To the Members of
INEOS Styrolution India Limited
Report on the audit of the financial statements
We have audited the accompanying financial statements of INEOS Styrolution IndiaLimited ("the Company") which comprise the Balance Sheet as at 31 March 2021and the Statement of Profit and Loss (including Other Comprehensive Income) theStatement of Cash Flows 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 financial statements give the information required by theCompanies Act 2013 ("the 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 a airs of the Company as at 31 March 2021 and its profit total comprehensiveincome its cash flows and the changes in equity for the year ended on that date.
Basis for Opinion
We conducted our audit of the financial statements in accordance with the Standards onAuditing specified under section 143(10) of the Act (SAs). Our responsibilities underthose Standards are further described in the Auditor's Responsibility for the Audit of theFinancial 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 our audit of thefinancial statements under the provisions of the Act and the Rules made thereunder and wehave fulfilled our other ethical responsibilities in accordance with these requirementsand the ICAI's Code of Ethics. We believe that the audit evidence obtained by us issufficient and appropriate to provide a basis for our audit opinion on the financialstatements.
Key Audit Matters
Key audit matters are those matters that in our professional judgment were of mostsignificance in our audit of the financial statements of the current period. These matterswere addressed in the context of our audit of the financial statements as a whole and informing our opinion thereon and we do not provide a separate opinion on these matters. Wehave determined the matters described below to be the key audit matters to be communicatedin our report.
|Key audit matter ||Auditor's Response |
|Assessment of ongoing income tax and indirect tax litigations [Refer to 1(s) Significant accounting policies) and Note 38 (Contingent liabilities) to the financial statements] ||Our procedures on the management's assessment of these matters included: |
|As at 31 March 2021 the Company is subjected to a number of indirect tax litigations relating to disallowance of CENVAT credit in respect of payment of countervailing duty and special additional duty through Duty Entitlement Passbook (DEPB) in respect of import of raw materials and availing of CENVAT credit disallowance of service tax credit on certain input services and income tax litigations relating to disallowance of expenses transfer pricing adjustments etc. (together referred to as "litigations"). These matters are in appeal before various judicial forums. ||Understanding and evaluating process and controls designed and implemented by the management including testing of relevant controls; |
|The eventual outcome of these litigations is uncertain and the positions taken by the management are based on the application of significant judgement and estimation. ||Gaining an understanding of the tax related litigations through discussions with the management including the significant developments additions and settlements during the year; |
|The review of these matters requires application and interpretation of tax laws and reference to applicable judicial pronouncements. Based on management judgement and the advice from external legal and tax consultants and considering the merits of the case the Company has recognized provisions wherever required and for the balance matters where the management expects favourable outcome these litigations have been disclosed as contingent liabilities in the financial statements unless the possibility of out flow of resources is considered to be remote. ||Inspecting demand notices if any received from tax authorities and evaluating the Company's response to those matters; |
|Given the uncertainty and application of significant judgment in this area in terms of the eventual outcome of litigations we determined this to be a key audit matter. ||Obtaining independent confirmations from the Company's external tax experts including the status of the significant litigations their views regarding the likely outcome and magnitude of the potential exposure; |
| ||Evaluating the management's assessment on the likely outcome and potential magnitude by involving auditor's experts on complex or significant matters as considered necessary; and |
| ||Assessing the adequacy of the Company's disclosures. |
Information Other than the Financial Statements and Auditor's Report Thereon
The Company's Board of Directors is responsible for the other information. The otherinformation comprises the information included in the Director's Report of even date andannexure thereof but does not include the financial statements and our auditor's reportthereon.
Our opinion on the financial statements does not cover the other information and we donot express any form of assurance conclusion thereon
In connection with our audit of the financial statements our responsibility is to readthe other information and in doing so consider whether the other information ismaterially inconsistent with the financial statements or our knowledge obtainedduring the course of our audit or otherwise appears to be materially 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. Wehave nothing to report in this regard.
