Oriental Carbon & Chemicals Ltd.
|BSE: 506579||Sector: Industrials|
|NSE: OCCL||ISIN Code: INE321D01016|
|BSE 00:00 | 18 Jun||1088.20||
|NSE 00:00 | 18 Jun||1085.40||
|Mkt Cap.(Rs cr)||1,087|
|Mkt Cap.(Rs cr)||1087.11|
Oriental Carbon & Chemicals Ltd. (OCCL) - Auditors Report
Company auditors report
Oriental Carbon & Chemicals Limited
Report on the Standalone Financial Statements Opinion
We have audited the accompanying standalone financial statements of OrientalCarbon & Chemicals Limited ("the Company") which comprise the BalanceSheet as at March 31 2020 the Statement of Profit and Loss (including OtherComprehensive Loss) the Statement of Changes in Equity and Statement of Cash Flows forthe year then ended and notes to the financial statements including a summary of thesignificant accounting policies and other explanatory information (hereinafter referred toas "standalone financial statements").
In our opinion and to the best of our information and according to theexplanations given to us the aforesaid Standalone financial statements give theinformation required by the Companies Act 2013 ("the Act") in the manner sorequired and give a true and fair view in conformity with the Indian Accounting Standardprescribed under section 133 of the Act read with the Companies (Indian AccountingStandard) Rules 2015 as amended ("Ind AS") and other accounting principlesgenerally accepted in India of the state of affairs of the Company as at March 31 2020the profit and total comprehensive income changes in equity and its cash flows for theyear ended on that date.
Basis for Opinion
We conducted our audit of the standalone financial statements inaccordance with the Standards on Auditing specified under section 143(10) of the Act(SAs). Our responsibilities under those Standards are further described in the Auditor'sResponsibilities for the Audit of the Standalone Financial Statements section of ourreport. We are independent of the Company in accordance with the Code of Ethics issued bythe Institute of Chartered Accountants of India (ICAI) together with the independencerequirements that are relevant to our audit of the standalone financial statements underthe provisions of the Act and the Rules made thereunder and we have fulfilled our otherethical responsibilities in accordance with these requirements and the ICAI's Code ofEthics. We believe that the audit evidence we have obtained is sufficient and appropriateto provide a basis for our audit opinion on the standalone financial statements.
Emphasis of Matter
We draw attention to note no. 33(C) on the statement which describesthe uncertainties and the impact of Covid-19 pandemic on the Company's operations andresults as assessed by the management. Due to Covid-19 related lockdown restrictionsmanagement could not perform year- end physical verification of inventories at variouslocations. Further our attendance at the physical Inventory verification done by themanagement subsequently was impracticable under the lock-down restrictions imposed by thegovernment. Consequently we have performed alternative audit procedures to obtain comfortover the existence and condition of inventory at the year-end as per the guidance providedby SA 501 "Audit Evidence - Specific Considerations for Selected Items" and haveobtained sufficient audit evidence.
Our opinion on these standalone financials is not modified in respectof the matter.
Key Audit Matters
Key Audit Matters are those matters that in our professional judgmentwere of most significance in our audit of the standalone financial statements of thecurrent period. These matters were addressed in the context of our audit of the standalonefinancial statements as a whole and in forming our opinion thereon and we do not providea separate opinion on these matters. We have determined the matters described below to bethe key audit matters to be communicated in our report.
Information Other than the Standalone Financial Statements andAuditor's Report Thereon
The Company's Board of Directors is responsible for the preparation ofthe other information. The other information comprises the information included in theManagement Discussion and Analysis Board's Report including Annexures to Board's ReportBusiness Responsibility Report Corporate Governance and Shareholder's Information butdoes not include the standalone financial statements and our auditor's report thereon.
Our opinion on the standalone financial statements does not cover theother information and we do not express any form of assurance conclusion thereon.
In connection with our audit of the standalone financial statementsour responsibility is to read the other information and in doing so consider whether theother information is materially inconsistent with the standalone financial statements orour knowledge obtained during the course of our audit or otherwise appears to bematerially misstated.
If based on the work we have performed we conclude that there is amaterial misstatement of this other information we are required to report that fact. Wehave nothing to report in this regard.
Responsibility of Management and Those Charged with Governance for theStandalone Financial Statements.
The Company's Board of Directors is responsible for the matters statedin Section 134(5) of the Act with respect to the preparation of these standalone financialstatements
that give a true and fair view of the financial position financialperformance including other comprehensive income changes in equity and cash flows of theCompany in accordance with the accounting principles generally accepted in Indiaincluding Ind AS. This responsibility also includes maintenance of adequate accountingrecords in accordance with the provisions of the Act for safeguarding the assets of theCompany and 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 management isresponsible for assessing the Company's ability to continue as a going concerndisclosing as applicable matters related to going concern and using the going concernbasis of accounting 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 responsible for overseeing the Company'sfinancial reporting process.
