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Valson Industries Ltd.

BSE: 530459 Sector: Industrials
NSE: N.A. ISIN Code: INE808A01018
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NSE 05:30 | 01 Jan Valson Industries Ltd
OPEN 18.00
PREVIOUS CLOSE 18.50
VOLUME 3444
52-Week high 36.20
52-Week low 16.20
P/E 14.16
Mkt Cap.(Rs cr) 14
Buy Price 18.35
Buy Qty 12.00
Sell Price 18.55
Sell Qty 142.00
OPEN 18.00
CLOSE 18.50
VOLUME 3444
52-Week high 36.20
52-Week low 16.20
P/E 14.16
Mkt Cap.(Rs cr) 14
Buy Price 18.35
Buy Qty 12.00
Sell Price 18.55
Sell Qty 142.00

Valson Industries Ltd. (VALSONINDS) - Auditors Report

Company auditors report

To the Members of

VALSON INDUSTRIES LIMITED

Report on the Audit of the Ind AS Financial Statements I. Opinion

We have audited the Ind AS financial statements of VALSON INDUSTRIES LIMITED("the Company") which comprise the balance sheet as at March 31 2019 thestatement of Profit and Loss (statement of changes in equity) statement of cash flows forthe year then ended and notes to the Ind AS financial statementsincluding significantaccounting policies and summaryof other explanatory information.

In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid fInd AS financial statements give the information required bythe 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 its profit changes in equity and its cash flows for the yearended. onthat date

II. Basis for Opinion

We conducted our audit in accordance with the Standards on Auditing (SAs) specifiedunder section 143(10) of the Act 2013. Our responsibilities under those Standards arefurther described in the Auditor's Responsibilities for the Audit of the Ind ASFinancial Statements section of our report. We are independent of the Company inaccordance with the Code of Ethics issued by the Institute of Chartered Accountantsof India together with the ethical requirements that are relevant to our audit of the IndAS financial 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

III. Key Audit Matters

Key audit matters are those matters that in our professional judgment were of mostsignificance in our audit of the Ind AS financial statements of the current period. Thesematters were addressed in the context of our audit of the Ind AS financial statements as awhole and in forming our opinion thereon and we do not provide a separate opinion onthese matters.

Key Audit Matter (KAM) How Our Audit Addressed The Key Audit Matter
Existence and valuation of inventories Note no 7 to the balance sheet in the financial statements Principal Audit Procedure;
Total inventories of Rs. 769.13 Lakhs represent 14.13 % of the Company's total assets as at March 31 2019. These inventories mainly consist of inventories of raw material (RM) packing material (PM) stores & spares (S&S) coal & diesel (C&D) and finished goods (FG). Our audit procedures to test the existence of the
RM PM stores & spares and coal & diesel are valued at cost and FG is valued at lower of cost or net realizable value (NRV). Inventories mainly consist of testing the relevant internal control procedures specifically by testing the inventory cycle counts that are periodically performed by management and internal auditors. We on a test check basis attended inventory count at the year end at the Silli Unit of the Company.
Cost comprises all cost of purchases cost of conversion and other costs incurred in bringing inventories to their present location and condition. To validate the valuation of inventories we performed following test / audit procedures to assess procedures followed by the Company to arrive at valuation of inventories is aligned with accounting policies of the Company;
These inventories being major share of total assets made us conclude that existence and valuation of inventories are a key audit matter of our audit. 1. Valuation of RM PM and stores & spares and coal & diesel at Cost;
Furthermore in a manufacturing company inventory valuation is an important factor for determining profitability of the Company. Accordingly impact of the same on revenue need to be assessed correctly. We selected sample of inventory items and compared the quantities we counted to the quantities recorded.
On an overall basis quantity of packed RM PM and Stores is verified from ERP system vis a vis the physical count taken by the management and internal auditors on a periodic basis.
Rates wrt RM PM stores & spares and coal & diesel are verified from latest purchase invoices to ensure RM PM and stores are valued at cost determined on First in First out (FIFO) method.
1. Valuation of Finished Goods FG;
Finished goods cost comprises of all cost of purchases cost of production including depreciation on machineries utilities and electrical installation and factory building directly involved in manufacturing activities. Accordingly all variable mfg. cost + Fixed mfg. costs (apportioned on total production) are considered for arriving at FG cost.
Further we have verified NRV on test check basis of FG to arrive at conclusion of valuation of inventory at lower of Cost or NRV by the Company.
We have checked valuation done by the Company on test check basis.
Based on the procedures described we consider
Management's estimates of the inventory valuation as well as its existence as acceptable.

