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Shankara Building Products Ltd.

BSE: 540425 Sector: Others
NSE: SHANKARA ISIN Code: INE274V01019
BSE 00:00 | 14 May 378.20 7.45
(2.01%)
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373.95

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396.35

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373.95

NSE 00:00 | 14 May 378.20 7.20
(1.94%)
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371.00

HIGH

396.95

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OPEN 373.95
PREVIOUS CLOSE 370.75
VOLUME 20907
52-Week high 518.30
52-Week low 229.00
P/E 98.49
Mkt Cap.(Rs cr) 864
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 373.95
CLOSE 370.75
VOLUME 20907
52-Week high 518.30
52-Week low 229.00
P/E 98.49
Mkt Cap.(Rs cr) 864
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Shankara Building Products Ltd. (SHANKARA) - Auditors Report

Company auditors report

INDEPENDENT AUDITOR'S REPORT

To the Members of

Shankara Building Products Limited Bengaluru - 560001.

Report on the Audit of the Standalone Financial Statements Opinion

We have audited the Standalone Ind AS financial statements of Shankara BuildingProducts Limited Bengaluru ("the Company") which comprise the standalonebalance sheet as at March 31 2020 and the standalone statement of profit and loss(including other comprehensive income) standalone statement of changes in equity andstandalone statement of cash flows for the year then ended and notes to the StandaloneInd AS financial statements (including a note on impact on COVID-19) including a summaryof significant accounting policies and other explanatory information (hereinafter referredto as "the Standalone Ind AS financial statements").

In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid Standalone Ind AS financial statements give the informationrequired by the Companies Act 2013 ("Act") in the manner so required and give atrue and fair view in conformity with the accounting principles generally accepted inIndia of the state of affairs of the Company as at March 31 2020 its profit and othercomprehensive income changes in equity and its cash flows for the year ended on thatdate.

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 Auditor's Responsibilities for the Audit of the Standalone Ind ASFinancial Statements section of our report. We are independent of the Company inaccordance with the Code of Ethics issued by the Institute of Chartered Accountants ofIndia together with the ethical requirements that are relevant to our audit of theStandalone Ind AS financial statements under the provisions of the Act and the Rulesthereunder and we have fulfilled our other ethical responsibilities in accordance withthese requirements and the Code of Ethics. We believe that the audit evidence we haveobtained is sufficient and appropriate to provide a basis for our opinion.

Key Audit Matters

Key audit matters are those matters that in our professional judgment were of mostsignificance in our audit of the Standalone Ind AS financial statements of the currentyear. These matters were addressed in the context of our audit of the Standalone Ind ASfinancial statements and in forming our opinion thereon and we do not provide a separateopinion on these matters.

Key audit matter How the matter was addressed in our audit
DISCOUNT FROM SUPPLIER
• Comparative analysis of movement of discount receivable during current year with that of previous year.
The company avails discount from its suppliers which are either based on Memorandum of Understanding (MoU) with the supplier (‘MoU based discounts') or oral negotiations with the supplier considering prevailing steel prices (‘Non-MoU based discounts'). The calculation of discount is dependent on an estimation of whether amounts due as discount receivable have been earned at the balance sheet date. In relation to calculation of Non-MoU based discount significant judgment is involved with respect to the realization of discount in the absence of any formal agreement/correspondence. We focused on this issue since such discounts represent a material reduction in cost of materials consumed and trade goods. • Tested the accuracy of calculation of discount receivable by verifying inventory purchased from invoicing done by the supplier during the year and in case of MoU based discount tested the rate of discount from MoU and in case of Non-MoU based discount we confirmed its reasonableness by comparing rate of discount availed with invoice rate.
• Verified credit notes on sample basis issued by the supplier for discounts previously recognized that provides an empirical evidence for the realization of discounts.
• Review of ageing analysis of discount receivable at year end and discussion with management regarding the realization of discount receivable.
INVENTORY EXISTENCE AND VALUATION
Inventory is held in various locations by the Company. There are complexities and manual process involved in determining inventory quantities on hand and valuation of the same due to the diverse & numerous inventory products multiple storage locations and price fluctuations of products. Therefore inventory quantities and valuation is identified as a key audit Matter. • We have attended inventory counts at certain locations which we selected based on financial significance and risk observed management's inventory count procedures to assess the effectiveness selected a sample of inventory products and compared the quantities counted to the quantities recorded and ensured inventory adjustments if any are recorded in the books of accounts.
• Reviewed the internal audit report regarding physical verification of inventories and traced adjustments on sample basis made on basis of such report to the books of accounts.
• Comparative analysis of inventory as at the end of the year with the inventory at the beginning of the year.
• we assessed whether the management's controls relating to inventory's valuation are appropriately designed and implemented. Verification of the correctness of valuation made by the management on a sample basis with regard to the cost and net realizable value of inventory.

