To The Members of
Sabrimala Industries India Limited
(formerly known as Sabrimala Leasing and Holdings Limited)
Report on the Ind AS financial statements
1. We have audited the accompanying Ind AS financial statements of M/s SabrimalaIndustries India Limited (formerly known as Sabrimala Leasing and Holdings Limited)(hereinafter referred to as "the company") which comprise the Balance Sheet asat March 31 2019 the Statement of Profit and Loss and Cash flow statement for the yearthen ended and a summary of significant accounting policies and other explanatoryinformation.
2. In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid financial statements give the information required by theCompanies Act2013 ("The Act") in the manner so required and give a true andfair view in conformity with the accounting principles generally accepted in India of thestate of affairs of the Company as at March 31 2019 and total comprehensiveincome(comprising of loss and other comprehensive income) changes in equity and its cashflows for the year then ended.
Basis of Opinion
3. We conducted our audit in accordance with the Standards on Auditing (SAs) specifiedunder section 143(10) of the Act. Our responsibilities under those Standards are furtherdescribed in the Auditor's responsibilities for the Audit of the Financial Statementssection of our report. We are independent of the Company in accordance with the Code ofEthics issued by the Institute of Chartered Accountants of India together with the ethicalrequirements 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 opinion.
Key Audit Matters
4. 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 in"Annexure-1" to this report to be the key audit matters to be communicated inour report.
5. 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 have nothing to report in this regard.
Management's Responsibility for the Ind AS financial statements
6. The Company's Board of Directors is responsible for the matters stated in section134(5) of the Companies Act 2013 ("the Act") with respect to the preparation ofthese Ind AS financial statements that give a true and fair view of the financialposition financial performance and cash flows of the Company in accordance with theaccounting principles generally accepted in India including the Accounting Standardsspecified under Section 133 of the Act. This responsibility also includes the maintenanceof adequate accounting records in accordance with the provision of the Act forsafeguarding of the assets of the Company and for preventing and detecting the frauds andother irregularities; selection and application of appropriate accounting policies; makingjudgments and estimates that are reasonable and prudent; and design implementation andmaintenance of internal financial controls that were operating effectively for ensuringthe accuracy and completeness of the accounting records relevant to the preparation andpresentation of the Ind AS financial statements that give a true and fair view and arefree from material misstatement whether due to fraud or error.
7. 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 financial statements
8. Our objectives are to obtain reasonable assurance about whether the standalonefinancial statements as awhole 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.
9. 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 standalone financialstatements whether due to fraud or error design and perform audit procedures responsiveto those risks and obtain audit evidence that is sufficient and appropriate to provide abasis for our opinion. The risk of 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 controls.? Obtain an understanding of internal financial controls relevant to the audit in order todesign audit procedures that are appropriate in the circumstances. Under section 143(3)(i)of the Act we are also responsible for expressing our opinion on whether the Company hasadequate internal financial controls system in place and the operating effectiveness ofsuch controls. ? Evaluate the appropriateness of accounting policies used and thereasonableness of accounting estimates and related disclosures made by management. ?Conclude on the appropriateness of management's use of the going concern basis ofaccounting and based on the audit evidence obtained whether a material uncertaintyexists related to events or conditions that may cast significant doubt on the Company'sability to continue as a going concern. If we conclude that a material uncertainty existswe are required to draw attention in our auditor's report to the related disclosures inthe 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 cease to continueas 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.
10. Materiality is the magnitude of misstatements in the standalone financialstatements that individually or in aggregate makes it probable that the economicdecisions of a reasonably knowledgeable user of the financial statements may beinfluenced. We consider quantitative materiality and qualitative factors in (i) planningthe scope of our audit work and in evaluating the results of our work; and (ii) toevaluate the effect of any identified misstatements in the financial statements. 11. Wecommunicate with those charged with governance regarding among other matters the plannedscope and timing of the audit and significant audit findings including any significantdeficiencies in internal control that we identify during our audit. 12. We also providethose charged with governance with a statement that we have complied with relevant ethicalrequirements regarding independence and to communicate with them all relationships andother matters that may reasonably be thought to bear on our independence and whereapplicable related safeguards.
