To the Members of Sky Industries Limited Report on the Audit of Financial StatementsOpinion
We have audited the accompanying financial statements of Sky Industries Limited(the Company') which comprise the Balance Sheet as at 31st March 2020the statement of Profit and Loss (including Other Comprehensive Income) Statement ofChanges in Equity and statement of cash flows for the year then ended and notes tofinancial statements including a summary of the significant accounting policies and otherexplanatory information.
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 theCompanies Act 2013 ("the Act") in the manner so required and give a true andfair view in conformity with the Accounting Standards prescribed under section 133 on theAct read with the Companies (Indian Accounting Standards) Rules 2015 as amended("Ind AS") and other accounting principles generally accepted in India of thestate of affairs of the Company as at 31st March 2019 and its profit othercomprehensive income the changes in equity and its cash flows for the year ended on thatdate.
Basis for Opinion
We conducted our audit of the financial statements in accordance with the Standards onAuditing (SA's) specified under section 143(10) of the Act. Our responsibilities underthose SA's are further described in the Auditor's Responsibility 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 (ICAI) together with the ethical requirements that are relevant to our audit of thefinancial statements under the provisions of the Act and the Rules made thereunder and wehave fulfilled our other ethical responsibilities in accordance with these requirementsand the ICAI's Code of Ethics. We believe that the audit evidence we have obtained issufficient and appropriate to provide a basis for our opinion on the financial statements.
Emphasis of Matter
We draw attention to the following matter:
Note no 2.2 to the accompanying financial statements which describes the economic andsocial disruption the Company is facing as a result of COVID -19 pandemic and itspossible consequential implications on the Company's operations and financial metrics
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. Wehave determined the matters described below to be the key audit matters to be communicatedin our report.
|Key Audit Matter ||How the matter was addressed in our audit |
|Revenue Recognition ||Our audit procedures included : |
|Revenue from sale of goods is recognized when control of the products being sold is transferred to the customer and when there are no longer any unqualified obligations. The performance obligations in the contracts are fulfilled at the time of dispatch delivery or upon formal customer acceptance depending on customer terms. ||We assessed the appropriateness of the revenue recognition accounting policies including those relating to rebates and discounts by comparing with applicable accounting standards |
|Revenue if one of the key profit drivers and is therefore susceptible to misstatement. Cut-off is the key assertion in so far as revenue recognition is concerned since an inappropriate cut-off can result in material misstatement of results for the year. ||We performed substantive testing by selecting samples of revenue transactions recorded during the year by verifying the underlying documents which included goods dispatch notes and shipping documents |
|Revenue is measured at fair value of the consideration received or receivable after the deduction of any trade discounts volume rebates and any taxes or duties collected on behalf of the government such as goods and services tax etc. Accumulated experience is used to estimate the provisions for discounts and rebates. Revenue is only recognized to the extent that it is highly probable a significant reversal will not occur. ||We performed cut-off testing for samples of revenue transactions recorded before and after the financial year end date by comparing with relevant underlying documentation which included goods dispatch notes and shipping documents to assess whether the revenue was recognized in the correct period. |
| ||We tested the design implementation and operating effectiveness of controls over the calculations of discounts and rebates |
| ||We assessed manual journals posted to revenue to identify unusual items. |
|Provision for taxation and other significant provisions ||Our audit procedures included : |
|Accrual for tax and other contingencies requires the management to make judgements and estimates in relation to the issues and exposures arising from a range of matters relating to direct tax indirect tax transfer pricing arrangements claims and other eventualities arising in the regular course of business ||We tested the effectiveness of controls around the recognition of provisions |
| ||We used our subject matter experts to assess the value of material provisions in light of the nature of the exposures applicable regulations and related correspondence with the authorities. |
|The key judgements lies in the estimations of the provisions where they may differ from the future obligations. By nature provision is difficult to estimate and includes many variables. ||We challenged the assumptions and critical judgements made by the management which impact their estimate of the provisions required considering judgments previously made by the authorities in the relevant jurisdictions or any relevant opinions given by the Company's advisors and assessing whether there was an indication of management bias. |
| ||We discussed the status in respect of significant provisions with the Company's internal tax team and consultant as well. |
| ||We performed retrospective review of management judgements relating to accounting estimate included in the financial statement of prior year and compared with the outcome. |
Information Other than the Financial Statements and Auditor's Report Thereon
The Company's management and Board of Directors are responsible for the otherinformation. The other information comprises the information included in the Company'sannual report but does not include the financial statements and our auditor's reportthereon.
