To The Members Of
BODAL CHEMICALS LIMITED
Report on the audit of the standalone financial statements
We have audited the accompanying standalone financial statements of BODAL CHEMICALSLIMITED ("the Company") which comprise the Balance Sheet as at 31st March2020 and the Statement of Profit and Loss (including Other Comprehensive Income) theStatement of Cash Flows and the Statement of Changes in Equity for the year then endedand a summary of significant accounting policies and other explanatory information. In ouropinion and to the best of our information and according to the explanations given to usthe aforesaid standalone financial statements give the information required by theCompanies Act 2013 ("the Act") in the manner so required and give a true andfair view in conformity with the Indian Accounting Standards prescribed under section 133of the 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 31st March 2020 and its profit Total comprehensiveincome its cash flows and the changes in equity 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 under section 143(10) of the Act (SAs). 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 Act and the Rules made thereunder 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 the standalone financial statements.
Emphasis of Matter
We draw attention to Note 49 to the standalone financial statements in which theCompany describes the uncertainties arising from the COVID 19 pandemic. Our report is notmodified 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 these matters. We have determined the matters described below to be thekey audit matters to be communicated in our report.
|Key Audit Matter ||Auditor's response |
|1 Timely recognition of revenue ||Principal audit procedures performed: |
|(Refer Note 1.3 and Note 28 to the Standalone Financial Statements) ||Our audit procedures was a combination of test of controls and substantive procedures which included the following: |
|We focused on this area as a Key audit matter due to the risk of incorrect timing of revenue recognition. Since the Company focuses on revenue as a key performance measure it could create an incentive for revenue to be recognized though the performance obligations have not been satisfied by the Company. || Evaluated the design of internal controls relating to recording of revenues at reporting periods. |
| || Selected a sample of invoices and tested the operating effectiveness of internal controls relating to revenue cut off's. |
| || Performed cut-off procedures (early and late cut off's) for sample of revenue transactions at year-end by testing the underlying invoices to the related delivery documents. |
|2 Existence and condition of inventories of raw materials stock in process and finished goods ||Principal audit procedures performed: |
|(Refer to Note 10 to the Standalone Financial Statements) ||We have performed the following alternate audit procedures to audit the existence and condition of inventories as per the guidance provided in SA 501 "Audit Evidence Specific Considerations for Selected Items" as at the year-end since we were not able to physically observe the physical stock verification: |
|The Company has its inventories placed in the factories at various locations. || Understood and evaluated the management's internal control process to establish the existence and condition of inventories such as: |
|The Company has a policy of performing physical verification of inventories across locations: during the year at reasonable intervals and also as on / or near to the balance sheet date. ||a) the process of periodic physical verification carried out by the management the scope and coverage of the periodic verification programme the results of such verification including analysis and accounting of the discrepancies if any; |
|On account of COVID-19 related lockdown restrictions management was unable to perform year end physical verification of inventories and verification was carried out subsequently for some of the locations. ||b) report of the Company's in-house internal audit team who physically verify the inventory of the Company at various locations. |
|Management has carried out other procedures to validate the existence and conditions of its inventory as at the year end such as roll back procedures for inventories which were physically verified subsequent to year end and carrying out consumption analysis to determine the quantities of the inventory at the balance sheet date. || Verified the stock movement analysis for the year in respect of key items of raw materials and finished goods at the factories to determine the quantities of inventory as at the balance sheet date. |
|We were not able to observe the physical verification of inventories that was carried out by the management subsequent to the year-end due to the COVID-19 related restrictions. || Performed alternate procedures to audit the existence and condition of inventorieswhich includes inspection of supporting documentation relating to purchases sales and production |
|In view of the foregoing obtaining sufficient appropriate audit evidence regarding existence and condition of inventories as at the balance sheet date is identified as a key audit matter. || |
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 information included in the Board's Report including Annexuresto Board's Report Corporate Governance Report and Management Discussion & Analysisbut does not include consolidated financial statements standalone financial statementsand our auditor's reports thereon.
Our opinion the standalone financial statements does not cover the other informationand we will not express any form of assurance conclusion thereon.
In connection with our audit of the standalone financial statements our responsibilityis to read the other information and in doing so consider whether the other informationis materially inconsistent with the standalone financial statements or our knowledgeobtained during the course of our audit or otherwise appears to be materially misstated.
