To the Members of Ester Industries Limited
Report on the Audit of the Financial Statements
1. We have audited the accompanying financial statements of Ester Industries Limited('the Company') which comprise the Balance Sheet as at March 31 2019 the Statement ofProfit and Loss (including Other Comprehensive Income) the Cash Flow Statement and theStatement of Changes in equity for the year then ended and a summary of the significantaccounting policies and other explanatory information.
2. In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid financial statements give the information required by theCompanies Act 2013 ('Act') in the manner so required and give a true and fair view inconformity with the accounting principles generally accepted in India including IndianAccounting Standards ('Ind AS') specified under section 133 of the Act of the state ofaffairs (financial position) of the Company as at March 312019 and its profit (financialperformance including other comprehensive income) its cash flows and the changes inequity for the year ended on that date
Basis for opinion
3. We conducted our audit in accordance with the Standards on Auditing specified undersection 143(10) of the Act. Our responsibilities under those standards are furtherdescribed in the Auditor's Responsibilities for the Audit of the Financial Statementssection of our report. We are independent of the Company in accordance with the Code ofEthics issued by the Institute of Chartered Accountants of India ('ICAI') together withthe ethical requirements that are relevant to our audit of the financial statements underthe provisions of the Act and the rules thereunder and we have fulfilled our otherethical responsibilities in accordance with these requirements and the Code of Ethics. Webelieve that the audit evidence we have obtained is sufficient and appropriate to providea basis for our opinion.
Key audit matters
4. Key audit matters are those matters that in our professional judgment were of mostsignificance in our audit of the financial statements of the current period. These matterswere addressed in the context of our audit of the financial statements as a whole and informing our opinion thereon and we do not provide a separate opinion on these matters.
5. We have determined the matter described below to be the key audit matter to becommunicated in our report.
|Key audit matter ||How our audit addressed the key audit matter |
|Allowance for inventories |
Refer note 5.4 for accounting policy and note 11 to the
|Our audit procedures to assess allowance for inventories included but were not limited to the following- |
|financial statements. |
The Company holds significant inventories and records allowance for identified obsolete slow-moving and non-
| Understood the management process for identification of slow moving nonmoving or obsolete inventories and ensured that the same is consistently applied. |
|moving inventories. |
At the end of each reporting period management of the
| Assessed the design and operating effectiveness of Company's controls (including the automated controls) around recording of inventory allowance; |
|that certain inventories which are stated at cost are above their net realisable value. If so these inventories are written down to their net realisable value. |
The complexities involved in this assessment include:
Judgement in specific identification process performed by management to ascertain slow moving and obsolete inventories;
Assessing the net realisable value of slow moving and obsolete inventory
The above complexities involve specific management judgements and estimates with respect to slow moving and obsolete inventory and hence considered to be a key audit matter for current year audit.
| Inquired with the management about slow and non-moving inventories as on 31 March 2019 and their corresponding status of the same having regard to planned consumption or planned re-processing. |
Tested the computation for allowance for slow-moving non-moving and obsolete inventories with the management analysis and performed independent age-wise analysis of the inventory line items along with specific inquiries with the management to ensure the completeness of the inventory recognised as slow moving non-moving and obsolete.
Tested the net realisable value of finished goods inventory on a sample basis to recent selling prices less costs to sell to identify allowance required for finished goods.
Compared and assessed the actual utilization or liquidation of inventories to the previous assessment or estimates done by the management to determine the efficacy of the process of estimation by the management.
Tested inventory ageing obtained through system reports where applicable.
Ensured the disclosures in the financial statements are in accordance with the applicable accounting standards.
Information other than the Financial Statements and Auditors Report thereon
6. 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 financial statements and our auditor's report thereon. The Annual Report is expectedto be made available to us after the date of this auditor's report.
Our opinion on the financial statements does not cover the other information and wewill not express any form of assurance conclusion thereon.
In connection with our audit of the financial statements our responsibility is to readthe other information identified above when it becomes available and in doing soconsider whether the other information is materially inconsistent with the financialstatements or our knowledge obtained in the
audit or otherwise appears to be materially misstated. When we read the Annual Reportif we conclude that there is a material misstatement therein we are required tocommunicate the matter to those charged with governance.
