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Vardhman Holdings Ltd.

BSE: 500439 Sector: Financials
NSE: VHL ISIN Code: INE701A01023
BSE 00:00 | 17 Jun 2542.50 27.80
(1.11%)
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2518.30

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2588.00

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2515.00

NSE 00:00 | 17 Jun 2537.60 2.85
(0.11%)
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2502.05

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OPEN 2518.30
PREVIOUS CLOSE 2514.70
VOLUME 346
52-Week high 2829.00
52-Week low 901.05
P/E 53.89
Mkt Cap.(Rs cr) 811
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 2518.30
CLOSE 2514.70
VOLUME 346
52-Week high 2829.00
52-Week low 901.05
P/E 53.89
Mkt Cap.(Rs cr) 811
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Vardhman Holdings Ltd. (VHL) - Auditors Report

Company auditors report

To

The Members of

Vardhman Holdings Limited.

Report on the Standalone Financial Statements

Opinion

We have audited the accompanying standalone financial statements ofVardhman Holdings Limited ("the Company") which comprise the Balance Sheet asat March 31 2020 and the Statement of Profit and Loss including the statement ofOtherComprehensive Income the Cash Flow Statement and the Statement of changes in Equity forthe year then ended and notes to the financial statements including a summary of thesignificant accounting policies and other explanatory information (hereinafter referred toas "Standalone Financial Statements'').

In our opinion and to the best of our information and according to theexplanations given to us the aforesaid standalone financial statements give theinformation required by the

Companies Act 2013 ("the Act") in the manner so required andgive a true and fair view in conformity with the Indian Accounting Standards prescribedunder section 133 of the Act read with the Companies (Indian Accounting Standards) Rules2015 as amended ("Ind AS") and other accounting principles generally acceptedin India of the state of affairs of the Company as at March 31 2020 the profit andother comprehensive income changes in equity and its cash flows for the year ended onthat date.

Basis for opinion

We conducted our audit of the standalone financial statements inaccordance with the Standards on Auditing (SAs) as specified under Section 143(10) of theAct. Our responsibilities under those Standards are further described in the‘Auditor's Responsibilities for the Audit of the Standalone FinancialStatements' section of our report. We are independent of the Company in accordancewith the ‘Code of Ethics' issued by the Institute of Chartered Accountants ofIndia together with the ethical requirements that are relevant to our audit of thestandalone financial statements under the provisions of the Act and the Rules there underand 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 audit opinion on the standalonefinancial statements.

Key audit matters

Key audit matters are those matters that in our professional judgmentwere of most significance in our audit of the standalone financial statements for thefinancial year ended 31 March 2020. These matters were addressed in the context of ouraudit of the standalone financial statements as a whole and in forming our opinionthereon and we do not provide a separate opinion on these matters. For each matter belowour description of how our audit addressed the matter is provided in that context.

We have determined the matter described below to be the key auditmatters to be communicated in our report.

We have fulfilled the responsibility described in the Auditor'sresponsibility for the audit of standalone financial statement section of our reportincluding in relation to the matters. Accordingly our audit included the performance ofprocedures designed to respond to our assessment of the risks of material misstatement ofthe standalone financial statements. The results of our audit procedures including theprocedures performed to address the matters below provide the basis for audit opinion onthe accompanying standalone financial statements.

Key audit matters How our audit addressed the key audit matter
(a) Assessment of carrying value of investments (as described in note 2.9.1.3 and 2.9.1.4 of the financial statements)
The accounting for investments is a Key Audit matter as there is a risk that fair valuation of investments in not done appropriately. Accordingly the existence and valuation of investments is considered as a key audit matter. The impairment assessment and fair valuation for such investments have been done by the management in accordance with Ind AS 113. We performed the following procedures in relation to existence and valuation of investments:
• Assessed the design and implementation of controls over valuation and existence of investments.
• On a sample basis tested the key controls set up by the management on existence and valuation of investments. Traced the quantity held from the confirmation provided by the Custodian with the books as at March 31st 2020
• Tested the valuation of the investments as per the investment valuation policy approved by the management.

