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Premier Explosives Ltd.

BSE: 526247 Sector: Industrials
NSE: PREMEXPLN ISIN Code: INE863B01011
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VOLUME 1746
52-Week high 428.00
52-Week low 210.00
P/E 63.60
Mkt Cap.(Rs cr) 357
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 330.00
CLOSE 331.75
VOLUME 1746
52-Week high 428.00
52-Week low 210.00
P/E 63.60
Mkt Cap.(Rs cr) 357
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Premier Explosives Ltd. (PREMEXPLN) - Auditors Report

Company auditors report

To

The Members of PREMIER EXPLOSIVES LIMITED

Report on the Audit of the Standalone Financial Statements

Opinion

We have audited the accompanying standalone financial statements of PREMIER EXPLOSIVESLIMITED ("the Company") which comprise the Balance Sheet as at March 312020and 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 trueand fair view in conformity with the Indian Accounting Standards prescribed under section133 of the Act read with the Companies (Indian Accounting Standards) Rules 2015 asamended ("Ind AS") and other accounting principles generally accepted in Indiaof the state of affairs of the Company as at March 31 2020 and its loss totalcomprehensive income its cash flows and the changes in equity for the year ended on thatdate.

Basis for Opinion

We conducted our audit of the standalone financial statements in accordance with theStandards on Auditing specified under section 143(10) of the Act (SAs). Ourresponsibilities under those Standards are further described in the Auditor'sResponsibility for the Audit of the Standalone Financial Statements section of our report.We are independent of the Company in accordance with the Code of Ethics issued by theInstitute of Chartered Accountants of India (ICAI) together with the ethical requirementsthat are relevant to our audit of the standalone financial statements under the provisionsof the Act and the Rules made thereunder and we have fulfilled our other ethicalresponsibilities in accordance with these requirements and the ICAI's Code of Ethics. Webelieve that the audit evidence obtained by us is sufficient and appropriate to provide abasis for our audit opinion on the standalone financial statements.

Emphasis of Matter

We draw your attention to Note 31(D) of the Standalone financial Statements whichdescribes the management's assessment of the financial impact of the events arising out ofCoronavirus (Covid-19) pandemic for which a definitive assessment of the impact in thesubsequent period is dependent upon the circumstances as they evolve.

Our opinion is not modified in respect of this matter.

Key Audit Matters

Key audit matters are those matters that in our professional judgment were of mostsignificance in our audit of the standalone financial statements of the current period.These matters were addressed in the context of our audit of the standalone financialstatements as a whole and in forming our opinion thereon and we do not provide aseparate opinion on these matters. we have determined the matters described below to bethe key audit matter to be communicated in our report.

S. No Key Audit Matter (Standalone) Auditor's Response
1 Fair value assessment of trade receivables Principal audit procedures performed:
Trade receivables comprise a significant portion of the liquid assets of the Company. As indicated in Note 31(A) to the consolidated financial statements 44.20% of the trade receivables of the parent are past due more than 90 days. We have Performed Audit confirmation procedures and due to non-response of the same we performed alternative procedures as below to assess the validity outstanding receivables.
The most significant portion of the trade receivables over 90 days comprises of Public Sector companies and Government organizations which are within their historic payment patterns. • We verified payments received subsequent to year-end against the outstanding amounts as on March 312019.
Company applies the simplified approach and recognises Expected credit loss (ECL) for trade receivable balances (refer standalone Note No 31(A)). Trade receivables have been assessed on a collective basis as they possess shared credit risk characteristics by grouping days past due of customers. Accordingly the estimation of the Expected Credit Losses allowances on trade receivables outstanding as at year end is a significant judgement area hence considered as a key audit matter. • Verified client source documentation to provide evidence for the existence assertion of the receivables.
(Standalone Trade receivables outstanding as at March 312020 - Rs 5184.57 lakhs - which is near to 75% of total financial assets) • Performed Analytical procedures for revenue recognised to find out unusual patterns in sales to identify potentially impaired balances.
• Enquiries with respective Marketing managers and with those charged with governance about long outstanding customer balances.
The assessment of the appropriateness of the ECL allowance for trade receivables comprised of audit procedures including:
1.We assessed management's ECL impairment model consistent with the requirements of IND AS 109;
2.We tested the mathematical accuracy of Management's ECL impairment model;
3. We agreed the data utilised in Management's ECL impairment model at March 31 2020 to receivables aging report calculations and other audited information;
4. We challenged assumptions and judgements made by Management through discussion comparison to data and our knowledge of the operations as gained through our audit in determining future expected loss rates.

