20 the company has commenced manufacturing at its new branch atSabarkantha Gujarat. As the assets of such new segment exceeds 10% of the total assetsand the loss from such segment also exceeds 10% of total loss we have disclosed thesegment wise assets segment wise loss as well as segment wise turnover.