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Galaxy Surfactants Ltd.

BSE: 540935 Sector: Consumer
NSE: GALAXYSURF ISIN Code: INE600K01018
BSE 00:00 | 18 Oct 1508.00 42.55
(2.90%)
OPEN

1472.35

HIGH

1543.55

LOW

1461.20

NSE 00:00 | 18 Oct 1505.15 34.65
(2.36%)
OPEN

1474.95

HIGH

1544.70

LOW

1461.95

OPEN 1472.35
PREVIOUS CLOSE 1465.45
VOLUME 3641
52-Week high 1543.55
52-Week low 885.00
P/E 32.43
Mkt Cap.(Rs cr) 5,346
Buy Price 1508.00
Buy Qty 1.00
Sell Price 1508.00
Sell Qty 4.00
OPEN 1472.35
CLOSE 1465.45
VOLUME 3641
52-Week high 1543.55
52-Week low 885.00
P/E 32.43
Mkt Cap.(Rs cr) 5,346
Buy Price 1508.00
Buy Qty 1.00
Sell Price 1508.00
Sell Qty 4.00

Galaxy Surfactants Ltd. (GALAXYSURF) - Auditors Report

Company auditors report

To The Members of Galaxy Surfactants Ltd

Report on the Audit of the Standalone Financial Statements

opinion

We have audited the accompanying standalone financial statements of Galaxy SurfactantsLtd (“the Company”) which comprise the Balance Sheet as at 31stMarch 2019 and the Statement of Profit and Loss (including Other Comprehensive Income)the Cash Flow Statement and the Statement of Changes in Equity for the year then endedand a summary of significant accounting policies and other explanatory information.

In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid standalone financial statements give the information requiredby the Companies Act 2013 (“the Act”) in the manner so required and give a trueand fair view in conformity with the Indian Accounting Standards prescribed under section133 of the Act read with the Companies (Indian Accounting Standards) Rules 2015 asamended (“Ind AS”) and other accounting principles generally accepted in Indiaof the state of affairs of the Company as at 31st March 2019 and its profittotal comprehensive income its cash flows and the changes in equity for the year ended onthat date.

BASIS FOR OpINION

We conducted our audit of the standalone financial statements in accordance with theStandards on Auditing specified under section 143(10) of the Act (SAs). Ourresponsibilities under those Standards are further described in the Auditor'sResponsibility for the Audit of the Standalone Financial Statements section of our report.We are independent of the Company in accordance with the Code of Ethics issued by theInstitute of Chartered Accountants of India (ICAI) 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 ICAI's Code of Ethics. Webelieve that the audit evidence obtained by us is sufficient and appropriate to provide abasis for our audit opinion on the standalone financial statements.

KEY AUDIT MATTERS

Key audit matters are those matters that in our professional judgment were of mostsignificance in our audit of the standalone financial statements of the current period.These matters were addressed in the context of our audit of the standalone financialstatements as a whole and in forming our opinion thereon and we do not provide aseparate opinion on these matters. We have determined the matters described below to bethe key audit matters to be communicated in our report.

