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Shalimar Paints Ltd.

BSE: 509874 Sector: Consumer
NSE: SHALPAINTS ISIN Code: INE849C01026
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OPEN 67.05
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VOLUME 3300
52-Week high 111.00
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P/E
Mkt Cap.(Rs cr) 366
Buy Price 67.35
Buy Qty 16.00
Sell Price 67.55
Sell Qty 18.00
OPEN 67.05
CLOSE 66.45
VOLUME 3300
52-Week high 111.00
52-Week low 43.85
P/E
Mkt Cap.(Rs cr) 366
Buy Price 67.35
Buy Qty 16.00
Sell Price 67.55
Sell Qty 18.00

Shalimar Paints Ltd. (SHALPAINTS) - Auditors Report

Company auditors report

To The Members of Shalimar Paints Limited

Report on the Audit of Standalone Financial Statements

Opinion

We have audited the accompanying standalone Ind AS financial statements of Shalimar Paints Limited (the Company) which comprise the Balance Sheet as at 31st March 2019 and the Statement of Profit and Loss (including Other Comprehensive Income) the Cash Flow Statement and the Statement of Changes in Equity for the year ended on that date and a summary of the significant accounting policies and other explanatory information (herein after referred to as the Standalone financial statements).

In our opinion and to the best of our information and according to the explanations given to us the aforesaid standalone Ind AS financial statements give the information required by the Companies Act 2013 (the `Act') in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India and the Indian Accounting Standards (Ind AS) prescribed under section 133 of the Act read together with Companies (Indian Accounting Standards) Rules 2015 of the state of affairs of the Company as at 31st March 2019 and its loss total comprehensive income its cash flows and the changes in equity for the year ended on that date.

Basis for Opinion

We conducted our audit of the standalone financial statements in accordance with the Standards on Auditing specified under section 143(10) of the Act (SAs). Our responsibilities under those Standards are further described in the Auditor's Responsibilities 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 the Institute of Chartered Accountants of India (ICAI) together with the independence requirements that are relevant to our audit of the standalone financial statements under the provisions of the Act and the Rules made thereunder and we have fulfilled our other ethical responsibilities in accordance with these requirements and the ICAI's Code of Ethics. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis 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 most significance 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 financial statements as a whole and in forming our opinion thereon and we do not provide a separate opinion on these matters. We have determined the matters described below to be the key audit matters to be communicated in our report.

Sr. No.Key Audit MatterAuditor's Response
1Evaluation of Trade receivables:Principal Audit Procedures
The Company's Trade receivables included material disputed receivables & receivables against which legal proceedings have been initiated or to be initiated by the Company . The Company has made provision for trade receivables (which are significantly disputed and which are subjected to legal proceedings) for Rs 1843.56 Lakh under the head `Life Time Expected Credit Loss' besides regular provisioning for expected credit loss of Rs 597.64 Lakh under the head `12 months Expected Credit Loss' [(Refer Note 45(ii) of the Standalone Financial Statement]While reviewing the quality of trade receivables from realization perspective based on information & explanation made available to us we also have relied upon the management representation with respect to fair valuation of trade receivable in accordance of applicable IND AS which have been confirmed by the IBBI Registered Valuer recognized under Companies Act 2013 (hereinafter referred to as `Registered Valuer').
Trade receivables which carried significant credit risk and /or credit impaired as evaluated in terms of provisioning thereof have been broadly reviewed by us on selective basis. We also obtained on sample basis direct confirmation from customers of the Company.
Our audit approach was a combination of test of internal controls with respect to Trade receivable management and substantive procedures.
The Audit Committee of the Company has also reviewed/approved the provisioning of Trade receivables for fair value thereof.
2Evaluation of InventoriesPrincipal Audit Procedures
The Company has identified inventories with minimal realizable value. The carrying amount / cost of such inventories lying at Godown & factory stood at Rs 1155.38 lakh as at year end .We on sample basis test checked said inventories with negligible realizable values. We took cognizance of and relied upon the report of Registered Valuer.
We have been informed by the management that such inventories shall be sold as scrap. The carrying amount of unrealizable inventories aggregating Rs 1155.38 lakh identified by the Management during the year has been shown as `Exceptional Item' in the Statement of Profit & Loss Account. [Refer Notes 38(b)of the Standalone Financial Statements] Other inventories are valued at applicable IND AS.The valuer has also reported that carrying amount of damaged inventories has only scrap value as stated in `key Audit Matter'. Audit committee of the Company has approved the fully damaged stock to be sold as scrap. Valuation of Other inventories ( test checked by us on sample basis) as stated in the financial statement are in agreement with report of the Registered Valuer.
3Evaluation of un-ascertained tax & other liabilitiesPrincipal Audit Procedures
The Company has material unascertained disputed taxes & other liabilities shown as continent liabilities the determination of which involves significant management judgment. Refer Notes 41 of the Standalone Financial StatementsWe have obtained the details of completed tax assessments and demands for the year ended March 312019 from management. We evaluated the management's underlying assumptions in estimating the tax provision and the possible outcome of the disputes. We have also evaluated the disputed tax demand of earlier years having regard to legal precedence and other rulings in evaluating management's position on these uncertain tax positions.
The material uncertain tax position & uncertain other liabilities giving rise to disputed liabilities shown as contingent liabilities have been examined by us having regard to material information & explanation furnished to us by the management. We review material uncertain tax position & uncertain other liabilities from year to year basis for changes therein.

