The Members of GARWARE SYNTHETICS LIMITED
Report on the standalone Financial Statements
We have audited the accompanying financial statements of M/s. GARWARE SYNTHETICSLIMITED ("the Company") which comprises the Balance Sheet as at March 312019 the Statement of Profit or Loss statement of changes in equity and statement ofcash flows for the year then ended and notes to the financial statements including asummary of significant accounting policies and other explanatory information.
In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid financial statements give the information required by the Actin the manner so required and give a true and fair view in conformity with the accountingprinciples generally accepted in India of the state of affairs of the Company as at March31 2019 and Statement of Profit or Loss changes in equity and its cash flows for theyear ended on that date.
Basis for Opinion
We conducted our audit in accordance with the Standards on Auditing (SAs) specifiedunder section 143(10) of the Companies Act 2013. Our responsibilities under thoseStandards are further described in the Auditor's Responsibilities for the Audit of theFinancial Statements section of our report. We are independent of the Company inaccordance with the Code of Ethics issued by the Institute of Chartered Accountants ofIndia together with the ethical requirements that are relevant to our audit of thefinancial statements under the provisions of the Companies Act 2013 and the Rules thereunder and we have fulfilled our other ethical responsibilities in accordance with theserequirements and the Code of Ethics. We believe that the audit evidence we have obtainedis sufficient and appropriate to provide a basis for our opinion.
Key Audit Matter
The company had been issued a Show Cause Notice by Employees' Provident FundOrganization (Ministry of Labour and Employment Govt of India) for cancellation ofexemption u/s 17(1)(a) of EPF & MP Act 1952 on 28/03/2018 for violation of variousconditions for grant of exemption which includes the copy of notification for claimingexemption not being available and the company failing to submit the same to concernedauthority. In light of evidences produced it could be construed that the company had beenunlawfully holding statutory funds of its employees. Thus to comply with the SCN thecompany was directed to transfer the funds to the statutory fund by closing the account ofthe subscribers by the close of financial year. The company has thus made aggregatepayment of '2.46 crores to the Employees' Provident Fund Organization.
Emphasis on Matters
The Company has not appointed Internal Auditor as required under Section 138 of theCompanies Act 2013.
Our opinion is not modified in respect of these matters
Responsibility of Management for the Standalone Financial Statements
The Company's Board of Directors is responsible for the matters stated in section134(5) of the Companies Act 2013 ("the Act") with respect to the preparation ofthese standalone financial statements that give a true and fair view of the financialposition financial performance changes in equity and cash flows of the Company inaccordance with the accounting principles generally accepted in India including theIndian accounting Standards specified under section 133 of the Act. This responsibilityalso includes maintenance of adequate accounting records in accordance with the provisionsof the Act for safeguarding of the assets of the Company and for preventing and detectingfrauds and other irregularities; selection and application of appropriate implementationand maintenance of accounting policies; making judgments and estimates that are reasonableand prudent; 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 financialstatement that give a true and fair view and are free from material misstatement whetherdue to fraud or error.
In preparing the financial statements management is responsible for assessing theCompany's ability to continue as a going concern disclosing as applicable mattersrelated to going concern and using the going concern basis of accounting unless managementeither intends to liquidate the Company or to cease operations or has no realisticalternative but to do so.
Those Board of Directors are also responsible for overseeing the company's financialreporting process
Auditor's Responsibility for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financialstatements as a whole are free from material misstatement whether due to fraud or errorand to issue an auditor's report that includes our opinion. Reasonable assurance is a highlevel of assurance but is not a guarantee that an audit conducted in accordance with SAswill always detect a material misstatement when it exists. Misstatements can arise fromfraud or error and are considered material if individually or in the aggregate theycould reasonably be expected to influence the economic decisions of users taken on thebasis of these financial statements.
In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid financial statements give the information required by the Actin the manner so required and give a true and fair view in conformity with the accountingprinciples generally accepted in India;
a) In the case of the Balance Sheet of the state of affairs of the Company as at March31 2019;
b) In the case of the Statement of Profit and Loss of the Loss for the yearended on that date; and
c) In the case of the Cash Flow Statement of the cash flows for the year ended on thatdate.
