To The Members of Lords Chloro Alkali Limited Report on the Audit of the FinancialStatements
We have audited the accompanying financial statements of Lords Chloro Alkali Limited("the Company") which comprise the Balance Sheet as at March 312019 theStatement of Profit and Loss (including Other Comprehensive Income) the Statement ofChanges in Equity and the Statement of Cash Flows for the year then ended and notes tothe financial statements including a summary of significant accounting policies and otherexplanatory 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 (financial performanceincluding other comprehensive income) changes in equity and its cash flows for the yearended on that date.
Basis for Opinion
We conducted our audit of the financial statements in accordance with the Standards onAuditing (SAs) specified under section 143(10) of the Act. Our responsibilities underthose Standards are further described in the Auditors Responsibilities for theAudit of the Financial Statements section of our report. We are independent of theCompany in accordance with the Code of Ethics issued by the Institute of CharteredAccountants of India (ICAI) together with the ethical requirements that are relevant toour audit of the financial statements under the provisions of the Act and the Rules madethere under and we have fulfilled our other ethical responsibilities in accordance withthese requirements and the Code of Ethics. We believe that the audit evidence we haveobtained is sufficient and appropriate to provide a basis for our opinion.
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 matter described below to be the key audit matters to be communicatedin our report.
|Key Audit Matter ||Auditors Response |
|Borrowings || |
|As at March 31 2019 the Company had a borrowing liability (Non-current) of Rs.6293.81 Lakhs representing 69.38% of total liabilities. Borrowings as a percentage of the total assets size of the Company is 37.87% as at March 31 2019. ||Our audit procedures in respect of this area included: |
| We read the agreements between the Company and its financiers to understand the terms associated with the facilities. |
|The borrowings are under agreements with terms and conditions detailed in note no. 14 to the notes of the financial statements. || We obtained confirmations from the Company's banks/financial institutions to confirm all significant borrowings including amounts tenure and conditions. |
|Given the size of the borrowings balance and the importance of the capital structure for continued growth the accounting for the Company's borrowings is considered a key audit matter. || Where debt is regarded as noncurrent we tested whether the Company has the unconditional right to defer payment such that there were no repayments required within 12 months from the balance date. |
| || We further considered whether the disclosures related to the borrowings in the financial statements are appropriate in all material respects. |
information Other than the Financial Statements and Auditors 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 Company'sBoard Report including annexures to the Board Report Management Discussion & AnalysisReport and Corporate Governance but does not include the financial statements and ourauditors' report thereon. The Company's Board Report including annexures to the BoardReport Management Discussion & Analysis Report and Corporate Governance is expectedto be made available to us after the date of this auditors' report.
Our opinion on the financial statements does not cover the other information and wewill not express any form of assurance conclusion thereon.
In connection with our audit of the financial statements our responsibility is to readthe other information identified above when it becomes available and in doing soconsider whether the other information is materially inconsistent with the financialstatements or our knowledge obtained during the course of our audit or otherwise appearsto be materially misstated.
When we read the Company's Board Report including annexures to the Board's ReportManagement Discussion & Analysis Report and Corporate Governance if we conclude thatthere is a material misstatement therein we are required to communicate the matter tothose charged with governance.
Managements 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 (including othercomprehensive income) changes in equity and cash flows of the Company in accordance withthe accounting principles generally accepted in India including the Indian accountingStandards (Ind AS) specified under section 133 of the Act read with Companies (IndianAccounting Standard) Rules 2015 as amended. This responsibility also includesmaintenance of adequate accounting records in accordance with the provisions of the Actfor safeguarding of 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 the 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 themanagement either intends to liquidate the Company or to cease operations or has norealistic alternative but to do so. Board of Directors is also responsible for overseeingthe Company's financial reporting process.
Auditors 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 auditors' 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 risk 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 in
order to design audit procedures that are appropriate in the circumstances. Undersection 143(3)(i) of the Act we are also responsible for expressing our opinion onwhether the Company has adequate internal financial controls system in place and theoperating effectiveness of such controls.
Evaluate the appropriateness of accounting policies used and the reasonablenessof accounting estimates and related disclosures made by management.
Conclude on the appropriateness of management's use of the going concern basisof accounting and based on the audit evidence obtained whether a material uncertaintyexists related to events or conditions that may cast significant doubt on the Company'sability to continue as a going concern. If we conclude that a material uncertainty existswe are required to draw attention in our auditors' 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 auditors'report. However future events or conditions may cause the Company to cease to continue asa going concern.
Evaluate the overall presentation structure and content of the financialstatements including the disclosures and whether the financial statements represent theunderlying transactions and events in a manner that achieves fair presentation.