Auditor's Responsibility for the Audit of the Standalone FinancialStatements
Our objectives are to obtain reasonable assurance about whether thestandalone financial statements as a whole
are free from material misstatement whether due to fraud or error andto issue 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 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 standalone financial statements.
As part of an audit in accordance with SAs we exercise professionaljudgment and maintain professional skepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of thestandalone financial statements whether due to fraud or error design and perform auditprocedures responsive to those risks and obtain audit evidence that is sufficient andappropriate to provide a basis for our opinion. The risk of not detecting a materialmisstatement resulting from fraud is higher than for one resulting from error as fraudmay involve collusion forgery intentional omissions misrepresentations or the overrideof internal control.
Obtain an understanding of internal financial controls relevantto the audit in order to design audit procedures that are appropriate in thecircumstances. Under section 143(3)(i) of the Act we are also responsible for expressingour opinion on whether the Company has adequate internal financial controls system inplace and the operating effectiveness of such controls.
Evaluate the appropriateness of accounting policies used and thereasonableness of accounting estimates and related disclosures made by management.
Conclude on the appropriateness of management's use of the goingconcern basis of accounting and based on the audit evidence obtained whether a materialuncertainty exists related to events or conditions that may cast significant doubt on theCompany's ability to continue as a going concern. If we conclude that a materialuncertainty exists we are required to draw attention in our auditor's report to therelated disclosures in the standalone financial statements or if such disclosures areinadequate to modify our opinion. Our conclusions are based on the audit evidenceobtained up to the date of our auditor's report. However future events or conditions maycause the Company to cease to continue as a going concern.
Evaluate the overall presentation structure and content of thestandalone financial statements including the disclosures and whether the standalonefinancial statements represent the underlying transactions and events in a manner thatachieves fair presentation.
Materiality is the magnitude of misstatements in the standalonefinancial statements that individually or in aggregate makes it probable that theeconomic decisions of a reasonably knowledgeable user of the financial statements may beinfluenced. We consider quantitative materiality and qualitative factors in (i) planningthe scope of our audit work and in evaluating the results of our work; and (ii) toevaluate the effect of any identified misstatements in the financial statements.
We communicate with those charged with governance regarding amongother matters the planned scope and timing of the audit and significant audit findingsincluding any significant deficiencies in internal control that we identify during ouraudit.
We also provide those charged with governance with a statement that wehave complied with relevant ethical requirements regarding independence and tocommunicate with them all relationships and other matters that may reasonably be thoughtto bear on our independence and where applicable related safeguards.
From the matters communicated with those charged with governance wedetermine those matters that were of most significance in the audit of the standalonefinancial statements of the current period and are therefore the key audit matters. Wedescribe these matters in our auditor's report unless law or regulation precludes publicdisclosure about the matter or when in extremely rare circumstances we determine that amatter should not be communicated in our report because the adverse consequences of doingso would reasonably be expected to outweigh the public interest benefits of suchcommunication.
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 in terms of sub-section(11) of section 143 of the Act we give in the "Annexure A" a statementon the matters specified in paragraphs 3 and 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 explanationswhich to the best of 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 beenkept by the Company so far as it appears from our examination of those books.
(c) The Balance Sheet the Statement of Profit and Loss (includingother comprehensive loss) the Statement of Cash Flow and Statement of Change in Equitydealt with by this report are in agreement with the books of account.
(d) In our opinion the aforesaid Standalone financial statementscomply with the Indian Accounting Standards specified under section 133 of the Act readwith relevant rule issued thereunder.
(e) On the basis of written representations received from the directorsas on March 31 2020 taken on record by the Board of Directors none of the directors isdisqualified as on March 31 2020 from being appointed as a director in terms ofsub-section 2 of section 164 of the Act.
(f) With respect to the other matters to be included in the Auditor'sReport in accordance with the requirements of section 197(16) of the Act as amended:
In our opinion and to the best of our information and according to theexplanations given to us the remuneration paid by the Company to its directors during theyear is in accordance with the provisions of section 197 of the Act.
(g) With respect to the adequacy of the internal financial controlswith reference to the financial statement of the Company and the operating effectivenessof such controls refer to our separate Report in "Annexure B". and
(h) With respect to the other matters to be included in the Auditor'sReport in accordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014 inour opinion and to the best of our information and according to the explanations given tous:
i. The Company has disclosed the impact of pending litigations on itsfinancial position in its Standalone financial statements - Refer Note 29 to thestandalone financial statements.
ii. The company has made adequate provision as required under the lawor accounting standards for material foreseeable losses if any on long term contractsincluding derivative contracts.>
iii. There has been no delay in transferring amount required to betransferred to the Investor Education and Protection Fund by the Company.
