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Privi Speciality Chemicals Ltd.

BSE: 530117 Sector: Industrials
NSE: PRIVISCL ISIN Code: INE959A01019
BSE 15:50 | 07 Jul 1040.00 -16.55
(-1.57%)
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1058.90

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1070.00

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1037.05

NSE 15:43 | 07 Jul 1042.55 -18.05
(-1.70%)
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1060.60

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1070.85

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OPEN 1058.90
PREVIOUS CLOSE 1056.55
VOLUME 2202
52-Week high 2268.00
52-Week low 1011.60
P/E 41.57
Mkt Cap.(Rs cr) 4,062
Buy Price 0.00
Buy Qty 0.00
Sell Price 1041.90
Sell Qty 2.00
OPEN 1058.90
CLOSE 1056.55
VOLUME 2202
52-Week high 2268.00
52-Week low 1011.60
P/E 41.57
Mkt Cap.(Rs cr) 4,062
Buy Price 0.00
Buy Qty 0.00
Sell Price 1041.90
Sell Qty 2.00

Privi Speciality Chemicals Ltd. (PRIVISCL) - Auditors Report

Company auditors report

To the Members of

Privi Speciality Chemicals Limited

(formerly known as Fairchem Speciality Limited)

Report on the Audit of the Standalone Financial Statements Opinion

We have audited the standalone financial statements of Privi Speciality ChemicalsLimited (formerly known as Fairchem Speciality Limited) ("the Company")which comprise the standalone balance sheet as at March 31 2021 and the standalonestatement of profit and loss (including other comprehensive income) standalone statementof changes in equity and standalone statement of cash flows for the year then ended andnotes to the standalone financial statementsincluding policies and other explanatoryinformation (hereinafter referred to as ‘standalone financial statements’).

In our opinion and to the best of our information and according to the explanationsgiven to us the financial statements information required by the the Companies Act 2013("Act") in the manner so required and in the context of the overriding effect ofthe provision in the Scheme of Merger and De-merger as approved by the National CompanyLaw Tribunal (‘NCLT’) regarding accounting of Merger and De-merger from thespecified retrospective appointed date and consequential restatement of comparatives givea true and fair view in conformity with the accounting principles generally accepted inIndia of the state of affairs of the Company as at March 31 2021 and profit(including other comprehensive income) changes in equity and its cash flows for the yearended on that date.

Basis for Opinion

We conducted our audit in accordance with the Standards on Auditing (SAs) specifiedunder Section 143(10) of the Act. Our responsibilities under those SAs are furtherdescribed in the Auditor’s Responsibilities for the Audit of the StandaloneFinancial Statements section of our report. We are independent of the Company inaccordance with the Code of Ethics issued by the Institute of Chartered Accountants ofIndia together with the ethical requirements that are relevant to our audit of thestandalone financial statements under the provisions of the Act and the Rules thereunderand we have fulfilled our other ethical responsibilities in accordance with theserequirements and the Code of Ethics. We believe that the audit evidence we have obtainedis sufficient and appropriate to provide a basis for our opinion on the Standalonefinancial statements.

Emphasis of matter

We draw attention to Note 42 of the standalone financial statements which describes theScheme of Merger and De-merger (‘Scheme’) between the Company Privi OrganicsIndia Limited and Fairchem Organics Limited (both being wholly owned subsidiaries). TheScheme has been approved by the National Company Law Tribunal (‘NCLT’) vide itsorder dated June 30 2020 and a certified has been filed by the Company with the Registrarof Companies Maharashtra on August 12 2020. Since the appointed date as per the NCLTapproved Scheme is April 1 2019 the merger and the de-merger has been accounted for witheffect from that date. Accordingly the amounts relating for the year ended March 31 2021include the impact of the merger and de-merger for the entire year and the correspondingamounts for the previous year ended March 31 2020 have been restated by the Company afterrecognising the effect of the merger and de-merger as above.

The aforesaid note also describes in detail the impact of the merger and de-merger onthe standalone financial statements. Our opinion is not modified in respect of thismatter.

Other Matter

The comparative financial statements of the Company for the year ended March 31 2020included in these standalone financial statements are based on the previously issuedstandalone financial statements audited by the predecessor auditor whose report for theyear ended March 31 2020 dated June 23 2020 expressed an unmodified opinion on thosestandalone financial statements as adjusted for the impact of effect of merger of PriviOrganics India Limited and demerger of the existing business of the Holding Company toFairchem Organics Limited which have been audited by us.

