THE MEMBERS OF
STERLING GREENWOODS LIMITED
Report on the Audit of the Standalone Financial Statements
We have audited the standalone financial statements of STERLING GREENWOODS Limited (the Company) which comprise the Balance Sheet as at 31st March 2019 and the statement of Profit and Loss Cash Flow Statement for the year then ended and notes to the financial statements including a summary of significant accounting policies and other explanatory information.
In our opinion and to the best of our information and according to the explanations given to us the aforesaid financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India of the state of affairs of the Company as at 31/03/2019 and its Loss and other comprehensive incomechanges in equity and cash flows for the year ended 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 responsibilities under those Standards are further described in the Auditor's Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Company in accordance with the Code of Ethics issued by the Institute of Chartered Accountants of India together with the ethical requirements that are relevant to our audit of the financial statements under the provisions of the Companies Act 2013 and the Rules there under and we have fulfilled our other ethical responsibilities in accordance with these requirements and the Code of Ethics. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion on standalone financial statements.
Key Audit Matters
Key audit matters are those matters that in our professional judgment were of most significance in our audit of the financial statements of the current period. These matters were addressed in the context of our audit of the financial statements as a whole and in forming our opinion thereon and we do not provide a separate opinion on these matters. For each matter below our description of how our audit addressed the matter is provided in that context.
|The Key Audit Matter||How our audit addressed the key audit matter |
|A. Valuation of Inventories.|
|Refer to note 1.6 to the financial statements.||We obtained assurance over the appropriateness of the management's assumptions applied in calculating the value of the inventories and related provisions by:-|
|As described in the accounting policies in note 1.6 to the financial statements inventories are carried at the lower of cost and net realizable value. As a result the management applies judgment in determining the appropriate provisions for obsolete stock based upon a detailed analysis of old inventory net realizable value below cost based upon future plans for sale of inventory. ||1. Completing a walkthrough of the inventory valuation process and assessed the design and implementation of the key controls addressing the risk.|
|2. Verifying the effectiveness of key inventory controls operating over inventories; including sample based physical verification.|
|3. Verifying for a sample of individual products that costs have been correctly recorded.|
|4. Comparing the net realizable value to the cost price of inventories to check for completeness of the associated provision.|
|B. Valuation and existence of Non-Current and Current Investments|
|Valuation and existence of Non-Current and Current Investments designated at fair value through profit or loss are valued at 121.42 lakh and classified as level 3 financial instruments in the fair value hierarchy. Further disclosures on the Investments are included in note 29.14 to the financial statements. This was an area of focus for our audit and the area where significant audit effort was directed. As at March 31 2019 the Investments are in Equity Shares of Unquoted||Our audit procedures over the valuation of the Investments included agreeing the fair valuation of all Investments held at March 31 2019 to the Net Assets Value provided by the respective Equity Shares|
|Based on the audit procedures performed we are satisfied with valuation and existence of non-current and current investment|
|C. REVENUE RECOGNITION||Principal Audit Procedures:|
|To ensure accuracy of recognition measurement presentation and disclosures of revenues and related accounts.||We have assessed the Company's internal control surrounding its revenue transactions We tested the key controls identified.|
|We performed substantive detail testing by selecting a sample revenue transactions that we considered appropriate to test the evidence of effectiveness of the internal controls and adherence to accounting policies in recognizing the revenue and the rebates and discounts there against.|
|D. Tax Liability including MAT Credit||Principal Audit Procedures:|
|Evaluation of uncertain Tax positions the Company has uncertain Tax positions including matter under dispute which involve significant judgment to determine the possible outcome of these disputes.||Obtained details of computed tax assessments demand and appeal there against as at 31st March2019. Review the management's underlying assumptions in estimating the Tax provisions and the possible outcome of the disputes based on legal and other precedent in valuating management's position on these uncertain tax position.|
Other Information (or another title if appropriate such as Information Other than the Standalone Financial Statements and Auditors' Report Thereon)
The Company's management and Board of Directors are responsible for the other information. The other information comprises the information included in the Company's annual report but does not include the financial statements and our auditors' report thereon.
Our opinion on the standalone financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.
In connection with our audit of the standalone financial statements our responsibility is to read the other information and in doing so consider whether the other information is materially inconsistent with the standalone financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If based on the work we have performed we conclude that there is a material misstatement of this other information we are required to report that fact. We have nothing to report in this regard.
