To The Members of
The Supreme Industries Limited
Report on the Audit of Standalone Financial Statements Opinion
We have audited the accompanying standalone financial statements of The SupremeIndustries Limited ("the Company") which comprises of Balance Sheet as at March31 2019 the Statement of Profit and Loss (including Other Comprehensive Income) theStatement of Changes in Equity and the Statement of Cash Flow for the year then ended andnotes to the financial statements including a summary of significant accounting policiesand other explanatory information in which are included the standalone financialstatements for the year ended on that date audited by the branch auditors of the Company's27 manufacturing units located in the India.
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 Companies Act 2013 (the Act) in the manner so required and give a true and fairview in conformity with the Indian Accounting Standards prescribed under section 133 ofthe Act read with 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 its profits (including othercomprehensive income) changes in equity and its cash flows for the year ended on thatdate.
Basis for Opinion
We conducted our audit in accordance with the Standards on Auditing (SAs) specifiedunder section 143(10) of the Act. Our responsibilities under those Standards are furtherdescribed in the Auditor's Responsibilities for the Audit of the Financial Statementssection of our report. We are independent of the Company in accordance with the Code ofEthics issued by the Institute of Chartered Accountants of India (ICAI) together with theethical requirements that are relevant to our audit of the standalone financial statementsunder the provisions of the Act and the Rules made thereunder and we have fulfilled ourother ethical responsibilities in accordance with these requirements and the Code ofEthics.
We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the standalone financial statements.
Key Audit Matters
Key audit matters are those matters that in our professional judgment were of mostsignificant in our audit of the standalone financial statements of the current period.These matters were addressed in the context of our audit of the standalone financialstatements as a whole and in forming our opinion thereon and we do not provide aseparate opinion on these matters.
|Key Audit Matters ||Auditor's response |
|1. Information Technology (IT) Systems and Controls ||Audit procedures performed: |
|During the year the Company has implemented SAP a new Enterprise Resource Planning (ERP) System. The new system is fully integrated financial accounting and reporting system. ||We have performed procedures to ensure the migration of financial data between old system and new system. |
|The implementation of ERP has a risk of loss of integrity of key financial data being migrated and elimination of traditional controls without replacing them with the new effective controls measures monitoring of IT controls which are relating to critical business processes such as purchase production sales inventory and including recording of transactions which could lead to financial errors or mis-statements and inaccurate financial reporting and also there is risk that automated accounting procedures and related IT manual controls might not work. ||Our audit approach consisted testing of design and operating effectiveness of internal controls and substantive testing around the new ERP system. We also performed sufficient test of details as a part of our audit. |
| ||We have performed the test of details for areas where the Management has implemented manual controls during the year including the continuing manual controls as at the year end. |
|We have accordingly designated this as a focus area in the audit. ||We have performed the test of controls regarding the appropriateness of system access and an effective maker and checker system built in the ERP system for proper authorizations of transactions and posting of accounting entries. |
| ||The combination of these tests of controls and procedures performed gave us a sufficient evidence to enable us to rely on the operations of ERP system for the purpose of the audit of the financial statements. |
|2. Industrial Promotion Scheme (IPS) receivables ||Audit Procedure performed: |
|Other current assets include government grant in the form of refund of Sales tax/GST under IPS Scheme of Rs 6242 lacs as at March 31 2019 from the states of Maharashtra Madhya Pradesh West Bengal and Rajasthan as the respective scheme notifications were issued by the aforesaid State Governments. ||In response to the risk of completeness of the accruals in the financial statements: |
|Post GST the state of west Bengal is yet to notify the IPS scheme and accordingly the Company has not recognized grant since July 2017 in this regard. The amount whereof is presently not ascertainable. ||We have examined the eligibility certificates and obtained a list of year wise break- up of the IPS receivables by the Company for all the financial years. We had discussed the status of the assessment of grants receivable for all the financial years and the Management view on the expected time frame by which the grants will be released. Additionally we have considered the status of the previous assessments and the adjustments if any done by the respective concerned authorities. |
|Management judgement is involved in assessing the accounting for grants and particularly in considering the probability of a grant being released and we have accordingly designated this as a focus area of the audit. ||Based on the procedures performed those gave us a sufficient evidence to conclude that the grants have been accounted in terms of the schemes announced by various state governments. |
Information Other than the Standalone Financial Statements and Auditor's report thereon
The Company's Board of Directors is responsible for the preparation of otherinformation. The Other information comprises the information included in the ManagementDiscussion and Analysis Board's Report including Annexures to the Board report Businessresponsibility Report Corporate Governance report and Shareholder's information but doesnot include the standalone financial statement and our auditor's report thereon.
