You are here » Home » Companies » Company Overview » Aarti Surfactants Ltd

Aarti Surfactants Ltd.

BSE: 543210 Sector: Industrials
NSE: AARTISURF ISIN Code: INE09EO01013
BSE 00:00 | 16 May 680.30 7.80
(1.16%)
OPEN

690.00

HIGH

690.00

LOW

659.95

NSE 00:00 | 16 May 678.25 6.65
(0.99%)
OPEN

656.05

HIGH

688.30

LOW

656.05

OPEN 690.00
PREVIOUS CLOSE 672.50
VOLUME 870
52-Week high 1885.00
52-Week low 659.95
P/E 58.45
Mkt Cap.(Rs cr) 516
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 690.00
CLOSE 672.50
VOLUME 870
52-Week high 1885.00
52-Week low 659.95
P/E 58.45
Mkt Cap.(Rs cr) 516
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Aarti Surfactants Ltd. (AARTISURF) - Auditors Report

Company auditors report

To the Members of Aarti Surfactants Limited

Report on the audit of the Standalone Financial Statements

Opinion

We have audited the accompanying standalone financial statements ofAarti Surfactants Limited ("the Company") which comprise the Balance Sheet asat March 31 2021 the Statement of Profit and Loss (including Other ComprehensiveIncome) the Statement of Cash Flows and the Statement of Changes in Equity for the yearthen ended and a summary of significant accounting policies and other explanatoryinformation (herein after referred as "standalone financial statements").

In our opinion and to the best of our information and according to theexplanations given to us the aforesaid standalone financial statements give theinformation required by the Companies Act 2013 ("the Act") in the manner sorequired and give a true and fair view in conformity with the Indian Accounting Standardsprescribed under Section 133 of the Act read with the Companies (Indian AccountingStandards) Rules 2015 as amended from time to time and other accounting principlesgenerally accepted in India of the state of affairs of the Company as at March 31 2021and its profit total comprehensive income its cash flows and the changes in equity forthe year ended on that date.

Basis of opinion

We conducted our audit of the standalone financial statements inaccordance with the Standards on Auditing specified under Section 143(10) of the Act(SAs). Our responsibilities 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 Act and the Rules made there under and we have fulfilled our other ethicalresponsibilities in accordance with these requirements and the ICAI's Code of Ethics. Webelieve that the audit evidence obtained by us is sufficient and appropriate to provide abasis for our audit opinion on the Standalone Financial Statements.

Key audit matters

Key audit matters are those matters that in our professionaljudgement were of most significance in our audit of the standalone financial statementsof the current period. These matters were addressed in the context of our audit of thestandalone financial statements as a whole and in forming our opinion thereon and we donot provide a separate opinion on these matters. We have determined the matters describedbelow to be the key audit matters to be communicated in our report.

Key Audit Matters Auditors' Response
Accuracy Completeness and disclosure with reference to Ind AS-16 of Property Plant and Equipment (including Capital Work-in-Progress) Our audit procedures amongst others include the following -
The carrying value of property plant and equipment (including capital work-in-progress) as on March 31 2021 of Rs. 20564.85 (Rs. 16409.22 lakhs as on March 31 2020) includes Rs.4840.15 lakhs capitalised /transferred from capital work in progress during the year ended March 31 2021 (Rs. 2218.71 lakhs for the year ended March 31 2020). Capital expenditure involves management's technical estimates and judgement about capitalisation estimated useful life impairment which has material impact on balance sheet and operating results of the Company. a) Obtained an understanding of operating effectiveness of management's internal controls over capital expenditure.
b) We assessed Company's process regarding maintenance of records valuation and accounting of transactions pertaining to Property Plant and Equipment including Capital Work in Progress with reference to Indian Accounting Standard -16 - Property Plant and Equipment.
c) We have reviewed management judgment pertaining to estimation of useful life and depreciation of the Property Plant and Equipment.
d) We have verified the capitalisation of borrowing cost incurred on qualifying assets in accordance with the Indian Accounting Standard 23 - Borrowing Costs.
Refer Note no. 1: Property Plant and Equipment to the standalone financial statements. e) Ensuring adequacy of disclosures in the standalone financial statements.

