REPORTS ON THE FINANCIAL STATEMENTS
We have audited the accompanying financial statements of “GALA GLOBAL PRODUCTS LIMITED”, which comprise the Balance Sheet as at Mar 31, 2018, the Statement of Profit and Loss and the cash flow statement for the year then ended, and a summary of significant accounting policies and other explanatory information.
MANAGEMENT RESPONSIBILITY 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 and presentation of these financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the accounting principles generally accepted in India, including the Accounting Standards Specified under Section 133 of the Act and relevant rules there under.
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 financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.
AUDITORS RESPONSIBILITY
Our responsibility is to express an opinion on these financial statements based on our audit.
We have taken into account the provisions of the Act, the accounting and auditing standards and matters which are required to be included in the audit report under the provisions of the Act and the Rules made there under.
We conducted our audit in accordance with the Standards on Auditing specified under Section 143(10) of the Act. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the standalone Ind AS financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making, those risk assessments, the auditor considers internal control relevant to the Company’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by Company’s Directors, as well as evaluating the overall presentation of the financial statements.
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.
We draw attention to the departures from complying with the requirements of Accounting Standard-15 “Employee Benefits”. According to the explanations given by the management, there were no employees who were eligible for Retirement Benefits and hence Provision for retirement benefits has not been provided for in the financial statements during the period under report.
OPINION
In our opinion and to the best of our information and according to the explanations given to us, the 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 accounting principles generally accepted in India:
a) in the case of the Balance Sheet, of the state of affairs of the Company as at March 31, 2018;
b) In the case of the Profit and Loss Account, of the profit/ loss for the year ended on that date;
c) In the case of the Cash Flow Statement, of the cash flows for the year ended on that date.
Audit Qualification (each audit qualification separately): a. Details of Audit Qualification:
The management have adopted policy of amortizing Intangible Assets from the next financial year, resulting into departures from complying with requirements of applicable accounting standards. Such policy adoption has an effect of overstatement of profit of Financial Year 2017-18.
b. Type of Audit Qualification: Qualified Opinion
c. For Audit Qualification(s) where the impact is quantified by the auditor, Management’s Views:
The Company has adopted Policy of reviewing the intangible in the year of recognition for possible returns. In case of the returns are not sustainable the intangible assets could be written off with in a period of 2-3 years. Moreover, if sustainable the same would be written off as provided under the applicable standard. Since the Company is required to adopt Ind-As compulsory with effect from 01st April 2018 and it has specifically defined in these forthcoming standards that any such Intangible Assets needs to be reviewed at each balance sheet date for any impairment (if any) whereas existing accounting standards require to amortize such intangibles compulsory within maximum of 5/10 years. Further the management foresee that there would not be any impairment requirement comparing to its carrying value as on 31 march 2018 (even in near future as well) and hence no amortization of intangible asset has been made in the period under report.
For Audit Qualification(s) where the impact is not quantified by the auditor: NA
(i) Management’s estimation on the impact of audit qualification:
(ii) If management is unable to estimate the impact, reasons for the same:
(iii) Auditors’ Comments on (i) or (ii) above:
REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENT
1. As required by the Companies (Auditor’s Report) Order, 2016(“the order”) as amended, 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.
2. As required by section 143 of the Companies Act, 2013 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 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, the Statement of Profit and Loss and the cash flows statement, dealt with by this Report are in agreement with the books of account;
d) In our opinion, the aforesaid financial statements comply with the Accounting Standards specified under section 133 of the Companies Act, 2013, 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, 2018, and taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2018, from being appointed as a director in terms of section 164 (2) of the Companies Act, 2013.
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 our separate Report in “Annexure B”.
g) 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. Company is originally listed on BSE SME platform and was successfully migrated to BSE main board platform with effect from 9th Nov, 2017 as per the BSE Notice No. - 20171107-19, dated Nov. 072017.
