The Members of TARINI INTERNATIONAL LIMITED
Report on the Audit of the Standalone Financial Statements Qualified Opinion
We have audited the accompanying standalone financial statements of TARINIINTERNATIONAL LIMITED ("the Company") which comprise the Balance sheet as atMarch 312021 the Statement of profit and loss cash flow statement for the year thenended and a summary of significant accounting policies and other explanatory information(hereinafter referred to as "the financial statements").
In our opinion and to the best of our information and according to the explanationsgiven to us except for the possible effect of matter described in Basis for qualifiedopinion paragraph the standalone financial statements give the information required bythe Companies Act 2013 ("the Act") in the manner so required and give a trueand fair view in conformity with the accounting principles generally accepted in India ofthe state of affairs of the company as at March 31 2021 and the Profit / Loss and itscash flow for the year ended on that date.
Basis for qualified opinion
We draw-attention to nt>iH m-Financial-Statement1'cgarrttiTgJ.l.iti-i.ux^UIJ^Itumn^mmg- :
Ks. 121.50 Lakhs in the subsidiaries which has suffered recurring losses and has a netcapital deficiency. The financial statements of that subsidiary have been preparedassuming that the Company will continue as a going concern. These conditions raisesubstantial doubt about its ability to continue as a going concern. The standalonefinancial statements do not include any adjustments relating to the recoverability andclassification of asset carrying amounts that might result that the subsidiary be unableto continue as a going concern. Had the provision been made in the books of account theprofit before tax for the year would have been converted into loss amounting to Rs. 73.44Lakhs.
We conducted our audit of the financial statements in accordance with the Standards onAuditing (SAs) specified under section 143(10) of the Act. Our responsibilities underthose Standards are further described in the Auditors Responsibilities for the Auditof the Financial Statements section of our report. We are independent of the Company inaccordance with the Code of Ethics issued by the Institute of Chartered Accountants ofIndia (ICAI) together with the ethical requirements that are relevant to our audit of thefinancial statements under the provisions of the Act and the Rules made thereunder and wehave fulfilled our other ethical responsibilities in accordance with these requirementsand the Code of Ethics. We believe that the audit evidence we have obtained is sufficientand appropriate to provide a basis for our opinion on the financial statements.
Emphasis of Matters
1. We draw attention to the note 20 of the standalone financial statements whichdescribes the managements assessment of impact of uncertainties related to outbreakof COVID-19 on the business of the Company.
2. We draw attention to the note 21 of the standalone financial statements in respectof trade receivables and trade payables external confirmations of the balances were notobtained by the Company. Due to non-availability of confirmation of balances we areunable to quantify the impact upon the profit for the year if any arising from theconfirmation of balances.
3. We draw attention to note 25 of the standalone financial statements that company hasgiven the collateral guarantee for the loan taken by its associate company / directors& loans / advances granted amounting to Rs. 380.39 Lakhs (as on 31/03/2021) to groupcompanies / associated companies in which directors are interested; the company is yet tocomply within the provisions of section 186 of the Companies Act 2013.
4. We draw attention to the note 29 of the standalone financial statements regardingthe provisional attachment of the farm house of the company by The Enforcement Directorateunder The Prevention of Money Laundering Act 2002 against which the company has obtainedthe stay from the High Court of Delhi.
5. We draw attention to the note 30 of the standalone financial statements regardingthe advance made of Rs. 59.16 Lakhs (equivalent Euro - 80000/-) as share applicationmoney during the year 2015-16 towards acquisition of 51% shares of HPWE GmbH. Againstsuch payment share has not been allotted as the company could not make full payment.
&^We^^w-attenti(m%o^ and Exchange Board of Securities and Exchange Board ofIndia Act 1992. The company has contested the said order in the Securities AppellantTribunal vide Appeal No. 179/2019 which has passed an interim order dated 03.05.2019 forno coercieve action.
7. We draw attention to note 33 wherein The Adjudicating Officer Securities andExchange Board of India has passed the order dated 10.02.2020 under section 15-1 of TheSecurities and Exchange Board of India Act 1992. The company has filed an appeal againstthe said order in the Securities Appellant Tribunal.
Our Opinion is not qualified in respect of these matters.
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 that there are no significant matters except for the matters described inthe basis of qualified opinion section and the Emphasis of matter section that arerequired to be disclosed here.
