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Khaitan Chemicals & Fertilizers Ltd.

BSE: 507794 Sector: Agri and agri inputs
NSE: N.A. ISIN Code: INE745B01028
BSE 00:00 | 19 Feb 7.94 0.39
(5.17%)
OPEN

7.41

HIGH

8.10

LOW

7.38

NSE 05:30 | 01 Jan Khaitan Chemicals & Fertilizers Ltd
OPEN 7.41
PREVIOUS CLOSE 7.55
VOLUME 20498
52-Week high 9.86
52-Week low 5.20
P/E 8.19
Mkt Cap.(Rs cr) 77
Buy Price 7.94
Buy Qty 60.00
Sell Price 8.10
Sell Qty 194.00
OPEN 7.41
CLOSE 7.55
VOLUME 20498
52-Week high 9.86
52-Week low 5.20
P/E 8.19
Mkt Cap.(Rs cr) 77
Buy Price 7.94
Buy Qty 60.00
Sell Price 8.10
Sell Qty 194.00

Khaitan Chemicals & Fertilizers Ltd. (KHAITANCHEMICAL) - Auditors Report

Company auditors report

To

The Members of Khaitan Chemicals and Fertilizers Limited

Report on the Audit of the Financial Statements

Opinion

We have audited the accompanying financial statements of Khaitan Chemicals AndFertilizers Limited ("the Company") which comprise the Balance Sheet as atMarch 31 2019 the Statement of Profit and Loss (including Other Comprehensive Income)the Statement of Changes in Equity and the Statement of Cash Flows for the year ended onthat date and notes to the financial statements including a summary of the significantaccounting policies and other explanatory information (hereinafter referred to as"the financial statements").

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 affairs of the Company as at March 31 2019 the profit and total comprehensiveincome changes in equity and its cash flows 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 Responsibilities for the Audit ofthe financial 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 independence requirements that are relevant to our audit ofthe financial statements under the provisions of the Act and the Rules made thereunderand we have fulfilled our other ethical responsibilities in accordance with theserequirements and the ICAI's Code of Ethics. We believe that the audit evidence we haveobtained is sufficient and appropriate to provide a basis for our audit opinion on thefinancial statements.

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.

Sr. No. Key Audit Matter Auditors Response
1. Recoverability position of trade receivables for newly explored markets. Principal Audit Procedures
The company has material trade receivables amounting to Rs. 917.14 lakhs outstanding from more than one year. Our procedures on the management's assessment of exploring the new markets and realisation of trade receivables included:
In past the company has explored certain market against which recovery from trade receivables are still outstanding. • Understanding and evaluating process and controls designed and implemented by the management including testing of relevant controls;
Also recovery is dependent on adequacy of monsoon. • Gaining an understanding of the procedure adopted in exploring the market;
As explained by the management that the stablishing of a newly explored market takes time and in past monsoon was not adequate. Management has represented that the money will be realised in due course • Obtaining sufficient audit evidence.
Based on the management estimate representation received and the audit procedure applied in respect of new market we consider the management's assessment as reasonable.

Information Other than the 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 Board'sReport including Annexures to Board's Report but does not include the financial statementsand our auditor's report thereon. Our opinion on the financial statements does not coverthe other information and we do not 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 standalone 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. We havenothing 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 total comprehensiveincome changes in equity and cash flows of the Company in accordance with the Ind AS andother accounting principles generally accepted in India. This responsibility also includesmaintenance of adequate accounting records in accordance with the provisions of the Actfor safeguarding the assets of the Company and for preventing and detecting frauds andother irregularities; selection and application of appropriate accounting policies; makingjudgments and estimates that are reasonable and prudent; and design implementation andmaintenance of adequate internal financial controls that were operating effectively forensuring the accuracy and completeness of the accounting records relevant to thepreparation and presentation of the financial statements that give a true and fair viewand are free from material misstatement whether due to fraud or error.

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.

The Board of Directors are responsible for overseeing the Company's financial reportingprocess.

Auditor's Responsibilities 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 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 section143(3)(i) of the Act we are also responsible for expressing our opinion on whether theCompany has adequate internal financial controls system in place and the operatingeffectiveness of such controls.

• Evaluate the appropriateness of accounting policies used and the reasonable nessof 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 event s 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 influenced. 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 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 in terms of Section 143(11) of the Act we give in"Annexure A" a statement on the matters specified in paragraphs 3 and 4 of theOrder.

2. 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 of the aforesaidfinancial statements.

