THE MEMBERS OF SETCO AUTOMOTIVE LIMITED
REPORT ON THE AUDIT OF THE STANDALONE FINANCIAL STATEMENTS
We have audited the Standalone Financial Statements of Setco Automotive Limited("the Company") which comprise the Standalone Balance Sheet as at 31st March2021 and the Standalone Statement of Profit and Loss (including Other ComprehensiveIncome) Standalone Statement of Changes in Equity Standalone Statement of Cash Flows forthe year then ended and notes to the Standalone Financial Statements including a summaryof 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 required bythe Companies Act 2013 ("the Act') in the manner so required and give a true andfair view in conformity with the Indian Accounting Standards prescribed under section 133of the Act read with the Companies (Indian Accounting Standards) Rule 2015 as amended("Ind AS) and other accounting principles generally accepted in India of the stateof affairs of the Company as at March 31 2021 and Loss and total comprehensive incomechanges 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 Companies Act 2013. Our responsibilities under thoseStandards are further described in the Auditor's Responsibilities for the Audit of theStandalone Ind AS Financial Statements section of our report. We are independent of theCompany in accordance with the Code of Ethics issued by the Institute of CharteredAccountants of India (ICAI) together with the ethical requirements that are relevant toour audit of the standalone financial statements under the provisions of the Act and theRules made thereunder and we have fulfilled our other ethical responsibilities inaccordance with these requirements and the Code of Ethics. We believe that the auditevidence we have obtained is sufficient and appropriate to provide a basis for our opinionon the standalone financial statement.
EMPHASIS OF MATTER
We draw attention to the following matters in the Notes to the Standalone Ind ASfinancial statements:
a) The management's assessment of the impact of COVID -19 pandemic on its liquidityposition and the recoverability of its assets comprising property plant and equipmentinventories receivables and other current assets as at the balance sheet date and on thebasis of evaluation has concluded that no material adjustments are required in thefinancial statements. (Refer Note No. 53 of Standalone Ind AS Financial Statements).
b) The Company's subsidiary Lava Cast Private Limited has eroded entire net worth dueto losses. However no impairment is provided on value of investment based on thevaluation report of Independent Valuer as per DCF method. (Refer Note no. 3(b) ofStandalone Ind AS Financial Statements).
c) The company has not charged interest on unsecured loan to the subsidiaries. (ReferNote no. 12(a) of Standalone Ind AS Financial Statements).
d) The Company has made investment of Rs. 5860 Lakhs in 9% cumulative compulsorilyredeemable preference shares of Setco Engineering Private Limited a company in whichdirectors have interest. SEPL being an investment company derives its major income fromSetco Automotive Limited in form of dividend and sales commission. SEPL has incurred lossin current year and hence the Company has made impairment provision for loss of dividend.(Refer Note No. 33(c) of Standalone Ind AS Financial Statements)
e) The Company has invested Rs. 1535.00 lakhs in 3070000 equity shares of SETransstadia Private Limited a company in which directors have interest. The investeeCompany has eroded entire net worth due to losses. Due to non-payment of interest andinstalments company's accounts with bank have become NPA in December 2018. The investeecompany has submitted restructuring proposal to bank on 17.06.2020 and the same is underconsideration. Based on the future projected profitable operations and report ofIndependent valuer as per DCF Method the Company has provided impairment on thisinvestment. (Refer Note No. 33(h) of Standalone Ind AS Financial Statements).
f) Amount receivable of Rs. 426 Lakhs towards sharing of common expenses from SETransstadia Pvt. Ltd. (SETPL) a company in which directors are interested. Consideringcurrent financial position of SETPL the said amount has remained outstanding. The companyhas made ECL provision of 20% of the outstanding amount. (Refer Note No. 33(g) ofStandalone Ind AS Financial Statements)
g) The Company's wholly owned ultimate foreign subsidiary Setco Automotive UK Ltd. haseroded net worth due to losses. Based on the report of Independent Valuer as per DCFmethod provision for impairment has been made on the Investment and loans receivablesfrom the subsidiary Company. (Refer Note No. 33 (b) of Standalone Ind As FinancialStatements).
