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GHCL Ltd.

BSE: 500171 Sector: Industrials
NSE: GHCL ISIN Code: INE539A01019
BSE 00:00 | 12 Apr 220.75 -15.95
(-6.74%)
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220.00

NSE 00:00 | 12 Apr 221.10 -16.10
(-6.79%)
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235.95

HIGH

235.95

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OPEN 226.90
PREVIOUS CLOSE 236.70
VOLUME 21671
52-Week high 258.00
52-Week low 95.15
P/E 7.14
Mkt Cap.(Rs cr) 2,097
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 226.90
CLOSE 236.70
VOLUME 21671
52-Week high 258.00
52-Week low 95.15
P/E 7.14
Mkt Cap.(Rs cr) 2,097
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

GHCL Ltd. (GHCL) - Auditors Report

Company auditors report

To the Members of GHCL Limited

Report on the Audit of the Standalone Ind AS Financial Statements

Opinion

We have audited the accompanying standalone Ind AS financial statements of GHCL Limited (the Company) which comprise the Balance sheet as at March 31 2020 the Statement of Profit and Loss including the statement of Other Comprehensive loss the Cash Flow Statement and the Statement of Changes in Equity for the year then ended and notes to the standalone Ind AS financial statements including a summary of significant accounting policies and other explanatory information.

In our opinion and to the best of our information and according to the explanations given to us the aforesaid standalone Ind AS financial statements give the information required by the Companies Act 2013 as amended (the Act) in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India of the state of affairs of the Company as at March 31 2020 its profit including other comprehensive loss its cash flows and the changes in equity for the year ended on that date.

Basis for Opinion

We conducted our audit of the standalone Ind AS financial statements in accordance with the Standards on Auditing (SAs) as specified under section 143(10) of the Act. Our responsibilities under those Standards are further described in the `Auditor's Responsibilities for the Audit of the standalone Ind AS Financial Statements' section of our report. We are independent of the Company in accordance with the `Code of Ethics' issued by the Institute of Chartered Accountants of India together with the ethical requirements that are relevant to our audit of the financial statements under the provisions of the Act and the Rules thereunder and we have fulfilled our other ethical responsibilities in accordance with these requirements and the Code of Ethics. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the standalone Ind AS financial statements.

Emphasis of Matter

We draw attention to Note 47 of the accompanying standalone financial statements which describes the management's evaluation of impact of uncertainties related to COVID-I9 and its consequential effects on the operations of the Company. Our opinion is not modified in respect of this matter.

Key Audit Matters

Key audit matters are those matters that in our professional judgment were of most significance in our audit of the standalone Ind AS financial statements for the financial year ended March 31 2020. These matters were addressed in the context of our audit of the standalone Ind AS financial statements as a whole and in forming our opinion thereon and we do not provide a separate opinion on these matters. For each matter below our description of how our audit addressed the matter is provided in that context.

We have determined the matters described below to be the key audit matters to be communicated in our report. We have fulfilled the responsibilities described in the Auditor's responsibilities for the audit of the standalone Ind AS financial statements section of our report including in relation to these matters. Accordingly our audit included the performance of procedures designed to respond to our assessment of the risks of material misstatement of the standalone Ind AS financial statements. The results of our audit procedures including the procedures performed to address the matters below provide the basis for our audit opinion on the accompanying standalone Ind AS financial statements.

