FOR THE YEAR ENDED 31ST MARCH 2020
To the Members of Kothari Petrochemicals Limited
REPORT ON THE AUDIT OF FINANCIAL STATEMENTS
We have audited the Financial Statements of Kothari
Petrochemicals Limited ("the Company") which comprise
the Balance Sheet as at 31st March 2020 and the Statement of Profitand Loss(including Other Comprehensive Income)
Statement of Changes in Equity and the Statement of
Cash Flows for the year then ended and Notes to the
Financial Statements including a summary of the
Accounting Policies and other explanatory information (hereinafter referred to as"the Financial Statements"). In our opinion and to the best of our informationand according to the explanations given to us the aforesaid
Financial Statements give the information required byportion the Companies Act 2013("the Act") in the manner so required
and give a true and fair view in conformity with the Indian Accounting Standardsprescribed under Section 133 of the Act read with the Companies (Indian AccountingStandards) Rules 2015 as amended ("Ind AS") and other accounting
principles generally accepted in India of the state of affairs of the Company as at 31stMarch 2020 the Profit (including
Other Comprehensive Income) the changes in Equity and its cash flows for the yearended on that date.
Basis for Opinion
We conducted our audit in accordance with the Standards on Auditing ("SAs")specified under Section 143(10) of the
Act. Our responsibilities under those Standards are further described in the"Auditor's Responsibilities for the Audit of the Financial Statements" sectionof our report. We are independent of the Company in accordance with the Code of Ethicsissued by the Institute of Chartered Accountants
of India together with the ethical requirements that are relevant to our audit of thefinancial statements under provisions of the Act and the Rules thereunder and we havefulfilled our other ethical responsibilities in accordance with these requirements and theCode of Ethics. We believe that the audit evidence we have obtained is sufficient andappropriate to provide a basis for our opinion on the
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 matters were addressed in the contextof our audit of the Financial Statements as a whole and in forming our opinion thereon
and we do not provide a separate opinion on these matters.
We have determined the matters described below to be the
key audit matters to be communicated in our report.
|S. Key Audit Matter ||Response to Key Audit Matter |
|No. Quantity of raw materials of Significant the material procurement is through pipelines and tankers which are accounted on weight- basis. There are also 1 cases of materials being extracted and the balance being returned through the pipelines. ||Our audit procedures included: |
| ||Assessment of controls over ascertaining the quantity of purchase for which payment is made. |
| ||Assessment of controls over calibration system of the weighing equipment. |
|Hence any variance in the ascertainment of the quantity purchased may have a significant on the cost of materials ||Assessment of controls over periodical stock - take and the related procedures. |
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 ManagementDiscussion and Analysis Board's Report including Annexures to Board's Report CorporateGovernance
Report and Shareholders' Information but does not include the financial statements andour auditor's report thereon. Our opinion on the financial statements does not cover theother 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 Financial Statements or our knowledge obtained during thecourse 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 performance changes in equity and cashflows of Company in accordance with the accounting principles generally accepted in Indiaincluding the accounting standards specified under Section 133 of the Act. 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 Financial Statements thatgive a true and fair view and are free from material misstatement whether due to fraud orerror.
In preparing the Financial Statements management is responsible for assessing theCompany's ability to continue as a going concern disclosing as applicable mattersrelated to going concern and using the going concern basis of accounting unless managementeither intends to liquidate the Company or to cease operations or has no realisticalternative but to do so.
The Board of Directors is also responsible for overseeing the Company's financialreporting process.
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. the
As part of an audit in accordance with SAs we exercise professional judgment andmaintain professional skepticism throughout the audit.
Identify and assess the risks of material misstatement of the Financial Statementswhether due to fraud or error design and perform audit procedures responsive to thoserisks and obtain audit evidence that is sufficientand appropriate to provide a basis forour opinion. The risk of not detecting a material misstatement resulting from fraud ishigher than for one resulting from error as fraud may involve collusion forgeryintentional omissions misrepresentations or the override of internal control.
Obtain an understanding of internal controls relevant to the audit in order to designaudit procedures that are appropriate in the circumstances. Under Section 143(3) (i) ofthe Companies Act 2013 we are also responsible for expressing our opinion on whether theCompany has adequate Internal Financial Controls with reference to Financial Statements inplace and the operating effectiveness 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 as a going concern. If weconclude that a material uncertainty exists we are required to draw attention in ourauditor's report to the related disclosures in the Financial Statements or if suchdisclosures are inadequate to modify our opinion. Our conclusions are based on the auditevidence obtained up to the date of our auditor's report. However future events orconditions may cause the Company to cease to continue as a going concern.
Evaluate the overall presentation structure and content of the Financial Statementsincluding the disclosures and whether the Financial Statements represent the underlyingtransactions and events in a manner that achieves fair presentation.