IV. Information other than the Financial Statements and Auditor's Report thereon

The Company's Board of Directors is responsible for the other information. The otherinformation comprises the information included in the Annual Report but does not includethe Financial Statements and our auditor's 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 in theaudit or otherwise appears to be materially misstated. If based on the work we haveperformed we conclude that there is a material misstatement of this other information; weare required to report that fact. We have nothing to report in this regard.

V. Management's Responsibility for the Ind AS 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 Ind AS financial statements that give a true and fair view of the financialposition financial performance changes in equity and cash flows of the Company inaccordance with 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 implementationand maintenance of accounting policies; making judgments and estimates that are reasonableand prudent; and design implementation and maintenance of adequate internal financialcontrols that were operating effectively for ensuring the accuracy and completeness ofthe accounting records relevant to the preparation and presentation of the Ind ASfinancial statement that give a true and fair view and are free from materialmisstatement whether due to fraud or error.

In preparing the Ind AS financial statements management is responsible for assessingthe Company'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.

VI. Auditor's Responsibilities for the Audit of the Ind AS FinancialStatements.

Our objectives are to obtain reasonable assurance about whether the IndASfinancialstatements 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 Ind AS 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 Ind ASfinancialstatements 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 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 Ind AS 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 Ind AS financialstatements including the disclosures and whether the Ind AS financial statementsrepresent the underlying transactions and events in a manner that achieves fairpresentation.

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 Ind AS financial statements ofthe current period 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.

VII. 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 of India in terms of sub-section (11) of section 143 ofthe Companies Act 2013 we give in the Annexure ‘A' statement on the mattersspecified in paragraphs 3 and 4 of the Order to the extent applicable.

2. As required by Section 143(3) of the Act we report that:

a. We have sought and obtained all the information and explanations which to the bestof our knowledge and belief were necessary for the purposes of our audit.

b. In our opinion proper books of account as required by law have been kept by theCompany so far as it appears from our examination of those books.

c. The Balance Sheet the Statement of Profit and Loss and the Cash Flow Statementdealt with by this Report are in agreement with the books of account.

d. In our opinion the aforesaid Ind AS financial statements comply with the AccountingStandards specified under 133 of the Act read with Rule 7 of the Companies (Accounts)Rules 2014.

e. On the basis of the written representations received from the directors as on March31 2019 taken on record by the Board of Directors none of the directors is disqualifiedas on March 31 2019 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".

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:

i. The Company has disclosed the impact of pending litigations on its financialposition in its Ind AS financial statements Refer Note 26 (II) to the Ind AS financialstatements;

ii. The Company has made provision as required under the applicable law or accountingstandards for material foreseeable losses if any on long-term contracts includingderivative contracts.

iii. There has been no delay in transferring amounts required to be transferred tothe Investor Education and Protection Fund by the Company during the year ended March 312019.

For BASTAWALA & ASSOCIATES
CHARTERED ACCOUNTANTS
Firm Registration No: 121789W
PRANAV BASTAWALA
Place: Mumbai PARTNER
Date: May 30 2019 MEMBERSHIP NO. 100468

Annexure A to the Independent Auditor's Report

(Referred to in paragraph VII 1 of "Report on Other Legal and RegulatoryRequirements" of our Independent Auditors' Report of even date on the accounts of VALSONINDUSTRIES LIMITED for the year ended March 31 2019) On the basis of such checks aswe considered appropriate and in terms of information and explanations given to us westate that: -

(i) (a) The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets.

