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Shentracon Chemicals Ltd.

BSE: 530757 Sector: Industrials
NSE: N.A. ISIN Code: N.A.
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Shentracon Chemicals Ltd. (SHENTRACONCHEM) - Auditors Report

Company auditors report

TO

THE MEMBERS OF

SHENTRACON CHEMICLAS LIMITED

Report on the Standalone Financial Statements

We have audited the accompanying standalone financial statements of ShentraconChemicals Limited (the "Company") which comprise the Balance Sheet as at 31March 2016 the Statement of Profit and Loss and the Cash Flow Statement for the yearthen ended and a summary of the significant accounting policies and other explanatoryinformation.

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 Standardsprescribed under section 133 of the Act as applicable.

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 and the Order under section 143 (11)of the Act.

We conducted our audit of the standalone financial statements in accordance with theStandards on Auditing specified under Section 143(10) of the Act. Those Standards requirethat we comply with ethical requirements and plan and perform the audit to obtainreasonable assurance about whether the financial statements are free from materialmisstatement.

An audit involves performing procedures to obtain audit evidence about the amounts andthe disclosures in the financial statements.

The procedures selected depend on the auditor's judgment including the assessment ofthe risks of material misstatement of the financial statements whether due to fraud orerror. In making those risk assessments the auditor considers internal financial controlrelevant to the Company's preparation of the financial statements that give a true andfair view in order to design audit procedures that are appropriate in the circumstances.An audit also includes evaluating the appropriateness of the accounting policies used andthe reasonableness 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

Subject to matter referred in notes on accounts in Schedule 20 with resulting impactthereof as regard (i) as indicate in point No. 20(ii) the accounts have been prepared onthe basis of going concern and hence erosion / diminution in value which may arise inassets of a closed chemical plant have not been considered. (ii) as pointed out in pointNo. 20(vi) no physical verification of inventory has taken place since 1988 and disclosedin the books at the same value since then. Being a chemical plant erosion in its potentialvalue can't be denied.

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 :

a) In the case of the Balance Sheet of the state of affairs of the Company as at 31stMarch2016;

b) In the case of the Profit and Loss Account of the Profit for the year ended on thatdate.

c) In the case of Cash Flow Statement of the cash flow for the year ended on thatdate.

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 prescribed under section 133 of the Act as applicable.

e) On the basis of the written representations received from the directors as on 31March 2016 taken on record by the Board of Directors none of the directors isdisqualified as on 31 March 2016 from being appointed as a director in terms of Section164 (2) 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 A". Our report expresses an unmodified opinion onthe adequacy and operating effectiveness of the Company's internal financial controls overfinancial reporting.

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:

a. The Company has disclosed the impact of pending litigations on its financialposition in its financial statements;

b. The Company did not have any long-term contracts including derivative contracts forwhich there were any material foreseeable losses;

c. There has been no delay in transferring amounts required to be transferred to theInvestor Education and Protection Fund by the Company. However such case is not prevalentat present.

2. As required by the Companies (Auditor's Report) Order 2016 (the "Order")issued by the Central Government in terms of Section 143(11) of the Act we give in"Annexure B" a statement on the matters specified in paragraphs 3 and 4 of theOrder.

For K. P. JHAWAR & CO.
CHARTERED ACCOUNTANTS
(Firm Registration No. 306105E)
(K. P. JHAWAR)
Place: Kolkata Proprietor
Date: 30th May 2016 Membership No. 010309

ANNEXURE "A" TO THE INDEPENDENT AUDITORS' REPORT

(Referred to in paragraph 1(f) under ‘Report on Other Legal and RegulatoryRequirements' of our report of even date) Report on the Internal Financial Controls OverFinancial Reporting under Clause (i) of Sub-section 3 of Section 143 of the Companies Act2013 (the "Act")

We have audited the internal financial controls over financial reporting of ShentraconChemicals Limited (the "Company") as of 31 March 2016 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 statedin the Guidance Note on Audit of Internal Financial Controls Over Financial Reportingissued by the Institute of Chartered Accountants of India. These responsibilities includethe design implementation and maintenance of adequate internal financial controls thatwere operating effectively for ensuring the orderly and efficient conduct of its businessincluding adherence to Company's policies the safeguarding of its assets the preventionand detection of frauds and errors the accuracy and completeness of the accountingrecords and the timely preparation of reliable financial information as required underthe 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") issued by the Institute of Chartered Accountants of Indiaand the Standards on Auditing prescribed under Section 143(10) of the Companies Act 2013to the extent applicable to an audit of internal financial controls. Those Standards andthe Guidance Note require that we comply with ethical requirements and plan and performthe audit to obtain reasonable assurance about whether adequate internal financialcontrols over financial reporting was established and maintained and if such controlsoperated 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 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 to the best of our information and according to the explanations givento us the Company has in all material respects an adequate internal financial controlssystem over financial reporting and such internal financial controls over financialreporting were operating effectively as at 31 March 2016 based on the internal controlover financial reporting criteria established by the Company considering the essentialcomponents of internal control stated in the Guidance Note on Audit of Internal FinancialControls Over Financial Reporting issued by the Institute of Chartered Accountants ofIndia.

