Candour Techtex Limited
(Formerly known as Chandni Textiles Engineering Industries Limited)
Report on the Audit of the Standalone Financial Statements
Opinion
We have audited the standalone financial statements of Candour Techtex Limited (Formerly known as Chandni Textiles Engineering Industries Limited) (hereinafter referred to as "the Company"), which comprise the Balance Sheet as at 31 March 2024, and the Statement of Profit and Loss (including other comprehensive income), Statement of Changes in Equity and Statement of Cash Flows for the year then ended, and notes to the financial statements, including a summary of material accounting policies and other explanatory information (hereinafter referred to as "the standalone financial statements").
In our opinion and to the best of our information and according to the explanations given to us, 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 Standard prescribed under Section 133 of the Act read with the Companies (Indian Accounting Standard) Rules, 2015, as amended, (“Ind AS”) and other accounting principles generally accepted in India, of the state of affairs of the Company as at 31 March 2024, and its loss (including other comprehensive income), 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) specified under Section 143(10) of the Act. Our responsibilities under those SAs are further described in the Auditor's Responsibilities for the Audit of the Standalone 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 together with the ethical requirements that are relevant to our audit of the standalone financial statements under the provisions of the Act and the Rules thereunder, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the Code of Ethics. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Key Audit Matters
Key audit matters ('KAM') are those matters that, in our professional judgment, were of most significance 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 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
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Measurement and valuation of inventory
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As at 31 March 2024, the Company has inventory amounting to Rs.377.46 lakhs (Refer Note no.9)
This was determined a key audit matter, as the measurement and valuation of the inventory at the year-end involves significant judgment and estimate.
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Our audit procedures relating to the measurement of inventory included the following:
(a) Understanding and evaluating the design and operating effectiveness of controls over physical count and measurement of such inventory
(b) Performing procedures to ensure that the changes in inventory between last verification date
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The Company uses internal and external experts,
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and date of Balance Sheet are properly recorded
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to perform volumetric assessments, on the basis of
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(Roll back and forward procedures).
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which the quantity for these inventories is
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(c)Evaluating of competency and capabilities of
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estimated.
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management’s experts;
(d)Performing substantive analytical procedures to test
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The physical count of inventory was carried out
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the correctness of inventory existence and
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by internal experts for inventory lying at
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valuation.
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Ankleshwar, Nasik and Malegaon factories.
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(e)Testing of accuracy of inventory reconciliations with the general ledgers at period end, including test of reconciling items.
Based on the above procedures performed, we did not identify any material exceptions in the measurement and valuation of inventory quantities of textile goods and plastic goods.
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Establishment of New Technical Textile Project at Malegaon, Maharashtra
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During the year, the Company commissioned Technical Textile manufacturing unit at Malegaon, Maharashtra.
The Company had acquired leasehold land from the State Government authority on which factory building was constructed. The Company installed and commissioned various machineries, equipment, and other manufacturing infrastructures at Malegaon unit during the year.
The funds for establishment of Technical Textile manufacturing unit at Malegaon has been raised through private placement of equity shares and has availed terms loans from the banks, financial institution, and private parties apart from internal accruals.
The company has incurred significant capital expenditure amounting to Rs.4032.14 lakhs for establishment of Technical Textile manufacturing unit at Malegaon. We identified the selfconstruction of property, plant and equipment and borrowing costs as the key audit matters since the same involves identification of costs relating to acquisition of capital assets, utilization of funds raised and related borrowing costs till the assets are ready for its intended use.
Measurement and recognition of property, plant and equipment and determination of timing of capitalization as well as rate of amortization / depreciation in order to ensure compliance with the stipulation of the applicable Accounting Standards involve estimates and significant judgment.
Selection of the depreciation method and
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Our audit procedures relating to the recognition and measurement of property, plant and equipment and borrowing costs relating to New Technical Textile Project at Malegaon included the following:
• Assessed the nature of the additions made to property, plant and equipment and capital work-inprogress on a test check basis to test whether they meet the recognition criteria as set out in Ind AS 16 -Property, Plant and Equipment, including intended use of management.
• Identified direct costs relating to acquisition or construction of property, plant & equipment of Malegaon project in accordance with Ind AS 16 and after deducting the income accrued during the construction period.
• Measured and recognized interest and other finance charges as a component of the carrying amount of self-constructed items of property, plant & equipment in accordance with Ind AS 23 Borrowing costs.
• Evaluated the assessment provided by third party vendors involved in the construction and testing process to determine whether capitalisation ceased when the asset is in the location and condition necessary for it to be capable of operating in the manner intended by the management.
• Assessed the design, implementation, and operating effectiveness of controls in respect of review of capital work in progress, particularly in respect of timing of the capitalization.
• Evaluated the management’s assessment and judgement for selection of the depreciation method and estimate of useful life of assets installed at Malegaon
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estimation of the useful life of assets are matters of judgement.
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unit.
