To the Members of Salora International Limited
Report on the Audit of the Standalone Financial Statements Opinion
We have audited the accompanying standalone financial statements of SaloraInternational Limited (the Company') which comprise the Balance Sheet as at March31 2019 the Statement of Profit and Loss (including Other Comprehensive Income) theStatement of Changes in Equity and the Statement of Cash Flows for the year ended on thatdate and a summary of the significant accounting policies and other explanatoryinformation (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 loss 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.
Emphasis of Matters
We draw attention to the following matters
i) The Company has inventories as at 31st March 2019 of Rs. 5445.51 lacs at cost whichincludes old inventories against which provision of Rs 169.53 lacs has been considered.Sale done from ageing inventories are not below cost. The additional provision if any oninventories shall be accounted for at the time of disposal / realization as stated in noteno 43 of the standalone financial statements.
ii) Contingent liabilities of Rs 6482.77 lacs related to Sales tax Excise duty Incometax etc against which amount deposited Rs 862.40 lacs which are contested by the companyat various forums. However management believes that based on legal advice the outcome ofthese contingencies will be favorable and that outflow of economic resources is notprobable as stated in note no 44 of the standalone financial statements.
iii) The Company has material undisputed statutory dues recoverable of Sales taxRs.335.98 lacs Income tax Rs.109.82 lacs Service tax Rs.14.74 lacs and Modvat Rs.7.82lacs has been considered good as stated in note no 45 of the standalone financialstatements.
iv) For deferred tax assets on unabsorbed depreciation business losses impairmentprovisions and capital losses etc recognized net of deferred tax liability on account ofdifference in block of fixed assets amounting to Rs 1834.64 lacs as at 31st March 2019 asthe management is confident for realization of the same as stated in note no 46 of thestandalone financial statements.
v) The Company holds Investments of Rs 341.48 lacs in its subsidiary Salora ComponentLimited which has net worth of Rs 89.54 lacs as on 31st March 2019. Company has enteredinto Share Purchase agreement dated on 30th March 2019 to sell the shares at cost subjectto the terms and conditions of this agreement and in consideration thereof for sell andtransfer of shares on compliance of all transfer formalities as stated in note no 47 ofthe standalone financial statements.
vi) Pending confirmations / statement of accounts / follow up documents of old debitbalances of certain trade payables and advances amounting to Rs 84.37 lacs have beenconsidered good as the management is hopeful of recovery of the same as stated in note no48 of the standalone financial statements. Our opinion is not modified in respect of thesematter stated above.
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 inour opinion there are no any such matter to be reported by us.
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 Board'sReport including Annexures to Board's Report Management Discussion and Analysis BusinessResponsibility Report and Report on Corporate Governance but does not include thestandalone financial statements and our auditors' report thereon. The above-referredinformation is expected to be made available to us after the date of this audit report.
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 identified above when it becomes available and in doingso consider whether the other information is materially inconsistent with the standalonefinancial statements or our knowledge obtained in the audit or otherwise appears to bematerially misstated. If based on the work we have performed we conclude that there is amaterial misstatement of this other information; we are required to report that fact.
When we read the other information if we conclude that there is a materialmisstatement therein we are required to communicate the matter to those charged withgovernance and take appropriate actions necessitated by the circumstances and theapplicable laws and regulations.
Responsibilities of Management and Those Charged with Governance for the StandaloneFinancial 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 internalcontrol.
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 report. However future events or conditions may cause the Company to cease tocontinue 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 Ordeh') issuedby the Central Government of India in terms of sub-section (11) of section 143 of the Actwe give in the Annexure-A a statement on the matters specified in the paragraph 3 and 4of the order.
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.
c. The Balance Sheet the Statement of Profit and Loss (including other ComprehensiveIncome) Statement of Changes in Equity and the Statement of Cash Flows dealt with by thisReport are in agreement with the relevant books of account.
d. In our opinion the aforesaid standalone financial statements comply with the Ind ASspecified under Section 133 of the Act read with Rule 7 of the Companies (Accounts)Rules 2014.
e. On the basis of the written representations received from the directors as on 31stMarch 2019 taken on record by the Board of Directors none of the directors isdisqualified as on 31st 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 with reference tofinancial statements of the Company and the operating effectiveness of such controlsrefer to our separate Report in ''Annexure B. Our report expresses an unmodifiedopinion on the adequacy and operating effectiveness of the Company's internal financialcontrols with reference to financial statements.
g. With respect to the other matters to be included in the Auditor's Report inaccordance with the requirements of Sec 197(16) of the Act as amended:
In our opinion and to the best of our information and according to the explanationsgiven to us the remuneration paid by the Company to its directors during the year is inaccordance with the provisions of section 197 of the Act.
h. With 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. Refer Note no 37 to the standalonefinancial statements.
