The Members of A-l Acid Limited
Report on the Audit of the Standalone Financial Statements
We have audited the accompanying standalone financial statements of A-l Acid Limited("the Company") which comprise the Balance Sheet as at 31stMarch2021 the Statement of Profit and Loss including the statement of other comprehensiveincome the Statement of Cash Flows and the statement of Changes in Equity for the yearthen ended and notes to the financial statements including a summary of significantaccounting policies and other explanatory information.
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 Companies Act 2013 ("the Act") in the manner so required and give a trueand fair view in conformity with the Accounting Standards prescribed under section 133 ofthe Act read with the Companies (Indian Accounting Standards) Rules 2015 as amended("IND AS") and other accounting principles generally accepted in India of thestate of affairs of the Company as at 31 March 2021 the profit and total comprehensiveincome changes in equity and its cash flows for the year ended on that date.
Basis for Opinion
We conducted our audit of the standalone financial statements in accordance with theStandards on Auditing specified (SAs) under section 143(10) of the Act. Ourresponsibilities under those Standards are further described in the Auditor'sResponsibility for the Audit of the Standalone Financial Statements section of our report.We are independent of the Company in accordance with the Code of Ethics issued by theInstitute of Chartered Accountants of India (ICAI) together with the ethical requirementsthat are relevant to our audit of the standalone financial statements under the provisionsof the Companies Act 2013 and the Rules made there under and we have fulfilled our otherethical responsibilities in accordance with these requirements and the ICAI's Code ofEthics. We believe that the audit evidence obtained by us is sufficient and appropriate toprovide a basis for our audit opinion on the standalone financial statements.
Emphasis of matter
We draw attention to Note 35 to the Standalone Financial Statement as regards theBoard of Directors' evaluation of COVID-19 impact on the future performance of theCompany. Our opinion is not modified in respect of this matter.
Key Audit Matters
Key audit matters are those matters that in our professional judgment were of mostsignificance in our audit of the standalone financial statements of the current period.These matters were addressed in the context of our audit of the standalone financialstatements as a whole and in forming our opinion thereon and we do not provide aseparate opinion on these matters. We have determined the matters described below to bethe key audit matters to be communicated in our report.
|Key Audit Matter ||Auditor's Response |
|Recoverability assessment of trade receivables: ||Our response to the risk: |
|The Company has a net trade receivables of INR 3627 Lacs after providing for bad and doubtful debts of INR 123 Lacs as at 31st March 2021. ||We tested the design and operating effectiveness of key controls focusing on the following: |
|Trade receivables of the Company comprises mainly receivables in relation to the Company's (i) trading business regarding the sale of Acid and (ii) services rendered for Transportation. ||- Identification of loss events including early warning and default warning indicators; |
|The increasing challenges over the economy and operating environment in the trading industry during the year have increased the risks of default on receivables from the Company's customers. In particular in the event of insolvency of customers the Company is exposed to potential risk of financial loss when the customers fail to meet their contractual obligations in accordance with the requirements Of the agreements. ||- Assessment and approval of individual loss provisions; |
|The recoverable amount was estimated by management based on their specific recoverability assessment on individual debtor with reference to the aging profile historical payment pattern and the past record of default of the customer. ||- Governance including model validation and the assessment of the suitability of models appropriateness of assumptions and approval of provisions; and Completeness and accuracy of data input into models and provision calculators. |
|Management would make provision based on the established model as well as specific provision against individual balances with reference to its recoverable amount. ||We have performed the following procedures in relation to the recoverability of trade receivables: |
|For the purpose of establishing provisioning model to make provision for bad and doubtful debts significant judgments and assumptions including the credit risks of customers the timing and amount of realisation of these receivables are required to be made. || Tested the accuracy of aging of trade receivables at year end on a sample basis; |
| || Obtained a list of outstanding receivables and identified any debtors with financial difficulty through discussion with management as well as conducting market research on the industry; |
| || Assessed the recoverability of the unsettled receivables on a sample basis through our evaluation of management's assessment with reference to the credit profile of the customers historical payment pattern of customers publicly available information and latest correspondence with customers and to consider if any additional provision should be made; and |
| || Tested subsequent settlement of trade receivables after the balance sheet date on a Sample basis if any |
| ||For modeled provisions we tested data inputs used for modeled provisions. We assessed the appropriateness of the models used. |
| ||Were performed the provision calculations and compared our measurement outcome to that prepared by management and investigated any Differences arising. |
| ||We assessed the appropriateness and presentation of disclosures against relevant accounting standards. |
Information Other than the Financial Statements and Auditor's Report Thereon
The Company's Board of Directors is responsible for the other information. The otherinformation comprises the Directors' Report including Annexures to the Directors' Reportbut does not include the standalone financial statements and our auditor's report thereon.The other information is expected to be made available to us after the date of thisauditor's report.
