To The members of
SHREE WORSTEX LIMITED
Report on Audit of the Financial Statements
We have audited the accompanying financial statements of SHREE WORSTEX LIMITED (the Company)which comprise the balance sheet as at 31st March 2019 the statement ofprofit and loss and the cash flow statement for the year then ended and notes to thefinancial statements including a summary of significant accounting policies and otherexplanatory information (hereby referred as the financial statements').
In our opinion and to the best of our information and explanations given to us theaforesaid financial statements required by the Companies Act 2013 ("the Act")in the manner so required and give a true and fair view in conformity with the AccountingStandards (AS) prescribed under section 133 of the Companies Act 2013 read with theCompanies (Accounting Standard) Rules 2006 as amended and the other accountingprinciples generally accepted in India : -
i. In case of the Balance Sheet of the state of affairs of the Company as at 31stMarch 2019; ii. In case of the Statement of Profit and Loss of the loss for the yearended on that date; and iii. In case of Cash Flow Statement of the cash flows for theyear ended on that date.
Basis for opinion
We conducted our audit in accordance with the Standards on Auditing (SAs) specifiedunder section 143(10) of the Act. Our responsibilities under those standards are furtherdescribed in the Auditor's Responsibilities for the Audit of Financial Statements'section of our report. We are independent of the Company in accordance with the Code ofEthics issued by the Institute of Chartered Accountants of India together with the ethicalrequirements that are relevant to our audit of the financial statements under theprovisions of the Act and the rules made there under and we have fulfilled our ethicalresponsibilities in accordance with these requirements and the Code of Ethics. We believethat the audit evidences we have obtained are sufficient and appropriate to provide abasis 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 financial statements of the current period. These matterswere addressed in the context of out audit of the financial statements as a whole and informing our opinion thereon and we do not provide a separate opinion on these matters. Wehave determined the matters described hereunder to be key audit matters to be communicatedin our report.
|S. No. ||Key audit matters ||Auditor's response |
|1. ||Loans and advances : - ||Our audit procedure inter-alia include the following : - |
| ||As the primary business of the Company is advancing of loan and during the year significant loan advancing transactions have taken place. We focused on the conditions of disbursement and appropriateness of sanctioning process. ||1. We evaluated the control environment including authorization sanctioning and disbursement of significant loans advanced during the year. |
| || ||2. We have obtained external confirmations from third parties in respect of transactions and closing balance for significant loans advanced by the company. |
| || ||3. We tested all material entries recorded in connection with the loan advance and interest thereon to determine whether the accounting was appropriate. |
|2. ||Compliance of RBI directions and circulars : - ||Our audit procedure inter-alia include the following : - |
| ||The recent RBI regulations increased the responsibility of auditors of NBFCs. ||We have reviewed the conditions for prudential norms prescribed by the RBI including : - |
| ||As Company is a NBFC it is responsibility of Company to duly follow the directions and circulars. ||1. Provision on standard assets. |
| ||We focused on the requisite compliance and disclosure as per the requirements in the norms. ||2. Transfer of 20% profit to special reserve maintained under section 45-IC of the RBI Act 1934. |
| || ||3. Holding of at least 50% of the financial assets and 50% of the financial income respectively. |
| || ||4. Maintaining minimum net owned funds of Rs. 200 lakhs. |
Information other than the financial statements and Auditor's Report thereon
The Company's Board of Directors is responsible for the preparation of the otherinformation. The other information comprises of information included in the ManagementDiscussion and Analysis Board's Report including Annexure to Board's Report BusinessResponsibility Report Corporate Governance and Shareholder's Information but does notinclude the financial 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 financial statements our responsibility is to readthe other information and in doing so consider whether the other information ismaterially inconsistent with the financial statements or our knowledge obtained during thecourse of our 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 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 financial statements that givea true and fair view of the financial position financial performance and cash flows ofthe Company in accordance with the AS and the other accounting principles generallyaccepted in India. This responsibility also includes maintenance of adequate accountingrecords in accordance with the provisions of the Act for safeguarding of 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 are operating effectively for insuring the accuracy andcompleteness of the accounting records relevant to the preparation and presentation ofthe financial statements that give a true and fair view and are free from materialmisstatements whether due to fraud or error.
