Disclaimer of Opinion
We have audited the accompanying Consolidated financial statements of Alka India Limited ("the Company, the Holding Company or the Parent Company”) and its Subsidiary Vintage FZE India Private Limited which comprise the Consolidated Balance Sheet as at March 31, 2021, the Consolidated Statement of Profit and Loss (including Other Comprehensive Income), the Consolidated Statement of Changes in Equity and the Consolidated Statement of Cash Flows for the year ended on that date, and a summary of the significant accounting policies and other explanatory information (hereinafter referred to as "the consolidated financial statements”).
We do not express an opinion on the accompanying Consolidated Financial Statements of the Holding Company. Because of the significance of the matters described in the Basis for Disclaimer of Opinion section of our report, we have not been able to obtain sufficient appropriate audit evidence to provide a basis for an audit opinion on these Consolidated Financial Statements.
Basis of Opinion
We are unable to determine the consequential impact of certain specific transactions / matters and disclosures on the Consolidated Financial Statements. Such specific transactions / matters include:
a. During the financial year 2020-21, the Parent company has booked Business Promotion Income of Rs. 11,01,696. The said services were provided by Alka India Limited to K Sera Sera Box Office Pvt Ltd, which is one of the Group Company. The management has explained over email that “Alka India Ltd is engaged in the business of Textiles which produces various cloth materials. Hence to promote the Dome business of KSS Box Office Pvt. Ltd, there is an agreement between both the companies stating that Alka India Ltd. will advertise the dome business of KSS Box Office on its every cloth material, like print of dome on the T-Shirts etc..”.
However, during our review, we were not provided with sufficient documentary evidence being Agreement, proof of printing of Dome on cloth material by Alka India Limited etc. to substantiate that the services were actually provided by Alka India Limited.
Thus, due to lack of sufficient and appropriate audit evidence, we are unable to comment on such income appearing in the accompanying audited consolidated financial statements for the year ended 31st March 2021.
b. The Parent Company has advanced an amount of Rs. 14,25,000 during the FY 2020-21 in the form of loans to Nityagata Advisor Management Consultancy for which we were not provided with documentary evidence to validate the said transaction.
Further, it was also noted that Mr. Ashok Panchariya (director of Alka) is also a director in Nityagata Advisor Management Consultancy and accordingly loans and advances to an entity where the director of Alka India Limited is interested resulted in the violation of the provisions under Section 185 of the Companies Act, 2013.
c. The Parent company has gross outstanding loans and advances of Rs. 10,29,25,486 (Gross) as on the year ended 31st March, 2021 from various companies, out of which the Parent company has created the provision for Doubtful Debts amounting to Rs. 8,04,05,486 in the previous financial years. We have circulated the independent balance confirmation for the majority of the outstanding loans and advances, however, we have not received any confirmation independently. Further, the Parent company has provided us the balance confirmation amounting to Rs. 5,42,58,905 (Gross) as obtained by the management of Alka India Limited from these companies to whom the loans have been advanced. Also, the Parent company has not accrued any interest on the said loans & advances. Accordingly, due to lack of sufficient and appropriate audit evidence, we are unable to comment on the recoverability and existence of such loans and advances.
d. The Parent company had not conducted the Fair Value Assessment for the Investments held by Alka India Limited of Rs. 2,43,94,962 (Net) in the shares of unlisted company as required under Ind AS 109. Hence we are unable to comment on the realizable value of such investment.
e. As per Standards on Auditing (SA) - 505 External Confirmation, Independent Balance confirmation for outstanding Bank Balances as on 31.03.2021 were sought during the course of audit but the response to the said confirmations were not received by us till the date of this report. Hence, the outstanding balances appearing as on 31st March, 2021 are based on the account statement available and provided by those charge with governance.
f. The Parent company has not made available the minutes of the Board Meetings held during the FY 2020-21 for our inspection till the date of this report and hence we are unable to review the same.
g. The Parent company has not provided us with the Internal Audit Report of the
Financial Year 2020-21, as required under Section 138 of the Companies Act,
2013 till the date of this report and hence we are unable to review the same.
Emphasis of Matters
We draw your attention to:
a) Note no. 1.3 of the Significant Accounting Policy and Other Notes to Accounts of audited consolidated financial statement, demand of Rs 179.51 Lacs including the interest and penalty under GVAT. The authorities have approved a refund amount of I NR 15 lakhs vide Refund Order dated 21st August 2020 and the same was received by the Parent company in its bank account.
b) Note no. 1.3 of the Significant Accounting Policy and Other Notes to Accounts of audited consolidated financial statement, the Parent Company name is in the list of shell companies (Vide SEBI on its letter bearing no. SEBI /HO/ISD/OW/P/2017/18183 dated August 7, 2017). Exchange had initiated a process of verifying the credentials / fundamentals of the company. It had appointed an auditor to conduct audit of the company to verify its credenti als/fundamentals.
