To the Members of omkar speciality Chemicals Limited report on the Financial statements
We have audited the accompanying financialstatements of oMKArspe CIALItY CHeMICALsLIMIted ("the Company") which comprise of the Balance Sheet as at March 312017 the Statement of Profit Loss Cash Flow Statement for the year then andended and a summary of significant accounting policies and other explanatory information.
Management's responsibility for the 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 financial statements that give a true and fair view of the financial positionfinancial performance and cash flows of the Company in accordance with the accountingprinciples generally accepted in India including the Accounting Standards specified underSection 133 of the Act read with Rule 7 of the Companies (Accounts) Rules 2014. Thisresponsibility also includes maintenance of adequate accounting records in accordance withthe provisions of the Act for safeguarding the assets of the Company and for preventingand detecting frauds and other irregularities; selection and application of appropriateaccounting policies; making judgments and estimates that are reasonable and prudent; anddesign implementation controls that were operating effectively for ensuring the accuracyand completeness andmaintenanceofadequateinternalfinancial of the accounting recordsrelevant to the preparation and presentation of the financial statements that are freefrom material misstatement whether due to fraud or error.
Our responsibility is to express an opinion on these financial statements based on ouraudit
We have taken into account the provisions of the Act the accounting and auditingstandards and matters which are required to be included in the audit report under theprovisions of the Act and the Rules made there under.
We conducted our audit in accordance with the Standards on Auditing specified underSection 143(10) of require that we comply with ethical requirements and plan and performthe audit to obtain reasonable assurance about whether the financial statements are freefrom material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts andthe disclosures in the financial 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. In making those risk assessments the auditorconsiders internal financial control relevant to the Company's preparation of thefinancial statements that give a true and fair view in order to design audit proceduresthat are appropriate in the circumstances but not for the purpose of expressing anopinion on whether the Company has in place an adequate internal financial controls systemover financial reporting and the operating effectiveness of such controls. An audit alsoincludes evaluating the appropriateness of the accounting policies used and thereasonableness of the accounting estimates made by the Company's Directors as well asevaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the financial statements opinion
In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid financial give the information required by 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 March31 2017 and its Statement of Profit and Loss and its Cash Flow for the year ended onthat date. emphasis of Matters
We draw attention to the Note no 27 of the financial statement for the year ended onMarch 31 2017 in respect of the Schemes of Arrangement (Merger) between Omkar SpecialityChemicals Limited and Lasa Laboratory Pvt. Ltd. Urdhwa Chemical Company Pvt. Ltd.Rishichem Research Ltd. Desh Chemicals Pvt. Ltd. and Demerger of API Division to LasaSupergenerics Ltd. as approved by The Honourable National Company Law Tribunal Mumbaithe assets and liabilities of Lasa Laboratory Pvt. Ltd. Urdhwa Chemical Company Pvt.Ltd. Rishichem Research Ltd. Desh Chemicals Pvt. Ltd. have been taken over by OmkarSpeciality Chemicals Ltd. at their fair market value. If the scheme of arrangement ofdemerger had not been effected the Net Worth of the demerged company for the year wouldhave been higher by Rs. 7366.30 lakhs.
report on other Legal and regulatory requirements
1. As required by the Companies (Auditor's Report) Order 2016 ("the Order")as amended issued by the Central Government of India in terms of sub-section (11) ofsection 143 of the Act we give in the "Annexure A" a statement onthe matters 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 andobtained all the information and explanations which to the best of our knowledge andbelief were necessary for the purpose of our audit; b. in our opinion proper books ofaccount as required by law have been kept by the Company so far as it appears from ourexamination of those books; c. the Balance Sheet the Statement of Profit and Loss and theCash Flow Statement dealt with by this Report are in agreement with the books of accountsd. in our opinion the aforesaid financial statements comply with the Accounting Standardsspecified under section 133 of the Act read with Rule 7 of the Companies (Accounts)Rules 2014. e. On the basis of written representations received from the directors as onMarch 31 2017 taken on record by the Board of Directors none of the directors isdisqualified as on March 31 2017 from being appointed as a director in terms of Section164 (2) of the Act. f. With respect to the adequacy of the internal financial controlsover financial reporting of the Company and the operating effectiveness of such controlsrefer to our separate Report in "Annexure B". g. With respect to theother matters to be included in the Auditor's Report in accordance with Rule 11 of theCompanies (Audit and Auditors) Rules 2014 in our opinion and to the best of ourinformation and according to the explanations given to us: i. The Company has a pendinglitigation by way of winding up petition filed before Hon. High Court Mumbai by M/s. MIQ
Logistics India Pvt. Ltd. for recovery of their outstanding dues amounting to Rs.3074905/-. ii. The Company did not have any long-term contracts including derivativecontracts for which there were any material foreseeable losses. iii. There were no amountswhich were required to be transferred to the Investor Education and Protection Fund by theCompany.
"Annexure A" to tHe Independent AudItors' report
Referred to in paragraph 1 under the heading Report on Other Legal &Regulatory Requirement' of our report of even date to the financial statements of theCompany for the year ended March 31 2017: (i) (a) The Company has maintained properrecords showing full particulars including quantitative details and situation of fixedassets (except for certain items of fixed assets and purchases of fixed assets duringthe year the quantitative details and the situation of the fixed assets we wereinformed are being updated.)
(b) A substantial portion of the fixed assets have been physically verified by themanagement during the year and in our opinion the frequency of verification is reasonablehaving regard to the size of the Company and Nature of Business. No material discrepancieswere noticed on such verification.
