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Sika Interplant Systems Ltd.

BSE: 523606 Sector: Engineering
NSE: N.A. ISIN Code: INE438E01016
BSE 00:00 | 16 Apr 287.35 8.15
(2.92%)
OPEN

288.90

HIGH

291.90

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280.15

NSE 05:30 | 01 Jan Sika Interplant Systems Ltd
OPEN 288.90
PREVIOUS CLOSE 279.20
VOLUME 1976
52-Week high 380.00
52-Week low 144.10
P/E 13.54
Mkt Cap.(Rs cr) 122
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 288.90
CLOSE 279.20
VOLUME 1976
52-Week high 380.00
52-Week low 144.10
P/E 13.54
Mkt Cap.(Rs cr) 122
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Sika Interplant Systems Ltd. (SIKAINTERPLANT) - Auditors Report

Company auditors report

TO THE MEMBERS OF M/s. SIKA INTERPLANT SYSTEMS LIMITED

Report on the Audit of the Standalone Financial Statements Opinion

We have audited the standalone financial statements of M/s. SIKAINTERPLANT SYSTEMS LIMITED ("the Company") which comprise the standalonebalance sheet as at 31st March 2020 and the standalone statement of profit and loss(including other comprehensive income) standalone statement of changes in equity andstandalone statement of cash flows for the year then ended and notes to the standalonefinancial statements 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 ("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 31 March 2020and loss and other comprehensive income changes in equity and its cash flows for the yearended on that date.

Basis for Opinion

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

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 period. 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.

> Revenue Recognition

The key audit matter How the matter was addressed in our audit
Revenue from sale of goods is recognized when control of the products being sold is transferred to the customer and when there are no longer any unfulfilled obligations. The performance obligations in the contracts are fulfilled at the time of dispatch delivery or upon formal customer acceptance depending on customer terms. Our audit procedures include:
• We assessed the appropriateness of the revenue recognition accounting policies by comparing with applicable accounting standards.
• We tested the design implementation and operating effectiveness of management's general IT controls and key application controls over the Company's IT systems which govern revenue recognition including access controls controls over program changes interfaces between different systems and key manual internal controls over revenue recognition to assess the completeness of the revenue entries being recorded in the general ledger accounting system.
Revenue from sale of services is recognized upon completion of service.
Revenue is measured at fair value of the consideration received or receivable after deduction of any trade discounts volume rebates and any taxes or duties collected on behalf of the government such as goods and services tax etc. Accumulated experience is used to estimate the provision for discounts and rebates. Revenue is only recognised to the extent that it is highly probable a significant reversal will not occur.
• We tested the design implementation and operating effectiveness of Internal Financial Controls.
There is a risk of revenue being overstated due to fraud including through manipulation of rebates and discounts resulting from pressure the management may feel to achieve performance targets at the reporting period end. • We performed substantive testing by selecting samples of revenue transactions recorded during the year by verifying the underlying documents which included goods dispatch notes shipping
documents and details with respect to percentage of completion of service projects.
• We inspected on a sample basis key customer contracts to identify terms and conditions relating to goods acceptance and rebates and assessing the Company's revenue recognition policies with reference to the requirements of the applicable accounting standards.
• We performed cut-off testing for samples of revenue transactions recorded before and after the financial year end date by comparing with relevant underlying documentation which included goods dispatch notes shipping documents and details with respect to percentage of completion of service projects to assess whether the revenue was recognized in the correct period.

> Provisions for taxation litigation and other significantprovisions

The key audit matter How the matter was addressed in our audit
Accrual for tax and other contingencies requires the Management to make judgements and estimates in relation to the issues and exposures arising from a range of matters relating to direct tax and other eventualities arising in the regular course of business. Our audit procedures included:
• We tested the effectiveness of controls around the recognition of provisions.
The key judgement lies in the estimation of provisions where they may differ from the future obligations. By nature provision is difficult to estimate and includes many variables. Additionally depending on timing there is a risk that costs could be provided inappropriately that are not yet committed. • We used other subject matter experts to assess the value of material provisions in light of the nature of the exposures applicable regulations and related correspondence with the authorities.
• We examined the assumptions and critical judgements made by management which impacted their estimate of the provisions required considering judgements previously made by the authorities in the relevant jurisdictions or any relevant opinions given by the Company's advisors and assessing whether there was an indication of management bias.
• We discussed the status in respect of significant provisions with the Company's Management and legal advisors.
• We performed retrospective review of management judgements relating to accounting estimate included in the financial statement of prior year and compared with the outcome.

