To the Members of
Zenith Steel Pipes & Industries Limited
(formerly known as Zenith Birla (India) Limited)
Report on the Audit of the Standalone Financial Statements
We have audited the accompanying standalone financial statements of Zenith SteelPipes & Industries Limited (formerly known as Zenith Birla (India) Limited)("the Company") which comprise the Balance Sheet as at 31st March 2021 theStatement of Profit and Loss (including Other Comprehensive Income)the Statement ofChanges in Equity and the Statement of Cash Flows for the year then ended and notes tothe standalone financial statements including a summary of the significant accountingpolicies and other explanatory information (herein after referred to as "thestandalone financial statements")
In our opinion and to the best of our information and according to the explanationsgiven to us subject to the effect of the matters described in the Basis for Qualifiedopinion paragraph below the aforesaid standalone financial statements give the informationrequired by the Companies Act2013 ("the Act") in the manner so required andgive true and fair view in conformity with the Indian Accounting Standards prescribedunder section 133 of the Act read with the Companies (Indian Accounting Standards) Rules2015 as amended ("Ind AS") and other accounting principles generally acceptedin India of the state of affairs of the Company as at 31st March 2021the loss and thetotal comprehensive loss changes in equity and its cash flows for the year ended on thatdate.
Basis for Qualified Opinion
1. The Company has not complied with the provisions of section 73 to 76 of thecompanies Act 2013 read with Rules made there under with regard to repayment of depositsand interest on due date maintenance of liquid assets to the extent required and also notfully complied with the orders passed by the Company Law Board. (Refer note 18 to theextend current maturities of fixed deposits and interest payable there of)
2. The balance confirmations in respect of Trade Payables Trade Receivables LoansAdvances Deposits etc. have not been received from the parties and hence we are unable tostate whether these balances are recoverable /payable to the extent stated. (Refer note43)
3. The Company has made provision of Rs. 12.82 lakhs in respect of certain currentaccounts maintained with banks which have been frozen by regulatory authorities. In theabsence of bank statements and year-end balance confirmations we are unable to comment onthe impact of shortfall in provision if any which is made based on balance as per booksof account. We are unable to comment on impact of shortfall in provisions if any whichis made for frozen bank balances of certain banks accounts against which confirmation andstatements are not available. (Refer note 56)
4. The Company has written-off Inter Corporate Deposits (ICDs) amounting to ' 834.44lakhs due to uncertainty of recoverability and consequently interest income on these ICDshas not been recognized for the current year. In the absence of any externalconfirmations we are unable to examine the correctness of amount of ICD written offduring the year. (Refer note 47)
5. The Company has accumulated losses exceeding the share capital and reserves and itsnet worth has been fully eroded. These conditions indicate the existence of a materialuncertainty that may cast significant doubt about the company's ability to continue as agoing concern. However the standalone financial statements have been prepared on a goingconcern basis considering management assessment of the current situation and futureprospects. (Refer note 50)
We conducted our audit in accordance with the Standards on Auditing specified underSection 143(10) of the Act (SAs). Our responsibilities under those SAs are furtherdescribed in the Auditor's Responsibilities for the Audit of the 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 (ICAI) togetherwith the ethical requirements that are relevant to our audit of the financial statementsunder the provisions of the Companies
Act 2013 and the Rules there under and we have fulfilled our other ethicalresponsibilities in accordance with these requirements and the Code of Ethics. We believethat the audit evidence we have obtained is sufficient and appropriate to provide a basisfor our opinion.
Emphasis of Matter
We draw attention to the following matters forming part of the notes to the financialstatements:
1. Note no. 45 & 46 regarding MOU entered into by the Company with Tribus RealEstate Pvt. Ltd (TREPL) for taking over the Company's secured bank loan the amount to theextend paid by TREPL has been shown in the accounts as secured loan from others throughbank / ARC is holding mortgaged securities which are not yet assigned in favor of theTREPL.
2. Note no 49 (i) regarding net impact of Rs. 173.51 lakhs on account of write-off ofcertain receivables amounting to ' 2174.16 lakhs and write-back of certain payablesamounting to ' 2000.65 lakhs arising due to impact of COVID-19 being charged to theprofit & loss for the current year.
