To the Members of
Paramount Cosmetics (India) Limited
Report on the Audit of the Standalone Financial Statements Opinion
We have audited the accompanying financial statements of Paramount Cosmetics (India)Limited ("the Company") which comprise the Balance Sheet as at March 31 2021the Statement of Profit and Loss (including Other Comprehensive Income) the Statement ofChanges in Equity and the Statement of Cash Flows for the year ended on that date and asummary of the significant accounting policies and other explanatory information(hereinafter referred to as "the financial statements").
In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid financial statements give the information required by theCompanies Act 2013 ("the Act") in the manner so required and give a true andfair view in conformity with the Indian Accounting Standards prescribed under section 133of the Act read with 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 March 31 2021 the Profit and total comprehensiveincome changes in equity and its cash flows for the year ended on that date.
Basis for Opinion
We conducted our audit of the financial statements in accordance with the Standards onAuditing (SAs) specified under section 143(10) of the Act (SAs). Our responsibilitiesunder those Standards are further described in the Auditor's Responsibilities for theAudit of the Financial Statements section of our report. We are independent of the Companyin accordance with the Code of Ethics issued by the Institute of Chartered Accountants ofIndia (ICAI) together with the independence requirements that are relevant to our audit ofthe financial statements under the provisions of the Act and the Rules there under and wehave fulfilled our other ethical responsibilities in accordance with these requirementsand the ICAI's Code of Ethics. We believe that the audit evidence we have obtained issufficient and appropriate to provide a basis for our opinion on financial statements.
Emphasis of Matters
We draw attention to note no. 8 of the audited stand-alone financial results asregards the management's evaluation of COVID-19 pandemic impact on the carrying value ofthe assets of the Company as at 31st March 2021 and the operations of the Company. Ouropinion is not modified in respect of these matters.
Key Audit Matters
Key audit matters are those matters that in our professional judgment were of mostsignificance in our audit of the financial statements of the current period. These matterswere addressed in the context of our audit of the financial statements as a whole and informing our opinion thereon and we do not provide a separate opinion on these matters. Wehave determined the matters described below to be the key audit matters to be communicatedin our report.
(A) Provisions for taxation litigation and other significant provisions
(i) Accrual for tax and other contingencies requires the Management to make judgementsand estimates in relation to the issues and exposures arising from a range of mattersrelating to direct tax indirect tax transfer pricing arrangements claims general legalproceedings environmental issues and other eventualities arising in the regular course ofbusiness.
(ii) The key judgement lies in the estimation of provisions where they may differ fromthe future obligations. By nature provision is difficult to estimate and includes manyvariables. Additionally depending on timing there is a risk that costs could be providedinappropriately that are not yet committed.
How the matter was addressed in our audit Our audit procedures included:
(i) We tested the effectiveness of controls around the recognition of provisions.
(ii) We used our subject matter experts to assess the value of material provisions inlight of the nature of the exposures applicable regulations and related correspondencewith the authorities.
(iii) We challenged the assumptions and critical judgements made by management whichimpacted their estimate of the provisions required considering judgements previously madeby the authorities in the relevant jurisdictions or any relevant opinions given by theCompany's advisors and assessing whether there was an indication of management bias.
(iv) We discussed the status in respect of significant provisions with the Company'sinternal tax and legal team.
(v) We performed retrospective review of management judgements relating to accountingestimate included in the financial statement of prior year and compared with the outcome.
(B) Assessment of contingent liabilities relating to litigations and claims The keyaudit matter
(i) The Company is periodically subject to challenges / scrutiny on range of mattersrelating to direct tax indirect tax.
(ii) Further potential exposures may also arise from general legal proceedingsenvironmental issues etc. in the normal course of business.
(iii) Assessment of contingent liabilities disclosure requires Management to makejudgements and estimates in relation to the issues and exposures. Whether the liability isinherently uncertain the amounts involved are potentially significant and the applicationof accounting standards to determine the amount if any to be provided as liability isinherently subjective.
How the matter was addressed in our audit Our audit procedures included:
(i) We tested the effectiveness of controls around the recording and re-assessment ofcontingent liabilities.
(ii) We used our subject matter experts to assess the value of material contingentliabilities in light of the nature of exposures applicable regulations and relatedcorrespondence with the authorities.
(iii) We discussed the status and potential exposures in respect of significantlitigation and claims with the Company's internal legal team including their views on thelikely outcome of each litigation and claim and the magnitude of potential exposure andsighted any relevant opinions given by the Company's advisors.
