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Kansai Nerolac Paints Ltd.

BSE: 500165 Sector: Consumer
NSE: KANSAINER ISIN Code: INE531A01024
BSE 00:00 | 22 Jun 463.90 -5.75
(-1.22%)
OPEN

466.10

HIGH

466.30

LOW

463.00

NSE 00:00 | 22 Jun 461.40 -6.40
(-1.37%)
OPEN

468.00

HIGH

468.15

LOW

460.10

OPEN 466.10
PREVIOUS CLOSE 469.65
VOLUME 9777
52-Week high 608.00
52-Week low 415.00
P/E 50.64
Mkt Cap.(Rs cr) 25,000
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 466.10
CLOSE 469.65
VOLUME 9777
52-Week high 608.00
52-Week low 415.00
P/E 50.64
Mkt Cap.(Rs cr) 25,000
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Kansai Nerolac Paints Ltd. (KANSAINER) - Auditors Report

Company auditors report

TO THE MEMBERS OF

KANSAI NEROLAC PAINTS LIMITED

Report on the Audit of the Standalone Ind AS Financial Statements

We have audited the accompanying standalone Ind AS financial statements of KansaiNerolac Paints Limited ("the Company") which comprise the standalonebalance sheet as at 31 March 2018 the standalone Statement of profit and loss (includingother comprehensive income) the standalone Statement of changes in equity and thestandalone Statement of cash flows for the year then ended and a summary of thesignificant accounting policies and other explanatory information (hereinafter referred toas "standalone Ind AS financial statements").

Management's Responsibility for the Standalone Ind AS Financial Statements

The Company's Board of Directors is responsible for the matters stated in Section 134(5) of the Companies Act 2013 ("the Act") with respect to the preparation ofthese standalone Ind AS financial statements that give a true and fair view of the stateof affairs profit (including other comprehensive income) changes in equity and cashflows of the Company in accordance with the accounting principles generally accepted inIndia including the Indian Accounting Standards (Ind AS) prescribed under Section133 of the Act read with relevant rules issued thereunder This responsibility alsoincludes maintenance of adequate accounting records in accordance with the provisions ofthe Act for safeguarding the assets of the Company and for preventing and detecting fraudsand other irregularities; selection and application of appropriate accounting policies;making judgments and estimates that are reasonable and prudent; and design implementationand maintenance of adequate internal financial controls that were operating effectivelyfor ensuring the accuracy and completeness of the accounting records relevant to thepreparation and presentation of the standalone Ind AS financial statements that give atrue and fair view and are free from material misstatement whether due to fraud or error.

In preparing the standalone Ind AS financial statements management is responsible forassessing the Company's ability to continue as a going concern disclosing as applicablematters related to going concern and using the going concern basis of accounting unlessmanagement either intends to liquidate the Company or to cease operations or has norealistic alternative but to do so.

Auditors' Responsibility

Our responsibility is to express an opinion on these standalone Ind AS financialstatements based on our audit.

We have taken into account the provisions of the Act the accounting and auditingstandards and matters which are required to be included in the audit report under theprovisions of the Act and the Rules made thereunder.

We conducted our audit of the standalone Ind AS financial statements in accordance withthe Standards on Auditing specified under Section 143(10) of the Act. Those Standardsrequire that we comply with ethical requirements and plan and perform the audit to obtainreasonable assurance about whether the standalone Ind AS financial statements are freefrom material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts andthe disclosures in the standalone Ind AS financial statements. The procedures selecteddepend on the auditors' judgment including the assessment of the risks of materialmisstatement of the standalone Ind AS financial statements whether due to fraud or error.In making those risk assessments the auditor considers internal financial controlrelevant to the Company's preparation of the standalone Ind AS financial statements thatgive a true and fair view in order to design audit procedures that are appropriate in thecircumstances. An audit also includes evaluating the appropriateness of the accountingpolicies used and the reasonableness of the accounting estimates made by the Company'sDirectors as well as evaluating the overall presentation of the standalone Ind ASfinancial statements.

