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Himatsingka Seide Ltd.
BSE: 514043 Sector: Industrials
NSE: HIMATSEIDE ISIN Code: INE049A01027
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Himatsingka Seide Ltd. (HIMATSEIDE) - Auditors Report
Company auditors report
To the Members of Himatsingka Seide Limited
Report on the Audit of the Standalone Financial Statements
We have audited the standalone financial statements of Himatsingka Seide Limited("the Company") which comprise the standalone balance sheet as at 31 March2019 the standalone statement of profit and loss (including other comprehensive income)standalone statement of changes in equity and standalone statement of cash flows for theyear then ended and notes to the standalone financial statements including a summary ofthe 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 standalone financial statements give the information requiredby the Companies Act 2013 ("Act") in the manner so required and give a true andfair view in conformity with the accounting principles generally accepted in India of thestate of affairs of the Company as at 31 March 2019 its profit and other comprehensiveincome changes in equity and its cash flows for the year 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 Act. Our responsibilities under those SAs are furtherdescribed in the Auditors' Responsibilities for the Audit of the Standalone 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 together with theethical requirements that are relevant to our audit of the standalone financial statementsunder the provisions of the Act and the Rules thereunder and we have fulfilled our otherethical responsibilities in accordance with these requirements and the Code of Ethics. Webelieve that the audit evidence we have obtained is sufficient and appropriate to providea basis for our opinion.
Key Audit Matters
Key audit matters are those matters that in our professional judgement 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 standalone financialstatements as a whole and in forming our opinion thereon and we do not provide aseparate opinion on these matters.
See note 2.1 and 20 to the standalone financial statements
The key audit matter How the matter was addressed in our audit
Revenue from the sale of goods in the course of ordinary activities is measured at the fair value of the consideration received or receivable when the goods are delivered and title In view of the significance of the matter we applied the following audit procedures in this area amongst other procedures to obtain sufficient appropriate audit evidence:
has passed the Company has transferred to the buyer the significant risks and rewards of ownership of the goods and the Company retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold. 1. We assessed the appropriateness of the revenue recognition accounting policies by comparing with applicable accounting standards.
We identified revenue recognition as a key audit matter because the Company and its external stakeholders focus on revenue as 2. We evaluated the design of key controls and operating effectiveness of the relevant key controls with respect to revenue recognition on selected transactions.
a key performance indicator. This result in a risk that revenues may be overstated or recognised before control has been transferred. 3. We performed substantive testing for the revenue transactions using statistical sampling and tested the underlying documents supporting the sales.
4. We carried out analytical procedures on revenue recognised during the year to identify unusual variances.
5. We tested on a sample basis specific revenue transactions recorded before and after the financial year end date to determine whether the revenue had been recognised in the appropriate financial period.
6. We tested manual journal entries posted to revenue to identify unusual items.
Carrying value of investments and loans given to subsidiaries See note 2.14 4A and 5to the standalone financial statements
The Company has made significant investments in subsidiaries which are recorded at cost less impairment. The investments to subsidiaries are required to be tested for impairment at least on an annual basis. The carrying value of investments is dependent on achieving sufficient level of future net cash flows. In view of the significance of the matter we applied the following audit procedures in this area amongst other procedures to obtain sufficient appropriate audit evidence:
Further the Company has advanced loans to its subsidiaries. The loans are carried at cost less provision for impairment. 1. We tested the design of key controls and operating effectiveness of the relevant key controls around the review of the assessment of impairment of investments in subsidiaries and loans to subsidiaries.
The Management is required to make significant judgement with respect to the provision required based on the information available with the Management. 2. We tested the underlying assumptions used by the Management for their assessment of the carrying value of the investments.
We have identified impairment of investments and loans to subsidiaries as a key audit matter because of their significance in the standalone financial statements and significant judgements in assessing the future performance and recoverability of respective investments/loans. 3. We involved valuation specialists who tested Management's assumptions with respect to the weighted average cost of capital and other key assumptions used for assessment of the carrying value of the subsidiaries.
4. We performed sensitivity analysis by considering a reasonably possible change in key management assumptions.
5. We tested the management assessment of the provision required if any for loans to its subsidiaries and investment in its subsidiaries.
Recognition for government grants and assessment of recoverability See note 2.5 6 and8 to the standalone financial statements
The Company is eligible for government grants under various schemes issued by State and the Central government. Each of these schemes requires fulfilment of conditions by the Company to be eligible to receive grant. The Company also needs to assess the recoverability of these grants at each balance sheet. In view of the significance of the matter we applied the following audit procedures in this area amongst other procedures to obtain sufficient appropriate audit evidence:
1. We assessed the appropriateness of the government grant accounting policies by comparing with the applicable accounting standards.
