To the Members of I G Petrochemicals Limited
Report on the Audit of the Standalone Financial Statements
We have audited the accompanying standalone financial statements of I GPetrochemicals Limited ("the
Company") which comprise the Standalone Balance Sheet as at 31stMarch 2021 and the Standalone Statement of Profit and Loss (including other comprehensiveincome) Standalone Statement of Changes in Equity and Standalone Statement of Cash Flowsfor the year then ended and notes to the standalone financial statements including asummary of significant and other explanatory information (hereinafter referred as"the standalone financial statements").
In our opinion and to the best of our information and according to theexplanations given to us the aforesaid standalone financial statements give theinformation required by the Companies Act 2013 (the "Act") in the manner sorequired and give a true and fair view in conformity with the Indian Accounting Standardsprescribed under Section 133 of the Act read with the Companies (Indian AccountingStandards) Rules 2015 as amended ("Ind AS") and other accounting principlesgenerally accepted in India of the state of affairs of the Company as at 31st March2021 the profit and total comprehensive income changes in equity and its cash flows forthe year ended on that date.
Basis for Opinion
We conducted our audit of the standalone financial statements inaccordance with the Standards on Auditing (SAs) specified under Section 143(10) of theCompanies Act 2013 (the Act'). Our responsibilities under those Standards arefurther described in the Auditor's Responsibilities for the audit of the standalonefinancial statements section of our report. We are independent of the Company inaccordance with the Code of Ethics issued by the Institute of Chartered Accountants ofIndia ("ICAI") together with the ethical requirements that are relevant to ouraudit of the standalone financial statements provisions of the Act and the Rulesthereunder and accounting policies we have fulfilled our other ethical accordance withthese requirements and the ICAI's Code of Ethics. We believe that the audit evidencewe have obtained is sufficient and a basis for our opinion on the standalone financialstatements.
Key Audit Matters
Key audit matters are those matters that in our professional judgmentwere of most significance in our audit of the standalone financial statements of thecurrent period. These matters were addressed in the context of our audit of the standalonefinancial statements as a whole and in forming our opinion thereon and we do not providea separate opinion on these matters. We have determined the matters described below to bethe key audit matters to be communicated in our report.
|Key audit matter ||How our audit addressed the key audit matter |
|Capitalisation of Property Plant and Equipment || |
|During the year ended 31st March 2021 the Company has incurred significant capital expenditure. Out of the total additions to Property Plant and Equipment of Rs. 26444.21 lakhs significant part of the capitalisation pertain to PA4 plant. The plant has been successfully commissioned and capitalized during the year. ||Our audit approach was a combination of test of internal controls and substantive procedures including: |
|Significant level of judgement is involved to ensure that the aforesaid capital expenditure/additions meet the recognition criteria of Ind AS 16 - Property Plant and Equipment specifically in relation to determination of trial run period and costs associated with trial runs for it to be ready for intended use. || Performing walk through of the capitalisation process and testing the design and operating effectiveness of the controls in the process. |
|As a result the aforesaid matter was determined to be a key audit matter || Assessing the nature of additions made to property plant and equipment and capital work- in-progress on a test check basis and carry out testing to ensure that they meet the recognition criteria as set out in para 16 to 22 of Ind AS 16 including any such costs incurred specifically for trial run. |
| || Assessing that the borrowing cost capitalised (including foreign exchange to the extent it is considered as an adjustment to interest cost) is in accordance with the accounting policy of the Company. |
| || Reviewing the project completion certificate provided by the management to determine whether the asset is in the location and condition necessary for it to be capable of operating in the manner intended by the management. |
Emphasis of Matter
We draw your attention to Note No. 40 to the standalone financialstatements where the Company had shut down its manufacturing facilities in the last weekof March 2020 due to the nationwide lockdown announced by the Government of India tocontain the spread of Covid-19. It restarted its operations from mid April 2020 in aphased manner and gradually achieved normal level of production by end of May 2020. The
Company has carried out a detailed study to assess the impact ofCovid-19 including the second wave on its liquidity position and on the recoverabilityand carrying values of its assets and has concluded that there is no significant same onits financial results as at 31st March 2021. The impact assessment of Covid-19 is acontinuous process given the uncertainties associated with its nature and duration. Themanagement will continue to monitor material changes to the future economic conditionswhich may have an impact on the operations of the Company.