In preparing the financial statements management is responsible for assessing theCompany's ability to continue as a going concern disclosing as applicable mattersrelated to going concern and using the going concern basis of accounting unless managementeither intends to liquidate the Company or to cease operations or has no realisticalternative but to do so.
The Board of Directors is also responsible for overseeing the Company's financialreporting process.
Auditor's Responsibility for the Audit of the Financial Statements
Our objectives are to obtain a reasonable assurance about whether the financialstatements as a whole are free from material misstatement whether due to fraud or errorand to issue our report that includes our opinion. Reasonable assurance is a high level ofassurance but is not a guarantee that an audit conducted in accordance with SAs willalways detect a material misstatement when it exists. Misstatements can arise due to fraudor error and are considered material if individually or in aggregate they couldreasonably be expected to influence the economic decisions of users taken on the basis ofthese financial statements.
As a part of an audit in accordance with the SAs we exercise professional judgment andmaintain professional skepticism throughout the audit. We also:
i. Identify and assess the risks of material misstatement of the financial statementswhether due to fraud or error design and perform audit procedures responsive to thoserisks and obtain audit evidence that is sufficient and appropriate to provide a basis forour opinion. The risk of not detecting a material misstatement resulting from fraud ishigher than one resulting from error as fraud may involve collusion forgery intentionalomissions misrepresentations or the override of internal controls.
ii. Obtain an understanding of the internal controls relevant to the audit in order todesign audit procedures that are appropriate in the circumstances. Under section 143(3)(i)of the Act we are also responsible for expressing our opinion on whether the Company hasadequate internal financial control system in place and the operating effectiveness ofsuch controls.
iii. Evaluate the appropriateness of accounting policies used and the reasonableness ofaccounting estimates and related disclosures made by the management.
iv. 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 financial statements or if such disclosures are inadequate to modify our opinion.Our conclusions are based on the audit evidence obtained upto the date of our auditor'sreport. However future events or conditions may cause the Company to cease to continue asa going concern.
v. Evaluate the overall presentation structure and content if the financialstatements including the disclosures and whether the financial statements represent theunderlying transactions and events in a manner that achieves fair presentation.
Materiality is the magnitude of misstatements in the financial statements individuallyor in aggregate makes it probable that the economic decision of reasonable knowledgeableuser of the financial statement may be influenced.
We consider quantitative materiality and qualitative factors in (i) Planning the scopeof our audit work and in evaluating the results of our work; and (ii) to evaluate theeffect of any identified 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 controls 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 reasonable be thought to bear on ourindependence and where applicable relevant safeguards.
From the matters communicated with those charged with governance we determine thosematters that were of most significance in the audit of the financial statements of thecurrent period and are therefore the key audit matters. We describe these matters in ourauditor's report unless law or regulation precludes public disclosure about the matter orwhen 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 reasonablebe expected to outweigh the public interest benefits of such communication.
Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditor's Report) Order 2016 (the Order') asamended issued by the Central Government of India in terms of sub-section (11) of section143 of the Act we give in the Annexure A a statement on the matters specified inparagraphs 3 and 4 of the order to the extent applicable.
2. The Company is a non-banking financial company not accepting public deposits andholding certificate of registration no- 14.00233 dated 31/07/2000 from Reserve Bank ofIndia has been issued to the Company.
a) The Board of Directors has passed resolutions for the non-acceptance of any publicdeposits.
b) The Company has not accepted any public deposits during the relevant year. c) TheCompany has complied with the prudential norms relating to income recognition accountingstandards assets classification and previously for bad and doubtful debts as applicableto it.
