THE MEMBERS OF SAWACA BUSINESS MACHINES LIMITED
Report on the Audit of the Standalone Financial Statements
We have audited the accompanying standalone Ind AS financial statements of SAWACABUSINESS MACHINES LIMITED ("the Company") which comprise the Balance Sheet asat 31st March 2019 the Statement of Profit and Loss the Statement of Changes in Equityand the Statement of Cash Flows for the year then ended and summary of the significantaccounting policies and other explanatory information (herein after referred to as"standalone Ind AS financial statements").
In our opinion and to the best of our information and according to the explanationsgiven to us except for the matters specified in Emphasis of matter the aforesaidstandalone Ind AS financial statements give the information required by the Act in themanner so required and give a true and fair view in conformity with the accountingstandards prescribed under section 133 of the Act read with companies Rules 2015 asamended ( IND AS) and other accounting principles generally accepted in India of the stateof affairs of the Company as at 31st March 2019 its profit (including other comprehensiveincome) changes in equity and its cash flows for the year ended on that date.
Basis of Opinion
We have conducted our audit of the standalone Ind AS financial statements in accordancewith the Standards on Auditing specified under Section 143(10) of the Act. Ourresponsibility under those Standards are further described in Auditor's Responsibility forthe Audit of the standalone financial statements section of our report. We are independentof the company in accordance of with code of ethics issued by ICAI together with theindependence requirement that are relevant to our audit of standalone financial statementunder the provisions of the Act and the rules made there under and we have fulfilled ourother ethical responsibilities in accordance with these requirements and the ICAI's Codeof Ethics. We believe that the audit evidence we have obtained is sufficient andappropriate to provide a basis for our audit opinion on the standalone financialstatement.
Key Audit Matters
|S.N. ||Key Audit Matters ||How Our Audit addressed the Key Audit Matter |
|1 ||Revenue Recognition ||The company has trading income and interest income. We have verified the basis of recognition of sale transaction and for interest income the basis of interest calculation has been verified with consistency. |
|2 ||Recoverability of the balance of debtors. ||The validation of the transaction and party confirmations have been verified. In some cases confirmations not available. |
Emphasis of Matter:
We would like to draw attention to the fact that balance confirmation from the partiesfrom whom amounts are due for more than one year were not available and in absence of thesame we are not in position to comment on the deviation in the balances or execution ofthe transactions. The absence of the said balance confirmation would also affect theexpected credit loss of the debtors and accordingly the same may affect the amount of thecarrying amount of debtors and the profit.
The company's management and board of directors are responsible for the otherinformation. The other information comprises Board's Report on corporate governance andBusiness Responsibility report but does not include the consolidated financial statementsstandalone financial statement and our auditor's report thereon.
Our opinion on the financial statement does not cover the other information and we donot express any form of assurance conclusion thereon.
In connection with our audit of standalone financial statements our responsibility isto read the other information and in doing so consider whether the other information ismaterially inconsistent with the standalone financial statements or our knowledge obtainedduring the course of our audit procedures or otherwise appear to be materially misstated.If based on the work we have performed we conclude that there is a material misstatementof this other information we are required to report on that fact. We have nothing toreport in this regard.
Management's Responsibility for the Standalone Ind AS Financial Statements
The Company's Board of Directors is responsible for the matters stated in Section 134(5) of the Companies Act 2013 ("the Act") with respect to the preparation ofthese standalone Ind AS financial statements that give a true and fair view of the stateof affairs Profit (including other comprehensive income) changes in equity and cashflowsof the Company in accordance with the accounting principles generally accepted in Indiaincluding the Indian Accounting Standards (Ind AS) prescribed under section 133 of theAct.
This responsibility also includes maintenance of adequate accounting records inaccordance with the provisions of the Act for safe guarding the assets of the Company andfor preventing 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 the accuracy and completeness of theaccounting records relevant to the preparation and presentation of the standalone Ind ASfinancial statements that give a true and fair view and are free from materialmisstatement whether due to fraud or error.
In preparing the financial statements management is responsible for assessing theCompany's ability to continue as a going concern disclosing as applicable mattersrelated to going concern and using the going concern basis of accounting unless managementeither intends to liquidate the Company or to cease operations or has no realisticalternative but to do so.
Board of directors is also responsible for overseeing the company's financial reportingprocess.
Our objectives are to obtain reasonable assurance about whether standalone financialstatements as a whole are free from material misstatement whether due to fraud or errorand to issue an auditor's report that includes our opinion. Reasonable assurance is highlevel of assurance but is not a guarantee that an audit conducted in accordance with SAswill always detect a material misstatement when it exists. Misstatements can arise fromfraud or error and are considered material if individually or in aggregate they couldreasonably be expected to influence the economic decision of users taken on the basis ofthese standalone financial statements.
