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Oriental Aromatics Ltd.

BSE: 500078 Sector: Industrials
NSE: OAL ISIN Code: INE959C01023
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OPEN 785.80
PREVIOUS CLOSE 784.65
VOLUME 1101
52-Week high 1009.00
52-Week low 164.00
P/E 25.46
Mkt Cap.(Rs cr) 2,609
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 785.80
CLOSE 784.65
VOLUME 1101
52-Week high 1009.00
52-Week low 164.00
P/E 25.46
Mkt Cap.(Rs cr) 2,609
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Oriental Aromatics Ltd. (OAL) - Auditors Report

Company auditors report

To the Members of Oriental Aromatics Limited

Report on the Audit of Standalone Financial Statements

Opinion

We have audited the accompanying standalone financial statements of Oriental AromaticsLimited ("the Company") which comprises of Balance Sheet as at March 31 2020the Statement of Profit and Loss (including Other Comprehensive Income) the Statement ofChanges in Equity and the Statement of Cash Flow for the year then ended and notes to thefinancial statements including a summary of significant accounting policies and otherexplanatory 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 (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 Companies (Indian Accounting Standards) Rules 2015 as amended("Ind AS") and other accounting principles generally accepted in India of thestate of affairs of the Company as at 31st March 2020 its profits (including othercomprehensive income) changes in equity and its cash flows for the year ended on thatdate.

Basis for Opinion

We conducted our audit in accordance with the Standards on Auditing (SAs) specifiedunder section 143(10) of the Act. Our responsibilities under those Standards are furtherdescribed in the Auditor's Responsibilities for the Audit of the Financial Statementssection of our report. We are independent of the Company in accordance with the Code ofEthics issued by the Institute of Chartered Accountants of India (ICAI) together with theethical requirements that are relevant to our audit of the standalone financial statementsunder the provisions of the Act and the Rules made thereunder and we have fulfilled ourother ethical responsibilities in accordance with these requirements and the Code ofEthics.

We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the standalone financial statements.

Key Audit Matters

Key audit matters are those matters that in our professional judgment were of mostsignificant 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.

Sr.No. Key Audit Matters Auditor's response
1. Goodwill on Amalgamation - Impairment : Our audit procedures in relation to management's impairment assessment included:
The Company is required to annually test the amount of goodwill for impairment. This annual impairment test was significant to our audit because the balance of` 4497.92 lakh relating to a cash generating unit is material to the financial statements. Besides the assessment process is judgmental by nature as it is based on assumptions on future market and/or economic conditions. - Assessing the valuation methodology and obtained understanding of the process followed by the management for determining the recoverable amount of the cash generating unit for which the goodwill is recognized.
The assumptions used included future cash flow projections discount rates perpetuity and sensitivity analysis. - Tested the inputs used in the Model by examining the underlying data and validating the future projections by comparing past projections with actual results including discussions with management relating to these.
- Tested the discount rate and long-term growth rates used in the forecast including comparison to economic and industry forecasts where appropriate
- Performed sensitivity analysis on these key assumptions to assess potential impact of downside in the underlying cash flow forecasts and assessed the possible mitigating actions identified by management.
- We also assessed the disclosures provided by the Company in relation to its annual impairment test in Note no. 49 to the standalone financial statements.
These procedures performed gave us a sufficientevidence to enable us to rely on the accounting for goodwill impairment for the purpose of our audit of the Standalone financial statements.
2. Inventory – existence and valuation
As at March 31 2020 the Company held inventories of Rs.16234.42 Lakh. [Also refer Note no. 9 of the standalone financial statements] Audit procedures performed:
We have performed following alternative audit procedures over inventory existence and valuations.
Inventories existence and valuation was an audit focus area because of nationwide lockdown imposed by the Government of India in view of pandemic coronavirus (COVID 19). (a) Ensuring the effectiveness of the and maintenance of controls over changes in inventory to determine whether the conduct of physical inventory verification at a date other than the date of the financial statement is appropriate and testing of those controls whether those have operated effectively.
As explained by the Management due to COVID 19 related restriction on account of nationwide lockdown physical locations as on the Balance sheet date couldn't be carried out.
We have accordingly designated this as a focus area of the audit. (b) Performing procedures to ensure that the changes in inventory between the last verification date and date of the Balance sheet are properly recorded (Roll back procedures)
(c) Performing substantive analytical procedures to test the correctness of inventory existence and valuation
(d) Testing of accuracy of inventory reconciliations with the general ledgers at period end including test of reconciling items
The procedures performed gave us a sufficientevidence to conclude about the inventory existence and valuation.

