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Hindustan Fluoro Carbons Ltd.

BSE: 524013 Sector: Industrials
NSE: N.A. ISIN Code: INE806J01013
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NSE 05:30 | 01 Jan Hindustan Fluoro Carbons Ltd
OPEN 2.93
PREVIOUS CLOSE 2.93
VOLUME 5
52-Week high 16.55
52-Week low 2.83
P/E 2.40
Mkt Cap.(Rs cr) 6
Buy Price 2.93
Buy Qty 50.00
Sell Price 2.93
Sell Qty 301.00
OPEN 2.93
CLOSE 2.93
VOLUME 5
52-Week high 16.55
52-Week low 2.83
P/E 2.40
Mkt Cap.(Rs cr) 6
Buy Price 2.93
Buy Qty 50.00
Sell Price 2.93
Sell Qty 301.00

Hindustan Fluoro Carbons Ltd. (HINDFLUOROCARB) - Auditors Report

Company auditors report

To

The Members of

M/s Hindustan Fluorocarbons Limited Hyderabad

Report on the Audit of Ind AS Financial Statements: Opinion:

1. We have audited the accompanying financial statements of M/s HindustanFluorocarbons Limited ("the Company") which comprise the Balance Sheet asat 31st March 2019 the Statement of Profit and Loss Cash Flow Statement andStatement of changes in Equity for the year ended on that date and notes to financialstatements including a summary of the significant accounting policies and otherexplanatory information (hereinafter referred to as "the Ind AS financialstatements").

2. In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid Ind AS financial statements give the information required bythe Companies Act 2013 ("Act") in the manner so required and give a true andfair view in conformity with the Indian Accounting Standards prescribed under Section 133of the Act read with the Companies (Indian Accounting Standards) Rules 2015 as amended("Ind AS)" and other accounting principles generally accepted in India of thestate of affairs of the said Company as at 31st March 2019 the Loss for theyear ended on that date and total Comprehensive Income and the Cash Flow Statement for theyear ended on that date.

Basis of Opinion

3. We conducted our audit of the financial statements in accordance with the Standardson Auditing (SAs) specified under section 143(10) of the Companies Act 2013. Ourresponsibilities under those Standards are further described in the Auditor'sResponsibilities for the Audit of the Financial Statements section of our report. We areindependent of the Company in accordance with the Code of Ethics issued by the Instituteof Chartered Accountants of India together with the Ethical requirements that are relevantto our audit of the financial statements under the provisions of the Companies Act 2013and the Rules there under and we have fulfilled our other ethical responsibilities inaccordance with these requirements and the Code of Ethics. We believe that the auditevidence we have obtained is sufficient and appropriate to provide a basis for our opinionon the financial statements.

Other Matter paragraph

4. The Comparative financial information of the Company for the earlier year ended 31stMarch 2018 prepared in accordance with the Ind AS included in these Ind ASFinancial Statements have been audited by the predecessor auditor. The report of theprevious auditor on the comparative financial information dated 23.5.2018 expressed anunmodified opinion.

Key Audit Matters

5. Key audit matters are those matters that in our professional judgement were ofmost significance in our audit of the financial statements of the current period. Thesematters were addressed in the context of our audit of financial statements as a whole andin forming our opinion thereon and we do not provide a separate opinion on these matters.We have determined the matters described below to be the key audit matters to becommunicated in our report.

a) During the year under review Company had revisited its status on reporting ofFinancial Instruments through OCI at amortized cost based on updated developments whencompared to immediate previous year.

Accordingly based on realistic assessment of the underlying transactions Company isof view that there are no Financial Instruments which are receivable/payable in future atdiscounted values and accordingly these are shown at actual values. Accordingly thecorresponding effect between the previous year and current year amounting to Rs.350.81Lakhs is passed through OCI during the current year.

b) During the year under review the Company had carried out a detailed review ofcertain reported errors/anomalies in pay fixation pertaining to employees and thisexercise resulted in identifying excess payment to certain employees due to this erroramounting to Rs.268.00 Lakhs since 1997 onwards. Accordingly the Company initiatedrecovery process from those employees and had already recovered/adjusted Rs.95.73 Lakhs upto 31.3.2019. Recovery proceeds of balance amount is under way.

c) Other Income includes an amount of Rs.226.75 Lakhs of ‘prior period income'relating to excess payments to certain employees as indicated in above paragraph.

