I have audited standalone financial statements of Katare Spinning Mills Limited ("the Company"), which comprise the Balance Sheet as at 31st March 2024, the Statement of Profit and Loss (including other comprehensive income), the Cash Flow Statement and the statement of changes in equity for the year then ended, and a summary of the significant accounting policies and other explanatory information (hereinafter referred to as the “standalone financial statements”).
In my opinion and to the best of my information and according to the explanations given to me, except for the effects of the matter described in the Basis for Qualified Opinion Paragraph, 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 other accounting principles generally accepted in India, of the state of affairs of the Company as at March 31, 2024 and its profit, total comprehensive income, changes in equity and its cash flows for the year ended on that date.
Basis for qualified Opinion
I conducted my audit of the standalone financial statements in accordance with the Standards on Auditing (“SA”s) specified under section 143(10) of the Act. My responsibilities under those Standards are further described in the Auditor’s Responsibilities for the Audit of the Standalone Financial Statements 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 (“ICAI”) together with the ethical requirements that are relevant to my audit of the standalone financial statements under the provisions of the Act and the Rules made thereunder, and I have fulfilled my other ethical responsibilities in accordance with these requirements and the ICAI’s Code of Ethics. I believe that the audit evidence obtained by me is sufficient and appropriate to provide a basis for my qualified opinion on the standalone financial statements.
Material Uncertainty Related to Going Concern
The Company’s spinning division has not been in operation from last three years. There is no concrete step initiated to bring the unit in operation. The company has incurred a net cash loss during the year under review. These conditions indicate that a material uncertainty exists that may cast significant doubt on the Company’s ability to continue as a going concern. However, the Ind AS financial statements of the Company are prepared on a going concern basis. My opinion is not modified in respect of this matter.
Emphasis of the Matter
I draw attention to Note No. 23 - other income.
During the previous financial year i.e. FY 2022-23, the company has sold its part of the land, for a consideration of Rs. 121.00 lakh. However, the sale deed in respect thereof is notarized and registered sale deed is not yet executed which is reported to be pending for procedural matter of stamp duty exemption granted by District Industries Centre but not implemented by the sub-registrar.
Key Audit Matters:
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 period. These matters were addressed in the context of my audit of the standalone financial statements as-a- whole, and in forming my opinion thereon, and I do not provide a separate opinion on these matters.
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Key Audit Matter
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How the same is addressed in the audit
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Going Concern as described in Note No. 2 of Financial Statements
The company has incurred cash loss during the year under review. The spinning division is not operation form last three years or so. There is no concrete proposal in evidence for resuming the operations.
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My audit procedure included - The management assessment regarding Going Concern status is reviewed and preparation and presentation of the accounts on that basis and concluded that though the division is not in operation, the management consider taking the steps for resuming the operations. At this stage it will be premature to say that the company’s assertion regarding Going Concern status is unacceptable considering the grounds presented by the management before me.
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Deferred Tax Asset/liability
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I evaluated the taxation provisions
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There is a complexity relating to the
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and potential exposures. This
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treatment and recognition of current and
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included:
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deferred taxation, arising from significant or unusual transactions may
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• Analyzing the taxation consequences arising on significant or
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be ambiguous and thereby require legal
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unusual transactions to determine if
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opinion. In addition, the determination of
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the treatment adopted is appropriate
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whether to recognize deferred taxation
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under the circumstances, and/or
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assets is dependent on the directors’
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based on appropriate legal counsel
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assessment of the utilization of the
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opinion obtained by the directors.
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historical taxation losses and the timing of realizing temporary differences,
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• Analyzing the current and
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which requires significant judgement.
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deferred taxation calculations for compliance with relevant taxation
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With respect to uncertain taxation
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legislation and uncertainty to recoup
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positions, the directors make provision
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the same by way of future taxable
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for taxation based on the most probable
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profits
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outcome.
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• Evaluating the directors’
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As a result, taxation is considered a key
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assessment of the estimated manner
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audit matter due to the complexities and
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in which the timing differences,
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judgment arising from the
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including the recoverability of the
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considerations relating to the
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deferred taxation assets, would be
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calculation, recognition, and
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realized by comparing this to
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classification of current and deferred tax
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evidence obtained in respect of other
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balances.
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areas of the audit, including cash flow forecasts, minutes of directors’
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The disclosures relating to taxation and
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meetings and evidence obtained in
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deferred taxation are contained in note
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other areas during the performance
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No.8 of the financial statements.
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of our audit procedures.
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• Critically evaluating the assumptions made by the directors for uncertain current and deferred taxation positions to assess whether appropriate current and deferred taxation provisions have been recognized and are based on the most probable outcome.