Information Other than the Standalone Financial Statements and Auditor's report thereon

The Company's Board of Directors is responsible for the preparation of otherinformation. The Other information comprises the information included in the Board'sReport including Annexures to the Board report and Corporate Governance report but doesnot include the standalone financial statement and our auditor's report thereon.

Our opinion on the standalone financial statements does not cover the other informationand we do not express any form of assurance conclusion thereon.

In connection with our audit of the standalone financial statements our responsibilityis to read the other information and in doing so consider whether the other informationis materially inconsistent with the standalone financial statements or our knowledgeobtained during the course of our audit or otherwise appears to be materially misstated.

If based on the work we have performed we conclude that there is a materialmisstatement of this other information we required to report that fact. We have nothingto report in this regard.

Responsibilities of Management and those charged with Governance for the StandaloneFinancial 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 standalone financial statementsthat give a true and fair view of the financial position financial performance (includingother comprehensive income) changes in equity and cash flows of the Company in accordancewith the accounting principles generally accepted in India including the accountingStandards 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 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 standalone financial statements that give a true and fair view and are free frommaterial misstatement whether due to fraud or error.

In preparing the standalone financial statements the Management 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 unlessmanagement either intends to liquidate the Company or to cease operations or has norealistic alternative but to do so.

The Board of Directors are 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 financialstatements are free from material misstatement whether due to fraud or error and toissue an auditor's report that includes our opinion. Reasonable assurance is a high levelof assurance but is not a guarantee that an audit conducted in accordance with SAs willalways detect a material misstatement when it exists.

Misstatements can arise from fraud or error and are considered material ifindividually or in the aggregate they could reasonably be expected to influence theeconomic decisions of users taken on the basis of these standalone financial statements.

As part of an audit in accordance with SAs we exercise professional judgment andmaintain professional skepticism throughout the audit. We are 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 Act we are also responsible for expressing our opinion on whether the Company hasadequate internal financial control system in place and the operating effectiveness ofsuch controls.

• Evaluate the appropriateness of accounting policies used and the reasonablenessof accounting estimates and related disclosures made by the 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 entity'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 standalone financial statements or if such disclosures are inadequate to modify ouropinion. 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 entity to cease tocontinue as a going concern.

• Evaluate the overall presentation structure and content of the standalonefinancial statements including the disclosures and whether the financial statementsrepresent the underlying transactions and events in a manner that achieves fairpresentation.

Materiality is the magnitude of misstatements in the standalone financial statementsthat individually or in aggregate makes it probable that the economic decisions of areasonably knowledgeable user of the financial statements may be influenced. We considerquantitative materiality and qualitative factors in (i) planning the scope pf our auditwork and in evaluating the results of our work and (ii) To evaluate the effect of antidentified misstatements in the standalone financial statements.

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. Pursuant to 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 Act we give in the Annexure "A" a statement on the matters specified inparagraphs 3 and 4 of the Order.

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

(a) We have sought and obtained all the information and 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 and records.

(c) The Balance sheet the Statement of Profit & Loss (including othercomprehensive income) Statement of Changes in Equity and the Cash Flow Statement dealtwith by this Report are in agreement with the books 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 (Account) Rules 2014.

(e) On the basis of the written representation received from the directors as on March31 2020 taken on records by the Board of Directors none of the directors aredisqualified as on March 31 2020 from being appointed as a Directors 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 Sec 197(16) of the Act as amended:

In our opinion and to the best of our information and according to the explanationsgiven to us the 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 matters to be included in the Auditor's report in accordancewith the rule 11 of the Companies (Audit and Auditors) Rules 2014 in our opinion and tothe best of our information and according to the explanations given to us:

i. The Company has disclosed the impact of pending litigations on its financialperformance in its standalone financial statements. [Refer Note No.- 37 to standalonefinancial statements]

ii. The Company did not have any long-term contracts including derivative contracts forwhich there were any material foreseeable losses.

