To the Members of Insecticides (India) Limited
Report on the Audit of the Standalone Financial Statements
We have audited the accompanying standalone financial statements of Insecticides(India)Limited ("the Company") which comprise the Balance Sheet as at March31 2020 the Statement of Profit and Loss (including other comprehensive income) theStatement of Changes in Equity and the Statement of Cash Flows for the year then endedand notes to the financial statements including a summary of the significant accountingpolicies and other explanatory information (hereinafter referred to as "thestandalone financial statements").
In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid standalone financial statements give the information requiredby the Companies Act 2013 ("the Act") in the manner so required and give a trueand fair view in conformity with the Indian Accounting Standards prescribed under section133 of the Act read with the Companies (Indian Accounting Standards) Rules2015 asamended ("Ind AS") and other accounting principles generally accepted in Indiaof the state of affairs of the Company as at March 31 2020 the profit and totalcomprehensive income changes in equity and its cash flows for the year ended on thatdate.
Basis for Opinion
We conducted our audit of the standalone financial statements in accordance with theStandards on Auditing (SAs) specified under section 143(10) of the Act. Ourresponsibilities under those Standards are further described in the Auditor'sResponsibilities for the Audit of the Standalone Financial Statements section of ourreport. We are independent of the Company in accordance with the Code of Ethics issued bythe Institute of Chartered Accountants of india (ICAI) together with the ethicalrequirements that are relevant to our audit of the Standalone financial statements underthe provisions of the Act and the Rules made there under and we have fulfilled our otherethical responsibilities in accordance with these requirements and the ICAI's Code ofEthics. We believe that the audit evidence we have obtained is sufficient and appropriateto provide a basis for our audit opinion on the standalone financial statements.
Emphasis of Matter
We draw attention to note no. 50 of the Standalone financial statement which describesthe uncertainties and the impact of Covid-19 pandemic on the Company's operations andresults as assessed by the management. Due to Covid-19 related lock-down restrictionsimposed by the Government physical verification of inventory at various locations wascarried out by the management of the Company near to year- end. Our attendance at thephysical Inventory verification done by the management was impracticable under such lock-down restrictions imposed by the government. Consequently we have performed alternativeaudit procedures to obtain comfort over the existence and condition of inventory at theyear-end as per the guidance provided by SA 501 "Audit Evidence - SpecificConsiderations for Selected Items" and have obtained sufficient audit evidence.
Our opinion is not modified in respect of this matter.
Key Audit Matter
Key audit matters are those matters that in our professional judgment were of mostsignificance in our audit of the standalone financial statements of the current period.These matters were addressed in the context of our audit of the standalone financialstatements as a whole and in forming our opinion thereon and we do not provide aseparate opinion on these matters. We have determined the matters described below to bethe key audit matters to be communicated in our report.
|Key Audit Matter ||Auditor's Response |
|Recognition of Revenue ||Principal Audit Procedures |
|The Company recognizes revenue at the point in time when control of the goods is transferred to the customer at an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services. In determining the transaction price for the sale the Company considers the effects of variable consideration and consideration receivable from the customer. For the year ended March 31 2020 the Company's Statement of Profit & Loss included Sales of Rs. 135016.06 Lakhs. The nature of rebates discounts and sales returns if any involve judgment in determining sales revenues and revenue cut-off. The risk is therefore that revenue may not be recognized in the correct period. Refer to Accounting policies Note 2.2(b) and Note No. 21 of the standalone Financial Statements. || We performed process walkthrough to understand the adequacy and the design of the revenue cycle. We tested internal controls in the revenue and trade receivables over the accuracy and timing of revenue accounted in the Financial statements. |
| || Understanding the policies and procedures applied to revenue recognition as well as compliance thereof including an analysis of the effectiveness of controls related to revenue recognition processes employed by the Company. |
| || We reviewed the revenue recognition policy applied by the Company to ensure its compliance with Ind- AS 115 requirements. |
| || We performed a detailed testing on transactions ensuring revenues were recognized in the correct accounting period. We also tested journal entries recognized in revenue focusing on unusual or irregular transactions. |
| || We validated the appropriateness and completeness of the related disclosures in Note No. 21 of the Standalone Financial statements. |
Information Other than the Standalone Financial Statements and Auditor's Report Thereon
The Company's Board of Directors is responsible for the preparation of the otherinformation. The other information comprises the information included in the ManagementDiscussion and Analysis Board's Report including Annexures to Board's Report CorporateGovernance and Shareholder's Information but does not include the standalone financialstatements and our auditor's report thereon.
