Report on the Audit of the Standalone Financial Statements
Opinion
We have audited the accompanying standalone financial statements of Orient Bell Limited (“the Company”), which comprise the balance sheet as at March 31, 2019, the Statement of Profit and Loss (including Other Comprehensive Income), the Statement of Changes in Equity and Statement of Cash Flows for the year then ended, and notes to the standalone financial statements, including a summary of significant accounting policies and other explanatory information (hereinafter referred to as” the standalone financial statements”).
In our opinion and to the best of our information and according to the explanations given to us, the aforesaid standalone financial statements give the information required by the Companies Act, 2013 (“the Act”) in the manner so required and give a true and fair view in conformity with the Indian Accounting Standards prescribed under section 133 of the Act read with the Companies (Indian Accounting Standards) Rules, 2015, as amended, (“Ind AS”) and accounting principles generally accepted in India, of the state of affairs of the Company as at March 31, 2019, the Profit and total comprehensive income, changes in equity and its cash flows for the year ended on that date.
Basis for Opinion
We conducted our audit of the standalone financial statements in accordance with the Standards on Auditing (SAs) specified under section 143(10) of the Act. Our responsibilities under those Standards are further described in the Auditor’s Responsibilities for the Audit of the Standalone Financial Statements section of our report. We are independent of the Company in accordance with the Code of Ethics issued by the Institute of Chartered Accountants of India (ICAI) together with the ethical requirements that are relevant to our audit of the standalone financial statements under the provisions of the Act and the Rules made thereunder, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the ICAI’s Code of Ethics. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion on standalone financial statements.
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance 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 financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. We have determined the matters described below to be the key audit matters to be communicated in our report.
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S.No.
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Key Audit Matters
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How our audit addressed the key audit matter
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1.
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Appropriateness of Capitalization Cost as per Ind AS 16- Property, Plant and Equipment (PPE)
(Refer to the accompanying note 4 forming integral part of the Standalone Financial Statements)
The Company has made substantial capitalization under - Plant & Machinery and Buildings, pertaining to a new production line at one of its manufacturing facilities.
This area was significant to our audit because:
- of significance of amount capitalized, and
- risk pertaining to the appropriateness of expenditure considered for capitalization
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Our procedure in relation to appropriateness of capitalization cost as per Ind AS 16 includes the following:
a) Substantive testing:
- Evaluated the approval of Board of Directors of the Company for new production line.
- Evaluated and tested the design and operating effectiveness of key controls relating to various costs incurred in relation to Property, Plant and Equipment.
- Tested on sample basis expenditures with focus on those items (example purchase cost, borrowing cost, stores and spares, repair & maintenance etc.) that we considered significant due to their amount or nature.
- Verified and tested, on sample basis, amounts capitalized during the year against underlying supporting documents to ascertain nature of costs and whether they meet the recognition criteria specified in Ind AS 16.
- Reviewed the physical verification report of PPE.
- Ensured adequacy of disclosures in the financial statements.
b) Controls testing : Wherever appropriate, our
substantive work was supplemented by controls testing
work which encompassed understanding, evaluating
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and testing key controls in respect of review of purchase orders, authorization of assets acquisition, external and plant manager certification, capitalization of pending capital advances, ageing of capital work in progress and allocation of administrative and operative expenditure for capitalization.
Our procedure as mentioned above did not identify any costs that had been inappropriately capitalized.
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2.
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Accounting for Customer Schemes, discounts and other trade promotional expenditure
(Refer to the accompanying note 23 forming integral part of the Standalone Financial Statements)
In line with normal industry practice and overall objective of increase in the revenue, the Company has varied incentive programs and discount policies in place. These include volume based rebates and schemes and trade spend commitments which are driven by customers achieving sales volume targets agreed with the Company over a pre-determined period.
These rebates and schemes on sales are accounted for as a deduction from revenue and recognized in the period to which it relates in accordance with the customer agreement.
