The Members of Signet Industries Limited
Report on the Financial Statements
We have audited the financial statements of Signet Industries Limited ("theCompany") which comprise the balance sheet as at 31st March 2019 and the statementof Profit and Loss (including other comprehensive income) statement of changes in equityand statement of cash flows for the year then ended and notes to the financialstatements including a summary of 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 financial statements give the information required by the Actin the manner so required and give a true and fair view in conformity with accountingprinciples generally accepted in India of the state of affairs of the company as at 31stMarch 2019 and its profit total comprehensive income the changes in equity and itscash flows for the year 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 Companies Act 2013. Our responsibilities under thoseStandards are further described in the Auditor's Responsibilities for the Audit of theFinancial 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 thefinancial statements under the provisions of the Companies Act 2013 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 financial statements of the current period. These matterswere addressed in the context of our audit of the financial statements as a whole and informing our opinion thereon and we do not provide a separate opinion on these matters.
|Key Audit Matters ||Auditor's Response |
|Accuracy of recognition measurement presentation and disclosures of revenues and other related balances in view of adoption of Ind AS 115 "Revenue from Contracts with Customers" (new revenue accounting standard) ||Principal Audit Procedures |
|The application of the new revenue accounting standard involves some key points which includes Identification of contract with customer identification of distinct performance obligations determination of transaction price of the identified performance obligations the appropriateness of the basis used to measure revenue recognized. Additionally new revenue accounting standard contains disclosures which involves collation of information in respect of disaggregated revenue and periods over which the remaining performance obligations will be satisfied subsequent to the balance sheet date. ||We assessed the Company's process to identify the impact of ' adoption of the new revenue accounting standard. Our audit approach consisted testing of the design and operating effectiveness of the internal controls and substantive testing as follows: |
| ||Evaluated the design of internal controls relating to implementation of the new revenue accounting standard. |
| ||Sample selected from continuing and new contracts and tested the operating effectiveness of the internal control relating to identification of the distinct performance obligations and determination of transaction price. |
| ||We have performed the following procedures: |
| || Read analysed and identified the distinct performance obligations in these contracts. |
| || Compared these performance obligations with that identified and recorded by the Company. |
| || Considered the terms of the contracts to determine the transaction price including any variable consideration to verify the transaction price used to compute revenue and to test the basis of estimation of the variable consideration. |
| || Sample of revenues disaggregated by type and service offerings was tested with the performance obligations specified in the underlying contracts. |
| || Performed analytical procedures for reasonableness of revenues disclosed by type and service offerings. |
| || We reviewed the collation of information and the logic of the report generated from the budgeting system used to prepare the disclosure relating to the periods over which the remaining performance obligations will be satisfied subsequent to the balance sheet date. |
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 the information included in the ManagementDiscussion and Analysis Board's Report including Annexures to Board's Report BusinessResponsibility Report Corporate Governance and Shareholder's Information but does notinclude the standalone 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 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 during the course 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 Companies Act 2013 ("the Act") with respect to the preparation ofthese financial statements that give a true and fair view of the financial positionfinancial performance changes in equity and cash flows of the Company in accordance withthe accounting principles generally accepted in India including the accounting Standardsspecified under section 133 of the Act. This responsibility also includes maintenance ofadequate accounting records in accordance with the provisions of the Act for safeguardingof the assets of the Company and for preventing and detecting frauds and otherirregularities; selection and application of appropriate implementation and maintenance ofaccounting 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 financial statement that givea true and fair view and are free from material misstatement whether due to fraud orerror.
In preparing the Ind. AS financial statements management is responsible for assessingthe Company'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.
Those Board of Directors are also responsible for overseeing the Company's financialreporting process.
Auditor's Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financialstatements as a whole are free from material misstatement whether due to fraud or errorand to issue an auditor's report that includes our opinion. Reasonable assurance is a highlevel of assurance but is not a guarantee that an audit conducted in accordance with SAswill always detect a material misstatement when it exists. Misstatements can arise fromfraud or error and are considered material if individually or in the aggregate theycould reasonably be expected to influence the economic decisions of users taken on thebasis of these financial statements.
As part of an audit in accordance with SAs we exercise professional judgment andmaintain professional skepticism throughout the audit. We also:
a.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 for one resulting from error as fraud may involve collusion forgeryintentional omissions misrepresentations or the override of internal control.
b.Obtain an understanding of internal financial controls relevant to the audit in orderto 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.
c.Evaluate the appropriateness of accounting policies used and the reasonableness ofaccounting estimates and related disclosures made by management.
d.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 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.
e.Evaluate the overall presentation structure and content of the standalone financialstatements including the disclosures and whether the standalone financial statementsrepresent the underlying transactions and events in a manner that achieves fairpresentation.
