To the Members of Diamines and Chemicals Limited
Report on the Audit of the Standalone financial statements
We have audited the accompanying standalone financial statements of Diaminesand Chemicals Limited ("the Company") which comprise the Balance Sheet asat March 31 2021 the Statement of Profit and Loss including Other Comprehensive incomethe Statement of Changes in Equity and the Statement of Cash Flows for the year thenended and notes to t he standalone financial statements including a summary ofsignificant accounting policies and other explanatory information (hereinafter referred toas "the standalone financial statements").
In our opinion and to the best of our information and according to theexplanations given to us the aforesaid standalone financial statements give theinformation required by the Companies Act 2013 ("the Act") in the manner sorequired and give a true and fair view in conformity with the Indian Accounting Standardsspecified under section 133 of the Act read with the Companies (Indian AccountingStandards) Rules 2015 as amended ("Ind AS") and other accounting principlesgenerally accepted in India of the state of affairs of the Company as at March 31 2021and total comprehensive income (comprising of profit and other comprehensive in come)changes in equity and its cash flows for the year ended on that date.
Basis for Opinion
We conducted our audit of the standalone financial statements inaccordance with the Standards on Auditing (SAs ) specified under section 143(10) of theAct. Our responsibilities under those Standards are further described in the Auditors'Responsibilities for the Audit of the Standalone financial statements section of ourreport. We are independent of the Company in accordance with the Code of Ethics issued bythe Institute of Chartered Accountants of India together with the ethical requirementsthat are relevant to our audit of the standalone financial statements under the provisionsof the Act and the Rules made thereunder and we have fulfilled our other ethicalresponsibilities in accordance with these requirements and the Code of Ethics. We believethat the audit evidence we have obtained is sufficient and appropriate to provide a basisfor our audit opinion.
Key Audit Matters
Key audit matters are those matters that in our professional judgmentwere of most significance in our audit of these standalone financial statements of thecurrent period. These matters were addressed in the context of our audit of the standalonefinancial statements as a whole and in forming our opinion thereon and we do not providea separate opinion on these matters. We have determined the matter described below to bethe key audit matter to be communicated in our report.
|Sr. Key Audit Matter No. ||How our audit addressed the key audit matter |
|1 Litigations and claims ||Our audit procedures inter alia included the following: |
|(Refer to note 37(c) to the standalone financial statement s) || |
|The cases are pending with multiple tax authorities like Income Tax Excise/Service Tax and Provident Fund Authority etc. and there are claims which have not been acknowledged as debt by the company. || Evaluation of management's judgment of tax risks estimates of tax exposures other claims and contingencies. Past and current experience with the tax authorities and management's response on the subject matter were used to assess the appropriateness of management's best estimate of the most likely outcome of each uncertain contingent liability. |
|In normal course of business financial exposures may arise from pending proceedings and from litigation and claims which are not acknowledged as debt by the company. Whether a claim needs to be recognised as liability or disclosed as contingent liability in the standalone financial statements is dependent on number of significant assumptions and judgments. The amounts involved are potentially significant and determining the amount if any to be recognised or disclosed in the standalone financial statements is inherently subjective. || Understanding the current status of the tax assessments & other litigations and discussing selected matters with the entity's management. |
|We considered the above area as a key audit matter due to associated uncertainty related to the outcome of these matters and application of material judgement in interpretation of law. || Assessing the entity's assumptions and estimates in respect of claims included in the contingent liabilities disclosed in the standalone financial statements. |
| || Assessment of the probability of negative result of litigation and the reliability of estimates of related obligations. |
| ||Conclusion: |
| ||Based on procedure described above we did not identify any material exceptions relating to management's assertions and treatment presentation and disclosure of the subject matter in the standalone financial statements. |
Information Other than the Standalone Financial Statements andAuditors' Report Thereon
The Company's Board of Directors is responsible for preparation of theother information. The other information comprises the information included in the Board'sReport including Annexes to Board's Report Management Discussion and Analysis CorporateGovernance Report and Shareholder's Information but does not include the standalonefinancial statements and our auditors' report thereon. The above-referred information isexpected to be made available to us after the date of this audit report.
Our opinion on the standalone financial statements does not cover theother information and we do not express any form of assurance conclusion thereon.
In connection with our audit of the standalone financial statementsour responsibility is to read the other information and in doing so consider whether theother information is materially inconsistent with the standalone financial statements orour knowledge obtained in the audit or otherwise appears to be materially misstated.
When we read the information if we conclude that there is a materialmisstatement therein we are required to communicate the matter to those charged withgovernance and take appropriate actions necessitated by the circumstances and theapplicable laws and regulations.
