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Dai-ichi Karkaria Ltd.

BSE: 526821 Sector: Industrials
NSE: DAICHIKARK ISIN Code: INE928C01010
BSE 00:00 | 03 Dec 348.35 8.50
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NSE 05:30 | 01 Jan Dai-ichi Karkaria Ltd
OPEN 349.15
PREVIOUS CLOSE 339.85
VOLUME 1427
52-Week high 469.00
52-Week low 235.00
P/E
Mkt Cap.(Rs cr) 260
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 349.15
CLOSE 339.85
VOLUME 1427
52-Week high 469.00
52-Week low 235.00
P/E
Mkt Cap.(Rs cr) 260
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Dai-ichi Karkaria Ltd. (DAICHIKARK) - Auditors Report

Company auditors report

To the Members of Dai-ichi Karkaria Limited

Report on the Audit of the Standalone Financial Statements

Opinion

We have audited the standalone financial statements of Dai-ichi Karkaria Limited("the Company") which comprise the standalone balance sheet as at 31 March2021 and the standalone statement of profit and loss (including other comprehensiveincome) standalone statement of changes in equity and standalone statement of cash flowsfor the year then ended and notes to the standalone financial statements including asummary 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 the explanationsgiven to us the aforesaid standalone financial statements give the information requiredby the Companies Act 2013 ("the Act") in the manner so required and give a trueand fair view in conformity with the accounting principles generally accepted in India ofthe state of affairs of the Company as at 31 March 2021 and profit and 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) specifiedunder section 143(10) of the Act. Our responsibilities under those SAs are furtherdescribed in the Auditor's Responsibilities for the Audit of the Standalone FinancialStatements section of our report. We are independent of the Company in accordance withthe Code of Ethics issued by the Institute of Chartered Accountants of India together withthe ethical requirements that are relevant to our audit of the standalone financialstatements under the provisions of the Act and the Rules thereunder and we have fulfilledour other ethical responsibilities in accordance with these requirements and the Code ofEthics. We believe that the audit evidence we have obtained is sufficient and appropriateto provide a basis for our opinion on the Standalone financial statements.

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 on these matters.

Description of Key Audit Matters

The key audit matters How the matter was addressed in our audit
Loss due to fire Our procedures included the following:
Refer to Note 48(a) to the standalone financial statements. In November 2020 a fire broke out at the Company's plant at Dahej Gujarat destroying the plant and machinery and inventories at site. • Obtained and examined the list of assets and inventories destroyed during the fire incident.
As a result of the incident the Company recognised loss due to fire of Rs.4932 lakhs (Rs. 4326 lakhs towards plant and machinery Rs.581 lakhs towards inventories and Rs.25 lakhs towards other expenses) as an exceptional item in the standalone financial statements. • Compared the list of assets and inventories destroyed with the insurance claim submission made by the company.
The Company is insured for fire incidents and has submitted its claim with the insurance company for the losses suffered. The claim is being evaluated by the insurance company and thus no income is recognised in the financial statements. • Assessed completeness of plant and machinery destroyed by examining the asset location as mentioned in the fixed asset register with the reported location of fire.
This as a key audit matter considering the estimation of loss involves significant judgement. • Agreed the value of plant and machinery and inventories destroyed with the value in books of accounts (fixed assets register and inventory module) of the Company on the date of fire.
• Performed inquiries with the management about the progress of claims made with the Insurance Company.
• Visited the plant location to assess the level of damage to the plant and machinery and inventories.
Revenue Recognition Our procedures included the following:
The Company recognises revenue from sale of products when the control over the products has been transferred to the customer based on the specific terms and conditions of the sales contracts entered into with respective customers. • Assessed the appropriateness of the policies in respect of revenue recognition by comparing with applicable accounting standards.
We have identified Revenue Recognition as a key audit matter as revenue is a key performance indicator. Also there is a presumed fraud risk of revenue being overstated through manipulation on the timing of transfer of control arising from pressure to achieve performance targets as well as meeting external expectations. • Tested the design implementation and operating effectiveness of the Company's general Information Technology (IT) controls and key IT application controls by involving our IT specialists.
• Performed substantive procedures including testing of recognition of revenue in the appropriate period by selecting statistical samples of revenue transactions recorded during and at the end of the financial year.
• Examined the underlying documents which included sales invoices/contracts and dispatch/shipping documents for the selected transactions.
• Assessed the manual journals posted in the revenue ledger to identify any unusual items.