Information other than the financial statements and auditor's reportthereon

The Board of Directors of the Company is responsible for the otherinformation. The other information comprises the information included in Annual Report butdoes not include the standalone financial statements and our auditor's report thereon.

Our opinion on the standalone financial statements does not cover theother information and we do not express any form of assurance conclusion thereon.

In connection with our audit of the standalone financial statementsour responsibility is to read the other information and in doing so consider whether theother information is materially inconsistent with the standalone financial statements orour knowledge obtained during the course of our audit or otherwise appears to bematerially misstated.

If based on the work we have performed we conclude that there is amaterial misstatement of this other information we are required to report that fact. Wehave nothing to report in this regard.

Responsibilities of Management and Those Charged with Governance forthe Standalone Financial Statements

The Company's Board of Directors is responsible for the matters statedin section 134(5) of the Act with respect to the preparation of these standalone financialstatements that give a true and fair view of the financial position financial performanceand cash flows of the Company in accordance with the accounting principles generallyaccepted in India including the accounting standards specified under section 133 of theAct. 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 judgements 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 standalonefinancial statements that give a true and fair view and are free from materialmisstatement whether due to fraud or error.

In preparing the standalone financial statements the Management isresponsible for assessing the ability of the Company to continue as a going concerndisclosing as applicable matters related to going concern and using the going concernbasis of accounting unless the Management either intends to liquidate the Company or tocease operations or has no realistic alternative but to do so.

The Board of Directors are also responsible for overseeing thefinancial reporting process of the Company.

Auditors' responsibilities for the audit of Standalone FinancialStatements

Our objectives are to obtain reasonable assurance about whether thestandalone financial statements as a whole are free from material misstatement whetherdue to fraud or error and to issue an Auditor's Report that includes our opinion.Reasonable assurance is a high level of assurance but is not a guarantee that an auditconducted in accordance with SAs will always detect a material misstatement when itexists. Misstatements can arise from fraud or error and are considered material ifindividually or in the aggregate they could reasonably be expected to influence theeconomic decisions of users taken on the basis of these standalone financial statements.

As part of an audit in accordance with SAs we exercise professionaljudgement and maintain professional skepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of thestandalone financial statements whether due to fraud or error design and perform auditprocedures responsive to those risks and obtain audit evidence that is sufficient andappropriate to provide a basis for our opinion. The risk of not detecting a materialmisstatement resulting from fraud is higher than for one resulting from error as fraudmay involve collusion forgery intentional omissions misrepresentations or the overrideof internal control.

• Obtain an understanding of internal financial control relevantto the audit in order to design audit procedures that are appropriate in thecircumstances. Under Section 143(3)(i) of the Act we are also responsible for expressingour opinion on whether the Company has adequate internal financial controls system inplace and the operating effectiveness of such controls.

• Evaluate the appropriateness of accounting policies used and thereasonableness of accounting estimates and related disclosures made by the Management.

• Conclude on the appropriateness of use of the going concernbasis of accounting by the Management and based on the audit evidence obtained whether amaterial uncertainty exists related to events or conditions that may cast significantdoubt on the ability of the Company to continue as a going concern. If we conclude that amaterial uncertainty exists we are required to draw attention in our Auditor's Report tothe related disclosures in the standalone financial statements or if such disclosures areinadequate to modify our opinion. Our conclusions are based on the audit evidenceobtained up to the date of our Auditor's Report. However future events or conditions maycause the Company to cease to continue as a going concern.

• Evaluate the overall presentation structure and content of thestandalone financial statements including the disclosures and whether the standalonefinancial statements represent the underlying transactions and events in a manner thatachieves fair presentation.

Materiality is the magnitude of misstatements in the standalonefinancial statements that individually or in aggregate makes it probable that theeconomic decisions of a reasonably knowledgeable user of the standalone financialstatements may be influenced. We consider quantitative materiality and qualitative factorsin

(i) planning the scope of our audit work and in evaluating the resultsof our work; and

(ii) to evaluate the effect of any identified misstatements in theStandalone Financial Statements.