Our opinion on the standalone financial statements does not cover the other informationand we do not express any form of assurance or conclusion thereon.
In connection with our audit of the standalone financial statements our responsibilityis to read the other information and in doing so consider whether the other informationis materially inconsistent with the standalone financial statements or our knowledgeobtained during 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. We havenothing to report in this regard.
Responsibilities of Management and Those Charged with Governance for the StandaloneFinancial Statements
The Company's Board of Directors is responsible for the matters stated in section134(5) of the Act with respect to the preparation of these standalone financial statementsthat give a true and fair view of the financial position financial performance totalcomprehensive income changes in equity and cash flows of the Company in accordance withInd AS and other accounting principles generally accepted in India. This responsibilityalso includes maintenance of adequate accounting records in accordance with the provisionsof the Act for safeguarding the assets of the Company and for preventing and detectingfrauds and other irregularities; selection and application of appropriate accountingpolicies; making judgments and estimates that are reasonable and prudent; and designimplementation and maintenance of adequate internal financial controls that wereoperating effectively for ensuring the accuracy and completeness of the accountingrecords relevant to the preparation and presentation of the standalone 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 the Board of Directors is responsiblefor assessing the Company's ability to continue as a going concern disclosing asapplicable matters related to going concern and using the going concern basis ofaccounting unless the Board of Directors either intends to liquidate the Company or tocease operations or has no realistic alternative but to do so.
The Board of Directors are also responsible for overseeing the Company's financialreporting process.
Auditor's Responsibilities for the Audit of the Standalone Financial Statements
Our objectives are to obtain reasonable assurance about
whether the Standalone Financial statements as a whole are free from materialmisstatement whether due to fraud or error and to issue an auditor's report thatincludes our opinion. Reasonable assurance is a high level of assurance but is not aguarantee that an audit conducted in accordance with SAs will always detect a materialmisstatement when it exists. Misstatements can arise from fraud or error and areconsidered material if individually or in the aggregate they could reasonably beexpected to influence the economic decisions of users taken on the basis of thesestandalone 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 standalone 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 section1 A3(3)(l)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 reasonableness ofaccounting estimates and related disclosures made by management.
Conclude on the appropriateness of management's use of the going concern basis ofaccounting and based on the audit evidence obtained whether a material uncertaintyexists related to events or conditions that may cast significant doubt on the Company'sability to continue as a going concern. If we conclude that a material uncertainty existswe are required to draw attention in our auditor's report to the related disclosures inthe standalone financial statements or if such disclosures are inadequate to modify ouropinion. Our conclusions are based on the audit evidence obtained up to the date of ourauditor's report. However future events or conditions may cause the Company to cease tocontinue as a going concern.
Evaluate the overall presentation structure and content of the standalone financialstatements including the disclosures and whether the standalone financial statementsrepresent the underlying transactions and events in a manner that achieves fairpresentation.
Materiality is the magnitude of misstatements in the standalone financial statementsthat individually or in aggregate makes it probable that the economic decisions of areasonably knowledgeable user of the financial statements
may be influenced. We consider quantitative materiality and qualitative factors in (i)planning the scope of our audit work and in evaluating the results of our work; and (ii)to evaluate the effect of any identified misstatements in the financial statements.