Our opinion on the standalone financial statements does not cover the other informationand we do not express any form of assurance conclusion thereon.
In connection with our audit of the standalone financial statements our responsibilityis to read the other information and in doing so consider whether the other informationis materially inconsistent with the standalone financial statements or our knowledgeobtained during the course of our audit or otherwise appears to be materially misstated.
If based on the work we have performed we conclude that there is a materialmisstatement of this other information we required to report that fact. We have nothingto report in this regard.
Responsibilities of Management and those charged with Governance for the StandaloneFinancial Statements
The Company's Board of Directors is responsible for the matters stated in section134(5) of the Act with respect to the preparation of these standalone financial statementsthat give a true and fair view of the financial position financial performance (includingother comprehensive income) changes in equity and cash flows of the Company in accordancewith the accounting principles generally accepted in India including the accountingStandards specified under section 133 of the Act.
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 financial statements that give a true and fair view and are free frommaterial misstatement whether due to fraud or error.
In preparing the standalone financial statements the Management is responsible forassessing the Company's ability to continue as a going concern disclosing as applicablematters related to going concern and using the going concern basis of accounting unlessmanagement either intends to liquidate the Company or to cease operations or has norealistic alternative but to do so.
The Board of Directors are also responsible for overseeing the Company's financialreporting process.
Auditor's Responsibilities for the Audit of the Standalone Financial Statements
Our objectives are to obtain reasonable assurance about whether the standalonefinancial statements 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 standalone 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 standalone 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 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 control system in place and the operating effectiveness ofsuch controls.
Evaluate the appropriateness of accounting policies used and the reasonableness ofaccounting estimates and related disclosures made by the 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 entity'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 standalone financial statements or if such disclosures are inadequate to modify ouropinion. Our conclusions are based on the audit evidence obtained up to the date of ourauditor's report. However future events or conditions may cause the entity to cease tocontinue 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 standalone financial statementsthat individually or in aggregate makes it probable that the economic decisions of areasonably knowledgeable user of the standalone financial statements may be influenced. Weconsider quantitative materiality and qualitative factors in (i) Planning the scope of ouraudit work and in evaluating the results of our work and (ii) To evaluate the effect ofant identified misstatements in the standalone financial statements.
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.
We did not audit the financial statements of 27 branches included in the standalonefinancial statements of the Company whose financial statements reflect the total assets ofRs 283816 lacs as at March 31 2019 and total revenue of Rs 551657 lacs for the yearended on that date. The financial statements of these branches have been audited by thebranch auditors whose reports have been furnished to us and our opinion in so far as itrelates to the amounts and disclosures included in respect of these branches is basedsolely on the report of such branch auditors.
Our opinion is not modified in respect of this matter.
Report on Other Legal and Regulatory Requirements
1. Pursuant to 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 inparagraphs 3 and 4 of the 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 and records.
(c) The reports on the financial statements of branches of the Company audited undersection 143(8) of the Act by nine firms of independent auditors have been sent to us andproperly dealt with by us in preparing this report.
(d) The Balance sheet the Statement of Profit & Loss (including othercomprehensive income) Statement of Changes in Equity and the Cash Flow Statement dealtwith by this Report are in agreement with the books of account.
(e) In our opinion the aforesaid standalone financial statements comply with theAccounting Standards specified under Section 133 of the Act read with Rule 7 of theCompanies (Account) Rules 2014.
(f) On the basis of the written representation received from the directors as on March31 2019 taken on records by the Board of Directors none of the directors aredisqualified as on March 31 2019 from being appointed as a Directors in terms of Section164(2) of the Act.
(g) 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".
(h) With respect to the other matters to be included in the Auditor's Report inaccordance with the requirements of Sec 197(16) of the Act as amended: In our opinion andto the best of our information and according to the explanations given to us theremuneration paid by the Company to its directors during the year is in accordance withthe provisions of section 197 of the Act.
