To the Members of Toyam Industries Limited
Report on the Audit of the Standalone Financial Statements
We have audited the standalone financial statements of Toyam Industries Limited("the Company") which comprise the balance sheet as at 31st March 2019 and thestatement of Profit and Loss statement of changes in equity and statement of cash flowsfor the year then ended and notes to the financial statements including a summary ofsignificant accounting policies and other explanatory information.
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 Act in the manner so required and give a true and fair view in conformity with theaccounting principles generally accepted in India of the state of affairs of the Companyas at March 31 2019 and profit/loss changes in equity and its cash flows for the yearended on that date.
Basis for Opinion
We conducted our audit in accordance with the Standards on Auditing (SAs) specifiedunder section 143(10) of the Companies Act 2013. Our responsibilities under thoseStandards are further described in the Auditor's Responsibilities for the Audit of theFinancial 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 together with the ethical requirements that are relevant to our audit of thefinancial statements under the provisions of the Companies Act 2013 and the Rulesthereunder and we have fulfilled our other ethical responsibilities in accordance withthese requirements and the Code of Ethics. We believe that the audit evidence we haveobtained is sufficient and appropriate to provide a basis for our opinion.
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.
Description of each key audit matter in accordance with SA 701:
|The Key Audit Matter ||How the matter was addressed in our |
| ||Audit |
|Inter Corporate Loans || |
|The value of loans as at 31st March 2019 is significant and there is a high degree of complexity and judgement involved for the company in the estimating individual and collective credit impairment provisions and write-offs against these loans. ||Our audit procedure included considering the appropriateness of the company's accounting policies for impairment of financial assets and assessing compliance with Ind AS 109. |
|The Company's impairment provision for receivables from financing business is based on the expected credit loss approach laid down under Ind AS 109. Under this approach the management has been required to exercise judgement in areas such as; ||For loans which are assessed for impairment on a portfolio basis we performed particularly the following procedures: |
| ||- We understood the methodology and policy laid down for loans given by the company. |
| ||- we have verified the existence of recovery process plant in the event of default. |
|- calculation of past default rates || |
|- applying macro-economics factors to arrive at forward looking probability of default; and ||- we have verified the historical trends of repayment of principal amount of loan and repayment of interest. |
|- significant assumption regarding the probability of various scenarios and discounting rates for different industries considering individual borrower profile. ||- we tested the reliability of the key data inputs and related management controls. |
|In view of the high degree of estimation involved in the process of calculation impairment provision and considering its significance to the overall Ind AS financial statement whereby any error or omission in estimation may give rise to a material misstatement of Ind AS financial statements it is considered as a key audit matter. ||- we have assessed the assumptions made by the company in making provision considering forward looking information. |
|Refer Note 8 to the standalone financial statements. || |
|Measurement of Investment in accordance with Ind AS 109 "Financial Instruments" ||Principal Audit procedure: |
|On initial recognition investment are recognized at fair value in vase of investment which are recognized at fair value through FVOCI. In that case that transaction costs are attributable to the acquisition value of the investments. || Obtaining an understanding of the companies objectives for such investments and assessment thereof in terms of Ind AS 109. |
|The Company's investment are subsequently classified into following categories based on the objective to manage the cash flows and options available in the standard: || Obtaining an understanding of the determination of the measurement of the investments and tested the reasonableness of the significant judgement applied by the management. |
| At amortised cost || Evaluated the design of internal controls relating to measurement and also tested the operating effectiveness of the aforesaid controls. |
| At fair value through profit or loss (FVTPL) || Obtaining understanding of basis of valuation adopted in respect of fair value investment and ensured that valuation techniques used are appropriate in circumstances and for which sufficient data are available to measure fair value. |
| At fair value through Other comprehensive Income (FVTOCI) || |
|The company has assessed following two objectives: || |
| Held to collect contractual cash flows. || Assessed the appropriateness of the discloser in the standalone financial statements in accordance with the applicable financial reporting framework. |
| Realising cash flows through sale of investments. The Company makes decision based on assets fair value and manages the assets to realize those fair values. || |
|Since valuation of investment at fair value involves critical assumptions significant risk in valuation and complexity in assessment of objectives the valuation of investments as per Ind AS 109 is determined to be a key audit matter in our audit of the standalone financial statements. || |
|Refer Note 3 to the standalone financial statements. || |
Emphasis of Matters
We draw attention to -
1. During the year the Company has recognized fair value of its Investments held inMoryo Industries Limited which was valued at nominal value in earlier year. Effect of Fairvalue measurement was recognized under Other Comprehensive Income to the extent of Rs.2896551/-. The aforesaid recognition is pursuant to exchange notice no. 20180613 datedJune 13 2018 for moving aforesaid company out of GSM III framework.