This area was significant to our audit because:
- those areas are subject to judgmental estimates and assessments that are material; and
- these expenses vary with regards to the nature and timing of the activity to which it relates
Our focus was on assessing the accuracy of the expense charged, whether the amount recognized were recorded in the appropriate period and the completeness of the expense.
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Our audit work in respect of accounting for customer schemes, discounts and other trade promotional expenditure comprised a combination of substantive testing, control testing and an assessment of the Company’s disclosures in this regard. The audit procedures include the following steps:
a) Substantive testing:
- Tested a sample of underlying agreements to obtain evidence in support of amount and timing of recognition of both customer rebates & other promotional expenditure. This involved evaluating whether the amount & timing of recognition was consistent with the contractual arrangements.
- Critically assessed the judgements taken by the Company in estimating year end accruals for amounts owing to customers. This included retrospective analysis/tests to assess the accuracy of the accruals in previous years, alongside the use of key assumptions of rebate/ discount terms and in the case of volume rebates, the level of sales likely to occur in the period under audit, with reference to historic events.
- Held discussions with the sales teams to understand the complexities, if any of these agreements and any unusual trends in the year.
- Tested post-year end credit notes issued and debit notes received, where applicable, to determine whether specific promotions were appropriately provided for as at the reporting date at the appropriate amount.
b) Controls testing: Wherever appropriate, our substantive work was supplemented by controls testing work which encompassed understanding, evaluating and testing key controls in respect of the approval of customer rebates, discounts and other trade promotional expenditure.
Our procedures as mentioned above did not identify any findings that are significant for the financial statements as whole in respect of accounting for customer schemes, discounts and other trade promotional expenditure
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3.
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Credit Risk vis-a-vis impairment of trade receivables as per Ind AS 109
(Refer to the accompanying note 11 forming integral part of the Standalone Financial Statements)
The Company continuously monitors defaults of customers and incorporates this information into its credit risks controls. The Company uses Expected Credit Loss model to assess the impairment loss and makes an allowance of doubtful debts using this model.
This area was significant to our audit because:
- Credit risk arises from the possibility that the
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Our procedure in relation to appropriateness of judgements used and calculation of allowance of doubtful debts vis-a-vis credit risk controls includes the following:
a) Substantive testing:
- Obtained an understanding of management’s process and evaluated design and tested operating effectiveness of controls around identification of indicators of Impairment vis-a-vis credit risk.
- Tested on sample basis, receivables balances that were provided during the year to determine the accuracy of judgements made by the Company in Expected Credit Loss Model.
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customer(s) may not be able to settle their
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- Analyzed the significant receivables aged over
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obligations.
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normal credit period and in particular over one
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- Impairment of receivables is a subjective
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year by the way of alternate audit procedures like
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area due to level of judgement applied by
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subsequent realization reconciliations. This also
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management in determining the impairment
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includes classifying the credit impaired receivables
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allowance.
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on the basis of external balance confirmations,
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ageing of receivables and requirement of write
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In addition to above, our focus was on assessing
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off that results from possible default events, such
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the financial reliability of customers, taking into account the financial conditions, economic trends,
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as customer declaring bankruptcy or a litigation decided against the Company.
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analysis of historical bad debts and ageing of such
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receivables.
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- Inspected arrangements and / or correspondences
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with the customers to assess the recoverability of long outstanding receivables.
b) Controls testing : Wherever appropriate, our substantive work was supplemented by controls testing work which encompassed understanding, evaluating and testing key controls in respect of Company’s credit management procedures including the controls around credit approvals, established credit terms, and reviewing the payment history.
Our procedures as mentioned above did not identify any findings that are significant for the financial statements as whole in respect of impairment of trade receivables vis-a-vis level of exposure of Company to credit risk from its operating activities.
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Information Other than the Standalone Financial Statements and Auditor’s Report Thereon
The Company’s Board of Directors are responsible for the preparation of the other information. The other information comprises the information included in the annual report, but does not include the standalone financial statements and our auditor’s report thereon.
