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Meghmani Organics Ltd.

BSE: 532865 Sector: Agri and agri inputs
NSE: MEGH ISIN Code: INE974H01013
BSE 00:00 | 15 Apr 123.85 1.60
(1.31%)
OPEN

120.95

HIGH

124.75

LOW

118.20

NSE 00:00 | 15 Apr 123.85 1.60
(1.31%)
OPEN

119.90

HIGH

124.80

LOW

118.05

OPEN 120.95
PREVIOUS CLOSE 122.25
VOLUME 208179
52-Week high 142.80
52-Week low 43.90
P/E 14.78
Mkt Cap.(Rs cr) 3,150
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 120.95
CLOSE 122.25
VOLUME 208179
52-Week high 142.80
52-Week low 43.90
P/E 14.78
Mkt Cap.(Rs cr) 3,150
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Meghmani Organics Ltd. (MEGH) - Auditors Report

Company auditors report

To the Members ofMeghmani Organics Limited

Report on the Audit of the Standalone Ind AS Financial Statements

Opinion

We have audited the accompanying standalone Ind AS financial statementsof Meghmani Organics Limited (“the Company”) which comprise the Balance sheetas at March 31 2020 the Statement of Profit and Loss including the statement of OtherComprehensive Income the Cash Flow Statement and the Statement of Changes in Equity forthe year then ended and notes to the standalone Ind AS financial statements including asummary of significant accounting policies and other explanatory information (hereinafterreferred to as the Standalone Ind AS financial statements).

In our opinion and to the best of our information and according to theexplanations given to us the aforesaid standalone Ind AS financial statements give theinformation required by the Companies Act 2013 as amended (“the Act”) in themanner so required and give a true and fair view in conformity with the accountingprinciples generally accepted in India of the state of affairs of the Company as at March312020 its profit including other comprehensive income its cash flows and the changesin equity for the year ended on that date.

Basis for Opinion

We conducted our audit of the standalone Ind AS financial statements inaccordance with the Standards on Auditing (SAS) as specified under section 143(10) of theAct. Our responsibilities under those Standards are further described in the‘Auditor's Responsibilities for the Audit of the Standalone Ind AS FinancialStatements' section of our report. We are independent of the Company in accordancewith the ‘Code of Ethics' issued by the Institute of Chartered Accountants ofIndia together with the ethical requirements that are relevant to our audit of thefinancial statements under the 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 audit opinion on the standalone Ind AS financialstatements.

Emphasis of Matter

We draw attention to Note 48 of the standalone Ind AS financialstatements as regards the management's evaluation of COVID-I9 impact on the operation andassets of the Company. Our opinion is not modified in respect of this matter.

Key Audit Matters

Key audit matters are those matters that in our professional judgmentwere of most significance in our audit of the standalone Ind AS financial statements forthe financial year ended March 312020. These matters were addressed in the context of ouraudit of the standalone Ind AS financial statements as a whole and in forming our opinionthereon and we do not provide a separate opinion on these matters. For each matter belowour description of how our audit addressed the matter is provided in that context.

We have determined the matters described below to be the key auditmatters to be communicated in our report. We have fulfilled the responsibilities describedin the Auditor's responsibilities for the audit of the standalone Ind AS financialstatements section of our report including in relation to these matters. Accordingly ouraudit included the performance of procedures designed to respond to our assessment of therisks of material misstatement of the standalone Ind AS financial statements. The resultsof our audit procedures including the procedures performed to address the matters belowprovide the basis for our audit opinion on the accompanying standalone Ind AS financialstatements.

Key audit matters How our audit addressed the key audit matter
Revenue recognition (as described in Note 2 of the standalone Ind AS financial statements)
The Company majorly operates in two segments viz: Agro chemicals and Pigment. Export sales contributes approximately 77% of total sales of the Company. The Company recognises revenue from sales of goods in accordance with the requirements of Ind AS 115 Revenue from Contracts with Customers measured at fair value of the consideration received in the ordinary course of the Company's activities. Revenue from sale of goods is recognised net of discounts rebates and taxes. Our audit procedures included the following:
• Read and evaluated the Company's policy for revenue recognition and assessed its compliance with Ind AS 115 ‘Revenue from contracts with customers'.
• Assessed the design and tested the operating effectiveness of internal controls related to sales including variable consideration.
• Performed sample tests of individual sales transactions and inspected the underlying sales orders invoice copies terms of delivery lorry receipts bill of lading and collection to assess revenue recognition as per the terms of the contract with customers.
Certain terms in sales arrangements relating to timing of transfer of control and delivery specifications including incoterms involves significant judgment in determining whether the revenue is recognised in the correct period. • Performed tests of samples of transactions near year end date as well as credit notes issued after the year end date.
• Read and assessed the relevant disclosures made within the Standalone Ind AS financial statements.

