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Fairchem Speciality Ltd.

BSE: 530117 Sector: Industrials
NSE: FAIRCHEM ISIN Code: INE959A01019
BSE LIVE 15:40 | 17 Nov 409.55 -3.15
(-0.76%)
OPEN

406.70

HIGH

414.30

LOW

402.05

NSE 15:59 | 17 Nov 409.35 -3.95
(-0.96%)
OPEN

412.00

HIGH

419.75

LOW

402.15

OPEN 406.70
PREVIOUS CLOSE 412.70
VOLUME 589
52-Week high 595.00
52-Week low 380.00
P/E 192.28
Mkt Cap.(Rs cr) 1,540
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 406.70
CLOSE 412.70
VOLUME 589
52-Week high 595.00
52-Week low 380.00
P/E 192.28
Mkt Cap.(Rs cr) 1,540
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Fairchem Speciality Ltd. (FAIRCHEM) - Auditors Report

Company auditors report

To the Members of

FAIRCHEM SPECIALITY LIMITED (FORMERLY KNOWN AS ADI FINECHEM LIMITED)

Report on the Standalone Financial Statements

1. We have audited the accompanying standalone financial statements of FairchemSpeciality Limited (Formerly known as Adi Finechem Limited) ("the Company")which comprise the Balance Sheet as at March 31 2017 the Statement of Profit and Lossthe Cash Flow Statement for the year then ended and a summary of the significantaccounting policies and other explanatory information.

Management's Responsibility for the Standalone Financial Statements

2. The Company’s Board of Directors is responsible for the matters stated inSection 134(5) of the Companies Act 2013 ("the Act") with respect to thepreparation of these standalone financial statements to give a true and fair view of thefinancial position financial performance and cash flows of the Company in accordance withthe accounting principles generally accepted in India including the Accounting Standardsspecified under Section 133 of the Act read with Rule 7 of the Companies (Accounts)Rules 2014. This responsibility also includes maintenance of adequate accounting recordsin accordance with the provisions of the Act for safeguarding of the assets of the Companyand for preventing and detecting frauds and other irregularities; selection andapplication of appropriate accounting policies; making judgments and estimates that arereasonable and prudent; and design implementation and maintenance of adequate internalfinancial controls that were operating effectively for ensuring the accuracy andcompleteness of the accounting records relevant to the preparation and presentation ofthe financial statements that give a true and fair view and are free from materialmisstatement whether due to fraud or error.

Auditors' Responsibility

3. Our responsibility is to express an opinion on these standalone financial statementsbased on our audit.

4. We have taken into account the provisions of the Act and the Rules made thereunderincluding the accounting standards and matters which are required to be included in theaudit report.

5. We conducted our audit in accordance with the Standards on Auditing specified underSection 143(10) of the Act and other applicable authoritative pronouncements issued by theInstitute of Chartered Accountants of India. Those Standards and pronouncements requirethat we comply with ethical requirements and plan and perform the audit to obtainreasonable assurance about whether the financial statements are free from materialmisstatement.

6. An audit involves performing procedures to obtain audit evidence about the amountsand the disclosures in the financial statements. The procedures selected depend on theauditors’ judgment including the assessment of the risks of material misstatement ofthe financial statements whether due to fraud or error. In making those risk assessmentsthe auditor considers internal financial control relevant to the Company's preparation ofthe financial statements that give a true and fair view in order to design auditprocedures that are appropriate in the circumstances. An audit also includes evaluatingthe appropriateness of the accounting policies used and the reasonableness of theaccounting estimates made by the Company's Directors as well as evaluating the overallpresentation of the financial statements.

7. We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis fo rour audit opinion on the standalone financial statements.

Opinion

8. In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid standalone financial statements give the information requiredby the Act in the manner so required and give a true and fair view in conformity with theaccounting principles generally accepted in India of the state of affairs of the Companyas at March 31 2017 and its profit and its cash flows for the year ended on that date.

Emphasis of Matter

9. We draw your attention to the Note no. 35 to the standalone financial statementsregarding accounting for issue of equity shares and compulsorily convertible preferenceshares with a corresponding debit to general reserve and surplus in the profit and lossin accordance with a Scheme of arrangement between the Company Privi Organics Limited andPrivi Organics India Limited (formerly known as Adi Aromatic Limited) approved byNational Company Law Tribunal Mumbai Bench.

Our opinion is not qualified in respect of this matter.

