TO THE MEMBERS OF UFLEX LIMITED
Report on the Audit of the Standalone Financial Statements
We have audited the accompanying Standalone Financial Statements of Uflex Limited("the Company") which comprise the Balance Sheet as at March 312020 theStatement of Profit and Loss (including Other Comprehensive Income) the Statement ofChanges in Equity the Cash Flow Statement for the year then ended notes to the financialstatements including a summary of the significant accounting policies and otherexplanatory information (hereinafter referred to as "the Standalone FinancialStatements").
In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid Standalone Financial Statements give the information requiredby the Companies Act 2013 as amended ("the Act") in the manner so required andgive a true and fair view in conformity with the Indian Accounting Standards (Ind AS)prescribed under Section 133 of the Act read with the Companies (Indian AccountingStandards) Rules 2015 as amended and other accounting principles generally accepted inIndia of the state of afl'airs of the Company as at March 312020 the profit and totalcomprehensive income changes in equity and its cash flows for the year ended on thatdate.
Basis for Opinion
We conducted our audit of the Standalone Financial Statements in accordance with theStandards on Auditing (SAs) as specified under Section 143(10) of the Act. Ourresponsibilities under those Standards are further described in the Auditor'sResponsibilities for the Audit of the Standalone Financial Statements sectionof our 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 thereunder 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.
Key Audit Matters
Key audit matters are those matters that in our professional judgment were of mostsignificance in our audit of the Standalone Financial Statements of the current year.These matters were addressed in the context of our audit of the Standalone FinancialStatements as a whole and in forming our opinion thereon and we do not provide aseparate opinion on these matters. We have determined the matters described below to bethe key audit matters to be communicated vide this report:
|Key Audit Matter ||Auditor's Response |
|Impact of COVID-19 on Standalone Financial Statements and audit procedures || |
|The outbreak of Coronavirus disease 2019 (COVID-2019) has created an unprecedented global health crisis that has deep impact on the businesses and economy. After COVID-19 was declared a Public Health Emergency of International Concern by the World Health Organization on February 11 2020 Governments in several countries including Indian Government have imposed stringent lockdown and restrictions which has led to significant adverse changes in macroeconomic conditions - constraints on supply chain sourcing of inputs and workforce availability. Hence audit is concerned that whether this has material impact on the Standalone Financial Statements of the Company and also fairness in reporting. ||The Company's plant manufacturing facilities in India largely remained operative during the lockdown as the major business of the Company is manufacturing of Flexible Packaging Films and Flexible Packaging which is predominantly used for essential categories like food and pharma packaging^ however despite restrictions on travel meetings and access to various locations of the Company we could obtain required audit evidences as besides normal audit procedures we also conducted alternative/ additional audit procedures to assess the material impact of COVID19 on the Standalone Financial Statements if any and ensure fairness in reporting which was not limited to following only: |
| || For Accounts Receivables: Evaluated the design and implementation of process and internal controls laid down by the company for booking of revenue and tested the operating effectiveness of the aforesaid controls including examination of shipping documentations/E-Way Bills and sales near the end period and subsequent realisations; |
| || For Accounts Payables: Evaluated the design and implementation of process and internal controls laid down by the company for booking of purchase and expenses and tested the operating effectiveness of the aforesaid controls including examination of Goods Inward Note Remittances made etc.; and |
| || For Inventory: Evaluated the design and implementation of process and internal controls laid down by the company for valuation of Raw Material WIP and Finished goods at lower of cost based or net realizable value and also tested the operating effectiveness of the aforesaid controls and ensuring physical verification of the inventory has been carried as per the process laid down by the company. Net Realisable Value of finished goods and work-in-progress has been verified with the customers contracts where applicable or subsequent selling price/realisation. |
| ||Definitive assessment of the impact in the subsequent period is highly dependent upon circumstances as they evolve. |
|Adoption of Ind AS 116 on Leases' || |
|Effective 1st April 2019 Ind AS 116 replaces the existing standard Ind AS 17 and specifies how an entity will recognise measure present and disclose leases. ||Our audit procedures included the following: |
|The standard provides a single lease accounting model requiring lessees to recognise a right of use asset ("ROU asset") and a corresponding liability on the lease commencement date. It provides exemption for leases with lease term of 12 months or less or where the underlying asset has a low value. ||Assessing the accounting regarding leases with reference to consistency with the definitions of Ind AS 116. This includes factors such as lease term discount rate and measurement principles; |