Materiality is the magnitude of misstatements in the Financial Statements thatindividually or in aggregate makes it probable that the economic decisions of areasonably knowledgeable user of the Financial Statements may be influenced. andqualitative factors (i) in planning the scope of our audit and in evaluating the resultsof our work; and (ii) to evaluate the effect of any identified misstatements in theFinancial statements.
We communicate with those charged with governance regarding among other matters theplanned scope and timing of the audit and significant any significant 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 significancein the audit of the Financial Statements of thecurrent period and are therefore the key audit matters. We describe these matters in ourauditor's report unless law ordoubt on the Company's to continue regulation precludespublic disclosure about the matter or when in extremely rare circumstances we determinethat a matter should not be communicated in our report because the adverse consequences ofdoing so would reasonably be expected to outweigh the public interest benefitscommunication.
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 the Order tothe extent applicable.
2. As required by Section 143(3) of the Act we report that: (a) We have sought andobtained all the information and explanations which to the best of our knowledge andbelief were necessary for the purposes of our audit.
(b) In our opinion proper books of account as requiredWe consider quantitativemateriality by law have been kept by the Company so far as it appears from our examinationof those books.
(c) The Balance Sheet the Statement of Profit and Loss (including Other ComprehensiveIncome) the Statement of Changes in Equity and the Cash Flow Statement dealt with by thisReport are in agreement with the relevant books of account. audit findings including (d)In our opinion the aforesaid Financial Statementsdeficiencies in internal control that weidentify comply with the Accounting Standards specified under Section 133 of the Act readwith Rule 7 of the Companies (Accounts) Rules 2014.
(e) On the basis of the written representations received from the Directors as on 31stMarch 2020 taken on record by the Board of Directors none of the Directors isdisqualified as on 31 st March 2020 from being appointed as a Director in termsof Section 164(2) of the Act.
(f) With respect to the adequacy of 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 unmodified opinion on the adequacy and operatingeffectiveness of the Company's internal financial controls with reference to financialstatements.
(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 in our opinionand to the best of our information and according to the explanations given to us:
i. The Company has disclosed the impact of pending litigations on its financialposition in its
Financial Statements - Refer to Note 37 to the financial statements. ii. The Companydid not have any long-term
contracts including derivative contracts for which there were any material foreseeablelosses. iii. There has been no delay in transferring amounts required to be transferredto the Investor Education and Protection Fund by the Company.
| ||For P. CHANDRASEKAR LLP |
| ||Chartered Accountants |
| ||FRN : 000580S/S200066 |
| ||S. Sriram |
| ||Partner |
|Place: Chennai ||M. No.: 205496 |
|Date : 16th June 2020 ||UDIN: 20205496AAAABX6586 |
Annexure "A" to the Independent Auditor's Report for the year ended 31stMarch 2020
(Referred to in paragraph 1 under "Report on Other Legal and RegulatoryRequirements" section of our report to the Members of Kothari Petrochemicals Limitedof even date)
(i) In respect of the Company's fixed assets: a) The Company has maintained properrecords showing full particulars including quantitative details and situation of fixedassets. b) As explained to us these fixed assets have been physically verifiedby theManagement at regular i ntervals; as informed to us no material discrepancies werenoticed on such verification. c) The title deeds of immovable properties are held in thename of the Company.
(ii) The Management has conducted physical verification of inventory at reasonableintervals and no material discrepancies were noticed.
(iii) According to the information and explanations given to us and on the basis of ourexamination of the books of account the Company has not provided any loans secured orunsecured to companies firms limited liabilitypartnerships or other parties covered inthe register maintained under Section 189 of the Companies Act 2013.
(iv) The Company has complied with the provisions of Section 185 and 186 of theCompanies Act 2013 in respect of investments made by the Company. The Company has notprovided any loans or guarantee or security to any company covered under Section 185 ofthe Companies Act 2013.
(v) The Company has not accepted any deposits from the public.
(vi) On the basis of the records produced to us we are of the opinion that primafacie the cost records prescribed by the Central Government under sub-section (1) ofSection 148 of the Companies Act 2013 have been maintained. However we have not carriedout any detailed examination of such records.
(vii) According to the information and explanations given to us in respect of statutorydues:
a) the Company is regular in depositing with the appropriate authorities the undisputedstatutory dues including Provident Fund Employees' State Insurance Income Tax ServiceTax Sales Tax Customs Duty Excise Duty Cess Goods and Service Tax to the appropriateauthorities. To the best of our knowledge and according to the information andexplanations given to us there were no undisputed amounts payable which were in arrearsas at 31st March 2020 for a period of more than six months from the date theybecome payable
b) the Company has no disputed dues of Income Tax Sales Tax Excise Duty Customs Dutyand Value Added Tax which have not been deposited as on 31st March 2020.
(viii) On the basis of verification of records and according to the information andexplanations given to us the Company has not defaulted in repayment of loans or borrowingto a financial institution bank Government or dues to debenture holders.
(ix) In our opinion and according to the information and explanations given to us theCompany has not raised monies by way of initial public offer or further public offer(including debt instruments) during the year. The term loans availed were applied for thepurposes for which they were raised.