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

The Company's Board of Directors is responsible for the preparation of the other information. The other information comprises the information included in the Management Discussion and Analysis Board's Report including Annexures to Board's Report Business Responsibility Report Corporate Governance and Shareholder's Information but does not include the standalone financial statements and our auditor's report thereon.

Our opinion on the standalone financial statements does not cover the other information and we do 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.

If based on the work we have performed we conclude that there is a material misstatement of this other information we are required to report that fact. We have nothing to report in this regard.

Management's Responsibility for the Standalone Ind AS Financial Statements

The Company's Board of Directors is responsible for the matters stated in Section 134(5) of the Companies Act 2013 (the Act) with respect to the preparation of these standalone Ind AS financial statements that give a true and fair view of the financial position financial performance including other comprehensive income cash flows and changes in equity of the Company in accordance with the accounting principles generally accepted in India including the Indian Accounting Standards (Ind AS) prescribed under Section 133 of the Act read with relevant rules issued thereunder.

This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the accuracy and completeness of the accounting records relevant to the preparation and presentation of the standalone Ind AS financial statements that give a true and fair view and are free from material misstatement whether due to fraud or error.

In preparing the standalone financial statements management is responsible for assessing the Company's ability to continue as a going concern disclosing as applicable matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations or has no realistic alternative but to do so.

The Board of Directors are responsible for overseeing the Company's financial reporting process.

Auditor's responsibility for the audit of the Ind AS Financial Statements

Our objectives are to obtain reasonable assurance about whether the standalone financial statements as a whole are free from material misstatement whether due to fraud or error and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with Standards on Auditing (SAs)will always detect material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if individually or in the aggregate they could reasonably be expected to influence the economic decisions of users taken on the basis of these standalone financial statements.

As part of an audit in accordance with SAs we exercise professional judgment and maintain 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 controls 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 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 statements that individually or in aggregate makes it probable that the economic decisions of a reasonably knowledgeable user of the financial statements may be influenced. We consider quantitative materiality and qualitative factors in (i) planning the scope of our audit work and in evaluating the results of our work; and (ii) to evaluate the effect of any identified misstatements in the financial statements. We communicate with those charged with governance regarding among other matters the planned scope and timing of the audit and significant audit findings including any significant deficiencies in internal control that we identify during our audit.

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

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

(i) As per information and explanation furnished to us the insurance claims of loss for damage of immovable & movable assets due to fire in Company's plants/units located at Howrah & Nasik are yet to be assessed by the Insurer & claim have been accounted for on estimated basis.( Note 51 of standalone financial statements).

(ii) Some of the financial assets & liabilities including trade receivables trade payables & advances are pending confirmation /reconciliation and their impact on financial statements if any is unascertained^ Note 55 of standalone financial statements )

(iii) As regard disclosure in Note 42 of standalone financial statements regarding Micro Small & Medium Enterprises we have relied upon the information & explanation to the extent made available to us by the management.

Our opinion on the standalone Ind AS financial statements and our report on Other Legal and Regulatory Requirements below is not modified in respect of these matters.

Report on Other Legal and Regulatory Requirements

1. As required by Section 143(3) of the Act based on our audit we report to the extent applicable 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 Cash Flow Statement and Statement of Changes in Equity dealt with by this Report are in agreement with the relevant books of account.

d) In our opinion the aforesaid standalone Ind AS financial statements comply with the Indian Accounting Standards prescribed under Section 133 of the Act& Rules made thereunder.

e) On the basis of the written representations received from the directors as on 31st March 2019 taken on record by the Board of Directors none of the directors is disqualified as on 31st March 2019 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 Auditors' Report in accordance with Rule 11 ofthe 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 financial position in its standalone Ind AS financial statements.( Note 41 to the standalone Ind AS financial statements)

ii. The Company did not have any long-term contracts including derivative contracts for which there were any material foreseeable losses.

iii. There has been no delay in transferring amounts required to be transferred to the Investor Education and Protection Fund.