Other Information

The Company's management and Board of Directors are responsible for the otherinformation. The other information comprises the information included in the Company'sAnnual report but does not include the standalone financial statements and our auditors'report thereon.

Our opinion on the standalone financial statements does not cover the other informationand we do 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 in the audit or otherwise appears to be materially misstated. If based on thework we have performed we conclude that there is a material misstatement of this otherinformation we are required to report that fact. We have nothing to report in thisregard.

Management's and Board of Directors' Responsibilities for the Standalone FinancialStatements

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 standalone financialstatements that give a true and fair view of the state of affairs profit/loss (includingother 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) specified under section 133 of the Act. This responsibilityalso includes maintenance of adequate accounting records in accordance with the provisionsof the Act for safeguarding of the assets of the Company and for preventing and detectingfrauds and other irregularities; selection and application of appropriate accountingpolicies; making judgments and estimates that are reasonable and prudent; and designimplementation and maintenance of adequate internal financial controls that were operatingeffectively for ensuring accuracy and completeness of the accounting records relevant tothe preparation and presentation of the standalone financial statements that give a trueand fair view and are free from material misstatement whether due to fraud or error.

In preparing the standalone financial statements the Management and Board of Directorsare responsible 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 the Board of Directors either intends to liquidate the Companyor to cease operations or has no realistic alternative but to do so.

The Board of Directors is also responsible for overseeing the Company's financialreporting process.

Auditor's Responsibilities 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 userstaken on the basis of these standalone financial statements.

As part of an audit in accordance with SAs we exercise professional judgement 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 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 on whether the company hasadequate internal financial controls with reference to standalone financial statements inplace and the operating effectiveness of such controls.

• Evaluate the appropriateness of accounting policies used and the reasonablenessof accounting estimates and related disclosures made by the management and the Board ofDirectors.

• Conclude on the appropriateness of the management and the Board of Directors'use of the going concern basis of accounting and based on the audit evidence obtainedwhether a material uncertainty exists related to events or conditions that may castsignificant doubt on the Company's ability to continue as a going concern. If we concludethat a material uncertainty exists we are required to draw attention in our auditor'sreport to the related disclosures in the standalone financial statements or if suchdisclosures are inadequate to modify our opinion. Our conclusions are based on the auditevidence obtained up to the date of our auditor's report. However future events orconditions may 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.

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 standalone financial statementsof the current period and are therefore the key audit matters. We describe these mattersin our Auditors' report unless law or regulation precludes public disclosure about thematter or 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 (Auditors' Report) Order 2016 ("the Order")issued by the Central Government of India in terms of section 143 (11) of the Act we givein the "Annexure A" a statement on the matters specified in paragraphs 3 and 4of the Order to the extent applicable.

(A) 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 standalone balance sheet the standalone statement of profit and loss (includingother comprehensive income) the standalone statement of changes in equity and thestandalone statement of cash flows dealt with by this Report are in agreement with thebooks 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 31March 2021 taken on record by the Board of Directors none of the directors isdisqualified as on 31 March 2021 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 with reference tofinancial statements of the Company and the operating effectiveness of such controlsrefer to our separate Report in "Annexure B".

(B) With respect to the other matters to be included in the Auditors' 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:

i. The Company has disclosed the impact of pending litigations as at 31 March 2021 onits financial position in its standalone financial statements-Refer Note 35 to thestandalone 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 in transferring amounts required to be transferred tothe Investor Education and Protection Fund by the Company; and

iv. The disclosures in the standalone financial statements regarding holdings as wellas dealings in specified bank notes during the period from 8 November 2016 to 30 December2016 have not been made in these financial statements since they do not pertain to thefinancial year ended 31 March 2021.

(C) 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 given to us theremuneration paid by the company to its directors during the current year is in accordancewith the provisions of Section 197 of the Act.

The remuneration paid to any director is not in excess of the limit laid down underSection 197 of the Act. The Ministry of Corporate Affairs has not prescribed other detailsunder Section 197(16) which are required to be commented upon by us.

