To the Members of
VALSON INDUSTRIES LIMITED
Report on the Audit of the Financial Statements
We have audited the Financial Statements of VALSON INDUSTRIESLIMITED (hereinafter referred to as "the Company") which comprise thebalance sheet as at March 31 2021 the statement of Profit and Loss (including OtherComprehensive Income) Statement of Changes in Equity and statement of cash flows for theyear then ended and notes to the Financial Statements including a summary of significantaccounting policies and other explanatory information (hereinafter referred to as"Financial Statements").
In our opinion and to the best of our information and according to theexplanations given to us the aforesaid Financial Statements give the information requiredby the Companies Act 2013 ("the Act") in the manner so required and give atrue and fair view in conformity with the accounting principles generally accepted inIndia of the state of affairs of the Company as at March 31 2021 and its loss othercomprehensive income changes in equity and its cash flows for the year ended on thatdate.
II. Basis for Opinion
We conducted our audit in accordance with the Standards on Auditing(SAs) specified under section 143(10) of the Act. Our responsibilities under thoseStandards are further described in the Auditor's Responsibilities for the Audit ofthe Financial 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 theFinancial
Statements under the provisions of the Act and the Rules thereunderand we have fulfilled our other ethical responsibilities in accordance with theserequirements and the Code of Ethics. We believe that the audit evidence we have obtainedis sufficient and appropriate to provide a basis for our opinion.
III. Key Audit Matters
Key audit matters are those matters that in our professional judgmentwere of most significance in our audit of the Financial Statements of the current period.These matters were addressed in the context of our audit of the Financial Statements as awhole and in forming our opinion thereon and we do not provide a separate opinion onthese matters. We have determined the matter described below to be the key audit mattersto be communicated in our report.
|Key Audit Matter ||How our audit addressed the key audit matter |
|Inventory Existence: || |
|The inventory's carrying value in the Balance Sheet as at March 31 2021 is Rs. 893.22 lakhs. The inventory of the Company is held across various locations including its Plants Sales Depots Warehouses and Contract Manufacturers' locations. ||We have performed the following procedures with respect to the inventory: |
|We focused on this matter because of the: ||Evaluated the design and implementation of the controls over physical verification of inventory and tested the operating effectiveness of these controls during the interim periods. |
| significance of the inventory balance to the profit and statement of financial position ||On account of COVID 19 related nationwide lockdown we were unable to carry out inventory verification at the year end. Consequently we have performed the following alternate procedures to audit the existence of inventory: |
| physical verification carried out by the management was not observed physically exceptions noted from by us subsequent to these year procedures. end due to the restrictions imposed on account of COVID 19. ||Obtained the physical verification records from the management and performed roll back procedures. |
| ||In case of the stock held at third party locations obtained direct confirmation of the inventory held by third party locations subsequent to the year end and performed roll back procedures. |
| ||We tested There were no significant a sample of inventory items to assess whether they were recorded at a value higher than that for which they could be sold. We did not identify any exceptions. |
IV. Information other than the Financial Statements and Auditor'sReport thereon
The Company's Board of Directors is responsible for the otherinformation. The other information comprises the information included in the AnnualReport but does not include the Financial Statements and our auditor's reportthereon.
Our opinion on the Financial Statements does not cover the otherinformation and we do not express any form of assurance conclusion thereon.
In connection with our audit of the Financial Statements ourresponsibility is to read the other information and in doing so consider whether theother information is materially inconsistent with the Financial Statements or ourknowledge obtained in the audit or otherwise appears to be materially misstated. If basedon the work we have performed we conclude that there is a material misstatement of thisother information; we are required to report that fact. We have nothing to report in thisregard.
