the Members of
VMS INDUSTRIES LIMITED
REPORT ON THE STANDALONE FINANCIAL STATEMENTS:
We have audited the standalone financial statements of VMS INDUSTRIES LIMITED("the Company") which comprise the Standalone Balance Sheet as at March 312021 the Standalone Statement of Profit and Loss (Including Other Comprehensive Income)the Standalone Statement of Changes In Equity and the Standalone Statement of Cash Flowsfor the year then ended and notes to the standalone financial statements including asummary of significant accounting policies and other explanatory information (hereinafterreferred to as "Standalone Financial Statements").
In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid standalone financial statements "except for non-provisionfor gratuity and other long term employee benefits as per Ind-As-19 "EmployeeBenefits" give the information required by the Companies Act 2013 ("Act")in the manner so required and give a true and fair view in conformity with the accountingprinciples generally accepted in India including Indian Accounting Standards ('Ind AS')specified under Section 133 of the Act of the state of affairs of the Company as at March31 2021 and its profit and other comprehensive income changes in equity and its cashflows for the year ended on that date.
BASIS OF OPINION
We conducted our audit in accordance with the Standards on Auditing (SAs) specifiedunder Section 143(10) of the Act. Our responsibilities under those SAs are furtherdescribed in the Auditor's Responsibilities for the Audit of the Standalone FinancialStatements section of our report. We are independent of the Company in accordance with theCode of Ethics issued by the Institute of Chartered Accountants of India together with theethical requirements that are relevant to our audit of the standalone financial statementsunder the provisions of the Act and the Rules thereunder and we have fulfilled our otherethical 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.
EMPHASIS OF MATTERS
We draw attention to:
i. Note No. 30(g) to the standalone financial statements describing effects of outbreakof Covid-19 pandemic on the company's business operations including effects offluctuations in foreign exchange rates.
Our opinion is not modified in respect of these matters.
KEY AUDIT MATTERS
Key audit matters are those matters that in our professional judgment were of mostsignificance in our audit of the standalone financial statements of the current period.These matters were addressed in the context of our audit of the standalone financialstatements as a whole and in forming our opinion thereon and we do not provide aseparate opinion on these matters.
Description of Key Audit Matters:
|The Key Audit Matter ||How the matter was addressed in our audit |
|1. Litigations and Claims (Refer to Note No. 29 Relating to Contingent Liabilities) || |
|The Company is/was subject to different Laws and Regulations which are subject to different implications and interpretations thereof. In such regulatory environment the Company is subject to some legal and tax related claims which have been disclosed as contingent liabilities in the financial statements based on the facts and circumstances of each case. || Gained an understanding of the process of identification of claims litigations and contingent liabilities and identified key controls in the process. |
|Taxation and litigations have been identified as a key audit matter due to the status of legal proceedings timescales involved for resolution and the potential financial impact of these on the financial statements. Further such tax litigations involve significant management judgment in assessing the exposure of each case and thus a risk that such cases may not be adequately provided for or disclosed. || Obtained the summary of Company's legal and tax cases and critically assessed management's position through discussions with the Legal Counsel appropriate senior management and operational management on both the probability of success in significant cases and the magnitude of any potential loss. |
| || Assessed management's estimate of the possible outcome of the litigations the relevant disclosures made within the financial statements to address whether they appropriately reflect the facts and circumstances of the respective tax and legal exposures and the requirements of relevant accounting standards. |
INFORMATION OTHER THAN THE STANDALONE FINANCIAL STATEMENTS AND AUDITORS' REPORT THEREON
The Company's management and Board of Directors are 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 report thereon.
Our opinion on the standalone financial statements does not cover the other informationand we do not express any form of assurance conclusion thereon.
In connection with our audit of the standalone financial statements our responsibilityis to read the other information and in doing so consider whether the other informationis materially inconsistent with the standalone financial statements or our knowledgeobtained in the audit or otherwise appears to be materially misstated. If based on thework we have performed we conclude that there is a material misstatement of this otherinformation we are required to report that fact. We have nothing to report in thisregard.
