To the Members of Alkyl Amines Chemicals Limited
Report on the audit of Standalone Financial Statements
We have audited the accompanying standalone financial Statements ofAlkyl Amines Chemicals Limited ("the Company") which comprise the balance sheetas at March 31 2019 the statement of profit and loss (including other comprehensiveincome) cash flow statement and the statement of change in equity for the year then endedand a summary of the significant accounting policies and other explanatory information(hereinafter referred to as "the 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 ("Ind AS") and other accounting principlesgenerally accepted in India of the state of affairs of the Company as at March 31 2019the profit and total comprehensive income its cash flows and changes in equity for theyear ended on that date.
Basis for 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 theAuditor's Responsibilities for the Audit of the Standalone Financial Statementssection of our report. We are independent of the Company in accordance with the Code ofEthics issued by the Institute of Chartered Accountants of India (ICAI) together with theindependence requirements that are relevant to our audit of the standalone financialstatements under the provisions of the Act and the Rules made thereunder and we havefulfilled our other ethical responsibilities in accordance with these requirements and theICAI's Code of Ethics. We believe that the audit evidence we have obtained issufficient and appropriate to provide a basis for our audit opinion on the standalonefinancial statements.
Key Audit Matters
Key audit matters are those matters that in our professional judgmentwere of most significance in our audit of the standalone financial statements of thecurrent period. These matters were addressed in the context of our audit of the standalonefinancial statements as a whole and in forming our opinion thereon and we do not providea separate opinion on these matters. We have determined the matters described below to bethe key audit matters to be communicated in our report.
|Sr.No. Key Audit Matter ||Auditor Response |
|1 Revenue Recognition presentation and disclosures with respect to Ind AS 115 "Revenue from Contracts with Customers" ||Audit Procedures |
| ||Our audit approach consisted of testing the design and operating effectiveness of the internal controls and substantive testing as follows |
| ||: |
| || Evaluating the design of internal controls relating to implementation of the new revenue accounting standard; |
|Revenue from the sale of goods (hereinafter referred to as "Revenue") is recognised when the Company performs its obligation to its customers and the amount of revenue can be measured reliably and recovery of the consideration is probable. The timing of such recognition in case of sale of goods is when the control over the same is transferred to the customer which is mainly upon delivery and when there are no longer any unfulfilled obligations. || Performing substantive testing by selecting a sample of contracts and tested the operating effectiveness of the internal control relating to revenue recognition; carrying out a combination of procedures involving enquiry and observation performance and inspection of evidence in respect of operation of these controls; |
|The timing of revenue recognition is relevant to the reported performance of the Company. The management considers revenue as a key measure for evaluation of performance. There is a risk of revenue being recorded before control is transferred. || Testing the design implementation and operating effectiveness of management's general IT controls and key application controls over the Company's IT systems which govern revenue recognition including access controls controls over program changes interfaces between different systems and key manual internal controls over revenue recognition to assess the completeness of the revenue entries being recorded in the general ledger accounting system; |
| || Testing the effectiveness of such controls over revenue cut off at year-end; |
|Refer to Note 1(d) to the Standalone Financial Statements || Testing the supporting documentation for sales transactions recorded during the period closer to the year end and subsequent to the year end to determine whether revenue was recognised in the correct period; and |
| || Reviewing the information used to prepare the disclosures relating to the periods over which the controls of the goods would be transferred subsequent to the balance sheet date. |
|Sr.No. Key Audit Matter ||Auditor Response |
|2 Litigations - Contingencies ||Audit Procedures |
|The Company has litigations in respect of certain income tax matters. In this regard the Company has recognised provisions and has disclosed contingent liabilities as at March 31 2019. ||Our audit procedures involved the following: |
| || Testing the effectiveness of controls around the recording and re- assessment of contingent liabilities; |
| || Discussing with management the status and recent developments of these matters including their views on the likely outcome of each litigation and claim; |
|Significant management judgment is required to assess these matters and to determine the probability of material outflow of economic resources and whether a provision should be recognised or a disclosure should be made. || Performing our assessment of the underlying calculations supporting the provisions or other disclosures made in the standalone financial statements; |
|Where considered relevant the management judgement is also supported with legal advice in these cases. || Evaluating the management's assessment of these matters and monitoring changes in the disputes with reference to subsequent orders passed and by way of discussion with the tax consultant where relevant in order to establish the appropriateness of the provisions / disclosures; |
|We focused on this area as the ultimate outcome of matters are uncertain and the positions taken by the management are based on the application of judgement related expert advice including those relating to interpretation of laws and regulations. || Evaluating management's assessment of the matters that are not disclosed as the probability of material outflow is considered to be remote by the management; and |
|Refer to Note 29 to the Standalone Financial Statements || Assessing the adequacy of the Company's disclosures. |
The Company's Board of Directors is responsible for thepreparation of the other information. The other information comprises the informationincluded in the Report on Corporate Governance Shareholder information and ManagementDiscussion and Analysis Board's Report including Annexures to Board's ReportBusiness Responsibility Report Corporate Governance and Shareholder's Informationbut does not include the standalone financial statements and our auditor's reportthereon.