Key audit mattersHow our audit addressed the key audit matter
Impairment assessment of Home Textile Division (as described in Note 3 of the standalone Ind AS financial statements)
Property plant and equipment Assets and Liabilities that areOur audit procedures included the following:
related to the integrated textile manufacturing facilities (at Tamil Nadu) Home Textiles facility (in Gujrat) and investments made in subsidiary to support the business hereafter collectively referred to as the Home Textile Division or HT Division with a carrying value amounting to INR 1152 crores. Understood management and the board's controls over the assessment of the carrying value of HTD's property plant and equipment to determine whether any asset impairment was required.
Key audit mattersHow our audit addressed the key audit matter
Impairment assessment of Home Textile Division (as described in Note 3 of the standalone Ind AS financial statements)
Home Textile Division has incurred losses in the last three years as a result the management has performed an impairment assessment as per the accounting policy stated in note 2.2.L to the standalone Ind AS financial statements. Together with valuation specialists we assessed the Company's valuation methodology applied in estimating the recoverable amount of the Company's Home Textile Division based on the cash flow projections provided by the management.
Our audit focused on this area because the assessment of recoverable value of the aforesaid assets of HT Division requires management to make a number of key judgements and estimates with respect to the future performance and profitability of the HT Division which involves judgements and estimates on future growth rates discount rates and Impact of Covid-19 etc. Together with valuation specialists we tested the assumptions of the cash flow forecasts (Post Covid-19) i.e. future growth rates discount rates used.
Accordingly Impairment assessment of the Company's Home Performed sensitivity analysis around the key assumptions used by management in impairment testing to understand the impact of reasonable changes in assumptions on the estimated recoverable amounts.
Textile division has been considered as a key audit matter. Assessed the disclosures included in the financial in note 3 to the standalone Ind AS financial statements.

We have determined that there are no other key audit matters to communicate in our report.

Information Other than the Financial Statements and Auditor's Report Thereon

The Company's Board of Directors is responsible for the other information. The other information comprises the information included in the Annual report 2019-20 but does not include the standalone Ind AS financial statements and our auditor's report thereon.

Our opinion on the standalone Ind AS financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.

In connection with our audit of the standalone Ind AS financial statements our responsibility is to read the other information and in doing so consider whether such other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If based on the work we have performed we conclude that there is a material misstatement of this other information we are required to report that fact. We have nothing to report in this regard.

Responsibilities of Management for the standalone Ind AS Financial Statements

The Company's Board of Directors is responsible for the matters stated in section 134(5) of the Act with respect to the preparation of these standalone Ind AS financial statements that give a true and fair view of the financial position financial performance including other comprehensive loss cash flows and changes in equity of the Company in accordance with the accounting principles generally accepted in India including the Indian  Accounting Standards (Ind AS) specified under section 133 of the Act read with the Companies (Indian Accounting Standards) Rules 2015 as amended. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding of the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and the design implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the accuracy and completeness of the accounting records relevant to the preparation and presentation of the standalone Ind AS financial statements that give a true and fair view and are free from material misstatement whether due to fraud or error.

In preparing the standalone Ind AS financial statements management is responsible for assessing the Company's ability to continue as a going concern disclosing as applicable matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations or has no realistic alternative but to do so.

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

Auditor's Responsibilities for the Audit of the standalone Ind AS Financial Statements

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

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

 Identify and assess the risks of material misstatement of the standalone Ind AS financial statements whether due to fraud or error design and perform audit procedures responsive to those risks and obtain audit evidence that is sufficient and appropriate to provide a basis 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 collusion forgery intentional omissions misrepresentations or the override of internal control.

 Obtain an understanding of internal control relevant to the audit in order to design 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 Company has adequate internal financial controls with reference to financial statements in place and the operating effectiveness of such controls.

 Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.

 Conclude on the appropriateness of management's use of the going concern basis of accounting and based on the audit evidence obtained whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company's ability to continue as a going concern. If we conclude that a material uncertainty exists we are required to draw attention in our auditor's report to the related disclosures in the 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's report. However future events or conditions may cause the Company to cease to continue as a going concern.

 Evaluate the overall presentation structure and content of the standalone Ind AS financial statements including the disclosures and whether the standalone Ind AS financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

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

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

From the matters communicated with those charged with governance we determine those matters that were of most significance in the audit of the standalone Ind AS financial statements for the financial year ended March 31 2020 and are therefore the key audit matters. We describe these matters in our auditor's report unless law or regulation precludes public disclosure about the matter or when in extremely rare circumstances we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

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 terms of sub-section (11) of section 143 of the Act we give in the Annexure 1 a statement on the matters specified in paragraphs 3 and 4 of the Order.