II. The Company did not have any long term contracts including derivative contracts forwhich there were any material
foreseeable losses and
III. There were no amount which were required to be transferred to the InvestorEducation and Protection Fund by the Company.
For R Gopal & Associates
Firm Registration No.: 000846C
Membership No.: 093209
Date : 25th May 2019
Place : New Delhi
Annexure A to the Independent Auditors' Report
The Annexure referred to in Independent Auditors' Report to the members of the Companyon the standalone financial statements for the year ended 31st March 2019 we report that:
(i) a) The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets.
b) Fixed assets have been physically verified by the management during the year. Asexplained to us no major discrepancies were noticed on such verification.
c) According to the information and explanation given to us and on the basis of ourexamination of the records of the Company the title deeds of immovable properties areheld in the name of the company except Lease hold land at D-13/4 Okhla Industrial AreaPhase II is in the Company's old name i.e Electronics Consortium Private Limited andnecessary steps are being taken for transfer in the company name as explained by themanagement.
(ii) Inventories have been physically verified by the management during the year atreasonable intervals except service spares and goods material in bond transit or withthird party. As per the information and explanations given to us no materialdiscrepancies were noticed on physical verification of inventories.
(iii) According to the information and explanation given to us the Company's has notgranted any loans secured or unsecured to companies firms Limited LiabilityPartnerships or other parties listed in the register maintained under section 189 of theCompanies Act 2013 and hence sub clause (a) (b) (c) are not applicable.
(iv) In our opinion and according to the information and explanations given to us theCompany has neither given any loans u/s 185 of the companies Act 2013 to its directors andnor has given any loans and guarantee or provided any security in connection with a loanby a company to any person or other body corporate and acquiring securities of any otherbody corporate by the company hence clause (iv) is not applicable to the company.
(v) The company has not accepted any deposits from the public in accordance with theprovisions of sections 73 to 76 of the Act and the Rules framed there under.
(vi) We have broadly reviewed the books of account maintained by the company pursuantto the Rules made by the Central Government of India maintenance of cost records has beenprescribed under sub section (1) of section 148 of the Companies Act 2013 and are of theopinion that prima facie the prescribed accounts and records are being made andmaintained. We have not however made a detailed examination of the same.
(vii) a) According to the records of the Company and information and explanations givento us Provident Fund Employees State Insurance Income Tax Duty of Customs Goods &Service Tax Cess and other material statutory dues have been deposited regularly duringthe year with the appropriate authorities. According to the records of the Company andinformation and explanations given to us there were no arrears of outstanding statutorydues as at 31st March 2019 for a period of more than six months from the date they becamepayable. b) According to the information and explanations given to us there are no duesof Income Tax Goods and Service Tax Sales Tax Service Tax Duty of Customs Duty ofExcise Value Added Tax Cess which have been not deposited on account of any disputeexcept the following:
|Name of the Statute ||Nature of the dues ||Amount not Deposited (Rs Lacs ) ||Period to which the amount relates ||Forum where dispute is pending |
| ||Sales Tax ||26.03 ||2001-2004 ||Supreme Court |
| ||Sales Tax ||0.19 ||2001-2002 ||High Court |
|Sales Tax Law ||Sales Tax ||1306.67 ||2000-2014 ||Sales Tax Commissioner |
| ||Sales Tax ||25.92 ||1999-2000 ||Appellate Authority - High Court |
| ||Sales Tax ||2.99 ||1995-1996 ||Remand back to Tribunal |
| ||Sales Tax ||0.78 ||2000-2001 ||Tribunal |
|Finance Act 1994 ||Service Tax on Royalty ||1.97 ||2002-2003 ||Excise Commissioner |
|Central Excise Act 1944 ||Excise Duty ||1835.21 ||1993-1994 to 2003-2004 ||Supreme Court |
| ||Penalty ||2435.22 ||1993-1994 to 2003-2004 ||Supreme Court |
| ||Excise Duty ||3.75 ||2000-2003 ||Remand back to Assessing officer |
| ||Excise Duty ||1.86 ||2000-2003 ||CESTAT |
(viii) According to the records of the Company examined by us and the information andexplanation given to us the Company has not defaulted in repayments of dues to any banksand financial institution. The Company does not have any loan and borrowings fromgovernment or dues to debenture holders during the year.