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 financial statements of thecurrent period and are therefore the key audit matters. We describe these matters in ourauditors' report unless law or regulation precludes public disclosure about the matter orwhen 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 onOther Legal and Regulatory Requirements
1. As required by the Companies (Auditors' 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 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 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 the Statement of Changes in Equity and the Statement of Cash Flow dealt with bythis Report are in agreement with the books of account.
d) In our opinion the aforesaid financial statements comply with the AccountingStandards specified under Section 133 of the Act read with the Companies (IndianAccounting Standards) Rules 2015 as amended.
e) On the basis of the written representations received from the directors as on March312019 taken on record by the Board of Directors none of the directors is disqualifiedas on March 312019 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 with reference tothe financial statements of the Company and the operating effectiveness of such controlsrefer to our separate Report in "Annexure B" to this report.
g) In our opinion and to the best of our information and according to the explanationsgiven to us the remuneration paid by the Company to its directors during the year is inaccordance with the provisions of section 197 of the Act.
h) With respect to the other matters to be included in the Auditors' 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 on its financialposition in its financial statements- Refer Note 43 to the financial statements.
ii. The Company did not have any long-term contracts including derivative contracts forwhich there were any material foreseeable losses.
ii. There has been delay in transferring the amounts which was required to betransferred to the investor education and protection fund by the company- Refer Note 44 tothe financial statements.
For Gupta Vigg & Co.
Firm's Registration Number: 001393N
(CA. Deepak Pokhriyal)
Membership Number: 524778
Place of Signature: New Delhi
Date: 29 May 2019
Annexure A To the Independent Auditors Report
The Annexure referred to in Independent Auditors' Report to the members of
the Company on the financial statements for the year ended March 312019
we report that:
(i) In respect of fixed assets:
(a) The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets.
(b) The Company has a regular programme of verification of fixed assets. All the fixedassets have been physically verified by the management during the year which in ouropinion is reasonable having regard to size of the Company and nature of fixed assets. Nomaterial discrepancies were noticed on such verification.
(c) On the basis of information and explanation provided by the management the titledeeds of immovable properties are held in the name of the Company.
(ii) On the basis of information and explanation provided by the managementinventories have been physically verified by the management during the year. In ouropinion the frequency of such verification is reasonable. No material discrepancies werenoticed on physical verification of inventories by the management.
(iii) According to the information and explanations given to us the Company has notgranted any loan secured or unsecured to companies firms Limited Liability Partnerships(LLPs) or other parties covered in the register maintained under Section 189 of the Act.Accordingly the provisions of paragraphs 3(iii)(a) 3(iii)(b) and 3(iii)(c) of the Orderare not applicable to the Company.
(iv) According to the information and explanations given to us the Company has notentered into any transaction covered under Sections 185 of the Act. The company hascomplied with the provisions of Sections 186 of the Act in respect of investments made.The Company has not granted any loans and has not provided any guarantees or securitiesto parties covered under Section 186 of the Act.
(v) In our opinion and according to the information and explanation given to us theCompany has not accepted any deposits from the public in accordance with the provisions ofSections 73 to 76 of the Act and the rules framed there under. Accordingly paragraph 3(v)of the Order is not applicable to the Company.
(vi) We have broadly reviewed the books of account maintained by the Company pursuantto the rules prescribed by the Central Government for the maintenance of cost recordsunder subsection (I) of Section
148 of the Act and are of the opinion that prima facie the prescribed accounts andrecords have been made and maintained. However we have not made a detailed examination ofthe records.
(vii) According to the information and explanations given to us in respect ofstatutory dues:
(a) The Company is generally regular in depositing undisputed statutory dues includingprovident fund employees state insurance income tax duty of customs goods andservice tax cess and other applicable statutory dues with the appropriate authoritiesthough there have been delays in a few cases.
There were no undisputed amounts payable in respect of provident fund employeesstate insurance income tax duty of customs goods and service tax cess and otherapplicable statutory dues in arrears as at March 31 2019 for a period of more than sixmonths from the date they became payable except below:
|S. No. ||Nature of Dues ||Amount (Rs. In Lakhs) |
|1 ||Investor Education and Protection Fund ||11.64 |
| || ||(11.64) |
Note- Figures in bracket relates to the previous year.
(b) There are no dues of income tax sales tax value added tax service tax goods andservice tax duty of customs duty of excise which have not been deposited with theappropriate authorities on account of any dispute other than those mentioned as under:
|Name of the Statue ||Nature of Dues ||Period to which the amount relates ||Amount (Rs. in lakhs) ||Forum Where Dispute is pending |
|Central Excise Act 1944 ||Excise |
|1995-99 ||64.76 |
|Commissioner (Appeals) Jaipur/ CESTAT New Delhi |
|Central Excise Act 1944 ||Excise |
|2011-12 ||1.53 |
|Total || || ||66.29 || |
| || || ||(66.29) || |
Note- Figures in brackets relates to the previous year.