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• I assessed the disclosures to ensure that this was accurately and appropriately recognized and found that the disclosures relating to the current and deferred tax are appropriate
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Payment of Gratuity
Ascertainment and its Provision for payment of gratuity liable under the respective asset
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No provision was made in respect of payment of gratuity in the past. During the year under review the company has actually made payment of gratuity amounting to Rs. 56,49,761 and settled the liability in full. The amount is charged to profit and loss account under employee benefit cost for the year under review.
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Information other than the financial statements and auditors’ report thereon:
The Company’s board of directors is responsible for the preparation of the other information. The other information comprises the information included in the Board’s Report including Annexures to Board’s Report, Business Responsibility Report but does not include the financial statements and my auditor’s 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 during the course of my audit or otherwise appears to be materially misstated.
If, based on the work I have performed, If 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.
Management's Responsibility 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, including other 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 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, management 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 the Board of Directors either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.
The Board of Directors is also responsible for overseeing the Company’s financial reporting process.
Auditor's Responsibility
My 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 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 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, I exercise professional judgment and maintain professional skepticism throughout the audit. I 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 my opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud any involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
• Obtain an understanding of internal financial controls relevant to the audit in order to design audit procedures that are appropriate in the circumstances. Under section 143(3)(i) of 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.
• 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 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.
• 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.
Materiality is the magnitude of misstatements in the Financial Statements that, individually or in aggregate, makes it probable that the economic decisions of a reasonably knowledgeable user of the Financial Statements may be influenced. I consider quantitative materiality and qualitative factors in (i) Planning the scope of my audit work and in evaluating the results of my work; and (ii) To evaluate the effect of any identified misstatements in the Financial Statements.
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.
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.
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 period 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.
II. Report on Other Legal and Regulatory Requirements
1. As required by Section 143(3) of the Act, based on my audit 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 of those books.
c) The standalone financial statements dealt with by this report The Balance Sheet, the Statement of Profit and Loss including Other Comprehensive Income, Statement of Changes in Equity and Statement of Cash Flow dealt with by this Report are in agreement with the relevant books of accounts.
d) In my opinion, the aforesaid standalone financial statements comply with the Ind AS specified under Section 133 of the Act.
e) On the basis of the written representations received from the directors as on 31st March 2024 taken on record by the Board of Directors, none of the directors is disqualified as on 31st 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 in "Annexure A”. My report expresses an unmodified opinion on the adequacy and operating effectiveness of the Company’s internal financial controls with reference to standalone financial statements.
g) With respect to the other matters to be included in the Auditor’s Report in accordance the requirements of section 197(16) of the Act, as amended:
In my opinion and to the best of my information and according to the explanations given to me, the remuneration paid by the Company to its directors during the year is in accordance with the provisions of section 197 of the act.
h) 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) Rule, 2014, as amended in my opinion and to the best of my information and according to the explanations given to me:
i) The Company has disclosed the impact of pending litigations on its financial position in its Financial Statements.
ii) The Company has made provision, as required under the applicable law or accounting standards, for material foreseeable losses, if any, on long-term contracts including derivative contracts.
iii) There are no incidences where the amount is required to be transferred to the investor Education and Protection Fund by the Company.
iv) (a) The Management has represented that, to the best of its knowledge
and belief, other than as disclosed in the note to the Standalone Financial Statements, no funds (which are material either individually or in the aggregate) 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 or entity, including foreign entity (“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;
(b) The Management has represented, that, to the best of its knowledge and belief, no funds (which are material either individually or in the aggregate) have been received by the Company from any person or entity, including foreign entity (“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;
(c) 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 subclause (i) and (ii) of Rule 11(e), as provided under (a) and (b) above, contain any material misstatement.
v. In view of the losses, the Board of directors has not proposed a dividend for the year under review.
vi. Based on my examination, which included test checks, the Company has used accounting software for maintaining its books of accounts 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 transaction recorded in the software. Further I did not come across any instance of audit trail featured being tampered with.
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 retention is not applicable for the financial year ended March 31,2024.
2. As required by the Companies (Auditor’s Report) Order, 2020 (the "Order”) issued by the Central Government in terms of Section 143(11) of the Act, I give in "Annexure B” a statement on the matters specified in paragraphs 3 and 4 of the Order.
For G M PAWLE AND ASSOCIATES Chartered Accountants FRN- 160253W
SD/-
Place: Solapur Ganesh Mallikarjun Pawle
Date: 30/05/2024 Proprietor
(Membership No.: 032561)
UDIN: 24032561BJZXLT6803
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