TO THE MEMBERS OF NOCIL LIMITED
Report on the Audit of the Standalone Financial Statements Opinion
We have audited the accompanying Standalone Financial Statements of NOCIL LIMITED("the Company") which comprise the Balance Sheet as at March 312019 theStatement of Profit and Loss the Statement of Changes in Equity the Cash Flow Statementfor the year then ended and Notes to the Financial Statements including a summary ofsignificant accounting policies and other explanatory information.
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 in the manner so required and give a true and fair view inconformity with the accounting principles generally accepted in India of the state ofaffairs of the Company as at March 312019 its profits changes in equity and its cashflows 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 theStandalone Financial Statements section of our report. We are independent of the Companyin accordance 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 Rulesthereunder 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 matters described below to be the key audit matters to be communicatedin our report.
|Sr. Key audit matter description no. ||How the scope of our audit addressed the key audit matter |
|1 Revenue recognition and measurement |
Refer to Note 2 (Accounting policies) for revenue recognition and measurement Note 25 of the Standalone Financial Statements for aggregate revenue from sale of goods recognised as required by the applicable Ind AS. For the year ended March 312019 the Company recognised revenues from sale of goods aggregating to ' 103036 lakh. The Company recognises revenue from sale of goods when the amount of revenue can be reliably measured it is probable that future economic benefits will flow to the entity and the products have been delivered to the customer.
Amounts disclosed as revenue are net of customer returns trade allowance rebates goods and services tax and amount collected on behalf of third parties.
|Our procedures included: |
Accounting policies: Assessing the Company's revenue recognition policies including those related to discounts rebates and returns by comparing with the applicable Ind AS.
Tests of controls: Evaluating the design and testing the operating effectiveness of controls over the accuracy of discounts incentives and rebates and correct timing of revenue recognition.
Tests of details:
- Verifying the supporting documentation for determining that the revenue was recognised in the correct accounting period.
- Comparing the discounts incentives and rebates with the prior year and where relevant performed further inquiries and testing.
- Verifying the manual journals posted to revenue to identify unusual or irregular items.
- To assess the recoverability of trade receivables our procedures included an assessment of whether the provision against or write off impacted our view as to the initial recognition of the related revenue.
|Risk identified: |
Revenue is recognised when control of the underlying goods is transferred to the customer. There may be a risk of revenue being overstated due to pressure from Management to achieve performance targets at the reporting period end.
|Performing substantive analytical procedures: |
Developing an expectation of the current year revenue based on trend analysis and recent market conditions and growth of the Company and compared the same with the actuals accompanied with further inquiries and testing.
We also assessed as to whether the disclosures in respect of revenue were adequate.
|2 Property Plant And Equipment Capitalisation |
Refer to Note 2 (Accounting policies) for Property Plant and Equipment measurement as required by the applicable Ind AS. During the year ending March 31 2019 the Company has capitalised ' 14937 lakh.
Capitalisation of costs and the useful lives assigned to assets are areas of judgement by Management.
These manifest themselves in the following two audit risks:
- the risk that amounts being capitalised do not meet capitalisation criteria; and
- the risk that the useful economic lives assigned to assets are inappropriate.
|Our procedures included: |
Accounting policies: Assessing the Company's capitalisation process and policies by comparing with the applicable Ind AS.
Tests of controls: Evaluating the design and testing the operating effectiveness of controls over the accuracy of amount capitalised estimation of useful life and correct timing of capitalisation. We determined that the operation of the controls provided to us with audit evidence in respect of the capitalisation of costs. Tests of details:
We tested costs capitalised in the year and considered the ageing of assets in the course of construction. We assessed the nature of costs incurred in capital projects through testing of amounts recorded and considering whether the expenditure met the criteria for capitalisation under accounting standards. We found no material misstatements from our testing. We tested the controls over the annual review of asset lives. In addition we tested whether Management's views on asset lives are supportable by considering our knowledge of the business. We also tested whether the prior year asset life review has been appropriately applied and assessed the judgements made by Management in the current year review.
|3. System environment and internal controls |
The IT and business process controls implemented might not be designed implemented or operating in a manner conducive to the effective processing and reporting of financial information.
The fragmented system environment introduces risks related to system access change management and we have accordingly designated this as a focus area in the audit.
The risk of end user devices which are used to store or process the Company's information are encrypted to prevent breach of the Company's information.
The risk of access to Operating system and SAP codes are given to
|Our procedures included: |
Our response to the risks related to the system environment includes both the test of IT and business process controls. We also performed sufficient tests of details as part of our audit.
We tested the Company's controls around access and change management related to key IT systems through our Information Technology specialist.