(viii) Based on our audit procedures and according to the information and explanationsgiven by the management the Company has not defaulted in repayment of dues to any bank orto any financial institution. The Company has not borrowed any loan from Government. TheCompany has not issued any debentures.
(ix) The Company has not raised any money by way of initial public offer or furtherpublic offer (including debt instruments). Based on our audit procedures and on theinformation given by the management we report
that term loans have been utilized for the purpose for which they have been raised.
(x) According to the information and explanations given to us no fraud by the Companyor on the Company by its officers or employees has been noticed or reported during theyear.
(xi0 The Company has paid or provided for managerial remuneration in accordance withthe requisite approvals mandated by the provisions of section 197 read with Schedule V toAct.
(xii) The Company is not a nidhi Company. Accordingly paragraph 3(xii) of the Order isnot 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 section 177 and 188 of the Act where applicable and details of suchtransactions have been disclosed in the financial statements as required by the applicableIndian Accounting Standards.
(xiv) The Company has not made any preferential allotment or private placement ofshares or fully or partly convertible debentures during the year. Accordingly paragraph3(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 the Company has not entered into non-cash transactions withdirectors or persons connected with him. Accordingly paragraph 3(xv) of the Order is notapplicable to the Company.
(xvi) The Company is not required to be registered under section 45-IA of the ReserveBank of India Act 1934. Accordingly paragraph 3(xvi) of the Order is not applicable tothe Company.
For Gupta Vigg & Co.
Firms Registration Number: 001393N
(CA. Deepak Pokhriyal)
Membership Number: 524778
Place of Signature: New Delhi
Date: May 29 2019
Annexure B To the independent Auditors Report
(Referred to in paragraph 1(f) under 'Report on Other Legal and RegulatoryRequirements' section of our report of even date to the Members of Lords Chloro AlkaliLimited)
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 with reference to financial statementsof Lords Chloro Alkali Limited ("the Company") as of March 312019 inconjunction with our audit of the financial statements of the Company for the year endedon that date.
Managements Responsibility for internal Financial Controls
The Company's management is responsible for establishing and maintaining internalfinancial controls based on the internal controls with reference to financial statementscriteria 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 ('ICAl'). 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.
Our responsibility is to express an opinion on the Company's internal financialcontrols with reference to financial statements based on our audit. We conducted our auditin accordance with the Guidance Note on audit of Internal Financial Controls overFinancial Reporting (the "Guidance Note") and the Standards on Auditing issuedby ICAI and deemed to be prescribed under section 143(10) of the Companies Act 2013 tothe extent applicable to an audit of internal financial 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 wasestablished and maintained and if such controls operated effectively in all materialrespects. Our audit involves performing procedures to obtain audit evidence about theadequacy of the internal financial controls system with reference to financial statementsand their operating effectiveness. Our audit of internal financial controls with referenceto financial statements included obtaining an understanding of internal financial controlswith reference to financial statements assessing the risk that a material weaknessexists and testing and evaluating the design and operating effectiveness of internalcontrol based on the assessed risk. The procedures selected depend on the auditors'judgment including the assessment of the risks of material misstatement of the financialstatements 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 systemwith reference to financial statements.
Meaning of internal Financial Controls with reference to Financial Statements
A company's internal financial control with reference to financial statements is aprocess designed to provide reasonable assurance regarding the reliability of financialreporting and the preparation of financial statements for external purposes in accordancewith generally accepted accounting principles. A company's internal financial control withreference to financial statements includes those policies and procedures that (1) pertainto the maintenance of records that in reasonable detail accurately and fairly reflectthe transactions and dispositions of the assets of the company; (2) 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 (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. inherentLimitations of internal Financial Controls with reference to Financial Statements
Because of the inherent limitations of internal financial controls with reference tofinancial statements including the possibility of collusion or improper managementoverride of controls material misstatements due to error or fraud may occur and not bedetected. Also projections of any evaluation of the internal financial controls withreference to financial statements to future periods are subject to the risk that theinternal financial control with reference to financial statements may become inadequatebecause of changes in conditions or that the degree of compliance with the policies orprocedures may deteriorate.
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 with reference to financial statements and such internal financial controls withreference to financial statements were operating effectively as at March 312019 based onthe internal control with reference to financial statements criteria established by theCompany considering the essential components of internal control stated in the GuidanceNote on Audit of Internal Financial Controls Over Financial Reporting issued by theInstitute of Chartered Accountants of India.
For Gupta Vigg & Co.
Firm's Registration Number: 001393N
(CA. Deepak pokhriyal)