Management Responsibilities for the Ind AS Financial Statements

6. The Company's Board of Directors is responsible for the matters stated in section134(5) of the Companies Act 2013 with respect to the preparation of these financialstatements that give a true and fair view of the financial position and financialperformance including other comprehensive income cash flows and Statement of changes inEquity of the Company in accordance with the Accounting Principles generally accepted inIndia including the Accounting Standards specified under section 133 of the Act. 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 judgements 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 Ind AS financial statementsthat give a true and fair view and are free from material misstatement whether due tofraud or error.

7. In preparing the Ind AS 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.

8. The Board of Directors are responsible for overseeing the Company's financialreporting process.

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

9. Our objectives are to obtain reasonable assurance about whether the Ind AS 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 with SAswill always detect a material misstatement when it exists. Misstatements can arise fromfraud or error and are considered material if individually or in the aggregate theycould reasonably be expected to influence the economic decisions of users taken on thebasis of these Ind AS financial statements.

10. As part of an audit in accordance with SAs we exercise professional judgement andmaintain professional scepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the Ind AS 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 fromfraud 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 financial controls 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 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 disclosure are inadequate to modify our opinion. Ourconclusions 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 Ind AS financialstatements including the disclosures and whether the financial statements represent theunderlying transactions and events in a manner that achieves fair presentation.

11. Materiality is the magnitude of misstatements in the Ind AS financial statementsthat individually or in aggregate makes it probable that the economic decisions of areasonably knowledgeable user of the financial statements may be influenced. We considerquantitative materiality and qualitative factors in (i) planning the scope of our auditwork and in evaluating the results of our work; and (ii) to evaluate the effect of anyidentified misstatements in the financial statements.

12. We also communicate with those charged with governance regarding among othermatters the planned scope and timing of the audit and significant audit findings that weidentify 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 in our auditor's report unless law or regulation precludespublic disclosure about the matter or when in extremely rare circumstances we determinethat a matter should not be communicated in our report because the adverse consequences ofdoing so would reasonably be expected to outweigh the public interest benefits of suchcommunication.

Report on Other Legal and Regulatory Requirements

15. 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 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 dealt with by this Report are in agreement with the books of account.

d) In our opinion the aforesaid Ind AS financial statements comply with the IndianAccounting Standards specified under Section 133 of the Act read with Rule 7 of theCompanies (Accounts) Rules 2014.

e) On the basis of the written representations received from the directors as on March31 2019 and taken on record by the Board of Directors none of the directors isdisqualified as on March 312019 from being appointed as a director in terms of Section164 (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 unmodifiedopinion on the adequacy and operating effectiveness of the Company's internal financialcontrols over financial reporting.

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 inour opinion and to the best of our information and according to the explanations given tous:

i. The Company had disclosed the impact of pending litigations as on 31stMarch 2019 on its financial position in its Ind AS financial statements;

ii. The Company had made provision as required under the applicable law or accountingstandards for material foreseeable losses if any on long term contract. The Companyneither entered into any derivative contracts during the year nor have any outstandingderivative contract at the end of the year;

iii. There were no amounts which were required to be transferred to the InvestorEducation and Protection Fund by the Company.

h) As required under section 143(5) of the Companies Act we report that:

i. As per the information explanations and records produced for our verification theCompany has a system in place to process all the accounting transactions through IT systemand there are no instances of processing of accounting transactions outside the IT system;

ii. There are no instances of any restructuring of existing loan availed by the Companyor cases of waiver/write off of debts/loans/interest made by a Lender to the Company onaccount of company's inability to repay the loan;

iii. As per the information explanations and records produced for our verificationduring the year under review no funds were received/receivable for any specific schemefrom central/state agencies. 16. As required by the Companies (Auditors' Report) Order2016 ("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 specifiedin paragraphs 3 and 4 of the Order.