|The Company has applied Ind AS 116 using the modified retrospective method. ||Testing completeness of the lease data as at April 01 2019 reconciling the Company's operating lease commitments to the underlying data used in computing the ROU asset and Lease liability; |
|We considered the first-time application of the standard as a key audit matter due to the judgements needed in establishing the underlying key assumptions. ||Assessing the transition to Ind AS 116 by verifying consistency with the definitions and practical expedients of Ind AS 116; |
| ||Examining the Company's judgement in establishing the underlying assumptions. This includes assessing the discount rate used in determining the lease liability; and Ensuring the necessary disclosures in the Standalone Financial Statements. |
|Evaluation of pending tax litigations || |
|The Company has pending litigation for demand in dispute under various tax statutes which involves significant judgment to determine the possible outcome of these disputes. ||We have obtained details of tax litigations under various statutes for the year ended March 31 2020 from the management; |
| ||We have reviewed the management's underlying assumptions in estimating the tax provision and the possible outcome of the disputes. We have also reviewed the legal precedence and other rulings provided for review by the management in evaluating its position in various matters; and We have also reviewed the assumptions made by the management as at March 31 2019 and evaluated whether any change was required on account of information and updates made available during the year. |
Information Other than the Standalone Financial Statements and Auditor's Report Thereon
The Company's Management and its Board of Directors are responsible for the preparationof the other information. The other information comprises the information included in theCompany's Annual Report but does not include the Standalone Financial Statements and ourauditor's report thereon.
Our opinion on the Standalone Financial Statements does not cover the other informationand we do not express any form of assurance conclusion thereon.
In connection with our audit of the Standalone Financial Statements our responsibilityis to read the other information and in doing so consider whether the other informationis materially inconsistent with the Standalone Financial Statements or our knowledgeobtained during the course of our audit or otherwise appears to be materially misstated.
If based on the work we have performed we conclude that there is a materialmisstatement of this other information we are required to report that fact. We havenothing to report in this regard.
Responsibility of the Management for the Standalone 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 Standalone Financial Statementsthat give a true and fair view of the financial position financial performance includingother comprehensive income changes in equity and cash flows of the Company in accordancewith the accounting principles generally accepted in India including the IndianAccounting 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 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 Standalone Financial Statements management is responsible forassessing the Company's ability to continue as a going concern disclosing as applicablematters related to going concern and using the going concern basis of accounting unlessmanagement either intends to liquidate the Company or to cease operations or has norealistic alternative but to do so.
Those Board of Directors are also responsible for overseeing the Company's financialreporting process.
Auditor's Responsibilities for the Audit of the Standalone Financial Statements
Our objectives are to obtain reasonable assurance about whether the StandaloneFinancial Statements as a whole are free from material misstatement whether due to fraudor error and to issue an auditor's report that includes our opinion. Reasonable assuranceis a high level of assurance but is not a guarantee that an audit conducted in accordancewith SAs will always detect a material misstatement when it exists. Misstatements canarise from fraud or error and are considered material if individually or in theaggregate they could reasonably be expected to influence the economic decisions of userstaken on the basis of these Standalone Financial Statements.
As part of an audit in accordance with SAs we exercise professional judgment andmaintain professional skepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of the StandaloneFinancial Statements whether due to fraud or error design and perform audit proceduresresponsive to those risks and obtain audit evidence that is sufficient and appropriate toprovide a basis for our opinion. The risk of not detecting a material misstatementresulting from fraud is higher than for one resulting from error as fraud may involvecollusion forgery intentional omissions misrepresentations or the override of internalcontrol.
Obtain an understanding of internal financial controls relevant to the audit inorder to design audit procedures that are appropriate in the circumstances. Under Section143(3)(i) of the Act we are also responsible for expressing our opinion on whether theCompany 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 Standalone Financial Statements or if such disclosures are inadequate to modify ouropinion. Our conclusions are based on the audit evidence obtained up to the date of ourauditor's report. However future events or conditions may cause the Company to cease tocontinue as a going concern.
