To the Members of Clariant Chemicals (India) Limited
Report on the Financial Statements
1. We have audited the accompanying financial statements of Clariant Chemicals(India) Limited ("the Company") which comprise the Balance Sheet as atMarch 31 2016 the Statement of Profit and Loss for the 15 months period from January 12015 to March 31 2016 (the "period") the Cash Flow Statement for the periodthen ended and a summary of the significant accounting policies and other explanatoryinformation.
Managements Responsibility for the Financial Statements
2. The Companys 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 financial statements to give a true and fair view of the financialposition financial performance and cash flows of the Company in accordance with theaccounting 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.
3. Our responsibility is to express an opinion on these financial statements based onour 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 Companyspreparation of the financial statements that give a true and fair view in order to designaudit procedures that are appropriate in the circumstances but not for the purpose ofexpressing an opinion on whether the Company has in place an adequate internal financialcontrols system over financial reporting and the operating effectiveness of such controls.An audit also includes evaluating the appropriateness of the accounting policies used andthe reasonableness of the accounting estimates made by the Companys Directors aswell as evaluating the overall presentation of the financial statements.
7. We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the financial statements.
8. In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid financial statements give the information required by the Actin the manner so required and give a true and fair view in conformity with the accountingprinciples generally accepted in India of the state of affairs of the Company as at March31 2016 and its profit and its cash flows for the period ended on that date.
Report on Other Legal and Regulatory Requirements
9. As required by the Companies (Auditors Report) Order2015 issued by the Central Government of India in terms of sub-section (11) ofsection 143 of the Act (hereinafter referred to as the "Order") and on thebasis of such checks of the books and records of the Company as we considered appropriateand according to the information and explanations given to us we give in the Annexure astatement on the matters specified in paragraphs 3 and 4 of the Order.
10. 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 except that the back upof the books of accounts and other books and papers maintained in electronic mode has notbeen maintained on servers physically located in India.
(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 financial statements comply with the AccountingStandards specified under Section 133 of the Act read with Rule 7 of the Companies(Accounts) Rules 2014.
(e) On the basis of the written representations received from the directors as on March31 2016 taken on record by the Board of Directors none of the directors is disqualifiedas on March 31 2016 from being appointed as a director in terms of Section 164 (2) of theAct.
(f) With respect to the maintenance of accounts and other matters connected therewithreference is made to our comment in Paragraph 10(b) above that the backup of the books ofaccounts and other books and papers maintained in electronic mode has not been maintainedon servers physically located in India.
(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 312016 on its financial position in its financial statements - Refer Note 30;
ii. The Company has made provision as at March 31 2016 as required under theapplicable law or accounting standards for material foreseeable losses if any onlong-term contracts. The Company did not have any derivative contracts as at March312016.
iii. There has been no delay in transferring amounts required to be transferred tothe Investor Education and Protection Fund by the Company during the 15 months periodended March 312016.
For Price Waterhouse Chartered Accountants LLP Firm Registration Number: 012754N/N500016
| ||Arvind Daga |
|Place: Mumbai ||Partner |
|Date: May 20 2016 ||Membership Number: 108290 |
ANNEXURE TO INDEPENDENT AUDITORS REPORT
(Referred to in paragraph 9 of the Independent Auditors Report of even date tothe members of Clariant Chemicals (India) Limited on the financial statements as of andfor the 15 months period ended March 312016)
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 period and no material discrepancies have beennoticed on such verification.
ii. (a) The inventory excluding stocks with third parties has been physically verifiedby the Management during the period. In respect of inventory lying with third partiesthese have substantially been confirmed by them. In our opinion the frequency ofverification is reasonable.
(b) In our opinion the procedures of physical verification of inventory followed bythe Management are reasonable and adequate in relation to the size of the Company and thenature of its business.
(c) On the basis of our examination of the inventory records in our opinion theCompany is maintaining proper records of inventory. The discrepancies noticed on physicalverification of inventory as compared to book records were not material.
iii. The Company has not granted any loans secured or unsecured to companies firmsor other parties covered in the register maintained under Section 189 of the Act.Therefore the provisions of Clause 3(iii) (iii)(a) and (iii)(b) of the said Order arenot applicable to the Company.
iv. In our opinion and according to the information and explanations given to ushaving regard to the explanation that except for certain items of inventory which are ofspecial nature for which suitable alternative sources do not exist there is an adequateinternal control system commensurate with the size of the Company and the nature of itsbusiness for the purchase of inventory and fixed assets and for the sale of goods andservices. Further on the basis of our examination of the books and records of theCompany and according to the information and explanations given to us we have neithercome across nor have been informed of any continuing failure to correct major weaknessesin the aforesaid internal control system.
