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NACL Industries Ltd.

BSE: 524709 Sector: Agri and agri inputs
NSE: NACLIND ISIN Code: INE295D01020
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OPEN 46.00
PREVIOUS CLOSE 45.95
VOLUME 8670
52-Week high 52.50
52-Week low 16.40
P/E 63.01
Mkt Cap.(Rs cr) 719
Buy Price 46.00
Buy Qty 192.00
Sell Price 46.65
Sell Qty 100.00
OPEN 46.00
CLOSE 45.95
VOLUME 8670
52-Week high 52.50
52-Week low 16.40
P/E 63.01
Mkt Cap.(Rs cr) 719
Buy Price 46.00
Buy Qty 192.00
Sell Price 46.65
Sell Qty 100.00

NACL Industries Ltd. (NACLIND) - Auditors Report

Company auditors report

To

The Members Nagarjuna Agrichem Limited Report on the Standalone Financial Statements

We have audited the accompanying standalone financial statements of Nagarjuna AgrichemLimited ("the Company") which comprise the Balance Sheet as at March 312017the Statement of Profit and Loss and the Cash Flow Statement for the year then ended and asummary of the significant accounting policies and other explanatory information(hereinafter referred to as "the standalone financial statements").

Management’s responsibility for the Standalone 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 financial statements that 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 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 standalone financial statements that give a true and fair view and are free frommaterial misstatement whether due to fraud or error.

Auditor’s Responsibility

Our responsibility is to express an opinion on these standalone financial statementsbased 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 there under.

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 financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts andthe disclosures in the standalone financial statements. The procedures selected depend onthe auditors’ judgement including the assessment of the risks of materialmisstatement of the standalone financial statements whether due to fraud or error. Inmaking those risk assessments the auditor considers internal financial control relevantto the Company’s preparation of the standalone financial statements that give a trueand fair view in order to design audit procedures that are appropriate in thecircumstances. An audit also includes 88evaluating the appropriateness of the accountingpolicies used and the reasonableness of the accounting estimates made by theCompany’s Directors as well as evaluating the overall presentation of the standalonefinancial statements. We believe that the audit evidence we have obtained is sufficientand appropriate to provide a basis for our audit opinion on the standalone financialstatements.

Opinion

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 312017 and its profit and its cash flows for the year ended on that date.

Emphasis of Matter

We draw attention to the following Notes to the financial statements:

Note No. 35 regarding the insurance claim on fire affected Block-5 of Srikakulam Plantduring 30th June 2012 has been settled and the company received an amount of Rs. 32.44Crores on 15th December 2016. The total amount of insurance claim proceeds (includingscrap realization) of Rs. 45.65 Crores is credited to the Profit & Loss Account. Thecompany has debited to the Profit & Loss Account Rs. 20.08 Crores being the book valueof completely damaged assets partially damaged assets damaged inventories. The netamount of Rs. 25.57 Crores is shown under Exceptional Items.

Our opinion is not modified in respect of above matters.

Report on Other Legal and Regulatory Requirements

1. 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 March312017 taken on record by the Board of Directors none of the directors is disqualifiedas on March 312017 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 we give ourseparate Report in "Annexure A".

(g) With respect to the other matters to be included in the Auditor’s 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 all pending litigations on its financialposition in its standalone financial statements - refer Note 31 to the standalonefinancial statements.

ii. The Company did not as at March 312017 have any material foreseeable lossesrelating to long-term contracts including derivative contracts.

iii. There has been no delay in transferring amounts required to be transferred tothe Investor Education and Protection Fund by the Holding Company and its SubsidiaryCompanies incorporated in India except in cases where in disputes relating to ownership ofthe underlying shared have remained unresolved.

iv. The Company has provided disclosures in Note 42 in the standalone financialstatements as to the holding of Specified Bank Notes on November 8 2016 and December 302016 as well as dealings in Specified Bank Notes during the period from November 8 2016and December 30 2016. Based on our audit procedures and relying on the managementrepresentation regarding the holding and nature of cash transactions including those inSpecified Bank Notes we report that these disclosures are in accordance with the books ofaccounts maintained by the Company and as produced to us by the management.

2. As required by the Companies (Auditors Report) Order 2016 ("the Order")issued by the Central Government in terms of

Section 143(11) of the Act we give in the "Annexure B" a statement on thematters specified in paragraphs 3 and 4 of the Order.

For M. Bhaskara Rao & Co;
Chartered Accountants
Firm Registration Number: 000459 S
(V. Raghunandan)
Place : Hyderabad Partner
Date : 27th May2017 Membership No. 26255

ANNEXURE A TO THE INDEPENDENT AUDITORS’ REPORT

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 NagarjunaAgrichem Limited ("the Company") as of March 312017 in conjunction with ouraudit of the standalone financial statements of the Company for the year ended on thatdate.

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

stated in the "Guidance Note on Audit of Internal Financial Controls overFinancial Reporting" issued by the Institute of Chartered Accountants of India(‘ICAI’). These responsibilities include the design implementation andmaintenance of adequate internal financial controls that were operating effectively forensuring the orderly and efficient conduct of its business including adherence tocompany’s policies the safeguarding of its assets the prevention and detection offrauds and errors the accuracy and completeness of the accounting records the timelypreparation of reliable financial information 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 FinancialReporting" (the "Guidance Note") and the Standards on Auditing issued byICAI and deemed to be prescribed under section 143(10) of the Companies Act 2013 to theextent applicable to an audit of internal financial controls. Those Standards and theGuidance Note require that we comply with ethical requirements and plan and perform theaudit to obtain reasonable assurance about whether adequate internal financial controlsover financial reporting was established and maintained and if such controls operatedeffectively in all material respects.

