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Somany Ceramics Ltd.

BSE: 531548 Sector: Consumer
NSE: SOMANYCERA ISIN Code: INE355A01028
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NSE 00:00 | 20 Oct 829.40 -9.60
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OPEN 825.00
PREVIOUS CLOSE 830.85
VOLUME 6351
52-Week high 864.05
52-Week low 193.00
P/E 38.09
Mkt Cap.(Rs cr) 3,453
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 825.00
CLOSE 830.85
VOLUME 6351
52-Week high 864.05
52-Week low 193.00
P/E 38.09
Mkt Cap.(Rs cr) 3,453
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Somany Ceramics Ltd. (SOMANYCERA) - Auditors Report

Company auditors report

To

The Members

Somany Ceramics Limited

Report on the Audit of the Standalone Financial Statements Opinion

We have audited the accompanying standalone financial statements of Somany CeramicsLimited ("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 Cash Flow Statement for the year then ended and notes to thefinancial statements including a summary of significant accounting policies and otherexplanatory information (hereinafter referred to as "the financial statements").

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 with the accounting principles generally accepted in India ofthe state of affairs of the Company as at March 31 2021 its profit including othercomprehensive income the changes in equity and its cash flows for the year ended on thatdate.

Basis for Opinion

We conducted our audit of the standalone financial statements in accordance with theStandards on Auditing (SAs) as specified under section 143(10) of the Act. Ourresponsibilities under those Standards are further described in the ‘Auditor’sResponsibilities for the Audit of the Standalone Financial Statements’ section of ourreport. We are independent of the Company in accordance with the ‘Code ofEthics’ issued by the Institute of Chartered Accountants of India together with theethical requirements that are relevant to our audit of the financial statements under theprovisions of the Act and the Rules thereunder and we have fulfilled our other ethicalresponsibilities in accordance with these requirements and the Code of Ethics. We believethat the audit evidence obtained by us is sufficient and appropriate to provide a basisfor 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 for the financial yearended March 31 2021. These matters were addressed in the context of our audit of thestandalone financial statements as a whole and in forming our opinion thereon and we donot provide a separate opinion on these matters. We have determined the matters describedbelow to be the key audit matters to be communicated in our report.

Key Audit Matter Auditor’s Response
1. Valuation of trade and other financial assets How our audit addressed the key audit matter:
We refer to Note no. 5 6 10 13 and 14 Note no. 2.18 to the financial statements. We obtained an understanding of the Company’s credit policy for trade receivables process of approvals and terms and conditions for granting inter corporate deposits (ICD) and business exigencies for other financial assets and evaluated the processes for identifying impairment indicators. We have reviewed and tested the ageing of trade and other financial assets and management’s assessment on the credit worthiness of selected customers for trade receivables and recoverability of other receivables. We have obtained year-end balance confirmations for inter corporate deposits. We further discussed with the key management on the adequacy of the allowance for credit losses recorded by the Company and reviewed the supporting documents provided by management in relation to their assessment. We have also reviewed adequacy and appropriateness of allowance for credit losses based on available information. Based on our audit procedures performed we found management’s assessment of the recoverability of trade and other financial assets to be reasonable.
As disclosed in Notes to the financial statements the Company assesses periodically and at each financial year end the expected credit loss associated with its receivables. When there is expected credit loss impairment the amount and timing of future cash flows are estimated based on historical current and forward- looking loss experience for assets with similar credit risk characteristics.
The carrying amount of trade and other financial assets of the Company was H 29752.49 Lakhs as at March 31 2021. We focused on this area because of its significance and the degree of judgement required to estimate the expected credit loss and determining the carrying amount of trade and other receivables as at the reporting date.

 

2. Valuation of inventories How our audit addressed the key audit matter:
We refer to Note 8 and 2.15 to the financial statements. We have analyzed the ageing of the inventories reviewed the historical trend on whether there were significant inventories written off or reversal of the allowances for inventory obsolescence. We conducted a detailed discussion with the key management and considered their views on the adequacy of allowances for inventory obsolescence considering the current economic environment. We have also reviewed the subsequent selling prices in the ordinary course of business and compared against the carrying amounts of the inventories on a sample basis at the reporting date. We found management’s assessment of the allowance for inventory obsolescence to be reasonable based on available evidence.
As at March 31 2021 the total carrying amount of inventories was H 13610.75 Lakhs. The assessment of impairment of inventories involves significant estimation uncertainty subjective assumptions and the application of significant judgment.
Reviews are made periodically by management on inventories for obsolescence and decline in net realizable value below cost. Allowances are recorded against the inventories for any such declines based on historical obsolescence and slow-moving history. Key factors considered include the nature of the stock its ageing and turnover rate.