MANAGEMENT'S AND BOARD OF DIRECTOR'S RESPONSIBILITY FOR THE STANDALONE FINANCIALSTATEMENTS:
The Company's Management and Board of Directors are responsible for the matters statedin section 134(5) of the Companies Act 2013 ("the Act") with respect to thepreparation of these standalone financial statements that give a true and fair view of thefinancial position financial performance including other comprehensive income cash flowsand changes in equity of the Company in accordance with the Indian Accounting Standards(Ind AS) accounting principles generally accepted in India including the IndianAccounting Standards specified under Section 133 of the Act read with the Companies(Indian Accounting Standard) Rules 2015 as amended.
This responsibility also includes the maintenance of adequate accounting records inaccordance with the provision of the Act for safeguarding of the assets of the Company andfor 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 financial statements that give a true and fair view and are free from materialmisstatement whether due to fraud or error.
In preparing the standalone financial statements management and Board of Directors areresponsible for assessing the Company's ability to continue as a 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.
The Board of Directors is also responsible for overseeing the Company's financialreporting process.
AUDITOR'S RESPONSIBILITIES FOR THE AUDIT OF THE STANDALONE FINANCIAL STATEMENTS:
Our objectives are to obtain reasonable assurance about whether the standalonefinancial 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. Reasonable assuranceis a high level of assurance but is not a guarantee that an audit conducted in accordancewith SAs will always detect a material misstatement when it exists. Misstatements canarise from fraud or error and are considered material if individually or in theaggregate they could reasonably be expected to influence the economic decisions of userstaken on the basis of these standalone 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 standalonefinancial statements whether due to fraud or error design and perform audit proceduresresponsive to those risks and obtain audit evidence that is sufficient and appropriate toprovide a basis for our opinion. The risk of not detecting a material misstatementresulting from fraud is higher than for one resulting from error as fraud may involvecollusion forgery intentional omissions misrepresentations or the override of internalcontrol.
Obtain an understanding of internal control relevant to the audit in order todesign audit procedures that are appropriate in the circumstances. Under Section 143(3)(i)of the Act we are also responsible for expressing our opinion on whether the Company hasadequate internal financial controls with reference to financial statements in place andthe operating effectiveness 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 standalone financial statements or if such disclosures are inadequate to modify ouropinion. Our conclusions are based on the audit evidence obtained up to the date of ourauditor's report. However future events or conditions may cause the Company to cease tocontinue as a going concern.
Evaluate the overall presentation structure and content of the standalonefinancial statements including the disclosures and whether the standalone financialstatements represent the underlying transactions and events in a manner that achieves fairpresentation.
We communicate with those charged with governance regarding among other matters theplanned scope and timing of the audit and significant audit findings including anysignificant deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have compliedwith relevant ethical requirements regarding independence and to communicate with themall relationships and other matters that may reasonably be thought to bear on ourindependence and where applicable related safeguards.
From the matters communicated with those charged with governance we determine thosematters that were of most significance in the audit of the standalone financial statementsof the current period and are therefore the key audit matters. We describe these mattersin our auditors' report unless law or regulation precludes public disclosure about thematter or 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:
1. As required by The Companies (Auditor's Report) Order 2016 issued by The CentralGovernment Of India in term of section 143 (11) of
The Companies Act 2013 we enclose in the Annexure-A hereto a statement on the mattersspecified in paragraphs 3 and 4 of the said order to the extent applicable to thecompany.
2. As required by section 143(3) of the Act based on our audit 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 appears from our examination of those books;
c) The Standalone Balance Sheet Standalone the Statement of Profit and Loss includingOther Comprehensive Income the Standalone Statement of Changes in Equity & theStandalone Statement of Cash Flows dealt with by this Report are in agreement with thebooks of account;
d) In our opinion aforesaid Standalone Balance Sheet the Standalone Statement ofProfit and Loss including Other Comprehensive Income the Standalone Statement of Changesin Equity & the Standalone Statement of Cash Flows except Ind-As-19 "EmployeeBenefits" comply with the Indian Accounting Standards prescribed under section 133of the Act;
e) On the basis of written representations received from the directors of the Companyas on March 31 2021 and taken on record by the Board of Directors none of the directorsis disqualified as on March 31 2021 from being appointed as a director in terms ofsub-section (2) of section 164 of Act;
f) With respect to the adequacy of internal financial control over financial reportingof the Company and the operating effectiveness of such controls refer to our separatereport in Annexure-B to this report;
g) With respect to the other matters included in the Auditor's Report in accordancewith Rule 11 of the Companies (Audit and Auditors) Rules 2014 as amended in our opinionand to the best of our information and according to the explanations given to us:
i. The Company had the following litigations pending as at the end of the financialyear which may impact its financial position on final disposal of the respective matters.