As per the road map issued by MCA for applicability of Indian Accounting Standard wide Companies (Indian Accounting Standards) Rules, 2015, the applicability criteria for the implementation of Indian Accounting Standards are given. The same are applicable to the company even if the company is in the process of listing in main board but the testing date for the criteria as per Para - 4, Explanation - 2 shall be the last date of the accounting year. (I.e. 31 March 2017, if company wants to apply for FY 201718.) Company is neither in the process of listing nor fulfilling any other criteria for applicability on Ind AS on 31st March 2017, so all financial results as well as Annual accounts for the Financial Year 2017-18 must be prepared under IGAAP. Applicability criteria testing was fulfilled, as on 31st March 2018, so Ind AS are applicable for the financial year 2018-19
ii. The Company does not have any pending litigations which would impact its financial position,
iii. The Company did not have any long-term contracts including derivative contracts for which there were any material foreseeable losses,
iv. There were no amounts, which were required to be transferred to the Investor Education and Protection Fund by the Company.
ANNEXURE ‘A’TO THE INDEPENDENT AUDITOR’S REPORT
The Annexure referred to in paragraph 1 of the Our Report of even date to the members of GALA GLOBAL PRODUCTSLIMITED on the accounts of the company for the year ended 31st March, 2018.
On the basis of such checks as we considered appropriate and according to the information and explanation given to us during the course of our audit, we report that:
1. (a) The company has maintained proper records showing full particulars including quantitative details and situation of fixed assets.
(b) As explained to us, majority of the assets have been physically verified by the management during the year in accordance with the planned programme of verification once in three years, which, in our opinion, is reasonable having regard to the size of the company and the nature of its assets. No material discrepancies were noticed on such verification.
(c) As explained to us, title deeds of immovable properties are held in the name of the company.
2 The inventory has been physically verified by the management at reasonable intervals during the year. The procedures of physical verification of the inventories followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its business. As per the information and explanations given to us, discrepancies noticed on physical verification between the physical stocks and book records were not material.
3. The Company has not granted any loans, secured or unsecured to companies, firms, limited liability partnerships or other parties covered in the register maintained under Section 189 of the Act. Accordingly, the provisions of clause 3(iii) of the Order are not applicable to the Company and hence not commented upon.
4. In our opinion and according to the information and explanations given to us, the Company has complied with the provisions of Section 185 and 186 of the Act to the extent applicable, with respect to the loans and investments made, guarantees given and security provided.
5. The Company has not accepted any deposits from the public and hence the directives issued by the Reserve Bank of India and the provisions of Sections 73 to 76 or any other relevant provisions of the Act and the Companies (Acceptance of Deposit) Rules, 2015 with regard to the deposits accepted from the public are not applicable.
6. In our opinion and according to the information and explanation given to us, the Central Government has not prescribed maintenance of cost records under section 148 of the Companies Act, 2013.
7. (a) According to the information and explanations given to us and on the basis of our examination of the records, the Company is generally regular in depositing undisputed statutory dues including provident fund, employees’ state insurance, income-tax, sales-tax, service tax, duty of customs, duty of excise, value added tax, cess and other statutory dues applicable to the Company with appropriate authorities. No undisputed amounts payable in respect of the aforesaid statutory dues were outstanding as at the last day of the financial year for a period of more than six months from the date they became payable.
(b) According to the information and explanations given to us, there is no amounts payable in respect of income tax, wealth tax, service tax, sales tax, customs duty and excise duty which have not been deposited on account of any disputes.
8. Based on our audit procedures and on the information and explanations given by the management, we are of the opinion that, the Company has not defaulted in repayment of dues to a financial institution or bank.
9. Based on audit procedures and according to the information and explanations given to us, the company has not raised any fund during the year under review. However, due to merger of this company with Gala Products Limited via NCLT Order dated 17th May,2017, 1,00,00,000 Equity shares of Rs.10 each were issued and allotted to the shareholders of Gala Products Limited as on 20.06.2017.
