TO THE MEMBERS OF BOROSIL LIMITED
Report on the Audit of the Standalone Financial Statements
We have audited the accompanying standalone financial statements of BOROSILLIMITED (formerly Hopewell Tableware Limited) ("the Company") whichcomprise the balance sheet as at 31st March 2020 and the statement of profitand loss (including other comprehensive income) statement of changes in equity andstatement of cash flows for the year then ended and notes to the financial statementsincluding a summary of significant accounting policies and other explanatory information(hereinafter referred to as "financial statements").
In our opinion and to the best of our information and according to theexplanations given to us the aforesaid financial statements give the information requiredby the Act in the manner so required and give a true and fair view in conformity with theaccounting principles generally accepted in India of the state of affairs of the Companyas at 31st March 2020 and profit (including other comprehensive income)statement of changes in equity and its cash flows for the year ended on that date.
Basis for Opinion
We conducted our audit in accordance with the Standards on Auditing(SAs) specified under section 143(10) of the Companies Act 2013 ("the Act").Our responsibilities under those Standards are further described in the Auditor'sResponsibilities for the Audit of the Financial Statements section of our report. We areindependent of the Company in accordance with the Code of Ethics issued by the Instituteof Chartered Accountants of India (ICAI) together with the ethical requirements that arerelevant to our audit of the financial statements under the provisions of the Act and theRules thereunder and we have fulfilled our other ethical responsibilities in accordancewith these requirements and the ICAI's Code of Ethics. We believe that the auditevidence we have obtained is sufficient and appropriate to provide a basis for ouropinion.
Key Audit Matters
Key audit matters are those matters that in our professional judgmentwere of most significance in our audit of the financial statements of the current year.These matters were addressed in the context of our audit of the financial statements as awhole and in forming our opinion thereon and we do not provide a separate opinion onthese matters.
|Key Audit Matters ||How our audit addressed the key audit matter |
|(i) Inventories || |
|As of 31st March 2020 inventories appear on the financial statements for an amount of Rs. 17057.20 lakhs which constitutes 48.62% of the total current assets. As indicated in Note no. 3.7 to the financial statements inventories are valued at the lower of cost and net realizable value: ||Our audit procedures included the following: |
|The Company may recognize an inventory allowance if inventory items are damaged if the selling price has declined or if the estimated costs to completion or to be incurred to make the sale have increased. || Reviewing the Company's process and procedures for physical verification of inventories at year end. |
|We focused on this matter because of the: Significance of the inventory balance. || Assessing the methods used to value inventories and ensuring ourselves of the consistency of accounting methods. |
|Complexity involved in determining inventory quantities on hand due to the number location and diversity of inventory storage locations. || Reviewing of the reported acquisition cost on a sample basis. |
|Valuation procedure including of obsolete inventories. || Analysing of the Company's assessment of net realizable value as well as reviewing of assumptions and calculations for stock obsolescence. |
| || Assessing of appropriateness of disclosures provided in the financial statements. |
|(ii) Scheme of Arrangement || |
|Accounting for Scheme of Arrangement As set out in note 47 to the financial statements the Company completed its Scheme of Arrangement which provide for amalgamation of Vyline Glass Works Limited (VGWL) Fennel Investment and Finance Private Limited (FIFPL) and Gujarat Borosil Limited (GBL) with Borosil Glass Works Limited (BGWL) since renamed as Borosil Renewables Limited ||Our audit procedures includes the followings: |
|(Henceforth BRL) and demerger of the Scientific and Industrial products and Consumer products businesses of BRL and VGWL along with its investment (including investments in subsidiaries) ("Demerged Undertakings") into Borosil Limited with appointed date as 1st October 2018 and effective date as 12th February 2020. The Company has accounted for the arrangement as per accounting treatment approved by the NCLT read with the applicable accounting standards prescribed under section 133 of the Companies Act 2013. ||Evaluating the Scheme of Arrangement approved by the National Company Law Tribunal (NCLT); |
|As accounting for arrangement includes various assumptions transfer of assets and liabilities on fair value & book value and recognition of goodwill and capital reserve and hence the accounting for arrangement is considered as key audit matter. ||Evaluating the accounting treatment of the Scheme in the books of accounts and to ensure the same has been applied as per the treatment given in the Scheme as approved by the NCLT. |
| ||Corroborating management's alignment of accounting policies by comparing the significant accounting policies of demerged undertakings with the Company's accounting policies. |
| ||Assessing of appropriateness of disclosures provided in the financial statements. |
The Company's Board of Directors is responsible for the otherinformation. The other information comprises the information included in the Annual Reportbut does not include the financial statements and our auditor's report thereon. Theabove information is expected to be made available to us after the date of thisauditor's report.