Information Other than the Financial Statements and Auditor's Report Thereon
The Company's Board of Directors is responsible for the other information. The otherinformation comprises the Director's Report and Report on Corporate Governance but doesnot include the financial statements and our auditor's report thereon which we obtainedprior to the date of this auditor's report.
Our opinion on the financial statements does not cover the other information and we donot express any form of assurance conclusion thereon.
In connection with our audit of the Standalone Financial Statements our responsibilityis to read the other information identified above and in doing so consider whether theother information is materially inconsistent with the Standalone 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 Financial Statements
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 changes in equity and cash flows of the Company inaccordance with the accounting principles generally accepted in India including theAccounting Standards specified under section 133 of the Act.
This responsibility also includes maintenance of adequate accounting records inaccordance with the provisions of the Act for safeguarding the assets of the Company andfor preventing and detecting frauds and other irregularities; selection and application ofappropriate accounting policies; making judgments and estimates that are reasonable andprudent; and design implementation and maintenance of adequate internal financialcontrols that were operating effectively for ensuring the accuracy and completeness ofthe accounting records relevant to the preparation and presentation of the StandaloneFinancial Statements that give a true and fair view and are free from materialmisstatement 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.
The Board of Directors is also responsible for overseeing the Company's financialreporting process.
Auditor's Responsibilities for the Audit of the Standalone Financial Statements
Our objectives are to obtain reasonable assurance about whether the Standalonefinancial statements as a whole are free from material misstatement whether due to fraudor error and to issue an auditor's report that includes our opinion. Reasonable assuranceis a high level of assurancebut is not a guarantee that an audit conducted in accordancewith SAs will always detect a material misstatement when it exists. Misstatements canarise from fraud or error and are considered material if individually or in theaggregate they could reasonably be expected to influence the economic decisions of userstaken on the basis 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
collusion forgery intentional omissions misrepresentations or the override ofinternal 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 ourauditor's report. However future events or conditions may cause the Company to cease tocontinue as a 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 ourauditor's 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 on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditor's Report)Order2016("the Order")issued by the Central Government of India in terms of sub-section (11) of section 143 ofthe Companies Act 2013 we give in the "Annexure A" a statement on the mattersspecified in paragraphs 3 and 4 of the said 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 purpose of our audit.
b) In our opinion proper books of account as required by law have been kept by theCompany so far as appears from our examination of those books.
c) The Balance Sheet the Statement of Profit and Loss the Statement of Changes inEquity and the Cash Flow Statement dealt with by this Report are in agreement with thebooks of account.
d) In our opinion the aforesaid Standalone Financial Statements comply with theAccounting Standards specified under section 133 of the Act read with Rule 7 of theCompanies (Accounts) Rules 2014.
e) On the basis of the written representations received from the Directors of theCompany as on March 31 2019 which were taken on record by the Board of Directors and ascertified by an external practising Company Secretary none of the Directors of theCompany are disqualified as on March 31 2019 from being appointed as a Director in termsof section 164(2) of the Act.
f) With respect to the adequacy of the internal financial controls with reference tofinancial statements of the Company and the operating effectiveness of such controlsrefer to our separate 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 Standalone Financial Statements disclose the impact of pending litigations onthe financial position of the Company. Refer Note 36 to the Standalone FinancialStatements.
ii) The Company has made provision as required under the applicable laws or AccountingStandards for material foreseeable losses if any on long term contracts includingderivative contracts. Refer Notes 2(h) and Note 41.5.2 to the Standalone FinancialStatements.
iii) There were no amounts which were required to be transferred to the InvestorEducation and Protection Fund by the Company
For KALYANIWALLA & MISTRYLLP
Firm Reg. No.: 104607W / W100166
Daraius Z. Fraser
M. No.: 42454
Mumbai: May10 2019.
ANNEXURE A TO THE INDEPENDENT AUDITOR'S REPORT
The Annexure referred to in paragraph 1 under Report on Other Legal andRegulatory Requirements' in our Independent Auditors' Report to the members of the Companyon the Standalone Financial Statements for the year ended March 312019:
Statement on Matters specified in paragraphs 3 and 4 of the Companies (Auditor'sReport) Order 2016:
1. Fixed Assets:
a) The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets.
b) The Company has a program for physical verification of fixed assets at periodicintervals. The Company has conducted a physical verification of fixed assets during theyear. In our opinion the period of verification is reasonable having regard to the sizeof the Company and the nature of its assets. The discrepancies noticed on suchverification are not material and have been properly dealt with in the books of account.
c) According to the information and explanations given to us and on the basis of therecords of the Company examined by us the title deeds of immovable properties are held inthe name of the Company or in the name of the erstwhile Companies that have merged withthe Company.