We communicate with those charged with governance regarding among other matters theplanned scope and timing of the audit and significant audit findings including anysignificant deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have compliedwith relevant ethical requirements regarding independence and to communicate with themall relationships and other matters that may reasonably be thought to bear on ourindependence and where applicable related safeguards.
From the matters communicated with those charged with governance we determine thosematters that were of most significance in the audit of the standalone financial statementsof the current period and are therefore the key audit matters. We describe these mattersin our auditor's report unless law or regulation precludes public disclosure about thematter or when in extremely rare circumstances we determine that a matter should not becommunicated in our report because the adverse consequences of doing so would reasonablybe expected to outweigh the public interest benefits of such communication.
Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditor's Report) Order 2016("the Order")issued by the Central Government of India in terms of section 1 A3 (11) of the Act wegive in the "Annexure A" a statement on the matters specified in paragraphs 3and 4 of the Order.
2. As required by Section 1A3(3) of the Act based on our audit we report that:
a) We have sought and obtained all the information and explanations which to the bestof our knowledge and belief were necessary for the purposes of our audit.
b) In our opinion proper books of account as required by law have been kept by theCompany so far as it appears from our examination of those books.
c) The Balance Sheet the Statement of Profit and Loss including Other ComprehensiveIncome Statement of Changes in Equity and the Statement of Cash Flow dealt with by thisReport are in agreement with the relevant books of account.
d) In our opinion the aforesaid standalone financial statements comply with the Ind ASspecified under Section 133 of the Act read with Rule 7 of the Companies(Accounts)Rules2014.
e) On the basis of the written representations received from the directors as on March31 2020 taken on record by the Board of Directors none of the directors is disqualifiedas on March 31 2020 from being appointed as a director in terms of Section 16A (2) of theAct.
f) With respect to the adequacy of the internal financial controls with reference tofinancial statements of the Company and the operating effectiveness of such controlsrefer to our separate Report in "Annexure B". 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 the requirements of section 197(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 year is inaccordance with the provisions of section 197of 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 201 A as amended inour opinion and to the best of our information and according to the explanations given tous:
i. The Company has disclosed the impact of pending litigations on its financialposition in its standalone financial statements. - Refer Note 39 to the standalonefinancial statements.
ii. The Company has made provision as required under the applicable law or accountingstandards for material foreseeable losses if any on long-term contracts includingderivative contracts.
iii. There has been no delay in transferring amounts required to be transferred tothe Investor Education and Protection Fund by the Company.
ANNEXURE'A' TO THE INDEPENDENT AUDITOR'S REPORT
(Referred to in paragraph 1 under 'Report on Other Legal and
Regulatory Requirements' section of our report to the Members
of lnsecticides (lndia)Limited of even date)
I. In respect of the Company's property plant & equipment:
(a) The Company has maintained proper records showing full particulars includingquantitative details and situation of property plant & equipment.
(b) The property plant & equipment have been physically verified by the managementaccording to the programme of periodical verification in phased manner which in ouropinion is reasonable having regard to the size of the Company and the nature of itsproperty plant & equipment. According to the information and explanations given tous no material discrepancies were noticed on such verification.
(c) According to the information and explanations given to us and on the basis of ourexamination of records of the Company the title deeds of immovable properties are held inthe name of the Company.
ii. We have been explained by the management that the inventory (except material intransit which material received) has been physically verified at reasonable interval andthe procedure of physical verification of the inventory followed by the management arereasonable in relation to the size of the company and nature of its business. However dueto Covid-19 related lock-down restrictions imposed by the government our attendance atthe physical Inventory verification done by the management near to year end wasimpracticable considering such lock-down restrictions. Consequently we have performedalternative audit procedures to obtain comfort over the existence and condition ofinventory at the year-end as per the guidance provided by SA 501 "Audit Evidence -Specific Considerations for Selected Items" and have obtained sufficient auditevidence. As far as we could ascertain and accordingly to the information and explanationsgiven to us no material discrepancies were noticed between the physical stock and bookrecords.
