To the Members of
Diamines and Chemicals Limited
Report on the Audit of the Financial Statements
We have audited the accompanying Financial statements of Diamines and ChemicalsLimited ("the Company") which comprise the Balance Sheet as at March 312020 the Statement of Profit and Loss including Other Comprehensive Income the Statementof Changes in Equity and the Statement of Cash
Flows for the year then ended and notes to the Financial statements including a summaryof signi cant accoun ng policies and other explanatory informao n (hereinaer referred toas "the Financial statements").
In our opinion and to the best of our informao n and according to the explanao ns givento us the aforesaid Financial statements give the informa on required by the CompaniesAct 2013 ("the Act")in the manner so required and give a true and fair view inconformity with the Indian Accoun ng Standards speci ed under secon 133 of the Act readwith the Companies (Indian Accoun ng Standards) Rules 2015 as amended ("IndAS") and other accounn g principles generally accepted in India of the state of aairs of the Company as at March 31 2020 and total comprehensive income (comprising ofProfitand other comprehensive income) changes in equity and its cash ows for the yearended on that date.
Basis for Opinion
We conducted our audit of the Financial statements in accordance with the Standards onAudi ng (SAs) speci ed under seco n 143(10) of the Act. Our responsibili es under thoseStandards are further described in the Auditors' Responsibili es for the Audit of theFinancial Statements seco n of our report. We are independent of the Company in accordancewith the Code of Ethics issued by the Ins tute of Chartered Accountants of India togetherwith the ethical requirements that are relevant to our audit of the Financial statementsunder the provisions of the Act and the Rules made thereunder and we have ful lled ourother ethical responsibili es in accordance with these requirements and the Code ofEthics. We believe that the audit evidence we have obtained is su cient and appropriate toprovide a basis for ouraudit opinion.
Key Audit Ma ers
Key audit ma ers are those ma ers that in our professional judgment were of mostsigni cance in our audit of these Financial statementsof the current year. These maers were addressed in the context of our audit of the Financial statements as a whole andin forming our opinion thereon and we do not provide a separate opinion on these ma ers.We have determined the ma ers described below to be the key audit ma ers to becommunicated in our report.
|Sr. No. Key Audit Ma er ||How our audit addressed the key audit ma er |
|1 Litigations and claims ||Our audit procedures inter alia included the following: |
|(Refer to note 37(c) to the Financial statements) || |
The cases are pending with mul ple tax authori es like Income Tax Excise/Service Tax Provident Fund Authority and Directorate General of Foreign Trade etc. and there are claims which have not been acknowledged as debt by the company.
Evaluao n of management's judgment of tax risks esmate s of tax exposures other claims and conn gencies. Past and current experience with the tax authori es and management's response on the subject ma er were used to assess the appropriateness of management's best esmat e of the most likely outcome of each uncertain con ngent liability.
|In normal course of business Financial exposures may arise from pending proceedings and from lig a on and claims which not acknowledged as debt by the company. Whether a claim needs to be recognised as liability or disclosed as con ngent liability in the Financial statements is dependent on number of signi cant assump ons and judgements. The amounts involved are poten ally signi cant and determining the amount if any to be recognised or disclosed in the Financial statements is inherently subjecv e. || Understanding the current status of the tax assessments & other li gao ns and discussing selected ma ers with the en ty's management. |
| || Crically assessing the enty 's assump ons and es mates in respect of claims included in the con ngent liabili es disclosed in the Financial statements. |
|We considered the above area as a key audit ma er due to associated uncertainty related to the outcome of these ma ers and applicao n of material judgement in interpreta on of law. || Assessment of the probability of nega ve result of li gao n and the reliability of es mates of related obligao n. |
| ||Conclusion: |
| ||Based on procedure described above we did not iden fy any material excep ons rela ng to management's assero ns and treatment presenta on and disclosure of the subject ma er in the Financial statements. |
Information Other than the Financial Statements and Auditors' Report Thereon
The Company's Board of Directors is responsible for the preparao n of the other informaon. The other informao n comprises the informao n included in the Board's Report includingAnnexures to Board's Report Management Discussion and Analysis Corporate GovernanceReport and Shareholder's
Informa on but does not include the Financial statements and our Auditors'reportthereon. The above- referred informao n is expected to be made available to us ae r thedate of this audit report.
