To the Members of Vyapar Industries Limited
Report on the Audit of the Financial Statements Opinion
We have audited the accompanying financial statements of Vyapar industries Limited ("theCompany") which comprise the Balance Sheet as at March 31 2019 the Statement ofProfit and Loss (including Other Comprehensive Income) the Statement of Changes in Equityand the Statement of Cash Flows for the year ended on that date and a summary of thesignificant accounting policies and other explanatory information (hereinafter referred toas "the financial statements").
In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid 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 Indian Accounting Standards prescribed under section 133of the Act read with the Companies (Indian Accounting Standards) Rules 2015 as amended("Ind AS") and other accounting principles generally accepted in India of thestate of affairs of the Company as at March 31 2019 the profit and total comprehensiveincome changes in equity and its cash flows for the year ended on that date.
Basis for Opinion
We conducted our audit of the financial statements in accordance with the Standards onAuditing specified under section 143(10) of the Act (SAs). Our responsibilities underthose Standards are further described in the Auditor's Responsibilities for the Auditof the Financial Statements section of our report. We are independent of the Companyin accordance with the Code of Ethics issued by the Institute of Chartered Accountants ofIndia (ICAI) together with the independence requirements that are relevant to our audit ofthe financial statements under the provisions of the Act and the Rules made thereunderand we have fulfilled our other ethical responsibilities in accordance with theserequirements and the ICAI's Code of Ethics. We believe that the audit evidence we haveobtained is sufficient and appropriate to provide a basis for our audit opinion on thefinancial statements.
Key Audit Matters
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 the matters described below to be the key audit matters to be communicatedin our report.
i. Provisions for Contingencies and Litigations and disclosure of Contingentliabilities
Description of Key Audit Matter:
At March 31 2019 the Company has disclosed total contingent liabilities of Rs.788.82lakhs. These contingent liabilities are based on judgements and accounting estimates madeby management in determining the likelihood and magnitude of claims. Accordinglyunexpected adverse outcomes could significantly impact the Company's reported loss andbalance sheet position.
Refer Note.2 (g) and Note.27 (b) of financial statements for accounting policies forprovisions and contingent liabilities and related disclosures.
We evaluated the design and tested the operating effectiveness of controls inrespect of the determination of the provisions. We determined that the operation of thecontrols provided us with evidence over the completeness accuracy and valuation of theprovisions.
We read the summary of litigation matters provided by management and helddiscussions with the management and their legal counsels. We requested legal letters fromsome of the Company's external legal advisors with respect to the matters included in theaforesaid disclosures. Where appropriate we examined correspondence connected with thecases.
For litigation provisions we tested the calculation of the provisions assessedthe assumptions against third party data where available and assessed the estimatesagainst historical trends.
We considered management's judgments on the level of provisioning anddisclosures in respect of the aforesaid matters which we considered to be appropriate.
ii. First time adoption of Ind AS 115 "Revenue from Contracts with Customers"
Description of Key Audit Matter:
The application of the new revenue accounting standard involves certain key judgmentsrelating to identification of distinct performance obligations determination oftransaction price of the identified performance obligations the appropriateness of thebasis used to measure revenue recognised over a period.
Refer note 2 (j) and note 18 of the financial statements for accounting policies forrevenue recognition and revenue recognised during year under various heads.
Our audit approach consisted testing of the design and operating effectiveness of theinternal controls and substantive testing on test check basis based on selected samples ofcontracts with customers.
We assessed the Company's process to identify the impact of adoption of the new revenueaccounting standard.
We selected a sample of continuing and new contracts and tested the operatingeffectiveness of the internal control and substantive testing relating to identificationof the distinct performance obligations and determination of transaction price.
We selected sample documents relating to delivery of goods and documentation ofperformance of service including customer acceptances to verify the transfer of control(either point in time' or over time') for revenue recognition.
We considered the terms of the contracts to determine the transaction price to verifythe transaction price used to compute revenue.
In respect of samples relating to fixed price contracts progress towards satisfactionof performance obligation used to compute recorded revenue was verified with actual andestimated efforts from the time recording and budgeting systems.
iii. Valuation of Investments
Description of Key Audit Matter:
The company has investments in unquoted financial assets of companies. The valuation ofthe financial assets held at fair value was a key area of audit focus due to thesignificance of the amount and complexity involved in the valuation process. Managementmakes significant judgments because of the complexity of the techniques and assumptionsused in valuing level 3 investments. Given the limited external evidence and unobservablemarket data available to support the valuation. These investments are accounted at fairvalue. The valuation is subject to a significant level of judgment and therefore there isa risk that the value of investments may be misstated. Refer to note no.1 (e) ofmeasurement of fair value and note no. 5 Investments of the stand-alone financialstatements.
Our audit procedures included among others considering the risk associated withinvestments.
We verified the data shared with the valuation expert and the rationale of theprojections provided by the management.
We also verified the assumptions and benchmarks considered by the valuation expert inarriving at the fair valuation of investments.