 

3. Valuation of Current Investments How our audit addressed the key audit matter:
As disclosed in Note 9 to the financial statements. Our audit procedures included updating our understanding of the processes employed by the Company for accounting and valuing their current investments. We have reviewed year end confirmation of depository participants. We have verified that the Company was the recorded owner of all investments. Our audit procedures over the valuation of the Investments included reviewing valuation of all Investments held as at March 31 2021. Based on the audit procedures performed we are satisfied with existence and valuation of investment.
As at March 31 2021 the total carrying amount of current investments was H 8881.65 Lakhs (net of impairment of H 1844.73 Lakhs). Current investments include quoted equity shares debentures and mutual funds. Fair valuation of unquoted current investments involves significant estimation uncertainty subjective assumptions and the application of significant judgment. This was an area of focus for our audit and the area where significant audit effort was directed.

Other Information

The Company’s Board of Directors is responsible for the other information. Theother information comprises the information included in the Annual report but does notinclude the standalone financial statements and our auditor’s report thereon. We haveobtained all other information prior to the date of this auditor’s report.

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 our audit of the standalone financial statements our responsibilityis to read the other information and in doing so consider whether the other informationis materially inconsistent with the financial statements or our knowledge obtained in theaudit or otherwise appears to be materially misstated. If based on the work we haveperformed we conclude that there is a material misstatement of this other information; weare required to report that fact. We have nothing to report in this regard.

Responsibilities of Management for the Standalone 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 the financial positionfinancial performance including other comprehensive income cash flows and statement ofchanges in equity of the Company in accordance with the accounting principles generallyaccepted in India including the Indian Accounting Standards specified under Section 133of the Act read with the Companies (Indian Accounting Standards) Rules 2015 andCompanies (Indian Accounting Standards) Amendment Rules 2016 as amended. Thisresponsibility also includes maintenance of adequate accounting records in accordance withthe provisions of the Act for safeguarding the assets of the Company and for preventingand detecting frauds and other irregularities; selection and application of appropriateaccounting policies; making judgments and estimates that are reasonable and prudent; anddesign implementation and maintenance of adequate internal financial controls that wereoperating effectively for ensuring the accuracy and completeness of the accountingrecords relevant to the preparation and presentation of the Standalone Financialstatements that give a true and fair view and are free from material misstatement whetherdue to fraud or error.

In preparing the standalone financial statements management is responsible forassessing the Company’s ability to continue as a going concern disclosing asapplicable matters related to going concern and using the going concern basis ofaccounting 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 also responsible for overseeing the Company’s financialreporting process.

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. Reasonableassurance is a high level of assurance but is not a guarantee that an audit conducted inaccordance with SAs will always detect a material misstatement when it exists.Misstatements can arise from fraud or error and are considered material if individuallyor in the aggregate they could reasonably be expected to influence the economic decisionsof users taken 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 standalone financialstatements whether due to fraud or error design and perform audit procedures responsiveto those risks and obtain audit evidence that is sufficient and appropriate to provide abasis for our opinion. The risk of not detecting a material misstatement resulting fromfraud is higher than for one resulting from error as fraud may involve collusionforgery intentional omissions misrepresentations or the override of internal control.

Obtain an understanding of internal control relevant to the audit in order to designaudit procedures that are appropriate in the circumstances. Under section 143(3)(i) of theCompanies Act 2013 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 reasonableness ofaccounting estimates and related disclosures made by management.

Conclude on the appropriateness of management’s use of the going concern basis ofaccounting and based on the audit evidence obtained whether a material uncertaintyexists 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 theCompany to cease to continue as a going concern.

Evaluate the overall presentation structure and content of the standalone financialstatements including the disclosures and whether the standalone financial statementsrepresent the underlying transactions and events in a manner that achieves fairpresentation. We communicate with those charged with governance regarding among othermatters 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 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 aboutthe matter or when in extremely rare circumstances we determine that a matter should notbe communicated in our report because the adverse consequences of doing so wouldreasonably be expected to outweigh the public interest benefits of such communication.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor’s Report) Order 2016 ("theOrder") issued by the Central Government of India in terms of sub-section (11) ofsection 143 of the Act we give in the "Annexure A" a statement on the mattersspecified in paragraphs 3 and 4 of the Order.

