To the Members of Sandhar Technologies Limited
Report on the Audit of the Standalone Financial Statements
We have audited the Standalone Financial Statements of Sandhar Technologies Limited(the Company) which comprise the Standalone Balance Sheet as at 31 March2020 and the Standalone Statement of Profit and Loss (including Other ComprehensiveIncome) Standalone Statement of Changes in Equity and Standalone Statement of Cash Flowsfor the year then ended and notes to the Standalone Financial Statements including asummary of the significant accounting policies and other explanatory information.
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 (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 31 March 2020 and Profit and Other ComprehensiveIncome Changes in Equity and its Cash Flows for the year ended on that date.
Basis for Opinion
We conducted our audit in accordance with the Standards on Auditing (SAs) specifiedunder section 143(10) of the Act. Our responsibilities under those SAs are furtherdescribed in the Auditors' Responsibilities for the Audit of the Standalone FinancialStatements section of our report. We are independent of the Company in accordance with theCode of Ethics issued by the Institute of Chartered Accountants of India together with theethical requirements that are relevant to our audit of the Standalone Financial Statementsunder the provisions of the Act and the Rules thereunder and we have fulfilled our otherethical responsibilities in accordance with these requirements and the Code of Ethics. Webelieve that the audit evidence we have obtained is sufficient and appropriate to providea basis for our opinion on the Standalone Financial Statements.
Key Audit Matter
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.
Description of Key Audit Matter
a) Revenue recognition
See note 17 to the Standalone Financial Statements
|The key audit matter ||How the matter was addressed in our audit |
|As disclosed in Note 17 to the Standalone Financial Statements the Company's revenue from operations for the year ended 31 March 2020 was INR 164002.85 Lacs (Previous year INR 203699.38 Lacs). ||Our audit procedures included: |
|The Company's revenue is derived primarily from sale of products which comprises safety and security systems and its associated components for the automotive industry. ||- Assessed the appropriateness of the accounting policy for revenue recognition as per the relevant accounting standard; |
|Standards on Auditing presume that there is fraud risk with regard to revenue recognition. Also revenue is one of the key performance indicators of the Company which makes it susceptible to misstatement. ||- Evaluated the design and implementation of key controls in relation to revenue recognition and tested the operating effectiveness of such controls for a sample of transactions; |
|In view of the above we have identified revenue recognition as a key audit matter. ||- Involved our IT specialists to assist us in testing of key IT system controls which impact relating to revenue recognition; |
| ||- Performed detailed testing by selecting samples of revenue transactions recorded during and after the year. For such sample verified the underlying documents including customer acceptance to assess whether these are recognised in the appropriate period in which control is transferred; |
| ||- Tested sample journal entries for revenue recognised during the year selected based on specified risk-based criteria to identify unusual transactions. |
| ||- Assessed the adequacy of the disclosures made in accordance with the relevant accounting standard. |
The Company's management and Board of Directors are responsible for the otherinformation. The other information comprises the information included in the Company'sannual report but does not include the Standalone Financial Statements and our auditor'sreport 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 in the audit or otherwise appears to be materially misstated. If based on thework we have 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 the Standalone FinancialStatements
The Company's Management and Board of Directors are responsible for the matters statedin section 134(5) of the Act with respect to the preparation of these Standalone FinancialStatements that give a true and fair view of the State of Affairs Profit and OtherComprehensive Income Changes in Equity and Cash Flows of the Company in accordance withthe accounting principles generally accepted in India including the Indian AccountingStandards (Ind AS) specified under section 133 of the Act. This responsibility alsoincludes maintenance of adequate accounting records in accordance with the provisions ofthe Act for safeguarding of the assets of the Company and for preventing and detectingfrauds and other irregularities; selection and application of appropriate accountingpolicies; making judgments and estimates that are reasonable and prudent; and designimplementation and maintenance of adequate internal financial controls that were operatingeffectively for ensuring accuracy and completeness of the accounting records relevant tothe preparation and presentation of the Standalone Financial Statements that give a trueand fair view and are free from material misstatement whether due to fraud or error.
In preparing the Standalone Financial Statements the Management and Board of Directorsare responsible for assessing the Company's ability to continue as a going concerndisclosing as applicable matters related to going concern and using the going concernbasis of accounting unless the Board of Directors either intends to liquidate the Companyor to cease operations or has no realistic alternative but to do so.