We communicate with those charged with governance regarding amongother matters the planned scope and timing of the audit and significant audit findingsincluding any significant deficiencies in internal control that we identify during ouraudit.

We also provide those charged with governance with a statement that wehave complied with relevant ethical requirements regarding independence and to communicatewith them all relationships and other matters that may reasonably be thought to bear onour independence and where applicable related safeguards.

From the matters communicated with those charged with governance wedetermine those matters that were of most significance in the audit of the standalonefinancial statements of the current period and are therefore the key audit matters. Wedescribe these matters in our Auditor's Report unless law or regulation precludes publicdisclosure about the matter or when in extremely rare circumstances we determine that amatter should not be communicated in our report because the adverse consequences of doingso would reasonably be expected to outweigh the public interest benefits of suchcommunication.

Report on other legal and regulatory requirements

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

2. As required by section 143(3) of the Act based on our audit wereport that:

a. We have sought and obtained all the information and explanationswhich to the best of our knowledge and belief were necessary for the purpose of our audit.

b. In our opinion proper books of accounts as required by law havebeen kept by the Company so far as it appears from our examination of those books.

c. The Balance Sheet the Statement of Profit and Loss (including OtherComprehensive Income) Statement of Cash Flows and Statement of Changes in Equity dealtwith by this Report are in agreement with the relevant books of account.

d. In our opinion the aforesaid standalone financial statements complywith the Ind AS specified under Section 133 of the Act.

e. On the basis of the written representations received from thedirectors as on March 31 2021 taken on record by the Board of Directors none of thedirectors is disqualified as on March 31 2021 from being appointed as a director interms of section 164(2) of the Act.

f. With respect to the adequacy of the internal financial controls overfinancial reporting of the Company and the operating effectiveness of such controls referour separate report in "Annexure B". Our report expresses an unmodified opinionon the adequacy and operating effectiveness of the internal financial controls overfinancial reporting of the Company.

g. With respect to the other matters to be included in the Auditor'sReport in accordance with the requirements of Section 197(16) of the Act as amended inour opinion and to the best of our information and according to the explanations given tous the remuneration paid by the Company to its Directors during the year is in accordancewith the provisions of Section 197 of the Act.

h. With respect to the other matters to be included in the Auditor'sReport in accordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014 asamended in our opinion and to the best of our information and according to theexplanations given to us:

i. The Company has disclosed the impact of pending litigations on itsfinancial position. (Refer Note No. 27 to the standalone financial statements).

ii. The Company did not have any long-term contracts includingderivative contracts for which there were any material foreseeable losses.

iii. There has been no delay in transferring amounts required to betransferred to the Investor Education and Protection Fund by the Company.

For Gokhale & Sathe
Chartered Accountants
Firm Registration Number: 103264W
Tejas Parikh
Partner
Place: Mumbai Membership Number: 123215
Date: May 21 2021 UDIN: 21123215AAAACU2520

Annexure A to the Independent Auditors' Report

Referred to in para 1 under 'Report on Other Legal and RegulatoryRequirements' section of our report of even date:

i. In respect of the Company's fixed assets:

a. The Company has maintained proper records showing full particularsincluding quantitative details and situation of its fixed assets.

b. The Company has phased programme of physical verification of fixedassets by which all fixed assets are verified over a period of three years and no materialdiscrepancy was noted on such physical verification. In our opinion periodicity ofphysical verification is reasonable having regard to the size of the Company and nature ofthe assets.

c. According to the information and explanation given to us and on thebasis of examination of the records of the Company title deeds of immovable propertiesare held in the name of the company. In respect of immovable properties taken on lease anddisclosed as property Plant and equipment in the standalone financial statements thelease agreements are in the name of the company except Plot No 6263645761 62A andS-3/1 at Pithampur Madhya Pradesh (Aggregate book value Rs. 267.80 lakhs) are inthe name of demerged Company (Aarti Industries Limited). According to explanation obtainedfrom management in view of demerger through court scheme leasehold rights are deemed tobe transferred to the Company and procedure for transferring in the name of the Company isyet to be completed.