For Sarath & Associates
Chartered Accountants
Firm Regn. No: 005120S
Place : Hyderabad CA P Gopi Krishna
Date : 24.05.2019 Partner
Membership No. 225868

"Annexure – A" to the Independent Auditor's Report of even date onthe Ind AS Financial Statements of M/s Hindustan Fluorocarbons Limited

Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section143 of the Companies Act 2013 ("the Act")

1. We have audited the internal financial controls over financial reporting of M/sHindustan Fluorocarbons Limited ("the Company") as of 31st March2019 in conjunction with our audit of the Ind AS financial statements of the Company forthe year ended on that date.

Management's Responsibility for Internal Financial Controls

2. 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 Reporting("the Guidance Note") issued by the Institute of Chartered Accountants of India.These responsibilities include the design implementation and maintenance of adequateinternal financial controls that were operating effectively for ensuring the orderly andefficient conduct of its business including adherence to company's policies thesafeguarding of its assets the prevention and detection of frauds and errors theaccuracy and completeness of the accounting records and the timely preparation ofreliable financial information as required under the Companies Act 2013.

3. The Company's Management has in present financial year amongst other areas hasspecifically identified the following areas (i) Property Plant & Equipment (ii) Loans(iii) Trade Receivables (iv) Other Financial Liabilities (v) Trade Payables; and (vi)Provisions as a benchmark criteria for establishing Internal Financial Controls overfinancial reporting.

Auditors' Responsibility

4. Our responsibility is to express an opinion on the Company's internal financialcontrols over financial reporting based on our audit. We conducted our audit in accordancewith the Guidance Note and the Standards on Auditing issued by ICAI and deemed to beprescribed under section 143(10) of the Companies Act 2013 to the extent applicable toan audit of internal financial controls both applicable to an audit of Internal FinancialControls and both issued by the Institute of Chartered Accountants of India. ThoseStandards and the Guidance Note require that we comply with ethical requirements and planand 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.

5. Our audit involves performing procedures to obtain audit evidence about the adequacyof the internal financial controls system over financial reporting and their operatingeffectiveness.

6. Our audit of internal financial controls over financial reporting included obtainingan understanding of internal financial controls over financial reporting assessing therisk that a material weakness exists and testing and evaluating the design and operatingeffectiveness of internal control based on the assessed risk. The procedures selecteddepend on the auditor's judgement including the assessment of the risks of materialmisstatement of the Ind AS financial statements whether due to fraud or error.

7. 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

8. A Company's internal financial control over financial reporting is a processdesigned to provide reasonable assurance regarding the reliability of financial reportingand the preparation of financial statements for external purposes in accordance withgenerally accepted accounting principles. A Company's internal financial control overfinancial reporting includes those policies and procedures that (1) pertain to themaintenance of records that in reasonable detail accurately and fairly reflect thetransactions and dispositions of the assets of the company; (2) provide reasonableassurance that transactions are recorded as necessary to permit preparation of financialstatements in accordance with generally accepted accounting principles and that receiptsand expenditures 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

9. 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

10. In our opinion the Company has in all material respects an adequate internalfinancial controls over financial reporting and such internal financial controls overfinancial reporting were operating effectively as at 31st March 2019 based onthe internal control over financial reporting criteria established by the Companyconsidering the essential components of internal control stated in the Guidance Noteissued by the Institute of Chartered Accountants of India.