V. Management's Responsibility for the Financial Statements
The Company's Management and Board of Directors are responsiblefor the matters stated in Section 134(5) of the Act with respect to the preparation ofthese Financial Statements that give a true and fair view of the state of affairsprofit/loss and other comprehensive income changes in equity and cash flows of theCompany in accordance with the accounting principles generally accepted in Indiaincluding the Indian Accounting Standards (Ind AS) specified under Section 133 of the Act.This responsibility also includes maintenance of adequate accounting records in accordancewith the provisions of the Act for safeguarding of the assets of the Company and forpreventing and detecting frauds and other irregularities; selection and application ofappropriate accounting policies; making judgments and estimates that are reasonable andprudent; and design implementation and maintenance of adequate internal financialcontrols that were operating effectively for ensuring the accuracy and completeness of theaccounting records relevant to the preparation and presentation of the FinancialStatements that give a true and fair view and are free from material misstatement whetherdue to fraud or error.
In preparing the Financial Statements management and Board ofDirectors are responsible for assessing the Company's ability to continue as a goingconcern disclosing as applicable matters related to going concern and using the goingconcern basis of accounting unless management either intends to liquidate the Company orto cease operations or has no realistic alternative but to do so.
The Board of Directors is also responsible for overseeing theCompany's financial reporting process.
VI. Auditor's Responsibilities for the Audit of the FinancialStatements.
Our objectives are to obtain reasonable assurance about whether theFinancial 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. Reasonableassurance is a high level of assurance but is not a guarantee that an audit conducted inaccordance with SAs will always detect a material misstatement when it exists.Misstatements can arise from fraud or error and are considered material if individuallyor in the aggregate they could reasonably be expected to influence the economic decisionsof users taken on the basis of these 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 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 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 with reference to Financial Statements inplace and the operating effectiveness of such controls.
Evaluate the appropriateness of accounting policies used and thereasonableness of accounting estimates and related disclosures in the Financial Statementsmade by the Management and Board of Directors.
Conclude on the appropriateness of the Management's and Board ofDirectors use of the going concern basis of accounting and based on the audit evidenceobtained whether a material uncertainty exists related to events or conditions that mayability to continue as a going concern. If we conclude that a material uncertainty castsignificant exists we are required to draw attention in our auditor's report to therelated disclosures in the Financial Statements or if such disclosures are inadequate tomodify our opinion. Our conclusions are based on the audit evidence obtained up to thedate of our auditor's report. However future events or conditions may cause theCompany to cease to continue as a going concern.
Evaluate the overall presentation structure and content of theFinancial Statements including the disclosures and whether the Financial Statementsrepresent the underlying transactions and events in a manner that achieves fairpresentation.
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 our
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 FinancialStatements of the current period and are therefore the key audit matters. We describethese matters in our auditors' report unless law or regulation precludes publicdisclosure about the matter or when in extremely rare circumstances we determine that amatter should not be communicated in our report because the adverse consequences of doingso would reasonably be expected to outweigh the public interest benefits of suchcommunication.
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 of the Companies Act 2013 we give in the Annexure A'statement on the matters specified in paragraphs 3 and 4 of the Order to the extentapplicable.
2. As required by Section 143(3) of the Act we report 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) the Statement of Changes in Equity and the Cash Flow Statementdealt with by this Report are in agreement with the books of account.
d. In our opinion the aforesaid the Financial Statements comply withthe Accounting Standards specified under Section 133 of the Act read with Rule 7 of theCompanies (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 Rule 11 of the Companies (Audit and Auditors)Rules 2014 in our opinion and to the best of our information and according to theexplanations given to us:
i. The Company has disclosed the impact of pending litigations on itsfinancial position in its Financial Statements Refer Note 26(II) to the Financialstatements;
ii. The Company has made provision as required under the applicablelaw or accounting standards for material foreseeable losses if any on long-termcontracts including derivative contracts.
iii. There were no amounts which were required to be transferred to theInvestor Education and Protection Fund by the Company.
iv. With respect to the matter to be included in the Auditors'Report under Section 197(16) of the Act: In our opinion and according to the informationand explanations given to us the remuneration paid by the Company to its directors duringthe current year is in accordance with the provisions of Section 197 of the Act. Theremuneration paid to any director is not in excess of the limit laid down under Section197 of the Act. The Ministry of Corporate Affairs has not prescribed other details underSection 197(16) of the Act which are required to be commented upon by us.
