Sintex Industries Ltd.
|BSE: 502742||Sector: Industrials|
|NSE: SINTEX||ISIN Code: INE429C01035|
|BSE 11:01 | 30 Jan||2.53||
|NSE 11:04 | 30 Jan||2.75||
|Mkt Cap.(Rs cr)||152|
|Mkt Cap.(Rs cr)||151.60|
Sintex Industries Ltd. (SINTEX) - Auditors Report
Company auditors report
To the Members of Sintex Industries Limited
Report on the Audit of the Standalone Financial Statements
We have audited the accompanying standalone financial statements ofSintex Industries Limited ("the Company") which comprise the balance sheet asat 31st March 2022 and the statement of Profit and Loss (including Other Comprehensiveincome) statement of cash flows and statement of changes in equity for the year thenended on that date and notes to the financial statements including a summary ofsignificant accounting policies and other explanatory information (hereinafter referred toas "standalone financial statements").
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") Act in the manner sorequired and give a true and fair view in conformity with the Indian Accounting Standardsprescribed under section 133 of the Act read with the Companies (Indian AccountingStandards) Rules 2015 as amended ("Ind As") and other accounting principlesgenerally accepted in India of the state of affairs of the Company as at March 31 2022Loss total comprehensive loss its cash flows and the changes in equity for the yearended 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 Companies Act 2013. Our responsibilitiesunder those Standards are further described in the Auditor's Responsibilities for theAudit of the Financial Statements section of our report. We are independent of the Companyin accordance with the Code of Ethics issued by the Institute of Chartered Accountants ofIndia (ICAI) together with the independence requirements that are relevant to our audit ofthe standalone financial statements under the provisions of the Act and the Rulesthereunder and we have fulfilled our other ethical responsibilities in accordance withthese requirements and the ICAI's Code of Ethics. We believe that the audit evidence wehave obtained is sufficient and appropriate to provide a basis for our audit opinion onthe standalone financial statements.
Emphasis of Matter
i. We draw attention to Note 19(i) to the standalone financialstatement with respect to continuing default in payment of dues and Company under CIRPmost of the lenders have sent notices / letters recalling their loans given and calledupon the Company to pay entire dues and other liabilities. Further the Committee ofCreditors has approved the Resolution Plan submitted by Reliance Industries Limitedjointly with Assets Care & Reconstruction Enterprise Limited under CIRP on 19.03.2022.The IRP has submitted Resolution Plan before Hon'ble NCLT Ahmedabad for its approval. Ason date approval of Resolution Plan is pending before Hon'ble NCLT Ahmedabad. Hence inview of the said facts & considering the matter of prudence whole of the long termborrowing outstanding as on 31st March2022 has been classified as current borrowings.
ii. We draw attention to Note 35 to the standalone financial statementwhich states that the company's credit rating has been downgraded (Company's credit ratingis "BWR D" from Brickwork Ratings India Pvt. Ltd. for Non-ConvertibleDebentures) which may substantially impair its ability to raise or generate funds torepay its obligations. As mentioned in the same note the company has defaulted in debtobligation of debentures aggregating to Rs 500.00 Crores for the period April19 to 6thApril2021 (date of admission in Corporate Insolvency Resolution Process) apart from othercredit facilities. However Company has made provision for interest for the periodApril2019to March2022. Further Company's inability to meet its obligation in relationto the payment of certain letters of credit which led to devolvement and consequent overutilization of the cash credit facilities availed by the Company delay in payment ofcertain term loan instalments as well as interest thereof. Further as described in saidNote although the Company submitted various Resolution Plans to lenders on various datesthe Punjab National Bank filed petition before the National Company Law Tribunal (NCLT)Ahmedabad under Section 7 of Insolvency and Bankruptcy Code 2016 for initiating CorporateInsolvency Resolution Process (CIRP) against the company in December2019. Petition forinitiation of Corporate Insolvency Resolution Process under Section 7 of the Insolvencyand Bankruptcy Code 2016 filed against the Company by Invesco Asset Management (India)Private Limited (Financial Creditor) for default amount of Rs 150000000/- (Principalamount) has been admitted against the Company vide Honourable National Company LawTribunal Ahmedabad Bench order dated 06.04.2021. Mr. Pinakin Shah (having registrationno. IBBI/IPA- 002/IP-N00106/2017-18/10248) has been appointed as Interim ResolutionProfessional by the Honourable National Company Law Tribunal Ahmedabad Bench underSection 13(1)(c) of the Insolvency and Bankruptcy Code 2016 and moratorium period underSection 14 of the Insolvency and Bankruptcy Code 2016 is declared.
