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Oriental Aromatics Ltd.

BSE: 500078 Sector: Industrials
NSE: OAL ISIN Code: INE959C01023
BSE 11:25 | 09 Jul 265.00 0.80
(0.30%)
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271.00

HIGH

277.90

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265.00

NSE 11:19 | 09 Jul 265.05 0.60
(0.23%)
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269.00

HIGH

272.10

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OPEN 271.00
PREVIOUS CLOSE 264.20
VOLUME 2914
52-Week high 299.50
52-Week low 117.05
P/E 10.28
Mkt Cap.(Rs cr) 892
Buy Price 264.50
Buy Qty 31.00
Sell Price 265.80
Sell Qty 14.00
OPEN 271.00
CLOSE 264.20
VOLUME 2914
52-Week high 299.50
52-Week low 117.05
P/E 10.28
Mkt Cap.(Rs cr) 892
Buy Price 264.50
Buy Qty 31.00
Sell Price 265.80
Sell Qty 14.00

Oriental Aromatics Ltd. (OAL) - Auditors Report

Company auditors report

To The Members of Oriental Aromatics Limited

(Formerly known as Camphor and Allied Products 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 2019the 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 informationRs..

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 2019its 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 FinancialStatements section of our report. We are independent of the Company in accordance withthe Code of Ethics issued by the Institute of Chartered Accountants of India (ICAI)together with the ethical requirements that are relevant to our audit of the standalonefinancial statements under the provisions of the Act and the Rules made thereunder and wehave fulfilled our other ethical responsibilities in accordance with these requirementsand the Code of Ethics.

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.

Key Audit Matters Auditor’s response
Commissioning of New Plant: Our audit approach consisted testing of design and operating effectiveness of internal controlsadopted by the Company and substantive testing around the materials consumption accounting procedures and computing inventories.
During the year the Company has commissioned a multiproduct plant having advanced and highly automated technology to produce Specialty Aroma Chemicals. Considering that commissioning of such new plant involves multiple processes with the risk of materials movement and its accounting involving: To address the risk of material consumption and inventory accounting our audit procedures includes amongst other:
Defining of controls in various processes with regard to issue of materials production processes and input output ratios a. Analyzing the inventory consumption pattern valuation process and practices
Continuous refining of Bill of Material (BOM) in the system as the production efficiency/ experiences built up b. Discussed with the Management and assessed the physical verification process adopted by the Company
Management judgement and estimates defining the yields.
We have accordingly designated this as a focus area in the audit. The combination of these tests of controls and procedures performed gave us a sufficient evidence to enable us to rely on the materials accounting for the purpose of our audit of the Standalone financial statements.

Information Other than the Standalone Financial Statements and Auditor’s reportthereon

The Company’s Board of Directors is responsible for the preparation of otherinformation. The Other information comprises the information included in the ManagementDiscussion and Analysis Board’s Report including Annexures to the Board report andCorporate Governance reportbut does not include the standalone financial statement andour 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 asapplicable matters related to going concern and using the going concern basis ofaccounting unless management either intends to liquidate the Company or to ceaseoperations or has no realistic 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 highlevel of assurance but is not a guarantee that an audit conducted in accordance with SAswill always detect a material misstatement when it exists.

Misstatements can arise 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 also:

Identify and assess the risks of material misstatement of the financialstatements whether due to fraud or error design and perform audit proceduresresponsive to those risks and obtain audit evidence that is sufficient and appropriate toprovide a basis for our opinion. The risk of not detecting a material misstatementresulting from fraud is higher than for one resulting from error as fraud may involvecollusion forgery intentional omissions misrepresentations or the override of internalcontrol.

Obtain an understanding of internal control relevant to the audit inorder to 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 control system in place and the operatingeffectiveness of such controls.

Evaluate the appropriateness of accounting policies used and thereasonableness of accounting estimates and related disclosures made by themanagement.