(i) With respect to the matters to be included in the Auditor's report in accordancewith the rule 11 of the Companies (Audit and Auditors) Rules 2014 in our opinion and tothe best of our information and according to the explanations given to us: i. The Companyhas disclosed the impact of pending litigations on its financial performance in itsstandalone financial statements. [Refer note no 36 to standalone financial statements] ii.The Company did not have any long-term contracts including derivative contracts for whichthere were any material foreseeable losses. iii. There has been no delay in transferringamounts required to be transferred to the Investor Education and Protection Fund by theCompany.
For LODHA & COMPANY
Firm registration No. 301051E
R. P. Baradiya
Membership No. 44101
Place : Mumbai
Date : May 07 2019
Annexure A to the Independent Auditor's Report
ANNEXURE "A" REFERRED TO IN "REPORT ON OTHER LEGAL AND REGULATORYREQUIREMENTS" SECTION OF OUR REPORT TO THE MEMBERS OF THE SUPREME INDUSTRIES LIMITEDOF EVEN DATE:
i. a. The Company has maintained proper records showing full including quantitativedetails and situation of fixed assets.
b. As explained to us the Company has a phased program for physical verification of thefixed assets for all locations. In our opinion the frequency of verification isreasonable considering the size of the Company and nature of its fixed assets. Pursuantto the program of the physical verification of fixed assets physical verification of theassets has been carried out during the year and no material discrepancies were noticed onsuch verification.
c. According to the information and explanations given to us and on the basis of ourexamination of the records of the Company the title deeds of immovable properties areheld in the name of the Company except certain freehold land and building having carryingvalue of Rs 43 lacs as at March 31 2019 (Rs 47 lacs as at March 31 2018) are heldin the name of 2 directors on behalf of the Company due to technical reasons.
ii. The inventories have been physically verified by the management at reasonableintervals during the year except for goods in transit and those lying with third parties.The procedures of physical verification of the inventories followed by the management arereasonable and adequate in relation to the size of the Company and nature of it'sbusiness. As per the information and explanations given to us no material discrepancieswere noticed on physical verification of inventories as compared to book records.
iii. According to the information and explanations given to us the Company has notgranted any loans secured or unsecured to companies firms limited liabilitypartnerships or other parties covered in the register maintained under section 189 of theAct. Accordingly the provisions of clause 3(iii) of the Order are not applicable to theCompany.
iv. In our opinion and according to the information and explanations given to us theCompany has complied with the provisions of section 185 and 186 of the Act to the extentapplicable with respect to the loans and investments made.
v. No deposits have been accepted by the Company within the meaning of directivesissued by RBI (Reserve Bank of India) and Section 73 to 76 or any other relevantprovisions of the Act and rules framed thereunder.
vi. According to the information and explanations given to us cost records weremaintained by the Company pursuant to the Order of the Central Government under Section148(1) of the Act.
vii. (a) According to the information and explanations given to us and on the basis ofour examination of the records the Company is generally regular in depositing undisputedstatutory dues including provident fund employees' state insurance income tax salestax custom duty cess excise duty service tax goods and service tax value added taxand other material statutory dues during the year with the appropriate authorities. Noundisputed amounts payable in respect of the aforesaid statutory dues were outstanding asat the last day of the financial year for a period of more than six months from the datethey became payable.
(b) According to the information and explanations given to us there are no dues ofincome tax goods and service tax sales tax service tax duty of customs duty ofexcise value added tax cess which have been not deposited on account of any disputeexcept the following:
|Name of the statute ||Nature of dues ||Amount Rs. In lacs ||Period to which the amount relates ||Forum where dispute is pending |
|The Central Excise Act 1944 ||Excise Duty and Penalty ||222 ||2012 -13 to 2015-16 ||Commissioner (Appeals) Large Tax Payer Unit |
| || ||4085 ||2000-01 to 2016-17 ||Custom Excise & Service Tax Appellate tribunal (CESTAT) |
|The Central Sales Tax Act 1956 and Sales Tax / VAT / Entry Tax- Acts of various states ||Sales Tax / VAT and Entry Tax ||66 ||Various years from 2004-05 to 2015-16 ||Joint / Deputy Commissioner / Commissioner (Appeals) |
| || ||2559 ||Various Years from 2002-03 to 2015-16 ||Sales tax Appellate Tribunal |
| || ||2163 ||Various Years from 2000-01 to 2015-16 ||High Courts |
viii. Based on our audit procedures and on the basis of information and explanationsgiven to us we are of the opinion that the Company has not defaulted in the repayment ofdues to banks and government. The Company did not have any outstanding dues to debentureholders during the year.