> Assessment of contingent liabilities relating to litigationswarranty claims and Bank guarantees issued.

The key audit matter How the matter was addressed in our audit
The Company is periodically subject to challenges/scrutiny on the matters relating to direct tax. Further potential exposures may also arise from general legal proceedings in course of business. Our audit procedures included:
• We tested the effectiveness of controls around the recording and re-assessment of contingent liabilities.
Assessment of contingent liabilities disclosure requires Management to make judgements and estimates in relation to the issues and exposures. Whether the liability is inherently uncertain the amounts involved are potentially significant and application of accounting standards to determine the amount if any to be provided as liability is inherently subjective.
• We discussed the status and potential exposures in respect of significant litigation and claims with the Company's management including their views on the likely outcome of each litigation and claim and the magnitude of potential exposure and sighted any relevant opinions given by the Company's advisors.
• We assessed the event occurring after the reporting period and the adequacy of disclosures made.
Refer Note 37(1) to the Financial Statements

> Impact of COVID-19 on the Company's financial statements.

The key audit matter How the matter was addressed in our audit
Coronavirus ('COVID-19') was declared a global pandemic by World Health Organisation. We have performed the following procedures to assess and evaluate the impact on financial statements because of business decisions government actions or economic environment developments:
In line with the directions on lockdown issued by the State Government of Karnataka the Company temporarily suspended the operations from 23 March 2020 till 31 March 2020; and subsequently upto further dates as instructed by the State Government.
• Performed cut-off procedures for a larger sample of invoices during the lockdown period for both domestic as well as export sales.
COVID-19 has resulted in restriction in movement of goods during the period from 23 March 2020 till 31 March 2020 impacting normal business operations for the Company including revenues receivables purchases including services and inventories at the year-end and hence considered key audit matter. • Enquired with the Company on the manner of financial support (if any) provided to the dealers vendors and service providers; and their recognition in the financial statements.
• Enquired with the Company on any information on the liquidity position of any dealers; and ascertained the need for any additional provisioning for impairment/credit loss in the financial statements.
• We assessed the disclosures on COVID-19 made in the financial statements. l Our ability to perform regular audit procedures has been impacted which has required us in certain cases to perform alternative audit procedures and exercise significant judgment in respect Year-end inventory observation of inventory counts could not be performed. However inventory counts were observed subsequent to year-end; and rolled back to year-end.
Refer Note 50 to the Financial Statements

Information other than the Consolidated Financial Statements andAuditor's Report thereon

The Company's Board of Directors is responsible for the otherinformation. The other information comprises the information included in the AnnualReport but does not include the financial statements and our auditor's report thereon.

Our opinion on the financial statements does not cover the otherinformation and we do not express any form of assurance conclusion thereon.

In connection with our audit of the financial statements ourresponsibility is to read the other information and in doing so consider whether theother information is materially inconsistent with the financial statements or ourknowledge obtained in the audit or otherwise appears to be materially misstated. If basedon the work we have performed we conclude that there is a material misstatement of thisother information we are required to report that fact. We have nothing to report in thisregard.