Responsibility of Management for Financial Statements
The Company's Board of Directors is responsible for the matters stated in Section 134(5) of the Companies Act 2013 with respect to the preparation of these standalone financial statements that give a true and fair view of the financial position and financial performance of the Company in accordance with the accounting principles generally accepted in India including the Accounting Standards specified under Section 133 of the Act. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding of the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the accuracy and completeness of the accounting records relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement whether due to fraud or error. In preparing the financial statements management is responsible for assessing the Company's ability to continue as a going concern disclosing as applicable matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations or has no realistic alternative but to do so.
Those Board of Directors are also responsible for overseeing the company's financial reporting process.
Auditor's Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement whether due to fraud or error and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with SAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if individually or in the aggregate they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements. As part of an audit in accordance with SAs we exercise professional judgment and maintain professional skepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of the financial statements whether due to fraud or error design and perform audit procedures responsive to those risks and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error as fraud may involve collusion forgery intentional omissions misrepresentations or the override of internal control.
Obtain an understanding of internal control relevant to the audit in order to design 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 whether the company has adequate internal financial controls system in place and the operating effectiveness of such controls.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
Conclude on the appropriateness of management's use of the going concern basis of accounting and based on the audit evidence obtained whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company's ability to continue as a going concern. If we conclude that a material uncertainty exists we are required to draw attention in our auditor's report to the related disclosures in the 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's report. However future events or conditions may cause the Company to cease to continue as a going concern.
Evaluate the overall presentation structure and content of the financial statements including the disclosures and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
We communicate with those charged with governance regarding among other matters the planned scope and timing of the audit and significant audit findings including any significant deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence and where applicable related safeguards.
From the matters communicated with those charged with governance we determine those matters that were of most significance in the audit of the financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor's report unless law or regulation precludes public disclosure about the matter or when in extremely rare circumstances we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.
Report on Other Legal and Regulatory Requirements
1. This report doesn't include a statement on the matters specified in paragraph 3 and 4 of the Companies (Auditor's Report) Order 2016 issued by the Central Government of India in terms of sub section 11 of section 143 of the companies Act 2013 since in Our opinion and according to the information and explanation given to us the details of the said Order are given in Annexure A to this Report.
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 best of 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 the Company so far as it appears from our examination of those books.
(c) The Balance Sheet the Statement of Profit and Loss (including Other Comprehensive Income) the tatement of Cash Flows and Statement of Changes in Equity dealt with by this Report are in agreement with the books of account.
(d) In our opinion the aforesaid financial statements comply with the Accounting Standards 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 31/03/2019 taken on record by the Board of Directors none of the directors is disqualified as 31/03/2019 from being appointed as a director in terms of Section 164 (2) of the Act.
(f) With respect to the adequacy of the internal financial controls over financial reporting of the Company and the operating effectiveness of such controls we give report of the same in Annexure B to this Report.
(g) With respect to the other matters to be included in the Auditor's Report 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 the explanations given to us the remuneration paid by the Company to its directors during the year is in accordance with the provisions of section 197 of the Act..
h) With respect to the other matters to be included in the Auditor's Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014 in our opinion and 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 financial position in its financial statements as stated in in Note No. 29.1 and 29.2.
ii. The Company has made provision as required under the applicable law or accounting standards for material foreseeable losses if any on long-term contracts including derivative contracts.
iii. There has not been an occasion in case of the Company during the year under report to transfer any sums to the Investor Education and Protection Fund by the Company. The question of delay in transferring such sums does not arise.
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|Date : 10th May 2019||FOR JAYESHM M SHAH & CO.|
|Place : Ahmedabad||(Chartered Accountants)|
|Reg No. : 104173W|
|(JAYESH M. SHAH)|
|M.No. : 030368|
ANNEXURE A TO THE INDEPENDENT AUDITORS' REPORT
(Referred to in paragraph 1 under 'Report on Other Legal and Regulatory Requirements' of the Independent auditors' report of even date to the members of Sterling Greenwoods Limited on the financial statements for the year ended 31st March 2019.)
We report that:
(i) In respect of Fixed Assets
(a) The Company has maintained proper records showing full particulars including quantitative details and situation of fixed assets except resorts assets which requires updation.