2. As required by Section 143(3) of the Act we report that:

(a) We have sought and obtained all the information and explanations which to the best of 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 the Company so far as it appears from our examination of those books;

(c) The Balance Sheet the Statement of Profit and Loss including the Statement of Other Comprehensive loss the Cash Flow Statement and Statement of Changes in Equity dealt with by this Report are in agreement with the books of account;

(d) In our opinion the aforesaid standalone Ind AS financial statements comply with the Accounting Standards specified under Section 133 of the Act read with Companies (Indian Accounting Standards) Rules 2015 as amended;

(e) The matter described in Emphasis of Matter paragraph above in our opinion may have an adverse effect on the functioning of the Company;

(f) On the basis of the written representations received from the directors as on March 31 2020 taken on record by the Board of Directors none of the directors is disqualified as on March 31 2020 from being appointed as a director in terms of Section 164 (2) of the Act;

(g) With respect to the adequacy of the internal financial controls over financial reporting of the Company with reference to these standalone Ind AS financial statements and the operating effectiveness of such controls refer to our separate Report in Annexure 2 to this report;

(h) In our opinion the managerial remuneration for the year ended March 31 2020 has been paid / provided by the Company to its directors in accordance with the provisions of section 197 read with Schedule V to the Act;

(i) With respect to the other matters to be included in the Auditor's Report in accordance 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 the explanations given to us:

i. The Company has disclosed the impact of pending litigations on its financial position in its standalone  Ind AS financial statements - Refer Note 35 to the standalone Ind AS financial statements;

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

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

For S.R. Batliboi & Co. LLP

Chartered Accountants
ICAI Firm Registration Number: 301003E/E300005
per Atul Seksaria
Partner
Place of Signature: GurugramMembershipNumber:086370
Date: May 20 2020UDIN: 20086370AAAABE213

 

ANNEXURE 1

Referred in paragraph under the heading Report on other legal and regulatory requirements of our report of even date

Re: GHCL Limited (the company)

(i) (a) The Company has maintained proper records showing full particulars including quantitative details and situation of property plant and equipment.

(b) All property plant & equipment have not been physically verified by the management during the year but there is a regular programme of verification which in our opinion is reasonable having regard to the size of the company and nature of its assets. No material discrepancies were noticed on such verification.

(c) According to the information and explanations given by the management the title deeds of immovable properties included in property plant and equipment are held in the name of the Company.

(ii) The inventory has been physically verified by the management during the year. In our opinion the frequency of verification is reasonable. No material discrepancies were noticed on such physical verification. Inventories lying with third parties have been confirmed by them as at March 31 2020 and no material discrepancies were noticed in respect of such confirmations.

(iii) (a) The Company has granted loan to a subsidiary company covered in the register maintained under section 189 of the Companies Act 2013. In our opinion and according to the information and explanations given to us the terms and conditions of the grant of such loans are not prejudicial to the company's interest.

(b) The Company has granted loan to a subsidiary covered in the register maintained under section 189 of the Companies Act 2013. The schedule of repayment of principal has been stipulated for the loans granted and the repayment are regular.

(c) There are no amount of loans granted to companies firms or other parties listed in the register maintained under section 189 of the Companies Act 2013 which are overdue for more than ninety days.

(iv) In our opinion and according to the information and explanations given to us provisions of section 185 and 186 of the Companies Act 2013 in respect of loans and advances given investments made and guarantees and securities given have been complied with by the company.

(v) The Company has not accepted any deposits within the meaning of Sections 73 to 76 of the Act and the Companies (Acceptance of Deposits) Rules 2014 (as amended). 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 pursuant to the rules made by the Central Government for the maintenance of cost records under section 148(1) of the Companies Act 2013 related to the manufacture of Soda Ash and Textile products and are of the opinion that prima facie the specified accounts and records have been made and maintained. We have not however made a detailed examination of the same.

(vii) (a) The Company is generally regular in depositing with appropriate authorities undisputed statutory dues including provident fund employees' state insurance income-tax sales-tax duty of custom goods and service tax cess and other statutory dues applicable to it.