(iv) We assessed the adequacy of disclosures made.
(v) We discussed the status in respect of significant provisions with the Company'sinternal tax and legal team.
(vi) We performed retrospective review of management judgements relating to accountingestimate included in the financial statement of prior year and compared with the outcome.
Information Other than the Financial Statements and Auditor's Report Thereon
The Company's Board of Directors is responsible for the preparation of the otherinformation. The other information comprises the information included in the ManagementDiscussion and Analysis Board's Report including Annexures to Board's Report CorporateGovernance and Shareholder's Information but does not include the financial statementsand our auditor's report thereon.
Our opinion on the financial statements does not cover the other information and we donot express any form of assurance conclusion thereon.
In connection with our audit of the financial statements our responsibility is to readthe other information and in doing so consider whether the other information ismaterially inconsistent with the financial statements or our knowledge obtained during thecourse 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 are required to report that fact. We havenothing to report in this regard.
Management's Responsibility for the Financial Statements
The Company's Board of Directors is responsible for the matters stated in section134(5) of the Act with respect to the preparation of these financial statements that givea true and fair view of the financial position financial performance total comprehensiveincome changes in equity and cash flows of the Company in accordance with the Ind AS andother accounting principles generally accepted in India. This responsibility also includesmaintenance of adequate accounting records in accordance with the provisions of the Actfor safeguarding the assets of the Company and for preventing and detecting frauds andother irregularities; selection and application of appropriate accounting policies; makingjudgments and estimates that are reasonable and prudent; and design implementation andmaintenance of adequate internal financial controls that were operating effectively forensuring the accuracy and completeness of the accounting records relevant to thepreparation and presentation of the financial statements that give a true and fair viewand are free from material misstatement whether due to fraud or error.
In preparing the financial statements management is responsible for assessing theCompany's ability to continue as a going concern disclosing as applicable mattersrelated to going concern and using the going concern basis of accounting unless managementeither intends to liquidate the Company or to cease operations or has no realisticalternative but to do so.
The Board of Directors are responsible for overseeing the Company's financial reportingprocess.
Auditor's Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financialstatements as a whole are free from material misstatement whether due to fraud or errorand to issue an auditor's report that includes our opinion. Reasonable assurance is 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 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 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 financial controls 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 controls system in place and the operatingeffectiveness of such controls.
Evaluate the appropriateness of accounting policies used and the reasonablenessof accounting estimates and related disclosures made by 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 Company'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 financial statements or if such disclosures are inadequate to modify our opinion.Our conclusions are based on the audit evidence obtained up to the date of our auditor'sreport. However future events or conditions may cause the Company to cease to continue asa going concern.
Evaluate the overall presentation structure and content of the financialstatements including the disclosures and whether the financial statements represent theunderlying transactions and events in a manner that achieves fair presentation.
Materiality is the magnitude of misstatements in the financial statements thatindividually 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 of our auditwork and in evaluating the results of our work; and (ii) to evaluate the effect of anyidentified misstatements in the 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 As required by Section 143(3) of the Act based on our audit 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.
(c) The Balance Sheet the Statement of Profit and Loss including Other ComprehensiveIncome Statement of Changes in Equity and the Statement of Cash Flow dealt with by thisReport are in agreement with the relevant books of account.
(d) In our opinion the aforesaid financial statements comply with the Ind AS specifiedunder 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 the directors as on March312021 taken on record by the Board of Directors none of the director is disqualified ason March 312021 from being appointed as a director in terms of Section 164 (2) of theAct.
(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 A'. Our report expresses an unmodified opinion on theadequacy and operating effectiveness of the Company's internal financial controls overfinancial reporting.
2. With respect to the other matters to be included in the Auditor's Report inaccordance 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 the explanationsgiven to us the remuneration paid by the Company to its directors during the current yearis in accordance with the provisions of section 197 of the Act. The remuneration paid toany director is not in excess of the limit laid down under Section 197 of the Act. TheMinistry of Corporate Affairs has not prescribed other details under Section 197(16) whichare required to be commented upon by us.
3. With respect to the other matters to be included in the Auditor's Report inaccordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014 in our opinionand to the best of our information and according to the explanations given to us:
i. The Company has disclosed the impact of pending litigations on its financialposition in its financial statements.
ii. The Company did not have any long-term contracts including derivative contracts forwhich there were any material foreseeable losses;
iii. There were no amounts which were required to be transferred to the InvestorEducation and Protection Fund by the Company.