Management's Responsibility for the Standalone Financial Statements

The Company's Board of Directors is responsible for the matters statedin Section 134(5) of the Act with respect to the preparation of these standalone financialstatements that give a true and fair view of the state of affairs (financial position)profit or loss (financial performance including other comprehensive income) changes inequity and cash flows of the Company in accordance with the accounting principlesgenerally accepted in India including

the Accounting Standards specified under Section 133 of the Act readwith Rule 7 of the Companies (Accounts) Rules 2014.This responsibility also includesmaintenance of adequate accounting records in accordance with the provisions of the Actfor safeguarding of the assets of the Company and for preventing and detecting frauds andother irregularities; selection and application of appropriate accounting policies; makingjudgments and estimates that are reasonable and prudent; and design implementation andmaintenance of adequate internal financial controls that were operating effectively forensuring the accuracy and completeness of the accounting records relevant to thepreparation and presentation of the financial statements that give a true and fair viewand are free from material misstatement whether due to fraud or error.

In preparing the 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 thecompany's financial reporting process.

Auditor's Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether thefinancial 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 financial statements.

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

a. Identify and assess the risks of material misstatement of thefinancial 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.

b. Obtain an understanding of internal control relevant to the audit inorder to design audit procedures that are appropriate in the circumstances. Under section143(3)(i) of the Companies Act 2013 we are also responsible for expressing our opinionon whether the company has adequate internal financial controls system in place and theoperating effectiveness of such controls.

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

d. Conclude on the appropriateness of management's use of the goingconcern basis of accounting and based on the audit evidence obtained whether a materialuncertainty exists related to events or conditions that may cast significant doubt on theCompany's ability to continue as a going concern. If we conclude that a materialuncertainty exists we are required to draw attention in our auditor's report to therelated disclosures in the financial statements or if such disclosures are inadequate tomodify our opinion. Our conclusions are based on the audit evidence obtained up to thedate of our auditor's report. However future events or conditions may cause the Companyto cease to continue as a going concern.

e. Evaluate the overall presentation structure and content of thefinancial statements including the disclosures and whether the financial statementsrepresent the underlying transactions and events in a manner that achieves fairpresentation.

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 financialstatements of the current period and are therefore the key audit matters. We describethese matters in our auditor's report unless law or regulation precludes public disclosureabout the matter or when in extremely rare circumstances we determine that a mattershould not be

communicated in our report because the adverse consequences of doing sowould reasonably be expected to outweigh the public interest benefits of suchcommunication.

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 of India in terms of sub-section(11) of section 143 of the Act we give in the "Annexure A" a statement on thematters specified in paragraphs 3 and 4 of the Order to the extent applicable.

2. As required by section 143(3) of the Act we report that:

a. We have sought and obtained all the information and explanationswhich to the best of our knowledge and belief were necessary for the purpose of our audit;

b. In our opinion proper books of account as required by law have beenkept by the Company so far as it appears from our examination of those books;

c. The standalone balance sheet the standalone statement of profit andloss (including other comprehensive income) the standalone statement of changes in equityand the standalone statement of cash flows dealt with by this Report are in agreement withthe books of account.

d. In our opinion the aforesaid financial statements comply with theAccounting Standards specified under section 133 of the Companies Act 2013 read with theRule 7 of the Companies (Accounts) Rules 2014;

e. On the basis of written representations received from the directorsas on March 31st 2020 taken on record by the Board of Directors none of thedirectors is disqualified as on March 31st 2020 from being appointed as adirector in terms of section 164 (2) of the Act;

f. With respect to the adequacy of the internal financial controls overfinancial reporting of the Company and the operating effectiveness of such controls referto our separate Report in "Annexure B";

g. With respect to the other matters to be included in the Auditor'sReport in accordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014 inour opinion and to the best of our information and according to the explanations given tous:

(i) The Company does not have any pending litigation which would impactits financial position;

(ii) The Company did not have any long-term contracts includingderivative contracts for which there were any material foreseeable losses;

(iii) There were no amounts which were required to be transferred tothe Investor Education and Protection Fund by the Company;

3. As required by Section 197(16) of the Act we report that theCompany has paid remuneration to its directors during the year in accordance with theprovisions of and limits laid down under Section 197 read with Schedule V to the Act

For B N Subramanya & Co.
Chartered Accountants
Firm Reg. No. 004142S
Devendra Nayak
Partner
Membership No. 27449
UDIN: 20027449AAAAAU7008
Place: Bengaluru
Date:29th June 2020