3. Note no 49 (ii) regarding forfeiture of the deposit amount of ' 23.25 lakhs pursuantto a settlement agreement.
4. Note No. 57 regarding impact of COVID-19 on the operations of the Company.
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 financial statements as awhole and in forming our opinion thereon and we do not provide a separate opinion onthese matters. We have determined the matters described below to be the Key Audit Mattersto be communicated in our report.
|Key Audit Matters ||Auditors Response |
|Evaluation of income tax provision ||In view of significance of matter we applied the following audit procedures in this area among others to obtain sufficient appropriate audit evidence:. |
|The Company is required to estimate its income tax liabilities in accordance with the tax laws applicable in India. || testing the design and operating effectiveness of the company's key controls over identifying uncertain tax position and matters involving litigations/disputes |
|Further there are matters of interpretation in terms of application of tax laws and related rules to determine current tax provision and deferred taxed. || obtaining details of tax positions and tax litigations for the year and as at 31 March 2021 and holding discussions with designated management personnel. |
|The Company has material tax positions and litigations on a range of tax matters. || assessing and analysing select key correspondences with tax authorities and inspecting external legal opinions obtained by management for key uncertain tax positions and tax litigations. |
|This requires management to make significant judgements to determine the possible outcome of uncertain tax provisions and litigations and their consequent impact on related accounting and disclosures in the standalone financial statements. || evaluating underlying evidence and documentation to determine whether the information provides a basis for amounts reserved / not reserved in the books of account. |
|Refer Note 33 to the Standalone Financial Statements. || Involving our tax specialists and evaluating managements underlying key assumptions in estimating the tax provisions and estimate the possible outcome of tax litigations;. and in respect of tax positions and litigation assessing the computation of provisions and consequent impact on related accounting and disclosures in the standalone financial statements |
|Net realisable value (NRV) of Inventory ||In view of the significance of the matter we applied the following audit procedures in this area among others to obtain sufficient audit evidence: |
|The total inventory of the Company amounting to Rs. 1081 lakhs (as on March 31 2021) forms about 9.09% of the total assets of the Company. || Assessed the appropriateness of the accounting policy for inventories as per relevant Indian accounting standards. |
|This includes materials such as HR Coil fuel iron ore etc which are susceptible to handling loss moisture loss/gain spillage etc. and determination of the same requires estimation based on experience and technical expertise. || Evaluated the design and implementation of key internal financial controls with respect to determination of NRV and tested the operating effectiveness of such controls on selected transactions. |
|Such judgment includes Company's expectations for future sale inventory liquidation plans and future selling prices less cost to sell & modification cost. || Verified inventory ageing report by testing samples selected using statistical sampling method. |
|In view of the above assessment of NRV and its consequential impact if any on the carrying value of inventories has been identified as a key audit matter. Refer Note 10 to the Standalone Financial Statements. || Tested the moving weighted average rate computation of inventory samples selected using statistical sampling method. |
| || We examined the valuation process/methodology and checks being performed at multiple levels to ensure that the valuation is consistent with and as per the policy followed in this respect. |
| || The company has procedure of physical verification of inventories at regular intervals. |
|Allowance for credit losses || |
|The Company determines the allowance for credit losses based on historical loss experience adjusted to reflect current and estimated future economic conditions. ||Our audit procedures related to the allowance for credit losses for trade receivables included the following among others: |
|The Company considered current and anticipated future economic conditions relating to industries the Company deals with and the geographical location where it operates. ||We tested the effectiveness of controls over the |
|In calculating expected credit loss the Company has also considered credit reports and other related credit information for its customers to estimate the probability of default in future and has taken into account estimates of possible effect from the pandemic relating to COVID-19. We identified allowance for credit losses as a key audit matter because the Company exercises significant judgment in calculating the expected credit losses. || development of the methodology for the allowance for credit losses including consideration of the current and estimated future economic conditions |