Sr. No. Key Audit Matter Auditor's Response
1 Fair valuation of financial instruments-Investment in preference shares in subsidiary company Principal audit procedures performed:
(Refer Note 4 sub note (p) (t) of Note 1(B) Note 51 and note 53 to Standalone financial statements of the Company) • We assessed the appropriateness of the valuation techniques used by the management for valuation of these financial instruments.
The Company's investment in preference shares in the Subsidiary Company amounting to ? 253.63 Crores is considered as a financial asset and is measured at fair value through Profit & loss in accordance with Ind AS 109. • We tested the design and operative effectiveness of the controls over valuation of investments including controls over assumptions used by the management's expert.
In terms of Ind AS 113 Fair value is defined as the price that would be received to sell an asset or paid to transfer • We obtained the fair valuation report of management's expert.
a liability in an orderly transaction between market participants at the measurement date. • We assessed the objectivity and competence of the management's expert.
Management has determined the fair values with the assistance of an external expert (management expert) • We evaluated the reasonableness of the future cash flows considered by the management in respect of the preference shares.
The fair value was determined based on the discounted cash flow model. The result of the fair value measurement depends to a large extent on the management's assessment of future cash inflows and the discount rate used and is therefore subject to significant judgement. Due to the estimation uncertainty of the valuation and due to the fact that changes in assumptions could affect the fair value of the financial assets this matter was of particular significance in the context of our audit. • We tested the assumptions used by the management's expert to determine whether these were reasonable and consistently applied. We involved our valuation specialists to assist in our assessment of the fair value of the preference shares.
2 Property plant and equipment (including works in progress) and determination of useful lives (Refer Note 2 and sub note (d) of note 1 (B) to Standalone financial statements of the Company) Principal audit procedures performed:
The carrying value of the property plant and equipment (including capital work in progress) of ? 394.34 Crores includes ? 105.93 Crores Capitalised during the year. • We tested the design and operating effectiveness of controls over additions including items recorded as capital work in progress disposals and computation of depreciation and classification of items of property plant and equipment into appropriate classes.
We identified the recognition and measurement of the cost capitalised and the determination of useful lives of property plant and equipment as a key audit matter as both these require management to exercise significant judgement in determining: • We obtained an understanding an understanding of management's identification of the costs that can be capitalised and for a sample checked the accuracy of these costs to supporting documents. We reviewed operating expenses to evaluate whether any costs that require to be capitalised have been charged to the statement of profit and loss.
• the cost incurred to acquire or construct an item of property plant and equipment and costs incurred subsequently to add to replace part of or service it including allocating amounts initially recognised in respect of an item of property plant and equipment to its significant parts; • We obtained a technical evaluation from the Project Incharge for the date of capitalisation.
• We reviewed the classification of items of property plant and equipment into appropriate classes.
• residual values; • We evaluated whether the borrowing costs capitalised were directly attributable to the acquisition or construction of an asset and assessed whether such costs ceased to be capitalised when substantially all the activities necessary to prepare the qualifying asset for its intended use were complete. We tested the arithmetical accuracy of the borrowing costs capitalised.
• eligible borrowing costs that may be included as a component of the carrying amount of an item of property plant and equipment; and
• estimating the useful lives of the asset including for the separately identifiable components considering the nature timing and likelihood of changes to the technical factors which may affect the useful life of the assets and therefore impact the depreciation charge for the year. • For a sample selected we physically verified the existence of capital work in progress and other items of property plant and equipment.
• We evaluated whether the estimated useful lives and residual values of items of property plant and equipment appear reasonable based on the Company's technical evaluation of the same and by comparing these with the rates specified in Schedule II to the Companies Act 2013.
• For a sample selected we calculated the depreciation charge for the year.

INFORMATION OTHER THAN THE FINANCIAL STATEMENTS AND AUDITOR'S REPORT THEREON

• The Company's Board of Directors is responsible for the other information. Theother information comprises the information included in the Director's Report includingAnnexures to Director's Report Management Discussion and Analysis Report BusinessResponsibility Report but does not include the consolidated financial statementsstandalone financial statements and our auditor's report thereon.

• Our opinion on the standalone financial statements does not cover the otherinformation and we do not express any form of assurance conclusion thereon.

• In connection with our audit of the standalone financial statements ourresponsibility 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 during the course of our audit or otherwise appears to bematerially misstated.

• If based on the work we have performed we conclude that there is a materialmisstatement of this other information we are required to report that fact. We havenothing to report in this regard.

MANAGEMENT'S RESPONSIBILITY FOR THE STANDALONE FINANCIAL 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 financial statementsthat give a true and fair view of the financial position financial performance includingother comprehensive income cash flows and changes in equity of the Company in accordancewith the Ind AS and other accounting principles generally accepted in India. Thisresponsibility also includes maintenance of adequate accounting records in accordance withthe provisions of the Act for safeguarding 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 financialstatement 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 is responsible forassessing the Company's ability to continue as a going concern disclosing as applicablematters related to going concern and using the going concern basis of accounting unlessmanagement either intends to liquidate the Company or to cease operations or has norealistic alternative but to do so.

