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Sanginita Chemicals Ltd.

BSE: 538408 Sector: Industrials
NSE: SANGINITA ISIN Code: INE753W01010
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Sanginita Chemicals Ltd. (SANGINITA) - Auditors Report

Company auditors report

To

The Members

Sanginita Chemicals Ltd.

Report On Standalone Financial Statements:

We have audited the accompanying Standalone financial statements of Sanginita ChemicalsLtd. ("the Company") which comprise the Balance Sheet as at March 31 2017 andthe Statement of Profit and Loss and Cash Flow Statement for the year then ended and asummary of significant accounting policies and other explanatory information.

Management Responsibility For 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 preparationand presentation of these financial statements that 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 records inaccordance with the provisions of the Act for safeguarding the assets of the Company andfor preventing and detecting frauds and other irregularities; selection and application ofappropriate accounting policies; making judgments and estimates that are reasonable andprudent; and design implementation and maintenance of adequate internal financialcontrols that were operating effectively for ensuring the accuracy and completeness ofthe accounting records relevant to the preparation and presentation of the 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 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 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 financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts anddisclosures in the financial statements. The procedures selected depend on the auditor'sjudgment including the assessment of the risks of material misstatement of the financialstatements whether due to fraud or error. In making those risk assessments the auditorconsiders internal financial control relevant to the Company's preparation of thefinancial statements that give a true and fair view in order to design audit proceduresthat are appropriate in the circumstances but not for the purpose of expressing anopinion on whether the Company has in place an adequate internal financial controls systemover financial reporting and the operating effectiveness of such controls. An audit alsoincludes evaluating the appropriateness of the accounting policies used and thereasonableness of the accounting estimates made by the Company's Directors as well asevaluating the overall presentation of the financial statements.

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

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:

(i) in the case of the Balance Sheet of the state of affairs of the Company as atMarch 31 2017; (ii) in the case of the Profit and Loss Account of the profit/ loss forthe year ended on that date; and (iii) in the case of the Cash Flow Statement of the cashflows for the year ended on that date.

Report on other Legal & Regulatory Requirement

As required by the Companies (Auditor's Report) Order 2016 ("the Order") asamended issued by the Central Government of India in terms of sub-section (11) of section143 of the Act we give in the "Annexure A" a statement on the mattersspecified in the paragraph 3 and 4 of the Order to the extent applicable.

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 purpose of our audit;

b) in our opinion proper books of account as required by law have been kept by theCompany so far as appears from our examination of those books

c) the Balance Sheet Statement of Profit and Loss and Cash Flow Statement dealt withby 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 31March 2017 taken on record by the Board of Directors none of the directors isdisqualified as on 31 March 2017 from being appointed as a director in terms of Section164 (2) of the Act; and

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"

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. As explained to us there is no pending litigation that affects the financialposition of the company.

ii. As explained to us the company has not entered into any long term contractsincluding derivatives contracts and hence no material forcible loss.

iii. As explained to us no such amount is required to be transferred to the investoreducation and protection fund in accordance with the relevant provisions of the companiesact2013 and the rules made there under.

iv. The company had provided requisite disclosures in its financial statements as toholdings as well as dealings in Specified Bank Notes during the period from 8th November2016 to 30th December 2016 and these are in accordance with the books of accountsmaintained by the company.

h) There are no observation or comments on financial transactions or matters during theyear which have any adverse effect on the functioning of the company

For & behalf of B. K. Chavda & Co.

Chartered Accountants Sd/-CA B.K. Chavda (Partner) Mem. No. : 116780 FRN No. : 125064W

Place : Gandhinagar Date : 20.05.2017

ANNEXURE A" TO THE AUDITORS' REPORT

This is an annexure on the accounts of Sanginita Chemicals Ltd. as referredabove in paragraph 1 under the heading ‘Report on other Legal & RegulatoryRequirement' of our report of even date to the standalone financial statement for the yearended

31st March 2017:

1. In respect of Fixed Assets :

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

(b) As explained to us the company has a regular programme of physical verification ofits fixed assets by which fixed assets are verified in a phased manner over a period ofthree years. in accordance with this programme certain fixed assets were verified duringthe year and no material discrepancies were noticed on such verification. In our opinionthe frequency of verification is reasonable having regard to the size of the Company andthe nature of its assets.

(c) on the basis of information and explanation given to us the Title Deeds ofImmovable Properties are held in name of company.

2. In respect of Inventories :

(a) The management has conducted physical verification of inventory at reasonableintervals. In our opinion the procedure followed by the management for such physicalverification is reasonable and adequate in relation to the size of the Company and natureof his business.

(b) In our opinion the Company is maintaining proper records of inventory. Nodiscrepancy on verification between physical inventories and the book records werenoticed.