Responsibilities of management and those charged with governance for the financialstatements
7. 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 financial statements that givea true and fair view of the state of affairs (financial position) profit or loss(financial performance including other comprehensive income) changes in equity and cashflows of the Company in accordance with the accounting principles generally accepted inIndia including the 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 wereoperating effectively for ensuring the accuracy and completeness of the accountingrecords relevant to the preparation and presentation of the financial statements thatgive a true and fair view and are free from material misstatement whether due to fraud orerror.
8. In preparing the financial statements management is responsible for assessing theCompany'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.
9. Those Board of Directors are also responsible for overseeing the Company's financialreporting process.
Auditor's responsibilities for the audit of the Financial
10. our objectives are to obtain reasonable assurance about whether the financialstatements 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 withStandards on Auditing will always detect a material misstatement when it exists.Misstatements can arise from fraud or error and are considered material if individuallyor in the aggregate they could reasonably be expected to influence the economic decisionsof users taken on the basis of these financial statements.
11. As part of an audit in accordance with Standards on Auditing we exerciseprofessional judgment and maintain professional skepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of the financialstatements whether due to fraud or error design and perform audit procedures responsiveto those risks and obtain audit evidence that is sufficient and appropriate to provide abasis for our opinion. The risk of not detecting a material misstatement resulting
from fraud 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 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 Companyhas adequate internal financial controls system in place and the operating effectivenessof such controls.
Evaluate the appropriateness of accounting policies used and the reasonablenessof accounting estimates and related disclosures made by management.
Conclude on the appropriateness of management's use of the going concern basisof accounting and based on the audit evidence obtained whether a material uncertaintyexists related to events or conditions that may cast significant doubt on the Company'sability to continue as a going concern. If we conclude that a material uncertainty existswe are required to draw attention in our auditor's report to the related disclosures inthe financial statements or if such disclosures are inadequate to modify our opinion.our conclusions are based on the audit evidence obtained up to the date of our auditor'sreport. However future events or conditions may cause the Company to cease to continue asa going concern.
evaluate the overall presentation structure and content of the financialstatements including the disclosures and whether the financial statements represent theunderlying transactions and events in a manner that achieves fair presentation.
12. We communicate with those charged with governance regarding among other mattersthe planned scope and timing of the audit and significant audit findings including anysignificant deficiencies in internal control that we identify during our audit.
13. We also provide those charged with governance with a statement that we havecomplied with relevant ethical requirements regarding independence and to communicatewith them all relationships and other matters that may reasonably be thought to bear onour independence and where applicable related safeguards.
14. From the matters communicated with those charged with governance we determinethose matters that were of most significance in the audit of the financial statements ofthe current period and are therefore the key audit matters. We describe these matters inour auditor's report unless law or regulation precludes public disclosure about the matteror when in extremely rare circumstances we determine that a matter should not becommunicated in our report because the adverse consequences of doing so would reasonablybe expected to outweigh the public interest benefits of such communication.
Report on other legal and regulatory requirements
15. As required by section 197(16) of the Act we report that the Company has paidremuneration to its directors during the year in accordance with the provisions of andlimits laid down under section 197 read with Schedule V to the Act.
16. As required by the Companies (Auditor's Report) Order 2016 ('the order') issued bythe Central Government of India in terms of section 143(11) of the Act we give in theAnnexure I a statement on the matters specified in paragraphs 3 and 4 of the Order.
17. Further to our comments in Annexure I as required by section 143(3) of the Act wereport that:
a) we have sought and obtained all the information and explanations which to the bestof our knowledge and belief were necessary for the purpose 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 financial statements dealt with by this report are in agreement with the booksof account;
d) in our opinion the aforesaid financial statements comply with Ind AS specifiedunder section 133 of the Act;
e) on the basis of the written representations received from the directors and taken onrecord by the Board of Directors none of the directors is disqualified as on 31 March2019 from being appointed as a director in terms of section 164(2) of the Act;
f) we have also audited the internal financial controls over financial reporting(IFCoFR) of the Company as on March 31 2019 in conjunction with our audit of thefinancial statements of the Company for the year ended on that date and our report datedMay 13 2019 as per Annexure II expressed an unmodified opinion;
g) 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
(as amended) in our opinion and to the best of our information and according to theexplanations given to us:
i. the Company as detailed in note 37 to the financial statements has disclosed theimpact of pending litigations on its financial position as at March 31 2019;
ii. the Company did not have any long-term contracts including derivative contracts forwhich there were any material foreseeable losses as at March 31 2019;
iii. there were no amounts which were required to be transferred to the InvestorEducation and Protection Fund by the Company during the year ended March 31 2019;
iv. the disclosure requirements relating to holdings as well as dealings in specifiedbank notes were applicable for the period from November 8 2016 to December 30 2016which are not relevant to these financial statements. Hence reporting under this clauseis not applicable.