If based on the work we have performed we conclude that there is a materialmisstatement of this other information we are required to report that fact. We havenothing to report in this regard.
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 includingother comprehensive income cash flows and changes in equity of the Company in accordancewith the Ind AS 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 userstakeNon 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 standalone financialstatements whether due to fraud or error design and perform audit procedures responsiveto those risks and obtain audit evidence that is sufficient and appropriate to provide abasis for our opinion. The risk of not detecting a material misstatement resulting fromfraud is higher than for one resulting from error as fraud may involve collusionforgery intentional omissions misrepresentations or the override of internal control.
Obtain an understanding of internal financial control relevant to the audit in order todesign audit procedures that are appropriate in the circumstances. Under section 143(3)(i)of the Act we are also responsible for expressing our opinion whether the Company hasadequate internal financial controls system in place and the operating effectiveness ofsuch controls.
Evaluate the appropriateness of accounting policies used and the reasonableness ofaccounting estimates and related disclosures made by the management.
Conclude on the appropriateness of management's use of the going concern basis ofaccounting 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 standalone financialstatements including the disclosures and whether the standalone financial statementsrepresent 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 with themall relationships and other matters that may reasonably be thought to bear on ourindependence and where applicable related safeguards. From the matters communicated withthose charged with governance we determine those matters that were of most significancein the audit of the standalone financial statements of the current period and aretherefore the key audit matters. We describe these matters in our auditor's report unlesslaw or regulation precludes public disclosure about the matter or when in extremely rarecircumstances we determine that a matter should not be communicated in our report becausethe adverse consequences of doing so would reasonably be expected to outweigh the publicinterest benefits of such communication. report on other Legal and regulatoryrequirements
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 Other ComprehensiveIncome the Statement of Cash Flows and Statement of Changes in Equity dealt with by thisReport are in agreement with the books of account.
d) In our opinion the aforesaid standalone financial statements comply with the Ind ASspecified under Section 133 of the Act.
e) On the basis of the written representations received from the directors as on 31stMarch 2020 takeNon record by the Board of Directors none of the directors isdisqualified as on 31st March 2020 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 theadequacy 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 in our opinionand to the best of our information and according to the explanations given to us theremuneration paid by the Company to its directors during the year is in accordance withthe provisions of section 197 of 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 has disclosed the impact of pending litigations on its financialposition in its standalone financial statements.
ii. The Company did not have any long-term contracts including derivative contracts forwhich there were any material foreseeable losses. iii. There has been no delay intransferring amounts required to be transferred to the Investor Education and ProtectionFund by the Company.
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.
Annexure "A" To The Independent Auditor's Report
(Referred to in paragraph 1(f) under Report on Other Legal and RegulatoryRequirements' section of our report of even date) report on the Internal FinancialControls over Financial reporting under Clause (i) of sub-section 3 of section 143 of theCompanies Act 2013 ("the Act")
We have audited the internal financial controls over financial reporting of BodalChemicals Limited ("the Company") as of 31st March 2020 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.
Our responsibility is to express an opinion the Company's internal financial controlsover financial reporting of the Company based on our audit. We conducted our audit inaccordance with the Guidance Note on Audit of Internal Financial Controls Over FinancialReporting (the "Guidance Note") issued by the Institute of Chartered Accountantsof India and the Standards on Auditing prescribed under Section 143(10) of the CompaniesAct 2013 to the extent applicable to an audit of internal financial controls. ThoseStandards and the Guidance Note require that we comply with ethical requirements and planand perform the audit to obtain reasonable assurance about whether adequate internalfinancial controls over financial reporting was established and maintained and if suchcontrols 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 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 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 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 31st March 2020 based on the criteria forinternal financial control over financial reporting 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 Auditor's 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) The Company has a program of verification of fixed assets to cover all the items ina phased manner over a period of three years which in our opinion is reasonable havingregard to the size of the Company and the nature of its assets. Pursuant to the programcertain fixed assets were physically verified by the Management during the year. Accordingto the information and explanations given to us no material discrepancies were noticed onsuch verification.