Our opinion on the standalone financial statements does not cover the other informationand we do not express any form of assurance conclusion thereon. In connection with ouraudit of the standalone financial statements our responsibility is to read the otherinformation identified above when it becomes available and in doing so consider whetherthe other information is materially inconsistent with the standalone financial statementsor our knowledge obtained during the course of our audit or otherwise appears to bematerially misstated.
When we read the other Information if we conclude that there is a materialmisstatement therein we are required to communicate the matter to those charged withgovernance as required under SA 720 'The Auditor's responsibilities Relating to OtherInformation'.
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 Act with respect to the preparation of these standalone financial statementsthat give a true and fair view of the financial position financial performance and cashflows of the Company in accordance with the Accounting Standards specified under section133 of the Act and other accounting principles generally accepted in India. 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 financialstatement that give a true and fair view and are free from material misstatement whetherdue to fraud or error.
In preparing the standalone financial statements management is responsible forassessing the Company's ability to continue as a going concern disclosing as applicablematters related to going concern and using the going concern basis of accounting unlessmanagement either intends to liquidate the Company or to cease operations or has norealistic alternative but to do so.
Those Board of Directors are also responsible for overseeing the Company's financialreporting process.
Auditor's Responsibility for the Audit of the Standalone Financial Statements
Our objectives are to obtain reasonable assurance about whether the standalonefinancial statements as a whole are free from material misstatement whether due to fraudor error and to issue an auditor's report that includes our opinion. Reasonable assuranceis a high level of assurance but is not a guarantee that an audit conducted in accordancewith SAs will always detect a material misstatement when it exists. Misstatements canarise from fraud or error and are considered material if individually or in theaggregate they could reasonably be expected to influence the economic decisions of userstaken on the basis of these standalone financial statements.
As part of an audit in accordance with SAs we exercise professional judgment andmaintain professional skepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of the standalonefinancial statements whether due to fraud or error design and perform audit proceduresresponsive to those risks and obtain audit evidence that is sufficient and appropriate toprovide a basis for our opinion. The risk of not detecting a material misstatementresulting from fraud is higher than for one resulting from error as fraud may involvecollusion forgery intentional omissions misrepresentations or the override of internalcontrol.
Obtain an understanding of internal financial control relevant to the audit inorder to design audit procedures that are appropriate in the circumstances. Under section143(3)(i) of the Act we are also responsible for expressing our opinion on whether theCompany has adequate internal financial controls system in place and the operatingeffectiveness of such controls.
Evaluate the appropriateness of accounting policies used and the reasonablenessof accounting estimates and related disclosures made by the management.
Conclude on the appropriateness of management's use of the going concern basisof accounting and based on the audit evidence obtained whether a material uncertaintyexists related to events or conditions that may cast significant doubt on the Company'sability to continue as a going concern. If we conclude that a material uncertainty existswe are required to draw attention in our auditor's report to the related disclosures inthe standalone financial statements or if such disclosures are inadequate to modify ouropinion. Our conclusions are based on the audit evidence obtained up to the date of ourauditor's report. However future events or conditions may cause the Company to cease tocontinue as a going concern.
Evaluate the overall presentation structure and content of the standalonefinancial statements including the disclosures and whether the standalone financialstatements represent the underlying transactions and events in a manner that achieves fairpresentation.
