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Kansai Nerolac Paints Ltd.

BSE: 500165 Sector: Consumer
NSE: KANSAINER ISIN Code: INE531A01024
BSE LIVE 15:45 | 17 Nov 493.35 -0.90
(-0.18%)
OPEN

497.00

HIGH

498.00

LOW

489.30

NSE 15:31 | 17 Nov 496.55 1.15
(0.23%)
OPEN

499.60

HIGH

500.00

LOW

490.00

OPEN 497.00
PREVIOUS CLOSE 494.25
VOLUME 13488
52-Week high 528.90
52-Week low 302.60
P/E 50.60
Mkt Cap.(Rs cr) 26,587
Buy Price 0.00
Buy Qty 0.00
Sell Price 493.35
Sell Qty 324.00
OPEN 497.00
CLOSE 494.25
VOLUME 13488
52-Week high 528.90
52-Week low 302.60
P/E 50.60
Mkt Cap.(Rs cr) 26,587
Buy Price 0.00
Buy Qty 0.00
Sell Price 493.35
Sell Qty 324.00

Kansai Nerolac Paints Ltd. (KANSAINER) - Auditors Report

Company auditors report

TO THE MEMBERS OF

KANSAI NEROLAC PAINTS LIMITED

Report on the Standalone Ind AS Financial Statements

We have audited the accompanying standalone Ind AS financial statements of KansaiNerolac Paints Limited ("the Company") which comprise the standalone Balancesheet as at 31 March 2017 the standalone statement of profit and loss (including othercomprehensive income) the standalone Statement of cash flows and the standalone Statementof changes in equity for the year then ended on that date and a summary of thesignificant accounting policies and other explanatory information (hereinafter referred toas "standalone Ind AS financial statements").

Management's Responsibility for the Standalone Ind AS Financial Statements

The Company's Board of Directors is responsible for the matters stated in Section134(5) of the Companies Act 2013 ("the Act") with respect to the preparation ofthese standalone Ind AS financial statements that give a true and fair view of thefinancial position financial performance including other comprehensive income cash flowsand changes in equity of the Company in accordance with the accounting principlesgenerally accepted in India including the Indian Accounting Standards (Ind AS) prescribedunder Section 133 of the Act read with relevant rules issued thereunder. Thisresponsibility also includes maintenance of adequate accounting records in accordance withthe provisions of the Act for safeguarding the assets of the Company and for preventingand detecting frauds and other irregularities; selection and application of appropriateaccounting policies; making judgments and estimates that are reasonable and prudent; anddesign implementation and maintenance of adequate internal financial controls that wereoperating effectively for ensuring the accuracy and completeness of the accountingrecords relevant to the preparation and presentation of the standalone Ind AS financialstatements that give a true and fair view and are free from material misstatement whetherdue to fraud or error.

Auditors' Responsibility

Our responsibility is to express an opinion on these standalone Ind AS financialstatements based on our audit.

We have taken into account the provisions of the Act the accounting and auditingstandards and matters which are required to be included in the audit report under theprovisions of the Act and the Rules made thereunder.

We conducted our audit in accordance with the Standards on Auditing specified underSection 143(10) of the Act. Those Standards require that we comply with ethicalrequirements and plan and perform the audit to obtain reasonable assurance about whetherthe standalone Ind AS financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts andthe disclosures in the standalone Ind AS financial statements. The procedures selecteddepend on the auditors' judgment including the assessment of the risks of materialmisstatement of the standalone Ind AS financial statements whether due to fraud or error.In making those risk assessments the auditor considers internal financial controlrelevant to the Company's preparation of the standalone Ind AS financial statements thatgive a true and fair view in order to design audit procedures that are appropriate in thecircumstances. An audit also includes evaluating the appropriateness of the accountingpolicies used and the reasonableness of the accounting estimates made by the Company'sDirectors as well as evaluating the overall presentation of the standalone Ind ASfinancial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the standalone Ind AS financial statements.

