Nitin Spinners Limited, Bhilwara
Report on the Audit of the Financial Statements Opinion
We have audited the accompanying Financial statements of Nitin Spinners Limited (“the Company”), which comprise the Balance Sheet as at March 31, 2024, the Statement of Profit and Loss (including Other Comprehensive Income), the Statement of Changes in Equity and the Statement of Cash Flows for the year ended on that date, and a summary of the material accounting policies and other explanatory information (hereinafter referred to as “the financial statements”).
In our opinion and to the best of our information and according to the explanations given to us, the aforesaid financial statements give the information required by 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, the profit and total comprehensive income, changes in equity and its cash flows for the year ended on that date.
Basis for Opinion
We conducted our audit of the Financial Statements in accordance with the Standards on Auditing (SAs) specified under section 143(10) of the Companies Act, 2013 (“the act”). Our responsibilities under those Standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Company in accordance with the Code of Ethics issued by the Institute of Chartered Accountants of India (ICAI) together with the independence requirements that are relevant to our audit of the financial statements under the provisions of the Act and the Rules made there under, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the ICAI’s Code of Ethics. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the financial statements.
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the current period. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. We have determined the matters described below to be the key audit matters to be communicated in our report.
|
Key Audit Matter
|
How the matter was addressed in our audit
|
|
1. Valuation of Inventories
|
Our Audit Procedure:
|
|
• The net carrying value of inventory as on 31st March,
|
•
|
We have performed the Inventory physical stock count on
|
|
2024 is 20.76% of Total Assets of the company.
|
|
sample basis. We performed inventory counts at location, which is selected based on financial significance and risk
|
|
• Sales in the industry can be extremely volatile with
|
|
and we performed the following procedures at each site:
|
|
consumer demand changing significantly (Seasonal)
|
|
based on current trends. As a result, there is a risk
|
|
(i) Selected a sample of inventory items and compared the
|
|
that the carrying value of inventory exceeds its net
|
|
quantities we counted to the quantities recorded.
|
|
realisable value.
|
|
(ii) Observed a sample of management’s inventory count procedures to assess compliance with Company’s
|
|
Hence, we determined the valuation of inventories as a key
|
|
policy, and
|
|
audit matter.
|
| |
|
(iii) Made inquiries regarding obsolete inventory items and
|
| |
| |
|
inspected the condition of items counted.
|
|
Please refer to point 6 to Note-1 (C) for details of the material
|
| |
•
|
We have also evaluated a selection of controls over inventory
|
|
accounting policies of inventories and Note-6 of Notes to
|
|
existence across the company.
|
|
Financial Statements for relevant disclosures of inventories.
|
| |
•
|
Examining the Company’s historical trading patterns of inventory sold at full price and inventory sold below full price, together with the related margins achieved for each product lines in order to gain comfort that stock has not been sold below cost.
|
| |
•
|
Evaluating the rationality of the inventory policies such as the policy of inventory valuation and provision for obsolescence and understanding whether the valuation of inventory was performed in accordance with the Company’s policy.
|
|
Key Audit Matter
|
How the matter was addressed in our audit
|
| |
•
|
Analyzing the inventory aging report and net realizable value of inventories.
|
| |
•
|
Inspecting the post period sales situation and evaluating the net realizable value of measurement applied on aging inventory in order to verify the evaluation accuracy of the estimated inventory allowance by the Company and
|
| |
•
|
Assessing whether the disclosures of provision for inventory valuation are appropriate.
|
|
2. Trade Receivables
|
Our Audit Procedure:
|
|
• The recoverability of trade receivables and the level
|
•
|
Assessed the design and implementation of key controls
|
|
of provisions for doubtful debts are considered to be
|
|
around the monitoring of recoverability.
|
|
a significant risk due to the pervasive nature of these balances to the financial statements, and the importance of cash collection with reference to the working capital management of the business.
|
•
|
Discussed with the management regarding the level and ageing of trade receivables, along with the consistency and appropriateness of receivables provisioning by assessing recoverability with reference to amount received in respect
|
|
• As at 31st March, 2024 the trade receivables balances
|
|
of trade receivables.
|
|
(net of provisions) consist of 11.83% of the total amount of
|
•
|
In addition, we have considered the company’s previous
|
|
assets of the company. Accordingly, we determined audit
|
|
experience of bad debt exposure and the individual counter-
|
|
of trade receivables as the key audit matter.
|
|
party credit risk.
|
|
Related Disclosures:
|
•
|
Tested these balances on a sample basis through agreement
|
|
Please refer to Note-7 of Notes to Financial Statements for
|
|
to post period end invoicing and cash receipt.
|
|
relevant disclosures of trade receivables.
|
•
|
The accuracy and completeness was verified through, analytical reviews and balance confirmation.
|
| |
•
|
Analyzing the aging schedule of trade receivable, past collection records, industry boom and concentration of customers’ credit risk.
