To the Members of SKY GOLD LIMITED (Formerly known as Sky Gold Private Limited)
Report on the Standalone Financial Statements
We have audited the accompanying standalone financial statements of SKY GOLD LIMITED(Formerly known as Sky Gold Private Limited) ("the Company") whichcomprise the Balance Sheet as at March 31 2020 and the Statement of Profit and Loss andCash Flow Statement for the year then ended and a summary of significant accountingpolicies and other explanatory information.
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 theaccounting principles generally accepted in India of the state of affairs of the Companyas at 3l March 2020 and its profit and its cash flows for the year ended on that date.
Basis for Opinion
We have taken into account the provisions of the Act the accounting and auditingstandards and matters which are required to be included in the audit report under theprovisions of the Act and the Rules made thereunder.
We conducted our audit in accordance with the Standards on Auditing specified underSection 143(10) of the Act. Those Standards require that we comply with ethicalrequirements and plan and perform the audit to obtain reasonable assurance about whetherthe financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts andthe disclosures in the financial statements. The procedures selected depend on theauditor's judgment including the assessment of the risks of material misstatement of thefinancial statements whether due to fraud or error. In making those risk assessments theauditor considers internal financial control relevant to the Company's preparation of thefinancial statements that give a true and fair view in order to design audit proceduresthat are appropriate in the circumstances. An audit also includes evaluating theappropriateness of the accounting policies used and the reasonableness of the accountingestimates made by the Company's Directors as well as evaluating the overall presentationof the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the financial statements.
Key Audit Matters
Key audit matters are those matters that in our professional judgment were of mostsignificance in our audit of the standalone financial statements of the current period.These matters were addressed in the context of our audit of the financial statements as awhole and in forming our opinion thereon and we do not provide a separate opinion onthese matters.
|Key Audit matter || |
How our audit addressed the key audit matter:
|Impact of COVID-19 pandemic on financial ||Our audit procedures considered the guidance laid down by ICAI especially in relation to - |
|reporting: || |
|On ii March 2020 the World Health Organisation declared the Novel Coronavirus (C0VIDl9) outbreak to be a pandemic. We have identified the impact of and uncertainty related to the COVID-19 pandemic as a key element and consideration for overall financial reporting by the Company. The extent to which COVID- 19 pandemic will impact the Company will depend on future events which are highly uncertain. ||> Impairment of assets |
| ||> Revenue recognition |
| ||> Provisions and contingent liabilities |
| ||> Going concern assessment |
| ||> Post balance sheet events |
| ||> Audit evidence through electronic mode |
| ||We considered the above points and appropriately modified our audit procedures to obtain sufficient and appropriate audit evidence and reached appropriate conclusions thereon. Our audit work in relation to the existence and valuation of inventory included but was not limited to performing the following procedures: |
|Existence and valuation of inventory || |
|The Company has an inventory balance of Z 33.92 crore as at 31 March 2020 as disclosed in note 12 of the accompanying standalone financial statements. Refer note 1(3) for the corresponding accounting policy adopted by the management with respect to the inventory balance. || |
| ||> Obtained an understanding of the management's process for physical verification including the changes required thereto as a result of COVID-19 related restrictions and recognition and measurement of purchase cost of gold diamonds and manufactured jewellery items. |
|The Company purchases gold from nominated agencies prescribed by Banks and other customers. || |
|With respect to existence of inventory as at year end there is an inherent risk of loss from theft or possible malafide intent due to the high intrinsic value and portable nature of individual inventory items. In addition to the physical verification performed by the management with the help of an independent professional gemologist the lenders of the Company also conduct stock counts with the help of their appointed independent gemologists. ||> Evaluated the design and tested the operating effectiveness of controls implemented by the Company with respect to such process including controls around safeguarding the high value inventory items. |
| ||> Assessed the appropriateness of accounting policy and management valuation methodology adopted by the management. |
|Considering the complexities involved portable nature of inventory high inherent risk and high level of estimation uncertainty involved in valuation of the inventory the existence and valuation of inventory has been determined as key audit matter for the current year audit ||> On a sample basis tested invoices and other underlying records to validate the costs and characteristics basis which the inventory is categorized for inventory management and valuation. |
| ||> Obtained the management physical verification records and inventory reconciliation performed by the management as at the year end. |
| ||> Obtained the category-wise inventory reconciliation from the management and tested the same on sample basis. |
| ||> On a sample basis tested samples of inventory sold before year-end and subsequent to year-end to corroborate management's assessment of net realizable value of closing inventory balance. |
| ||> Evaluated disclosures made in the accompanying financial statements for appropriateness and adequacy in accordance with the requirements of the accounting standards. |
Management's Responsibility for the Financial Statements
The Management is responsible for the matters stated in section 134(5) of the CompaniesAct 2013 ("the Act") with respect to the preparation of these standalonefinancial statements that give true and fair view of the financial position financialperformance and cash flows of the company in accordance with the accounting principlesgenerally accepted in India including the Accounting Standards specified under section133 of the Act read with Rule 7 of the Companies (Accounts) Rules 2016. 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 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. 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 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 financialstatements whether due to fraud or error design and perform audit procedures responsiveto those risks and obtain audit evidence that is sufficient and appropriate to provide abasis for our opinion. The risk of not detecting a material misstatement resulting fromfraud is higher than for one resulting from error as fraud may involve collusionforgery intentional omissions misrepresentations or the override of internal control.