(ix) The Company did not raise any money by way of initial public offer or furtherpublic offer (including debt instruments) or term loan and hence clause (ix) is notapplicable to the company.
(x) According to the information and explanations given to us no fraud by the Companyor on the Company by its officers or employees has been noticed or reported during theyear.
(xi) According to the information and explanation given to us and to best of ourknowledge we are of the opinion that the managerial remuneration has been paid orprovided in accordance with the requisite approvals mandated by the provisions of section197 read with Schedule V to the Companies Act.
(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 to the company.
(xiii) According to the information and explanation given to us and based on ourexamination of the records all the transactions with related parties are in compliancewith section 177 and
188 of the Companies Act 2013 and all the details have been disclosed in the financialstatements as per applicable Indian Accounting Standard.
(xiv) According to the information and explanation given to us and to the best of ourknowledge the Company has not made any preferential allotment or private placement ofshares or fully or partly convertible debentures during the year. Accordingly paragraph3(xiv) of the Order is not applicable to the company.
(xv) According to the information and explanation given to us and to the best of ourknowledge the Company has not entered into any non-cash transactions during the year withdirectors or persons connected with him.
(xvi) The Company is not required to be registered under section 45-IA of the ReserveBank of India Act 1934.
For R Gopal & Associates
Firm Registration No.: 000846C
Membership No.: 093209
Place: New Delhi
Date : 25th May 2019
Report on the Internal financial controls with reference to financial statements underClause (i) of Sub-section 3 of Section 143 of the Companies Act 2013 (theAct)
We have audited the internal financial controls with reference to financial statementsof Salora International Limited (the Company) as of 31st March 2019 inconjunction with our audit of the standalone financial statements of the Company for theyear 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. These responsibilities includethe design implementation and maintenance of adequate internal financial controls thatwere operating effectively for ensuring the orderly and efficient conduct of its businessincluding adherence to the Company's policies the safeguarding of its assets theprevention and detection of frauds and errors the accuracy and completeness of theaccounting records and the timely preparation of reliable financial information asrequired under the Act..
Our responsibility is to express an opinion on the Company's internal financialcontrols with reference to financial statements based on our audit. We conducted our auditin accordance with the Guidance Note on Audit of Internal Financial Controls overFinancial Reporting (the Guidance Note) and the Standards on Auditing asspecified under section 143(10) of the Act to the extent applicable to an audit ofinternal financial controls both applicable to an audit of Internal Financial Controlsand both issued by the Institute of Chartered Accountants of India. 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 was established and maintained and if suchcontrols operated effectively in all material respects. Our audit involves performingprocedures to obtain audit evidence about the adequacy of the internal financial controlswith reference to financial statements and their operating effectiveness. Our audit ofinternal financial controls with reference to financial statements included obtaining anunderstanding of internal financial controls with reference to financial statementsassessing 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 standalone financial statements whether due to fraud orerror. We believe that the audit evidence we have obtained is sufficient and appropriateto provide a basis for our audit opinion on the Company's internal financial controls withreference to financial statements.
Meaning of Internal Financial Controls with reference to financial statements
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 of records that in reasonable detail accurately andfairly reflect the transactions and dispositions of the assets of the company;
2) Provide reasonable assurance that transactions are recorded as necessary to permitpreparation of financial statements in accordance with generally accepted accountingprinciples and that receipts and expenditures of the company are being made only inaccordance with authorizations of management and directors of the company; and
3) Provide reasonable assurance regarding prevention or timely detection ofunauthorized acquisition use or disposition of the company's assets that could have amaterial effect on the financial statements.
Inherent Limitations of Internal Financial Controls with reference to financialstatements
Because of the inherent limitations of internal financial controls with reference tofinancial statements including the possibility of collusion or improper managementoverride of controls material misstatements due to error or fraud may occur and not bedetected. Also projections of any evaluation of the internal financial controls withreference to financial statements to future periods are subject to the risk that theinternal financial control with reference to financial statements may become inadequatebecause of changes in conditions or that the degree of compliance with the policies orprocedures may deteriorate.
In our opinion the Company has in all material respects an adequate internalfinancial controls with reference to financial statements and such internal financialcontrols with reference to standalone financial statements were operating effectively asat 31st March 2019 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 which needs to be strengthened.
For R Gopal & Associates
Firm Registration No.: 000846C
Membership No.: 093209
Date : 25th May 2019
Place : New Delhi