Our opinion on the Financial statements does not cover the other informao n and we donot express any form of assurance conclusion thereon.
In connec on with our audit of the Financial statements our responsibility is to readthe other informao n iden ed above when it becomes available and in doing so considerwhether the other informao n is materially inconsistent with the Financial statements orour knowledge obtained in the audit or otherwise appears to be materially misstated.
When we read the informa on if we conclude that there is a material misstatementtherein we are required to communicate the ma er to those charged with governance andtake appropriate ac ons necessitated by the circumstances and the applicable laws andregula ons.
Responsibili]es of Management and Those Charged with Governance for the FinancialStatements
The Company's Board of Directors is responsible for the ma ers stated in seco n 134(5)of the Act with respect to the prepara on of these Financial statements that give a trueand fair view of the Financial posio n Financial performance total comprehensive incomechanges in equity and cash ows of the
Company in accordance with the accounn g principles generally accepted in Indiaincluding the Indian Accoun ng Standards (Ind AS) speci ed under seco n 133 of the Act.This responsibility also includes maintenance of adequate accoun ng records in accordancewith the provisions of the Act for safeguarding of the assets of the Company and forprevenn g and detecn g frauds and other irregulari es; seleco n and applica on ofappropriate accounng policies; making judgments and esmat es that are reasonable andprudent; and design implementao n and maintenance of adequate internal Financialcontrols that were operang e ec vely for ensuring the accuracy and completeness of theaccounng records relevant to the prepara on and presentao n of the Financialstatementsthat give a true and fair view and are free from material misstatement whetherdue to fraud or error.
In preparing the Financial statements management is responsible for assessing theCompany's ability to con nue as a going concern disclosing as applicable ma ers relatedto going concern and using the going concern basis of accoun ng unless management eitherintends to liquidate the Company or to cease operao ns or has no realisc alternav e butto do so.
The Board of Directors is also responsible for overseeing the Company's Financial reporng process.
Auditors'Responsibilitiesfor the Audit of the Financial Statements
Our objecv es are to obtain reasonable assurance about whether the Financial statementsas a whole are free from material misstatement whether due to fraud or error and toissue an Auditors' report that includes our opinion. Reasonable assurance is a high levelof assurance but is not a guarantee that an audit conducted in accordance with SAs willalways detect a material misstatement when it exists. Misstatements can arise from fraudor error and are considered material if individually or in the aggregate they couldreasonably be expected to in uence the economic decisions of users taken on the basis ofthese Financial statements.
As part of an audit in accordance with SAs we exercise professional judgment andmaintain professional skepc ism throughout the audit. We also:
Idenfy and assess the risks of material misstatement of the Financial statementswhether due to fraud or error design and perform audit procedures responsive to thoserisks and obtain audit evidence that is su cient and appropriate to provide a basis forour opinion. The risk of not detec ng a material misstatement resul ng from fraud ishigher than for one resul ng from error as fraud may involve collusion forgery intenonal omissions misrepresentao ns or the override of internal control.
Obtain an understanding of internal control relevant to the audit in order to designaudit procedures that are appropriate in the circumstances. Under seco n 143(3)(i) of theAct we are also responsible for expressing our opinion on whether the Company hasadequate internal Financial controls with reference to Financial statements in place andthe opera ng e ecv eness of such controls.
Evaluate the appropriateness of accounng policies used and the reasonableness ofaccounn g esmat es and related disclosures made by management.
Conclude on the appropriateness of management's use of the going concern basis ofaccoun ng and based on the audit evidence obtained whether a material uncertainty existsrelated to events or condion s that may cast signi cant doubt on the Company's ability tocon nue as a going concern.
If we conclude that a material uncertainty exists we are required to draw a en on inour Auditors' report to the related disclosures in the 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 Auditors' report. However future events or condions may cause the Company to cease to continue as a going concern.