Evaluate the overall presentation structure and content of the StandaloneFinancial Statements including the disclosures and whether the Standalone FinancialStatements represent the underlying transactions and events in a manner that achieves fairpresentation.
Materiality is the magnitude of misstatements in the Standalone Financial Statementsthat individually or in aggregate makes it probable that the economic decisions of areasonably knowledgeable user of the 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 also provide those charged with governance with a statement that we have compliedwith relevant ethical requirements regarding independence and to communicate with themall relationships and other matters that may reasonably be thought to bear on ourindependence and where applicable related safeguards.
From the matters communicated with those charged with governance we determine thosematters that were of most significance in the audit of the Standalone Financial Statementsof the current year and are therefore the key audit matters. We describe these matters inour auditor's report unless law or regulation precludes public disclosure about the matteror when in extremely rare circumstances we determine that a matter should not becommunicated in our report because the adverse consequences of doing so would reasonablybe expected to outweigh the public interest benefits of such communication.
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) of the Act we give in"Annexure A" a statement on the matters specified in paragraphs 3 and 4 of theOrder.
2. As required by Section 143(3) of the Act based on our audit 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 the Statement of Changes in Equity and the Cash Flow Statement dealt with by thisReport are in agreement with the relevant books of account;
d) In our opinion the aforesaid Standalone Financial Statements comply with the Ind ASspecified under Section 133 of the Act read with Companies (Indian Accounting Standards)Rules 2015 as amended;
e) On the basis of the written representations received from the directors as on March31 2020 taken on record by the Board of Directors none of the directors is disqualifiedas on March 31 2020 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 over financialreporting of the Company and the operating effectiveness of such controls refer to ourseparate Report in "Annexure B". Our report expresses an unmodified opinion onthe adequacy and operating effectiveness of the Company's internal financial controls overfinancial reporting;
g) With respect to the other matters to be included in the Auditor's Report inaccordance with the requirements of Section 197(16) of the Act as amended:
In our opinion and to the best of our information and according to the explanationsgiven to us the remuneration paid by the Company to its directors during the year is inaccordance with the provisions of Section 197 of the Act.
h) 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 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 Standalone Financial Statements- Refer Note No. 33 A & 33 C to theStandalone Financial Statements;
ii. The Company did not have any long-term contracts including derivative contractsfor which there were any material foreseeable losses and;
iii. According to the information and explanations given to us there was no delay intransferring amounts required to be transferred to the Investor Education and ProtectionFund by the Company.
ANNEXURE-A TO THE INDEPENDENT AUDITOR'S REPORT
(Referred to in paragraph 1 under "Report on Other Legal and RegulatoryRequirements" Section of our report to the members of Uflex Ltd. ("theCompany") of even date)
1. In respect of Fixed Assets (Property Plant and Equipment Capital Work in ProgressInvestment Property and Other Intangible Assets including those under development) of theCompany:
a) The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets;
b) The Fixed Assets have been physically verified by the management at reasonableintervals and no material discrepancies were noticed on such physical verification;
c) According to the information and explanations given to us and on the basis of ourexamination of the records of the Company the title deeds of immovable properties areheld in the name of the Company except in respect of two residential flats aggregating toRs. 25.15 lacs (original acquisition cost).
2. The inventory has been physically verified during the year by the management atreasonable intervals and the discrepancies noticed on such physical verification ofinventory as compared to book records were not significant and were properly dealt within the books of account.
3. In respect of interest-bearing unsecured loan granted during the year by theCompany to one of the Indian Subsidiary covered in the register maintained under Section189 of the Companies Act 2013 ("the Act"):
a) In our opinion and according to the information given to us the terms andconditions of the loan given by the Company are prima-facie not prejudicialto the interest of the Company;
b) The terms for repayment of principal and payment of interest have been stipulated;however repayment of principal amount and interest has not started till the date of theBalance Sheet as per the stipulated terms;
c) There is no overdue amount in respect of both principal and interest.
