To the Members of Simplex Mills Company Limited
Report on the audit of the Standalone Financial Statements
We have audited the accompanying financial statements of Simplex Mills Company Limited(the Company') which comprise the Balance Sheet as at 31st March 2021 the Statement ofProfit and Loss (including Other Comprehensive Income) the Statement of Changes in Equityand the Cash Flow Statement for the year then ended and a summary of significantaccounting policies and other explanatory information (hereinafter referred to as"the standalone financial statements").
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 Act in the manner so required and give a true and fair view in conformity with theIndian Accounting Standards prescribed under Section 133 of the Act read with theCompanies (Indian Accounting Standards) Rules 2015 as amended ("Ind AS") andother accounting principles generally accepted in India of the state of affairs of theCompany as at 31st March 2021 the profit and total comprehensive income / expensechanges in equity and its cash 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 ("the Act"). Ourresponsibilities under those Standards are further described in the Auditor'sResponsibilities for the Audit of the Financial Statements' section of our report. We areindependent of the Company in accordance with the Code of Ethics issued by the Instituteof Chartered Accountants of India together with the ethical requirements that are relevantto our audit of the financial statements under the provisions of the Companies Act 2013and the Rules thereunder and we have fulfilled our other ethical responsibilities inaccordance with these requirements and the Code of Ethics. We believe that the auditevidence we have obtained is sufficient and appropriate to provide a basis for ouropinion.
Emphasis of Matter
We draw attention to the following matters in the Notes to the financial statements:
1. The Company has accumulated losses and its net worth has been fully eroded. Thissituation along with other matters set forth in Note No. 28 indicate the existence of anuncertainty that may cast doubt about the Company's ability to continue as a goingconcern. However the financial statements of the Company have been prepared on a goingconcern basis for the reason stated in the said note.
2. Attention is drawn on Note No. 1 (1(a)) of the Standalone financial statementsrelating to impact of COVID - 19 pandemic on the Company. In the opinion of theManagement the said pandemic is not likely to significantly impact the carrying amount ofloans investments receivables inventories and other assets. The impact of COVID-19pandemic on the Company's Financial Statements may differ from that estimated as at thedate of approval of these financial statements.
Our opinion is not modified in respect of the aforesaid matter.
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.
We have determined that there are no key audit matters to communicate in our report.
Information Other than the Standalone 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 CorporateGovernance and Shareholder's Information but does not include the standalone financialstatements 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 Standalone 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 standalone financial statements that give a true and fair view of the financialposition financial performance (changes in equity) and cash flows of the Company inaccordance with the accounting principles generally accepted in India including theaccounting Standards specified under section 133 of the Act. This responsibility alsoincludes maintenance of adequate accounting records in accordance with the provisions ofthe Act for safeguarding of the assets of the Company and for preventing and detectingfrauds and other irregularities; selection and application of appropriate accountingpolicies; making judgments and estimates that are reasonable and prudent; and designimplementation 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 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 are also responsible for overseeing theCompany's financial reporting process.
Auditor's Responsibility 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:
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 exists we arerequired to draw attention in our auditor's report to the related disclosures in thestandalone 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 chargedwith governance regarding among other matters the planned scope and timing of the auditand significant audit findings including any significant deficiencies in internal controlthat 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
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' a statement on the matters specified inParagraphs 3 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 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 Statement of Profit and Loss including Other ComprehensiveIncome Statement of Changes in Equity and the Cash Flow Statement dealt with by thisReport are in agreement with the books of account;
(d) in our opinion the aforesaid financial statements comply with the IndianAccounting Standards specified under Section 133 of the Act.
(e) on the basis of the written representations received from the directors as on 31stMarch 2021 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 terms of Section164 (2) of the Act;
(f) With respect to the adequacy of the internal financial controls over financialreporting of the Company and operative effectiveness of such controls refer to ourseparate report in Annexure B' and
(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 of pending litigations on its financialposition in its financial statements - Refer Note no. 27 to the 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 Investor
Education and Protection Fund by the Company.
For K.M. Shah & Co. Chartered Accountants
Firm's registration number: 109637W
Kantilal M. Shah
Proprietor Membership number: 003857 Mumbai 27th May 2021 UDIN: 21003857AAAADC4710
Annexure A' to the Independent Auditors' Report to the members of the Company onthe financial statements for the year ended 31st March 2021 referred to in paragraph 1under the heading "Report on Other Legal and Regulatory Requirements" of ourreport of even date.
i. a. The Company has maintained proper records
showing full particulars including quantitative details and situation of fixed assets.
b. The fixed assets have been physically verified by the management at reasonableintervals and as per information and explanation given the discrepancies noticed onphysical verification as compared to book records maintained if any were not materialand have been properly dealt with in the books of account. In our opinion such frequencyis reasonable having regard to the size of the Company and the nature of its fixed assets.
