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Century Enka Ltd.

BSE: 500280 Sector: Industrials
NSE: CENTENKA ISIN Code: INE485A01015
BSE 00:00 | 24 Sep 165.30 -1.90
(-1.14%)
OPEN

166.00

HIGH

166.00

LOW

163.75

NSE 00:00 | 24 Sep 164.60 -2.90
(-1.73%)
OPEN

166.50

HIGH

166.80

LOW

163.10

OPEN 166.00
PREVIOUS CLOSE 167.20
VOLUME 599
52-Week high 218.50
52-Week low 100.00
P/E 6.93
Mkt Cap.(Rs cr) 361
Buy Price 163.80
Buy Qty 1.00
Sell Price 175.00
Sell Qty 50.00
OPEN 166.00
CLOSE 167.20
VOLUME 599
52-Week high 218.50
52-Week low 100.00
P/E 6.93
Mkt Cap.(Rs cr) 361
Buy Price 163.80
Buy Qty 1.00
Sell Price 175.00
Sell Qty 50.00

Century Enka Ltd. (CENTENKA) - Auditors Report

Company auditors report

TO THE MEMBERS OF CENTURY ENKA LIMITED

Report on the audit of the Ind AS Financial Statements Opinion

We have audited the accompanying Ind AS financial statements of Century Enka Limited("the Company”) which comprise the Balance Sheet as at 31 March 2020 theStatement of Profit and Loss (including Other Comprehensive Income) the Statement ofChanges in Equity and the Cash Flow Statement for the year then ended and notes to theInd AS financial statements including a summary of the significant accounting policiesand other explanatory information (herein after referred to as "Ind AS financialstatements”).

In our opinion and to the best of our information and according to the explanationsgiven to us the Ind AS 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 accounting principles generally accepted in India of thestate of affairs of the Company as at 31 March 2020 its profit (including othercomprehensive income) changes in equity and its cash flows for the year ended on thatdate.

Basis for Opinion

We conducted our audit in accordance with the Standards on Auditing ("SAs”)specified under Section 143(10) of the Act. Our responsibilities under those SAs arefurther described in the Auditor's Responsibilities for the Audit of the Ind AS financialstatements section of our report. We are independent of the Company in accordance with theCode

Description of Key Audit Matters:

of Ethics issued by the Institute of Chartered Accountants of India together with theethical requirements that are relevant to our audit of the financial statements under theprovisions of the Act and the Rules thereunder and we have fulfilled our other ethicalresponsibilities in accordance with these requirements and the Code of Ethics. We believethat the audit evidence we have obtained is sufficient and appropriate to provide a basisfor our opinion.

Emphasis of Matter

We draw attention to Note 46(b) of the Ind AS financial statement regarding the CESTATorder dated 20 December 2019 relating to the excise duty demand aggregating '22927 lakhplus interest thereon and penalty equivalent to demand amount. CESTAT in its order upheldthe denial of applicability of notification No. 6/2000 dated 1 March 2000 and remandedback the matter to Central Excise Department to redetermine the assessable value andapplicable interest and penalty. The Company has filed an appeal against the order ofCESTAT in the Supreme Court on 22 February 2020 and await for admission. Based on expertlegal advice and merits of the case no provision has been considered necessary by theCompany Our opinion is not modified in respect of this matter.

Key Audit Matters

Key audit matters are those matters that in our professional judgement were of mostsignificance in our audit of the Ind AS financial statements of the current year. Thesematters were addressed in the context of our audit of the Ind AS financial statements as awhole and in forming our opinion thereon and we do not provide a separate opinion onthese matters.