Our opinion is not modified in respect of the above matter.
Information Other than the Standalone Financial Statements andAuditor's Report Thereon
The Company's Board of Directors is responsible for the otherinformation. The other information comprises the information included in the ManagementDiscussion and Analysis Board's Report including Annexures to Board's ReportBusiness Responsibility Report Corporate Governance Report and Shareholder Informationbut does not include the standalone financial statements and our auditor's reportthereon. This other information is expected to be made available to us after the date ofthis auditors' report.
Our opinion on the standalone financial statements does not cover theother information and we will not express any form of assurance conclusion thereon. Inconnection with our audit of the standalone financial statements our responsibility is toread the other information identified above when it becomes available and in doing soconsider whether the other information is materially inconsistent with the standalonefinancial statements or our knowledge obtained in the audit or otherwise appears to bematerially misstated.
When we read such other information as and when made available to usand if 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 forthe Standalone Financial Statements
The Company's Board of Directors is responsible for the mattersstated in Section 134(5) of the Act with respect to the preparation of these standalonefinancial statements that give a true and fair view of the state of affairs profit / loss(including other comprehensive income) changes in equity and cash flows the Company inaccordance with the accounting principles generally accepted in India including theIndian Accounting Standards (Ind AS) specified under Section 133 of the Act read with theCompanies (Indian Accounting Standards) impactonaccountofthe Rules 2015 asamended. This responsibility also includes maintenance of adequate accounting records inaccordance with the provisions of the Act for safeguarding of the assets of the Companyand for preventing and detecting frauds and other irregularities; selection andapplication of appropriate accounting policies; making judgments and estimates that arereasonable and prudent; and design implementation and maintenance of adequate internalfinancial controls that were operating effectively completeness of the accountingrecords relevant to the preparation and presentation of the standalone financialstatements 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 isresponsible for assessing the Company's ability to continue as a going concerndisclosing as applicable matters related to going concern and using the going concernbasis of accounting unless management either intends to liquidate the Company or to ceaseoperations or has no realistic alternative but to do so.
The Board of Directors are also responsible for overseeing theCompany's financial reporting process.
Auditor's Responsibilities for the Audit of the StandaloneFinancial Statements
Our objectives are to obtain reasonable assurance about whether thestandalone financial statements as a whole are free from material misstatement whetherdue 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 auditconducted in accordance with SAs will always detect a material misstatement when itexists. Misstatements can arise from fraud or error and are considered material ifindividually or in the aggregate they could reasonably be expected to influence theeconomic decisions of users taken on the basis of these standalone financial statements.
As part of an audit in accordance with SAs we exercise professionaljudgment and maintain professional scepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of thestandalone financial statements whether due to fraud or error design and perform auditprocedures responsive to those risks and obtain audit evidence that is sufficient andappropriate 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 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 thereasonableness of accounting estimates and related disclosures made by management.
Conclude on the appropriateness of management's use of the goingconcern basis of accounting and based on the audit evidence obtained whether a materialuncertainty exists related to events or conditions that may cast significantCompany's ability to continue as a going concern. If we conclude that a materialuncertainty exists we are required to draw attention in our auditor's report to therelated disclosures in the standalone financial statements or if such disclosures areinadequate to modify our opinion. Our conclusions are based on the audit evidenceobtained up to the date of our auditor's report. However future events or conditionsmay cause the Company to cease to continue as a going concern.
Evaluate the overall presentation structure and content of thestandalone financial statements including the disclosures and whether the standalonefinancial statements represent the underlying transactions and events in a manner thatachieves fair presentation.
Materiality is the magnitude of misstatements in the standalonefinancial statements that individually or in aggregate makes it probable that theeconomic decisions of a reasonably knowledgeable user of the standalone financialstatements may be influenced.
quantitative materiality and qualitative factors in
(i) planning the scope of our audit work and in evaluating the resultsof our work; and
(ii) to evaluate the effect of any identified misstatements in thestandalone financial statements.
We communicate with those charged with governance regardingamong other matters the planned scope and timing of the audit to provide a basis for andsignificant identify during our audit.
We also provide those charged with governance with a statementthat we have complied with relevant ethical requirements regarding independence and tocommunicate with them all relationships and other matters that may reasonably be thoughtto bear on our independence and where applicable related safeguards.