iii. We draw attention to Note 36 to the standalone financialstatement result with respect to impairment of assets. As described in the said note thecompany has discontinued the manufacturing operations of structured fabrics (exceptbleaching facility) at Kalol effective from 1st July 2019 on account of high cost ofoperations. The management of the company has assessed that any provision needs to berecognised on account of the impairment of assets in respect of property plant andequipment of its Textile Division. The higher of Textile Division assets fair value (lesscost of disposal) and its value in use as per valuation report obtained from approvedvaluer as on 30th September2020 and is found lower than its carrying amount as per booksof accounts of the company and hence the Company has recognised impairment loss of Rs426.64 crores for the year 2020-21. Therefore the impairment loss has been shown under"Exceptional Item".
iv. We draw attention to Note 37 to the standalone financial statementwith respect to USD 110 Million Foreign Currency Convertible Bonds due 2022 (FCCBs) raisedby the Company there are USD 6.5 Million FCCBs outstanding for conversion as on 31stMarch 2022.Further the Company has defaulted in payment of Interest amounting to USD0.64 Million for the period 25th May19 to 31st March2022.
v. We draw attention to Note 42 to the standalone financial statementwith respect to recognition of deferred tax assets. As stated in the said Note deferredtax asset has not been recognized in view of losses during the year.
vi. We draw attention to Note 43 to the standalone financial statementwith respect to spending on Corporate Social responsibility. As stated in the said Notecompany is not liable to spent anything on it as per Section 135 of the Companies Act2013.
vii. We draw attention to Note 49 to the standalone financialstatement with respect to realization of subsidies aggregating to Rs 469.34 croresoutstanding as at 31st March 2022 including interest subsidy of Rs 210.96 Crores. As perthe information and explanations furnished to us IRP and the suspended management istaking necessary actions for realization of these subsidies and as stated in the saidNote IRP has also filed application in NCLT Ahmedabad for recovery of power and GSTsubsidies.
viii. We draw attention to Note 52 to the standalone financialstatement with respect to confirmation of balances. As stated in the said noteconfirmation of balances (other than related party) in respect of amounts due from tradereceivables capital advances given and loans and advances granted as well as for theamounts due to/payables to trade payables have not been obtained and/or received by thecompany and therefore these balances remained unconfirmed.
ix. We draw attention to Note 54 to the standalone financial resultwith respect to expected quantum of loss is approximately Rs 115.00 crores on account ofCyclone Tauktae. Till 31.03.2022 the Company has incurred expenses of Rs 83.11 crore(including loss of inventory of Rs 21.02 crores and advance of Rs 5.07 Cr) for restorationof plant which was damaged due to Cyclone Tauktae on 17th May 2021 and 18th May 2021. Ason 31.03.2022 the Company has recovered Rs 16.64 crores by realization of salvage value ofdamaged materials and Rs 1 crore as advance against insurance claim on 17.03.2022 fromInsurance Company. Accordingly as on 31.03.2022 net amount of Rs 65.47 crores shown underthe head "Other Current Assets - Advances recoverable in cash or kind" and notdebited to Statement of Profit & Loss account considering loss / damage is covered bythe Insurance. Process of claiming insurance is going on. Further out of 65.47 croresreceivable from Insurance Company on account of Insurance claim of Cyclone Taukate theCompany has received Rs 24.98 crores as on 25.04.2022 and Rs 1 crores as on 27.04.2022 asadvance against insurance claim.