Recognition of grants (including its classification as capital or revenue grant) require a reasonable assurance that the Company will be in compliance with the conditions specified in the relevant schemes and the grants will be received. The assessment of fulfilment of relevant conditions specified in the grant at the time of recognition involves significant management judgement and assumptions. 2. We evaluated the design of key controls and operating effectiveness of the relevant key controls with respect to recognition of grant (including its classification as capital and revenue grant) and assessment of recoverability of government grants.
Further the Company needs to assess at each balance sheet the recoverability of the grant. 3. We performed substantive procedures on the government grants recognised during the year by testing the underlying documents and whether the recognition of grants is in accordance with the relevant incentive scheme including its classification as revenue or capital grant.
We have identified the recognition (including its classification as capital or revenue grant) of grant and its recoverability as a key audit matter because of the complexities in establishing the eligibility conditions of the grant and judgement involved towards the assessment of its recoverability. 4. We have evaluated the assessment performed by the management towards its recoverability of respective grant (including grants recorded in earlier years and outstanding at the beginning of the year).
The Company's management and Board of Directors are responsible for the otherinformation. The other information comprises the information included in the Company'sannual report but does not include the financial statements and our auditors' reportthereon. The other information is expected to be made available to us after the date ofthis auditors' report.
Our opinion on the standalone financial statements does not cover the other informationand we will 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 identified above when it becomes available and in doingso consider whether the other information is materially inconsistent with the standalonefinancial statements or our knowledge obtained in the audit or otherwise appears to bematerially misstated.
Management's Responsibility for the Standalone Financial Statements
The Company's management and Board of Directors are responsible for the matters statedin Section 134(5) of the Act with respect to the preparation of these standalone financialstatements that give a true and fair view of the state of affairs profit/(loss) and othercomprehensive income changes in equity and cash flows of the Company in accordance withthe accounting principles generally accepted in India including the Accounting Standardsspecified under Section 133 of the Act. This responsibility also includes maintenance ofadequate accounting records in accordance with the provisions of the Act for safeguardingof the assets of the Company and for preventing and detecting frauds and otherirregularities; selection and application of appropriate accounting policies; makingjudgements and estimates that are reasonable and prudent; and design implementation andmaintenance of adequate internal financial controls that were operating effectively forensuring the accuracy and completeness of the accounting records relevant to thepreparation and presentation of the standalone financial statements that give a true andfair view and are free from material misstatement 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 management either intends to liquidate the Company or to ceaseoperations or has no realistic alternative but to do so.
The Board of Directors is also responsible for overseeing the Company's financialreporting process.
Auditors' 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 Auditors' 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 judgement 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)0)of the Act we are also responsible for expressing our opinion on whether the Company hasadequate internal financial controls with reference to financial statements in place andthe 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 Auditors' 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 ourAuditors' 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.
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.
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 Section 143 (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. A) 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 standalone balance sheet the standalone statement of profit and loss (includingother comprehensive income) the standalone statement of changes in equity and thestandalone statement of cash flows dealt with by this Report are in agreement with thebooks of account.
d) In our opinion the aforesaid standalone financial statements comply with the IndianAccounting Standards ("Ind AS") specified under Section 133 of the Act.
e) On the basis of the written representations received from the directors as on 31March 2019 taken on record by the Board of Directors none of the directors isdisqualified as on 31 March 2019 from being appointed as a director in terms of Section164(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".
B) With respect to the other matters to be included in the Auditors' 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 as at 31 March 2019 onits financial position in its standalone financial statements - Refer Note 28 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.
iv) The disclosures in the standalone financial statements regarding holdings as wellas dealings in specified bank notes during the period from 8 November 2016 to 30 December2016 have not been made in these financial statements since they do not pertain to thefinancial year ended 31 March 2019.
C) With respect to the matter to be included in the Auditors' Report under Section197(16):
In our opinion and according to the information and explanations given to us theremuneration paid by the Company to its directors during the current year is in accordancewith the provisions of Section 197 of the Act. The remuneration paid to any director isnot in excess of the limit laid down under Section 197 of the Act. The Ministry ofCorporate Affairs has not prescribed other details under Section 197(16) which arerequired to be commented upon by us.
For B S R & Co. LLP
Firm's Registration Number. 101248W/W-100022
Supreet Sachdev
Membership No. 205385
Place: Bengaluru
Annexure - A to the Independent Auditors' Report
With reference to the Annexure A referred to in paragraph 1 in Report on Other Legaland Regulatory Requirements of the Independent Auditors' Report to the MembersofHimatsingka Seide Limited ('the Company') on the standalone financial statements for theyear ended 31 March 2019 we report that:
i) a) The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets.
b) The Company has a regular programme of physical verification of its fixed assets bywhich all fixed assets are verified in a phased manner over a period of two years. In ouropinion this periodicity of physical verification is reasonable having regard to the sizeof the Company and the nature of its assets. Pursuant to the programme certain fixedassets were physically verified during the year. No material discrepancies were noticed onsuch verification.
c) In our opinion and according to the information and explanations given to us and onthe basis of our examination of the records of the Company the title deeds of immovableproperties included in property plant and equipment are held in the name of the Companywhich includes the share of undivided land jointly held with other entities. However anadvance of ^1540 lakhs which has been paid towards two immovable properties is not in thename of the Company as the registration is pending as at the balance sheet date.
