The Members of
VIKRAM THERMO (INDIA) LIMITED
Report on the Audit of the Financial Statements
1. We have audited the financial statements of VIKRAM THERMO (INDIA) LIMITED ("theCompany") which comprise the Balance Sheet as at 31st March 2020and the Statement of Profit and Loss the Statement of Changes in Equity and Statement ofCash Flows for the year then ended and notes to the financial statements including asummary of the significant accounting policies and other explanatory information.
2. 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 a true andfair view in conformity with the accounting principles generally accepted in Indiaincluding Indian Accounting Standards (Ind AS') specified under Section 133 of theAct of the state of affairs of the Company as at 31 March 2020 and its profit totalcomprehensive income its cash flows and the changes in equity for the year ended on thatdate.
Basis for Opinion
3. We conducted our audit in accordance with the Standards on Auditing specifiedunder section 143(10) of the Act. Our responsibilities under those Standards are furtherdescribed in the Auditor's Responsibilities for the Audit of the Financial Statementssection of our report. We are independent of the Company in accordance with the Code ofEthics issued by the Institute of Chartered Accountants of India together with the ethicalrequirements that are relevant to our audit of the financial statements under theprovisions of the Companies Act 2013 and the Rules there under and we have fulfilled ourethical responsibilities in accordance with these requirements and the Code of Ethics. Webelieve that the audit evidence we have obtained is sufficient and appropriate to providea basis for our opinion.
Key Audit Matters
4. Key audit matters are those matters that in our professional judgment were ofmost 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 statementsas a whole and in forming our opinion thereon and we do not provide a separate opinionon these matters.
5. Key audit matter identified in our audit is on recoverability assessment oftrade receivables as follows:
|Key audit matter ||How our audit addressed the key audit matter |
|Revenue Recognition || |
|Revenue from the sale of goods is recognised upon the transfer of control of the goods to the customer usually on delivery of goods. The Company uses a variety of shipment terms across its operating markets and this has an impact on the timing of revenue recognition. ||1. Our audit procedures included reading the Company's revenue recognition accounting policies to assess compliance with Ind AS 115 "Revenue from contracts with customers". |
|There is a risk that revenue could be recognised in the incorrect period for sales transactions occurring on and around the year end therefore revenue recognition has been identified as a key audit matter. ||2. We performed test of controls of management's process of recognizing the revenue from sales of goods and placed specific attention on the timing of revenue recognition as per the sales terms with the customers. |
| ||3. We performed test of details of the sales transactions testing based on a representative sampling of the sales orders to test that the related revenues and trade receivables are recorded appropriately taking into consideration the terms and conditions of the sale orders including the shipping terms. |
| ||4. We also performed sales cut off procedures by agreeing deliveries occurring around the year end to supporting documentation to establish that sales and corresponding trade receivables are properly recorded in the correct period. |
Information other than the Financial Statements and Auditors' Report thereon.
6. The Company's Board of Directors is responsible for the other information. Theother information comprises the information included in the Annual 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 identified above when it becomes available and in doing soconsider whether the other information is materially inconsistent with the financialstatements or our knowledge obtained in the audit or otherwise appears to be materiallymisstated. When we read the Annual Report if we conclude that there is a materialmisstatement therein we are required to communicate the matter to those charged withgovernance and as may be legally advised.
Responsibilities of Management and Those Charged with Governance for the FinancialStatements
7. The Company's Board of Directors is responsible for the matters stated inSection 134(5) of the Act with respect to the preparation of these financial statementsthat give a true and fair view of the financial position financial performance changesin equity and cash flows of the Company in accordance with the accounting principlesgenerally accepted in India including the Indian Accounting Standards (Ind AS) specifiedunder section 133 of the Act. This responsibility also includes maintenance of adequateaccounting records in accordance with the provisions of the Act for safeguarding theassets of the Company and for preventing and detecting frauds and other irregularities;selection and application of appropriate implementation and maintenance of 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.
8. In preparing the 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.
9. Those Board of Directors are also responsible for overseeing the Company'sfinancial reporting process.
Auditors' Responsibilities for the Audit of the Financial Statements
10. 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 high level of assurance but is not a guarantee that an auditconducted in accordance with SAs will always detect a material misstatement when itexists. Misstatements 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 these financial statements.
11. As part of an audit in accordance with SAs we exercise professional judgmentand 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 of opinion. The risk of not detecting a material misstatement resulting from fraudis higher than for our resulting from error as fraud may involve collusion forgeryintentional 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 Act we are also responsible for expressing our opinion on whether the company hasadequate internal financial control system in place and the operating effectiveness ofsuch controls.
