To the Members of Swaraj Engines Limited
Report on the Audit of the Financial Statements Opinion
We have audited the accompanying Financial statements of Swaraj EnginesLimited("the Company") which comprise the balance sheet as at March 31 2021the statement of Profit and Loss including other comprehensive income the statement ofchanges in equity and the statement of cash flows for the year then ended on that dateincluding a summary of significant accounting policies and other explanatory information(herein after referred to as "the financial statements").
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 Indian Accounting Standards prescribed under Section 133of the Act 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 March 31 2021 the profit and total comprehensiveincome changes in equity and its cash flows for the year ended on that date.
Basis for Opinion
We conducted our audit of the financial statements in accordance with the Standards onAuditing (SAs) specified under Section 143(10) of the Act (SAs). Our responsibilitiesunder those Standards are further described in the Auditor's Responsibilities for theAudit of the Financial statements section of our report. We are independent of the Companyin accordance with the Code of Ethics issued by the Institute of Chartered Accountants ofIndia ("the ICAI") together with the ethical requirements that are relevant toour audit of the Financial statements under the provisions of the Act and the Rulesthereunder and we have fulfilled our other ethical responsibilities in accordance withthese requirements and the ICAI's Code of Ethics. We believe that the audit evidenceobtained by us is sufficient and appropriate to provide a basis for our audit opinion onthe financial statements.
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 matter described below to be the key audit matter to be communicatedin our report:
KAM on Related Party Transactions
|Key Audit Matter ||As a part of the business activity the Company deals with entities which are related parties and significant revenue sources are from related parties only. |
| ||The Arm's length pricing of the transactions with Related Parties risks of material misstatement associated with related party relationships and transactions may have significant impact on the interest of the Company and true and fair presentation of related party relationships and transactions in the financial statements of the Company. |
|Principal Audit Procedures ||We performed following audit procedures relating to related party relationships and transactions. |
| ||We inquired of management regarding: |
| ||The identity of the Company's related parties including changes from the prior period; |
| ||The nature of the relationships between the Company and related parties; and the type and purpose of the transactions with related parties; |
| ||Identify account for and disclose related party relationships and transactions in accordance with the applicable financial reporting framework; |
| ||Confirmations obtained from related parties for an outstanding balance as part of our audit procedures; |
| ||Performed appropriate substantive audit procedures relating to identified related parties and related party transactions; |
| ||Evaluate the terms of the related party transactions that these are consistent with management's explanations; |
| ||Ensured that all Related Party Transactions are placed before the Audit Committee for approval. |
| ||Prior omnibus approval of the Audit Committee is obtained for the transactions which are repetitive in nature; |
| ||Inquired that the Company has adopted a Related Party Transactions Policy approved by the Board and transactions are as per the policy. |
Information other than the Financial Statements and Auditors' Report thereon
The Company's Board of Directors is responsible for the other information. The otherinformation comprises the information included in the Management Discussion and AnalysisBoard's Report and the related annexures but does not include the Financial statementsand our Auditors' Report thereon.
Our opinion on the Financial statements does not cover the other information and we donot 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 work we have performed we conclude that there is a materialmisstatement of this other information we are required to report that fact. We havenothing to report in this regard.
Responsibilities of management for the Financial 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 financial statements that givea true and fair view of the financial position financial performance including othercomprehensive income cash flows and changes in equity of the Company in accordance withthe accounting principles generally accepted in India.
This responsibility also includes maintenance of adequate accounting records inaccordance with the provisions of the Act for safeguarding the assets of the Company andfor preventing and detecting frauds and other irregularities; selection and application ofappropriate accounting policies; making judgments and estimates that are reasonable andprudent; and design implementation and maintenance of adequate internal financialcontrols that were operating effectively for ensuring the accuracy and completeness ofthe accounting records relevant to the preparation and presentation of the financialstatements that give a true and fair view and are free from material misstatement whetherdue to fraud or error.
In preparing the financial statements management is responsible for assessing theCompany's ability to continue as a going concern disclosing as applicable mattersrelated to going concern and using the going concern basis of accounting unless managementeither intends to liquidate the Company or to cease operations or has no realisticalternative but to do so. Those Board of Directors are also responsible for overseeing theCompany's financial reporting process.
Auditors' Responsibilities for the audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the Financialstatements as a whole are free from material misstatement whether due to fraud or errorand to issue an auditors' 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.