Information Other than the Standalone Ind AS financial statements and Auditor's ReportThereon

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 financial statements and our auditor's reportthereon. Our opinion on the Standalone Ind AS 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 Ind AS financial statements ourresponsibility is to read the other information and in doing so consider whether theother information is materially inconsistent with the Standalone Ind AS financialstatements or our knowledge obtained in the audit or otherwise appears to be materiallymisstated. If based on the work we have performed we conclude that there is a materialmisstatement of this other information we are required to report that fact. We havenothing to report in this regard.

Responsibilities of the Management and Those Charged with Governance for the StandaloneInd AS 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 Ind AS financialstatements that give a true and fair view of the financial position financial performanceincluding other comprehensive income changes in equity and cash flows of the Company inaccordance with the accounting principles generally accepted in India including theIndian Accounting Standards (Ind AS) specified under Section 133 of the Act. 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 judgments and estimates that are reasonable and prudent; anddesign implementation and maintenance of adequate internal financial controls that wereoperating effectively for ensuring the accuracy and completeness of the accountingrecords relevant to the preparation and presentation of the Standalone Ind AS financialstatements that give a true and fair view and are free from material misstatement whetherdue to fraud or error. In preparing the Standalone Ind AS financial statements the Boardof Directors is responsible for assessing the Company's ability to continue as a goingconcern disclosing as applicable matters related to going concern and using the goingconcern basis of accounting unless management either intends to liquidate the Company orto cease operations or has no realistic alternative but to do so.

Those Board of Directors are also responsible for overseeing the Company's financialreporting process.

Auditor's Responsibilities for the Audit of the Standalone Ind AS financial statements

Our objectives are to obtain reasonable assurance about whether the Standalone Ind ASfinancial 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 Ind AS financial statements. As part of an audit inaccordance with SAs we exercise professional judgment and maintain professionalskepticism throughout the audit. We also:- Identify and assess the risks of materialmisstatement of the standalone Ind AS financial statements whether due to fraud or errordesign and perform audit procedures responsive to those risks and obtain audit evidencethat is sufficient and appropriate to provide a basis for our opinion. The risk of notdetecting a material misstatement resulting from fraud is higher than for one resultingfrom error as fraud may involve collusion forgery intentional omissionsmisrepresentations 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 system with reference to 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 made by management.

- Conclude on the appropriateness of management's use of the going concern basis ofaccounting 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 Ind AS financial statements or if such disclosures are inadequate tomodify our opinion. Our conclusions are based on the audit evidence obtained up to thedate of our auditor's report. However future events or conditions may cause the Companyto cease to continue as a going concern.

- Evaluate the overall presentation structure and content of the Standalone Ind ASfinancial statements including the disclosures and whether the Standalone Ind ASfinancial statements represent the underlying transactions and events in a manner thatachieves fair presentation.

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 Ind AS financialstatements of the current period and are therefore the key audit matters. We describethese matters in our auditor's report unless law or regulation precludes public disclosureabout the matter or when in extremely rare circumstances we determine that a mattershould not be communicated in our report because the adverse consequences of doing sowould reasonably be expected to outweigh the public interest benefits of suchcommunication.

Other Matter

The comparative financial information of the Company for the year ended March 31st2019 prepared in accordance with Ind AS included in this Statement has been audited by ourpredecessor who has expressed an unmodified opinion vide their report dated May 09th2019. Our report is not modified in respect of this matter.

Report on Other Legal and Regulatory Requirements

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 1" a statement on the matters specified in paragraphs 3 and 4 ofthe Order to the extent applicable.

As required by Section 143(3) of the Act we report that: (a) We have sought andobtained all the information and explanations which to the best of our knowledge andbelief 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(including other comprehensive income) the standalone Statement of Changes in Equity andthe standalone Cash Flows statement dealt with by this Report are in agreement with thebooks of account.

(d) In our opinion the aforesaid Standalone Ind AS financial statements comply withthe Ind AS specified under section 133 of the Act read with Rule 7 of the Companies(Accounts) Rules 2014.

(e) On the basis of the written representations received from the directors as on March31 2020 taken on record by the Board of Directors none of the directors is disqualifiedas on March 31 2020 from being appointed as a director in terms of Section 164(2) of theAct.

(f) With respect to the adequacy of the internal financial controls with reference tofinancial statements of the Company and the operating effectiveness of such controlsrefer to our separate Report in "Annexure 2".

