TO THE MEMBERS OF RELIANCE CHEMOTEX INDUSTRIES LTD.
Report on the Audit of the Standalone Ind AS Financial Statements
We have audited the accompanying Annual Ind AS financial statements of RelianceChemotex Industries Limited ("the Company") which comprise the Balancesheet as at March 31 2020 the Statement of Profit and Loss including the statement ofOther Comprehensive Income the Cash Flow Statement and the statement of Changes in Equityfor the year then ended and notes to the financial statements including a summary ofsignificant 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 Annual Ind AS financial statements give the informationrequired by the Companies Act 2013 as amended ("the Act") in the manner sorequired and give a true and fair view in conformity with the accounting principlesgenerally accepted in India of the state of affairs of the Company as at March 31 2020its profit including other comprehensive income its cash flows and the changes in equityfor the year ended on that date.
Basis for Opinion
We conducted our audit of the Annual Ind AS financial statements in accordance with theStandards on Auditing (SAs) as specified under section 143(10) of the Act. Ourresponsibilities under those Standards are further described in the 'Auditor'sResponsibilities for the Audit of the Annual Ind AS Financial Statements' section of ourreport. We are independent of the Company in accordance with the 'Code of Ethics' issuedby the Institute of Chartered Accountants of India 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 auditopinion on the Annual Ind AS financial statements.
Emphasis of matter
We draw attention to Note 49 to the financial result which describes the uncertaintiesand the impact of the COVID -19 pandemic on the company's operations and results asassessed by the management. The actual results may differ from such estimates depending onthe future developments. 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 Annual financial statements of the current period. Thesematters were addressed in the context of our audit of the Annual financial statements as awhole and in forming our opinion thereon and we do not provide a separate opinion onthese matters.
We have determined the matters described below to be the key audit matters to becommunicated in our report. We have fulfilled the responsibilities described in theAuditor's responsibility for the audit of the Annual Ind AS financial statements sectionof our report including in relation to these matters. Accordingly our audit included theperformance of procedures designed to respond to our assessment of the risks of materialmisstatement of the Annual Ind AS financial statements. The results of our auditprocedures including the procedures performed to address the matters below provide thebasis for our audit opinion on the accompanying Annual Ind AS financial statements.
|Key Audit Matters ||Auditors Response |
|IND AS 116 Leases ||Our audit procedures on adoption of Ind AS 116 include: |
|As described in Note No. 35(VII) to the financial statements the Company has adopted Ind AS 116 Leases in the current year. The application and transition to this accounting standard is complex and is an area of focus in our audit. Ind AS 116 introduces a new lease accounting model wherein lessees are required to recognise a right-of- use (ROU) asset and a lease liability arising from a lease on the balance sheet. || Assessed and tested new processes and controls in respect of the lease accounting standard (Ind AS 116); |
| || Assessed the Company's evaluation on the identification of leases based on the contractual agreements and our knowledge of the business; |
|The lease liabilities are initially measured by discounting future lease payments during the lease term as per the contract/ arrangement. || On a statistical sample we performed the following procedures: |
|Adoption of the standard involves significant judgments and estimates including determination of the discount rates and the lease term. || assessed the key terms and conditions of each lease with the underlying lease contracts; and |
|Additionally the standard mandates detailed disclosures in respect of transition. || evaluated computation of lease liabilities and verified the key estimates such as discount rates and the lease term. |
|Refer Note 48 to the Annual financial statements. || Assessed and tested the presentation and disclosures relating to Ind AS 116 including disclosures relating to transition. |
We have determined that there are no other key audit matters to communicate in eachreport
Information Other than the Financial Statements and Auditor's Report Thereon
The Company's Board of Directors is responsible for the other information. The otherinformation comprises the information included in the Annual Report 2019-20. Our opinionon the Annual Ind AS 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 Annual Ind AS financial statements ourresponsibility is to read the other information and in doing so consider whether suchother information is materially inconsistent with the Annual Ind AS financial statementsor our knowledge obtained in the audit or otherwise appears to be materially misstated.If based on the work we have performed we conclude that there is a material misstatementof this other information we are required to report that fact. We have nothing to reportin this regard.