2. 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 including Other ComprehensiveIncome the Statement of Change in Equity and the Cash Flow Statement dealt with by thisReport are in agreement with the books of account;

(d) In our opinion the aforesaid standalone financial statements comply with theIndian Accounting Standards (Ind AS) specified under Section 133 of the Act;

(e) On the basis of the written representations received from the directors as on March31 2021 taken on record by the Board of Directors none of the directors is disqualifiedas on March 31 2021 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 with reference to these standalone financialstatements and the operating effectiveness of such controls refer to our separate Reportin "Annexure B" to this report;

(g) In our opinion the remuneration paid /provided by the Company to its directorsduring the year is in accordance with the provisions of section 197 (16) 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 as amended inour opinion and to the best of our information and according to the explanations given tous:

i. The Company has disclosed the impact of pending litigations on its financialposition in its standalone financial statements – Refer Note 39 to the standalonefinancial statements;

ii. The Company did not have material foreseeable losses in long-term contractsincluding derivative contracts;

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

For Singhi & Co.
Chartered Accountants
Firm Reg. No. 302049E
Bimal Kumar Sipani
Partner
Place: Noida (Delhi-NCR) Membership No. 088926
Date: June 16 2021 UDIN: 21088926AAAAHV9626

Annexure A referred to in paragraph 1 of our report of even date on the other legal andregulatory requirements (Re: Somany Ceramics Limited)

(i) a. The Company has maintained proper records showing full particulars includingquantitative details and situation of property plant & equipment.

b. The Company has a regular programme of physical verification of its property plantand equipment by which property plant and equipment are verified in a phased manner overa period of three years which in our opinion is reasonable having regard to the size ofthe Company and nature its property plant and equipment. In accordance with thisprogramme physical verification of property plant & equipment of has been conductedby the external agency. Reconciliations with records was completed for the physicalverifications conducted in current and previous year. No material discrepancies wasnoticed on such physical verifications.

c. The title deeds of all the immovable properties included under the head‘Property plant and equipment’ are held in the name of the Company.

(ii) The management has conducted physical verification of inventories during the yearat reasonable interval and no material discrepancies were noticed on such physicalverification.

(iii) The Company has granted unsecured loans to the companies covered in the registermaintained under Section 189 of the Companies Act 2013. The terms and conditions of thegrant of such loans are not prima facie prejudicial to the interest of the Company. TheCompany has stipulated schedule of repayment of principal and payment of interest andrepayment of principal and interest are regular wherever applicable. The Company has notgiven granted any loan to Firms Limited Liability Partnership or any other partiescovered in the register maintained under section 189 of the Companies Act 2013.

(iv) The Company has complied with provisions of Section 186 of the Companies Act 2013in respect of loan granted investments made and guarantee or security given. There is noloan granted or guarantee or security provided under section 185 of the Companies Act2013.

(v) The Company has not accepted any deposit covered under sections 73 to 76 of theCompanies Act 2013 during the year. Therefore provisions of clause 3(v) of the Order arenot applicable to the Company.

(vi) The maintenance of cost records has not been prescribed by the Central Governmentunder the section 148 (1) of the Act read with Companies (Cost Records and Audit) Rules2014 for the product manufactured by the Company. Therefore provisions of clause 3(vi) ofthe Order are not applicable to the Company.

(vii) a. According to the records of the Company the Company is generally regular indepositing amounts deducted/ accrued in the books of account in respect of undisputedstatutory dues including Provident Fund Employee’s State Insurance Income-taxSales-tax Service Tax Goods and Service Tax Duty of customs Duty of excise ValueAdded Tax Cess and other material statutory dues where applicable with the appropriateauthorities. There were no undisputed outstanding statutory dues as at the yearend for aperiod of more than six months from the date they became Payable.

b. According to the records of the Company there are no dues outstanding of incometax sales tax service tax duty of customs duty of excise and value added tax onaccount of any dispute other than the followings:

Name of Statue Nature of Dues Period to which it relates Amount * (H in Lakhs) Forum where dispute is pending
The Sales Tax Act / The Demand of Entry Tax 2012-13 to 2016-17 38.88 High Court of Kolkata
Value Added Tax Demand of Turnover Tax 2011-12 and 2012-13 59.46 Deputy Commissioner Commercial Taxes Ahmedabad
The Income Tax Act 1961 Demand of Income Tax including penalties Assessment Year 2014-15 to 2017-18 5.74 Commissioner of Income Tax (Appeal) Kolkata
The Central Excise Act 1944 and the Finance Act 1994 Demand for Cenvat credit Financial Year 2016-17 19.94 CESTAT Ahmedabad
Financial Year 2016-17 and 2017-18 287.87 CESTAT Chandigarh

* Exclude matters in respect of which favorable order has been received at variousappellate authorities

(viii) The Company has not defaulted in repayment of dues to banks. The Company did nothave any borrowing from Financial Institution Government and dues to debenture holders.

(ix) During the year the Company did not raise any money by way of initial publicoffer or further public offer (including debt instruments). Further in our opinion andexplanations given to us term loans raised during the year were applied for the purposefor which loans were raised.

(x) Based upon the audit procedures performed for the purpose of reporting the true andfair view of the financial statements and according to the information and explanationsgiven to us no fraud by the Company or no fraud on the Company by its officers andemployees has been noticed or reported during the year.