x. We draw attention to Note 55 to the standalone financial resultwherein it is mentioned that- the Company continuously monitoring the Covid situation& accordingly managing the operations of the Company. The Company plant wasoperational for whole year including period of 2nd & 3rd wave of Covid 19 by takingprecautionary steps. Further during first quarter ended 30th June 2021 there is severedamage at our factory plant situated at Taluka Jafarabad Lunsapur Amreli Gujarat due toCyclone Tauktae on 17th May 2021 and 18th May 2021. The loss / damage is covered by theInsurance. Process of claiming insurance is going on. Plant of the Company was notoperational due to non availability of electricity at our factory plant due to damage ofCyclone Tauktae. Electricity was restored at our plant on 05th July 2021 and operationsof the Company have commenced in a phased manner and achieved 95% capacity as on date.
xi. We draw attention to Note 56 to the standalone financial statementwherein it is mentioned that The Company has outstanding advances of Rs 531.91 croresreceivables from Sintex Prefab & Infra Limited. Petition for initiation of CorporateInsolvency Resolution Process under Section 7 of the Insolvency and Bankruptcy Code 2016filed against Sintex Prefab & Infra Limited by Bank of Baroda (Financial Creditor) hasbeen admitted vide Honourable National Company Law Tribunal Ahmedabad Bench order dated24.02.2021. The Company has submitted claims of Rs 531.91 crores to Mr. Chandra PrakashJain (IRP of Sintex Prefab & Infra Limited) on 16.03.2021. However admission of claimyet to be confirmed by IRP of Sintex Prefab & Infra Limited.
xii. We draw attention to Note 57 to the standalone financialstatement with respect to insurance claim receivable. The insurance claim receivableincludes insurance claim of Rs 23.11 crores of F.Y. 2016-17 is outstanding as on 31stMarch2022. The insurance company has repudiated claim pertaining to FY 2016 - 17.Management of company has filed reply against the same and is hopeful of settling theclaims in full. The Company has initiated legal proceedings against the same.
xiii. We draw attention to Note 58 to the standalone financialstatement with respect to defaulted in repayment of principal and interest payments. Theperiod and amount of continuing default as on the Balance sheet date are as under:
( Rs in Crores)
xiv. We draw attention to Note 60 to the standalone financialstatement with respect to the Resolution Plan submitted by Reliance Industries Limitedjointly with Assets Care & Reconstruction Enterprise Limited has been approved by CoC.As per the said approved Resolution Plan there may be impairment of assets of the Company.However as on date impact of the same is not considered in the financial statements asthe Resolution Plan is pending before Hon'ble NCLT Ahmedabad for approval. Once theResolution Plan is approved by Hon'ble NCLT Ahmedabad the necessary effect of impairmentof assets if any will be done in the financial statement as part of implementation of theResolution Plan.
Our Opinion is not modified in respect of this matter.
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 period. 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.
Information Other than the Financial Statements and Auditor's ReportThereon
The Company's Board of Directors and Interim Resolution Professional(IRP) is responsible for the other information. The other information comprises theinformation included in the Board's Report and Annexure to Board's Report but does notinclude the financial statements and our auditor's report thereon. The other informationis expected to be made available to us after the date of this auditor's report thereon.
Our opinion on the financial statements does not cover the otherinformation and we do not express any form of assurance conclusion thereon.
In connection with our audit of the financial statements ourresponsibility is to read the other information identified above when it becomes availableand in doing so consider whether the other information is materially inconsistent withthe financial statements or our knowledge obtained in the audit or otherwise appears tobe materially misstated.
Management's and Interim Resolution Professional's Responsibility forthe Standalone Financial Statement
The Company's Board of Directors and IRP 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 total comprehensive income changes in equity and cash flows of the Companyin accordance with the accounting principles generally accepted in India. Thisresponsibility also includes maintenance of adequate accounting records in accordance withthe provisions of the Act for safeguarding of the assets of the Company and for preventingand detecting frauds and other irregularities; selection and application of appropriateaccounting 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 statements thatgive a true and fair view and are free from material misstatement whether due to fraud orerror.
