1. I have audited the accompanying standalone financial result of SUN RETAIL LIMITED
(the company) for the year ended 31st March, 2024 which comprise the balance sheet
as at 31 March 2024, and the statement of profit and loss (including other
comprehensive income), statement of changes in equity and statement of cash flows
for the year then ended, and notes to the financial statements, including a summary
of significant accounting policies and other explanatory information ("the Financial
Statements”).
2. In my opinion and to the best of my information and according to the explanations
given to me these standalone financial statement, except for the matters pointed out
in basis of qualified opinion paragraph, give the information required by the
Companies Act, 2013 ('Act') in the manner so required and give a true and fair view in
conformity with the accounting principles generally accepted in India, of the state of
affairs of the Company as at March 31, 2024, its Profit and cash flows for the year
ended on that date.
3. As per MCA Notification dated February 16, 2015, the companies whose shares are
listed on SME Platform as referred to chapter XB of SEBI (ICDR) Regulation, 2009 are
exempted from compulsory adoption of IND-AS and as the company falls under
exempt category, it has not adopted IND-AS for preparation of financial statement.
Basis of Qualified Opinion:
4. I conducted my audit in accordance with the Standards on Auditing (SAs) specified
under section 143(10) of the Companies Act, 2013 (the Act). My responsibilities under
those Standards are further described in the Auditor's Responsibilities for the Audit of
the Standalone Financial Results section of my report. I am independent of the
Company in accordance with the Code of Ethics issued by the Institute of Chartered
Accountants of India together with the ethical requirements that are relevant to my
audit of the financial results under the provisions of the Companies Act, 2013 and the
Rules there under, and I have fulfilled my other ethical responsibilities in accordance
with these requirements and the Code of Ethics. I believe that the audit evidence I
have obtained are sufficient and appropriate to provide a basis for my qualified opinion
as stated in the report.
1) During the year under consideration company has adjusted its outstanding liability
towards TJR Agrocom Pvt Limited by otherwise than cash. The total liability
adjusted by way of book entry is Rs. 4,30,00,000. As per the management
explanation the transaction relates to prior period and company has paid deposit
through bank entry. I have not been provided with any audit evidence in this regard
and hence unable to comment in detail on the same.
2) During the year under consideration company has settled its liability towards Raj
Traders of Rs. 5,00,000/- against its debtor Alpesh Trader for Rs. 4,85,242 in full
and final settlement and has received waiver of Rs. 14,757/-. I have not been
provided with confirmation of parties for this transaction. In absence of any clear
audit evidence regarding existence of right to receive from debtor, liability to pay
toward creditors and consent of parties for recorded settlement, I am unable to
comment upon existence, reliability and accuracy of recorded transaction.
3) I have not been provided with clear classification of creditors such as creditor for
expenses and creditor for goods. Thus, I am unable to comment upon. I have not
been provided with classification of creditors and as per management
representation all creditors are other than registered under MSMED Act. Thus in
absence of clear audit evidence in this regard I am unable to determine the delay
in making payment to MSME entities, liability of interest and compliance on such
delayed payments in terms of provisions 6f MSMED Act, if any.
4) During the year company has written off its liability towards Oasis Tradelink Ltd.
Worth Rs. 26569604/-. The management has taken this decision on the basis of
fact that liquidation process has been initiated against the creditor Oasis Tradelink
Ltd. As per management the liability was disputed and thus company is not liability
to pay. As per management they have not received any communication from
appointed liquidator. Liquidation process has been initiated against creditor Oasis
Tradelink Ltd. and matter is admitted and pending before NCLT Ahmedabad- case
number CP(IB) 433 of 2018. However, I have not been provided with anu audit
evidence regarding existence of dispute, communication records with liquidator
and thus I am unable to comment on this adjustment. In case liability arise in future
then this may impact financial position adversely.
