The Members of
KOTHARI PRODUCTS LIMITED
REPORT ON THE STANDALONE IND-AS FINANCIAL STATEMENTS
We have audited the accompanying standalone Ind-AS financial statements of Kothari Products Limited (the Company) which comprise the Balance Sheet as at 31st March 2019 the Statement of Profit and Loss (including other comprehensive income)the Cash Flow Statement for the year ended the statement of changes in equity for the year ended and a summary of the significant accounting policies and other explanatory information (herein after referred to as standalone Ind-AS Financial Statements).
In our opinion and to the best of our information and according to the explanations given to us the aforesaid standalone Ind-AS financial statements give the information required by the Companies Act 2013 (the Act) in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India of the state of affairs of the Company as at 31st March 2019 and its Profit including other comprehensive income its cash ows and the changes in equity for the year ended on that date.
BASIS FOR OPINION
We conducted our audit of the standalone Ind AS financial statements in accordance with the Standards on Auditing (SAs) as 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 Standalone Ind AS Financial Statements' section of our report. We are independent of the Company in accordance with the `Code of Ethics' issued by the Institute of Chartered Accountants of India together with the ethical requirements that are relevant to our audit of the financial statements under the provisions of the Act and the Rules thereunder and we have ful lled our other ethical responsibilities in accordance with these requirements and the Code of Ethics. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the standalone Ind AS financial statements.
KEY AUDIT MATTERS
Key audit matters are those matters that in our professional judgment were of most significance in our audit of the standalone Ind AS financial statements for the financial year ended March 31 2019. These matters were addressed in the context of our audit of the standalone Ind AS financial statements as a whole and in forming our opinion thereon and we do not provide a separate opinion on these matters. For each matter below our description of how our audit addressed the matter is provided in that context. We have determined the matters described below to be the key audit matters to be communicated in our report. We have fulfilled the responsibilities described in the Auditor's responsibilities for the audit of the standalone Ind AS financial statements section of our report including in relation to these matters. Accordingly our audit included the performance of procedures designed to respond to our assessment of the risks of material misstatement of the standalone Ind AS financial statements. The results of our audit procedures including the procedures performed to address the matters below provide the basis for our audit opinion on the accompanying standalone Ind AS financial statements.
Increase in Inter corporate deposits and utilization thereof-
The company's short term borrowings have increased by ? 399.63 crores during the year and there is no corresponding increase in the property plant and equipment or other assets of the company or volume of trading activity of the company. This has also resulted in increased burden of finance costs on the company. The increase in loans was primarly by way of borrowings from persons/parties who are related entities in terms of Ind-AS 24. In view of the above verification of the end use of the funds and compliances of reporting requirements in respect of the same involved extensive procedures and also judgements with respect to proper classification terms and conditions of the loans etc.
How our audit addressed the key audit matter
For the matter referred to above our procedures included among others verification of the funds flow and bank transactions of the company type of relationship between the company and the lending party the statutory records and lings done by the company with the Registrar of Companies and lings done by the lending parties the loan agreements executed between the parties etc.
EMPHASIS OF MATTER
Reference is invited towards Note No.21 describing the fact that an amount of ? 874.42 lakhs being demand of Income Tax recovered by the Department though is subject to Appeal and is in the nature of a deposit under protest has not been carried as a receivable/recoverable balance in the Financial Statements. The Management has charged the said amount to its Other Equity following the principle of conservatism. Our opinion is not modified in respect of the said matter.
INFORMATION OTHER THAN THE FINANCIAL STATEMENTS AND AUDITOR'S REPORT THEREON
The Company's Board of Directors is responsible for the other information. The other information comprises the information included in the Annual report but does not include the standalone Ind AS financial statements and our auditor's report thereon.
Our opinion on the standalone Ind AS financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.
In connection with our audit of the standalone Ind AS financial statements our responsibility is to read the other information and in doing so consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If based on the work we have performed we conclude that there is a material misstatement of this other information we are required to report that fact. We have nothing to report in this regard.