Our opinion is not modified in respect of this matters.

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.

Description of Key Audit Matter

Key Audit Matter How the matter was addressed in our audit
Revenue Recognition (Refer note - 21 and note 37 to the standalone financial statements) In view of the significance of the matter we applied the following audit procedures in this area among others to obtain sufficient appropriate audit evidence:-
The Company’s revenue is derived primarily from sale of products. The principal products of the Company comprise aroma chemicals. Assessed the appropriateness of Company’s accounting policies relating to revenue recognition as per the applicable accounting standard.
Revenue from sale of goods is recognised on transfer of control of the products to the customer. The Company uses a variety of shipment terms across its operating markets and this has an impact on the timing of revenue recognition. The performance obligations in the contracts may be fulfilled at the time of dispatch delivery or upon formal customer acceptance depending on contract terms. Obtained an understanding of the Company's sales process and evaluated the design and implementation of key internal controls in relation to the timing of revenue recognition. We also tested the operating effectiveness of such controls for a sample of transactions with special reference to controls over revenue recognised on and around the year end.
There is a risk that revenue could be recognised at a time which is different from transfer of control especially for sales transactions occurring on and around the reporting period. In view of this and since revenue is a key performance indicator of the Company we have identified timing of the revenue recognition as a key audit matter. For a sample of sale transactions selected using statistical sampling performed detailed testing and in particular examined whether these are recognised in the period in which control is transferred. This included examination of the terms and conditions of the customer orders including the shipping terms transporter documents and customer acceptances.
T ested on a sample basis using statistical sampling specific revenue transactions recorded around the year end date to check whether revenue has been recognised in the correct reporting period by examining the underlying documents.
T ested sample journal entries for revenue recognised during the year selected based on specified risk-based criteria to identify unusual transactions.

Other Information

The Company’s management and Board of Directors are responsible for the otherinformation. The other information comprises the information included in theCompany’s annual report but does not include the financial statements and ourauditors’ report thereon. Our opinion on the standalone financial statements does notcover the other information and we do not express any form of assurance conclusionthereon.

In connection with our audit of the standalone financial statements our responsibilityis to read the other information and in doing so consider whether the other informationis materially inconsistent with the standalone financial statements or our knowledgeobtained in the audit or otherwise appears to be materially misstated. If based on thework we have performed we conclude that there is a material misstatement of this otherinformation we are required to report that fact. We have nothing to report in thisregard.

Management’s and Board of Directors’ Responsibility for the StandaloneFinancial Statements

The Company’s Management and Board of Directors are responsible for the mattersstated in Section 134(5) of the Act with respect to the preparation of these standalonefinancial statements that give profit / loss and other true fairview the stateaffairs comprehensive income changes in equity and cash flows of the Company inaccordance with the accounting principles generally accepted in India and basis describedin Note 2 including the Indian Accounting Standards (Ind AS) specified under Section 133of the Act. This responsibility also includes maintenance of adequate accounting recordsin accordance 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 accuracy and completenessof the accounting records relevant to the preparation and presentation of the standalonefinancial statements that give a true and fair view and are free from materialmisstatement whether due to fraud or error.

and Board of Directors In preparing the standalone financial are responsible forassessing the Company’s ability to continue as a going concern disclosing asapplicable matters related to going concern and using the going concern basis ofaccounting unless the Board of Directors either intends to liquidate the Company or tocease operations or has no realistic alternative but to do so.

The Board of Directors is also responsible for overseeing the Company’s financialreporting process

Auditor’s Responsibilities 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. Reasonableassurance is a high level of assurance but is not a guarantee that an audit conducted inaccordance with SAs 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 standalone financial statements As part of an auditin accordance with SAs we exercise professional judgment and maintain professionalskepticism throughout the audit. We also:

Identify and assess the risks of material misstatement of the standalone 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 to designaudit procedures that are appropriate in the circumstances. Under Section 143(3)(i) of theAct we are also responsible for expressing our opinion on whether the company hasadequate internal financial controls with reference to financial statements in place andthe operating effectiveness of such controls.

Evaluate the appropriateness of accounting policies used and the reasonableness ofaccounting estimates and related disclosures in the standalone financial statements madeby the Management and Board of Directors.