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

AUDITOR'S RESPONSIBILITY FOR THE AUDIT OF THE STANDALONE FINANCIAL STATEMENTS

Our objectives are to obtain reasonable assurance about whether the standalonefinancial statements as a whole are free from material misstatement whether due to fraudor error and to issue an auditor's report that includes our opinion. Reasonable assuranceis a high level of assurance but is not a guarantee that an audit conducted in accordancewith SAs will always detect a material misstatement when it exists. Misstatements canarise from fraud or error and are considered material if individually or in theaggregate they could reasonably be expected to influence the economic decisions of userstaken on the basis of these standalone financial statements.

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

• I dentify and assess the risks of material misstatement of the standalonefinancial statements whether due to fraud or error design and perform audit proceduresresponsive to those risks and obtain audit evidence that is sufficient and appropriate toprovide a basis for our opinion. The risk of not detecting a material misstatementresulting from fraud is higher than for one resulting from error as fraud may involvecollusion forgery intentional omissions misrepresentations or the override of internalcontrol.

• Obtain an understanding of internal financial control relevant to the audit inorder to design audit procedures that are appropriate in the circumstances. Under section143(3)(i) of the Act we are also responsible for expressing our opinion on whether theCompany has adequate internal financial controls system in place and the operatingeffectiveness of such controls.

• Evaluate the appropriateness of accounting policies used and the reasonablenessof accounting estimates and related disclosures made by the 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 standalone financial statements or if such disclosures are inadequate to modify ouropinion. Our conclusions are based on the audit evidence obtained up to the date of ourauditor's report. However future events or conditions may cause the Company to cease tocontinue as a going concern.

• Evaluate the overall presentation structure and content of the standalonefinancial statements including the disclosures and whether the standalone financialstatements represent the underlying transactions and events in a manner that achieves fairpresentation.

Materiality is the magnitude of misstatements in the standalone financial statementsthat individually or in aggregate makes it probable that the economic decisions of areasonably knowledgeable user of the standalone financial statements may be influenced. Weconsider quantitative materiality and qualitative factors in (i) planning the scope of ouraudit work and in evaluating the results of our work; and (ii) to evaluate the effect ofany identified misstatements in the standalone financial statements.

We communicate with those charged with governance regarding among other matters theplanned scope and timing of the audit and significant audit findings including anysignificant deficiencies in internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have compliedwith relevant ethical requirements regarding independence and to communicate with themall relationships and other matters that may reasonably be thought to bear on ourindependence and where applicable related safeguards.

From the matters communicated with those charged with governance we determine thosematters that were of most significance in the audit of the standalone financial statementsof the current period and are therefore the key audit matters. We describe these mattersin our auditor's report unless law or regulation precludes public disclosure about thematter or when in extremely rare circumstances we determine that a matter should not becommunicated in our report because the adverse consequences of doing so would reasonablybe expected to outweigh the public interest benefits of such communication.

REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS

1. As required by Section 143(3) of the Act based on our audit 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 Profit and Loss including Other ComprehensiveIncome the Cash Flow Statement and Statement of Changes in Equity dealt with by thisReport are in agreement with the books of account.

d) In our opinion the aforesaid standalone financial statements comply with the Ind ASspecified under Section 133 of the Act.

e) On the basis of the written representations received from the directors as on 31stMarch 2019 taken on record by the Board of Directors none of the directors isdisqualified as on 31st March 2019 from being appointed as a director in termsof Section 164(2) of the Act.

f) With respect to the adequacy of the internal financial controls over financialreporting of the Company and the operating effectiveness of such controls refer to ourseparate Report in “Annexure A”. Our report expresses an unmodified opinion onthe adequacy and operating effectiveness of the Company's internal financial controls overfinancial reporting.

g) With respect to the other matters to be included in the Auditor's Report inaccordance with the requirements of section 197(16) of the Act as amended

I n our opinion and to the best of our information and according to the explanationsgiven to us the remuneration paid by the Company to its directors during the year is inaccordance with the provisions of section 197 of 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 as amended 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 litigations on its financialposition in its standalone financial statements

ii. The Company has made provision as required under the applicable law or accountingstandards for material foreseeable losses if any on long-term contracts includingderivative contracts;

iii. There has been no delay in transferring amounts required to be transferred tothe Investor Education and Protection Fund by the Company

2. As required by the Companies (Auditor's Report) Order 2016 (“the Order”)issued by the Central Government in terms of Section 143(11) of the Act we give in“Annexure B” a statement on the matters specified in paragraphs 3 and 4 of theOrder.

