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Sirca Paints India Ltd.

BSE: 535083 Sector: Others
NSE: SIRCA ISIN Code: INE792Z01011
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Sirca Paints India Ltd. (SIRCA) - Auditors Report

Company auditors report

To the Members of Sirca Paints India Limited

REPORT ON THE AUDIT OF THE STANDALONE FINANCIAL STATEMENTS

Opinion

We have audited the standalone financial statements of Sirca Paints India Limitedformerly known as SIRCA PAINTS INDIA PRIVATE LIMITED earlier known as SIRCOLOR WOODCOATINGS PRIVATE LIMITED ("the Company") which comprise the standalone balancesheet as at March 31 2020 the standalone statement of profit and loss (including othercomprehensive income) the standalone statement of changes in equity and the standalonestatement of Cash Flows for the year ended on that date and the 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 the explanationsgiven to us the aforesaid standalone financial statements give the information requiredby the Companies Act 2013 ("the Act") in the manner so required and give a trueand fair view in conformity the accounting principles generally accepted in India of thestate of a!airs of the Company as at March 31 2020 and profit and other comprehensiveincome changes in equity and its cash flows for the year ended on that date.

Basis for Opinion

We conducted our audit of the standalone financial statements in accordance with theStandards on Auditing (SAs) specified under section 143(10) of the Act. Ourresponsibilities under those SAs are further described in the Auditor's Responsibilitiesfor the Audit of the Standalone Financial Statements section of our report. We areindependent of the Company in accordance with the Code of Ethics issued by the Instituteof Chartered Accountants of India (ICAI) together with the independence requirements thatare relevant to our audit of the standalone financial statements under the provisions ofthe Act and the Rules made there under and we have fulfilled our other ethicalresponsibilities in accordance with these requirements and the ICAI's Code of Ethics. Webelieve that the audit evidence we have obtained is su"cient and appropriate toprovide 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 mostsignificance 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 financialstatements as a whole and in forming our opinion thereon and we do not provide aseparate opinion on these matters. a) Revenue recognition (refer note no. 2.4 & 28 ofthe Standalone financial Statements)

The key audit matters How the matter was addressed in our report
Revenue from the sale of goods (hereinafter referred to as "Revenue") is recognised when the Company performs its obligation to its customers and the amount of revenue can be measured reliably and recovery of the consideration is probable. The timing of such recognition in case of sale of goods is when the control over the same is transferred to the customer which is mainly upon delivery. The timing of revenue recognition is relevant to the reported performance of the Company. The management considers revenue as a key measure for evaluation of performance. Assessing the appropriateness of the Company's revenue recognition accounting policies in line with Ind AS 115 ("Revenue from Contracts with Customers") and testing thereof. Our other audit procedures with regard to revenue recognition include testing controls automated and manual around dispatches/deliveries E –Way bill Verification inventory reconciliations and circularization of receivable balances substantive testing for cut-offs and analytical review procedures. Testing the supporting documentation for sales transactions recorded during the period closer to the year end and subsequent to the year end including examination of credit notes issued after the year end to determine whether revenue was recognised in the correct period. Performing analytical procedures on current year revenue based on monthly trends and where appropriate conducting further enquiries and testing.
There is a risk of revenue being recorded before control is transferred.

b) Discounts and incentives (Refer note 2.4 and 28 of the Standalone FinancialStatements)

The key audit matters How the matter was addressed in our report
Discounts and incentives to dealers / customers are administered through various schemes including incentives. Our audit procedures included assessment of the design and implementation of controls in addition to testing the effectiveness of key controls in respect of recognition of the liabilities for such discounts and incentives. We have considered each significant type of discount recognized and assessed the appropriateness of the judgement applied while recognising the liability including the methodology and inputs used in calculating the amount and in some cases re-performed the calculation. Our audit procedures also included verification of appropriate authorization analytical review including comparison of budgeted amount and actual charge for the year and review of historical trends in respect of these liabilities.
These are material items of business cost. The calculation of the amount of expense to be recognized is both voluminous complex and involves significant judgement.
The liability recognized for such discounts and incentives for the year ending 31st March 2020 is Rs.1001.30 Lakhs.
There is a risk that such liabilities for discounts and incentives may be inaccurately recognised.