Information Other than the Financial Statements and Auditors Report thereon
The Companys Board of Directors is responsible for the preparation of the otherinformation. The other information comprises the information included in theDirectors Report including its Annexures but does not include the financialstatements and 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 and those Charged with Governance for the StandaloneFinancial Statements
The Companys Board of Directors is responsible for the matters stated in Section134(5) of the Act with respect to the preparation and presentation of these standalonefinancial statements that give a true and fair view of the financial position financialperformance and cash flows of the Company in accordance with the accounting principlesgenerally accepted in India including the-Accounting Standards specified under Section133 of the Act read with relevant Rules issued thereunder. This responsibility alsoincludes maintenance of adequate accounting records in accordance with the provisions ofthe Act for safeguarding the assets of the Company and for preventing and detecting fraudsand other irregularities; selection and application of appropriate accounting policies;making judgments and estimates that are reasonable and prudent; and design implementationand maintenance of adequate internal financial controls that were operating effectivelyfor ensuring the accuracy and completeness of the accounting records relevant to thepreparation and presentation of the standalone financial statements that give a true andfair view and are free from material misstatement whether due to fraud or error.
In preparing the financial statements the Board of Directors is responsible forassessing the Companys ability to continue as a going concern disclosing asapplicable matters related to going concern and using the going concern basis ofaccounting unless the Board of Directors either intends to liquidate the Company or tocease operations or has no realistic alternative but to do so.
Those Board of Directors are also responsible for overseeing the Companysfinancial 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 ahigh level of assurance but is not a guarantee that an audit conducted in accordance withSAs will always detect a material misstatement when it exists. Misstatements can arisefrom fraud or error and are considered material if individually or in the aggregate theycould reasonably be expected to influence the economic decisions of users taken on thebasis of these financial statements.
As part of an audit in accordance with SAs we exercise professional judgment andmaintain professional skepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of the 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 todesign audit procedures that are appropriate in the circumstances but not for the purposeof expressing an opinion on the effectiveness of the Companys internal control.
Evaluate the appropriateness of accounting policies used and the reasonablenessof accounting estimates and related disclosures made by management.
Conclude on the appropriateness of managements use of the going concernbasis of accounting and based on the-audit^vidcncer~obtafned7~whcther"a~mateTira1uncertainty exists related to events or conditions that may cast significant doubt on theCompanys 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 theCompany to 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.
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.
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 we give in the Annexure - A a statement on the matters specifiedin the paragraph 3 and 4 of the Order.
2. As required by section 143 (3) of the Act we report that:
a) We have sought and except for the matters described in the basis for qualifiedopinion paragraph obtained all the information and explanations which to the best of ourknowledge and belief were necessary for the purposes of our audit.
b) Except for the possible effects of the matters described in the basis for qualifiedopinion paragraph in our opinion proper books of account as required by law have beenkept by the Company so far as it appears from our examination of those books.
c) The Balance Sheet the Statement of Profit and Loss and the Statement of Cash Flowdealt with by this Report are in agreement with the books of account.
d) Except for the possible effects of the matters described in the basis for qualifiedopinion paragraph in our opinion the aforesaid standalone financial statements complywith the Accounting Standards specified under Section 133 of the Act read with Companies(Accounting Standards) Rules 2006 as amended.
e) On the basis of the written representations received from the directors as on March312021 taken on record by the Board of Directors none of the directors is disqualifiedas on March 312021 from being appointed as a director in terms of Section 164 (2) of theAct.
f) With respect to the adequacy of internal financial control over financial reportingof the company and the operating effectiveness of such controls refer to our separatereport in Annexure-B.
g) In our opinion and to the best of our information and according to the explanationsprovided to us the remuneration paid by the company to its directors is in accordancewith the provisions of section 197 of the Act read with Schedule V of the Act.
h) With respect to the other matters to be included in the Auditors Report inaccordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014 as amended inour opinion and to the best of our information and according to the explanations given tous:
i. the Company has disclosed the impact of pending litigations on its financialposition in its financial statements. Refer note 28 to the Financial Statements;
ii. the Company did not have any long-term contracts including derivative contracts forwhich there were any material foreseeable losses;
iii. there were no amounts which were required to be transferred to the InvestorEducation and Protection Fund by the Company.
ANNEXURE "A" REFERRED TO IN PARAGRAPH 1 OF OUR REPORT OF EVEN DATE UNDERSECTION REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS
Tarini International Limited ("The Company")
i. a. The Company has maintained proper records showing full particulars
including quantitative details and situation of property plant and equipment.
b. A major portion of the property plant and equipment has been physically verified bythe management during the year pursuant to a programme for physical verification of fixedassets which in our opinion is reasonable having regard to the size of the Company andthe nature of its assets. According to the information and explanations provided to us nomaterial discrepancies were noticed on such verification.
c. According to the information and explanations provided to us title deeds ofimmovable properties are held in the name of the company.
ii. As per the information and explanations provided to us the company does not haveany inventory; therefore the clause 3 (ii) (a) (b) & (c) of the Companies (AuditorsReport) Order 2016 is not applicable to the company.
iii. According to the information and explanations provided to us the Company has
granted interest bearing unsecured loan to companies firms or other parties coveredin the register maintained under Section 189 of the Companies Act 2013. In respect ofsuch loans; '
a) In our opinion the terms and conditions of the loans granted by the company to 6group companies aggregating to Rs. 1252.46 Lakhs as at March 31 2021 are not prejudicialto the interest of the company.
