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Panama Petrochem Ltd.

BSE: 524820 Sector: Industrials
NSE: PANAMAPET ISIN Code: INE305C01029
BSE 00:00 | 17 Sep 286.40 -0.15
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291.90

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291.90

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275.00

NSE 00:00 | 17 Sep 286.30 -0.45
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292.00

HIGH

292.00

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OPEN 291.90
PREVIOUS CLOSE 286.55
VOLUME 14876
52-Week high 309.65
52-Week low 50.20
P/E 10.36
Mkt Cap.(Rs cr) 1,733
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 291.90
CLOSE 286.55
VOLUME 14876
52-Week high 309.65
52-Week low 50.20
P/E 10.36
Mkt Cap.(Rs cr) 1,733
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Panama Petrochem Ltd. (PANAMAPET) - Auditors Report

Company auditors report

To the Members of Panama Petrochem Limited Report on the audit of thestandalone Financial statements

opinion

We have audited the accompanying standalone financial statements of PanamaPetrochem Limited ("the Company") which comprises of the Balance Sheet asat March 31 2021 the Statement of Profit and Loss (including Other ComprehensiveIncome) the Statement of Changes in Equity and the Statement of Cash Flows for the yearended on that date and a summary of the significant accounting policies and otherexplanatory information (hereinafter referred to as "the standalone financialstatements").

In our opinion and to the best of our information and according to theexplanations given to us the aforesaid standalone financial statements gives a true andfair view in conformity with the aforesaid Ind AS and other accounting principlesgenerally accepted in India prescribed under section 133 of the Act read with theCompanies (Indian Accounting Standards) Rules 2015 as amended ("Ind AS") andother accounting principles generally accepted in India of the state of affairs of theCompany as at March 31 2021 the profit (other comprehensive income) changes in equityand its cash flows for the year ended on that date.

Basis for opinion

We conducted our audit of the standalone financial statements inaccordance with the Standards on Auditing ("SA"s) specified under section143(10) of the Act. Our responsibilities under those Standards are further described inthe Auditor's Responsibilities for the Audit of the Standalone 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 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 ICAI's Code of Ethics. We believe that the audit evidence obtained by us issufficient and appropriate to provide a basis for our audit opinion on the standalonefinancial statements.

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. Key Audit Matters

Key audit Matter Auditor's Response
Inventory existence:
The Company recognized inventory of Rs. 25979.91 Lakhs as at 31 March 2021. Inventory held at various locations across India. Due to various restrictions imposed currently as part of measures to combat COVID-19 pandemic we have not attended inventory counts at any locations which we selected based on financial significance and risk.
Within each Location inventory is stored in warehouses tanks containers and tanks attached to the Bonded Custom Warehouse.
This is a key audit matter because of the For locations selected we performed the following procedures at each site:
• Significance of the inventory balance to the statement of financial position and • evaluated the design and implementation of the controls over physical verification of inventories and tested the operating effectiveness of the controls during the year.
• Complexity involved in determining inventory quantities on hand due to the number conversion from Ltr. to Kgs. location and diversity of inventory storage locations inventories lying with third parties etc. • for stocks at third party warehouses obtained confirmations and as appropriate performed roll-back procedures to tally with stock quantities at the year end on a sample basis.
• observed the physical verification of inventories carried out by management at certain locations subsequent to year end through virtual mediums and performed roll back procedures evidencing the movement in stocks from the date of such verification to the year end on a sample basis.
• verified the analytical reviews performed by the management such as consumption analysis and stock movement analysis for the year for raw material and finished goods at factories on a sample basis.

Trade Receivables:
Trade receivables comprise a significant portion of the current assets of the Company and serve as security for a majority of the Company short-term debt. As indicated in Note 6.2 to the Standalone financial statements. The receivables provision has made based on Expected Credit Loss method. The Company considered current and anticipated future economic conditions relating to industries the Company deals with and the countries where it operates. In calculating expected credit loss the Company has also considered credit reports and other related credit information for its customers to estimate the probability of default in future and has taken into account estimates of possible effect from the pandemic relating to COVID -19. Accordingly the estimation of the allowance for trade receivables is a significant judgments area and is therefore considered a key audit matter. We assessed the validity of material long outstanding receivables by obtaining third-party confirmations of amounts receivable. We also considered payments received subsequent to year-end insurance held for overseas trade receivables past payment history and unusual patterns to identify potentially impaired balances. The assessment of the appropriateness of the allowance for trade receivables comprised a variety of audit procedures across the Company including:
• Assessing the appropriateness and reasonableness of the assumptions applied in the managements' assessment of the receivables allowance;
• Consideration of the creditworthiness of significant trade receivables over 90 days;
• Consideration and concurrence of the agreed payment terms;
• Verification of receipts from trade receivables subsequent to year-end;
• Inspection of credit insurance policies; and
• Considered the completeness and accuracy of the disclosures. To address the risk of management bias we evaluated the results of audit procedures on other key balances to assess whether or not there was an indication of bias. We were satisfied that the Company's trade receivables are fairly valued and adequately provided. We further considered whether the provisions were misstated and concluded that they were appropriate in all material respects and disclosures related to trade receivable in the standalone financial statements are appropriate.