RESPONSIBILITIES OF MANAGEMENT AND THOSE CHARGED WITH GOVERNANCE 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 Act with respect to the preparation of these standalone Ind AS financial statements that give a true and fair view of the financial position financial performance including other comprehensive income cash ows and changes in equity of the Company in accordance with the accounting principles generally accepted in India including the Indian Accounting Standards (Ind AS) specified under section 133 of the Act read with the Companies. (Indian Accounting Standards) Rules 2015 as amended. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding of the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and the design implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the accuracy and completeness of the accounting records relevant to the preparation and presentation of the standalone Ind AS financial statements that give a true 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 for assessing the Company's ability to continue as a going concern disclosing as applicable matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations or has no realistic alternative but to do so.
Those charged with governance are also responsible for overseeing the Company's financial reporting process.
AUDITOR'S RESPONSIBILITIES FOR THE AUDIT OF THE STANDALONE IND AS FINANCIAL STATEMENTS
Our objectives are to obtain reasonable assurance about whether the standalone Ind AS financial statements as a whole are free from material misstatement whether due to fraud or error and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with SAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if individually or in the aggregate they could reasonably be expected to influence the economic decisions of users taken on the basis of these standalone Ind AS financial statements.
As part of an audit in accordance with SAs we exercise professional judgment and maintain professional skepticism throughout the audit. We also:
A. Identify and assess the risks of material misstatement of the standalone Ind AS financial statements whether due to fraud or error design and perform audit procedures responsive to those risks and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error as fraud may involve collusion forgery intentional omissions misrepresentations or the override of internal control.
B. Obtain an understanding of internal control relevant to the audit in order to design 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 has adequate internal financial controls system in place and the operating effectiveness of such controls.
C. Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
D. Conclude on the appropriateness of management's use of the going concern basis of accounting and based on the audit evidence obtained whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company's ability to continue as a going concern. If we conclude that a material uncertainty exists we are required to draw attention in our auditor's report to the related disclosures in the 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's report. However future events or conditions may cause the Company to cease to continue as a going concern.
E. Evaluate the overall presentation structure and content of the standalone Ind AS financial statements including the disclosures and whether the standalone Ind AS financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
We communicate with those charged with governance regarding among other matters the planned scope and timing of the audit and significant audit findings including any significant deficiencies in internal control that we identify during our audit. We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence and where applicable related safeguards.
From the matters communicated with those charged with governance we determine those matters that were of most significance in the audit of the standalone Ind AS financial statements for the financial year ended March 31 2019 and are therefore the key audit matters. We describe these matters in our auditor's report unless law or regulation precludes public disclosure about the matter or when in extremely rare circumstances we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.
REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS
As required by the Companies (Auditor's Report) Order 2016 (the Order) issued by the Central Government of India in terms of sub-section (11) of section 143 of the Companies Act 2013 we give in the Annexure A a statement on the matters specified in paragraphs 3 and 4 of the Order to the extent applicable.
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 best of our knowledge and belief were necessary for the purposes of our audit;
(b) In our opinion proper books of account as required by law have been kept by the Company so far as it appears from our examination of those books;
(c) The Balance Sheet the Statement of Profit and Loss including the Statement of Other Comprehensive Income the Cash Flow Statement and Statement of Changes in Equity dealt with by this Report are in agreement with the books of account;
(d) In our opinion the aforesaid standalone Ind AS financial statements comply with the Accounting Standards specified under Section 133 of the Act read with Companies (Indian Accounting Standards) Rules 2015 as amended;
(e) On the basis of the written representations received from the directors as on March 31 2019 taken on record by the Board of Directors none of the directors is disqualified as on March 31 2019 from being appointed as a director in terms of Section 164 (2) of the Act;
(f) With respect to the adequacy of the internal financial controls with reference to these standalone Ind AS financial statements and the operating effectiveness of such controls refer to our separate Report in Annexure B to this report;
(g) In our opinion the managerial remuneration for the year ended March 31 2019 has been paid / provided by the Company to its directors in accordance with the provisions of section 197 read with Schedule V to the Act;
(h) With respect to the other matters to be included in the Auditor's Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014 as amended in our opinion and 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 financial position in its financial statements - Refer Note - to the financial statements;
ii. The Company does not have any long term contracts requiring a provision for any material foreseeable losses.