Responsibilities of Management and Those Charged with Governance forthe Standalone Financial Statements
The Company's Board of Directors is 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 financial position financialperformance total comprehensive income changes in equity and cash flows of the Companyin accordance with the accounting principles generally accepted in India including theIndian Accounting 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 of the assets of the Company and for preventingand detecting frauds and other irregularities; selection and application of appropriateaccounting policies; making judgments and estimates that are reasonable and prudent; anddesign implementation and maintenance of adequate internal financial controls that wereoperating effectively for ensuring the accuracy and completeness of the accountingrecords relevant to the preparation and presentation of the standalone financialstatements that give a true and fair view and are free from material misstatement whetherdue to fraud or error.
In preparing the standalone financial statements management isresponsible 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 Board of Directors is also responsible for overseeing the Company'sfinancial reporting process.
Auditors' Responsibilities for the Audit of the Standalone FinancialStatements
Our objectives are to obtain reasonable assurance about whether thestandalone financial statements as a whole are free from material misstatement whetherdue to fraud or error and to issue an auditors' report that includes our opinion.Reasonable assurance is a high level of assurance but is not a guarantee that an auditconducted in accordance with SAs will always detect a material misstatement when itexists. Misstatements can arise from fraud or error and are considered material ifindividually or in the aggregate they could reasonably be expected to influence theeconomic decisions of users taken on the basis of these standalone financial statements.
As part of an audit in accordance with SAs we exercise professionaljudgment and maintain professional skepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of thestandalone financial statements whether due to fraud or error design and perform auditprocedures responsive to those risks and obtain audit evidence that is sufficient andappropriate to
provide a basis for our opinion. The risk of not detecting a materialmisstatement resulting from fraud is higher than for one resulting from error as fraudmay involve collusion forgery intentional omissions misrepresentations or the overrideof internal control.
Obtain an understanding of internal control relevant to theaudit in order to design audit procedures that are appropriate in the circumstances. Undersec bon 143(3)(i) of the Act we are also responsible for expressing our opinion onwhether the Company has adequate internal financial controls with reference to standalonefinancial statements in place and the operating 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 theCompany's ability to continue as a going concern. If we conclude that a materialuncertainty exists we are required to draw attention in our auditors' report to therelated disclosures in the standalone financial statements or if such disclosures areinadequate to modify our opinion. Our conclusions are based on the audit evidenceobtained up to the date of our auditors' report. However future events or conditions maycause the Company to cease to continue as a going concern.
Evaluate the overall presentation structure and content of thestandalone financial statements including the disclosures and whether the standalonefinancial statements represent the underlying transactions and events in a manner thatachieves fair presentation.
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 safe guard s.
From the matters communicated with those charged with governance wedetermine those matters that were of most significance in the audit of the standalonefinancial statements of the current period and are therefore the key audit matters. Wedescribe these matters in our auditors' report unless law or regulation precludes publicdisclosure about the matters or when in extremely rare circumstances we determine that amatter should not be communicated in our report because the adverse consequences of doingso would 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 term s ofsub-section (11) of section 143 of the Act we give in "Annexure A" astatement on the matters specified in paragraphs 3 and 4 of the Order to theextent applicable.
2. As required by Section 143(3) of the Act we report that:
a. we have sought and obtained all the information andexplanations which to the best of our knowledge and belief were necessary for thepurposes of our audit;
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 includingother comprehensive income the Statement of Changes in Equity and the Statement of CashFlows dealt with by this Report are in agreement with the books of account;
d. in our opinion the aforesaid standalone financial statementscomply with the Indian Accounting Standards (Ind AS) prescribed under Section 133 of theAct;
e. on the basis of the written representationsreceived from the directors as on March 31 2021 taken on record by the Board ofDirectors none of the directors is disqualified as on March 31 2021 from beingappointed as a director in terms of Section 164(2) of the Act;
f. with respect to the adequacy of t he internal financial controlswith reference to standalone financial statements of the Company and the operatingeffectiveness of such controls refer to our separate report in "Annexure B";
g. with respect to the other matters to be included in theAuditors' Report in accordance with the requirements of section 197(16) of the Act asamended: in our opinion and to the best of our information and according to theexplanations given to us the remuneration paid by the Company to its directors during theyear is in accordance with the provisions of section 197 of the Act; and
h. with respect to the other matters to be included in the Auditors'Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014 inour opinion and to the best of our information and according to the explanations given tous:
i. the Company has disclosed the impact of pending litigation's on itsfinancial position in its standalone financial statements - Refer Note 37 to thestandalone financial statements;
ii. the Company did not have any long-term contracts includingcontracts as at March 31 2021 for which there were any material foreseeable losses;
iii. there has been no delay in transferring amounts required to betransferred to the Investor Education and Protection Fund by the Company.