c) Capital work-in-progress/Property Plant and Equipment (PPE) - (Refer note 2.6 &note 5 of the Standalone Financial Statements)

The key audit matters How the matter was addressed in our report
The Company had embarked on the project of setting up manufacturing plants in Nathupur Haryana. Value of Nathupur plant capitalized during the year is Rs 2413 Lakhs. The projects need to be capitalized and depreciated once the assets are ready for use as intended by the management. Inappropriate timing of capitalization of the project and/or inappropriate classification of categories of items of PPE could result in material misstatement of Capital work-in-progress/ PPE with a consequent impact on depreciation charge and results for the year. Our audit procedures included testing the design implementation and operating effectiveness of controls in respect of review of capital work in progress particularly in respect of timing of the capitalization and recording of additions to items of various categories of PPE with source documentation substantive testing of appropriateness of the cut-o! date considered for project capitalization. We tested the source documentation to determine whether the expenditure is of capital nature and has been appropriately approved and segregated into appropriate categories and classified under appropriate category of PPE. We reviewed operating expenses to determine appropriateness of accounting. Further through sites visits we physically verified existence of capital work in progress/PPE.

Other information

The Company's management and Board of Directors are responsible for the preparation ofthe other information. The other information comprises the information included in thecompany's annual report but does not include the standalone financial statements and ourauditor's report thereon.

Our opinion on the standalone financial statements does not cover the other informationand we do not express any form of assurance conclusion thereon. In connection with ouraudit of the standalone financial statements our responsibility is to read the otherinformation and in doing so consider whether the other information is materiallyinconsistent with the standalone financial statements or our knowledge obtained during thecourse of our audit or otherwise appears to be materially misstated. If based on the workwe have performed we conclude that there is a material misstatement of this otherinformation we are required to report that fact. We have nothing to report in thisregard.

Management's and Board of Directors' Responsibility for the Standalone FinancialStatements

The Company's management and Board of Directors are 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 profit/loss and othercomprehensive income changes in equity and cash flow of the company in accordance withthe accounting principles generally accepted in India including the Indian AccountingStandards (Ind AS) specified under section 133 of the Act. This responsibility alsoincludes maintenance of adequate accounting records in accordance with the provisions ofthe Act for safeguarding the assets of the Company and for preventing and detecting fraudsand other irregularities; selection and application of appropriate accounting policies;making judgments and estimates that are reasonable and prudent; and design implementationand maintenance of adequate internal financial controls that were operating effectivelyfor ensuring the accuracy and completeness of the accounting records relevant to thepreparation and presentation of the standalone financial statements that give a true andfair view and are free from material misstatement whether due to fraud or error.

In preparing the standalone financial statements management and Board of Directors areresponsible for assessing the Company's ability to continue as a going concerndisclosing as applicable matters related to going concern and using the going concernbasis of accounting unless management either intends to liquidate the Company or to ceaseoperations or has no realistic alternative but to do so.

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

Auditor's Responsibilities for the Audit of the Standalone Financial Statements

Our objectives are to obtain reasonable assurance about whether the standalonefinancial 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 standalone 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 standalonefinancial statements whether due to fraud or error design and perform audit proceduresresponsive to those risks and obtain audit evidence that is sufficient and appropriate toprovide a basis for our opinion. The risk of not detecting a material misstatementresulting from fraud is higher than for one resulting from error as fraud may involvecollusion forgery intentional omissions misrepresentations or the override of internalcontrol.