|Name of The Party/Department ||Brief Facts of the Case ||Financial Impact (Rs. in Lacs) |
|1. Honourable ITAT Ahmedabad ||Disputed Income Tax Demand for A.Y. 2014-15 ||8.28 |
|2. Commissioner of Income Tax (Appeals) Ahmedabad ||Disputed Income Tax Demand for A.Y. 2015-16 ||14.24 |
|3. Deputy Commissioner of Commercial Tax-Appeal Division-9 Bhavnagar ||Disputed VAT Liabilities for F.Y. 2009-10 ||19.28 |
|4. Deputy Commissioner of Commercial Tax-Appeal Division-9 Bhavnagar ||Disputed VAT Liabilities for F.Y. 2010-11 ||37.72 |
ii. The Company did not have any long-term contracts including derivatives contractsfor which there were any material foreseeable losses.
iii. As at 31st March 2021 there were no amounts which were required to betransferred to the Investor Education and Protection Fund by the Company.
3. With respect to the matter to be included in the Auditors' Report under Section197(16) of the Act:
In our opinion and according to the information and explanations given to us theremuneration paid by the Company to its directors during the current year is in accordancewith the provisions of Section 197 of the Act. The remuneration paid to any director isnot in excess of the limit laid down under Section 197 of the Act. The Ministry ofCorporate Affairs has not prescribed other details under Section 197(16) of the Act whichare required to be commented upon by us.
ANNEXURE-A TO THE INDEPENDENT AUDITOR'S REPORT
[Referred to in paragraph 1 under "Report On Other Legal And RegulatoryRequirements' section of our report of even date to the members of VMS INDUSTRIES LIMITEDon the Standalone financial statements of the company for the year ended 31stMarch 2021:
On the basis of such checks of the books and records of the company as we consideredappropriate and according to the information and explanation given to us during the courseof audit and to the best of our knowledge and belief we further report that:
i. In respect of its fixed assets:
a) According to the information and explanations given to us the company hasmaintained proper records showing full particulars including quantitative details andsituation of property plant and equipment.
b) As explained to us the management in accordance with a phased programme ofverification adopted by the company has physically verified the property plant andequipment. To the best of our knowledge no material discrepancies have been noticed onsuch verification or have been reported to us.
c) According to the information and explanations given to us and on the basis of theexamination of the records of the company the title deeds of immovable properties areheld in the name of the Company as at the balance sheet date.
ii. In respect of its Inventories:
a) As explained to us the inventories have been physically verified at reasonableintervals during the year by the management of the company.
b) As explained to us no material discrepancies were noticed on physical verificationof inventory as compared to the books of account.
iii. Loans/Advances Granted:
As informed to us during the year the company has granted unsecured loans re-payableon demand to one Company covered in the register maintained under section 189 of theCompanies Act 2013.
a) According to the information and explanations given to us the company has notstipulated any specific terms or conditions as to the loans granted to the above party.However as explained to us the loans so granted are not prejudicial to the interest ofthe company.
b) According to the information and explanations given to us the company has notstipulated any schedule for repayment of the loans. As informed to us the repayment ofloan was received as and when demands were raised. As informed to us there is no defaultin repayment of loan and payment of interest by the party.
c) According to the information and explanations given to us the amount of loansgranted will be recovered in the normal course of business as and when demands will beraised and there are not overdues for more than nine days in case recovery of theprincipal and interest amounts.
iv. According to the information and explanations given to us the company has compliedwith the provisions of Sections 185 and 186 of The Companies Act 2013 in respect of grantof any loans investments guarantees and securities as applicable.