2. During the year the company has provided for Bad Debts to the extent of Rs.2568663/- (Previous year Rs. 4451488/-) against non-recoverability of Principal and/orInterest on Loans. Company is following up with these parties for recovery however we havenot provided with documentary evidences of the follow ups.
3. Sundry Debtors includes amount of Rs. 16860881/- which is due for more than ayear. No provision has been made in the books as in the opinion of the management amountis fully recoverable.
4. Refer to no. 15 of the Financial statement where the revenue is from Advertisementincome arising out of Event business is Rs. 11624980/- whereas direct expenses for theaforesaid event is Rs. 56672497/-. The Company has made net direct loss of Rs.45047517/- from the aforesaid segment (Note no. 17 of the Financial statement).
Management's Responsibility for the Standalone Financial Statements
The Company's Board of Directors is responsible for the matters stated in section134(5) of the Companies Act 2013 ("the Act") with respect to the preparation ofthese standalone financial statements that give a true and fair view of the financialposition financial performance (changes in equity)5 and cash flows of the Company inaccordance with6 the accounting principles generally accepted in India including theaccounting Standards specified under section 133 of the Act. This responsibility alsoincludes maintenance of adequate accounting records in accordance with the provisions ofthe Act for safeguarding of the assets of the Company and for preventing and detectingfrauds and other irregularities; selection and application of appropriate accountingpolicies; making judgments and estimates that are reasonable and prudent; and designimplementation and maintenance of adequate internal financial controls that wereoperating effectively for ensuring the accuracy and completeness of the accountingrecords relevant to the preparation and presentation of the financial statement that givea true and fair view and are free from material misstatement whether due to fraud orerror.
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 the Company's financialreporting process.
Auditor's 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 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 financial statements.
Paragraph 40(b) of this SA explains that the shaded material below can be located in anAppendix to the auditor's report. Paragraph 40(c) explains that when law regulation orapplicable auditing standards expressly permit reference can be made to a website of anappropriate authority that contains the description of the auditor's responsibilitiesrather than including this material in the auditor's report provided that the descriptionon the website addresses and is not inconsistent with the description of the auditor'sresponsibilities below.
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. Under section 143(3)(i)of the Companies Act 2013 we are also responsible for expressing our opinion on whetherthe company has adequate internal financial controls system in place and the operatingeffectiveness of such controls.
Evaluate the appropriateness of accounting policies used and the reasonablenessof accounting estimates and related disclosures made by management.
Conclude on the appropriateness of management's use of the going concern basisof accounting and based on the audit evidence obtained whether a material uncertaintyexists related to events or conditions that may cast significant doubt on the Company'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 financial statements or if such disclosures are inadequate to modify our opinion.Our conclusions are based on the audit evidence obtained up to the date of our auditor'sreport. However future events or conditions may cause the Company to cease to continue asa 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.
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 ourauditor's 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.
1. In certain cases the Company has not charged interest on Loans and advances givento parties. The non-charging interest makes these loans Interest free loans and therebyviolates section 186(7) of the Companies Act 2013. Effect on the aforesaid cannot bequantified.
2. During the year Company has taken and/or repaid Unsecured Loan from its ManagingDirector on several occasions. In absence of written agreement the purpose of theseloans terms and conditions etc. are not clear as to why it has been obtained and repaid.