2. The Management has conducted physical verification of inventory at reasonableintervals and obtained inventory confirmations from third parties in respect of inventorylying with them. The discrepancies noticed on physical verification were not material inrelation to the operations of the Company and the same have been properly dealt with inthe books of account.
3. The Company has not granted any loan secured or unsecured to companies firmslimited liability partnerships or other parties which are listed in the registermaintained under Section 189 of the Companies Act 2013.
4. In our opinion and according to the information and explanations given to us theCompany has not advanced any loans to parties or granted securities covered under Section185 of the Companies Act 2013. In our opinion and according to the information andexplanations given to us and records examined by us the provisions of Section 186 of theCompanies Act 2013 in respect of loans given guarantees given and investments made havebeen complied with by the Company.
5. In our opinion and according to the information and explanations given to us theCompany has not accepted any deposits from the public within the meaning of Sections 73 to76 or any other relevant provisions of the Companies Act and the rules framed thereunder.No order has been passed by the Company Law Board or National Company Law Tribunal orReserve Bank of India or any Court or any other Tribunal.
6. According to the information and explanations given to us in our opinion theCompany has prima facie made and maintained the prescribed cost records pursuant to theCompanies (Cost Records and Audit) Rules 2014 as amended and prescribed by the CentralGovernment under sub section (1) of Section 148 of the Companies Act 2013. We havehowever not made a detailed examination of the cost records with a view to determinewhether they are accurate or complete.
7. Statutory Dues:
a) According to the information and explanations given to us and on the basis of therecords examined by us the Company is regular in depositing undisputed statutory duesincluding Provident Fund Employees' State Insurance Income-tax Goods and Service TaxSales-tax Service Tax Duty of Customs Duty of Excise Value added tax Cess and anyother statutory dues with the appropriate authorities wherever applicable. We have beeninformed that there are no undisputed dues which have remained outstanding as at the lastday of the financial year for a period of more than six months from the date they becamepayable.
b) According to the information and explanations given to us there are no dues ofIncome-tax Goods and Service Tax Sales tax Service tax Duty of Customs Duty ofExciseValue added tax or Cess outstanding on account of any dispute other than thefollowing:
|Name of Statute ||Nature of Dues ||Amount (' Lakhs) ||Period to which the amount relates ||Forum where dispute is pending |
|The Central Excise Act 1944 || |
Excise Duty / Service Tax demands relating to disputed classification assessable values etc. which the Company has contested and is in appeals at various levels. Net of amount paid under protest Rs. 25.22 Lakh
|25.49 ||1992-93 1997 2001-02 ||CESTAT |
|8.39 ||1991-1996 1997-1999 ||Commissioner |
|0.78 ||1993- 1994 1994- 1995 1995- 1996 ||Deputy Commissioner |
|The Customs Tariff Act 1962 ||Custom Duty demands relating to classifications etc. Net of amount paid under protest Rs. 4.69 Lakh ||Nil ||2011-2013 ||CESTAT |
|Central Sales Tax Act 1956 and various State Sales Tax Acts || |
Sales Tax demands.
|358.71 ||1995-1999 2003-2004 ||Appellate Tribunal |
|5.65 ||2001-2002 2004-2005 ||Commissioner (Appeals) |
|Income-tax Act 1961 ||Income-tax demands against which the company has preferred appeals. ||251.81 ||1989-1990 2011-2012 2012-2013 ||Commissioner of income tax appeals |
|Chapter V of the Finance Act 1994 || |
Service Tax relating to disputed classification assessable values etc. which the Company has contested and is in appeals at various levels. Net of amount paid under protest Rs. 5.99 Lakh
|190.90 ||2010-2016 ||CESTAT |
|1.81 ||2015-2018 ||Superintendent Customs & CEX |
|Employees Provident Funds & Miscellaneous Provisions Act 1952 ||Provident Fund Contribution Case (PPD and PCD) ||9.92 ||2002-2004 ||Assistant PF Commissioner |
|Property Tax ||Property Tax demands. ||630.53 ||1995 onwards ||Navi Mumbai Municipal Corporation |
8. According to the information and explanations given to us and based on the documentsand records produced before us there has been no default in repayment of dues to banksfinancial institutions or debenture holders. There are no dues to Government.
9. The Company did not raise any money by way of initial public offer or further publicoffer (including debt instruments) during the year and the term loan obtained by theCompany were applied for the purpose for which the loan were obtained.
