To the Members of Nikhil Adhesives Limited
Report on the Audit of the Standalone Financial Statements
We have audited the standalone financial statements of Nikhil Adhesives Limited("the Company") which comprise the balance sheet as at 31st March 2019 and thestatement of profit and loss (including Other Comprehensive Income) statement of changesin equity and statement of cash flows for the year then ended and notes to the financialstatements including a summary of significant accounting policies and other explanatoryinformation.
In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid standalone financial statements give the information requiredby the Companies Act 2013 (the Act) in the manner so required and give a true and fairview in conformity with the Indian Accounting Standards prescribed under section 133 ofthe Act read with the Companies (Indian Accounting Standards) Rules 2015 as amended (IndAS) and other accounting principles generally accepted in India of the state of affairsof the Company as at March 31 2019 and its profit other comprehensive income changesin equity and its cash flows for the year ended on that date.
Basis for Opinion
We conducted our audit in accordance with the Standards on Auditing (SAs) specifiedunder section 143(10) of the Companies Act 2013. Our responsibilities under thoseStandards are further described in the Auditor's Responsibilities for the Audit of theFinancial Statements section of our report. We are independent of the Company inaccordance with the Code of Ethics issued by the Institute of Chartered Accountants ofIndia together with the ethical requirements that are relevant to our audit of thefinancial statements under the provisions of the Companies Act 2013 and the Rules thereunder and we have fulfilled our other ethical responsibilities in accordance with theserequirements and the Code of Ethics. We believe that the audit evidence we have obtainedis 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.
Revenue is one of the key profit drivers. Cut off is the key assertion in so far asrevenue recognition is concerned since an inappropriate cutoff can result in materialmisstatement of results for the year. The issue was addressed in our audit by auditprocedures with regard to revenue recognition that included testing controls arounddispatches/deliveries substantive testing for cut -offs and analytical review procedures.
Provision of bad debts
The key matter observed during the audit was identification of bad debts and ensuringappropriate write off of such debts. The issue was addressed by the management and baddebts of Rs. 114.07 lakhs were written off. (Refer Note No. 34)
Responsibilities of Management and Those Charged with Governance for FinancialStatements
The Company's Board of Directors is responsible for the matters stated in section134(5) of the Companies Act 2013 ("the Act") with respect to the preparation ofthese standalone financial statements that give a true and fair view of the financialposition financial performance total comprehensive income changes in equity and cashflows of the Company in accordance with the Ind AS and other accounting principlesgenerally accepted in India. This responsibility also includes maintenance of adequateaccounting records in accordance with the provisions of the Act for safeguardingof theassets of the Company and for preventing and detecting frauds and other irregularities;selection and application of appropriate accounting policies; making judgments andestimates that are reasonable and prudent; and design implementation and maintenance ofadequate internal financial controls that were operating effectively for ensuring theaccuracy and completeness of the accounting records relevant to the preparation andpresentation of the financial statements that give a true and fair view and are free frommaterial misstatement whether due to fraud or error.
In preparing the financial statements the Board of Directors is responsible forassessing the Company's ability to continue as a going concern disclosing as applicablematters related to going concern and using the going concern basis of accounting unlessthe Board of Directors either intends to liquidate the Company or to cease operations orhas no realistic alternative but to do so.
Those Board of Directors are 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.
As part of an audit in accordance with SAs we exercise professional judgment andmaintain professional skepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of the financialstatements whether due to fraud or error design and perform audit procedures responsiveto those risks and obtain audit evidence that is sufficient and appropriate to provide abasis for our opinion. The risk of not detecting a material misstatement resulting fromfraud is higher than for one resulting from error as fraud may involve collusionforgery intentional omissions misrepresentations or the override of internal control.
Obtain an understanding of internal control relevant to the audit in order todesign audit procedures that are appropriate in the circumstances. Under section 143(3)(i)of the Companies Act 2013 we are also responsible for expressing our opinion on whetherthe company has adequate internal financial controls system in place and the operatingeffectiveness 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 auditor's report to the related disclosures inthe financial statements or if such disclosures are inadequate to modify our opinion.Our conclusions are based on the audit evidence obtained up to the date of our auditor'sreport. However future events or conditions may cause the Company to cease to continue asa going concern.
Evaluate the overall presentation structure and content of the financialstatements including the disclosures and whether the financial statements represent theunderlying transactions and 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 our auditor's report unless law or 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 benefits of suchcommunication.
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 subsection (11) of section 143 ofthe Companies Act 2013 we give in the Annexure A a statement on the matters specifiedin paragraphs 3 and 4 of the Order to the extent applicable.