iii. There has been no delay in transferring amounts required to be transferred to the Investor Education and Protection Fund by the Company
iv. The disclosures in the standalone financial statements regarding holdings as well as dealings in specified bank notes duringthe period from 08th Nov. 2016 to 30th Dec. 2016 have not been made in these standalone financial statements since they do not pertain to the financial year ended 31st March 2019.
|For RAJIV MEHROTRA & ASSOCIATES|
|Firm Registration No. 002253C|
|Date : 29th May 2019||M.No.401701|
ANNEXURE A TO THE INDEPENDENT AUDITORS' REPORT
(Referred to in Para 1 under `Report on Other legal and Regulatory Requirements' section of our report of even date)
Re: Kothari Products Ltd.
we report that:
(i) a. The company is maintaining proper records showing full particulars including quantitative details and situation of fixed assets.
b. The company has a program of physical verification of fixed assets so as to cover all the items over a period of three years. In accordance with this programme property plant and equipment were verified during the year and no material discrepancies were noticed on such verification.
c. According to the information and explanations given to us and the records examined by us and based on the registered sale deeds/transfer deeds etc. evidencing title in immovable properties which are freehold we report that the immovable properties capitalized in the books of account of the company are held in its name.
(ii) a. According to the information explanations and documents produced for our verification we report that the inventory of traded goods and immovable properties have been physically verified by the management at reasonable intervals during the year at various locations and no material discrepancies were noticed on such physical verification.
b. The procedures of physical verification of inventories followed by the management are reasonable and adequate in relation to the size of the company and the nature of its business.
c. The company has maintained proper records of inventory. According to the information and explanations given to us and on the basis of our examination of records we are of the opinion that no material discrepancies were noticed on physical verification and the same have been properly dealt with in the books of accounts.
(iii) a. That as regards the loans to entities covered in the Register maintained u/s 189 of the Companies Act 2013 it is reported that:
- The company has granted unsecured loan to its Subsidiary and associates during the year under consideration.
- The total outstanding balance as at the close of the year in respect of such advances was 13293.75 Lacs.
i. In our opinion and according to the information and explanations given to us the terms and conditions of the grant of such loans are not prejudicial to the company's interest.
ii. That as per the information and explanations given to us there is no repayment schedule in respect of the short term advance given to the subsidiary and the same is repayable on demand. That as regards the loans given to the Associate concerns as per the information and explanations given to us and the terms of loans/advances made by the company no advances are due for payment within one year from the close of the year.
iii. That as per the information and explanations given to us and terms of the loans given by the company there are no amounts overdue on account of interest/principal.
(iv) In Our opinion and according to the information and explanations given us the company has complied with the provisions of section 185 and 186 of the Companies Act 2013 in respect of grant of loans making investments and providing guarantees.
(v) In our opinion and according to the information and explanations given to us the company has not accepted any public deposits. No Order has been passed by the Company Law Board/National Company Law Tribunal or Reserve Bank of India.
(vi) In our opinion and according to the information and explanations given to us the company is not liable for maintenance of cost records u/s 148 of the Companies Act 2013.
(vii) (a) The company is regular in depositing with appropriate authorities undisputed statutory dues including investor education protection fund income tax sales tax wealth tax service tax & customs duty and other material statutory dues applicable to it. According to the information and explanations given to us no undisputed amounts payable in respect of provident fund income tax sales tax wealth tax customs duty VAT cess and other material statutory dues were in arrears as at 31st March 2019 for a period of more than six months from the date they became payable.