As a part of an audit in accordance with SAs we exercise professional judgment andmaintain professional skepticism throughout the audit. We also:
Identify and assess the risk of material misstatement of the standalonefinancial statements weather due to fraud or error design and perform audit procedureresponsive to those risk and obtain evidence that us sufficient and appropriate toprovide a basis for our opinion. The risk of not detecting a material misstatementresulting from fraud for one resulting from error as fraud may involve collusionforgery intentional omission misrepresentation or the override of internal control.
Obtain an understanding of internal financial control relevant to the audit inorder to design audit procedure 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 control 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 the 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 standalone financial statements may be influenced. Weconsider quantitative materiality and qualitative factors in (i) planning the scope of ouraudit work and in evaluating the results of our work; and (ii) to evaluate the effect ofany identified misstatements in the standalone financial statements.
We communicate with those charged with governance regarding among other matters theplanned scope and timing of the audit and significant audit findings including anysignificant deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have compliedwith relevant ethical requirements regarding independence and to communicate with themall relationships and other matters that may reasonably be thought to bear on ourindependence and where applicable related safeguards.
From the matters communicated with those charged with governance we determine thosematters that were of most significance in the audit of the standalone financial statementsof the current period and are therefore the key audit matters. We describe these mattersin our auditor's report unless law or regulation precludes public disclosure about thematter or when in extremely rare circumstances we determine that a matter should not becommunicated in our report because the adverse consequences of doing so would reasonablybe expected to outweigh the public interest benefits of such communication.
Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditor's Report) Order 2016 ("the Order")issued by the Central Governmentin terms of Section 143(11) of the Act we give in"Annexure A" a statement on the matters specified inparagraphs 3 and 4 of theOrder.
2. As required by Section 143 (3) of the Act we report that:
(a) We have sought and obtained all the information and explanations which to thebestof our knowledgeand 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 itappears from our examination of those books.
(c) The Balance Sheet the Statement of Profit and Loss Statement of Changes in Equityand the Cash FlowStatement dealt with by this Report are in agreement with the books ofaccount.
(d) In our opinion the aforesaid standalone Ind AS financial statements comply withthe Indian Accounting Standards prescribed under section 133 of the Act.
(e) We have not received any written representation from the directors as on 31stMarch2019and therefore we are not in position to confirm whether any of the directors isdisqualified as on 31st March 2019 from beingappointed 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 statementsof the Company andthe operating effectiveness of such controls referto our separate Report in"Annexure B".
(g) With respect to the other matters to be included in the Auditor's Report inaccordance with Rule 11 ofthe Companies (Audit and Auditors) Rules 2014 in our opinionand to the best of our information andaccording to the explanations given to us:
i. There is no pending litigation on the company therefore the same is not required tobe disclosed.
ii. the Company did not have any long-term contracts including derivative contracts forwhich therewere 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
Annexure A to the Independent Auditors' Report (Referred to in our report of even date)
With reference to the Annexure A referred to in the Independent Auditors' report to themembers of the Company on the standalone Ind AS financial statements for the year ended31st March 2019 we report the following:
I. In Respect of Fixed Assets
(a) The Company has maintained proper records showing full particulars includingquantitative details and situation of Fixed Assets on the basis of available information.
(b) As per the information and explanations given to us the management at reasonableintervals during the year in accordance with a programme of physical verificationphysically verified the fixed assets and no material discrepancies were noticed on suchverification as compared to the available records.
(c) The Company does not hold the immovable property. Therefore the provisions ofClause 3(i) (c) of the said Order are not applicable to the Company.
II. In Respect of Inventories
As explained to us physical verification of the inventories has been conducted atreasonable intervals by the management which in our opinion is reasonable having regardto the size of the Company and nature of its inventories. No material discrepancies werenoticed on such physical verification.
III. Compliance under section 189 of The Companies Act 2013
As informed the company company has granted loans secured or unsecured to companiesfirms or other parties covered in the register maintained under section 189 of theCompanies Act 2013.
(a) In our opinion and according to the information and explanations given to us. Therate of interest and other terms and conditions for such loans are not prima facieprejudicial to the interest to the company.
(b) In respect of loans granted repayment of the principal amount is as stipulated andpayment of interest have been regular.
(c) There is no overdue amount of loans granted to companies firms or other partieslisted in the register maintained under section 189 of the companies Act 2013.
IV. Compliance under section 185 and 186 of The Companies Act 2013
In our opinion and according to information and explanations given to us the Companyhas complied with provisions of Section 185 and 186 of the Companies Act 2013 in respectof grant of loans making investments and providing guarantees and securities asapplicable.
V. Compliance under section 73 to 76 of The Companies Act 2013 and Rules framedthereunder while accepting Deposits
The Company has not accepted any deposits within the meaning of Sections 73 to 76 ofthe Act and the Companies (Acceptance of Deposits) Rules 2014 (as amended). Accordinglythe provisions of clause 3(v) of the Order are not applicable.
