To the Members of Insilco Limited
Report on the audit of the financial statements
1. We have audited the accompanying financial statements of Insilco Limited ("theCompany") which comprise the balance sheet as at March 31 2021 and the statementof Profit and Loss ((including Other Comprehensive loss) statement of changes in equityand statement of cash flows for the year then ended and notes to the financialstatements including a summary of significant accounting policies and other explanatoryinformation.
2. 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 except for theindeterminate effects of the matter referred to in the Basis for Qualified Opinion sectionof our report give a true and fair view in conformity with the accounting principlesgenerally accepted in India of the state of affairs of the Company as at March 31 2021and total comprehensive loss (comprising loss and other comprehensive loss) changes inequity and its cash flows for the year then ended.
Basis for qualified opinion
3. We draw your attention to Note 33 to the Financial Statements regarding suspensionof the Company's manufacturing operations due to rejection of the Company's applicationsfor water and air consent approvals by the U.P. Pollution Control Board (UPPCB) vide itsorder dated October 22 2019. The Company's appeals before the Special SecretaryDepartment of Environment UP have been dismissed by the Special Secretary vide ordersdated December 4 2020. Further as described in the said note the Board of Directors hasrecommended voluntary liquidation of the Company and accordingly as described in Note 36use of the going concern basis of accounting in the preparation of the financialstatements is considered inappropriate as there are no realistic alternatives forresumption of the Company's operations and accordingly the financial statements for theyear ended March 31 2021 have not been prepared on a going concern basis and certainadjustments described in the said note have been made based on the current estimates ofthe Company. However future course of events as stated in the aforesaid note for therealisation of the assets and settlement of its liabilities might affect theclassification and consequential adjustments to the carrying values of assets andliabilities of the Company the impact of which on the financial statements cannot beascertained at this stage.
4. We draw your attention to Note 35 to the Financial Statements regarding letter datedJuly 1 2020 of Uttar
Pradesh State Industrial Development Authority (UPSIDA) granting conditional approvalof the change in Shareholding and Directors in earlier years subject to payment ofproportionate transfer levy amounting to Rs.80900 thousands restriction on transfer ofcontrolling interest for five years execution of fresh lease deed with the Companyincrease in lease rent during remaining period of lease of land and compliance with otherconditions. As described in the said note the Company has deposited transfer levy ofRs.80900 thousands along with interest of Rs.5710 thousands under protest which has beenexpensed during the year ended March 31 2021 and has contested before UPSIDA that theaforementioned other terms and conditions in respect of the lease are not applicable tothe Company. As described in the said note the Company has filed writ petition before theHon'ble Allahabad High Court in this regard which is pending disposal. Pending resolutionof these matters with appropriate authorities we are unable to comment on the potentialimpact if any on carrying value of the assets and liabilities in these financialstatements.
We are unable to determine the impact of the aforesaid matters in aggregate on theloss for the year and consequently on the shareholders' funds as at March 31 2021.
5. We conducted our audit in accordance with the Standards on Auditing (SAs) specifiedunder section 143(10) of the Act. Our responsibilities under those Standards are furtherdescribed in the Auditor's Responsibilities for the Audit of the Financial Statementssection of our report. We are independent of the Company in accordance with the Code ofEthics issued by the Institute of Chartered Accountants of India together with the ethicalrequirements that are relevant to our audit of the financial statements under theprovisions of the Act and the Rules thereunder and we have fulfilled our other ethicalresponsibilities in accordance with these requirements and the Code of Ethics. We believethat the audit evidence we have obtained is sufficient and appropriate to provide a basisfor our qualified opinion.
Key audit matters
6. 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.Except for the matters described in the Basis for Qualified Opinion section above we havedetermined that there are no other key matters to be communicated in our report.
7. The Company's Board of Directors is responsible for
the other information. The other information comprises the information included in theAnnual Report 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 obtained in theaudit or otherwise appears to be materially misstated. If based on the work we haveperformed we conclude that there is a material misstatement of this other information weare required to report that fact.
We have nothing to report in this regard.
Responsibilities of management and those charged with governance for the financialstatements
8. 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 changes in equityand cash flows of the Company in accordance with the accounting principles generallyaccepted in India including the Accounting Standards specified under section 133of the Act. This responsibility also includes maintenance of adequate accounting recordsin accordance 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 for ensuring the accuracy andcompleteness of the accounting records relevant to the preparation and presentation ofthe financial statements that give a true and fair view and are free from materialmisstatement whether due to fraud or error.