(b) Deferred Tax asset

(uncertainty in estimation in the future profits and the accuracy ofthe provision)As per Ind AS 12- Income Taxes The amounts of income taxes recoverable infuture periods in respect of deductible temporary differences and the carry forward ofunused tax losses and credits. The reversal of deferred tax assets depends upon themanagement estimates and future realizable profits which have a degree of uncertainty.

On review of the deferred Tax Asset the following factors wereconsidered:

• Existence of sufficient taxable temporary difference.

• Convincing other evidence that sufficient taxable profits will be available inthe future.

Based on the future projections and representations provided to us theCompany's judgment on recoverability of Deferred Tax Asset as mentioned in Note 2.5.2of the Standalone Financial Statements is fair and reasonable.

Emphasis of Matter

We draw your attention to Note 31 to the standalone financial statementwhich explains the management's assessment of the financial impact due to thelock-downs and other restrictions and conditions related to the Covid-19 pandemicsituation for which definitive assessment of the impact in the subsequent period ishighly dependent upon the circumstances as they evolve. Our opinion is not modified inrespect of this matter.

Other information

The company's Board of Directors is responsible for the otherinformation. The other information comprises the information included in the ManagementDiscussion and Analysis Board's Report including Annexures to Board's ReportBusiness Responsibility Report Corporate Governance Report and Shareholder Informationbut does not include the standalone financial statements and our auditor's reportthereon.

Our opinion on the standalone financial statements does not cover theother information and we do not express any form of assurance conclusion thereon.

In connection with our audit of the standalone financial statementsour responsibility is to read the other information and in doing so consider whethersuch other information is materially inconsistent with the standalone financial statementsor our knowledge obtained in the audit or otherwise appears to be materially misstated.If based on the work we have performed we conclude that there is a material misstatementof this other information we are required to report that fact. We have nothing to reportin this regard.

Management's Responsibility for the Standalone FinancialStatements

The Company's Board of Directors is responsible for the mattersstated in section 134(5) of the Companies Act 2013 ("the Act") with respect tothe preparation and presentation of these standalone financial statements that give a trueand fair view of the financial position financial including other comprehensive incomecash flows changes in equity of the Company in accordance with the accounting principlesgenerally accepted in India including the Indian Accounting Standards specified underSection 133 of the Act read with Rule 7 of the Companies (Accounts) Rules 2014 asamended. This responsibility also includes the maintenance of adequate accounting recordsin accordance with the provision of the Act for safeguarding of the assets of the Companyand for preventing and detecting the frauds and other irregularities; selection andapplication of appropriate accounting policies; making judgments and estimates that arereasonable and prudent; and design implementation and maintenance of adequate internalfinancial control that were operating effectively for ensuring the accuracy andcompleteness of the accounting records relevant to the preparation and presentation ofthe standalone financial statements that give a true and fair view and are free frommaterial misstatement whether due to fraud or error.

In preparing the standalone financial statements management isresponsible for assessing the company's ability to continue as going concerndisclosing as applicable matters related to going concern and using the going concernbasis of accounting unless management either intends to liquidate the company or to ceaseoperations or has no realistic alternative but to do so.

Those charged with governance are also responsible for overseeing thecompany's financial reporting process.

Auditor's Responsibilities for the audit of the standalonefinancial statements

Our objectives are to obtain reasonable assurance about whether thestandalone financial statements as a whole are free from material misstatement whetherdue to fraud or error and to issue an auditor's report that include our opinion.Reasonable assurance is the high level of assurance but is not a guarantee that an auditconducted in accordance with SAs will always detect a material misstatement when itexists. Misstatement can arise from fraud or error and are considered material ifindividually or in the aggregate they could reasonably be expected to influence theeconomic decisions of users taken on the basis of this standalone financial

As part of an audit in accordance with SAs we exercise professionaljudgement and maintain professional scepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of thestandalone financial statements whether due to fraud or error design and perform auditprocedures responsive to those risks and obtain audit evidence that is sufficient andappropriate to provide a basis for our opinion. The risk of not detecting a materialmisstatement resulting from fraud is higher than for one resulting from error as fraud mayinvolve collusion forgery intentional omissions misrepresentations or the override ofinternal control.

• Obtain an understanding of internal control relevant to theaudit in order to design audit procedures that are appropriate in the circumstances. Undersection 143(3) (i) of the act we are also responsible for expressing our opinion onwhether the company has adequate internal financial controls system in place and theoperating effectiveness of such controls.