(b) As per information and explanation given to us the physical verification of its fixed assets have been carried out by the management at the end of year which in our opinion is reasonable having regard to the size of the company and the nature of its assets. As per the information and explanation given to us no discrepancies have been noticed by the management on the fixed assets other than the resort's assets. The reconciliation of the renovated resort assets are in progress and in absence of the final out put we are unable to comment on resort assets. We have been informed that the discrepancies if any will be dealt in the books of accounts on completion of reconciliation.
(c) According to the Information and explanation given to us and the records examined by us as disclosed in Note No. 2 and based on the examination of the registered sale deed/purchase deed/ allotment letters - Allotment Certificate share certificate etc. provided to us we report that the title deed comprising immovable properties of lands and acquired buildings which are freehold except land valuing Rs. 2242400/ - and property valuing Rs. 278344/- are held in the name of the company as at the balance sheet date. Further possession of property valuing Rs. 278344/- is not with the Company.
(ii) In respect of Inventories as per the information and explanation given to us the inventories have been physical verified by the management at the end of the year which in our opinion is reasonable having regard to the size of the company and the nature of its activity. As per the information and explanation given to us no material discrepancies noticed on physical verification.
(iii) In respect of Loans and Advances Granted during the year.
a) The Company has granted loans to its subsidiary/Associate company covered in the register maintained under section 189 of the Companies Act 2013 (`the Act').
b) In the case of the loans granted to its subsidiary/Associate company listed in the register maintained under section 189 of the Act is not prejudicial to the Company's interest the loans have been granted is interest free further there in no stipulation for repayment of the loans granted hence the question of regular in the payment of the interest is not relevant. The terms of arrangements do not stipulate any repayment schedule and the loans are repayable on demand. Accordingly paragraph 3(iii) (b) of the Order is not applicable to the Company in respect of repayment of the principal amount.
c) Since there is no stipulation in repayment of principal there are no overdue amounts of more than ninety days in respect of the loans granted to its subsidiary company listed in the register maintained under section 189 of the Act.
(iv) In our opinion and according to the information and explanations given to us the Company has complied with the provision of Section 185 and 186 of the companies Act2013 in respect of grant of loans making investments. However the Company has not provided any guarantees and securities.
(v) In our opinion and according to the information and explanation given to us the company has complied with the provisions of section 73 to section 76 and other relevant provisions of the Companies Act 2013 and Companies (Acceptance of Deposits ) Rules 2014 with regard to the deposits accepted from the members and the public.
(vi) As per the information and explanation provided to us the company is not required to maintain the cost records as per the provisions of Companies (Cost Records and Audit) Rules 2014 hence Clause
(vi) of the Companies (Auditor's Report) order2015 are not applicable.
(vii) In respect of Statutory Dues
According to the information and explanation given to us in respect of statutory dues:
(a) The Company has generally been regular in depositing undisputed statutory dues including Provident Fund Investor education and protection fund Employees' state Insurance income tax Vat/Sales Tax GST Service Tax Custom Duty Excise duty Cess and any other material statutory dues applicable to it with the appropriate authorities.
(b) According to information and explanation given to us no undisputed amounts payable in respect of the aforesaid dues were outstanding as at March 31 2019 for a period of more than six months from the date of becoming payable.
(c) Details of dues of Income Tax and Service Tax which have not been deposited as on March 31 2019 on account of disputes are given below:
|Name of the Statue||Nature of Dues||Year||Amount||Forum where dispute is pending|
|Service Tax||Service Tax Penalty||2002-03 to 2007-08||3410080||Appellate Tribunal|
|Service Tax||Service Tax Penalty||2004-05 to 2008-09||2303073||Appellate Tribunal|
|Service Tax||Service Tax Demand||2004-05 to 2008-09||1128073||Audit Department|
|Service Tax||Service Tax Demand||2008-09||182101||Appellate Tribunal|
|Service Tax||Service Tax Penalty||2008-09||482101||Appellate Tribunal|
|Service Tax||Service Tax Demand||2009-10||326572||Appellate Tribunal|
|Service Tax||Service Tax Penalty||2009-10||776572||Appellate Tribunal|
|Service Tax||Service Tax Demand||2010-11||221367||Appellate Tribunal|
|Service Tax||Service Tax Penalty||2010-11||421367||Appellate Tribunal|
(viii) In our opinion and according to the information and explanation given to us the Company has not defaulted in the repayment of loans or borrowings to financial institutions banks and government and des to the debenture holders.
(ix) In our opinion and according to the information and explanations given to us the term loans have been applied by the Company during the year for the purpose for which they are raised. The Company has not raised moneys by way of initial public offer or further public offer (including debt instruments).