13. From the matters communicated with those charged with governance we determinethose matters that were of most significance in the audit of the standalone financialstatements of the current period and are therefore the key audit matters. We describethese matters in our auditor's report unless law or regulation precludes public disclosureabout the matter or when in extremely rare circumstances we determine that a mattershould not be communicated in our report because the adverse consequences of doing sowould reasonably be expected to outweigh the public interest benefits of suchcommunication.
Report on other legal and regulatory requirements
14. 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" a statement on the matters specified in theparagraph 3 and 4 of the Order to the extent applicable. 15. As required by section143(3) of the Act we report that; a) We have sought and obtained all theinformation and explanations which to the best of our knowledge and belief were necessaryfor the purposes of our audit. b) In our opinion proper books of account as required bylaw have been kept by the Company so far as appears from our examination of those books.
c) The Balance Sheet the Statement of Profit and Loss and the Cash Flow Statementdealt with by this Report are in agreement with the books of accounts.
d) In our opinion the aforesaid Ind AS financial statements comply with the AccountingStandards specified under Section 133 of the Act.
e) On the basis of written representations received from the directors as on March 312019 taken on record by the Board of Directors none of the directors is disqualified ason March 31 2019 from being appointed as a director in terms of Section 164(2) of theAct.
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 B";
g) With respect to the other matters to be included in the Auditor's Report inaccordance with the Rule 11 of the Companies (Audit and Auditors) Rules 2014 in ouropinion and to the best of our information and according to the explanations given to us:
i. The company does not have any pending litigations as on March 31 2019which haveimpact on its financial position in its Ind AS financial statements;
ii. The Company does not have any derivatives contract and in respect of others longterm contracts there are no material foreseeable losses as on March 31 2019.
iii. There were no amounts which were required to be transferred to the investoreducation and protection fund by the company during the year ended March 31 2019. iv. Thereporting on disclosures relating to specified bank notes is not applicable to the companyfor year ended March 31 2019
For Khatter& Associates
Place : New Delhi
Date : May 30 2019
Annexure "A'' to the "Independent Auditors report"
[The annexure referred to in Paragraph 6 (i) under the heading of "Report on otherLegal & Regulatory Requirements" of Independent Auditors' Report to the membersof the Company on the Ind AS financial statements for the year ended 31 March 2019 wereport that :
(i) (a) The Company has maintained proper records showing full particulars includingquantitative details and situation of property plant and equipments and intangibleassets.
(b) The property plant and equipments have been physically verified by the Managementaccording to the programme of periodical verification in phased manner which in ouropinion is reasonable having regard to the size of the Company and the nature of itsproperty plant and equipments. The discrepancies noticed on such physical verificationwere not material.
(c) According to the information and explanations given to us and on the basis of ourexamination of the records of the company title deeds of the immovable properties areheld in the name of the Company.
(ii) Physical verification of inventory has been conducted at reasonable intervals bythe management. Discrepancies noticed on physical verification of inventory as compare torecords were not material.
(iii) In our opinion and according to the information and explanation given to us theCompany has not granted any loan secured or unsecured to any companies firms limitedliability partnerships or other parties covered in the register maintained under Section189 of the Companies Act 2013 except advance amounting Rs. 3357888/- towards capitalcontribution to M/s Sabrimala Industries LLP which is wholly owned subsidiary of company.Accordingly the provisions of Clause 3(iii) (a) (b) & (c) of the Order are notapplicable to the Company.
(iv) The Company has complied with the provisions of section 185 & 186 of theCompanies Act 2013 in respect of loans investments guarantees and securities.
(v) In our opinion and according to the information and explanations given to us theCompany has not accepted any deposits from public within the meaning of the Section 73to76 of the Act and rules framed there under and the directives issued by Reserve bank ofIndia or any other relevant provisions of the Act. We have been informed that no order hasbeen passed by the Company Law Board or National Company Law Tribunal or Reserve Bank ofIndia or any Court or other tribunal in this regard. (vi) The Central Government has notprescribed the maintenance of cost records under section 148(1) of the Act for any of theactivities of the company. Therefore this clause is not applicable to the company.