Annexure - A to the Independent Auditors' Report
[Referred to in paragraph VII (1) of our report of even date]
With reference to the Annexure A referred to in the IndependentAuditors' Report to the members of VALSON INDUSTRIES LIMITED on the FinancialStatements for the year ended March 31 2021 we report the following:
(i) (a) The Company has maintained proper records showing fullparticulars including quantitative details and situation of fixed assets.
(b) There is a regular programme of verification of fixed assetsadopted by the Management whereby part of fixed assets was verifiedduring the year. In ouropinion the programme of physical verification is reasonable having regard to the size ofthe Company and the nature of its assets. No material discrepancies were noticed on suchverification.
(c) The title deeds of immovable properties including leasehold landas disclosed in Note 3 on property plant and equipment to the FinancialStatements are held in the name of the company.
(ii) The inventory has been physically verified at reasonable intervalsduring the year by the Management. The discrepancies noticed on physical verification ofinventory as compared to book records were not material and have been appropriately dealtwith in the books of accounts.
(iii) According to the information and explanation given to us thecompany has not granted any loans secured or unsecured to companies firms LimitedLiability Partnerships or other parties covered in the register maintained under section189 of the Companies Act.
As the Company has not granted any loans secured or unsecured tocompanies firms Limited Liability Partnerships or other parties covered in the registermaintained under section 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 explanationsgiven to us the Company has complied with the provisions of section 185 and 186 of theCompanies Act 2013 in respect of the loans and investments made and security provided byit.
(v) In our opinion and according to the information and explanationsgiven to us the Company has accepted deposits and the directives issued by Reserve Bankof India and the provisions of sections 73 to 76 or any other relevant provisions of theCompanies Act and the rules framed there under where applicable have been complied with.
(vi) We have broadly reviewed the Cost records maintained by thecompany which have been specified by the Central Government under sub-section (1) ofsection 148 of the Companies Act in respect of the Company's products to which thesaid rules are made applicable and are of the opinion that prima-facie the prescribedaccounts and records have been made and maintained. We have however not made a detailedexamination of the records with a view to determine whether they are accurate.
(vii) (a) The Company is generally regular in depositing withappropriate authorities undisputed statutory dues including provident fundemployees' state insurance income tax goods and services tax cess and any otherstatutory dues with the appropriate authorities According to the information andexplanations given to us no undisputed amounts payable in respect of any of the abovestatutory dues were in arrears as at March 31 2021 for a period of more than six monthsfrom the date they became payable.
(b) According to the information and explanations given to us and therecords of the Company examined by us there are no dues of income tax sales tax servicetax customs duty excise duty or value added tax which have not been deposited onaccount of any dispute. The disputed statutory dues aggregating to Rs.2.39 lakhs ofTextile Cess that has not been deposited on account of matter pending before appropriateauthority is as under:
|. 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 ||FY 2001 02 to 2005 06 ||2.39 |
|2. Gujarat VAT ||VAT Dues ||Dy. Commissioner (Appeal Surat) VAT Dept. ||FY 2017-2018 ||25.11 |
(viii) According to the records of the Company examined by us and theinformation and explanation given to us the Company has not defaulted in repayment ofloans or borrowings to banks. The Company did not have any outstanding loans or borrowingsfrom financial institutions or government and there are no dues to debenture holdersduring the year.
(ix) In our opinion and according to the information and explanationsgiven to us the term loans have been applied for the purposes for which they wereobtained.
(x) During the course of our examination of the books and records ofthe Company carried out in accordance with the generally accepted auditing practices inIndia no fraud by the company or on the company by its officers or employees has beennoticed or reported during the year.
(xi) The company has paid/provided for managerial remuneration inaccordance with the requisite approvals mandated by the provisions of section 197 readwith Schedule V to the Companies Act.
(xii) As the company is not a Nidhi Company and the Nidhi Rules 2014are not applicable to it. Accordingly paragraph 3(xii) of the Order is not applicable.
(xiii) In our opinion and according to the information and explanationsgiven to us the Company has entered into transactions with related parties in compliancewith the provisions of Sections 177 and 188 of the Companies Act. The details of suchrelated party transactions have been disclosed in the Financial Statements as requiredunder Indian Accounting Standard (Ind. AS) 24 Related Party Disclosures.