Information other than the Standalone Ind ASfinancial statements and Auditor's report thereon:

The Company's Board of Directors is responsible for the otherinformation. The other information comprises the information included in the managementdiscussion and analysis and chairman statement but does not include the standalone Ind ASfinancial statements and our auditor's report thereon.

Our opinion on the standalone Ind AS financial statements does notcover the other information and we do not express any form of assurance conclusionthereon.

In connection with our audit of the standalone Ind AS financialstatements our responsibility is to read the other information and in doing so considerwhether such other information is materially inconsistent with the financial statements orour knowledge obtained in the audit or otherwise appears to be materially misstated. Ifbased on the work we have performed we conclude that there is a material misstatement ofthis other information we are required to report that fact. We have nothing to report inthis regard.

Responsibilities of Management for the Standalone Ind AS FinancialStatements

The Company's Board of Directors is responsible for the mattersstated in Section 134(5) of the Act with respect to the preparation and presentation ofthese standalone Ind AS financial statements that give a true and fair view of thefinancial position financial performance including other comprehensive income cash flowsand changes in equity of the Company in accordance with the accounting principlesgenerally accepted in India including the Indian Accounting Standards (Ind AS) specifiedunder section 133 of the Act read with the Companies (Indian Accounting Standards) Rules2015 as amended. This responsibility also includes maintenance of adequate accountingrecords in accordance with the provisions of the Act for safeguarding of the assets of theCompany and for preventing and detecting frauds and other irregularities; selection andapplication of appropriate accounting policies; making judgments and estimates that arereasonable and prudent; and the design implementation and maintenance of adequateinternal financial controls that were operating effectively for ensuring the accuracy andcompleteness of the accounting records relevant to the preparation and presentation ofthe standalone Ind AS financial statements that give a true and fair view and are freefrom material misstatement whether due to fraud or error.

In preparing the standalone Ind AS financial statements management isresponsible for assessing the Company's ability to continue as a going concerndisclosing as applicable matters related to going concern and using the going concernbasis of accounting unless management either intends to liquidate the Company or to ceaseoperations or has no realistic alternative but to do so.

The Board of Directors are also responsible for overseeing theCompany's financial reporting process.

Auditor's Responsibilities for the Audit of the Standalone Ind ASFinancial Statements

Our objectives are to obtain reasonable assurance about whether thestandalone Ind AS financial statements as a whole are free from material misstatementwhether due to fraud or error and to issue an auditor's report that includes ouropinion. Reasonable assurance is a high level of assurance but is not a guarantee that anaudit conducted in accordance with SAs will always detect a material misstatement when itexists. Misstatements can arise from fraud or error and are considered material ifindividually or in the aggregate they could reasonably be expected to influence theeconomic decisions of users taken on the basis of these standalone Ind AS financialstatements.

As part of an audit in accordance with SAs we exercise professionaljudgment and maintain professional skepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of thestandalone Ind AS financial statements whether due to fraud or error design and performaudit procedures responsive to those risks and obtain audit evidence that is sufficientand appropriate to provide a basis for our opinion. The risk of not detecting a materialmisstatement resulting from fraud is higher than for one resulting from error as fraudmay involve collusion forgery intentional omissions misrepresentations or the overrideof internal control.

• Obtain an understanding of internal control relevant to theaudit 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 with reference to financialstatements in place and the operating effectiveness of such controls.

• Evaluate the appropriateness of accounting policies used and thereasonableness of accounting estimates and related disclosures made by management.

• Conclude on the appropriateness of management's use of thegoing concern basis of accounting and based on the audit evidence obtained whether amaterial uncertainty exists related to events or conditions that may cast significantdoubt on the Company's ability to continue as a going concern.

If we conclude that a material uncertainty exists we are required todraw attention in our auditor's report to the related disclosures in the financialstatements or if such disclosures are inadequate to modify our opinion. Our conclusionsare 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 goingconcern.