5) Significant number of creditors are outstanding for more than 2 years. Moreover,
as the amount remains outstanding for more than six months; the input tax credit
availed in relation to these transactions needs to be reversed as required under
GST Laws. This may impact financial statement adversely. In absence of clear
bifurcation of Input Tax Credit in the books of account, I am unable to quantify
effect of the same.
6) During the year company has adjusted prior period wrong accounting entry
against its deposit - Performance Security (GSDM)-2. Company has adjusted total
Rs.32,67,289. This has resulted into decrease in assets by Rs. 32,67,289. I have not
been provided with any supportive audit evidence in relation to this transaction.
Hence, I am unable to comment upon existence, accuracy, and value involved in
the transaction.
7) The closing stock includes significant quantity of slow or non-moving goods. The
slow and non-moving goods are identified on the basis of its movement during
reporting period. Closing stock includes total 53 items of stock worth Rs.
9918167.67/- for which no single transaction is observed during the reporting
period. It constitutes almost 72% of the closing stock. Company may have to
reverse input tax credit availed and utilized, if any, for this non or slow-moving
goods. This indicates doubt on marketability of the goods. I have not been given
an opportunity to physically verify these items and thus I am unable to comment
upon its existence, accuracy and realizability of the slow and non-moving stock.
This may affect financial statement adversely.
8) The amount recorded as balance receivable from revenue is on the basis of
management representation and are not in conformity with records of income tax
and GST department. I have not been provided any audit evidence in this regard
and thus, I am unable to comment upon existence, realizability, accuracy of the
same.
9) Company has obtained DDU-GKY project from Gujarat Livelihood Promotion
Company Limited for skilling Rural Youth in the state of Gujarat and project from
Government of Jammu and Kashmir for skill development and has recorded grant
income of Rs. 48138797/- from these projects. This income has been recorded as
grant income under head other income. Debtor includes amount receivable from
Gujarat Skill Development Mission Rs. 1,73,28,087 and Grant receivable Rs.
3,94,46,103. Company has incurred total booked skilled development expenses of
Rs. 3,67,49,375 as expenses in profit and loss account of which significant amount
remains payable. I have not been provided audit evidence highlighting detailed
terms and conditions regarding recoverability of this grant. Thus, I am unable to
comment upon the same.
10) There were no sale transactions during first five months of year under audit. Total
revenue recoded against head sale of services comes from transaction executed
during last seven month of the year. The indicates unusual trend in the sales.
11) The total profit of the company for the period includes more than forty percent on
account of book adjustment entries regarding writing of debtors and creditor.
5. Key Audit Matter
Key audit matters are those matters that, in my professional judgment, were of most
significance in my audit of the Financial Statements of the current year. These matters
were addressed in the context of my audit of the Financial Statements as a whole, and
in forming my opinion thereon, and I do not provide a separate opinion on these
matters. The key audit matters are as under:
1. Closing Inventory:
The closing inventory includes slow and non-moving inventories. Further GST
certificate contains no address where such huge inventories can be kept.
Company has maintained its inventory in the custody of third party.
In my view it is considered as key audit matter because there is risk of non¬
existence or deficit in physical inventory. Further there is possibility of over or
under reporting of value of inventories. This will affect the financial statement
adversely.
My audit procedure in this case includes examination of custody related
documents with the third party and physical verification of inventories.
2. Unusual Movement in Sales:
Company has not booked any sales during first five months of the current
financial year. Moreover, there is significant increase in sales volume as
compared to previous year.
In my view it is considered as key audit matter because there is risk of over
statement or understatement of revenue. There is no comparative significant
recoveries in debtors.
My audit procedure in this case includes examination of statutory records to
ensure proper recording of revenue and verification of confirmation from
debtors to ensure genuineness of transactions.
6. Other Information
The Company's Board of Directors are responsible for the other information. The other
information comprises the information included in the Company's annual report, but
does not include the Financial Statements and my auditors' report thereon.
