To the Members of VIKAS ECOTECH LIMITED
Report on the Audit of the Standalone Financial Statements
We have audited the standalone financial statements of VIKAS ECOTECH LIMITED ("theCompany") which comprise the balance sheet as at 31st March 2021 thestatement of Profit and Loss and the statement of cash flows for the period then endedand notes to the financial statements including a summary of significant accountingpolicies and other explanatory information
Subject to the possible impact due to matters reported in other matters para in ouropinion and to the best of our information and according to the explanations given to usthe aforesaid standalone financial statements give the information required by theCompanies Act 2013 ("the Act") in the manner so required and give a true andfair view in conformity with the accounting principles generally accepted in India of thestate of affairs of the Company as at 31st March 2021 its profit and its cash flows forthe period ended on that date.
Basis for Opinion
We conducted our audit in accordance with the Standards on Auditing (SAs) specifiedunder section 143(10) of the Companies Act 2013. Our responsibilities under thoseStandards are further described in the Auditor's Responsibilities for the Audit of theFinancial Statements section of our report. We are independent of the Company inaccordance with the Code of Ethics issued by the Institute of Chartered Accountants ofIndia together with the ethical requirements that are relevant to our audit of thefinancial statements under the provisions of the Companies Act 2013 and the Rules thereunder and we have fulfilled our other ethical responsibilities in accordance with theserequirements and the Code of Ethics. Except for the documents/ information related tomatters mentioned in other matters para we believe that the audit evidence we haveobtained is sufficient and appropriate to provide a basis for our opinion.
KEY AUDIT MATTTERS
Key audit matters are those matters that in our professional judgment were of mostsignificance in our audit of the financial statements of the current period. These matterswere addressed in the context of our audit of the financial statements as a whole and informing our opinion thereon and we do not provide a separate opinion on these matters. Wehave determined following matters as key audit matters to be communicated in our report.
|S. No. Key Audit Matters ||How audit addressed the key audit matter |
|1 Litigation Matters || |
|The company has certain significant open legal proceedings under Direct and Indirect tax laws and civil suits refer note 35. ||Our audit procedures included and were not limited to the following: |
|-Income Tax Demand Rs. 2204386 related to AY 200809. Letter of Request for rectification was submitted to The Asst. Commissioner of Income Tax [Circle 26(2)] New Delhi since TDS credit from Lupin Ltd.was not reflected in 26 AS of relevant year. || Assessing management's position through discussions with the inhouse legal expert the probability of success in the aforesaid cases and the magnitude of any potential loss. |
|-Income Tax Demand Rs. 1980580 related to AY 200910. Letter of Request for rectification was submitted to The Asst. Commissioner of Income Tax [Circle 26(2)] New Delhi since TDS credit from Lupin Ltd.was not reflected in 26 AS of relevant year. || Discussion with the management on the development in these litigations during the year ended March 31 2021. |
|Income Tax Demand Rs. 2474790 related to AY 201718. Letter of Request for rectification u/s 154 has been submitted to The Asst. Commissioner of Income Tax [Circle 26(2)] New Delhi since Assessment order passed u/s 143(3) for the A.Y. 2017-18 carries mistake apparent from records. || Obtained representation letter from the management on the assessment of these matters |
|-Excise demand of Rs. 3124983 related M/s Sigma Plastic Industries pertaining to FY 2014-15. The appeal has been filed by the company and at present it is pending at CESTAT New Delhi. The Company had acquired 100% share in Sigma Plastic Industries which was merged in the Company during financial year 2014-15. Accordingly pending litigation of Sigma Plastic Industries has also become part of pending litigation of the Company. || |
|The Company has filed civil suit against ADM Agro Industries Kota and Akola Limited supplier of Soya Bean Oil in Saket Court Delhi (Case No-CS OS No.- 198/214) amounting Rs. 9961516 due to poor supply of soya bean oil. The Company has suffered a loss due to such poor quality of material supplied by them and non-recovery of money from debtors and it also affect goodwill of the Company. ADM Agro Industries Kota and Akola Limited has also filed winding up petition against the Company in High Court (Case No. CO PET N. 64/2014) due to non-payment of Rs. 4115664 along with interest at the rate of 18% from the due date of payment. ADM Agro Industries Kota and Akola Limited has also filed a summary suit for recovery of debts in Tis Hazari Court (Summary Suit No. - C S (OS) 3077/2014) || |