We are responsible to 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 significant doubt on theentity's ability to continue as going concern. If we conclude that a material uncertaintyexists we are required to draw attention in the auditors' report to the relateddisclosures in the standalone Ind AS financial statements or if such disclosures areinadequate to modify the opinion. Our conclusions are based on the audit evidenceobtained up to the date of auditors' report. However future events or conditions maycause an entity to cease to continue as a going concern.

We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the standalone Ind AS financial statements.

Opinion

In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid standalone Ind AS financial statements give the informationrequired by the Act in the manner so required and give a true and fair view in conformitywith the accounting principles generally accepted in India of the statement of affairs ofthe Company as at 31 March 2018 its profit and other comprehensive income changes inequity and its cash flows for the year ended on that date.

Report on Other Legal and Regulatory Requirements

As required by the Companies (Auditor's Report) Order 2016 (‘the Order') issuedby the Central Government of India in terms of Section 143 (11) of the Act we givein "Annexure A" a statement on the matters specified in the paragraphs 3 and 4of the Order.

As required by Section 143 (3) of the Act we report that:

(a) we have sought and obtained all the information and explanations which to the bestof our knowledge and belief were necessary for the purposes of our audit; (b) in ouropinion proper books of account as required by law have been kept by the Company so faras it appears from our examination of those books; (c) the standalone balance sheet thestandalone Statement of profit and loss (including other comprehensive income) thestandalone statement of cash flows and the standalone Statement of changes in equity dealtwith by this report are in agreement with the books of account; (d) in our opinion theaforesaid standalone Ind AS financial statements comply with the Indian AccountingStandards (Ind AS) prescribed under Section 133 of the Act; (e) on the basis of thewritten representations received from the directors as on 31 March 2018 taken on record bythe board of directors none of the directors are disqualified as on 31 March 2018 frombeing appointed as a director in terms of Section 164(2) of the Act; (f) with respect tothe adequacy of the internal financial controls with reference to the standalone Ind ASfinancial statements of the Company and the operating effectiveness of such controlsrefer to our separate Report in "Annexure B"; and (g) with respect to the othermatters to be included in the Auditors' Report in accordance with Rule 11 of the Companies

(Audit and Auditors) Rules 2014 in our opinion and to the best of our information andaccording to the explanations given to us: i. the Company has disclosed the impact ofpending litigations on its financial position in its standalone Ind AS financialstatements – Refer Note 32 to the standalone Ind AS financial statements; ii. theCompany did not have any long-term contracts including derivative contracts for whichthere were any material foreseeable losses; iii. there has been no delay in transferringamounts required to be transferred to the Investor Education and Protection Fund by theCompany during the year ended 31 March 2018; and iv. the disclosure in the standalone IndAS financial statements regarding holdings as well as dealings in Specified Bank Notesduring the period from 8 November 2016 to 30 December 2016 have not been made since theydo not pertain to the financial year ended 31 March 2018. However amounts as appearing inthe audited standalone Ind AS financial statements for the period ended 31 March 2017 havebeen disclosed.

For B S R & Co. LLP
Chartered Accountants
Firm's Registration No.: 101248W/W-100022
Aniruddha Godbole
Partner
Mumbai 2 May 2018 Membership No.: 105149

ANNEXURE A TO THE INDEPENDENT AUDITORS' REPORT – 31 MARCH 2018

With reference to the Annexure A referred to in the Independent Auditors' Report to themembers of the Company on the standalone Ind AS financial statements for the year ended 31March 2018 we report the following: (i) (a) The Company has maintained proper recordsshowing full particulars including quantitative details and situation of property plantand equipment and investment properties.

(b) The Company has a regular programme of physical verification of its property plantand equipment and investment properties by which the property plant and equipment andinvestment properties are verified by the management according to a phased programmedesigned to cover all the items over a period of three years. In our opinion thisperiodicity of physical verification is reasonable having regard to the size of theCompany and the nature of its assets. In accordance with the policy the Company hasphysically verified certain property plant and equipment and investment properties duringthe year and we are informed that no material discrepancies were noticed on suchverification and the same have been dealt with in the books of account.

