We have audited the accompanying financial statements of CHAMAN LAL SETIA EXPORTS LTD. ("the Company”), which comprises of Balance Sheet as at March 31st, 2024, the Statement of Profit and Loss (including other comprehensive income), Statement of Changes in Equity and Cash Flow Statement 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 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 (hereinafter referred to as "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 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 31st March 2024, its profits including other comprehensive income),changes inequity and its cash flows for the year ended on that date.
2. Basis for opinion
We conducted our audit in accordance with the Standards on Auditing (SAs) specified under section 143(10) of the Act and other applicable authoritative pronouncements issued by the Institute of Chartered Accountants of India. Our responsibilities under those Standards are further described in the ‘Auditor' 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 ("the ICAI”) 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 of our opinion on the Standalone Financial Statements.
Key Audit Matters: -
3. Key Audit matters are those matters that, in our professional judgment, were of most significant 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
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Key audit matter
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How our audit addressed the key audit matter
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Revenue recognition - Sale of Goods procedures:
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Our audit work included, but was not limited to, the following
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Refer Note 4 in the Summary of significant accounting policies and other explanatory information
The Company recognised an amount of Rs.135562.84 lacs revenue for the year ended 31st March, 2024, as disclosed in Note 17 to the standalone financial statements.
Revenue for the Company primarily comprises of, revenue from sale of rice either manufactured or traded.
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Obtained an understanding of the process of each revenue stream,
particularly of sale of rice and by products;
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Evaluated the design and implementation and tested the operating
effectiveness of controls over revenue recognition including around quantity sold, pricing and accounting of revenue transactions;
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Performed substantive analytical procedures on revenue which includes ratio analysis and region wise analysis;
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Key audit matter
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How our audit addressed the key audit matter
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Evaluated the terms and conditions of the contracts, including incoterms, with customers to ensure that the revenue recognition criteria are assessed by the management in accordance with the accounting standards;
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On a sample basis, tested revenue transactions recorded during the year, and revenue transactions recorded in the period before and after year-end with supporting documents, such as invoices, agreements with customers, proof of deliveries, and subsequent collection of payment;
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Performed other substantive audit procedures including domestic debtor confirmations on a sample basis, reviewed the subsequent collection of payment and proof of deliveries document of such selected debtors. Further, reconciling revenue recorded during the year with statutory returns;
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Tested, on sample basis, manual journal entries recorded in revenue accounts, credit notes and claims, to the relevant
approvals and the supporting documents;
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Evaluated disclosures made in the financial statements for revenue recognition from sale of goods for appropriateness in accordance with the accounting standards.
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Inventory existence and valuation
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Our audit work included, but was not limited to the following procedures:
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Refer Note 4 in the Summary of significant accounting policies and other explanatory information.
Inventory of the Company consists primarily of variety of rice, paddy and their by- products, manufactured during the process of conversion of paddy into rice.
The Company held inventories amounting to Rs. 49944.41 lacs as at 31st March 2024. Which represent 59% of total Current Assets of the company and 50% Total Assets of The Company. The inventory primarily comprises of Paddy as raw material, packing such as Bardana/ Empties material and finished goods in the form of rice and by-products. Inventory holding is generally significant considering the finished goods are aged for 6-9 months and also due to seasonality of the purchase of paddy. Such inventory is stored in plinths, godown, warehouses, silos, and storage bags. High quantity of inventory makes inventory physical verification an extensive procedure for the management, at the year end.
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Existence:
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Obtained an understanding of the management's process of inventory management and inventory physical verification performed subsequent to year-end;
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Evaluated the design effectiveness of controls over inventory management process/ inventory physical verification and tested key controls for their operating effectiveness;
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Reviewed the instructions given by senior management to stock count teams, including ensuring proper segregation of stock, use of calibration scales/charts, identification of damaged inventory, if any, etc.;
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Obtained inventory records and results of management conducted count;
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Reviewed reconciliation of differences, if any, between management physical count and inventory records, and tested the necessary adjustment made in the inventory records by the management;
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Reviewing the Stock Auditor Report of an Independent Chartered Accountant M/s AJ Mohan & Associates on
30.09.2023 along with its valuation and also Reviewing the Stock Auditor Report of an Independent Chartered Accountant M/s Jaitley Sumit and & Associates on
31.10.2023 along with its valuation
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Key audit matter
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How our audit addressed the key audit matter
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The valuation of finished rice and by products is a comprehensive exercise and is carried out manually with the help of computer aided devices. The valuation process involves estimation around determination of -
Determination of Weighted average Cost
• Allocable overheads and their absorption rates;
• Determination of net realisable value of by products such as husk, bran, etc, and
• Determination of net realisable value of the different variety of finished product.
Accordingly, existence and valuation of the yearend inventory balance, which is significant with respect to the total assets held by the Company, is considered to be one of the areas which required significant auditor attention owing to the complexity and judgements involved in the process of physical
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Valuation:
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Obtained an understanding of management process of inventory valuation;
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Evaluated design effectiveness of controls over inventory valuation process and tested key controls for their operating effectiveness;
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Tested inputs into the valuation process from source documents general ledger accounts;
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Tested reconciliation of opening inventory, purchase/ production, sales and year-end inventory to validate the amount of yield during the year and to identify any abnormal production loss;
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Compared key estimates, including those involved in computation of allocable overheads and their absorption rate, to prior years and enquired reasons for any significant variations,
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Checked net realisable value of by-products from actual sale proceeds near/ subsequent to the year-end;
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Tested arithmetical accuracy of valuation calculations; and
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Evaluated appropriateness of disclosure of inventory year-end balance in the financial statements.