The Board of Directors is also responsible for overseeing the Company's financialreporting process.
Auditor's Responsibilities for the Audit of the Standalone Financial Statements
Our objectives are to obtain reasonable assurance about whether the 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 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 control.
Obtain an understanding of internal control relevant to the audit in order to designaudit procedures that are appropriate in the circumstances. Under section 143(3)(I) of theAct we are also responsible for expressing our opinion on whether the Company hasadequate internal financial controls with reference to Standalone Financial Statements inplace and the operating effectiveness of such controls.
Evaluate the appropriateness of accounting policies used and the reasonableness ofaccounting estimates and related disclosures in the Standalone Financial Statements madeby the Management and Board of Directors.
Conclude on the appropriateness of the Management and Board of Directors use of thegoing concern basis of accounting and based on the audit evidence obtained whether amaterial uncertainty exists related to events or conditions that may cast significantdoubt on the Company's ability to continue as a going concern. If we conclude that amaterial uncertainty exists we are required to draw attention in our auditor's report tothe related disclosures in the Standalone Financial Statements or if such disclosures areinadequate to modify our opinion. Our conclusions are based on the audit evidenceobtained up to the date of our auditor's report. However future events or conditions maycause the Company to cease to continue as a going concern.
Evaluate the overall presentation structure and content of the Standalone FinancialStatements including the disclosures and whether the Standalone Financial Statementsrepresent the underlying transactions and events in a manner that achieves fairpresentation.
We communicate with those charged with governance regarding among other matters theplanned scope and timing of the audit and significant audit findings including anysignificant deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have compliedwith relevant ethical requirements regarding independence and to communicate with themall relationships and other matters that may reasonably be thought to bear on ourindependence and where applicable related safeguards.
From the matters communicated with those charged with governance we determine thosematters that were of most significance in the audit of the Standalone Financial Statementsof the current period and are therefore the key audit matters. We describe these mattersin our auditor's report unless law or regulation precludes public disclosure about thematter or when in extremely rare circumstances we determine that a matter should not becommunicated in our report because the adverse consequences of doing so would reasonablybe expected to outweigh the public interest benefits of such communication.
Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditor's Report) Order 2016 (the Order)issued by the Central Government in terms of section 143 (11) of the Act we give in theAnnexure A a statement on the matters specified in paragraphs 3 and 4 of theOrder 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 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 Standalone Balance Sheet the Standalone Statement of Profit and Loss (includingOther Comprehensive Income) the Standalone Statement of Changes in Equity and theStandalone Statement of Cash Flows dealt with by this Report are in agreement with thebooks of account.
d) In our opinion the aforesaid Standalone Financial Statements comply with the Ind ASspecified under section 133 of the Act.
e) On the basis of the written representations received from the directors as on 31March 2020 taken on record by the Board of Directors none of the directors isdisqualified as on 31 March 2020 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 toStandalone 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 the Auditor's Report inaccordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014 in our opinionand to the best of our information and according to the explanations given to us:
i. The Company has disclosed the impact of pending litigations as at 31 March 2020 onits financial position in its Standalone Financial Statements - Refer Note 31 to theStandalone Financial Statements;
ii. The Company did not have any long-term contracts including derivative contracts forwhich there were any material foreseeable losses;
iii. There were no amounts which were required to be transferred to the InvestorEducation and Protection Fund by the Company; and
iv. The disclosures in the Standalone Financial Statements regarding holdings as wellas dealings in specified bank notes during the period from 8 November 2016 to 30 December2016 have not been made in these Standalone Financial Statements since they do not pertainto the financial year ended 31 March 2020.
(C) With respect to the matter to be included in the Auditor's Report under Section197(16):
In our opinion and according to the information and explanations given to us theremuneration paid by the Company to its directors during the current year is in accordancewith the provisions of Section 197 of the Act. The remuneration paid to any director isnot in excess of the limit laid down under Section 197 of the Act. The Ministry ofCorporate Affairs has not prescribed other details under Section 197(16) which arerequired to be commented upon by us.
ANNEXURE A REFERRED TO IN OUR INDEPENDENT AUDITOR'S REPORT
to the members of Sandhar Technologies Limited on the Standalone Financial Statementsfor the year ended 31 March 2020.