Management's Responsibility for the 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 financial statements that givea true and fair view of the financial position financial performance including othercomprehensive 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 maintance 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 maintance of adequate internal financial controls that wereoperating effectively for ensuring the accuracy and completeness of the accountingrecords relevant to the preparation and presentation of the financial statement that givea true and fair view and are free from material misstatement whether due to fraud orerror.
In preparing the financial statements management is responsible for assessing theCompany's ability to continue as a going concern disclosing as applicable mattersrelated to going concern and using the going concern basis of accounting unless managementeither intends to liquidate the Company or tOfficease operations or has no realisticalternative 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 Financial Statements
Our objectives are to obtain reasonable assurance about whether the financialstatements as a whole are free from material misstatement whether due to fraud or errorand to issue an auditor's report that includes our opinion. Reasonable assurance is a highlevel of assurance but is not a guarantee that an audit conducted in accordance 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 financial statements.
As part of an audit in accordance with SAs we exercise professional judgment andmaintain professional skepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of the financial statementswhether due to fraud or error design and perform audit procedures responsive tothose 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 mayinvolve collusion forgery intentional omissions misrepresentations or theoverride of internal control.
Obtain an understanding of internal financial control relevant to the audit in order todesign audit procedures that are appropriate in the circumstances. Under section143(3)(I) of the Act we are also responsible for expressing our opinion on whetherthe Company has adequate internal financial controls system in place and the operatingeffectiveness of such controls.
Evaluate the appropriateness of accounting policies used and the reasonableness ofaccounting estimates and related disclosures made by the management.
Conclude on the appropriateness of management's use of the going concern basis ofaccounting and based on the audit evidence obtained whether a materialuncertainty exists related to events or conditions that may cast significant doubton the Company'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 tothe related disclosures in the financial statements or if such disclosures areinadequate to modify our opinion. Our conclusions are based on the audit evidence obtainedup to the date of our auditor's report. However future events or conditions may cause theCompany tOfficease to continue as a going concern.
Evaluate the overall presentation structure and content of the financial statementsincluding the disclosures and whether the financial statements represent theunderlying transactions and events in a manner that achieves fair presentation.
Materiality is the magnitude of misstatements in the financial statements thatindividually or in aggregate makes it probable that the economic decisions of areasonably knowledgeable user of the financial statements may be in uenced. 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.
We communicate with those charged with Goverance regarding among other matters theplanned scope and timing of the audit and significant audit ndings including anysignificant deficiencies in internal control that we identify during our audit.
We also provide those charged with Goverance 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 Goverance we determine thosematters that were of most significance in the audit of the financial statements of thecurrent period and are therefore the key audit matters. We describe these matters in ourauditor's report unless law or regulation precludes public disclosure about the matter orwhen 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.
Other Matters paragraph
1. The comparative financial information of the Company for the year ended March 312020 prepared in accordance with Ind AS included in the Financial Statements hasbeen audited by the predecessor auditors. The report of the predecessor auditors onthis comparative financial information dated June 25 2020 expressed an unmodi ed opinion.
2. On account of COVID-19 related restrictions we were not able to physically observethe physical verification of inventory that was carried out by the management nearto the year end. Consequently we have performed alternate procedures to audit theexistence and condition of inventory as per the guidance provided in SA 501 "Auditevidence - Speci c consideration for selected items" which includes inspectionof supporting documentation relating to purchases production sales and results ofthe counts performed by the management through the year and have obtainedsufficient appropriate audit evidence to issue our unmodi ed opinion on these FinancialStatements.
Our opinion on the financial statements and our report on Other Legal and RegulatoryRequirements below is not modified in respect of these matters.
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 OtherComprehensive Income the Statement of Cash Flows and Statement of Changes inEquity dealt with by this Report are in agreement with the relevant books ofaccount.
d. In our opinion the aforesaid financial statements comply with the Ind AS specifiedunder Section 133 of the Act.
e. On the basis of the written representations received from the directors as on 31March 2021 taken on record by the Board of Directors none of the directors isdisqualified as on 31 March 2021 from being appointed as a director in terms ofSection 164(2) of the Act.
f. With respect to the adequacy of the internal financial controls overfinancial reporting of the Company and the operating effectiveness of suchcontrols refer to our separate Report in "Annexure A". Our report expresses anunmodi ed opinion on the adequacy and operating effectiveness of the Company'sinternal financial controls over financial reporting. g. With respect to the othermatters to be included in the Auditor's Report in accordance with the requirements of section197(16) of the Act as amended.