3. During the year Company has taken Unsecured Loans from various parties to the extentof Rs. 22400000/-. In the absence of written agreement requisite details we wereunable to verify the purpose of these loans terms and conditions beneficial owners etc.
4. The Loans and Advances given are closely monitored by Board of Directors andtherefore no appraisal renewal policies procedures and documents has been executed.
Our opinion is not modified in respect of this matter.
Report on Other Legal and Regulatory Requirements
As required by 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 Companies Act 2013 we give in the Annexure a statement on the matters specified inparagraphs 3 and 4 of the Order to the extent applicable.
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 and the Cash Flow Statementdealt with by this Report are in agreement with the books of account.
(d) 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 (Accounts) Rules
(e) On the basis of the written representations received from the directors as on 31stMarch 2019 taken on record by the Board of Directors none of the directors isdisqualified as on 31st March 2019 from being appointed as a director in terms of Section164 (2) of the Act.
(f) With respect to the adequacy of the internal financial controls over financialreporting of the
Company and the operating effectiveness of such controls refer to our separate Reportin "Annexure A".
(g) With respect to the other matters to be included in the Auditor's Report inaccordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014 in our opinionand to the best of our information and according to the explanations given to us:
1. The Company has disclosed the impact of pending litigations on its financialposition in its financial statements.
2. The Company did not have any long-term contracts including derivative contracts forwhich there were any material foreseeable losses.
3. There has been no delay in transferring amounts required to be transferred to theInvestor Education and Protection Fund by the Company. 4.
ANNEXURE A TO THE AUDITORS' REPORT
The Annexure referred to in our Independent Auditors' Report to the members of theCompany on the standalone financial statements for the year ended March 31st 2019 wereport that:
(i) (a) The Company has maintained proper records showing full particularsincluding quantitative details and situation of fixed assets.
(b) The Company has a regular program of physical verification of its fixed assets bywhich fixed assets are verified in a phased manner over a period of one years. Inaccordance with this program certain fixed assets were verified during the year and nomaterial discrepancies were noticed on such verification. In our opinion this periodicityof physical verification is reasonable having regard to the size of the Company and thenature of its assets.
(c) There are no immovable properties held by the Company.
(ii) (a) There are no inventories held by the Company.
(iii) (a) The Company has granted loans to one party covered in the registermaintained under section 189 of the Companies Act2013 (the Act')
(b)In the case of the loans granted to any parties in the register maintained undersection 189 of the act the borrowers have been regular in the payment of the interest asstipulated. The terms of arrangements do not stipulate any repayment schedule and theloans are repayable on demand. Accordingly paragraph 3(ii) (b) of the order is notapplicable to the company in respect of payment of the principal amount.
(c) There are no overdue amounts for period of more than ninety days in respect of theloans granted to the bodies corporate listed in the register maintained under section 189of the act.
(iv) In our opinion and according to the information and explanations given to usthe Company has complied with provision of section 185 and 186 of Act with respect to theloan and investment made except for certain instances where Interest has not been chargedon certain Loans and Advances made.
(v) The Company has not accepted any deposits during the year within the meaning ofthe provisions of section 73 to 76 or any other relevant provisions of the Companies Actand the rules framed there under.
(vi) The Central Government has not prescribed the maintenance of cost recordsunder section148 (1) of the Act for any of the services rendered by the Company
(vii) (a) According to the information and explanations given to us and on thebasis of our examination of the records the Company is regular in depositing undisputedstatutory dues including provident fund income tax service tax cess and other materialstatutory dues with the appropriate authorities. As explained to us the Company did nothave any dues on account of sales tax wealth tax duty of customs value added taxemployees' state insurance and duty of excise.
(b) According to the information and explanation given to us there is no disputepending in respect of dues of provident fund/sales tax/wealth tax/service tax/customduty/excise duty/cess/value added tax were in arrears as at 31st march 2019 for a periodof more than six month from the date they became payable. According to the records of theCompany income-tax.
|Name of the Statute ||Nature of dues ||Amount (in Rs. is) ||Period to which it relates ||Form where the Dispute is pending |
|Income Tax Act 1961 ||Income tax dues ||42070 ||A.Y. 2010-11 ||Assessing Officer |
(viii) The Company did not have any outstanding dues to financial institutionsbanks or debenture holders during the year.