• Evaluate the appropriateness of accounting policies used and thereasonableness of accounting estimates and related disclosures made by management.

• Conclude on appropriateness of management's use of thegoing concern basis of accounting and based on the audit evidence obtained whether amaterial uncertainty exists related to events or conditions that may cast significantdoubt on the company's ability to continue as a going concern. If we conclude thatmaterial uncertainty exists we are required to draw attention in our auditor'sreport to the related disclosures in the standalone financial statements or if suchdisclosures are inadequate to modify our opinion. Our conclusions are based on the auditevidence obtained up to the date of our auditor's report. However future events orconditions may cause the company to cease to continue as a going concern.

• Evaluate the overall presentation structure and content of thestandalone financial statements including the disclosures and whether the standalonefinancial statements represent the underlying transactions and events in a manner thatachieves fair presentation.

Materiality is the magnitude of misstatements in the annual standalonefinancial statements that individually or in aggregate makes it probable that theeconomic decisions of a reasonably knowledgeable user of the annual standalone financialstatements may be influenced. We consider quantitative materiality and qualitative factorsin

(i) planning the scope of our audit work and in evaluating the resultsof our work; and

(ii) to evaluate the effect of any identified misstatements in theannual standalone financial statements.

We communicate with those charged with governance regarding amongother matters the planned scope and timing of the audit and significant audit findingsincluding any significant deficiencies in internal control that we identify during ouraudit. We also provide those charged with governance with a statement that we havecomplied with relevant ethical requirements regarding independence and to communicatewith them all relationships and other matters that may reasonably be thought to bear onour independence and where applicable related safeguards.

From the matters communicated with those charged with governance wedetermine those matters that were of most significance in the audit of the standalonefinancial statements of the current period and are therefore the key audit matters. Wedescribe these matters in our auditor's report unless law or regulation precludespublic disclosure about the matter or when in extremely rare circumstances we determinethat a matter should not be communicated in our report because the adverse consequences ofdoing so would reasonably be expected to outweigh the public interest benefits of suchcommunication.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor's Report) Order 2016("the Order") issued by the Central Government of India in terms of sub-section11 of section 143 of the Act we give in the "Annexure- A" which forms part ofthis report a statement on the matters prescribed in paragraphs 3 and 4 of the Order.

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 accounts;

d) In our opinion the aforesaid standalone financial statements complywith the Ind AS specified under Section 133 of the Act read with Rule 7 of the Companies(Accounts) Rules 2014 as amended;

e) On the basis of written representations received from the directorsas on March 31 2020 and taken on record by the Board of Directors none of the directorsis disqualified as on March 31 2020 from being appointed as a director in terms ofSection 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" and

g) With respect to the other matters included in the Auditor'sReport in accordance with Rule 11 of the Companies (Audit and Auditor's) Rules 2014as amended 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 financial statements. Refer Note No. 27 to the standalone financialstatements;

II. The Company did not have any long-term contracts including derivatives contractsfor which there were any material foreseeable losses;

III. There are no amounts required to be transferred to the Investors Education andProtection Fund by the Company.

For R. Dewan & Co.
Chartered Accountants
FRN 017883N
( Rajiv Dewan )
Partner
M.No.: 084718
UDIN: 20084718AAAAAD8456
Place: Ludhiana
Date: 29th June 2020

Annexure - A to the Auditor's Report

The Annexure referred to in Independent Auditors' Report to themembers of the company on the financial statements for the year ended 31st March 2020.

On the basis of such checks as we considered appropriate and accordingto the information and explanation given to us during the course of our audit we reportthat:

(i) a) The Company has maintained proper records showing fullparticulars including quantitative details and situation of its fixed assets.

b) According to the information and explanations given to us FixedAssets are verified by rotation every year. No discrepancies were observed in the FixedAssets physically verified during the financial year

c) According to the information and explanation given to us and on thebasis of our examination of the records of the company the title deeds of the immovableproperties are held in the name of the company.

(ii) The company has not held any inventory during the year thereforethe provision of clause 3(ii) of the Order are not applicable to the company.

