To the Members of Pondy Oxides And Chemicals Limited
Report on the Audit of the Standalone Financial Statements Opinion
We have audited the standalone financial statements of Pondy Oxides And ChemicalsLimited ("the Company") which comprise the balance sheet as at 31-March 2021and the statement of Profit and Loss (including Other Comprehensive Income) the statementof cash flows and the Statement of Changes in Equity for the year then ended and asummary of significant accounting policies and other explanatory information.
In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid standalone financial statements give the information requiredby the Companies Act 2013 (the Act') in the manner so required and give a true andfair view in conformity with the accounting principles generally accepted in Indiaincluding Indian Accounting Standards (Ind AS') specified under Section 133 of theAct of the state of affairs (financial position) of the Company as at 31 March 2021 andits profit (financial performance including other comprehensive income) its cash flowsand the changes in equity for the year ended on that date.
Basis for Opinion
We conducted our audit of the standalone financial statements in accordance with theStandards on Auditing (SAs) specified under Section 143(10) of the Act. Ourresponsibilities under those Standards are further described in the Auditor'sResponsibilities for the Audit of the Financial Statements section of our report. We areindependent of the Company in accordance with the Code of Ethics issued by the Instituteof Chartered Accountants of India (ICAI') together with the ethical requirementsthat are relevant to our audit of the financial statements under the provisions of the Actand the rules there under and we have fulfilled our other ethical responsibilities inaccordance with these requirements and the Code of Ethics. We believe that the auditevidence we have obtained is sufficient and appropriate to provide a basis for our opinionon the financial statements.
Emphasis of Matter
We draw attention to Note 2B to the financial statements which explain theuncertainties and the impact of COVID-19 pandemic situation on the Company's financialresults as assessed by the management.
Our opinion is not modified in respect of the above matter.
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.Based on the examination of books of account and explanations provided to us we havedetermined the matters described below to be the key audit matters to be communicated inour report.
|Key audit matters ||How our audit addressed the key audit matter |
|Derivative financial instruments are used to manage and hedge foreign currency exchange risks and commodity risk. Derivatives are measured at fair value and changes therein are generally recognised in profit or loss. ||Our procedures included: We obtained an understanding of the risk management policies and testing key controls for the use recognition and measurement of derivative financial instruments; |
|The Company designates certain derivatives as hedging instruments to hedge the variability in cash flows associated with highly probable forecast transactions arising from changes in foreign exchange rates. At inception of designated hedging relationships the Company documents the risk management objective and strategy for undertaking the hedge. The Company also documents the economic relationship between the hedged item and the hedging instrument including whether the changes in cash flows of the hedged item and hedging instrument are expected to offset each other. || We reconciled derivative financial instruments data with third party confirmations; |
| We focused on this area on account of the number of contracts their measurement the complexity related to hedge accounting and the potential impact on the statement of profit and loss. || We compared valuation of derivative financial instruments with market data; |
| As at 31st March 2021 the Company has net derivative financial liability at fair value of Rs. 0.61 crores (Refer note no. 22) || We tested on a sample basis the applicability and accuracy of hedge accounting; and |
| || We considered the appropriateness of disclosures in relation to financial risk management derivative financial instruments and hedge accounting in notes 2227 & 28 to the f i nancial statements; |
| ||Based on the procedures performed the derivative financial instruments and hedge accounting are fairly |
Information Other than the Standalone Financials Statements and Auditor's Reportthereon (Other Information)
The Company's Board of Directors is responsible for the other information. The otherinformation comprises the information included in the Management Discussion and AnalysisBoard's Responsibility Report including Annexure to Board's Report Corporate Governanceand Shareholders Information but does not include the financial statements andourauditor'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 identified above when it becomes available and in doing soconsider whether the other information is materially inconsistent with the financialstatements or our knowledge obtained during the course of 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 Standalone 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 including othercomprehensive income changes in equity and cash flows of the Company in accordance withthe Ind AS and other accounting principles generally accepted in India.
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 financial statement that give a true and fair view and are free from materialmisstatement 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.
That Board of Directors is also responsible for overseeing the company's financialreporting process.
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 withStandards of Auditing will always detect a material misstatement when it exists.Misstatements can arise from fraud or error and are considered material if individuallyor in the aggregate they could reasonably be expected to influence the economic decisionsof users taken on the basis of these financial statements.
As part of an audit in accordance with Standards on Auditing we exercise professionaljudgment and maintain 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 control relevant to the audit in order todesign audit procedures that are appropriate in the circumstances. Under Section 143(3)(l)of the Act we are also responsible for expressing our opinion on whether the Company hasadequate internal financial controls system in place and the operating effectiveness ofsuch controls.