Report on Other Legal and Regulatory Requirements
As required by the Companies (Auditor's Report) Order 2016 ("the Order")issued by the Central Government of India in terms of sub-section (11) of section 143 ofthe Companies Act 2013 we give in the "Annexure B" a statement on thematters specified in paragraphs 3 and 4 of the Order to the extent applicable.
As required by Section 143(3) of the Act we report that:
We have sought and obtained all the information and explanations which to the best ofour knowledge and belief were necessary for the purposes of our audit.
a. 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.
b. The Balance Sheet the Statement of Profit and Loss and the Cash Flow Statementdealt with by this Report are in agreement with the books of account.
c. In our opinion the aforesaid financial statements comply with the Indian AccountingStandards specified under Section 133 of the Act read with Rule 7 of the Companies(Accounts) Rules 2014.
d. On the basis of the written representations received from the directors as on 31stMarch 2019 taken on record by the Board of Directors one of the director Mrs. KavitaPawar is disqualified on 31st March 2019 as per section 167(1)(a) read withsection 164 of Companies Act 2013.
e. With respect to the adequacy of the internal financial controls over financialreporting of the Company and the operating effectiveness of such controls refer to ourseparate Report in "Annexure A".
f. With respect to the other matters to be included in the Auditor's Report inaccordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014 in our opinionand to the best of our information and according to the explanations given to us:
i. The Company has disclosed the impact of pending litigations on its financialposition in its financial statements - Refer Note 27 to the financial statements
ii. The Company did not have any long-term contracts including derivative contracts forwhich there were any material foreseeable losses.
iii. There were no amounts which were required to be transferred to the InvestorEducation and Protection Fund by the Company.
|For Krunal H. Shah & Associates || |
|Chartered Accountants || |
|Firm Regn.No: 133038W || |
|Sd/- || |
|(Krunal H. Shah) || |
|Proprietor ||Place: Mumbai |
|M. No.143308 ||Date: 30/05/2019 |
(Referred to in paragraph 1(f) under Report on Other Legal and RegulatoryRequirements' section of our report of even date)
Report on the Internal Financial Controls Over Financial Reporting under Clause (i) ofSub-section 3 of Section 143 of the Companies Act 2013 (the Act')
We have audited the internal financial controls over financial reporting of GarwareSynthetics Limited (the Company') as of March 31 2019 in conjunction with ouraudit of the financial statements of the Company for the year ended and as on that date.
Management's Responsibility for Internal Financial Controls
The Company's management is responsible for establishing and maintaining internalfinancial controls based on the internal control over financial reporting criteriaestablished by the Company considering the essential components of internal control statedin the Guidance Note on Audit of Internal Financial Controls over Financial Reportingissued by the Institute of Chartered Accountants of India (the Guidance Note').These responsibilities include the design implementation and maintenance of adequateinternal financial controls that were operating effectively for ensuring the orderly andefficient conduct of its business including adherence to Company's policies thesafeguarding of its assets the prevention and detection of frauds and errors theaccuracy and completeness of the accounting records and the timely preparation ofreliable financial information as required under the Act.
Our responsibility is to express an opinion on the Company's internal financialcontrols over financial reporting based on our audit. We conducted our audit in accordancewith the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting(the Guidance Note') issued by the Institute of Chartered Accountants of India andthe Standards on Auditing prescribed under Section 143(10) of the Act to the extentapplicable to an audit of internal financial controls. Those Standards and the GuidanceNote require that we comply with the ethical requirements and plan and perform the auditto obtain reasonable assurance about whether adequate internal financial controls overfinancial reporting was established and maintained and if such controls operatedeffectively in all material respects.
Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal financial controls system over financial reporting and their operatingeffectiveness. Our audit of internal financial controls over financial reporting includedobtaining an understanding of internal financial controls over financial reportingassessing the risk that a material weakness exists and testing and evaluating the designand operating effectiveness of internal control based on the assessed risk. The proceduresselected depend on the auditors' judgment including the assessment of the risks ofmaterial misstatement of the financial statements whether due to fraud or error.
We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the Company's internal financial controls systemover financial reporting.
Meaning of Internal Financial Controls over Financial Reporting
A company's internal financial control over financial reporting is a process designedto provide reasonable assurance regarding the reliability of financial reporting and thepreparation of financial statements for external purposes in accordance with generallyaccepted accounting principles. A company's internal financial control over financialreporting includes those policies and procedures that (1) pertain to the maintenance ofrecords that in reasonable detail accurately and fairly reflect the transactions anddispositions of the assets of the company; (2) provide reasonable assurance thattransactions are recorded as necessary to permit preparation of financial statements inaccordance with generally accepted accounting principles and that receipts andexpenditures of the company are being made only in accordance with authorizations ofmanagement and directors of the company; and (3) provide reasonable assurance regardingprevention or timely detection of unauthorized acquisition use or disposition of thecompany's assets that could have a material effect on the financial statements.
Inherent Limitations of Internal Financial Controls over Financial Reporting
Because of the inherent limitations of internal financial controls over financialreporting including the possibility of collusion or improper management override ofcontrols material misstatements due to error or fraud may occur and not be detected.Also projections of any evaluation of the internal financial controls over financialreporting to future periods are subject to the risk that the internal financial controlsover financial reporting may become inadequate because of changes in conditions or thatthe degree of compliance with the policies or procedures may deteriorate.
In our opinion to the best of our information and according to the explanations givento us the Company has in all material Respects an adequate internal financial controlssystem over financial reporting and such internal financial controls over financialreporting were operating effectively as at March 31 2019 based on the internal controlover financial reporting criteria established by the Company considering the essentialcomponents of internal control stated in the Guidance Note.
For Krunal H. Shah & Associates
Firm Regn.No: 133038W
(Krunal H. Shah)
M. No. : 143308
(Referred to in paragraph 2 under Report on Other Legal and RegulatoryRequirements' section of our report of even date)
Report on Companies (Auditor's Report) Order 2016 (the Order') issued by theCentral Government in terms of Section 143(11) of the Companies Act 2013 (the Act')of Garware Synthetics Limited (the Company')
i. In respect of fixed assets
(a) The company has maintained proper records showing full particulars includingquantitative details and situation of fixed Asset.
(b) As explained to us Fixed Assets have been physically verified by the management atreasonable intervals; no material discrepancies were noticed on such verification.
(c) As explained to us by the management and placing reliance on the certificate issuedby the management the title deeds of immovable properties are held in the name of thecompany. However the immovable property includes land & Building. The title of thesame is under dispute and the case is pending with the court of law.
(d) In our opinion and according to the information and explanations given to us nosubstantial fixed asset has been disposed off during the year and therefore does notaffect the going concern assumption.
ii. In respect of inventories
(a) As explained to us by the management and as observed by us the inventory of rawmaterialfinished goods stores and spares etc. has been physically verified during theyear and specifically at the year- end by the management. In our opinion the frequency ofphysical verification is reasonable having regard to the size and nature of business ofthe company.
(b) In our opinion the procedure for physical verification of inventories followed bythe management is reasonable and adequate in relation to the size of the company and thenature of its business.
(c) On the basis of examination of the records of inventory and placing reliance on thecertificate issued by the management we are of the opinion that the company ismaintaining proper records of inventory and no material discrepancy was noticed onphysical verification of the same.
iii. The company has not granted any loans secured or unsecured to companiesfirms or other parties covered in the register maintained under section 189 of the Act.
iv. In our opinion and according to the information and explanations given to usthe company has complied with the provisions of section 185 and 186 of the Companies Act2013 in respect of loans investments guarantees and security.