3. As required by Section 143(3) of the Act we report that:
a) We have sought and obtained all the information and explanations which to the bestof our knowledge and belief were necessary for the purposes of our audit;
b) In our opinion proper books of account as required by law have been kept by theCompany so far as it appears from our examination of those books;
c) The Balance Sheet the Statement of Profit and Loss and the Cash Flow Statementdealt with by this Report are in agreement with the books of account;
d) In our opinion the aforesaid financial statements comply with the accountingstandards 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 thedirectors as on 31st March 2019 taken on record by the Board of Directors none of thedirectors is disqualified as on 31st March 2019 from being appointed as a director interms of Section 164 (2) of the Act;
f) With respect to the adequacy of the internal financial controls over financialreporting of the Company and the operating effectiveness of such controls refer to ourseparate Report in Annexure-B. Our report expresses an unmodified opinion on the adequacyand operating effectiveness of the Company's internal financial controls over financialreporting;
g) With respect to the other matters to be included in the Auditor's Report inaccordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014 in our opinionand to the best of our information and according to the explanations given to us:
i. The Company has disclosed the impact if any of pending litigations on itsfinancial position in its financial statements (refer note 29).
ii. The Company did not have any long-term contracts including derivative contracts forwhich there were any material foreseeable losses.
iii. The Company is not required to transfer any amount to the Investor
Education and Protection Fund.
FOR V. N. PUROHIT & CO.
Firm Regn. No. 304040E
O. P. Pareek
Membership No. 014238
New Delhi the 24th day of May 2019
ANNEXURE-A TO THE AUDITOR'S REPORT
The annexure referred to in paragraph 1 under the heading of "Report o other Legaland Regulatory Requirements" of our report of even date to the members of SHREEWORSTEX LIMITED for the year ended on 31st March 2019.
(i) As per information and explanation given to us the Company does not hold any fixedassets hence the provision of sub-clause (i) of the clause 3 of the order is notapplicable;
(ii) As per information and explanation given to us physical verification of inventoryhas been conducted once in a year by the management and no material discrepancies werenoticed during the course of physical verification
(iii) According to information and explanations given to us the Company has grantedunsecured loans to parties covered in register maintained under section 189 of theCompanies Act 2013 and;
(a) According to information and explanation given to us the terms and conditions ofthe grant of such loans are not prejudicial to the Company's interest;
(b) According to information and explanation given to us the schedule of repayment ofprincipal and payment of interest has been stipulated and the receipts are regular as perstipulations; the receipt of principal and interest on above are regular as perstipulation between the parties;
(c) According to information and explanation given to us there were no overdue amountexceeding ninety days considering stipulations with parties hence the question forrecovery of same does not arise;
(iv) According to information and explanations given to us the Company has compliedwith the provisions of section 185 and section 186 of the Companies Act 2013 to theextent applicable in respect of loans advances guarantees and securities so given;
(v) According to information and explanations given to us the Company has not acceptedpublic deposits and the provision of section 73 to 76 or other relevant provisions of theCompanies Act 2013 and rules framed there under are not applicable to the Company;
(vi) According to information and explanations given to us the Company is not liableto maintain cost records as prescribed under section 148(1) of the Companies Act 2013;
(vii) (a) According to information and explanations given to us the Company isgenerally regular in depositing undisputed statutory dues including income tax and anyother applicable statutory dues to the appropriate authorities and there are nooutstanding statutory dues as on the last day of the financial year concerned for a periodof more than six months from the date they became payable;
(b) According to information and explanations give to us there are no outstanding dueson part of the Company which is not deposited on account of dispute.