• Obtain an understanding of internal financial controls relevant to the audit inorder to design audit procedures that are appropriate in the circumstances. Under section143(3)(i) of the Act we are also responsible for expressing 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 reasonablenessof accounting estimates and related disclosures in the standalone financial statementsmade by the Management and Board of Directors.

• Conclude on the appropriateness of Management and Board of Director'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's report tothe related disclosures in the standalone financial statements or if such disclosures areinadequate to modify our opinion. Our conclusions are based on the audit evidenceobtained up to the date of our auditor's report. However future events or conditions maycause the Company to cease to continue as a going concern.

• Evaluate the overall presentation structure and content of the standalonefinancial statements including the disclosures and whether the standalone financialstatements represent the underlying transactions and events in a manner that achieves fairpresentation.

We communicate with those charged with governance regarding among other matters theplanned scope and timing of the audit and significant audit findings including anysignificant deficiencies in internal control that we identify during our audit.

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

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

Report on Other Legal and Regulatory Requirements

1. As required by Section 143(3) of the Act we report that:

a) We have sought and obtained all the information and explanations which to the bestof our knowledge and belief were necessary for the purposes of our audit;

b) In our opinion proper books of account as required by law have been kept by theCompany so far as it appears from our examination of those books;

c) The Balance Sheet the Statement of Profit and Loss and the Statement of Cash Flowdealt with by this Report are in agreement with the books of account;

d) In our opinion the aforesaid standalone financial statements comply with the ASspecified under Section 133 of the Act;

e) On the basis of the written representations received from the directors as on March31 2020taken on record by the Board of Directors none of the directors is disqualifiedas on March 31 2020 from being appointed as a director in terms of Section 164 (2) of theAct;

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 A". Our report expresses an unmodifiedopinion on the adequacy and operating effectiveness of the Company's internal financialcontrols over financial reporting.

2. 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 as amended inour opinion and to the best of our information and according to the explanations given tous:

i. The Company does not have any pending litigations which would impact on thefinancial position of the company.

ii. The Company does not have any long-term contracts including derivative contractsas such the question of commenting on any material foreseeable losses thereon does notarise.

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

iv. The disclosures in the standalone financial statements regarding holdings as wellas dealings in specified bank notes during the period from 8 November 2016 to 30 December2016 have not been made in these standalone financial statements since they do not pertainto the financial year ended 31 March 2020.

3. With respect to the matter to be included in the Auditors' Report under Section197(16) of the Act: In our opinion and according to the information and explanations givento us the remuneration paid by the Company to its directors during the current year is inaccordance with the provisions of Section 197 of the Act. The remuneration paid to anydirector is not in excess of the limit laid down under Section 197 of the Act. TheMinistry of Corporate Affairs has not prescribed other details under Section 197(16) whichare required to be commented upon by us.

4. 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 B" a statement on the matters specified in paragraphs 3 and 4 of theOrder.

For Rajesh Kukreja& Associates

Chartered Accountants (Firm's Registration No.0004254N )

Rajesh Kukreja

Proprietor

New Delhi June 29 2020 (Membership No.083496)

UDIN: 20083496AAAAAT3150

Annexure A

 

TO THE INDEPENDENT AUDITOR'S REPORT on the standalone financial statements of SircaPaints India Limited for the year ended 31st March 2020

(Referred to in paragraph 1(f) under ‘Report on Other Legal and RegulatoryRequirements' section of our report of even date)

REPORT ON THE INTERNAL FINANCIAL CONTROLS OVER FINANCIAL REPORTING UNDER SECTION143(3)(I) OF THE COMPANIES ACT 2013("THE ACT")

Opinion

We have audited the internal financial controls over financial reporting of SIRCAPAINTS INDIA LIMITED formerly known as SIRCA PAINTS INDIA PRIVATE LIMITED earlier knownas SIRCOLOR WOOD COATINGS PRIVATE LIMITED ("the Company") as of March 312020 in conjunction with our audit of the standalone financial statements of the Companyfor the year ended on that date.