Evaluate the appropriateness of accounting policies used and the reasonablenessof accounting estimates and related disclosures made by 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.
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 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 Companies Act 2013 we give in the Annexure A a statement on the matters specifiedin 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 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 Flows dealt with by thisReport are in agreement with the books of account
(d) In our opinion the aforesaid standalone financial statements comply with the IndAS specified under Section 133 of the Act
(e) On the basis of the written representations received from the Directors as on 31"'March 2021 taken on record by the Board of Directors none of the directors isdisqualified as on 31stMarch 2021 from being appointed as a Director in termsof Section 164 (2) of the Act
(f) WithrespecttotheadequacyoftheinternalfinancialcontrolsoverfinancialreportingoftheCompany and the operating effectiveness of such controls refer to our separate Report in"Annexure B". Our report expresses an unmodified opinion on the adequacy andoperating effectiveness of the Company's internal financial controls over financialreporting
(g) 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 year is inaccordance with the provisions of section 197 of the Act.
(h) 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 (as amended) inour opinion and to the best of our information and according to the explanations given tous:
i. The Company does not have any materially significant pending litigations which wouldimpact its financial position.
ii. The Company has made provision as required under the applicable law or accountingstandards for material foreseeable losses if any on long-term contracts includingderivative contracts.
iii. There has been no delay in transferring amounts required to be transferred tothe Investor Education and Protection Fund by the Company.
ANNEXURE - A TO THE INDEPENDENT AUDITOR'S REPORT Statement of matters specified in Para3 & 4 of the order referred to in sub-section (11) of 143.
The annexure referred to in Para 1 under the heading of "Report on other Legal andRegulatory Requirements" of our report to the members of PONDY OXIDES AND CHEMICALSLIMITED of even date:
1. In respect of company's fixed assets:
a) The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets.
b) As per the information and explanation given to us all the fixed assets have beenphysically verified by the Company at reasonable intervals and no material discrepancieswere noticed on such verification. In our opinion this periodicity of physicalverification is reasonable having regard to the size of the Company and the nature of itsassets. No material discrepancies as compared to book records were noticed on suchverification.
c) According to the information and explanations given to us and the records examinedby us and based on the examination of the registered conveyance deed provided to us wereport that the title deeds comprising all the immovable properties of land are held inthe name of the Company as at the balance sheet date. Immovable properties of freeholdland disclosed as fixed assets in the financial statement whose title deeds have beenpledged as security for loans are held in the name of the Company. In respect ofimmovable properties of land that have been taken on lease and disclosed as fixed asset inthe financial statements the lease agreements are in the name of the Company where theCompany is the lessee in the agreement.
2. The inventories have been physically verified by the management during the year. Inour opinion the frequency of such verification is reasonable and adequate in relation tothe size of the company and nature of its business. No material discrepancies were noticedon physical verification of inventories as compared to the book records.
3 During the year the company has not granted any loans secured or unsecured tocompanies firms or other parties covered in the Register maintained under Section 189 ofthe Companies Act 2013. Accordingly the provisions of clauses (iii) (a)(b) &(c) ofPara 3 of the Order are not applicable.
4. 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 with respectto the loans and investments made.
5. The Company has not accepted any deposits during the year from the public withinthe meaning of Section 73 to 76 or any other relevant provisions of the Act and Rulesframed there under and does not have any unclaimed deposits as at March 312021 andtherefore the provisions of the clause 3 (v) of the Order are not applicable to theCompany.
6. We have broadly reviewed the books of accounts maintained by the Company pursuant tothe rules prescribed by the Central Government for the maintenance of cost records undersub Section (1) of Section 148 of the Companies Act 2013 and are of the opinion thatprima facie the prescribed accounts and records have been made and maintained. We havehowever not made a detailed examination of the cost records with a view to determinewhether they are accurate or complete.
7. According to the information and explanations given to us in respect of statutorydues:
a) The Company has generally been regular in depositing undisputed statutory duesincluding Provident Fund Employees' State Insurance Income Tax Sales Tax Service TaxGoods and Service Tax Value Added Tax Customs Duty Cess and other material statutorydues applicable to it with the appropriate authorities.
b) There were no undisputed amounts payable in respect of Provident Fund Employees'State Insurance Income Tax Sales Tax Service Tax Goods and Service Tax Value AddedTax Customs Duty Cess and other material statutory dues were in arrears as at 31 stMarch 2021 for a period of more than six months from the date they became payable.
8. 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 banks and financialinstitutions. The Company has not taken any loan or borrowing from government and has notissued any debentures during the year under audit.
