To the Members of
ShankarlalRampal DyeChem Limited
Report on the Audit of the Financial Statements
We have audited the accompanying Financial statements of ShankarlalRampal Dye ChemLimited("the Company") which comprise the Balance Sheet as at March 31 2021the Statement of Profit and Loss (including Other Comprehensive Income) the Statement ofChanges in Equity and the Statement of Cash Flows for the year ended on that date and asummary of the significant accounting policies and other explanatory information (hereinahereinafter referred to as "the financial statements").
In our opinion and to the best of our information and according to the explanatio givento us the aforesaid financial statements give the information required by Companies Act2013 ("the Act") in the manner so required and give a true and fair view inconformity with the Indian Accounting Standards prescribed under section 133 of the Actread with the Companies (Indian Accounting Standards) Rules 2015 as amended("IndAs" ) and other accounting principles generally accepted in India of thestate of affairs of the Company as at March 31 2021 the profit and total comprehensiveincome changes in equity and its cash flows for the year ended on that date.
Basis for Opinion
We conducted our audit of the Financ inancialStatements in accordance with theStandards on Auditing (SAs) specified under section 143(10) of the Companies Act 2013("the act"). Our respon sponsibilities under those Standards are furtherdescribed in the Auditor's Responsibilities for the Audi of the Financial Statementssection of our report. We are independent of the Company in accordanc with the Code ofEthics issued by the Institute of Chartered Accountants of India (ICAI) together with theindependence requirements that are relevant to our audit of the financial statements underthe provisions of the Act and the Rules made thereunder and we have fulfilled our otherethical responsibilities in accordance with these requirements and the ICAI's Code ofEthics. We believe that the audit evide we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the financial statements.
Key Audit Matters
Key audit matters are those matters that in our professional judgment were of mostsignificance in our audit of the financial statements of the current period. These matterswere addressed in the context of our audit of the financial statements as a whole and informing our opinion thereon and we do not provide a separate opinion on these matters. Wehave determined the matters described below to be the key audit matters to be communicatedin our report.
|Key Audit Matter ||How the matter was addressed in our audit |
|1.Valuation of Inventories ||Our audit procedure: |
|? The net carrying value of inventory as on 31st March 2021is 10.07 % of Total Assets of the company. ||? We have performed the Inventory physical stock count on sample basis. We performed inventory counts at location which is selected based on financial significance and risk and we performed the following procedures at each site: |
|? Sales in the industry can be extremely volatile with consumer demand changin significantly (Seasonal) based on current trends. As a result there is a risk that the carrying value of inventory exceeds its net realisable value. ||(i) Selected a sample of inventory items and compared the quantities we counted to the quantities recorded. |
|Hence we determined the valuatio of inventories as a key audit matter. ||(ii)Observed a sample of management's inventory count procedures to assess compliance with Compa ompany's policy and |
|Related Disclosures ||(iii)Made inquiries regarding obsolete inventory items and inspected the condition of items counted. |
|: Please refer to Note for details of the accounting policies of inventories and Note-4 of Notes to Financial Statements for relevant disclosures of inventories. ||? We have also evaluated a selection of controls over inventory existence across the company. |
| ||? Examining the Company historical trading patterns of inventory sold at full price and inventory sold below full price together with the related margins achieved for each product lines in order to gain comfort that stock has not been sold below cost. |
| ||? Evaluating the rationality of the inventory policies such as the policy of inventory 41 valuation and provision for obsolescence and Page understanding whether the valuation of inventory was performed in accordance with the Company's policy. |
| ||? Analyzing the inventory aging report and net realizable value of inventories. |
| ||?Inspecting the post period sales situation and evaluating the net realizable value of measurement applied on aging inventory in order to verify the evaluation accuracy of the estimated inventory allowance by the Company and |
| ||?Assessing whether the disclosures of provision for inventory valuation are appropriate. |
|2. Trade Receivables ||Our Audit Procedure: |
|? The recoverability of trade receiva eceivables and the level of provisions for doubtful debts are considered to be a significant risk due to the pervasive nature of these balance to the financial statements and the importance of cash collection with reference to the working capital management of the business. ||? Assessed the design and implementation of key controls around the monitoring of recoverability. |