In our opinion the Company has in all material respects an adequate internalfinancial control system with reference to financial statements and such internalfinancial controls were operating effectively as at 31 March 2020 based on the internalfinancial controls with reference to financial statements criteria established by theCompany considering the essential components of internal controls stated in the GuidanceNote on Audit of Internal Financial Controls over Financial Reporting issued by theInstitute of Chartered Accountants of India (the "Guidance note").

Management's Responsibility for Internal Financial Controls

The company's Management and Board of Directors are responsible for establishing andmaintaining internal financial controls based on the internal financial controls withreference to financial statements criteria established by the Company considering theessential components of internal control stated in the Guidance Note. Theseresponsibilities include the design implementation and maintenance of adequate internalfinancial controls that were operating effectively for ensuring the orderly and efficientconduct of its business including adherence to respective 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.

Auditor's Responsibility

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 and the Standards on Auditing prescribed underSection 143(10) of the Companies Act 2013 to the extent applicable to an audit ofinternal financial controls with reference to financial statements. Those Standards andthe Guidance Note require that we comply with ethical requirements and plan and performthe audit to obtain reasonable assurance about whether adequate internal financialcontrols over financial reporting was established and maintained and if such controlsoperated effectively in all material respects.

Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal financial controls with reference to financial statements and their operatingeffectiveness. Our audit of internal financial controls with reference to financialstatements included obtaining an understanding of such internal financial controlsassessing 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 systemwith reference to financial statements.

Meaning of Internal Financial Controls with reference to Financial Statements

A company's internal financial control 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 control withreference to financial statements include those policies and procedures that (1) pertainto the maintenance of records that in reasonable detail accurately and fairly reflectthe transactions and dispositions of the assets of the company; (2) provide reasonableassurance that transactions are recorded as necessary to permit preparation of financialstatements in accordance with generally accepted accounting principles and that receiptsand expenditures of the company are being made only in accordance with authorizations ofmanagement and directors of the company; and (3) provide reasonable assurance regardingprevention or timely detection of unauthorized acquisition use or disposition of thecompany's assets that could have a material effect on the financial statements.

Inherent Limitations of Internal Financial Controls with reference to financialstatements

Because of the inherent limitations of internal financial controls with reference tofinancial statements 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.

For Rajesh Kukreja& Associates

Chartered Accountants

(Firm's Registration No.0004254N )

Rajesh Kukreja

Proprietor

New Delhi June 29 2020

(Membership No.083496)

UDIN: 20083496AAAAAT3150

Annexure B

 

TO THE INDEPENDENT AUDITOR'S REPORT on the standalone financial statements of SircaPaints India Limited for the year ended 31st March 2020

(Referred to in paragraph under ‘Report on Other Legal and RegulatoryRequirements' section of our report of even date)

1. On the basis of such checks as we considered appropriate and according to theinformation and explanations given to us during the course of our audit we report that:

a) The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets;

b) The fixed assets of the Company have been physically verified by the Managementduring the year and no material discrepancies have been noticed on such verification. Inour opinion the frequency of verification is reasonable.

c) According to the information and explanations given to us the records examined byus and based on the examination of the conveyance deeds / registered sale deed provided tous we report that the title deeds comprising all the immovable properties of land andbuildings which are freehold are held in the name of the Company as at the balance sheetdate. In respect of immovable properties of land and building that have been taken onlease and disclosed as fixed assets in the standalone financial statements the leaseagreements are in the name of the Company

2. a) The inventory except goods-in-transit has been physically verified during theyear by the management. In our opinion the frequency of verification is reasonable.

b) In our opinion and according to the information and explanations given to us theprocedures of physical verification of inventories followed by the management arereasonable and adequate in relation to the size of the Company and the nature of itsbusiness. In respect of inventory lying with third parties these have substantially beenconfirmed by them.

c) The Company has maintained proper records of inventories. As explained to us therewere no material discrepancies noticed on physical verification of inventories as comparedto the book records.