(I) (a) According to the information and explanations given to us the Company hasmaintained proper records showing full particulars including quantitative details andsituation of fixed assets (property plant and equipment).
(b) According to the information and explanations given to us the Company has aregular programme of physical verification of its fixed assets by which all fixed assetsare verified once in two years. In our opinion this periodicity of physical verificationis reasonable having regard to the size of the Company and the nature of its assets. Inaccordance with this programme all fixed assets were physically verified by themanagement during the year. As informed to us no material discrepancies were noticed onsuch verification.
(c) According to the information and explanations given to us and on the basis of ourexamination of the records of the Company the title deeds of the immovable property isheld in the name of the Company except for:
|Land situation* ||Whether leasehold /freehold ||Gross block as at 31 March 2020 ||Net block as at 31 March 2020 |
| || ||(Rs.. In Lacs) ||(Rs.. In Lacs) |
|Attibele ||Freehold ||35.02 ||35.02 |
|Chennai ||Freehold ||21.31 ||21.31 |
|Manesar ||Freehold ||510.46 ||529.15 |
|Mysore ||Freehold ||28.54 ||28.54 |
|Peenya ||Freehold ||5006.68 ||5006.68 |
|Total || ||5602.01 ||5620.70 |
* The aforesaid land parcels had been transferred to the Company pursuant to theschemes of amalgamation dated 2 May 2013 and 29 December 2015 for which registration inthe name of the Company is pending
(ii) According to the information and explanations given to us the inventories exceptgoods-in-transit and stock lying with third parties have been physically verified by themanagement at the year end. In our opinion the frequency of such verification isreasonable having regard to the size of the Company and nature of its business. For stockslying with third parties as at the year-end written confirmation have been obtained. Asinformed to us the discrepancies noticed on comparison of physical verification ofinventories with book records were not material and have been properly dealt with in thebooks of account.
(iii) According to the information and explanations given to us the Company hasgranted loans to four companies covered in the register maintained under Section 189 ofthe Companies Act 2013 (the Act').
a) In our opinion the rate of interest and other terms and conditions on which theloans had been granted to the companies listed in the register maintained under Section189 of the Act were not prima facie prejudicial to the interest of the Company.
b) The said companies have been regular in repayment of principal which are payable ondemand. Further the said companies have been regular in payment of interest.
c) There are no overdue amounts in respect of the loans granted to the companies listedin the register maintained under Section 189 of the Act.
According to the information and explanations given to us the Company has not grantedany loans secured or unsecured to other parties firms or limited liability partnershipscovered in the register maintained under section 189 of the Act.
(iv) In our opinion and according to the information and explanations given to us theCompany has complied with the provisions of Section 185 and 186 of the Companies Act 2013in respect of grant of loans providing guarantee and making investments as applicable.Moreover the Company has not provided any security as specified under Section 185 and 186of the Companies Act 2013.
(v) As per the information and explanations given to us the Company has not acceptedany deposits as mentioned in the directives issued by the Reserve Bank of India and theprovisions of Section 73 to 76 or any other relevant provisions of the Companies Act 2013and the rules framed there under. Accordingly paragraph 3(v) of the Order is notapplicable to the Company.
(vi) The Central Government has prescribed the maintenance of cost records undersub-section (1) of Section 148 of the Act for certain activities carried out by theCompany. We have broadly reviewed the books of account maintained by the Company pursuantto the Rules made by the Central Government for the maintenance of cost records underSection 148 of the Act and are of the opinion that prima facie the prescribed accountsand records have been made and maintained.
(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 Provident fund Employees' StateInsurance Income-tax Goods and Services Tax (GST') Duty of customs Cess andother material statutory dues have generally been regularly deposited during the year bythe Company with the appropriate authorities.
According to the information and explanations given to us no undisputed amountspayable in respect of Provident fund Employees' State Insurance Income-tax GST Servicetax Duty of excise Sales tax Value added tax Duty of customs and other materialstatutory dues were in arrears as at 31 March 2020 for a period of more than six monthsfrom the date they became payable.
The Company does not have liability in respect of Service tax Duty of excise Salestax and Value added tax since effective 1 July 2017 these statutory dues has beensubsumed into GST.