|? At 31st March 2021 the trade receivables balances (net of provisions)consis of 48.30 % of the total amount of assets. Accordingly we determined audit of trade receivab ceivables as the key audit matter. ||? Discussed with the management regarding the level and ageing of trade receivables along with the consisten sistency and appropriateness of receivables provisioning by assessing recoverab verability with reference to amount received in respect of trade receivables. |
|Related Disclosures: ||? In addition we have considered the company's previous experience of bad debt exposure and the individual counter-party credit risk. |
|Please refer to Note-5 of Notes to Financial Statements for relevant disclosures of Trade Receivables. ||? Tested these balances on a sample basis through agreement to post period end invoicing and cash receipt. |
| ||? The accuracy and completeness was verified through analytical reviews and balance 42 confirmation. |
| ||? Analyzing the aging schedule of trade Page receivable past collectio records industry boom and concentration of customers' credit risk. |
|3. Revenue Recognition ||Our audit procedure: |
|? Revenue is an important measure used to evaluate the performance of the Company. ||? Assessing the design implementation existence and operating effectiveness of internal control procedures implemented as well as test of details to ensure accurate processing of revenue transactions. |
|There is a risk that the revenue is presented for amounts higher than what has been actually generated by the Company. Consequently we considered revenue recognition to be a significant key audit matter. ||? Inspecting underlying documentation for any book entries which were considered to be material on a sample basis. |
|Related Disclosures: ||? Inspecting the key terms and conditions of agreements with major customers on a sample basis to assess if there were any terms and conditions that may have affected the accounting treatmen of the revenue recognition. |
|Please refer to Note-1 of the accounting policies for details of the accounting policie of revenue recognition and Note- 16 of Notes to Financial Statements. ||? The accuracy and completeness of revenue was verified through cut-off test analytical reviews and balance confirmation. |
Information Other than the Financi l Statements and Auditor's Report Thereon
The Company's Board of Directors is responsible for the preparation of the otherinformation. The other information comprises the informatio included in the ManagementDiscussion and Analysis Board's Report including Annexures to Board's Report CorporateGovernance and Shareho hareholder's Information but does not include the financialstatements and our auditor's report thereon. The other information as identified above isexpected to be made available to us after the date of this auditor's report.
Our opinion on the financial stateme does not cover the other information and we willnot express any form of assurance conclusion thereon.
In connection with our audit of the financial statements our responsibility is to readthe other information identified above when it becomes available and in doing soconsider whether the other information is materially inconsistent with thefinancialstatements or our knowledg obtained during the course of our audit or otherwise appea tobe materially misstated.
When we read the other informatio as identified above if we conclude that there is amaterial misstatement therein we are required to communicate the matter to those chargedwith governance.
Management's Responsibility for the Financial Statements
The Company's Board of Directors is responsible for the matters stated in Section134(5) of the Companies Act 2013 ("the Act") with respect to the preparation ofthese financial statements that give a true and fair view of thefinancial positionfinancial performance total comprehensiv income changes in equity and cash flows of theCompany in accordance with the IndAS and other accounting principles generally accepted inIndia. This responsibility also includes maintenance of adequate accounting records inaccordance with the provisions of the Act for safeguarding the assets of the Company andfor preventing and detecting frauds and other irregularities; selection and applicatplication of appropriate accounting policies; making judgme dgments and estimates that arereasonable and prudent; and design implementation and maintenance of adequate internalfinancial controls that were operating effectively for ensuring the accuracy andcompleteness of the accounting records relevant to the preparation and presentation ofthe financial stateme tatements that give a true and fair view and are free from materialmisstatement whether due to fraud or error
In preparing the financial statements management is responsible for assessing theCompany's ability to continue as a going concern disclosi isclosing 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 responsi sponsible for overseeing the Company's financialreporting process.