(xiv) According to the information and explanations given to us theCompany has not made any preferential allotment or private placement of shares or fully orpartly convertible debentures during the year. Accordingly paragraph 3(xiv) of the Orderis not applicable.
(xv) According to the information and explanations given to us thecompany has not entered into any non-cash transactions with directors or persons connectedwith him. Accordingly paragraph 3(xv) of the Order is not applicable.
(xvi) According to the information and explanations given to us thecompany is not required to get registered under section 45-IA of the Reserve Bank of IndiaAct 1934. Accordingly paragraph 3(xvi) of the Order is not applicable.
Annexure - B to the Independent Auditors' Report on the
Financial Statements of Valson Industries Limited for the year ended 31March 2021
Report on the internal financial controls with reference to theaforesaid Financial Statements under Clause (i) of Sub-Section 3 of Section 143 of theCompanies Act 2013.
(Referred to in paragraph VII(2)(f) under Report on Other Legaland Regulatory Requirements' section of our report of even date)
Opinion controls with reference to Financial Statements of We haveaudited the internal financial Valson Industries Limited (hereinafter referred to as"the Company") as of March 31 2021 in conjunction with our audit of theFinancial Statements of the Company for the year ended on that date.
In our opinion the Company has in all material respects adequateinternal financial controls with reference to Financial Statements and such internalfinancial controls were operating effectively as at March 31 2021 based on the internalfinancial controls with reference to Financial Statements criteria established by theCompany considering the essential components of internal control stated in the GuidanceNote on Audit of Internal Financial Controls Over Financial Reporting issued by theInstitute of Chartered Accountants of India (the "Guidance Note").
Management's Responsibility for Internal Financial Controls
The Company's management and the Board of Directors areresponsible for establishing and maintaining internal financial controls based on theinternal financial controls with reference to Financial Statements criteria established bythe Company considering the essential components of internal control stated in theGuidance Note. 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 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 Companies Act 2013(hereinafter referred to as "the Act").
Our responsibility is to express an opinion on the Company'sinternal financial controls with reference to Financial Statements based on our audit. Weconducted our audit in accordance with the Guidance Note and the Standards on Auditingprescribed under
Section 143(10) of the Act to the extent applicable to an audit ofinternal financial controls with reference to Financial Statements
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 with reference to Financial Statements wereestablished and maintained and whether such controls operated effectively in all materialrespects.
Our audit involves performing procedures to obtain audit evidence aboutthe adequacy of the internal financial controls with reference to Financial Statements andtheir operating effectiveness. Our audit of internal financial controls with reference toFinancial Statements included obtaining an understanding of such internal financialcontrols 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 with reference to Financial Statements.
Meaning of Internal Financial Controls over Financial Reporting
A company's internal financial controls with reference toFinancial Statements is a process designed to provide reasonable assurance regarding thereliability of financial reporting and the preparation of Financial Statements forexternal purposes in accordance with generally accepted accounting principles. Acompany's internal financial controls with reference to Financial Statements includethose 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 authorizations of management and directors of thecompany; and
(3) provide reasonable assurance regarding prevention or timelydetection of unauthorized acquisition use or disposition of the company's assetsthat could have a material effect on the Financial Statements
Inherent Limitations of Internal Financial Controls with Reference toFinancial Statements
Because of the inherent limitations of internal financial controls withreference to Financial Statements including the possibility of collusion or impropermanagement override of controls material misstatements due to error or fraud may occurand not be detected.
Also projections of any evaluation of the internal financial controlswith reference to Financial Statements to future periods are subject to the risk that theinternal financial controls with reference to Financial Statements may become inadequatebecause of changes in conditions or that the degree of compliance with the policies orprocedures may deteriorate.
| ||For BASTAWALA & ASSOCIATES |
| ||CHARTERED ACCOUNTANTS |
| ||Firm Registration No: 121789W |
| ||PRANAV BASTAWALA |
| ||PARTNER |
|Place: Mumbai ||MEMBERSHIP NO. 100468 |
|Date: June 30 2021 ||UDIN: 21100468AAAABC1519 |