Our opinion on the standalone financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.
In connection with our audit of the standalone financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the standalone financial statements or our knowledge obtained during the course of our audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.
Responsibility of Management and Those Charge with Governance for the Standalone Financial Statements
The Company’s Board of Directors is responsible for the matters stated in section 134(5) of the Act with respect to the preparation of these standalone financial statements that give a true and fair view of the financial position, financial performance, total comprehensive income, changes in equity and cash flows of the Company in accordance with the Ind AS and other accounting principles generally accepted in India. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding of the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the standalone financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.
In preparing the standalone financial statements, the board of directors is responsible for assessing the Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless board of director either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.
Those Board of Directors are also responsible for overseeing the company’s financial reporting process.
Auditor’s Responsibilities for the Audit of the Standalone Financial Statements
Our objectives are to obtain reasonable assurance about whether the standalone financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with SAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these standalone financial statements.
As part of an audit in accordance with SAs, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:
- Identify and assess the risks of material misstatement of the standalone financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
- Obtain an understanding of internal control relevant to the audit in order to design 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 has adequate internal financial controls with reference to standalone financial statements in place and the operating effectiveness of such controls.
- Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
- Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the standalone 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’s report. However, future events or conditions may cause the Company to cease to continue as a going concern.
- Evaluate the overall presentation, structure and content of the standalone financial statements, including the disclosures, and whether the standalone financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.
From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be 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 (“the Order”), issued by the Central Government of India in terms of sub-section (11) of section 143 of the Act, we give in “Annexure A” a statement on the matters specified in paragraphs 3 and 4 of the Order.
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 best of 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 the Company so far as it appears from our examination of those books.
c) The Balance Sheet, the Statement of Profit and Loss (including Other Comprehensive Income), Statement of Change in Equity and the Cash Flow Statement dealt with by this Report are in agreement with the relevant books of account.
d) In our opinion, the aforesaid standalone financial statements comply with the Ind AS specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014.
e) On the basis of the written representations received from the directors as on March 31, 2019 taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2019 from being appointed as a director in terms of Section 164 (2) of the Act.
f) With respect to the adequacy of the internal financial controls with reference to standalone financial statements of the Company and the operating effectiveness of such controls, refer to our separate Report in “Annexure B”. Our report expresses an unmodified opinion on the adequacy and operating effectiveness of the Company’s internal financial controls over financial reporting.
g) With respect to the other matters to be included in the Auditor’s Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules, 2014, in our opinion and to the best of our information and according to the explanations given to us:
i. On the basis of written representations received from the management of the Company, the Company has disclosed the impact of pending litigations on its financial position in its standalone financial statements- Refer Note No. 37 to the standalone financial statements.
ii. The Company did not have any long-term contracts including derivative contracts for which there were any material foreseeable losses.
iii. There has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Company.
3. With respect to the matter to be included in the Auditors’ report under Section 197(16):
In our opinion and according to the information and explanation given to us, the Company has paid remuneration to its directors during the year is in accordance with the provisions of and limit laid down under section 197 read with Schedule V of the Act.
i) In respect of fixed assets:
a) The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets.
b) The Company has a program of verification to cover all the items of fixed assets in a phased manner which, in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. Pursuant to the program, certain fixed assets were physically verified by the management during the year. According to the information and explanations given to us, no material discrepancies were noticed on such verification.
c) On the basis of written representation received from the management of the Company, the title deeds of immovable properties held in the name of the Company are mortgaged with the Banks for securing the long term borrowings and credit limits raised by the Company. In case of immovable properties that have been taken on lease and disclosed as property, plant and equipment in the financial statements, we report that the lease agreement are in name of the Company.
ii) In respect of its inventory:
a) On the basis of information and explanation provided by the management, inventories have been physically verified by the management during the year. In our opinion the frequency of physical verification followed by the management is reasonable. However, we were being informed that physical verification of clay was made on the basis of volume and density which is approximately correct.