(vii) (a) According to the information and explanations given to us and on the basis ofour examination of the records of the Company amounts deducted / accrued in the books ofaccount in respect of undisputed statutory dues including in provident fund income-taxservice tax value added tax central excise duty other material statutory dues have beenregularly deposited during the year by the company with the appropriate authorities.
(b) According to the information and explanations given to us no undisputed amountspayable in respect of income tax goods and service tax value added tax cess and othermaterial statutory dues were in arrears as at 31 March 2019 for a period of more than sixmonths from the date they became payable. However delay in the deposit of tax deducted atsource was noticed.
(c) According to the information and explanations given to us there are no materialdues of income tax and goods and service tax which have not been deposited with theappropriate authorities on account of any dispute.
(viii) The Company does not have any loans or borrowings from any financialinstitution banks government or debenture holders during the year nor has it issued anydebenture as at balance sheet date the provisions clause 3(viii) of the order are notapplicable to the company.
(ix) The Company did not raise any money by way of initial public offer or furtherpublic offer (including debt instruments) and term loans during the year. Accordinglyparagraph 3 (ix) of the Order is not applicable.
(x) According to the information and explanations given to us no material fraud by theCompany or on the Company by its officers or employees has been noticed or reported duringthe course of our audit.
(xi) The Companyhas paid/provided for managerial remuneration in accordance with therequisite approval mandated by the provisions of section 197 read with schedule v of theAct.
(xii) In our opinion and according to the information and explanations given to us theCompany is not a nidhi company. Accordingly paragraph 3(xii) of the Order is notapplicable.
(xiii) According to the information and explanations given to us and based on ourexamination of the records of the Company the transactions with the related parties arein compliance with sections 177 and 188 of the Companies Act 2013 where applicable anddetails of such transactions have been disclosed in terms of the Indian AccountingStandard (Ind AS) 24 Related Party disclosures specified under section 133 of the Act.(xiv) According to the information and explanations give to us and based on ourexamination of the records of the Company the Company has not made any preferentialallotment or private placement of shares or fully or partly convertible debentures duringthe year. Accordingly paragraph 3 (xiv) of the Order is not applicable.
(xv) According to the information and explanations given to us and based on ourexamination of the records of the Company the Company has not entered into non-cashtransactions with directors or persons connected with them. Accordingly paragraph 3(xv)of the Order is not applicable.
(xvi) According to the information and explanations given to us and based on ourexamination of the records of the Company the Company is not required to be registeredunder section 45-IA of the Reserve Bank of India Act 1934.
For Khatter& Associates
Place : New Delhi
Date : May 30 2019
Annexure "B'' to the "Independent Auditors report"
Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section143 of the Companies Act 2013 ("the Act")
We have audited the internal financial controls over financial reporting ofSabrimalaIndustriesIndia Limited (formerly known as SabrimalaLeasing and Holdings Limited ("theCompany") as of 31 March 2019 in conjunction with our audit of the Ind AS financialstatements of the Company for the year ended on that date.
Management's Responsibility for Internal Financial Controls
The Company's management is responsible for establishing and maintaining internalfinancial controls based on the internal control over financial reporting criteriaestablished by the Company considering the essential components of internal control statedin the Guidance Note on Audit of Internal Financial Controls over Financial Reportingissued by the Institute of Chartered Accountants of India (ICAI'). Theseresponsibilities include the design implementation and maintenance of adequate internalfinancial controls that were operating effectively for ensuring the orderly and efficientconduct of its business including adherence to company's policies the safeguarding ofits assets the prevention and detection of frauds and errors the accuracy andcompleteness of the accounting records and the timely preparation of reliable financialinformation as required under the Companies Act 2013.
Our responsibility is to express an opinion on the Company's internal financialcontrols over financial reporting based on our audit. We conducted our audit in accordancewith the Guidance Note on Audit of Internal Financial Controls over Financial Reporting(the "Guidance Note") and the Standards on Auditing issued by ICAI and deemedto be prescribed under section 143(10) of the Companies Act 2013 to the extentapplicable to an audit of internal financial controls both applicable to an audit ofInternal Financial Controls and both issued by the Institute of Chartered Accountants ofIndia. Those Standards and the Guidance Note require that we comply with ethicalrequirements and plan and perform the audit to obtain reasonable assurance about whetheradequate internal financial controls over financial reporting was established andmaintained and if such controls operated effectively in all material respects.
Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal financial controls system over financial reporting and their operatingeffectiveness. Our audit of internal financial controls over financial reporting includedobtaining an understanding of internal financial controls over financial reportingassessing the risk that a material weakness exists and testing and evaluating the designand operating effectiveness of internal control based on the assessed risk. The proceduresselected depend on the auditor's judgment including the assessment of the risks ofmaterial misstatement of the Ind AS 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 Company's internal financial controls systemover financial reporting.
Meaning of Internal Financial Controls over Financial Reporting
The company's internal financial control over financial reporting is a process designedto provide reasonable assurance regarding the reliability of financial reporting and thepreparation of Ind AS financial statements for external purposes in accordance withgenerally accepted accounting principles. A company's internal financial control overfinancial reporting includes those policies and procedures that (1) pertain to themaintenance of records that in reasonable detail accurately and fairly reflect thetransactions and dispositions of the assets of the company; (2) provide reasonableassurance that transactions are recorded as necessary to permit preparation of Ind ASfinancial statements in accordance with generally accepted accounting principles and thatreceipts and expenditures of the company are being made only in accordance withauthorizations of management and directors of the company; and (3) provide reasonableassurance regarding prevention or timely detection of unauthorized acquisition use ordisposition of the company's assets that could have a material effect on the Ind ASfinancial statements.
Inherent 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.
In our opinion to the best of our information and according to the explanations givento us the Company has in all material respects an adequate internal financial controlssystem over financial reporting and such internal financial controls over financialreporting were operating effectively as at March 31 2019 based on the internal controlover financial reporting criteria established by the Company considering the essentialcomponents of internal control stated in the Guidance Note on Audit of Internal FinancialControls Over Financial Reporting issued by the Institute of Chartered Accountants ofIndia.
For Khatter& Associates
Place : New Delhi
Date : May 30 2019
Key audit matter description
Assessment of impairment of Property Plant and Equipment (Refer Note 6 to theFinancial Statements)
Property plant and equipment represent 27% of total assets on the balance sheet. Ifthese were to be impaired it would have a significant impact on reported loss and thebalance sheet position of the Group.
Impairment assessment of property plant and equipment was considered to be a key auditmatter as the group has been incurring losses in the past few years and there is a riskthat the recoverable amount could be less than the carrying value of assets.
The Management's assessment of impairment depends on the valuation approach followed toestimate the fair value of the assets and cost to sell and there is significant judgmentin respect of: ? Estimated current replacement cost of the buildings taking in toconsideration the specifications of the building such as (i) type of construction (ii)quality and quantity of materials (iii) area and (iv) height of the buildings etc. ?Estimated current replacement costs for all other assets based on the price index; and ?Discounted rate and salvage value percentage estimated to arrive at fair value and cost tosell respectively.
The Management has concluded that the recoverable amount is higher than their carryingvalues and that no impairment provision is required.
How our audit addressed the key audit matter
Our procedures in relation to management's impairment assessment of property plant andequipment included: ? Understanding and evaluating the controls and testing the operatingeffectiveness of the controls related to estimating the fair value of the assets ; ?Understanding the methodologies used by the external valuer if any engaged by theManagement to estimate resale values ; ? Evaluating the external valuer's competencecapabilities independence and objectivity ; ? Testing the accuracy and appropriateness ofthe input data including the specifications provided by the Management to the externalvaluer ; ? Together with the auditor's valuation experts assessing the following a. Valuation methodology b. Assumptions used in the estimation of the resale valuescurrent replacement cost discount rates and salvage value. c. Performed sensitivityanalysis of possible changes to the key assumptions.
Based on the above procedures the results of the Management's assessment of impairmentof Property Plant and Equipment was considered to be appropriate.
For Khatter& Associates
Place : New Delhi
Date : May 30 2019