Information Other than the Financial Statements and Auditor's Report Thereon

• The Company's Board of Directors is responsible for the other information. The other information comprises the information included in the Directors report including annexures to directors report Corporate governance and Management discussion and analysis (MD & A) but does not include the standalone financial statements and our auditor's report thereon. These reports containing other information is expected to be made available to us after the date of this auditor's report.
• Our opinion on the standalone financial statements does not cover the other information and we will not express any form of assurance conclusion thereon.
• In connection with our audit of the standalone financial statements our responsibility is to read the other information and in doing so consider whether the other information is materially inconsistent with the standalone financial statements or our knowledge obtained during the course of our audit or otherwise appears to be materially misstated.
• When we read the Directors report including annexures to directors report Corporate governance and Management discussion and analysis (MD & A) if we conclude that there is a material misstatement therein we are required to communicate the matter to those charged with governance as required under SA 720 'The Auditor's responsibilities Relating to Other Information'.

Responsibilities of Management and Those charged with Governance for the StandaloneFinancial Statements

The Company's Board of Directors is responsible for the matters stated in section134(5) of the Act with respect to the preparation of these standalone financial statementsthat give a true and fair view of the financial position financial performance includingother comprehensive income cash flows and changes in equity of the Company in accordancewith the Ind AS and other accounting principles generally accepted in India. Thisresponsibility also includes maintenance of adequate accounting records in accordance withthe provisions of the Act for safeguarding the assets of the Company and for preventingand detecting frauds and other irregularities; selection and application of appropriateaccounting policies; making judgments and estimates that are reasonable and prudent; anddesign implementation and maintenance of adequate internal financial controls that wereoperating effectively for ensuring the accuracy and completeness of the accountingrecords relevant to the preparation and presentation of the standalone financialstatement that give a true and fair view and are free from material misstatement whetherdue to fraud or error.

In preparing the standalone financial statements management is responsible forassessing the Company's ability to continue as a going concern disclosing as applicablematters related to going concern and using the going concern basis of accounting unlessmanagement either intends to liquidate the Company or to cease operations or has norealistic alternative but to do so.

Those Board of Directors are also responsible for overseeing the Company's financialreporting process.

Auditor's Responsibility for the Audit of the Standalone Financial Statements

Our objectives are to obtain reasonable assurance about whether the standalonefinancial statements as a whole are free from material misstatement whether due to fraudor error and to issue an auditor's report that includes our opinion. Reasonable assuranceis a high level of assurance but is not a guarantee that an audit conducted in accordancewith SAs will always detect a material misstatement when it exists. Misstatements canarise from fraud or error and are considered material if individually or in theaggregate they could reasonably be expected to influence the economic decisions of userstaken on the basis of these standalone financial statements.

As part of an audit in accordance with SAs we exercise professional judgment andmaintain professional skepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the standalone financial statements whether due to fraud or error design and perform audit procedures responsive to those risks and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error as fraud may involve collusion forgery intentional omissions misrepresentations or the override of internal control.
• Obtain an understanding of internal financial control relevant to the audit in order to design audit procedures that are appropriate in the circumstances. Under section 143(3)(i) of the Act we are also responsible for expressing our opinion on whether the Company has adequate internal financial controls system in place and the operating effectiveness of such controls.
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the management.
• Conclude on the appropriateness of management's use of the going concern basis of accounting and based on the audit evidence obtained whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company's ability to continue as a going concern. If we conclude that a material uncertainty exists we are required to draw attention in our auditor's report to the related disclosures in the standalone 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's report. However future events or conditions may cause the Company to cease to continue as a going concern.
• Evaluate the overall presentation structure and content of the standalone financial statements including the disclosures and whether the standalone financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

Materiality is the magnitude of misstatements in the standalone financial statementsthat individually or in aggregate makes it probable that the economic decisions of areasonably knowledgeable user of the standalone financial statements may be influenced. Weconsider quantitative materiality and qualitative factors in (i) planning the scope of ouraudit work and in evaluating the results of our work; and (ii) to evaluate the effect ofany identified misstatements in the standalone financial statements.

We communicate with those charged with governance regarding among other matters theplanned scope and timing of the audit and significant audit findings including anysignificant deficiencies in internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have compliedwith relevant ethical requirements regarding independence and to communicate with themall relationships and other matters that may reasonably be thought to bear on ourindependence and where applicable related safeguards.

From the matters communicated with those charged with governance we determine thosematters that were of most significance in the audit of the standalone financial statementsof the current period and are therefore the key audit matters. We describe these mattersin our auditor's report unless law or regulation precludes public disclosure about thematter or when in extremely rare circumstances we determine that a matter should not becommunicated in our report because the adverse consequences of doing so would reasonablybe expected to outweigh the public interest benefits of such communication.