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 bestof 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 Cash Flow Statement dealt with by thisReport are in agreement with the books of account.
(d) In our opinion the aforesaid financial statements comply with the Ind AS specifiedunder Section 133 of the Act.
(e) On the basis of the written representations received from the directors as on 31stMarch 2019 taken on record by the Board of Directors none of the directors isdisqualified as on 31st March 2019 from being appointed as a director in terms of Section164(2) of the Act.
(f) With respect to the adequacy of the internal financial controls over financialreporting of the Company and the operating effectiveness of such controls refer to ourseparate Report in "Annexure B".
(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 does not have any pending litigations which would impact its financialposition.
(ii) The Company did not have any long-term contracts including derivative contracts.Hence the question of foreseeable losses in respect thereof does not arise as at 31stMarch 2019.
(iii) There has been no delay in transferring amounts required to be transferred tothe Investor Education and Protection Fund by the Company.
For PHD & Associates
Firm Registration No.111236W
Membership No.: 38220
Date: 30 May 2019
Referred to in paragraph 1 under Report on Other Legal and RegulatoryRequirements' section of our Independent Auditors'
Report of even date to the members of Nikhil Adhesives Limited on the financialstatements for the year ended 31 March 2019:
(i) (a) The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets.
(b) The fixed assets were physically verified during the year by the Management atreasonable intervals. According to the information and explanations given to us nomaterial discrepancies were noticed on such verification.
(c) According to the information and explanations given to us and the records examinedby us we report that the title deeds of immovable properties are held in the name of theCompany. In respect of immovable properties that have been taken on lease and disclosed asfixed assets in the financial statements the lease agreements are in the name of theCompany.
(ii) The management has conducted physical verification of inventory at reasonableintervals during the year and no material discrepancies were noticed on such physicalverification.
(iii) According to the information and explanations given to us in respect ofunsecured loan granted to a company covered in the register maintained under Section 189of the Companies Act 2013 (the Act') in our opinion the terms and conditions ofthe grant of such loan is not prejudicial to the Company's interest. The loan is repayableon demand and interest is received as stipulated.
(iv) In our opinion and according to the information and explanations given to us inrespect of loans investments guarantees and security where applicable the provisionsof Section 185 and 186 of the Companies Act 2013 have been complied with by the Company.
(v) In our opinion and according to the information and explanations given to us theCompany has accepted deposits during the year and complied with the provisions of Sections73 to 76 and other relevant provisions of the Companies Act 2013 and the rules framedthere under as applicable.
(vi) The maintenance of cost records have been specified by the Central Governmentunder section 148(1) of the Companies Act 2013. We have broadly reviewed the cost recordsmaintained by the Company pursuant to the Companies (Cost Records and Audit) Rules 2014as amended prescribed by the Central Government under sub-section (1) of the Section 148of the Companies Act 2013 and are of the opinion that prima facie the prescribed costrecords have been made and maintained. We have however not made a detailed examinationof the cost records with a view to determine whether they are accurate or complete.
(vii) (a) According to the information and explanations given to us and on the basisof our examination of the books of account the Company has been generally regular indepositing with the appropriate authorities undisputed statutory dues including IncomeTax Goods and Service Tax cess and other statutory dues as applicable and as at March31 2019 there were no undisputed dues payable for a period of more than six months fromthe date of becoming payable.
(b)According to the information and explanations given to us there are no dues ofIncome tax or Sales tax or Value Added Tax or Service Tax or Custom Duty or Excise Duty orCess or GST which have not been deposited on account of disputes except following:
|Statute ||AY ||Forum Commissioner of Income ||Amount(Rs) |
| ||2017-18 ||Tax Appeals-CIT-(A) ||171509 |
|Income Tax || || || |
(viii) In our opinion and according to the information and explanations given to usthe Company has not defaulted in the repayment of loans or borrowings to the banks. TheCompany has not availed any loan or borrowing from financial institutions or governmentand has not issued debentures. Thus the question of default in respect thereof does notarise.
(ix) According to the information and explanations given to us the Company has neitherraised money by way of initial public offer or further public offer (including debtinstruments). The term loans taken by the Company were applied for the purposes for whichthey were taken.
(x) To the best of our knowledge and belief and according to the information andexplanations given to us no fraud by the Company and no fraud on the Company by itsofficers or employees has been noticed or reported during the year.
(xi) In our opinion and according to the information and explanations given to us themanagerial remuneration has been paid in accordance with the requisite approvals mandatedby the provisions of Section 197 read with Schedule V to the Act.