My opinion on the Financial Statements does not cover the other information and I do
not express any form of assurance conclusion thereon.
In connection with my audit of the Financial Statements, my responsibility is to read
the other information and, in doing so, consider whether the other information is
materially inconsistent with the Financial Statements or my knowledge obtained in the
audit or otherwise appears to be materially misstated. If, based on the work I have
performed, I conclude that there is a material misstatement of this other information;
I am required to report that fact. I have nothing to report in this regard, except
reported in the basis for qualified opinion paragraph.
7. Management's Responsibilities for the Standalone Financial Results
1. The Company's Board of Directors is responsible for the matters stated in section
134(5) of the Companies Act, 2013 ("the Act”) with respect to the preparation
of these financial statements that give a true and fair view of the financial
position, financial performance and cash flows of the Company in accordance
with the accounting principles generally accepted in India, including the
accounting Standards specified under section 133 of the Act. 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 financial statements that give a true and
fair view and are free from material misstatement, whether due to fraud or
error.
2. In preparing the standalone financial results, the Board of Directors are
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 the Board of Directors either intends to
liquidate the Company or to cease operations, or has no realistic alternative but
to do so.
3. The Board of Directors are also responsible for overseeing the Company's
financial reporting process.
8. Auditor's Responsibilities for the Audit of the Standalone Financial Results
My objectives are to obtain reasonable assurance about whether the 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 my 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 Financial Statements.
As part of an audit in accordance with SAs, I exercise professional judgment and
maintain professional scepticism throughout the audit. I also:
a) Identify and assess the risks of material misstatement of the 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 my 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.
b) 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) the Act, I am also responsible for expressing my opinion on
whether the Company has adequate internal financial controls with reference to
Financial Statements in place and the operating effectiveness of such controls.
c) Evaluate the appropriateness of accounting policies used and the
reasonableness of accounting estimates and related disclosures made by the
management.
d) Conclude on the appropriateness of the 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 I
conclude that a material uncertainty exists, I am required to draw attention in
my auditor's report to the related disclosures in the Financial Statements or, if
such disclosures are inadequate, to modify my opinion. My conclusions are
based on the audit evidence obtained up to the date of my auditor's report.
However, future events or conditions may cause the Company to cease to
continue as a going concern.
e) Evaluate the overall presentation, structure and content of the Financial
Statements, including the disclosures, and whether the Financial Statements
represent the underlying transactions and events in a manner that achieves fair
presentation.
f) I 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 I identify during my
audit.
g) I also provide those charged with governance with a statement that I 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 my independence, and where applicable, related
safeguards.
h) From the matters communicated with those charged with governance, I
determine those matters that were of most significance in the audit of the
Financial Statements of the current year and are therefore the key audit matters.
I describe these matters in my auditor's report unless law or regulation precludes
public disclosure about the matter or when, in extremely rare circumstances, I
determine that a matter should not be communicated in my report because the
adverse consequences of doing so would reasonably be expected to outweigh
the public interest benefits of such communication.
9. Report on Other Legal and Regulatory Requirements
As required by the Companies (Auditor's Report) Order, 2020 ("the Order”), issued by
the Central Government of India in terms of sub-section (11) of section 143 of the Act,
I give in the "Annexure A” a statement on the matters specified in paragraphs 3 and 4
of the Order, to the extent applicable.
