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Southern Magnesium & Chemicals Ltd.

BSE: 513498 Sector: Metals & Mining
NSE: N.A. ISIN Code: INE308N01012
BSE 00:00 | 22 Mar 64.52 -1.48
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NSE 05:30 | 01 Jan Southern Magnesium & Chemicals Ltd
OPEN 64.00
PREVIOUS CLOSE 66.00
VOLUME 2097
52-Week high 97.85
52-Week low 19.20
P/E 7.46
Mkt Cap.(Rs cr) 19
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 64.00
CLOSE 66.00
VOLUME 2097
52-Week high 97.85
52-Week low 19.20
P/E 7.46
Mkt Cap.(Rs cr) 19
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Southern Magnesium & Chemicals Ltd. (SOUTHMAGNESIUM) - Auditors Report

Company auditors report

TO THE MEMBERS OF SOUTHERN MAGNESIUM AND CHEMICALS LIMITED HYDERABAD

Report on the Audit of the Financial Statements

Opinion

We have audited the accompanying financial statements of SOUTHERN MAGNESIUM ANDCHEMICALS LIMITED ("the company") which comprise the Balance Sheet as atMarch 31 2022 the Statement of Profit and Loss (including other comprehensive income)the Statement of Changes in Equity and the Statement of Cash Flows for the year ended onthat date and a summary of the significant accounting policies and other explanatoryinformation (herein after referred to as "the financial statements")

In our opinion and to the best of our information and according to the explanationsgiven to us the accompanying financial statements give the information required by theCompanies Act 2013 ("the Act") in the manner so required and give a true andfair view in conformity with the accounting principles generally accepted in India of thestate of affairs of the Company as at March 31 2022 the 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 financial statements in accordance with the Standards onAuditing (SAs) specified under Section 143(10) of the Act. Our responsibilities underthose standards are further described in the Auditors responsibility for the Audit ofFinancial 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 (ICAI) together with the ethical requirements that are relevant to our audit of thefinancial statements under the provisions of the Act and the Rules made thereunder and wehave fulfilled our other ethical responsibilities in accordance with these requirementsand the Code of Ethics. We believe that the audit evidence we have obtained is sufficientand appropriate to provide a basis for our audit opinion on the financial statements.

Key Audit Matters

Key Audit matters are those matters that in our professional judgment were of mostsignificance in our audit of the financial statements of the current period. These matterswere addressed in the context of our audit of the financial statements as a whole and informing our opinion thereon and we do not provide a separate opinion on these matters. Wehave determined the matters described below to be the key audit matters to be communicatedin our report.

Key Audit Matters Auditor's Response
Revenue Recognition Principal audit procedures
Revenue from sale of goods is recognized when significant risks and rewards in respect of ownership of products are transferred to customers. ? Assessing the appropriateness of the company's revenue recognition policies in line with IND AS 115 - "Revenue from contracts with customers"
Revenue from domestic sale of products is recognized on dispatch of products. ? Understanding the Revenue recognition policy evaluating the design and implementation of company's control in respect of revenue recognition.
Revenue from products is stated exclusive of Goods and Service Tax (GST) returns and applicable trade discounts and allowances. ? 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.
Revenue from services is recognized as per the terms of contract with customers when a performance obligation is satisfied by transferring control over a promised good or service. Testing the effectiveness of such controls over revenue cut off at year-end.

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 our auditor's report thereon.

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

In connection with our audit of the financial statements our responsibility is to readthe other information and in doing so consider whether the other information ismaterially inconsistent with the 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.

Responsibilities of Management and Those Charged with Governance for the FinancialStatements

The Company's Board of Directors is responsible for the matters stated in Section134(5) of the Act with respect to the preparation of these financial statements that givea true and fair view of the financial position financial performance including othercomprehensive income cash flows and changes in equity of the Company in accordance withthe Indian Accounting Standards (Ind AS) prescribed under Section 133 of the Act read withrelevant rules issued there under and other accounting principles generally accepted inIndia. This responsibility also includes maintenance of adequate accounting records inaccordance with the provisions of the Act for safeguarding of the assets of the companyand for preventing and detecting the 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 offinancial statements that give a true and fair view and are free from materialmisstatement whether due to fraud or error.

In preparing the financial statements the Board of Directors 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 unlessthe Board of Directors either intends to liquidate the company or to cease operations orhas no realistic alternative but to do so.

