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Sonal Adhesives Ltd.

BSE: 526901 Sector: Industrials
NSE: N.A. ISIN Code: INE344I01017
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NSE 05:30 | 01 Jan Sonal Adhesives Ltd
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VOLUME 1128
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OPEN 14.53
CLOSE 14.53
VOLUME 1128
52-Week high 15.16
52-Week low 5.73
P/E
Mkt Cap.(Rs cr) 9
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Sonal Adhesives Ltd. (SONALADHESIVES) - Auditors Report

Company auditors report

To The Members of Sonal Adhesives Limited

Report on the Audit of the Standalone IND AS Financial Statements Opinion

I have audited the accompanying standalone IND AS financial statements of SonalAdhesives Limited (‘the Company') which comprise the Balance Sheet as at 31 Mar2021 the Statement of Profit and Loss(including Other Comprehensive Income) Cash FlowStatement and Statement of Changes in Equity for the year then ended and a summary ofsignificant accounting policies and other explanatory information.

In my opinion and to the best of my information and according to the explanations givento me the aforesaid standalone IND AS financial statements give the information requiredby the Companies Act 2013 (the 'Act') in the manner so required and give a true and fairview inconformity with the accounting principles generally accepted in India includingIndian Accounting Standards('Ind AS') specified under Section 133 of the Act of the stateof affairs (financial position) of the Company as at 31 March 2021 and its profit(financial performance including other comprehensive income) its cash flows and thechanges inequity for the year ended on that date.

Basis of Qualified Opinion

i. The banking facility availed from SBI have become NPA as per RBI guidelines andconsequently the said bank has stopped charging interest. During the year under review noprovisions have been made for unapplied interest on account of NPA not charged by thebank which is not in accordance with the generally accepted accounting principles.

ii. The balance of SBI Term Loan Cash Credit and other credit facilities appearing inthe books of accounts are not in accordance with the bank statement and are subject toreconciliation process.

iii. The Company has received notice under section 13(2) of the SARFAESI Act forattachment of its assets from State Bank of India. Pursuant to this the Company has beenintimated of the symbolic possession taken by the State Bank of India on 22ndFeb 2016. Matter is pending in Debts Recovery Tribunal Mumbai and Debt RecoveryAppellate Tribunal Mumbai. As on 27th March 19 SBI has assigned companiesloan account to ASREC (India) Limited (Asset Reconstruction Company).

iv. As informed to me the Company had given corporate guarantee of Rs. 38262938/-for credit facilities availed by M/S Sonal Impex Ltd. The same has been classified as NPAby the bank the guarantee been has invoked and company has been called upon by the bankto repay the entire amount.

v. As told by management Rs. 21178196 Worth of Debtors are more than 3 years oldthe same being time barred should have been written off but no provision for the same hadbeen provided in books of accounts. The same is the case with Sundry creditors as permanagement the same is under settlement process.

Basis of Opinion

I conducted my audit in accordance with the Standards on Auditing (SAs) specified undersection 143(10) of the Companies Act 2013. My responsibilities under those Standards arefurther described in the Auditor's Responsibilities for the Audit of the FinancialStatements section of my report. I am independent of the Company in accordance with theCode of Ethics issued by the Institute of Chartered Accountants of India together with theethical requirements that are relevant to my audit of the financial statements under theprovisions of the Companies Act 2013 and the Rules thereunder and I have fulfilled myother ethical responsibilities in accordance with these requirements and the Code ofEthics. I believe that the audit evidence I have obtained is sufficient and appropriate toprovide a basis for my Qualified opinion.

Material Uncertainty Related to Going Concern

I draw attention to Note 1 (b) in the financial statement which describes that theCompany's net worth is negative and the borrowings from banks and financial institutionshave been classified by the lenders as non-performing assets. I was informed that theCompany is also in the process to initiate a One Time Settlement (OTS) with the banks. Theabove factors cast a significant uncertainty on the Company's ability to continue as agoing concern. Pending the resolution of the above uncertainties the Company has preparedthe aforesaid statement on a going concern basis.

Emphasis of Matter

I invite attention to Note No 1 (h) to the standalone financial results regarding theuncertainties arising out of the outbreak of COVID-19 pandemic and the assessment made bythe management on its business and financials including valuation of assets and solvencyfor the year ended March 312021 this assessment and the outcome of the pandemic is asmade by the management and is highly dependent on the circumstances as they evolve in thesubsequent periods.

My opinion in not modified on the above matter.

Key Audit Matters

Key audit matters are those matters that in my professional judgment were of mostsignificance in my audit of the financial statements of the current period. These matterswere addressed in the context of my audit of the financial statements as a whole and informing my opinion thereon and I do not provide a separate opinion on these matters.