Our opinion on the financial statements does not cover the other information and we donot and will not express any form of assurance conclusion thereon.
In connection with our audit of the financial statements our responsibility is to readthe other information and in doing so consider whether the other information ismaterially inconsistent with the financial statements or our knowledge obtained during thecourse of our audit or otherwise appears to be materially misstated. If based on the workwe have performed we conclude that there is a material misstatement of this otherinformation we are required to report that fact. We have nothing to report in thisregard.
Management's Responsibility for the Financial Statements
The Company's management and Board of Directors are responsible for the matters statedin Section 134(5) of the Companies Act 2013 ("the Act") with respect to thepreparation and presentation of these financial statements that give a true and fair viewof the financial position financial performance including other comprehensive incomecash flows and changes in equity of the Company in accordance with Indian AccountingStandards (Ind AS) prescribed under Section 133 of the Act read with Companies (IndianAccounting Standards) Rules 2015 as amended and other accounting principles generallyaccepted in India. This responsibility also includes maintenance of adequate accountingrecords in accordance with the provisions of the Act for safeguarding the assets of theCompany and for preventing and detecting frauds and other irregularities; selection andapplication of appropriate accounting policies; making judgments and estimates that arereasonable and prudent; and design implementation and maintenance of adequate internalfinancial controls that were operating effectively for ensuring the accuracy andcompleteness of the accounting records relevant to the preparation and presentation ofthe financial statements that give a true and fair view and are free from materialmisstatement whether due to fraud or error.
In preparing the financial statements management and Board of Directors areresponsible for assessing the Company's ability to continue as a going concerndisclosing as applicable matters related to going concern and using the going concernbasis of accounting unless management either intends to liquidate the Company or to ceaseoperations or has no realistic alternative but to do so.
The Board of Directors is also responsible for overseeing the Company's financialreporting process.
Auditor's Responsibility for the Ind AS 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 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.
Obtain an understanding of internal control relevant to the audit in order to designaudit procedures that are appropriate in the circumstances. Under section 143(3)(i) of theAct we are also responsible for expressing our opinion on whether the Company hasadequate internal financial controls with reference to financial statements in place andthe operating effectiveness of such controls
Evaluate the appropriateness of accounting policies used and the reasonableness ofaccounting estimates and related disclosures in the standalone financial statements madeby management and Board of Directors.
Conclude on the appropriateness of management's and Board of Director 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 the standalone financialstatements including the disclosures and whether the financial statements represent theunderlying transactions and events in a manner that achieves fair presentation.
Materiality is the magnitude of misstatements in the financial statements 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 audit work and in evaluating the results of our work; and
(ii) to evaluate the effect of any identified misstatements in the financialstatements.
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 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 Requirements
1. As required by Section 197(16) of the Act we report that the Company has paidremuneration to its directors during the year in accordance with the provisions of andlimits laid down under Section 197 read with Schedule V to the Act.
2. 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 in theparagraph 3 and 4 of the order to the extend applicable.
3. As required by Section 143(3) of the Act we report that:
(a) We have sought and obtained all the information and explanations which to the bestof our knowledge and belief were necessary for the purposes of our audit.