2. As required by the Companies (Auditors' 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 the Order.

For A K Dubey & Co.
Chartered Accountants
Firm Registration No. 329518E
Place : Gurugram
Date : 28th May 2019.Arun Kumar Dubey
Partner
Membership No.- 057141

Annexure A to the independent Auditors' Report

(Referred to in paragraph 1(f) under `Report on Other Legal and Regulatory Requirements' Section of our report of even date to the Members of Shalimar Paints Limited )

Report on the Internal Financial Controls Over Financial Reporting under Clause (i) of Sub-section 3 of section 143 of the Companies Act 2013 (the Act)

We have audited the internal financial controls over financial reporting of Shalimar Paints Limited (the Company) as of 31st March 2019 in conjunction with our audit of the standalone Ind AS financial statements of the Company for the year ended on that date.

Management's Responsibility for Internal Financial Controls

The Company's management represented by the Board of directors is responsible for establishing and maintaining internal financial controls based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls over Financial Reporting issued by the Institute of Chartered Accountants of India (ICAI). These responsibilities include the design implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the orderly and efficient conduct of its business including adherence to company's policies the safeguarding of its assets the prevention and detection of frauds and errors the accuracy and completeness of the accounting records and the timely preparation of reliable financial information as required under the Companies Act 2013.

Auditors' Responsibility

Our responsibility is to express an opinion on the Company's internal financial controls over financial reporting of the Company based on our audit. We conducted our audit in accordance with the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting (the Guidance Note) issued by the Institute of Chartered Accountants of India and the Standards on Auditing prescribed under Section 143(10) of the Companies 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 and plan and perform the audit to obtain reasonable assurance about whether adequate internal financial controls over financial reporting was established and maintained and if such controls operated effectively in all material respects.

Our audit involves performing procedures to obtain audit evidence about the adequacy of the internal financial controls system over financial reporting and their operating effectiveness. Our audit of internal financial controls over financial reporting included obtaining an understanding of internal financial controls over financial reporting assessing the risk that a material weakness exists and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. The procedures selected depend on the auditors' judgment including the assessment of the risks of material misstatement of the financial statements whether due to fraud or error.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the Company's internal financial controls system over financial reporting.

Meaning of Internal Financial Controls Over Financial Reporting

A company's internal financial controls over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal financial controls over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition use or disposition of the company'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 financial reporting including the possibility of collusion or improper management override of controls material misstatements due to error or fraud may occur and not be detected. Also projections of any evaluation of the internal financial controls over financial reporting to future periods are subject to the risk that the internal financial controls over financial reporting may become inadequate because of changes in conditions or that the 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 given to us the Company has in all material respects an adequate internal financial controls system over financial reporting and such internal financial controls over financial reporting were operating effectively as at 31st March 2019 based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issued by the Institute of Chartered Accountants of India.

For A K Dubey & Co.
Chartered Accountants
Firm Registration No. 329518E
Place : Gurugram
Date : 28th May 2019.Arun Kumar Dubey
Partner
Membership No.- 057141

Annexure B to the independent Auditors' Report

(Referred to in paragraph 2 under `Report on Other Legal and Regulatory Requirements'''' section of our report of even date to the Members of Shalimar Paints Limited)

i. (a) The Company has maintained proper records showing full particulars including quantitative details and situation of the fixed assets.

(b) Due to fire in Company's Howrah & Nasik Plants there has been significant damage its fixed assets comprising Building Plant & Machineries etc situated therein. The Company has a regular programme/policy of physical verification of its fixed assets included in Property Plant & Equipments (PPE) by which all fixed assets are verified in a phased manner. In our opinion this periodicity of physical verification is reasonable having regard to the size of the Company and the nature of its assets. As per the policy certain fixed assets excluding damaged as stated above were physically verified by the Management during the year. According to the information and explanations given to us no material discrepancies were noticed on such verification.

(c) According to the information and explanations given to us and the records examined by us on test basiswe report that the title deeds in respect of freehold immovable properties of land and buildings are held in the name of the Company as at the Balance Sheet date. In respect of leasehold immovable properties the lease agreements are in the name of the Company.

ii. The inventory( except material/ goods-in-transit stocks lying with third parties& stock burnt/damaged due to fire in Howrah & Nasik Plants ) have been physically verified by the management during the year. In our opinion the frequency of such verification is reasonable. For stocks lying with third parties at the year end written confirmations obtained by the management have been verified by us on test basis. The discrepancies noticed on verification between the physical stocks and the book records were not material and have been dealt with in books of account.

iii. The Company is to receive Rs 722.08 lakh (previous year Rs 699.90lakh) from its subsidiary Shalimar AdhunikNirman Limited( SANL) which is shown under the head `Loans(Non-current) under sub head Loan to Related parties' in Note 9 of the Financial Statement. The said loan includes Rs 492.00 lakh (Note 50) being consideration money for transfer of Land by the Company to SANL and the same is interest free. The terms and conditions of said advances are not prejudicial to the Company's interest.

