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Sharda Cropchem Ltd.

BSE: 538666 Sector: Agri and agri inputs
NSE: SHARDACROP ISIN Code: INE221J01015
BSE 00:00 | 22 Aug 270.05 -7.60
(-2.74%)
OPEN

279.55

HIGH

286.00

LOW

270.00

NSE 00:00 | 22 Aug 270.00 -7.90
(-2.84%)
OPEN

281.15

HIGH

285.20

LOW

270.00

OPEN 279.55
PREVIOUS CLOSE 277.65
VOLUME 999
52-Week high 420.00
52-Week low 259.80
P/E 16.96
Mkt Cap.(Rs cr) 2,436
Buy Price 267.00
Buy Qty 1.00
Sell Price 280.00
Sell Qty 1.00
OPEN 279.55
CLOSE 277.65
VOLUME 999
52-Week high 420.00
52-Week low 259.80
P/E 16.96
Mkt Cap.(Rs cr) 2,436
Buy Price 267.00
Buy Qty 1.00
Sell Price 280.00
Sell Qty 1.00

Sharda Cropchem Ltd. (SHARDACROP) - Auditors Report

Company auditors report

To the Members of

Sharda Cropchem Limited

Report on the Audit of Standalone Financial Statements

Opinion

We have audited the standalone financial statements of Sharda CropchemLimited (‘the Company') which comprise the standalone balance sheet as at 31stMarch 2019 and the standalone statement of profit and loss (including othercomprehensive income) the standalone statement of changes in equity and standalonestatement of cash flows for the year then ended and notes to the standalone financialstatements including a summary of the significant accounting policies and otherexplanatory information.

In our opinion and to the best of our information and according to theexplanations given to us the aforesaid standalone financial statements give theinformation required by the Companies Act 2013 (‘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 31st March2019 and profit and other comprehensive income changes in equity and its cash flows forthe year ended on that date.

Basis for Opinion

We conducted our audit in accordance with the Standards on Auditing(SAs) specified under Section 143(10) of the Act. Our responsibilities under those SAs arefurther described in the Auditor's Responsibilities for the Audit of thestandalone financial Statements section of our report. We are independent of theCompany in accordance with the Code of Ethics issued by the Institute of CharteredAccountants of India together with the ethical requirements that are relevant to our auditof the standalone financial statements under the provisions of the Act and the Rulesthereunder and we have fulfilled our other ethical responsibilities in accordance withthese requirements and the Code of Ethics. We believe that the audit evidence we haveobtained is sufficient and appropriate to provide a basis for our opinion

Key Audit Matters

Key audit matters are those matters that in our professional judgmentwere of most significance in our audit of the standalone financial statements of thecurrent year. These matters were addressed in the context of our audit of the standalonefinancial statements as a whole and in forming our opinion thereon and we do not providea separate opinion on these matters.

Description of Key Audit Matters:

Key Audit Matters How the matter was addressed in our audit
Revenue recognition
Our audit procedures included following:
Revenue is measured based on transaction price which is the consideration adjusted for rebates discounts incentives (scheme allowances) and estimated sales returns. As disclosed in Note 2 (e) to the standalone financial statements revenue is recognised upon transfer of control of promised goods to customers in an amount that reflects the consideration which the Company expects to receive in exchange for those goods. - Understanding the process followed by the management for the purpose of identifying and determining the amount of provision of sales returns and accrual for rebates and schemes;
- Checking of completeness and accuracy of the data used by the management for the purpose of calculation of the provision for sales returns and checking of its arithmetical accuracy;
Sales return estimation
As disclosed in Note 2 (e) to the standalone financial statements revenue is recognised net of sales returns. - Comparison between the estimate of the provision for sales returns created in the past with subsequent actual sales returns and analysis of the nature of any deviations to corroborate the effectiveness of the management estimation process;
Estimation of sales returns involves significant judgement and estimates due to its dependency on various internal and external factors. - Considering the appropriateness of the Company accounting policies regarding revenue recognition as they relate to accounting for rebates discounts and scheme allowances;
Estimation of sales return amount together with the level of judgement involved makes its accounting treatment a significant matter for our audit. - Testing the Company's process and controls over the calculation of rebates discounts and scheme allowance;
Accrual for rebates and schemes
Revenue is recognised net of rebates discounts incentives (scheme allowances) and estimated sales returns owed to the customers based on the arrangement with customers. - Selecting a samples of revenue transactions and scheme circular to re-check that rebates discounts and scheme allowance were calculated in accordance with the eligibility criteria mentioned in the scheme;
The recognition and measurement of rebates discounts and schemes allowances including establishing an appropriate accrual at year end involves significant judgement and estimates particularly the expected level of claims of each of the customers. - Selecting a sample of claims submitted by customers along with claim form and verifying it with the accrual made in the books of account; and
The value of rebates discounts and schemes allowances together with the level of judgement involved make its accounting treatment a significant matter for our audit. - Considering the assumptions and judgements used by the Company in calculating rebates discounts and schemes allowances including the level of expected claims by reviewing historical trends of claims.

