To the Members of
SHAKTI PUMPS (INDIA) LIMITED
Report on the Audit of the Standalone Financial Statements OPINION
We have audited the accompanying Standalone Financial Statements ofShakti Pumps (India) Limited ("the Company") which comprise the Balance sheetas at March 31 2020 the Statement of Profit and Loss including the statement of OtherComprehensive Income the Cash Flow Statement and the Statement of Changes in Equity 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 theexplanations given to us the aforesaid Standalone Financial Statements give theinformation required by the Companies Act 2013 as amended ("the Act") in themanner so required and give a true and fair view in conformity with the accountingprinciples generally accepted in India of the state of affairs of the Company as at March31 2020 its loss including other comprehensive income its cash flows and the changes inequity for the year ended onthat date.
BASIS FOR OPINION
We conducted our audit of the Standalone Financial Statements inaccordance with the Standards on Auditing (SAs) as specified under Section 143(10) of theAct. Our responsibilities under those Standards are further described in the 'Auditors'Responsibilities for the Audit of the Standalone Financial Statements' section of ourreport. We are independent of the Company in accordance with the 'Code of Ethics' issuedby the Institute of Chartered Accountants of India together with the ethical requirementsthat are relevant to our audit of the financial statements under the provisions of the Actand the Rules 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 auditopinion on the Standalone Financial Statements
Emphasis of Matter Paragraph
We draw your attention to note no. 38 to the standalone financialstatements which describes the uncertainties and the impact of Covid-19 pandemic on theCompany's operations and results as assessed by the management. Due to Covid-19 relatedlock- down restrictions management could not perform year-end physical verification ofinventories at various locations. Further our attendance at the physical inventoryverification done by the management subsequently was impracticable under the lock- downrestrictions imposed by the government. Consequently we
have performed alternative audit procedures to obtain comfort over theexistence and conditions of inventory at the year-end as per the guidance provided by SA501 " Audit Evidence- specific considerations for selected items" and haveobtained sufficient audit evidence.
Our opinion is not modified in respect ofthis matter.
KEY AUDIT MATTERS
Key audit matters are those matters that in our professional judgmentwere of most significance in our audit of the standalone financial statements of thecurrent period. These matters were addressed in the context of our audit of the standalonefinancial statements and in forming our opinion thereon and we do not provide a separateopinion on these matters. We have determined the matters described below to be the keyaudit matters to be communicated in our report.
|Key Audit Matter ||Auditor's Response |
|1. Evaluation of uncertain tax positions ||Principal Audit Procedures |
|The Company has material uncertain tax positions including matters under dispute which involves significant judgment to determine the possible outcome of these disputes. ||Obtained details of completed tax assessments and demands for the year ended March 31 2020 from management. We involved our internal experts to challenge the management's underlying assumptions in estimating the tax provision and the possible outcome of the disputes. Our internal experts also considered legal precedence and other rulings in evaluating management's position on these uncertain tax positions. |
|Refer Notes 29 to the Standalone Financial Statements ||Additionally we considered the effect of new information in respect of uncertain tax positions as at April 1 2019 to evaluate whether any change was required to management's position on these uncertainties. |
INFORMATION OTHER THAN THE FINANCIAL STATEMENTS AND AUDITORS'REPORTTHEREON
The Company's Board of Directors is responsible for the otherinformation. The other information comprises the information included in the Annual Reportbut does not include the Standalone Financial Statements and our auditors' report thereon
Our opinion on the Standalone Financial Statements does not cover theother information and we do not express any form of assurance conclusion thereon.
In connection with our audit of the Standalone Financial Statementsour responsibility is to read the other information and in doing so consider whethersuch other information is materially inconsistent with the financial statements or ourknowledge obtained in the audit or otherwise appears to be materially misstated. If basedon the work we have performed we conclude that there is a material misstatement of thisother information we are required to report that fact. We have nothing to report in thisregard.