(b) According to the information and explanations given to us no undisputed amounts payable in respect of provident fund employees' state insurance income-tax sales-tax duty of custom goods and service tax cess and other material statutory dues were outstanding at the year end for a period of more than six months from the date they became payable.

(c) According to the records of the company the dues outstanding of employees' state insurance income-tax sales-tax duty of custom duty of excise goods and service tax cess and other statutory dues on account of any dispute are as follows:

Name of the StatuteNature of DuesDemand raised Pre - Deposit Period to which the amount relatesForum where dispute is pending
(Amount in INR Crore)(Amount in INR Crore)
Customs Act 1962Differential duty on account of classification under different chapters of CETA6.780.27F.Y. 2012-13 2014-15Customs Excise and Service tax Appellate Tribunal Chennai & Customs Excise and Service tax Appellate Tribunal Ahmedabad
Denial of Import Eligibility0.590.04F.Y 2015-16Principal Commissioners Customs- (Chennai-III)
Central Excise Act 1944Denial of service tax credit on ineligible services4.260.10F.Y 2004-2005 F.Y 2009-10 F.Y.2016-17Dy. Commissioner Junagadh & Commissioner Bhavnagar
Denial of CENVAT Credit & Non Payment of Service Tax & Excise Duty Demand of excise duty on Fly Ash & Trading Material65.484.72F.Y. 2008-09 to F.Y.Customs Excise and Service
2016-17Tax Appellate Tribunal Ahmedabad
Denial of service tax credit on foreign services1.290.10F.Y 2005-2006Customs Excise and Service Tax Appellate Tribunal Delhi
Denial of CENVAT credit on capital goods and others0.03-F.Y 2001-2002Hon'ble High Court Chennai
Short reversal of CENVAT credit on goods under duty drawback scheme0.590.06F.Y 2008-2009CESTAT Ahmedabad (Appeal)
The Employee's State Insurance Act 1948Contribution Demand0.03-F.Y 1989-2002ESI Court Madurai
Contribution Demand0.01-F.Y 1985-1986Hon'ble Supreme Court of India
Income Tax ActDisallowance of write off of loans to subsidiaries and interest thereon corporate guarantees encashed by third parties on subsidiaries' s behalf foreign sales commission service income of subsidiaries and disallowances under section 14A154.65-F.Y 2008-09 to F.Y 2013-14ITAT Ahmedabad
Disallowance for claim u/s 80- IA Section 14A and others3.63-F.Y 2015-2016Joint Comm Ahmedabad
Gujarat Sales Tax Act 1969Disallowance of Set off of Sales Tax0.020.02FY 2002-2003VAT Tribunal Ahmedabad
0.02-FY 2003-2004

According to the information and explanations given to us there are no dues of Provident Fund service tax value added tax goods and service tax and cess which have not been deposited on account of any dispute.

(viii) In our opinion and according to the information and explanations given by the management the Company has not defaulted in repayment of loans or borrowing to a financial institution bank or Government. The Company did not have any outstanding debentures during the year.

(ix) In our opinion and according to the information and explanations given by the management the Company has utilized the monies raised by way of term loans for the purposes for which they were obtained. The Company has not raised any money by way of initial public offer / further public offer / debt instruments during the year.

(x) Based upon the audit procedures performed for the purpose of reporting the true and fair view of the financial statements and according to the information and explanations given by the management we report that no fraud by the Company or no material fraud on the company by the officers and employees of the Company has been noticed or reported during the year.

(xi) According to the information and explanations given by the management the managerial remuneration has been paid / provided in accordance with the requisite approvals mandated by the provisions of section 197 read with Schedule V to the Companies Act 2013.

(xii) In our opinion the Company is not a nidhi company. Therefore the provisions of clause 3(xii) of the order are not applicable to the Company and hence not commented upon.

(xiii) According to the information and explanations given by the management transactions with the related parties are in compliance with section 177 and 188 of Companies Act  2013 where applicable and the details have been disclosed in the notes to the financial statements as required by the applicable accounting standards.