Auditor's Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonabl assurance about whether the financial statementsas a whole are free from material misstatement whether due to fraud or error and toissue an auditor's report that includes our opinion. Reasonable assurance is a high levelof assurance but is not a guarantee that an audit conducted in accordance with SAs willalways detect a material misstatem tatement when it exists. Misstatements can arise fromfraud or error and are considered material if individually or in the aggregate theycould reasonably be expected to influence the economic decisions of users taken on thebasis of these 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 financial statatements whether due to fraud or error design and perform audit procedures responsive tothose risks and obtain audit evidence that is sufficient and appropriate to provide abasis for our opinio . The risk of not detecting a material misstatem resulting from fraudis higher than for one resulting from error as fraud may involve collusion forgeryintentional omissions misrepre isrepresentations or the override of internal control.
? Obtain an understanding of internal financial controls relevant to the au in orderto design audit procedures that are appropriate in the circumstances. Under section143(3)(i) of the Act we are also responsible for expre sing our opinion on whether theCompany has adequate internal financial controls system in place and the operatingeffectiveness of such controls.
? Evaluate the appropriateness of accounting policies used and the reasonableonableness of accounting estimates and related disclosur made by management.
? Conclude on the appropriatene of management's use of the going concern basis ofaccounting and based on the audit eviden obtained whether a material uncertainty existsrelated to events or conditions that may cast significant doubt on the Company's abilityto continue as a going concern.
If we conclude that a material uncertai ncertainty exists we are required to drawattention in our auditor's report to the related disclosures in the financ statements orif such disclosures are inadeq nadequate to modify our opinion. Our conclusions are basedon the audit evidence obtained up to the date of our auditor's report. However futureevents or conditions may cause the Company to cease to continue as a going concern.
? Evaluate the overall presentation structure and content of the financialstatements including the disclosures and whether the financial statements represent theunderlying transactions and events in a manner that achieves fair presentation.
Materiality is the magnitude of misstatements in the financial statements thatindividually or in aggregate makes it probable that the economic decisions of areasonably knowled owledgeable user of the financial statements may be influence . 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 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 any signiignificant deficiencies in internal control that we identify during our audit. We alsoprovide those charged with governance with a statement that we have complied with relevantethical requirements regarding independence and to communicate with them all relationshationships and other matters that may reasonably be thought to bear on our independenceand where applicab plicable related safeguards.
From the matters communicated with those charged with governance we determine thosematters that were of most significance in the audit of the financial statements of thecurrent perio and are therefore the key audit matters. We describe these matters in ourauditor's report unless law or regulation precludes public disclosure about the matter orwhen in extremely rare circumstan umstances we determine that a matter should not becommuni municated in our report because the adverse conseq onsequences of doing so wouldreasonably be expected to outweigh the public interest benefits of such commuommunication.
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 I" a statement on the matters specified in paragraph 3 and 4 of theOrder
2) As required by section 143(3) of the Act based on our audit we report:
(a) We have sought and obtained all the information and explanations which to the bestof our knowledge and belief were necess ecessary for the purpose of our audit;
(b) In our opinion and to the best of our information and according to the explanxplanations given to us proper books of accounts as required by law have been kept by theCompany so far as appears from our examination of those books;
(c) The Balance Sheet the Statemen of Profit and Loss (including Other ComprehensiveIncome) Statement of Changes in Equity and the Statement of Cash Flow dealt with by thisReport are in agreement with the relevant books of account.
(d) In our opinion the aforesaid financial statements comply with the IndAS specifiedunder Section 133 of the Act read with Rule 7 of the Companies (Accounts) Rules 2014
(e) On the basis of written representa esentations received from the directors as onMarch 31 2021 and taken on record by the Board of Directors none of the Directors aredisqualified 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 over financireporting of the Company and the operating effectiveness of such controls refer toAnnexure II' to this report.
