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Orient Abrasives Ltd.

BSE: 504879 Sector: Engineering
NSE: ORIENTABRA ISIN Code: INE569C01020
BSE 00:00 | 21 Jan 31.10 -1.10
(-3.42%)
OPEN

32.80

HIGH

32.80

LOW

30.50

NSE 00:00 | 21 Jan 31.10 -1.10
(-3.42%)
OPEN

32.20

HIGH

32.20

LOW

30.70

OPEN 32.80
PREVIOUS CLOSE 32.20
VOLUME 58694
52-Week high 38.60
52-Week low 20.00
P/E 35.34
Mkt Cap.(Rs cr) 372
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 32.80
CLOSE 32.20
VOLUME 58694
52-Week high 38.60
52-Week low 20.00
P/E 35.34
Mkt Cap.(Rs cr) 372
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Orient Abrasives Ltd. (ORIENTABRA) - Auditors Report

Company auditors report

To

The Members of

ORIENT ABRASIVES LIMITED

Report on the Audit ofthe Financial Statements

Opinion

We have audited the accompanying financial statements of Orient Abrasives Limited("the Company") which comprise the balance sheet as at 31st March 2021 thestatement of profit and loss (including other comprehensive income) the statement ofchanges in equity and the statement of cash flows for the year then ended and notes to thefinancial statements including a summary of the significant accounting policies and otherexplanatory information (hereinafter referred to as "the financial statements").

In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid financial statements give the information required by theCompanies Act 2013 ("the Act") in the manner so required and give a true andfair view in conformity with the Indian Accounting Standards prescribed under section 133of the Act read with the Companies (Indian Accounting Standards) Rules 2015 as amended('Ind AS") and the other accounting principles generally accepted in India of thestate of affairs of the Company as at 31st March 2021 its profit and total comprehensiveincome changes in equity and its cash flows for the year ended on that date.

Basis for Opinion

We conducted our audit of the financial statements in accordance with the Standards onAuditing (SAs) specified under Section 143(10) of the Act. Our responsibilities underthose Standards are further described in the Auditor's Responsibilities for the Audit ofthe Financial 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 ("the ICAI") together with the ethical requirements that are relevant toour audit of the financial statements under the provisions of the Act and the Rules madethereunder and we have fulfilled our other ethical responsibilities in accordance withthese requirements and the ICAI's Code of Ethics. We believe that the audit evidence wehave obtained is sufficient and appropriate to provide a basis for our opinion on thefinancial statements.

Emphasis of matter

We draw your attention to Note 44 to financial statements which explains theuncertainties and the management's assessment of the financial impact due to regularlock-downs and other restrictions and condition related to the COVID-19 pandemicsituation for which definitive assessment of the impact in the subsequent period ishighly dependent upon the circumstances as they evolve.

Our opinion is not modified in respect of this matter.

Key Audit Matters

Key audit matters are those matters which 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 inour forming our opinion thereon and we do not provide a separate opinion on thesematters. We have the matters described below to be the key audit matters to becommunicated in our report:

