TO THE MEMBERS OF SHARIKA ENTERPRISES LIMITED
Report on the Audit of the Standalone Financial Statements
We have audited the accompanying standalone financial statements of SHARIKA ENTERPRISESLIMITED ("the Company") which comprise the Balance Sheet as at March 31 2020the Statement of Profit and Loss and the Statement of Cash Flows for the year ended onthat date and a summary of the significant accounting policies and other explanatoryinformation.
In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid standalone financial statements give the information requiredby the Companies Act 2013 ("the Act") in the manner so required and give a trueand fair view in conformity with the Indian Accounting Standards prescribed under section133 of the Act read with the Companies (Accounting Standards) Rules 2006 and otheraccounting principles generally accepted in India of the state of affairs of the Companyas at March 31 2020 the net profit and its cash flows for the year ended on that date.
Basis for Opinion
We conducted our audit of the standalone financial statements in accordance with theStandards on Auditing (SAs) specified under section 143(10) of the Act. Ourresponsibilities under those Standards are further described in the Auditor'sResponsibilities for the Audit of the Standalone Financial Statements section of ourreport. We are independent of the Company in accordance with the Code of Ethics issued bythe Institute of Chartered Accountants of India (ICAI) together with the independencerequirements that are relevant to our audit of the standalone financial statements underthe provisions of the Act and the Rules made thereunder and we have fulfilled our otherethical responsibilities in accordance with these requirements and the ICAI's Code ofEthics. We believe that the audit evidence we have obtained is sufficient and appropriateto provide a basis for audit opinion on the standalone financial statements.
Key Audit Matters
Key audit matters are those matters that in our professional judgment were of mostsignificance in our audit of the standalone financial statements of the current period.These matters were addressed in the context of our audit of the standalone financialstatements as a whole and in forming our opinion thereon and we do not provide aseparate opinion on these matters. We have determined the matters described below to bethe key audit matters to be communicated in our report.
a) The company has investments in Subsidiary and Associate Companies. These investmentsare carried out at cost less adjustment on account of accumulated losses of the respectivesubsidiary and associate companies. The company has disclosed the loss based on thestandalone audited financial statements of the respective companies. (Refer Note 11 of thestandalone financial statements)
b) We are unable to verify physical inventories due to the size and nature ofinventories and we are also unable to satisfy ourselves by alternative audit proceduresconcerning the inventories held at 31st March 2020. Also our presence at client premisesfor the physical verification of inventory was impracticable under current lock-downrestrictions imposed by the Government.
We have therefore relied on the information explanations and other documents providedby the Management. How'ever as explained by Management physical verification ofInventories has been conducted at reasonable intervals of some of the items of Inventoryand no material discrepancies were observed.
As per the accounting policy of the Company the Company is valuing its inventories atlower of cost and net realizable value. Since proper Inventory records are not maintainedexact cost is not ascertainable and therefore the impact if any on account of valuationof inventories on basis of actual cost is not quantifiable and thus not provided for.
c) Balances under trade receivables and trade payables loans and advances and depositsgiven by the Company and parties from whom unsecured loans have been taken are subject toconfirmations and adjustments if any required upon such confirmations arc notascertainable and hence not provided for. As explained by the management no externalbalance confirmations were received due to lockdown imposed by the Government due toCovid-19.
d) The Fixed Deposits shown in the financial statement are confirmed by the management.The supported documents could not be arranged during the audit period.
e) The GST Input tax credit in the books of accounts is not in reconciliation withcredit shown at the GST portal. We have not received any reconciliation for the same fromthe Management. (Refer Note 8 of the standalone financial statements)
Information Other than the Financial Statements and Auditor's Report Thereon
The Company's Board of Directors are responsible for the other information. The otherinformation comprises the information included in the Management Discussion and AnalysisBoard's Report including Annexures to Board's Report Business Responsibility ReportCorporate Governance and Shareholder's Information but does not include the standalonefinancial statements and our auditor's report thereon.
Our opinion on the standalone financial statements does not cover the other informationand we do not express any form of assurance conclusion thereon.
In connection with our audit of the standalone financial statements our responsibilityis to read the other information and in doing so consider whether the other informationis materially inconsistent with the standalone financial statements or our knowledgeobtained in the audit or otherwise appears to be materially misstated.
If based on 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.
