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Dalmia Refractories Ltd.

BSE: 500481 Sector: Engineering
NSE: DALMIAREF ISIN Code: INE200F01017
BSE 05:30 | 01 Jan Dalmia Refractories Ltd
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Dalmia Refractories Ltd. (DALMIAREF) - Auditors Report

Company auditors report

To the Members of

Dalmia Refractories Limited

Report on the Audit of Standalone Financial Statements

Opinion

We have audited the standalone nancial statements of DALMIA REFRACTORIES LIMITED(“the Company”)

which comprise the balance sheet as at 31 March 2021 and the statement of pro t andloss (including other comprehensive income) statement of changes in equity and statementof cash ows for the year then ended and notes to the nancial statements including asummary of signi cant accounting policies and other explanatory information (hereinafterreferred to as “standalone nancial statements”).

In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid standalone nancial statements give the information required bythe 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 31 March 2021 and pro t (including other comprehensive income) statement ofchanges in equity and its cash ows for the year ended on that date.

Basis for Opinion

We conducted our audit in accordance with the Standards on Auditing (SAs) speci edunder section 143(10) of the Companies Act 2013 (“the Act”). Ourresponsibilities 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 ethicalrequirements that are relevant to our audit of the standalone nancial statements under theprovisions of the Act and the Rules thereunder and we have ful lled our other ethicalresponsibilities in accordance with these requirements and the ICAI's Code of Ethics. Webelieve that the audit evidence we have obtained is suf cient and appropriate to provide abasis for our opinion.

Key Audit Matters

Key audit matters are those matters that in our professional judgment were of mostsigni cance in our audit of the standalone nancial statements for the year ended 31 March2021. These matters were addressed in the context of our audit of the standalone nancialstatements as a whole and in forming our opinion thereon and we do not provide aseparate opinion on these matters.

Key Audit Matter How our audit addressed the key audit matter
Revenue recognition We assessed the Company's processes and controls for recognizing revenue as part of our audit. Our audit procedures included the following:
The accounting policies for revenue recognition are set out in Inventories Note 3.11 to the standalone nancial statements. Considered the appropriateness of Company's revenue recognition policy and its compliance in terms of Ind AS 115 'Revenue from contracts with customers';
The terms of sales arrangements including the timing of transfer of control and delivery speci cations create complexity and judgment in determining sales revenues and accordingly it was determined to be a key audit matter in our audit of the standalone nancial statements. Assessed the design and tested the operating effectiveness of internal controls related to sales;
Performed sample tests of individual sales transaction and traced to sales invoices sales orders and other related documents. In respect of the samples selected tested that the revenue has been recognized as per the sales agreements;
Assessed the relevant disclosures made in the Standalone nancial statements.

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 Annual Report (but does not includethe nancial statements and our auditor's report thereon) which is expected to be madeavailable to us after that date.

Our opinion on the nancial statements does not cover the other information and we donot and will not express any form of assurance conclusion thereon.

In connection with our audit of the nancial statements our responsibility is to readthe other information identi ed above and in doing so consider whether the otherinformation is materially inconsistent with the nancial statements or our knowledgeobtained in the audit or otherwise appears to be materially misstated.

When we read the other information identi ed above if we conclude that there is amaterial misstatement therein we are required to communicate the matter to those chargedwith governance.

Responsibilities of Management and those charged with Governance for the StandaloneFinancial 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 nancial statementsthat give a true and fair view of the nancial position nancial performance changes inequity and cash ows of the Company in accordance with the accounting principles generallyaccepted in India including the accounting Standards speci ed under section 133 of theAct. This responsibility also includes maintenance of adequate accounting records inaccordance with the provisions of the Act for safeguarding of the assets of the Companyand for preventing and detecting frauds and other irregularities; selection andapplication of appropriate implementation and maintenance of accounting policies; makingjudgments and estimates that are reasonable and prudent; and design implementation andmaintenance of adequate internal nancial controls that were operating effectively forensuring the accuracy and completeness of the accounting records relevant to thepreparation and presentation of the standalone nancial statements that give a true andfair view and are free from material misstatement whether due to fraud or error.

In preparing the standalone nancial statements management is responsible for assessingthe Company's ability to continue as a going concern disclosing as applicable mattersrelated to going concern and using the going concern basis of accounting unless managementeither intends to liquidate the Company or to cease operations or has no realisticalternative but to do so.