9. 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 to cease operations or has no realisticalternative but to do so. Those Board of Directors are also responsible for overseeing theCompany's financial reporting process.
Auditor's responsibilities for the audit of the financial statements
10. 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.
11. As part of an audit in accordance with SAs we exercise professional judgment andmaintain professional scepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of the 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 control relevant to the audit in order todesign audit procedures that are appropriate in the circumstances Under Section 143(3)(i)of the Act we are also responsible for expressing our opinion on whether the company hasadequate internal financial controls with reference to financial statements in place andthe operating effectiveness 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 disclosures are inadequate to modify our opinion.Our conclusions 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 financialstatements including the disclosures and whether the financial statements represent theunderlying transactions and events in a manner that achieves fair presentation.
12. We communicate with those charged with governance regarding among other mattersthe planned scope and timing of the audit and significant audit findings including anysignificant deficiencies in internal control that we identify 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 inour auditor's report unless law or regulation precludes public disclosure about the matteror 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
15. As required by the Companies (Auditor's Report) Order 2016 ("theOrder") issued by the Central Government of India in terms of sub-section (11) ofsection 143 of the Act we give in the Annexure B a statement on the matters specified inparagraphs 3 and 4 of the Order to the extent applicable.
16. As required by Section 143(3) of the Act we report that:
(a) We have sought and except for the matters described in the Basis of QualifiedOpinion section of our report obtained all the information and explanations which to thebest of our knowledge and belief were necessary for the purposes of our audit.
(b) In our opinion except for the in determinate effect of the matter described in theBasis for Qualified Opinion paragraph section of our report proper books of account asrequired by law have been kept by the Company so far as it appears from our examination ofthose books.
(c) The Balance Sheet the Statement of Profit and Loss (including other comprehensiveloss) the Statement of Changes in Equity and Statement of Cash Flow dealt with by thisReport are in agreement with the books of account.
(d) In our opinion except for the indeterminate effect of the matters described in theparagraphs 3 & 4 of the Basis for Qualified Opinion section of our report theaforesaid financial statements comply with the Accounting Standards specified underSection 133 of the Act.
(e) The matters described under basis of qualified opinion paragraph may have anadverse effect on the functioning of the Company.
(f) On the basis of the written representations received from the directors as on March31 2021 taken on record by the Board of Directors none of the directors is disqualifiedas on March 31 2021 from being appointed as a director in terms of Section 164 (2) of theAct.
(g) The qualification relating to the maintenance of accounts and other mattersconnected therewith are as stated in the Basis for Qualified Opinion section of our report
(h) 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 A".
(i) 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 in our opinionand to the best of our information and according to the explanations given to us: i. TheCompany has disclosed the impact of pending litigations on its financial position in itsfinancial statements Refer Notes 26 and 35 to the financial statements; ii. TheCompany has made provision as required under the applicable law or accounting standardsfor material foreseeable losses if any on long-term contracts Refer Note 12 tothe financial statements. The Company did not have any derivative contracts as at March31 2021; iii. There were no amounts which were required to be transferred to the InvestorEducation and Protection Fund by the Company during the year ended March 31 2021; iv. Thereporting on disclosures relating to Specified Bank Notes is not applicable to the Companyfor the year ended March 31 2021.
17. The Company has paid/ provided for managerial remuneration in accordance with therequisite approvals mandated by the provisions of Section 197 read with Schedule V to theAct.
Annexure A to Independent Auditors' Report
Referred to in paragraph 16 (h) of the Independent Auditors' Report of even date to themembers of Insilco Limited on the financial statements for the year ended March 31 2021
Report on the Internal Financial Controls with reference to financial statements underClause (i) of Sub-section 3 of Section 143 of the Act
1. We have audited the internal financial controls with reference to financialstatements of Insilco Limited ("the Company") as of March 31 2021 inconjunction with our audit of the financial statements of the Company for the year endedon 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 Reportingissued by the Institute of Chartered Accountants of India (ICAI). These responsibilitiesinclude the design implementation and maintenance of adequate internal financial controlsthat were operating effectively for ensuring the orderly and efficient conduct of itsbusiness including adherence to 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 Act.