Management's Responsibility for the Standalone Financial Statements
The Company's Board of Directors is 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 financial position financialperformance total comprehensive income changes in equity and cash flows of the Companyin accordance with the Ind AS and other accounting principles generally accepted in India.This responsibility also includes maintenance of adequate accounting records in accordancewith the provisions of the Act for safeguarding the assets of the Company and forpreventing 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 ofthe accounting records relevant to the preparation and presentation of the standalonefinancial statements that give a true and fair view and are free from materialmisstatement whether due to fraud or error.
In preparing the standalone financial statements management isresponsible 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 management either intends to liquidate the Company or to ceaseoperations or has no realistic alternative but to do so.
The Board of Directors are responsible for overseeing the Company'sfinancial reporting process.
Our objectives are to obtain reasonable assurance about whether thestandalone financial statements as a whole are free from material misstatement whetherdue to fraud or error and to issue an auditor's report that includes our opinion.Reasonable assurance is a high level of assurance but is not a guarantee that an auditconducted in accordance with SAs will always detect a material misstatement when itexists. Misstatements can arise from fraud or error and are considered material ifindividually or in the aggregate they could reasonably be expected to influence theeconomic decisions of users taken on the basis of these standalone financial statements.
As part of an audit in accordance with SAs we exercise professionaljudgment and maintain professional scepticism through out the audit. We also:
Identify and assess the risks of material misstatement of thestandalone financial statements whether due to fraud or error design and perform auditprocedures responsive to those risks and obtain audit evidence that is sufficient andappropriate to provide a basis for our opinion. The risk of not detecting a materialmisstatement resulting from fraud is higher than for one resulting from error as fraudmay involve collusion forgery intentional omissions misrepresentations or the override of internal control.
Obtain an understanding of internal financial controls relevantto the audit in order to design audit procedures that are appropriate in thecircumstances. Under section 143(3)(l) of the Act we are also responsible for expressingour opinion on whether the Company has adequate internal financial controls system inplace and the operating effectiveness of such controls
Evaluate the appropriateness of accounting policies used and thereasonableness of accounting estimates and related disclosures made by management
Conclude on the appropriateness of management's use of the goingconcern basis of accounting and based on the audit evidence obtained whether a materialuncertainty exists related to events or conditions that may cast significant doubt on theCompany's ability to continue as a going concern. If we conclude that a materialuncertainty exists we are required to draw attention in our auditor's report to therelated 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 thestandalone financial statements including the disclosures and whether the standalonefinancial statements represent the underlying transactions and events in a manner thatachieves fair presentation
Materiality is the magnitude of misstatements in the standalonefinancial statements that individually or in aggregate makes it probable that theeconomic decisions of a reasonably knowledgeable user of the financial statements may beinfluenced. We consider quantitative materiality and qualitative factors in (i) planningthe scope of our audit work and in evaluating the results of our work; and (ii) toevaluate the effect of any identified misstatements in the financial statements.
We communicate with those charged with governance regarding amongother matters the planned scope and timing of the audit and significant audit findingsincluding any significant deficiencies in internal control that we identify during ouraudit.
We also provide those charged with governance with a statement that wehave complied with relevant ethical requirements
regarding independence and to communicate with them all relationshipsand other matters that may reasonably be thought to bear on our independence and whereapplicable related safeguards
From the matters communicated with those charged with governance wedetermine those matters that were of most significance in the audit of the standalonefinancial statements of the current period and are therefore the key audit matters. Wedescribe these matters in our auditor's report unless law or regulation precludes publicdisclosure about the matter or when in extremely rare circumstances we determine that amatter should not be communicated in our report because the adverse conseguences of doingso would reasonably be expected to outweighthe public interest benefits of suchcommunication.