Annexure A to the Independent Auditors' Report

The Annexure referred to in our Independent Auditors' Report to themembers of the Company on the standalone financial statements for the year ended 31stMarch 2020 we report that:

i) Fixed Assets

a) The Company has maintained proper records of fixed assets showingfull particulars including quantitative details and situation of the assets.

b) The Management has conducted a physical verification of the fixedassets during the year and no material discrepancies were noticed on such verification.

c) The title deeds of immovable properties are held in the name of thecompany.

ii) Inventory

The inventory has been physically verified during the year by themanagement at reasonable intervals and there are no material discrepancies noticed.

iii) Loans and Advances

The Company has granted unsecured to companies covered in the registermaintained under section 189 of Companies Act 2013. And the amount involved are as below:

Number of parties

Maximum Amount Involved during the year

Amount as at 31.03.2020

2 Rs. 6616319/- Rs. 6616319/-

a) The terms and conditions of the grant of such loan is notprejudicial to the company's interest;

b) There are no stipulated terms in respect of repayment of principleand interest.

c) We are also unable to ascertain the overdue amount for the periodexceeding 90Days as there has been no stipulation with respect to the repayment of suchloans or the payment of Interest

iv) Loans/Investments/Guarantees

In our opinion and according to the information and explanations givento us provisions of section 185 and 186 of the Companies Act 2013 have been compliedwith in respect of loans investments guarantees and security given by the company.

v) Deposits

According to the information and explanation given to us the companyhas not accepted any deposits consequently directives of the RBI and the provision ofSection 73 and 76 or any other relevant provision of the Companies Act2013 and the rulesframed there under are not applicable to the company.

vi) Cost records

According to information and explanation given to us the company isnot required to maintain cost records as per sub section (1) of section 148 of the Acthence no comment is required on the same.

vii) Statutory Dues

a) According to the records of the Company Company is regular indepositing with appropriate authorities Undisputed statutory dues including providentfund employee's state insurance income tax sales tax

service tax duty of customs duty of excise value added tax Goodsand Services tax cess and other statutory dues applicable to it.

b) According to the records of the Company there are no dues of Incometax or Sales tax or Service tax or Goods and Services tax or duty of customs or duty ofexcise or value added tax which have not been deposited on account of any dispute exceptthe following:

Name of the Statute Nature of the Dues Amount Period to which the amount related to Forum where dispute is pending
Income Tax Act 1961 Income - Tax Rs.68705/- Assessment Year-201617 Commissioner of Income tax Appeals

viii) Repayment of Loans

According to the information and explanations given to us and on thebasis of our examination of the records of the Company the company has not defaulted inrepayment of loans or borrowings to a financial institution bank Government or dues todebenture holders.

ix) Diversion of Funds

The company has neither borrowed any term loan nor raised money by wayof public offer. Hence paragraph 3(ix) of the order is not applicable.

x) Frauds noticed / Detected

According to the information and explanations given to us and on thebasis of our examination of the records of the Company no material fraud by the companyor any fraud on the company by its officers or employees has been noticed or reportedduring the year.

xi) Managerial Remuneration

According to the information and explanations given to us and based onour examination of the records of the company managerial remuneration has beenpaid/provided in accordance with the requisite approvals mandated by the provisions ofsection 197 read with Schedule V to the Companies Act.

xii) Nidhi Company

The company is not a Nidhi Company as mentioned in section 406 of theCompanies Act 2013 and hence no comment is required on the same.

xiii) Related Party Transactions

According to the information and explanations given to us and on thebasis of our examination of the records of the Company all transactions with the relatedparties are in compliance with sections 177 and 188 of Companies Act 2013 whereapplicable and the details of the transactions have been disclosed in the FinancialStatements as required by the accounting standards and The Companies Act 2013.

xiv) Preferential allotment

According to the information and explanations given to us and on thebasis of 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 under review and hence no comment is required on the same.

xv) Non-cash transactions

According to the information and explanations given to us and on thebasis of our examination of the records of the Company the company has not entered intoany non-cash transactions with directors or persons connected with him and hence nocomment is required on the same.

xvi) Certification for Non-Banking Financial Institution

The company is not a Non-Banking Financial Institution henceregistration under section 45-IA of the Reserve Bank of India Act 1934 is not required.