ii. In our opinion and according to the information and explanationsprovided to us the inventories have been physically verified by the management during theyear. In our opinion the frequency of such verification is reasonable. In our opinion andas explained to us there were no material discrepancies noticed on physical verificationof inventories as compared with the books of account.

iii. According to the information and explanations given to us theCompany has not granted any loans secured or unsecured to companies or parties covered inthe register maintained under Section 189 of the Act. Accordingly the provisions ofparagaph 3(iii) (a) (b) and (c) of the Order are not applicable to the Company.

iv. In our opinion and according to the information and explanationsgiven to us the Company has complied with provisions of Section 185 and 186 of the Act inrespect of grant of loans making investments and providing guarantees and securities asapplicable.

v. According to the information and explanations given to us theCompany has not accepted any deposits from the public during the year.

vi. We have broadly reviewed the cost records maintained by the Companypursuant to the Companies (Cost Records and Audit) Rules 2014 prescribed by the CentralGovernment under Section 148(1)(d) of the Companies Act 2013 and are of the opinion thatprima facie the prescribed accounts and cost records have been maintained. We havehowever not made a detailed examination of the cost records with a view to determinewhether they are accurate or complete.

vii. According to the information and explanations given to us inrespect of statutory dues:

a. According to the information and explanation given to us and on thebasis of our examination of the records of the Company amounts deducted / accrued in thebooks of account in respect of undisputed statutory dues including Provident FundEmployees State Insurance Income tax Sales tax GST Custom duty and any other materialapplicable statutory dues have been regularly deposited during the year with theappropriate authorities. According to the information and explanations given to us noundisputed amounts payable in respect of the aforesaid dues were in arrears as of 31stMarch 2021 for a period of more than six months from the date they became payable.

b. There are no dues of income tax sales tax VAT GST custom dutyEntry Tax PF Act which have not been deposited on account of any dispute except thebelow

(Rs. in Lakhs)

Name of statute Nature of dues Forum where dispute is Pending Period to which the amount relates Amount
Customs Act Value Added Tax Act Custom Duty Value Added Tax Commissioner of Customs Commissioner (Appeals) 2016-17 2011-12 to 2015-16 670.86 151.61
Entry Tax Act Entry Tax Appellate Board (Commercial Taxes) 2010-11 2011-12 53.33
2015-16 and 2016-17

viii. In our opinion and according to the information and explanationsgiven to us the Company has not defaulted in repayment of dues for loans taken frombanks. The Company has not taken any loans from financial institutions and has not issueddebentures.

ix. In our opinion and according to the information and explanationgiven to us the Company has utilized the monies raised by way of term loans for thepurpose for which they were raised. The Company did not raise any money by way of publicoffer or further public offer (including debt instruments) during the year.

x. To the best our knowledge and according to the information andexplanations given to us no fraud by the Company or no material fraud on the Company byits officers or employees has been noticed or reported during the year.

xi. In our opinion and according to the information and explanationsgiven to us the Company has paid/provided managerial remuneration in accordance with therequisite approvals mandated by the provisions of section 197 read with Schedule V to theCompanies Act 2013.

xii. The Company is not a Nidhi Company and hence reporting underparagraph 3(xii) of the Order is not applicable.

xiii. In our opinion and according to the information and explanationsgiven to us the Company is in compliance with Section 177 and 188 of the Companies Act2013 where applicable for all transactions with the related parties and the details ofrelated party transactions have been disclosed in the standalone financial statements asrequired by the applicable accounting standards.

xiv. During the year the Company has not made any preferentialallotment or private placement of shares or fully or partly paid convertible debenturesand hence reporting under paragraph 3(xiv) of the Order is not applicable to the Company.

xv. According to the information and explanation given to us theCompany has not entered into non-cash transactions with directors or persons connectedwith him. Accordingly paragraph 3(xv) of the Order is not applicable.

xvi. The Company is not required to be registered under section 45-IAof the Reserve Bank of India Act 1934.