Report on Other Legal and Regulatory Requirements
1. As required by Section 143(3) of the Act we report that:
a) we have sought and obtained all the information and explanationswhich to the best of our knowledge and belief were necessary for the purpose of our audit;
b) in our opinion proper books of account as required by law have beenkept by the Company so far as it appears from ourexamination oft hose books;
c) The Balance Sheet the Statement of Profit and Loss (including othercomprehensive income) the Cash Flow Statement and Statement of Changes in Equity dealtwith by this Report are in agreement with the books of account;
d) in our opinion the aforesaid standalone financial statements complywith the Indian Accounting Standards prescribed under Section 133 of the Act; read withCompanies (Indian Accounting Standards) Rules 2015 as amended;
e) on the basis of the written representations received from thedirectors as on 31 March 2020 taken on record by the Board of Directors none of thedirectors is disqualified as on 31 March 2020 from being appointed as a director in termsof Section 164(2) of the Act;
f) with respect to the adequacy of the internal financial controls overfinancial reporting of the Company and the operating effectiveness of such controls referto our separate report in 'Annexure A'; and
g) In our opinion the managerial remuneration for the year ended March31 2020 has been paid/provided by the Company to its directors in accordance with theprovisions of section 197 read with Schedule V to the Act;
h) with respect to the other matters to be included in the Auditor'sReport in accordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014 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 itsfinancial position in its standalone financial statements- Refer Note No. 29 of financialstatements;
ii. The Company has made provision as required under the applicablelaw or accounting standards for material foreseeable losses if any on long-termcontracts iincluding derivative contracts;
iii. There has been no delay in transferring amounts required to betransferred to the Investor Education and Protection Fund by the Company;
2. As required by the Companies (Auditor's Report) Order 2016("the Order") issued by the Central Government in terms of Section 143(11) ofthe Act we give in "Annexure B" a statement on the matters specified inparagraphs 3 and 4 of the Order
Annexure- A to the Independent Auditors' Report
The Annexure A referred to in our Report of even date to the Members ofShakti Pumps (India) Limited ("the Company") on the financial statements for theyear ended 31 March 2020.
Report on the Internal Financial Controls under Clause (i) ofsubsection 3 of Section 143 of the Companies Act 2013 ('the Act')
We have audited the internal financial controls over financialreporting of Shakti Pumps (India) Limited ('the Company') as of 31 March 2020 inconjunction with our audit of the Ind AS financial statements of the Company for the yearended on that date.
M anagement's Responsibility for Internal Financial Controls
The Board of Directors of the Company is responsible for establishingand maintaining internal financial controls based on the internal control over financialreporting criteria established by the Company considering the essential components ofinternal control stated in the Guidance Note on Audit of Internal Financial Controls OverFinancial Reporting issued by the Institute of Chartered Accountants of India. Theseresponsibilities include the design implementation and maintenance of adequate internalfinancial controls that were operating effectively for ensuring the orderly and efficientconduct of its business including adherence to respective 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.
Our responsibility is to express an opinion on the Company's internalfinancial controls over financial reporting based on our audit. We conducted our audit inaccordance with the Guidance Note on Audit of Internal Financial Controls over FinancialReporting (the 'Guidance Note') and the Standards on Auditing issued by ICAI and deemedto be prescribed 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 ICAI. Those Standards and the Guidance Note require that we complywith ethical requirements and plan and perform the audit to obtain reasonable assuranceabout whether adequate internal financial controls over financial reporting wereestablished and maintained and if such controls operated effectively in all materialrespects.
Our audit involves performing procedures to obtain audit evidence aboutthe adequacy of the internal financial controls system over financial reporting and theiroperating effectiveness. Our audit of internal financial controls over financial reportingincluded obtaining an understanding of internal financial controls over financialreporting assessing the risk that a material weakness exists and testing and evaluatingthe design and operating effectiveness of internal control based on the assessed risk. Theprocedures selected depend on the auditor's judgment including the assessment of therisks of material misstatement of the Ind AS financial statements whether due to fraud orerror.
We believe that the audit evidence we have obtained is sufficient andappropriate to provide a basis for our audit opinion on the Company's internal financialcontrols system over financial reporting.