> Obtain an understanding of internal control relevant to the audit in order todesign audit procedures that are appropriate in the circumstances. Under section 143(3)(i)of the Companies Act 2013 we are also responsible for expressing our opinion on whetherthe company has adequate internal financial controls system in place and the operatingeffectiveness of such controls.
> Evaluate the appropriateness of accounting policies used and the reasonableness ofaccounting estimates and related disclosures made by management.
> Conclude on the appropriateness of management's use of the going concern basis ofaccounting and based on the audit evidence obtained whether a material uncertaintyexists related to events or conditions that may cast significant doubt on the Company'sability to continue as a going concern. If we conclude that a material uncertainty existswe are required to draw attention in our auditor's report to the related disclosures inthe financial statements or if such disclosures are inadequate to modify our opinion.Our conclusions are based on the audit evidence obtained up to the date of our auditor'sreport. However future events or conditions may cause the Company to cease to continue asa going concern.
> Evaluate the overall presentation structure and content of the financialstatements including the disclosures and whether the financial statements represent theunderlying transactions and events in a manner that achieves fair presentation.
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 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 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.
1. As required by the Companies (Auditor report) Order 2016 ("The Order")Issued by the Central Government of India in terms of Section 143(l 1) of the Act we givethe "Annexure - A" statement on the matter specified in paragraph 3 & 4 ofthe order.
9 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.
(h) 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 and the Statement of Profit and Loss dealt with by this Reportare in agreement with the books of account.
(d) In our opinion the aforesaid financial statements comply with the AccountingStandards specified under Section 133 of the Act read with Rule 7 of the Companies(Accounts) Rules 2014
(e) On the basis of the written representations received from the directors as on 31stMarch 2020 taken on record by the Board of Directors none of the directors isdisqualified as on 31 St March 2020 from being appointed as a director in terms ofSection 164 (2) of the Act.
(1) 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 "Arinexure B".
(g) With respect to other matters to be included in the Auditor's Report and tothe best of our information and according to the explanations given to us:
i. The company does not have any pending litigations which would impact its financialposition. ii. The company did not have any long-term contracts including derivativecontracts for which there were any material foreseeable losses. iii. There were no amountswhich were required to be transferred to the Investor Education and Protection Fund by thecompany.
|Place: Mumbai ||For VJ SHAH & CO |
| ||Chartered Accountants |
| ||FRN: 109823W |
| ||NIRAV M. MALDE |
| ||(PARTNER) |
|Date :- 30.07.2020 ||Membership No. 152425 |
Annexure "A" Auditors' Report
Annexure referred to in Paragraph 1 under the heading of "Report on Other Legaland Regulatory Requirements" of the Independent Auditor's Report on the Accounts ofSKY GOLD LIMITED (Formerly known as Sky Gold Private Limited) ('the company') for the yearended 31st March 2020.
1) In respect of Fixed Assets:
(a) The company has maintained the fixed assets register showing full particularsincluding quantitative details and situation of fixed assets on the basis of availableinformation.
(b) As explained to us all the fixed assets have been physically verified by themanagement during the year at reasonable intervals which in our opinion is reasonablehaving regard to the size of the company and the nature of assets. No materialdiscrepancies were noticed on such physical verification.
(c) The title deed of immovable properties are held in the name of the company.
