TO THE MEMBERS OF THE HI-TECH GEARS LIMITED
Report on the Audit of the Standalone Financial Statements
We have audited the accompanying standalone financial statements of THEHI-TECH GEARS LIMITED ("the Company") which comprise the Balance Sheet as atMarch 31 2021 the Statement of Profit and Loss (including Other Comprehensive Income)the Statement of Changes in Equity and the Statement of Cash Flows for the year ended onthat date and notes to the financial statements including a summary of the significantaccounting policies and other explanatory information (hereinafter referred to as"the standalone financial statements").
In our opinion and to the best of our information and according to theexplanations given to us the aforesaid standalone financial statements give theinformation required by the Companies Act 2013 ("the Act") in the manner sorequired and give a true and fair view in conformity with the Indian Accounting Standardsprescribed under section 133 of the Act read with the Companies (Indian AccountingStandards) Rules 2015 as amended ("Ind AS") and other accounting principlesgenerally accepted in India of the state of affairs of the Company as at March 31 2021its profit and total comprehensive income changes in equity and its cash flows for theyear ended on that date.
Basis for Opinion
We conducted our audit of the standalone financial statements inaccordance with the Standards on Auditing (SAs) specified under section 143(10) of theAct. Our responsibilities under those Standards are further described in the Auditor'sResponsibilities for the Audit of the Standalone Financial Statements section ofour report. We are independent of the Company in accordance with the Code of Ethicsissued by the Institute of Chartered Accountants of India (ICAI) together with the ethicalrequirements that are relevant to our audit of the standalone financial statements underthe provisions of the Act and the Rules made there under and we have fulfilled our otherethical responsibilities in accordance with these requirements and the ICAI's Code ofEthics. We believe that the audit evidence we have obtained is sufficient and appropriateto provide a basis for our audit opinion on the standalone financial statements.
Emphasis of matter
We draw attention to Note 46 to the standalone financial statementswhich describes the possible effect of uncertainties relating to Covid-19 pandemic on theCompany's financial performance as assessed by the management. Our opinion is notmodified in respect of the above matter.
Key audit matters are those matters that in our professional judgmentwere of most significance in our audit of the standalone financial statements of thecurrent period. These matters were addressed in the context of our audit of the standalonefinancial statements as a whole and in forming our opinion thereon and we do not providea separate opinion on these matters. We have determined the matters described below to bethe key audit matters to be communicated in our report.
|Key audit matters ||Auditor's Response |
|1. Contingent liabilities || |
|There are legal and tax cases against the Company which have been identified as a key audit matter due to the uncertainties involved in these tax and legal claims and significant judgment is required. ||Audit procedures in respect of this area: |
|Refer to the note no.38 "Contingent liabilities" to the notes to the standalone financial statements. || We gained an understanding of the process of identification of legal and tax cases and evaluated the design and implementation of controls in respect of these contingent liabilities. |
| || For legal and tax matters our procedures included testing key controls surrounding litigation and tax procedures; discussing matters with the Company's litigation and tax teams; and assessing management's conclusions through understanding precedents set in similar cases. |
| || Validated the completeness and appropriateness of the related disclosures with regard to the facts and circumstances of the legal and tax matters. |
|2. Borrowings || |
|The Company had a borrowing liability (current and non- current) of 2036.52 million as at 31st March 2021. The borrowings are under agreements with terms and conditions detailed in notes no. 19A and 19B to the notes of the standalone financial statements. ||Audit procedures in respect of this area: |
|Keeping in view the size of the borrowings the Company's borrowings is considered as key audit matter. || We have gone through the agreements between the Company and its lenders. |
| || We obtained confirmations from the Company's banks/financial institutions to confirm the outstanding balances. |
| || Where debt is regarded as non-current we tested whether the Company has the unconditional right to defer payment such that there were no repayments required within 12 months from the balance sheet date. |
| || We further considered whether the disclosures related to the borrowings in the standalone financial statements are appropriate in all material respects. |
Information Other than the Standalone Financial Statements andAuditor's Report Thereon
The Company's Board of Directors is responsible for the otherinformation. The other information comprises the information included in the ManagementDiscussion & Analysis Report and Board's Report including Annexures toBoard's Report but does not include the standalone financial statements and ourauditor's report thereon. The Management Discussion & Analysis Report andBoard's Report including Annexures to Board's Report is expected to be madeavailable to us after the date of this auditor's report.