Management's Responsibility for the Standalone Financial Statements
The Company's management and Board of Directors are responsible for the matters statedin section 134(5) of the Act with respect to the preparation of these standalone financialstatements that give a true and fair view of the state of affairs as evidence by financialposition financial performance changes in equity and cash flows of the Company inaccordaiiqe\withThe accounting principles generally accepted in India including theAccounting Standards (AS) another accounting principles generally accepted in
India. This responsibility also includes maintenance of adequate accounting records inaccordance with the provisions of the Act for safeguarding of the assets of the Companyand for preventing and detecting frauds and other irregularities; selection andapplication of appropriate accounting policies; making judgments and estimates that arereasonable and prudent; and design implementation and maintenance of adequate internalfinancial controls that were operating effectively for ensuring the accuracy andcompleteness of the accounting records relevant to the preparation and presentation ofthe standalone financial statements that give a true and fair view and are free frommaterial misstatement whether due to fraud or error.
In preparing the standalone financial statements management and Board of Directors areresponsible 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 is also responsible for overseeing the Company's financialreporting process.
Auditor's Responsibilities for the Audit of the Standalone Financial Statements
Our objectives are to obtain reasonable assurance about whether the standalonefinancial statements as a whole are free from material misstatement whether due to fraudor error and to issue an auditor's report that includes our opinion. Reasonable assuranceis a high level of assurance but is not a guarantee that an audit conducted in accordancewith SAs will always detect a material misstatement when it exists. Misstatements canarise from fraud or error and are considered material if individually or in theaggregate they could reasonably be expected to influence the economic decisions of userstaken on the basis of these standalone financial statements.
As part of an audit in accordance with SAs we exercise professional judgment andmaintain professional scepticism 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 financial controls relevant to the audit inorder to design audit procedures 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 controls 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 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 financial statements may be influenced. We considerquantitative materiality and qualitative factors in (i) planning the scope of our auditwork and in evaluating the results of our work; and (ii) to evaluate the effect of anyidentified misstatements in the 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 Section 143(3) of the Act based on our audit we report that:
a) We have sought and obtained subject to key audit matters all the information andexplanations which to the best of our knowledge and belief were necessary for the purposesof 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 and the Statement of Cash Flowdealt with by this Report are in agreement with the relevant books of account.
d) In our opinion the aforesaid standalone financial statements comply with the ASspecified 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 over financialreporting of the Company and the operating effectiveness of such controls refer to ourseparate Report in "Annexure A".
g) With respect to the other matters to be included in the Auditors' 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 as amended inour opinion and to the best of our information and according to the explanations given tous:
1. The Company has not disclosed the impact of pending litigations on its financialposition in its financial statements.
ii. The Company did not have any long-term contracts including derivative contracts forwhich there were any material foreseeable losses.
iii. There were no amounts which were required to be transferred to the InvestorEducation and Protection Fund by the Company.
2. As required by the Companies (Auditor's Report) Order 2016 ("the Order")issued by the Central Government in terms of Section 143(=11) of the Act we give in"Annexure B" a statement on the matters specified in paragraphs 3 and 4 of theOrder.
For WDK & ASSOCIATES
Chartered Accountants FRN: 016389N
.Membership Np.091143 / UDIN: 20091143AAAAAY5988
Place: New Delhi
Date: 30th July 2020
Annexure - A to the Independent Auditors' Report
(Refer to paragraph 1(f) under Report on other Legal & RegulatoryRequirements' section of our report to the Members of Sharika Enterprises Limited)
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 SHARIKAENTERPRISES LIMITED ("the Company") as of March 31 2020 in conjunction with ouraudit of the financial statements of the Company for the year ended on that date.
In our opinion the Company has in all material respects an adequate internalfinancial control system with reference to financial statements and such internalfinancial controls were operating effectively as at 31 March 2020 based on the internalfinancial controls with reference to financial statements criteria established by theCompany considering the essential components of internal controls stated in the GuidanceNote on Audit of Internal Financial Controls over Financial Reporting issued by theInstitute of Chartered Accountants of India (the "Guidance note").
Management's Responsibility for Internal Financial Controls
The Company's management 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 (TCAF). These responsibilitiesinclude the design implementation and maintenance of adequate internal financial controlsthat were operating effectively for ensuring the orderly and efficient conduct of itsbusiness including adherence to 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 issued by ICAI and deemedto be prescribed under section 143(10) of the Companies Act 2013 to the extentapplicable to an audit of internal financial controls both applicable to an audit ofInternal Financial Controls and both issued by the Institute of Chartered Accountants ofIndia. Those Standards and the Guidance Note require that we comply with ethicalrequirements and plan and perform the audit to obtain reasonable assurance about whetheradequate internal financial controls over financial reporting was established andmaintained and if such controls 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 Company's internal financial controls systemover financial reporting.
Meaning of Internal Financial Controls with reference to Financial Statements
A company's internal financial controls 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 controls with reference to financial statements includethose 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 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
(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 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.