Meaning of Internal Financial Controls Over Financial Reporting
A Company's internal financial control over financial reporting is aprocess designed to provide reasonable assurance regarding the reliability of financialreporting and the preparation of Ind AS financial statements for external purposes inaccordance with generally accepted accounting principles. A Company's internal financialcontrol over financial reporting includes those policies and procedures that:
1) pertain to the maintenance of records that in reasonable detailaccurately and fairly reflect the transactions and dispositions of the assets of theCompany;
2) provide reasonable assurance thattransactions are recorded asnecessary to permit preparation of Ind AS financial statements in accordance withgenerally accepted accounting principles and that receipts and expenditures of theCompany are being made only in accordance with authorisations of Management and directorsof the Company; and
3) provide reasonable assurance regarding prevention ortimely detectionof unauthorised acquisition use or disposition of the Company's assets that could have amaterial effect on the
nd AS financ i al statements
Inherent Limitations of Internal Financial Controls Over FinancialReporting
Because of the inherent limitations of internal financial controls overfinancial reporting 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 overfinancial reporting to future periods are subject to the risk that the internal financialcontrol over financial reporting may become inadequate because of changes in conditionsor that the degree of compliance with the policies or procedures may deteriorate.
In our opinion the Company has in all material respects an adequateinternal financial controls system over financial reporting and such internal financialcontrols over financial reporting were operating effectively as at 31 March 2020 based onthe internal control over financial reporting criteria established by the Companyconsidering the essential components of internal control stated in the Guidance Note onAudit of Internal Financial Controls Over Financial Reporting issued by the ICAI
Annexure- B to the Independent Auditors' Report on the Ind AS FinancialStatements
The Annexure B referred to in the Independent Auditors' Report of evendate to the Members of Shakti Pumps (India) Limited ('the Company') on the financialstatements for the year ended 31 March 2020 we report that:
i. In respect of its Fixed Assets:
a. The Company has maintained proper records showing full includingquantitative details and situation of fixed assets in respect of all its locations on thebasis of available information.
b. As explained to us all the fixed Assets have been physicallyverified during the year by the management in accordance with a regular programme ofverification of the fixed assets at reasonable intervals which in our opinion isreasonable having regard to the size of the company and the nature of its assets.According to the information and explanation given to us no materia discrepancies werenoticed on such physical verification
c. As per the records and information and explanation given to ustitle deeds of immovable properties are in the name of the Company
ii. In respect of its inventories:
a. The inventory (excluding stocks with third parties) has beenphysically verified by the management during the year at reasonable interval. In respectof inventory lying with third parties these have substantially been confirmed by them. Inour opinion the frequency of verification is reasonable.
b. In our opinion the procedures of physical verification of inventoryfollowed by the management are reasonable and adequate in relation to the size of thecompany and nature of its business.
c. On the basis of our examination of the inventory records in ouropinion the Company is maintaining proper records of inventory. As explained to us therewas no material discrepancies noticed on physical verification.
iii. According to the information and explanations given to us theCompany has not granted any loans secured or unsecured to companies firms LimitedLiability Partnerships or other parties covered in the register maintained under section189 of the Companies Act 2013. Accordingly the provisions of clause 3(iii) (a) (b) and(c) of the Order are not applicable to the Company and hence not commented upon.
iv. In our opinion and according to the information and explanationsgiven to us provisions of section 185 and 186 of the Companies Act 2013 in respect ofloans to directors including entities in which they are interested and in respect of loansand advances given investments made and guarantees and securities given have beencomplied with by the Company.
v. The Company has not accepted any deposits within the meaning ofSections 73 to 76 of the Act and the Companies (Acceptance of Deposits) Rules 2014 (asamended). Accordingly the provisions of clause 3(v) of the Order are not applicable
vi. We have broadly reviewed the books of account maintained by theCompany pursuant to the rules made by the Central Government for the maintenance of costrecords under section 148(1) of the Companies Act 2013 related to the manufacture ofelectrical goods and are of the opinion that prima facie the specified accounts andrecords have been made and maintained. We have not however made a detailed examinationof the same
Annexure- B to the Independent Auditors' Report on the Ind AS
Financial Statements (continued)
vii. (a) The Company is regular in depositing with appropriateauthorities undisputed statutory dues including provident fund employees' stateinsurance income-tax GST duty of custom cess and other statutory dues applicable toit.