|The Directorate of Enforcement Delhi Zonal Office New Delhi has issued a provisional attachment order ("Order") bearing number 04/2020 and file number ECIR/10/DZ-1/2017/16962 under Section 5(1) of the Prevention of Money Laundering Act 2002 ("PMLA") against the Company and its Promoter/ Director Mr. Vikas Garg and other third parties. Through the said attachment UCO bank account of the company maintained at Parliament Street New Delhi Branch has been attached for an amount of Rs. 715533/-. || |
|Due to complexity involved in these litigation matters management's judgement regarding recognition and measurement of provisions for these legal proceedings is inherently uncertain and might change over time as the outcomes of the legal cases are determined. Accordingly it has been considered as a key audit matter. || |
|2. Physical Verification of Inventory as on 31 March 2021 || |
|Refer note 9 of the financial statements. The value of inventory includes raw material valuing Rs. 85.72 Crores and Finished Goods valuing Rs. 14.83 Crores as on 31 March 2021. Due to COVID-19 related lockdown inventory at different locations could not be physically verified. ||As an alternate procedure in accordance with Standard of Auditing we verify and inspect supporting documents related to purchase production and sale of inventory on test check basis. |
|Being material this has been considered as key audit matter. ||Besides this the details of inventory and its valuation as on year ended March 21 have been certified by the management of company and cost auditor of the company. |
|3. Physical Verification of Property Plant and Equipment as on 31 March 2021 || |
|Due to COVID-19 related lockdown physical inspection of property plant and equipment at different locations could not be done. Being material this has been considered as key audit matter. ||As an alternate procedure in accordance with Standard of Auditing we verified and inspected supporting documents related to additions and disposals of property plant and equipment on test check basis |
Information other than the financial statements and auditors' report thereon
The Company's board of directors is responsible for the preparation of the otherinformation. The other information comprises the information included in the Board'sReport including Annexures to Board's Report Business Responsibility Report but does notinclude the 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 standalone financial statements or our knowledge obtainedduring 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.
Responsibilities of Management and Those Charged with Governance for the StandaloneFinancial Statements
The Company's Board of Directors is responsible for the matters stated in section134(5) of the Companies Act 2013 ("the Act") with respect to the preparation ofthese standalone financial statements that give a true and fair view of the financialposition financial performance changes in equity 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 accountingpolicies; making judgments and estimates that are reasonable and prudent; and designimplementation and maintenance of adequate internal financial controls that wereoperating effectively for ensuring the accuracy and completeness of the accountingrecords relevant to the preparation and presentation of the financial statements thatgive a true and fair view and are free from material misstatement whether due to fraud orerror.
In preparing the financial statements the Board of Directors 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 unlessthe Board of Directors either intends to liquidate the Company or to cease operations orhas no realistic alternative but to do so.
The Board of Directors are also responsible for overseeing the company's financialreporting process.
Auditor's Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financialstatements as a whole are free from material misstatement whether due to fraud or errorand to issue an auditor's report that includes our opinion. Reasonable assurance is a highlevel of assurance but is not a guarantee that an audit conducted in accordance with SAswill always detect a material misstatement when it exists. Misstatements can arise fromfraud or error and are considered material if individually or in the aggregate theycould reasonably be expected to influence the economic decisions of users taken on thebasis of these financial statements.
As part of an audit in accordance with SAs we exercise professional judgment andmaintain professional skepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of the financialstatements whether due to fraud or error design and perform audit procedures responsiveto those risks and obtain audit evidence that is sufficient and appropriate to provide abasis for our opinion. The risk of not detecting a material misstatement resulting fromfraud is higher than for one resulting from error as fraud may involve collusionforgery intentional omissions misrepresentations or the override of internal control.
Obtain an understanding of internal control relevant to the audit in order todesign audit procedures that are appropriate in the circumstances. Under section 143(3)(i)of the Companies Act 2013 we are also responsible for expressing our opinion on whetherthe company has adequate internal financial controls system in place and the operatingeffectiveness of such controls.
Evaluate the appropriateness of accounting policies used and the reasonablenessof accounting estimates and related disclosures made by management.