"ANNEXURE A" TO THE INDEPENDENT AUDITORS' REPORT
The annexure referred to in our Independent Auditors' Report to themembers of Diamines and Chemicals Limited ('the Company") on the standalonefinancial statements for the year ended March 31 2021 we report that:
i. (a) The Company has maintained proper records showing fullparticulars including quantitative details and situation of fixed assets.
(b) The Company has a regular programme of physical verification of itsfixed assets by which fixed assets are verified in a phased manner over a period of threeyears. In accordance with this programme certain fixed assets were verified during theyear and no material discrepancies were noticed on such verification. In our opinion theperiodicity of physical verification is reasonable having regard to the size of theCompany and the nature of its assets.
(c) According to the information and explanations given to us and onthe basis of our examination of the records of the Company the title deeds / lease deedsof immovable properties are held in the name of the Company as on date of this report.
ii. The Inventories except for goods-in-transit have been physicallyverified by the management during the year and in our opinion the frequency ofverification is reasonable. As explained to us there were no material discrepancies onphysical verification of inventory as compared to the book records.
iii . The Company has not granted any loans secured or unsecured tocompanies firms Limited Liability Partnerships or other parties covered in the registermaintained under section 189 of the Companies Act 2013 and therefore reporting underclause (iii) (a) to clause (iii) (c) of the Order is not applicable to the Company.
iv. The Company has not granted any loans or provided any guarantees orsecurity to the parties covered under section 18 5 and 186 of the Act. In our opinion andaccording to the information and explanation given to us the Company has complied withthe provisions of section 186 of the Act in respect of the Investments made.
v. According to the information and explanations given to us theCompany has not accepted any deposits during the year from the public within the meaningof provisions of section 73 to 76 of the Act and the rules framed thereunder or under thedirectives issued by the Reserve Bank of India and therefore reporting under clause (v)of the Order is not applicable to the Company.
vi. We have broadly reviewed the cost re cords and accounts maintainedby the Company pursuant to the Companies (Cost Records and Audit) Rules 2014 as specifiedby the Central Government under section 148(1) of the Act and are of the opinion thatprima facie the prescribed accounts and records have been made and maintained.However we have not carried out a detailed examination of the same.
vii. (a) According to the information and explanations given to us andon the basis of our examination of the records the Company has been regular in depositingwith appropriate authorities undisputed statutory dues including provident fundemployee's state insurance income-tax duty of customs goods and service tax cess andany other statutory dues applicable to it. Further no undisputed amounts payable inrespect of income tax duty of customs goods and services tax cess and other statutorydues were in arrears as at March 31 2021 for a period of more than six months from thedate they become payable.
(b) According to the information and explanations given to us and onthe basis of our examination of the records of the Company there are no disputed dues inrespect of goods and service tax which have not been deposited. According to theinformation and explanations given to us the following are the particulars of Income taxService tax duty of customs and duty of excise as at March 31 2021 which have not beendeposited on account of dispute:
|Name of the statute (Nature of disputed dues) ||Amount (Rs. in lakhs) ||Period to which the amount relates ||Forum where pending |
|Income Tax Act 1961 (Income Tax) ||4.45 ||A.Y 2010-11 ||Income-tax Appellate Tribunal - Ahmedabad |
|Income Tax Act 1961 (Income Tax) ||11.97 ||A.Y 2013-14 ||Income-tax Appellate Tribunal - Ahmedabad |
|Income Tax Act 1961 (Income Tax) ||31.00 ||A.Y 2014-15 ||Income-tax Appellate Tribunal - Ahmedabad |
|Income Tax Act 1961 (Income Tax) ||5.64 ||A.Y 2016-17 ||Commissioner of Income-Tax (Appeals) Vadodara |
|Income Tax Act 1961 (Income Tax) ||38.75 ||A.Y 2017-18 ||Commissioner of Income-Tax (Appeals) Vadodara |
|Finance Act 1994 (Service tax/ Excise) ||62.63 ||F.Y. 2004- 05 to 2012- 13 ||Customs Excise & Service Tax Appellate Tribunal (CESTAT) Ahmedabad. |
|Finance Act 1994 (Service tax/ Excise) ||3.71 ||F.Y. 2011-12 to 2016-17 ||Superintendent Excise Customs Tax Vadodara-I - Central and Service |
viii. In our opinion and according to the information and explanationsgiven to us the Company has not defaulted in repayment of loans or borrowings obtainedfrom the bank. The company has not taken any loans from financial institution orGovernment. It has not issued any debentures.
ix. The Company has not raised any money by way of initial public offeror further public offer (including debt instruments) or term loans during the year andtherefore reporting under clause (ix) of the Order is not applicable to the Company.
x. To the best of our knowledge and according to information andexplanations given to us no fraud by the company or on the Company by its officers oremployees has been noticed or reported during the year.
xi. According to the information and explanations given to us and basedon our examination of the records of the Company the Company has paid/provided formanagerial remuneration in accordance with the requisite approvals mandated by theprovisions of Section 197 read with Schedule V to the Act.