In respect of immovable properties taken on finance lease and disclosed as propertyplant and equipment in the standalone financial statements the lease agreements are inthe name of the Company where the Company is the lessee in the agreement except in caseof four premises having a gross book value of Rs. 5.50 lakhs and net book value of Rs.2.92 lakhs where the lease-cum-sale deed had been entered into by the Company and the salehas not been registered upon completion of the lease period. The Company has initiatedprocedures for executing the sale in its favour.
ii) The inventory except goods-in-transit and stocks lying with third parties hasbeen physically verified by the Management during the year. In our opinion the frequencyof such verification is reasonable. The discrepancies noticed on verification between thephysical stock and the book records were not material.
iii) a) According to the information and explanations given to us the Company has notgranted any loans secured or unsecured to the companies firms limited liabilitypartnerships or other parties covered in the register maintained under Section 189 of theAct during the current year. Thus the paragraph 3(iii)(a) of the Order is not applicableto the Company.
b) According to the information and explanations given to us loans granted in earlieryears are re-payable on demand. We are informed that the Company has not demandedrepayment of any such loan during the year and thus there has been no default on thepart of the parties to whom the money has been lent.
c) There are no amounts of loans granted to companies firms limited liabilitypartnerships or other parties listed in the register maintained under Section 189 of theAct which are overdue for more than ninety days.
iv) In our opinion and according to the information and explanations given to us theCompany has complied with the provisions of Section 185 and 186 of the Act with respectto the loans given investments made guarantees and security given.
v) In our opinion and according to the information and explanations given to us theCompany has not accepted any deposits from the public within the meaning of the directivesissued by the Reserve Bank of India provisions of Section 73 to 76 of the Act any otherrelevant provisions of the Act and the relevant rules framed thereunder.
vi) We have broadly reviewed the books of account maintained by the Company pursuant tothe rules prescribed by the Central Government of India for maintenance of cost recordsunder Section 148 of the Act in respect of products manufactured and are of the opinionthat prima facie the prescribed accounts and records have been made and maintained.However we have not made a detailed examination of the records.
vii) a) According to the information and explanations given to us and on the basis ofour examination of the records of the Company amounts deducted/ accrued in the books ofaccount in respect of undisputed statutory dues including Provident fund Employee's StateInsurance Income tax duty of Customs Goods and Services Tax cess and any othermaterial statutory dues have generally been regularly deposited with the appropriateauthorities though there has been slight delays in few cases. As explained to us theCompany did not have any dues on account of Sales-tax Service-tax Duty of excise andValue added tax.
According to the information and explanations given to us no undisputed amountspayable in respect of Provident fund Employee's State Insurance Income tax duty ofCustoms Goods and Services Tax cess and any other material statutory dues were inarrears as at 31 March 2019 for a period of more than six months from the date theybecame payable. As explained to us the Company did not have any dues on account ofSales-tax Service-tax Duty of excise and Value added tax.
b) According to the information and explanations given to us there are no dues whichhave not been deposited by the Company on account of disputes except for the following:
Name of the Statute Nature of the Dues Amount (in ^ ) Period to which the amount relates Forum where dispute is pending
Income-tax Act 1961 Income Tax 64887270 AY 2006-07 2009-10 and 2013-14 Income Tax Appellate Tribunal Kolkata
Income-tax Act 1961 Income Tax 23358818 AY 2010-11 and 2014-15 Commissioner of Income Tax (Appeals) Kolkata
Central Excise Act 1944 Excise Duty and penalty 64831131 (858689)* FY 2003-04 to 2009-10 2012-13 and 2015-16 Central Excise and Service Tax Appellate Tribunal
Central Excise Act 1944 Excise Duty and penalty 9790232 (367134)* FY 2013-14 and 2014-15 Commissioner of Central Excise (Appeals)
Represents payments made under protest
viii) In our opinion and according to the information and explanations given to us theCompany has not defaulted in repayment of loans or borrowings to financial institutionsand banks. The Company does not have any outstanding loans or borrowings from governmentand there are no dues to debenture holders during the year.
ix) According to the information and explanations given to us and based on examinationof the records of the Company the term loans obtained during the year were applied forthe purpose for which they were obtained. The Company has not raised any money by way ofinitial public offer or further public offer (including debt instruments) during the year.
x) According to the information and explanations given to us no material fraud on theCompany by its officers or employees or fraud by the Company has been noticed or reportedduring the course of our audit.