Key Audit Matters How the matter was addressed in our audit
Impairment of Property Plant and Equipment (PPE) Our procedures included:
• The Company has significant balances of PPE as on 31 March 2020 (refer note 3 to the Ind AS financial statements). The Company has policy to review PPE to assess impairment in carrying value of PPE if any • Reviewing the PPE schedule and analyse the management's assessment for impairment in the value of property plant and equipment (due to changes in production or underutilization external information obsolescence and damage) in accordance with Ind AS
• Evaluation of impairment involves significant management judgements to estimate recoverable amount of PPE (refer note 2(A) Critical accounting judgements and key sources of estimation uncertainty).
• Assessing the reliability of management's judgements used to estimate the recoverable amount of PPE
• Given the judgement required to estimate the recoverable amount of PPE this is considered key audit matter • On sample basis physically sighting the PPE to assess whether they are operating and in a good condition
• Reviewed the valuation report and discussing with management the future plans for the assets not in the operating condition
Inventory Valuation Our procedures included:
• The Company has significant balances of inventory as on 31 March 2020 (refer note 9 to the Ind AS financial statements) • Obtaining understanding of production process and testing of key controls over recognition and measurement of inventory
• Inventories are valued at lower of cost or net realizable value (NRV). Cost is determined using weighted average cost method • For sample locations conducted physical verification of inventories at date later than the date of financial statements and checked movement in inventories between the date of financials statement and date of physical verification of inventory.
• Valuation of inventories can be subjective due to inherent uncertainty due to volatility in prices of raw material and volatility in prices of finished goods due to changes in consumer demands
• For sample of inventory items re-performed the weighted average cost calculation
• Determination of whether inventory will be realized for value less than cost requires management to exercise judgement and apply assumption
• Obtaining management's calculation and relevant supporting for inventory valuation validated mathematical accuracy of production costs and agreed the same with financial statements
• Because of size inherent uncertainty in volatility in prices of raw material assumption and complexities involved in inventory valuation this is considered key audit matter
• Assessing reasonableness of assumption and judgements applied by management in inventory valuation including evaluating consistencies with management's prior period estimations
• Assessing appropriateness of NRV estimated by management on sample basis by comparing NRV to recent market prices
down based on ageing and NRV of inventory
• Comparing historical trend of prices of raw material and finished goods to determine appropriateness of valuation of inventory

Other Information

The Company's management and Board of Director are responsible for the OtherInformation. The Other Information comprises the information included in the company'sannual report but does not include the financial statements and our auditor's reportthereon. The Other Information is expected to be made available to us after the date ofthis auditor's report.

Our Opinion on the accompanying Ind AS 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 accompanying Ind AS financial statements ourresponsibility is to read the Other Information and in doing so consider whether theOther Information is materially inconsistent with accompanying Ind AS financial statementsor our knowledge obtained in the audit or otherwise appears to be materially misstated.

When we read the Other Information included in the Company's annual report if weconcluded that there is a material misstatement therein we are required to communicatethe matter to those charged with governance.

Management's Responsibility for the Ind AS Financial Statements

The Company's management and Board of Directors are responsible for the matters statedin Section 134(5) of the Act with respect to the preparation of these Ind AS financialstatements that give a true and fair view of the state of affairs profit or loss andother comprehensive income changes in equity and cash flows of the Company in accordancewith the accounting principles generally accepted in India including the IndianAccounting Standards ("Ind AS”) prescribed under Section 133 of the Act. 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 Ind AS financial statementsthat give a true and fair view and are free from material misstatement whether due tofraud or error.

In preparing the Ind AS financial statements management and Board of Director areresponsible for assessing the Company's ability to continue as a going concerndisclosing as applicable matters related to going concern and using the going concernbasis of accounting unless management either intends to liquidate the Company or to ceaseoperations or has no realistic alternative but to do so.

The Company's management and Board of Directors are also responsible for overseeing theCompany's financial reporting process.

Auditor's Responsibility for the Audit of the Ind AS Financial Statements

Our objectives are to obtain reasonable assurance about whether the Ind AS financialstatements as whole are free from material misstatement whether due to fraud or errorand to issue an auditor's report that includes our opinion. Reasonable assurance is a highlevel assurance but is not a guarantee that an audit conducted in accordance with SAswill always detect a material misstatement when it exists. Misstatements can arise fromfraud or error and are considered material if individually or in aggregate they couldreasonably be expected to influence the economic decisions of users taken on the basis ofthese Ind AS Financial Statements.

As part of an audit in accordance with SAs we exercise professional judgment andmaintain professional skepticism throughout the audit. We also:

1. Identify and assess the risks of material misstatement of the Ind AS 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.

2. Obtain an understanding of internal control relevant to the audit in order to designaudit procedures that are appropriate in the circumstances. Under Section 143(3)(i) of theAct we are also responsible for expressing our opinion on whether the company hasadequate internal financial controls system in place and the operating effectiveness ofsuch controls.