From the matters communicated with those charged with governance wedetermine those matters that were of most significance in the audit of the standalonefinancial statements of the current period and are therefore the key audit matters. Wedescribe 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 suchdoubt on the communication.
In view of the initial lockdown and ongoing lockdown most of the auditfor the year was carried out online based on remote access of data as provided by themanagement instead of standard conventional Audit. This resulted in need for carrying outalternative audit procedures as per the Standards on Auditing prescribed by the Instituteof Chartered Accountants of India (ICAI). The Audit has been carried out based on theadvisory on "Specific Considerations while conducting Distance Audit/ Remote Audit/Online Audit under current Covid-19 situation" issued by the Auditing and AssuranceStandards Board of ICAI. We have been represented by the management that the data providedfor our audit purposes is correct complete reliable and are directly generated by theaccounting system of the Company without any further manual modifications. Audit of thefinancial statements has been performed in the aforesaid conditions
Our opinion is not modified in respect of the above matter.
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 Section143(11) of the Act we give in the "Annexure A" a statement on the mattersspecified in paragraphs 3 and 4 of the Order to the extent applicable.
2. As required by Section 143(3) of the Act we report that:
(a) We have sought and obtained all the information and explanationswhich to the best of our knowledge and belief were necessary for the purposes of ouraudit.
(b) In our opinion proper books of account as required by law havebeen kept by the Company so far as it appears from our examination of those books.
(c) The Standalone Balance Sheet the Standalone Statement of Profitand Loss (including other comprehensive Income) the Standalone Statement of Changes inEquity and the Standalone Statement of Cash Flows dealt with by this Report are inagreement with the books of account.
(d) In our opinion the aforesaid standalone financial statementscomply with the Indian Accounting Standards specified under Section 133 of the Act readwith the Companies (Indian Accounting Standards) Rules 2015 as amended.
(e) On the basis of the written representations received from thedirectors as on 31st March 2021 taken on record by the Board of Directorsnone of the directors is disqualified as on 31st March 2021 from beingappointed as a director in terms of Section 164 (2) of the Act.
(f) With respect to the adequacy of the internal financial controlsover financial reporting of the Company and the operating effectiveness of such controlsrefer to our separate Report in "Annexure B".
(g) With respect to the other matters to be included in theAuditor's Report in accordance with the requirements of Section 197(16) of the Actas amended: In our opinion and to the best of our information and according to theexplanations given to us the remuneration paid by the Company to its directors during theyear is in accordance with the provisions of Section 197 of the Act.
(h) With respect to the other matters to be included in theAuditor's Report in accordance with Rule 11 of the Companies (Audit and Auditors)Rules 2014 in our opinion and to the best of our information and according to theexplanations given to us:
i. The Company has disclosed the impact of pending litigations on itsfinancial position in its standalone financial statements Refer Note 31 to the standalonefinancial statements;
ii. The Company has made provision as required under the applicablelaw or accounting standards for material foreseeable losses if any on long-termcontracts including derivative contracts.
iii. There has been no delay in transferring amounts required to betransferred to the Investor Education and Protection Fund by the Company.
Annexure - A to the Independent Auditors' Report
As referred to in paragraph 1 under Report on Other Legal andRegulatory Requirements' of our report of even date
(i) a) As per information and explanation provided to us and based onour examination of the records of the Company the Company has maintained proper recordsshowing full particulars including quantitative details and situation of fixed assets. b)According to information and explanation given to us there is a regular programme ofphysical verification of the fixed assets by the management which in our opinion isreasonable having regard to the size of the Company and nature of its assets. As informedto us no material discrepancies were noticed on such verification. c) As per informationprovided to us and to the best of our knowledge and belief the title deeds of immovableproperties are held in the name of the Company.
(ii) A s per information provided to us and to best of our knowledgeand belief the physical verification of inventory has been conducted by the management atreasonable intervals. No material discrepancies have been noticed on physical verificationof inventories as compared to book records.