(b) As per the information and explanations given to us and on the basis of the verification of the records of the company the statutory dues which have not been deposited on account of disputes are as under:
|Sl. No.||Name of the Statue||Nature of Dues||Amount in ? Lacs||Pending amount||Period to which the amount relates||Forum where dispute is pending|
|1.||Income Tax Act||Income Tax||47.16||-||A Y 2013-14||CIT(Appeal)|
|2.||Income Tax Act||Income Tax||1.68||1.68||A Y 2013-14||CPC Bangalore|
|3.||Income Tax Act||IncomeTax||874.01||80.26||A Y 2016-17||CIT(Appeal)|
|4.||Income Tax Act||IncomeTax||16.30||-||A Y 2010-11||Income Tax Appellate Tribunal|
|5.||Income Tax Act||IncomeTax||67.02||67.02||A Y 2010-11||CPC Bangalore|
|6.||Income Tax Act||Income Tax||30.04||-||A Y 2009-10||Income Tax Appellate Tribunal|
|7.||Income Tax Act||Income Tax||97.43||97.43||A Y 2009-10||Jurisdictional AO|
|8.||Income Tax Act||Income Tax||2.68||2.68||A Y 2009-10||Jurisdictional AO|
|9.||Income Tax Act||Income Tax||206.72||-||Block Period||High Court|
|10.||Income Tax Act||Income Tax||65.12||-||A Y 2001-02||High Court|
|11.||Income Tax Act||Income Tax||117.93||-||A Y 2001-02||High Court|
|12.||Income Tax Act||Income Tax||26.10||-||A Y 2008-09||High Court|
|13.||Income Tax Act||Income Tax||19.12||19.12||A Y 2011-12||Jurisdictional AO|
|14.||Income Tax Act||Penalty||5.20||5.20||A Y 2012-13||Jurisdictional AO|
|15.||Income Tax Act||Penalty||6.94||6.94||A Y 2014-15||Jurisdictional AO|
|16.||Income Tax Act||Income Tax||0.14||0.14||A Y 2014-15||CPC Bangalore|
|17.||Income Tax Act||Income Tax||22.14||22.14||A Y 2015-16||Jurisdictional AO|
|18.||Income Tax Act||Income Tax||3.36||3.36||A Y 2017-18||CPC Bangalore|
|19.||Income Tax Act||TDS Interest and penalty||4.46||4.46||Several years upto AY 2016-17||TDS Centralized processing center|
|20.||U.P. Sales Tax Act*||Luxary Tax & Sales Tax||17.97||17.97||1994-1995||Deputy Commissioner Commercial Tax|
|21.||U.P. Sales Tax Act*||Trade Tax||25.66||25.66||2007-2008||Tribunal Commercial Tax|
|22.||U.P. Sales Tax Act*||Trade Tax||3.52||3.52||2007-2008||Tribunal Commercial Tax|
|23.||Tamilnadu VAT ACT*||Sales Tax||272.00||272.00||2000-2001||Supreme Court|
|25.||Central Excise Act||Prosecution of Excise Act||Amount unascertainable||-||-||CJM Court|
|26.||C.R.P.C.||U/S 482 CR.P.C.||Amount unascertainable||-||-||High Court|
|27.||P.F.A. Act*||PFA Case||Amount unascertainable||-||-||Judicial Magistrate|
|28.||M.V. Act||Claim Cases||Amount unascertainable||-||-||MACT|
(viii) In our opinion and according to the information and explanations given to us the company has not defaulted in repayment of dues to any financial institution Banks or Government. There are no debenture holders.
(ix) In our opinion and according to the information and explanations given to us the company has applied term loans for the purposes for which the same were availed. The company is a listed company. However no funds have been raised through a public offering in the year under consideration.
(x) According to the information and explanations given to us no fraud by the company or on the company by its officers or employees has been noticed or reported during the course of our audit.
(xi) In our opinion and according to the information and explanations given to us the company has paid/provided managerial remuneration in accordance with the requisite approvals mandated by the provisions of section 197 r.w. Schedule V of the Companies Act 2013.
(xii) The Company is not a Nidhi Company and hence the reporting under clause (xii) of CARO 2016 Order is not applicable.