(b) According to the information and explanations given to us there are no dues inrespect of Income-tax GST Sales-tax Service tax Duty of customs Duty of excise andValue added tax which have not been deposited with the appropriate authorities on accountof any dispute except for the following:
|Name of the Statute ||Nature of dues ||Financial year to which amount relates ||Forum where dispute is pending ||Amount (Rs. in Lacs) ||Amount paid under protest (Rs. in Lacs) |
|Income Tax Act 1961 ||Disallowance of royalty expenses ||AY 2012-13 ||Commissioner of Income tax (A) LTU ||0.32 ||- |
|Income Tax Act 1961 ||Expenses disallowed u/s 35 (2AB) ||AY 2013-14 to AY 2016-17 ||Income tax Appellate Tribunal (ITAT) ||73.00 ||- |
|Income Tax Act 1961 ||Penalty proceed || |
|Commissioner of Income tax (A) LTU ||3.12 ||- |
|Income Tax Act 1961 ||Mat credit disallowed || |
|Income tax Appellate Tribunal (ITAT) ||63.14 ||- |
|Income Tax Act 1961 ||Depreciation on Intangible asset disallowance u/s 14A disallowance on membership fee sponsorship fee and bad debt ||AY 2017-18 ||Commissioner of Income tax (A) LTU ||19.54 ||- |
|Income Tax Act 1961 ||P.F & ESI expenses disallowed ||AY 2018-19 ||Assessing Officer ||1.45 ||- |
|Haryana Sales Tax Act ||Local area development tax levied ||FY 2000-01 ||Joint Commissioner (A) Sales Tax ||1.27 ||- |
|Finance Act 1994 Service tax ||Service tax on freight ||FY 2005-06 ||Assistant Commissioner Central Excise ||1.18 ||- |
|Finance Act 1994 Service tax ||Service tax on freight ||FY 2016-17- July-2016 to March 2017 ||Commissioner (Appeal) Central Goods and Services Tax Gurugram ||6.92 ||- |
|Finance Act 1994 Service tax ||Service tax on freight ||April-17 to June-18 ||Supdt. Central Goods and Services Tax Gurugram ||4.10 ||- |
|Finance Act 1994 Service tax ||Service tax on Manpower for Job work ||FY 2005-06 to 2010-11 ||Joint Commissioner CE LTU Delhi ||100.78 ||- |
|Finance Act 1994 Service tax ||Service tax on Manpower for Job work ||March-2011 to February-2015 ||Additional Commissioner Central Excise ||160.29 ||- |
|Finance Act 1994 Service tax ||Service tax on Commercial & industrial construction ||FY 2006-07 ||Assistant Commissioner Central Excise ||2.11 ||- |
|Finance Act 1994 Service tax ||Service tax on various outward freight & Telephone Service ||FY 2016-17- July -16 to March-17 ||Assistant Commissioner Central Excise ||1.30 ||- |
|Finance Act 1994 Service tax ||Service tax on taking credit on levy of service tax on Outdoor catering services ||FY 2009-10 ||Dy. Commissioner Central Excise LTU Delhi ||0.49 ||- |
|Finance Act 1994 Service tax ||Service tax on Civil construction CHA maintenance or repair outward freight Travel Agent Catering Pandal Shamiana Authorised Service Station & Telephone Service ||February-2004 to November-2011 ||Commissioner Joint Commissioner and Deputy Commissioner Central Excise ||33.85 ||- |
(viii) In our opinion and according to the information and explanations given to us andon the basis of records examined by us the Company has not defaulted in repayment ofloans or borrowings to banks and a financial institution. Further the Company did nothave any outstanding dues to any debenture holder and from government during the year.
(ix) The Company did not raise any money by way of initial public offer or furtherpublic offer (including debt instruments) and terms 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 and neither any material fraud on the Company by its officers or employees hasbeen noticed or reported during the year.
(xi) According to the information and explanations given to us and on the basis of ourexamination of the records of the Company the managerial remuneration has been paid orprovided by the Company in accordance with the provisions of Section 197 read withSchedule V of the Act.
(xii) According to the information and explanations given to us the Company is not aNidhi Company. Accordingly paragraph 3(xii) of the Order is not applicable.
(xiii) In our opinion and according to the information and explanations given to us andon the basis of our examination of the records of the Company the transactions with therelated parties are in compliance with Section 177 and 188 of the Companies Act 2013where applicable and the details have been disclosed in the standalone financialstatements as required by the accounting standards.
(xiv) According to the information and explanation given to us and on the basis of 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.