(iii) The Company has granted loan to one body corporate covered in theregister maintained under Section 189 of the Companies Act 2013 ("the Act").
a) I n our opinion the rate of interest terms and conditions on whichthe loan had been granted to the body corporate listed in the register maintained underSection 189 of the Act were not prima facie prejudicial to the interest of the Company.
b) I n case of the loan granted to corporate listed in the registermaintained under Section 189 of the Act the borrower have been regular in the payment ofthe principal and interest as stipulated.
c) There is no overdue amount in respect of the loan granted to thebody corporate listed in the register maintained under Section 189 of the Act.
(iv) According to the information and explanations given to us theCompany has complied with the provisions of Section 185 and 186 of the Act.
(v) According to the information and explanations given to us duringthe financial year the Company has not accepted deposits within the meaning of Section 73to 76 of the Act. Accordingly paragraph 3(v) of the Order is not applicable.
(vi) We have broadly reviewed the books of account maintained by theCompany pursuant to the Rules made by the Central Government for the maintenance of costrecords under sub-section (1) of Section 148 of the Act in respect of Company'sproducts and are of the opinion that prima facie the prescribed accounts and recordshave been made and maintained. However we have not the made a detailed examination of thecost records with a view to determine whether they a re accurate or complete.
(vii) a) According to the information provided and explanations givento us and based on our examination of the records of the Company the Company is generallyregular in depositing with appropriate authorities undisputed statutory dues includingprovident fund employee's state insurance income tax sales tax service tax dutyof customs duty of excise value added tax other cess and other statutory duesapplicable to it. There are no material outstanding statutory dues existing as on the lastday of the financial year which is outstanding for more than six months from the day thesebecomes payable. body
b) According to the information and explanations given to us and basedon our examination of the records of the Company there are no dues of income tax salestax service tax duty of customs duty of excise value added tax which have not beendeposited on account of any dispute other than those indicated below :
|Name of the statute ||Nature of disputed dues ||Amount ((Rs. in lakhs)) ||Year to which demand relates ||Forum where dispute is pending |
|Central Excise Act 1944 ||Excise Duty ||1820.11 ||Various Years from 1997 to 2009 ||CESTAT |
|Income Tax Act 1961 ||Income Tax ||5531.43# ||Various Assessment Year from 1992-93 to 2018-19 ||Karnataka High Court / ITAT/ CIT (Appeals) |
# After taking into consideration of the payments under protest / MATadjustments.
(viii) According to the information and explanations given to us theCompany has not defaulted in repayment of loans or borrowings to financial institutionbank Government or dues to debenture holders.
(ix) In our opinion and according to the information and explanationsgiven to us and to the best of our knowledge and belief the Company did not take any loan& did not raise money by way of initial public offer or further public offer duringthe year.
(x) According to the information and explanations given to us and tothe best of our knowledge and belief no fraud by or on the Company by its officers oremployees has been noticed or reported during the year.
(xi) According to the information and explanations given to us andbased on examination of the record of the Company the Company has paid / provided for themanagerial remuneration in accordance with requisite approval mandated by the provisionsof Section 197 read with schedule V to the Act.
(xii) According to the information and explanations given to us theCompany is not a Nidhi Company. Accordingly paragraph 3(xii) of the Order is notapplicable.
(xiii) According to the information and explanations given to us andbased on our examination of the records of the Company the Company has enteredtransactions during the period with the related parties as per the provisions of Section177 and 188 of the Act and wherever applicable the details have been disclosed in theFinancial Statements as required by the applicable accounting standards.
(xiv) According to the information and explanations given to us andbased on our examination of the records of the Company the Company has not made anypreferential allotment or private placement of shares or fully or partly convertibledebentures during the year.
(xv) According to the information and explanations given to us andbased on our examination of the records of the Company the Company has not entered intonon-cash transactions with directors or persons connected with him. Accordingly paragraph3(xv) of the Order is not applicable.
(xvi) According to the information and explanations given to us theCompany is not required to be registered under Section 45-IA of the Reserve Bank of IndiaAct 1934.
Annexure - B to the Independent Auditors' Report
(Referred to in paragraph 1(f) under Report on Other Legal andRegulatory Requirements' section of our report to the Members of I G PetrochemicalsLtd of even date)
Report on the Internal Financial Controls Over Financial Reportingunder Clause (i) of Sub- section 3 of Section 143 of the Companies Act 2013 ("theAct")
We have audited the internal financial controls over financialreporting of I G Petrochemicals Limited ("the Company") as of 31st March 2021in conjunction with our audit of the standalone financial statements of the Company forthe year ended on that date.
