The Members of Smruthi Organics Ltd.
Report on the Standalone Financial Statements
We have audited the accompanying standalone Ind AS financial statements of SmruthiOrganics Ltd. ("the Company") which comprise the Balance Sheet as at March 312020 the Statement of Profit and Loss (including other comprehensive Income) the CashFlow Statement and the statement of changes of equity for the year ended and a summary ofthe significant accounting policies and other explanatory information.
Management's Responsibility for the Standalone Financial Statements
The Company's Board of Directors is responsible for the matters stated in Section134(5) of the Companies Act 2013 ("the Act") with respect to the preparation ofthese Standalone Ind AS financial statements that give a true and fair view of thefinancial position profit or loss (financial performance)including other comprehensiveIncome and cash flows and changes in the equity of the Company in accordance with theaccounting principles generally accepted in India including Indian Accounting Standards(Ind AS) specified under Section 133 of the Act read with Rule 7 of the Companies(Accounts) Rules 2014.
This responsibility also includes maintenance of adequate accounting records inaccordance with the provisions of the Act for safeguarding of the assets of the Companyand 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 Standalone Ind AS financial statements that give a true and fair view and are freefrom material misstatement whether due to fraud or error.
Our responsibility is to express an opinion on these Standalone IndAS financialstatements based on our audit.
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 of the Standalone Ind AS financial statement in accordance withthe Standards on Auditing specified under Section 143(10) of the Act. Those Standardsrequire that we comply with ethical requirements and plan and perform the audit to obtainreasonable assurance about whether the Standalone Ind AS financial statements are freefrom material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts andthe disclosures in the Standalone Ind AS financial statements. The procedures selecteddepend on the auditor's judgment including the assessment of the risks of materialmisstatement of the Standalone Ind AS financial statements whether due to fraud or error.In making those risk assessments the auditor considers internal financial controlrelevant to the Company's preparation of the Standalone Ind AS financial statements thatgive a true and fair view in order to design audit procedures that are appropriate in thecircumstances. An audit also includes evaluating the appropriateness of the accountingpolicies used and the reasonableness of the accounting estimates made by the Company'sDirectors as well as evaluating the overall presentation of the Standalone Ind ASfinancial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the Standalone Ind AS financial statements.
In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid standalone Ind AS financial statements give the informationrequired by the Act in the manner so required and give a true and fair view in conformitywith the accounting principles generally accepted in India including Ind AS of the stateof affairs (Financial Position) of the Company as at March 31 2020 and its profit(Financial performance including other comprehensive Income) and its cash flows and thechanges in equity for the year ended on that date a) in case of the Balance Sheet of thestate of affairs of the Company as at 31st March 2020; b) in the case of Statement ofProfit and Loss of the profit for the year ended on that date; and c) in the case of CashFlow Statement of the cash flows for the year ended on that date.
Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditor's Report) Order 2016 ("the Order) issuedby the Central Government in terms of sub-section (11) of section 143 of theAct(hereinafter referred to the "Order") and on the basis of such checks of thebooks and records of the Company as we considered appropriate and according to theinformation and explanations given to us we give in Annexure A a statement on mattersspecified in paragraphs 3 and 4 of the said order.
2. As required by Section 143 (3) of the Act we report that :
(a) We have sought and obtained all the information and explanations which to the bestof our knowledge and belief were necessary for the purposes of our audit.
(b) In our opinion proper books of account as required by law have been kept by theCompany so far as it appears from our examination of those books.
(c) The Balance Sheet the Statement of Profit and Loss Cash Flow Statement andstatement of changes in equity dealt with by this Report are in agreement with the booksof account.
(d) In our opinion the aforesaid standalone Ind AS financial statements comply withthe Accounting Standards specified under Section 133 of the Act read with Rule 7 of theCompanies (Accounts) Rules 2014.
(e) In the course of our audit we have not come across any transactions or matterswhich have any adverse effects on the functioning of the company.
(f) On the basis of the written representations received from the directors as on March31 2020 taken on record by the Board of Directors none of the directors is disqualifiedas on March 31 2020from being appointed as a director in terms of Section 164 (2) of theAct.
(g) With respect to the adequacy of the internal financial control over financialreporting of the company and operating effectiveness of such controls. As required bySection 143 (3) (i) of the Companies Act 2013 refer to our separate Report in Annexure -B.