b) The schedule of repayment of principal and payment of interest has not beenstipulated; hence we are unable to comment as to whether the repayment of principal andpayment of interest is regular.
c) As the schedule of repayment of principal and payment of interest has not beenstipulated we are unable to comment whether any amount is overdue and whether reasonablesteps have been taken by the company for recovery of principal and interest thereupon.
iv. According to the information and explanations provided to us the company hasgranted the loans made investment provided guarantees which outstanding as on March 312021. The company has not complied with the provisions of section 186 of the CompaniesAct 2013.
v. According to the information and explanations provided to us the Company has notaccepted any deposit as per the directives issued by the Reserve Bank of India and theprovisions of sections 73 to 76 or any other relevant provisions of the Companies Act2013 and the rules framed there under. No order against the Company has been passed by theCompany Law Board or National Company Law Tribunal or Reserve Bank of India or any Courtor any other Tribunal. Therefore the clause 3(v) of Companies (Auditors Report) Order2016 is not applicable.
vi. According to the information and explanations given to us the Company does notcovered under specified category for the maintenance of cost records under Sub Section (1)of Section 148 of the Companies Act 2013 as prescribed by the Central Governmenttherefore clause 3 (vi) of the Companies (Auditors Report) Order 2016 is not applicableto the company.
vii. a. According to the records of the company and Information & explanationprovided to us the Company during the year is generally regular in depositingundisputed statutory dues including provident fund income tax service tax and otherstatutory dues as applicable with the appropriate authorities except Rs. 11.59 Lakhstowards Service tax Rs. 28.05 lakhs towards Income Tax & Rs. 46.48 Lakhs towardsGoods & Service tax and which was outstanding as on March 31 2021 for more than sixmonths.
b. According to the information and explanation given to us there were no disputedamounts payable in respect of income tax sales tax service tax duty of customs valueadded tax or cess as at March 31 2021 except for the following:
|S. Name of the No Statute ||Nature of Dues ||Amount (Rs.) ||Period to which amount relates ||Forum where dispute is pending |
|1 Income tax Act ||Income tax ||1680080 ||A.Y. 2013-14 ||CIT - Appeals* |
|2 Income tax Act ||Income tax ||1226350 ||A.Y. 2012-13 ||CIT - Appeals* |
|3 Income tax Act ||Income tax ||3489680 ||A.Y.2011-12 ||CIT-Appeals* |
*Pursuant to the Honble Supreme Court Order dated 05.12.2017 the CIT- Appeal hastermed the entire proceeding/assessment as infructuous and disposed off.
viii. In our opinion and according to the information and explanations provided to usthe Company has not defaulted in repayment of dues to any financial institution or bank orGovernment. The Company has not issued any debentures.
ix. According to the information and explanations provided to us the company has notraised moneys by way of initial public offer or further public offer (including debtinstruments).
x. According to the information and explanations provided to us no fraud by theCompany or on the Company by its officers or employees have been noticed or reportedduring the year.
xi. According to the information and explanations provided to us and based on the auditprocedures conducted by us Remuneration has been paid or provided to a director inaccordance with the requisite approvals mandated by the provisions of section 197 readwith schedule V to the Companies Act 2013.
xii. In our opinion and according to the information and explanations provided to usthe Company is not a Nidhi Company therefore clause 3 (xii) of the Companies (AuditorsReport) Order 2016 is not applicable to the company.
xiii. In our opinion and according to the information and explanations provided to usall transactions with the related parties are in compliance with section 177 and 188 ofCompanies Act 2013 where applicable and the details have been disclosed in the FinancialStatements as required by the applicable accounting standards.
xiv. According to the information and explanations provided to us the company has notmade any preferential allotment or private placement of shares or fully or partlyconvertible debentures during the year therefore clause 3 (xiv) of the Companies(Auditors Report) Order 2016 is not applicable to the company.
xv. According to the information and explanations provided to us the company has notentered into any non-cash transactions with directors or persons connected with themtherefore clause 3 (xv) of the Companies (Auditors Report) Order 2016 is not applicableto the company.
xvi. In our opinion and according to the information and explanations provided to usthe Company is not required to be registered under section 45 IA of the Reserve Bank ofIndia Act 1934.
ANNEXURE "B" TO THE INDEPENDENT AUDITORS REPORT OF EVEN DATE ON THEFINANCIAL STATEMENTS OF TARINI INTERNATIONAL LIMITED
Report on the Internal Financial Controls over Financial Reporting under Clause (i) ofSub-section 3 of Section 143 of the Companies Act 2013 ("the Act")
We have audited the internal financial controls over financial reporting of TariniInternational Limited ("the Company") as of March 31 2021 in conjunction withour audit of the standalone financial statements of the Company for the year ended on thatdate.