3. According to information and explanations given to us the company has not grantedany loans secured or unsecured to companies firms Limited Liability Partnerships orother parties covered in the register maintained under section 189 of the Act. Accordinglyreporting under clause (iii) of Paragraph 3 of the Order is not applicable to the Company.

4. The company has not granted any loans investments guarantees and securities to theparties covered under section 185 of the Act. Accordingly reporting under clause (iv) ofParagraph 3 of the Order is not applicable to the Company.

5. According to the information and explanation given to us the Company has notaccepted any deposits from the public covered under Section 73 to 76 of the Companies Act2013. Accordingly reporting under clause (v) of Paragraph 3 of the Order is not applicableto the Company.

6. According to the information and explanation given to us the Central Government hasnot prescribed maintenance of Cost Records under Sub section (1) of section 148 of the Act2013. Accordingly reporting under clause (vi) of Paragraph 3 of the Order is notapplicable to the Company.

7 (a) According to the information and explanations given to us and the records of theCompany examined by us in our opinion undisputed statutory dues including ProvidentFund Investor's Education & Protection Fund Employee's State Insurance Goods &Service Tax Income-Tax Customs Duty Cess and other statutory dues have generally beenregularly deposited with the appropriate authorities. According to the information &explanations given to us no undisputed amounts payable in respect of the above said dueswere in arrears as at 31 March 2020 for a period of more than six months from the datethey became payable.

b) According to the information and explanations given to us there are no dues ofIncome Tax Service Tax Goods & Service Tax and Customs Duty and other statutorydues which have not been deposited with the appropriate authorities on account of anydisputes.

8. According to the information and explanations given to us the Company has not takenany loans or borrowings from any financial institution bank or Government nor has itissued any debentures. Accordingly reporting under clause (viii) of Paragraph 3 of theOrder is not applicable to the Company.

9. The Company has not raised any moneys by way of initial public o!er further publico!er (including debt instruments) or term loans during the year. Accordingly reportingunder clause (ix) of Paragraph 3 of the Order is not applicable to the Company.

10. According to the information and explanations given to us no material fraud by theCompany or on the Company by its o"cers or employees has been noticed or reportedduring the year.

11. According to the information and explanations given to us and based on ourexamination of the records the Company has paid or provided for managerial remunerationin accordance with the requisite approvals mandated by the provisions of section 197 readwith schedule V to the Act.

12. In our opinion and according to the information and explanations given to us theCompany is not a Nidhi company. Accordingly reporting under clause (xii) of Paragraph 3 ofthe Order is not applicable to the Company.

13. According to the information and explanations given to us and based on ourexaminations of the records of the Company transactions with the related parties are incompliance with sections 177 and 188 of the Act where applicable. The details of suchrelated party transactions have been disclosed in the standalone financial statements asrequired by applicable Indian Accounting Standards.

14. According to the information and explanations given to us and based on ourexamination of the records the Company has not made any preferential allotment or privateplacement of shares or fully or partly convertible debentures during the year. Accordinglyreporting under clause (xiv) of Paragraph 3 of the Order is not applicable to the Company.

15. According to the information and explanations given to us and based on ourexamination of the records the Company has not entered into non-cash transactions withdirectors or persons connected with him. Accordingly reporting under clause (xv) ofParagraph 3 of the Order is not applicable to the Company.

16. The Company is not required to be registered under section 45-IA of the ReserveBank of India Act 1934. Accordingly reporting under clause (xvi) of Paragraph 3 of theOrder is not applicable to the Company.

For Rajesh Kukreja& Associates

Chartered Accountants (Firm's Registration No.0004254N )

Rajesh Kukreja

Proprietor New Delhi June 29 2020 (Membership No.083496)

UDIN: 20083496AAAAAT3150

.