(h) With respect to the other matters to be included in the Auditor's Report inaccordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014 in our opinionand to the best of our information and according to the explanations given to us :
i. The Company has disclosed the impact of pending litigations on its financialposition in Standalone Ind AS financial statement.
ii. In our opinion and as per the in formation and explanations provided to us theCompany did not have any long-term contracts including derivative contracts for whichthere were any material foreseeable losses.
iii. There has been no delay in transferring amounts required to be transferred to theInvestor Education and Protection Fund by the Company.
ANNEXURE A TO THE INDEPENDENT AUDITOR'S REPORT
Referred to in paragraph 1 under the heading of "Report on other legal andregulatory requirements of our report of even date"Report on companies (Auditor'sReport) Order 2016 (the Order) issued by the Central Government in terms of section 143(11) of the companies Act 2013 Smruthi Organics Ltd. For the Year Ended March 31 2020
1. Fixed Assets [Clause 3(i)]
a) Proper Records: The company is maintaining proper records showing full particularsincluding quantitative details and situation of fixed assets:
b) Physical Verification: These fixed assets have been physically verified by themanagement at reasonable intervals;
Any material discrepancies were noticed on such verification and if so whether thesame have been properly dealt with in the books of account by the management at regularintervals - No
c) Title Deed: The title deeds of immovable properties are held in the name of thecompany.
2. Inventory [Clause 3(ii)]
Physical verification: Physical verification of inventory has been conducted atreasonable intervals by the managements; Valuation of closing stock is taken as certifiedvalued and verified by the management by the Company
No such material discrepancies were noticed on such verification.
3. Loan given by Company [Clause 3(iii)]
a) The company has not granted any loans secured or unsecured to companies firmsLimited Liability Partnerships (LLP) or other parties covered in the register maintainedunder section 189 of the Companies Act 2013.
b) Terms and Conditions: The terms and conditions of the grant of such loans are notprejudicial to the company's interest Not Applicable.
c) Regular Recovery: The schedule of repayment of principal and payment of interest hasbeen stipulated and whether the repayments or receipts are regular; Not Applicable.
d) Steps for Recovery: If the amount is overdue state the total amount overdue formore than 90 days and whether reasonable steps have been taken by the company forrecovery of the principal and interest. Not Applicable.
4. Loan to the Directors and investment by Company [Clause3(iv)]
The company has not granted or made any investments guarantees and security to theparties covered under section 185 and 186 of the Companies Act 2013
The company has not accepted any deposits from the public within the meaning of section73 to 76 or any other relevant provisions of the Companies Act 2013 and the rules framedthere under.
6. Cost Records [Clause3(vi)]
The Central Government has specified maintenance of cost records under section 148 (1)of the Companies Act 2013 and hence such accounts and records have been made andmaintained.
7. Statutory Dues [Clause 3(vii)]
Following matters shall be reported for statutory dues and disputes for tax and duties.
a) Statutory Dues for more than 6 Months: Whether the company is regular in depositingundisputed statutory dues with the appropriate authorities including:
i. Provident fund; No Such Dues
ii. Employee's state insurance; No Such Dues iii. Income - tax; No Such Dues
iv. Sales- tax; No Such Dues
v. Service tax; No Such Dues
vi. Duty of customs; No Such Dues
vii. Duty of excise; No Such Dues
viii. Value Added Tax (VAT);No Such Dues
ix. Cess; No Such Dues x. Any other statutory dues; No Such Dues
If the company is not regular in depositing such statutory dues the extent of thearrears of outstanding statutory dues as at the last day of the financial year concernedfor a period of more than six months from the date they became payable shall be indicatedby the auditor. No such dues are pending.
b) According to the records of the company and as per information and explanation givento us there are no dues of Sales Tax or Value added tax which have not been deposited onaccount of any dispute as on 31.03.2020 except Dy. Commissioner of GST (VAT) Solapur hasissued assessment order for financial year 2013-14and F Y 2015-16 by E-mail dated31.03.2020in which differential liability along with penalty and interest is levied of Rs.129546. The said liability is agreed and paid by the company.
8. Repayment of Loans [Clause 3(viii)]
The company has not defaulted in repayment of loans or borrowing to a financialinstitution bank Government.
9. Utilization of IPO and further Public offer [Clause 3(ix)]
The Company has not raised money by way of initial public offer or further public offerand Term Loans where applied for the purposes for which those are raised.