II) In respect of Inventories:
(a) As explained to us the inventory has been physically verified by the management atregular intervals during the year.
(b) In our opinion and according to the information and explanations given to us and onthe basis of our examination of the records of inventory the Company has maintainedproper records of inventory and there were no material discrepancies noticed on physicalverification of inventory as compared to the book records.
III) In respect of loans secured or unsecured the company has not granted tocompanies firms or other parties covered in the register maintained under section 189 ofthe Companies Act.
The company has not granted any loans therefore sub clause (iii) (a) (b) and (c) arenot applicable.
IV) According to the information and explanations given to us the company has compliedwith the provisions of section 185 & 186 of The Act in respect of loans investmentsguarantees and securities.
V) The company has not accepted deposits therefore the clause (v) is not applicable.
VI) We have broadly reviewed the cost records maintained by the company pursuant to theRules made by the Central Government for the maintenance of cost records under sub section(1) of section 148 of the Companies Act and are of the opinion that prima facie theprescribed cost records have been made and maintained as per the documentary evidenceprovided by the management. We have however not made a detailed examination of therecords with a view to determining whether they are accurate or complete.
VII) In respect of statutory dues:
(a) According to the information & explanation given to us the company wasgenerally regular in depositing dues in respect of Employees Provident Fund EmployeesState Insurance Fund Income Tax and other statutory dues with the appropriate authorityduring the year.
(b) According to records examined by us and the information and explanation given tous there are no disputed amounts due to in respect of income tax sales tax excise dutyEmployees Provident Fund Employees State Insurance Fund and other statutory dues at theend of the year.
VIII) Based on our audit procedures and on the basis of information and explanationsgiven by the management the company has not defaulted in the repayment of dues to bankfinancial institution and Debentures holders during the year.
IX) In our opinion and according to the information and explanations given to us theCompany has utilised the money raised by way of initial public offer/ further public offerfor the purpose they were raised.
X) In our opinion and according to the information and explanations given to us nofraud on or by the Company has been noticed or reported during the year that causes thefinancial statements to be materially misstated.
XI) In our opinion and according to the information and explanations given managerialremuneration has been paid or provided in accordance with the requisite approvals mandatedby the provisions of section 197 with Schedule V to the Companies Act 2013.
XII) In our opinion the company is not a Chit Fund Nidhi or Mutual Benefit activityand therefore the provisions of Clause 3(xii) of the said order are not applicable.
XIII) In our opinion according to the information and explanations all transactionswith the related parties are in compliance with section 177 and 188 of Companies Act 2013and details are disclosed in the Financial statement as per Accounting Standard 18.
XIV) The company has not made any preferential allotment to parties and companiescovered under register maintained under section 42 of the Companies Act 2013 during theyear therefore the provisions of Clause 3(xiv) of the said order are not applicable.
XV) In our opinion according to the information and explanations company has notentered into any non-cash transaction with directors or persons connected with him as perprovision of section 192 of Companies Act 2013.
XVI) According to the information and explanations given to us company is not requiredto be registered under section 45-IA of the Reserve Bank of India Act 1934.
|UDIN: 20152425AAAABA1505 || |
|Place: Munibni ||For VJ SHAH & CO |
| ||Chartered Accountants |
| ||FRN: 109823W |
Annexure "B" Auditors' Report
Report on the Internal Financial Controls under Clause (i) of Sub-section 3 ofSection 143 of the
Companies Act. 2013 ("the Act").
We have audited the internal financial controls over financial reporting of SKY GOLDLIMITED (Formerly known as Sky Gold Private Limited) ("the Company")as of March 31 2020 in conjunction with our audit of the standalone financial statementsof 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 (ICAI). 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 Act.
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 deemed to be prescribedunder section 143(10) of the Act to the extent applicable to an audit of internalfinancial controls both applicable to an audit of internal financial controls and bothissued by the ICAI. 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 over financial reporting was established andmaintained and if such controls operated effectively 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 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 a) pertain to the maintenance ofrecords that in reasonable detail accurately and fairly reflect the transactions anddispositions of the assets of the company; b) 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 c) provide reasonable assurance regardingprevention or timely detection of unauthorised 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 March 31 2020 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.
|UDIN: 20152425AAAABA1505 || |
|Place: Mumbai ||For V J SHAH & CO |
| ||Chartered Accountants |
| ||FRN: 109823W |