"Annexure A" to the Independent Auditors' Report
The Annexure as referred in paragraph (1) 'Report on Other Legal andRegulatory Requirements of our Independent Auditors' Report to the members of OrientalCarbon & Chemicals Limited on the standalone financial statements for the yearended March 31 2020 we report that:
i. (a) The Company has maintained proper records showing fullparticulars including quantitative details and situation of fixed assets.
(b) Management has made a programme of periodical verification of fixedassets in phased manner which in our opinion is reasonable having regard to the size ofthe Company and the nature of its Fixed Assets. However management has explained that dueto the Covid-19 related lock-down restrictions imposed by the government year-endactivity with respect to physical verification of fixed assets as per such phased programwas not carried out. We were represented that the same will be carried out immediately oneasing of such restrictions.
(c) The title deeds of immovable properties are held in the name of theCompany except in the following case:
*Also refer Note No. 2(ii)
ii. We have been explained by the management that the inventory (exceptstock lying with the third parties and in transit for which confirmations have beenreceived/ material received) has been physically verified at reasonable intervals and theprocedures of physical verification of inventory followed by the management are reasonablein relation to the size of the Company and nature of its business. However due toCovid-19 related lock-down restrictions imposed by the government our attendance at thephysical Inventory verification done by the management near to year end was impracticableconsidering such lock-down restrictions. Consequently we have performed alternative auditprocedures to obtain comfort over the existence and condition of inventory at the year-endas per the guidance provided by SA 501 "Audit Evidence - Specific Considerations forSelected Items" and have obtained sufficient audit evidence. As far as we couldascertain and accordingly to the information and explanations given to us no materialdiscrepancies were noticed between the physical stock and book records.
iii. The Company has not granted any loan secured or unsecured tocompanies firms Limited Liability Partnership Firms or other parties covered in theregistered maintained under section 189 of the Companies Act 2013 ('the Act').Accordingly the provisions of clause 3(iii)(a) to (c) of the Order are not applicable tothe Company.
iv. According to the information and explanations given to us theCompany has complied with the provisions of section 185 and section 186 of the CompaniesAct 2013 with respect to the loans investments guarantees and security provided.
v. The company has complied with the directives issued by the ReserveBank of India and the provisions of the section 73 to 76 of the Companies Act 2013 andthe rules framed thereunder as applicable. We are informed by the management that no orderhas been passed by the Company Law Board or National Company Law Tribunal or Reserve Bankof India or any other authority.
vi. We have broadly reviewed the books of account maintained by theCompany pursuant to the rules prescribed by the Central Government of India for themaintenance of cost records under sub-section 1 of Section 148 of the Companies Act 2013in respect of the manufacture of Insoluble Sulphur and chemicals and are of the opinionthat prima facie the prescribed records and accounts have been made and maintained.However we have not carried out a detailed examination of such records with a view todetermining whether they are accurate or complete.
vii. (a) According to the information and explanations
given to us and on the basis of examination of the records of theCompany the company is generally regular in depositing undisputed statutory duesincluding provident fund employees' state insurance income tax Goods and Service Taxcustom duty Cess and other material statutory dues with the appropriate authorities tothe extent applicable and further there are no undisputed statutory dues payable for aperiod of more than six months from the date they become payable as at March 31 2020.
(b According to the records and information and explanations given tous there are no dues in respect of income tax sales tax service tax duty of exciseduty of custom value added tax or Goods and Service Tax which have not been deposited onaccount of any dispute except as given below:
viii. In our opinion on the basis of audit procedures and according tothe information and explanations given to us the Company has not defaulted in repaymentof loan or borrowing to any banks or Financial Institutions. The Company has not obtainedany loans from government and no dues is outstanding to debenture holders.
ix. According to the information and explanation given to us thecompany has not raised moneys by way of initial public offer (IPO) or further public offer(including debt instruments) during the year. The term loans were applied for the purposesfor which they are raised.
x. During the course of our examination of the books and records of theCompany carried out in accordance with the generally accepted auditing practices in Indiawe have neither come across any instance of fraud by the Company or on the Company by itsofficers or employees noticed or reported during the year nor have we been informed ofsuch case by the management.
xi. According to the information and explanations given to us and basedon our examination of the records of the Company the Company has paid/ provided formanagerial 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 explanationsgiven to us the Company is not a Nidhi Company. Accordingly clause 3(xii) of the Orderis not applicable.
xiii. According to the information and explanations given to us andbased on our examination of the record of the Company transactions with the relatedparties are in compliance with provision of section 177 & 188 of the Act whereapplicable and details of such transactions have been disclosed in the financialstatements as required by the applicable accounting 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. Accordingly clause 3(xiv) of the Order is not applicable.
xv. According to the information and explanations given to us and basedon our examination of the records of the Company the Company has not entered into noncashtransactions with directors or persons connected with him. Accordingly clause 3(xv) ofthe Order is not applicable.
xvi. The Company is not required to be registered under Section 45-IAof the Reserve Bank of India Act 1934. Accordingly clause 3(xvi) of the Order is notapplicable.