(g) With respect to the other matter to be included in the Auditor's Report inaccordance 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 explanatio givento us the remuneration paid by the Company to its directors during the year is inaccordance with the 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 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 financial statements.
ii. The Company did not have any long term contracts including derivative cont forwhich there were any material foreseeable losses.
iii. There are no amounts which are required to be transferred to the InvestorEducation and Protection
Fund by the Company.
For AlokPalod& Company.
Firm Regn. No 018061C
Membership No.- 417729
Date: 30th June 2021
ANNEXURE I' TO THE INDEPENDENT AUDITOR'S REPORT
(Referred to in paragraph 2 under Report on Other Legal and RegulatoryRequirements' section of our report to the Members of ShankarlalRa rlalRampal Dye ChemLimited of even date)
i. In respect of the Compan ompany's fixed assets:
(a) The Company has maintained proper records showing full particularsincludingquantitative details and situation of fixed assets (Property Plant &Equipment).
(b) The fixed assets (Property Plant & Equipment) have been physically verified bythe management at reasonable intervals. According to the information and explanationsgiven to us no material discrepancies were noticed on such verification.
(c) The title deeds of immovable properties are held in the name of company.
ii. Physical verification of inventory has been conducted during the year at reasonableintervals by management. As informed to us no material discrepancies have been noticed onsuch verification.
iii. The Company has not granted any loans secured or unsecured to any companiesfirms limited liability partnership or other parties covered in register maintained underSectio 189 of the Companies Act 2013.
iv. No loans have been given to parties covered under sectio 185 of the Companies Act2013. The company has not given any guarantee or provided any security to any partycovered under section 185 or 186 of the Companies Act 2013. In case of investm vestmentsprovisions of section 185 and 186 of the Companies Act 2013 has been complied.
v. The company has not accepted deposits from the public within the meaning of Sections73 to 76 of the Companies Act 2013 and the rules made there under hence this clause isnot applicable.
vi. The maintenance of cost records has notbeen prescribed by the Central
Government under section 148(1) of the Companies Act 2013 and as informed to us suchaccounts and records have not been so made and maintained. However we have not conducteda detailed examination of the same.
vii. According to the informat formation and explanations given to us in respect ofstatutory dues:
(a) Undisputed statutory dues including provident fund employee state insuranceincome tax GST custom duty cess and other statutory dues have generally been regularlydepos eposited with the appropriate authorities and there are no undisputed duesoutstanding as on 31st March 2021.
(b) There is no of dues of Income Tax Goods and Service Tax Sales Tax Service TaxExcise Duty and Value Added Tax which have not been deposited as at March 31 2021onaccount of dispute.
viii. Based on our verificati and according to the information and explanations givenby the manageme gement and also considering the relief/moratori ratorium allowed byReserve Bank of India pursuant to Covid-19 pandemic the Company has not defaulted in therepaym epayment of loans or borrowings to any banks and financial institutions. The Compaompany did not have any loans or borrowing in respect of Government or dues to debentureholders during the year
ix. The Company has not raised any money by way of initial public offer or furtherpublic offer. According to the information and explanation given to us the money raisedby the company by way of term loans have been applied for the purpose for which they wereobtained.
x. To the best of our knowledge and according to the information and explanations givento us no fraud by the Company or no material fraud on the Company by its officers oremployees has been noticed or reported during the year.
xi. In our opinion and according to the information and explanations given to us theCompany has paid/prov ded managerial remuneration in accordance with the requisiteapprovals mandated by the provisions of section 197 read with Schedule V to the Act.
xii. The Company is not a Nidhi Company and hence reporting under clause 3 (xii) of the
Order is not applicable to the Company.