|Refer Notes 31 to the Standalone financial statements. || completeness and accuracy of information used in the estimation of probability of default and |
| || Computation of the allowance for credit losses. |
| ||For a sample of customers: We tested the input data such as credit reports and other credit related information used in estimating the probability of default by comparing them to external and internal sources of information. |
| ||We tested the mathematical accuracy and computation of the allowances by using the same input data used by the Company. |
| ||Evaluation of impairment risk and assessing whether triggers exist for any investment based on consideration of external and internal factors affecting the value and performance of the investment. |
|Investment impairment assessment || |
|The Company has investments in subsidiaries. ||Our audit procedures included: |
|These investments are accounted for at cost less impairment. || Obtained management assessment of recoverable amount for investments where impairment risk is identified. |
|If an impairment exists the recoverable amounts of the above investment are estimated in order to determine the extent of the impairment loss if any. || Evaluated the mathematical accuracy of the cash flow projection and assessed the underlying key assumptions in management's valuation models used to determine recoverable amount considering external data including assumptions of projected EBITDA revenue growth rate terminal growth rates discount rates and assessed the sensitivity of the assumptions on the impairment assessment and assessed the forecasts against the historical performance including the impact of the COVID-19 pandemic. |
|Determination of triggers for impairment in value of these investments and recoverable amount involves significant estimates and judgements including those related to the possible effect of the COVID-19 pandemic. ||Assessed the appropriateness of the related disclosures in the standalone financial statements. |
Information Other than the Standalone Financial Statements and Auditor's Report Thereon
The Company's management and Board of Directors are responsible for the otherinformation. The other information comprises the information included in the ManagementDiscussion and Analysis Director's Report including annexures to Director's Report andCorporate Governance Report But does not include the financial statements and ourauditors' 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 during the course of our audit or otherwise appears to be materially misstated.
If based on the work we have performed on the other information obtained prior to dateof this audit report 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 Responsibilities for the Standalone Financial Statements.
The Company's management and Board of Directors are responsible for the matters statedin Section134 (5) of the Act with respect to the preparation of these standalone financialstatements that give a true and fair view of the financial position financialperformance including other comprehensive income changes in equity and cash flows of theCompany in accordance with the accounting principles generally accepted in Indiaincluding the Indian Accounting Standards (Ind AS) specified under Section 133 of the Act.This responsibility also includes maintenance of adequate accounting records in accordancewith the provisions of the Act for safeguarding of the assets of the Company and forpreventing and detecting frauds and other irregularities; selection and application ofappropriate accounting policies; making judgments and estimates that are reasonable andprudent; and design implementation and maintenance of adequate internal financialcontrols that were operating effectively for ensuring the accuracy and completeness ofthe accounting records relevant to the preparation and presentation of the standalonefinancial 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 the Board of Directors either intends to liquidate the Companyor to cease operations 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 companyhas adequate internal financial controls with reference to Standalone financial statementsin place and the 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.
Materiality is the magnitude of misstatements in the standalone financial statementsthat individually or in aggregate makes it probable that the economic decisions of areasonably knowledgeable user of the standalone financial statements may be influenced. Weconsider quantitative materiality and qualitative factors in
(i) planning the scope of our audit work and in evaluating the results of our work; and
(ii) to evaluate the effect of any identified misstatements in the standalone financialstatements.
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.
The figures for the previous financial year ended March 312020 have been audited bythe then statutory auditors and their audit report furnished to us by the Management havebeen relied upon by us.
Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditors' Report) Order 2016 (the Order')issued by the Central Government of India in terms of Section143 (11) of the Act we givein the Annexure A' a statement on the matters specified in Paragraphs 3 and 4of the Order to the extent applicable.