h) The Company's wholly owned foreign subsidiary Setco MEA DMCC has eroded net worthdue to loss. The Company has provided impairment loss against trade receivable equal tothe net assets deficit reported by the company. Pending compliance of Bank conditions theCompany could not remit share application money to this foreign subsidiary sinceinception and hence allotment of share and issue of share certificate is pending. TheCompany has recognized it as investment in the subsidiary company and consolidated thesaid subsidiary based on 100% control. The Company has decided to close this subsidiaryvide Board Resolution dated 09.02.2021. (Refer Note No. 33(d) of Standalone Ind ASFinancial Statements)
i) Trade receivables Trade Payables and other debit/ credit balances are subject toreconciliation and confirmation. (Refer Note No. 44 of Standalone Ind AS FinancialStatements).
j) In earlier year the Company has recognized Rs. 398 Lakhs as income beingreimbursement of Central Goods & Service Tax (CGST)/Integrated Goods & Service Tax(IGST) share of State for the Uttarakhand unit pending notification of incentives by theState Government. In absence of any notification in the said matter the Company has filedwrit petition in High Court. Pending any further progress in this matter the Company hasprovided for impairment at 100%. (Refer Note No. 33(e) of Standalone Ind AS FinancialStatements)
k) An amount of Rs. 1834.99 lakhs (Rs. 3260.97 lakhs) is pending against exportreceivables as on 31 March 2021 beyond the timelines stipulated under the ForeignExchange Management Act 1999. The management of the Company has submitted necessaryapplication with the appropriate authority for condonation of delays to regularize thedefault. Impact thereof if any will be considered when such application is disposed off.(Refer Note No. 9 of Standalone Ind AS Financial Statements)
l) The company has provided ECL on investments in Equity and preference shares in WEWHoldings Limited (Mauritius) in respect of its holding in Setco Automotive (UK) Ltd.(Refer Note No. 3(c) of Standalone Ind AS Financial Statements).
m) Capital advances for purchase of machinery to the supplier was unrecoverable andthus 100% impairment provision is made. (Refer Note No. 33(f) of Standalone Ind ASFinancial Statements).
n) On physical verification of stocks stock costing Rs. 1863.92 lakhs were found to berusty damaged and unfit for consumption and unretrievable without compromising thequality of finished products. Therefore such items of stocks are written down in theaccounts net of the existing provision and valued at NIL and the net effect is disclosedunder the head "Exceptional Items". (Refer Note No. 33(i) of Standalone Ind ASFinancial Statements).
o) The company has obtained consent of members to transfer the clutch manufacturingbusiness to a wholly owned subsidiary in EGM held on 22nd May 2021.
Further the company has obtained member's consent to purchase trademark/ Brand"LIPE" owned by foreign subsidiaries (SAUL & SANAI) based on valuations doneby approved valuers.
In absence of binding agreements/ documents till date in this regard no effectrelating to said proposals are given or recognised in accounts for the year. (Refer tonote no. 35 of the accompanying standalone Ind AS financial statement.)
Our opinion is not modified in respect of these matters.
Key Audit Matters
Key audit matters are those matters that in our professional judgement 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 Ind ASFinancial Statements as a whole and in forming our opinion thereon and we do not providea separate opinion on these matters.