Our opinion on the financial statements does not cover the otherinformation and we do not express any form of assurance conclusion thereon.
In connection with our audit of the financial statements ourresponsibility is to read the other information identified above when it becomes availableand in doing so consider whether the other information is materially inconsistent withthe financial statements or our knowledge obtained in the audit or otherwise appears to bematerially misstated.
When we read the above other information if we conclude that there ismaterial misstatement therein we are required to communicate the matter to those chargedwith governance.
Responsibilities of Management and Those Charged with Governance forthe Financial Statements
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 financialstatements that give a true and fair view of the financial position financialperformance changes in equity and cash flows of the Company in accordance with theaccounting principles generally accepted in India including the accounting Standardsspecified under section 133 of the Act.
This responsibility also includes maintenance of adequate accountingrecords in accordance with the provisions of the Act for safeguarding of the assets of theCompany and for preventing and detecting frauds and other irregularities; selection andapplication of appropriate implementation and maintaince of accounting policies; makingjudgments and estimates that are reasonable and prudent; and design implementation andmaintenance of adequate internal financial controls that were operating effectively forensuring the accuracy and completeness of the accounting records relevant to thepreparation and presentation of the financial statements that give a true and fair viewand are free from material misstatement whether due to fraud or error.
In preparing the financial statements management is responsible forassessing the Company's ability to continue as a going concern disclosing asapplicable matters related to going concern and using the going concern basis ofaccounting unless management either intends to liquidate the Company or to ceaseoperations or has no realistic alternative but to do so.
Those Board of Directors are also responsible for overseeing theCompany's financial reporting process.
Auditor's Responsibilities for the Audit of the FinancialStatements
Our objectives are to obtain reasonable assurance about whether thefinancial 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. Reasonableassurance is a high level of assurance but is not a guarantee that an audit conducted inaccordance with SAs will always detect a material misstatement when it exists.Misstatements can arise from fraud or error and are considered material if individuallyor in the aggregate they could reasonably be expected to influence the economic decisionsof users taken on the basis of these financial statements.
As part of an audit in accordance with SAs we exercise professionaljudgment and maintain professional scepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of the 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 controls relevant to theaudit in order to design audit procedures that are appropriate in the circumstances. Undersection 143(3) (i) of the Act we are also responsible for expressing our opinion onwhether the Company has adequate internal financial controls system in place and theoperating effectiveness of such controls.
Evaluate the appropriateness of accounting policies used and thereasonableness of accounting estimates and related disclosures made by management.
Conclude on the appropriateness of management's use of the goingconcern basis of accounting and based on the audit evidence obtained whether a materialuncertainty exists related to events or conditions that may cast significant doubt on theability of the Company 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 financial statements or if such disclosures are inadequate tomodify our opinion. Our conclusions are based on the audit evidence obtained up to thedate of our auditor's report. However future events or conditions may cause theCompany to cease to continue as a going concern.
Evaluate the overall presentation structure and content of thefinancial statements including the disclosures and whether the financial statementsrepresent the underlying transactions and events in a manner that achieves fairpresentation.
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 financialstatements of the current year and are therefore the key audit matters. We describe thesematters in our auditor's report unless law or regulation precludes public disclosureabout the matter or when in extremely rare circumstances we determine that a mattershould not be communicated in our report because the adverse consequences of doing sowould 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("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 "Annexure B" astatement on the matters specified in paragraphs 3 and 4 of the Order to the extentapplicable.
2 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 including othercomprehensive income the Statement of Changes in Equity and the Cash Flow Statement dealtwith by this Report are in agreement with the books of account.
(d) In our opinion the aforesaid financial statements comply with theIndian Accounting Standards specified under Section 133 of the Act read with Rule 7 ofthe Companies (Accounts) Rules 2014.
(e) On the basis of the written representations received from thedirectors as on 31st March 2020 and taken on record by the Board of Directorsnone of the directors is disqualified as on 31st March 2020 from beingappointed as a director in terms 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".
(g) With respect to the other matters to be included in theAuditor's Report in accordance with the requirements of section 197(16) of the Actas amended:
In our opinion and to the best of our information and according to theexplanations given to us the remuneration paid or provided by the Company to itsdirectors during the year is in accordance with the provisions of section 197 of the Actexcept remuneration paid to/provided for Managing Director & Whole Time Directoramounting to Rs. 216.39 lakhs which is subject to the shareholder's approval.