b) No material discrepancies were noticed on verification between the physical stocks and the book records.
iii) (a) to (c) According to the information and explanation given to us, the Company had not granted loans, secured or unsecured, to any of the companies, firms or other parties covered in the register maintained under section 189 of the Companies Act, 2013. Therefore, the provisions of paragraph 3(iii) (a) to (c) of the Companies (Auditor’s Report) Order, 2016 are not applicable to the Company.
iv) According to the information and explanation given to us, the Company has no transaction of loans, guarantees, and security during the year covered under the provisions of section 185 and 186 of the Companies Act, 2013. Therefore, the provisions of paragraph 3(iv) of the Companies (Auditor’s Report) Order, 2016 are not applicable to the Company.
v) In our opinion and according to the information and explanation given to us, since the Company has not accepted any deposits therefore the question of the compliance of any directives issued by the Reserve Bank of India and the provisions of sections 73 to 76 or any other relevant provisions of the Companies Act and the rules framed there under does not arise.
vi) On the basis of available information and explanation provided to us, the Central Government has not prescribed maintenance of cost records under sub-section (1) of section 148 of the Companies Act, 2013 read with Companies (Cost Records and Audit) Amendment Rules, 2014 dated December 31, 2014 (as amended from time to time) to the current operations carried out by the Company. Accordingly, the provisions of paragraph 3(vi) of the Companies (Auditor’s Report) Order, 2016 are not applicable to the Company.
vii) In respect to statutory dues:
a) The Company is generally regular in depositing undisputed statutory dues including Provident Fund, Employees’ State Insurance, Income Tax, duty of Customs, Goods and Service Tax and any other material statutory dues applicable to it with the appropriate authorities. There were no undisputed amounts payable in respect of Provident Fund, Employees’ State Insurance, Income Tax, duty of Customs, Goods and Service Tax and any other material statutory dues in arrears as at March 31, 2019 for a period of more than six months from the date they became payable.
b) According to the records of the Company examined by us and the information and explanations given to us, there were no dues of Income Tax or Sales Tax or Goods and Service Tax or Service Tax or duty of Customs or duty of Excise or Value Added Tax which have not been deposited on account of any dispute except the following, which have not been deposited on account of dispute:
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Name of the Statute
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Nature of Dispute
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Amount (in Rs.)
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Period
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Forum where dispute is pending
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U.P. Vat Act
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Entry tax and other dues
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11,91,100
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2000-01 & 2003-04
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Allahabad High Court
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U.P. Vat Act
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Form 3B Misused By Indian Oil Corporation
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5,64,710
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2000-2001
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Tribunal Ghaziabad
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U.P. Vat Act
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Entry tax and other dues
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3,20,813
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2002-03
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Ghaziabad Tribunal
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U.P. Vat Act
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Sales Tax Demand
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69,189
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2003-04
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U.P. Vat Act
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Sales Tax Demand
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10,98,623
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2003-04
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Allahabad High Court
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U.P. Vat Act
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Sales Tax Demand
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23,94,965
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2003-04
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U.P. Vat Act
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Advance Agst Form C
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10,02,338
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2011-12
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Tribunal Ghaziabad
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U.P. Vat Act
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Vehicle Seizure Order Hearing Notice
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2,80,000
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2013-14
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Tribunal Ghaziabad
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U.P. Vat Act
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Vehicle Seizure Order Hearing Notice
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1,56,600
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2016-17
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DC Sikandrabad
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U.P. Vat Act
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Vehicle Seizure Order Hearing Notice
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1,98,650
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2016-17
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DC Sikandrabad
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U.P. Vat Act
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Vehicle Seizure Order Hearing Notice
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2,03,000
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2016-17
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DC Sikandrabad
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U.P. Vat Act
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Vehicle Seizure Order Hearing Notice
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1,24,700
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2016-17
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DC Sikandrabad
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U.P. Vat Act
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Vehicle Seizure Order Hearing Notice
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1,25,000
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2016-17
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DC Sikandrabad
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U.P. Vat Act
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Vehicle Seizure Order Hearing Notice
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2,28,838
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2016-17
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DC Sikandrabad
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U.P. Vat Act
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Vehicle Seizure Order Hearing Notice
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69,660
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2017-18
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DC Sikandrabad
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U.P. Vat Act
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Vehicle Seizure Order Hearing Notice
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55,800
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2017-18
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DC Sikandrabad
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U.P. Vat Act
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Vehicle Seizure Order Hearing Notice
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10,51,515
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2017-18
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DC Sikandrabad
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Gujrat VAT
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Sales Tax Demand
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2,80,259
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2010-11
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Asstt. Comm. of Commercial Tax
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Gujrat VAT
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Sales Tax Demand
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4,72,499
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2006-07
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Gujarat VAT Tribunal,
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Gujrat CST
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VAT/CST Demand
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5,08,000
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2013-14
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State Deputy Commissioner, Ahmedabad
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Gujrat CST/VST
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VAT/CST Demand
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19,07,161
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2014-15
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A.P.VAT Act
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Sales Tax demand
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4,89,768
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2005-06 & 2006-07
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High Court of A.P.