Further in respect of interest-bearing unsecured loan granted to one of the IndianSubsidiary as referred above and a Joint venture entity outstanding at the beginning ofthe year terms of repayments have been modified which are prima-facienot prejudicial to the interest of the Company.
4. In our opinion and according to the information and explanations given to us theCompany has complied with the provisions of Section 185 and 186 of the Act with respectto the loans and investments made guarantees given and securities provided.
5. The Company has not accepted any deposits under the provisions of Sections 73 to 76or any other relevant provisions of the Act and the rules framed there under during theyear under report.
6. We have broadly reviewed the cost records maintained by the Company under Section148(1) of the Act and are of the opinion that prima- facie the prescribedrecords have been made and maintained.
7. In respect of Statutory dues:
a) According to the records of the Company undisputed statutory dues includingProvident Fund Employee's
State Insurance Income Tax Custom Duty Goods and Services Tax (GST) Cess and otherapplicable statutory dues have been generally deposited regularly with the appropriateauthorities.
b) According to the information and explanation given to us there are no dues ofcustom duty which have not been deposited on account of any dispute. However followingamount are involved (Gross of amount deposited under protest if any) with under-mentionedforums in respect of the disputed statutory dues:
|Name of Statute ||Nature of Dues ||Amount (Rs. in lacs) ||Period to which it pertains (all or some years in case of block) ||Forum where dispute is pending |
|The Central Sales Tax Act 1956 and concerned Value Added Tax Laws ||Sales tax and VAT ||775.20 ||AY 2008-09 and AY 2010-11 ||High Courts |
| || ||215.97 ||AY 2009-10 to AY 2015-16 ||Tribunal |
| || ||16.17 ||AY 2015-16 ||Appellate Authority |
| || ||311.92 ||AY 2014-15 and AY 2015-16 ||DC (Appeal) |
| || ||78.70 ||AY 2014-15 ||Assessing Authorities |
|Total || ||1397.96 || || |
|The Income-tax Act 1961 ||Income-tax ||80.31 ||AY 2002-03 and AY 2003-04 ||High Court |
| || ||873.32 ||AY 2004-05 to AY 2013-14 ||ITAT |
| || ||68.91 ||AY 2016-17 ||CIT(A) |
| || ||106.94 ||AY 2017-18 ||Assessing Authorities |
|Total || ||1129.48 || || |
|The Central Excise Act 1944 ||Excise Duty ||2837.26 ||2011-12 to 2015-16 ||Tribunal |
| || ||2342.03 ||1997-98 to 2016-17 ||Commissioner (Appeals) |
| || ||195.30 ||1997-98 to 2017-18 ||AC/DC/JC/ADC |
|Total || ||5374.59 || || |
|The Finance Act 1994 ||Service Tax ||54.86 ||2006-07 ||Commissioner (Appeals) |
| || ||6.34 ||2006-07 ||AC/DC |
|Total || ||61.20 || || |
|Laws on Goods and Services Tax ||Goods and Services Tax ||17.93 ||2017-18 to 2019-20 ||Assessing Authorities |
|Total || ||17.93 || || |
8. Based on the audit procedure and according to the information and explanation givento us we are of the opinion that the Company has not defaulted in repayment of loans orborrowings to banks and financial institution. Further the company has availed therelaxation provided by the Reserve Bank of India on deferment of instalments (includinginterest) of all loans outstanding as of March 01 2020 for a period of six months fromMarch 01 2020 to August 31 2020. Also the Company does not have any loans andborrowings from government and has not issued any debentures.
9. The Company did not raise any money by way of initial public ofl^er or furtherpublic ofl'er (including debt instruments). The term loans raised during the year havebeen applied for the same purpose for which the loans were obtained.
10. According to the information and explanations given to us no material fraud by theCompany or on the Company by its officers or employees has been noticed or reported duringthe course of our audit.
11. According to the information and explanations given to us and based on ourexamination of the records of the Company the Company has paid for managerialremuneration in accordance with the requisite approvals mandated by the provisions ofSection 197 read with Schedule V to the Act.
12. In our opinion and according to the information and explanations given to us theCompany is not a nidhi company. Accordingly paragraph 3(xii) of the Order is notapplicable.