(c) According to the information and explanations given to us and on the basis of ourexamination of the records of the Company the title deeds of immovable properties (otherthan leasehold land) as disclosed in Note 2 and Note 3 to the standalone Ind AS financialstatements are held in the name of the Company. In respect of leasehold lands we haveverified the lease agreements duly registered with the appropriate authorities asdisclosed in Note 2 and Note 3 to the standalone Ind AS financial statements.

(ii) The inventory except for goods-in-transit and stocks lying with third partieshas been physically verified by the management during the year. In our opinion thefrequency of such verification is reasonable. In respect of stocks lying with thirdparties at the year-end written confirmations have been obtained. The discrepanciesnoticed on verification between the physical stocks and the book records were not materialand have been dealt with in the books of account.

(iii) According to the information and explanations given to us the Company has notgranted any loans secured or unsecured to companies firms limited liabilitypartnerships or other parties covered in the register maintained under Section 189 of theCompanies Act 2013 (‘the Act'). Accordingly paragraphs 3 (iii) (a) (b) and (c) ofthe Order are not applicable to the Company.

(iv) In our opinion and according to the information and explanation given to us theCompany has not granted any loans or provided any guarantees or security to the partiescovered under Section 185 of the Act. The Company has complied with the provisions ofSection 186 of the Act in respect of the investments made.

(v) In our opinion and according to the information and explanations given to us theCompany has not accepted deposits as per the directives issued by the Reserve Bank ofIndia and the provisions of Sections 73 to 76 or any other relevant provisions of the Actand the rules framed thereunder. Accordingly paragraph 3 (v) of the Order is notapplicable to the Company.

(vi) We have broadly reviewed the books of accounts maintained by the Company pursuantto the rules prescribed by the Central Government for the maintenance of cost recordsunder Section 148(1) of the Act and are of the opinion that prima facie the prescribedaccounts and records have been made and maintained.

(vii) (a) According to the information and explanations given to us and on the basis ofour examination of the records of the Company amounts deducted / accrued in the books ofaccount in respect of undisputed statutory dues including Provident fund Employees' StateInsurance Duty of customs Duty of excise Sales-tax Service tax Value added tax Goodsand Service tax Cess Profession tax and other material statutory dues have beenregularly deposited during the year with the appropriate authorities. According to theinformation and explanations given to us and on the basis of our examination of therecords of the Company amounts deducted/ accrued in the books of account in respect ofundisputed statutory dues of Income-tax have generally been regularly deposited during theyear with the appropriate authorities though there have been slight delays in a fewcases. As explained to us the Company did not have any dues on account of wealth tax.

According to the information and explanations given to us no undisputed amountspayable in respect of Provident fund Employees' State Insurance Profession taxIncome-tax Duty of customs Duty of excise Sales-tax Service tax Goods and Servicetax Value added tax Cess Profession tax and other material statutory dues were inarrears as at 31 March 2018 for a period of more than six months from the date they becamepayable.

(b) According to the information and explanations given to us there are no dues ofIncome-tax Sales tax Service tax Duty of customs Duty of excise Goods and Service taxand Value added tax as at 31 March 2018 which have not been deposited with theappropriate authorities on account of any dispute except as stated below: (Rs. in crores)

Name of Act Nature of Dues Amount Demanded Amount not Deposited Under Disputes Period to which amount relates Forum where dispute is pending
Sales Tax and Tax Penalty 0.62 0.62 1980-1981 Commissioner
Value Added Tax and Interest 1991-1992
1996-1997
2001-2007
2009-2010
0.51 0.43 1995-96 to 2009-10 Appellate Authorities and Tribunal
The Central Excise Tax Penalty 1.03 1.03 1994-1996 Commissioner
Act 1944 and Interest 1998 to 2001
2015-2016
0.01 0.01 1995-1996 Appellate Authorities and Tribunal
The Finance Act Tax Penalty 1.94 1.79 2010-2011 Commissioner
1994 and Interest 2013-2014
2015-2016
7.37 6.79 2009-2016 Appellate Authorities and Tribunal

(viii) In our opinion and according to the information and explanations given to usthe Company has not defaulted in repayment of dues to the government. The Company did nothave any outstanding dues to bankers financial institutions and debenture holders duringthe year.