 

Key Audit Matters How the matter was addressed in our audit
Impairment testing of Other intangible assets and intangible assets under development Our audit procedures included following:
The Company's intangible assets comprised product registrations and licenses. - Inquired with management about its intention and probability to obtain product registrations in the respective geographies;
The carrying amount of the intangible assets and intangible assets under development represents 28.31% of the Company's total assets. - Compared management's assessment with the past trend product registrations awarded; and
The Company applies for product registrations in different countries to sell its products and capitalises costs incurred to apply for product registrations. - Testing the mathematical accuracy of the discounted cash flow model and evaluation of the assumptions and methodologies used by the Company.
The value of intangible assets and intangible assets under development was identified as a key audit matter as the Company's annual impairment assessment contains significant judgments involving forecasting and discounting future cash flows. It also involves likelihood of obtaining product registration.
The impairment assessment is based on each product registrations value in use.
This impairment test is significant to our audit because the assessment process is complex and judgement is based on assumptions such as expected growth rate expected profitability and future market or economic conditions.
Due to significance and magnitude of the costs capitalised this was considered a key audit matter.

Other Information

The Company's management and Board of Directors are responsiblefor the other information. 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 not cover theother information and we do not express any form of assurance conclusion thereon.

In connection with our audit of the standalone financial statementsour responsibility is to read the other information and in doing so consider whether theother information is materially inconsistent with the standalone financial statements orour knowledge obtained in the audit or otherwise appears to be materially misstated. Ifbased on the work we have performed we conclude that there is a material misstatement ofthis other information we are required to report that fact. We have nothing to report inthis regard.

Management's Responsibility for the Standalone FinancialStatements

The Company's management and Board of Directors are responsiblefor the matters stated in Section 134(5) of the Act with respect to the preparation ofthese standalone financial statements that give a true and fair view of the state ofaffairs profit /(loss) and other comprehensive income changes in equity and cash flowsof the Company in accordance with the accounting principles generally accepted in Indiaincluding the Indian Accounting Standards (Ind AS) specified under Section 133 of the Act.This responsibility also includes maintenance of adequate accounting records in accordancewith the provisions of the Act for safeguarding of the assets of the Company and forpreventing and detecting frauds and other irregularities; selection and application ofappropriate accounting policies; making judgments and estimates that are reasonable andprudent; and design implementation and maintenance of adequate internal financialcontrols that were operating effectively for ensuring the accuracy and completeness of theaccounting records relevant to the preparation and presentation of the standalonefinancial Ind AS statements that give a true and fair view and are free from materialmisstatement whether due to fraud or error.

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

The Board of Directors is also responsible for overseeing theCompany's financial reporting process.

Auditors' Responsibilities for the Audit of the standalonefinancial statements

Our objectives are to obtain reasonable assurance about whether thestandalone financial statements as a whole are free from material misstatement whetherdue 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 auditconducted in accordance with SAs will always detect a material misstatement when itexists. Misstatements can arise from fraud or error and are considered material ifindividually or in the aggregate they could reasonably be expected to influence theeconomic decisions of users taken on the basis of these standalone financial statements.

As part of an audit in accordance with SAs we exercise professionaljudgment and maintain professional skepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of thestandalone financial statements whether due to fraud or error design and perform auditprocedures responsive to those risks and obtain audit evidence that is sufficient andappropriate to provide a basis for our opinion. The risk of not detecting a materialmisstatement resulting from fraud is higher than for one resulting from error as fraudmay involve collusion forgery intentional omissions misrepresentations or the overrideof internal control.

• Obtain an understanding of internal control relevant to theaudit in order to design audit procedures that are appropriate in the circumstances. UnderSection 143(3)(i) of the Act we are also responsible for expressing our opinion onwhether the company has adequate internal financial controls with reference to financialstatements in place and the operating effectiveness of such controls.