2. 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) the Statement of Changes in Equity and the Statement of Cash Flows dealt with bythis Report are in agreement with the books of account;
d. In our opinion the aforesaid standalone financial statements comply with the Ind ASspecified under Section 133 of the Actread with the Companies (Indian AccountingStandards) Rules 2015 as amended;
e. On the basis of the written representations received from the directors as on 31stMarch 2021 taken on record by the Board of Directors none of the directors isdisqualified as on 31st March 2021 from being appointed as a director in terms ofSection164(2) of the Act.
f. With respect to the adequacy of the internal financial controls with reference tofinancial statements of the Company and the operating effectiveness of such controlsrefer to our separate Report in Annexure B'.Our report expresses anunmodified opinion on the existence of internal financial control with reference tofinancial statements and its operating effectiveness on the company.
g. In our opinion and to the best of our information and according to the explanationsgiven to us the remuneration paid by the company to its directors during the year is inaccordance with the provisions of section 197 of the Act.
h. With respect to the other matters to be included in the Auditors' Report inaccordance with Rule11 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 as at 31st March 2021 onits financial position in its standalone financial statements Refer Note 33 to thestandalone financial statements;
ii) The Company did not have any long-term contracts including derivative contracts forwhich there were any material foreseeable losses.
iii) There has been no delay in transferring amounts required to be transferred tothe Investor Education and Protection Fund by the Company;
Annexure A to the Independent Auditors' Report
(Referred to in paragraph 1 under Report on Other Legal and RegulatoryRequirements' section of our report of even date to the members of Zenith Steel Pipes& Industries Limited (formerly known as Zenith Birla (India) Limited) ("theCompany") on the standalone financial statements for the year ended 31st March2021.)
Based on the audit procedures performed for the purpose of reporting a true and fairview on the standalone financial statements of the Company and taking into considerationthe information and explanations given to us and the books of account and other recordsexamined by us in the normal course of audit we report that:
1. a) The Company has not maintained records showing full particulars includingquantitative details and situation of fixed assets.
b) The fixed assets of the Company are physically verified as per the program approvedby the management for such verification. As per the information and explanation providedby the management due to COVID-19 lock down the aforesaid verification could not beundertaken by the Company as at the end of the current financial year. The managementexplanation that considering the past trend and having regard to the size of the Companyand nature of its assets and related internal controls there is unlikely to be anymaterial discrepancy for the current financial year has been relied upon. Further themanagement has informed that post COVID-19 lock down an interim physical verificationshall be conducted for the next financial year (Refer note no 2.1)
c) As per the information and explanations provided to us title deeds of immovableproperties are generally in the name of the Company except in case of one freeholdproperty valued at Rs. 325.90 lakhs.
2. As per the information and explanation provided by the management inventories havebeen physically verified by the management at reasonable intervals with the records. Inour opinion the Company is maintaining proper records of inventory. No materialdiscrepancies were noticed by the management on physical verification of inventory ascompared to the books of account.
3. In our opinion and according to the information and explanations given to us theCompany had granted an unsecured loans in the earlier year to other body corporatescovered in the register maintained under Section 189 of the Companies Act 2013 the samehas been written off during the current financial year.
4. In our opinion and according to the information and explanations given to us thecompany has not complied with the provisions of section 185 and 186 of the Companies Act2013 in respect of Loans investments guarantees and security where applicable.(Refernote 47)
5. In our opinion and according to the information and explanations given to us inrespect of compliance by the Company with the directive issued by the Reserve Bank ofIndia the provisions of section 73 to 76 of the companies Act 2013 read with Rules madethereunder with regard to repayment of deposits and interest on due date maintenance ofliquid assets to the extent required and also not fully complied with the orders passed bythe Company Law Board.
6. We have broadly reviewed the books of accounts maintained by the Company in respectof products where pursuant to the rules made by Central Government of India themaintenance of cost records has been prescribed under sub section (i) of Section 148 ofthe Companies Act 2013 and are of the opinion that prima facie the prescribed accountsand records have been made and maintained. We have however not made a detailed examinationof the records with a view to determine whether they are accurate or complete.