For K. P. JHAWAR & CO.
CHARTERED ACCOUNTANTS
(Firm Registration No. 306105E)
( K. P. JHAWAR )
Place: Kolkata Proprietor
Date: 30th May 2016 Membership No. 010309

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

b) We are informed that the Board of Directors had resolved to close the company's mainbusiness of chemicals in F.Y 2010-11. In view of the fact that the existing chemical plantwill not be of any use in any other probable line of production. It was decided to disposethe Plant & Machinery and Electrical appurtment thereto As these are meant fordisposal the same were shown under Current Assets since last few years.

c) According to the information and explanations given to us and the records examinedby us and based on the examination of the registered sales deed/conveyance deed providedto us we report that the title deeds comprising all the immovable properties of landand building which are freehold are held in the name of the Company as at the balancesheet date.

ii. a) It is informed to us that inventory comprising stock of materials stores andfinished goods could not be physically verified since 21.07.1998 due to closure of thefactory and hence we are not in a position to comment thereon. Consequently we are not ina position to comment on as regards unserviceable and damaged inventory.

b) It is informed to us that any erosion in potential value of the stock which mayarise due to its nature could not be dealt with due to non verification of stock and itstechnical evaluation.

c) The closing stock of finished goods work in progress and reusable residues and rawmaterials have been taken in the account on the basis of verification/evaluationcertificate dated 21.07.1998 of an independent valuer appointed by State Bank of India.There was no movement of inventory thereafter. No further physical verification and / ortechnical evaluation has been made thereafter.

d) We are informed that proper records of inventory has been maintained. However inabsence of physical verification thereof we are not in a position to comment ondiscrepancy comparing with the physical stock.

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 Companies Act 2013.

iv. In our opinion and according to the information and explanations given to us theCompany has complied with the provisions of Sections 185 and 186 of the Companies Act2013 in respect of grant of loans making investments and providing guarantees andsecurities as applicable.

v. According to the information and explanations given to us the Company has notaccepted any deposit during the year.

vi. There has been no manufacturing activity during the previous year hence thereporting under section 148(1)is not applicable.

vii. According to the information and explanations given to us in respect of statutorydues:

a) The Company has generally been regular in depositing undisputed statutory duesincluding Provident Fund Employee's State Insurance Income-tax Sales Tax Service TaxCustoms Duty Excise Duty Value Added Tax cess and other material statutory duesapplicable to it to the appropriate authorities.

b) There were no disputed amounts payable in respect of Provident Fund Employee'sState Insurance Income tax Sales Tax Service Tax Customs Duty Excise Duty ValueAdded Tax cess and other material statutory dues in arrears as at 31st March 2016.

viii. In our opinion and according to the information and explanations given to us theCompany has not defaulted in the repayment of loans or borrowings to banks and dues todebenture holders. The Company has not obtained any loan from financial institution.

ix. The Company has not raised moneys by way of initial public offer or further publicoffer (including debt instruments) or term loans and hence reporting under clause (ix) ofthe Order is not applicable.

x. To the best of our knowledge and according to the information and explanations givento us no fraud by the Company and no material fraud on the Company by its officers oremployees has been noticed or reported during the year.

xi. In our opinion and according to the information and explanations given to us theCompany has paid / provided managerial remuneration in accordance with the requisiteapprovals mandated by the provisions of section 197 read with Schedule V to the CompaniesAct 2013.

xii. The Company is not a Nidhi Company and hence reporting under clause (xii) of theOrder is not applicable.

xiii. In our opinion and according to the information and explanations given to us theCompany is in compliance with Section 177 and 188 of the Companies Act 2013 whereapplicable for all transactions with the related parties and the details of related partytransactions have been disclosed in the financial statements etc. as required by theapplicable accounting standards.

xiv. During the year the Company has not made any preferential allotment or privateplacement of shares or fully or partly convertible debentures and hence reporting underclause (xiv) of Order is not applicable to the Company.

xv. In our opinion and according to the information and explanations given to usduring the year the Company has not entered into any non-cash transactions with itsdirectors or directors of its holding subsidiary or associate company or personsconnected with them and hence provisions of section 192 of the Companies Act 2013 are notapplicable.

xvi. The Company is not required to be registered under section 45-IA of the ReserveBank of India Act 1934.

For K. P. JHAWAR & CO.
CHARTERED ACCOUNTANTS
(Firm Registration No. 306105E)
( K. P. JHAWAR )
Place: Kolkata Proprietor
Date: 30th May 2016 Membership No. 010309