Our opinion on the standalone financial statements does not cover theother information and we will not express any form of assurance conclusion thereon.
In connection with our audit of the standalone financial statementsour responsibility is to read the other information identified above when it becomesavailable and in doing so consider whether the other information is materiallyinconsistent with the standalone financial statements or our knowledge obtained in theaudit or otherwise appears to be materially misstated.
When we read the Management Discussion & Analysis Report and BoardsReport if we conclude that there is a material misstatement therein we are required tocommunicate the matter to those charged with governance.
Management's Responsibility for the Standalone FinancialStatements
The Company's Board of Directors is responsible for the mattersstated in section 134(5) of the Act with respect to the preparation of these standalonefinancial statements that give a true and fair view of the financial position financialperformance total comprehensive income changes in equity and cash flows of the Companyin accordance with the Ind AS and other accounting principles generally accepted in India.
This responsibility also includes maintenance of adequate accountingrecords in accordance with the provisions of the Act for safeguarding the assets of theCompany and 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 management isresponsible for assessing the Company's ability to continue as a going concerndisclosing as applicable matters related to going concern and using the going concernbasis of accounting unless management either intends to liquidate the Company or to ceaseoperations or has no realistic alternative but to do so.
The Board of Directors are also responsible for overseeing theCompany's financial reporting process.
Auditor's Responsibilities for the Audit of the StandaloneFinancial Statements
Our objectives are to obtain reasonable assurance about whether thestandalone financial statements as a whole are free from material misstatement whetherdue 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 auditconducted in accordance with SAs will always detect a material misstatement when itexists. Misstatements can arise from fraud or error and are considered material ifindividually or in the aggregate they could reasonably be expected to influence theeconomic decisions of users taken on the basis of these standalone financial statements.
As part of an audit in accordance with SAs we exercise professionaljudgment and maintain professional skepticism throughout the audit. We also:
Identify and assess the risks of material misstatement ofthe standalone financial statements whether due to fraud or error design and performaudit procedures responsive to those risks and obtain audit evidence that is sufficientand appropriate to provide a basis for our opinion. The risk of not detecting a materialmisstatement resulting from fraud is higher than for one resulting from error as fraudmay involve collusion forgery intentional omissions misrepresentations or the overrideof internal control.
Obtain an understanding of internal controls 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 andthe reasonableness of accounting estimates and related disclosures made by management
Conclude on the appropriateness of management's use ofthe going concern basis of accounting and based on the audit evidence obtained whether amaterial uncertainty exists related to events or conditions that may cast significantdoubt on the Company's ability to continue as a going concern. If we conclude that amaterial uncertainty exists we are required to draw attention in our auditor'sreport to the related disclosures in the standalone financial statements or if suchdisclosures are inadequate to modify our opinion. Our conclusions are based on the auditevidence obtained up to the date of our auditor's report. However future events orconditions may cause the Company to cease to continue as a going concern.
Evaluate the overall presentation structure and content ofthe standalone financial statements including the disclosures and whether the standalonefinancial statements represent the underlying transactions and events in a manner thatachieves fair presentation.
We communicate with those charged with governance regarding amongother matters the planned scope and timing of the audit and significant audit findingsincluding any significant deficiencies in internal control that we identify during ouraudit.
We also provide those charged with governance with a statement that wehave complied with relevant ethical requirements regarding independence and tocommunicate with them all relationships and other matters that may reasonably be thoughtto bear on our independence and where applicable related safeguards.