(b) In our opinion proper books of account as required by law have been kept by theCompany so far as it appears from our examination of those books;
(c) The standalone balance sheet the standalone statement of profit and loss(including other comprehensive income) standalone statement of changes in equity andstandalone statement of cash flow dealt with by this Report are in agreement with thebooks of account;
(d) In our opinion the aforesaid standalone financial statements comply with theIndian Accounting Standards prescribed under Section 133 of the Act
(e) On the basis of the written representations received from the directors as on 31stMarch 2019 taken on record by the Board of Directors none of the directors isdisqualified as on 31st March 2020 from being appointed as a director in termsof Section 164 (2) of the Act;
(f) With respect to the adequacy of the internal financial controls over financialreporting of the Company and the operating effectiveness of such controls refer to ourseparate report in "Annexure B"; 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 (if any) as at 31stMarch 2020 on its financial position in its standalone financial statements ReferNote 34 to the standalone financial statements;
ii. The Company has made provision as required under the applicable law or accountingstandards for material foreseeable losses if any on long-term contracts includingderivative contracts.
iii. There has been no delay in transferring amounts required to be transferred to theInvestor Education and Protection Fund.
ANNEXURE - A TO THE INDEPENDENT AUDITORS' REPORT
The Annexure referred to in Independent Auditors' Report to the members of the Companyon the financial statements for the year ended 31st March 2020 we report that:
1. Fixed Assets a. The Company has maintained proper records showing fullparticulars including quantitative details and situation of fixed asset. b. As explainedto us the Company has a phased program for physical verification of the fixed asset of thecompany to cover all locations. In our opinion the frequency of verification isreasonable considering the size of the Company. No material discrepancies were noticed onsuch verification carried on during the year as compared with the available records. c.According to the information and explanation given to us and on the basis of ourexamination of the records of the Company the title deeds of immovable properties are heldin the name of the company.
The inventory of finished goods raw materials components stores and spare partsexcept those lying with third parties and in transit has been physically verified by themanagement at regular intervals which we consider to be reasonable. The discrepanciesnoticed during the physical verification of inventories as compared to book records werenot material and have been property dealt with in the books of account.
3. Loans and Advances granted
According to the information and explanation given to us the Company's has not grantedany loans secured or unsecured during the period to companies firms or other partiescovered in the register maintained under section 189 of the Companies Act 2013.Accordingly the clause 3(iii) (a)(b) & (c) of the order are not applicable.
4. Compliances with Sections 185 and 186 in case of loans investmentsguarantees and security:
According to the information and explanation given to us the company has complied withthe provisions of section 185 and 186 of the Companies Act 2013 with respect to the loans& investment made.
The company has not accepted any deposit from the public and hence the directivesissued by Reserve Bank of India and provision of section 73 to 76 or any other relevantprovisions of the Act and the Rule framed there under are not applicable.
6. Cost Records:
We have broadly reviewed the books of account maintained by the company pursuant to theRules made by the Central Government of India maintenance of cost records has beenprescribed under sub-section (1) of section 148 of the Companies Act 2013 and are of theopinion that prima facie the prescribed accounts and records have been made andmaintained. However we have not made detailed examination of the records.
7. Statutory Dues: a. According to the records of the Company andinformation and explanations given to us Provident Fund Employees State InsuranceIncome Tax Sales Tax Custom Duty Cess Excise Duty Service Tax Value added tax Goods& Service Tax and other material statutory dues have been deposited regularly duringthe period with the appropriate authorities whenever applicable there are no suchoutstanding as at 31st March 2020 for a period of more than six months fromthe date they become payable except for the following undisputed statutory dues which werein arrears as at March 31 2020 for a period of more than six months from the date theybecame payable:
|Name of the statute ||Nature of dues ||Amount (in Rs) ||Period to which the amount relates |
|Navi Mumbai Municipal Corporation ||Property Tax ||25932960/- ||Various Years |
8. Dues To Financial Institutions/Banks
Based on our audit procedures and on the basis of information and explanations given bythe management we are of the opinion that the Company has not defaulted in the repaymentof dues to financial institutions banks governments or debenture holders.
9. Application of Initial Public Offer / Term Loans
The Company has not raised any moneys by way of initial public offer further publicoffer (including debt instruments) or term loans during the year. Accordingly paragraph 3(ix) of the Order is not applicable to the Company.
According to the information and explanations given to us no material fraud by theCompany or on the Company by its officers or employees has been noticed or reported duringthe course of our audit.