(xi) The Company has paid/provided for managerial remuneration in accordance with therequisite approvals mandated by the provisions of section 197 read with Schedule V to theAct 2013.

(xii) In our opinion and according to the information and explanations given to us theCompany is not a nidhi company. Therefore the provisions of clause 3(xii) of the Orderare not applicable to the Company.

(xiii) According to the information and explanations given by the management and basedon our examination of the records of the Company transactions with the related partiesare in compliance with section 177 and 188 of the Companies Act 2013 where applicable anddetails for the same have been disclosed in the standalone financial statements asrequired by the applicable Indian accounting standards.

(xiv) The Company has not made any preferential allotment or private placement ofshares or fully or partly convertible debentures during the year. Therefore theprovisions of clause 3(xiv) of the Order are not applicable to the Company.

(xv) According to the information and explanations given by the management the Companyhas not entered into any non-cash transactions with directors or persons connected withthem. Therefore the provisions of clause 3(xv) of the Order are not applicable to theCompany.

(xvi) The Company is not required to be registered under section 45-IA of the ReserveBank of India Act 1934.

For Singhi & Co.
Chartered Accountants
Firm Reg. No. 302049E
Bimal Kumar Sipani
Partner
Place: Noida (Delhi-NCR) Membership No. 088926
Date: June 16 2021 UDIN: 21088926AAAAHV9626

ANNEXURE B

Report on the Internal Financial controls under Clause (i) of Sub - section 3 ofSection 143 of the Companies Act 2013 ("the Act")

We have audited the internal financial controls with reference to standalone financialstatements of Somany Ceramics Limited (‘the Company") as of March 31 2021 inconjunction with our audit of the standalone financial statements of the Company for theyear ended on that date.

Management’s Responsibility for Internal Financial Controls

The Company’s management is responsible for establishing and maintaining internalfinancial controls based on the internal control over the financial reporting criteriaestablished by the Company considering the essential components of internal control statedin the Guidance Note on Audit of Internal Financial Controls over Financial Reportingissued by the Institute of Chartered Accountants of India. These responsibilities includethe design implementation and maintenance of adequate internal financial controls thatwere operating effectively for ensuring the orderly and efficient conduct of its businessincluding adherence to Company’s policies the safeguarding of its assets theprevention and detection of frauds and errors the accuracy and completeness of theaccounting records and the timely preparation of reliable financial information asrequired 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 on Audit of Internal Financial Controls OverFinancial Reporting (the "guidance Note") and the standards on Auditing issuedby ICAI and deemed to be prescribed under section 143(10) of the Companies Act 2013 tothe extent applicable to as audit of internal financial controls both applicable to anaudit of Internal Financial Controls and both issued by the Institute of CharteredAccountants of India. Those standards and the

Guidance Note require that we comply with ethical requirements of and plan and performthe audit to obtain reasonable assurance about whether adequate internal financialcontrols with reference to financial statements was established and maintained and if suchcontrols operated effectively in all material respects. Our audit involves performingprocedures to obtain audit evidence about the adequacy of the internal financial controlssystem with reference to financial statements and their operating effectiveness. Our auditof internal financial controls with reference to financial statements included obtainingan understanding of internal financial controls with reference to financial statementsassessing 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 judgement 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 controlssystem with reference to financial statements.

Meaning of Internal Financial controls with reference to financial statements

A Company’s internal financial controls with reference to financial statements isa process 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; financialcontrol with reference to financial statements includes those policies and procedures that

(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) provide reasonable assurance that transactions are recorded as necessary to permitpreparation of financial statements in accordance with generally accepted accountingprinciples and that receipts and expenditures of the company are being made only inaccordance with authorization of management and directors of the company ; and

(3) provide reasonable assurance regarding prevention or timely detection ofunauthorised acquisition use or disposition of the company’s assets that could havea 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 withreference to financial statements to future periods are subject to the risk that theinternal financial controls with reference to financial statements may become inadequatebecause of changes in conditions or that the degree of compliance with the policies orprocedures may deteriorate.

Opinion

In our opinion the Company has in all material respects an adequate internalfinancial controls system with reference to financial statements and such internalfinancial controls with reference to financial statements were operating effectively as atMarch 31 2021 based on the internal control over the financial reporting criteriaestablished by the company considering the essential components of internal control statedin the Guidance Note on Audit of Internal Financial Controls over Financial Reportingissued by the Institute of Chartered Accountants of India however same need to be furtherstrengthened.

For Singhi & Co.
Chartered Accountants
Firm Reg. No. 302049E
Bimal Kumar Sipani
Partner
Place: Noida (Delhi-NCR) Membership No. 088926
Date: June 16 2021 UDIN: 21088926AAAAHV9626

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