From the matters communicated with those charged with governance wedetermine those matters that were of most significance in the audit of the standalonefinancial statements of the current period and are therefore the key audit matters. Wedescribe these matters in our auditor's report unless law or regulation precludespublic disclosure about the matter or when in extremely rare circumstances we determinethat a matter should not be communicated in our report because the adverse consequences ofdoing so would reasonably be expected to outweigh the public interest benefits of suchcommunication.
Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditor's Report) Order 2016("the Order") issued by the Central Government in terms of Section 143(11) ofthe Act we give in "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 based on our audit wereport that:
a) We have sought and obtained all the information and explanationswhich to the best of our knowledge and belief were necessary for the purposes of ouraudit.
b) 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 including OtherComprehensive Income Statement of Changes in Equity and the Statement of Cash Flow dealtwith by this Report are in agreement with the relevant books of account.
d) In our opinion the aforesaid standalone financial statements complywith the Ind AS 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 thedirectors as on March 31 2021 taken on record by the Board of Directors none of thedirectors is disqualified as on March 31 2021 from being appointed as a director in termsof Section 164 (2) of the Act.
f) With respect to the adequacy of the internal financial controls overfinancial reporting of the Company and the operating effectiveness of such controls referto our separate Report in "Annexure B".
g) With respect to the other matters to be included in theAuditor's Report in accordance with the requirements of section 197(16) of the Actas amended: In our opinion and to the best of our information and according to theexplanations given to us the remuneration paid by the Company to its directors during theyear is in accordance with the provisions of section 197 of the Act.
h) With respect to the other matters to be included in theAuditor' s Report in accordance with Rule 11 of the Companies (Audit and Auditors)Rules 2014 as amended in our opinion and to the best of our information and accordingto the explanations given to us:-
a) The Company has disclosed the impact of pending litigations on itsfinancial position in its standalone financial statements-Refer Note 38 to the standalonefinancial statements;
b) The Company has made provision as required under the applicable lawor accounting standards for material foreseeable losses if any on long-term contractsincluding derivative contracts - Refer Note 44 to the Financial Statements.
c) There has been no delay in transferring amount required to beTransferred to the Investor Education and Protection Fund by the Company.
Annexure A' To the Independent Auditors' Report
The Annexure referred to in Independent Auditors' Report to themembers of the Company on the standalone financial statements for the year ended March 312021 we report that:
(i) In respect of Companys Fixed Assets
(a) The Company has maintained proper records showing full particularsincluding quantitative details and situation of fixed assets.
(b) The Company has a regular programme of verification of fixedassets. All the fixed assets except furniture and fixtures and office equipments have beenphysically verified by the management during the year which in our opinion is reasonablehaving regard to size of the Company and nature of fixed assets. No material discrepancieswere noticed on such verification.
(c) On the basis of information and explanation provided by themanagement the title deeds of immovable properties are held in the name of the Company.
(ii) According to information and explanation given to us inventorieshave been physically verified by the management during the year except forstock-in-transit. In our opinion the frequency of such verification is reasonable. Nomaterial discrepancies were noticed on physical verification of inventories by themanagement.
(iii) According to the information and explanations given to us theCompany has not granted any loan secured or unsecured to companies firms LimitedLiability Partnerships (LLPs) or other parties covered in the register maintained underSection 189 of the Act.
Accordingly the provisions of paragraphs 3(iii)(a) 3(iii)(b) and3(iii)(c) of the Order are not applicable to the Company.
(iv) According to the information and explanations given to us theCompany has not entered into any transaction covered under Sections 185 of the Act. TheCompany has not granted any loans and has not provided any guarantees or securities thecompany has complied with the provisions of Section 186 of the Act in respect ofinvestments made.
(v) In our opinion and according to the information and explanationgiven to us the Company has not accepted any deposits from the public in accordance withthe provisions of Sections 73 to 76 of the Act and the rules framed thereunder.Accordingly paragraph 3(v) of the Order is not applicable to the Company.