Responsibilities of Management for the Annual Ind AS 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 Annual Ind AS financialstatements that give a true and fair view of the financial position financial performanceincluding other comprehensive income cash flows and changes in equity of the Company inaccordance with the accounting principles generally accepted in India including theIndian Accounting Standards (Ind AS) specified under section 133 of the Act read with [theCompanies (Indian Accounting Standards) Rules 2015 as amended. This responsibility alsoincludes maintenance of adequate accounting records in accordance with the provisions ofthe Act for safeguarding of the assets of the Company and for preventing and detectingfrauds and other irregularities; selection and application of appropriate accountingpolicies; making judgments and estimates that are reasonable and prudent; and the designimplementation 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 Annual Ind AS financialstatements that give a true and fair view and are free from material misstatement whetherdue to fraud or error.
In preparing the Annual Ind AS 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 Responsibilities for the Audit of the Annual Ind AS Financial Statements
Our objectives are to obtain reasonable assurance about whether the Annual Ind ASfinancial 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 Annual Ind AS 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 Annual Ind ASfinancial 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 control relevant to the audit in order todesign 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 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 Annual Ind ASfinancial statements including the disclosures and whether the Annual Ind AS financialstatements represent the underlying transactions and events in a manner that achieves fairpresentation.
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 Annual Ind AS financialstatements for the financial year ended March 31 2020 and are therefore the key auditmatters. We describe these matters in our auditor's report unless law or regulationprecludes public disclosure about the matter or when in extremely rare circumstances wedetermine that a matter should not be communicated in our report because the adverseconsequences of doing so would reasonably be expected to outweigh the public interestbenefits 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 in terms of Section 143(11) of the Act we give in"Annexure A" a statement on the matters specified in paragraphs 3 and 4 of theOrder.
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 the Cash Flow Statement andStatement of Changes in Equity dealt with by this Report are in agreement with the booksof account
d) In our opinion the aforesaid Ind AS financial statements comply with the IndianAccounting Standards prescribed under section 133 of the Act.
e) On the basis of the written representations received from the directors as on 31stMarch 2020 taken on record by the Board of Directors none of the directors isdisqualified as on 31st March 2020 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 over financialreporting of the Company and the operating effectiveness of such controls refer to ourseparate Report in "Annexure B".
g) With respect to the other matters to be included in the Auditor's Report inaccordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014 in our opinionand to the best of our information and according to the explanations given to us:
i. The Company has disclosed the impact of pending litigations on its financialposition in its Ind AS financial statements;
ii. The Company did not have any long term contracts including derivative contracts forwhich there were any material foreseeable losses.
iii. There were no amounts which were required to be transferred to the InvestorEducation and Protection Fund by the Company.
For Jain Pramod Jain & Co.
(Firm Registration No. 016746N)
Membership No. 010479
Place: New Delhi
UDIN 20010479 AAAA BD4471
"Annexure A" to the Independent Auditors' Report
Reliance Chemotex Industries Limited (Referred to in Paragraph 1 under the heading of"Report on Other Legal and Regulatory Requirements" of our report of even date)
i. (a) The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets;
(b) Fixed assets have been physically verified by the management according to theregular programme of periodical verification in phased manner designed to cover all itemsover a period of 3 years which in our opinion is reasonable having regard to the size ofthe company and the nature of its fixed assets. No material discrepancies were noticed onsuch verification;
(c) The title deeds of immovable properties are held in the name of the company.
ii. The inventories of the Company at all its locations (except stock in transit) havebeen physically verified by the management at reasonable intervals and the discrepancieswhich were noticed on physical verification of inventory as compared to book records werenot material;
iii. The Company has not granted any loan to companies firms or other parties coveredin the Register maintained under section 189 of the Act. Therefore the provisions ofclause 3 (iii) of the order are not applicable to the company and hence not commentedupon.
iv. In our opinion and according to the information and explanations given to us thecompany has complied with provisions of section 185 and 186 of the Companies Act 2013with respect of loans investments guarantees and securities.
v. The Company has not accepted any deposit from public.