(x) Based upon the audit procedures performed for the purpose of reporting the true andfair view of the Financial Statements and as per the information and explanations given tous by the Management no fraud by the Company and no fraud on the Company by its officersor employees has been noticed or reported during the year.
(xi) In our opinion and according to the information and explanations given to usmanagerial remuneration paid or provided has been in accordance with the requisiteapprovals mandated by the provisions of Section 197 read with Schedule V to the CompaniesAct 2013.
(xii) The Company is not a Nidhi Company and hence compliance with the provisions ofthe Nidhi Rules is not applicable.
(xiii) In our opinion and according to the information and explanations given to usall transactions with related parties are in compliance with Sections 177 and 188 of theCompanies Act 2013 where applicable and the details have been disclosed in the FinancialStatements as required by the applicable accounting standards.
(xiv) During the year the Company has not made any preferential allotment or privateplacement of shares or fully or partly convertible debentures.
(xv) In our opinion and according to the information and explanations given to usduring the year the Company has not entered into any non-cash transactions with itsdirectors or persons connected with him which will come under the purview of Section 192of the Companies Act 2013.
(xvi) The Company is not required to be registered under Section 45-IA of the ReserveBank of India Act 1934.
| ||For P. CHANDRASEKAR LLP |
| ||Chartered Accountants |
| ||FRN : 000580S/S200066 |
| ||S. Sriram |
|Place: Chennai ||Partner |
|Date : 16th June 2020 ||M. No.: 205496 |
| ||UDIN: 20205496AAAABX6586 |
Annexure - B to the Independent Auditors' Report for the year ended 31stMarch 2020
(Referred to in paragraph 2 under "Report on Other Legal and RegulatoryRequirements" section of our report to the Members of Kothari Petrochemicals Limitedof even date)
Report on the Internal Financial Controls with reference to financial statements underSection 143(3)(i) of the
Companies Act 2013 ("the Act")
We have audited the internal financial controls with reference to financial statementsof Kothari Petrochemicals Limited ("the Company") as of 31st March2020 in conjunction with our audit of the Ind AS financial statements of the Company forthe year ended on that date.
Management's Responsibility for Internal Financial Controls
The Company's management is responsible for establishing and maintaining internalfinancial controlsbased 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 theorderly 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.
Our responsibility is to express an opinion on the Company's internal financialcontrols with reference to financial statements based on our audit. We conducted ouraudit in accordance with the Guidance Note on Audit of Internal Financial Controls OverFinancial Reporting ("the Guidance Note") and the Standards on Auditing issuedby ICAI and deemed to be prescribed under Section 143(10) of the Companies Act 2013 tothe extent applicable to an audit of internal fi nancial controls both applicable to anaudit of Internal Financial Controls and both issued by the Institute of CharteredAccountants of India. Those Standards and the Guidance Note require that we comply withethical requirements and plan and perform the audit to obtain reasonable assurance aboutwhether adequate internal financial controls with reference to financial statements werein place and if such controls were operated effectively in all material respects.
Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal financialcontrols with reference to financial statements and their operatingeffectiveness. Our audit of internal financial controls with reference to financialstatements included obtaining an understanding of internal financial controls withreference to financial statements assessing the risk that a material weakness exists andtesting and evaluating the design and operating effectiveness of internal control based onthe assessed risk. The procedures selected depend on the auditor's judgment including theassessment of the risks of material misstatement of the financialstatements whether d ueto fraud or error. We believe that the audit evidence we have obtained is sufficientandappropriate to provide a basis for our audit opinion on the Company's internal financialcontrols with reference to financial statements.
Meaning of Internal Financial Controls with reference to Financial Statements controlsA company's with reference to financial statements are designed to provide internalreasonable assurance regarding the reliability of financial reportingandthepreparationoffinancialstatements for external purposes in accordance with generallyaccepted accounting principles. A company's internal financial controlswith reference tofinancial statements includes those policies and procedures that a) pertain to themaintenance of records that in reasonable detail accurately and fairly reflect thetransactions and dispositions of the assets of the company; b) provide reasonableassurance that transactions are recorded as necessary to permit preparation of financialstatements in accordance with generally accepted accounting principles and that receiptsand expenditures of the company are being made only in accordance with authorisations ofmanagement and directors of the company; and c) 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 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 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 controls th reference to financial wi statements may become inadequatebecause of changes in conditions or that the degree of compliance with the policies orprocedures may deteriorate.
In our opinion the Company has in all material respects adequate internal financialcontrols withreference to financial statements and such internal financial controls wereoperating effectively as at 31 st March 2020 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 P. CHANDRASEKAR LLP |
| ||Chartered Accountants |
| ||FRN : 000580S/S200066 |
|Place: Chennai ||S. Sriram |
|Date : 16th June 2020 ||Partner |
| ||M. No.: 205496 |
| ||UDIN: 20205496AAAABX6586 |