(xiv) According to the information and explanations given to us and on an overall examination of the balance sheet the Company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures during the year under review and hence reporting requirements under clause 3(xiv) are not applicable to the company and not commented upon.

(xv) According to the information and explanations given by the management the Company has not entered into any non-cash transactions with directors or persons connected with him as referred to in section 192 of Companies Act 2013.

(xvi) According to the information and explanations given to us the provisions of section 45-IA of the Reserve Bank of India Act 1934 are not applicable to the Company.

For S.R. Batliboi & Co. LLP
Chartered Accountants
ICAI Firm Registration Number: 301003E/E300005
per Atul Seksaria
Partner
Place of Signature: GurugramMembershipNumber:086370
Date: May 20 2020UDIN: 20086370AAAABE2136

ANNEXURE 2

To the Independent Auditor's Report of even date on the Standalone Financial Statements of GHCL Limted

Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section 143 of the Companies Act 2013 (the Act)

We have audited the internal financial controls over financial reporting of GHCL (the Company) as of March 31 2020 in conjunction with our audit of the standalone financial 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 and maintaining internal financial controls based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issued by the Institute of Chartered Accountants of India. These responsibilities include the design implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the orderly and efficient conduct of its business including adherence to the Company's policies the safeguarding of its assets the prevention and detection of frauds and errors the accuracy and completeness of the accounting records and the timely preparation of reliable financial information as required under the Companies Act 2013.

Auditor's Responsibility

Our responsibility is to express an opinion on the Company's internal financial controls over financial reporting with reference to these standalone financial statements based on our audit. We conducted our audit in accordance with the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting (the Guidance Note) and the Standards on Auditing as specified under section 143(10) of the Companies Act 2013 to the extent applicable to an audit of internal financial controls and both issued by the Institute of Chartered Accountants of India. Those Standards and the Guidance Note require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether adequate internal financial controls over financial reporting with reference to these standalone financial statements was established and maintained and if such controls operated effectively in all material respects.

Our audit involves performing procedures to obtain audit evidence about the adequacy of the internal financial controls over financial reporting with reference to these standalone financial statements and their operating effectiveness. Our audit of internal financial controls over financial reporting included obtaining an understanding of internal financial controls over financial reporting with reference to these standalone financial statements assessing the risk that a material weakness exists and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. The procedures selected depend on the auditor's judgement including the assessment of the risks of material misstatement of the financial statements whether due to fraud or error.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the internal financial controls over financial reporting with reference to these standalone financial statements.

Meaning of Internal Financial Controls Over Financial Reporting With Reference to these Financial Statements

A company's internal financial control over financial reporting with reference to these standalone financial statements is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal financial control over financial reporting with reference to these standalone financial statements includes those policies and procedures that (1) pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles and that receipts and expenditures of the company are being made only in accordance with authorisations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorised acquisition use or disposition of the company's assets that could have a material effect on the financial statements.

Inherent Limitations of Internal Financial Controls Over Financial Reporting With Reference to these Standalone Financial Statements

Because of the inherent limitations of internal financial controls over financial reporting with reference to these standalone financial statements including the possibility of collusion or improper management override of controls material misstatements due to error or fraud may occur and not be detected. Also projections of any evaluation of the internal financial controls over financial reporting with reference to these standalone financial statements to future periods are subject to the risk that the internal financial control over financial reporting with reference to these standalone financial statements may become inadequate because of changes in conditions or that the degree of compliance with the policies or procedures may deteriorate.

Opinion

In our opinion the Company has in all material respects adequate internal financial controls over financial reporting with reference to these standalone financial statements and such internal financial controls over financial reporting with reference to these standalone financial statements were operating effectively as at March 31 2020 based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issued by the Institute of Chartered Accountants of India.

For S.R. Batliboi & Co. LLP
Chartered Accountants
ICAI Firm Registration Number: 301003E/E300005
per Atul Seksaria
Partner
Place of Signature: GurugramMembershipNumber:086370
Date: May 20 2020UDIN: 20086370AAAABE2136
.