vi. We have broadly reviewed the books of account maintained by the Company pursuant tothe rules made by the Central Government for the maintenance of cost records under Section148(1) of the Companies Act 2013 and are of the opinion that prima-facie prescribedaccounts and records have been made and maintained. We have however not made a detailedexamination of the said records with a view to determine whether they are accurate andcomplete;
vii.(a) According to the information and explanations and records of the Company thecompany is regular in depositing undisputed statutory dues including Provident FundEmployees' State Insurance Income tax Sales tax Goods and Service Tax Custom DutyExcise Duty Value Added Tax Cess and other statutory dues with the appropriateauthorities. There are no arrears of outstanding statutory dues for a period of more thansix months from the date they became payable as on 31 March 2020;
(b) According to the records and information and explanations given to us there are nodues in respect of custom duty and Goods and Service Tax that have not been deposited onaccount of any dispute. In our opinion and according to the information and explanationsgiven to us the dues in respect of income tax or sales tax or service tax or excise dutyor value added tax that have not been deposited with the appropriate authority on accountof dispute and the forum where the dispute is pending are given below:
|Nature of Statute ||Nature of dues ||Amount involved in Rs. ||Period to which it relates to (Year ended) ||Forum where dispute is pending |
|Service Tax Act ||Service Tax ||240837 ||16.07.2017 to 16.10.2018 ||The Asst. commissioner Central Excise Udaipur |
|Central Excise Act ||Excise Duty ||23567 ||F.Y 1979-80 ||The Asst. Commissioner Central Excise Udaipur |
|Central Excise Act ||Excise Duty ||6310184 ||F.Y 2012-13 to 2015-16 ||CESTAT (Department Appeal) |
viii. The Company has not defaulted in repayment of loans or borrowings to a financialinstitution banks or government.
ix. In our opinion the term loans have been applied for the purpose for which the loanswere raised
x. Based upon the audit procedure performed and information and explanation given tous we report that no fraud by the company or any fraud on the company by its officers oremployees has been noticed or reported during the course of our audit.
xi. Managerial Remuneration has been paid or provided in accordance with the requisiteapprovals mandated by the provision of Section 197 read with schedule V of the CompaniesAct 2013.
xii. Provision of Nidhi Company is not applicable to the Company.
xiii. According to the information and explanation give to us and based on ourexamination of the records of the company all transactions with the related parties arein compliance with Section 177 and 188 of the Companies Act 2013 and the details havebeen disclosed in the financial statements etc as required by the applicable accountingstandard.
xiv. The company has not made any preferential allotment or private placements ofshares or fully or partly convertible debentures during the year under review.
xv. The company has not entered into any non-cash transaction with Directors or personsconnected with him.
xvi. The company is not required to be registered under section 45-1A of the ReserveBank of India Act 1934.
| ||For Jain Pramod Jain & Co. |
| ||Chartered Accountants |
| ||(Firm Registration No. 016746N) |
|Place: New Delhi ||(P.K.JAIN) |
|Date: 26.06.2020 ||Partner |
| ||M No.010479 |
Annexure B to the independent Auditors' report of even date on the standalone FinancialStatement of Reliance Chemotex Industries Limited .
Report on the Internal Financial Controls under Clause (i) of sub section 3 of section143 of the Companies Act 2013 We have audited the internal financial controls overfinancial reporting of Reliance Chemotex Industries Limited as at March 312020 inconjunction with our audit of the Annual financial statements of the Company for the yearended 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 criteriaestablished by the Company considering the essential components of Internal control statedin the Guidance Note on Audit of "the 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.
Our responsibility is to express an opinion on the Company's internal financialcontrols over financial reporting based on our audit. We conducted our audit in accordancewith Guidance note on Audit of Internal Financial Controls over Financial Reporting(the" Guidance Note") and the Standards on Auditing issued by ICAI and deemedto be prescribed under section 143 (10) of the Companies Act 2013 to the extentapplicable to an audit of internal financial controls both applicable to an audit ofInternal Financial Controls and both issued by the Institute of Chartered Accountants ofIndia. Those standards and the Guidance Note require that we Comply with ethicalrequirements and plan and perform the audit to obtain reasonable assurance about whetheradequate Internal financial controls over financial reporting was established andmaintained and if such controls operated effectively in all material respects. Our auditinvolves performing procedures to obtain audit evidence about the adequacy of the Internalfinancial controls system over financial reporting and their operating effectiveness ouraudit of internal financial controls over financial reporting included obtaining andunderstanding of internal financial controls over financial reporting assessing the riskthat a material 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 financial statement 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 details accurately and fairly reflect the transactions anddisposition of the assets of the company;(2) provide reasonable assurance thattransactions are recorded as necessary to permit preparation of financial statement 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 limitation 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 may 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.
In our opinion the Company has in all material respects an adequate internalfinancial control system over financial reporting and such internal financial controlsover financial reporting were operating effectively as at March 31 2020 based on"the internal control over financial reporting criteria established by the CompanyConsidering the essential components of internal control stated in the "Guidance Noteon Audit of Internal Financial Controls over Financial Reporting issued by the Instituteof Chartered Accountants of India".
| ||For Jain Pramod Jain & Co. |
| ||Chartered Accountants |
| ||(Firm Registration No. 016746N) |
|Place: New Delhi ||(P.K.JAIN) |
|Date: 26.06.2020 ||Partner |
| ||M No.010479 |