|1. Product Development: || |
|Kev Audit Matters ||How the matter was addressed in the audit |
|Intangible Assets: Product development ||1. Testing management's controls over capitalization of Product development costs. |
|The Company conducts significant level of development activities and has to apply judgements in identifying product development expenses meeting the criteria for capitalization under the requirements of Ind AS. . Expenditure Identifiable and reliably measurable incurred on product development yielding future economic benefits is capitalized as Product Development Expenses. We identified the capitalization of Product development costs as a key audit matter due to significant management judgements about the future performance and viability of the products. ||2. Evaluating the nature of development expenses incurred that are capitalized into product development expense. |
| ||3. Assessing the reasonableness of the capitalization based on success of the product |
| ||4. Verifying amortization of capitalization after commercial production commences as per consistent policy of Company to amortise over 10 years. |
| ||5. Obtaining fair valuation of product development capitalised from independent valuer. |
| ||6. Checking reasonableness of disclosure relating to research and development in financial statements. |
| ||Refer to note no. 2 (iii) of the accompanying standalone Ind AS financial statement. |
|2. Impairment assessment of long-term investments in loans receivables and trade receivables from subsidiaries joint venture and associates. || |
|Kev Audit Matters ||How the matter was addressed in the audit |
|The assessment of recoverable amount of the Company's investment in and loans receivable and trade receivables from its subsidiaries and joint venture and other related entity involves significant judgement. The investments are carried at cost less any diminution in value of such investments and tested for impairment at each reporting date. These includes assumptions such as projected cash flows discount rates current work on hand future contract future business plan claims recoverability of certain receivables as well as economic assumption such as growth rate. ||1. Evaluated and tested the design and implementation of operating effectiveness of controls over the management review process of impairment assessment. |
|We focused on these areas as key audit matter due to judgement involved in forecasting future cash flows and selection of assumptions. ||2. Compared the carrying amount of investment with the expected value of the business based on the discounted cash flow method. |
| ||3. Assessed the key assumptions including discount rate and estimated future growth of independent valuation report obtained by the Company. Compared the previous forecast to actual results to assess the Company's ability to forecast accurately. |
| ||4. We checked the loans advanced / repaid in relation to these loans during the year through bank statements. |
| ||5. Evaluated accuracy of disclosure in the financial statements. |
| ||Refer Note no. 3 & 33 of accompanying Standalone Ind AS financial statements. |
INFORMATION OTHER THAN THE STANDALONE FINANCIAL STATEMENTS AND AUDITOR'S REPORT THEREON
The Company's Board of Directors is responsible for the other information. The otherinformation comprises the information included in the Company's annual report i. e.Corporate Information Board of Directors Management Discussion and Analysis DirectorsReport and Corporate Governance Report but does not include the standalone financialstatements and our auditors' report thereon. The above information is yet to be providedto us.
MANAGEMENT'S RESPONSIBILITIES FOR THE STANDALONE FINANCIAL 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 of the assets of the Company and for preventingand detecting frauds and other irregularities; selection and application of appropriateaccounting policies; making judgements 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 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 judgement 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 control relevant to the audit in order todesign audit procedures that are appropriate in the circumstances. Under section 143(3)(i) of the Companies Act 2013 we are also responsible for expressing our opinion onwhether the Company has adequate internal financial controls system in place and theoperating effectiveness 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.
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 of India in terms of section 143 (11) of the Act we givein "Annexure A" a statement on the matters specified in paragraphs 3 and 4 ofthe Order to the extent applicable.
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 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 the Statement of Changes in Equity and the Cash Flow Statement dealt with by thisReport are in agreement with the books 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 31stMarch 2021 taken on record by the Board of Directors none of the directors isdisqualified as on 31st March 2021 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 over financialreporting of the Company and the operating effectiveness of such controls refer to ourseparate Report in "Annexure B". Our report expresses an unmodified opinion onthe adequacy and operating effectiveness of the Company's internal financial controls overfinancial reporting.
g) With respect to the other matters to be included in the Auditor's Report inaccordance with the requirements of section 197(16) of the Act as amended in our opinionand to the best of our information and according to the explanations given to us theremuneration paid by the Company to its directors during the year is in accordance withthe 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 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 on its financialposition in its standalone financial statements - Refer Note 43 B to the standalonefinancial statements;
(ii) The Company did not have any long-term contracts including derivative contractsfor which there were any material foreseeable losses.
(iii) There has been no delay in transferring amounts required to be transferred tothe Investor Education and Protection Fund by the Company.