Other Matter

10. The standalone financial statements of the Company for the year ended March 312016 were audited by another firm of chartered accountants under the Companies Act 2013who vide their report dated April 29 2016 expressed an unmodified opinion on thosefinancial statements.

Our opinion is not qualified in respect of this matter.

Report on Other Legal and Regulatory Requirements

11. As required by 'the Companies (Auditor's Report) Order 2016' issued by theCentral Government of India in terms of subsection (11) of section 143 of the Act(hereinafter referred to as the "Order") and on the basis of such checks of thebooks and records of the Company as we considered appropriate and according to theinformation and explanations given to us we give in the Annexure B a statement on thematters specified in paragraphs 3 and 4 of the Order.

12. 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 bestof 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 theCompany so far as it appears from our examination of those books.

(c) The Balance Sheet the Statement of Profit and Loss and the Cash Flow Statementdealt with by this Report are in agreement with the books of account.

(d) In our opinion the aforesaid standalone financial statements comply with theAccounting Standards specified under Section 133 of the Act read with Rule 7 of theCompanies (Accounts) Rules 2014.

(e) On the basis of the written representations received from the Directors as on March31 2017 taken on record by the Board of Directors none of the Directors is disqualifiedas on March 31 2017 from being appointed as a Director in terms of Section 164 (2) of theAct.

(f) With respect to the adequacy of the internal financial controls over financialreporting of the Company and the operating effectiveness of such controls refer to ourseparate Report in Annexure A.

(g) With respect to the other matters to be included in the Auditors' Report inaccordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014 in our opinionand to the best of our knowledge and belief and according to the information andexplanations given to us:

i. The Company has disclosed the impact if any of pending litigations as at March 312017 on its financial position in its standalone financial statements. Refer Note 29 tothe standalone financial statement;

ii. The Company did not have any long-term contracts including derivative contracts asat March 31 2017;

iii. There has been no delay in transferring amounts required to be transferred tothe Investor Education and Protection Fund by the Company during the year ended March 312017.

iv. The Company has provided requisite disclosures in the standalone financialstatements as to holdings as well as dealings in Specified Bank Notes during the periodfrom 8th November 2016 to 30th December 2016. Based on audit procedures and relying onthe management representation we report that the disclosures are in accordance with booksof account maintained by the Company and as produced to us by the Management - Refer Note33.

For Price Waterhouse & Co. Chartered Accountants LLP
Chartered Accountants
Firm Registration Number:304026E/ E-300009
Place : Ahmedabad Priyanshu Gundana
Date : May 11 2017 Partner
M No : 109553

"Annexure A" to Independent Auditors’ Report

Referred to in paragraph 12 (f) of the Independent Auditors' Report of even date to themembers of Fairchem Speciality

Limited (formerly known as Adi Finechem Limited) on the standalone financial statementsfor the year ended March 31 2017

Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section143 of the Act

1. We have audited the internal financial controls over financial reporting of FairchemSpeciality Limited (formerly known as Adi Finechem Limited) ("the Company") asof March 31 2017 in conjunction with our audit of the standalone financial statements ofthe Company for the year ended on that date.

Management’s Responsibility for Internal Financial Controls

2. The Company's management is responsible for establishing and maintaining internalfinancial controls based on the internal control over financial reporting criteriaestablished by the Company considering the essential components of internal control statedin the Guidance Note on Audit of Internal Financial Controls Over Financial Reportingissued by the Institute of Chartered Accountants of India (ICAI). These responsibilitiesinclude the designimplementation and maintenance of adequate internal financial controlsthat were operating effectively for ensuring the orderly and efficient conduct of itsbusiness including adherence to company's policies the safeguarding of its assets theprevention and detection of frauds and errors the accuracy and completeness of theaccounting records and the timely preparation of reliable financial information asrequired under the Act.

Auditors’ Responsibility

3. Our responsibility is to express an opinion on the Company's internal financialcontrols over financial reporting based on our audit. We conducted our audit in accordancewith the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting(the"Guidance Note") and the Standards on Auditing deemed to be prescribed undersection 143(10) of the Act to the extent applicable to an audit of internal financialcontrols both applicable to an audit of internal financial controls and both issued bythe ICAI. Those Standards and the Guidance Note require that we comply with ethicalrequirements and plan and perform the audit to obtain reasonable assurance about whetheradequate internal financial controls over financial reporting was established andmaintained and if such controls operated effectively in all material respects.