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 best of 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 the Company so far as it appears from our examination of those books.
c) The Balance Sheet the Statement of Profit and Loss including Other Comprehensive Income the Statement of Cash Flows and Statement of Changes in Equity dealt with by this Report are in agreement with the books of account.
d) In our opinion the aforesaid standalone financial statements comply with the Ind AS specified under Section 133 of the Act.
e) On the basis of the written representations received from the directors as on March 312020 taken on record by the Board of Directors none of the directors is disqualified as on March 312020 from being appointed as a director in terms of Section 164(2) of the Act.
f) With respect to the adequacy of the internal financial controls over financial reporting of the Company and the operating effectiveness of such controls refer to our separate Report in "Annexure A". Our report expresses an unmodified opinion on the adequacy and operating effectiveness of the Company's internal financial controls over financial reporting.
g) With respect to the other matters to be included in the Auditor's Report 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 the explanations given to us the remuneration paid by the Company to its directors during the year is in accordance with the provisions of section 197 of the Act.
h) With respect to the other matters to be included in the Auditor'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 according to the explanations given to us:

i. The Company has disclosed the impact of pending litigations on its financialposition in its standalone financial statements -(refer note no 33 to the standalonefinancial statements);

ii. The Company has made provision as required under the applicable law or accountingstandards for material foreseeable losses if any on long-term contracts the companydidn't have derivative contracts;

iii. There has been no delay in transferring amounts required to be transferred tothe 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 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.

For MAJETI & CO
Chartered Accountants
Firm's Registration No: 015975S
Kiran Kumar Majeti
Partner
Place: Hyderabad Membership No: 220354
Date: June 29 2020 UDIN No: 20220354AAAAAT3276

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 of 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 PREMIEREXPLOSIVES LIMITED ("the Company") as of March 31 2020 in conjunction with ouraudit of the standalone Ind AS financial statements of the Company for the year ended onthat date.

Management's Responsibility for Internal Financial Controls

The Board of directors of the company is responsible for establishing and maintaininginternal financial controls based on "the internal control over financial reportingcriteria established by the Company considering the essential components of internalcontrol stated in the Guidance Note on Audit of Internal Financial Controls Over FinancialReporting 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 company's policies the safeguarding ofits assets the prevention and detection of frauds and errors the accuracy andcompleteness of the accounting records and the timely preparation of reliable financialinformation as required under the Companies Act 2013.

Auditor's Responsibility

Our responsibility is to express an opinion on the Company's internal financialcontrols over financial reporting of the Company based on our audit. We conducted ouraudit in accordance with the Guidance Note on Audit of Internal Financial Controls OverFinancial Reporting (the"Guidance Note") issued by the Institute of CharteredAccountants of India and the Standards on Auditing prescribed under Section 143(10) of theCompanies Act 2013 to the extent applicable to an audit of internal financial controls.Those Standards and the Guidance Note require that we comply with ethical requirements andplan and 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 Company's internal financial controls systemover financial reporting.

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 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 authorisations ofmanagement and directors of the company; and (3) provide reasonable assurance regardingprevention or timely detection of unauthorised 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 internal financial controls over financialreporting including the possibility of collusion or improper management override ofcontrols material misstatements due to error or fraud may occur and not be detected.Also projections of any evaluation of the internal financial controls over financialreporting to future periods are subject to the risk that the internal financial controlover financial reporting may become inadequate because of changes in conditions or thatthe degree of compliance with the policies or procedures may deteriorate.

Opinion

In our opinion 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 312020 based on "the criteria forinternal financial control over financial reporting established by the Company consideringthe essential components of internal control stated in the Guidance Note on Audit ofInternal Financial Controls Over Financial Reporting issued by the Institute of CharteredAccountants of India".

For MAJETI & CO
Chartered Accountants
Firm's Registration No: 015975S
Kiran Kumar Majeti
Partner
Place: Hyderabad Membership No: 220354
Date: June 29 2020 UDIN No: 20220354AAAAAT3276

ANNEXURE "B" TO THE INDEPENDENT AUDITOR'S REPORT

(Referred to in paragraph 2 under 'Report on Other Legal and

Regulatory Requirements' section of our report of even date)