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

For Bagaria & CO LLP
Chartered Accountants
Firm registration No. -113447W/W-100019
Vinay Somani
Partner
Place: Mumbai Membership No. 143503
Date: June 29 2020 UDIN:-20143503AAAAGI7069

Annexure "A" referred to in "Report on Other Legal and RegulatoryRequirements" section of our report to the members of Oriental Aromatics Limited ofeven date:

i. a. The Company has maintained proper records showing full including quantitativedetails and situation of fixed assets.

b. As explained to us the Company has a phased program for physical verification ofthe fixed assets for all locations. In our opinion the frequency of verification isreasonable considering the size of the Company and nature of its fixed assets. Pursuantto the program of the physical verification of fixed assets physical verification of theassets has been carried out during the year and no material discrepancies were noticed onsuch 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 except for leasehold land having net block of Rs.581.47lakh as at March 31 2020 (as at March 31 2019 - Rs.615.55 lakh) are in the name of theerstwhile entity that got merged with the Company.

ii. The inventories have been physically verified by the management at reasonableintervals during the year. The procedures of physical verification of the inventoriesfollowed by the management are reasonable and adequate in relation to the size of theCompany and nature of its business. As per the information and explanations given to usno material discrepancies were noticed on physical verification of inventories as comparedto book records. Due to Covid 19 related nationwide lockdown the Management was not ableto perform year end physical verification of inventory except at one location (holdings34% of total inventories).

iii. According to the information and explanations given to us the Company has notgranted any loans secured or unsecured to companies firms limited liabilitypartnerships or other parties covered in the register maintained under section 189 of theAct. Accordingly the provisions of clause 3(iii) of the Order are not applicable to theCompany.

iv. In our opinion and according to the information and explanations given to us theCompany has complied with the provisions of section 185 and 186 of the Act to the extentapplicable with respect to the loans and investments made. The Company has not providedany guarantee and security to parties covered under section 185 and 186 of the Act.

v. No deposits have been accepted by the Company within the meaning of directivesissued by RBI (Reserve Bank of India) and Section 73 to 76 or any other relevantprovisions of the Act and rules framed thereunder.

vi. We have broadly reviewed the books of account maintained by the Company pursuant torules made by the central government for the maintenance of cost records under sub section1 of section 148 of the Act in respect of company's products and services and are of theopinion that prima facie the prescribed accounts and records have been made andmaintained. However we have not made a detailed examination of the cost records with aview to determine whether they are accurate and complete.

vii. (a) According to the information and explanations given to us and on the basis ofour examination of the records the Company

is generally regular in depositing undisputed statutory dues including provident fundemployees' state insurance income tax sales tax custom duty cess excise duty servicetax goods and service tax value added tax and other material statutory dues during theyear with the appropriate authorities. No undisputed amounts payable in respect of theaforesaid statutory dues were outstanding as at the last day of the financial year for aperiod of more than six months from the date they became payable.

(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 ofexcise value added tax cess which have been not deposited on account of any disputeexcept the following:

Name of Statue Nature of dues Rs. in lakh Period to which the amount relates Forum where dispute is pending
The Central Sales Tax Act 1956 and Sales Tax / VAT / Entry Tax- Acts of various states Sales tax 497.26 2004-05 to 2006-07 and 2015-16 to 2016-17 High Court Allahabad *
The Central Sales Tax Act 1956 and Sales Tax / VAT / Entry Tax- Acts of various states Sales Tax 5.57 2016-17 Addl. Commissioner Grade-2 (Appeal) Commercial Tax Bareilly
The Central Excise Act 1944 Excise Duty and Penalty 12.39 2007-08 to 2011-12 Central Tax & Service Tax Appellate Tribunal Karnataka

* Include Rs.459.65 Lakh wherein department has filed an appeal.

viii. Based on our audit procedures and on the basis of information and explanationsgiven to us we are of the opinion that the Company has not defaulted in the repayment ofdues to banks and government. The Company did not issue any debentures during the year andin earlier years

ix. In our opinion and according to the information and explanations given to us theterm loans have been applied for the purpose for which they were raised. The Company hasnot raised any money by way of Initial public offer or further public offer (Includingdebt instrument) during the year or in the recent past.