As required by Section 143(3) of the Act, I report that:
a) I have sought and obtained all the information and explanations which to the
best of my knowledge and belief were necessary for the purposes of my audit.
b) In my opinion, proper books of account as required by law have been kept by the
Company so far as it appears from my examination except for those books for
the matters stated in the paragraph 10(h) below, on reporting under Rule 11(g)
of the Companies (Audit and Auditors) Rules, 2014.
c) The balance sheet, the statement of profit and loss including other
comprehensive income, the statement of changes in equity and the cash flow
statement dealt with by this Report are in agreement with the books of account.
d) In my opinion, the aforesaid Financial Statements comply with the Accounting
Standards specified under Section 133 of the Act, read with the Companies
(Indian Accounting Standard) Rules, 2015, as amended.
e) On the basis of the written representations received from the directors as on 31
March 2024 taken on record by the Board of Directors, none of the directors is
disqualified as on 31 March 2024 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
Financial Statements of the Company and the operating effectiveness of such
controls, refer to my separate Report on internal financials control over
financials reporting as per Annexure-2; and
g) In my opinion and according to the information and explanations given to me,
the remuneration paid by the Company to its directors during the current year
is in accordance with the provisions of Section 197 of the Act. Company has paid
sitting fees to its directors.
h) The modifications relating to the maintenance of accounts and other matters
connected therewith are as stated in the paragraph 9(b) above on reporting
under section 143(3)(b) of the Act and paragraph 10(h) below on reporting under
Rule 11(g) of the Companies (Audit and Auditors) Rules, 2014.
10. 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 my opinion and to
the best of information and according to the explanations given to me:
a) The Company does not have any pending litigations which would impact its
financial position.
b) The Company did not have any long-term contracts including derivative
contracts for which there were any material foreseeable losses.
c) There were no amounts which were required to be transferred to the Investor
Education and Protection Fund by the Company.
d) The management has represented that no funds have been advanced or loaned
or invested (either from borrowed funds or share premium or any other sources
or kind of funds) by the Company to or in any other person(s) or entity(ies),
including foreign entities ("Intermediaries”), with the understanding, whether
recorded in writing or otherwise, that the Intermediary shall, whether, directly
or indirectly lend or invest in other persons or entities identified in any manner
whatsoever by or on behalf of the Company ("Ultimate Beneficiaries”) or provide
any guarantee, security or the like on behalf of the Ultimate Beneficiaries. Based
on reasonable audit procedures adopted by me, nothing has come to my notice
that such representation contains any material misstatement.
e) The management has represented that no funds have been received by the
Company from any person(s) or entity(ies), including foreign entities ("Funding
Parties”), with the understanding, whether recorded in writing or otherwise, that
the Company shall, whether, directly or indirectly, lend or invest in other persons
or entities identified in any manner whatsoever by or on behalf of the Funding
Party ("Ultimate Beneficiaries”) or provide any guarantee, security or the like on
behalf of the Ultimate Beneficiaries. Based on reasonable audit procedures
adopted by me, nothing has come to my notice that such representation
contains any material misstatement.
f) Based on the audit procedures that have been considered reasonable and
appropriate in the circumstances, nothing has come to my notice that has
caused me to believe that the representations under sub-clause (i) and (ii) of
Rule 11(e), as provided under (a) and (b) above, contain any material
misstatement.
g) In my opinion and according to the information and explanations given to me,
no dividend has been declared and / or paid during the year by the Company.
h) Based on my examination, which included test checks, the Company has not
used accounting software for maintaining its books of account for the financial
year ended March 31, 2024 which has a feature of recording audit trail (edit
log) facility and the same has operated throughout the year for all relevant
transactions recorded in the software. Thus, I am unable to comment upon
incidence of tempering with audit trail.
As proviso to Rule 3(1) of the Companies (Accounts) Rules, 2014 is applicable
from April 1, 2023, reporting under Rule 11(g) of the Companies (Audit and
Auditors) Rules, 2014 on preservation of audit trail as per the statutory
requirements for record retention is not applicable for the financial year ended
March 31, 2024
Place: Ahmedabad As per my attached report of even date
Date: 30.05.2024 For, N.S. NANAVATI & CO.,
Chartered Accountants
Firm No. 134235W
(CA NITESH NANAVATI)
(Proprietor)
M No:- 143769
UDIN: 24143769BKFPCD4017
Place: Ahmedabad
Date: 30.05.2024
|