Evaluate the overall presentao n structure and content of the Financial statementsincluding the disclosures and whether the Financial statements represent the underlyingtransaco ns and events in a manner that achieves fair presentao n.
We communicate with those charged with governance regarding among other ma ers theplanned scope and m ing of the audit and signi cant audit ndings including any signi cantde ciencies in internal control that we iden fy 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 rela onships and other ma ers that may reasonably be thought to bear on ourindependence and where applicable related safeguards.
From the ma ers communicated with those charged with governance we determine those maers that were of most signi cance in the audit of the Financial statements of the currentyear and are therefore the key audit ma ers. We describe these ma ers in our Auditors'report unless law or regulao n precludes public disclosure about the ma ers or when inextremely rare circumstances we determine that a ma er should not be communicated in ourreport because the adverse consequences of doing so would reasonably be expected tooutweigh the public interest bene ts of such communica on.
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 sub-seco n (11) of seco n 143 of theAct we give in Annexure "A" a statement on the ma ers speci ed in paragraphs 3and 4 of the Order to the extent applicable.
2. As required by Sec on 143(3) of the Act we report that:
a. we have sought and obtained all the informa on and explanao ns which to the best ofour 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 examinao n of those books;
c. the Balance Sheet the Statement of Profit and loss including other comprehensiveincome the Statement of Changes in Equity and the Statement of Cash Flows dealt with bythis Report are in agreement with the books of account;
d. in our opinion the aforesaid Financial statements comply with the Ind AS speci edunder Sec on 133 of the Act;
e. on the basis of the wri en representao ns received from the directors as on March31 2020 taken on record by the Board of Directors none of the directors is disquali edas on March 31 2020 from being appointed as a director in terms of Seco n 164(2) of theAct;
f. with respect to the adequacy of the internal Financial controls with reference toFinancial statements of the Company and the operang e ec veness of such controls refer toour separate report in Annexure "B"; g. with respect to the other ma ers to beincluded in the Auditors'Report in accordance with the requirements of seco n 197(16) ofthe Act as amended:
In our opinion and to the best of our informao n and according to the explanao ns givento us the remunerao n paid by the Company to its directors during the year is inaccordance with the provisions of seco n 197 of the Act; and
h. with respect to the other ma ers 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 informao n and according to the explanao ns given to us:
i. the Company has disclosed the impact of pending lig a ons on its Financial posi onin its nancial statements Refer Note 37 to the Financial statements;
ii. the Company did not have any long-term contracts including deriva ve contracts forwhich there were material foreseeable losses as at March 31 2020;and
iii. there has been no delay in transferring amounts required to be transferred tothe Investor Educa on and Protec on Fund by the Company.
ANNEXURE "A"TO THE INDEPENDENT AUDITORS' REPORT
The annexure referred to in our Independent Auditors' Report to the members of Diaminesand Chemicals Limited ("the Company") on the Financial statements for theyear ended March 31 2020 we report that:
i. (a) The Company has maintained proper records showing full parcu lars includingquan tav e details and situa on of xed assets.
(b) The Company has a regular programme of physical veri ca on of its xed assets bywhich xed assets are veri ed in a phased manner over a period of three years. Inaccordance with this programme certain xed assets were veri ed during the year and nomaterial discrepancies were no ced on such veri cao n. In our opinion the periodicity ofphysical veri ca on is reasonable having regard to the size of the Company and the natureof its assets.