For WDK & ASSOCIATES Chartered Accountants / FRN: 016389N
Place: New Delhi
Date: 30th July 2020
Annexure - B to the Auditors' Report
The Annexure referred to paragraph 2 under Report on other Legal & RegulatoryRequirements' section of our report to the Members of Sharika Enterprises Limited of evendate we report that:
(i) (a) The Company has maintained proper records showing full particulars includingquantitative details and situation of the fixed assets.
(b) The fixed assets were physically verified during the year under audit by theManagement in accordance with a regular programme of verification. In our opinion thisperiodicity of physical verification is reasonable having regard to the size of theCompany and the nature of its assets.
(c) According to the information and explanations given to us the title deeds ofimmovable properties are held in the name of the Company.
(ii) Some of the items of the inventories are physically verified during the year bythe management and discrepancies if any noticed on verification between the physicalstocks and the book records were adjusted in books.
(iii) (a) According to the information and explanations given to us and on the basis ofour examination of the books of account the Company has granted unsecured loans tocompanies firms limited liability partnerships or other parties covered in the registermaintained under section 189 of the Companies Act 2013.
(b) The terms of arrangements do not stipulate any repayment schedule and the loans arerepayable on demand. Accordingly paragraph 3 (iii) (b) of the Order is not commented uponin respect of repayment of the principal amount.
(c) In the absence of any stipulated repayment schedule we cannot comment on theoverdue amounts in respect of the loans granted to the bodies corporate listed in theregister maintained under section 189 of the Act.
(iv) In our opinion and according to the information and explanations given to us thecompany has complied with the provisions of Section 185 &186 of the Act in respect ofgrant of loans and investments made. The loans given are to the associate and wholly ownedsubsidiary Company. However in the absence of any formal agreement no interest has beenrecovered or accrued on the loans given.
(v) The Company has not accepted any deposit from the public covered under Section 73to 76 of the Companies Act 2013. Therefore the provisions of paragraph 3(v) of the Orderare not applicable to the Company.
(vi) To the best of our knowledge and as explained to us the Central Government hasnot specified the maintenance of cost records under section 148 (1) of the Companies Act2013 for the business activities carried out by the Company Accordingly paragraph 3(vi)of the Order is not applicable to the company.
(vii) a) According to the information and explanation given to us and on the basis ofour examination of the records of the company amounts deducted/accrued in the books ofaccount in respect of undisputed statutory dues including Provident Fund Employees StateInsurance Income Tax Goods and Service Tax Custom Duty Cess and other material dueshave been generally deposited during the period by the Company with appropriateauthorities with some delays.
b) There is no undisputed amounts payable in respect of Provident Fund Employees StateInsurance Income Tax Goods and Service Tax Custom Duty Cess and other material dues inarrears as at March 31 2020 for a period of more than six months from the date theybecame payable.
c) According to the information and explanations given to us there are no materialdues of income tax Goods and Service Tax duty of customs and cess which have not beendeposited with the appropriate authorities on account of any dispute. However there iscertain amount payable on account of TDS/Income tax which is yet to be deposited pendingfinalisation/settlement of actual amount payable.
viii) Based on the records examined by us and as per the information and explanationsgiven to us the payment of principal as well as interest dues to banks and FinancialInstitutions in the form of Term Loan or Cash Credit/Overdraft Facilities were notdefaulted. The Company did not have any debentures.
ix) The Company did not raise any money by way of initial public offer or furtherpublic offer (including debt instrument) during the year. According to the information andexplanations given to us money taken by way of Term loans or Cash Credit/Overdraftfacilities from Bank or Financial Institutions during the year were applied for thepurpose they were raised.
x) Based on the audit procedures performed and the information and explanations givento us we report that no material fraud on or by the Company has been noticed or reportedduring the period nor have we been informed of such case by the management;
xi) According to the information and explanations given by the management and based onour examination of the record of the Company the Company has paid/provided for managerialremuneration in accordance with the requisite approvals mandated by the provisions ofsection 197 read with Schedule V to the Act.
xii) In our opinion and according to the information and explanation given to us theCompany is not a Nidhi Company and hence the paragraph 3(xii) is not applicable.
xiii) According to the information and explanations given to us and based on ourexamination of the records of the Company transactions with the related parties are incompliance with section 177 and 188 of the Act where applicable and details of suchtransactions have been disclosed in the financial statements as required by the applicableaccounting standards;
xiv) According to 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.
xv) According to information and explanation given to us the Company has not enteredinto any noncash transactions with directors or persons connected with him. Accordinglythe paragraph 3(xv) is not applicable the Company.
xvi) In our opinion and on the basis of information and explanation given to us by themanagement the Company is not required to be registered under section 45-IA of theReserve Bank of India Act 1934.
For WDK & ASSOCIATES Chartered Accountants \ FRN\016389N
Membership No.091143 UDIN: 20091143AAAAAY5988
Place: New Delhi
Date: 30th July 2020