Conclude on the appropriateness of management's use of the going concern basisof accounting and based on the audit evidence obtained whether a material uncertaintyexists related to events or conditions that may cast significant doubt on the Company'sability to continue as a going concern. If we conclude that a material uncertainty existswe are required to draw attention in our auditor's report to the related disclosures inthe financial statements or if such disclosures are inadequate to modify our opinion.Our conclusions are based on the audit evidence obtained up to the date of our auditor'sreport. However future events or conditions may cause the Company to cease to continue asa going concern.
Evaluate the overall presentation structure and content of the financialstatements including the disclosures and whether the financial statements represent theunderlying transactions and events in a manner that achieves fair presentation.
We communicate with those charged with governance regarding among other matters theplanned scope and timing of the audit and significant audit findings including anysignificant deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have compliedwith relevant ethical requirements regarding independence and to communicate with themall relationships and other matters that may reasonably be thought to bear on ourindependence and where applicable related safeguards.
From the matters communicated with those charged with governance we determine thosematters that were of most significance in the audit of the financial statements of thecurrent period and are therefore the key audit matters. We describe these matters in ourauditor's report unless law or regulation precludes public disclosure about the matter orwhen in extremely rare circumstances we determine that a matter should not becommunicated in our report because the adverse consequences of doing so would reasonablybe expected to outweigh the public interest benefits of such communication.
a. Closing stock has been valued and certified by the management of the company andrelied upon by us. The inventory holding level being significantly higher as compare tosales trends of the company is subject to management view and business expediency.
b. Closing stock includes stock valuing Rs. 1.53 Cr. non moving/slow moving natureidentified on the basis of ageing of stock for more than year. No provisioning is donesince as per the management the stock is usable and is in good condition and hence noprovisioning for impairment in value of stock is required.
c. Balances of Sundry Debtors Sundry Creditors including advances made to suppliersand advances received from customers have been confirmed by management of the company andrelied upon by us as the balance confirmations are yet to be received from some parties.
d. Debtors includes debtors amounting to Rs. 13.75 Cr. which are overdue andoutstanding for more than one year as on March 2021. The said balances are subject toprovisioning for expected credit loss (ECL) on the basis of probability of recoverability.No provision is being done against these balances since as per the management balances aregood and recoverable.
e. Debtors includes debtors amounting to Rs. 6.06 Cr. which are outstanding on accountof dispute with the parties. The said balances are subject to provisioning for expectedcredit loss (ECL) on the basis of probability of recoverability. No provision is beingdone against these balances since as per the management said balances are good andrecoverable.
f. The advances given to suppliers amounting to Rs. 75.02 Crores being significantlyhigher as compare to purchase trends of the company is subject to management view andbusiness expediency. An advance to suppliers includes advances of Rs. 10.45 Crores whichare pending for more than one year and pending for adjustment as on March 2021. Noprovision is being done against these balances since as per the management balances aregood and recoverable.
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 Act we give in the Annexure-"A" a statement on the matters specified inparagraphs 3 and 4 of the Order.
2. As required by Section 143(3) of the Act we report to the extent applicable 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 except theinformation and explanation related to matters mentioned in other matters para.
b) In our opinion proper books of account as required by law relating to preparationof the aforesaid financial statements have been kept so far as it appears from ourexamination of those books. .
c) The company is not having any branch office and hence clause (c) of section 143(3)of the Companies Act 2013 is not applicable.
d) The Balance Sheet the Statement of Profit and Loss dealt with by this Report are inagreement with the relevant books of account maintained for the purpose of preparation ofthe financial statements.
e) In our opinion except as otherwise disclosed in accounting policies and notes tothe financial statements the aforesaid financial statements comply with the AccountingStandards specified under Section 133 of the Act read with Rule 7 of the Companies(Accounts) Rules 2014
f) On the basis of the written representations received from the directors of theCompany as on 31st March 2021 taken on record by the Board of Directors of the Companynone of the directors of the company is disqualified as on 31st March 2021 from beingappointed as a director in terms of Section 164 (2) of the Act.
g) 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".