Those Board of Directors are also responsible for overseeing the Company's nancialreporting process.

Auditor's Responsibilities for the Audit of Standalone Financial Statements

Our objectives are to obtain reasonable assurance about whether the standalone nancialstatements as a 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 of 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 the aggregate theycould reasonably be expected to in uence the economic decisions of users taken on thebasis of these standalone nancial statements.

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

Identify and assess the risks of material misstatement of the standalone nancialstatements whether due to fraud or error design and perform audit procedures responsiveto those risks and obtain audit evidence that is suf cient 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 nancial controls 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 Companyhas adequate internal nancial controls with reference to the standalone nancial statementsin place and the operating effectiveness of such controls.

Evaluate the appropriateness of accounting policies used and the reasonableness ofaccounting estimates and related disclosures made by 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 signi cant doubt on the ability ofthe Company to continue as a going concern. If we conclude that a material uncertaintyexists we are required to draw attention in our auditor's report to the relateddisclosures in the standalone nancial statements or if such disclosures are inadequateto modify 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 the Companyto cease to continue as a going concern.

Evaluate the overall presentation structure and content of the standalone nancialstatements including the disclosures and whether the standalone nancial 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 signi cant audit ndings including any signicant de ciencies 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 signi cance in the audit of the standalone nancial statementsfor the year ended 31 March 2021 and are therefore the key audit matters. We describethese matters 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 bene ts of suchcommunication.

Other Matter

We draw your attention to the Note no. 45 to the Standalone Financial Statementsregarding “Scheme of Amalgamation and Arrangement” amongst the Companies (i.e.Dalmia Refractories Limited GSB Refractories India Private Limited Dalmia BharatRefractories Limited) and their respective shareholders and creditors wherein DalmiaRefractories Limited will be amalgamated with Dalmia Bharat Refractories Limited on agoing concern basis. The appointed date is

1 April 2020. Pending approval of the above scheme by the various regulatoryauthorities and other Compliances the Standalone Financial Statements of the

Company for the year ended 31 March 2021 have been prepared on going concern basis.Our opinion is not modi ed in respect of above matter.

Report on other Legal and Regulatory Requirements

1. As required by the Companies (Auditor's Report) Order 2016 (“theOrder”) issued by the Central Government of India in terms of sub-section (11) ofsection 143 of the Act (“the Order”) and on the basis of such checks of thebooks and records of the Company as we considered appropriate and according to theinformation and explanations given to us we give in “Annexure A” a statement onthe matters speci ed in paragraphs 3 and 4 of the Order to the extent applicable.

2. Further to our comments in Annexure A as required by Section 143(3) of theAct 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 Pro t and Loss (including other comprehensiveincome) the Statement of Changes in Equity and the Cash Flow Statement dealt with by thisReport are in agreement with the books of account;

(d) In our opinion the aforesaid standalone nancial statements comply with the IndianAccounting Standards speci ed 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 is disqualied as on 31 March 2021 from being appointed as a director in terms of Section 164 (2) ofthe Act.

(f) With respect to the adequacy of the internal nancial controls with reference tonancial statement of the Company and the operating effectiveness of such controls referto our separate Report in “Annexure B”.

(g) In our opinion the managerial remuneration for the year ended 31 March 2021 hasbeen paid / provided by the Company to its directors in accordance with the provisions ofsection 197 read with Schedule V to 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 in our opinionand to the best of our information and according to the explanations given to us: (i) TheCompany has disclosed the impact of pending litigations on its nancial position in itsstandalone nancial statements. Refer Note 30 to the standalone nancial statements.

(ii) The Company did not have any long-term contracts including derivative contractsfor which there were any material foreseeable losses.

(iii) There were no amounts which were required to be transferred to the InvestorEducation and Protection Fund by the Company.

“Annexure A” to the Independent Auditor's Report

(Referred to in paragraph 1 under 'Report on Other Legal and Regulatory Requirements'section of our report of even date)

(i) In respect of its property plant and equipment: (a) The Company has maintainedproper records showing full particulars including quantitative details and situation ofproperty plant and equipment.