(c) According to the information and explanations given to us and on the basis of ourexamination of the records of the Company the title deeds of immovable properties areheld in the name of the company.
(ii) The inventories have been physically verified during the year by the management.In our opinion the frequency of verification is reasonable. On the basis of examinationof inventory records in our opinion and according to the information and explanationsgiven to us the Company is maintaining proper records of inventory. The discrepanciesnoticed on verification between the physical stocks and the book records were not materialand have been properly dealt within the books of accounts. (iii) The Company has notgranted any loan secured or unsecured to Companies firms or other parties covered inthe register maintained under section 189 of the Companies Act 2013.
(iv) The Company has not accepted any deposit from the public.
(v ) We have broadly reviewed the cost records maintained by the company specified bythe Central Government under sub-section (l) of section 148 of the Companies Act 2013 andare of the opinion that prima facie the prescribed records have been maintained. Howeverwe have not made a detailed examination of the cost records with a view to determinewhether they are accurate or complete.
(vii) (a) According to the records of the Company and as per the information andexplanations given to us the Company is generally regular in depositing undisputedstatutory dues including Provident Fund Investor Education and Protection FundEmployees' State Insurance Sales tax Wealth tax Service tax Duty of Customs Duty ofExcise value added tax cess and other statutory dues with appropriate authorities (except)Income Tax liability for the Assessment year 2015-16 for which return was filed with taxpayable of Rs. 357.16 lakhs. Out of which Rs. 101.28 lakhs is Rs. 255.88 lakhs andinterest liability was due on the same was approximately Rs. 61.41 lakhs as on 31stMarch 2017. (b) According to the information and explanation given to us and recordsexamined by us there are no disputed dues of Sales Tax Wealth Tax Service Tax CustomDuty Excise Duty and Cess outstanding as on 31st March 2016 except followingdues raised by the income Tax Department Sales tax Department which are disputed by theCompany:
| || || ||(Rs. In Lakhs) |
|Assessment year ||Total demand ||Payment made ||Particulars |
|Income tax || || || |
|2009-10 ||41.32 ||29.75 ||Appellate Tribunal referred back to Assessing officer. The demands referred |
|2010-11 ||119.74 ||139.00 || |
| || || ||Here in are Sec 271(1)(c ) demands. |
|2011-12 ||97.50 ||71.25 || |
|2012-13 ||28.36 ||15.00 ||Appeal is filled at ITAT. |
|Cst || || || |
|2010-11 ||17.42 ||10.25 ||Stay granted |
|2011-12 ||59.13 ||4.37 ||Stay granted |
(viii)In our opinion and according to the information and explanations given to us theCompany has not defaulted in repayment of dues to a financial institution or banks ordebenture holders.
(ix) The Company did not raise any money by way of initial public offer or furtherpublic offer (including debt instruments) and term loans during the year. Accordinglyparagraph 3 (ix) of the Order is not applicable.
(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 thecourse of our audit.
(xi) As per the information and explanation given to us the Company has paid /provided for managerial remuneration as per the provisions of Section 197 of the CompaniesAct 2013.
(xii) In our opinion and according to the information and explanations given to us theCompany is not a Nidhi company. Accordingly paragraph 3(xii) of the Order is notapplicable.
(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 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. (xiv) According to the information and explanations given to us andbased on our examination of the records of the Company the Company has not made anypreferential allotment or private placement of shares or fully or partly convertibledebentures during the year.
(xv) 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. Accordingly paragraph 3(xv) ofthe Order is not applicable.
"Annexure B" to the Independent Auditor's report of even date on theFinancial statements of omkar speciality Chemicals Limited Report on the InternalFinancial Controls under Clause (i) of sub-section 3 of section 143 of the Companies Act2013 ("the Act")
We have audited the internal financial controls over financial reporting of OmkarSpeciality Chemicals Limited ("the Company") as of March 31 2017 in conjunctionwith our audit of the financial statements of the Company for the year ended on that date.
Management's responsibility for Internal Financial Controls
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". 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 Companies Act 2013.
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 issued by ICAI and deemedto be prescribed under section 143(10) of the Companies Act 2013 to the extentapplicable to an audit of internal financial controls both applicable to an audit ofInternal Financial Controls and both issued by the Institute of Chartered Accountants ofIndia. 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.
Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe 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 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 of therisks of material misstatement of the financial statements whether due to fraud or error.
We believe that the audit evidence we have obtained is sufficient and appropriate 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
A company's internal financial control over financial reporting is a process designedto provide reasonable assurance regarding the reliability of financial reporting and thepreparation of financial statements for external purposes in accordance with generallyaccepted accounting principles. A company's internal financial control over financialreporting includes those policies and procedures that (1) pertain to the maintenance ofrecords that in reasonable detail accurately and fairly reflect the transactions anddispositions of the assets of the company; (2) provide reasonable assurance thattransactions are recorded as necessary to permit preparation of financial statements inaccordance with generally accepted accounting principles and that receipts andexpenditures of the company are being made only in accordance with authorizations 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.
Inherent Limitations of Internal Financial Controls over Financial reporting
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.
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 2017 based on"the internal control over financial reporting criteria established by the Companyconsidering the essential components of internal control stated in the Guidance Note onAudit of Internal Financial Controls Over Financial Reporting issued by the Institute ofChartered Accountants of India".
| ||For J.p.J. AssoCIAtes |
| ||Chartered Accountants |
| ||Firm Registration No.113012W |
| ||CA sAndesH deoruKHKAr |
| ||Partner |
| ||M.No.: 044397 |
|Place: Mumbai || |
|Dated: May 20 2017 || |