In preparing the financial statements management is responsible forassessing the Company's ability to continue as a going concern disclosing as applicablematters related to going concern and using the going concern basis of accounting unlessmanagement either intends to liquidate the Company or to cease operations or has norealistic 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 Financial Statements
Our objectives are to obtain reasonable assurance about whether thefinancial statements as a whole are free from material misstatement whether due to fraudor error and to issue an auditor's report that includes our opinion. Reasonable assuranceis a high level of assurance but is not a guarantee that an audit conducted in accordancewith SAs will always detect a material misstatement when it exists. Misstatements canarise from fraud or error and are considered material if individually or in theaggregate they could reasonably be expected to influence the economic decisions of userstaken on the basis of these financial statements.
As part of an audit in accordance with SAs we exercise professionaljudgment and maintain professional skepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of thefinancial 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 theaudit in order to design audit procedures that are appropriate in the circumstances. Undersection 143(3)(i) of the Act we are also responsible for expressing our opinion onwhether 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 financial statements or if such disclosures are inadequate tomodify our opinion. Our conclusions are based on the audit evidence obtained up to thedate of our auditor's report. However future events or conditions may cause the Companyto cease to continue as a going concern.
Evaluate the overall presentation structure and content of thefinancial statements including the disclosures and whether the financial statementsrepresent the underlying transactions and events in a manner that achieves fairpresentation.
Materiality is the magnitude of misstatements in the standalonefinancial statements that individually or in aggregate makes it probable that theeconomic decisions of a reasonably knowledgeable user of the financial statements may beinfluenced. We consider quantitative materiality and qualitative factors in (i) planningthe scope of our audit work and in evaluating the results of our work; and (ii) toevaluate the effect of any identified misstatements in the financial statements.
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 financialstatements of the current period and are therefore the key audit matters. We describethese matters in our auditor's report unless law or regulation precludes public disclosureabout the matter or when in extremely rare circumstances we determine that a mattershould not be communicated in our report because the adverse consequences of doing sowould 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) Order 2016("the Order") issued by the Central Government of India in terms of sub-section(11) of section 143 of the Act we give in the "Annexure A" a statement on thematters specified in paragraphs 3 and 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 explanationswhich to the best of our knowledge and belief were necessary for the purposes of ouraudit.
(c) The Balance Sheet the Statement of Profit and Loss including OtherComprehensive income the statement of changes in equity and the Cash Flow Statement dealtwith by this Report are in agreement with the books of account.
(d) In our opinion the aforesaid standalone financial statementscomply with the Accounting Standards specified under Section 133 of the Act read withRule 7 of the Companies (Accounts) Rules 2014.
(e) On the basis of the written representations received from thedirectors as on 31st March 2022 taken on record by the Board of Directors none of thedirectors is disqualified as on 31st March 2022 from being appointed as a director interms of Section 164 (2) of the Act.
(f) With respect to the adequacy of the internal financial controlswith reference to financial statements of the Company and the operating effectiveness ofsuch controls refer to our separate Report in "Annexure B".
(g) With respect to the other matters to be included in the Auditor'sReport in accordance with the requirements of section 197(16) of the Act as amended:
In our opinion and to the best of our information and according to theexplanations given to us the managerial remuneration has not been paid by the company toits directors during the year is in accordance with provisions of Section 197 of the Act.
(h) With respect to the other matters to be included in the Auditor'sReport in accordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014 asamended 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 financial statements - Refer Note no 51 to the standalonefinancial statements;
ii. Provision has been made in the financial statements as requiredunder the applicable law or accounting standards for material foreseeable losses if anyon long-term contracts including derivative contracts.
iii. There were no amounts which were required to be transferred to theinvestor's education and protection fund by the company.