Identify and assess the risks of material misstatement of the Financialstatements whether due to fraud or error design and perform audit procedures responsiveto those risks and obtain audit evidence that is sufficient and appropriate to provide abasis for our opinion. The risk of not detecting a material misstatement resulting fromfraud is higher than for one resulting from error as fraud may involve collusionforgery intentional omissions misrepresentations or the override of internal control.
Obtain an understanding of internal financial control relevant to theaudit in order to design audit procedures that are appropriate in the circumstances. UnderSection 143(3)(i) of the Act we are also responsible for expressing our opinion onwhether the Company has adequate internal financial controls system in place and theoperating effectiveness of such controls.
Evaluate the appropriateness of accounting policies used and thereasonableness of accounting estimates and related disclosures made by the management.
Conclude on the appropriateness of management's use of the going concernbasis 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 auditors' 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 auditors' 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 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 auditwork and in evaluating the results of our work; and (ii) to evaluate the effect of anyidentified misstatements in the 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 alsoprovide those charged with governance with a statement that we have complied with relevantethical requirements regarding independence and to communicate with them allrelationships and other matters that may reasonably be thought to bear on ourindependence and where applicable related safeguards.
From the matters communicated with those charged with governance we determine thosematters that were of most significance in the audit of the financial statements of thecurrent period and are therefore the key audit matters. We describe these matters in ourauditors' report unless law or regulation precludes public disclosure about the matter orwhen in extremely rare circumstances we determine that a matter should not becommunicated in our report because the adverse consequences of doing so would reasonablybe expected to outweigh the public interest benefits of such communication.
Report on other Legal and Regulatory requirements
1. As required by the Companies (Auditors' Report) Order 2016 ("theOrder") issued by the Central Government of India in terms of sub-section (11) ofSection 143 of the Act on the basis of such checks of the books and records of theCompany as we considered appropriate and according to the information and explanationsgiven to us we give in "Annexure-A" a statement on the matters specified inparagraphs 3 and 4 of the Order to the extent applicable.
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 including other comprehensiveincome statement of changes in equity and the statement of cash flows dealt with by thisReport are in agreement with the books of account.
(d) In our opinion the aforesaid financial statements comply with the AccountingStandards specified under Section 133 of the Act.
(e) On the basis of the written representations received from the directors as on March31 2021 taken on record by the Board of Directors none of the directors is disqualifiedas on March 31 2021 from being appointed as a director in terms of Section 164 (2) of theAct.
(f) With respect to the adequacy of the internal financial controls with reference tofinancial statements of the Company and the operating effectiveness of such controlsrefer to our separate report in Annexure-B. Our report expresses an unmodified opinion onthe adequacy and operating effectiveness of the Company's internal financial controls withreference to financial statements.
(g) In our opinion the managerial remuneration for the year ended March 31 2021 hasbeen paid / provided by the Company to its directors in accordance with the provisions ofSection 197 read with Schedule V to the Act.
(h) With respect to the other matters to be included in the Auditors' Report inaccordance with the requirements of Rule 11 of the Companies (Audit and Auditors) Rules2014 (as amended) in our opinion and to the best of our information and according to theexplanations given to us:
i. The Company does not have any pending litigations which would impact its financialposition.
ii. The Company did not have any long-term contracts including derivative contracts forwhich there were any material foreseeable losses. iii. There was no delay in transferringthe amounts to the Investor Education and Protection Fund by the Company.
For B.K. KHARE & CO.
Firm Registration No. 105102W
Membership No. 111212
UDIN : 21111212AAAAPG3982
Mohali April 20 2021
ANNEXURE A TO THE INDEPENDENT AUDITORS' REPORT
(Referred to in paragraph 1 under 'Report on Other Legal and Regulatory Requirements'section of our report of even date)
(i) In respect of its Fixed Assets:
a) According to the information and explanations given to us the Company hasmaintained proper records showing full particulars including quantitative details andsituation of property plant and equipment.
b) The Company has a regular programme for physical verification of its property plantand equipment once in a period of three years. In our opinion this periodicity ofphysical verification is reasonable having regard to the size of the Company and thenature of its property plant and equipment. In accordance with the programme the Companyhas not physically verified property plant and equipment during the year.
c) According to the information and explanations given to us the title deeds ofimmovable properties are held in the name of the Company.