Conclude on the appropriateness of the Management and Board of Directors use of thegoing concern basis of accounting and based on the audit evidence obtained whether amaterial uncertainty exists related to events or conditions that may cast significantdoubt on the Company’s ability to continue as a going concern. If we conclude that amaterial uncertainty exists we are required to draw attention in our auditor’sreport to the related disclosures in the standalone financial statements or if suchinadequate 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 conditionsmay cause the Company to cease to continue as a going concern.

Evaluate the overall presentation structure and content of the standalone financialstatements including the whether the standalone 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.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditors’ Report) Order 2016 ("theOrder") issued by the Central Government in terms of Section 143 (11) of the Act wegive in the" Annexure A" a statement on the matters specified in paragraphs 3and 4 of the Order to the extent applicable.

2. (A) 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 standalone balance sheet the standalone statement of profit and loss (includingother comprehensive income) the standalone statement of changes in equity and thestandalone statement of cash flows dealt with by this Report are in agreement with thebooks of account.

d) In our opinion the aforesaid standalone financial statements comply with the Ind ASspecified under Section 133 of the Act.

e) On the basis of the written representations received from the directors as on March31 2021 and taken on record by the Board of Directors none of the directors isdisqualified as on March 31 2021 from being appointed as a director in terms of Section164(2) of the Act.

f) With respect to the adequacy of the internal financial controls with reference tofinancial statements of the Company and the operating effectiveness of such controlsrefer to our separate Report in "Annexure B".

(B) With respect to the other matters to be included in the Auditors’ Report inaccordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014 in ouropinion and to the best of our information and according to the explanations givento us:

i. The Company has disclosed the impact of pending litigations as at March 31 2021 onits financial position in its standalone financial statements - Refer Note 34 to thestandalone financial statements;

ii. The Company did not have any long-term contracts for which there were any materialforeseeable losses. The Company has made provision for foreseeable losses on derivativecontracts. Refer Note 19 to the standalone financial statements

iii. There were no amounts which were required to be transferred to the InvestorEducation and Protection Fund by the Company. iv. The disclosures in the standalonefinancial statements regarding holdings as well as dealings in specified bank notes duringthe period from November 8 2016 to December 30 2016 have not been made in thesefinancial statements since they do not pertain to the financial year ended March 31 2021.

(C) With respect to the matter to be included in the Auditors’ Report underSection 197(16): In our opinion and according to the information and explanations given tous the remuneration paid by the company to its directors during the current year is inaccordance with the provisions of Section 197 of the Act. The remuneration paid to anydirector 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.

For B S R & Co LLP
Chartered Accountants
Firm’s Registration No.101248W/W-100022
Jayesh T. Thakkar
Partner
Mumbai Membership No: 113959
May 14 2021 ICAI UDIN: - 21113959AAAACQ4917

ANNEXURE A TO THE INDEPENDENT AUDITORS’ REPORT ON STANDALONE FINANCIAL STATEMENTS– MARCH 31 2021

(Referred to in paragraph 1 under ‘Report on Other Legal and RegulatoryRequirements’ section of our report of even date)

i. (a) The Company has maintained proper records showing full particulars includingquantitative details and situation of property plant and equipment.

(b) All property plant and equipment were physically verified by the management duringthe year in accordance with a planned programme of verifying them once in two years whichin our opinion is reasonable having regard to the size of the Company and the nature ofits assets. No material discrepancies were noticed on such verification and the same havebeen dealt with in the books of account.

(c) In our opinion and according to the information and explanations given to us and onthe basis of our examination of the records of the Company the title deeds of immovableproperties are held in the name of the Company.

ii. The inventory except for goods-in-transit and stocks lying with third parties hasbeen physically verified by the management reasonable intervals during the year. In ouropinion the frequency of such verification is reasonable. For stocks lying with thirdparties at the year-end written confirmations have been obtained and in respect ofgoods-in-transit subsequent goods receipts have been verified or confirmations have beenobtained from the parties. The discrepancies noticed on verification between the physicalstocks and the book records were not material and have been properly dealt with in thebooks of account.