(h) 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 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 in its financial statements. Refer Note 38 to the financial statements.
(ii) The Company did not have any long-term contracts includingderivative contracts for which there were any material foreseeable losses.
(iii) There were no amounts which were required to be transferred tothe Investor Education and Protection Fund by the Company.
We draw attention to Note 47 to the accompanying financial Statementsregarding accounting of the scheme from the appointed date being 1st October2018 as approved by the National Company Law Tribunal though the Scheme has becomeeffective on 12th February 2020 and restatement of comparatives for theprevious year by the management of the Company.
"ANNEXURE A" TO INDEPENDENT AUDITOR'S REPORT
(Referred to in paragraph 2 (f) under Report on Other Legal andRegulatory Requirements' of our report of even date to the members of Borosil Limited( formerly Hopewell Tableware Limited) on the Standalone Financial Statements for the yearended 31st March 2020)
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 Borosil Limited (formerly Hopewell Tableware Limited) ("theCompany") as of 31st March 2020 in conjunction with our audit of theStandalone 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 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 (the "Guidance Note") issued by the Institute of CharteredAccountants of India. These responsibilities include the design implementation andmaintenance of adequate internal financial controls that were operating effectively forensuring the orderly and efficient conduct of its business including adherence toCompany's policies the safeguarding of its assets the prevention and detection offrauds and errors the accuracy and completeness of the accounting records and the timelypreparation of reliable financial information as required under the Act.
Our responsibility is to express an opinion on the Company'sinternal financial controls over financial reporting based on our audit. We conducted ouraudit in accordance with the Guidance Note and the Standards on Auditing prescribed underSection 143(10) of the Act to the extent applicable to an audit of internal financialcontrols. Those Standards and the Guidance Note require that we comply with ethicalrequirements and plan and perform the audit to obtain reasonable assurance about whetheradequate 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 aboutthe adequacy of the internal financial controls 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 judgment 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 and appropriate toprovide a basis for our audit opinion on the Company's internal financial controlssystem over financial reporting.
Meaning of Internal Financial Controls over Financial Reporting
A Company's internal financial control over financial reporting isa process designed to provide reasonable assurance regarding the reliability of financialreporting and the preparation of financial statements for external purposes in accordancewith generally accepted accounting principles. A Company's internal financial controlover financial reporting includes those policies and procedures that (1) pertain to themaintenance of records that in reasonable detail accurately and fairly reflect thetransactions and dispositions of the assets of the Company; (2) provide reasonableassurance that transactions are recorded as necessary to permit preparation of financialstatements in accordance with generally accepted accounting principles and that receiptsand expenditures 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 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.
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 over financial reporting and such internal financial controls overfinancial reporting were operating effectively as at 31st March 2020 based onthe internal control over financial reporting criteria established by the Companyconsidering the essential components of internal control stated in the Guidance Noteissued by ICAI.
"ANNEXURE B" TO INDEPENDENT AUDITOR'S REPORT
(Referred to in paragraph 1 under the heading "Report on OtherLegal and Regulatory Requirements" of our report of even date to the members ofBorosil Limited ( formerly Hopewell Tableware Limited ) on the Standalone FinancialStatements for the year ended 31st March 2020)
i. In respect of its fixed assets:
a. The Company has maintained proper records showing full particularsincluding quantitative details and situation of fixed assets on the basis of availableinformation.
b. As explained to us fixed assets have been physically verified bythe Management except some moulds which are at the manufacturing facilities of thevendors in accordance with a phased program of verification which in our opinion isreasonable having regard to the size of the Company and nature of its assets. No materialdiscrepancies were noticed on such physical verification as compared with the availablerecords.
c. According to the information and explanation provided to us and therecords examined by us and based on the examination of the registered sale deed/conveyance deed we report that the title deeds comprising all the immovable propertiesof land and buildings which are freehold are held in the name of the Company as at thebalance sheet date. In respect of immovable properties of land that have been taken onlease the lease agreements are in the name of the Company where the Company is thelessee in the agreement. Except the following immovable properties as detailed below:
Rs. In Lakhs
|Particulars ||Actual Cost ||Net Block ||Remarks |
| ||as at 31st March 2020 ||as at 31st March 2020 || |
|Freehold/Leasehold land (No of Lands: 6) ||3583.98 ||3544.56 ||The title deeds are in the name of demerged Companies that merged with the Company pursuant to the Scheme of Arrangement (refer note 47 to the financial statements) and yet to be transferred in the name of the Company. |
|Buildings (No of Buildings: 6) ||6456.04 ||5612.35 || |
ii. In respect of its inventories:
As explained to us inventories except goods in transit have beenphysically verified during the year by the management. In our opinion the frequency ofverification is reasonable. Discrepancies noticed on physical verification of theinventories between the physical inventories and book records were not material havingregard to the size of the operations of the Company and the same have been properly dealtwith.