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 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 financial statements - Refer Note 35 to the financial statements;
ii. The Company did not have any material foreseeable losses on long-term contractsincluding derivative contracts.
iii. There were no amounts which were required to be transferred to the InvestorEducation and Protection Fund by the Company.
| ||For KSMC & ASSOCIATES |
| ||Chartered Accountants |
| ||FRN: 003565N |
| ||(CA SACHIN SINGHAL) |
| ||Partner |
| ||M. No.:505732 |
| ||UDIN: 21505732AAAACZ7970 |
|Place: New Delhi || |
|Date: 14.07.2021 || |
ANNEXURE TO THE AUDITOR'S REPORT
The Annexure referred to in our report to the members of VIKAS ECOTECHLIMITED("the Company") for the year ended March 31 2021. We report that:
|S. No. ||Particulars ||Auditor's Remarks |
|(i) ||(a) whether the company is maintaining proper records showing full particulars including quantitative details and situation of fixed assets; ||In the absence of requisite documents and explanation we are unable to comment on this. |
| ||(b) whether these fixed assets have been physically verified by the management at reasonable intervals; whether any material discrepancies were noticed on such verification and if so whether the same have been properly dealt with in the books of account; ||In the absence of requisite documents and explanation we are unable to comment on this. |
| ||(c) Whether the title deeds of immovable properties are held in the name of the company. If not provide the details thereof; ||According to information and explanations given to us and on the basis of examination of the records of the company the title deeds of immovable properties are held in the name of the Company |
|(ii) ||whether physical verification of inventory has been conducted at reasonable intervals by the management and whether any material discrepancies were noticed and if so whether they have been properly dealt with in the books of account; ||In our opinion according to information given to us the inventories have been physically verified during the year by the Management at reasonable intervals and as explained to us no material discrepancies were noticed on physical verification. |
|(iii) ||Whether the company has granted any loans secured or unsecured to companies firms Limited Liability Partnerships or other parties covered in the register maintained under section 189 of the Companies Act 2013. If so ||The company has not granted any loans secured or unsecured to companies firms Limited Liability Partnerships or other parties covered in the register maintained under Section 189 of the Companies Act 2013. |
| ||(a) whether the terms and conditions of the grant of such loans are not prejudicial to the company's interest; ||NA. |
| ||(b) whether the schedule of repayment of principal and payment of interest has been stipulated and whether the repayments or receipts are regular; ||NA |
| ||(c) if the amount is overdue state the total amount overdue for more than ninety days and whether reasonable steps have been taken by the company for recovery of the principal and interest; ||NA |
|(iv) ||In respect of loans investments guarantees and security whether provisions of section 185 and 186 of the Companies Act 2013 have been complied with. If not provide the details thereof. ||The company has not given any loan or guarantee or provided any security during the year. In respect of investments made by the company during the year all applicable compliances are complied with. |
|(v) ||in case the company has accepted deposits whether the directives issued by the Reserve Bank of India and the provisions of sections 73 to 76 or any other relevant provisions of the Companies Act 2013 and the rules framed there under where applicable have been complied with? If not the nature of such contraventions be stated; If an order has been passed by Company Law Board or National Company Law Tribunal or Reserve Bank of India or any court or any other tribunal whether the same has been complied with or not? ||According to the information and explanations given to us the Company has not accepted any deposit within meaning of section 73 to 76 of the Companies Act 2013 and rules framed there under during the year. |
|(vi) ||Whether maintenance of cost records has been specified by the Central Government under subsection (1) of section 148 of the Companies Act 2013 and whether such accounts and records have been so made and maintained. ||The Company has maintained cost records as required as specified by the Central Government under sub-section (1) of section 148 of the Companies Act 2013. In this regard Management Representation and certificate from cost auditor has been provided and relied upon by us being technical matter in nature. |
|(vii) ||(a) whether the company is regular in depositing undisputed statutory dues including provident fund employees' state insurance income-tax sales-tax service tax duty of customs duty of excise value added tax cess and any other statutory dues to the appropriate authorities and if not the extent of the arrears of outstanding statutory dues as on the last day of the financial year concerned for a period of more than six months from the date they became payable shall be indicated; ||According to the information and explanations given to us and on the basis of our examination of the records of the Company in respect of undisputed statutory dues including Provident Fund Employee's State Insurance Fund Income Tax Sales Tax Service Tax Goods and Service Tax Custom Duty Value Added Tax cess and other material statutory dues have been deposited during the year by the Company with the appropriate authorities but delay in deposit of the same has been observed in some of the cases. As on year end following are the unpaid statutory dues which are remaining unpaid since very long time: |