• Evaluate the overall presentation structure and content of thestandalone Ind AS financial statements including the disclosures and whether thestandalone Ind AS financial statements represent the underlying transactions and events ina manner that achieves fair presentation.

We communicate with those charged with governance regarding amongother matters the planned scope and timing of the audit and significant audit findingsincluding any significant deficiencies in internal control that we identify during ouraudit.

We also provide those charged with governance with a statement that wehave complied with relevant ethical requirements regarding independence and tocommunicate with them all relationships and other matters that may reasonably be thoughtto bear on our independence and where applicable related safeguards.

From the matters communicated with those charged with governance wedetermine those matters that were of most significance in the audit of the standalone IndAS financial statements for the financial year ended March 31 2020 and are therefore thekey audit matters. We describe these matters in our auditor's report unless law orregulation precludes public disclosure about the matter or when in extremely rarecircumstances we determine that a matter should not be communicated in our report becausethe adverse consequences of doing so would reasonably be expected to outweigh the publicinterest 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 of India in terms of sub-section(11) of section 143 of the Act we give in the “Annexure 1” a statement on thematters specified in paragraphs 3 and 4 of the Order.

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

(a) We have sought and obtained all the information and explanationswhich to the best of our knowledge and belief were necessary for the purposes of ouraudit;

(b) In our opinion proper books of account as required by law havebeen 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 theStatement of Other Comprehensive Income the Cash Flow Statement and Statement of Changesin Equity dealt with by this Report are in agreement with the books of account;

(d) In our opinion the aforesaid standalone Ind AS financialstatements comply with the Accounting Standards specified under Section 133 of the Actread with Companies (Indian Accounting Standards) Rules 2015 as amended;

(e) On the basis of the written representations received from thedirectors as on March 312020 taken on record by the Board of Directors none of thedirectors is disqualified as on March 312020 from being appointed as a director in termsof Section 164 (2) of the Act;

(f) With respect to the adequacy of the internal financial controlsover financial reporting of the Company with reference to these standalone Ind ASfinancial statements and the operating effectiveness of such controls refer to ourseparate Report in “Annexure 2” to this report;

(g) In our opinion the managerial remuneration for the year endedMarch 312020 has been paid / provided by the Company to its directors in accordance withthe provisions of section 197 read with Schedule V to the Act; and

(h) With respect to the other matters to be included in theAuditor'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 tothe explanations given to us:

i. The Company has disclosed the impact of pending litigations on itsfinancial position in its standalone Ind AS financial statements - Refer Note 40 to thestandalone Ind AS financial statements;

ii. The Company did not have any long-term contracts includingderivative contracts for which there were any material foreseeable losses; and

iii. There has been no delay in transferring amounts required to betransferred to the Investor Education and Protection Fund by the Company

For S R B C & CO LLP
Chartered Accountants
ICAI Firm Registration Number: 324982E/E300003
per Sukrut Mehta
Partner
Membership Number: 101974
UDIN: 20101974AAAABB1177
Place of Signature: Ahmedabad
Date: June 15 2020

Annexure 1

Referred to in Paragraph 1 of Report on Other Legal and RegulatoryRequirements of our report of even date of Meghmani Organics Limited for the year endedMarch 31 2020.

i. (a) The Company has maintained proper records showing fullparticulars including quantitative details and situation of

property plant and equipment.

(b) All property plant and equipment have not been physically verifiedby the management during the year. However there is a regular programme of verificationonce in three years which in our opinion is reasonable having regard to the size of theCompany and the nature of its assets. Discrepancies noticed on such verification have beenappropriately dealt with in the books of accounts.

(c) According to the information and explanations given by themanagement the title deeds of immovable properties included in property plant andequipment are held in the name of the Company.

ii. The inventory (except goods in transit) has been physicallyverified by the management during the year. In our opinion the frequency of verificationis reasonable. No material discrepancies were noticed on such physical verification.

iii. According to the information and explanations given to us theCompany has not granted any loans secured or unsecured to companies firms LimitedLiability Partnerships or other parties covered in the register maintained under section189 of the Companies Act 2013. Accordingly the provisions of clause 3(iii) (a) (b) and(c) of the Order are not applicable to the Company and hence not commented upon.

iv. In our opinion and according to the information and explanationsgiven to us provisions of Section 186 of the Act in respect of investments made have beencomplied with by the Company. Further in our opinion and according to the information andexplanations given to us there are no loans guarantees and securities given in respectof which provisions of section 185 and 186 of the Act are applicable and hence notcommented upon.