11. Managerial Remuneration:
According to the information and explanations give to us and based on our examinationof the records of the Company the Company has paid/provided for managerial remunerationin accordance with the requisite approvals mandated by the provisions of section 197 readwith Schedule V to the Act.
12. Nidhi Companies:
In our opinion and according to the information and explanations given to us theCompany is not a Nidhi company. Accordingly paragraph 3(xii) of the Order is notapplicable.
13. Compliances with Sections 177 and 188 in case of transactions with related parties:
According to the information and explanations given to us and based on our examinationof the records of the Company transactions with the related parties are in compliancewith sections 177 and 188 of the Act where applicable and details of such transactionshave been disclosed in the standalone financial statements as required by the applicableIndian Accounting Standards.
14. Preferential allotment or private placement of shares/debentures:
According to the information and explanations given to us and based on our examinationof the records of the Company the Company has made preferential allotment of sharesduring the year under review. The requirements of Section 42 of Companies Act 2013 havebeen complied with by the Company and the amount raised has been used for the purpose forwhich the funds were raised.
15. Compliances with Sections 192 in case of non cash transactions with Directors:
According to the information and explanations given to us and based on our examinationof the records of the Company the Company has not entered into non-cash transactions withdirectors or persons connected with him. Accordingly paragraph 3(xv) of the Order is notapplicable. 16. The Company is not required to be registered under section 45-IA ofthe Reserve Bank of India Act 1934. Accordingly paragraph 3(xvi) of the Order is notapplicable to the Company.
ANNEXURE - B TO THE AUDITORS' REPORT
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 SkyIndustries Limited ("the Company") as of 31st March 2020 inconjunction with our audit of the financial statements of the Company for the year endedon that date.
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 2020based 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.
Management's Responsibility for Internal Financial Controls
The Company's management and the Board of Director are responsible for establishing andmaintaining internal financial controls based on the internal financial controls withreference 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 (ICAI'). These responsibilities include the designimplementation and maintenance of adequate internal financial controls that were operatingeffectively for ensuring the orderly and efficient conduct of its business includingadherence to company's policies the safeguarding of its assets the prevention anddetection of frauds and errors the accuracy and completeness of the accounting recordsand the timely preparation of reliable financial information as required under theCompanies Act 2013.
Our responsibility is to express an opinion on the Company's internal financialcontrols over financial reporting based on our audit. We have conducted our audit inaccordance with the Guidance Note on Audit of Internal Financial Controls over FinancialReporting (the "Guidance Note") and the Standards on Auditing issued by ICAIand deemed to be prescribed under section 143(10) of the Companies Act 2013 to theextent applicable to an audit of internal financial controls both applicable to an auditof Internal Financial Controls and both issued by the Institute of Chartered Accountantsof India. Those Standards and the Guidance Note require that we comply with ethicalrequirements and plan and perform the audit to obtain reasonable assurance about whetheradequate 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 judgment including the assessment of the risks ofmaterial misstatement of the standalone financial statements whether due to fraud orerror.
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 with reference to Financial Statements
A company's internal financial controls with reference to financial statements is aprocess designed to provide reasonable assurance regarding the reliability of financialreporting and the preparation of financial statements for external purposes in accordancewith generally accepted accounting principles. A company's internal financial controlswith reference to financial statements include those policies and procedures that
(1) pertain to the maintenance of records that in reasonable detail accurately andfairly reflect the transactions and dispositions of the assets of the company;
(2) provide reasonable assurance that transactions are recorded as necessary to permitpreparation of financial statements in accordance with generally accepted accountingprinciples and that receipts and expenditures of the company are being made only inaccordance with authorisations of management and directors of the company; and
(3) provide reasonable assurance regarding prevention or timely detection ofunauthorised acquisition use or disposition of the company's assets that could have amaterial effect on the financial statements.
Inherent Limitations of Internal Financial Controls over Financial Reporting
Because of the inherent limitations of internal financial controls over financialreporting including the possibility of collusion or improper management override ofcontrols material misstatements due to error or fraud may occur and 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.