(c) According to the informa on and explanao ns given to us and on the basis of ourexaminao n of the records of the Company the t le deeds / lease deedsofimmovableproperesareheld in the name of the Company as on date of this report.
ii. During the year the inventories have been physically veri ed by the management. Inour opinion the frequency of veri cao n is reasonable. On the basis of our examina on ofthe records of inventory we are of the opinion that the discrepancies no ced on veri caon between the physical stocks and book records were not material and have been properlydealt with in the books of account.
iii. The Company has not granted any loans secured or unsecured to companies rmsLimited Liability Partnerships or other pares covered in the register maintained under secon 189 of the Companies Act 2013 and therefore reporng under clause (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 or security to thepar es covered under seco n 185 and 186 of the Act. In our opinion and according to theinforma on and explanao n given to us the Company has complied with the provisions ofseco n 186 of the Act in respect of the Investments made.
v. According to the informao n and explana ons given to us the Company has notaccepted any deposits during the year from the public within the meaning of provisions ofsec on 73 to 76 of the Act and the rules framed thereunder or under the direc ves issuedby the Reserve Bank of India and therefore repor ng under clause (v) of the Order is notapplicable to the Company.
vi. We have broadly reviewed the cost records and accounts maintained by the Companypursuant to the Companies (Cost Records and Audit) Rules 2014 as speci ed by the CentralGovernment under seco n 148(1) of the Act and are of the opinion that prima facie theprescribed accounts and records have been made and maintained. However we have notcarried out a detailed examina on of the same.
vii. (a) According to the informa on and explana ons given to us and on the basis ofour examinao n of the records the Company has been regular in deposi ng with appropriateauthori es undisputed statutory dues including provident fund employee's stateinsurance income-tax duty of customs goods and service tax cess and any otherstatutory dues applicable to it. Further no undisputed amounts payable in respect ofincome tax sales tax service tax duty of customs duty of excise value added taxgoods and service tax cess and other statutory dues were in arrears as at 31st March2020 for a period of more than six months from the date they become payable.
(b) According to the informao n and explanao ns given to us and on the basis of ourexaminao n of the records of the Company there are no disputed dues in respect of goodsand service tax which have not been deposited. According to the informa on and explanao nsgiven to us the following are the par culars of Income tax Service tax duty of customsand duty of excise as at March 31 2020 which have not been deposited on account ofdispute:
|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) ||78.69 ||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 - Central Excise Customs and Service Tax Vadodara-I |
|The Foreign Trade (Development and Regula on) Act 1992 ||5.46 ||F.Y. 1993-94 to 1997-98 ||Jt. Director General of Foreign Trade Vadodara. |
viii. In our opinion and according to the informao n and explana ons given to us theCompany has not defaulted in repayment of loans or borrowings obtained from the bank. Thecompany has not taken any loans from Financial inst uo n or Government. It has notissuedany debentures.
ix. The Company has not raised any money by way of ini al public o er or further publico er (including debt instruments) or term loans during the year and therefore repor ngunder clause (ix) of the Order is not applicable to the Company.
x. To the best of our knowledge and according to informa on and explana ons given tous no fraud by the company or on the Company by its o cers or employees has been no cedor reported during the year.
xi. According to the informao n and explana ons given to us and based on our examinao nof the records of the Company the Company has paid/provided for managerial remunerao n inaccordance with the requisite approvals mandated by the provisions of Sec on 197 read withSchedule V to the Act.
xii. In our opinion the Company is not a Nidhi company and therefore reporng underclause (xii) of the Order is not applicable to the Company. xiii. In our opinion andaccording to the informa on and explana ons given to us transac ons with the related pares are in compliance with seco ns 177 and 188 of the Act where applicable and the detailsof such transac ons have been disclosed in the Financial statements as required by theapplicable Indian Accounn g Standards (Ind AS).
xiv. According to the informao n and explanao ns given to us and based on our examinaon of the records the Company has not made any preferenal allotment or private placementof shares or fully or partly converb le debentures during the year and therefore repor ngunder clause (xiv) of the Order is not applicable to the Company.
xv. In our opinion and according to the informao n and explana ons given to us theCompany has not entered into non-cash transac ons with directors or persons connected withhim and therefore repor ng under clause(xv) of the Order is not applicable to theCompany.
xvi. In our opinion and according to the informa on and explana ons given to us theCompany is not required to be registered under Sec on 45-IA of the Reserve Bank of IndiaAct 1934.