ANNEXURE A TO INDEPENDENT AUDITORS' REPORT
Referred to in paragraph under the heading "Report on Other Legal and RegulatoryRequirements" of our report of even date to the Members of Setco Automotive Limitedon the Standalone Financial Statements as of and for the year ended on March 31 2021
1. In respect of its fixed assets :
a) The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets. on the basis of availableinformation.
b) The Company has a program of verification to cover all the items of fixed assets inphased manner which in our opinion is reasonable having regard to the size of the Companyand the nature of its assets. During the year the Company has verified certain fixedassets in accordance with this program. According to the information and explanation givento us no material discrepancies were noticed on such verification.
c) The title deeds of immovable properties disclosed in Note No. 2 on Fixed Assets tothe Standalone Financial Statements are held in the name of the Company. In respect ofleased hold land that have been taken on lease and disclosed as fixed assets in thestandalone financial statements the lease agreements are in the name of the Company.
2. According to the information and explanations given to us inventories (excludingstocks with third parties) were physically verified during the year by the management atreasonable intervals. On verification the stocks which were found to be rusty damagedand unfit for consumption and unretrievable without compromising the quality of finishedproducts such items of stocks were written down in the accounts net of the existingprovision and valued at NIL and the net effect is disclosed under the head"Exceptional Items". In respect of inventory lying with third parties thesehave substantially been confirmed by them.
3. According to the information and explanations given to us the Company has notgranted any loans secured or unsecured to companies firms limited liabilitypartnerships or other parties covered in the register maintained under section 189 of theCompanies Act 2013 except loans given to its wholly owned ultimate foreign subsidiarycompanies and Indian subsidiary Company and one Company in which two directors havesubstantial interest.
a) The terms and conditions of such loans are not prima facie prejudicial to theCompany's interest.
b) No schedule of repayment of principal or interest has been stipulated for suchloans.
c) In view of (b) above the question of any overdue amount does not arise.
4. According to the information and explanations given to us the Company has compliedwith the provisions of section 185 and 186 of the Act with respect to Loans &Investments made.
5. According to the information and explanations given to us the Company has notaccepted any deposits under the directives issued by the Reserve Bank of India or withinthe meaning of section 73 to 76 or any other relevant provisions of the Act and the rulesframed there under.
6. We have been informed that Company is not required to maintain cost records u/s148(1) of the Companies Act 2013. The Company has voluntarily maintained sufficient costrecords for its internal use. We have broadly reviewed these cost records however wehave not made a detailed examination of the records with a view to determine whether theyare accurate or complete.
7. According to the information and explanations given to us and on the basis of ourexamination of books of account :
a) The Company has been generally regular in depositing undisputed statutory dues withappropriate authorities. There is delay in deposition of Provident Fund and Employees'State Insurance for three months Professional Tax for two months Goods and Service Taxfor two months TDS TCS payable for almost twelve months Income Tax & dividend taxfor more than a year. According to the information and explanations given to us there areundisputed statutory dues in respect of TDS/ TCS payable of Rs. 475.25 lakhs for A.Y2021-22 Income tax Rs. 328.45 lakhs and dividend tax of Rs. 274.96 lakhs for A.Y 2019-20outstanding as at 31st March 2021 for more than six months from the date they becamepayable.