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Kerala Vat Act
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Sales Tax Demand
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4,38,904
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2005-06
|
|
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Kerala Vat Act
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Sales Tax Demand
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26,39,208
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2009-10
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Assistant commissioner, Ernakulum
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Kerala Vat Act
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Sales Tax Demand
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55,526
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2008-09
|
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Kerala Vat Act
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OBL Kerala 12-13 under VAT Act
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1,16,22,439
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2012-13
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Kerala Vat Act
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BCL Kerala under Vat Act
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1,14,512
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2012-13
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Commissioner (Appeals) DC
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A.P.VAT Act
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Sales Tax Demand
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10,68,317
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2009-10
|
Commissioner (Appeals)
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A.P.VAT Act
|
Sales Tax Demand
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10,68,317
|
2009-10
|
|
Goa VAT Act
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Sales Tax Demand
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3,707
|
2008-09
|
Assistant commissioner, Goa
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Haryana Vat Act
|
Sales Tax Demand
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1,21,318
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2015-16
|
Commissioner (Appeal)
|
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Mumbai VAT Department
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BCL-Mumbai : Tax demand on Vehicle Sale
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27,246
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2006-07
|
VAT Officer
|
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Delhi VAT
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CST Act’ Self-Asstt demand
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9,884
|
2013-14
|
VAT Officer
|
|
Delhi VAT
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Unpaid Challan demand
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66,894
|
2006-07
|
VAT Officer
|
|
Delhi VAT
|
CST Act’ Asstt demand
|
1,11,732
|
2008-09
|
VAT Officer
|
|
Delhi VAT
|
CST Act’ Asstt demand
|
2,89,470
|
2009-10
|
VAT Officer
|
|
Delhi VAT
|
CST Act’ Asstt demand
|
2,46,849
|
2011-12
|
VAT Officer
|
|
Central Excise & Customs Act
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Excise & other dues
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1,02,69,255
|
2010-2017
|
CESTAT, Ahmedabad
|
|
Income Tax Act, 1961
|
Income Tax demand
|
22,37,194
|
AY: 1995-96
|
Gujarat High Court
|
|
Income Tax Act, 1961
|
Income Tax demand
|
16,92,841
|
AY: 1990-91
|
|
|
Income Tax Act, 1961
|
Income Tax demand
|
7,62,880
|
AY:2003-04
|
ITAT, Ahmedabad
|
|
Income Tax Act, 1961
|
Income Tax demand
|
16,30,483
|
AY:2003-04
|
|
|
Income Tax Act, 1961
|
Income Tax demand
|
3,10,57,825
|
AY:2011-12
|
CIT (Appeals), Ahmedabad
|
viii) On the basis of information and explanation provided to us, the Company has not defaulted in repayment of loans and borrowings to financial institution and bank. The Company has not taken any loan from Government and also has not issued any debentures.