Information other than the standalone Financial statements andauditor's Report thereon

The Company's Board of Directors is responsible for thepreparation of the other information. The other information comprises the informationincluded in the Management Discussion and Analysis Board's Report includingAnnexures to Board's Report Corporate Governance and Shareholder's Informationbut does not include the standalone financial statements and our 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 for the standalone Financial statements

The Company's Board of Directors is responsible for the mattersstated in Section 134(5) of the Companies Act2013 ("the Act") with respect tothe preparation and presentation of these standalone Ind AS financial statements that givea true and fair view of the financial position financial performance (including othercomprehensive income) cash flows and changes in equity of the Company in accordance withthe accounting principles generally accepted in India including the Indian AccountingStandards (Ind AS) specified under section 133 of the Act read with relevant rules issuedthereunder. This responsibility also includes maintenance of adequate accounting recordsin accordance with the provisions of the Act for safeguarding 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 Ind AS financial statements that give a true and fair view and are freefrom material misstatement whether due to fraud or error.

In preparing the financial statements 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 theCompany's financial reporting process of the Company.

AUDITOR'S RESPONSIBILITY FOR THE AUDIT OF THE FINANCIAL STATEMENTS

Our objectives are to obtain reasonable assurance about whether thestandalone financial statements as a whole are free from material misstatement whetherdue to fraud or error and to issue an auditor's report that includes our opinion.Reasonable assurance is a high level of assurance but is not a guarantee that an auditconducted in accordance with SAs will always detect a material misstatement when itexists. 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 the 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 thegoing concern 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 Company'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 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. Wecommunicate with those charged with governance regarding among other matters the plannedscope and timing of the audit and significant audit findings including any significantdeficiencies in internal control that we identify during our audit. We also provide thosecharged with governance with a statement that we have complied with relevant ethicalrequirements regarding independence and to communicate with them all relationships andother matters that may reasonably be thought to bear on our independence and whereapplicable 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.

We describe these matters in our auditor's report unless law orregulation precludes public disclosure about the matter or when in extremely rarecircumstances we determine that a matter should not be communicated in our report becausethe adverse consequences of doing so would reasonably be expected to outweigh the publicinterest benefits of such communication.

Report on other Legal and Regulatory Requirements

1. As required by Section 143(3) of the Act based on our audit wereport that:

a. We have sought and obtained all the information and explanationswhich to the best of our knowledge and belief were necessary for the purposes of ouraudit.

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 (including OtherComprehensive Income) Statement of Changes in Equity and the Statement of Cash Flow dealtwith by this Report are in agreement with the relevant books of account.

d. In our opinion the aforesaid standalone financial statements complywith the Ind AS specified under Section 133 of the Act read with Rule 7 of the Companies(Accounts) Rules 2014.

e. On the basis of the written representations received from thedirectors as on March 31 2021 taken on record by the Board of Directors none of thedirectors is disqualified as on March 31 2021 from being appointed as a director in termsof Section 164 (2) of the Act.

f. With respect to the adequacy of the internal financial controls overfinancial reporting of the Company and the operating effectiveness of such controls referto our separate Report in "Annexure A". Our report expresses an unmodifiedopinion on the adequacy and operating effectiveness of the Company's internalfinancial controls over financial reporting.

g. With respect to the other matters to be included in theAuditor's Report in accordance with the requirements of section 197(16) of the Actas 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.

h. With respect to the other matters to be included in theAuditor's Report in accordance with Rule 11 of the Companies (Audit and Auditors)Rules 2014 as amended in our opinion and to the best of our information and accordingto the explanations given to us:

i. The Company has disclosed the impact of pending litigations on itsfinancial position in its standalone financial statements.

ii. The Company has made provision as required under the applicablelaw or accounting standards for material foreseeable losses if any on long-termcontracts including derivative contracts.

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

2. 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 Companies Act 2013 we give in the "Annexure B" astatement on the matters specified in paragraphs 3 and 4 of the Order to the extentapplicable.