ix. In our opinion and according to the information and explanations given to us theterm loans have been applied for the purpose for which they were raised. The Company hasnot raised any money by way of Initial public offer or further public offer (Includingdebt instrument) during the year or in the recent past.
x. During the course of our examination of the books and records of the Companycarried out in accordance with the generally accepted auditing practices in India andaccording to the information and explanations given to us we have neither come across anyinstance of fraud by or on the Company by its officers or employees noticed or reportedduring the year nor have we been informed of such case by the management.
xi. According to the information and explanations given to us and based on ourexamination of the books and records of the Company the Company has paid / provided forthe managerial remuneration in accordance with the requisite approvals mandated by theprovisions of Section 197 read with Schedule V to the Act.
xii. In our opinion and according to the information and explanations given to us theCompany is not a Nidhi Company. Therefore the provisions of clause 3(xii) of the Orderare not applicable to the Company.
xiii. According to the information and explanations given to us and based on ourexamination of the records of the Company all the transactions with related parties arein compliance with section 177 and 188 of the Act and all the details have been disclosedin the standalone financial statements as required by the applicable Accounting Standard(Refer Note 38 to the standalone financial statements).
xiv. According to the information and explanations given to us and based on ourexamination of the records of the Company the Company has not made any preferentialallotment or private placement of shares or fully or partly convertible debentures duringthe year or in the recent past. Therefore the provisions of clause 3(xiv) of the Orderare not applicable to the Company.
xv. According to the information and explanations given to us the Company has notentered into any non-cash transactions prescribed under Section 192 of the Act withdirectors or persons connected with them during the year.
xvi. The Company is not required to be registered under section 45-IA of the ReserveBank of India Act 1934.
For LODHA & COMPANY
Firm registration No. 301051E
R. P. Baradiya
Membership No. 44101
Place : Mumbai
Date : May 07 2019
Annexure B to the Independent Auditor's Report
ANNEXURE "B" REFERRED TO IN "REPORT ON OTHER LEGAL AND REGULATORYREQUIREMENTS" SECTION OF OUR REPORT TO THE MEMBERS OF THE SUPREME INDUSTRIES LIMITEDOF EVEN DATE:
Report on the Internal Financial Controls over Financial Reporting under Clause (i) ofSub-section 3 of Section 143 of the Act
We have audited the internal financial controls over financial reporting of the SupremeIndustries Limited ("the Company") as of March 31 2019 in conjunction with ouraudit of the standalone financial statements of the Company for the year ended on thatdate.
Management's Responsibility for Internal Financial Controls
The Board of Directors of the Company is responsible for establishing and maintaininginternal financial controls based on the internal control over financial reportingcriteria established by the Company considering the essential component of internalcontrol stated in the Guidance Note on Audit of Internal Financial Controls over FinancialReporting issued by the Institute of Chartered Accountants of India (ICAI). Theseresponsibilities include the design implementation and maintenance of adequate internalfinancial controls that were operating effectively for ensuring the orderly and efficientconduct of its business including adherence to company's policies the safeguarding ofits assets the prevention and detection of frauds and errors the accuracy andcompleteness of the accounting records and the timely preparation of reliable financialinformation as required 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 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 standalone financial statements for external purposes in accordance withgenerally accepted accounting principles. A Company's internal financial control overfinancial reporting includes those policies and procedures that (1) pertain to themaintenance of records that in reasonable detail accurately and fairly reflect thetransactions and dispositions of the assets of the company; (2)provide reasonableassurance that transactions are recorded as necessary to permit preparation of financialstatements in accordance with generally accepted accounting principles and that receiptsand expenditures of the entity are being made only in accordance with authorisations ofmanagement; and (3) provide reasonable assurance regarding prevention or timely detectionof unauthorised acquisition use or disposition of the entity's assets that could have amaterial effect on the standalone 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 and to the best of our information and according to the explanationsgiven to us the Company has in all material respects an adequate internal financialcontrols system over financial reporting and such internal financial controls overfinancial reporting were operating effectively as at March 31 2019 based on the internalcontrol over financial reporting criteria established by the Company considering theessential Component of internal control stated in the Guidance Note on Audit of InternalFinancial Controls Over Financial Reporting issued by the Institute of CharteredAccountants of India.
For LODHA & COMPANY
Firm registration No. 301051E
R. P. Baradiya
Membership No. 44101
Place : Mumbai
Date : May 07 2019