(vi) We have broadly reviewed the books of account maintained by theCompany pursuant to the rules prescribed by the Central Government for the maintenance ofcost records under sub-section (I) of Section 148 of the Act and are of the opinion thatprima facie the prescribed accounts and records have been made and maintained. Howeverwe have not made a detailed examination of the records.
(vii) According to the information and explanations given to us inrespect of statutory dues:
(a) The Company is generally regular in depositing undisputed statutorydues including provident fund employees' state insurance income tax duty ofcustoms goods and service tax cess and other applicable statutory dues with theappropriate authorities.
There were no undisputed amounts payable in respect of provident fundemployees' state insurance income tax sales tax service tax value added tax dutyof excise duty of customs goods and service tax cess and other applicable statutorydues in arrears as at March 31 2021 for a period of more than six months from the datethey became payable.
(b) According to the information and explanations given to us thereare no dues of income tax sales tax value added tax service tax goods and service taxduty of customs duty of excise which have not been deposited with the appropriateauthorities on account of any dispute other than those mentioned as under:
|Name of the Statue ||Nature of Dues ||Period to which the amount relates ||Amount (Rs. In Mn) ||Forum Where Dispute is Pending |
|Income Tax Act 1961 ||Income Tax ||A.Y. 2017-18 ||9.48 ||Deputy Commissioner of Income Tax New Delhi |
|Income Tax Act 1961 ||Income Tax ||A.Y.2017-18 ||0.12 ||Deputy Commissioner of Income Tax New Delhi |
|Income Tax Act 1961 ||Income Tax ||A.Y. 2018-19 ||7.51 ||Deputy Commissioner of Income Tax New Delhi |
|Income Tax Act 1961 ||Income Tax ||A.Y 2019-20 ||2.66 ||Deputy Commissioner of Income Tax New Delhi |
|Goods & Service Tax ||Goods & Service Tax ||July 2017 to September 2017 ||16.95 ||Deputy Commissioner (Appeals) Estate GST Alwar Rajasthan |
|Finance Act 1994 ||Service Tax ||December 2015 to August 2016 ||0.03 ||Deputy Commissioner (Appeals) Estate GST Alwar Rajasthan |
|Finance Act 1994 ||Service Tax ||November 2016 to June 2017 ||0.01 ||Deputy Commissioner (Appeals) Estate GST Alwar Rajasthan |
|Finance Act 1994 ||Service Tax ||June 2016 ||0.10 ||Deputy Commissioner (Appeals) Estate GST Alwar Rajasthan |
(viii) Based on our audit procedures and according to the informationand explanations given by the management the Company has not defaulted in repayment ofdues to any bank or to any financial institution. The Company has not borrowed any loanfrom Government. The Company has not issued any debentures.
(ix) The Company has not raised any money by way of initial publicoffer or further public offer (including debt instruments). Based on our audit proceduresand on the information given by the management we report that term loans have beenutilized for the purpose for which they have been raised.
(x) According to the information and explanations given to us no fraudon or by the company has been noticed or reported during the course of our Audit.
(xi) The Company has paid or provided for managerial remuneration inaccordance with the requisite approvals mandated by the provisions of section 197 readwith Schedule V to Act.
(xii) The Company is not a nidhi Company. Accordingly paragraph 3(xii)of the Order is not applicable to the Company.
(xiii) According to the information and explanations given to us andbased on our examination of the records of the Company transactions with the relatedparties are in compliance with section 177 and 188 of the Act where applicable anddetails of such transactions have been disclosed in the standalone financial statements asrequired by the applicable Indian Accounting Standards.
(xiv) The Company has not made any preferential allotment or privateplacement of shares or fully or partly convertible debentures during the year.Accordingly paragraph 3(xiv) of the Order is not applicable to the Company.
(xv) According to the information and explanations given to us andbased on our examination of the records the Company has not entered into non-cashtransactions with directors or persons connected with him. Accordingly paragraph 3(xv) ofthe Order is not applicable to the Company.
(xvi) The Company is not required to be registered under section 45-IAof the Reserve Bank of India Act 1934. Accordingly paragraph 3(xvi) of the Order is notapplicable to the Company.