(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 the remuneration paid /provided during the year to directors is in accordance with the provisions of section 197of the Act With respect to the other matters to be included in the Auditor's Report inaccordance with Rule 11 of the Companies (Audit and Auditor's) 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 March 31 2020 onits financial position in its Standalone Ind AS financial statements - refer note 39 tothe Standalone Ind AS financial statements;

ii. the Company did not have any long-term contract 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;

iv. The disclosures in the Standalone Ind AS financial statements regarding holdings aswell as dealings in specified bank notes during the period from November 8 2016 toDecember 30 2016 have not been made in these Standalone Ind AS financial statements sincethey do not pertain to the financial year ended March 31 2020.

Annexure 1 referred to in our report under "Report on Other Legal and Regulatoryrequirements Para 1" of even date on the accounts for the year ended March 31 2020

i. (a) The company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets;

(b) Fixed assets are verified physically by the management in accordance with a regularprogramme at reasonable intervals. In our opinion the interval is reasonable having regardto the size of the Company and the nature of its assets. No material discrepancies werenoticed on such verification.

(c) On the basis of examination of records of the company the title deeds of immovableproperties are held in the name of the company.

ii. The inventory has been physically verified at reasonable intervals during the yearby the management. The discrepancies between the physical stocks and the book were notmaterial and have been properly dealt with in the books of account.

iii. The company has not granted any loan secured or unsecured to a company firm orother parties covered in the register maintained under Section 189 of the Companies Act2013. Accordingly the provisions of clause 3 (iii) (a) (b) and (c) of the order are notapplicable to the company.

iv. According to the information and explanations given to us the company has compliedwith provisions of section 185 and 186 of the Act with respect to loans investmentsguarantees and security as applicable.

v. The company has not accepted any deposit as mentioned in the directives issued bythe Reserve Bank of India and the provisions of sections 73 to 76 of the Act or any otherrelevant provisions of the Act and the rules framed thereunder. Accordingly the paragraphof clause 3(v) of the Order is not applicable.

vi. The Central Government has not prescribed the maintenance of cost records for anyof the products of the company under sub-section (1) of section 148 of the Act.

vii. (a) According to the records provided to us the company is generally regular indepositing undisputed statutory dues including Provident Fund Employees' State InsuranceIncome Tax (including Tax Deducted at Source) Duty of Customs Goods and Service TaxCess and other statutory dues with the appropriate authorities wherever applicable. Wehave observed belated remittances of income tax deducted at source profession tax goodsand service tax provident fund and employees' state insurance in a few instances.According to the information and explanations given to us no undisputed amounts payablein respect of Income Tax Duty of Customs Goods and Service Tax and Cess were in arrearsas at March 31 2020 for a period of more than six months from the date they becamepayable.

(b) According to the information and explanation given to us the dues outstanding withrespect to income tax sales tax service tax duty of customs duty of excise valueadded tax cess and goods and service tax on account of any dispute are as follows:

Name of the statute: Income Tax Act 1961

Assessment year Nature of dues Amount (`) Forum where the dispute is Pending
2008-2009 Income Tax* 3620030 High Court of Karnataka
2018-2019 Income Tax** 2921070 Commissioner of Income Tax (Appeals)
Bengaluru

*out of it `3557270/- has been remitted by the company under protest **out of it`292107/- has been remitted by the company under protest

Name of the statute: The Maharashtra Value Added Tax Act 2002

Financial year Nature of dues Amount (`) Forum where the dispute is Pending
2010-2011 Value added tax* 4050930 Joint Commissioner of Sales Tax
Appeal (IV) Bandra (E)
2012-2013 Value added tax** 18763706 Joint Commissioner of Sales Tax
Appeal (IV) Bandra (E)

Appeal (IV) Bandra (E)

* out of it `500000/- has been remitted by the company under protest ** out of it`1500000/- has been remitted by the company under protest

Name of the statute: The Central Sales Tax 1956
Financial year Nature of dues Amount (`) Forum where the dispute is Pending
2012-2013 Central sales tax* 726462 Joint Commissioner of Sales Tax Appeal (IV) Bandra (E)

viii. The company has not defaulted in repayment of loans or borrowings to banks. Thecompany did not borrow or avail loan from Government or financial institution and has notissued any debenture. Hence the question of delay in repayment of dues to Governmentfinancial institution and debenture holder does not arise.

ix. (a) The company has not raised any money by the way of initial public offer orfurther public offer (including debt instruments) during the year. Hence reporting onutilization of such money does not arise.