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

Auditor's Responsibility for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the financialstatements as a whole are free from material misstatement whether due to fraud or errorand to issue an auditor's report that includes our opinion. Reasonable assurance is a highlevel of assurance but is not a guarantee that an audit conducted in accordance with SAswill always detect a material misstatement when it exists. Misstatements can arise fromfraud or error and are considered material if individually or in the aggregate theycould reasonably be expected to influence the economic decisions of users taken on thebasis of these financial statements.

As part of an audit in accordance with SAs we exercise professional judgment andmaintain professional scepticism throughout the audit. We 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 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 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 in place and the operating effectivenessof such 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 we conclude that a material uncertainty existswe are required to draw attention in our auditor's report to the related disclosures inthe financial statements or if such disclosures are inadequate to modify our opinion.Our conclusions are based on the audit evidence obtained up to the date of our 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.

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 alsoprovide those charged with governance with a statement that we have complied with relevantethical requirements regarding independence and to communicate with them allrelationships 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 financial statements of thecurrent period and are therefore the key audit matters. We describe these matters in ourauditor's report unless law or regulation precludes public disclosure about the matter orwhen 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 the Companies (Auditor's Report) Order2020 ("the Order")issued by the Central Government of India in terms of sub-section (11) of section 143 ofthe Act we give in the Annexure A a statement on the matters specified in the paragraph3 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 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 statement of changes 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 financial statements comply with the Indian AccountingStandards (Ind AS) prescribed under Section 133 of the Act.

e) On the basis of written representations received from the directors as on March 312022 taken on record by the Board of Directors none of the directors is disqualified ason March 31 2022 from being appointed as a director in terms of Section 164(2) of theAct

f) With respect to the adequacy of internal financial controls with reference tofinancial statements of the Company and the operating effectiveness of such controlsrefer to our separate report in "Annexure B".

g) With respect to the Managerial remuneration to be included in the auditor's reportin accordance with the requirements of section 197(16) of the Act as amended:

In our opinion and to the best of our information and according to the explanationsgiven to us the remuneration paid by the company to its directors during the year is inaccordance with the provisions of Section 197 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 in our opinionand to the best of our information and according to the explanations given to us:

i. The Company does not have any pending litigations which would impact its financialposition.

ii. The Company did not have any long-term contracts including derivative contracts forwhich there

were any material foreseeable losses;

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

iv. a. The Management has represented that to the best of its knowledge and belief nofunds (which are material either individually or in the aggregate) have been advanced orloaned or invested (either from borrowed funds or share premium or any other sources orkind of funds) by the Company to or in any other person or entity including foreignentity ("Intermediaries") with the understanding whether recorded in writingor otherwise that the Intermediary shall whether directly or indirectly lend or investin other persons or entities identified in any manner whatsoever by or on behalf of theCompany ("Ultimate Beneficiaries") or provide any guarantee security or thelike on behalf of the Ultimate Beneficiaries;

b. The Management has represented that to the best of its knowledge and belief nofunds (which are material either individually or in the aggregate) have been received bythe Company from any person or entity including foreign entity ("FundingParties") with the understanding whether recorded in writing or otherwise that theCompany shall whether directly or indirectly lend or invest in other persons orentities identified in any manner whatsoever by or on behalf of the Funding Party("Ultimate Beneficiaries") or provide any guarantee security or the like onbehalf of the Ultimate Beneficiaries;

c. Based on the audit procedures that have been considered reasonable and appropriatein the circumstances nothing has come to our notice that has caused us to believe thatthe representations under sub-clause (a) and (b) above contain any material misstatement.

v The Company neither declared nor paid any dividend during the year.

for BRAHMAYYA & CO.
Chartered Accountants
Firm's Regn No. 000513S
(K.SHRAVAN)
Partner
Place : HYDERABAD Membership No.215798
Date : 20.5.2022 UDIN: 22215798AJHIDH8812

ANNEXURE - A TO THE AUDITOR'S REPORT:

The Annexure referred to in Para 1 under the heading of "Report on Other Legal andRegulatory Requirements" of our report of even date to the members of SOUTHERNMAGNESUIM AND CHEMICALS LIMITED for the year ended March 312022.

i. In respect of the Company's Property Plant and Equipment and Intangible Assets:

a. (A) The Company has maintained proper records showing full particulars includingquantitative details and situation of Property Plant and Equipment and relevant detailsof right-of-use assets.