(iii) According to the information and explanations given to us wereport that the Company has not granted any loans secured or unsecured to companiesfirms partnership or other parties covered in the register maintained under section 189of the Companies Act 2013.Therefore the provisions of paragraph 3(iii) (a) (b) and (c)of the Order are not applicable to the Company.

(iv) According to the information and explanations given to us theCompany has complied with the requirements of the section 186 of the Companies Act 2013pursuant to loans granted and investments made. The company has not granted loans todirectors or to the person in whom directors are interested. Therefore the provisions ofthe section 185 of the Companies Act 2013 are not applicable to the company.

(v) According to the information and explanations given to us theCompany has not accepted deposits covered under the provisions of sections 73 to 76 otherrelevant provisions of the Companies Act 2013 and the rules framed there under. Accordingto the information and explanations given to us no order under the aforesaid sections hasbeen passed by the Company Law Board National Company Law Tribunal or Reserve Bank ofIndia or any Court or any other Tribunal on the Company.

(vi) The provision of Clause 3(vi) of the Order regarding maintenanceof cost records is not applicable to the company.

(vii) a) According to the information and explanations given to us andon the basis of the records of the Company examined by us in our opinion the Company hasbeen regular in depositing undisputed statutory dues including provident fundemployees' state insurance income tax Goods and Services Tax (GST) cess and otherstatutory dues with the appropriate authorities. According to the information andexplanations given limited liability to us no undisputed amounts in respect of statutorydues payable were outstanding as on the last day of the financial year concerned for aperiod of more than six months from the date they became payable.

b) According to the information and explanations given to us the duesof Income tax which has not been deposited on March 31 2020 on account of any disputeare as follows:

Name of the Statute Nature of Dues Amount in (Rs.) Period to which the amount relates Forum where dispute is pending
Income Tax Act 1961 Income Tax 2841242 2017-18 Commissioner of Income Tax (Appeals)
Income Tax Act 1961 Income Tax 15020923 2016-17 Commissioner of Income Tax (Appeals)

(viii) According to the information and explanations given to us theCompany has not taken any loans or borrowings from any financial institution bank orgovernment Therefore the provisions of clause 3(viii) of the Order are not applicable tothe company.

(ix) The company has not raised money by way of initial public offer orfurther public offer (including debt instruments) during the year. Further no money wasborrowed by way of term loan. Therefore the provisions of clause 3(ix) of the Order arenot applicable to the company.

(x) According to the information and explanations given to us no fraudby the company or on the company by its officers or employees has been noticed or reportedduring the course of our audit.

(xi) According to the information and explanations given to us andbased on our examination of records of company the company has paid managerialremuneration in accordance with the requisite approvals mandated by the provisions ofsection 197 read with Schedule V to Companies Act 2013.

(xii) According to the information and explanation given to us thecompany is not a Nidhi Company. Therefore the provisions of paragraph 3(xii) of the Orderare not applicable.

(xiii) According to the information and explanations given to us andbased on our examination of the records of the company transactions with the relatedparties are in compliance with section 177 and 188 of the Act where applicable and thedetails of the transactions have been disclosed in the financial statements as required bythe applicable accounting standards.

(xiv) According to the information and explanations given to us thecompany has not made preferential allotment or private placement of shares or fully orpartly convertible debentures during the year under audit. Thus the provisions ofparagraph 3(xiv) of the Order are not applicable.

(xv) According to information and explanations given to us and basedon our examination of the records of the company the company has not entered intonon-cash transactions with director or person connected with him. Accordingly provisionsof paragraph 3 (xv) of the Order are not applicable.

(xvi) The company is registered as a Non-Banking Financial Company(‘NBFC') as defined under section 45-IA of the Reserve Bank of India(‘RBI') Act 1934.

For R. Dewan & Co.
Chartered Accountants
FRN 017883N
( Rajiv Dewan )
Partner
M.No.: 084718
UDIN: 20084718AAAAAD8456
Place: Ludhiana
Date: 29th June 2020

Annexure - B to the Auditor's Report

Report on the Internal Financial Controls under Clause (i) ofSub-section 3 of Section 143 of the Companies Act 2013("the Act")

1. We have audited the internal financial controls over financialreporting of Vardhman Holdings Limited ("the Company") as of 31st March 2020 inconjunction with our audit of the standalone financial statements of the Company for theyear ended on that date.