Evaluate the appropriateness of accounting policies used and the reasonablenessof accounting estimates and related disclosures made by the 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.
12. We communicate with those charged with governance regarding among othermatters the planned scope and timing of the audit and significant audit findingsincluding any significant deficiencies in internal control that we identify during ouraudit.
13. We also provide those charged with governance with a statement that we havecomplied with relevant ethical requirements regarding independence and to communicate withthem all relationships and other matters that may reasonably be thought to bear on ourindependence and where applicable related safeguards.
14. From the matters communicated with those charged with governance we determinethose matters that were of most significance in the audit of the 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.
Report on Other Legal and Regulatory Requirements
15. As required by the Companies (Auditor's Report) Order2016 ("theOrder") issued by the Central Government of India in terms of sub-section (11) ofSection 143 of the Act we give in "Annexure A" a statement on the mattersspecified in paragraphs 3 and 4 of the Order to the extent applicable.
16. 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 financial statements comply with the Ind AS Specifiedunder section 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 31stMarch 2020 taken on record by the Board of Directors none of the directors isdisqualified as on 31st March 2020 from being appointed as a director in terms of Section164 (2) of the Act.
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 the financial statements- Refer Note-36 of financial statement;
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 a delay of 36 delays in transferring the amount of Rs.294517/- tothe Investor Education and Protection Fund by the Company.
ANNEXURE "A" TO INDEPENDENT AUDITORS' REPORT
Referred to in paragraph 15 of "Report on Other Legal and RegulatoryRequirements" of our Report of even date to the Members of VIKRAM THERMO(INDIA) LIMITED for the year ended 31st March 2020.
1. In respect of Fixed Assets :
(a) The Company has maintained proper records showing full particulars includingquantitative details and situation of Fixed Assets on the basis of available information.
(b) As per the information and explanations given to us the management at reasonableintervals during the year in accordance with a programme of physical verificationphysically verified the fixed assets and no material discrepancies were noticed on suchverification as compared to the available records.
(c) As explained to us the title deeds of all the immovable properties are held in thename of the company.
2. In respect of its Inventories :
(a) The inventory has been physically verified during the year by the management. Inour opinion the frequency of verification is reasonable.
(b) The procedures of physical verification of inventories followed by the managementare reasonable and adequate in relation to the size of the Company and the nature of itsbusiness.
(c) On the basis of our examination of the records of inventory we are of opinion thatthe Company is maintaining proper records of inventory. The discrepancies noticed onverification between the physical stocks and books records were not material.
3. In respect of Loans and Advances granted during the year:
As regards the loans the company has not granted any loans secured or unsecuredduring the year under audit to the companies firms Limited Liability Partnership orother parties covered in the register maintained under section 189 of the companies Act2013 and therefore the clauses (iii) (a) to (c) of the companies (Auditor's Report)Order 2016 are not applicable.
4. Loans Investments and gurantees:
According to the information and explanation given to us the company had neither givenany loan guarantee or security nor made any investments during the year to partiescovered under Section 185 and 186. Therefore clauses (iv) of companies (Auditor's Report)Order 2016 is not applicable to the company.
5. Acceptance of Deposits:
During the year the company has not accepted any deposits and hence the directivesissued by the Reserve Bank of India and the provisions of sections 73 to 76 or any otherrelevant provisions of the Companies Act and the rules framed there under are notapplicable to the company. Therefore clauses (v) of companies (Auditor's Report) Order2016 is not applicable to the company.
6. Cost Records:
Pursuant to the rules made by the central government of India the Company is requiredto maintain cost records as specified under section 148(1) of the Act.
We have broadly reviewed the same and are of the opinion that prima facie theprescribed accounts and records have been made and maintained. However we have not made adetailed examination of the cost records with a view to determine whether they areaccurate or complete.
7. In respect of Statutory Dues :
(a) According to the records of the Company the Company is by and large regular indepositing with appropriate authorities undisputed statutory dues including providentfund employees' state insurance income tax value added tax wealth tax service taxduty of customs duty of excise value added tax goods and service tax cess and anyother statutory dues with the appropriate authorities applicable to it except there hasbeen delay in payment of Professional tax in certain cases. According to the informationand explanations given to us no undisputed amounts payable in respect statutory dues wereoutstanding as at 31st March 2020 for a period of more than six months fromthe date they became payable.
(b) According to the records of the company there are no dues of income tax valueadded tax wealth tax goods and service tax service tax duty of customs duty of exciseor value added tax which have not been deposited on account of dispute.