| || ||1. Interest on DDT Rs. 175706 |
| || ||2. TDS Payable Rs. 450497 |
| || ||3. Interest on late payment of GST Rs. 160874 |
| || ||4. Late filing fees TdS Rs. 30400 |
| || ||5. Income Tax Payable Rs. 48072910 |
| || ||6. Income Tax payable Rs. 7522196 |
| || ||7. Custom Duty Payable Rs. 10638175*** |
| || ||8. Interest on ESIC Rs. 2808 |
| || ||*** This amount is payable against goods damaged in fire. Against this loss the company had lodged the insurance claim with the Insurance Company. |
| || ||During the year the claim has been partly settled by the insurance company. Regarding short claim the Company has already filled its objection with respect to short amount of insurance claim received from OIC which is pending as on date. In view of this the abovementioned amount payable has been put on hold for payment and shall be paid as and when insurance company settles the pending insurance claim. |
| ||(b) where dues of income tax or sales tax or service tax or duty of customs or duty of excise or value added tax have not been deposited on account of any dispute then the amounts involved and the forum where dispute is pending shall be mentioned. (A mere representation to the concerned Department shall not be treated as a dispute). ||For amounts which are not paid on account of disputes for which appeals are pending refer Note 35 to Financial Statements for the year ended 31st March 2021. |
|(viii) ||Whether the company has defaulted in repayment of loans or borrowing to a financial institution bank Government or dues to debenture holders? If yes the period and the amount of default to be reported (in case of defaults to banks financial institutions and Government lender wise details to be provided). ||In our opinion and according to the information and explanations given to us the Company has not defaulted in the repayment of loans or borrowings to financial institutions banks and Government or dues to debenture holders during the year. |
|(ix) ||Whether moneys raised by way of initial public offer or further public offer (including debt instruments) and term loans were applied for the purposes for which those are raised. If not the details together with delays or default and subsequent rectification if any as may be applicable be reported; ||During the year the company has not raised any money by way of public offer. The amount raised by way of term loans were applied for the purpose for which those are raised. |
|(x) ||whether any fraud by the company or any fraud on the Company by its officers or employees has been noticed or reported during the year; If yes the nature and the amount involved is to be indicated; ||Based upon the audit procedures performed and information and explanations given by the management we report that no fraud on or by the Company has been noticed or reported during the course of our audit. |
|(xi) ||Whether managerial remuneration has been paid or provided in accordance with the requisite approvals mandated by the provisions of section 197 read with Schedule V to the Companies Act? If not state the amount involved and steps taken by the company for securing refund of the same; ||In our opinion and according to the information and explanations given to us the Company has paid / provided managerial remuneration in accordance with the requisite approvals mandated by the provisions of section 197 read with Schedule V to the Companies Act 2013. |
|(xii) ||whether the Nidhi Company has complied with the Net Owned Funds to Deposits in the ratio of 1: 20 to meet out the liability and whether the Nidhi Company is maintaining ten per cent unencumbered term deposits as specified in the Nidhi Rules 2014 to meet out the liability; ||The Company is not a Nidhi Company and hence reporting under clause (xii) of Paragraph 3 of the Order is not applicable. |
|(xiii) ||Whether all transactions with the related parties are in compliance with sections 177 and 188 of Companies Act 2013 where applicable and the details have been disclosed in the Financial Statements etc. as required by the applicable accounting standards; ||In our opinion and according to the information and explanations given to us the Company's transactions with its related party are in compliance with Sections 177 and 188 of the Companies Act 2013 where applicable and details of related party transactions have been disclosed in the financial statements etc. as required by the applicable accounting standards. |
|(xiv) ||Whether the company has made any preferential allotment or private placement of shares or fully or partly convertible debentures during the year under review and if so as to whether the requirement of section 42 of the Companies Act 2013 have been complied with and the amount raised have been used for the purposes for which the funds were raised. If not provide the d etails in respect of the amount involved and nature of non-compliance; ||During the year under review the Company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures and hence this clause is not applicable. |