3. Evaluate the appropriateness of accounting policies used and the reasonableness ofaccounting estimates and related disclosures made by management.

4. 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 Ind AS 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.

5. Evaluate the overall presentation structure and content of the Ind AS financialstatements including the disclosures and whether the Ind AS financial statementsrepresent the underlying transactions and events in a manner that achieves fairpresentation.

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 with those charged with governance we determine thosematters that were of most significance in the audit of the Ind AS financial statements ofthe current period and are therefore the key audit matters. We describe these matters inour auditor's report unless law or regulation precludes public disclosure about the matteror when in extremely rare circumstances we determine that a matter should not becommunicated in our report because the adverse consequences of doing so would reasonablybe expected to outweigh the public interest benefits of such communication.

Report on Other Legal and Regulatory Requirements

1. As required by 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 the"Annexure A” a statement on the matters specified in paragraphs 3 and 4 of theOrder to the extent applicable.

2. As required by Section 143(3) of the Act 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 Changes in Equity and Cash Flow Statement and dealt with by thisReport are in agreement with the books of account

d) In our opinion the aforesaid Ind AS financial statements comply with the IndianAccounting Standards specified under Section 133 of the Act

e) On the basis of the written representations received from the directors as on 31March 2020 taken on record by the Board of Directors none of the directors isdisqualified as on 31 March 2020 from being appointed as a director in terms of Section164(2) of the Act and

f) With respect to the adequacy of the internal financial controls with reference tofinancial statements of the Company and the operating effectiveness of such controlsrefer to our separate Report in "Annexure B”.

3. 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 in our opinionand to the best of our information and according to the explanations given to us:

a) The Company has disclosed the impact of pending litigations as at 31 March 2020 onits financial position in its Ind AS financial statements - Refer Note 46(a) to the Ind ASfinancial statements.

b) The Company has made provision as required under the applicable law or accountingstandards for material foreseeable losses if any on long term contracts includingderivative contracts Refer Note 45 to the Ind AS financial statements. The Company did nothave any other long-term contracts for which there were any material foreseeable losses.

c) There has been no delay in transferring amounts required to be transferred to theInvestor Education and Protection Fund by the Company.

d) The disclosure in the Ind AS financial statements regarding holdings and well asdealings in specified bank notes during the period from 8 November 2016 to 30 December2016 have not been made in these Ind AS financial statements since they do not pertain tothe financial year ended 31 March 2020

4. With respect to the matter to be included in the Auditors' Report under Section197(16) of the Act in our opinion and according to the information and explanations givento us the remuneration paid by the Company to its directors during the current year is inaccordance with the provisions of Section 197 of the Act. The remuneration paid to anydirector is not in excess of the limit laid down under Section 197 of the Act. TheMinistry of Corporate Affairs has not prescribed other details under Section 197(16) whichare required to be commented upon by us.

For Khimji Kunverji & Co LLP
(formerly Khimji Kunverji & Co)
Chartered Accountants
(FRN: 105146W/ W100621)
Date : 9th June 2020 Gautam V Shah
Place : Mumbai Partner (F-117348)

Annexure A to the Independent Auditors' Report of even date on the Ind AS financialstatements

i. (a) The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets.

(b) The Company has a regular programme of physical verification of its fixed assets bywhich all fixed assets are verified in a phased manner over a period of three years. Inour opinion this periodicity of physical verification is reasonable having regard to thesize of the Company and the nature of its assets. Pursuant to the programme certain fixedassets were physically verified by the Management during the year. In our opinion andaccording to the information and explanations given to us no material discrepancies werenoticed on such verification.