iii. According to the information and explanations given to us the Company has notgranted any loans secured or unsecured to companies firms limited liabilitypartnerships or other parties covered in the register maintained under Section 189 of theCompanies Act 2013 (‘the Act’). Accordingly paragraphs 3(iii) (a) (b) and (c)of the Order are not applicable to the Company.

iv. In our opinion and according to the information and explanations given to us theCompany has complied with the provisions of Sections 185 and 186 of the Act in respect ofloans given investments made guarantees given and security provided.

v. In our opinion and according to the information and explanations given to us theCompany has not accepted any deposits from the public during the year in terms of thedirectives issued by the Reserve Bank of India and the provisions of Sections 73 to 76 orany other relevant provisions of the Act and the rules framed there under. Accordinglyparagraph 3(v) of the Order is not applicable to the Company.

vi. W e have broadly reviewed the books of account maintained by the Company asspecified under Section 148(1) of the Act for maintenance of cost records in respect ofproducts manufactured by the Company and are of the opinion that prima facie theprescribed accounts and records have been made and maintained. However we have not made adetailed examination of the cost records with a view to determine whether they areaccurate or complete.

vii. (a) According to the information and explanations given to us and on the basis ofour examination of the records of the Company amounts deducted/accrued in the books ofaccount in respect of undisputed statutory dues including Provident Fund Employees’State Insurance Goods and Service Tax Duty of Customs Cess and other material statutorydues have been regularly deposited during the year by the Company with the appropriateauthorities. According to the information and explanations given to us and on the basis ofour examination of the records of the Company amounts deducted / accrued in the books ofaccount in respect of undisputed statutory dues including Income tax and Profession taxhave generally been regularly deposited during the year with the appropriate authoritiesthough there have been slight delays in few cases. According to the information andexplanations given to us no undisputed amounts payable in respect of Provident FundEmployees’ State Insurance Income-tax Goods and Service Tax Duty of Customs Cessand other material statutory dues were in arrears as at March 31 2021 for a period ofmore than six months from the date they became payable.

(b) According to the information and explanations given to us there are no dues ofService tax Value Added tax Goods and Service tax and Sales tax which have not beendeposited with the appropriate authorities on account of any dispute.

According to the information and explanation given to us the following dues of Incometax Duty of Customs and Duty of Excise have not been deposited by the Company on accountof disputes:

Name of the statue Nature of the dues Amount (Rs. in lakhs) Period to which the amount relates Forum where dispute is pending Date of payment
The Income Tax Act 1961 Income tax 3.32 2005-2006 CIT Appeals Not Yet Paid
The Income Tax Act 1961 Income tax 1111.88 2011-2012 CIT Appeals Not Yet Paid
The Customs Act 1962 Customs Duty 9.52 1998-1999 CESTAT Not yet paid
The Income Tax Act 1961 Income Tax 316.12 2014-2015 CIT Appeals Not Yet Paid
The Income Tax Act 1961 Income Tax 31.21 2015-2016 CIT Appeals Not Yet Paid
The Customs Act 1962 Customs Duty 90.54 2013-2014 CESTAT Not Yet Paid

viii. In our opinion and according to the information and explanations given to us theCompany has not defaulted in the repayment of dues to banks or to any financialinstitutions. The Company did not have any outstanding dues to government and debentureholders during the year.

ix. According to the information and explanations given to us the term loans have beenapplied by the Company during the year for the purposes for which they were obtained. TheCompany did not raise money by way of initial public offer or further public offer(including debt instruments) during the year.

x. According to the information and explanations given to us no material fraud by theCompany or on the Company by its officers or employees has been noticed or reported duringthe course of our audit.

xi. According to the information and explanations give to us and based on ourexamination of the records of the Company the Company has paid/provided for managerialremuneration in accordance with the requisite approvals mandated by the provisions ofSection 197 read with Schedule V to the Act.

xii. In our opinion and according to the information and explanations given to us theCompany is not a Nidhi company. Accordingly paragraph 3(xii) of the Order is notapplicable to the Company.

xiii. According to the information and explanations given to us and based on ourexamination of the records of the Company transactions with the related parties are incompliance with Sections 177 and 188 of the Act where applicable and details of suchtransactions have been disclosed in the standalone financial statements as required by theapplicable accounting standards.

xiv. According to the information and explanations given 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. Accordingly paragraph 3(xiv) of the Order is not applicable to the Company.

xv. 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 directors or persons connected with them. Accordingly paragraph 3(xv)of the Order is not applicable to the Company.

xvi. According to the information and explanations given to us the Company is notrequired to be registered under Section 45 - IA of the Reserve Bank of India Act1934. Accordingly paragraph 3(xvi) of the Order is not applicable to the Company.