4. As required by the Companies (Auditor's Report) Order 2016 ("the Order")issued by the Central Government in terms of Section 143(11) of the Act we give in"Annexure B" a statement on the matters specified in paragraphs 3 and 4 of theOrder.
ANNEXURE "A" TO THE INDEPENDENT AUDITOR'S REPORT
(Referred to in paragraph 1(f) under 'Report on Other Legal and RegulatoryRequirements' section of our report to the Members of Paramount Cosmetics (India) Limitedof even date)
Report on the Internal Financial Controls Over Financial Reporting under Clause (i) ofSub-section 3 of Section 143 of the Companies Act 2013 ("the Act").
We have audited the internal financial controls over financial reporting of ParamountCosmetics (India) Limited ("the company) as of March 31 2021 in conjunction with ouraudit of the financial statements of the Company for the year ended on that date.
In our opinion to the best of our information and according to the explanations givento us the Company has in all material respects an adequate internal financial controlssystem over financial reporting and such internal financial controls over financialreporting were operating effectively as at March 31 2021 based on the internal controlover financial reporting 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.
Management's Responsibility for Internal Financial Controls
The Company's management and Board of Directors are 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. 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 respective company's policies thesafeguarding 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 internal financial controls overfinancial reporting of the Company based on our audit. We conducted our audit inaccordance with the Guidance Note on Audit of Internal Financial Controls Over FinancialReporting (the "Guidance Note") issued by the Institute of Chartered Accountantsof India and the Standards on Auditing prescribed under Section 143(10) of the CompaniesAct 2013 to the extent applicable to an audit of internal financial controls. ThoseStandards and the Guidance Note require that we comply with ethical requirements and planand perform the audit to obtain reasonable assurance about whether adequate internalfinancial controls over financial reporting was established and maintained and if suchcontrols 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 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 and appropriate toprovide a basis for our audit opinion on the internal financial controls system overfinancial reporting of the Company.
Meaning of Internal Financial Controls Over Financial Reporting
A company's internal financial control over financial reporting is a process designedto provide reasonable assurance regarding the reliability of financial reporting and thepreparation of financial statements for external purposes in accordance with generallyaccepted accounting principles. A company's internal financial control over financialreporting includes those policies and procedures that
(1) pertain to the maintenance of records that in reasonable detail accurately andfairly reflect the transactions and dispositions of the assets of the company;
(2) provide reasonable assurance that transactions are recorded as necessary to permitpreparation of financial statements in accordance with generally accepted accountingprinciples and that receipts and expenditures of the company are being made only inaccordance with authorisations of management and directors of the company; and
(3) provide reasonable assurance regarding prevention or timely detection ofunauthorised acquisition use or disposition of the company's assets that could have amaterial effect on the financial statements.
Inherent Limitations of Internal Financial Controls Over Financial Reporting
Because of the inherent limitations of internal financial controls over financialreporting including the possibility of collusion or improper management override ofcontrols material misstatements due to error or fraud may occur and not be detected.Also projections of any evaluation of the internal financial controls over financialreporting to future periods are subject to the risk that the internal financial controlover financial reporting may become inadequate because of changes in conditions or thatthe degree of compliance with the policies or procedures may deteriorate.
ANNEXURE "B" TO THE INDEPENDENT AUDITOR'S REPORT
(Referred to in paragraph 4 under 'Report on Other Legal and Regulatory Requirements'section of our report to the Members of Paramount Cosmetics (India) Limited of even date)
i. In respect of the Company's fixed assets:
(a) The company has maintained proper records showing full particulars includingquantitative details and situation of its fixed assets.
(b) The Company has a program of verification to cover all the items of fixed assets ina phased manner which in our opinion is reasonable having regard to the size of theCompany and the nature of its assets. Pursuant to the program fixed assets werephysically verified by the management during the year. According to the information andexplanations given to us no material discrepancies 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.
ii. In respect of its inventory:
As informed to us the physical verification of inventory has been conducted by themanagement at reasonable intervals and the discrepancies noticed during such physicalverification were not material.
iii. The Company has not granted any loans secured or unsecured to Companies FirmsLimited Liability Partnerships or other parties covered in the register maintained underSection 189 of the Companies Act. Accordingly paragraph 3(iii) of the Order is notapplicable.
iv. In our opinion and according to the information and explanations given to us theCompany has not given loans made investments given guarantees and provided securitieswhich are covered by the provisions of Section 185 and 186 of the Act. Accordinglyparagraph 3(iv) of the Order is not applicable.