7. a) According to the information and explanations given to us and the records of theCompany examined by us
in our opinion except for dues in respect of Dividend Distribution Tax Tax Deducted atSource Profession tax Tax Collected at Source Provident Fund Labour Welfare Fund andExcise Duty the Company is generally regular in depositing the undisputed statutory duesincluding Custom Duty Cess and other material statutory dues as applicable. Thefollowing balances remained in arrears as at the last day of the financial year for aperiod exceeding six months from the date they become payable:
|Nature of Due ||Amount Outstanding (Rs. in Lakhs) |
|1. Income Tax Deducted at Source ||24.68 |
|2. Provident Fund ||29.04 |
|3. Maharashtra Labour Welfare Fund ||0.01 |
|4. Profession Tax ||0.44 |
|5. Dividend Distribution Tax ||359.08 |
|6. Interest on Dividend Distribution Tax ||398.58 |
|7. Wealth Tax ||1.88 |
b) According to the information and explanation given to us and the records of theCompany examined by us there were no disputed dues in respect of Service Tax. Theparticulars of Dues of Customs Duty Excise Duty Sales Tax and Value added tax andIncome Tax as at March 312021 which have not been deposited on account of disputes areas follows:
|Name of the Statute ||Nature of Dues ||Period to which the matter pertains to ||Forum where dispute is pending ||Amount (Rs. in Lakhs) |
| || ||1985-86 ||High Court ||3.45 |
|Custom Act1962 ||Custom Duty ||1998-99 ||Tribunal ||82.00 |
|Central Excise Act1959 ||Excise Duty ||1995-96 ||Commissioner Appeal ||129.78 |
|Central Sales Tax Act1956 ||Central Sales Tax ||1995-96 ||Tribunal ||78.88 |
| || ||2006-07 ||Joint Commissioner Appeal ||1739.30 |
| || ||2007-08 ||Joint Commissioner Appeal ||2577.63 |
|Maharashtra Value Added Tax2002 ||Value added Tax ||2009-10 ||Deputy Commissioner for Reassessment ||279.84 |
| || ||2011-12 ||Tribunal ||50.98 |
| || ||2012-13 ||Joint Commissioner Appeal ||330.30 |
| || ||2013-14 ||Joint Commissioner Appeal ||30.67 |
| || ||2008-09 ||CIT (Appeal) ||2545.08 |
| || ||2009-10 ||CIT (Appeal) ||102.01 |
|Income Tax Act 1961 ||Income Tax ||2010-11 ||CIT (Appeal) ||1108.80 |
| || ||2011-12 ||CIT (Appeal) ||189.88 |
| || ||2013-14 ||CIT (Appeal) ||2.18 |
8. According to the records of the Company examined by us and the information andexplanations given to us there has been default in payments to the banks since August2012. The company has entered into an agreement with Tribus Real Estate Pvt. Ltd. fortaking over the company's dues to the banks as reflected earlier in the company books onterms agreed to between the Company and Tribus Real Estate Pvt. Ltd.
Consequently there are no Bank loan/outstanding in the Books of the Company as thishas been transferred to Tribus Real Estate Pvt .Ltd during the previous year.
9. Based upon the audit procedure performed and the information and explanations givenby the management the Company has not raised moneys by way of initial public offer orfurther public offer including debt instruments and not availed term loan during the year.Accordingly the provisions of clause 3(ix) of the order are not applicable to theCompany.
10. According to the information and explanations given to us and to the best of ourknowledge no material fraud by the Company or on the Company by its officers or employeeshas been noticed or reported during the year.
11. In our opinion and according to the information and explanations given to us themanagerial remuneration has been paid/provided by the Company during the current year isin accordance with the requisite approval mandated by the provision of section 197 readwith schedule V to the Companies Act 2013.
12. According to information and explanations given to us the Company is not a NidhiCompany as prescribed under Section 406 of the Act. Accordingly paragraph 3(xii) of theOrder is not applicable to the Company.
13. According to information and explanations given to us all transactions with therelated parties are in compliance with Sections 177 and 188 of the Act where applicableand the details of such transactions have been disclosed in the standalone financialstatements as required by the applicable accounting standards.
14. The Company has not made any preferential allotment or private placement of sharesor fully or partly convertible debentures during the year under review and hence reportingunder paragraph 3 (xiv) of the Order is not applicable to the Company.
15. According to information and explanations given to us the Company has not enteredinto any non-cash transactions with directors or persons connected with them and henceclause 3(xv) of the Order is not applicable to the Company.