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.
Management's Responsibility for the Standalone FinancialStatements
The Company's Board of Directors is responsible for the mattersstated in section 134(5) of the Act with respect to the preparation of these standalonefinancial statements that give a true and fair view of the financial position financialperformance total comprehensive income changes in equity and cash flows of the Companyin accordance with the Ind AS and other accounting principles generally accepted in India.This responsibility also includes maintenance of adequate accounting records in accordancewith the provisions of the Act for safeguarding the assets of the Company and forpreventing 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 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 management isresponsible for assessing the Company's ability to continue as a going concerndisclosing as applicable matters relating to going concern and using the going concernbasis of accounting unless management either intends to liquidate the Company or ceaseoperations or has no realistic alternative but to do so.
The Board of Directors is responsible for overseeing the Company'sfinancial reporting process.
Auditor's Responsibility for the Standalone Financial Statements
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 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 controls 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 an 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 management.
Conclude on the appropriateness of management's use of the going concernbasis of accounting and based on the audit evidence obtained whether a materialuncertainty exists related to events or conditions that may cast significant doubt on theCompany's ability to continue as a going concern. If we conclude that a materialuncertainty exists we are required to draw attention in our auditor's report to therelated 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 conditionsmay cause the Company to cease to continue 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 standalonefinancial statements that individually or in aggregate makes it probable that theeconomic decisions of a reasonably knowledgeable user of the financial statements may beinfluenced. We consider quantitative materiality and qualitative factors in (i) planningthe scope of our audit work and in evaluating the results of our work; and (ii) toevaluate the effect of any identified misstatements in the 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 tocommunicate with them all relationships and other matters that may reasonably be thoughtto bear on our 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 precludespublic disclosure about the matter or when in extremely rare circumstances we determinethat a matter should not be communicated in our report because the adverse consequences ofdoing so would reasonably be expected to outweigh the public interest benefits of suchcommunication.
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 explanationswhich to the best of our knowledge and belief were necessary for the purposes of ouraudit.
(b) In our opinion proper books of account 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 includingOther Comprehensive Income Cash Flow Statement and Statement of Change in Equity dealtwith by this Report are in agreement with the books of account.
(d) In our opinion the aforesaid standalone financial statementscomply with the Indian Accounting Standards specified under Section 133 of the Act asapplicable.
(e) On the basis of the written representations received from thedirectors as on March 31 2019 and taken on record by the Board of Directors none of thedirectors is disqualified as on March 31 2019 from being appointed as a director interms of Section 164 (2) of the Act.
(f) With respect to the adequacy of the internal financial controlsover financial reporting of the company and the operating effectiveness of such controlsrefer to our separate Report in "Annexure A". Our report expresses an unmodifiedopinion on adequacy and operating effectiveness of the Company's internal financialcontrols over financial reporting.
(g) With respect to the other matters to be included in theAuditor's Report in accordance with Rule 11 of the Companies (Audit and Auditors)Rules 2014 as amended in our opinion and to the best of our information and accordingto the explanations given to us:
i. The Company has disclosed the impact of pending litigations on itsfinancial position in its standalone financial statements Refer Note 29 to thestandalone financial statements;
ii. The Company did not have any material foreseeable losses onlong-term contracts including derivative contracts.
iii. There has been no delay in transferring amounts required to betransferred to the Investor Education and Protection Fund by the Company.
2. With respect to the matter to be included in the Auditor'sReport under section 197(16): In our opinion and according to the information andexplanations given to us the remuneration paid by the Company to its directors during thecurrent year is in accordance with the provisions of section 197 read with Schedule V ofthe Act.
3. As required by the Companies (Auditor's Report) Order 2016("the Order") issued by the Central Government of India in terms of subsection (11) of section 143 of the Companies Act 2013 we give in the "AnnexureB" a statement on the matters specified in paragraph 3 and 4 of the Order.
| ||For N. M. Raiji & Co. |
| ||Chartered Accountants |
| ||Firm's Registration Number: 108296W |
| ||Vinay D. Balse |
|Place : Mumbai ||Partner |
|Date : May 21 2019 ||Membership Number: 39434 |