v. According to the information and explanations given to us the company has notaccepted any deposits from the public within the meaning of section 737475 & 76 ofthe Act and Rules framed thereunder during the year and therefore the provisions ofclause 3(v) of the Order are not applicable to the Company.
vi. We have broadly reviewed the cost records maintained by the Company pursuant torules made by the Central Government under section 148 (1). We are of the opinion thatprima facie the prescribed accounts and records have been maintained and made. We havehowever not made a detailed examination of these records with a view to determine whetherthey are accurate or complete.
vii. In respect of Statutory Dues:
a) As per the information & explanations furnished to us in our opinion thecompany is generally regular in depositing with appropriate authorities undisputedstatutory dues of Custom Duty T.D.S. GST Employee Provident Fund ESIC ProfessionalTax Cess and other material statutory dues as applicable to it. According to theinformation and explanations given to us no undisputed statutory liabilities wereoutstanding for more than six months as at 31st March 2021 from the date theywere due for payment.
b) According to information and explanations given to us and so far as appears fromour examination of books of account there were no statutory dues outstanding as at 31stMarch 2021 which have not been deposited on account of any dispute except the followingdisputed dues.
|Name of the Act ||Nature of Dues ||(Rsin Lacs) ||Period to Which Amount Relates ||Forum where dispute is pending |
|1. Income Tax Act 1961 ||Income Tax Demand ||8.28 ||A.Y. 2014-15 ||Ho'nable ITAT Ahmedabad |
|2. Income Tax Act 1961 ||Income Tax Demand ||14.24 ||A.Y. 2015-16 ||CIT-(Appeals)-8 Ahmedabad |
|3. Value Added Tax Laws ||VAT ||19.28 ||F.Y. 2009-10 ||Deputy Commissioner of Commercial Tax-Appeal Division-9 Bhavnagar |
|4. Value Added Tax Laws ||VAT ||37.72 ||F.Y. 2010-11 ||Deputy Commissioner of Commercial Tax-Appeal Division-9 Bhavnagar |
viii. According to the information and explanations given to us the Company has notdefaulted in the repayment of loans or borrowings to Banks and payment of interest to theBanks.
ix. According to the information and explanations given to us and based on ourexamination of the records of the Company the Company has not raised any moneys by way ofinitial public offer or further public offer (including debt instruments) and has notobtained any term loans during the year. Accordingly paragraph 3 (ix) of the Order is notapplicable to the Company.
x. According to the information and explanations given to us no material fraud by thecompany or on the company by its Officers or Employees has been noticed or reported to usby the management during the year.
xi. In our opinion and according to the information and explanations given to us thecompany had paid/provided managerial remuneration in accordance with the provisions ofSection 197 of the Companies Act 2013 read with Schedule V of the Companies Act 2013.
xii. As the company is not the Nidhi Company clause (xii) of paragraph 3 of TheCompanies (Auditor's Report) Order 2016 is not applicable to it.
xiii. According to the information and explanations given to us the company is incompliance with the provisions of sections 177 and 188 of the Companies Act 2013 whereapplicable for related party transactions and the details of related party transactionshave been disclosed in the Notes to the Financial Statements in accordance with theapplicable Ind AS.
xiv. The company has not made any preferential allotment or private placement of sharesor fully or partly convertible debentures during the year. Accordingly clause (xiv) ofparagraph 3 of The Companies (Auditor's Report) Order 2016 is not applicable to it forthe year.
xv. According to the information and explanations given to us the company has notentered into any non-cash transaction with directors or persons connected with them andhence clause (xv) of paragraph 3 of The Companies (Auditor's Report) Order 2016 is notapplicable to it during the year.
xvi. As the company is not required to be registered under section 45-IA of the ReserveBank of India 1934 clause (xvi) of paragraph 3 of The Companies (Auditor's Report)Order 2016 is not applicable to it.
ANNEXURE "B" TO THE INDEPENDENT AUDITORS' REPORT
[REFERRED TO IN PARAGRAPH 2(f) UNDER "REPORT ON OTHER LEGAL AND REGULATORYREQUIREMENTS SECTION OF OUR REPORT OF EVEN DATE] FINANCIAL YEAR ENDED 31stMARCH 2021
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 VMSINDUSTRIES LIMITED ("the Company") as of March 31 2021 in conjunction with ouraudit of the Standalone Ind AS financial statements of the company for the year ended onthat date.