Key audit matters How our audit addressed the key audit matter
1. Overdue statutory payables – Royalty contribution to District Mineral Fund (DMF) and Contribution to National Mineral Exploration Trust (NMET)
The Company is liable to pay royalty liability on dispatch of extracted material from its mines. The Company is also required to make contribution to District Mineral Fund (DMF) and National Mineral Exploration Trust (NMET) as per various government notification in this regard. Our audit procedures included the following:
As at year end the Company is carrying liability in its books of INR 571 lacs in respect of royalty and other contributions against which there is an advance payment of INR 166 lacs as at March 31 2021. The liability amount includes contribution payable for past 1-4 years as per the books. l We have verified the arithmetical accuracy of the recognition of the royalty DMF and NMET liabilities in the book based on dispatch of goods from mines as per the records maintained by the Company.
The Company has also received demand letter dated August 16 2018 from the Office of District Mineral Foundation and the Geology and Mining Department (District Mineral Foundation (Cell)) against the unpaid contribution and interest thereof with respect to the dispatch of bauxite ores from mines. The Company has filed petition against such demand which is pending in the Honorable Gujarat High Court and the management believes that the decision will come in favor of the company. l We have verified measurement and completeness of the Company's obligation with respect of Royalty NMET and DMF;
l We have discussed the Company's policy regarding deposit of Royalty NMET and DMF dues and as per management representation the royalty is deposited in advance at the rate prescribed by Commissioner of Geology and Mining (CGM) whereas the royalty payable in the books of accounts is on account of difference between the rates prescribed by CGM and Indian Bureau of Mines (IBM).
Apart from above the Company has also received orders from department of Udyog and Khan Gandhinagar up to March 2018 with respect to LME based royalty refund (net of payable) of INR 129 lacs. The refund is not yet received by the Company. l The management informed that the Company has also filed petition with honorable High Court of Gujarat against the demand letter from the Office of District Mineral Foundation and the Geology and Mining Department (District Mineral Foundation (Cell)) as the company is of the view that the contribution is on production of bauxite ores after applicability of law w.e.f. September 16 2015 instead of dispatch of bauxite ores from mines which were extracted before September 16 2015.
Since the royalty and other contributions are payable upon dispatch of material from mines the pending liability has been considered as key audit matter in terms of various government notification. l With respect to net refund orders received from department of Udyog and Khan Gandhinagar the Company will account for the same on receipt of such amount on the principles of prudence.
We have ensured completeness of liabilities and relied on management representation as regards compliance of the Acts/notifications.
2. Advance given to mining contractors pending adjustment
The Company extracts raw bauxite from its mines which are taken on lease. The company get the raw bauxite extracted through various sub-contractors which includes extraction sizing sorting truck loading activities etc. at various mines. Our audit procedures included the following:
The Company accounts for the inventories of raw bauxite in the books when all the activities of the sub-contractors gets completed and material is readily usable. l We have reviewed the Company's internal control as regards accounting of advance to sub-contractors and accounting of purchase of material.
As at March 31 2021 the extracted stock of raw bauxite which remain to be sorted and weighment thereof is not recorded in the books. l We have obtained the confirmation received from the subcontractors for the balance outstanding as at March 31 2021 which also mentions mining activities are in progress.
Against the contracted activities which are currently in progress the Company has outstanding advance of Rs. 908 lacs as at reporting date paid to sub-contractors towards various activities at mines. l Per contractors confirmation and management representation at the reporting year end as mining activities are in progress and hence the amount paid to the contractors are treated as advances since the mining services obligations are not yet completed.
Treatment of amount paid to sub-contractor as an advance pending adjustment was determined to be key matter in our audit of the Ind AS financial statements. We have also verified the amount of advance settled during the year based on receipt of raw bauxite and details of additional advance paid during the year.

Information Other than the Financial Statements and Auditor's Report Thereon

The Company's Board of Directors is responsible for the preparation of the otherinformation. The other information comprises the information included in the Board'sReport including Annexures to Board's Report Management Discussion and AnalysisCorporate Governance Report Shareholder's Information but does not include the financialstatements and auditor's report thereon. The Board's Report and other information areexpected to be made available to us after 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 financial statements our responsibility is to readthe other information identified above when it becomes available and in doing soconsider whether the other information is materially inconsistent with the financialstatements or our knowledge obtained during the course of our audit or otherwise appearsto be materially misstated.

When we read the aforesaid reports and information if we conclude that there ismaterial misstatement therein we are required to communicate the matter to those chargedwith governance.

Management's Responsibility for the Financial Statements

The Company's Board of Directors is responsible for the matters stated in Section134(5) of the Act with respect to the preparation of these financial statements that givea true and fair view of the financial position financial performance and cash flows ofthe Company in accordance with the Ind AS and accounting principles generally accepted inIndia. This responsibility also includes maintenance of adequate accounting records inaccordance with the provisions of the Act for safeguarding of the assets of the Companyand for preventing and detecting frauds and other irregularities; selection andapplication of appropriate accounting policies; making judgments and estimates that arereasonable and prudent; and design implementation and maintenance of adequate internalfinancial controls that were operating effectively for ensuring the accuracy andcompleteness of the accounting records relevant to the preparation and presentation ofthe financial statements that give a true and fair view and are free from materialmisstatement whether due to fraud or error.

In preparing the financial statements management is responsible for assessing theCompany's ability to continue as a going concern disclosing as applicable mattersrelated to going concerns and using the going concern basis of accounting unlessmanagement either intends to liquidate the Company or to cease operations or has norealistic alternative but to do so.

The Board of Directors is also responsible for overseeing the Company's financialreporting process.