For B S R & Co. LLP
Chartered Accountants
Firm's Registration No: 101248W/W-100022
Balajirao Pothana
Partner
Mumbai Membership No: 122632
10 May 2021 UDIN: 21122632AAAAAP3707

Annexure A to the Independent Auditor's report on the standalone financial statementsof Dai-ichi Karkaria Limited for the year ended 31 March 2021

The Annexure referred to in Independent Auditors' Report to the members of the Companyon the standalone financial statements for the year ended 31 March 2021 we report that:

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 of land and building that are freehold as disclosed in Note 4 to thestandalone financial statements are held in the name of the Company. In respect ofleasehold land we have verified the lease deed duly registered with the appropriateauthorities with the Company as lessee.

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. The Company has maintained proper records of inventory. Thediscrepancies noticed on verification between the physical stocks and the book recordshave been suitably dealt with in the books of accounts.

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. In our opinion and according to the information and explanations given to us theCompany has complied with the provisions of Section 186 of the Act with respect to theinvestments made guarantees given and security provided as applicable. The Company hasnot granted any loans.

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. In our opinion and according to the information and explanations given to us theCompany is not required to maintain cost records as per Section 148(1) of the Act readwith the Companies (Cost Record and Audit) Rules 2014. Accordingly paragraph 3(vi) ofthe Order is not applicable to the Company.

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' StateInsurance Income-tax Goods and Service Tax (GST) Duty of Customs Cess and othermaterial statutory dues have been generally regularly deposited during the year by theCompany 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 andService Tax (GST) Sales-tax Service tax Duty of Customs Duty of Excise Value addedtax Cess and other material statutory dues were in arrears as at 31 March 2021 for aperiod 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 and Value added tax which have not been deposited as on 31 March 2021 onaccount of disputes are given below:

Name of the statute Nature of the dues Amount of demand under dispute ( Rs.) Amount paid under protest ( Rs.) Amount under dispute not deposited ( Rs.) Period to which the amount relates Forum where the dispute is pending
Income-tax Act 1961 Income-tax interest and penalty 2981358 - 2981358 FY 2005-06 High Court
Income-tax Act 1961 Income-tax interest and penalty 183969 - 183969 FY 2006-07 DCIT
Income-tax Act 1961 Income-tax interest and penalty 29539577 7500000 22039577 FY 2008-09 ITAT
Income-tax Act 1961 Income-tax interest and penalty 23943546 - 23943546 FY 2008-09 CIT (A)
Income-tax Act 1961 Income-tax interest and penalty 1662680 - 1662680 FY 2010-11 DCIT
Income-tax Act 1961 Income-tax interest and penalty 3458400 - 3458400 FY 2011-12 DCIT
Income-tax Act 1961 Income-tax interest and penalty 1978861 - 1978861 FY 2012-13 CIT (A)
Income-tax Act 1961 Income-tax and interest 584845 - 584845 FY 2016-17 CIT (A)
Service tax under Finance Act Service tax 5444777 - 5444777 FY 2008-09 to FY 2011- 12 High Court
Service tax under Finance Act Service tax 6168350 - 6168350 April 2013 to June 2017 Addl. Commissioner Central Excise & Service Tax
The Central Sales Tax Act I956 and The Maharashtra Value Added Tax Act 2002 Tax and interest thereon 974037 99952 874085 FY 2014-15 Joint Commissioner of State Tax
The Central Sales Tax Act I956 Tax and interest thereon 484403 259039 225364 FY 2017-18 Joint Commissioner of State Tax

There are no dues of Duty of Customs Duty of Excise and Cess which have not beendeposited as on 31 March 2021 on account of disputes.

viii. In our opinion and according to the information and explanations given to us andbased on the records of the Company the Company has not defaulted in the repayment ofloans or borrowings to financial institutions banks and government. The Company has notissued any debentures.

ix. According to the information and explanations given to us the Company did notraise money by way of initial public offer or further public offer (including debtinstruments) and term loan during the year. Accordingly paragraph 3(ix) of the Order isnot applicable to the Company.

x. During the course of our examination of the books and records of the Companycarried out in accordance with the generally accepted auditing practices in India andaccording to the information and explanations given to us we have neither come across anyinstance of material fraud by the Company or on the Company by its officers or employeesnoticed or reported during the year nor have we been informed of any such case by themanagement.