As per information & explanation given to us the repayment schedule is being adhered to so far as it relates to payment of principal & interest whenever they fall due . There is no overdue amount of loan & interest.

Except loan and advances to the aforesaid subsidiary the Company has not granted any loans secured or unsecured to companies firms Limited Liability Partnership or other parties covered in the register maintained under section 189 of the Companies Act 2013.

iv. In our opinion and according to information and explanations given to us in respect of loans investments guarantees and security the Company has complied with the provisions of section 185 & 186 of the Companies Act 2013 to the extent applicable.

v. In our opinion and according to the information and explanations given to us the Company has not accepted any deposit from the public in accordance with the provisions of Sections 73 to 76 or any other relevant provisions of the Act and the rules framed thereunder. Accordingly Clause 3(v) of the Order is not applicable to the Company.

vi. The Central Government has prescribed Cost Records under Section 148(1) of the Companies Act2013 in respect of certain manufacturing activities of the Company. However as per information and explanation furnished to us the same is not statutorily required to be maintained during the year under audit .

vii. According to the information and explanations given to us in respect of statutory dues:

(a) The Company has generally been regular in depositing undisputed statutory dues including Provident Fund Employees' State Insurance Income Tax Sales Tax Service Tax Customs Duty Excise Duty Value Added Tax cess and other material statutory dues applicable to it to the appropriate authorities.

(b) There were no undisputed amounts payable in respect of Provident Fund Employees' State Insurance Income Tax Sales Tax Service Tax Customs Duty Excise Duty Value Added Tax cess and other material statutory dues in arrears as at 31st March 2019 for a period of more than six months from the date they became payable except excise duty /VAT- Rs 270.05 lakh and custom duty as stated in para ( c) below.

(c) Details of dues of Income Tax Sales Tax Service Tax Excise Duty and Value Added Tax which have not been deposited as on 31st March 2019 on account of disputes are given below:

Name of StatuteNature of duesForum where dispute is pendingAmount Involved (Rs lakh)
Central Excise Act 1944Excise DutyVarious Assessing Appellate & Tribunal Authorities837.61
Income Tax Act 1961Income TaxVarious Assessing Appellate Tribunal Authorities221.44
Sales Tax ActCentral Sales Tax & VATVarious Assessing Appellate Tribunal & Revision Board Authorities1677.78
Customs Act 1962Custom DutyApplication to be made to DGFT for appropriate compliance & waiver of penalty [Refer Note 41(b) of the Standalone Financial Statements]54.00

viii. In our opinion and according to the information and explanations given to us the Company has not defaulted during the year in repayment of dues to its financial institutions bankers and government of the to the standalone Ind AS financial statements. The Company did not have any outstanding debentures during the year.

ix. The Company has not raised money by way of initial public offer or further public offer (including debt instruments) According to information & explanation given to us the term loans are applied for the purposes for which those are raised .

x. Based upon the audit procedures performed for the purpose of reporting the true and fair view of the financial statements and according to the information and explanations given by the management we report that no fraud by the Company or on the Company by the officers and employees of the Company has been noticed or reported during the year.

xi. According to the information and explanations given by the management the managerial remuneration has been paid / provided in accordance with the requisite approvals mandated by the provisions of section 197 read with Schedule V to the Companies Act 2013.

xii. The Company is not a Nidhi Company & accordingly reporting under Clause (xii) of the Order is not applicable to the Company.

xiii. According to the information and explanations given to us all transactions with the related parties are in compliance with Section 177 and 188 of Act where applicable ;and the details have been disclosed in the Financial Statements as required by the applicable Indian Accounting Standards.

xiv. During the year the Company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures; hence reporting under Clause (xiv) of the Order is not applicable to the Company.

xv. According to the information and explanations given to us and based on our examination of the records of the Company the Company has not entered into non-cash transactions with its directors or persons connected with them ; hence provisions of Section 192 of the Companies Act 2013 & Clause (xv) of the Order are not applicable.

xvi. The Company is not required to be registered under Section 45 IA of the Reserve Bank of India Act 1934. Hence Clause (xvi) of the Order are not applicable.

For A K Dubey & Co.
Chartered Accountants
Firm Registration No. 329518E
Place : Gurugram
Date : 28th May 2019.Arun Kumar Dubey
Partner
Membership No.- 057141

   

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