xi) According to the information and explanations given to us and based on ourexamination of the records of the Company the Company has paid/provided for managerialremuneration in accordance with the requisite approvals mandated by the provisions ofSection 197 read with Schedule V to the Act.
xii) According to the information and explanations given to us in our opinion theCompany is not a Nidhi Company as prescribed under Section 406 of the Act.
xiii) According to the information and explanations given to us and based on ourexamination of the records of the Company all transactions with the related parties arein compliance with Sections 177 and 188 of the Act where applicable and details of suchtransactions have been disclosed in the standalone financial statements as required by theapplicable accounting standards.
xiv) According to the information and explanations given to us and based on ourexamination of the records of the Company the Company has not made any preferentialallotment or private placement of shares or fully or partly convertible debentures duringthe year.
xv) According to the information and explanations given to us and based on ourexamination of the records of the Company the Company has not entered into non-cashtransactions with directors or persons connected with him.
xvi) According to the information and explanation given to us and in our opinion theCompany is not required to be registered under Section 45-IA of the Reserve Bank of IndiaAct 1934.
Annexure - B to the Independent Auditors' report
We have audited the internal financial controls with reference to standalone financialstatements of Himatsingka Seide Limited ("the Company") as of 31 March 2019 inconjunction with our audit of the standalone financial statements of the Company for theyear ended on that date.
In our opinion the Company has in all material respects adequate internal financialcontrols with reference to standalone financial statements and such internal financialcontrols were operating effectively as at 31 March 2019 based on the internal financialcontrols with reference to standalone financial statements criteria established by theCompany considering the essential components of internal control stated in the GuidanceNote on Audit of Internal Financial Controls Over Financial Reporting issued by theInstitute of Chartered Accountants of India (the "Guidance Note").
Management's Responsibility for Internal Financial Controls
The Company's management and the Board of Directors are responsible for establishingand maintaining internal financial controls based on the internal financial controls withreference to standalone financial statements criteria established by the companyconsidering the essential components of internal control stated in 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 Companies Act 2013 (hereinafterreferred to as "the Act").
Auditors' Responsibility
Our responsibility is to express an opinion on the Company's internal financialcontrols with reference to standalone financial statements based on our audit. Weconducted our audit in accordance with the Guidance Note and the Standards on Auditingprescribed under Section 143(10) of the Act to the extent applicable to an audit ofinternal financial controls with reference to financial statements. Those Standards andthe Guidance Note require that we comply with ethical requirements and plan and performthe audit to obtain reasonable assurance about whether adequate internal financialcontrols with reference to standalone financial statements were established and maintainedand whether such controls operated effectively in all material respects.
Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal financial controls with reference to standalone financial statements andtheir operating effectiveness. Our audit of internal financial controls with reference tostandalone financial statements included obtaining an understanding of such internalfinancial controls assessing the risk that a material weakness exists and testing andevaluating the design and operating effectiveness of internal control based on theassessed risk. The procedures selected depend on the Auditors' judgement including theassessment of the risks of material misstatement of the standalone financial statementswhether 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 withreference to standalone financial statements.
Meaning of Internal Financial controls with Reference to Financial Statements
A company's internal financial controls 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 controlswith reference to financial statements include those policies and procedures that (1)pertain to the maintenance of records that in reasonable detail accurately and fairlyreflect the transactions and dispositions of the assets of the company; (2) providereasonable assurance that transactions are recorded as necessary to permit preparation offinancial statements in accordance with generally accepted accounting principles and thatreceipts and expenditures of the company are being made only in accordance withauthorisations of management and directors of the company; and (3) provide reasonableassurance regarding prevention or timely detection of unauthorised acquisition use ordisposition of the company's assets that could have a material effect on the financialstatements.
Inherent Limitations of Internal Financial controls with Reference to FinancialStatements
Because of the inherent limitations of internal financial controls with reference tostandalone financial statements including the possibility of collusion or impropermanagement override of controls material misstatements due to error or fraud may occurand not be detected. Also projections of any evaluation of the internal financialcontrols with reference to standalone financial statements to future periods are subjectto the risk that the internal financial controls with reference to standalone financialstatements may become inadequate because of changes in conditions or that the degree ofcompliance with the policies or procedures may deteriorate.
Place: Bengaluru Date: 28 May 2019
Reconciliation between opening and closing balance sheet for liabilities arising fromfinancing activities
Opening balance 01 April 2018 Cash flows Non-cash movement Closing balance 31 March 2019
Borrowings (including current maturities) 124449.53 35306.25 1624.84 161380.62
Short - term borrowings 64172.01 7755.90 - 71927.91
Interest accured but not due 485.72 61.58 - 547.30
Total liabilities from financing activities 189107.26 43123.73 1624.84 233855.83
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