(ii) In respect of Inventory:
a) According to the information and explanations given to us the inventory comprisingof finished goods raw materials stores & spares components work-in-progress(other than those with sub-contractors) has been physically verified at reasonableintervals by the management during the year. Stock-in-transit as on March 31 2021 hasbeen verified by the management on subsequent receipt of the goods.
b) In our opinion coverage and procedure of such verification is appropriate and nomaterial discrepancies for each class of inventory were noticed on such verificationbetween the physical inventory and the book records.
c) We have relied on confirmations and representations from third parties in case ofinventory lying in their locations wherever applicable.
(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 reporting under Clauses 3(iii)(a) 3(iii)(b) and 3(iii)(c) of theOrder is not applicable to the Company.
(iv) In our opinion and according to the information and explanations given to us thecompany has complied with the provisions of sections 185 and 186 of the Companies Act2013 in respect of loans investments guarantees and security.
(v) According to the information and explanations given to us the Company has notaccepted any deposits from the public within the meaning of Sections 73 to 76 or any otherrelevant provisions of the Act and the rules framed thereunder where applicable.Accordingly the reporting under Clause 3(v) of the Order is not applicable to theCompany.
(vi) The maintenance of cost records has been specified by the Central Government undersub-section (1) of Section 148 of the Act for the products of the Company. We have broadlyreviewed the cost records maintained by the Company pursuant to the Companies (CostRecords and Audit) Rules 2014 as amended prescribed by the Central Government undersub-section (1) of Section 148 of the Act and are of the opinion that prima facie theprescribed cost records have been made and maintained. We have however not made adetailed examination of the cost records with a view to determine whether they areaccurate or complete.
(vii) According to the information and explanations given to us in respect ofstatutory dues:
(a) According to the information and explanations given to us and on the basis of ourexamination of records of the Company the amounts deducted / accrued in the books ofaccount in respect of undisputed statutory dues including Goods and Services TaxProvident Fund Employees' State Insurance Cess and other material statutory dues havebeen regularly deposited during the year by the Company with the appropriate authorities.
(b) According to the information and explanations given to us and on the basis of ourexamination of records of the Company there were no arrears of undisputed statutory duesin respect of Goods and Services Tax Provident Fund Employees' State InsuranceIncome-tax Duty of Customs and other material statutory dues as applicable as on thelast day of the year for a period of more than six months from the date they becamepayable.
(c) According to the information and explanations given to us and on the basis of theexamination of the records of the Company the particulars of income tax sales tax valueadded tax which have not been deposited with the appropriate authorities on account of anydispute as at March 31 2021 are as under:
|Statute ||Nature ||Forum where dispute is pending ||Period to which the amount relates ||Amount involved |
|Central Excise Act 1944 ||Excise Duty ||Appellate Authority- Tribunal Level ||F.Y. 2004-05 to F.Y. 2008-09 ||89.19 |
|Income Tax Act 1961 ||Income Tax ||Assessing Officer ||A.Y. 2003-04 ||35.11 |
| || ||Punjab VAT Tribunal ||A.Y. 2012-13 ||47.80 |
|Punjab Value Added Tax Act 2005 ||Sales Tax ||Dy. Excise & Taxation Commissioner (Appeal) Mohali ||A.Y. 2013-14 ||30.77 |
(viii) According to the information and explanations given to us and on the basis ofour examination of records of the Company the Company has not defaulted in the repaymentof loans or borrowings to banks and debenture holders. The Company has not taken any loansor borrowings from financial institutions and Government.
(ix) According to the information and explanations given to us the Company has notraised any moneys by way of initial public offer further public offer (including debtinstruments) and term loans during the year. Accordingly the reporting under Clause 3(ix)of the Order is not applicable to the Company.
(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 material fraud by the Company or on the Company by its officers or employeesnoticed or reported during the year nor have we been informed of any such case by themanagement.
(xi) Based upon the audit procedures performed and the information and explanationsgiven by the management the managerial remuneration has been paid or provided inaccordance with the requisite approvals mandated by the provisions of section 197 readwith Schedule V to the Companies Act.
(xii) The Company is not a Nidhi Company and hence reporting under clause 3 (xii) ofthe Order is not applicable to the Company.