(ix) The Company did not raise any money by way of initial public offer orfurther public offer (including debt instruments) and term loans during the year.Accordingly paragraph 3 (ix) of the Order is not applicable.
(x) Based upon the audit procedure performed for purpose of reporting the trueand fair view of the Financial Statements and According to the information andexplanations given to us no material fraud on or by the Company has been noticed orreported during the course of our audit.
(xi) According to the information and explanations given to us and based on ourexamination of the record of the Company managerial remuneration has been paid/providedin accordance with the requisite approvals.
(xii) In our opinion and according to the information and explanations given to usthe company is not Nidhi Company. Accordingly paragraph 3(xii) of Order is notapplicable.
(xiii) According to the information and explanations given to us and based onour examination of the records of the Company transactions with the related parties arein compliance with sections 177 and 188 of the Act where applicable and details of suchtransactions have been disclosed in the Standalone financial statements as required by theapplicable accounting standards.
(xiv) The company has not made any preferential allotment or private placement ofshares or fully or partly convertible debentures during the year under review.
(xv) According to the information and explanations given to us and based on ourexamination of the record of the Company the company has not entered into any non-cashtransactions with directors or persons connected with him.
(xvi) According to the information and explanations given to us the provisionsof the section 45-IA of the Reserve Bank of India Act 1934 are not applicable to thecompany.
ANNEXURE B TO THE AUDITORS' REPORT
Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section143 of the Companies Act 2013 ("the Act")
We have audited the internal financial controls over financial reporting of ToyamIndustries Limited ('the Company') as of 31st March 2019 in conjunction with our auditof the standalone 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 FinancialReporting (the "Guidance Note") issued by the Institute of Chartered Accountantsof India (the "ICAI"). These responsibilities include the design implementationand maintenance of adequate internal financial controls that were operating effectivelyfor ensuring the orderly and efficient conduct of its business including adherence to theCompany's policies safeguarding of its assets prevention and detection of frauds anderrors accuracy and completeness of the accounting records and timely preparation ofreliable financial information 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 issued by ICAI and deemedto be prescribed under section 143(10) of the Companies Act 2013 to the extentapplicable to an audit of internal financial controls both applicable to an audit ofInternal Financial Controls and both issued by the Institute of Chartered Accountants ofIndia. Those Standards and the Guidance Note require that we comply with ethicalrequirements and plan and perform the audit to obtain reasonable assurance about whetheradequate internal financial controls over financial reporting was established andmaintained and if such controls operated effectively in all material respects. Our auditinvolves performing procedures to obtain audit evidence about the adequacy of the internalfinancial controls system over financial reporting and their operating effectiveness.
Our audit of internal financial controls over financial reporting included obtaining anunderstanding of internal financial controls over financial reporting assessing the riskthat a material weakness exists and testing and evaluating the design and operatingeffectiveness of internal control based on the assessed risk. The procedures selecteddepend on the auditor's judgment including the assessment of the risks of materialmisstatement of the financial statements whether due to fraud or error. We believe thatthe audit evidence we have obtained is sufficient and appropriate to provide a basis forour audit opinion on the Company's internal financial controls system over financialreporting.
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 financial statements for external purposes in accordance with generallyaccepted accounting principles. A company's internal financial control over financialreporting 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
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 the company has in all material respects an adequate internalfinancial control system over financial reporting and such internal financial controlsover financial reporting were operating effectively as at march 312019 based on theinternal control over financial reporting criteria established by the company consideringthe essential components of internal control stated in the guidance note on audit ofinternal financial control over financial reporting issued by the Institute of CharteredAccountant of India. However considering the change in core business activities it isrecommended that company should update its current IFC to meet extend businessrequirements.
FOR R SONI & COMPANY
Firm's registration number: 130349W