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 whether a material weakness exists 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 financial statements whether due to fraud or 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 controlssystem over financial reporting.

Meaning of Internal Financial Controls over Financial Reporting

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 that receipts andexpenditure 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 March 312017 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 M. Bhaskara Rao & Co;
Chartered Accountants
Firm Registration Number: 000459 S
(V. Raghunandan)
Place : Hyderabad Partner
Date : 27th May2017 Membership No. 26255

ANNEXURE B TO THE INDEPENDENT AUDITORS’ REPORT

(Referred to in paragraph 2 under ‘Report on Other Legal and RegulatoryRequirements’ section of our report of even date)

i) According to the information and explanations furnished to us

(a) The Company has maintained proper records showing full particulars includingquantitative details and situation of its fixed assets

(b) The said fixed assets have been physically verified by the management during theyear based on a phased programme of verification over a period of three years which inour opinion is reasonable having regard to the size of the Company and the nature of itsfixed assets. No material discrepancies were noticed in respect of the fixed assetsverified during the year and the records in respect thereof.

(c) The title deeds of the immovable properties of the Company are held in its name.

ii) According to the information and explanations furnished to us physicalverification of inventories has been conducted during the year by the management. In ouropinion the frequency of the verification is reasonable. Further the discrepancies foundduring such verification were not material and the same have been properly dealt with inthe books of the Company.

iii) According to the information and explanations furnished to us the Company hasgranted an unsecured loan to its Associate Company covered in the register maintainedunder Section 189 of the Companies Act 2013 in respect of which in our opinion

(a) The terms and conditions of the grant of such loan are not prejudicial to theCompany’s interest.

(b) The repayment of the loan and the payment of interest thereon have not been regularin terms of the stipulated schedule in respect thereof

(c) Principal amount of Rs. 167 Lakhs and interest of Rs. 109.24 Lakhs was overdue formore than 90 days as at the date of the Balance Sheet

(d) The Company has been taking reasonable steps for recovery of such overdue principaland interest.

iv) According to the information and explanations furnished to us the company has notmade any loans to which the provisions of Sections 185 and 186 of the Act apply except aloan made by the company to its associate company in respect of which in our opinion theprovisions of Sec 186 of the Act to the extent applicable have been complied with.

v) According to the information and explanations furnished to us the company has notaccepted any deposits covered by sections 73 to 76 of the Companies Act 2013 and the rulesframed there under.

vi) We have broadly reviewed the books of account maintained by the Company pursuant tothe Rules made by the Central Government for maintenance of cost records prescribed underSection 148(1) of the Companies Act 2013 are of the opinion that prima facie theprescribed accounts and records have been made and maintained. We have however not madea detailed examination of the cost records with a view to determine whether they areaccurate or complete.

vii) (a) According to the information and explanations furnished to us the Company isregular in depositing undisputed

statutory dues including Provident Fund Employees’ State Insurance Income TaxWealth Tax Service Tax Customs duty Excise Duty Value Added Tax Cess and otherapplicable statutory dues with the appropriate authorities; there were no arrears of suchstatutory dues as at 31st March 2017 for a period of more than six months from the datethey became payable.

(b) According to the information and explanations furnished to us there are no dues ofIncome Tax Wealth Tax Value Added Tax Customs duty Service Tax Excise duty or Cesswhich have not been deposited on account of any dispute pending except the following:

Statute Nature of the Dues Forum where dispute is pending Period to which the amount relates Demand (Rs. In Lakhs) Amount paid under protest (Rs. In Lakhs) Dues-Net of amount paid under protest (Rs. In Lakhs)
Finance Service Commissioner 2011-12 2012-13
Act 1994 Tax(including interest & penalty) (Appeals) Visakhapatnam 2013- 14 2014- 15 52.26 3.52 48.74
2015-16
CESTAT Bangalore 2010-11 4.17 - 4.17

 

Statute Nature of the Dues Forum where dispute is pending Period to which the amount relates Demand (Rs. In Lakhs) Amount paid under protest (Rs. In Lakhs) Dues-Net of amount paid under protest (Rs. In Lakhs)
Central Excise duty Andhra Pradesh 2004-05
Excise Act1994 (including interest And penalty) Honourable High Court 2006-07 8.13 - 8.13
2007-08
Additional Commissioner(Appeals) Visakhapatnam 2006-07 27.00 14.86 12.14

(c) According to the information and explanations given to us the Company has notdefaulted in repayment of dues to any financial institution or bank.

(d) According to the information and explanations given to us the working capital termloans raised by the Company have been applied for the purpose for which they were raised.

(e) According to the information and explanations given to us no material fraud by theCompany or on the Company by its officers or employees has been noticed or reported duringthe course of our audit.

(f) According to the information and explanations give 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.

(g) In our opinion and according to the information and explanations given to us theCompany is not a Nidhi Company. Accordingly reporting under paragraph 3(xii) of the Orderdoes not arise.

(h) 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 financial statements as required by the applicableaccounting standards.

(i) According to the information and explanations give 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.

(j) 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 non-cashtransactions with directors or persons connected with him. Accordingly reporting underparagraph 3 (xv) of the Order does not arise.

(k) According to the information and explanations furnished to us the Company is notrequired to be registered under section 45-IA of the Reserve Bank of India Act 1934

For M. Bhaskara Rao & Co;
Chartered Accountants
Firm Registration Number: 000459 S
(V. Raghunandan)
Place : Hyderabad Partner
Date : 27th May2017 Membership No. 26255