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 financial statements comply with the Ind AS specifiedunder Section 133 of the Act read with relevant rules issued thereunder.

e) On the basis of the written representations received from the directors as on March31 2019 taken on record by the Board of Directors none of the directors is disqualifiedas on March 31 2019 from being appointed as a director in terms of Section 164 (2) of theAct.

f) With respect to the adequacy of the internal financial controls over financialreporting of the Company and the operating effectiveness of such controls refer to ourseparate Report in "Annexure B". Our report expresses an unmodified opinion onthe adequacy and operating effectiveness of the Company's internal financial controls overfinancial 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 opinionand to the best of our information and according to the explanations given to us theremuneration paid by the Company to its directors during the year is in accordance withthe 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 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 as at March 31 2019 onits financial position in its financial statements Refer Note 37 to the financialstatements;

ii. The Company did not have any long-term contracts including derivative contracts forwhich there were any material foreseeable losses; and

iii. There has been no delay in transferring amounts required to be transferred to theInvestor Education and Protection Fund by the Company during the year ended March 31 2019

For NSBP & Co.
Chartered Accountants
Firm's Registration No. 001075N
Deepak K. Aggarwal
Partner
(Membership No. 095541)
Place: New Delhi
Date: May 09 2019

"ANNEXURE A" TO THE INDEPENDENT AUDITOR'S REPORT

To the Members of Khaitan Chemicals and Fertilizers Limited on its financial statementsdated May 09 2019

Report on the matters specified in paragraph 3 of the Companies (Auditor's Report)Order 2016 ("the Order') issued by the Central Government of India in terms ofsection 143(11) of the Companies Act 2013 ("the Act") as referred to inparagraph 1 of ‘Report on Other Legal and Regulatory Requirements' section

i. (a) The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets.

(b) The fixed assets have been physically verified by the management according to theprogramme of periodical verification in phased manner which in our opinion is reasonablehaving regard to the size of the company and the nature of its fixed assets. Thediscrepancies if any noticed on such physical verification have been properly dealt within the books of accounts.

(c) According to the information and explanation given to us and on the basis of ourexamination of the records of the Company the title deeds of immovable properties asdisclosed in the note 4 on fixed assets to the financial statements are held in the nameof the company except in the following cases where title deeds/lease agreement are notheld in the name of the Company {Refer Note 4 (b) &(c)}

Nature of Immovable Properties No. of Properties Gross Carrying Value (Rs. In Lakhs) Net Carrying Value(Rs. In Lakhs)
Freehold Land 2 57.47 57.47
Leasehold Land 1 24.86 16.22
Total 3 82.33 73.69

iii. The inventory of the Company has been physically verified by the management duringthe year (except for stock of Rock Phosphate Sulphur and Single Super phosphate for whichstock is taken on estimation basis and for the stock in transit and stock lying withoutside parties). In our opinion the frequency of verification is reasonable thediscrepancies noticed on physical verification of the inventory as compared to bookrecords 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. Thus the paragraph 3(iii)(a) to (c) of the Order is notapplicable to the Company.

iv. As per the information and explanation given to us and on the basis of ourexamination of the records the company has complied with provision of section 185 and 186of the Act with respect to the loans and investment made.

v. In our opinion and according to the information and explanations given to us theCompany has not accepted any deposits from the public and consequently the directivesissued by the Reserve Bank of India and the provisions of sections 73 to 76 or any otherrelevant provisions of the Companies Act and the rules framed there under are notapplicable to the Company.

vi. We have broadly reviewed the books of accounts maintained in pursuance to subsection (1) of Section 148 of the Act in respect of single super phosphate fertilizerssulphuric acid and refined vegetable oil manufactured by the Company and are of theopinion that prima facie the prescribed records and accounts have been made andmaintained. We have however not made a detailed examination of the cost records with aview to determine whether they are accurate or complete.

vii. (a) According to the records of the Company examined by us and the information andexplanations given to us the Company is generally regular in depositing its undisputedstatutory dues including provident fund employees' state insurance income-taxsales-tax service tax goods and service tax duty of customs duty of excise valueadded tax cess and any other statutory dues as applicable with the appropriateauthorities.

Further there were no undisputed amounts outstanding at the year-end for a period ofmore than six months from the date they became payable.

(b) According to the information and explanations given to us and the records of theCompany examined by us there are no dues of sales-tax and goods and service tax whichhave not been deposited on account of any dispute except the following dues of servicetax income tax duty of customs value added tax and cess along with the forum where thedispute is pending as follows:

Name of the Statute Nature of dues Amount (Rs.) Amount paid under protest (in Rs lacs) Amount outstanding (in Rs. lacs) Period to which the amount relates Forum where the dispute is pending
Mines and Minerals (Development and Regulation) Act1957 Royalty on rock phosphate 158.36 39.59 118.77 2004-05 High Court Rajasthan
Commercial Tax Act 1994 Purchase Tax 63.38 63.38 - 2004-05 High Court of Madhya Pradesh Jabalpur
UP Trade Tax 1948 Trade Tax 1.53 0.53 1.00 2006-07 The Deputy Commission Commercial Tax Jhansi
M.P.Entry Tax Act 1976 Entry Tax 35.37 26.88 8.49 2007-08 MP Commercial Tax Appellate Board Bhopal
Custom Act 1962 Custom Duty 185.47 13.91 - 171.56 2004-05 to 2008-09 Commissioner Appeal Mumbai
Income Tax Act 1962 Income Tax 1.16 - - 1.16 2009-10 CIT (Appeal)- New Delhi
Income Tax Act 1962 Income Tax 21.07 - 21.07 2017-18 CIT (Appeal)- New Delhi
Income Tax Act 1962 Income Tax 22.87 - 22.87 For various year TDS- CPC
U.P. Sales Tax Sales Tax 2.66 - 2.66 2011-12 DY. Commissioner Jhansi
U.P. Sales Tax Sales Tax 2.57 - 2.57 2012-13 DY. Commissioner Jhansi
U.P. Central Sales Tax 1956 Sales Tax 0.69 0.69 2013-14 DY. Commissioner Jhansi
U.P. Entry Tax 2007 Entry Tax 0.11 0.11 2013-14 DY. Commissioner Jhansi

viii. According to the information and explanations given to us and as per the booksand records examined by us in our opinion the company has not defaulted in repayment ofloans or borrowings to a financial institution and banks. The Company has not taken anyloans from debenture holders and Government.

ix. In our opinion and on the basis of information and explanations given to us thecompany has not raised any monies by way of initial public offer or further public offeror term loan during the financial year hence the related reporting requirement of theOrder are not applicable.

x. During the course of our examination of the books and records of the Company carriedout in accordance with the generally accepted auditing practices in India we have neithercome across any instance of fraud on or by the Company or any fraud on the Company by itsofficers or employees has been noticed or reported during the year nor have we beeninformed of such case by the management.

xi. According to the information and explanations given to us and based on ourexamination of the records of the Company the Company has paid/provided for managerialremuneration in accordance with the requisite approvals mandated by the provisions ofsection 197 read with Schedule V of the Act.

xii. The company is not a Nidhi company hence the related reporting requirement of theOrder are not applicable.

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 financial statements as required by applicableaccounting standards.

xiv. As the Company has not made any preferential allotment and private placement ofshares or fully & partly convertible debentures during the year under review therequirement of section 42 of the Act are not applicable.

xv. In our opinion and according to the information and explanations given to us theCompany has not entered into any non-cash transactions with directors or persons connectedwith him.

xvi. According to the information and explanations given to us the provisions ofsection 45-IA of the Reserve Bank of India Act 1934 are not applicable to the Company.

For NSBP & Co.
Chartered Accountants
Firm's Registration No. 001075N
Deepak K. Aggarwal
Place: New Delhi Partner
Date: May 09 2019 Membership No: 095541

"ANNEXURE B" TO THE INDEPENDENT AUDITOR'S REPORT

Annexure B to the Independent Auditor's Report to the Members of Khaitan Chemicals andFertilizers Limited (‘the Company') on its financial statements dated May 09 2019.

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") as referredto in paragraph 1(f) of ‘Report on Other Legal and Regulatory Requirements' section

We have audited the internal financial controls over financial reporting of KhaitanChemicals and Fertilizers Limited ("the Company") as of March 31 2019 inconjunction with our audit of the financial statements of the Company for the year endedon 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 over financial reportingcriteria established by the Company considering the essential components of internalcontrol stated in the Guidance Note on Audit of Internal Financial Controls Over FinancialReporting 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 the Company's policies the safeguardingof its 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 accordance with the Guidance Note on Audit of InternalFinancial Controls Over Financial Reporting (the "Guidance Note") and theStandards on Auditing as specified under section 143(10) of the Act to the extentapplicable to an audit of internal financial controls both applicable to an audit ofInternal Financial Controls and both issued by the Institute of Chartered Accountants ofIndia. Those Standards and the Guidance Note require that we comply with ethicalrequirements and plan and perform the audit to obtain reasonable assurance about whetheradequate internal financial controls over financial reporting was established andmaintained and if such controls operated effectively in all material respects.

Our 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 included obtaining anunderstanding of internal financial controls over financial reporting assessing the riskthat a material weakness exists and testing and evaluating the design and operatingeffectiveness of internal control based on the assessed risk. The procedures selecteddepend on the auditor's judgement including the assessment of the risks of materialmisstatement 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:

a) pertain to the maintenance of records that in reasonable detail accurately andfairly reflect the transactions and dispositions of the assets of the Company;

b) 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 authorizations of management and directors of the Company; and

c) provide reasonable assurance regarding prevention or timely detection ofunauthorized acquisition use or disposition of the company's assets that could have amaterial 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 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 2019 based on the internal controlover financial reporting criteria established by the Company considering the essentialcomponents of internal control stated in the Guidance Note on Audit of Internal FinancialControls Over Financial Reporting issued by the Institute of Chartered Accountants ofIndia.

For NSBP & Co.
Chartered Accountants
Firm Registration No. 001075N
Deepak K. Aggarwal
Place: New Delhi Partner
Date: May 09 2019 Membership No: 095541