Opinion

In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid standalone Ind AS financial statements give the informationrequired by the Act in the manner so required and give a true and fair view in conformitywith the accounting principles generally accepted in India including Ind AS of thefinancial position of the Company as at 31 March 2017 and its financial performanceincluding other comprehensive income its cash flows and the changes in equity for theyear ended on that date.

Report on Other Legal and Regulatory Requirements

As required by the Companies (Auditor's Report) Order 2016 (‘the Order') issuedby the Central Government of India in terms of sub-section (11) of Section 143 of the Actwe give in the Annexure A a statement on the matters specified in the paragraphs 3 and 4of the Order.

As required by sub-section (3) of Section 143 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 standalone Balance sheet the standalone Statement of profit and loss(including other comprehensive income) the standalone Statement of cash flows and thestandalone Statement of changes in equity dealt with by this report are in agreement withthe books of account;

(d) in our opinion the aforesaid standalone Ind AS financial statements comply withthe Indian Accounting Standards (Ind AS) prescribed under Section 133 of the Act readwith relevant rules issued thereunder;

(e) on the basis of the written representations received from the directors as on 31March 2017 taken on record by the board of directors none of the directors aredisqualified as on 31 March 2017 from being appointed as a director in terms ofsub-section (2) of Section 164 of the Act;

(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 B; and

(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 information and according to the explanations given to us:

i. the Company has disclosed the impact of pending litigations on its financialposition in its standalone Ind AS financial statements – Refer Note 34 to thestandalone Ind AS financial statements;

ii. the Company did not have any long-term contracts including derivative contractsfor which there were any material foreseeable losses;

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 31 March2017; and

iv. the Company has provided requisite disclosure in its standalone Ind AS financialstatements as to holdings as well as dealings in Specified Bank Notes during the periodfrom 8 November 2016 to 30 December 2016 and these are in accordance with the books ofaccounts maintained by the Company. Refer Note 44 to the standalone Ind AS financialstatements.

ForB S R & Co. LLP
Chartered Accountants
Firm's Registration No.: 101248W/W-100022
Aniruddha Godbole
Partner
Mumbai 2 May 2017 Membership No.: 105149

ANNEXURE A TO THE INDEPENDENT AUDITORS' REPORT – 31 MARCH 2017

With reference to the Annexure A referred to in the Independent Auditors' Report to themembers of the Company on the standalone Ind AS financial statements for the year ended 31March 2017 we report the following:

(i) (a) The Company has maintained proper records showing full particulars includingquantitative details and situation of property plant and equipment and investmentproperties.

(b) The Company has a regular programme of physical verification of its property plantand equipment and investment properties by which the property plant and equipment andinvestment properties are verified by the management according to a phased programmedesigned to cover all the items over a period of three years. In our opinion thisperiodicity of physical verification is reasonable having regard to the size of theCompany and the nature of its assets. In accordance with the policy the Company hasphysically verified certain property plant and equipment and investment properties duringthe year and we are informed that no discrepancies were noticed on such verification.

(c) According to the information and explanations given to us and on the basis of ourexamination of the records of the Company the title deeds of immovable properties (otherthan leasehold land) as disclosed in Note 2 and Note 3 to the standalone Ind AS financialstatements are held in the name of the Company. In respect of leasehold lands we haveverified the lease agreements duly registered with the appropriate authorities asdisclosed in Note 2 and Note 3 to the standalone Ind AS financial statements.

(ii) The inventory except for goods-in-transit and stocks lying with third partieshas been physically verified by the management during the year. In our opinion thefrequency of such verification is reasonable. In respect of stocks lying with thirdparties at the year-end written confirmations have been obtained. The discrepanciesnoticed on verification between the physical stocks and the book records were not materialand have been dealt with in books of account.

