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Premier Explosives Ltd.

BSE: 526247 Sector: Industrials
NSE: PREMEXPLN ISIN Code: INE863B01011
BSE 00:00 | 01 Apr 60.85 -1.45
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63.20

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NSE 00:00 | 01 Apr 61.95 0.45
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61.90

HIGH

63.90

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60.45

OPEN 62.15
PREVIOUS CLOSE 62.30
VOLUME 60
52-Week high 260.20
52-Week low 56.50
P/E
Mkt Cap.(Rs cr) 65
Buy Price 56.25
Buy Qty 20.00
Sell Price 62.40
Sell Qty 68.00
OPEN 62.15
CLOSE 62.30
VOLUME 60
52-Week high 260.20
52-Week low 56.50
P/E
Mkt Cap.(Rs cr) 65
Buy Price 56.25
Buy Qty 20.00
Sell Price 62.40
Sell Qty 68.00

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 PREMIEREXPLOSIVES LIMITED ("the Company") which comprise the Balance Sheet as atMarch 31 2019 and the Statement of Profit and Loss (including Other ComprehensiveIncome) Statement of Changes in Equity and the Statement of Cash Flows for the year thenended and a summary 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 informationrequiredbytheCompaniesAct2013("theAct")inthemanner 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 inIndia of the state of affairs of the Company as at March 31 2019 and its profit totalcomprehensive income changes in equity and its cash flows 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.

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 matters to be communicated in our report.

Sr. No. Key Audit Matter 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. We have Performed Audit confirmation procedures and due to non-response of the same we performed alternative procedures as below to assess the validity of outstanding receivables.
As indicated in Note 31(A) to the standalone financial statements 38.04% of the trade receivables are past due more than 90 days.
The most significant portion of the trade receivables over 90 days comprises of Public Sector companies and Government organisations which are within their historic payment patterns. We verified payments received subsequent to year-end against the outstanding amounts as on March 31 2019.
Verified client source documentation to provide evidence for the existence assertion of the receivables.
Company applies the simplified approach and recognises Expected credit loss (ECL) for trade receivable balances (refer 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. 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.
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. 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 9;
(Trade receivables outstanding as at March 31 2019 – Rs. 6961.17 lakhs – which is near to 51% of total financial assets) 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 2019 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 Standalone 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' reportincluding annexures to Directors' report Corporate governance and Management discussionand analysis (MD & A) but does not include the standalone financial statements andour auditor's report thereon. The Directors' report including annexures to Directors'report Corporate governance and Management discussion and analysis (MD & A) report isexpected 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 otherinformation and we do not and will not express any form of assurance conclusion thereon.

In connection with our audit of the standalone financial statements ourresponsibility is to read the other information identified above when it becomes availableand in doing so consider whether the other information is materially inconsistent withthe standalone financial statements or our knowledge obtained during the course of ouraudit or otherwise appears to be materially misstated.

When we read the Directors' report including annexures to Directors' reportCorporate governance and Management discussion and analysis (MD & A) if we concludethat there is a material misstatement therein we are required to communicate the matterto those charged with governance as required under SA 720 ‘The Auditor'sresponsibilities 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 changes in equity and cash flows of the Company in accordancewith the Ind AS and other accounting principles generally accepted in India including theaccounting standards specified under section 133 of the Act. This responsibility alsoincludes maintenance of adequate accounting records in accordance with the provisions ofthe Act for safeguarding the assets of the Company and for preventing and detecting fraudsand other irregularities; selection and application of appropriate accounting policies;making judgments and estimates that are reasonable and prudent; and design implementationand maintenance of adequate internal financial controls that were operating effectivelyfor ensuring the accuracy and completeness of the accounting records relevant to thepreparation and presentation of the standalone financial statement that give a true andfair view and are free from material misstatement whether due 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 unlessBoard of Directors either intends to liquidate the Company or to cease operations or hasno realistic alternative but to do so. Those Board of Directors are also responsible foroverseeing the Company's financial reporting 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 scepticism throughout the audit. We also:

Identify and assess the risks of material misstatement of the standalonefinancial statements whether due to fraud or error design and perform audit proceduresresponsive to those risks and obtain audit evidence that is sufficient and appropriate toprovide a basis for our opinion. The risk of not detecting a material misstatementresulting from fraud is higher than for one resulting from error as fraud may involvecollusion forgery intentional omissions misrepresentations or the override of internalcontrol.

Obtain an understanding of internal financial control relevant to the auditin order to design audit procedures that are appropriate in the circumstances. Undersection 143(3)(i) of the Act we are also responsible for expressing our opinion onwhether the Company has adequate internal financial controls system in place and theoperating effectiveness of such controls.