v. The Company has not accepted deposits during the year and does not have anyunclaimed deposits as at March 31 2021 and therefore the provisions of the clause 3 (v)of the Order are not applicable to the Company. No order has been passed by Company LawBoard or National Company Law Tribunal or Reserve Bank of India or any Court or any otherTribunal for contravention of these sections or any other relevant provision(s) of the Actand the relevant rules.
vi. The Central Government has specified maintenance of cost records under Sub-Section(1) of Section 148 of the Act and we are of the opinion that prima facie such accounts andrecords are made and maintained. We have not however made a detailed examination of therecords with a view to determine whether they are accurate or complete.
vii. According to the information and explanations given to us in respect of statutorydues:
- The Company is not regular in depositing undisputed statutory dues includingProvident Fund Employees' State Insurance Income Tax Goods and Service Tax CustomsDuty Cess and other material statutory dues applicable to it with the appropriateauthorities.
- The following undisputed amounts payable in respect of Provident Fund Employees'State Insurance Income Tax Goods and Service Tax Customs Duty Cess and other materialstatutory dues in arrears as at March 31 2021 for a period of more than six months fromthe date they became payable:
|Name Of Statute ||Nature Of Dues ||Forum Where Amount Is Pending ||Amount Lakhs |
|Employee State Insurance Act 1948 ||ESI Monthly Statutory Payment Dues ||Employee State Insurance Corporation ||11.35 |
|Employees Provident fund & Miscellaneous Provisions Act 1952 ||EPF Monthly Statutory Payment Dues ||Employer Provident Fund ||0.62 |
|Professional Tax Act 1987 ||PT Monthly Statutory Payment Dues ||Professional Tax ||0.89 |
|Income Tax Act 1961 ||TDS Monthly Statutory Payment Dues ||Income Tax Department ||24.58 |
|Income Tax Act 1961 ||Income Tax Payment Due ||Income Tax Department ||96.8 |
- There are no dues of income tax sales tax value added tax service tax goods andservice tax duty of customs duty of excise which have not been deposited with theappropriate authorities on account of any dispute except the following
|Name Of Statute ||Nature Of Dues ||Forum Where Dispute Is Pending ||Date Of Notice ||Amount in lakhs |
|Employee State Insurance Act 1948 ||Contribution and Interest ||Office Of The Recovery Officer New Delhi ||15-01-2020 ||2.37 |
|Employee State Insurance Act 1948 ||Contribution and Interest ||Employer Provident Fund ||13-10-2019 ||0.45 |
|Employees Provident fund & Miscellaneous Provisions Act 1952 ||Contribution and Interest ||Assistant PF Commissioner VAPI ||26-02-2020 ||0.14 |
Viii In our opinion and according to the information and explanations given to us theCompany has not defaulted in the repayment of loans or borrowings to financialinstitutions banks and government and dues to debenture holders.
ix In our opinion and according to the information and explanations given to us theterm loans taken by the Company have been applied for the purpose for which they wereraised. The Company had not raised money by way of initial public offer or further publicoffer (including debt instruments) during the current financial year.
x According to the information and explanations given to us no fraud by the Company oron the Company by its officers or employees has been noticed or reported during the year.
xi In our opinion and according to the information and explanations given to us theCompany has not paid/provided managerial remuneration in accordance with the requisiteapprovals mandated by the provisions of section 197 read with Schedule V to the Act.
xii The Company is not a Nidhi Company and hence reporting under clause 3 (xii) of theOrder is not applicable to the Company.
xiii In our opinion and according to the information and explanations given to us theCompany is in compliance with Section 177 and 188 of the Companies Act 2013 whereapplicable for all transactions with the related parties and the details of related partytransactions have been disclosed in the financial statements as required by the applicableIndian accounting standards.
xiv During the year the Company has not made any preferential allotment or privateplacement of shares or fully or partly paid convertible debentures and hence reportingunder clause 3 (xiv) of the Order is not applicable to the Company.
xv In our opinion and according to the information and explanations given to us duringthe year the Company has not entered into any non-cash transactions with its Directors orpersons connected to its directors and hence provisions of section 192 of the CompaniesAct 2013 are not applicable to the Company.
xvi The Company is not required to be registered under section 45-IA of the ReserveBank of India Act 1934.
| ||For Pary & Co. |
| ||Chartered Accountants |
| ||FRN-007288C |
|Place: Surat || |
|Date: 30.06.2021 ||Rakesh Kumar Jain |
| ||Partner |
| ||Membership No. 106109 |