Annexure B' To the Independent Auditors' Report
(Referred to in paragraph 2(f) under Report on Other Legal andRegulatory Requirements' section of our report of even date to the Members of theCompany)
Report on the Internal Financial Controls under Clause (i) ofSubsection 3 of Section 143 of the Companies Act 2013 ("the Act")
We have audited the internal financial controls over financialreporting of The Hi-Tech Gears Limited ("the Company") as of March 312021 in conjunction with our audit of the standalone financial statements of the Companyfor the year ended on that date.
Management's Responsibility for Internal Financial Controls
The Company's management is responsible for establishing andmaintaining internal financial controls 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(ICAl'). These responsibilities include the design implementation andmaintenance of adequate internal financial controls that were operating effectively forensuring the orderly and efficient conduct of its business including adherence toCompany's policies the safeguarding of its assets the prevention and detection offrauds and errors the accuracy and completeness of the accounting records and the timelypreparation of reliable financial information as required under the Companies Act 2013.
Our responsibility is to express an opinion on the Company'sinternal financial controls over financial reporting based on our audit. We conducted ouraudit in accordance with the Guidance Note on audit of Internal Financial Controls overFinancial Reporting (the "Guidance Note") and the Standards on Auditing issuedby ICAI and deemed to be prescribed under section 143(10) of the Companies Act 2013 tothe extent applicable to an audit of internal financial controls both applicable to anaudit of Internal Financial Controls and both issued by the Institute of CharteredAccountants of India. 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 aboutthe adequacy of the internal financial controls system over financial reporting and theiroperating effectiveness. Our audit of internal financial controls over financial reportingincluded obtaining an understanding of internal financial controls over financialreporting assessing the risk that a material weakness exists and testing and evaluatingthe design and operating effectiveness of internal control based on the assessed risk. Theprocedures selected depend on the auditor's judgment including the assessment of therisks of material misstatement of the financial statements whether due to fraud or error.
We believe that the audit evidence we have obtained is sufficient andappropriate to provide a basis for our audit opinion on the Company's internalfinancial controls system over financial reporting.
Meaning of Internal Financial Controls with reference to FinancialStatements
A company's internal financial control over financial reporting isa process 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 controlover financial reporting includes those policies and procedures that
(1) pertain to the maintenance of records that in reasonable detailaccurately and fairly reflect the transactions and dispositions of the assets of thecompany;
(2) provide reasonable assurance that transactions are recorded asnecessary to permit preparation of financial statements in accordance with generallyaccepted accounting principles and that receipts and expenditures of the company arebeing made only in accordance with authorisations of management and directors of thecompany; and
(3) provide reasonable assurance regarding prevention or timelydetection of unauthorised acquisition use or disposition of the company's assetsthat could have a material effect on the standalone financial statements.
Inherent Limitations of Internal Financial Controls with reference toFinancial Statements
Because of the inherent limitations of internal financial controls overfinancial reporting 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 overfinancial reporting to future periods are subject to the risk that the internal financialcontrol over financial reporting may become inadequate because of changes in conditionsor that the degree of compliance with the policies or procedures may deteriorate.
In our opinion to the best of our information and according to theexplanations given to us the Company has in all material respects an adequate internalfinancial controls system over financial reporting and such internal financial controlsover financial reporting were operating effectively as at March 31 2021 based on"the internal control over financial reporting criteria established by the Companyconsidering the essential components of internal control stated in the Guidance Note onAudit of Internal Financial Controls Over Financial Reporting issued by the Institute ofChartered Accountants of India.
| ||FOR O.P.DADU & CO. |
| ||CHARTERED ACCOUNTANTS |
| ||FRN. 001201N |
|PLACE : NEW DELHI ||(AMIT GUPTA) |
|DATED: 29TH JUNE 2021 ||PARTNER |
| ||M.NO. 094202 |
| ||UDIN : 21094202AAAAAU8038 |