Auditors' Responsibility 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 highlevel of assurance but is not a guarantee that 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:

l Identify and assess the risks of material misstatements of the financial statementswhether due to fraud or error design and perform audit procedures responsive to thoserisks and obtain audit evidence that is sufficient and appropriate to provide a basis forour opinion. The risk of not detecting a material misstatement resulting from fraud ishigher than for one resulting from error as fraud may involve collusion forgeryintentional omissions misrepresentations or the override of the internal control.

l Obtain an understanding of internal financial controls relevant to the audit in orderto design audit procedures that are appropriate in the circumstances. Under section143(3)(i) of the Act we are also responsible for expressing our opinion on whether theCompany has adequate internal financial controls system in place and the operatingeffectiveness of such controls.

l Evaluate the appropriateness of accounting policies used and the reasonableness ofaccounting estimates and related disclosures made by the management.

l Conclude on the appropriateness of management's use of the going concern basis ofaccounting 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 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.

l Evaluate the overall presentation structure and content of the financial statementsincluding the disclosure and whether the financial statements represent the underlyingtransactions 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) Order 2016 ("the Order")issued by the Central Government of India terms of subsection (11) of section 143 of theAct we give in the Annexure – A a statement on the matters specified in clause 3and 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 purpose 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 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 AccountingStandards specified 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 on 31st March2021 and taken on record by the Board of Directors none of the directors is disqualifiedas on 31st March 2021 from being appointed as a director in terms section 164(2) of theAct;

f) With respect to the adequacy of internal financial controls over financial reportingof the Company and operating effectiveness of such controls our separate report inannexure – B may be referred;

g) In our opinion and to the best of our information and according to the explanationsgiven to us remuneration paid by the Company to its directors during the year is inaccordance with the provisions of section 197 of the Act.

h) With respect to the other matters to be included in the 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 explanation given to us:

i. The Company has disclosed the impact of pending litigations on its financialposition in its financial statements;

ii. The Company did not have any long-term contracts including derivatives contractsfor which there were any material foreseeable losses;

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

For SANGHAVI & CO.
Chartered Accountants
FRN: 109099W
Bhavnagar MANOJ GANATRA
May 11 2021 Partner
Membership No. 043485
UDIN: 21043485AAAAJR1821

ANNEXURE - A TO THE INDEPENDENT AUDITORS' REPORT

(Referred to in paragraph 1 under 'Report on Other Legal and Regulatory Requirements'section of our report of even date)

On the basis of such checks as we considered appropriate and in terms of informationand explanations given to us we state that:

1 In respect of fixed assets:

a. The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets.

b. All fixed assets have not been physically verified by the management during the yearbut there is a regular programme of verification of property plant and equipment over theperiod of three years which in our opinion is reasonable having regard to the size ofthe Company and the nature of its assets. No material discrepancies were noticed on suchverification.

c. The title deeds of immovable properties are held in the name of the Company.

2 The inventories were physically verified by the management at reasonable intervalsduring the year. No material discrepancies were noticed on such physical verificationcarried out by the Company.

3 The Company has not granted any loans secured or unsecured to companies firmslimited liability partnerships or other parties covered in the register maintained undersection 189 of the Act. Accordingly the provisions of clause 3(iii)(a) (b) and (c) ofthe Order are not applicable to the Company.

4 There are no loans investments guarantees and securities in respect of whichprovisions of section 185 and 186 of the Act are applicable.

5 The Company has not accepted any deposits within the meaning of the provisions ofsection 73 to 76 or any other relevant provisions of the Act and the rules framedthereunder with regard to the deposits accepted from the public. Accordingly theprovisions of clause 3(v) of the Order are not applicable.

6 We have broadly reviewed the cost records maintained by the Company pursuant toSection 148(1) of the Companies Act 2013 and are of the opinion that prima facie theprescribed cost records have been maintained. We have however not made a detailedexamination of the cost records with a view to determine whether they are accurate orcomplete.

7 In respect of statutory and other dues:

a. The Company has generally been regular in depositing undisputed statutory duesincluding Provident Fund Employees State Insurance Income Tax Cess Goods & ServiceTax and other material statutory dues to the extent applicable with the appropriateauthorities during the year except for a few cases related to income-tax and providentfund.

b. Undisputed dues in respect of following liabilities were outstanding at the year endfor a period of more than six months from the date they became payable:

Name of the statute Nature of dues ` In lacs Period to which the amount relates
Mines and Minerals (Development and Regulation) (Amendment) Act 2015 Payment of Royalty 141.15 Various Years
Mines and Minerals (Contribution to District Mineral Foundation) Rules 2015 Contribution to District Mineral Foundation 242.65 2015-16 to 2018-19
Mines and Minerals (Development and Regulation) (Amendment) Act 2015 Contribution to National Mineral 2015-16 to 2018-19
Mines and Minerals (Development and Regulation) Exploration Trust Payment of royalty 21.66
(Amendment) Act 2015 as London Metal Exchange (LME) prices Dead Rent and Surface Rent 136.18* 2008-09 to 2017-18

* ` 129 lacs refundable on net basis for all the mines considered together. c. Thereare no statutory dues which have not been deposited on account of dispute except for thefollowings:

Name of the statute Nature of dues ` In lacs Forum where dispute is pending
Customs Act 1962 Custom Duty 54.51 Commissioner of Customs (Appeals)
Customs Act 1962 Custom Duty 1.59 Additional Commissioner of Customs
Income Tax Act 1961 Income Tax 909.07 The High Court of Gujarat
Income Tax Act 1961 Income Tax 130.97 Income Tax Appellate Tribunal
Income Tax Act 1961 Income Tax 278.15 Commissioner of Income Tax (Appeals)
Mines and Minerals (Contribution to District Minerals Foundation) Rules 2015 Royalty 275.02* Office of District Minerals Foundation and the Geology and Mining Department (District Minerals Foundation (Cell))
Mines and Minerals (Contribution to District Minerals Foundation) Rules 2015 Royalty 18.72 Office of District Minerals Foundation and the Geology and Mining Department {District Minerals Foundation (Cell)}

* ` 33 lacs paid under protest as at 31st March 2021.

8 The Company has not defaulted in repayment of loans or borrowing to banks. TheCompany has not obtained any borrowings from any financial institutions or government orby way of debentures.

9 Terms loans obtained by the Company have been applied for the purpose for which theywere obtained. The Company has not raised any money during the year by way of publicoffer (including debt instruments).

10 To the best of our knowledge and belief and according to the information andexplanations given to us no fraud on or by the Company or on the Company by its officersor employees was noticed or reported during the year.

11 Managerial remuneration paid or provided by the Company during the year is inaccordance with the requisite approvals mandated by the provisions of Section 197 readwith Schedule V to the Act.

12 Since the Company is not a Nidhi Company the provisions of clause 3 (xii) of theOrder are not applicable to the Company.

13 All transactions with the related parties are in compliance with Section 177 and 188of the Act and the details have been disclosed in the financial statements as required bythe applicable accounting standards.

14 The Company has not made any preferential allotment or private placement of sharesor fully or partly convertible debentures during the year under review.

15 The Company has not entered into any non-cash transactions during the year withdirectors or persons concerned with him.

16 The Company is not required to be registered under Section 45-IA of the Reserve Bankof India Act 1934.

For SANGHAVI & CO.
Chartered Accountants
FRN: 109099W
Bhavnagar MANOJ GANATRA
May 11 2021 Partner
Membership No. 043485
UDIN: 21043485AAAAJR1821

ANNEXURE - B TO THE INDEPENDENT AUDITORS' REPORT

(Referred to in paragraph 2 (f) under 'Report on Other Legal and RegulatoryRequirements' section of our report of even date)

We have audited the internal financial controls over financial reporting of OrientAbrasives Limited ("the Company") as of 31 March 2021 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

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 Reporting("the Guidance Note") issued by the Institute of Chartered Accountants of India("the ICAI"). These responsibilities include the design implementation andmaintenance of adequate internal financial controls that were operating effectively forensuring the orderly and efficient conduct of its business including adherence tocompany's policies the safeguarding of its assets the prevention and detection of fraudsand errors the accuracy and completeness of the accounting records and the timelypreparation of reliable financial information as required under the Companies Act 2013.

Auditor's Responsibility

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 and the Standards on Auditing issued by the ICAI and prescribedunder section 143(10) of the Companies Act 2013 to the extent applicable to an audit ofinternal financial controls. Those Standards and the Guidance Note require that we complywith ethical requirements and plan and perform the audit to obtain reasonable assuranceabout whether adequate internal financial controls over financial reporting wasestablished and maintained and if such controls operated effectively in all materialrespects.

Our audit involves performing procedures to obtain audit evidence about theadequacy of the internal financial controls system over financial reporting and theiroperating effectiveness. Our audit of internal financial controls over financialreporting included obtaining an understanding of internal financial controls overfinancial reporting assessing the risk that a material weakness exists and testing andevaluating the design and operating effectiveness of internal control based on theassessed risk. The procedures selected depend on the auditors' judgement including theassessment of the risks of material misstatement of the financial statements whether dueto 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 controlssystem over 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 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 authorizations of management and directors of the company; and

(3) Provide reasonable assurance regarding prevention or timely detection ofunauthorized acquisition use or disposition of the company's assets that could have amaterial 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.

Opinion

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 31 March 2021 based on theinternal control over financial reporting criteria established by the Company consideringthe essential components of internal control stated in the Guidance Note issued by theICAI.

For SANGHAVI & CO.
Chartered Accountants
FRN: 109099W
Bhavnagar MANOJ GANATRA
May 11 2021 Partner
Membership No. 043485
UDIN: 21043485AAAAJR1821

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