|(xv) ||whether the company has entered into any non-cash transactions with directors or persons connected with him and if so whether the provisions of section 192 of Companies Act 2013 have been complied with; ||The company has not entered into any non-cash transactions with directors or persons connected with him hence the provisions of section 192 of Companies Act 2013 are not applicable |
|(xvi) ||Whether the company is required to be registered under section 45-IA of the Reserve Bank of India Act 1934 and if so whether the registration has been obtained. ||In our opinion and according to information and explanations provided to us the Company is not required to be registered under section 45-IA of the Reserve Bank of India Act 1934. |
| ||For KSMC & ASSOCIATES |
| ||Chartered Accountants |
| ||Firm Regn. No. 003565N |
| ||CA SACHIN SINGHAL |
| ||Partner |
| ||Membership No.: 505732 |
| ||UDIN: 21505732AAAACZ7970 |
|Place: New Delhi || |
|Date : 14.07.2021 || |
Annexure "B" to the Independent Auditors Report on the FinancialStatements of VIKAS ECOTECH LIMITED
(Referred to in paragraph 2 (f) under 'Report on Other Legal and RegulatoryRequirements' of our report 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 VIKASECOTECH LIMITED ("the Company") as of March 31 2021 in conjunction with ouraudit of the 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 Financial Reportingissued by the Institute of Chartered Accountants of India". These responsibilitiesinclude the design implementation and maintenance of adequate internal financial controlsthat were operating effectively for ensuring the orderly and efficient conduct of itsbusiness including adherence to company's policies the safeguarding of its assets theprevention and detection of frauds and errors the accuracy and completeness of theaccounting records and the timely preparation of reliable financial information asrequired under the Companies Act 2013.
Our responsibility is to express an opinion on the Company's internal financialcontrols over financial reporting based on my/our audit conducted in accordance with theGuidance Note on Audit of Internal Financial Controls Over Financial Reporting (the"Guidance Note") and the Standards on Auditing to the extent applicable to anaudit of internal financial controls both issued by the Institute of CharteredAccountants of India. 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 over Financial Reporting were established andmaintained and if such controls operated 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 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 judgement including the assessment of the risks ofmaterial misstatement of the financial statements 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 financial control over financial reporting is a process designedto provide reasonable assurance regarding the reliability of financial reporting and thepreparation of financial statements for external purposes in accordance with generallyaccepted accounting principles. A company's internal financial control over financialreporting includes those policies and procedures that:
(1) pertain to the maintenance of records that in reasonable detail accurately andfairly reflect the transactions and dispositions of the assets of the company;
(2) provide reasonable assurance that transactions are recorded as necessary to permitpreparation of financial statements in accordance with generally accepted accountingprinciples and that receipts and expenditures of the company are being made only inaccordance with authorizations of management and directors of the company; and
(3) provide reasonable assurance regarding prevention or timely detection ofunauthorized acquisition use or disposition of the company's assets that could have amaterial effect on the financial statements.
INHERENT LIMITATIONS OF INTERNAL FINANCIAL CONTROLS OVER FINANCIAL REPORTING
Because of the inherent limitations of internal financial controls over financialreporting including the possibility of collusion or improper management override ofcontrols material misstatements due to error or fraud may occur and not be detected.Also projections of any evaluation of the internal financial controls over financialreporting to future periods are subject to the risk that the internal financial controlover financial reporting may become inadequate because of changes in conditions or thatthe degree of compliance with the policies or procedures may deteriorate.
Except for the possible impact due to matter reported in other matters para in ouropinion to the best of our information and according to the explanations given to us theCompany has in all material respects an adequate internal financial controls system overfinancial reporting and such internal financial controls over financial reporting wereoperating effectively as at March 31 2021 based on the internal control over financialreporting criteria established by the Company considering the essential components ofinternal control stated in the Guidance Note issued by the ICAI.
With reference to stock and inventory the company needs to make its inventorymanagement system including physical stock taking process more effective and robust.Further the company also needs to improve its process for conduct of physical verificationof fixed assets in phased manner at regular intervals and also process for obtainingbalances confirmations from suppliers or customers at regular interval.
| ||For KSMC & ASSOCIATES |
| ||Chartered Accountants |
| ||Firm Regn. No. 003565N |
| ||CA SACHIN SINGHAL |
| ||Partner |
| ||Membership No.: 505732 |
| ||UDIN: 21505732AAAACZ7970 |
|Place: New Delhi || |
|Date: 14.07.2021 || |