I have determined the matters described below to be the key audit matters to becommunicated in my report.

i. Note No. 14.1 and 28 to the standalone IND AS Financial Statements which inter-aliadescribes the uncertainty related to the outcome of the cases/notices filed/given againstthe Company.

ii. The accumulated losses of the Company exceed its net worth as at the financial yearend. Also the Company has incurred cash losses during the year.

iii. Considering the overall financial health of the Company it may require furtherfund infusion for growth and expansion. Other Matter

Due to the COVID-19 pandemic lockdown and other restrictions imposed by the Governmentand local administration the audit processes were carried out based on the remote accessto the extent available/feasible and necessary records made available by the managementthrough digital medium.

Also I was not able to participate in the physical verification of inventory that wascarried out by the management subsequent to the year end. In absence of other sufficientalternate audit evidence I am unable to verify the inventory. My opinion is modified inthis matter.

Information other than the Financial Statements and Auditor's Report thereon

The Company's Board of Directors is responsible for the other information. The otherinformation comprises the information included in the Annual Report but does not includethe financial statements and my auditor's report thereon.

My opinion on the financial statements does not cover the other information and I donot express any form of assurance conclusion thereon.

In connection with my audit of the financial statements my responsibility is to readthe other information and in doing so consider whether the other information ismaterially inconsistent with the financial statements or my knowledge obtained in theaudit or otherwise appears to be materially misstated. If based on the work I haveperformed I conclude that there is a material misstatement of this other information Iam required to report that fact. I have nothing to report in this regard.

Responsibility of Management for the Standalone IND AS 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 preparationand presentation of these standalone IND AS financial statements that give a true and fairview of the financial position financial performance including other comprehensiveincome cash flows and changes in equity of the Company in accordance with the accountingprinciples generally accepted in India including the Accounting Standards (Ind AS)specified under Section 133 of the Act read with Rule 7 of the Companies (Accounts)Rules 2014. This responsibility also includes maintenance of adequate accounting recordsin accordance with the provisions of the Act for safeguarding the assets of the Companyand for preventing and detecting frauds and other irregularities; selection andapplication of appropriate accounting policies; making judgments and estimates that arereasonable and prudent; and design implementation and maintenance of adequate internalfinancial controls that were operating effectively for ensuring the accuracy andcompleteness of the accounting records relevant to the preparation and presentation ofthe standalone IND AS financial statements that give a true and fair view and are freefrom material misstatement whether due to fraud or error.

In preparing the financial statements management is responsible for assessing theCompany's ability to continue as a going concern disclosing as applicable mattersrelated to going concern and using the going concern basis of accounting unless managementeither intends to liquidate the Company or to cease operations or has no realisticalternative but to do so.

Those Board of Directors are also responsible for overseeing the company's financialreporting process.

Auditor's Responsibility

My objectives is to obtain reasonable assurance about whether the financial statementsas a whole are free from material misstatement whether due to fraud or error and toissue an auditor's report that includes my opinion. Reasonable assurance is a high levelof assurance but is not a guarantee that an audit conducted in accordance with Standardson Auditing 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 Standards on Auditing I exercise professionaljudgment and maintain professional skepticism throughout the audit. I also:

• Identify and assess the risks of material misstatement of the 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 my 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 todesign audit procedures that are appropriate in the circumstances. Under Section 143(3)(i) of the Act I am also responsible for explaining my opinion on whether the Company hasadequate internal financial controls system in place and the operating effectiveness ofsuch controls.

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

• Conclude on the appropriateness of management's use of the going concern basisof accounting and based on the audit evidence obtained whether a material uncertaintyexists related to events or conditions that may cast significant doubt on the Company'sability to continue as a going concern. If I conclude that a material uncertainty existsI am required to draw attention in my auditor's report to the related disclosures in thefinancial statements or if such disclosures are inadequate to modify my opinion. Myconclusions are based on the audit evidence obtained up to the date of my auditor'sreport. However future events or conditions may cause the Company to cease to continue asa going concern.

• Evaluate the overall presentation structure and content of the financialstatements including the disclosures and whether the financial statements represent theunderlying transactions and events in a manner that achieves fair presentation.

I 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 I identify during my audit.

I also provide those charged with governance with a statement that I have complied withrelevant ethical requirements regarding independence and to communicate with them allrelationships and other matters that may reasonably be thought to bear on my independenceand where applicable related safeguards.

From the matters communicated with those charged with governance I determine thosematters that were of most significance in the audit of the financial statements of thecurrent period and are therefore the key audit matters. I describe these matters in myauditor's report unless law or regulation precludes public disclosure about the matter orwhen in extremely rare circumstances I determine that a matter should not becommunicated in my report because the adverse consequences of doing so would reasonably beexpected to outweigh the public interest benefits of such communication.