4. Our audit involves performing procedures to obtain audit evidence about the adequacyof the internal financial controls system over financial reporting and their operatingeffectiveness. Our audit of internal financial controls over financial reporting includedobtaining an understanding of internal financial controls over financial reportingassessing the risk that a material weakness exists and testing and evaluating the designand operating effectiveness of internal control based on the assessed risk. The proceduresselected depend on the auditor's judgement including the assessment of the risks ofmaterial misstatement of the financial statements whether due to fraud or error.

5. We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the Company's internal financial controls systemover financial reporting.

Meaning of Internal Financial Controls Over Financial Reporting

6. A company's internal financial control over financial reporting is a processdesigned to provide reasonable assurance regarding the reliability of financial reportingand the preparation of financial statements for external purposes in accordance withgenerally accepted accounting principles. A company's internal financial control overfinancial reporting includes those policies and procedures that (1) pertain to themaintenance of records that in reasonable detail accurately and fairly reflect thetransactions and dispositions of the assets of the company; (2) provide reasonableassurance that transactions are recorded as necessary to permit preparation of financialstatements in accordance with generally accepted accounting principles and that receiptsand expenditures of the company are being made only in accordance with authorisations ofmanagement and Directors of the company; and (3) provide reasonable assurance regardingprevention or timely detection of unauthorised acquisition use or disposition of thecompany's assets that could have a material effect on the financial statements.

Inherent Limitations of Internal Financial Controls Over Financial Reporting

7. Because of the inherent limitations of internal financial controls over financialreporting including the possibility of collusion or improper management override ofcontrols material misstatements due to error or fraud may occur and not be detected.Also projections of any evaluation of the internal financial controls over financialreporting to future periods are subject to the risk that the internal financial controlover financial reporting may become inadequate because of changes in conditions or thatthe degree of compliance with the policies or procedures may deteriorate.

Opinion

8. In our opinion the Company has in all material respects an adequate internalfinancial controls system over financial reporting and such internal financial controlsover financial reporting were operating effectively as at March 31 2017 based on theinternal control over financial reporting criteria established by the Company consideringthe essential components of internal control stated in the Guidance Note on Audit ofInternal Financial Controls Over Financial Reporting issued by the Institute of CharteredAccountants of India.

For Price Waterhouse & Co. Chartered Accountants LLP
Chartered Accountants
Firm Registration Number:304026E/ E-300009
Place : Ahmedabad Priyanshu Gundana
Date : May 11 2017 Partner
M No : 109553

"Annexure B" to Independent Auditors' Report

Referred to in paragraph 11 of the Independent Auditors' Report of even date to themembers of Fairchem Speciality Limited

(Formerly known as Adi Finechem Limited) on the Standalone financial statements as ofand for the year ended March 31 2017.

i. (a) The Company is maintaining proper records showing full particulars includingquantitative details and situation of fixed assets.

(b) The fixed assets are physically verified by the Management according to a phasedprogramme designed to cover all the items over a period of three years which in ouropinion is reasonable having regard to the size of the Company and the nature of itsassets. Pursuant to the programme a portion of the fixed assets has been physicallyverified by the Management during the year and no material discrepancies have been noticedon such verification.

(c) The title deeds of immovable properties as disclosed in Note 12 on fixed assets tothe financial statements are held in the name of the Company except for as mentionedhere under:

Total Number of Cases Nature of Assets Gross Block (Amount in Rs. in lakhs) Net Block (Amount in Rs. in lakhs) Remarks
1 Leasehold Land 441.05 433.34 The Asset is registered in the name of Adi Finechem Limited. The saidname of the company was changed to Fairchem Speciality Limited vide certificate dated October 6 2016. The Company has initiated process for change of name of the said asset.

ii. The physical verification of inventory have been conducted at reasonable intervalsby the Management during the year.

The discrepancies noticed on physical verification of inventory as compared to bookrecords were not material.

iii. The Company has not granted any loans secured or unsecured to companies firmsLimited Liability Partnerships or other parties covered in the register maintained underSection 189 of the Act. Therefore the provisions of Clause 3(iii) (iii)(a) (iii)(b) and(iii)(c) of the said Order are not applicable to the Company.

iv. In our opinion and according to the information and explanations given to us theCompany has complied with the provisions of Section 186 of the Act in respect of the loansand investments made and guarantees and security provided by it. The Company has notgranted any loans or made any investments or provided any guarantees or security to theparties covered under Section 185 of the Act.