(b) The property plant and equipment are physically veri ed by the managementaccording to a phased programme designed to cover all the items over a period of threeyears which in our opinion is reasonable having regard to the size of the Company andthe nature of its assets. Pursuant to the programme a portion of the property plant andequipment has been physically veri ed by the management during the year and no materialdiscrepancies were noticed on such veri cation.

(c) According to information and explanation given to us and on the basis of ourexamination of records of the Company the title deeds of immovable properties are held inthe name of the Company.

(ii) In respect of its inventories:-

As explained to us inventories have been physically veri ed during the year by themanagement except goods in transit which have been veri ed with reference to con rmationsand/or subsequent receipt of material. In our opinion the frequency of veri cation isreasonable. Discrepancies noticed on physical veri cation of the inventories between thephysical inventories and book records were not material having regard to the size of theoperations of the Company and the same have been properly dealt with.

(iii) The Company has not granted any loans secured or unsecured to companies rmsLimited Liability Partnerships or other parties covered in the Register maintained underSection 189 of the Companies Act 2013. Therefore provision paragraph 3 (iii) of theOrder are not applicable to the company.

(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.

(v) The Company has not accepted any deposits from the public within the meaning ofSections 73 to 76 of the Act and the Rules framed there under to the extent noti ed.During the year no order has been passed by the Company Law Board or National Company LawTribunal or Reserve Bank of India or any court or any other Tribunal.

(vi) Pursuant to the rules made by the Central Government of India the Company isrequired to maintain cost records as speci ed under Section

148(1) of the Act in respect of its products. We have broadly reviewed the same andare of the opinion that prima facie the prescribed accounts and records have been madeand maintained. We have not however made a detailed examination of the records with aview to determine whether they are accurate or complete.

(vii) (a) According to the records of the Company and information and explanationsgiven to us the Company has generally been regular in depositing undisputed statutorydues including Provident Fund Employees' State Insurance Income-tax Goods and ServicesTax Duty of customs Cess and other material statutory dues applicable to it to theappropriate authorities as applicable during the year. According to the information andexplanation given to us no undisputed amounts payable in respect of such statutory dueswere outstanding as at 31 March 2021 for a period of more than six months from the datethey became payable.

(b) According to the information and explanations given to us and the records of theCompany examined by us there are no dues of income-tax sales-tax Goods and Service Taxservice-tax duty of customs and duty of excise or value added tax which have not beendeposited on account of any dispute except as mentioned below:-

Name of the Statute Nature of the Dues Amount (` Lakh)* Period to which the amount Relates Forum Where dispute is Pending
Madhya Pradesh Vat Act 2002 Sales Tax 3.90 2009-10 to 2014-15 Sales Tax Department Katni
The Gujarat VAT Tax Act 2003 Sales Tax 35.07 2001-2002 The Gujarat High Court Ahmedabad
Finance Act 1994 Service Tax 181.37 2004-05 to 2011-12 CESTAT Ahmedabad
Finance Act 1994 Service Tax 92.7 2012-13 to 2014-15 Commissioner (Appeals) Rajkot
Assistant Commissioner of Central
Finance Act 1994 Service Tax 70.90 2014-15 GST & Central Excise Jamnagar

 

*Net of amount paid

(viii) According to the records examined by us and information and explanations givento us the Company has not defaulted in the repayment of loans or borrowings to nancialinstitution and banks as at Balance Sheet date. The Company has not taken any loans orborrowing from government and has not issued any debentures during the year.

(ix) In our opinion and according to the information and explanations given to us theCompany has not raised moneys by way of initial public offer or further public offer(including debt instruments) and no term loans raised during the year. Thereforeprovision of clause (ix) of paragraph 3 of the order is not 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 of cers or employeesnoticed or reported during the year nor have we been informed of any such case by theManagement.

(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 theOrder is not applicable.

(xiii) The Company has entered into transactions with related parties in compliancewith provisions Section 177 and 188 of the Act. The details of such related partytransactions have been disclosed in the standalone nancial statements as required by theapplicable accounting standards.

(xiv) During the year the Company has not made any preferential allotment or privateplacement of shares or fully or partly convertible debentures. Therefore the provisionsof Clause 3 (xiv) of the Order are not applicable to the Company.

(xv) 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 its directors or personsconnected with them. Therefore the provisions of clause 3 (xv) of the order are notapplicable to the Company.