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

• Conclude on the appropriateness of management's 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 suchdisclosures are inadequate to modify our opinion. Our conclusions are based on the auditevidence obtained up to the date of our auditor's report. However future events orconditions may cause the Company to cease to continue as a going concern.

• Evaluate the overall presentation structure and content of thestandalone financial statements including the disclosures and whether the standalonefinancial statements represent the underlying transactions and events in a manner thatachieves fair presentation.

We communicate with those charged with governance regarding amongother matters the planned scope and timing of the audit and significant audit findingsincluding any significant deficiencies in internal control that we identify during ouraudit.

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

From the matters communicated with those charged with governance wedetermine those matters that were of most significance in the audit of the standalonefinancial statements of the current period and are therefore the key audit matters. Wedescribe these matters in our auditors' report unless law or regulation precludespublic disclosure about the matter or when in extremely rare circumstances we determinethat a matter should not be communicated in our report because the adverse consequences ofdoing so would reasonably be expected to outweigh the public interest benefits of suchcommunication.

Other Matters

The Standalone financial statements of the Company for the year ended31st March 2018 were audited by the predecessor auditor who expressed an unmodifiedopinion on those financial statements on 09 May 2018. Our opinion is not modified inrespect of this matter.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditors' Report) Order 2016(‘the Order') issued by the Central Government in terms of Section 143 (11) ofthe Act we give in the ‘Annexure A' a statement on the matters specified inparagraphs 3 and 4 of the Order to the extent applicable.

(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 31stMarch 2019 taken on record by the Board of Directors none of the directors isdisqualified as on 31st March 2019 from being appointed as a director in terms of Section164(2) of the Act; and

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 theAuditors' Report in accordance with Rule 11 of the Companies (Audit and Auditors)Rules 2014 in our opinion and to the best of our information and according to theexplanations given to us:

i. The Company has disclosed the impact of pending litigations as at31st March 2019 on its financial position in its standalone financial statements - ReferNote 32 to the standalone financial statements;

ii. The Company did not have any long-term contracts includingderivative contracts for which there were any material foreseeable losses; iii. There hasbeen no delay in transferring amounts required to be transferred to the InvestorEducation and Protection Fund by the Company; and

iv. The disclosures in the standalone financial statements regardingholdings as well as dealings in specified bank notes during the period from 8 November2016 to 30 December 2016 have not been made in these financial statements since they donot pertain to the financial year ended 31st March 2019.

(C) With respect to the matter to be included in the Auditors'Report under Section 197(16) of the Act in our opinion and according to the informationand explanations given to us the remuneration paid by the Company to its directors duringthe current year is in accordance with the provisions of Section 197 of the Act. Theremuneration paid to any director is not in excess of the limit laid down under Section197 of the Act. The Ministry of Corporate Affairs has not prescribed other details underSection 197(16) which are required to be commented upon by us.

For B S R & Associates LLP
Chartered Accountants
Firm's Registration No. 116231W/W-100024
Shabbir Readymadewala
Mumbai Partner
May 14 2019 Membership No: 100060

Annexure A to the Independent Auditors' report 31st March 2019(Referred to in our report of even date)

i. (a) The Company has maintained proper records showing fullparticulars including quantitative details and situation of fixed assets. (b) Fixedassets have been physically verified by the management during the year and no materialdiscrepancies were identified on such verification.

(c) According to the information and explanations given to us thereare no immovable properties included in fixed assets of the company. Accordinglyparagraph 3(i)(c) of the Order is not applicable to the Company.

ii. The inventory except for goods-in-transit and stocks lying withthird parties has been physically verified by the management at reasonable intervalsduring the year. In our opinion the frequency of such verification is reasonable. Forstocks lying with third parties at the year-end written confirmations have been obtainedby management and in respect of goods-intransit subsequent goods receipts have beenverified. The discrepancies noticed on verification between the physical stocks and thebook records were not material.

iii. (a) The Company had in the past granted a loan to one subsidiarycompany covered in the register maintained under section 189 of the Companies Act 2013.In our opinion and according to the information and explanations given to us the termsand conditions of the grant of such loans were not prejudicial to the company'sinterest. However the Company has written off loan given to that subsidiary of र 140Lakhs (31st March 2018: र 510 Lakhs) during the year.

(b) The principal and interest for the above referred loan are payableon demand and these have been paid during the year as and when demanded by the Companyand thus there is no default on part of the party to whom the money has been lent.