iii. The Company has not granted any loans secured or
unsecured to companies firms Limited Liability Partnerships or other parties coveredin the register maintained under Section 189 of the Act. Accordingly the provisions ofparagraph iii (a) to (c) of the Order are not applicable to the Company.
iv. According to the information explanations and representations given to us andbased upon audit procedures performed we are of the opinion that in respect of loansinvestments guarantees and securities the Company has complied with the provisions ofsection 185 and 186 of the Act.
v. According to the information and explanations given to us the Company has notaccepted any deposits from the public within the provisions of sections 73 to 76 of theAct and the rules framed there under.
vi. We have broadly reviewed the books of account maintained by the Company pursuant tothe rules made by Central Government for the maintenance of the cost records under section148(1) of the Act in respect to the Company's products to which said rules are madeapplicable and are of the opinion that prima facie the prescribed records have been madeand maintained. We have however not made a detailed examination of the said records with aview to determine whether they are accurate or complete.
vii. (a) According to the information and explanations given to
us and on the basis of examination of the records of the Company the Company hasgenerally been regular in depositing undisputed statutory dues including provident fundemployees' state insurance income tax goods and service tax custom duty cess and anyother material statutory dues with the appropriate authorities to the extent applicableand further there were no undisputed statutory dues payable for a period of more than sixmonths from the date they become payable as at March 312020.
(b) According to the records and information and explanations given to us there are nodues in respect of income tax sales tax service tax goods and service tax duty ofexcise duty of custom and value added tax that have not been deposited on account of anydispute except as given below:
|s . No. Name of the Statute ||Nature of Dues ||Period to which it relates ||Forum where dispute is pending ||Gross Liability (A) ||Amount Deposited under protest(B) ||Net Amount* (Rs. In Lacs) (A-B) |
|1 Gujarat Stamp Act 1958 ||Stamp Duty ||2013-14 ||Commissioner of Revenue Department Tehsil Vagra District Bharuch ||89.60 ||19.60 ||70.00 |
|2 Gujarat Value Added Tax Act 2003 ||VAT & CST ||2011-12 & 2012-13 ||Joint Commissioner of commercial Tax Baroda ||268.27 ||85.28 ||182.99 |
|3 Andhra Pradesh VAT Act 2005 ||VAT ||2014-15 ||APVAT Appellate Tribunal Visakhapatnam. ||122.08 ||61.04 ||61.04 |
|4 MP VAT Act 2002 ||CST ||2012-13 ||Assistant Commissioner VAT Indore ||1.52 ||0.15 ||1.37 |
|5 Central Excise Act 1944 ||Excise Duty ||2015- 16 2016- 17 & 2017-18 ||Central Excise Audit Commissionerate Jaipur ||294.37 ||11.04 ||283.33 |
|6 West Bengal VAT Act 2004 ||VAT ||2010-2011 ||Appellate Authority VAT West Bengal ||5.70 ||7.29 ||- |
|7 Central Excise Act 1944 ||Excise Duty ||2012-13 & 2013-14 ||Central Excise Audit Commissionerate Jammu ||135.14 ||5.07 ||130.07 |
viii. In our opinion on the basis of audit procedures and according to the informationand explanations given to us the Company has not defaulted in repayment of loan orborrowing to any bank.
The Company has not taken any loans or borrowings from the government and financialinstitution. Further the Company had not issued any debentures.
ix. According to the information and explanations given to us the Company has notraised money by way of initial public offer or further public offer (including debtinstruments) during the year. The term loans have been applied for the purposes for whichthey were raised.
x. Based on the audit procedures performed and on the basis of information andexplanations provided by the management no instance of fraud by the Company or on theCompany by its officers or employees has been noticed or reported during the year.
xi. In our opinion and according to the information and explanations given to us themanagerial remuneration has been paid/ provided in accordance with the requisite approvalsmandated by the provisions of section 197 read with schedule V to the Act.
xii. The Company is not a Nidhi Company and hence reporting
under clause 3(xii) of the Order is not applicable to the Company.