(b) According to the information and explanations given to us the company has utilizedthe term loans for the purposes for which they were obtained

x. Based on the audit procedures adopted and information and explanations given to usby the management no fraud on the company by its officers or employees or by the companyhas been noticed or reported during the course of our audit.

xi. According to the information and explanation given to us managerial remunerationhas been paid / provided in accordance with the requisite approvals mandated by theprovisions of section 197 read with Schedule V to the Act.

xii. The Company is not a Nidhi company and as such this clause of the Order is notapplicable.

xiii. According to the information and explanation given to us all transactionsentered into by the company with the related parties are in compliance with the sections177 and 188 of the Act where applicable. The details of such related party transactionshave been disclosed in the Standalone Ind AS financial statements as required underapplicable accounting standards.

xiv. During the year the company has not made any preferential allotment or privateplacement of shares or fully or partly convertible debentures under section 42 of theCompanies Act 2013. Hence reporting under this clause does not arise.

xv. In our opinion and according to the information and explanations given to us thecompany has not entered into any non-cash transactions with directors or persons connectedwith them.

xvi. The company does not require registration under section 45-IA of the Reserve Bankof India Act 1934. Hence matters relating to transfer to Statutory Reserve are notapplicable.

Annexure – 2 - Report on the Internal Financial Controls with reference toFinancial Statements under Clause (i) of Sub-section 3 of Section 143 of the CompaniesAct 2013 ("the Act")

We have audited the internal financial controls with reference to standalone financialstatements of Shankara Building Products Limited Bengaluru ("the Company") asof March 31 2020 in conjunction with our audit of the standalone financial statements ofthe Company for the year ended on that date.

Management's Responsibility for Internal Financial Controls with reference to FinancialStatements

The Company's management is responsible for establishing and maintaining internalfinancial controls with reference to financial statements 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 Institute of Chartered Accountants ofIndia ("the ICAI"). These responsibilities include the design implementationand maintenance of adequate internal financial controls with reference to financialstatements that were operating effectively for ensuring the orderly and efficient conductof its business including adherence to company's policies the safeguarding of itsassets the prevention and detection of frauds and errors the accuracy and completenessof the accounting records and the timely preparation of reliable financial informationas required under the Companies Act 2013.

Auditors' Responsibility

Our responsibility is to express an opinion on the Company's internal financialcontrols with reference to financial statements based on our audit. We conducted our auditin accordance with the Guidance Note on Audit of Internal Financial Controls OverFinancial Reporting (the "Guidance Note") and the Standards on Auditing issuedby ICAI and deemed to be prescribed under section 143(10) of the Companies Act 2013 tothe extent applicable to an audit of internal financial controls with reference tofinancial statements 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 controlswith reference to financial statements was established and maintained and if such controlsoperated effectively in all material respects.

Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal financial controls system with reference to financial statements and theiroperating effectiveness. Our audit of internal financial controls with reference tofinancial statements included obtaining an understanding of internal financial controlswith reference to financial statements assessing the risk that a material weaknessexists and testing and evaluating the design and operating effectiveness of internalcontrol based on the assessed risk. The procedures selected depend on the auditor'sjudgement including the assessment of the risks of material misstatement of the financialstatements 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 systemwith reference to financial statements.

Meaning of Internal Financial Controls Over Financial Reporting

A company's internal financial control with reference to financial statements is aprocess designed to provide reasonable assurance regarding the reliability of financialreporting and the preparation of financial statements for external purposes in accordancewith generally accepted accounting principles.

A company's internal financial control with reference to financial statements includesthose policies and procedures that;

I. pertain to the maintenance of records that in reasonable detail accurately andfairly reflect the transactions and dispositions of the assets of the company;

II. provide reasonable assurance that transactions are recorded as necessary to permitpreparation of financial statements in accordance with generally accepted accountingprinciples and that receipts and expenditures of the company are being made only inaccordance with authorisations of management and directors of the company; and

III. 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 financial statements.

Inherent Limitations of Internal Financial Controls Over Financial Reporting

Because of the inherent limitations of internal financial controls with reference tofinancial statements including the possibility of collusion or improper managementoverride of controls material misstatements due to error or fraud may occur and not bedetected. Also projections of any evaluation of the internal financial controls withreference to financial statements to future periods are subject to the risk that theinternal financial control with reference to financial statements may become inadequatebecause of changes in conditions or that the degree of compliance with the policies orprocedures may deteriorate.

Opinion

In our opinion the Company has in all material respects an adequate internalfinancial controls system with reference to financial statements and such internalfinancial controls with reference to financial statements were operating effectively as atMach 31 2020 based on; i. existing policies and procedures adopted by the Company forensuring orderly and efficient conduct of business. ii. continuous adherence to Company'spolicies. iii. existing procedures in relation to safeguarding of Company's fixed assetsinvestments inventories receivables loans and advances made and cash and bank balances.iv. existing system to prevent and detect fraud and errors. v. accuracy and completenessof Company's accounting records; and vi. existing capacity to prepare timely and reliablefinancial information

For Sundaram & Srinivasan
Chartered Accountants
Firm Registration No. 004207S
Venkatasubramanian.S
Partner
Membership Number : 219238
Place : Chennai
UDIN: 20219238AAAAAV1737
Date : June 10 2020

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