(c) According to the information and explanations given to us and based on theexamination of the registered sale deed / transfer deed / conveyance deed provided to uswe report that the title deeds comprising all the immovable properties of land andbuildings are held in the name of the Company as at the balance sheet date. Immovableproperties of land and buildings whose title deeds have been pledged as security forloans are held in the name of the Company based on the confirmations directly received byus from lenders.
ii) As explained to us the inventories were physically verified during the year by theManagement at reasonable intervals and no material discrepancies were noticed on physicalverification.
iii) According to the information and explanations given to us the Company has grantedloans secured or unsecured to companies firms Limited Liability Partnerships or otherparties covered in the register maintained under section 189 of the Companies Act 2013in respect of which:
(a) The terms and conditions of the grant of such loans are in our opinion primafacie not prejudicial to the Company's interest.
(b) The schedule of repayment of principal and payment of interest has not beenstipulated and in the absence of such schedule we are unable to comment on the regularityof the repayments or receipts of principal amounts and interest.
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 deposits from the public within the meaning of provisions of sections 73 to76 of the Act and the rules framed there under and hence reporting under clause (v) of theOrder is not applicable.
vi) The maintenance of cost records has been specified by the Central Government undersection 148(1) of the Companies Act 2013. We have broadly reviewed the cost recordsmaintained by the Company pursuant to the Companies (Cost Records and Audit) Rules 2014as amended prescribed by the Central Government under sub-section (1) of Section 148 ofthe Companies Act 2013 and are of the opinion that prima facie the prescribed costrecords have been made and maintained.
We have however not made a detailed examination of the cost records with a view todetermine whether they are accurate or complete. vii) According to the information andexplanations given to us in respect of statutory dues:
(a) The Company has generally been regular in depositing undisputed statutory duesincluding Provident Fund Employees' State Insurance Income Tax Goods & Service TaxCustoms Duty cess and other material statutory dues applicable to it to the appropriateauthorities.
(b) There were no undisputed amounts payable in respect of Provident Fund Employees'State Insurance Income Tax Goods & Service Tax Customs Duty cess and othermaterial statutory dues in arrears as at 31st March 2020 for a period of more than sixmonths from the date they became payable.
(c) Details of dues of Income Tax Sales Tax Excise Duty Service Tax and Value AddedTax which have not been deposited as on 31st March 2020 on account of disputes are givenbelow:
|Name of the statue ||Nature of the dues ||Forum where dispute is pending ||Period to which the amount relates ||Amount involved ||Amount unpaid |
| || || || ||(Rs. in Million) ||(Rs. in Million) |
|Income Tax Act 1961 ||Demand for Tax ||Commissioner of Income Tax ||AY 2006-07 ||62.84 ||29.66 |
| || ||(Appeals) ||AY 2007-08 || || |
| || || ||AY 2008-09 || || |
| || || ||AY 2010-11 and AY 2016-17 || || |
| || ||Deputy Commissioner of Income Tax ||AY 2014-2015 ||0.72 ||0.72 |
| || ||Assessing Officer ||Various ||6.37 ||6.37 |
|Central Excise Act 1944 ||Demand for Tax and Penalty ||Customs Excise and Service Tax Appellate Tribunal ||FY 2005-2015 ||28.70 ||27.99 |
| || ||Commissioner (Appeals) ||FY 2009-2015 ||2.96 ||2.93 |
|The Finance Act 1994 ||Demand for Tax and Penalty ||Central Excise and Service Tax Appellate Tribunal ||FY 2011-2017 ||3.42 ||3.42 |
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. The Companyhas not borrowed any amounts from financial institutions and government. The Company hasnot issued any debentures.
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 theCARO 2016 Order is not applicable.
xiii) 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 paragraph 3 of the Order is not applicable to the Company.
xiv) 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 them and hence provisions of section 192 of theCompanies Act 2013 are not applicable.
xv) The Company is not required to be registered under section 45-IA of the ReserveBank of India Act 1934.
| ||FOR DELOITTE HASKINS & SELLS LLP |
| ||Chartered Accountants |
|(Firm's Registration No. 117366W/W-100018) || |
| ||VARSHA A. FADTE |
| ||Partner |
|CHICALIM GOA ||(Membership No. 103999) |
|6th July 2020 ||UDIN: 20103999AAAACV6504 |