ix) The Company did not raise any money by the way of initial public or further public offer (including debt instruments) during the year. The term loans taken during the year were applied for the purpose for which the same has been raised.
x) According to the information and explanations given to us, no fraud by the Company or on the Company by its officers or employees has been noticed or reported during the year.
xi) In our opinion and according to the information and explanation given to us, the Company has paid/ provided managerial remuneration to its directors during the year in accordance with provisions of section 197 read with Schedule V to the Companies Act, 2013 as applicable to the Company.
xii) The Company is not a nidhi company hence the provisions of paragraph 3(xii) of the Companies (Auditor’s Report) Order, 2016 are not applicable to the Company.
xiii) During the course of our examination of the books and records of the Company, all transactions entered with the related parties are in compliance with section 177 and 188 of Companies Act, 2013 and the details have been disclosed in the financial statements etc. as required by the applicable accounting standards.
xiv) The Company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures during the year under review. Accordingly, the provisions of paragraph 3(xiv) of the Companies (Auditor’s Report) Order, 2016 are not applicable to the Company.
xv) The Company has not entered into any non-cash transactions with directors or persons connected with him and hence provisions of section 192 of the Companies Act, 2013 are not applicable.
xvi) The Company is not required to be registered under section 45-IA of the Reserve Bank of India Act, 1934. Accordingly, the provisions of paragraph 3(xvi) of the Companies (Auditor’s Report) Order, 2016 are not applicable to the Company.
We have audited the internal financial controls with reference to financial statements of Orient Bell Limited (“the Company”) as of March 31, 2019 in conjunction with our audit of the stand alone 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 internal financial controls based on the internal control with reference to financial statements criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issued by the Institute of Chartered Accountants of India (ICAI). These responsibilities include the design, implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the orderly and efficient conduct of its business, including adherence to company’s policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information, as required under the Companies Act, 2013.
Auditors’ Responsibility
Our responsibility is to express an opinion on the Company’s internal financial controls with reference to financial statements based on our audit. We conducted our audit in accordance with the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting (the “Guidance Note”) and the Standards on Auditing, issued by ICAI and deemed to be prescribed under section 143(10) of the Companies Act, 2013, to the extent applicable to an audit of internal financial controls, both applicable to an audit of Internal Financial Controls and, both issued by the Institute of Chartered Accountants of India. Those Standards and the Guidance note require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether adequate internal financial controls with reference to financial statements was established and maintained and if such controls operated effectively in all material respects.
Our audit involves performing procedures to obtain audit evidence about the adequacy of the internal financial controls system with reference to financial statements and their operating effectiveness. Our audit of internal financial controls with reference to financial statements included obtaining an understanding of internal financial controls with reference to financial statements, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material 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 to provide a basis for our audit opinion on the Company’s internal financial controls system with reference to financial statements.
Meaning of Internal Financial Controls with reference to financial statements
A company’s internal financial control with reference to financial statements is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of Ind AS financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal financial control with reference to financial statements includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of Ind AS financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorisations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorised acquisition, use, or disposition of the company’s assets that could have a material effect on the Ind AS financial statements.
Inherent Limitations of Internal Financial Controls with reference to financial statements
Because of the inherent limitations of internal financial controls with reference to financial statements, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may occur and not be detected. Also, projections of any evaluation of the internal financial controls with reference to financial statements to future periods are subject to the risk that the internal financial control with reference to financial statements may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Opinion
In our opinion, the Company has, in all material respects, an adequate internal financial controls system with reference to financial statements and such internal financial controls with reference to financial statements were operating effectively as at March 31, 2019, based on “the internal control with reference to financial statements criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issued by the Institute of Chartered Accountants of India.
For B.R. Gupta & Co.
Chartered Accountants
Firm’s Registration Number 008352N
(Deepak Agarwal)
Place of Signature : New Delhi Partner
Date : 22 May, 2019 Membership No. 073696
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