3. Our responsibility is to express an opinion on the Company's internal financialcontrols with reference to financial statements based on our audit. We conducted our auditin accordance with the Guidance Note on Audit of Internal Financial Controls OverFinancial Reporting (the "Guidance Note") and the Standards on Auditing deemedto be prescribed under section 143(10) of the Act to the extent applicable to an audit ofinternal financial controls both applicable to an audit of internal financial controlsand both issued by the ICAI. Those Standards and the Guidance Note require that we complywith ethical requirements and plan and perform the audit to obtain reasonable assuranceabout whether adequate internal financial controls with reference to financial statementswas established and maintained and if such controls operated effectively in all materialrespects.
4. Our audit involves performing procedures to obtain audit evidence about the adequacyof the 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'sjudgement including the assessment of the risks of material misstatement of the financialstatements whether due to fraud or error.
5. We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our qualified audit opinion on the Company's internal financialcontrols system with reference to financial statements.
Meaning of Internal Financial Controls with reference to financial statements
6. A company's internal financial controls 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 controlswith reference to financial statements includes those policies and procedures that (1)pertain to the maintenance of records that in reasonable detail accurately and fairlyreflect the transactions and dispositions of the assets of the company; (2) providereasonable assurance that transactions are recorded as necessary to permit preparation offinancial statements in accordance with generally accepted accounting principles and thatreceipts and expenditures of the company are being made only in accordance withauthorizations of management and directors of the company; and (3) provide reasonableassurance regarding prevention or timely detection of unauthorized acquisition use ordisposition of the company's assets that could have a material effect on the financialstatements.
Inherent Limitations of Internal Financial Controls with reference to financialstatements
7. Because of the inherent limitations of internal financial controls with reference tofinancial statements 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 withreference to financial statements to future periods are subject to the risk that theinternal financial control controls with reference to financial statements may becomeinadequate because of changes in conditions or that the degree of compliance with thepolicies or procedures may deteriorate.
Basis for Qualified opinion
8. According to the information and explanations given
to us and based on our audit a material weakness in the Company's internal controlsystem has been identified as at March 31 2021 in the period end financial reportingprocess as we were unable to obtain sufficient appropriate evidence with respect tooperating effectiveness of the Company's internal control for the evaluation andassessment of carrying value of certain assets and liabilities along with theclassification presently under litigation as described in note 35 of the financialstatements along with the related uncertainty over the future course of events in respectof realisation of the assets and settlement of its liabilities as described in note 36 ofthe financial statements.
9. A material weakness' is a deficiency or a combination of deficiencies ininternal financial control over financial reporting such that there is a reasonablepossibility that a material misstatement of the company's annual or interim financialstatements will not be prevented or detected on a timely basis.
10. In our opinion except for the possible effects of the material weakness describedin the Basis for Qualified Opinion paragraph above on the achievement of the objectives ofthe control criteria the Company has in all material respects an adequate internalfinancial controls system with reference to financial statements and such internalfinancial controls with reference to financial statements were operating effectively as at
March 31 2021 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 ICAI.
11. We have considered the material weaknesses identified and reported above indetermining the nature timing and extent of audit tests applied in our audit of thefinancial statements of the Company for the year ended March 31 2021 and the materialweaknesses referred to in paragraph 8 have affected our opinion on the financialstatements of the Company and we have issued a qualified opinion on the financialstatements. Refer Basis of Qualified Opinion section of the main audit report.
Annexure B to Independent Auditors' Report
Referred to in paragraph 15 of the Independent Auditors' Report of even date to themembers of Insilco Limited on the financial statements as of and for the year ended March31 2021 i. (a) The Company is maintaining proper records showing full particularsincluding quantitative details and situation of property plant and equipmentright-of-use assets investment properties and other intangible assets.
(b) The property plant and equipment right-of-use assets and investment propertiesare physically verified by the Management according to a phased programme designed tocover all the items over a period of three years which in our opinion is reasonablehaving regard to the size of the Company and the nature of its assets.
Pursuant to the programme a portion of the property plant and equipment has beenphysically verified by the Management during the year and no material discrepancies havebeen noticed on such verification.
(c) The title deeds of immovable properties as disclosed in Note 3(b) on Leases Right-of-use assets and Note 4 on investment properties to the financial statements areheld in the name of the Company.
ii. The physical verification of inventory have been conducted at reasonable intervalsby the Management during the year. The discrepancies noticed on physical verification ofinventory as compared to book records 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 Act. Therefore the provisions of Clause 3(iii) (iii)(a) (iii)(b) and(iii)(c) of the said Order are not applicable to the Company.
iv. The Company has not granted any loans or made any investments or provided anyguarantees or security to the parties covered under Section 185 and 186.