i. (a) The Company is maintaining proper records showing full particulars including quantitative details and situation of fixed assets.
(b) The fixed assets are physically verified by the Management according to a phased programme designed to cover all the items on rotation basis which in our opinion is reasonable having regard to the size of the Company and the nature of its assets. Pursuant to the programme a portion of the fixed assets has been physically verified by the Management during the year and no material discrepancies have been noticed on such verification.
(c) The title deeds of immovable properties as disclosed in Note 3 on property plant and equipment to the financial statements are held in the name of the Company.
ii. The physical verification of inventory excluding stocks with third parties have been conducted at reasonable intervals by the Management during the year. In respect of inventory lying with third parties these have substantially been confirmed by them. The discrepancies noticed on physical verification of inventory as compared to book records were not material.
iii. a) The Company has granted unsecured loans to one company covered in the register maintained under Section 189 of the Act. There are no firms LLPs and other parties covered in the register maintained under Section 189 of the Act.
b) In respect of the aforesaid loans the terms and conditions under which such loans were granted are not prejudicial to the Company's interest.
c) In respect of the aforesaid loans no schedule for repayment of principal and payment of interest has been stipulated by the Company. Therefore in absence of stipulation of repayment terms we do not make any comment on the regularity of repayment of principal and payment of interest.
d) In respect of the aforesaid loans no schedule for repayment of principal and payment of interest has been stipulated by the Company. Therefore in absence of stipulation of repayment terms we do not make any comment on the regularity of repayment of principal and payment of interest.
iv In our opinion and according to the information and explanations given to us the Company has complied with the provisions of Section 185 and 186 of the Companies Act 2013 in respect of the loans and investments made and no guarantees and security provided by it.
v. The Company has not accepted any deposits from the public within the meaning of Sections 73 74 75 and 76 of the Act and the Rules framed there under to the extent notified.
vi. Pursuant to the rules made by the Central Government of India the Company is required to maintain cost records as specified under Section 148(1) of the Act in respect of its products.

We have broadly reviewed the same and are of the opinion that prima facie theprescribed accounts and records have been made and maintained. We have not however madea detailed examination of the records with a view to determine whether they are accurateor complete.

vii. (a) According to the information and explanations given to us and the records ofthe Company examined by us in our opinion the Company is generally regular in depositingundisputed statutory dues including Goods and Services Tax Customs Duty cess and othermaterial statutory dues as applicable except there has been a slight delay in a fewcases of employees' state insurance Income tax Professional Tax and provident fund withthe appropriate authorities.

(b) According to the information and explanations given to us and the records of theCompany examined by us there are no dues of Provident fund Employees State InsuranceIncome Tax Goods and Services Tax Customs duty cess and other material statutory duesas applicable which have not been deposited on account of any dispute. The particulars ofdues of sales tax value added tax as at March 31 2020 which have not been deposited onaccount of a dispute are as follows:

Name of the statute Nature of dues Amount (Rs. in lakhs) Period to which the amount relates Forum where the dispute is pending
Central Honourable High
Sales Tax 1956 Tamil Nadu Sales Tax 151.31 2007-08 Court of Andhra Pradesh and Telangana Honourable
Value Added tax 2006 Value Added Tax 424.52 2009-10 to 2015-16 High Court of Judicature at Madras

viii. According to the records of the Company examined by us and the information andexplanations given to us The Company has not defaulted in repayment of loans orborrowings to any financial institution or bank or Government or dues to debenture holdersas at the balance sheet date.

ix. The Company has not raised any moneys by way of initial public offer furtherpublic offer (including debt instruments). In our opinion and according to theinformation and explanations given to us the moneys raised by way of term loans have beenapplied for the purposes for which they were obtained.

x. During the course of our examination of the books and records of the Companycarried out in accordance with the generally accepted auditing practices in India andaccording to the information and explanations given to us we have neither come across anyinstance of material fraud by the Company or on the Company by its officers or employeesnoticed or reported during the year nor have we been informed of any such case by theManagement.

xi. The Company has paid/ provided for managerial remuneration in accordance with therequisite approvals mandated by the provisions of Section 197 read with Schedule V to theAct.

xii. As the Company is not a Nidhi Company and the Nidhi Rules 2014 are not applicableto it the provisions of Clause 3(xii) of the Order are not applicable to the Company.

xiii. The Company has entered into transactions with related parties in compliance withthe provisions of Sections 177 and 188 of the Act. The details of such related partytransactions have been disclosed in the financial statements as required under IndianAccounting Standard (IND AS) 24 Related Party Disclosures specified under Section 133 ofthe Act read with Rule 7 of the Companies (Accounts) Rules 2014.

xiv. The Company has not made any preferential allotment of shares during the yearunder review in compliance with the requirements of Section 42 of the Act. The amountsraised during the previous year have been used for the purpose for which funds wereraised:

Equity Shares Purpose for which funds raised Total Amount Raised/ Opening Unutilized balance Amount utilised for the purpose of its raise Un-utilised balance as at Balance sheet date
Qualified Business
Institutional Expansion
Placement & & Working 1660.65 1660.65 -
Preferential Capital
Issue expansion

xv. The Company has not entered into any non-cash transactions with its directors orpersons connected with him. Accordingly the provisions of Clause 3(xv) of the Order arenot applicable to the Company.

xvi. The Company is not required to be registered under Section 45-IA of the ReserveBank of India Act 1934. Accordingly the provisions of Clause 3(xvi) of the Order are notapplicable to the Company.

For MAJETI & CO
Chartered Accountants
Firm's Registration No: 015975S
Kiran Kumar Majeti
Partner
Place: Hyderabad Membership No: 220354
Date: June 29 2020 UDIN No: 20220354AAAAAT3276

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