iii. In respect of loans secured or unsecured granted by the Companyto Companies firms Limited liability partnerships or other parties covered in theregister maintained under section 189 of the Act.
a. In our opinion and according to the information given to us theterms and conditions of the loans given by the Company was prima facie not prejudicial tothe interest of the Company.
b. The schedule of repayment of principal and payment of interest wasstipulated and repayments of principal amounts and/ or receipts of interest were regularas per stipulations.
c. As the above loan was fully repaid during the year and thereforequestion of overdue amounts in respect of principal and interest does not arise.
iv. In our opinion and according to the information and explanationsgiven to us the Company has complied with the provisions of sections 185 & 186 of theAct as applicable in respect of grant of loans making investments and providingsecurities during the year.
v. According to the information and explanations given to us theCompany has not accepted any deposit from the public. Therefore the provisions of clause(v) of paragraph 3 of the Order are not applicable to the Company.
vi. According to the information and explanations given to us CentralGovernment has not prescribed maintenance of cost records under sub-Section (1) of Section148 of the Act in respect of activities carried on by the Company. Therefore theprovisions of clause (vi) of paragraph 3 of the Order are not applicable to the Company.
vii. According to the information and explanations given to us inrespect of statutory dues: a. The Company has been generally regular in depositingundisputed statutory dues including Provident Fund Employees' State InsuranceIncome Tax Goods and Service Tax Duty of Customs Cess and any other statutory dues tothe appropriate authorities as applicable during the year. According to the informationand explanations given to us no undisputed amounts payable in respect of such statutorydues were outstanding as at 31st March 2020 for a period of more than six months from thedate they became payable.
b. According to information and explanations given to us there are nodues of Income Tax Sales Tax Service tax Custom Duty Excise Duty Value Added Tax andGoods and Service Tax as applicable which have not been deposited on accounts of anydispute.
viii. Based on our audit procedures and according to the informationand explanations given by the management we are of the opinion that as on 31st March2020 the Company has not defaulted in repayment of dues to banks. The Company does nothave any borrowings from financial institutions government and debenture holders.
ix. According to the information and explanations given to us theCompany did not raise any money by way of initial public offer or further public offer(including debt instruments) and no term loan was raised during the year. Therefore theprovisions of clause (ix) of paragraph 3 of the Order are not applicable to the Company.
x. Based on our audit procedures performed for the purpose of reportingthe true and fair view of the financial statements and on the basis of information andexplanations given by the management no fraud by the Company or on the Company by itsofficers 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 or provided managerial remuneration in accordance withthe requisite approvals mandated by the provision of section 197 read with Schedule V tothe Act except remuneration paid to/ provided for Managing Director & Whole TimeDirector amounting to Rs. 216.39 lakhs which is subject to the shareholder'sapproval.
xii. In our opinion the Company is not a Nidhi Company. Therefore theprovisions of clause (xii) of paragraph 3 of the Order are not applicable to the Company.
xiii. According to the information and explanations given to usCompany's transactions with the related parties are in compliance with section 177and 188 of the Act as applicable and details of such transactions have been disclosed inthe financial statements as required by the applicable Indian accounting standards.
xiv. According to the information and explanations given to us andbased on our examination of the records of the Company the Company has not made anypreferential allotment or private placement of shares or fully or partly convertibledebentures during the year. Therefore the provisions of clause (xiv) of paragraph 3 ofthe Order are not applicable to the Company.
xv. According to the information and explanations given to us and basedon our examination of records of the Company the Company has not entered into non-cashtransactions with directors or persons connected with him Therefore the provisions ofclause (xv) of paragraph 3 of the Order are not applicable to the Company.
xvi. In our opinion and according to information and explanationsprovided to us the Company is not required to be registered under section 45-IA of theReserve Bank of India Act 1934.
|For Pathak H. D. & Associates LLP |
|Chartered Accountants |
|(Firm's Registration No. 107783W/W100593) |
|Gyandeo Chaturvedi |
|(Membership No.46806) |
|UDIN: - 20046806AAAAAP4750 |
|Place: Mumbai |
|Date : 13th July 2020 |