(b) According to the information and explanations given to us noundisputed amounts payable in respect of provident fund employees' state insuranceincome-tax duty of custom cess and other statutory dues were outstanding at the yearend for a period of more than six months from the date they became payable.
(c) According to the records of the Company the dues of income-taxCommercial Tax which have not been deposited on account of any dispute are as follows.
|Name of Statute ||Nature of Dues ||Amount Involved Unpaid/ Unadjusted ||Period to which the amount relates (FY) ||Forum where the Dispute is Pending |
| || ||(Rs. Lacs) ||(Rs. Lacs) || || |
|Commercial Tax ||VAT & Entry Tax ||70.44 ||70.44 ||2010-11 ||M.P. High Court Indore Bench |
|Commercial Tax ||VAT & CST ||6.16 ||2.45 ||2010-11 ||M.P. Commercial Tax Appellate Board Bhopal |
|Commercial Tax ||VAT & CST ||12.07 ||3.27 ||2012-13 ||M.P. Commercial Tax Appellate Board Bhopa |
|Commercial Tax ||CST & Entry Tax ||11.39 ||- ||2013-14 ||M.P. Commercial Tax Appellate Board Bhopa |
|Commercial Tax ||CST ||9.99 ||7.49 ||2014-15 ||Appellate Authority Commercial Tax Indore |
|Commercial Tax ||VAT & CST ||42.29 ||31.59 ||2015-16 ||Appellate Authority Commercial Tax Indore |
|Commercial Tax ||VAT & CST ||30.17 ||20.80 ||2016-17 ||Appellate Authority Commercial Tax Indore |
|Commercial Tax ||VAT & CST ||5.88 ||5.88 ||2012-13 to 2015-16 ||Tribuna |
|Income Tax Act 1961 ||Income Tax ||3759.64 ||2982.83 ||2009-10 to 2016-17 ||CIT Appeal Bhopal/lndore |
viii. In our opinion and according to the information and explanationsgiven by the management we are of the opinion that the Company has not defaulted inrepayment of dues to banks. The Company did not have any outstanding dues in respect of afinancial institution or debenture holders or government
ix. According to the information and explanations given by themanagement the Company has not raised any money by way of initial public offer/ furtherpublic offer/ debt instruments and term loans hence reporting under clause (ix) is notapplicable to the Company and hence not commented upon
x. Based upon the audit procedures performed for the purpose ofreporting the true and fair view of the financial statements and according to theinformation and explanations given by the management we report that no fraud by thecompany or no material fraud on the company by the officers and employees of the Companyhas been noticed or reported during the year.
xi. According to the information and explanations given by themanagement the managerial remuneration has been paid / provided in accordance with therequisite approvals mandated by the provisions of section 197 read with Schedule V to theCompanies Act 2013.
xii. In our opinion the Company is not a nidhi company. Therefore theprovisions of clause 3(xii) of the order are not applicable to the Company and hence notcommented upon.
xiii. According to the information and explanations given by themanagement transactions with the related parties are in compliance with section 177 and188 of Companies Act 2013 where applicable and the details have been disclosed in thenotes to the financial statements as required by the applicable accounting standards.
xiv. According to the information and explanations given to us and onan overall examination of the balance sheet the company has not made any preferentialallotment or private placement of shares or fully or partly convertible debentures duringthe year under review and hence reporting requirements under clause 3(xiv) are notapplicable to the company and not commented upon.
xv. According to the information and explanations given by themanagement the Company has not entered into any noncash transactions with directors orpersons connected with him as referred to in section 192 of Companies Act 2013.
xvi. According to the information and explanations given to us theprovisions of section 45-1A of the Reserve Bank of India Act 1934 are not applicable tothe Company.
| ||For PGS & Associates Chartered Accountants |
| ||Firm Registration Number: 122384W |
|Place: Mumbai ||Premal Gandhi |
|Date: June 292020 ||Partner Membership Number: 111592 |