9. In our opinion and according to the information and explanations given to us theterm loans availed by the Company have been applied for the purpose for which they wereobtained. The Company has not raised monies byway of initial public offer orfurther publicoffer (including debt instruments) during the year
10. Based upon the audit procedures performed for the purpose of reporting the true andfair view of the financial statements to the best of our knowledge and belief and as perthe information and explanations given to us by the Management and the representationsobtained from the management no material fraud by the Company and no fraud on the companyby its officers or employees has been noticed or reported during the year.
11. According to the information and explanations give to us and based on ourexamination of the records of the Company the Company has paid or provided managerialremuneration in accordance with the requisite approvals mandated by the provisions ofSection 197 read with Schedule V to the Act.
12. The Company is not a Nidhi Company and hence reporting under Clause 3 paragraph3(xii) of the Order is not applicable to the company.
13. According to the information and explanations given to us and based on ourexamination of the records and approvals of the Audit Committee of the Company alltransactions with the related parties are in compliance with Sections 177 and 188 of theAct where applicable and the details of such transactions have been disclosed in thefinancial statements as required by the applicable accounting standards.
14. According to the information and explanations give 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 and hence reporting under Clause 3 (xiv) of the Order is not applicable to theCompany.
15. According to the information and explanations given to us and based on ourexamination of the records of the Company the Company has not entered into non-cashtransactions with its directors or persons connected to its Directors. Accordinglyparagraph 3(xv) of the Order is not applicable.
16. According to the information and explanation given to us the Company is notrequired to be registered under section 45-IAof the Reserve Bank of India Act 1934.Accordingly paragraph 3(xvi) of the Order is not applicable.
ANNEXURE - B TO THE INDEPENDENT AUDITORS' REPORT
(Referred to in paragraph 2(f) under Report on Other Legal and RegulatoryRequirements' section of our report to the members of PONDY OXIDES AND CHEMICALS LIMITEDof even date)
Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section143 of the Companies Act 2013 ("the Act")
We have audited the Internal Financial Controls over financial reporting of PONDYOXIDES AND CHEMICALS LIMITED ("the Company") as of March 312021 in conjunctionwith our audit of the financial statements of the Company for the year ended on that date.
Management's Responsibility for Internal Financial Controls
The Company's management is responsible for establishing and maintaining internalfinancial controls based on the internal control over financial reporting (IFCoFR)criteria established by the Company considering the essential components of internalcontrol stated in the Guidance Note on Audit of Internal Financial Controls Over FinancialReporting (the "Guidance Note") issued by the Institute of Chartered Accountantsof India (ICAI). These responsibilities include the design implementation and maintenanceof adequate 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 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 judgment including the assessment of the risks ofmaterial misstatement of the financial statements whether due to fraud or error.
We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the Company's internal financial controls systemover financial reporting.
Meaning of Internal Financial Controls over Financial Reporting
ACompany's IFCoFR is a process designed to provide reasonable assurance regarding thereliability of financial reporting and the preparation of financial statements forexternal purposes in accordance with generally accepted accounting principles. ACompany'sIFCoFR includes those policies and procedures that (1) pertain to the maintenance ofrecords that in reasonable detail accurately and fairly reflect the transactions anddispositions of the assets of the Company; (2) provide reasonable assurance thattransactions are recorded as necessary to permit preparation of financial statements inaccordance with generally accepted accounting principles and that receipts andexpenditures of the Company are being made only in accordance with authorizations ofmanagement and Directors of the Company; and (3) provide reasonable assurance regardingprevention or timely detection of unauthorized acquisition use or disposition of theCompany's assets that could have a material effect on the financial statements.
Inherent Limitations of Internal Financial Controls over Financial Reporting
Because of the inherent limitations of IFCoFR including the possibility of collusionor improper management override of controls material misstatements due to error or fraudmay occur and not be detected. Also projections of any evaluation of the IFCoFR to futureperiods are subject to the risk that IFCoFR may become inadequate because of changes inconditions or that the degree of compliance with the policies or procedures maydeteriorate.
In our opinion the Company has in all material respects adequate internal financialcontrols over financial reporting and such internal financial controls over financialreporting were operating effectively as at 31 March 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 FinancialControl over Financial Reporting issued by the ICAI.
| ||For L Mukundan and Associates |
| ||Chartered Accountants |
| ||Firm Registration No: 010283S |
|Place: Chennai ||L Mukundan |
|Date: 25* June 2021 ||Partner |
| ||Membership No. 204372 |
| ||UDIN: 21204372AAAACU1434 |