10. Based on the audit procedures performed and the information and explanations given to us, we report that no fraud on or by the Company has been noticed or reported during the year, nor we have been informed of such case by the management.
11. Based on our audit procedures and on the information given by the management, we report that the managerial remuneration has been paid / provided in accordance with the requisite approvals mandated by the provisions of section197 read with schedule V to the Companies Act.
12. The company is not Nidhi Company. Therefore, this clause is not applicable to the company.
13. Based on our audit procedures and on the information given by the management, we report all transactions with the related parties are in compliance with Section 188 and 177 of Companies Act, 2013 where applicable and the details havebeen disclosed in the Financial Statements etc. as required by the accounting standards and Companies Act, 2013.
14. Based on our audit procedures and on the information given by the management, we report the company has not made any preferential allotment / private placement of fully paid equity shares during the year under review. However, during the financial year under review, GALA GLOBAL PRODUCTS LIMITED further issued equity shares in numbers of 1,00,00,000 shares to the shareholders of Gala Products Limited as per Scheme of Amalgamation approved via NCLT Order dated 17th May,2017 and Also issued bonus shares on 14th November, 2017 in the ratio of 1: in numbers 12,37,825.
15. Based on our audit procedures and on the information given by the management, we report the company has not entered into any non-cash transactions with directors or persons connected with him.
16. Based on the information given by the management, we report the company is not required to be registered under section 45 IA of the Reserve Bank of India Act, 1934.
Annexure ‘B’
Annexure to the independent auditor’s report of even date on the financial statements of “GALA GLOBAL PRODUCTS LIMITED”
Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section 143 of the Companies Act, 2013 (‘‘the Act’’)
We have audited the internal financial controls over financial reporting of GALA GLOBAL PRODUCTS LIMITED (‘‘the Company’’) as of March 31, 2018 in conjunction with our audit of the financial statements of the Company for the year ended on that date.
Management’s Responsibility for Internal Financial Controls
The Company’s management is responsible for establishing and maintaining internal financial controls based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls over Financial Reporting issued by the Institute of Chartered Accountants of India. These responsibilities include the design, implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the orderly and efficient conduct of its business, including adherence to company’s policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information, as required under the Act.
Auditors’ Responsibility
Our responsibility is to express an opinion on the Company’s internal financial controls over financial reporting based on our audit. We conducted our audit in accordance with the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting (the ‘‘Guidance Note’’) and the Standards on Auditing, issued by ICAI and deemed to be prescribed under section 143(10) of the Act, to the extent applicable to an audit of internal financial controls, both applicable to an audit of Internal Financial Controls and, both issued by the Institute of Chartered Accountants of India. Those Standards and the Guidance Note require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether adequate internal financial controls over financial reporting was established and maintained and if such controls operated effectively in all material respects. Our audit involves performing procedures to obtain audit evidence about the adequacy of the internal financial controls system over financial reporting and their operating effectiveness.
Our audit of internal financial controls over financial reporting included obtaining an understanding of internal financial controls over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. The procedures selected depend on the auditor’s Judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the Company’s internal financial controls system over financial reporting.
Meaning of Internal Financial Controls over Financial Reporting
A company’s internal financial control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal financial control over financial reporting includes those policies and procedures that
(1) Pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;
(2) Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and
(3) Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Inherent Limitations of Internal Financial Controls over Financial Reporting
Because of the inherent limitations of internal financial controls over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may occur and not be detected. Also, projections of any evaluation of the internal financial controls over financial reporting to future periods are subject to the risk that the internal financial control over financial reporting may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Opinion
In our opinion, the Company has, in all material respects, an adequate internal financial controls system over financial reporting and such internal financial controls over financial reporting were operating effectively as at March 31, 2018, based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issued by the Institute of Chartered Accountants of India.
DATE: 30/05/2018 FOR, P P SHAH & CO.
PLACE: AHMEDABAD CHARTERED ACCOUNTANTS
FRN: 131378W
Sd/-
(PRITESH SHAH)
PARTNER
Mem.No. 123449
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