For DELOITTE HASKINS & SELLS LLP

Chartered Accountants (Firm‘s Registration No. 117366W/W-100018)

Kedar Raje
Place: Mumbai Partner
Date: 28th May 2019 (Membership No. 102637)

Annexure “A” To The Independent Auditor's Report

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

REPORT ON THE INTERNAL FINANCIAL CONTROLS OVER FINANCIAL REPORTING UNDER CLAUSE (i) OFSUB-SECTION 3 OF SECTION 143 OF THE COMPANIES ACT 2013 (“THE ACT”)

We have audited the internal financial controls over financial reporting of GalaxySurfactants Ltd (“the Company”) as of 31st March 2019 in conjunctionwith our audit of the standalone Ind AS financial statements of the Company for the yearended on that 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 reporting criteriaestablished by the Company considering the essential components of internal control statedin the Guidance Note on Audit of Internal Financial Controls Over Financial Reportingissued by the Institute of Chartered Accountants of India. These responsibilities includethe design implementation and maintenance of adequate internal financial controls thatwere operating effectively for ensuring the orderly and efficient conduct of its businessincluding adherence to company's policies the safeguarding of its assets the preventionand detection of frauds and errors the accuracy and completeness of the accountingrecords and the timely preparation of reliable financial information as required underthe Companies Act 2013.

AUDITOR'S RESPONSIBILITY

Our responsibility is to express an opinion on the Company's internal financialcontrols over financial reporting of the Company based on our audit. We conducted ouraudit in accordance with the Guidance Note on Audit of Internal Financial Controls OverFinancial Reporting (the “Guidance Note”) issued by the Institute of CharteredAccountants of India and the Standards on Auditing prescribed under Section 143(10) of theCompanies Act 2013 to the extent applicable to an audit of internal financial controls.Those Standards and the Guidance Note require that we comply with ethical requirements andplan and perform the audit to obtain reasonable assurance about whether adequate internalfinancial controls over financial reporting was established and maintained and if suchcontrols operated effectively in all material respects.

Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal financial controls system over financial reporting and their operatingeffectiveness. Our audit of internal financial controls over financial reporting includedobtaining an understanding of internal financial controls over financial reportingassessing the risk that a material weakness exists and testing and evaluating the designand operating effectiveness of internal control based on the assessed risk. The proceduresselected depend on the auditor's judgement including the assessment of the risks ofmaterial misstatement of the financial statements whether due to fraud or error.

We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the Company's internal financial controls systemover financial reporting.

MEANING OF INTERNAL FINANCIAL CONTROLS OvER FINANCIAL REPORTING

A company's internal financial control over financial reporting is a process designedto provide reasonable assurance regarding the reliability of financial reporting and thepreparation of financial statements for external purposes in accordance with generallyaccepted accounting principles. A company's internal financial control over financialreporting includes 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

Because of the inherent limitations of internal financial controls over financialreporting including the possibility of collusion or improper management override ofcontrols material misstatements due to error or fraud may occur and not be detected.Also projections of any evaluation of the internal financial controls over financialreporting to future periods are subject to the risk that the internal financial controlover financial reporting may become inadequate because of changes in conditions or thatthe degree of compliance with the 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 financial controlssystem over financial reporting and such internal financial controls over financialreporting were operating effectively as at 31st March 2019 based on thecriteria for internal financial control over financial reporting established by theCompany considering the essential components of internal control stated in the GuidanceNote on Audit of Internal Financial Controls Over Financial Reporting issued by theInstitute of Chartered Accountants of India.

For DELOITTE HASKINS & SELLS LLP

Chartered Accountants (Firm‘s Registration No. 117366W/W-100018)

Kedar Raje
Place: Mumbai Partner
Date: 28th May 2019 (Membership No. 102637)

Annexure “B” To The Independent Auditor's Report

(Referred to in paragraph 2 under ‘Report on Other Legal and RegulatoryRequirements' section of our report of even date to the members of Galaxy SurfactantsLimited on the financial statements for the year ended 31st March 2019)

(i) (a) The Company has maintained proper records showing full Particulars includingquantitative details and situation of fixed assets.