v. The Company has not accepted any deposits from the public and hence thedirectives issued by the Reserve Bank of India and the provisions of Sections 73 to 76 orany other relevant provisions of the Act and the Companies (Acceptance of Deposit) Rules2015 with regard to the deposits accepted from the public are not applicable.
vi. The Central Government has prescribed maintenance of cost records undersub-section (1) of Section 148 of the Act but such accounts and records have been not somade and maintained as total aggregate turnover of the company from all its production orservice is not more than 35 Crore in the preceding financial year.
vii. In respect of Statutory Dues
(a) According to the information and explanations given to us and based on the recordsof the company examined by us the company is regular in depositing the undisputedstatutory dues including Provident Fund Employees' State Insurance Income-taxSales-tax Wealth Tax Service Tax Custom Duty Goods and service tax Excise Duty andother material statutory dues as applicable except Profession Tax with the appropriateauthorities in India.
(b) According to the information and explanations given to us and based on the recordsof the company examined by us the particulars of dues of Income Tax Wealth Tax ServiceTax Sales Tax Customs Duty and Excise Duty which have not been deposited on account ofany disputes are as follows:
|Sr No. ||Financial Year ||Bombay Sales Tax (BST) ||Central Sales Tax (CST) ||Income Tax ||Forum where Dispute is pending |
|1 ||2001 - 02 ||3480294 ||770246 ||- ||Deputy Commissioner of Sales Tax |
|2 ||2002 - 03 ||3316840 ||1115852 ||- ||Deputy Commissioner of Sales Tax |
|3 ||2003 - 04 ||6222840 ||5098890 ||- ||Deputy Commissioner of Sales Tax |
|4 ||2004 - 05 ||1948300 ||946532 ||- ||Deputy Commissioner of Sales Tax |
|5 ||2011 - 12 ||- ||- ||2335540 ||Income Tax Appellate Tribunal |
|6 ||2012 - 13 ||- ||- ||1411930 ||Commissioner of Income Tax (Appeal) |
|7 ||2015 - 16 ||- ||- ||7725849 ||Commissioner of Income Tax (Appeal) |
viii. According to the records of the company examined by us and as per the informationand explanations given to us the Company has not defaulted in the repayment of dues tobanks. The Company has not taken any loan either from financial institutions or from thegovernment and has not issued any debentures.
ix. The Company has not raised money by way of initial public offer or further publicoffer (including debt instruments). Accordingly the provisions of clause 3 (ix) of theOrder are not applicable to the Company and hence not commented upon.
x. Based upon the audit procedures performed and the information and explanations givento us we report that no fraud by the Company or on the company by its officers oremployees has been noticed or reported during the year.
xi. Based upon the audit procedures performed and the information and explanationsgiven to us the managerial remuneration has been paid or provided in accordance with therequisite approvals mandated by the provisions of section 197 read with Schedule V to theCompanies Act.
xii. In our opinion the Company is not a Nidhi Company. Therefore the provisionsof clause 4 (xii) of the Order are not applicable to the Company.
xiii. In our opinion all transactions with the related parties are in compliancewith section 177 and 188 of Companies Act 2013 and the details have been disclosed in theFinancial Statements as required by the applicable accounting standards.
xiv. Based upon the audit procedures performed and the information and explanationsgiven to us the company has not made any preferential allotment or private placement ofshares or fully or partly convertible debentures during the year under review.Accordingly the provisions of clause 3 (xiv) of the Order are not applicable to theCompany and hence not commented upon.
xv. Based upon the audit procedures performed and the information and explanationsgiven to us the company has not entered into any non-cash transactions with directors orpersons connected with him. Accordingly the provisions of clause 3 (xv) of the Order arenot applicable to the Company and hence not commented upon.
xvi. In our opinion and according to the information and explanations given to usthe company is not required to be registered under section 45 IA of the Reserve Bank ofIndia Act 1934 and accordingly the provisions of clause 3 (xvi) of the Order are notapplicable to the Company and hence not commented upon.
For Krunal H. Shah & Associates
Firm Regn.No: 133038W
(Krunal H. Shah)
M. No. : 143308