13. According to the information and explanations given to us and based on ourexamination of the records of the Company transactions with the related parties are incompliance with Sections 177 and 188 of the Act where applicable and details of suchtransactions have been disclosed in the Standalone Financial Statements as required bythe applicable Ind AS.
14. According to the information and explanations given to us and based on ourexamination of the records of the Company the Company has not made any preferentialallotment or private placement of shares or fully or partly convertible debentures duringthe year.
15. According to the information and explanations given to us and based on ourexamination of the records of the Company the Company has not entered into any non-cashtransactions with directors or persons connected with them as referred to in Section 192of the Act. Accordingly paragraph 3(xv) of the Order is not applicable.
16. The Company is not required to be registered under Section 45-IA of the ReserveBank of India Act1934.
ANNEXURE-B TO THE INDEPENDENT AUDITOR'S REPORT
(Referred to in paragraph 2(f) under "Report on Other Legal and RegulatoryRequirements" section of our report to the members of Uflex Ltd. ("theCompany") of even date)
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 UflexLimited ('the Company') as of March 31 2020 in conjunction with our audit of theStandalone 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 Accountants ofIndia ('ICAI'). These responsibilities include the design implementation and maintenanceof adequate internal financial controls that were operating effectively for ensuring theorderly and efficient conduct of its business including adherence to the Company'spolicies the safeguarding of its assets the prevention and detection of frauds anderrors the accuracy and completeness of the accounting records and the timelypreparation of reliable 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 accordance with the Guidance Note issued by the ICAI and theStandards on Auditing prescribed under Section 143 (10) of the Act to the extentapplicable to an audit of Internal Financial Controls. Those Standards and the GuidanceNote require that we comply with ethical requirements and plan and perform the audit toobtain reasonable assurance about whether adequate internal financial controls overfinancial reporting were established and maintained and if such controls operatedeffectively in all material respects.
Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal financial controls system over financial reporting and their operatingeffectiveness. Our audit of internal financial controls over financial reporting includedobtaining an understanding of internal financial controls over financial reportingassessing the risk that a material weakness exists and testing and evaluating the designand operating effectiveness of internal control based on the assessed risk. The proceduresselected depend on the auditor's judgment including the assessment of the risks ofmaterial misstatement of the Standalone Financial Statements whether due to fraud orerror
We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the Company's internal financial controls systemover financial reporting.
Meaning of Internal Financial Controls over Financial Reporting
A company's internal financial control over financial reporting is a process designedto provide reasonable assurance regarding the reliability of financial reporting and thepreparation of Standalone Financial Statements for external purposes in accordance withthe Ind AS and other accounting principles generally accepted in India. A company'sinternal financial control over financial reporting includes those policies and proceduresthat (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) providereasonable assurance that transactions are recorded as necessary to permit preparation ofStandalone Financial Statements in accordance with the Ind AS and other accountingprinciples generally accepted in India and that receipts and expenditures of the Companyare being made only in accordance with authorizations of the Management and Directors ofthe Company; and (3) provide reasonable assurance regarding prevention or timely detectionof unauthorized acquisition use or disposition of the Company's assets that could have amaterial effect on the Standalone Financial Statements.
Inherent Limitations of Internal Financial Controls over Financial Reporting
Because of the inherent limitations of internal financial controls over financialreporting including the possibility of collusion or improper management override ofcontrols material misstatements due to error or fraud may occur and not be detected.Also projections of any evaluation of the internal financial controls over financialreporting to future periods are subject to the risk that the internal financial controlover financial reporting may become inadequate because of changes in conditions or thatthe degree of compliance with the policies or procedures may deteriorate.
In our opinion 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 over financial reporting and such internal financial controls over financialreporting were operating effectively as at March 31 2020 based on the internal controlover financial reporting criteria established by the Company considering the essentialcomponents of internal control stated in the Guidance Note issued by the ICAI.
| || |
For KAAP & Associates
| ||Chartered Accountants |
| ||ICAI Firm's Regn. No.: 019416N |
| ||CA. Deepak Sehgal |
| ||Partner |
|Place : NOIDA ||Membership No. 085391 |
|Date : 30'h June 2020 ||UDIN: 20085391AAAAAG5879 |