(iii) According to the information and explanations given to us and based on the legalopinion obtained by the Company the Company has not granted any loans secured orunsecured to companies firms limited liability partnerships or other parties covered inthe register maintained under Section 189 of the Companies Act 2013 (‘the Act').Accordingly paragraphs 3 (iii) (a) (b) and (c) of the Order are not applicable to theCompany.

(iv) In our opinion and according to the information and explanation given to us andbased on the legal opinion obtained by the Company the Company has not granted any loansor provided any guarantees or security to the parties covered under Section 185 of theAct. The Company has complied with the provisions of Section 186 of the Act in respect ofthe loans given and investments made.

(v) In our opinion and according to the information and explanations given to us theCompany has not accepted deposits as per the directives issued by the Reserve Bank ofIndia and the provisions of Sections 73 to 76 or any other relevant provisions of the Actand the rules framed thereunder. Accordingly paragraph 3 (v) of the Order is notapplicable to the Company.

(vi) We have broadly reviewed the books of accounts maintained by the Company pursuantto the rules prescribed by the Central Government for the maintenance of cost recordsunder Section 148(1) of the Act and are of the opinion that prima facie the prescribedaccounts and records have been made and maintained.

(vii) (a) According to the information and explanations given to us and on the basis ofour examination of the records of the Company amounts deducted/accrued in the books ofaccount in respect of undisputed statutory dues including Provident fund Profession taxIncome-tax Duty of customs Duty of excise Cess and other material statutory dues havebeen regularly deposited during the year with the appropriate authorities. The amountsdeducted/accrued in the books of account in respect of undisputed statutory dues includingEmployees' State Insurance Sales-tax Service tax and Value added tax have generally beenregularly deposited during the year with the appropriate authorities though there havebeen slight delays in a few cases. As explained to us the Company did not have any dueson account of wealth tax.

According to the information and explanations given to us no undisputed amountspayable in respect of Provident fund Profession tax Employees' State InsuranceIncome-tax Sales-tax Service tax Duty of customs Duty of excise Value added tax Cessand other material statutory dues were in arrears as at 31 March 2017 for a period of morethan six months from the date they became payable.

(b) According to the information and explanations given to us there are no dues ofIncome-tax Sales tax Service tax Duty of customs Duty of excise and Value added tax asat 31 March 2017 which have not been deposited with the appropriate authorities onaccount of any dispute except as stated below:

(Rs In Crores)
Name of Act Nature of Dues Amount Demanded Amount not Deposited Under Disputes Period to which amount relates Forum where dispute is pending
Sales Tax and Value Added Tax Tax Penalty and Interest 0.01 0.01 1980-81 Commissioner
0.01 0.01 1991-92 Commissioner
0.32 0.32 1996-97 Commissioner
0.26 0.26 2001-02 to 2006-07 Commissioner
0.02 0.02 2009-10 Commissioner
0.51 0.51 1995-96 to 2009-10 Appellate Authorities and
Tribunal
The Central Excise Tax Penalty and 0.75 0.75 1994-95 to 1995-96 Commissioner
Act 1944 Interest
0.27 0.27 1998-99 to 2000-01 Commissioner
0.01 0.01 2015-16 Commissioner
0.01 1995-96 Appellate Authorities and Tribunal
The Finance Act 1994 Tax Penalty and Interest 1.36 1.36 2014-15 to 2015-16 Commissioner
0.59 0.59 2009-10 Appellate Authorities and Tribunal
6.41 5.98 2011-12 to 2015-16 Appellate Authorities and Tribunal

(viii) In our opinion and according to the information and explanations given to usthe Company has not defaulted in repayment of dues to the government. The Company did nothave any outstanding dues to bankers financial institutions and debenture holders duringthe year.

(ix) According to the information and explanations given to us and based on ourexamination of the records of the Company the Company has not raised any moneys by way ofinitial public offer or further public offer (including debt instruments) and has notobtained any term loans during the year. Accordingly paragraph 3 (ix) of the Order is notapplicable to the Company.