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. We have broadly reviewed the books of account maintained by the Company in respectof products where pursuant to the rules made by the Central Government of India themaintenance of cost records has been specified under subsection (l) of Section 148 of theAct and are of the opinion that prima facie the prescribed accounts and records havebeen made and maintained. We have not however made a detailed examination of the recordswith a view to determine whether they are 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 except for service tax dues during the periodin respect of the matter stated below the Company is regular in depositing undisputedstatutory dues including provident fund employees state insurance income taxsales tax wealth tax duty of customs duty of excise value added tax cess and othermaterial statutory dues as applicable with the appropriate authorities. The extent ofthe arrears of statutory dues outstanding as at March 31 2016 for a period of more thansix months from the date they became payable are as follows:
|Name of the statute ||Nature of dues ||Amount (Rs. Lakhs) ||Period to which the amount relates ||Due date ||Date of Payment |
|Service Tax under Finance Act 1994 ||Service Tax including interest and penalty ||102.20 ||October 2014- September 2014 ||Various dates ||07-May-16 |
(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 taxexcise duty and value added tax as at March 31 2016 which have not been deposited onaccount of a dispute are as follows:
|Name of the statute ||Nature of dues ||Amount (Rs. Lakhs) ||Period to which the amount relates ||Forum where the dispute is pending |
|Central Sales Tax Act and Local Sales Tax ||Sales Tax including interest and penalty as applicable ||2.27 ||1996-97 to 1998-99 ||High Court of Tamil Nadu |
| || ||17.88 ||1999-00 ||Sales Tax Appellate Tribunals of Maharashtra |
| || ||13356.73 ||1992-93 to 2011-12 ||Appellate Authority - up to Commissioners level |
|The Central Excide Act 1944 ||Excise duty including interest and penalty as applicable ||437.58 ||1999-00 to 2008-09 ||Tribunal of various states |
| || ||324.98 ||1994-95 to 1997-98 2000-01 and 2010-11 to 2013-14 ||Appellate Authority - up to Commissioners level |
|Service Tax under Finance Act 1994 ||Service Tax including interest and penalty as applicable ||123.95 ||2005-06 to 2010-11 ||Tribunal of various states |
| || ||29.36 ||2002-03 to 2004-05 2007-08 to 2012-13 ||Appellate Authority - up to Commissioners level |
|Income Tax Act 1961 ||Income Tax including interest and penalty as applicable ||438.25 ||1982-83 to 1986-87 1989-90 1991-92 1993-94 1995-96 1997-98 to 2004-05 and 2006-07 ||Income Tax Appellate Tribunal |
| || ||77.60 ||2001-02 2011- 12 to 2012- 13 ||Appellate Authority - up to Commissioners level |
| || ||655.50 ||2007-08 to 2014-15 ||Deputy Commissioner of Income Tax (TDS) |
(c) The amount required to be transferred to Investor Education and Protection Fund hasbeen transferred within the stipulated time in accordance with the provisions of theCompanies Act 1956 and the rules made thereunder.
viii. The Company has no accumulated losses as at the end of the period and it has notincurred any cash losses in the period ended on that date or in the immediately precedingfinancial year.
ix. As the Company does not have any borrowings from any financial institution or banknor has it issued any debentures as at the balance sheet date the provisions of Clause3(ix) of the Order are not applicable to the Company.
x. In our opinion and according to the information and explanations given to us theCompany has not given any guarantee for loans taken by others from banks or financialinstitutions during the period. Accordingly the provisions of Clause 3(x) of the Orderare not applicable to the Company.
xi. The Company has not raised any term loans. Accordingly the provisions of Clause3(xi) of the Order are not applicable to the Company.
xii. 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 on or by the Company noticed or reported during the periodnor have we been informed of any such case by the Management.
| ||For Price Waterhouse Chartered Accountants LLP |
| ||Firm Registration Number: 012754N/N500016 |
| ||Arvind Daga |
|Place: Mumbai ||Partner |
|Date: May 20 2016 ||Membership Number: 108290 |