iv. (a) The Management has represented that to the best of theirknowledge and belief no funds have been advanced or loaned or invested (either fromborrowed funds or share premium or any other sources or kind of funds) by the company toor in any other person(s) or entities including foreign entities("Intermediaries") with the understanding whether recorded in writing orotherwise that the Intermediary shall whether directly or indirectly lend or invest inother persons or entities identified in any manner whatsoever by or on behalf of thecompany ("Ultimate Beneficiaries") or provide any guarantee security or thelike on behalf of the Ultimate Beneficiaries;
iv (b) The management has represented that to the best of theirknowledge and belief no funds have been received by the company from any person(s) orentity (ies) including foreign entities ("Funding Parties") with theunderstanding whether recorded in writing or otherwise that the company shall whetherdirectly or indirectly lend or invest in other persons or entities identified in anymanner whatsoever by or on behalf of the Funding Party ("UltimateBeneficiaries") or provide any guarantee security or the like on behalf of theUltimate Beneficiaries;
iv. (c) Based on such audit procedures that have been consideredreasonable and appropriate in the circumstances nothing has come to our notice that hascaused them to believe that the representations under sub-clause (i) and (ii) contain anymaterial mis-statement.
v. Company has not declared or paid any dividend during the year.
ANNEXURE A - to the Independent Auditors' Report
for the period ended March 2022
(Referred to in Paragraph 1 under the Heading of "Report on OtherLegal and Regulatory Requirements" section of our Report of even date)
(i) Fixed Assets
a) The Company has maintained proper records showing full particularsincluding quantitative details and situtation of fixed assets.
b) The Company has a program of physical verification of its propertyplant and equipment to cover all the items of property plant and equipment in a phasedmanner which in our opinion is reasonable having regard to the size of the Company andthe nature of its property plant and equipment. Pursuant to the program certainproperty plant and equipment were physically verified by the Management during the year.According to the information and explanations given to us no material discrepancies werenoticed on such verification.
c) According to the information and explanations given to us and thetitle deeds and other records examined by us we report that the title deeds in respect ofall the immovable properties comprising of freehold land and buildings are held in thename of the Company except in respect of freehold lands having aggregate cost of Rs 438.91Crores for which documents in favor of the Company are not executed as at end of theyear. (Refer Note - 4.2 and 53 to Standalone financial statements)
d) The company has not revalued its Property Plant and Equipments andIntangible assets durint the year.
e) According to the information and explanations given to us and on thebasis of our examinations of the records of the Company there are no proceedingsinitiated or pending against the company for holding any benami property under theProhibition of Benami Property Transactions Act1988 and rules made thereunder.
(a) As explained to us the inventories were physically verifiedduring the year by the Management at reasonable intervals and no material discrepancieswere noticed on physical verification.
(b) According to the information and explanations given to us theCompany has been admitted under CIRP as per Honable NCLT Ahmedabad order dated 6th April2021. Accordingly Clause 3(ii)(b) is not applicable to the Company.
(iii) Loans given
According to Information and explanations given to us the Company hasnot granted any Secured or unsecured loan to companies firms Limited LiabilityPartnerships or other parties covered in the register maintained under Section 189 of theCompanies Act 2013. Hence reporting under clause 3 (iii) (a) (b) and (c) does not arise.
(iv) Compliance of Sec. 185 & 186
In our openion and according to the information and explanations givento us the compnay has complied with the provisions of sections 185 & 186 of thecompanies Act 2013 in respect of grant of loans making investments and providingguarantees and securities as applicable.
(v) Public Deposit
According to Information and explanations given to us the company hasnot accepted any deposits from the public during the year and in respect of unclaimeddeposits the company has complied with the proviosn of section 73 to 76 or any otherrelevent provisons of the copmanies Act 2013.
(vi) Cost Records
The company is maintaining the cost records as specified by the CentralGovernment under sub-section (1) of section 148 of the Companies Act in respect of servicecarried out by the company. We have broadly reviewed the cost records maintained by theCompany pursuant to the Companies (Cost Records and Audit) Rules 2014 as amendedprescribed 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 cost records have beenmade and maintained. We have however not made a detailed examination of the cost recordswith a view to determine whether they are accurate or complete.
(vii) Statutory Dues
According to the information and explanations given to us in respectof statutory dues:
a) The Company has generally been regular in depositing its undisputedstatutory dues including Provident Fund Income-tax Goods and Service Tax Customs dutycess and other material statutory dues applicable to it to the appropriate authorities.
b) No undisputed amounts payable in respect of the aforesaid dues wereoutstanding as at March 31 2022 for a period of more than six months from the date theybecame payable.
c) According to the information and explanations given to us there areno dues of income tax sales tax excise duty and Goods and Service Tax on account of anydispute which have not been deposited.