(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) According to the information and explanations given to us and based on ourexamination of the records of the Company the Company has paid/provided for managerialremuneration in accordance with the requisite approvals mandated by the provisions ofSection 197 read with Schedule V to the Act.

(xii) In our opinion and according to the information and explanations given to us theCompany is not a Nidhi company and the Nidhi Rules 2014 are not applicable to it.Accordingly paragraph 3 (xii) of the Order is not applicable to the Company.

(xiii) According to the information and explanations given to us and based on ourexamination of the records of the Company transactions with the related parties are incompliance with Sections 177 and 188 of the Act where applicable and details of suchtransactions have been disclosed in the standalone Ind AS financial statements as requiredby applicable Ind AS.

(xiv) According to the information and explanations given to us and based on ourexamination of the records of the Company the Company has not made any preferentialallotment or private placement of shares or fully or partly convertible debentures duringthe year. Accordingly paragraph 3 (xiv) of the Order is not applicable to the Company.

(xv) According to the information and explanations given to us and based on ourexamination of the records of the Company the Company has not entered into any non-cashtransactions with directors or persons connected with them. Accordingly paragraph 3 (xv)of the Order is not applicable to the Company.

(xvi) In our opinion and according to the information and explanations given to us theCompany is not required to be registered under Section 45-IA of the Reserve Bank of IndiaAct 1934. Accordingly paragraph 3 (xvi) of the Order is not applicable to the Company.

ForB S R & Co. LLP
Chartered Accountants
Firm's Registration No.: 101248W/W-100022
Aniruddha Godbole
Partner
Mumbai 2 May 2017 Membership No.: 105149

ANNEXURE B TO THE INDEPENDENT AUDITORS' REPORT – 31 MARCH 2017

(Referred to in our report of even date)

Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section143 of the Companies Act 2013 ("the Act")

We have audited the internal financial controls over financial reporting of KansaiNerolac Paints Limited ("the Company") as of 31 March 2017 in conjunction withour audit of the standalone Ind AS financial statements of the Company for the year endedon that date.

Management's Responsibility for Internal Financial Controls

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'). Theseresponsibilities include the design implementation and maintenance of adequate internalfinancial controls that were operating effectively for ensuring the orderly and efficientconduct of its business including adherence to company's policies the safeguarding ofits assets the prevention and detection of frauds and errors the accuracy andcompleteness of the accounting records and the timely preparation of reliable financialinformation as required under the Companies Act 2013.

Auditors' Responsibility

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 issued by ICAI and deemedto be prescribed under Section 143(10) of the Act to the extent applicable to an auditof internal financial controls both applicable to an audit of Internal Financial Controlsand both issued by the ICAI of India. Those Standards and the Guidance Note require thatwe comply with ethical requirements and plan and perform the audit to obtain reasonableassurance about whether adequate internal financial controls over financial reporting wasestablished and maintained and if such controls operated effectively in all materialrespects.

Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe 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 auditors' judgement including the assessment of the risks ofmaterial misstatement of the standalone Ind AS financial statements whether due to fraudor error.

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

A company's internal financial control over financial reporting is a process designedto provide reasonable assurance regarding the reliability of financial reporting and thepreparation of financial statements for external purposes in accordance with generallyaccepted accounting principles. A company's internal financial control over financialreporting includes those policies and procedures that (1) pertain to the maintenance ofrecords that in reasonable detail accurately and fairly reflect the transactions anddispositions of the assets of the Company; (2) provide reasonable assurance thattransactions are recorded as necessary to permit preparation of financial statements inaccordance with generally accepted accounting principles and that receipts andexpenditures 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

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

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 31 March 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 ICAI.

ForB S R & Co. LLP
Chartered Accountants
Firm's Registration No.: 101248W/W-100022
Aniruddha Godbole
Partner
Mumbai 2 May 2017 Membership No.: 105149