For B S R & Co. LLP
Chartered Accountants
Firm’s Registration No.101248W/W-100022
Jayesh T. Thakkar
Partner
Mumbai Membership No: 113959
May 14 2021 ICAI UDIN: - 21113959AAAACQ4917

ANNEXURE B TO THE INDEPENDENT AUDITORS’ REPORT ON THE STANDALONE FINANCIALSTATEMENTS OF PRIVI SPECIALITY CHEMICALS LIMITED

(‘formerly known as Fairchem Speciality Limited’) for the year endedMarch 31 2021

Report on the internal financial controls with reference to the aforesaid standaloneFinancial Statements under Clause (i) of Sub-

Section 3 of Section 143 of the Companies Act 2013

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

Opinion

We have audited the internal financial controls with reference to Standalone FinancialStatements of Privi Speciality Chemicals Limited (‘formerly known as FairchemSpeciality Limited’) ("the Company") as of March 31 2021 inconjunction with our audit of the standalone financial statements of the Company for theyear ended on that date.

In our opinion the Company has in all material respects adequate internal financialcontrols with reference to standalone Financial Statements and such internal financialcontrols were operating effectively with reference to standalone financial statementscriteria 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 (the "GuidanceNote").

Management’s Responsibility for Internal Financial Controls

The Company’s management and the Board of Directors are responsible forestablishing and maintaining internal financial controls based on the internal financialcontrols with reference to standalone financial statements criteria established by theCompany considering the essential components of internal control stated in the GuidanceNote. These responsibilities include the design implementation and maintenance ofadequate internal financial controls that were operating effectively for ensuring theorderly and efficient conduct of its business including adherence to company’spolicies the safeguarding of its assets the prevention and detection of frauds anderrors the accuracy and completeness of the accounting records and the timelypreparation of reliable financial information as required under the Companies Act 2013(hereinafter referred to as "the Act").

Auditors’ Responsibility

Our responsibility is to express an opinion on the Company's internal financialcontrols with reference to standalone financial statements based on our audit. Weconducted our audit in accordance with the Guidance Note and the Standards on Auditingprescribed under Section 143(10) of the Act to the extent applicable to an audit ofinternal financial controls with reference to standalone financial statements. 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 with reference to standalone financial statements were established andmaintained and whether such controls operated effectively in all material respects.

Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal financial controls with reference . Our audit of internal financial controlswith reference to standalone to standalone financial financial statements includedobtaining an understanding of such internal financial controls assessing the risk that amaterial weakness exists and testing and evaluating the design and operatingeffectiveness of internal control based on the assessed risk. The procedures selecteddepend on the auditor’s judgement including the assessment of the risks of materialmisstatement of the standalone 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 controlswith reference to standalone financial statements.

Meaning of Internal Financial controls with Reference to Standalone financialstatements

A company's internal financial controls with reference to standalone financialstatements is a process designed to provide reasonable assurance regarding the reliabilityof financial reporting and the preparation of Standalone financial statements for externalpurposes in accordance with generally accepted accounting principles. A company's internalfinancial controls with reference to standalone financial statements include thosepolicies 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 standalone financial statements in accordance with generally acceptedaccounting principles and that receipts and expenditures of the company are being madeonly in accordance 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 standalone financial statements.

Inherent Limitations of Internal Financial controls with Reference to StandaloneFinancial Statements

Because of the inherent limitations of internal financial controls with reference toStandalone Financial Statements including the possibility of collusion or impropermanagement override of controls material misstatements due to error or fraud may occurand not be detected. Also projections of any evaluation of the internal financialcontrols with reference to Standalone Financial Statements to future periods are subjectto the risk that the internal financial controls with reference to standalone FinancialStatements may become inadequate because of changes in conditions or that the degree ofcompliance with the policies or procedures may deteriorate.

For B S R & Co. LLP
Chartered Accountants
Firm’s Registration No.101248W/W-100022
Jayesh T. Thakkar
Partner
Mumbai Membership No: 113959
May 14 2021 ICAI UDIN: - 21113959AAAACQ4917

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