Management's Responsibility for Internal Financial Controls
The Board of Directors of the company is responsible for establishing and maintaininginternal financial controls 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 FinancialReporting issued by the Institute of Chartered Accountants of India.
These responsibilities include the design implementation and maintenance of adequateinternal financial controls that were operating effectively for ensuring the orderly andefficient conduct of its business including adherence to company's policies thesafeguarding of its assets the prevention and detection of frauds and errors theaccuracy and completeness of the accounting records and the timely preparation ofreliable financial information as required under the 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 prescribed under section143(10) of the Companies Act 2013 to the extent applicable to an audit of internalfinancial controls. 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 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 detail accurately 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 authorisations ofmanagement and directors of the company; and (3) provide reasonable assurance regardingprevention or timely detection of unauthorised 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 and to the best of our information and according to the information andexplanations given to us the company has in all material respects an adequate internalfinancial controls system over financial reporting and such internal financial controlsover financial reporting were commensurate with the nature of the business of the companyand operating effectively as at March 31 2021 based on the internal control overfinancial reporting criteria established by the company considering the essentialcomponents of internal control stated in the Guidance Note on Audit of Internal FinancialControls Over Financial Reporting issued by the Institute of Chartered Accountants ofIndia.
AUDITORS' CERTIFICATE REGARDING COMPLIANCE OF CONDITIONS OF CORPORATE GOVERNANCE
To the Members of
VMS INDUSTRIES LIMITED
We have examined the compliance of conditions of Corporate Governance by VMS INDUSTRIESLIMITED for the year ended on 31st March 2021 as stipulated in Regulations17 to 27 and clauses (b) to (i) of Regulation 46(2) and para C and D of Schedule V to theSEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 (the"Listing Regulations").
The compliance of conditions of Corporate Governance is the responsibility of theManagement of the Company. This responsibility includes the design implementation andmaintenance of internal control and procedures to ensure compliance with the conditions ofthe Corporate Governance stipulated in the Listing Regulations.
Our responsibility is limited to examining the procedures and implementation thereofadopted by the Company for ensuring compliance with the conditions of the CorporateGovernance. It is neither an audit nor an expression of opinion on the financialstatements of the Company.
We have examined the books of account and other relevant records and documentsmaintained by the Company for the purposes of providing reasonable assurance on thecompliance with Corporate Governance requirements by the Company.
We have carried out an examination of the relevant records of the Company in accordancewith the Guidance Note on Certification of Corporate Governance issued by the Institute ofthe Chartered Accountants of India (the "ICAI") the Standards on Auditingspecified under Section 143(10) of the Companies Act 2013 in so far as applicable for thepurpose of this certificate and as per the Guidance Note on Reports or Certificates forSpecial Purposes issued by the ICAI which requires that we comply with the ethicalrequirements of the Code of Ethics issued by the ICAI.
We have complied with the relevant applicable requirements of the Standard on QualityControl (SQC) 1 Quality Control for Firms that Perform Audits and Reviews of HistoricalFinancial Information and Other Assurance and Related Services Engagements.
According to the information and explanations given to us and the representationsprovided by the Management of the company and in our opinion and to the best of ourinformation we certify that the Company has complied with the conditions of CorporateGovernance as stipulated in Regulations 17 to 27 and clauses (b) to (i) of Regulation46(2) and para C and D of Schedule V to the Listing Regulations during the year ended 31stMarch 2021.
We state that such compliance is neither an assurance as to the future viability of theCompany nor the efficiency or effectiveness with which the Management has conducted theaffairs of the Company.
| ||FOR AND ON BEHALF OF |
| ||S. N. SHAH & ASSOCIATES |
| ||CHARTERED ACCOUNTANTS |
| ||FIRM REG. NO. 109782W |
| ||FIROJ G. BODLA |
| ||PARTNER |
|PLACE: AHMEDABAD ||M. No. 126770 |
|DATED: 29th JUNE 2021 ||UDIN: 21126770AAAAFK8643 |