(c) In our opinion and according to the information and explanations given to us and onthe basis of our examination of the records of the Company the title deeds of immovableproperties are held in the name of the Company.

ii. The inventory except for goods-in-transit has been physically verified by themanagement at reasonable intervals during the year. In our opinion the frequency of suchverification is reasonable. For goods- in- transit verified bill of entry and subsequentgoods receipt for good received in factory. The discrepancies noticed on verificationbetween the physical stocks and the book records were not material.

iii. In our opinion and according to the information and explanations given to us theCompany has not granted any loans secured or unsecured to companies firms LimitedLiability Partnerships or other parties covered in the register maintained under Section189 of the Act. Accordingly paragraph 3(iii) of the Order is not applicable to theCompany.

iv. The Company has not granted any loans or provided any guarantees or security to theparties covered under section 185 of the Act. In our opinion and according to theinformation and explanations given to us the Company has complied with the provisions ofSection 186 of the Act with respect to the loans given investments made guaranteesgiven and security provided.

v. In our opinion and according to the information and explanations given to us theCompany has not accepted any deposits from the public during the year in terms of theprovisions of Sections 73 to 76 or any other relevant provisions of the Act and the rulesframed there under. Accordingly paragraph 3(v) of the Order is not applicable to theCompany.

vi. We have broadly reviewed the books of account maintained by the Company asspecified under Section 148(1) of the Act for maintenance of cost records in respect ofproducts manufactured by the Company and are of the opinion that prima facie theprescribed accounts and records have been made and maintained. However we have not made adetailed examination of the cost records with a view to determine whether they areaccurate or complete.

vii. (a) According to the information and explanations given to us and on the basis ofour examination of the records of the Company amounts deducted/accrued in the books ofaccount in respect of undisputed statutory dues including

Provident Fund Employees' State Insurance Income-tax Goods and service tax Duty ofCustoms Cess and other material statutory dues have been regularly deposited during theyear by the Company with the appropriate authorities.

According to the information and explanations given to us no undisputed amountspayable in respect of Provident Fund Employees' State Insurance Income- tax Goods &Service Tax Duty of Customs Cess and other material statutory dues were in arrears as at31 March 2020 for a period of more than six months from the date they became payable.

(b) According to the information and explanations given to us and on the basis of ourexamination of the records of the Company details of dues of Income-tax Sales- taxService tax Goods & Service Tax Duty of Customs Duty of Excise and Value added taxwhich have not been deposited as on 31 March 2020 on account of disputes are given below:

Name of the Statute Nature of the Dues Forum where dispute is pending

A

Period to which amount relates Amount* (' in Lakh)
Income tax Act 1961 Income tax interest and Penalty Calcutta High Court A.Y. 2004-2005 118
Income Tax Appellate Tribunal A.Y. 2008-2009 50
Central Excise Act 1944 Excise Duty and Penalty Custom Excise and Service Tax Appellate Tribunal 2000 to 2003 45154'
2007-08 to 2010-2011 185
Finance Act 1994 Service Tax Custom Excise and Service Tax Appellate Tribunal 2009-10 to 2013-14 141
Gujarat Sales Tax Act 1969 Sales Tax including interest & Penalty The Supreme Court of India 2000-2001 599

A Exclude matters in respect of which favourable order has been received atvarious appellate authorities.

* net of amounts paid under protest.

# This does not include the interest claimed (not quantified) by the Central exciseauthorities

viii. According to the information and explanations given to us and based on therecords of the Company the Company has not defaulted in the repayment of loans orborrowings to financial institutions banks government and dues to debenture holders.

ix. According to the information and explanations given to us the term loans have beenapplied by the Company during the year for the purposes for which they were obtained. TheCompany did not raise money by way of initial public offer or further public offer(including debt instruments) during the year.

x. According to the information and explanations given to us no fraud by the Companyor on the Company by its officers or employees has been noticed or reported during thecourse of our audit.

xi. According to the information and explanations give to us and based on ourexamination of the records of the Company the Company has paid/provided for managerialremuneration in accordance with the requisite approvals mandated by the provisions ofSection 197 read with Schedule V to the Act.

xii. In our opinion and according to the information and explanations given to us theCompany is not a Nidhi company. Accordingly paragraph 3(xii) of the Order is notapplicable to the Company

xiii. According to the information and explanations given to us and based on ourexamination of the records of the Company transactions with the related parties are incompliance with Sections 177 and 188 of the Act where applicable and details of suchtransactions have been disclosed in the Ind AS financial statements as required by theapplicable accounting standards.

xiv. According to the information and explanations given to us and based on ourexamination of the records of the Company the Company has not made any preferentialallotment or private placement of shares or fully or partly convertible debentures duringthe year. Accordingly paragraph 3(xiv) of the Order is not applicable to the Company.

xv. According to the information and explanations given to us and based on ourexamination of the records of the Company the Company has not entered into non-cashtransactions with directors or persons connected with them. Accordingly paragraph 3(xv)of the Order is not applicable to the Company.

xvi. According to the information and explanations given to us the Company is notrequired to be registered under section 45 IA of the Reserve Bank of India Act 1934.Accordingly paragraph 3(xvi) of the Order is not applicable to the Company.