For JMR & associates LLP
Chartered Accountants
Firm Registration No. 106912W / W100300
Ca. nikesh Jain
Partner
Membership No. 114003
UDIN : 21114003AAAADS7124
Place : Mumbai
Date : 31 May 2021

Annexure "a" to the independent auditors' report

(Referred to in paragraph 1(f) under ‘Report on Other Legal andRegulatory Requirements' section of our report to the Members of Panama PetrochemLimited of even date)

Report on the Internal Financial Controls under Clause (i) ofsub-section 3 of section 143 of the Companies act 2013 ("the act")

We have audited the internal financial controls over financialreporting of Panama Petrochem Limited ("the Company") as of March 312021 in conjunction with our audit of the standalone Ind AS financial statements of theCompany 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 over financialreporting criteria established by the Company considering the essential components ofinternal control stated in the Guidance Note on Audit of Internal Financial Controls overFinancial Reporting issued by the Institute of Chartered Accountants of India(‘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 offrauds and errors the accuracy and completeness of the accounting records and the timelypreparation of reliable financial information as required under the Act.

Auditors' Responsibility

Our responsibility is to express an opinion on the Company'sinternal financial controls over financial reporting based on our audit. We conducted ouraudit in accordance with the Guidance Note on Audit of Internal Financial Controls overFinancial Reporting (the "Guidance Note") and the Standards on Auditing issuedby ICAI and deemed to be prescribed under section 143(10) of the Act to the extentapplicable to an audit of internal financial controls both applicable to an audit ofInternal Financial Controls and both issued by the Institute of Chartered Accountants ofIndia. Those Standards and the Guidance Note require that we comply with ethicalrequirements and plan and perform the audit to obtain reasonable assurance about whetheradequate internal financial controls over financial reporting was established andmaintained and if such controls operated effectively in all material respects.

Our audit involves performing procedures to obtain audit evidence aboutthe adequacy of the internal financial controls system over financial reporting and theiroperating effectiveness. Our audit of internal financial controls over financial reportingincluded obtaining an understanding of internal financial controls over financialreporting assessing the risk that a material weakness exists and testing and evaluatingthe design and operating effectiveness of internal control based on the assessed risk. Theprocedures selected depend on the auditor's judgment including the assessment of therisks of material misstatement of the financial statements whether due to fraud or error.

We believe that the audit evidence we have obtained is sufficient andappropriate to provide a basis for our audit opinion on the Company's internalfinancial controls system over financial reporting.

Meaning of Internal Financial Controls over Financial Reporting

A company's internal financial control over financial reporting isa process designed to provide reasonable assurance regarding the reliability of financialreporting and the preparation of financial statements for external purposes in accordancewith generally accepted accounting principles. A company's internal financial controlover financial reporting includes those policies and procedures 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 asnecessary to permit preparation of financial statements in accordance with generallyaccepted accounting principles and that receipts and expenditures of the company arebeing made only in accordance with authorisations of management and directors of thecompany; and

(3) provide reasonable assurance regarding prevention or timelydetection of unauthorised acquisition use or disposition of the company's assetsthat could have a material effect on the financial statements.

Inherent Limitations of Internal Financial Controls over FinancialReporting

Because of the inherent limitations of internal financial controls overfinancial reporting including the possibility of collusion or improper managementoverride of controls material misstatements due to error or fraud may occur and not bedetected. Also projections of any evaluation of the internal financial controls overfinancial reporting to future periods are subject to the risk that the internal financialcontrol over financial reporting may become inadequate because of changes in conditionsor that the degree of compliance with the policies or procedures may deteriorate.

Opinion

In our opinion and to the best of our information and according to theexplanations given to us the Company have in all material respects an adequate internalfinancial controls system over financial reporting and such internal financial controlsover financial reporting were operating effectively as at March 31 2021 based on theinternal control over financial reporting criteria established by the respective companiesconsidering the essential components of internal control stated in the Guidance Note onAudit of Internal Financial Controls Over Financial Reporting issued by the ICAI.

For JMR & associates LLP
Chartered Accountants
Firm Registration No. 106912W / W100300
Ca. nikesh Jain
Partner
Membership No. 114003
UDIN : 21114003AAAADS7124
Place : Mumbai
Date : 31 May 2021

Annexure "B" to the independent auditors' report

(Referred to in paragraph 1 under ‘Report on Other Legal andRegulatory Requirements' section of our report to the Members of Panama PetrochemLimited of even date.)

i. In respect of property plant and equipment's:

a) The Company has maintained proper records showing full particularsincluding quantitative details and situation of property plant and equipment's.

b) As informed to us the property plant and equipment's havebeen physically verified by the management during the period according to a phasedprogram. In our opinion such program is reasonable having regard to the size of theCompany and the nature of its assets. As informed no material discrepancies were noticedon such verification by the management.