| ||For Walker Chandiok & Co LLP |
| ||Chartered Accountants |
| ||Firm's Registration No.: 001076N/N500013 |
| ||Sd/- |
|Place : New Delhi ||Ashish Gupta |
|Date : May 13 2019 ||Membership No.: 504662 |
Annexure I to the Independent Auditor's Report of even date to the members of EsterIndustries Limited on the financial statements for the year ended March 31 2019
Based on the audit procedures performed for the purpose of reporting a true and fairview on the financial statements of the Company and taking into consideration theinformation and explanations given to us and the books of account and other recordsexamined by us in the normal course of audit and to the best of our knowledge and beliefwe report that:
(i) (a) The Company has maintained proper records showing
full particulars including quantitative details and situation of fixed assets.
(b) The Company has a regular program of physical verification of its fixed assetsunder which fixed assets are verified in a phased manner over a period of three yearswhich in our opinion is reasonable having regard to the size of the Company and thenature of its assets. In accordance with this program certain fixed assets were verifiedduring the year and no material discrepancies were noticed on such verification.
(c) The title deeds of all the immovable properties (which are included under the head'Property plant and equipment') are held in the name of the Company.
(ii) In our opinion the management has conducted physical verification of inventory atreasonable intervals during the year except for goods-in-transit. No materialdiscrepancies were noticed on the aforesaid verification.
(iii) The Company has not granted any loan secured or unsecured to companies firmsLimited Liability Partnerships (LLPs) or other parties covered in the register maintainedunder Section 189 of the Act. Accordingly the provisions of clauses 3(iii)(a) 3(iii)(b)and 3(iii)(c) of the Order are not applicable.
(iv) In our opinion the Company has complied with the provisions of Sections 185 and186 of the Act in respect of loans investments guarantees and security.
(v) In our opinion the Company has not accepted any deposits within the meaning ofSections 73 to 76 of the Act and the Companies (Acceptance of Deposits) Rules 2014 (asamended). Accordingly the provisions of clause 3(v) of the order are not applicable.
(vi) We have broadly reviewed the books of account maintained by the Company pursuantto the Rules made by the Central Government for the maintenance of cost records undersub-section (1) of Section 148 of the Act in respect of Company's products and are of theopinion that prima facie the prescribed accounts and records have been made andmaintained. However we have not made a detailed examination of the cost records with aview to determine whether they are accurate or complete.
(vii) (a) The Company is regular in depositing undisputed
statutory dues including provident fund employees' state insurance income-tax goodsand services tax duty of customs cess and other material statutory dues as applicablewith the appropriate authorities. Further no undisputed amounts payable in respectthereof were outstanding at the year-end for a period of more than six months from thedate they become payable.
(b) The dues outstanding in respect of income-tax sales- tax service-tax duty ofcustoms duty of excise and value added tax on account of any dispute are as follows:
Statement of Disputed Dues
|Name of the statute ||Nature of dues ||Amount (Rs. in lacs) ||Period to which the amount relates ||Forum where dispute is pending |
|Central Excise Act 1944 ||Excise Duty ||8.06 ||March 1990 to May 1991 ||Commissioner (Appeals) Central Excise Ghaziabad UP |
|Central Excise Act 1944 ||Excise Duty ||17.46 ||June 1988 to March 1992 ||Joint Commissioner Meerut UP |
|Central Excise Act 1944 ||Excise Duty ||164.2 ||April 1990 to February 1992 ||Commissioner (Appeals) Central Excise Ghaziabad UP |
|Central Excise Act 1944 ||Excise Duty ||11.72 ||June 1987 to October 1988 ||Assistant Commissioner Central Excise Rampur UP |