Materiality is the magnitude of misstatements in the standalone financial statementsthat individually or in aggregate makes it probable that the economic decisions of areasonably knowledgeable user of the standalone financial statements may be influenced. Weconsider quantitative materiality and qualitative factors in (i) planning the scope of ouraudit work and in evaluating the results of our work; and (ii) to evaluate the effect ofany identified misstatements in the standalone financial statements.
We communicate with those charged with governance regarding among other matters theplanned scope and timing of the audit and significant audit findings including anysignificant deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have compliedwith relevant ethical requirements regarding independence and to communicate withthem allrelationships and other matters that may reasonably be thought to bear on ourindependence and where applicable related safeguards.
From the matters communicated with those charged with governance we determine thosematters that were of most significance in the audit of the standalone financial statementsof the current period and are therefore the key audit matters. We describe these mattersin our auditor's report unless law or regulation precludes public disclosure about thematter or when in extremely rare circumstances we determine that a matter should not becommunicated in our report because the adverse consequences of doing so would reasonablybe expected to outweigh the public interest benefits of such communication.
Report on Other Legal and Regulatory Requirements
1. As required by Section 143(3) of the Act based on our audit 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 including Statement of OtherComprehensive Income the Statement of Cash Flows and the Statement of Changes in Equitydealt 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 Companies (IndianAccounting Standard) Rules 2015 as amended.
e) On the basis of the written representations received from the directors as on 31stMarch 2021 taken on record by the Board of Directors none of the directors isdisqualified as on 31st March 2021 from being appointed as a director in termsof Section 164(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 the requirements of section 197(16) of the Act as amended we reportthat:
In our opinion and according to the records of the Company examined by us and theinformation and explanation given to us 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.
h) 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 as amended inour opinion and to the best of our information and according to the explanations given tous:
i. The Company does not have any pending litigations which would impact its financialposition
ii. The Company did not have any long-term contracts including derivative contracts forwhich there were any material foreseeable losses.
iii. There were no amounts which were required to be transferred to the InvestorEducation and Protection Fund by the Company.
2. As required by the Companies (Auditor's Report) Order 2016 ("the Order")issued by the Central Government of India in terms of Section 143(11) of the Act we givein "Annexure B" a statement on the matters specified in paragraphs 3 and 4 ofthe Order.
Annexure A to the Independent Auditors' Report
[Annexure referred to in paragraph 1 (f) under'Report on Other Legal and RegulatoryRequirements' section of our report on financial statements for the year ended March 312021 to the members of A-l Acid Limited]
Report on Internal Financial Controls over Financial Reporting
Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section143 of the Act
We have audited the internal financial controls over financial reporting of A-l AcidLimited ("the Company") as of March 31 2021 in conjunction with our audit ofthe 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 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). These responsibilitiesinclude the design implementation and maintenance of adequate internal financial controlsthat were operating effectively for ensuring the orderly and efficient conduct of itsbusiness including adherence to company's policies the safeguarding of its assets theprevention and detection of frauds and errors the accuracy and completeness of theaccounting records and the timely preparation of reliable financial information asrequired under the Act.
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 deemed to be prescribedunder section 143(10) of the Act to the extent applicable to an audit of internalfinancial controls both applicable to an audit of internal financial controls and bothissued by the ICAI. Those Standards and the Guidance Note require that we comply withethical requirements and plan and perform the audit to obtain reasonable assurance aboutwhether adequate 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(l) 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.
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 2021 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.
Annexure B to the Independent Auditors' Report
[Annexure referred to in paragraph 2 under "Report on Other Legal and RegulatoryRequirements" section of our report on financial statements for the year ended March31 2021 to the members of A-l Acid Limited]
Referred to in our report of even date
i. (a) The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets.
(b) According Majority of the fixed assets have been physically verified by themanagement during the year and there is a regular programme of verification which in ouropinion is reasonable having regard to the size of the Company and the nature of itsassets. No material discrepancies were noticed on such verification.