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4. Information other than the Standalone Financial Statements and Auditors' 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 Standalone Financial Statements and our auditor's report thereon.
Our opinion on the Standalone Financial Statements does not cover the other information and we do 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 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.
If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.
5. MANAGEMENT'S RESPONSIBILITY FOR THE IND AS FINANCIAL STATEMENTS
The Company's Board of Directors is responsible for the matters stated in sub-section (5) of Section 134 of the Companies Act, 2013 ("the Act”) with respect to the preparation and presentation of these Ind AS Financial Statements that give a true and fair view of the State of affairs, profit (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 prescribed 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 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 the ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the Ind AS 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, the 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 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.
6 AUDITORS' RESPONSIBILITY 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 Standards on Auditing 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 Standards on Auditing, 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 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 in the financial statements made by the Management and Board of Directors.
• Conclude on the appropriateness of the Management and Board of Directors 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 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 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.
7 Report:-
We conducted our audit in accordance with the Standards on Auditing specified under section 143(10) of 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 ethical requirements that are relevant to our audit of the 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.
In our opinion and to the best of our information and according to the explanations given to us, the aforesaid Ind AS financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the Ind AS and other accounting principles generally accepted in India. Except the Impact of Undisputed Trade Receivables - Considered Doubtful which are considered Doubtful to Rs. 447.42 Lacs which were not write off in Current Year or not provided for and except impact of Non-Disputed Trade payables which were not written back to profits amounting Rs 28.83 Lacs Outstanding for more than 3 Years.
(a) In the case of the Balance sheet, of the state of affairs of the Company as at March 31st, 2024
(b) In the case of the Statement of profit and loss , of the profit for the year ended on that date (including other comprehensive income) ,
(c) Changes in equity for the year ended on that date.
(d) In the case of Cash Flow Statement, of the cash flows for the year ended on that date.
8 REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS
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, we give in the Annexure A, a statement on the matters specified in paragraphs 3 and 4 of the Order, to the extent applicable.
1. As required by Section 143(3) of the Act, we report to the extent applicable 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, 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 matter stated in the paragraph 2(i)(vi)
below on reporting under Rule 11(g) of the Companies (Audit and Auditors) Rules, 2014
c. The Balance Sheet, the Statement of Profit and Loss (including other comprehensive income), Statement of changes in Equity and the Cash Flow Statement and dealt with by this Report are in agreement with the books of account;
d. In our opinion, the aforesaid Ind AS financial statements comply with the Ind AS prescribed under section 133 of the Act, read with relevant rules issued thereunder;
e. On the basis of written representations received from the Directors as on March 31st, 2024, taken on record by the Board of Directors, none of the Directors are disqualified as on March 31st , 2024, from being appointed as a Director in terms of Section 164(2) of the Act;
f. The modification relating to the maintenance of accounts and other matters connected therewith is as stated in paragraph (b) above.
g. With respect to the adequacy of the internal financial controls over the financial reporting of the Company and the operating effectiveness of such controls, refer to our separate report in "Annexure B” to this report;
h. With respect to the other matters to be included in the Auditors' Report in accordance with the requirements of Section 197(16) of the Act, as amended: In our opinion, the managerial remuneration for the year ended 31.03.2024 has been paid/provided by the Company to its directors in accordance with the provisions of section 197 read with Schedule V to the Act.
i. 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), 2014, as amended, in our opinion and to the best of our information and according to the explanations given to us;
j. The Company has disclosed the impact of pending litigations as at 31.03.2024 on its financial position in its financial statements. Refer Note No. 8 to Notes of Accounts.
ii. In our opinion and as per the information and explanations provides to us, the Company has not entered into any long-term contracts including derivative contracts, requiring provision under applicable laws or accounting standards, for material foreseeable losses.
iii. There has been no delay in transferring the amounts, required to be transferred, to the Investor Education and Protection Fund by the Company during the year ended 31st March, 2024.
iv. (a) The management has represented that, to the best of it's knowledge and belief, 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 persons or entities, including foreign entities ("Intermediaries”), with the understanding, whether recorded in writing or otherwise, that the Intermediary shall, 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 it's knowledge and belief, no funds have been received by the Company from any persons or entities, including foreign entities ("Funding Parties”), with the understanding, whether recorded in writing or otherwise, that the Company shall, 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 performed 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) contain any material misstatement.
(v) The final dividend paid by the Company during the year in respect of the same declared for the previous year is in accordance with Section 123 of the Act to the extent it applies to payment of dividend
As stated in note no. 10 to the standalone financial statements, the Board of Directors 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 dividend proposed is in accordance with Section 123 of the Act, as applicable.
(vi) The Company uses accounting software(s) for maintaining its books of account which has a feature of recording audit trail (edit log) facility and based on our examination which included test checks, the same has operated throughout the year for all relevant transactions recorded in such accounting software(s). However, with respect to the primary accounting software, the audit trail feature is not enabled for direct changes to data when using certain privileged/administrative access rights to the underlying database. As informed to us by the management of the Company, such privileged/administrative access rights to the database are with service provider only and changes, if any, are mandatorily recorded to sufficiently demonstrate its audit trail (edit log). Further, to the extent audit trail (edit log) facility was enabled and operated throughout the year for the respective accounting software(s), we did not come across any instance of the audit trail feature being tampered with.
For Rajesh Kapoor & Co.
Chartered Accountants
sd/-
Rajesh Kapoor Prop.
Place: Amritsar M.No.:- 092692
Date: 28.05.2024 FRN NO.13527N
UDIN:24092692BKCJCV3233
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