For Khimji Kunverji & Co LLP
(formerly Khimji Kunverji & Co)
Chartered Accountants
(FRN: 105146W/ W100621)
Date : 9th June 2020 Gautam V Shah
Place : Mumbai Partner (F-117348)

Annexure B to the Independent Auditors' Report of even date on the Ind AS financialstatements

Report on the Internal Financial Controls with reference to Financial Statements underClause (i) of Sub-section 3 of Section 143 of the Act

We have audited the internal financial control over financial reporting of the CenturyEnka Limited ("the Company”) as at 31st March 2020 in conjunctionwith our audit of the Ind AS financial statements of the Company for the year ended onthat date.

Management's Responsibility for Internal Financial Controls

The Company's management and Board of Directors are 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 Accountant of India("ICAI”). 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 to theCompany's policies the safeguarding of its assets the prevention and detection of fraudsand errors the accuracy and completeness of the accounting records and the timelypreparation of reliable financial information as required under the Companies Act 2013("the Act”).

Auditors' Responsibility

Our responsibility is to express an opinion on the Company's internal financialcontrols with reference to Ind AS financial Statements based on our audit. We conductedour audit in accordance with the Guidance Note on Audit of Internal Financial Controlsover Financial Reporting ("the Guidance Note”) and the Standards on Auditingprescribed under Section 143(10) of the Act to the extent applicable to an audit ofinternal financial controls with reference to Ind AS financial statements. Those Standardsand the Guidance Note require that we comply with ethical requirements and plan andperform the audit to obtain reasonable assurance about whether adequate internal financialcontrols with reference to Ind AS financial Statements were established and maintained andwhether such controls operated effectively in all material respects.

Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal financial controls system with reference to Ind AS financial statements andtheir operating effectiveness. Our audit of internal financial controls with reference toInd AS financial statements included obtaining an understanding of such internal financialcontrols 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 Ind AS financial statements whether due to fraud orerror.

We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the Company's internal financial controls withreference to Ind AS financial statements.

Meaning of Internal Financial Controls with reference to Ind AS financial statements

A Company's internal financial control with reference to Ind AS financial statements isa process designed to provide reasonable assurance regarding the reliability of financialreporting and the preparation of Ind AS financial statements for external purposes inaccordance with generally accepted accounting principles. A Company's internal financialcontrol with reference to Ind AS financial statements include those policies andprocedures that:

(a) pertain to the maintenance of records that in reasonable detail accurately andfairly reflect the transactions and dispositions of the assets of the Company;

(b) provide reasonable assurance that transactions are recorded as necessary to permitpreparation of Ind AS financial statements in accordance with generally acceptedaccounting principles and that receipts and expenditures of the Company are being madeonly in accordance with authorisations of management and directors of the Company; and

(c) provide reasonable assurance regarding prevention or timely detection ofunauthorised acquisition use or disposition of the Company's assets that could have amaterial effect on the Ind AS financial statements.

Inherent Limitations of Internal Financial Controls with reference to Ind AS financialstatements

Because of the inherent limitations of internal financial with reference to Ind ASfinancial statements 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 withreference to Ind AS financial statements to future periods are subject to the risk thatthe internal financial control with reference to Ind AS financial statements may becomeinadequate because of changes in conditions or that the degree of compliance with thepolicies or procedures may deteriorate.

Opinion

In our opinion the Company has in all material respects an adequate internalfinancial controls system over financial reporting and such internal financial controlsover financial reporting were operating effectively as at 31st March 2020based on the internal control over financial reporting criteria established by the Companyconsidering the essential components of internal control stated in the Guidance Note onAudit of Internal Financial Controls Over Financial Reporting issued by the ICAI.

For Khimji Kunverji & Co LLP
(formerly Khimji Kunverji & Co)
Chartered Accountants
(FRN: 105146W/ W100621)
Date : 9th June 2020 Gautam V Shah
Place : Mumbai Partner (F-117348)

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