Therefore the provisions of Clause 3(iv) of the said Order are not applicable to theCompany.
v. The Company has not accepted any deposits from the public within the meaning ofSections 73 74 75 and 76 of the Act and the Rules framed there under to the extentnotified.
vi Pursuant to the rules made by the Central Government of India the Company isrequired to maintain cost records as specified under Section 148(1) of the Act in respectof its products. We have broadly reviewed the same and are of the opinion that primafacie the prescribed accounts and records have been made and maintained as may beapplicable since there were no operations during the year as described in Note 33 of theFinancial Statements. We have not however made a detailed examination of the recordswith a view to determine whether they are accurate or complete.
vii. (a) According to the information and explanations given to us and the records ofthe Company examined by us in our opinion the Company is generally regular in depositingundisputed statutory dues in respect of property and water tax to Nagarpalika Parishad(refer Note 22 (b) of the financial statements) and Income Tax though there has been aslight delay in a few cases and is regular in depositing undisputed statutory duesincluding provident fund employees' state insurance sales tax service tax duty ofcustoms duty of excise value added tax cess goods and service tax and other materialstatutory dues as applicable with the appropriate authorities. Also refer note 26(c) tothe financial statements regarding management's assessment on certain matters relating toprovident fund.
(b) According to the information and explanations given to us and the records of theCompany examined by us there are no dues of income-tax service-tax duty of customsduty of excise which have not been deposited on account of any dispute. The particulars ofdues of sales tax and value added tax as at March 31 2021 which have not been depositedon account of a dispute are as follows:
|Name of the Statute ||Nature of Dues ||Amount (Rupees in 000) ||Period to which the amount relates ||Forum where the dispute is pending |
|West Bengal Value ||Penalty ||107* ||2010-11 ||West Bengal |
|Added Tax 2003 || || || ||Taxation Tribunal |
|Uttar Pradesh Value ||Value added tax ||546** ||2015-16 ||Assistant Commissioner of |
|Added Tax Act 2008 || || || ||Commercial Tax (Appeals) |
* Net of payment under protest of Rs. 50 (000)
** Net of payment under protest of Rs. 231 (000) viii. As the Company does nothave any loans or borrowings from any financial institution or bank or Government nor hasit issued any debentures as at the balance sheet date the provisions of Clause 3(viii) ofthe Order are not applicable to the Company.
ix. The Company has not raised any moneys by way of initial public offer furtherpublic offer (including debt instruments) and term loans. Accordingly the provisions ofClause 3(ix) of the Order are not applicable to the Company.
x. During the course of our examination of the books and records of the Companycarried out in accordance with the generally accepted auditing practices in India andaccording to the information and explanations given to us we have neither come across anyinstance of material fraud by the Company or on the Company by its officers or employeesnoticed or reported during the year nor have we been informed of any such case by theManagement.
xi. The Company has paid/ provided for managerial remuneration in accordance with therequisite approvals mandated by the provisions of Section 197 read with Schedule V to theAct. Also refer paragraph 17 of our main audit report.
xii. As the Company is not a Nidhi Company and the Nidhi Rules 2014 are not applicableto it the provisions of Clause 3(xii) of the Order are not applicable to the Company.
xiii. The Company has entered into transactions with related parties in compliance withthe provisions of
Sections 177 and 188 of the Act. The details of such related party transactions havebeen disclosed in the financial statements as required under Indian Accounting Standard(Ind AS) 24 Related Party Disclosures specified under Section 133 of the Act.
xiv. The Company has not made any preferential allotment or private placement of sharesor fully or partly convertible debentures during the year under review.
Accordingly the provisions of Clause 3(xiv) of the Order are not applicable to theCompany.
xv. The Company has not entered into any non cash transactions with its directors orpersons connected with him. Accordingly the provisions of Clause 3(xv) of the Order arenot applicable to the Company.
xvi. The Company is not required to be registered under Section 45-IA of the ReserveBank of India Act 1934.
Accordingly the provisions of Clause 3(xvi) of the Order are not applicable to theCompany.
For Price Waterhouse & Co Chartered Accountants LLP Firm Registration Number:304026E/ E-300009
Charan S Gupta
Membership Number: 093044
May 31 2021