(x) To the best of our knowledge and according to the information and explanations given to us no fraud by the Company and no material fraud on the company by its officers or employees has been noticed or reported during the year.
(xi) In our opinion and according to the information and explanations given to us the Company has paid / provided managerial remuneration in accordance with the requisite approvals mandated by the provisions of section 197 read with Schedule V to the Companies Act 2013.
(xii) The Company is not a Nidhi Company and hence reporting under clause (xii) of the CARO 2016 Order is not applicable.
(xiii) In our opinion and according to the information and explanations given to us the Company is in compliance with Section 177 and 188 of the Companies Act 2013 where applicable for all transactions with the related parties and the details of related party transactions have been disclosed in the financial statements etc. as required by the applicable accounting standards.
(xiv) During the year the Company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures and reporting under clause (xiv) of CARO 2016 Order is not applicable to the Company.
(xv) In our opinion and according to the information and explanations given to us during the year the Company has not entered into any non cash transactions with its directors or directors of the holding subsidiary or associate company as applicable or persons connected with them and hence provisions of section 192 of the Companies Act 2013 are not applicable.
(xvi) The Company is not required to be registered under section 45-IA of the Reserve Bank of India Act 1934.
|For Jayesh M Shah & Co.|
|Firm Reg. Number: 104173W|
|Jayesh M Shah|
|Place : Ahmedabad||Proprietor|
|Date : 10/05/2019||M.No.: 030638|
Annexure - 'B' to the Independent Auditors' Report
(Referred to clause (f) of Paragraph 2 under 'Report on Other Legal and Regulatory Requirements' of the Independent auditors' to the Independent Auditor's Report of even date to the members of Sterling Greenwoods Limited on the Ind AS financial statements for the year ended 31st March2019
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 Sterling Greenwood Limited (the Company) as at 31st March 2019 in conjunction with our audit of the Ind AS financial statements of the Company for the year ended on that date.
Management's Responsibility for Internal Financial Controls
The Company's management is responsible for establishing and maintaining internal financial controls based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls over Financial Reporting issued by the Institute of Chartered Accountants of India (`ICAI'). These responsibilities include the design implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the orderly and efficient conduct of its business including adherence to Company's policies the safeguarding of its assets the prevention and detection of frauds and errors the accuracy and completeness of the accounting records and the timely preparation of reliable financial information as required under the Companies Act2013.
Our responsibility is to express an opinion on the Company's internal financial controls over financial reporting based on our audit. We conducted our audit in accordance with the Guidance Note on Audit of Internal Financial Controls over Financial Reporting (the Guidance Note) and the Standards on Auditing issued by ICAI and deemed to be prescribed under Section 143(10) of the Companies Act 2013 to the extent applicable to an audit of internal financial controls both applicable to an audit of Internal Financial Controls and both issued by the Institute of Chartered Accountants of India. Those Standards and the Guidance Note require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether adequate internal financial controls over financial reporting was established and maintained and if such controls operated effectively in all materialrespects. Our audit involves performing procedures to obtain audit evidence about the adequacy of the internal financial controls system over financial reporting and their operating effectiveness. Our audit of internal financial controls over financial reporting included obtaining an understanding of internal financial controls over financial reporting assessing the risk that a material weakness exists and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk.The procedures selected depend on the auditor's judgment including the assessment of the risks of material misstatement of the financial statements whether due to fraud orerror.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the Company's internal financial controls system over financial reporting.
Meaning of Internal Financial Controls over Financial Reporting
A Company's internal financial control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A Company's internal financial control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the Company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the Company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition use or disposition of the Company'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 financial reporting including the possibility of collusion or improper management override of controls material misstatements due to error or fraud may occur and not be detected. Also projections of any evaluation of the internal financial controls over financial reporting to future periods are subject to the risk that the internal financial control over financial reporting may become inadequate because of changes in conditions or that the degree of compliance with the policies or procedures may deteriorate.
In our opinion the Company has in all material respects an adequate internal financial controls system over financial reporting and such internal financial controls over financial reporting were operating effectively as at 31st March 2019 based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls over Financial Reporting issued by the Institute of Chartered Accountants of India.
|For Jayesh M Shah & Co.|
|Firm Reg. Number: 104173W|
|Jayesh M Shah|
|Place : Ahmedabad||Proprietor|
|Date : 10/05/2019||M.No.: 030638|