For Sarath & Associates
Chartered Accountants
Firm Regn. No: 005120S
Place : Hyderabad CA P Gopi Krishna
Date : 24.05.2019 Partner
Membership No. 225868

"Annexure B" to the

Independent Auditors Report

 

(Referred to in paragraph 16 under the heading ‘Report on Other Legal &Regulatory Requirements' of our report of even date to the financial statements of the M/sHindustan Fluorocarbons Limited for the year ended 31st March 2019)

As per the books and records produced before us and as per the information andexplanations given to us and based on such audit checks that we considered necessary andappropriate we confirm that:

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

(b) The fixed assets have been physically verified by the management at reasonableintervals in accordance with its phased programme designed to cover all the assets byphysical verification over a period of one to five years which in our opinion isreasonable having regard to the size of the Company and nature of assets. No materialdiscrepancies were noticed on such verification.

(c) The title deeds of immovable properties are held in the name of the Company

(ii) (a) The management has conducted the physical verification of inventories atreasonable intervals.

(b) The discrepancies noticed on physical verification of the inventory as compared tobook records which has been properly dealt in the books of account were not material.

(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 during the period under review. Accordingly theprovisions of Clause 3(iii)(a) to Clause 3 (iii)(c) of the said Order are not applicablefor the Company during the year under review.

(iv) In our opinion and according to the information and explanations given to us thecompany has not given any loans made any investments provided any guarantees and givenany security to which the provisions of section 185 and 186 of the Companies Act 2013 areapplicable.

(v) According to information and explanation given to us the Company has not acceptedany deposits from the public. Therefore the provisions of Clause (v) of Paragraph 3 ofthe Order are not applicable to the Company

(vi) We have broadly reviewed the books of account maintained by the Company pursuantto the rules made by the Central Govt. of India relating to maintenance of Cost Recordsspecified under sub-section (1) of Section 148 of the Act in respect of the activitiescarried on by the company and are of the opinion that prima facie the prescribedaccounts and records have been made and maintained.

However we have not made a detailed examination of the records with a view todetermine whether they are accurate or complete.

(vii) (a) The Company has been generally regular in depositing undisputed statutorydues including provident fund employees' state insurance GST income-tax sales-taxservice tax duty of customs duty of excise value added tax cess and any otherstatutory dues to the appropriate authorities. According to the information andexplanations given to us no undisputed amounts payable in respect of the above were inarrears as at March 31 2019

(b) There are no dues of income tax or sales tax or service tax or duty of customs orduty of excise or value added tax or GST have not been deposited on account of anydispute.

(viii) In our opinion and according to the information and explanations given to usthe Company has defaulted in repayment of dues to Govt. of India Ministry of Chemicals& Fertilizers (Dept. of Chemicals and Petrochemicals).

The Company has not paid Govt. plan Loan of Rs.12.44 Crores (5 instalments) andinterest payable being Rs.1.82 Crores in the current Financial Year.

(ix) The company has not raised moneys by way of initial public offer or further publicoffer including debt instruments and term Loans. Accordingly the provisions of Clause3(ix) of the Order are not applicable to the Company for the Current Year

(x) Based upon the audit procedures performed and the information and explanationsgiven by the management we report that no fraud by the Company or on the company by itsofficers or employees has been noticed or reported during the year.

(xi) Based upon the audit procedures performed and the information and explanationsgiven by the management there is no managerial remuneration which has been paid orprovided during the current year.

(xii) As the Company is neither carrying on business of Nidhi nor reported as a Nidhicompany paragraph 3(Xii) of the order is not applicable.

(xiii) The transactions with the related parties are in compliance with sections 177and 188 of Companies Act 2013 where applicable and the details have been disclosed in theInd AS Financial Statements etc. as required by the applicable accounting standards.

(xiv) The Company has not made any preferential allotment or private placement ofshares or fully or partly convertible debentures during the year under review.

(xv) The Company has not entered into any non-cash transactions with directors orpersons connected with them. Accordingly the paragraph 3(XV) of the order is notapplicable.

(xvi) The Company is not carrying on the business of Non- Banking Finance the companyis not required to be registered under section 45-IA of the Reserve Bank of India Act1934.

For Sarath & Associates
Chartered Accountants
Firm Regn. No: 005120S
Place : Hyderabad CA P Gopi Krishna
Date : 24.05.2019 Partner
Membership No. 225868