Managements Responsibility for Internal Financial Controls
The Companys 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 companys 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 Companies Act 2013.
Our responsibility is to express an opinion on the Company's internal financialcontrols over financial reporting with reference to these standalone financial statementsbased on our audit. We conducted our audit in accordance with the Guidance Note on Auditof Internal Financial Controls Over Financial Reporting (the "Guidance Note")and the Standards on Auditing to the extent applicable to an audit of internal financialcontrols. botlrissued by the Institute of Chartered Accountants of India. Those Standardsand the
Guidance Note require that we comply with ethical requirements and plan and perform theaudit to obtain reasonable assurance about whether adequate internal financial controlsover financial reporting with reference to these standalone financial statements wasestablished and maintained and if such controls operated effectively in all materialrespects.
Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal financial controls system over financial reporting with reference to thesestandalone financial statements and their operating effectiveness.
Our audit of internal financial controls over financial reporting included obtaining anunderstanding of internal financial controls over financial reporting with reference tothese standalone financial statements assessing the risk that a material weakness existsand testing and evaluating the design and operating effectiveness of internal controlbased on the assessed risk. The procedures selected depend on the auditors judgmentincluding the assessment of the risks of material misstatement of the standalone financialstatements whether due to fraud or error.
We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for audit opinion on the internal financial controls over financialreporting with reference to these standalone financial statements.
Meaning of Internal Financial Controls Over Financial Reporting with Reference to theseStandalone Financial Statements
A company's internal financial control over financial reporting with reference to thesestandalone financial statements is a process designed to provide reasonable assuranceregarding the reliability of financial reporting and the preparation of financialstatements for external purposes in accordance with generally accepted accountingprinciples. A company's internal financial control over financial reporting with referenceto these standalone financial statements includes those policies and procedures that
(1) pertain to the maintenance of records that in reasonable detail accurately andfairly reflect the transactions and dispositions of the assets of the company;
(2) provide reasonable assurance that transactions are recorded as necessary to permitpreparation of financial statements in accordance with generally accepted accountingprinciples and that receipts and expenditures of the company are being made only inaccordance with authorizations of management and directors of the company; and
(3) provide reasonable assurance regarding prevention or timely detection ofunauthorized acquisition use or disposition of the company's assets that could have amaterial effect on the financial statements.
Inherent Limitations of Internal Financial Controls Over Financial Reporting withReference to these Standalone Financial Statements
Because of the inherent limitations of internal financial controls over financialreporting with reference to these standalone financial statements including thepossibility of collusion or improper management override of controls materialmisstatements due to error or fraud mav occur and not be detected. Also projections ofany evaluation of the internal financial controls over financial reporting with referenceto these standalone financial statements to future periods are subject to the risk thatthe internal financial control over financial reporting with reference to these standalonefinancial statements may become inadequate because of changes in conditions or that thedegree of compliance with the policies or procedures may deteriorate.
Basis for Qualified Opinion
In our opinion and according to the information and explanations given to us and basedon our audit the following material weaknesses have been identified as at March 31 2021:
The Company did not have appropriate internal financial controls over
(a) Assessment of impairment in value of long term equity investment and assessment ofimpairment in value of loans and advances to various parties
(b) Control over reconciliation of Creditors balances or other advances
(c) Control over the statutory compliances
(d) Assessment of expected cash requirement for the timely payment of statutory duessuch as Income tax Service tax GST and PF etc.
The inadequate supervisory and review control over Companys process in respect ofaforesaid assessment in accordance with the accounting principles generally accepted inIndia could potentially result in a material misstatement in preparation and presentationof standalone financial statement including the profit/loss after tax.
A material weakness is a deficiency or a combination of deficiencies ininternal financial control over financial reporting with reference to these standalonefinancial statements such that there is a reasonable possibility that a materialmisstatement of the company's annual or interim standalone financial statements will notbe prevented or detected on a timely basis.
In our opinion except for the possible effects of material weaknesses described in"basis of qualified opinion" paragraph above the Company has in all materialrespects an adequate internal financial controls system over financial reporting withreference to these standalone financial statements and such internal financial controlsover financial reporting with reference to these standalone financial statements wereoperating effectively as at March 31 2021 based on the internal control over financialreporting criteria established by the Company considering the essential components ofinternal control stated in the Guidance Note on Audit of Internal Financial Controls OverFinancial Reporting issued by the Institute of Chartered Accountants of India.
We have considered the material weaknesses identified and reported above in determiningthe nature timing and extent of audit tests applied in our audit of the standalonefinancial statements of the Company for the year ended on March 31 2021 and thesematerial weaknesses have affected our opinion on the standalone financial statements ofthe Company and we have issued a qualified opinion on the standalone financial statements