Conclude on the appropriateness of Management’s use of the goingconcern basis of accounting and based on the audit evidence obtained whether amaterial uncertainty exists related to events or conditions that may cast significantdoubt on the entity’s ability to continue as a going concern. If we conclude that amaterial uncertainty exists we are required to draw attention in our auditor’sreport to the related disclosures in the standalone financial statements or if suchdisclosures are inadequate to modify our opinion. Our conclusions are based on the auditevidence obtained up to the date of our auditor’s report. However future events orconditions may cause the entity to cease to continue as a going concern.

Evaluate the overall presentation structure and content of the standalonefinancial statements including the disclosures and whether the financialstatements represent 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 thematter or when 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.

Other Matter:

Opening balances has been taken on the basis of the financial statements for the yearended 31st March 2018 audited by another firm of Chartered Accountants who have issuedan unmodified report dated 31st May 2018.

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 sub-section (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 2019 taken on records by the Board of Directors none of the directors aredisqualified as on March 31 2019 from being appointed as 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 andto 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 matters to be included in the Auditor’s report inaccordance with the rule 11 of the Companies (Audit and Auditors) Rules 2014 in ouropinion and to the 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.-35 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.

ForBagaria & CO LLP
Chartered Accountants
Firm registration No. – 113447W/W-100019
Vinay Somani
Place: Mumbai Partner
Date: May 27th 2019 Membership No. 143503

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. The fixed assets are physically verified by the Management according to a phasedprogramme designed to cover all the items over a period of 2 years which in our opinionis reasonable considering the size of the Company and nature of its fixed assets.Pursuant to the program of the physical verification of fixed assets physicalverification of the assets has been carried out during the year and no materialdiscrepancies were 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 except for leasehold land having net block of Rs. 615.55lakh as at March 31 2019 are in the name of the entity that got merged with the Company.

ii. The inventories have been physically verified by the management at reasonableintervals during the year except for goods in transit and those lying with thirdparties.The procedures of physical verification of the inventories followed by themanagement are reasonable and adequate in relation to the size of the Company and natureof it’s business. As per the information and explanations given to us no materialdiscrepancies were noticed on physical verification of inventories as compared to bookrecords.

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 in respect ofthe loans and investment made. The Company has not provided any guarantees or security toparties 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. On the basis of records produced we are of the opinion that prima facie the costrecords and accounts prescribed by the Central Government under Section 148(1) of the Acthave been maintained. However we are not required to and thus have not carried out anydetailed examination of such accounts and records with a view to ascertain whether theseare 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 undisputedstatutory dues including provident fund employees’ state insurance income taxsales tax custom duty cess excise duty service tax goods and service tax value addedtax and other material statutory dues during the year with the appropriate authorities.No undisputed amounts payable in respect of the aforesaid statutory dues were outstandingas at the last day of the financial year for a period of more than six months from thedate 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 Amount (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 37.62 2004-05 to 2006-07 High Court Allahabad
The Central Excise Act 1944 Excise Duty and Penalty 12.39 2007-08 to 2011-12 Central Tax & Service Tax Appellate Tribunal Karnataka

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 financial institutions banks and government. The Company did not have anyoutstanding dues to debenture holders during the year.

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 40 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.

ForBagaria& CO. LLP
Chartered Accountants
Firm registration No. – 113447W/W-100019
Vinay Somani
Place: Mumbai Partner
Date: May 27th 2019 Membership No. 143503

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 2019 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 safeguardingof its 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 controlssystem over financial reporting.

Meaning of Internal Financial Controls Over Financial Reporting

A Company’s internal financial control over financial reporting is a processdesigned to provide reasonable assurance regarding the reliability of financial reportingand the preparation of financial statements for external purposes in accordance withgenerally accepted accounting principles. A Company's internal financial control overfinancial reporting includes those policies and procedures that (1) pertain to themaintenance of records that in reasonable detail accurately and fairly reflect thetransactions and dispositions of the assets of the company; (2)provide reasonableassurance that transactions are recorded as necessary to permit preparation of financialstatements in accordance with generally accepted accounting principles and that receiptsand expenditures of the entity are being made only in accordance with authorisations ofmanagement; and (3) provide reasonable assurance regarding prevention or timely detectionof unauthorised acquisition use or disposition of the entity'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 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 2019 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
Place: Mumbai Partner
Date: May 27th 2019 Membership No. 143503