Materiality is the magnitude of misstatements in the financial statements thatindividually 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 alsoprovide those charged with governance with a statement that we have complied with relevantethical requirements regarding independence and to communicate with them allrelationships 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 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 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 the Companies (Auditor's Report ) Order 2016 ("the Order")issued by the Central Government of India in terms of sub section (11) of section 143 ofthe Act we give in the Annexure A statement on the matters specified in the paragraph 3and 4 of the Order to the extent applicable.
2.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 purpose of our audit.
b)In our opinion proper books of account as required by law have been kept by theCompany so far as appears from our examination of those books.
c)The Balance Sheet the Statement of Profit and Loss (including Other ComprehensiveIncome) Statement of Changes in Equity and the Statement of Cash Flow dealt with by thisReport are in agreement with the books of account.
d)In our opinion the aforesaid financial statements comply with the Indian accountingstandards specified under section 133 of the act read with rules framed thereunder.
e)On the basis of the written representations received from the directors as on 31stMarch 2019 taken on records by the Board of Director none of the directors isdisqualified as on 31st March 2019 from being appointed as a director in terms of section164(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".
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 (as amended) inour opinion and to be best of our information and according to the explanations given tous:
i.The company has disclosed the impact of pending litigations on its financial positionin its financial statement - refer note 35 to the financial statement;
ii.The Company did not have any long term contract including derivative contract forwhich there were any material foreseeable losses.
iii.There has been no delay in transferring amounts required to be transferred to theInvestor Education and Protection Fund by the company.
h)With respect to the matter to be included in the Auditors' Report under Section197(16) of the Act In our opinion and according to the information and explanations givento us the remuneration paid by the Company to its directors during the current year is inaccordance with the provisions of Section 197 of the Act.
| ||For SMAK & Co. |
| ||Chartered Accountants |
| ||(Firm Reg. No. 020120C) |
| ||CA Shridhar Mandhanya |
| ||Partner |
|Date: 30.05.2019 ||M. No. 421425 |
|Place: Indore || |
Annexure A to Independent Auditor's Report
Referred to in paragraph (1) under the heading of "Report on Other Legal andRegulatory Requirements" of our report of even date to the members of SignetIndustries Limited on the financial statements for the year ended March 312019.
i. In respect of its Fixed Assets :
a. The Company is maintaining proper records showing full particulars includingquantitative details and situation of fixed assets.
b. As explained to us the fixed assets of the Company have been physically verified bythe management during the year which in our opinion is reasonable having regard to thesize of the Company and the nature of its assets. No material discrepancies between thebook records and the physical inventory have been noticed. In our opinion the frequencyof verification is reasonable.
c. According to the information and explanations given to us and on the basis of ourexamination of the records of the Company the title deeds of immovable properties areheld in the name of the Company.
ii. In respect of its Inventories:
The inventories has been physically verified by the Management during the year. In ouropinion the frequency of verification is reasonable and no material discrepancies werenoticed.
iii. According to the information and explanations given to us the Company has notgranted loans secured or unsecured to company firms LLP or other parties covered in theregister maintained under section 189 of the Companies Act 2013. In our opinionprovisions of para 3 clause (iii) of the order are not applicable to the company.
iv.In our opinion and according to the information and explanations given to us theCompany has complied with the provisions of section 185 and 186 of the Act with respectto the loans and investments made and guarantee given. The company has not provided anysecurity in terms of section 185 and 186 of the Act.
v.In our opinion and according to the information and explanations given to us theCompany has not accepted deposits from the public within the meaning of Section 73 to 76or any other relevant provisions of the Companies Act 2013 and the Rules framed thereunder. As informed to us no Order has been passed by the Company Law Board or NationalCompany Law Tribunal or Reserve Bank of India or any court or any other Tribunal.
vi.We have broadly reviewed the cost records maintained by the Company pursuant to therules made by the Central Government under sub-section (1) of Section 148 of the CompaniesAct 2013 and are of the opinion that prima facie the prescribed records have been madeand maintained. We have however not made a detailed examination of the cost records witha view to determine whether they are accurate or complete.
vii.In respect of Statutory dues :
a) According to the information and explanations given to us and the records of theCompany examined by us in our opinion the Company is generally regular in depositingundisputed statutory dues including provident fund employee's state insurance incometax goods and service tax duty of customs cess and any other statutory dues with theappropriate authorities. There were no undisputed statutory dues in arrears as at 31stMarch 2019 for a period of more than six months from the date they became payable.