(viii) According to the information and explanations given to us and onthe basis of our examinations of the records of the company the Company has notsurrendered or disclosed any transactions previously unrecorded as income in the books ofaccount in tax assessments under the Income Tax Act 1961 as income during the year.
(ix) (a) In our opinion and according to the information andexplanations given to us the company has defaulted in repayment of dues to banksfinancial institutions and debenture holders. Lender wise details of defaults in repaymentof borrowing (Term Loan & Working Capital) and interest are given below.
( Rs in Crores)
(b) Accordig to the information available on credit informationcompanies two lenders banks has declared the Company as wilful defaulter (Refer note no.58 of to Standalone financial statements).
(c) According to the information and explanations given to us and onthe basis of our examinations of the records of the company we report that no short termfunds has been used for long term purpose during the year.
(d) According to the information and explanations given to us and on anoverall exminations of the financial statement of the company we report that the Companyhas not taken any funds from any entity or person on account of or to meet the obligationsof its subsidiaries as defined under the Act. The Company does not hold any investment inany associates and joint ventures during the year ended 31st March2022.
(x) (a) The Company has not raised money by way of initial public offeror further public offer (including debt instrument) any term loans during the period underaudit therefore Clause 3 (x)(a) of the order is not applicable to the company.
(b) According to the information and explanations given to us and onthe basis of our examinations of the records of the company the Company has not made anypreferential allotement or private placement of shres or fully or partly convertibledebentues during the year. Accordingly Clause 3(x)(b) is not applicable to the company.
(xi) (a)Based upon the audit procedures performed for the purpose ofreporting the true and fair view of the financial statements and as per the informationand explanations given by the management we report that no fraud by the Company or anyfraud on the company by its officers or employees has been noticed or reported during theyear.
(b) According to the infromation and explanations given to us noreport under sub-section (12) of Section 143 of the Act has been filed by the auditors inForm ADT-4 as prescribed under rule 13 of the Companies (Audit and Auditors) Rules 14with the Central Government during the year.
(c) We have not taken into consideration whistle blower compliantsreceived by the Company during the year while determining the nature timing and extent ofour audit procedures.
(xii) The company is not a Nidhi Company and hence reporting underclause (xii) of the paragraph 3 of the order is not applicable.
(xiii) In our opinion and according to the information and explanationsgiven to us all the transactions with the related parties are in compliance with section177 and 188 of the Companies Act 2013 where applicable and the details of related partytransactions have been disclosed in the standalone financial statements as required by theapplicable Indian accounting standards.
(xiv) (a) Based on information and explanations provided to us and ouraudit procedures in our opinion the Company has an internal audit system commensuratewith the size and nature of its business.
(b) We have considered the internal audit report of the Company issuedtill date for the period under audit.
(xv) In our opinion and according to the information and explanationsgiven to us during the year the company has not entered into any non-cash transactionswith its directors or persons connected with him and hence paragraph 3 (xv) of the orderis not applicable to the company.
(xvi) (a) In our opinion and according to the information andexplanations given to us company is not required to be registered under section 45-IA ofthe Reserve Bank of India Act 1934. Accordingly Clause 3(xvi)(a) and 3(xvi)(b) is notapplicable to the company.
(b) The Company is not a Core Investment Company(CIC) as defined underthe reguations made by the reserve bank of india hence Clause 3(xvi)(c) and 3(xvi)(d) isnot applicable to the company.
(xvii) The Company has not incurred cash losses in the current and inthe immediately preceding financia year.
(xviii) There has been no resignation of statutory auditors during theyear. Accordingly Clause 3 (xviii) of the Order is not appliable to the company.
(xix) The company has been admitted under CIRP proceding by HonableNCLT Ahmedabad dated 6th April 2021 hence clause 3(xix) is not applicable to thecompany.
(xx) In our opinion and according to the information and explanationsgiven to us there is no unspent amount of CSR under sub-section (5) of Section 135 of theAct pursuant to any project. Hence Clause 3(xx)(a) and 3(xx)(b) is not applicable to theCompany.