(viii) According to information and explanations given to us the company has notobtained any loans and borrowings from any financial institution bank government or duesto debenture holders hence the provisions of sub-clause (viii) of clause 3 of the orderdoes not applies;
(ix) According to information and explanations given to us the Company has not raisedmoney by way of initial public offer or further public offer. The Company has not takenany term loans from any bank or financial institution;
(x) According to information and explanations given to us there is no noticed orunreported fraud on or by the Company during the year under audit;
(xi) According to information and explanations given to us the Company has not paidany managerial remuneration during the year hence the provision of sub- clause (xi) ofclause 3 of the order does not applicable;
(xii) As per information the Company is not a Nidhi Company hence provisions of sub-clause (xii) of the paragraph 3 of the order are not applicable;
(xiii) According to information and explanations given to us all transactions with therelated parties are in compliance with sections 177 and 188 of Companies Act 2013wherever applicable and the details have been disclosed in the financial statements etc.as required by the applicable accounting standards;
(xiv) According to information and explanations given to us the Company has not madeany preferential allotment or private placement of shares or fully or partly convertibledebentures during the year;
(xv) According to information and explanations given to us the Company has not enteredinto non-cash transactions with directors or persons connected with him;
(xvi) According to information and explanations given to us the Company is aNon-Banking Financial Company and registered under Section 45-IA of the Reserve Bank ofIndia Act 1934.
Signed for the purpose of identification
FOR V.N. PUROHIT & CO.
Firm Regn. No. 304040E
Membership No. 014238
New Delhi the 24th day of May 2019
ANNEXURE- B TO THE AUDITOR'S REPORT
Report on the Internal Financial Controls under Clause (i) of Sub-section (3) ofSection 143 of the Companies Act 2013
We have audited the internal financial controls over financial reporting of SHREEWORSTEX LIMITED as on 31st March 2019 in conjunction with our audit of thefinancial statements of the Company for the year ended on that date.
Management's Responsibility for the 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 controlsstated in the Guidance Note on Audit of Internal Financial Control over FinancialReporting issued by the Institute of Chartered Accountants of India (ICAI). 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 company's policies the safeguarding ofits assets the prevention and detection of fraud and errors the accuracy andcompleteness of accounting records and the timely preparation of reliable financialinformation as required 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 deemed to beprescribed under Section 143(10) of the Companies Act 2013 to the extent applicable to anaudit of internal financial controls both applicable to an audit of Internal FinancialControls and both issued by the ICAI. Those Standards and the Guidance Note require thatwe comply with ethical requirements and plan and perform the audit to obtain reasonableassurance about whether adequate internal financial controls over financial reporting wasestablished and maintained and if such controls operated effectively in all materialaspects.
Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal financial control 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 risks of materialmisstatement of the financial statements whether due to fraud or error.
We believe that the audit evidences we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the Company's internal financial controls systemover financial reporting.
Meaning of Internal Financial Controls over Financial Reporting
A Company's internal financial control over financial reporting is a process designedto provide reasonable assurance regarding the reliability of financial reporting and thepreparation of financial statements for external purposes in accordance with generallyaccepted accounting principles. A Company's internal financial control over financialreporting includes those policies and procedures that: -
(1) Pertain to the maintenance of records that in reasonable detail accurately andfairly reflect the transactions and dispositions of the assets of the Company;
(2) Provide reasonable assurance that transactions are recorded as necessary to permitpreparation of financial statements in accordance with generally accepted accountingprinciples and the receipt and expenditures of the Company are being only in accordancewith authorizations of management and directors of the Company; and
(3) Provide reasonable assurance regarding prevention or timely detection ofunauthorized 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 could not bedetected. Also projections of any evaluation of the internal financial control overfinancial reporting to future periods are subject to the risk that the internal financialcontrols over financial reporting may became 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 aspects an adequate internalfinancial controls system over financial reporting and such internal financial controlsover financial reporting were operating effectively as at 31st March 2019based on "the internal financial controls over financial reporting criteriaconsidering the essential components of internal control stated in the Guidance Note onAudit of Internal Financial Controls over Financial Reporting issued by the Institute ofChartered Accountants of India".
FOR V. N. PUROHIT & CO.
Firm Regn. No. 304040E
Membership No. 014238
New Delhi the 24th day of May 2019