Sheela Foam Ltd.
|BSE: 540203||Sector: Industrials|
|NSE: SFL||ISIN Code: INE916U01025|
|BSE 00:00 | 26 Nov||3148.70||
|NSE 00:00 | 26 Nov||3144.80||
|Mkt Cap.(Rs cr)||15,359|
|Mkt Cap.(Rs cr)||15359.36|
Sheela Foam Ltd. (SFL) - Auditors Report
Company auditors report
To The Members Of Sheela Foam Limited' on StandaloneFinancial Statements
We have audited the accompanying standalone financial statements ofSheela Foam Limited (the "Company") which comprise the Standalone Balance Sheetas at 31st March 2021 and the Standalone Statement of Profit and Loss(including Other Comprehensive Income) the Standalone Statement of Changes in Equity andthe Standalone Statement of Cash Flows for the year then ended and notes to thestandalone financial statements including a summary of the significant accounting policiesand 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 (the Act') in the manner sorequired and give a true and fair view in conformity with the accounting principlesgenerally accepted in India of the state of affairs of the Company as at 31stMarch 2021 and total Comprehensive Income its changes in equity and its cash flows forthe year ended on that date.
BASIS FOR OPINION
We conducted our audit in accordance with the Standards on Auditing(SAs) specified under section 143(10) of the Act. Our responsibilities under thoseStandards are further described in the Auditor's Responsibilities for the Audit ofthe Financial 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 financial statements under the provisions of the Act and the Rules thereunderand we have fulfilled our other ethical responsibilities in accordance with theserequirements and the Code of Ethics. We believe that the audit evidence we have obtainedis sufficient and appropriate to provide a basis for our opinion.
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 year. These matters were addressed in the context of our audit of the standalonefinancial statements as a whole and in forming our opinion thereon and we do not providea separate opinion on these matters. We have determined the matters described below to bethe key audit matters to be communicated in our report.
I NF ORMATION OTHER THAN THE STANDALONE FINANCIAL STATEMENTS ANDAUDITOR'S REPORT THEREON
The Company's Board of Directors is responsible for the otherinformation. The other information comprises the Corporate Governance Report andDirectors' Report including annexures thereon but does not include the standalonefinancial statements and our auditor's 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 identified above and in doing soconsider whether the other information is materially inconsistent with the standalonefinancial statements or our knowledge obtained in the audit or otherwise appears to bematerially misstated.
If based on the work we have performed on the other information weconclude that there is a material misstatement of this other information we are requiredto report that fact. We have nothing to report in this regard.
RESPONSIBILITIES OF MANAGEMENT AND THOSE CHARGED WITH GOVERNANCE FORTHE STANDALONE FINANCIAL STATEMENTS
The Company's Board of Directors is responsible for the mattersstated in Section 134(5) of the Act with respect to the preparation of these standalonefinancial statements that give a true and fair view of the financial position financialperformance including other comprehensive income changes in equity and cash flows of theCompany in accordance with the accounting principles generally accepted in Indiaincluding the Indian Accounting Standards ("Ind AS") notified under Section 133of the Act read with the Companies (Indian Accounting Standards) Rules 2015 as amendedfrom time to time.
This responsibility also includes maintenance of adequate accountingrecords in accordance with the provisions of the Act for safeguarding the assets of theCompany and 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 the Board ofDirectors 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 the Board of Directors either intends to liquidate theCompany or to cease operations or has no realistic alternative but to do so.
Those Board of Directors are also responsible for overseeing theCompany's financial reporting process.
AUDITOR'S RESPONSIBILITIES FOR THE AUDIT OF THE STANDALONEFINANCIAL STATEMENTS
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 skepticism throughout the audit. We also:
- Identifyandassesstherisksofmaterialmisstatement 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 inorder to design audit procedures that are appropriate in the circumstances. Under section143(3)(i) of the Companies Act 2013 we are also responsible for expressing our opinionon whether the company has adequate internal financial controls system in place and theoperating 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 conditionsmay cause 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.
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 tocommunicate with them all relationships and other matters that may reasonably be thoughtto bear on our independence and where applicable 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 precludespublic disclosure about the matter or when in extremely rare circumstances we determinethat a matter should not be communicated in our report because the adverse consequences ofdoing so would reasonably be expected to outweigh the public interest benefits of suchcommunication.
REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS
1. As required by the Companies (Auditor's Report) Order2016' ("the Order") issued by the Central Government of India in terms ofsub-section (11) of Section 143 of the Act we give in the Annexure-A' astatement on the matters specified in paragraph 3 and 4 of the Order.
2. As required by Section 143(3) of the Act we report that:
b. in our opinion proper books of account as required by law have beenkept by the Company so far as appears from our examination of those books.
c. the Standalone Balance Sheet the Standalone Statement of Profit andLoss (including Other Comprehensive Income) Standalone Statement of Changes in Equity andthe Standalone Statement of Cash Flows dealt with by this Report are in agreement with thebooks of account.
d. in our opinion the aforesaid standalone financial statements complywith the Indian Accounting Standards ("Ind AS") notified under Section 133 ofthe Act read with the Companies (Indian Accounting Standards) Rules 2015 as amended fromtime to time.
e. on the basis of the written representations received from thedirectors and 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 termsof Section 164 (2) of the Act.
f. with respect to the adequacy of the internal financial controls withreference to financial statements of the Company and the operating effectiveness of suchcontrols refer to our separate report in Annexure-B';
g. In our opinion the remuneration paid by the Company to itsDirectors is in accordance with the provisions of Section 197 of the Companies Act 2013;and
h. with respect to the other matters to be included in theAuditor's Report in accordance with Rule 11 of the Companies (Audit and Auditors)Rules 2014 in our opinion and to the best of our information and according to theexplanations given to us:
i. The Company has disclosed the impact of pending litigations on itsfinancial position in its standalone financial statements Refer Note 39.1 to thestandalone financial statements;
ii. The Company has not entered into any long-term contracts includingderivative contracts.
iii. There has been no amount required to be transferred to theInvestor Education and Protection Fund by the Company.
Annexure-A' to the Independent Auditors' Report
(Referred to in paragraph 1 under `Report on Other Legal and RegulatoryRequirements' section of the independent auditors' report of even date on thestandalone financial statements of Sheela Foam Limited for the year ended 31stMarch 2021)
(i) In respect of its property plant and equipments; a. The Companyhas maintained proper records showing full particulars including quantitative details andsituation of the property plant and equipments.
b. As explained to us the property plant and equipments arephysically verified by the management at reasonable intervals which in our opinion isreasonable having regard to the size of the Company and nature of its property plant andequipments. No material discrepancies were noticed on such physical verification.
c. According to the information and explanations given to us and on thebasis of our examination of the records of the Company the title deeds of immovableproperties as disclosed in Note 3 on property plant and equipments and Note 5 oninvestment property to the standalone financial statements are held in the name of theCompany.
(ii) As explained to us inventories have been physically verified bythe management at regular intervals during the year. The discrepancies noticed on suchphysical verification as compared to book records were not material and have beenappropriately dealt with in the books of accounts.
(iii) According to the information and explainations given to us theCompany has granted unsecured loan to a Subsidiary Company covered in the Registermaintained under Section 189 of the Companies Act 2013 in respect of which we reportthat:
a. The terms and conditions of grant of the said unsecured loan in ouropinion prima facie are not prejudicial to the interest of the Company.
b. The schedule of repayment of principal and payment of interest hasbeen stipulated as per which the repayment of principal and interest has not yet fallendue.
c. As the repayment of principal and interest has not yet started thesaid clause regarding the overdue outstanding is not applicable.
(iv) In our opinion and according to the information and explanationsgiven to us the Company in respect of loans investments guarantees and security hascomplied with the provisions of section 185 and 186 of the Act.
(v) The Company has not accepted any deposits from the public withinthe meanings of Sections 73 to 76 of the Act and the rules framed thereunder to the extentnotified.
(vi) Pursuant to the rules made by the Central Government of India theCompany is required to maintain cost records as specified under sub-section (1) of Section148 of the Act in respect of its products. We have broadly reviewed the same and are ofthe opinion that prima facie the prescribed cost records have been made and maintained.We have however not made a detailed examination of the cost records with a view todetermine whether they are accurate or complete.
(viii) In respect of statutory dues: a. According to the informationand explanations given to us and the records of the Company examined by us in our opinionthe Company is generally regular in depositing undisputed statutory dues includingProvident Fund Employees' State Insurance Income Tax Goods and Service Tax Dutyof Customs Cess and other statutory dues as applicable with the appropriate authorities.According to the information and explanations given to us no undisputed amounts payablein respect of the aforesaid dues were outstanding as at 31st March 2021 for aperiod of more than six months from the date they became payable.
b. The disputed statutory dues aggregating to Rs. 1391.46 lakhs thathave not been deposited on account of matters pending in appeals before appropriateauthorities are as under:
(viii) Based on the audit procedures and according to the informationand explanations given to us the Company has not defaulted in repayment of loans orborrowings to financial institution banks and Government.