On verification, if Exchange do not find appropriate credentials / fundamentals about existence of the company, Exchange may initiate the proceeding for compulsory delisting against the company, and the said company shall not be permitted to deal in any security on exchange platform and its holding in any depository account shall be frozen till such delisting process is completed.
Accordingly, the forensic audit was conducted, however, till date the Parent company has not received any further communication from BSE.
c) Note no. 1.3of the Significant Accounting Policy and Other Notes to Accounts of audited consolidated financial statement, the Parent Company had received a demand of Rs. 25 Lacs from SEBI vide its order no. EAD/BJD/NJMR/2/2017-18 with regards to redressal of investor grievances through SEBI Complaints Redress System (SCORES). The Parent company has filed an appeal against the demand with Securities Appellate Tribunal Mumbai and via order dated 7th August 2019, the appeal was dismissed. Later the Parent company contested the same in Supreme Court and vide order dated 24th July 2020, the appeal is dismissed. Thus, in the said quarter, the Parent company has recognized the liability of Rs. 25 lakhs payable towards the penalty imposed by SEBI on account of non- redressal of investor grievances.
Material uncertainty related to Going Concern
Due to the matters described under Basis on Disclaimer of Opinion and Emphasis of Matter and possible impact thereof, we are unable to obtain sufficient appropriate audit evidence as to whether the Company will be able to service its debts, realize its assets and discharge its liabilities as and when they become due over the period of next 12 months. Accordingly, we are unable to comment on whether the Company will be able to continue as Going Concern.
Management's Responsibility for the Consolidated Financial Statements
The Holding Company's management and Board of Directors are responsible for the matters stated in Section 134(5) of the Act with respect to the preparation of these consolidated financial statements that give a true and fair view of the state of affairs, profit / loss (including other comprehensive income), changes in equity and cash flows of the Company in accordance with the accounting principles generally accepted in India, including the Indian Accounting Standards (Ind AS) specified under Section 133 of the Act. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding of the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the consolidated financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, management and Board of Directors are responsible for assessing the Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.
Board of Directors is also responsible for overseeing the Company’s financial reporting process.
Auditor's Responsibility
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 scepticism throughout the audit. We also:
• Identify and assess the risks of material misstatement of the Consolidated 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 control relevant to the audit in order to design audit procedures that are appropriate in the circumstances. Under section 143(3X0 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 the 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 Consolidated 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 conditiorfs may cause the Company to cease to continue as a going concern.
• Evaluate the overall presentation, structure and content of the Consolidated financial statements, including the disclosures, and whether the Consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
Materiality is the magnitude of misstatements in the Consolidated financial statements that, individually or in aggregate, makes it probable that the economic decisions of a reasonably knowledgeable user of the Consolidated 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 Consolidated 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.
Other Matter
We did not audit the financials statement of one subsidiary reflect total asset of Rs. 1388.16 lakhs as at March 31, 2021, total revenue is nil for the year ended on that date, as considered in the consolidated financial statement. This financial statement has been audited by another auditor whose reports have been furnished to us by the management and our opinion on the consolidated financial statements, in so far as it relates to the amounts and disclosure included in respect of this subsidiary is based solely on the report of other auditor.
Report on Other Legal and Regulatory Requirements
1. As required by section 143(3) of the Act, based on our audit and on the consideration of the report of the other auditor referred to in the other matters section above we report that:
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, except for the matter mentioned in the emphasis of matter para above, proper books of account as required by law have been kept by the company so far as appears from our examination of those books;
c) The Balance sheet, statement of profit & loss (including other comprehensive income), the statement of changes in Equity and statement of cash flows dealt with by this report are in agreement with the books of account;
d) Except for the matter mentioned in the emphasis of matter para above,in our opinion, the aforesaid consolidated financial statements comply with Ind AS Specified under section 133 of the Act;
e) In our opinion, the matter described under the Emphasis of Matter Para above may have an adverse effect on the functioning of the Company;
f) On the basis of the written representation received from the directors as on 31st March 2021 and taken on record by the board of directors, none of the directors is disqualified as on 31stMarch 2021, from being appointed as a director in terms ofsectionl64(2) of the act;
g) 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 our separate Report in "Annexure A''. Our report expresses disclaimer of opinion on the Company's internal financial controls over financial reporting for the reasons stated therein.
h) With respect to the other matters included in the Auditor’s Report in accordance withRulell of the Companies (Audit and Auditors) Rule 2014 in our opinion best of our Information and according to the explanations given to us:
i. The Company has disclosed the impact of pending litigation on its financial position in its Financial statements Refer to Note No. 1.3;
ii. The Company does not have any long-term contracts including derivatives contracts for which any provision is required;
iii. The Company is not required to transfer amounts to the Investor Education and Protection Fund.
FOR, PIPARA & CO LLP
CHARTERED ACCOUNTANTS FRN No. 107929W/W100219
BHAWIK MADRECHA
Date: 30th June, 2021 PARTNER
Place: Mumbai M.No. 163412
UDIN: 21163412AAAALB3707
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