In 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 yearis in accordance 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 asamended in our opinion and to the best of our information and according to the explanationsgiven to us:
i. The Company has disclosed the impact of pending litigations on its financialposition in its 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 contractsincluding derivative 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 4of the Order.
| ||For Deloitte Haskins & Sells |
| ||Chartered Accountants |
| ||(Firm's Registration No. 117365W) |
| ||Kartikeya Raval |
| ||(Partner) |
|Place: Ahmedabad ||(Membership No. 106189) |
|Date: 19 May 2021 ||(UDIN: 21106189AAAAFB4412) |
ANNEXURE A TO INDEPENDENT AUDITORS' 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 INEOSStyrolution India Limited ("the Company") as of March 31 2021 inconjunction with our audit of the 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 maintance of adequate internal financial controls that wereoperating effectively for ensuring the orderly and efficient conduct of its businessincluding adherence to respective company's policies the safeguarding of its assets theprevention and detection of frauds and errors the accuracy and completeness of theaccounting records and the timely preparation of reliable financial information asrequired under the Companies Act 2013.
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 maintance 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 tOfficerror 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.
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 March 31 2021 based on the criteria forinternal financial control over financial reporting established by the Company consideringthe essential components of internal control stated in the Guidance Note on Audit ofInternal Financial Controls Over Financial Reporting issued by the Institute of CharteredAccountants of India.
| ||For Deloitte Haskins & Sells |
| ||Chartered Accountants |
| ||(Firm's Registration No. 117365W) |
| ||Kartikeya Raval |
| ||(Partner) |
|Place: Ahmedabad ||(Membership No. 106189) |
|Date: 19 May 2021 ||(UDIN: 21106189AAAAFB4412) |
ANNEXURE B TO INDEPENDENT AUDITORS' REPORT
(Referred to in paragraph 'Report on Other Legal and Regulatory Requirements' sectionof our report of even date)
(i) (a) The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets.
(b) The fixed assets were physically verified during the year by the Management inaccordance with a regular programme of verification which in our opinion providesfor physical verification of all the fixed assets at reasonable intervals.According to the information and explanation given to us no material discrepancies werenoticed on such verification.
(c) According to the information and explanations given to us and the records examinedby us and based on the examination of the registered sale deed / transfer deed /conveyance deed provided to us we report that the title deeds comprising all theimmovable properties of land and buildings which are freehold are held in the nameof the Company as at the balance sheet date except the following:
|Particulars of the land and building ||Gross Block ||Net Block ||Remarks |
| ||(as at March 31 2021) ||(as at March 31 2021) || |
|Land at Katol-Surve No.17 Paki-1 - Plant Site Kharabo admeasuring 8500 sq mt ||Rs 24.87 lacs ||Rs 24.87 lacs ||The title deeds are in the name of ABS Industries Limited erstwhile name of the company |
(ii) As explained to us the inventories were physically verified during the year bythe Management at reasonable intervals and no material discrepancies were noticedon physical verification.
(iii) The Company has not granted any loans secured or unsecured to companies rmsLimited Liability Partnerships or other parties covered in the register maintainedunder section 189 of the Companies Act 2013.
(iv) In our opinion and according to the information and explanations given to us theCompany has complied with the provisions of Sections 185 and 186 of the CompaniesAct 2013 in respect of grant of loans making investments and providing guaranteesand securities as 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 Companyhas complied with the provisions of Sections 73 to 76 or any other relevantprovisions of the Companies Act 2013.