"Annexure B" to the Independent Auditor's Report of even dateon the Standalone Financial Statements of Oriental Carbon & Chemicals Limited.
Report on the Internal Financial Controls under Clause (i) ofSub-section 3 of Section 143 of the Companies Act 2013 ("the Act") as referredto in paragraph 2(f) of 'Report on Other Legal and Regulatory Requirements'
We have audited the internal financial controls with reference tofinancial statements of Oriental Carbon & Chemicals Limited ("the Company")as of March 31 2020 in conjunction with our audit of the standalone financial statementsof the Company for the year ended on that date.
Management's Responsibility for Internal Financial Controls
The Company's management is responsible for establishing andmaintaining internal financial controls based on the internal control with reference tofinancial statements criteria established by the Company considering the essentialcomponents of internal control stated in the Guidance Note on Audit of Internal FinancialControls over Financial Reporting issued by the Institute of Chartered Accountants ofIndia (ICAI). These responsibilities include the design implementation and maintenance ofadequate internal financial controls that were operating effectively for ensuring theorderly and efficient conduct of its business including adherence to Company's policiesthe safeguarding of its assets the prevention and detection of frauds and errors theaccuracy and completeness of the accounting records and the timely preparation ofreliable financial information as required under the Companies Act 2013.
Our responsibility is to express an opinion on the Company's internalfinancial controls with reference to financial statements based on our audit. We conductedour audit in accordance with the Guidance Note on Audit of Internal Financial ControlsOver Financial Reporting ("the Guidance Note") and the Standards on Auditingissued by ICAI and deemed to be prescribed under section 143(10) of the Companies Act2013 to the extent applicable to an audit of internal financial controls both applicableto an audit of Internal Financial Controls and both issued by the Institute of CharteredAccountants of India. 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 with reference to financial statements wasestablished and maintained and if such controls operated effectively in all materialrespects.
Our audit involves performing procedures to obtain audit evidence aboutthe adequacy of the internal financial controls system with reference to financialstatements and their operating effectiveness. Our audit of internal financial controlswith reference to financial statements included obtaining an understanding of internalfinancial controls with reference to financial statements assessing the risk that
a material weakness exists and testing and evaluating the design andoperating effectiveness of internal control based on the assessed risk. The proceduresselected depend on the auditor's judgement 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 andappropriate to provide a basis for our audit opinion on the Company's internal financialcontrols system with reference to financial statements.
Meaning of Internal Financial Controls with reference to financialstatements
A Company's internal financial control with reference to financialstatements is a process designed to provide reasonable assurance regarding the reliabilityof financial reporting and the preparation of financial statements for external purposesin accordance with generally accepted accounting principles. A Company's internalfinancial control with reference to financial statements includes those policies andprocedures that (1) pertain to the maintenance of records that in reasonable detailaccurately and fairly reflect the transactions and dispositions of the assets of theCompany; (2) provide reasonable assurance that transactions are recorded as necessary topermit preparation of financial statements in accordance with generally acceptedaccounting principles and that receipts and expenditures of the Company are being madeonly in accordance with authorisations of management and directors of the Company; and (3)provide reasonable assurance regarding prevention or timely detection of unauthorisedacquisition use or disposition of the Company's assets that could have a material effecton the financial statements.
Inherent Limitations of Internal Financial Controls with reference tofinancial statements
Because of the inherent limitations of internal financial controls withreference to financial statements including the possibility of collusion or impropermanagement override of controls material misstatements due to error or fraud may occurand not be detected. Also projections of any evaluation of the internal financialcontrols with reference to financial statements to future periods are subject to the riskthat the internal financial control with reference to financial statements may becomeinadequate because of changes in conditions or that the degree of compliance with thepolicies or procedures may deteriorate.
In our opinion the Company has in all material respects an adequateinternal financial controls system with reference to financial statements and suchinternal financial controls with reference to financial statements were operatingeffectively as at March 31 2020 based on the internal control with reference tofinancial statements criteria established by the Company considering the essentialcomponents of internal control stated in the Guidance Note on Audit of Internal FinancialControls Over Financial Reporting issued by the Institute of Chartered Accountants ofIndia.