(b) There is a regular programme of verification of fixed assets adopted by theManagement whereby part of fixed assets were verifiedduring the year. In our opinion theprogramme of physical verification is reasonable having regard to the size of the Companyand the nature of its assets. No material discrepancies were noticed on such verification.

(c) The title deeds of immovable properties including leasehold land as disclosed in Note3 on property plant and equipment to the Ind AS financial statements are held in thename of the company.

(ii) The inventory has been physically verified at reasonable intervals during the yearby the Management. The discrepancies noticed on physical verification of inventory ascompared to book records were not material and have been appropriately dealt with in thebooks of accounts.

(iii) According to the information and explanation given to us the company has notgranted any loans secured or unsecured to companies firms Limited LiabilityPartnerships or other parties covered in the register maintained under section 189 of theCompanies Act.

As the Company has not granted any loans secured or unsecured to companies firmsLimited Liability Partnerships or other parties covered in the register maintained undersection 189 of the Companies Act. Accordingly paragraph 3(iii) sub-clauses (a) (b) and(c) of the Order is not applicable.

(iv) 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 Companies Act 2013in respect of the loans and investments made and security provided by it.

(v) In our opinion and according to the information and explanations given to us theCompany has accepted deposits and the directives issued by Reserve Bank of India and theprovisions of sections 73 to 76 or any other relevant provisions of the Companies Act andthe rules framed there under where applicable have been complied with.

(vi) We have broadly reviewed the Cost records maintained by the company which havebeen specified by the Central Government under sub-section (1) of section 148 of theCompanies Act in respect of the Company's products to which the said rules are madeapplicable and are of the opinion that prima-facie the prescribed accounts and recordshave been made and maintained. We have however not made a detailed examination of therecords with a view to determine whether they are accurate.

(vii) (a) The Company is generally regular in depositing with appropriate authoritiesundisputed statutory dues including provident fund employees' state insurance incometax goods and services tax cess and any other statutory dues with the appropriateauthorities According to the information and explanations given to us no undisputedamounts payable in respect of any of the above statutory dues were in arrears as at March31 2019 for a period of more than six months from the date they became payable.

(b) According to the information and explanations given to us and the records of theCompany examined by us there are no dues of income tax sales tax service tax customsduty excise duty or value added tax which have not been deposited on account of anydispute. The disputed statutory dues aggregating to Rs.2.39 lakhs of Textile Cess thathas not been deposited on account of matter pending before appropriate authority is asunder:

Sr. No. Name of the Statute Nature of the Dues Forum where dispute is pending Period to which amount relates Amount (Rs. Lakhs)
1. Textiles Committee Act Textiles Cess Textiles Committee 2001 02 to 2005 06 2.39

(viii) According to the records of the Company examined by us and the information andexplanation given to us the Company has not defaulted in repayment of loans or borrowingsto banks. The Company did not have any outstanding loans or borrowings from financialinstitutions or government and there are no dues to debenture holders during the year.

(ix) In our opinion and according to the information and explanations given to us theterm loans have been applied for the purposes for which they were obtained.

(x) During the course of our examination of the books and records of the Companycarried out in accordance with the generally accepted auditing practices in India nofraud by the company or on the company by its officers or employees has been noticed orreported during the year.

(xi) The company has paid/provided for managerial remuneration in accordance with therequisite approvals mandated by the provisions of section 197 read with Schedule V to theCompanies Act.

(xii) As the company is not a Nidhi Company and the Nidhi Rules 2014 are notapplicable to it. Accordingly paragraph 3(xii) of the Order is not applicable.

(xiii) In our opinion and according to the information and explanations given to usthe Company has entered into transactions with related parties in compliance with theprovisions of Sections 177 and 188 of the Companies Act. The details of such related partytransactions have been disclosed in the Ind AS financial statements as required underIndian Accounting Standard (Ind. AS) 24Related Party Disclosures.