|Central Excise Act 1944 ||Excise Duty ||20.61 ||March 1991 to May 1991 ||Commissioner (Appeals) Central Excise Ghaziabad UP |
|Central Excise Act 1944 ||Excise Duty ||17.23 ||April 1992 to November 1993 ||Commissioner Central Excise Meerut UP |
|Central Excise Act 1944 ||Excise Duty ||4.68 ||August 1993 to March 1994 and January 2010 ||Commissioner (Appeal) Central Excise Rampur UP |
|Central Excise Act 1944 ||Excise Duty ||12.95 ||April 1991 to November 1992 ||Joint Commissioner Meerut II UP |
|Central Excise Act 1944 ||Excise Duty ||1.58 ||July 1987 to December 1988 ||Commissioner Central Excise Meerut UP |
|Central Excise Act 1944 ||Excise Duty ||5.22 ||April 1992 to July 1993 ||Assistant Commissioner Central Excise Rampur UP |
|Central Excise Act 1944 ||Excise Duty ||34.44 ||January 2010 to January 2012 ||Commissioner (Appeals) Central Excise Meerut II UP |
|Central Excise Act 1944 ||Excise Duty ||2.5 ||April 2009 to December 2009 ||Commissioner (Appeals) Central Excise Rampur UP |
|Central Excise Act 1944 ||excise Duty ||3.00 ||January 1995 ||Commissioner (Appeals) Noida UP |
|Finance Act 1994 ||Service Tax ||27.57 ||April 1988 to March 2016 ||Deputy Commissioner Central excise Rampur UP |
|Finance Act 1994 ||Service Tax ||123.30 ||April 2010 to March 2015 ||Commissioner (Appeals) Central excise Meerut II UP |
|finance Act 1994 ||Service Tax ||13.53 ||october 2011 ||Assistant Commissioner Central excise Rampur UP |
|The Customs Act 1962 ||Custom Duty ||2.58 ||January 1997 to March 1998 ||Additional Commissioner (Customs) Mumbai |
|The Customs Act 1962 ||Custom Duty ||4.48 ||January 1997 to March 1998 ||Additional Commissioner (Customs) Mumbai |
|The Customs Act 1962 ||Custom Duty ||7.59 ||January 1997 to March 1998 ||Additional Commissioner (Customs) Mumbai |
|The Customs Act 1962 ||Custom Duty ||43.05 ||April 1998 to March 1999 ||Commissioner of Customs Mumbai |
|The Customs Act 1962 ||Custom Duty ||14.43 ||June 2016 ||Additional Commissioner of Customs (Appeals) New Delhi |
|The Customs Act 1962 ||Custom Duty ||15.35 ||June 2016 ||Additional Commissioner of Customs (Appeals) New Delhi |
|Income Tax Act 1961 ||Income Tax ||18.00 ||Assessment year 1993-94 to Assessment year 1995-96 ||Income Tax Appellate Tribunal New Delhi |
|Income Tax Act 1961 ||Income Tax ||3.41 ||Assessment year 1997-98 ||The Hon'ble Supreme Court of India |
|Income Tax Act 1961 ||Income Tax ||11.16 ||Assessment year 2005-06 ||Income Tax Appellate Tribunal New Delhi |
|Income Tax Act 1961 ||Income Tax ||5.78 ||Assessment year 2004-05 ||The Hon'ble Supreme Court of India |
|Income Tax Act 1961 ||Income Tax ||14.09 ||Assessment year 2006-07 to Assessment year 2007-08 and Assessment year 2011-12 ||Income Tax Appellate Tribunal New Delhi |
|Income Tax Act 1961 ||Income Tax ||4.05 ||Assessment year 2006-07 to 2013-14 ||Commissioner of Income Tax (Appeals) New Delhi |
|Income Tax Act 1961 ||Income Tax ||33.68 ||Assessment year 2004-05 ||The Hon'ble Supreme Court of India |
|Income Tax Act 1961 ||Income Tax ||45.74 ||Assessment year 2014-15 ||Commissioner of Income Tax (Appeals) New Delhi |
(viii) The Company has not defaulted in repayment of loans or borrowings to any bank orfinancial institution during the year. The Company did not have any outstanding debenturesor loan from government during the year.
(ix) The Company did not raise moneys by way of initial public offer or further publicoffer (including debt instruments). In our opinion the term loans were applied for thepurposes for which the loans were obtained though idle funds which were not required forimmediate utilisation were invested in liquid investments payable on demand.
(x) No fraud by the Company or on the Company by its officers or employees has beennoticed or reported during the period covered by our audit.
(xi) Managerial remuneration has been provided by the Company in accordance with therequisite approvals mandated by the provisions of Section 197 of the Act read withSchedule V to the Act.