16. The Company is not required to be registered under Section 45-IA of the ReserveBank of India Act 1934.
Annexure B to the Independent Auditors' Report
(Referred to in paragraph 2(f) under Report on Other Legal and RegulatoryRequirements' section of our report to the members of Zenith Steel Pipes &Industries Limited (formerly known as Zenith Birla (India) Limited) of even date.)
Report on the Internal Financial Controls with reference to standalone financialstatements under Clause (i) of Sub- section 3 of Section 143 of the Companies Act 2013(the Act').
We have audited the internal financial controls with reference to standalone financialstatements of Zenith Steel Pipes & industries Limited (formerly known as ZenithBirla (India) Limited) (the Company') as of 31 March 2021 in conjunction with ouraudit of the standalone financial statements of the Company for the year ended on thatdate.
Management's Responsibility for Internal Financial Controls
The Company's management and Board of Directors are responsible for establishing andmaintaining internal financial controls based on the internal control with reference tofinancial 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 (the Guidance Note') issued by the Institute ofChartered Accountants of India (ICAI'). These responsibilities include the designimplementation and maintenance of adequate internal financial controls that were operatingeffectively for ensuring the orderly and efficient conduct of its business includingadherence to company's policies the safeguarding of its assets the prevention anddetection of frauds and errors the accuracy and completeness of the accounting recordsand the timely preparation of reliable financial information as required under the Act.
Our responsibility is to express an opinion on the Company's internal financialcontrols with reference to financial statements based on our audit. We conducted our auditin accordance with the Guidance Note issued by ICAI and the Standards on Auditingprescribed under section 143(10) of the Act to the extent applicable to an audit ofinternal financial controls. Those Standards and the Guidance Note require that we complywith ethical requirements and plan and perform the audit to obtain reasonable assuranceabout whether internal financial controls with reference to financial statements wasestablished and maintained and if such controls operated effectively in all materialrespects.
Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal financial controls system with reference to financial statements and theiroperating effectiveness. Our audit of internal financial controls with reference tofinancial statements included obtaining an understanding of internal financial controlswith reference to financial statements assessing the risk that a material weaknessexists and testing and evaluating the design and operating effectiveness of internalcontrol based on the assessed risk. The procedures selected depend on the auditor'sjudgment including the assessment of the risks of material misstatement of the financialstatements whether due to fraud or error.
We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the Company's internal financial controls systemwith reference to financial statements.
Meaning of Internal Financial Controls over Financial Statements
A company's internal financial control with reference to financial statements is aprocess designed to provide reasonable assurance regarding the reliability of financialreporting and the preparation of financial statements for external purposes in accordancewith generally accepted accounting principles. A company's internal financial control overfinancial statements includes those policies and procedures that
(i) pertain to the maintenance of records that in reasonable detail accurately andfairly reflect the transactions and dispositions of the assets of the company;
(ii) 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
(iii) 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 Statements
Because of the inherent limitations of internal financial controls with reference tofinancial statements including the possibility of collusion or improper management override of controls material misstatements due to error or fraud may occur and not bedetected. Also projections of any evaluation of the internal financial controls withreference to financial statements to future periods are subject to the risk that theinternal financial control with reference to financial statements may become inadequatebecause of changes in conditions or that the degree of compliance with the policies orprocedures may deteriorate.
In our opinion to the best of our information and according to the explanations givento us the Company has maintained in all material respects an adequate internalfinancial controls system with reference to financial statements and such internalfinancial controls with reference to financial statements were operating effectively as at31st March 2021 "except for the facts the Company maintains Stock records pertainingto production on a consolidated basis with other companies in the Group using the samemanufacturing facilities on job work basis'' based on internal financial control withreference to financial statements criteria established by the Company considering theessential components of internal control stated in the Guidance Note issued by the ICAI.
|For C K S P AND CO LLP |
|Chartered Accountants |
|FRN - 131228W / W100044 |
|Debmalya Maitra |
|M. No. 053897 |
|UDIN: 21053897AAAAAW3708 |
|Place: Mumbai |
|Date: 29.06.2021 |