x. During the course of our examination of the books and records of the Companycarried out in accordance with the generally accepted auditing practices in India andaccording to the information and explanations given to us we have neither come across anyinstance of fraud by or on the Company by its officers or employees noticed or reportedduring the year nor have we been informed of such case by the management.

xi. According to the information and explanations given to us and based on ourexamination of the books and records of the Company the Company has paid / provided forthe managerial remuneration in accordance with the requisite approvals mandated by theprovisions of Section 197 read with Schedule V to the Act.

xii. In our opinion and according to the information and explanations given to us theCompany is not a Nidhi Company. Therefore the provisions of clause 3(xii) of the Orderare not applicable to the Company.

xiii. According to the information and explanations given to us and based on ourexamination of the records of the Company all the transactions with related parties arein compliance with section 177 and 188 of the Act and all the details have been disclosedin the standalone financial statements as required by the applicable Accounting Standard(Refer Note 42 to the standalone financial statements).

xiv. 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 or in the recent past. Therefore the provisions of clause 3(xiv) of the Orderare not applicable to the Company.

xv. According to the information and explanations given to us the Company has notentered into any non-cash transactions prescribed under Section 192 of the Act withdirectors or persons connected with them during the year.

xvi. The Company is not required to be registered under section 45-IA of the ReserveBank of India Act 1934.

For Bagaria & CO LLP
Chartered Accountants
Firm registration No. -113447W/W-100019
Vinay Somani
Partner
Place: Mumbai Membership No. 143503
Date: June 29 2020 UDIN:-20143503AAAAGI7069

Annexure "B" referred to in "Report on Other Legal and RegulatoryRequirements" section of our report to the members of The Oriental Aromatics Limitedof even date:

Report on the Internal Financial Controls over Financial Reporting under Clause (i) ofSub-section 3 of Section 143 of the Act

We have audited the internal financial controls over financial reporting of theOriental Aromatics Limited ("the Company") as of March 31 2020 in conjunctionwith our audit of the standalone financial statements of the Company for the year ended onthat date.

Management's Responsibility for Internal Financial Controls

The Board of Directors of the Company is responsible for establishing and maintaininginternal financial controls based on the internal control over financial reportingcriteria established by the Company considering the essential component of internalcontrol stated in the Guidance Note on Audit of Internal Financial Controls over FinancialReporting issued by the Institute of Chartered Accountants of India (ICAI). Theseresponsibilities include the design implementation and maintenance of adequate internalfinancial controls that were operating effectively for ensuring the orderly and efficientconduct of its business including adherence to company's policies the safeguarding ofits assets the prevention and detection of frauds and errors the accuracy andcompleteness of the accounting records and the timely preparation of reliable financialinformation as required under the Act.

Auditors' 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 on Audit of Internal Financial Controls Over Financial Reporting(the "Guidance Note") and the Standards on Auditing deemed to be prescribedunder section 143(10) of the Act to the extent applicable to an audit of internalfinancial controls both applicable to an audit of internal financial controls and bothissued by the ICAI. Those Standards and the Guidance Note require that we comply withethical requirements and plan and perform the audit to obtain reasonable assurance aboutwhether adequate 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 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.

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 entity are being made only in accordance with authorisations ofmanagement; (3) provide reasonable assurance regarding prevention or timely detection ofunauthorised acquisition use or disposition of the entity's assets that could have amaterial effect on the financial statements and (4) also provide us reasonable assuranceby the internal auditors through their internal audit reports given to the organizationfrom time to time.

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 best of our information and according to the explanations given tous the Company has broadly in all material respects an adequate internal financialcontrols system over financial reporting and such internal financial controls overfinancial reporting were operating effectively as at March 31 2020 based on the internalcontrol over financial reporting criteria established by the Company considering theessential Component of internal control stated in the Guidance Note on Audit of InternalFinancial Controls Over Financial Reporting issued by the Institute of CharteredAccountants of India.

For Bagaria & CO LLP
Chartered Accountants
Firm registration No. -113447W/W-100019
Vinay Somani
Partner
Place: Mumbai Membership No. 143503
Date: June 29 2020 UDIN:-20143503AAAAGI7069