xii. In our opinion the Company is not a Nidhi company and thereforereporting under clause (xii) of the Order is not applicable to the Company.
xiii. In our opinion and according to the information and explanationsgiven to us transactions with the related parties are in compliance with sections 177 and188 of the Act where applicable and the details of such transactions have been disclosedin the standalone financial statements as required by the applicable Indian AccountingStandards (Ind AS).
xiv. According to the information and explanations given to us andbased on our examination of the records the Company has not made any preferentialallotment or private placement of shares or fully or partly convertible debentures duringthe year and therefore reporting under clause (xiv) of the Order is not applicable to theCompany.
xv. In our opinion and according to the information and explanationsgiven to us the Company has not entered into non-cash transactions with directors orpersons connected with them and therefore reporting under clause(xv) of the Order is notapplicable to the Company.
xvi. In our opinion and according to the information and explanationsgiven to us the Company is not required to be registered under Section 45-IA of theReserve Bank of India Act 1934.
"ANNEXURE B" TO THE INDEPENDENT AUDITORS' REPORT
(Referred to in paragraph 2(f) under 'Report on Other Legal andRegulatory Requirements' section of our report to the Members of Diamines and ChemicalsLimited on the standalone financial statements of even date)
Report on the Internal Financial Controls with reference to standalonefinancial statements under Clause (i) of Sub-section 3 of Section 143 of the Act.
We have audited the internal financial controls with reference tostandalone financial statements of Diamines and Chemicals Limited ("theCompany") as of March 31 2021 in conjunction with our audit of the standalonefinancial 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 issued by the Institute of Chartered Accountants 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 tocompany'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.
Our responsibility is to express an opinion on the Company's internalfinancial controls with reference to standalone financial statements based on our audit.We conducted our audit in accordance with the Guidance Note on Audit of Internal FinancialControls over Financial Reporting (the "Guidance note") and the Standards onAuditing issued by ICAI and prescribed under section 143( 10) of the Act to the extentapplicable to an audit of internal financial controls both applicable to an audit ofInternal Financial Controls and both issued by the ICAI. Those Standards and the GuidanceNote require that we comply with ethical requirements and plan and perform the audit toobtain reasonable assurance about whether adequate internal financial controls withreference to standalone financial statements were established and maintained and if suchcontrols operated effectively to all material respects.
Our audit involves performing procedures to obtain audit evidence aboutthe adequacy of the internal financial controls with reference to standalone financialstatements and their operating effectiveness. Our audit of internal financial controlswith reference to standalone financial statements included obtaining an understanding ofinternal financial controls with reference to standalone financial statements assessingthe risk that a material weakness exists and testing and evaluating the design andoperating effectiveness of internal control based on the assessed risk. The proceduresselected depend on the auditors' judgement including the assessment of the risks ofmaterial misstatement of the standalone financial statements whether due to fraud orerror.
We believe that the audit evidence we have obtained is sufficient andappropriate to provide a basis for our audit opinion on the Company's internal financialcontrols with reference to standalone financial statements.
Meaning of Internal Financial Controls with reference to standalonefinancial statements
A Company's internal financial controls with reference to standalonefinancial statements is a process designed to provide reasonable assurance regarding thereliability of financial reporting and the preparation of standalone financial statementsfor external purposes in accordance with generally accepted accounting principles. ACompany's internal financial controls with reference to standalone financial statementsincludes those policies and procedures that
(1) pertain to the maintenance of records that in reasonable detailaccurately and fairly reflect the transactions and dispositions of the assets of theCompany;
(2) provide reasonable assurance that transactions are recorded asnecessary to permit preparation of standalone financial statements in accordance withgenerally accepted accounting principles and that receipts and expenditures of theCompany are being made only in accordance with authorisations of management and directorsof the Company; and
(3) provide reasonable assurance regarding prevention or timelydetection of unauthorised acquisition use or disposition of the Company's assets thatcould have a material effect on the standalone financial statements.
Inherent Limitations of Internal Financial Controls with reference tostandalone financial statements
Because of the inherent limitations of internal financial controls withreference to standalone financial statements including the possibility of collusion orimproper management override of controls material misstatements due to error or fraud mayoccur and 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 control 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.
In our opinion the Company has in all material respects adequateinternal financial controls with reference to standalone financial statements and suchinternal financial controls with reference to standalone financial statements wereoperating effectively as a t March 31 2021 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 Accountants of India.
|For K.C. Mehta & Co. |
|Chartered Accountants |
|Firm's Registration No. 106237W |
|Vishal P. Doshi |
|Membership No. 101533 |
|UDIN: 21101533AAAABC9848 |
|Place: Vadodara |
|Date: May 18 2021 |