(ix) The Company has not raised money by way of initial public offer orfurther public offer (including debt instruments) and term loans during the year.
(x) In our opinion and according to the information and explanationsgiven to us no fraud by the Company or fraud on the Company by its officers / employeeshas been noticed or reported during the course of our audit.
(xi) The managerial remuneration paid / provided is within the limitand in compliance of the provisions of section 197 read with Schedule V to the Act.
(xii) The Company is not a Nidhi Company hence the requirement of thisclause is not applicable.
(xiii) According to the information and explanations given to us andbased on our examination of the records of the Company transactions with the relatedparties are in compliance with section 177 and 188 of the Act where applicable. Thedetails of such transcations have been disclosed in the standalone financial statementsas required by the Ind AS 24 Related Party Disclosures.
(xiv) According to the information and explanations given to us andbased on our examination of the records of the Company the Company has not made anypreferential allotment or private placement of shares or fully or partly convertibledebentures during the year.
(xiv) In our opinion and according to the information and explanationsgiven to us the Company has not entered into any non-cash transactions with Directors orpersons connected with them.
(xvi)As explained to us the Company is not required to be registeredunder section 45-IA of the Reserve Bank of India Act 1934.
Annexure-B' to the Independent Auditors' Report
(Referred to in paragraph 2(f) under `Report on Other Legal andRegulatory Requirements' section of the independent auditors' report of evendate on the standalone financial statements of Sheela Foam Limited for the year ended 31stMarch 2021)
REPORT ON THE INTERNAL FINANCIAL CONTROLS UNDER CLAUSE _I_ OFSUB_SECTION 3 OF SECTION 143 OF THE COMPANIES ACT 2013 _"THE ACT"_
We have audited the internal financial controls over financialreporting of Sheela Foam Limited ("the Company") as of 31stMarch 2021 in conjunction with our audit of the standalone financial statements of theCompany for the year ended on that date.
MANAGEMENT'S RESPONSIBILITY FOR I NTERNA L 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 ControlsOver Financial Reporting" (the "Guidance Note") issued by the Institute ofChartered Accountants of India ("ICAI"). These responsibilities include thedesign implementation and maintenance of adequate internal financial controls that wereoperating effectively for ensuring the orderly and efficient conduct of its businessincluding 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 Act.
Our responsibility is to express an opinion on the Company'sinternal financial controls over financial reporting based on our audit. We conducted ouraudit in accordance with the Guidance Note on Audit of Internal Financial Controls OverFinancial Reporting (the Guidance Note') and the Standards on Auditing issuedby the Institute of Chartered Accountants of India and deemed to be prescribed undersection 143(10) of the Act to the extent applicable to an audit of internal financialcontrols both applicable to an audit of Internal Financial Controls and both issued bythe Institute of Chartered Accountants of India. Those Standards and the Guidance Noterequire that we comply with ethical requirements and plan and perform the audit to obtainreasonable assurance about whether adequate internal financial controls over financialreporting was established and maintained and if such controls operated effectively in allmaterial respects.
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 auditors' judgement including the assessment ofthe risks of material misstatement of the 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 internalfinancial controls system over financial reporting.
MEANING OF INTERNAL FINANCIAL CONTROLS OVER FINANCIAL REPORTING
A company's internal financial control over financial reporting isa process 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 controlover 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 that transactions are recorded asnecessary to permit preparation of financial statements in accordance with generallyaccepted accounting principles and that receipts and expenditures of the Company arebeing made only in accordance with authorisations of management and Directors of theCompany; and
(3) provide reasonable assurance regarding prevention or timelydetection of unauthorised acquisition use or disposition of the Company's assetsthat could have a material effect on the financial statements.
I NHERENT LI MITATIONS 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 to the best of our information and according to theexplanations given to us the Company has in all material respects adequate internalfinancial controls with reference to financial statements and such internal financialcontrols with reference to financial statements were operating effectively as at 31stMarch 2021 based on the internal control over financial reporting criteria establishedby the Company considering the essential components of internal control stated in theGuidance Note on Audit of Internal Financial Controls Over Financial Reporting issued bythe Institute of Chartered Accountants of India.