(c) In respect of the loans referred to in para (iii)(a) above and theinterest thereon there are no amounts which are overdue for more than ninety days.

iv. In our opinion and according to the information and explanationsgiven to us the Company has not granted any loans or provided any guarantees or securityin respect of any party covered under the section 185 of the Act and hence not commentedupon. In respect of loans granted to and investments made by the Company incompanies/bodies corporate Company the provisions of section 186 of the Act have beencomplied with. According to the information and explanations given to us the Company hasnot given guarantees or provided security in connection with loans to any person / bodiescorporate and hence are not commented upon.

v. In our opinion and according to the information and explanationsgiven to us the Company has not accepted any deposits from the public during the year interms of the provisions of Sections 73 to 76 or any other relevant provisions of the Actand the rules framed there under. Accordingly paragraph 3(v) of the Order is notapplicable to the Company.

vi. We have broadly reviewed the books of account maintained by theCompany as specified under Section 148(1) of the Act for maintenance of cost records inrespect of products manufactured by the Company and are of the opinion that prima faciethe prescribed accounts and records have been made and maintained. However we have notmade a detailed 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 andon the basis of our examination of the records of the Company amounts deducted/accrued inthe books of account in respect of undisputed statutory dues including Provident FundEmployees' State Insurance Income-tax Goods and Service Tax Duty of Customs Cessand other material statutory dues have been generally regularly deposited during the yearby the Company with the appropriate authorities.

According to the information and explanations given to us noundisputed amounts payable in respect of Provident Fund Employees' State InsuranceIncome-tax Goods and Service Tax Duty of Customs Cess and other material statutorydues were in arrears as at 31st March 2019 for a period of more than six months from thedate they became payable.

(b) According to the information and explanations given to us and onthe basis of our examination of the records of the Company details of dues of Income-taxand Service tax which have not been deposited as at 31st March 2019 on account ofdisputes are given below:

Name of the Statute Dues Forum where Nature of the dispute is pending Period to which amount relates (Assessment Year) ( In Lakhs
Finance Act 1994 Service Tax Commissioner CESTAT Deputy 2007-08 to 2012-13 785.14
Income Tax Act 1961 Income Tax Commissioner of Income Tax Deputy 2015-16 565.94
Income Tax and Interest Commissioner of Income Tax 2016-17 1994.65

*net of amounts paid under protest viii. In our opinion and accordingto the information and explanations given by the management the Company has not defaultedin repayment of the borrowing to a bank. The Company did not have any outstanding loans orborrowing dues in respect of a financial institution or to government or dues to debentureholders during the year.

ix. According to the information and explanations given to us theCompany did not raise money by way of initial public offer or further public offer(including debt instruments) or term loan during the year. Accordingly paragraph 3(ix) ofthe Order is not applicable to the Company.

x. According to the information and explanations given to us no fraudby the Company or on the Company by its officers or employees has been noticed or reportedduring the course of our audit.

xi. According to the information and explanations give to us and basedon our examination of the records of the Company the Company has paid/provided formanagerial remuneration in accordance with the requisite approvals mandated by theprovisions of Section 197 read with Schedule V to the Act.

xii. In our opinion and according to the information and explanationsgiven to us the Company is not a Nidhi company. Accordingly paragraph 3(xii) of theOrder is not applicable to the Company.

xiii. According to the information and explanations given to us andbased on our examination of the records of the Company transactions with the relatedparties are in compliance with Sections 177 and 188 of the Act where applicable anddetails of such transactions have been disclosed in the standalone financial statements asrequired by the applicable accounting standards.

xiv. According to the information and explanations given to us andbased on our examination of the records of the Company the Company has not made anypreferential allotment or private placement of shares or fully or partly convertibledebentures during the year. Accordingly paragraph 3(xiv) of the Order is not applicableto the Company.

xv. According to the information and explanations given to us and basedon our examination of the records of the Company the Company has not entered intonon-cash transactions with directors or persons connected with them. Accordinglyparagraph 3(xv) of the Order is not applicable to the Company.

xvi. According to the information and explanations given to us theCompany is not required to be registered under Section 45 - IA of the Reserve Bank ofIndia Act 1934. Accordingly paragraph 3(xvi) of the Order is not applicable to theCompany.

For B S R & Associates LLP
Chartered Accountants
Firm's Registration No. 116231W/W-100024
Shabbir Readymadewala
Mumbai Partner
May 14 2019 Membership No: 100060