b According to the information and explanations given to us the dues of sales taxvalue added tax income tax duties of excise which have not been deposited withappropriate authorities on account of any dispute are as follows :
|Name of the Statute ||Nature of Liability ||Related Period ||( Rs. In lacs) # ||Forum where dispute is pending |
|Income Tax Act 1961 ||Income Tax ||2006-07 2007-08 2009-10 and 2011-12 ||225.22 ||High Court |
|Income Tax Act 1961 ||Income Tax ||2016-17 ||75.78 ||Commissioner (Anneal) |
|M.P. Value Added Tax Act 2002 ||Sales Tax ||2008-09 ||2.19 ||Additional Comm. (Appeal) |
|Custom & Central Excise & Service Tax ||Excise Duty ||2014-15 ||48.77 ||Commissioner (Appeal) |
|Income Tax Act 1961 ||Income tax ||2013-14 & 2014-15 ||5.50 ||Commissioner (Appeal) |
|Madhya Pradesh Value Added Tax Act 2002 ||Sales Tax ||2015-16 ||39.65 ||Additional Commissioner Commercial Tax (Appeal) |
|Madhya Pradesh Value Added Tax Act 2002 ||Sales Tax ||2016-17 ||13.51 ||Additional Commissioner Commercial Tax (Appeal) |
|The Central Sales Tax Act 1956 ||Central Sales Tax ||2016-17 ||15.60 ||Additional Commissioner Commercial Tax (Appeal) |
|Custom & Central Excise & Service Tax ||Custom Duty ||2014-16 ||66.18 ||Custom & Central Excise & Service Tax (Appealate Tribunal) |
# Net of amount deposited
viii.According to the records of the company examined by us and as per the informationand explanations given to us the Company has not defaulted in repayment of dues tofinancial institution bank or government as on the balance sheet date. The Company hasnot issued any debenture.
ix.In our opinion and according to the information and explanations given to us thecompany has not raised money by way of initial public offer or further public offer(including debt instruments) and In our opinion and according to the information andexplanations given to us the term loans obtained during the year have been applied forthe purpose for which they were obtained.
x.During the course of our examination of the books of account and records of theCompany carried out in accordance with the generally accepted auditing practices in Indiaand according to the information and explanations given to us we have neither come acrossany instance of material fraud by the Company or on the company by employees or officersnoticed or reported during the year nor have we been informed of such case by themanagement.
xi.According to the information and explanations give to us and based on ourexamination of the records 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 information and explanation given to us thecompany is not a Nidhi Company therefore the provision of para 3 (xii) of the Order isnot applicable to the company.
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 sections 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 the information and explanations given to us and based on ourexamination of the records of the company the company has not made any preferentialallotment or private placement of shares or fully or partly convertible debentures duringthe year therefore the provision of para 3 (xiv) of the Order is not applicable to thecompany.
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 him during the year hence the provision of para 3 (xv) of the Order is notapplicable to the company.
xvi.The company is not required to be registered under section 45-IA of the ReserveBank of India Act 1934 therefore the provision of para 3 (xvi) of the Order is notapplicable to the company for the year under audit.
| ||For SMAK & Co. |
| ||Chartered Accountants |
| ||(Firm Reg. No. 020120C) |
| ||CA Shridhar Mandhanya |
| ||Partner |
|Date: 30.05.2019 ||M. No. 421425 |
|Place: Indore || |
Annexure B To the Independent Auditor's Report of even date on the Financial Statementsof Signet Industries Limited
Report on the Internal Financial Controls under Clause
(i)of Sub-section 3 of Section 143 of the Companies Act 2013 ("the Act")
We have audited the internal financial controls over financial reporting of SignetIndustries Limited ("the Company") as of March 312019 in conjunction with ouraudit of the financial statements of the Company for the year ended on that date.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. These responsibilities includethe design implementation and maintenance of adequate internal financial controls thatwere operating effectively for ensuring the orderly and efficient conduct of its businessincluding adherence to company's policies the safeguarding of its assets the preventionand detection of frauds and errors the accuracy and completeness of the accountingrecords and the timely preparation of reliable financial information as required underthe 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. Those Standards and the GuidanceNote require that we comply with ethical requirements and plan and perform the audit toobtain reasonable assurance about whether adequate internal financial controls overfinancial reporting was established and maintained and if such controls operatedeffectively 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 of materialmisstatement 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 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 ofrecords that in reasonable detail accurately and fairly reflect the transactions anddispositions of the assets of the company; (2) provide reasonable assurance thattransactions are recorded as necessary to permit preparation of financial statements inaccordance with generally accepted accounting principles and that receipts andexpenditures of the company are being made only in accordance with authorizations ofmanagement and directors of the company; and (3) provide reasonable assurance regardingprevention or timely detection of unauthorized acquisition use or disposition of thecompany's assets that could have a material 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. Opinion
In our opinion the Company has in all material respects an adequate internalfinancial controls system over financial reporting and such internal financial controlsover financial reporting were operating effectively as at March 31 2019 based on theinternal control over financial reporting criteria established by the Company consideringthe essential components of internal control stated in the Guidance Note on Audit ofInternal Financial Controls Over Financial Reporting issued by the Institute of CharteredAccountants of India.
| ||For SMAK & Co. |
| ||Chartered Accountants |
| ||(Firm Reg. No. 020120C) |
| ||CA Shridhar Mandhanya |
|Date: 30.05.2019 ||Partner |
|Place: Indore ||M. No. 421425 |