3. 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. Accordingly the provisions of clause 3 (iii) (a) to (C) of theOrder are not applicable to the Company.

4. In our opinion and according to the information and explanations given to usthe company has complied with the provisions of section 185 and I86 of the Companies Act2013 In respect of loans investments guarantees and security.

5. The Company has not accepted any deposits from the public.

6. We have just broadly reviewed the books of accounts relating to materialslabour and other items of cost maintained by the company pursuant to the rules made by theCentral Government for the maintenance of cost records u/s. 148 (1) of the Companies Act.And we are of the opinion that prima facie the prescribed accounts and records have beenmade and maintained.

7. (a) According to information and explanations given to us and on the basis ofour examination of the books of account and records the Company has been generallyregular in depositing undisputed statutory dues including Provident Fund Employees StateInsurance Income-Tax Sales tax Service Tax Duty of Customs Duty of Excise Valueadded Tax Cess and any other statutory dues with the appropriate authorities. Accordingto the information and explanations given to us no undisputed amounts payable in respectof the above were in arrears as at March 31 2017 for a period of more than six monthsfrom the date on when they become payable except point 7(b). (b) According to theinformation and explanation given to us there are no dues of sales tax service tax dutyof customs duty of excise value added tax outstanding on account of any dispute. Duringthe year the assessee has received penalty order of income tax for the A.Y. 2011-12 as perwhich penalty of Rs. 145000/- is payable.

However the assessee has made an appeal against the same order. According to therecords information and explanation given to us the Company is generally regular indepositing with appropriate authorities the applicable statutory dues which are notdisputed.

8. In our opinion and according to the information and explanations given to usthe Company has not defaulted in the repayment of loans or borrowing to financialinstitutions or banks Governments or due to debenture holders.

9. Based upon the audit procedures performed and the information and explanationsgiven by the management during the year the company have made an Initial Public Offer4566000 equity shares and raised amount of Rs 100452000 and term loans were appliedfor the purposes for which those are raised and therefore other disclosure requirementspertaining to this clause is not applicable.

10. Based upon the audit procedures performed and the information and explanationsgiven by the management we report that no fraud by the Company or on the company by itsofficers or employees has been noticed or reported during the year.

11. Based upon the audit procedures performed and the information and explanationsgiven by the management the managerial remuneration has been paid or provided inaccordance with the requisite approvals mandated by the provisions of section 197 readwith Schedule V to the Companies Act; 12. In our opinion and according to theinformation and explanations given to us the Company is not a Nidhi Company.

Therefore the provisions of clause 4 (xii) of the Order are not applicable to theCompany.

13. In our opinion all transactions with the related parties are in compliancewith section 177 and 188 of Companies Act 2013 and the details have been disclosed in theFinancial Statements as required by the applicable accounting standards. 14. Accordingto the information and explanations given to us and based on our examination of therecords of the company the company has not made any preferential allotment or privateplacement of shares or fully or partly convertible debentures during the year underreview.

15. 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.

16. The company is not required to be registered under section 45-IA of the ReserveBank Of India Act1934.

For & behalf of B. K. Chavda & Co.

Chartered Accountants Sd/-CA B.K. Chavda (Partner) Mem. No. : 116780 FRN No. : 125064W

Place : Gandhinagar Date : 20.05.2017

"ANNEXURE B" TO THE 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 SanginitaChemicals Ltd ("the Company") as of March 31 2017 in conjunction with our auditof the standalone 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 internalfinancial controls based on internal control over financial reporting criteria establishedby the company considering the essential components of internal control stated in theguidance note on audit of internal financial controls over financial reporting issued bythe Institute of Chartered Accountants of India (‘ICAI'). These responsibilitiesinclude the design implementation and maintenance of adequate internal financialcontrols that were operating effectively for ensuring the orderly and efficient conduct ofits business including adherence of the company's policies the safeguarding of itsassets the prevention and detection of frauds and errors the accuracy and completenessof the accounting records and timely preparation of reliable financial information asrequired under the companies act2013.

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 Companies Act 2013 to the extentapplicable to an audit of internal financial controls both applicable to an audit ofInternal Financial Controls and both issued by the Institute of Chartered Accountants ofIndia. 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.

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 auditor's 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 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 authorizations ofmanagement and directors of the company; and (3) provide reasonable assurance regardingprevention or timely detection of unauthorized 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 31 2017 based on"the internal control over financial reporting criteria established by the Companyconsidering the essential components of internal control stated in the Guidance Note onAudit of Internal Financial Controls Over Financial Reporting issued by the Institute ofChartered Accountants of India".

For & behalf of B. K. Chavda & Co.

Chartered Accountants Sd/-CA B.K. Chavda (Partner) Mem. No. : 116780 FRN No. : 125064W

Place : Gandhinagar]

Date : 20.05.2017