c) According to the information and explanations given to us therecords examined by us and based on the examination of the conveyance deeds / registeredsale deed provided to us we report that the title deeds comprising all the immovableproperties of land and buildings which are freehold are held in the name of the Companyas at the balance sheet date. In respect of immovable properties of land and building thathave been taken on lease and disclosed as property plant and equipment in the standalonefinancial statements the lease agreements are in the name of the Company

ii. In respect of its inventories:

As informed to us the physical verification of the inventories wasdone by the management at reasonable intervals at the end of each month and for year-end.We have received confirmation with respect to inventories lying with third parties. In ouropinion the frequency of verification is reasonable. Further on the basis of ourexamination of the records the Company is generally maintaining proper records of itsinventories. No material discrepancy was noticed on physical verification of stocks by themanagement as compared to book records.

iii. The Company has not granted loans secured or unsecured tocompanies firms limited liability partnerships or other parties covered in the registermaintained under Section 189 of the Act and accordingly the provisions of Clause (iii)(a) to (c) of Para 3 of the Order are not applicable to the Company.

iv. The Company has not granted any loan under section 185 of the Act.The Company has complied with the provisions of section 186 of the Act with respect tothe investment and guarantees. The Company has neither given any security nor given anyloans during the year.

v. According to the information and explanations given to us theCompany has not accepted any deposits from the public as per the provisions of section 73to 76 of the Act and rules framed thereunder and accordingly the provisions of Clause(v) of Para 3 of the Order are not applicable to the Company.

vi. We have broadly reviewed accounts and records maintained by theCompany pursuant to the rules made by the Central Government for the maintenance of costrecords under section (1) of Section 148 of the Act related to manufacture of specialtypetroleum products and are of the opinion that prima facie the prescribed accounts andrecords have been made and maintained. We have however not made a detailed examinationof records with a view to determine whether they are accurate.

vii. In respect of statutory dues:

a) According to the information and explanations given to us andaccording to the records of the Company examined by us in our opinion the Company isgenerally regular in depositing with the appropriate authorities undisputed statutory duesincluding provident fund Employees' State Insurance Income-tax Goods and Servicetax cess or/ and any other material statutory dues wherever applicable.

According to the information and explanations given to us there were nooutstanding statutory dues as on 31 March 2021 for a period of more than six months fromthe date they became payable.

b) According to the information and explanation given to us there areno dues outstanding in respect of Income-tax VAT Excise duty Service tax Custom dutyGoods and Service tax Cess or/and any other material statutory dues wherever applicablewhich have not been deposited on account of any dispute except the following;

Name of the statute Nature of the dues Amount (inr in lakhs) Period to which the amount relates Forum where dispute is pending
Central Excise Act 1944 Central Excise Duty 40.47 FY 2016-17 The Commissioner Appeals CGST & Central Excise Commissionerate Surat.
Central Excise Act 1944 Central Excise Duty 27.97 FY 2017-18 The Commissioner Appeals CGST & Central Excise Commissionerate Surat.

viii. In our opinion and according to the information and explanationsgiven to us the Company has not defaulted in the repayment of dues to banks. The Companydid not have any borrowings from financial institutions government or dues to debentureholders.

ix. Based on our audit procedures and on the basis of information andexplanations given to us the Company did not raise any money by way of initial publicoffer or further public offer (including debt instruments) during the year. According tothe information and explanations given to us the term loans raised have been applied bythe Company during the year for the purposes for which they were raised.

x. Based upon the audit procedures performed and the information andexplanations given by the management no fraud by the Company and no fraud on the Companyby its officers or employees has been noticed or reported during the year.

xi. Based upon the audit procedures performed and the information andexplanations given by the management the managerial remuneration has been paid / providedin accordance with the requisite approvals mandated by the provisions of section 197 readwith 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 the provisions of Clause(xii) of Para 3 of the Order are not applicable to the Company.

xiii. According to the information and explanations given to us andbased on our examination of the records of the Company transactions with the relatedparties are in compliance with Sections 177 and 188 of the Act where applicable anddetails of such transactions have been disclosed in the financial statements as requiredby the applicable accounting standards.

xiv. According to the information and explanations give to us and basedon our examination of the records of the Company the Company has not made anypreferential allotment or private placement of shares or fully or partly convertibledebentures during the year. xv. According to the information and explanations given to usand based on our examination of the records of the Company the Company has not enteredinto non-cash transactions with directors or persons connected with the directorsrequiring compliance with Section 192 of the Companies Act.

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 to the Company.

For JMR & associates LLP
Chartered Accountants
Firm Registration No. 106912W / W100300
Ca. nikesh Jain
Partner
Membership No. 114003
UDIN : 21114003AAAADS7124
Place : Mumbai
Date : 31 May 2021

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