We have taken comfort from the valuation expert's report for the fair value accountedfor the investments in unlisted companies.
Information Other than the Financial Statements and Auditor's 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 Management Discussionand Analysis Board's Report including Annexures to Board's Report BusinessResponsibility Report Corporate Governance and Shareholder's Information 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 financial statements or our knowledge obtained during thecourse 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.
Responsibility of Management for Financial 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 financial statements that give a true and fair view of the financial positionfinancial performance changes in equity and cash flows of the Company in accordance withthe accounting principles generally accepted in India including the accounting Standardsspecified under section 133 of the Act. This responsibility also includes maintenance ofadequate accounting records in accordance with the provisions of the Act for safeguardingof the assets of the Company and for preventing and detecting frauds and otherirregularities; selection and application of appropriate accounting policies; makingjudgments and estimates that are reasonable and prudent; and design implementation andmaintenance of adequate internal financial controls that were operating effectively forensuring the accuracy and completeness of the accounting records relevant to thepreparation and presentation of the financial statement that give a true and fair view andare free from material misstatement whether due to fraud or error.
In preparing the financial statements management is responsible for assessing theCompany'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.
Those 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 financial statementswhether due to fraud or error design and perform audit procedures responsive to thoserisks and obtain audit evidence that is sufficient and appropriate to provide a basis forour opinion. The risk of not detecting a material misstatement resulting from fraud ishigher than for one resulting from error as fraud may involve collusion forgeryintentional omissions misrepresentations or the override of internal control.
Obtain an understanding of internal financial controls relevant to the audit in orderto design audit procedures that are appropriate in the circumstances. Under section143(3)(i) of the Act we are also responsible for expressing our opinion on whether theCompany has adequate internal financial controls system in place and the operatingeffectiveness of such controls.
Evaluate the appropriateness of accounting policies used and the reasonableness ofaccounting estimates and related disclosures made by management.
Conclude on the appropriateness of management's use of the going concern basis ofaccounting 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 financial statementsincluding the disclosures and whether the financial statements represent the underlyingtransactions and events in a manner that achieves fair presentation.
Materiality is the magnitude of misstatements in the financial statements thatindividually or in aggregate makes it probable that the economic decisions of areasonably knowledgeable user of the financial statements may be influenced. We considerquantitative materiality and qualitative factors in (i) planning the scope of our auditwork and in evaluating the results of our work; and (ii) to evaluate the effect of anyidentified misstatements in the financial statements.
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.
Report on Other Legal and Regulatory Requirements
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 Companies Act 2013 we give in the Annexure A' a statement on the mattersspecified in paragraphs 3 and 4 of the Order to the extent applicable.
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 including Other ComprehensiveIncome and the Cash Flow Statement dealt with by this Report are in agreement with thebooks of account.
d) In our opinion the aforesaid financial statements comply with the AccountingStandards specified under Section 133 of the Act.
e) On the basis of the written representations received from the directors as on March31 2019 taken on record by the Board of Directors none of the directors is disqualifiedas on March 31 2019 from being appointed as a director in terms of Section 164 (2) of theAct.
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" to this report.
g) With respect to the other matters to be included in the Auditor's Report inaccordance with the requirements of section 197(16) of the Act as amended:
In our opinion and to the best of our information and according to the explanationsgiven to us there is no remuneration paid by the Company to its directors during the yearunder the provisions of section 197 of the Act.
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 27(b) to the financial statements;
ii. The Company did not have any long-term contracts including derivative contracts forwhich there were any material foreseeable losses.
iii. There were no amounts which were required to be transferred to the InvestorEducation and Protection Fund by the Company.
As required by the Companies (Auditor's Report) Order 2016 ("the Order")issued by the Central Government in terms of Section 143(11) of the Act we give in"Annexure B" a statement on the matters specified in paragraphs 3 and 4 of theOrder.
For M M Parikh & Co
Firm Reg. No.: 107557W
Membership No: 31110
Date:30 May 2019
ANNEXURE A TO INDEPENDENT AUDITOR'S REPORT
The Annexure referred to in Independent Auditors' Report to the members of the Companyon the Financial Statements for the year ended March 31 2019 we report that:
(i) (a) According to the information and explanations given to us the Company hasmaintained proper records showing full particulars including quantitative details andsituation of fixed assets.
(b) As explained to us all the fixed assets have been physically verified by theManagement in a periodical manner which in our opinion is reasonable having regard tothe size of the company and nature of its assets. No material discrepancies were noticedon such physical verification.
(c) According to the information and explanations given to us and on the basis of ourexamination of the records of the Company the title deeds of immovable properties areheld in the name of the Company.
(ii) (a) On the basis of explanation and submission given to us physical verificationof inventory has been conducted at reasonable intervals by the management.
(b) In our opinion and on the basis of examination done by us the procedure ofphysical verification of inventory followed by the management is reasonable and adequatein relation to the size of the company and the nature of its business.
(c) The Company is maintaining proper records of inventory and discrepancies noticed onphysical verification if any have been properly dealt with in the books of accounts.