Report on other legal and regulatory requirements

i. As required by The Companies (Auditors Report) Order 2016 ("the Order")issued by the Central Government of India in terms of subsection(11) of section 143 of theAct I give in the Annexure A a statement on the matters specified in paragraphs 3 and 4of the said order.

ii. As required by section 143(3) of the Companies Act 2013 based on my audit I reportto the extent applicable that:

a. As described in the Basis of Qualification of Opinion Paragraph I was unable toobtain all the information and explanations which to the best of my knowledge and beliefwere necessary for the purpose of my audit;

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

c. The Balance Sheet the Statement of Profit and Loss including Other ComprehensiveIncome the Statement of Cash Flow and Statement of Changes in Equity dealt with by thisReport are in agreement with the relevant books of account;

d. Except for the effects of the matter described in the Basis for Qualified /Disclaimer Opinion / Key Audit Matters/ Other Matter paragraphs in my opinion theaforesaid standalone Ind AS financial statements comply with the Accounting Standardsspecified under section 133 of the Act;

e. On the basis of written representations received from the directors as on 31stMarch 2021 and taken on record by the Board of Directors none of the directors isdisqualified as on 31st March 2021 from being appointed as a director in terms ofSection 164(2) of the Act.

f. With respect to the adequacy of the internal financial controls over financialreporting of the Company and the operating effectiveness of such controls refer toseparate report in "Annexure B" and

g. With respect to the other matters to be included in the Auditor's Report inaccordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014 in my opinionand to the best of my information and according to the explanations given to me:

i. The Company has disclosed the impact of pending litigations on its financialposition in its standalone IND AS financial statements- Refer Note 28 to the standaloneIND AS financial statements;

ii. The Company does not have any long-term contracts including derivative contractsfor which there were any material foreseeable losses

iii. The amounts which were required to be transferred to the Investor Education andProtection Fund by the Company have been transferred.

M. C. Asawa & Co.
Chartered Accountants
FRN : 008041C
Mukund Sarda
Place: Khopoli Proprietor
Date: 28th June 2021 M. No. 163405

ANNEXURE-A TO THE INDEPENDENT AUDITORS' REPORT

The annexure referred to my Independent Auditors' Report to the members of the companyon the standalone IND AS financial statements for the year ended 3181 March2021 I report that:

1. a) The company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets.

b) Fixed assets have been physically verified by the management at reasonableintervals. I have been informed that no material discrepancies were noticed on suchverification.

c) According to the information and explanations given to me and on the basis of myexamination of the records of the Company all the title deeds of immovable properties areheld in the name of the Company.

2. As explained to me the inventory of the company has been physically verified by themanagement during the year at reasonable intervals and no material discrepancies werenoticed on physical verification.

3. As per the information and explanations given to me and the records produced beforeme for my verification the Company has not granted unsecured loan to companies firmsLLPs or other parties covered in the register maintained under section 189 of theCompanies Act 2013. Accordingly clause 3 (iii) (a) & (b) of the Order is notapplicable to the Company.

4. The Company has not given any loans guarantees or made any investments undersection 185 of the Companies Act 2013. However it had given guarantee against loan to M/sSonal Impex Ltd. the same has been classified as NPA by the bank during the year and thecompany has been called upon to discharge in full the liability by paying to the bank. Theguarantee amount does not exceed the limit as per provisions of section 186.

5. The company has not accepted loans & deposits u/s 73 to 76 or any other relevantprovisions of the Companies Act 2013 and the rules framed there under.

6. The cost records as prescribed under sub-section (1) of section 148 of the CompaniesAct 2013 is not applicable to the company.

7. a) The Company has generally been regular in depositing undisputed statutory duesincluding Provident Fund Employees' State Insurance Income-tax Goods & Service TaxSales Tax Service Tax Customs Duty Excise Duty Value Added Tax Cess and othermaterial statutory dues applicable to it to the appropriate authorities.

b) There were no undisputed amounts payables in respect of Provident Fund Employees'State Insurance Income-tax Goods & Service Tax Sales Tax Service Tax CustomsDuty Excise Duty Value Added Tax Cess and other material statutory dues in arrears asat 31 March 2021 for a period of more than six months from the date they became payable.

c) The Company has no disputed statutory dues pending to be deposited as on 31st March2021 in respect of provident fund employees state insurance income tax good and servicetax sales tax wealth tax service tax custom duty excise duty cess and otherstatutory dues applicable to it.

8. The Company has defaulted in payment of loans to banks during the year the previousfinancial period. The details of such default are as under:

Bank Name Total Amount Defaulted Date default started
State Bank of India Rs. 233661442 Feb 2015

Rs. 233661442.00 does not include unapplied interest for FY 2016-17to19-20.