xiii. The Company has complied with Section 177 and 188 of the Compa ompanies Act 2013where applicable for all transactions with the related parties and the details of relatedparty transactio sactions have been disclosed in the financial statements as required bythe applicable Indian Accounting Standards.
xiv. During the year the Company has not made any preferential allotment or privateplacement of shares or fully or partly convertible debentures accordingly this clause isnot applicable
xv. The Company has not entered into any non-cash transactions with its Directors orpersons connected to its directors and hence provisions of section 192 of the CompaniesAct 2013 are not applicable to the Company.
xvi. The Company is not required to be registered under section 45-IA of theReserveBank of India Act 1934
Annexure "II" forming part of Independent Auditor's Report
Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section143 of the Companies Act 2013 ("the Act").
We have audited the internal financial controls with reference to financ statements ofShankarlalRampal Dye ChemLIMITE ("the Company") as of March 31 2021 inconjunction with our audit of the financial statements of the Company for the year endedon that date.
Management's Responsibility for Internal Financial Controls
The Company's management is responsible for establishing and maintaining interfinancial controls with reference to financial statement based on the internal controlover financia reporting criteria established by the Company considering the essentialcomponents of internal control stated in the Guidance Note on Audit of Internal FinancialControls over Financial Reporting issued by the Institute of Chartered Accountants ofIndia. These responsibilities include the design implementation and maintenance ofadequate internal financial controls that were operating effectiv for ensuring the orderlyand efficient conduct of its business including adherence to company's policies thesafeguarding of its assets the prevention and detection of frauds and errors theaccuracy and completeness of the accounting records and the timely preparation ofreliable financial information as required under the Act.
Our responsibility is to express an opinion on the Company's internal financialcontrols with reference to financial statements based on our audit. We conducted our auditin accordance with the Guidance Note on Audit of Internal Financial Controls OverFinancial Reporting (the "Guidan Note") and the Standards on Auditing issued byICAI and deemed to be prescribed under section 143(10) of the Companies Act 2013 to theextent applicable to an audit of internal financial controls both applicable to an auditof Internal Financial Controls and both issued by the Institute of Charte harteredAccountants of India. Those Standards and the Guidance Note require that we comply withethica requirements and plan and perform the audit to obtain reasonable assurance aboutwhether adequat internal financial controls with reference to financial statements wasestablished and maintained and if such controls operated effectively in all materialrespects.
Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal financial controls system with reference to financial statements and theiroperating effectiveness. Our audit of internal financial controls over financial reportingincluded obtaining an understanding of internal financial controls over financi 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 judgment 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 withreference to financial statements.
Meaning of Internal Financial Controls over Financial Reporting
A company's internal financial controls with reference to financial statements is aprocess designed to provide reasonable assurance regarding the reliability of financialreporting and the preparation of financial statements for external purposes in accordancewith generally accepted accounting principles. A company's internal financial controlswith reference to IndAS financial stateme tatements includes those policies and proceduresthat (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) providereasonable assurance that transaction are recorded as necessary to permit preparation offinancial statements in accordance with generally accepted accounting principles and thatreceipts and expenditures of the company are being made only in accordance withauthorizations of management and directors of the company; and (3) provide reasonableassurance regarding preventio or timely detection of unauthorised acquisition use ordisposition of the company's assets that could have a material effect on the financialstatements.
Inherent Limitations of Internal financial controls with reference to financialstatements
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.
In our opinion the Company has in all material respects an adequate internalfinancial controls with reference to financial statements and such internal financialcontrols with referen to IndAS financial statements were operating effectively as at March31 2021 based on the internal financial controls with reference to IndAS financialstatements criteria established by the Company considering the essential components ofinternal control stated in the Guidance Note on Audit of Internal Financial Controls overFinancial Reporting issued by the Institute of Chartered Accountants of India.
For AlokPalod& Company.
Firm Regn. No 018061C
Membership No.- 417729
Date: 30th June 2021