(xiv) According to the information and explanations given to us the Company has notmade any preferential allotment or private placement of shares or fully or partlyconvertible debentures during the year. Accordingly paragraph 3(xiv) of the Order is notapplicable.

(xv) According to the information and explanations given to us the company has notentered into any non-cash transactions with directors or persons connected with him.Accordingly paragraph 3(xv) of the Order is not applicable.

(xvi) According to the information and explanations given to us the company is notrequired to get registered under section 45-IA of the Reserve Bank of India Act 1934.Accordingly paragraph 3(xvi) of the Order is not applicable.

For BASTAWALA & ASSOCIATES
CHARTERED ACCOUNTANTS
Firm Registration No: 121789W
PRANAV BASTAWALA
Place: Mumbai PARTNER
Date: May 30 2019 MEMBERSHIP NO. 100468

Annexure B to the Independent Auditor's Report

(Referred to in paragraph VII 2 (f) of "Report on Other Legal and RegulatoryRequirements" of our Independent Auditors' Report of even date on the accounts of VALSONINDUSTRIES LIMITED for the year ended March 31 2019)

Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section143 of the Act controls over financial reporting

We have audited the internal financial of VALSON INDUSTRIES LIMITED (‘theCompany") as at March 31 2019 in conjunction with our audit of the Ind ASfinancial 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 financial control over financial reportingcriteria established by the Company considering the essential components of internalcontrol stated in the Guidance Note on Audit of Internal Financial Controls over FinancialReporting issued by the Institute of Chartered Accountants of India (ICAI). Theseresponsibilities include the design implementation and maintenance of adequate internalfinancial controls that were operating effectively for ensuring the orderly andefficientconduct of its business including adherence to Company's policies thesafeguarding of its assets the prevention and detection of frauds and errors theaccuracy and completeness of the accounting records and the timely preparation ofreliable financial information. as required under theAct.

Auditor's Responsibility

Our responsibility is to express an opinion on the Company's internal financialcontrolsover financial reporting based on our audit.We conducted our audit in accordance with theGuidance Note on Audit of Internal Financial Controls Over Financial Reporting (the"Guidance Note") and the Standards on Auditing deemed to be prescribed undersection 143(10) of the Act to the extent applicable to an audit of internal financialcontrols both applicable to an audit of Internal Financial Controls and both issued

Those Standards and the Guidance Note require that we comply with ethical requirementsand plan and perform the audit to obtain reasonable assurance about whether adequateinternal financial controls over financial reporting was established and if such controlsoperated effectively 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 financialcontrols over financial reporting includedan understanding of internal financial controls over financial reporting assessing therisk that a material weakness exists and and evaluating the design and operatingeffectiveness of internal control based on the assessed risk. The procedures selecteddepend on the auditor's judgement including the assessment of the risks of materialmisstatement of the Ind AS financial Whether due to fraud or error.

We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the Company's internal financial controls systemover financial reporting.

Meaning of Internal Financial Controls Over Financial Reporting

A company's internal financialcontrol over financial reporting is a process designed toprovide reasonable assurance regarding the reliability of financial reporting and thepreparation of Ind AS financial statements for external purposes in accordance withgenerally accepted accounting principles. A company's internal financial control overfinancial reporting 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 Ind AS financial statements in accordance with generally acceptedaccounting principles and that receipts expenditures of the Company are being made onlyin accordance 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 Ind AS 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 financialcontrols 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.

Opinion

In our opinion the Company has in all material respects an adequate internalfinancial controls system over financial reporting and such internal financial controlsover financial reporting were control over financial reporting criteria established by theCompany considering stated in the Guidance Note on Audit of Internal Financial ControlsOver Financial Reporting issued by the Institute of Chartered Accountants of India.

For BASTAWALA & ASSOCIATES
CHARTERED ACCOUNTANTS
Firm Registration No: 121789W
PRANAV BASTAWALA
Place: Mumbai PARTNER
Date: May 30 2019 MEMBERSHIP NO. 100468