(xii) In our opinion the Company is not a Nidhi company. Therefore the provisions ofclause 3(xii) of the Order are not applicable to the Company and reporting under thisclause 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 theAct where applicable and details of related party transactions have been disclosed inthe financial statements as required by the applicable Indian Accounting Standards.
(xiv) The Company has not made any preferential allotment or private placement ofshares or issued fully or partly convertible debentures during the year under review hencereporting under this clause is not applicable.
(xv) According to the information and explanations given to us the Company has notentered into any non-cash transactions with its Directors or persons connected to itsDirectors and hence reporting under this clause is not applicable.
(xvi) According to the information and explanations given to us the Company is notNBFC and hence the Company is not required to be registered under section 45-IA of theReserve Bank of India Act 1934. Therefore reporting under this clause is not applicableto the Company.
For PHD & Associates
Firm Registration No.111236W
Membership No.: 38220
Date: 30 May 2019
Referred to in paragraph 2(f) under Report on Other Legal and RegulatoryRequirements' section of our Independent Auditors'
Report of even date to the members of Nikhil Adhesives Limited on the financialstatements for the year ended March 31 2019.
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 over financial reporting of NikhilAdhesives Limited ("the Company") as at March 31 2019 in conjunction withour audit of the financial statements of the Company for the year ended on that date.
Management's Responsibility for Internal Financial Controls
1. The Company's management is responsible for establishing and maintaining internalfinancial controls based 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). These responsibilitiesinclude the design implementation and maintenance of adequate internal financial controlsthat were operating effectively for ensuring the orderly and efficient conduct of itsbusiness including adherence to company's policies the safeguarding of its assets theprevention and detection of frauds and errors the accuracy and completeness of theaccounting records and the timely preparation of reliable financial information asrequired under the Act.
2. Our responsibility is to express an opinion on the Company's internal financialcontrols over financial reporting based on our audit. We conducted our audit in accordancewith the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting(the Guidance Note') and the Standards on Auditing deemed to be prescribed undersection 143(10) of the Act to the extent applicable to an audit of internal financialcontrols both applicable to an audit of Internal Financial Controls and both issued bythe ICAI. Those Standards and the Guidance Note require that we comply with ethicalrequirements and plan and perform the audit to obtain reasonable assurance about whetheradequate internal financial controls over financial reporting was established andmaintained and if such controls operated effectively in all material respects.
3. Our audit involves performing procedures to obtain audit evidence about the adequacyof the internal financial controls system over financial reporting and their operatingeffectiveness. Our audit of internal financial controls over financial reporting includedobtaining an understanding of internal financial controls over financial reportingassessing the risk that a material weakness exists and testing and evaluating the designand operating effectiveness of internal control based on the assessed risk. The proceduresselected depend on the auditor's judgment including the assessment of the risks ofmaterial misstatement of the financial statements whether due to fraud or error.
4. We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the Company's internal financial controls systemover financial reporting.
Meaning of Internal Financial Controls Over Financial Reporting
5. A Company's internal financial control over financial reporting is a processdesigned to provide reasonable assurance regarding the reliability of financial reportingand the preparation of financial statements for external purposes in accordance withgenerally accepted accounting principles. A Company's internal financial control overfinancial reporting includes those policies and procedures that:
(a) Pertain to the maintenance of records that in reasonable detail accurately andfairly reflect the transactions and dispositions of the assets of the Company; (b) Providereasonable assurance that transactions are recorded as necessary to permit preparation offinancial statements in accordance with generally accepted accounting principles and thatreceipts and expenditures of the Company are being made only in accordance withauthorizations of management and directors of the Company; and (c) Provide reasonableassurance regarding prevention or timely detection of unauthorized acquisition use ordisposition of the Company's assets that could have a material effect on the financialstatements.
Inherent Limitations of Internal Financial Controls Over Financial Reporting.
6. Because of the inherent limitations of internal financial controls over financialreporting including the possibility of collusion or improper management override ofcontrols material misstatements due to error or fraud may occur and not be detected.Also projections of any evaluation of the internal financial controls over financialreporting to future periods are subject to the risk that the internal financial controlover financial reporting may become inadequate because of changes in conditions or thatthe degree of compliance with the policies or procedures may deteriorate.
7. In our opinion the Company has in all material respects an adequate internalfinancial controls system over financial reporting and such internal financial controlsover financial reporting were operating effectively as at March 31 2019 based on theinternal control over financial reporting criteria established by the Company consideringthe essential components of internal control stated in the Guidance Note on Audit ofInternal Financial Controls Over Financial Reporting issued by the Institute of CharteredAccountants of India.
For PHD & Associates
Firm Registration No.111236W
Membership No.: 38220
Date: 30 May 2019