Management's Responsibility for Internal Financial Controls
The Board of Directors of the Company are responsible for establishingand maintaining internal financial controls based on the internal control over financialreporting criteria established by the Company considering the essential components ofinternal control stated in the Guidance Note on Audit of Internal Financial Controls overFinancial Reporting issued by the Institute of Chartered Accountants of India(ICAI'). These responsibilities include the design implementation andmaintenance of adequate internal financial controls that were operating effectively forensuring the orderly and efficient conduct of its business including adherence toCompany's policies the safeguarding of its assets the prevention and detection offrauds and errors the accuracy and completeness of the accounting records and the timelypreparation of reliable financial information as required under the Companies Act 2013.
Our responsibility is to express an opinion on the Company's internalfinancial controls over financial reporting based on our audit. We conducted our audit inaccordance with the Guidance Note on Audit of Internal Financial Controls over FinancialReporting (the "Guidance Note") and the Standards on Auditing issued by ICAIand deemed to be prescribed under Section 143(10) of the Companies Act 2013 to theextent applicable to an audit of internal financial controls both applicable to an auditof Internal Financial Controls and both issued by the Institute of Chartered Accountantsof India. Those Standards and the Guidance Note require that we comply with ethicalrequirements and plan and perform the audit to obtain reasonable assurance about whetheradequate internal financial controls over financial reporting was established andmaintained and if such controls operated effectively in . all material respects Our auditinvolves performing procedures to obtain audit evidence about the adequacy of the internalfinancial controls system over financial reporting and their operating effectiveness. Ouraudit of internal financial controls over financial reporting included obtaining anunderstanding of internal financial controls over financial reporting assessing the riskthat 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 judgment including the assessment of the risks of materialmisstatement of the financial statements whether due to fraud or error. We believe thatthe audit evidence we have obtained is sufficient and appropriate to provide opinion onthe Company's internal financial controls system over financial reporting.
Meaning of Internal Financial Controls over Financial Reporting
A Company's internal financial control over financial reporting is aprocess designed to provide reasonable assurance regarding the reliability of financialreporting and the preparation of financial statements for external purposes in accordancewith generally accepted accounting principles. A Company's internal financial control overfinancial reporting includes those policies and procedures that
(1) pertain to the maintenance of records that in reasonable detailaccurately and fairly reflect the transactions and dispositions of the assets of theCompany;
(2) provide reasonable assurance that transactions are recorded asnecessary to permit preparation of financial statements in accordance with generallyaccepted accounting principles and that receipts and expenditures of the company arebeing made only in accordance with authorizations of management and directors of theCompany; and
(3) provide reasonable assurance regarding prevention or timelydetection of unauthorized acquisition use or disposition of the Company's assets thatcould have a material effect on the financial statements.
Inherent Limitations of Internal Financial Controls over FinancialReporting
Because of the inherent limitations of internal financial controls overfinancial reporting including the possibility of collusion or improper managementoverride of controls material misstatements due to error or fraud may occur and not bedetected. Also projections of any evaluation of the internal financial controls overfinancial reporting to future periods are subject to the risk that the internal financialcontrol over financial reporting may become inadequate because of changes in conditionsor that the degree of compliance with the policies or procedures may deteriorate.
In our opinion to the best of our information and according to theexplanations given to us the Company has in all material respects an adequate internalfinancial controls system over financial reporting and such internal financial controlsover financial reporting were operating effectively as at 31st March 2021based on the internal control over financial reporting criteria established by the Companyconsidering the essential components of internal control stated in the Guidance Note onAudit of Internal Financial Controls Over Financial Reporting issued by the Institute ofChartered Accountants of India.
|For UDAY & Co. ||For SMMP & Company |
|Chartered Accountants ||Chartered Accountants |
|Firm's Registration No. ||Firm's Registration No. |
|004440S ||120438W |
|K Sathyanarayanan ||Chintan Shah |
|Partner ||Partner |
|Membership No. 203644 ||Membership No. 166729 |
|abasisforouraudit UDIN : 21203644AAAAAL7764 ||UDIN : 21166729AAAAJS1076 |
|Place: Bengaluru ||Place: Mumbai |
|Date: 24th May 2021 ||Date: 24th May 2021 |