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 standalone financial statements as required by theapplicable Ind AS.

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. In our opinion and according to the information and explanations given to us theCompany is not required to be registered under Section 45-IA of the Reserve Bank of IndiaAct 1934. Accordingly paragraph 3(xvi) of the Order is not applicable to the Company.

For B S R & Co. LLP
Chartered Accountants
Firm's Registration No: 101248W/W-100022
Balajirao Pothana
Partner
Mumbai Membership No: 122632
10 May 2021 UDIN: 21122632AAAAAP3707

Annexure B to the Independent Auditors' report on the standalone financial statementsof Dai-ichi Karkaria Limited for the year ended 31 March 2021.

Report on the internal financial controls with reference to the aforesaid standalonefinancial statements under Clause (1) of Sub-section 3 of Section 143 of the CompaniesAct 2013.

(Referred to in paragraph A(f) under ‘Report on Other Legal and RegulatoryRequirements' section of our report of even date)

Opinion

We have audited the internal financial controls with reference to standalone financialstatements of Dai-ichi Karkaria Limited ("the Company") as of 31 March 2021 inconjunction with our audit of the standalone financial statements of the Company for theyear ended on that date.

In our opinion the Company has in all material respects adequate internal financialcontrols with reference to standalone financial statements and such internal financialcontrols were operating effectively as at 31 March 2021 based on the internal financialcontrols with reference to standalone financial statements criteria established by theCompany considering the essential components of internal control stated in the GuidanceNote on Audit of Internal Financial Controls Over Financial Reporting issued by theInstitute of Chartered Accountants of India (the "Guidance Note").

Management's Responsibility for Internal Financial Controls

The Company's management and the Board of Directors are responsible for establishingand maintaining internal financial controls based on the internal financial controls withreference to standalone financial statements criteria established by the Companyconsidering the essential components of internal control stated in the Guidance Note.These responsibilities include the design implementation and maintenance of adequateinternal financial controls that were operating effectively for ensuring the orderly andefficient conduct of its business including adherence to company's policies thesafeguarding of its assets the prevention and detection of frauds and errors theaccuracy and completeness of the accounting records and the timely preparation ofreliable financial information as required under the Companies Act 2013 (hereinafterreferred to as "the Act").

Auditors' Responsibility

Our responsibility is to express an opinion on the Company's internal financialcontrols with reference to standalone financial statements based on our audit. Weconducted our audit in accordance with 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 standalone financial statements. 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 with reference to standalone financial statements were established andmaintained and whether such controls operated effectively in all material respects.

Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal financial controls with reference to standalone financial statements andtheir operating effectiveness. Our audit of internal financial controls with reference tostandalone financial statements included obtaining an understanding of such internalfinancial controls assessing the risk that a material weakness exists and testing andevaluating the design and operating effectiveness of internal control based on theassessed risk. The procedures selected depend on the auditor's judgement including theassessment of the risks of material misstatement of the standalone financial statementswhether 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 controls withreference to standalone financial statements.

Meaning of Internal Financial controls with Reference to Standalone FinancialStatements

A company's internal financial controls with reference to standalone financialstatements is a process designed to provide reasonable assurance regarding the reliabilityof financial reporting and the preparation of standalone financial statements for externalpurposes in accordance with generally accepted accounting principles. A company's internalfinancial controls with reference to standalone financial statements include thosepolicies and procedures that:

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

(2) provide reasonable assurance that transactions are recorded as necessary to permitpreparation of standalone 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

(3) 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 standalone financial statements.

Inherent Limitations of Internal Financial controls with Reference to StandaloneFinancial Statements

Because of the inherent limitations of internal financial controls with reference tostandalone financial statements including the possibility of collusion or impropermanagement override of controls material misstatements due to error or fraud may occurand not be detected. Also projections of any evaluation of the internal financialcontrols with reference to standalone financial statements to future periods are subjectto the risk that the internal financial controls with reference to standalone financialstatements may become inadequate because of changes in conditions or that the degree ofcompliance with the policies or procedures may deteriorate.

For B S R & Co. LLP
Chartered Accountants
Firm's Registration No: 101248W/W-100022
Balajirao Pothana
Partner
Mumbai Membership No: 122632
10 May 2021 UDIN: 21122632AAAAAP3707

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