|
|
3. Revenue Recognition
|
Our Audit procedure:
|
|
• Revenue is an important measure used to evaluate the
|
•
|
Assessing the design, implementation existence and
|
|
performance of the Company. There is a risk that the
|
|
operating effectiveness of internal control procedures
|
|
revenue is presented for amounts higher than what has
|
|
implemented as well as test of details to ensure accurate
|
|
been actually generated by the Company. Consequently,
|
|
processing of revenue transactions.
|
|
we considered revenue recognition to be a significant
|
•
|
Inspecting underlying documentation for any book entries
|
|
key audit matter.
|
|
which were considered to be material on a sample basis.
|
|
Related Disclosures:
|
•
|
Inspecting the key terms and conditions of agreements
|
|
Please refer to Point 11 to Note-1(C) of the accounting policies
|
|
with major customers on a sample basis to assess if there
|
|
for details of the accounting policies of revenue recognition and
|
|
were any terms and conditions that may have affected the
|
|
Note-22 of Notes to Financial Statements.
|
•
|
accounting treatment of the revenue recognition.
The accuracy and completeness of revenue was verified through, cut-off test, analytical reviews and balance confirmation.
|
Information Other than the Financial Statements and Auditor’s 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 Management Discussion and Analysis, Board’s Report including Annexures to Board’s Report, Corporate Governance and Shareholder’s Information, but does not include the financial statements and our auditor’s report thereon. The other information as identified above is expected to be made available to us after the date of this auditor’s report.
Our opinion on the financial statements does not cover the other information and we will not express any form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information identified above when it becomes available and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained during the course of our audit or otherwise appears to be materially misstated.
When we read the other information as identified above, if we conclude that there is a material misstatement therein, we are required to communicate the matter to those charged with governance.
Responsibilities of Management and Those Charged with Governance for the Financial Statements
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, total comprehensive income, changes in equity and cash flows of the Company in accordance with the Ind AS and other accounting principles generally accepted in India. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding 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.
In preparing the 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 management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.
The Board of Directors are responsible for overseeing the Company’s financial reporting process.
Auditor’s Responsibilities for the Audit of the Financial Statements
Our 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 our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with SAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
As part of an audit in accordance with SAs, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:
• Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate
to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
• Obtain an understanding of internal 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, we are also responsible for expressing our opinion on whether the Company has adequate internal financial controls system in place and the operating effectiveness of such controls.
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
• Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Company to cease to continue as a going concern.
• Evaluate the overall presentation, structure and content of the 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. We consider quantitative materiality and qualitative factors in (i) planning the scope of our audit work and in evaluating the results of our work; and (ii) to evaluate the effect of any identified misstatements in the financial statements.
We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.
From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the financial statements of the current period and are therefore the key audit matters. We describe
these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.
Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditor’s Report) Order, 2020 (“the Order”), issued by the Central Government of India in terms of sub-section (11) of section 143 of the Act, and according to the information & explanation given to us, we give in the Annexure-1, a statement on the matters specified in paragraphs 3 and 4 of the Order, to the extent applicable.
2) As required by section 143(3) of the Act, based on our audit we report:
(a) We have sought and obtained all the information and explanations, which to the best of our knowledge and belief were necessary for the purpose of our audit;
(b) In our opinion and to the best of our information and according to the explanations given to us, proper books of accounts as required by law have been kept by the Company so far as appears from our examination of those books;
(c) The Balance Sheet, the Statement of Profit and Loss (including Other Comprehensive Income), Statement of Changes in Equity and the Statement of Cash Flow dealt with by this Report are in agreement with the relevant books of account.
(d) In our opinion, the aforesaid financial statements comply with the Ind AS specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014
(e) On the basis of written representations received from the directors, as on March 31, 2024 and taken on record by the Board of Directors, none of the Directors are disqualified as on March 31, 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 over financial reporting of the Company and the operating effectiveness of such controls, refer to Annexure ‘II’ to this report.
(g) With respect to the other matter to be included in the Auditor’s Report in accordance with the requirements of section 197(16) of the Act, as amended:
In our opinion and to the best of our information and according to the explanations given to us, 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) Rules, 2014, in our opinion and 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 financial position in its financial statements. (Refer Note No. 30)
ii. The Company did not have any long term contracts including derivative contracts, for which there were any material foreseeable losses.
iii. There has been no delay in transferring amounts which are 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, 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 our notice that has caused us 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.
v. As stated in Note - 34 to the financial statements
(a) The final dividend proposed in the previous year, declared and paid by Company during the year is in accordance with section 123 of the act, as applicable
(b) The Board of Director of the company have proposed final dividend for the year which is subject to the approval of the members at the ensuing Annual General Meeting. The amount of dividend proposed is in accordance with section 123 of the Act, as applicable.
vi. Based on our examination which includes test check, the company has used an accounting software for maintaining its books of accounts which has a feature of recording audit trail
(edit log) facility and the same has operated throughout the year for all the relevant transactions recorded in the software. Further, during the course of our audit we did not come across any instance of audit trail feature being tampered with.
For Kalani & Company.
Chartered Accountants
Firm Regn. No 000722C
S.P. Jhanwar
Place: Bhilwara Partner
Date: 9th May, 2024 Membership No.- 074414
| 