• Recalculated depreciation charge on property, plant
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Accordingly, valuation and completeness are key
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& equipment considering the useful life of the
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assertions related to capitalization of property,
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respective assets assessed by the management and time
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plant, and equipment while accuracy is the key assertion in respect of depreciation/amortization charge.
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of capitalization of assets.
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Information Other than the Standalone Financial Statements and Auditor‘s Report thereon
The Company’s Management and Board of Directors are responsible for the other information. The other information comprises the information included in the Company’s annual report, but does not include the financial statements and the auditors’ report thereon. The Company’s annual report is expected to be made available to us after the date of this auditor’s report.
Our opinion on the standalone 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 standalone 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 standalone financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated.
When we read the Company’s annual report, if we conclude that there is a material misstatement therein, we are required to communicate the matter to those charged with governance and take necessary actions, as applicable under the relevant laws and regulations.
Management’s and Board of Directors’ Responsibility for the Standalone Financial Statements
The 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 standalone 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 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 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 Responsibilities for the Audit of the Standalone Financial Statements
Our 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 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 standalone 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 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 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 control 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 with reference to standalone 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 we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the standalone 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 auditors' 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 standalone financial statements, including the disclosures, and whether the standalone financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
Materiality is the magnitude of misstatements in the standalone financial statements that, individually or in aggregate, makes it probable that the economic decisions of a reasonably knowledgeable user of the standalone 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 standalone 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 standalone financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditors' 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 (Auditors' Report) Order, 2020 ("the Order") issued by the Central Government of India in terms of Section 143(11) of the Act, we give in "Annexure A" a statement on the matters specified in paragraphs 3 and 4 of 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 best of 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 the Company so far as it appears from our examination of those books except for the matters stated in paragraph 2(B)(f) below on reporting under Rule 11(g) of the Companies (Auditor and Auditors) Rules, 2014.
(c) The Balance Sheet, the Statement of Profit and Loss (including other comprehensive income), the Statement of Changes in Equity and the Statement of Cash Flows dealt with by this Report are in agreement with the books of account.
(d) In our opinion, the aforesaid standalone financial statements comply with the Indian Accounting Standards specified under Section 133 of the Act.
(e) On the basis of the written representations received from the directors as on 31 March 2024 taken on record by the Board of Directors, none of the directors is disqualified as on 31 March 2024 from being appointed as a director in terms of Section 164(2) of the Act.
(f) The modifications relating to the maintenance of accounts and other matters connected therewith are as stated in paragraph 2A(b) above on reporting under Section 143(3)(b) of the Act and paragraph 2B(f) below on reporting under Rule11(g) of the Companies (Audit and Auditors) Rules, 2014.
(g) With respect to the adequacy of the internal financial controls with reference to standalone financial statements of the Company and the operating effectiveness of such controls, refer to our separate Report in "Annexure B".
(B) With respect to the other matters to be included in the Auditors 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:
(a) The Company does not have pending litigations which would impact its financial position;
(b) The Company did not have any long-term contracts including derivative contracts for which there were any material foreseeable losses; and
(c) There has been no amount required to be transferred to the Investor Education and Protection Fund by the Company.
(d) (i) The Management has represented that, to the best of its knowledge and belief, as
disclosed in Note No 48(viii) to the standalone financial statements, no funds 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;
(ii) The Management has represented, that, to the best of its knowledge and belief, as disclosed in Note No 48(viii) to the standalone financial statements, no funds 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; and
(iii) 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
(i) and (ii) hereinabove, contain any material misstatement.
(e) The company has not declared or paid any dividend during the year.
(f) Based on our examination which included test checks, except for the instances mentioned below, the Company has used an accounting software for maintaining its books of account which has a feature of recording audit trail (edit log) facility and the same has operated throughout the year for all relevant transactions recorded in the software:
(i) The feature of recording audit trail (edit log) facility was not enabled throughout the year in the accounting software at Ankleshwar factory where accounting records in respect of sales have been generated;
(ii) The feature of recording audit trail (edit log) facility was not enabled until 05-032024 in the accounting software at Nasik factory where accounting records in respect of sales have been generated;
(iii) The feature of recording audit trail (edit log) facility was not enabled until 28-062023 in the accounting software at Malegaon factory where accounting records in respect of sales and purchases have been generated;
Further, during the course of our audit, for the periods where audit trail (edit log) facility was enabled and operated for the accounting software at the respective locations as mentioned above, we did not come across any instance of audit trail feature 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 record retention is not applicable for the financial year ended 31 March 2024.
(C) With respect to the matter to be included in the Auditors' Report under Section 197(16) as amended:
In our opinion and according to the information and explanations given to us, the Company has paid/provided for managerial remuneration in accordance with the provisions of Section 197 read
with Schedule V to the Act. The Ministry of corporate Affairs has not prescribed other details under Section 197(16) of the Act which are required to be commented upon by us.
For Ambavat Jain & Associates LLP
Chartered Accountants
ICAI Firm Registration No: 109681W
Ashish J Jain Partner
Membership No.111829
Place: Mumbai Date: 30 May 2024
ICAI UDIN No: 241n829BKCBVU4328
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