v. The Company has not accepted any deposits within the meaning ofSections 73 to 76 of the Act and the Companies (Acceptance of Deposits) Rules 2014 (asamended). Accordingly the provisions of clause 3(v) of the Order are not applicable andhence not commented upon.

vi. We have broadly reviewed the books of account maintained by theCompany pursuant to the rules made by the Central Government for the maintenance of costrecords under Section 148(1) of the Companies Act 2013 related to the manufacture ofagrochemicals and pigment products and are of the opinion that prima facie the specifiedaccounts and records have been made and maintained. We have not however made a detailedexamination of the same.

vii. (a) According to the information and explanations given to us andon the basis of our examination of the records of the

Company amounts deducted/accrued in the books of account in respect ofundisputed statutory dues including provident fund employees' state insuranceincome-tax duty of custom goods and services tax cess and other statutory dues aregenerally regularly deposited with the appropriate authorities though there has been aslight delay in a few cases.

(b) According to the information and explanations given to us noundisputed amounts payable in respect of provident fund employees' state insuranceincome-tax duty of custom goods and services tax cess and other material statutory dueswere outstanding at the year end for a period of more than six months from the date theybecame payable.

(c) According to the information and explanations given to us thereare no dues of income tax duty of excise duty of customs goods and service tax andother material statutory dues which have not been deposited with the appropriateauthorities on account of any dispute except for the following:

Annexure 1

Referred to in Paragraph 1 of Report on Other Legal and RegulatoryRequirements of our report of even date of Meghmani Organics Limited for the year endedMarch 31 2020.

Name of statue Nature of dues Amount involved (INR lakhs) Period Forum where the dispute is pending
Central Excise Act Excise duty demand 1721.87 2003-04 to 2008-09 and 2011-12 to 2016-17 Gujarat Highcourt Central Excise and Service Tax Appellate Tribunal Commissioner (Appeals)
Income tax Act 1961 Income tax demands 1192.84 2002-03 2008-09 2012-13 to 2016-17 Gujarat High Court Income tax Apellate Tribunal Commissioner Appeals Income tax

*Net of amount paid under protest amounting to INR 172.47 lakhs andadjustment of the amount of Income tax refunds pertaining to other assessment yearsamounting to INR 165.00 lakhs.

viii. In our opinion and according to the information and explanationsgiven by the management the Company has not defaulted in repayment of loans or borrowingsfrom banks. The Company did not have any due payable to the financial institutionsdebenture holders and government during the year.

ix. According to the information and explanations given by themanagement the Company has utilized the monies raised by way of term loans for thepurposes for which they were raised. The Company has not raised money by way of initialpublic offer further public offer and debt instrument during the year.

x. Based upon the audit procedures performed for the purpose ofreporting the true and fair view of the financial statements and according to theinformation and explanations given by the management we report that no fraud by theCompany or no fraud on the Company by the officers and employees of the Company has beennoticed or reported during the year.

xi. According to the information and explanations given by themanagement the managerial remuneration has been paid / provided in accordance with therequisite approvals mandated by the provisions of section 197 read with Schedule V to theCompanies Act 2013.

xii. In our opinion the Company is not a nidhi company. Therefore theprovisions of clause 3(xii) of the order are not applicable to the Company and hence notcommented upon.

xiii. According to the information and explanations given by themanagement on certain transactions entered with related parties being of specializednature transactions with the related parties are in compliance with Section 177 and 188of Companies Act 2013 where applicable and the details have been disclosed in the notesto the standalone Ind AS financial statements as required by the applicable accountingstandards.

xiv. According to the information and explanations given to us and onan overall examination of the balance sheet the Company has not made any preferentialallotment or private placement of shares or fully or partly convertible debentures duringthe year under review and hence reporting requirements under clause 3(xiv) are notapplicable to the Company and not commented upon.

xv. According to the information and explanations given by themanagement the Company has not entered into any noncash transactions with directors orpersons connected with him as referred to in Section 192 of the Act.