VI. Maintenance of cost records
The Company is not required to maintain cost records pursuant to the Rules made by theCentral Governmentfor the maintenance of cost records under sub-section (1) of section 148of the Companies Act 2013.
VII. Deposit of Statutory Dues
(a) The company is regular in depositing the undisputed statutory dues includingprovident fund employees` state insurance income tax sales tax wealth tax servicetax custom duty excise duty GST Cess and other statutory dues applicable to theCompany with the appropriate authorities. No undisputed amounts payable in respect of theaforesaid statutory dues were outstanding as at the last day of the financial year for aperiod of more than six months from the date they became payable.
(b) As informed to us by the management there is no dispute with the revenueauthorities regarding any duty or tax payable.
VIII. Repayment of Loans and Borrowings
The company has not taken any loan from financial institution bank or debentureholders.
ix. Utilization of Money Raised by Public Offers and Term Loan For which they Raised
According to the information and explanations give to us and based on our examinationof the records of the Company the Company has not raised any moneys by way of initialpublic offer or further public offer (including debt instruments) and has not obtained anyterm loans during the year. Accordingly paragraph 3(ix) of the Order is not applicable tothe Company.
x. Reporting of Fraud During the Year
Based upon the audit procedures performed for the purpose of reporting the true andfair view of the financial statements and according to the information and explanationsgiven by the management we report that no fraud by the Company or no fraud on the Companyby the officers and employees of the Company has been noticed or reported during the year.
xi. Managerial Remuneration
Managerial remuneration has been paid or provided in accordance with the requisiteapprovals mandated by theprovisions of section 197 read with Schedule V to the CompaniesAct.
xii. Compliance by Nidhi Company Regarding Net Owned Fund to Deposits Ratio
In our opinion the Company is not a Nidhi Company. Therefore the provisions of clause3(xii) of the order are not applicable to the Company and hence not commented upon.
xiii. Related party compliance with Section 177 and 188 of companies Act - 2013
According to the information and explanations given by the management transactionswith the related parties are in compliance with section 177 and 188 of Companies Act 2013where applicable and the details have been disclosed in the notes to the financialstatements as required by the applicable accounting standards.
xiv. Compliance under section 42 of Companies Act - 2013 regarding Private placementof Shares or Debentures
According to the information and explanations given to us and on an overallexamination of the balance sheet the Company has not made any preferential allotment orprivate placement of shares or fully or partly convertible debentures during the yearunder review and hence reporting requirements under clause 3(xiv) are not applicable tothe Company and not commented upon.
xv. Compliance under section 192 of Companies Act - 2013
According to the information and explanations given by the management the Company hasnot entered into any non-cash transactions with directors or persons connected with him asreferred to in section 192 of Companies Act 2013.
xvi. Requirement of Registration under 45-IA of Reserve Bank of India Act 1934
According to the information and explanations given to us the provisions of section45-IA of the Reserve Bank of India Act 1934 are not applicable to the Company.
Annexure B to the Auditor's 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 of SAWACABUSINESS MACHINES LIMITED ("the Company") as of March 31 2019 in conjunctionwith our audit of the standalone financial statements of the Company for the year ended onthat 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 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 as specified under section143(10) of the Companies Act 2013 to the extent applicable to an audit of internalfinancial controls and both issued by the Institute of Chartered Accountants of India.Those Standards and the Guidance Note require that we comply with ethical requirements andplan and perform the audit to obtain reasonable assurance about whether adequate internalfinancial controls over financial reporting was established and maintained and if suchcontrols 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 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 internal financial controls system overfinancial reporting.
Meaning of Internal Financial Controls Over Financial Reporting
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 ofrecords that in reasonable detail accurately and fairly reflect the transactions anddispositions of the assets of the company; (2) provide reasonable assurance thattransactions are recorded as necessary to permit preparation of financial statements inaccordance with generally accepted accounting principles and that receipts andexpenditures of the company are being made only in accordance with authorizations ofmanagement and directors of the company; and (3) provide reasonable assurance regardingprevention or timely detection of unauthorized acquisition use or disposition of thecompany's assets that could have a material effect on the financial 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 the Company has in all material respects an adequate internalfinancial controls system over financial reporting and such internal financial controlsover financial reporting were operating effectively as at March 31 2018 based on theinternal control over financial reporting criteria established by the Company consideringthe essential components of internal control stated in the Guidance Note on Audit ofInternal Financial Controls Over Financial Reporting issued by the Institute of CharteredAccountants of India.
|Date : 22/05/2019 ||For M A A K & Associates |
|Place : Ahmedabad ||(Chartered Accountants) |
| ||F.R.N:.135024W |
| ||CA Marmik G. Shah |
| ||(Partner) |
| ||M. No. : 133926 |