(vi) The maintance of cost records has been specified by the Central Government undersection 148(1) of the Companies Act 2013. We have broadly reviewed the costrecords maintained by the Company pursuant to the Companies (Cost Records andAudit) Rules 2014 as amended prescribed by the Central Government under sub-section(1) of Section 148 of the Companies Act 2013 and are of the opinion that prima faciethe prescribed cost records have been made and maintained. We have however notmade a detailed examination of the cost records with a view to determine whetherthey are accurate or complete.
(vii) According to the information and explanations given to us in respect ofstatutory dues:
(vii) (a) The Company has generally been regular in depositing undisputed statutorydues including Provident Fund Employees' State Insurance Income-tax Sales TaxService Tax Customs Duty Excise Duty Value Added Tax cess and other materialstatutory dues applicable to it to the appropriate authorities.
(vii) (b) There were no undisputed amounts payable in respect of Provident FundEmployees' State Insurance Income-tax Sales Tax Service Tax Customs DutyExcise Duty Value Added Tax cess and other material statutory dues in arrears asat March 31 2021 for a period of more than six months from the date they becamepayable.
(vii) (c) Details of dues of Income-tax Sales Tax Service Tax Customs Duty ExciseDuty and Value Added Tax which have not been deposited as on March 31 2021 onaccount of disputes are given below:
|Name of Statute ||Nature of Dues ||Forum where Dispute is Pending ||Period to which the Amount Relates ||Amount Involved (Rs in Lakhs) ||Amount paid (Rs in Lakhs) ||Amount Unpaid (Rs in Lakhs) |
|The Central Excise Act 1944 ||CVD Claimed as credit as per exemption under DEPB ||CESTAT ||January 2005 to December 2011 ||8116 ||94 ||8022 |
|Income Tax Act 1961 ||Income Tax ||Commissioner of Income Tax (Appeals) ||AY 2010-11 to AY 2015-16 ||2674 ||- ||1713 |
|Income Tax Act 1961 ||Income Tax ||The Assistant commissioner TDS Circle ||AY 2013-14 ||362 ||- ||362 |
|Income Tax Act 1961 ||Income Tax ||Additional / Joint / Deputy / Assistant Commissioner of ||AY 2017-18 AY 2018-19 ||1143 ||- ||1143 |
|The Central Sales Tax Act 1956 ||Sales Tax ||Income Tax/ Joint Commissioner Commercial Tax ||FY 2002-03 & 2003-04 ||88 ||9 ||79 |
|The Central Sales Tax Act 1956 ||Sales Tax ||Appellate Tribunal Commercial Tax Ahmedabad ||FY 2013-14 ||25 ||20 ||5 |
|Value Added Tax Act 2005 ||VAT ||Commissioner of Sales Tax (Appeals) ||FY 1999-00 FY 2001-02 ||131 ||82 ||49 |
|Value Added Tax Act 2005 ||VAT ||Commissioner of Sales Tax Gujarat ||& FY 2015-16 FY 2015-16 ||19 ||11 ||8 |
|The Customs Tariff Act 1975 ||Custom ||CESTAT ||FY 2011-12 ||39 ||2 ||37 |
|finance Act 1994 ||Service Tax ||CESTAT ||August 2008 to June 2016 ||2284 ||87 ||2197 |
|finance Act 1994 ||Service Tax ||Commissioner Central Excise (A) Surat ||March 2014 to January 2015 ||18 ||0 ||18 |
|finance Act 1994 ||Service Tax ||The Assistant commissioner TDS Circle ||FY 2014-15 and FY 2016-17 ||56 ||2 ||54 |
(viii) The Company has not taken any loans or borrowings from financial institutionsand government or has not issued any debentures. In our opinion and according tothe information and explanations given to us the Company has not defaulted in therepayment of loans or borrowings to banks.
(ix) The Company has not raised monies by way of initial public offer further publicoffer (including debt instruments) or term loans during the year.
(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 itsOfficers or 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 managerial remuneration in accordance with the requisite approvalsmandated 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 ofrelated party transactions have been disclosed in the financial statements etc. asrequired by the applicable 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 reportingunder clause (xiv) of the Order 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.