9. The Company has not raised moneys by way of initial public offer or further publicoffer (including debt instruments) or term loans and hence this clause is not applicable

10. Based upon the audit procedures performed and information and explanations given bythe management I report that no fraud on or by the company has been noticed or reportedby its officers or employees during the year.

11. Managerial Remuneration has been paid in accordance with section 197 of schedule Vof Companies Act 2013.

12. This clause is not applicable since the company is not a NIDHI company.

13. a) Transactions with related parties are in accordance with the provisions ofsection 177 & 188. b) Details of the same have been disclosed in the standalone IND ASfinancial statements.

14. The company has not made any preferential allotment or private placement of sharesor convertible debentures; hence this clause is not applicable.

15. The Company has not entered into any non-cash transactions with directors orconnected persons; hence this clause is not applicable.

16. The company is not required get registration u/s 45-IA of RBI Act 1934.

M. C. Asawa & Co.
Chartered Accountants
FRN : 008041C
Mukund Sarda
Place: Khopoli Proprietor
Date: 28th June 2021 M. No. 163405

ANNEXURE - B TO THE AUDITORS' REPORT

Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section143 of the Companies Act 2013 ("the Act") Ihave audited the internal financialcontrols over financial reporting of Sonal Adhesives Limited ("the Company") asof 31 March 2021 in conjunction with my audit of the standalone financial statements ofthe Company for the year ended on that date. Management's Responsibility for InternalFinancial Controls

The Company's management is responsible for establishing and maintaining internalfinancial controls based on the internal control over 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 (‘ICAI'). 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 company's policies the safeguarding ofits assets the prevention and detection of frauds and errors the accuracy andcompleteness of the accounting records and the timely preparation of reliable financialinformation as required under the Companies Act 2013.

Auditors' Responsibility

My responsibility is to express an opinion on the Company's internal financial controlsover financial reporting based on my audit. I conducted audit in accordance with theGuidance Note on Audit of Internal Financial Controls over Financial Reporting (the"Guidance Note") and the Standards on Auditing issued by ICAI and deemed to beprescribed under section 143(10) of the Companies Act 2013 to the extent applicable toan audit of internal financial controls both applicable to an audit of Internal FinancialControls and both issued by the Institute of Chartered Accountants of India. ThoseStandards and the Guidance Note require that I comply with ethical requirements and planand perform the audit to obtain reasonable assurance about whether adequate internalfinancial controls over financial reporting was established and maintained and if suchcontrols operated effectively in all material respects.

My audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal financial controls system over financial reporting and their operatingeffectiveness. My audit of internal financial controls over financial reporting includedobtaining an understanding of internal financial controls over financial reportingassessing the risk that a material weakness exists and testing and evaluating the designand operating effectiveness of internal control based on the assessed risk. The proceduresselected depend on the auditor's judgment including the assessment of the risks ofmaterial misstatement of the financial statements whether due to fraud or error.

I believe that the audit evidence I have obtained is sufficient and appropriate toprovide a basis for my audit opinion on the Company's internal financial controls systemover financial reporting.

Meaning of Internal Financial Controls over Financial Reporting

A company's internal financial control over financial reporting is a process designedto provide reasonable assurance regarding the reliability of financial reporting and thepreparation of financial statements for external purposes in accordance with generallyaccepted accounting principles. A company's internal financial control over financialreporting includes those policies and procedures that (1) pertain to the maintenance ofrecords that in reasonable detail accurately and fairly reflect the transactions anddispositions of the assets of the company; (2) provide reasonable assurance thattransactions are recorded as necessary to permit preparation of financial statements inaccordance with generally accepted accounting principles and that receipts andexpenditures of the company are being made only in accordance with authorisations ofmanagement and directors of the company; and (3) provide reasonable assurance regardingprevention or timely detection of unauthorised acquisition use or disposition of thecompany's assets that could have a material effect on the financial statements.

Inherent Limitations of Internal Financial Controls Over Financial Reporting

Because of the inherent limitations of internal financial controls over financialreporting including the possibility of collusion or improper management override ofcontrols material misstatements due to error or fraud may occur and not be detected.Also projections of any evaluation of the internal financial controls over financialreporting to future periods are subject to the risk that the internal financial controlover financial reporting may become inadequate because of changes in conditions or thatthe degree of compliance with the policies or procedures may deteriorate.

Opinion

In my opinion the Company has in all material respects an adequate internalfinancial controls system over financial reporting and such internal financial controlsover financial reporting were operating effectively as at 31 March 2021 based on theinternal control over financial reporting criteria established by the Company consideringthe essential components of internal control stated in the Guidance Note on Audit ofInternal Financial Controls Over Financial Reporting issued by the Institute of CharteredAccountants of India.

M. C. Asawa & Co. Chartered Accountants
FRN : 008041C
Mukund Sarda
Place: Khopoli Proprietor
Date: 28th June 2021 M. No. 163405

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