(xiii) In our opinion and according to the information and explanations given to us the company has complied with Sections 177 and Section 188 of the Companies Act 2013 where applicable for all transactions with related parties and the details of related party transactions have been disclosed in the financial statements etc. as required by the applicable accounting standards.
(xiv) During the year the company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures and hence reporting under clause (xiv) of CARO 2016 is not applicable to the Company.
(xv) In our opinion and according to the information and explanations given to us the company has not entered into any non-cash transactions with its directors or directors of its subsidiary or associate companies or persons connected with them during the year under consideration and hence provisions of section 192 of Companies Act 2013 are not applicable.
(xvi) In our opinion the company is not required to be registered under Section 45-IA of the Reserve Bank of India Act 1934.
|For RAJIV MEHROTRA & ASSOCIATES|
|Firm Registration No. 002253C|
|Date : 29th May 2019||M.No.401701|
ANNEXURE B TO THE INDEPENDENT AUDITORS' REPORT
(Referred to in Para 2(f) under `Report on Other legal and Regulatory Requirements' section of our report of even date
REPORT ON THE INTERNAL FINANCIAL CONTROLS UNDER SECTION 143(3)(I) OF THE COMPANIES ACT 2013 (THE ACT)
We have audited the internal financial controls with reference to financial statements of Kothari Products Limited (the Company) as of March 31 2019 in conjunction with our audit of the financial statements of the Company for the year ended on that date.
In our opinion to the best of our information and according to the explanations given to us the company has in all material aspects an adequate internal financial controls' system over financial reporting and such internal financial controls with reference to financial statements were operating effectively as at March 31st 2019 based on the internal control over financial reporting criteria established by the company considering the essential components of internal control stated in Guidance Note of Audit of Internal Financial Controls Over Financial Reporting issued by the Institute of Chartered Accountants of India.
Management's Responsibility for Internal Financial Controls
The Company's management is responsible for establishing and maintaining internal financial controls based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls over Financial Reporting issued by the Institute of Chartered Accountants of India. These responsibilities include the design implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the orderly and efficient conduct of its business including adherence to company's policies the safeguarding of its assets the prevention and detection of frauds and errors the accuracy and completeness of the accounting records and the timely preparation of reliable financial information as required under the Companies Act 2013.
Our responsibility is to express an opinion on the Company's internal financial controls with reference to financial statements based on our audit. We conducted our audit in accordance with the Guidance Note on Audit of Internal financial controls with reference to financial statements (the Guidance Note) and the Standards on Auditing to the extent applicable to an audit of internal financial controls both issued by the Institute of Chartered Accountants of India. Those Standards and the Guidance Note require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether adequate internal financial controls with reference to financial statements was established and maintained and if such controls operated effectively in all material respects.
Our audit involves performing procedures to obtain audit evidence about the adequacy of the internal financial with reference to financial statements and their operating effectiveness. Our audit of internal financial controls with reference to financial statements included obtaining an understanding of internal financial controls over financial reporting assessing the risk that a material weakness exists and testing and evaluating the design and operating effectiveness of internal controls based on the assessed risk. The procedures selected depend on the auditor's judgment including the assessment of the risks of material misstatement of the financial statements whether due to fraud or error.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the Company's internal financial controls system with reference to financial statements.
Meaning of Internal Financial Controls Over Financial Reporting
A company's internal financial control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal financial control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition use or disposition of the company's assets that could have a material effect on the financial statements.
Inherent Limitations of Internal Financial Controls with reference to Financial Statements
Because of the inherent limitations of internal financial controls over financial reporting including the possibility of collusion or improper management override of controls material misstatements due to error or fraud may occur and not be detected. Also projections of any evaluation of the internal financial controls with reference to financial statements to future periods are subject to the risk that the internal financial control over financial reporting may become inadequate because of changes in conditions or that the degree of compliance with the policies or procedures may deteriorate.
|For RAJIV MEHROTRA & ASSOCIATES|
|Firm Registration No. 002253C|
|Date : 29th May 2019||M.No.401701|