(xvi) The Company is not required to be registered under section 45-IA of the ReserveBank of India Act 1934.

“Annexure B” to the Independent Auditor's Report

(Referred to in paragraph 2(f) under 'Report on Other Legal and RegulatoryRequirements' section of our report of even date)

Report on the Internal Financial Controls with reference to the aforesaid standalonenancial statements under Clause (i) of Sub- section 3 of Section 143 of the Companies Act2013 (“the Act”)

We have audited the internal nancial controls with reference to standalone nancialstatements of DALMIA REFRACTORIES LIMITED (“the Company”) as of 31st March 2021in conjunction with our audit of the standalone nancial statements of the Company for theyear ended on that date.

Management's Responsibility for Internal Financial Controls

The Company's management is responsible for establishing and maintaining internalnancial controls based on the internal control with reference to standalone nancialstatements 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 Accountants of India. Theseresponsibilities include the design implementation and maintenance of adequate internalnancial controls that were operating effectively for ensuring the orderly and ef cientconduct of its business including adherence to company's policies the safeguarding ofits assets the prevention and detection of frauds and errors the accuracy andcompleteness of the accounting records and the timely preparation of reliable nancialinformation as required under the Companies Act 2013.

Auditors' Responsibility

Our responsibility is to express an opinion on the internal nancial controls withreference to standalone nancial statements of the Company based on our audit. We conductedour audit in accordance with the Guidance Note on Audit of Internal Financial ControlsOver

Financial Reporting (the “Guidance Note”) issued by the Institute ofChartered Accountants of India (“ ICAI”) and the Standards on Auditingprescribed under Section 143(10) of the Companies Act 2013 to the extent applicable toan audit of internal nancial controls. Those Standards and the Guidance Note require thatwe comply with ethical requirements and plan and perform the audit to obtain reasonableassurance about whether adequate internal nancial controls with reference to standalonenancial statements was established and maintained and if such controls operatedeffectively in all material respects.

Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal nancial controls system with reference to standalone nancial statements andtheir operating effectiveness. Our audit of internal nancial controls with reference tostandalone nancial statements included obtaining an understanding of internal nancialcontrols with reference to standalone nancial statements assessing the risk that amaterial weakness exists and testing and evaluating the design and operatingeffectiveness of internal control based on the assessed risk. The procedures selecteddepend on the auditor's judgement including the assessment of the risks of materialmisstatement of the nancial statements whether due to fraud or error.

We believe that the audit evidence we have obtained is suf cient and appropriate toprovide a basis for our audit opinion on the Company's internal nancial controls systemwith reference to standalone nancial statements.

Meaning of Internal Financial Controls with reference to nancial statements

A company's internal nancial control with reference to standalone nancial statements isa process designed to provide reasonable assurance regarding the reliability of nancialreporting and the preparation of nancial statements for external purposes in accordancewith generally accepted accounting principles. A company's internal nancial control withreference to standalone nancial statements includes those policies and procedures that (1)pertain to the maintenance of records that in reasonable detail accurately and fairly reect the transactions and dispositions of the assets of the company; (2) provide reasonableassurance that transactions are recorded as necessary to permit preparation of nancialstatements 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 standalone nancial statements.

Inherent Limitations of Internal Financial Controls with reference to nancialstatements

Because of the inherent limitations of internal nancial controls with reference tostandalone nancial 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 nancial controlswith reference to standalone nancial statements to future periods are subject to the riskthat the internal nancial control with reference to standalone nancial statements maybecome inadequate because of changes in conditions or that the degree of compliance withthe policies or procedures may deteriorate.

Opinion

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 nancial controlssystem with reference to standalone nancial statements and such internal nancial controlswith reference to nancial statements were operating effectively as at 31 March 2021based on the internal control with reference to nancial statements criteria established bythe Company considering the essential components of internal control stated in theGuidance Note on Audit of Internal Financial Controls Over Financial Reporting issued bythe ICAI.

For Chaturvedi & Shah LLP
Chartered Accountants
(Registration No. 101720W/W100355)

Vijay Napawaliya

Partner

Place: Mumbai

Membership No. 109859

Dated: 31 May 2021

UDIN: 21109859AAAACC4982

.