For Gokhale & Sathe
Chartered Accountants
Firm Registration Number: 103264W
Tejas Parikh
Partner
Place: Mumbai Membership Number: 123215
Date: May 21 2021 UDIN: 21123215AAAACU2520

Annexure B to the Independent Auditors' Report

Referred to in paragraph 2(f) under 'Report on Other Legal andRegulatory Requirements' section of our report of even date:

Report on the Internal Financial Controls Over Financial Reportingunder Clause (i) of sub-section 3 of section 143 of the Companies Act 2013 ("theAct")

We have audited the internal financial controls over financialreporting of Aarti Surfactants Limited ("the Company") as on March 31 2021 inconjunction with our audit of the standalone financial statements of the Company for theyear ended on that date.

Management's responsibility for internal financial controls

The Management of the Company is responsible for establishing andmaintaining internal financial controls based on the internal control over financialreporting criteria established by the Company considering the essential components ofinternal control stated in the Guidance Note on Audit of Internal Financial Controls OverFinancial Reporting issued by the Institute of Chartered Accountants of India. 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 the policies of the company thesafeguarding of its assets the prevention and detection of frauds and errors theaccuracy and completeness of the accounting records and the timely preparation ofreliable financial information as required under the Companies Act 2013.

Auditors' responsibility

Our responsibility is to express an opinion on the internal financialcontrols of the Company over financial reporting based on our audit. We conducted ouraudit. We conducted audit in accordance with the Guidance Note on Audit of InternalFinancial Controls Over Financial Reporting (the "Guidance Note") issued by theInstitute of Chartered Accountants of India and the Standards on Auditing prescribed undersection 143(10) of the Companies Act 2013 to the extent applicable to an audit ofinternal financial controls. Those standards and the Guidance Note require that we complywith ethical requirements and plan and perform the audit to obtain reasonable assuranceabout 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 aboutthe adequacy of the internal financial control system over financial reporting and theiroperating effectiveness. Our audit of internal financial controls over financial reportingincluded obtaining an understanding of internal financial controls over financialreporting assessing the risk that a material weakness exists and testing and evaluatingthe design and operating effectiveness of internal control based on the assessed risk. Theprocedures selected depend on the auditor's judgement including the assessment of therisks of material misstatement of the financial statements whether due to fraud or error.

We believe that the audit evidence we have obtained is sufficient andappropriate to provide a basis for our audit opinion on the internal financial controlssystem over financial reporting of the Company.

Meaning of internal financial controls over financial reporting

A Company's internal financial control with reference to StandaloneFinancial Statements is a process designed to provide reasonable assurance regarding thereliability of financial reporting and the preparation of financial statements forexternal purposes in accordance with generally accepted accounting principles. A company'sinternal financial control with reference to Standalone Financial Statements include thosepolicies and procedures that

(1) pertain to the maintenance of records that in reasonable detailaccurately and fairly reflect the transactions and dispositions of the assets of theCompany;

(2) provide reasonable assurance that transactions are recorded asnecessary to permit preparation of Standalone Financial Statements in accordance withgenerally accepted accounting principles and that receipts and expenditures of theCompany are being made only in accordance with authorisations of management and directorsof the Company; and

(3) provide reasonable assurance regarding prevention or timelydetection of unauthorised acquisition use or disposition of the Company's assets thatcould have a material effect on the Standalone Financial statements.

Inherent limitations of internal financial controls over financialreporting

Because of the inherent limitations of internal financial controls overfinancial reporting including the possibility of collusion or improper managementoverride of controls material misstatements due to error or fraud may occur and not bedetected. Also projections of any evaluation of the internal financial controls overfinancial reporting to future periods are subject to the risk that the internal financialcontrol over financial reporting may become inadequate because of changes in conditionsor that the degree of compliance with the policies or procedures may deteriorate.

Opinion

In our opinion to the best of our information and according to theexplanations given to us 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 issued by theInstitute of Chartered Accountants of India.

For Gokhale & Sathe
Chartered Accountants
Firm Registration Number: 103264W
Tejas Parikh
Partner
Place: Mumbai Membership Number: 123215
Date: May 21 2021 UDIN: 21123215AAAACU2520

.