(b) Some of the fixed assets were physically verified during the year by the Managementin accordance with a programme of verification which in our opinion provides for physicalverification of all the fixed assets at reasonable intervals. According to the informationand explanations given to us no material discrepancies were noticed on such verification.

(c) According to the information and explanations given to us and the records examinedby us Immovable properties of Land and Buildings whose title deeds have been pledged assecurity for loans are held in the name of the Company based on the examination of theconfirmation received from custodians.

(ii) As explained to us the inventories were physically verified during the year bythe Management at reasonable intervals and no material discrepancies were noticed on suchphysical verification.

(iii) The Company has not granted any loans secured or unsecured to companies firmsLimited Liability Partnerships or other parties covered in the register maintained undersection 189 of the Companies Act 2013.

(iv) The Company has not granted any loans made investments or provided guarantees andhence reporting under clause (iv) of the CARO 2016 is not applicable.

(v) According to the information and explanations given to us the Company has notaccepted any deposit during the year. In respect of unclaimed deposits the Company hascomplied with the provisions of Sections 73 to 76 or any other relevant provisions of theCompanies Act 2013.

(vi) The maintenance of cost records has been specified by the Central Government undersection 148(1) of the Companies Act 2013 in respect of specified products of the Company.For such products we have broadly reviewed the cost records maintained by the Companypursuant to the Companies (Cost Records and Audit) Rules 2014 as amended prescribed bythe Central Government under sub-section (1) of Section 148 of the Companies Act 2013and are of the opinion that prima facie the prescribed cost records have been made andmaintained We have however not made a detailed examination of the cost records with aview to determine whether they are accurate or complete.

(vii) According to the information and explanations given to us in respect ofstatutory dues:

(a) The Company has generally been regular in depositing undisputed statutory duesincluding Provident Fund Employees' State Insurance Income-tax Goods and Service TaxCustoms Duty cess and other material statutory dues applicable to it to the appropriateauthorities.

(b) There were no undisputed amounts payable in respect of Provident Fund Employees'State Insurance Income-tax Goods and Service Tax Customs Duty cess and other materialstatutory dues in arrears as at 31st March 2019 for a period of more than sixmonths from the date they became payable.

(c) Details of dues of Income-tax Sales Tax Service Tax Customs Duty Excise Dutyand Value Added Tax which have not been deposited as on 31st March 2019 onaccount of disputes are given below:

Statute Nature of Dues Forum where the dispute is pending period to which the amount relates Amount involved (? Crores)
The Central Excise Act 1944 Excise Duty Appellate Tribunal 2006-15 2.81
High Court 2011-13 0.09
The Finance Act 1994 Service Tax Commissioner (Appeals) 2015-18 0.69
Income Tax Act1961 Income Tax Commissioner (Appeals) 2010-11 0.97
Maharashtra Value Added Tax Act 2002 Value Added Tax Joint Commissioner 2012-14 3.43
The Custom Act1962 Custom Duty Commissioner (Appeals) 2012-13 3.14

(viii) In our opinion and according to the information and explanations given to usthe Company has not defaulted in the repayment of loans or borrowings to banks. Companydid not have dues to financial institutions government and to debenture holders.

(ix) The Company did not raise moneys by way of Initial Public Offer or further publicoffer (including debt instruments). According to the information and explanations given tous the term loans raised have been applied by the Company during the year for thepurposes for which they were raised.

(x) To the best of our knowledge and according to the information and explanationsgiven to us no fraud by the Company and no material fraud on the Company by its officersor employees has been noticed or reported during the year.

(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) In our opinion and according to the information and explanations given to us theCompany is in compliance with Section 177 and 188 of the Companies Act 2013 whereapplicable for all transactions with the related parties and the details of related partytransactions have been disclosed in the financial statements etc. 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 and hence reporting underclause (xiv) of CARO 2016 is 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 itsdirectors or directors of its holding subsidiary or associate company or personsconnected with them and hence provisions of section 192 of the Companies Act 2013 are notapplicable.

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

For DELOITTE HASKINS & SELLS LLP

Chartered Accountants (Firm‘s Registration No. 117366W/W-100018)

Kedar Raje
Place: Mumbai Partner
Date: 28th May 2019 (Membership No. 102637)