ANNEXURE "B" TO THE INDEPENDENT AUDITORS' REPORT
(Referred to in paragraph 2(f) under Report on Other Legal and RegulatoryRequirements' seco n of our report to the Members of Diamines and Chemicals Limited onthe Financial statementsof even date) Report on the Internal Financial Controls withreference to Financial statements under Clause (i) of Sub-section 3 of Section 143 of theAct.
We have audited the internal Financial controls with reference to Financial statementsof Diamines and Chemicals Limited ("the Company") as of March 31 2020 inconjunc on with our audit of the Financial statements of the Company for the year ended onthat date.
Management's Responsibility for Internal Financial Controls
The Company's management is responsible for establishing and maintaining internalFinancial controls based on the internal control over Financial reporng criteriaestablished by the Company considering the essenal components of internal control statedin the Guidance Note on Audit of Internal Financial Controls over Financial Repor ngissued by the Inst ute of Chartered Accountants of India ("ICAI"). Theseresponsibilies include the design implementao n and maintenance of adequate internalFinancial controls that were opera ng e ecv ely for ensuring the orderly and e cientconduct of its business including adherence to company's policies the safeguarding ofits assets the preven on and deteco n of frauds and errors the accuracy and completenessof the accoun ng records and the mely prepara on of reliable Financial informao n asrequired under the Act.
Our responsibility is to express an opinion on the Company's internal Financialcontrols with reference to Financial statements based on our audit. We conducted our auditin accordance with the Guidance Note on Audit of Internal Financial Controls overFinancial Repor ng (the "Guidance note") and the Standards on Audin g issued byICAI and deemed to be prescribed under sec on 143(10) of the Companies 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 Financial statements were established and maintained and if such controlsoperated e ecve ly in all material respects.
Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal Financial controls with reference to Financial statements and their opera nge ecv eness. Our audit of internal Financial controls with reference to Financialstatements included obtaining an understanding of internal Financial controls withreference to Financial statements assessing the risk that a material
weakness exists and tesng and evalua ng the design and opera ng e ecv eness ofinternal control based on the assessed risk. The procedures selected depend on theauditor's judgement including the assessment of the risks of material misstatement of theFinancial statements whether due to fraud or error.
We believe that the audit evidence we have obtained is su cient and appropriate toprovide a basis for our audit opinion on the Company's internal Financial controls withreference to Financial statements.
Meaning of Internal Financial Controls with reference to Financial statements
A company's internal Financial controls with reference to Financial statements is aprocess designed to provide reasonable assurance regarding the reliability of Financialrepor ng and the prepara on of Financial statements for external purposes in accordancewith generally accepted accoun ng principles. A company's internal Financial controls withreference to Financial statements include those policies and procedures that (1) pertainto the maintenance of records that in reasonable detail accurately and fairly re ect thetransacon s and disposi ons of the assets of the company;
(2) provide reasonable assurance that transaco ns are recorded as necessary to permitprepara on of Financial statements in accordance with generally accepted accoun ngprinciples and that receipts and expenditures of the company are being made only inaccordance with authorisao ns of management and directors of the company; and
(3) provide reasonable assurance regarding preveno n or mely deteco n of unauthorisedacquisi on use or disposi on of the company's assets that could have a material e ect onthe Financial statements.
Inherent Limitations of Internal Financial Controls with reference to Financialstatements
Because of the inherent limita ons of internal Financial controls with reference toFinancial statements including the possibility of collusion or improper managementoverride of controls material misstatements due to error or fraud may occur and not bedetected. Also projeco ns of any evalua on of the internal Financial controls withreference to Financial statements to future periods are subject to the risk that theinternal Financial controls with reference to Financial statements may become inadequatebecause of changes in condi ons or that the degree of compliance with the policies orprocedures may deteriorate.
In our opinion the Company has in all material respects adequate internal Financialcontrols with reference to Financial statements and such internal Financial controls withreference to Financial statements were opera ng e ec vely as at March 31 2020 based onthe internal control over Financial repor ng criteria established by the Companyconsidering the essenal components of internal control stated in the Guidance Note onAudit of Internal Financial Controls over Financial Repor ng issued by the Institute ofChartered Accountants of India.