c. Based on the audit procedure performed and according to the records of the Companytitle deeds of all the freehold immovable properties are held in the name of the Company.
ii. As explained to us management conducted physical verification of stocks of rawmaterials finished goods and others at reasonable intervals during the year as also asat the balance sheet date. In our opinion and according to the information andexplanations given to us the frequency of verification is reasonable. On the basis of ourexamination of records of inventory we are of the opinion that the discrepancies noticedon verification between the physical stocks and book records were not material and havebeen properly dealt with in the books of accounts.
iii. The Company has granted loans to one party covered in the register maintainedunder Section 189 of the Companies Act 2013 (the Act').
a. In our opinion the terms and conditions on which the Company has given loans arenot prima facie prejudicial to the interest of the Company.
b. The schedule of repayment of principle and payment of interest has not beenstipulated by the Company and hence we are unable to make any comment on the regularity ofrepayment of principle and payment of interest.
c. The repayment terms are 'On demand' and hence there is no overdue amount ofprincipal and interest.
iv. In our opinion and according to the information and explanation given to us theCompany has complied with the provisions 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 any deposits from the public within the meaning of Section 73 to76 of the Act and the rules framed there under.
vi. As per information and explanation given to us by the management the provisionsfor maintenance of the cost records under Section 148(1) of the Act are not applicable tothe Company as there is no manufacturing activity during the year under review.
vii. a. According to the information and explanations given to us the Company wasregular during the year in depositing undisputed statutory dues including Provident FundIncome tax Sales tax Customs duty Goods and Service Tax and Excise duty with theappropriate authorities. According to the information and explanation given to us as atthe balance sheet date the Company has no undisputed statutory dues of a material naturewhich remained unpaid for a period exceeding six months from the date on which they werepayable.
b. According to the information and explanation given to us as at the balance sheetdate the Company has not deposited dues of excise duty aggregating to ' 10246247/- onaccount of the following disputes pending before authorities:
|Period to which dues relate ||Pending before ||In Rs. |
|1984-85 and 1995 to 1996 ||Assistant Commissioner ||4913695 |
|1981-84 ||CESTAT ||5291 |
|1981 to 1984 ||High Court ||5327261 |
| ||Total ||10246247 |
viii. According to the information and explanations given to us the Company has notdefaulted in repayment of dues to financial institutions banks or debenture holdersduring the year.
ix. According to the information and the explanations given to us the Company has notraised any money by way of Initial/further public offer (including debt instruments) andterm loans during the year. Accordingly Para 3(ix) of the Order is not applicable.
x. To the best of our knowledge and belief and according to the information andexplanations given to us there have been no cases of fraud on or by the Company noticedor reported during the year under report.
xi. As per the information and explanations given to us the Company has paid /provided for managerial remuneration in accordance with the provisions of Section 197 readwith Schedule V to the Act.
xii. In our opinion the Company is not a chit fund or a nidhi/mutual benefitfund/society. Therefore provisions of the clause 3(xii) of the Order are not applicable tothe Company.
xiii. In our opinion and as per the information and explanation given by themanagement all the transactions with the related parties are in compliance with Section177 and 188 of Act where applicable and details have been disclosed in the financialstatements as required by the applicable accounting standards.
xiv. The Company has not made any preferential allotment or private placement of sharesor partly/fully convertible debentures during the year therefore reporting under clause3(xiv) shall not be applicable.
xv. According to the information and explanation given to us and on an overallexamination of financial statement of the Company we report that Company has not enteredin to any non-cash transactions with director or persons connected with him.
xvi. In our opinion the Company is not required to be registered under Section 45-IAof the Reserve Bank of India Act 1934.
For K.M. Shah & Co.
Firm's registration number: 109637W
Kantilal M. Shah
Proprietor Membership number: 003857 Mumbai 27th May 2021 UDIN: 21003857AAAADC4710
Annexure B' to the Independent Auditors' Report of the even date.
The Annexure referred to in our Independent Auditors' Report to the members of theCompany on the financial statements for the year ended 31st March 2021 we report that:
Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section143 of the Companies Act 2013
We have audited the internal financial controls over financial reporting of SimplexMills Company Limited
(the Company') as of 31st March 2021 in conjunction with our audit of thefinancial 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 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 The Institute ofChartered Accountants of India and deemed to be prescribed under Section 143(10) of theCompanies Act 2013 to the extent applicable to an audit of internal financial controlsboth applicable to an audit of Internal Financial Controls and both issued by theInstitute of Chartered Accountants of India. Those Standards and the Guidance Note requirethat 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 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 judgement 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 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 authorisations 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.
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 31st March 2021 based on"the internal control over financial reporting criteria established by the Companyconsidering 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 K.M. Shah & Co.
Chartered Accountants Firm's registration number: 109637W
Kantilal M. Shah
Proprietor Membership number: 003857 Mumbai 27th May 2021