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 Act where applicable for alltransactions with the related parties and the details of related parties transactions havebeen disclosed in the standalone financial statements as required by the applicableAccounting standards.
xiv. According to the information and explanations given to us the Company has notmade any preferential allotment of shares or private placement of shares or fully / partlyconvertible debentures during the year in terms of provisions of Sections 42 of the Act.
xv. According to the information and explanations given to us and based on ourexamination of the records of the Company the Company has not entered into non-cashtransactions with directors or persons connected with him. Accordingly paragraph 3(xv) ofthe Order is not applicable.
xvi. The Company is not required to be registered under Section 45-IA of the ReserveBank of India Act 1934 as the provisions of the section is not applicable to the Company.
ANNEXURE "B" TO THE INDEPENDENT AUDITOR'S REPORT
(Referred to in paragraph 2(f) under 'Report on Other Legal and RegulatoryRequirements' section of our report to the Members of lnsecticides (lndia)Limited of evendate)
Report on the Internal Financial Controls over Financial Statements under Clause (i) ofSub-section 3 of Section 143 of the Companies Act 2013("the Act")
We have audited the internal financial controls with reference to financial statementsof INSECTICIDES (INDIA) LIMITED ("the Company") as of March 31 2020 inconjunction with our audit of the standalone financial statements of the Company for theyear ended on that date.
Management's Responsibility for Internal Financial Controls
The Board of Directors of the Company is responsible for establishing and maintaininginternal financial controls based on the internal control with reference to financialstatements 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. Theseresponsibilities include the design implementation and maintenance of adequate internalfinancial controls that were operating effectively for ensuring the orderly and efficientconduct of its business including adherence to respective 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 Act.
Our responsibility is to express an opinion on the internal financial controls withreference to financial statements 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 theAct to the extent applicable to an audit of internal financial controls. Those Standardsand the Guidance Note require that we comply with ethical requirements and plan andperform the audit to obtain reasonable assurance about whether adequate internal financialcontrols with reference to financial statements 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 with reference to financial statements and theiroperating effectiveness. Our audit of internal financial controls with reference tofinancial statements included obtaining an understanding of internal financial controlswith reference to financial statements assessing the risk that a material weaknessexists and testing and evaluating the design and operating effectiveness of internalcontrol based on the assessed risk. The procedures selected depend on the auditor'sjudgment including the assessment of the risks of material misstatement of the financialstatements 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 internal financial controls system withreference to financial statements of the Company.
Meaning of Internal Financial Controls with reference to financial statements
A Company's internal financial control with reference to financial statements 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 withreference to financial statements includes those policies and procedures that
(1) pertain to the maintenance of records that in reasonable detail accurately andfairly reflect the transactions and dispositions of the assets of the Company;
(2) provide reasonable assurance that transactions are recorded as necessary to permitpreparation of financial statements in accordance with generally accepted accountingprinciples and that receipts and expenditures of the Company are being made only inaccordance with authorisations of management and directors of the Company; and
(3) provide reasonable assurance regarding prevention or timely detection ofunauthorised acquisition use or disposition of the Company's assets that could have amaterial effect on the financial statements.
Inherent Limitations of Internal Financial Controls with reference to financialstatements
Because of the inherent limitations of internal financial controls with reference tofinancial statements including the possibility of collusion or improper managementoverride of controls materia misstatements due to error or fraud may occur and not bedetected. Also projections of any evaluation of the internal financial controls withreference to financial statements to future periods are subject to the risk that theinternal financial control with reference to financial statements may become inadequatebecause of changes in conditions or that the degree of compliance with the policies orprocedures 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 with reference to financial statements and such internal financial controls withreference to financial statements were operating effectively as at March 312020 based onthe internal control with reference to financial statements criteria established by theCompany considering the essential components of internal control stated in the GuidanceNote on Audit of Internal Financial Controls Over Financial Reporting issued by theInstitute of Chartered Accountants of India.