8. Based on our audit procedure and according to the information and explanationgiven to us we are of the opinion that during the year the Company has not defaulted inrepayment of dues to a Financial Institutions Banks or debenture holders.
9. According to the information and explanations given to us the company had notraised any money by way of public issue during the year. According to the information andexplanations given to us and on an overall examination of the balance sheet of thecompany in our opinion the term loans taken during the year were applied for the purposefor which they were obtained.
10. Based upon the audit procedures performed and information and explanationsgiven by the management we report that no fraud by the Company or any fraud on thecompany by it's officer or employees has been noticed or reported during the course of ouraudit.
11. In our opinion and according to the information and explanations given to usthe company had paid managerial remuneration which is in accordance with the requisiteapprovals mandated by the provisions of section 197 read with schedule V of The CompaniesAct 2013.
12. In our opinion and according to the information and explanations given to usthe provisions of special statute applicable to chit funds and nidhi / mutual benefitfunds / societies are not applicable to the company. Hence clause (xii) of the Company's(Auditor's Report) Order 2016 is not applicable to the company.
13. In our opinion and according to the information and explanations given to usthe transactions entered by the company with related parties are in compliance with theprovisions of section 177 and 188 of The Companies Act 2013 and details thereof areproperly disclosed in the financial statements.
14. During the year the Company has issued the shares on preferential allotmentbasis and has complied with the requirement of Section 42 of the Companies Act 2013Further amount raised by said preferential issue have been used for the purpose for whichFunds were raised (Refer Note No. 46).
15. The company had not entered in to any non-cash transactions with the directorsor persons connected with him during the year and hence clause (xv) of Company's(Auditor's Report) Order 2016 is not applicable to the company. 16. According tothe information and explanation given to us the company is not required to registeredunder section 45-IA of Reserve Bank of India Act 1934 hence clause (xvi) of Company's(Auditor's Report) Order 2016 is not applicable to the company.
ANNEXURE "B" TO INDEPENDENT AUDITORS' REPORT
Referred to in paragraph 16(f) of "Report on Other Legal and RegulatoryRequirements" of our Report of even date to the Members of VIKRAM THERMO(INDIA) LIMITED for the year ended 31st March 2020.
Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section143 of the Companies Act 2013 ("the Act")
We have audited the internal financial controls over financial reporting of VIKRAMTHERMO (INDIA) LIMITED as of 31st March 2020 in conjunction with our audit ofthe standalone 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 responsibilities includethe design implementation and maintenance of adequate internal financial controls thatwere operating effectively for ensuring the orderly and efficient conduct of its businessincluding adherence to company's policies the safeguarding of its assets the preventionand detection of frauds and errors the accuracy and completeness of the accountingrecords and the timely preparation of reliable financial information as required underthe Companies Act 2013.
Our responsibility is to express an opinion on the Company's internal financialcontrols over financial reporting based on our audit. We conducted our audit in accordancewith the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting(the "Guidance Note") and the Standards on Auditing issued by ICAI and deemedto be prescribed under section 143(10) of the Companies Act 2013 to the extentapplicable to an audit of internal financial controls both applicable to an audit ofInternal Financial Controls and both issued by the Institute of Chartered Accountants ofIndia. Those Standards and the Guidance Note require that we comply with ethicalrequirements and plan and perform the audit to obtain reasonable assurance about whetheradequate internal financial controls over financial reporting was 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 judgment 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 ofrecords that in reasonable detailaccurately and fairly reflect the transactions anddispositions of the assets of the company; (2) Provide reasonable assurance thattransactions are recorded as necessary to permit preparation of financial statements inaccordance with generally accepted accounting principles and that receipts andexpenditures of the company are being made only in accordance with authorizations ofmanagement and directors of the company; and (3) provide reasonable assurance regardingprevention or timely detection of unauthorized acquisition use or disposition of thecompany's assets that could have a material 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.
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 operating effectively as at 31st March 2020 based on theinternal control over financial reporting criteria established by the Company consideringthe essential components of internal control stated in the Guidance Note on Audit ofInternal Financial Controls Over Financial Reporting issued by the Institute of CharteredAccountants of India.
| ||For J.T. Shah & Co. |
| ||Chartered Accountants |
| ||[Firm Regd. No. 109616W] |
|Place: Ahmedabad ||(A. R. Pandit) |
|Date: 29/06/2020 ||Partner |
| ||[M. No. 127917] |
| ||UDIN: 20127917AAAABV8265 |