Evaluate the appropriateness of accounting policies used and thereasonableness of accounting estimates and related disclosures made by the management.

Conclude on the appropriateness of management's use of the going concernbasis of accounting and based on the audit evidence obtained whether a materialuncertainty exists related to events or conditions that may cast significant doubt on theCompany's ability to continue as a going concern. If we conclude that a materialuncertainty exists we are required to draw attention in our auditor's report to therelated disclosures in the standalone financial statements or if such disclosures areinadequate to modify our opinion. Our conclusions are based on the audit evidenceobtained up to the date of our auditor's report. However future events or conditions maycause the Company to cease to continue as a going concern.

Evaluate the overall presentation structure and content of the standalonefinancial statements including the disclosures and whether the standalone financialstatements represent the underlying transactions and events in a manner that achieves fairpresentation.

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 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 relevant books of account.

d) In our opinion the aforesaid standalone financial statements comply with the Ind ASspecified 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 the directors as on March31 2019 taken on record by the Board of Directors none of the directors is disqualifiedas on March 31 2019 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 onthe adequacy and operating effectiveness of the Company's internal financial controls overfinancial reporting.

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 opinionand to the best of our information and according to the explanations given to us theremuneration paid by the Company to its directors during the year is in accordance withthe 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 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 Number: 015975S
Kiran Kumar Majeti
Hyderabad Partner
May 18 2019 Membership Number: 220354

ANNEXURE "A" TOT HEINDE PENDENTAUDITO R'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 FinancialControls Over Financial Reporting under Clause (i) of Sub-section 3 of Section 143 of theCompanies Act 2013 ("the Act")

We have audited the internal financial controls over financial reporting of PREMIEREXPLOSIVES LIMITED ("the Company") as of March 31 2019 in conjunction withour audit of the standalone Ind AS financial statements of the Company for the year endedon that 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 31 2019 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 Number: 015975S
Kiran Kumar Majeti
Hyderabad Partner
May 18 2019 Membership Number: 220354

ANNEXURE "B" TOT HEINDE PENDENTAUDITO R'S REPORT

(Referred to in paragraph 2 under ‘Report on Other Legal and RegulatoryRequirements' section of our report of even date)

i. (a) The Company is maintaining proper records showing full particulars includingquantitative details and situation of fixed assets.

(b) The fixed assets are physically verified by the Management according to a phasedprogramme designed to cover all the items on rotation basis which in our opinion isreasonable having regard to the size of the Company and the nature of its assets. Pursuantto the programme a portion of the fixed assets has been physically verified by theManagement during the year and no material discrepancies have been noticed on suchverification.

(c) The title deeds of immovable properties as disclosed in Note 3 on property plantand equipment to the financial statements are held in the name of the Company.

ii. The physical verification of inventory excluding stocks with third parties havebeen conducted at reasonable intervals by the Management during the year. In respect ofinventory lying with third parties these have substantially been confirmed by them. Thediscrepancies noticed on physical verification of inventory as compared to book recordswere 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 Act. Therefore the provisions of Clause 3(iii) (iii)(a) (iii)(b) and(iii)(c) of the said Order are not applicable to the Company.

iv The Company has not granted any loans or made any investments or provided anyguarantees or security to the parties covered under Section 185 and 186. Therefore theprovisions of Clause 3(iv) of the said Order are not applicable to the Company.

v. The Company has not accepted any deposits from the public within the meaning ofSections 73 74 75 and 76 of the Act and the Rules framed there under to the extentnotified.

vi. Pursuant to the rules made by the Central Government of India the Company isrequired to maintain cost records as specified under Section 148(1) of the Act in respectof 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 provident fund Goods and Services Tax Income taxCustoms Duty cess and other material statutory dues as applicable except employees'state insurance with the 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 2019 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 dispute is pending
Central Sales Tax 1956 Sales Tax 151.31 2007-08 Honourable High Court of Telangana
Tamil Nadu Value Added tax 2006 Value Added Tax 424.52 2009-10 to 2015-16 Honourable High Court of Judicature at Madras

viii. According to the records of the Company examined by us and the informationand explanations 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) and term loans. Accordingly the provisions ofClause 3(ix) of the Order are not applicable to the Company.

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 made a preferential allotment of shares during the year underreview in compliance with the requirements of Section 42 of the Act. The amounts raisedhave been used for the purpose for which funds were raised except as described below:

Equity Shares Purpose for which funds raised Total Amount Raised & Opening unutilised balance Amount utilised for the purpose of its raise Un-utilised balance as at Balance sheet date
Qualified Institutional Placement & Preferential Issue Business Expansion & Working Capital expansion 3153.13 1492.48 1660.65

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 Number: 015975S
Kiran Kumar Majeti
Hyderabad Partner
May 18 2019 Membership Number: 220354