(iii) According to the information and explanations given to us the Company has notgranted any loans secured or unsecured to Companies Firms Limited LiabilityPartnerships or other parties covered in the register maintained under section 189 of theCompanies Act. Accordingly paragraph 3(iii) (a) (b) and (c) of the Order are notapplicable to the Company.
(iv) According to the information and explanations given to us the Company has notgiven any loans or made any investments or provided any guarantee or security asspecified under Section 185 and 186 of the Companies Act 2013. Accordingly paragraph3(iv) of the Order is not applicable.
(v) According to information and explanations given to us the Company has not acceptedany deposits from the public in accordance with the provisions of section 73 to 76 or anyrelevant provisions of the Act and rules framed thereunder.
(vi) The Central Government has not prescribed the maintenance of cost records undersection 148(1) of the Act for any of the goods dealt by the Company.
(vii) (a) According to the information and explanations given to us and on the basis ofour examination of the records of the Company amounts deducted/ accrued in the books ofaccount in respect of undisputed statutory dues including provident fund income-taxemployees' state insurance duty of excise sales tax value added tax duty of customsservice tax Goods and service tax cess and other material statutory dues have beenregularly deposited during the year by the Company with the appropriate authorities.
According to the information and explanations given to us no undisputed amountspayable in respect of provident fund income tax sales tax value added tax duty ofcustoms service tax Goods and service tax cess and other material statutory dues werein arrears as at 31 March 2019 for a period of more than six months from the date theybecame payable.
(b) According to the information and explanations given to us outstanding dues thathave not been deposited by the Company on account of disputes are given below:
|Name of the Statute ||Nature of Dues ||Amount (Rs. In lakhs) ||Period to which the amount relates ||Forum where dispute is pending |
|Income-tax Act 1961 ||Income- tax ||396650/- ||2009-10 ||Appellate |
|Income-tax Act 1961 ||Income- tax ||40120894/- ||2011-12 ||Appellate |
|Income-tax Act 1961 ||Income- tax ||685693/- ||2012-13 ||Appellate |
|Income-tax Act 1961 ||Income- tax ||593506/- ||2013-14 ||Appellate |
|Income-tax Act 1961 ||Income- tax ||36033597/- ||2014-15 ||Appellate |
|Income-tax Act 1961 ||TDS ||390/- ||2017-18 ||ACIT |
|Income-tax Act 1961 ||TDS ||1208/- ||2016-17 ||ACIT |
|Income-tax Act 1961 ||TDS ||6650/- ||Prior to FY 2016-17 ||ACIT |
(viii) According to the information and explanations given to us based on our auditprocedures and as per information and explanation given to us the Company has notdefaulted in repayment of dues to any bank. The Company did not have any outstanding duesin respect of loans or borrowings from any financial institution government or debentureholders during the year.
(ix) According to the information and explanations given to us the Company did notraise any money by way of initial public offer or further public offer (including debtinstruments) and term loans during the year. Accordingly paragraph 3 (ix) of the Order isnot applicable.
(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 duringthe course of our audit.
(xi) According to the information and explanations given to us the Company has paid /provided for managerial remuneration in accordance with requisite approvals mandated bythe provisions of Section 197 read with Schedule V to the Act.
(xii) According to the information and explanations given to us in our opinion andaccording to the information and explanations given to us the Company is not a nidhicompany. Accordingly paragraph 3(xii) of the Order is not applicable.
(xiii) According to the information and explanations given to us and based on ourexamination of the records of the Company transactions with the related parties are incompliance with sections 177 and 188 of the Act where applicable and details of suchtransactions have been disclosed in the financial statements as required by the applicableaccounting standards
(xiv) According to the information and explanations give to us and based on ourexamination of the records of the Company the Company has not made any preferentialallotment or private placement of shares or fully or partly convertible debentures duringthe year.
(xv) According to the information and explanations given to us and based on ourexamination of the records of the Company the Company has not entered into non-cashtransactions with directors or persons connected with him. Accordingly paragraph 3(xv) ofthe Order is not applicable.
(xvi) The Company is not required to be registered under section 45-IA of the ReserveBank of India Act 1934.
For M M Parikh & Co
Firm Reg. No.: 107557W
Membership No: 31110
Date:30 May 2019
ANNEXURE B TO INDEPENDENT AUDITOR'S REPORT
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 VyaparIndustries Limited("the Company") as of March 31 2019 in conjunction with ouraudit of the Ind AS 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 (ICAI'). Theseresponsibilities include the design implementation and maintenance of adequate internalfinancial controls that were operating effectively for ensuring the orderly and efficientconduct of its business including adherence to company's policies the safeguarding ofits assets the prevention and detection of frauds and errors the accuracy andcompleteness of the accounting records and the timely preparation of reliable financialinformation 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 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 Ind AS 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.
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 March 31 2019 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 M.M. Parikh & Co
Firm Reg. No.: 107557W
Membership No: 31110
Date:30 May 2019