(xv) According to the information and explanations given to us the Company has notentered into any non-cash transactions with directors or person connected with him.Accordingly paragraph 3 (xv) of the Order is not applicable.
(xvi) According to the information and explanations given to us the Company is notrequired to be registered under Section 45-IA of the Reserve Bank of India Act 1934.
ANNEXURE B TO THE INDEPENDENT AUDITOR'S REPORT
on the Standalone Financial Statements of Sandhar Technologies Limited for the yearended 31 March 2020
Report on the Internal Financial Controls with reference to the aforesaid StandaloneFinancial Statements under Clause (i) of Sub-section 3 of Section 143 of the CompaniesAct 2013
(Referred to in paragraph (A) (f) under Report on Other Legal and RegulatoryRequirements' section of our report of even date)
We have audited the Internal Financial Controls with reference to Standalone FinancialStatements of Sandhar Technologies Limited (the Company) as of 31 March 2020in conjunction with our audit of the Standalone Financial Statements of the Company forthe year ended on that date.
In our opinion the Company has in all material respects adequate Internal FinancialControls with reference to Standalone Financial Statements and such Internal FinancialControls were operating effectively as at 31 March 2020 based on the Internal FinancialControls with reference to Standalone Financial Statements criteria established by theCompany considering the essential components of internal control stated in the GuidanceNote on Audit of Internal Financial Controls Over Financial Reporting issued by theInstitute of Chartered Accountants of India (the Guidance Note).
Management's Responsibility for Internal Financial Controls
The Company's management and the Board of Directors are responsible for establishingand maintaining Internal Financial Controls based on the Internal Financial Controls withreference to Standalone Financial Statements criteria established by the Companyconsidering the essential components of internal control stated in the Guidance Note.These responsibilities include the design implementation and maintenance of adequateInternal Financial Controls that were operating effectively for ensuring the orderly andefficient conduct of its business including adherence to Company's policies thesafeguarding of its assets the prevention and detection of frauds and errors theaccuracy and completeness of the accounting records and the timely preparation ofreliable financial information as required under the Companies Act 2013 (hereinafterreferred to as the Act).
Our responsibility is to express an opinion on the Company's Internal FinancialControls with reference to Standalone 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 Standalone Financial Statements. ThoseStandards and the Guidance Note require that we comply with ethical requirements and planand perform the audit to obtain reasonable assurance about whether adequate InternalFinancial Controls with reference to Standalone Financial Statements were established andmaintained and whether such controls operated effectively in all material respects.
Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe Internal Financial Controls with reference to Standalone Financial Statements andtheir operating effectiveness. Our audit of Internal Financial Controls with reference toStandalone Financial Statements included obtaining an understanding of such InternalFinancial Controls assessing the risk that a material weakness exists and testing andevaluating the design and operating effectiveness of internal control based on theassessed risk.
The procedures 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 and appropriate toprovide a basis for our audit opinion on the Company's Internal Financial Controls withreference to Standalone Financial Statements.
Meaning of Internal Financial controls with Reference to Standalone FinancialStatements
A Company's Internal Financial Controls with reference to Standalone FinancialStatements is a process designed to provide reasonable assurance regarding the reliabilityof financial reporting and the preparation of Financial Statements for external purposesin accordance with generally accepted accounting principles. A Company's InternalFinancial Controls with reference to Standalone Financial Statements include thosepolicies and procedures that (1) pertain to the maintenance of records that in reasonabledetail accurately and fairly reflect the transactions and dispositions of the assets ofthe Company; (2) provide reasonable assurance that transactions are recorded as necessaryto permit preparation of Financial Statements in accordance with generally acceptedaccounting principles and that receipts and expenditures of the Company are being madeonly in accordance with authorisations of management and directors of the Company; and (3)provide reasonable assurance regarding prevention or timely detection of unauthorisedacquisition use or disposition of the Company's assets that could have a material effecton the Standalone Financial Statements.
Inherent Limitations of Internal Financial controls with Reference to StandaloneFinancial Statements
Because of the inherent limitations of Internal Financial Controls with reference toStandalone 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 Standalone Financial Statements to future periods are subjectto the risk that the Internal Financial Controls with reference to Standalone FinancialStatements may become inadequate because of changes in conditions or that the degree ofcompliance with the policies or procedures may deteriorate.