10. During the course of our examination of the books of account and records of theCompany to the best of our knowledge and belief and according to the information andexplanations given to us by the Management no fraud by the Company or on the Company byits officers or employees has been noticed or reported during the year.
11. According to the information and explanations given to us and based on ourexamination of the records of the Company the Company has paid/provided for managerialremuneration in accordance with the requisite approvals mandated by the provisions ofsection 197 read with Schedule V to the Act.
12. In our opinion and according to the information and explanations given to us theCompany is not a Nidhi Company.
13. According to the information and explanations given to us and based on ourexamination of the records of the Company transactions with related parties are incompliance with sections 177 and 188 of the Act where applicable and details of suchtransactions have been disclosed in the financial statements as required by the applicableaccounting standards.
14. According to the information and explanations given to us and based on ourexamination of the records of the Company the Company has not made any preferentialallotment or private placement of shares or fully or partly convertible debentures duringthe year.
15. According to the information and explanations given to us and based on ourexamination of the records of the Company the Company has not entered into non-cashtransactions with Directors or persons connected with him.
16. The Company is not required to be registered under section 45-IA of the ReserveBank of India Act 1934.
For KALYANIWALLA & MISTRYLLP
Firm Regn. No.: 104607W / W100166
Daraius Z. Fraser
M. No.: 42454
Mumbai: May 10 2019.
ANNEXURE B TO THE INDEPENDENT AUDITOR'S REPORT
Referred to in Paragraph 2(f)Report on Other Legal and Regulatory Requirements'in our Independent Auditor's Report to the members of the Company on the StandaloneFinancial Statements for the year ended March 312019.
Report on the Internal Financial Controls with reference to financial statements underClause (i) of Sub-section 3 of section 143 of the Companies Act 2013.
We have audited the internal financial controls with reference to financial statementsof NOCIL LIMITED ("the Company") as of March 31 2019in conjunction with ouraudit of the Standalone Financial Statements of the Company for the year ended on thatdate.
Management's Responsibility for Internal Financial Controls
The Company's Management is responsible for establishing and maintaining internalfinancial controls based on the internal control 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 (the "Guidance Note") issued by the Institute of Chartered Accountantsof India (ICAI). These responsibilities include the design implementation and maintenanceof adequate internal financial controls that were operating effectively for ensuring theorderly and efficient conduct of its business including adherence to Company's policiesthe safeguarding of its assets the prevention and detection of frauds and errors theaccuracy and completeness of the accounting records and the timely preparation of reliablefinancial information as required under the Companies Act 2013 (the "Act" orthe "Companies Act").
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 and the Standards on Auditing issued by ICAI anddeemed to be prescribed under section 143(10) of the Companies Act 2013 to the extentapplicable to an audit of internal financial controls both issued by the ICAI. 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 with reference to financial statements was established and maintainedand if such controls operated effectively in all material respects.
Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal financial controls system with reference to financial statements and theiroperating effectiveness. Our audit of internal financial controls with reference tofinancial statements included obtaining an understanding of internal financial controlswith reference to financial statements assessing the risk that a material weakness existsand testing and evaluating the design and operating effectiveness of internal controlbased on the assessed risk. The procedures selected depend on the auditor's judgmentincluding 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 accordance with generally acceptedaccounting principles. A company's internal financial control with reference to financialstatements includes those policies and procedures that:
1) pertain to the maintenance of records that in reasonable detail accurately andfairly reflect the transactions and dispositions of the assets of the company;
2) provide reasonable assurance that transactions are recorded as necessary to permitpreparation of financial statements in accordance with generally accepted accountingprinciples and that receipts and expenditures of the company are being made only inaccordance with authorisations of Management and directors of the company; and
3) provide reasonable assurance regarding prevention or timely detection ofunauthorised acquisition use or disposition of the company's assets that could have amaterial effect on the financial statements.
Inherent Limitations of Internal Financial Controls with reference to FinancialStatements
Because of the inherent limitations of internal financial controls with reference tofinancial statements including the possibility of collusion or improper managementoverride of controls material misstatements due to error or fraud may occur and not bedetected. Also projections of any evaluation of the internal financial controls withreference to financial statements to future periods are subject to the risk that theinternal financial 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 knowledge and according to the explanations given tous the Company hasin 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 31 2019 basedon the internal control with reference to financial statements criteria established by theCompany considering the essential components of internal control stated in the GuidanceNote issued by the Institute of Chartered Accountants of India.
For KALYANIWALLA & MISTRYLLP CHARTERED ACCOUNTANTS
Firm Regn. No.: 104607W / W100166
Daraius Z. Fraser PARTNER M. No.: 42454
Mumbai: May 10 2019.