If not the details together with delays or default and subsequent rectification ifany as may be applicable are reported - Not applicable.
10 Reporting of Fraud [Clause(x)]
No fraud by the company or any fraud on the Company by its officers or employees hasbeen noticed or reported during the year.
11 Approval of Managerial Remuneration [Clause 3(xi)]
Managerial remuneration has been paid or provided in accordance with the requisiteapprovals mandated by the provisions of section 197 read with Schedule V part II of theCompanies Act 2013.
12 Nidhi Company [Clause3 (xii)]
Whether the Nidhi Company has complied with the Net Owned Funds to Deposits in theratio of 1:20 to meet out the liability and whether the Nidhi Company is maintaining 10%unencumbered term deposits as specified in the Nidhi Rules 2014 to meet out theliability; Not Applicable
13 Related Party Transaction [Clause 3 (xiii)]
All transactions with the related parties are in compliance with sections 177 and 188Companies Act 2013. The details of such related party transaction have been disclosed inthe Financial Statements as required under Indian Accounting Standard (Ind AS) 24 relatedparty disclosures specified under section 133 of the Act.
14 Private Placement or Preferential Issues [Clause 3(xiv)]
The company has not made any preferential allotment or private placement of shares orfully or party convertible debentures during the year under review. Accordingly theprovisions of Clause 3 (xiv)of the order are not applicable to the company.
15 Non- cash Transactions [Clause 3(xv)]
The company has not entered into any non-cash transactions with directors or personsconnected with him hence reporting requirement on compliance with the provisions ofSection 192 of the CompaniesAct2013of [Clause 3(xv)] of the order are not applicable tothe company.
16 Register under RBI Act 1934 [Clause 3 (xvi)]
The company is not required to be registered under section 45-IA of the Reserve Bank ofIndia Act 1934. Accordingly provisions of Clause 3 (xvi) of the order are not applicableto the company.
ANNEXURE - B TO THE INDEPENDENT AUDITORS' REPORT
Referred to in paragraph 2(g) under the heading of "Report on other legal andregulatory requirements of our report of even date."
Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section143 of the Companies Act 2013 ("the Act")
We have audited the internal financial controls over financial reporting of SmruthiOrganics Ltd ("the Company") as of 31st March 2020 in conjunction with our auditof the standalone Ind AS financial statements of the Company for the year ended on thatdate.
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') (the "GuidanceNote"). These responsibilities include the design implementation and maintenance ofadequate internal financial controls that were operating effectively for ensuring theorderly and efficient conduct of its business including adherence to company's policiesthe safeguarding of its assets the prevention and detection of frauds and errors theaccuracy and completeness of the accounting records and the timely preparation ofreliable financial information as required under the Companies Act 2013.
Our responsibility is to express an opinion on the Company's internal financialcontrols over financial reporting based on our audit. We conducted our audit in accordancewith the Guidance Note on Audit of Internal Financial Controls over Financial Reporting(the "Guidance Note") and the Standards on Auditing issued by ICAI and deemedto be prescribed under section 143(10) of the Companies Act 2013 to the extentapplicable to an audit of internal financial controls both applicable to an audit ofInternal Financial Controls and both issued by the Institute of Chartered Accountants ofIndia. 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 over Financial Reporting
A company's internal financial control over financial reporting is a process designedto provide reasonable assurance regarding the reliability of financial reporting and thepreparation of financial statements for external purposes in accordance with generallyaccepted accounting principles. A company's internal financial control over financialreporting includes those policies and procedures that (1) Pertain to the maintenance ofrecords that in reasonable detail accurately and fairly reflect the transactions anddispositions of the assets of the company; (2) Provide reasonable assurance thattransactions are recorded as necessary to permit preparation of financial statements inaccordance with generally accepted accounting principles and that receipts andexpenditures of the company are being made only in accordance with authorisations ofmanagement and directors of the company; and (3) Provide reasonable assurance regardingprevention or timely detection of 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 31 March 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.
| ||N. R. Waghchaure & Associates |
| ||Chartered Accountants |
| ||FRN: 114999W |
| ||Nilkanth R. Waghchaure |
|Place : Solapur ||Proprietor |
|Date : 29th June 2020 ||ICAI Membership No:048890 |
| ||UDIN : 20048890AAAABA1253 |