(ix) According to the information and explanations given to us and based on ourexamination of the records of the Company the Company has not raised any moneys by way ofinitial public offer or further public offer (including debt instruments) and has notobtained any term loans during the year. Accordingly paragraph 3 (ix) of the Order is notapplicable 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) According to the information and explanations given to us and based onour examination of the records of the Company the Company has paid / provided formanagerial remuneration in accordance with the requisite approvals mandated by theprovisions of Section 197 read with Schedule V to the Act.

(xii) In our opinion and according to the information and explanations given to us theCompany is not a Nidhi company and the Nidhi Rules 2014 are not applicable to it.Accordingly paragraph 3 (xii) of the Order is not applicable to the Company.

(xiii) According to the information and explanations given to us and based on ourexamination of the records of the Company transactions with the related parties are incompliance with Sections 177 and 188 of the Act where applicable and details of suchtransactions have been disclosed in the standalone Ind AS financial statements as requiredby applicable Ind AS.

(xiv) According to the information and explanations given to us and based on ourexamination of the records of the Company the Company has not made any preferentialallotment or private placement of shares or fully or partly convertible debentures duringthe year. Accordingly paragraph 3 (xiv) of the Order is not applicable to the Company.(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 any non-cashtransactions with directors or persons connected with them. Accordingly paragraph 3 (xv)of the Order is not applicable to the Company.

(xvi) In our opinion and 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. Accordingly paragraph 3 (xvi) of the Order is not applicable to the Company.

For B S R & Co. LLP
Chartered Accountants
Firm's Registration No.: 101248W/W-100022
Aniruddha Godbole
Partner
Mumbai 2 May 2018 Membership No.: 105149

ANNEXURE B TO THE INDEPENDENT AUDITORS' REPORT – 31 MARCH 2018

(Referred to in our report of even date)

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

We have audited the internal financial controls over financial reporting of KansaiNerolac Paints Limited ("the Company") as of 31 March 2018 in conjunction withour audit of the standalone Ind AS financial statements of the Company for the year endedon 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 (‘ICAI'). 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 company's policies the safeguarding ofits assets the prevention and detection of frauds and errors the accuracy andcompleteness of the accounting records and the timely preparation of reliable financialinformation as required under the Companies Act 2013.

Auditors' Responsibility

Our responsibility is to express an opinion on the Company's internal financialcontrols over financial reporting based on our audit. We conducted our audit in accordancewith the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting(the "Guidance Note") and the Standards on Auditing issued by ICAI and deemedto be prescribed under Section 143(10) of the Act to the extent applicable to an auditof internal 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 over financial reporting wasestablished and maintained and if such controls operated effectively in all materialrespects.

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 auditors' judgement including the assessment of the risks ofmaterial misstatement of the standalone Ind AS financial statements whether due to fraudor 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 maintenance 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 to error or fraud may occur and not be detected.Also projections of any evaluation of the internal financial controls over financialreporting to future periods are subject to the risk that the internal financial controlover financial reporting may become inadequate because of changes in conditions or thatthe degree of compliance with the policies or procedures may deteriorate.

Opinion

In our opinion 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 31 March 2018 based on theinternal control over financial reporting criteria 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 ICAI.

For B S R & Co. LLP
Chartered Accountants
Firm's Registration No.: 101248W/W-100022
Aniruddha Godbole
Partner
Mumbai 2 May 2018 Membership No.: 105149