(c) The company does not have any immovable properties of freehold or leasehold landand building and hence reporting under clause 3(i)(c) of the order is not applicable.
ii. (a) As explained to us inventories have been physically verified at reasonableintervals by the management during the year. In our opinion the frequency of theverification is reasonable. No material discrepancies were noticed during suchverification.
iii. The company has not granted any loans secured or unsecured to companies firmLimited Liability Partnership or other parties covered in the register maintained undersection 189 of the Companies Act. Therefore the provisions of Clause 3 (iii) (a) (b) and(c) of the said Order are not applicable to the Company and hence not commented upon.
iv. According to the information and explanations given to us and on the basis ofexamination of the records of the company the company has not given any loans guaranteesand securities and made investments covered under section 185 of the Companies Act 2013however provisions of section 186 of the act have been complied with by the company asapplicable.
v. In our opinion and according to the information and explanation given to us thecompany has not accepted any deposits as per the directives issued by the reserve bank ofIndia under the provision of section 73 to 76 or any other relevant provisions of the Actand the rules framed there under. Accordingly paragraph 3 (V) of the order is notapplicable to the company.
vi. As informed to us and according to the explanations given to us The CentralGovernment has not prescribed the maintenance of cost records under sub section (1) ofsection 148 of the Act 2013 for any of the products manufactured/ services rendered bythe company.
vii. (a) According to the information and explanations given to us and the records ofthe Company examined by us in our opinion the Company is generally regular in depositingthe undisputed statutory dues including goods and service tax provident fund employees'state insurance income tax duty of customs and other material statutory dues asapplicable though there has been a slight delay in few cases with the appropriateauthorities.
According to the information and explanations given to us and the records of theCompany examined by us in our opinion no undisputed amounts payable in respect of goodsand service tax provident fund employees' state insurance income tax duty of customsand other material statutory dues in arrears as at March 31 2021 for a period of morethan six months from the date they became payable.
(b) According to the information and explanations given to us and the records of theCompany examined by us there are no dues of income tax or sales tax or service tax orgoods and service Tax or duty of customs or duty of excise or value added tax as at 31March 2021 which have not been deposited with the appropriate authorities on account ofany dispute.
viii. According to the records of the Company examined by us and the information andexplanation given to us the Company has not defaulted in repayment of loans or borrowingsto any financial institution or bank or Government as at the balance sheet date. Thecompany did not have any outstanding dues to debenture holders during the year.
ix. Based on the information and explanations given by the management and on an overallexamination of the balance sheet the Company did not raise any money by way of initialpublic offer or further public offer (including debt instruments) and that the term loanshave been applied for the purposes for which they were raised.
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 records of the Company examined by us and the information andexplanation given to us the Company has paid/ provided for managerial remuneration inaccordance with the requisite approvals mandated by the provisions of Section 197 readwith Schedule V to the Act.
xii. In our opinion the company is not a Nidhi Company. Therefore the provisions ofthe provisions of clause 3(xii) of the Order are not applicable to the Company.
xiii. Based on our examination of records of the Company and according to theinformation and explanations given to us the transactions with related parties are incompliance with the provisions of Section 177 and 188 of the Act. The details of suchrelated party transactions have been disclosed in the Standalone Financial Statements asrequired by the applicable accounting standard.
xiv. According to the records of the Company examined by us and the information andexplanation given to us the Company has not made any preferential allotment or privateplacement of shares or fully or partly convertible debentures during the year underreview. Accordingly provisions of clause 3(xiv) are 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 persons connected with him. Accordingly the provisions of Clause 3(xv) ofthe Order are not applicable to the Company.
xvi. The Company is not required to be registered under Section 45-IA of the ReserveBank of India Act 1934. Accordingly the provisions of Clause 3(xvi) of the Order are nota applicable to the Company.
|For Riddhi P. Sheth & CO |
|Chartered Accountants |
|Firm Registration number: 140190W |
|(Riddhi P.Sheth) |
|Membership No. 159123 |
|Place: Ahmedabad. |
|Date: June 09 2021 |