v. The Company has not accepted any deposits from the public within the meaning ofSections 73 74 75 and 76 of the Act and the Rules framed there under to the extentnotified.

vi. Pursuant to the rules made by the Central Government of India the Company isrequired to maintain cost records as specified under Section 148(1) of the Act in respectof its products.We have broadly reviewed the same and are of the opinion that primafacie the prescribed accounts and records have been made and maintained. We have nothowever made a detailed examination of the records with a view to determine whether theyare accurate or complete.

vii. (a) According to the information and explanations given to us and the records ofthe Company examined by us in our opinion the Company is regular in depositing theundisputed statutory dues including provident fund employees' state insurance incometax sales tax service tax duty of customs duty of excise value added tax and othermaterial statutory dues as applicable with the appropriate authorities.

(b) According to the information and explanations given to us and the records of theCompany examined by us the particulars of dues of income tax sales tax service taxduty of customs and duty of excise duty value added tax as at March 31 2017 which havenot been deposited on account of a dispute are as follows:

Name of the statute Nature of dues

Amount (Rs. in lakhs)

Period to which the amount relates

Forum where the dispute is pending

The Income Tax Act 1961 Income Tax liability on account of various disallowances

8.59

Assessment year 2006 - 2007

Income Tax Appellate Tribunal

The Central Excise Act 1944 Demand in respect of Excise duty and Cenvat

22.79

Year 2012 - 13

The Commissioner (Appeals - II) Central Excise Ahmedabad

Name of the statute Nature of dues

Amount (Rs. in lakhs)

Period to which the amount relates

Forum where the dispute is pending
Service Tax The Finance Act 1994 Demand in respect of Cenvat credit reversal

3.85

February 2013 to November 2014

The Commissioner (Appeal) Central Excise Ahmedabad

2.44

December 2014 to August 2015

The Commissioner (Appeal) Central Excise Ahmedabad
Central Sales Tax Act 1956 and The Gujarat Value added tax 2003 Demand in respect of Input Tax Credit

4.71

Year 2011 - 12

Dy. Commissioner of Commercial Tax - Appeal Ahmedabad

8.22

Year 2012 - 13

Dy. Commissioner of Commercial Tax - Appeal Ahmedabad
Customs Act 1962 Demand in respect of custom duty on imports

5.20

Year 2007-08

Office of Commissioner of Customs NhavaSheva

viii. According to the records of the Company examined by us and the information andexplanation given to us the Company has not defaulted in repayment of loans or borrowingsto any financial institution or bank or Government or dues to debenture holders as at thebalance sheet date.

ix. The Company has not raised any moneys by way of initial public offer furtherpublic offer (including debt instruments). The term loans were applied for the purposesfor which those are raised.

x. During the course of our examination of the books and records of the Companycarried out in accordance with the generally accepted auditing practices in India andaccording to the information and explanations given to us we have neither come across anyinstance of material fraud by the Company or on the Company by its officers or employeesnoticed or reported during the year nor have we been informed of any such case by theManagement.

xi. The Company has paid/ provided for managerial remuneration in accordance with therequisite approvals mandated by the provisions of Section 197 read with Schedule V to theAct.

xii. As the Company is not a Nidhi Company and the Nidhi Rules 2014 are not applicableto it the provisions of Clause 3(xii) of the Order are not applicable to the Company.

xiii. The Company has entered into transactions with related parties in compliance withthe provisions of Sections 177 and 188 of the Act where applicable. The details of suchrelated party transactions have been disclosed in the standalone financial statements asrequired under Accounting Standard (AS) 18 Related Party Disclosures specified underSection 133 of the Act read with Rule 7 of the Companies (Accounts) Rules 2014.

xiv. The Company has not made any preferential allotment or private placement of sharesor fully or partly convertible debentures during the year under review. Accordingly theprovisions of Clause 3(xiv) of the Order are not applicable to the Company.

xv. The Company has not entered into any non cash transactions with its Directors orpersons connected with him. Accordingly the provisions of Clause 3(xv) of the Order arenot applicable to the Company.

xvi. The Company is not required to be registered under Section 45-IA of the ReserveBank of India Act 1934. Accordingly the provisions of Clause 3(xvi) of the Order are notapplicable to the Company.

For Price Waterhouse & Co. Chartered Accountants LLP
Chartered Accountants
Firm Registration Number:304026E/ E-300009
Place : Ahmedabad Priyanshu Gundana
Date : May 11 2017 Partner M No : 109553