b) According to information and explanations given to us and records of the Companyexamined by us there were disputed dues of Income Tax as of 31st March 2021 which havenot been deposited as per following details :
|Sr. Name of the Statute ||Nature of the dues ||Amount (Rs. In Lakhs) ||Related F.Y / A.Y. ||Forum where dispute is pending ||Remark if any |
|1 Income Tax Act 1961 ||Demand Notice U/s 156 ||0.73 ||A.Y. 16-17 ||CIT(A) - Vadodara. ||* |
|2 Income Tax Act 1961 ||Demand notice u/s 92CA(1) and 92D(3) ||0.35 ||A.Y. 17-18 ||CIT(A)- Baroda ||* |
|3 Income Tax Act 1961 ||Demand Notice u/s 156 ||472.10 ||A. Y. 11-12 ||ITAT- Ahmedabad || |
|4 Income Tax Act 1961 ||Notice U/s 271(c) ||- ||A.Y. 14-15 ||ITO National e-assessment centre || |
|5 Income Tax Act 1961 ||Income Tax dues as per Intimation u/s 143(1) ||2.00 ||A.Y. 15-16 ||CPC Bengaluru ||* |
|* Matter covered by ITAT Judgement in Company's own case for earlier years for allowing product development expenses as revenue expense || || || || || |
8. In our opinion and according to the information & explanations given to us theCompany has not defaulted in repayment of loans or borrowing obtained from banks andfinancial institutions. The Company has neither taken any loan from government nor issuedany debentures.
9. In our opinion and according to the information and explanations given to us andexamination of records of the Company the Company has not raised moneys by way initialpublic offer or further public offer (including debt instruments) during the year.
10. During the course of our examination of the books and records of the Company andaccording to the information and explanations given to us no fraud by the Company or onthe Company by its officers or employees were noticed or reported during the year.
11. The Company has paid/provided for managerial remuneration in accordance with therequisite approvals mandated by the provisions of section 197 read with schedule V of theAct.
12. As the Company is not a Nidhi Company and hence reporting under clause 3(xii) ofthe Order is not applicable to the Company.
13. As per the information and explanation given to us the transactions with therelated parties are in compliance with Section 177 and 188 of the Act and the detailsthere of have been disclosed in the standalone financial statements as per Ind AS 24"Related Party Disclosures". (Refer Note No. 38 of the Standalone FinancialStatements).
14. As per the information and explanation given to us the Company has not made anypreferential allotment or private placement of shares or fully or partly convertibledebentures during the period under review.
15. As per the information and explanation given to us the Company has not enteredinto any non-cash transactions with directors or persons connected with him.
16. The Company is not required to be registered under Section 45-IA of the ReserveBank of India Act 1934.
ANNEXURE B TO INDEPENDENT AUDITORS' REPORT
Referred to in paragraph (g) under the heading "Report on Other Legal andRegulatory Requirements" by "Section 143(3) of the Act" of our report ofeven date.
REPORT ON THE INTERNAL FINANCIAL CONTROLS UNDER SECTION 143(3)(I) OF THE ACT.
We have audited the internal financial controls over financial reporting of SetcoAutomotive Limited ("the Company") as of 31st March 2021 in conjunction withour audit of the standalone financial statements of the Company for the year ended on thatdate.
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 ICAI. These responsibilities include the design implementation andmaintenance of adequate internal financial controls that were operating effectively forensuring the orderly and efficient conduct of its business including adherence toCompany's policies the safeguarding of its assets the prevention and detection of fraudsand errors the accuracy and completeness of the accounting records and the timelypreparation of reliable financial information as required under the Act.
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 deemed to be prescribedunder section 143(10) of the Act to the extent applicable to an audit of internalfinancial controls both applicable to an audit of Internal Financial Controls and bothissued by the Institute of Chartered Accountants of India. Those Standards and theGuidance Note require that we comply with ethical requirements and plan and perform theaudit to obtain reasonable assurance about whether adequate internal financial controlsover financial reporting was established and maintained and if such controls operatedeffectively 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 judgement 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
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 standalone 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 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 standalone 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 ofunauthorised acquisition use or disposition of the Company's assets that could have amaterial effect on the standalone 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.
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 31st March 2021 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 ICAI. However such internal financialcontrols over financial reporting need to be improved and strengthened further in future.The Company needs to strengthen its internal control over inventory fixed assets andreceiving external balance confirmation on periodic basis.
|For V. Parekh & Associates Chartered Accountants |
|(Firm Registration No. 107488W) |
|(Rasesh V. Parekh) Partner |
|Membership No. 38615 |
|UDIN: 21038615AAAAKL5714 |
|Place : Nathdwara |
|Date : 8th August 2021 |