(xii) In our opinion the Company is not a Nidhi Company. Accordingly provisions ofclause 3(xii) of the order are not applicable.
(xiii) In our opinion all transactions with the related parties are in compliance withSections 177 and 188 of Act where applicable and the requisite details have beendisclosed in
the financial statements etc. as required by the applicable Ind AS.
(xiv) During the year the Company has not made any preferential allotment or privateplacement of shares or fully or partly convertible debentures.
(xv) In our opinion the Company has not entered into any noncash transactions with thedirectors or persons connected with them covered under Section 192 of the Act.
(xvi) The Company is not required to be registered under Section 45-IA of the ReserveBank of India Act 1934.
|For Walker Chandiok & Co LLP |
|Chartered Accountants |
|Firm's Registration No.: 001076N/N500013 |
|Ashish Gupta |
|Membership No.: 504662 |
|Place : New Delhi |
|Date : May 13 2019 |
Annexure II to the independent auditor's report of even date to the members of EsterIndustries Limited on the financial statements for the year ended March 31 2019
Independent auditor's report on the Internal Financial
Controls under clause (i) of sub-section 3 of Section 143 of the Companies Act 2013(the Act')
1. In conjunction with our audit of the financial statements of Ester IndustriesLimited ('the Company') as at and for the year ended March 31 2019 we have audited theinternal financial controls over financial reporting ('IFCoFR') of the Company as at thatdate.
Management's responsibility for internal financial controls
2. The Company's Board of Directors is responsible for establishing and maintaininginternal financial controls based on the internal control over financial reportingcriteria established by the Company considering the essential components of internalcontrol stated in the Guidance Note on Audit of Internal Financial Controls over FinancialReporting ('the Guidance Note') issued by the Institute of Chartered Accountants of India('ICAI'). These responsibilities include the design implementation and maintenance ofadequate internal financial controls that were operating effectively for ensuring theorderly and efficient conduct of the Company's business including adherence to theCompany's policies the safeguarding of its assets the prevention and detection of fraudsand errors the accuracy and completeness of the accounting records and the timelypreparation of reliable financial information as required under the Act.
3. Our responsibility is to express an opinion on the Company's IFCoFR based on ouraudit. We conducted our audit in accordance with the Standards on Auditing issued by theICAI and deemed to be prescribed under Section 143(10) of the Act to the extentapplicable to an audit of IFCoFR and the Guidance Note issued by the ICAI. ThoseStandards and the Guidance Note require that we comply with ethical requirements and planand perform the audit to obtain reasonable assurance about whether adequate IFCoFR wereestablished and maintained and if such controls operated effectively in all materialrespects.
4. Our audit involves performing procedures to obtain audit evidence about the adequacyof the IFCoFR and their operating effectiveness. Our audit of IFCoFR includes obtaining anunderstanding of IFCoFR assessing the risk that a material weakness exists and testingand evaluating 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 financial statements whether dueto fraud or error.
5. We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the Company's IFCoFR.
Meaning of internal financial controls over financial reporting
6. A company's IFCoFR is a process designed to provide reasonable assurance regardingthe reliability of financial reporting and the preparation of financial statements forexternal purposes in accordance with generally accepted accounting principles. A company'sIFCoFR include those policies and procedures that (1) pertain to the maintenance ofrecords that in reasonable detail accurately and fairly reflect the transactions anddispositions of the assets of the company; (2) provide reasonable assurance thattransactions are recorded as necessary to permit preparation of financial statements inaccordance with generally accepted accounting principles and that receipts andexpenditures 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 financial statements.
Inherent limitations of internal financial controls over financial reporting
7. Because of the inherent limitations of IFCoFR including the possibility ofcollusion or improper management override of controls material misstatements due to erroror fraud may occur and not be detected. Also projections of any evaluation of the IFCoFRto future periods are subject to the risk that the IFCoFR may become inadequate because ofchanges in conditions or that the degree of compliance with the policies or proceduresmay deteriorate.
8. In our opinion the Company has in all material respects adequate internalfinancial controls over financial reporting and such controls were operating effectivelyas at March 31 2019 based on the internal control over financial reporting criteriaestablished by the Company considering the essential components of internal control statedin the Guidance Note issued by the ICAI.
For Walker Chandiok & Co LLP
Firm's Registration No.: 001076N/N500013
Membership No.: 504662
Place : New Delhi
Date : May 13 2019