ANNEXURE B - to the Independent Auditors' Report of even date on theStandalone Financial Statements of Sintex Industries Limited.
(Referred to in Paragraph 2(F) under the Heading of "Report onOther Legal and Regulatory Requirements" section of our Report of even date)
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 with reference toFinancial Statements of Sintex Industries Limited ("the Company") as of 31March 2022 in conjunction with our audit of the standalone financial statements of theCompany for the year ended on that date.
Management's Responsibility for Internal Financial Controls
The Company's management is responsible for establishing andmaintaining internal financial controls based on "the internal financial controlswith reference to financial statements criteria established by the Company considering theessential components of internal control stated in the Guidance Note on Audit of InternalFinancial Controls over Financial Reporting issued by the Institute of CharteredAccountants of India". These responsibilities include the design implementation andmaintenance of adequate internal financial controls that were operating effectively forensuring the orderly and efficient conduct of its business including adherence tocompany's policies the safeguarding of its assets the prevention and detection of fraudsand errors the accuracy and completeness of the accounting records and the timelypreparation of reliable financial information as required under the Companies Act 2013.
Our responsibility is to express an opinion on the Company's internalfinancial controls with reference to financial statements based on our audit. We conductedour audit in accordance with the Guidance Note on Audit of Internal Financial ControlsOver Financial Reporting (the "Guidance Note") and the Standards on Auditingissued by ICAI and deemed to be prescribed under section 143(10) of the Companies Act2013 to the extent applicable to an audit of internal financial controls both applicableto an audit of Internal Financial Controls and both issued by the Institute of CharteredAccountants of India. Those Standards and the Guidance Note require that we comply withethical requirements and plan and perform the audit to obtain reasonable assurance aboutwhether adequate internal financial controls with reference to financial statements wasestablished and maintained and if such controls operated effectively in all materialrespects.
Our audit involves performing procedures to obtain audit evidence aboutthe adequacy of the internal financial controls with reference to financial statements andtheir operating effectiveness. Our audit of internal financial controls with reference tofinancial statements included obtaining an understanding of internal financial controlswith reference to financial statements assessing the risk that a material weaknessexists and testing and evaluating the design and operating effectiveness of internalcontrol based on the assessed risk. The procedures selected depend on the auditor'sjudgement including the assessment of the risks of material misstatement of the financialstatements whether due to fraud or error.
We believe that the audit evidence we have obtained is sufficient andappropriate to provide a basis for our audit opinion on the Company's internal financialcontrols with reference to financial statements.
Meaning of Internal Financial Controls with reference to financialstatements
A company's internal financial control with reference to financialstatements is a process designed to provide reasonable assurance regarding the reliabilityof financial reporting and the preparation of financial statements for external purposesin accordance with generally accepted accounting principles. A company's internalfinancial control with reference to financial statements includes those policies andprocedures 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 as necessary topermit preparation of financial statements in accordance with generally acceptedaccounting principles and that receipts and expenditures of the company are being madeonly in accordance with authorizations of management and directors of the company; and (3)provide reasonable assurance regarding prevention or timely detection of unauthorizedacquisition use or disposition of the company's assets that could have a material effecton the financial statements.
Inherent Limitations of Internal Financial Controls with reference toFinancial Statements
Because of the inherent limitations of internal financial controls withreference to financial statements including the possibility of collusion or impropermanagement override of controls material misstatements due to error or fraud may occurand not be detected. Also projections of any evaluation of the internal financialcontrols with reference to financial statements to future periods are subject to the riskthat the internal financial control with reference to financial statements may becomeinadequate because of changes in conditions or that the degree of compliance with thepolicies or procedures may deteriorate.
In our opinion the Company has in all material respects an adequateinternal financial controls system with reference to financial statements and suchinternal financial controls with reference to financial statements were operatingeffectively as at 31 March 2022 based on "the internal control with reference tofinancial statements criteria established by the Company considering the essentialcomponents of internal control stated in the Guidance Note on Audit of Internal FinancialControls Over Financial Reporting issued by the Institute of Chartered Accountants ofIndia".