(xiii) In our opinion and according to the information and explanations given to usthe Company has entered into transactions with related parties in compliance with theprovisions of Sections 177 and 188 of the Act. The details of such related partytransactions have been disclosed in the financial statements as required by IndianAccounting Standard (Ind AS) 24 Related Party Disclosures specified under Section 133 ofthe Act.
(xiv) According to the information and explanations given to us the Company has notmade any preferential allotment or private placement of shares or fully or partlyconvertible debentures during the year. Accordingly the reporting under Clause 3(xiv) ofthe Order is not applicable to the Company.
(xv) In our opinion and according to the information and explanations given to us theCompany has not entered into any non-cash transactions with its directors or personsconnected with them during the year and hence the provisions of Section 192 of the Act arenot applicable to the Company. Accordingly the reporting under Clause 3(xv) of the Orderis not applicable to the Company.
(xvi) According to the information and explanations given to us the Company is notrequired to be registered under Section 45-IA of the Reserve Bank of India Act 1934.Accordingly the reporting under Clause 3(xvi) of the Order is not applicable to theCompany.
|For B.K. KHARE & CO. |
|Chartered Accountants |
|(Firm Registration No. 105102W) |
|SHIRISH RAHALKAR |
|Membership No. 111212 |
|UDIN: 21111212AAAAPG3982 |
|Mohali April 20 2021 |
ANNEXURE B TO THE INDEPENDENT AUDITORS' REPORT
(Referred to in paragraph "f" under 'Report on Other Legal and RegulatoryRequirements' section of our report of even date) Report on the Internal FinancialControls with reference to Financial Statement under Clause (i) of Subsection (3) ofSection 143 of the Companies Act 2013 ("the Act")
We have audited the internal financial controls with reference to financial statementsof Swaraj Engines Limited ("the Company") as of March 31 2021 in conjunctionwith our audit of the 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 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. These responsibilities includethe design implementation and maintenance of adequate internal financial controls thatwere operating effectively for ensuring the orderly and efficient conduct of its businessincluding adherence to the Company's policies the safeguarding of its assets theprevention and detection of frauds and errors the accuracy and completeness of theaccounting records and the timely preparation of reliable financial information asrequired under the Act.
Our responsibility is to express an opinion on the Company's internal financialcontrols with reference to financial statements of the Company based on our audit. Weconducted our audit in accordance with the Guidance Note on Audit of Internal FinancialControls Over Financial Reporting ("the Guidance Note") issued by the Instituteof Chartered Accountants of India and the Standards on Auditing prescribed under Section143(10) of the Act to the extent applicable to an audit of internal financial controls.Those Standards and the Guidance Note require that we comply with ethical requirements andplan and perform the audit to obtain reasonable assurance about whether adequate internalfinancial controls with reference to financial statements was established and maintainedand 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 with reference to financial statements and theiroperating effectiveness. Our audit of internal financial controls with reference tofinancial statements included obtaining an understanding of internal financial controlswith reference to financial statements assessing the risk that a material weaknessexists and testing and evaluating the design and operating effectiveness of internalcontrol based on the assessed risk. The procedures selected depend on the auditors'judgement including the assessment of the risks of material misstatement of the financialstatements whether due to fraud or error.
We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the Company's internal financial controls systemwith reference to financial statements.
Meaning of Internal Financial Controls with reference to financial statements
A company's internal financial control 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 control withreference to financial statements includes those policies and procedures that (1) pertainto the maintenance of records that in reasonable detail accurately and fairly reflectthe transactions 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 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 with reference to financialstatements
Because of the inherent limitations of internal financial controls with reference tofinancial statements including the possibility of collusion or improper managementoverride of controls material misstatements due to error or fraud may occur and not bedetected. Also projections of any evaluation of the internal financial controls withreference to financial statements to future periods are subject to the risk that theinternal financial control with reference to financial statements may become inadequatebecause of changes in conditions or that the degree of compliance with the policies orprocedures may deteriorate.
In our opinion to the best of our information and according to the explanations givento us the Company has in all material respects an adequate internal financial controlssystem with reference to financial statements and such internal financial controls withreference to financial statements were operating effectively as at March 31 2021 basedon the criteria for internal financial control with reference to financial statementsestablished 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.
For B.K. KHARE & CO.
(Firm Registration No. 105102W)
Membership No. 111212
Mohali April 20 2021