For B N Subramanya & Co.
Chartered Accountants
Firm Reg.No. 04142S
Devendra Nayak
Partner
Membership No.27449
UDIN:20027449AAAAAU7008
Place: Bengaluru
Date:29th June 2020

Annexure B to Auditors' report

Report on the Internal Financial Controls under Clause (i) ofSub-section 3 of Section 143 of the Companies Act 2013 ("the Act")

We have audited the internal financial controls over financialreporting of M/s. SIKA INTERPLANT SYSTEMS LIMITED ("the Company") as ofMarch 31st 2020 in conjunction with our audit of the financial statements of the Companyfor the year ended on that date.

Management's Responsibility for Internal Financial Controls

The Company's management is responsible for establishing andmaintaining internal financial controls based on the internal control over financialreporting criteria established by the Company considering the essential components ofinternal control stated in the "Guidance Note on Audit of Internal Financial ControlsOver Financial Reporting" issued by the Institute of Chartered Accountants of India.These responsibilities include the design implementation and maintenance of adequateinternal financial controls that were operating effectively for ensuring the orderly andefficient 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 Companies Act 2013.

Auditors' Responsibility

Our responsibility is to express an opinion on the Company's internalfinancial controls over financial reporting based on our audit. We conducted our audit inaccordance with the Guidance Note on Audit of Internal Financial Controls Over FinancialReporting (the "Guidance Note") and the Standards on Auditing issued by ICAIand 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 Chartered Accountantsof India. 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 audit involves performing procedures to obtain audit evidence aboutthe adequacy of the internal financial controls system over financial reporting and theiroperating effectiveness. Our audit of internal financial controls over financial reportingincluded obtaining an understanding of internal financial controls over financialreporting assessing the risk that a material weakness exists and testing and evaluatingthe design and operating effectiveness of internal control based on the assessed risk. Theprocedures selected depend on the auditor's judgment including the assessment of therisks of material misstatement of the financial statements whether due to fraud or error.

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

Meaning of Internal Financial Controls Over Financial Reporting

A company's internal financial control over financial reporting 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 control overfinancial reporting includes those policies and procedures that:

(1) Pertain to the maintenance of records that in reasonable detailaccurately and fairly reflect the transactions and dispositions of the assets of thecompany;

(2) Provide reasonable assurance that transactions are recorded asnecessary to permit preparation of financial statements in accordance with generallyaccepted accounting principles and that receipts and expenditures of the company arebeing made only in accordance with authorizations of management and directors of thecompany; and

(3) Provide reasonable assurance regarding prevention or timelydetection of unauthorized acquisition use or disposition of the company's assets thatcould have a material effect on the financial statements.

Inherent Limitations of Internal Financial Controls Over FinancialReporting

Because of the inherent limitations of internal financial controls overfinancial reporting including the possibility of collusion or improper managementoverride of controls material misstatements due to error or fraud may occur and not bedetected. Also projections of any evaluation of the internal financial controls overfinancial reporting to future periods are subject to the risk that the internal financialcontrol over financial reporting may become inadequate because of changes in conditionsor that the degree of compliance with the policies or procedures may deteriorate

Opinion

In our opinion the Company has in all material respects an adequateinternal financial controls system over financial reporting and such internal financialcontrols over financial reporting were operating effectively as at March 31 2020 basedon 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 theInstitute of Chartered Accountants of India.

For B N Subramanya & Co.
Chartered Accountants
Firm Reg.No.004142S
Devendra Nayak
Partner
Membership No.27449
UDIN:20027449AAAAAU7008
Place: Bengaluru
Date: 29th June 2020

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