2. Management's Responsibility for Internal FinancialControls

The Company's management is responsible for establishing andmaintaining internal financial controls based on the internal control over financialreporting criteria established by the Company considering the essential components ofinternal control stated in the Guidance Note on Audit of Internal Financial Controls overFinancial Reporting (the "Guidance Note") issued by the Institute of CharteredAccountants of India (‘ICAI'). These responsibilities include the designimplementation and maintenance of adequate internal financial controls that were operatingeffectively for ensuring the orderly and efficient conduct of its business includingadherence to company's policies the safeguarding of its assets the prevention anddetection of frauds and errors the accuracy and completeness of the accounting recordsand the timely preparation of reliable financial information as required under theCompanies Act 2013.

3. Auditors' Responsibility

Our responsibility is to express an opinion on the Company'sinternal financial controls over financial reporting with reference to these standalonefinancial statements based on our audit. We conducted our audit in accordance with theGuidance Note and the Standards on Auditing issued by ICAI and deemed to be prescribedunder section 143(10) of the Companies Act 2013 to the extent applicable to an audit ofinternal financial controls both applicable to an audit of Internal Financial Controlsand both issued by the Institute of Chartered Accountants of India. Those Standards andthe Guidance Note require that we comply with ethical requirements and plan and performthe audit to obtain reasonable assurance about whether adequate internal financialcontrols over financial reporting with reference to these standalone financial statementswere established and maintained and if such controls operated effectively in all materialrespects.

Our audit involves performing procedures to obtain audit evidence aboutthe adequacy of the internal financial controls system over financial reporting withreference to these standalone financial statements and their operating effectiveness. Ouraudit of internal financial controls over financial reporting included obtaining anunderstanding of internal financial controls over financial reporting with reference tothese standalone financial statements assessing the risk that a material weakness existsand testing and evaluating the design and operating effectiveness of internal controlbased on the assessed risk. The procedures selected depend on the auditor's judgmentincluding the assessment of the risks of material misstatement of the financialstatements whether due to fraud or error.

We believe that the audit evidence we have obtained is sufficient andappropriate to provide a basis for our audit opinion on the Company's internalfinancial controls system over financial reporting with reference to these standalonefinancial statements.

4. Meaning of Internal Financial Controls over FinancialReporting

A company's internal financial control over financial reportingwith reference to these standalone financial statements is a process designed to providereasonable assurance regarding the reliability of financial reporting and the preparationof financial statements for external purposes in accordance with generally acceptedaccounting principles. A company's internal financial control over financialreporting with reference to these standalone financial statements includes those policiesand procedures that:

(1) pertain to the maintenance of records that in the reasonabledetail accurately and fairly reflect transactions and dispositions of the assets of thecompany;

(2) provide reasonable assurance that transactions are recorded asnecessary to permit preparation of financial statements in accordance with generallyaccepted accounting principles and that receipts and expenditures of the company arebeing made only in accordance with authorisations of management and directors of thecompany; and

(3) provide reasonable assurance regarding prevention or timelydetection of unauthorised acquisition use or disposition of the company's assetsthat could have a material effect on the financial statements

5. Inherent Limitations of Internal Financial Controls overFinancial Reporting

Because of the inherent limitations of internal financial controls overfinancial reporting with reference to these standalone financial statements including thepossibility of collusion or improper management override of controls materialmisstatements due to error or fraud may occur and not be detected. Also projections ofany evaluation of the internal financial controls over financial reporting with referenceto these standalone financial statements to future periods are subject to the risk thatthe internal financial control over financial reporting with reference to these standalonefinancial statements may become inadequate because of changes in conditions or that thedegree of compliance with the policies or procedures may deteriorate.

6. Opinion

In our opinion the Company has in all material respects an adequateinternal financial controls system over financial reporting with reference to thesestandalone financial statements and such internal financial controls over financialreporting with reference to these standalone financial statements were operatingeffectively as at31st March 2020 based on the internal 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 Financial Reporting issued by the Institute of CharteredAccountants of India.

For R. Dewan & Co.
Chartered Accountants
FRN 017883N
( Rajiv Dewan )
Partner
M.No.: 084718
Place: Ludhiana
Date: 29th June 2020