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

For S R B C & CO LLP
Chartered Accountants
ICAI Firm Registration Number: 324982E/E300003
per Sukrut Mehta
Partner
Membership Number: 101974
UDIN: 20101974AAAABB1177
Place of Signature: Ahmedabad
Date: June 15 2020

Annexure 2

To the Independent Auditor's report of even date on the StandaloneInd AS financial statements

of Meghmani Organics Limited

Report on the Internal Financial Controls underClause (i) of Sub-section 3 of Section 143 of the Companies Act 2013 ("theAct”)

We have audited the internal financial controls over financialreporting of Meghmani Organcis Limited (“the Company”) as of March 312020 inconjunction with our audit of the Standalone Ind AS financial statements of the Companyfor the year ended on that date.

Management's Responsibility for Internal Financial Controls

The Company's Management is responsible for establishing andmaintaining internal financial controls based on the internal control over financialreporting criteria established by the Company considering the essential components ofinternal control stated in the Guidance Note on Audit of Internal Financial Controls OverFinancial Reporting 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 thesafeguarding of its assets the prevention and detection of frauds and errors theaccuracy and completeness of the accounting records and the timely preparation ofreliable financial information as required under the Act.

Auditor's Responsibility

Our responsibility is to express an opinion on the Company's internalfinancial controls over financial reporting based on our audit. We conducted our audit inaccordance with the Guidance Note on Audit of Internal Financial Controls Over FinancialReporting (the “Guidance Note”) and the Standards on Auditing as specified underSection 143(10) of the Act to the extent applicable to an audit of internal financialcontrols and both issued by the Institute of Chartered Accountants of India. ThoseStandards and the Guidance Note require that we comply with ethical requirements and planand perform the audit to obtain reasonable assurance about whether adequate internalfinancial controls system over financial reporting was established and maintained and ifsuch controls operated effectively in all material respects.

Our audit involves performing procedures to obtain audit evidence aboutthe adequacy of the internal financial controls system over financial reporting and theiroperating effectiveness. Our audit of internal financial controls over financial reportingincluded obtaining an understanding of internal financial controls over financialreporting assessing the risk that a material weakness exists and testing and evaluatingthe design and operating effectiveness of internal control based on the assessed risk. Theprocedures selected depend on the auditor's judgement including the assessment ofthe risks of material misstatement of the Ind AS financial statements whether due tofraud or error.

We believe that the audit evidence we have obtained is sufficient andappropriate to provide a basis for our audit opinion on the internal financial controlsover system financial reporting.

Meaning of Internal Financial Controls SystemOver Financial Reporting with reference to these Standalone Ind AS financial statements

A Company's internal financial control over financial reporting withreference to these standalone Ind AS financial statements is a process designed to providereasonable assurance regarding the reliability of financial reporting and the preparationof financial statements for external purposes in accordance with generally acceptedaccounting principles. A company's internal financial control over financial reportingwith reference to these standalone financial statements includes those policies andprocedures that (1) pertain to the maintenance of records that in reasonable detailaccurately and fairly reflect the transactions and dispositions of the assets of thecompany; (2) provide reasonable assurance that transactions are recorded as necessary topermit preparation of financial statements in accordance with generally acceptedaccounting principles and that receipts and expenditures of the company are being madeonly in accordance with authorisations of management and directors of the company; and (3)provide reasonable assurance regarding prevention or timely detection of unauthorisedacquisition use or disposition of the company's assets that could have a material effecton the financial statements.

Annexure 2

to the Independent Auditor's report of even date on the StandaloneInd AS financial statements of Meghmani Organics Limited

Inherent Limitations of Internal FinancialControls Over Financial Reporting with reference to these Standalone financial statements

Because of the inherent limitations of internal financial controls overfinancial reporting with reference to these standalone Ind AS financial statementsincluding the possibility of collusion or improper management override of controlsmaterial misstatements due to error or fraud may occur and not be detected. Alsoprojections of any evaluation of the internal financial controls over financial reportingwith reference to these standalone Ind AS financial statements to future periods aresubject to the risk that the internal financial control over financial reporting maybecome inadequate because of changes in conditions or that the degree of compliance withthe policies or procedures may deteriorate.

Opinion

In our opinion the Company has in all material respects an adequateinternal financial controls system over financial reporting with reference to thesestandalone Ind AS financial statements and such internal financial controls over financialreporting were operating effectively as at March 31 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 S R B C & CO LLP
Chartered Accountants
ICAI Firm Registration Number: 324982E/E300003
per Sukrut Mehta
Partner
Membership Number: 101974
UDIN: 20101974AAAABB1177
Place of Signature: Ahmedabad
Date: June 15 2020

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