(B) The Company has maintained proper records showing full particulars of intangibleassets.

b. The Company has a regular program of physical verification of its property plantand equipment and right of use assets under which the assets are physically verified in aphased manner over a period of three years which in our opinion is reasonable havingregard to the size of the Company and the nature of its assets. In accordance with thisprogram certain property plant and equipment were verified during the year and nomaterial discrepancies were noticed on such verification

c. According to the information and explanations given to us and on the basis of ourexamination of the records of the Company the title deeds of all the immovable properties(other than Properties where the company is the lessee and the lease agreements are dulyexecuted in favour of the lessee) are held in the name of the Company.

d. The company did not revalue its Property Plant and Equipment (including right ofuse assets) or intangible assets during the year. Accordingly para 3 (i)(d) of the Orderis not applicable.

e. There are no proceedings initiated or are pending against the Company for holdingany benami property under the Prohibition of Benami Property Transactions Act 1988 andrules made thereunder

ii. a. The management has conducted physical verification of inventory at reasonableintervals during the year. In our opinion the coverage and procedure of such verificationby the management is appropriate and no discrepancies of 10% or more in the aggregate foreach class of inventory were noticed.

b. According to the information and explanations given to us at any point of time ofthe year the Company has not been sanctioned any working capital facility from banks orfinancial institutions in excess of Rs. 5.00 crores on the basis of security of currentassets and hence reporting under para 3(ii)(b) of the Order is not applicable.

iii. The company has not granted any loans to companies firms Limited LiabilityPartnerships or any other parties. Therefore the provisions of Clauses {a} to (f} of subpara {iii} of Para 3 of the said Order are not applicable for the year under report:

iv. The Company has not granted any loans or made any investments or provided anyguarantees or security to the parties covered under sections 185 and 186. Therefore theprovisions of clause 3(iv) of the said order not applicable to the Company

v. The Company has not accepted any deposit or amounts which are deemed to be deposits.Hence reporting under clause 3(v) of the Order is not applicable.

vi. We have broadly reviewed the cost records maintained by the Company pursuant tosub-section (1) of section 148 of the Companies Act and are of the opinion that primefacie the prescribed accounts and records have been made and maintained. We have howevernot made a detailed examination of the cost records with a view to determine whether theyare accurate or complete.

vii. a. According to the records the company is regular in depositing undisputedstatutory dues including Goods and service tax provident fund employees' stateinsurance income-tax sales-tax service tax duty of customs duty of excise valueadded tax cess and all other material statutory dues with the appropriate authorities andthere were no arrears of statutory dues as at March 31 2022 for a period of more than sixmonths from the date they became payable.

b. According to the records of the Company and the information and explanations givento us there were no dues of income tax or sales tax or service tax or duty of customs orduty of excise or value added tax have not been deposited on account of any dispute.

viii. According to the information and explanations given to us no transactions weresurrendered or disclosed as income during the year in the tax assessments under the IncomeTax Act 1961 (43 of 1961) which have not been recorded in the books of accounts.

ix. a. According to the information and explanations given to us the Company has notdefaulted in repayment of loans or in the payment of interest thereon to any lender.

b. According to the information and explanations given to us including representationreceived from the Management of the Company and on the basis of our audit procedures wereport that the Company has not been declared a willful defaulter by any bank or financialinstitution or other lender.

c. The Company has not taken any term loan during the year and there are no unutilisedterm loans at thebeginning of the year and hence reporting under clause 3 (ix)(c) of theOrder is not applicable.

d. On an overall examination of the financial statements of the Company funds raisedon short-term basis have prima facie not been used during the year for long-termpurposes by the Company

e. the Company the does not have subsidiaries associates or joint ventures. Hence Para3 (ix) (e) the above mentioned Order is not applicable;

f. the company does not have subsidiaries associates or joint ventures. Hence Para 3(ix) ( f ) of the above mentioned Order is not applicable

x. a. The Company did not raise any money by way of initial public offer or furtherpublic offer (including debt instruments) during the year. Accordingly para 3 (x)(a) ofthe Order is not applicable.

b. The Company has not made any preferential allotment or private placement of sharesor convertible debentures (fully partially or optionally convertible) during the year.Hence reporting under para 3(x)(b) of the order doesn't arise.

xi. a. No fraud by the Company and no material fraud on the Company has been noticed orreported during the year.

b. No report under section 143(12) of the Act has been filed with the CentralGovernment for the period covered by our audit.

c. According to the information and explanations given to us including therepresentation made to us by the management of the Company there are no whistle-blowercomplaints received by the Company during the year

xii. In our opinion and according to the information and explanations given to us theCompany is not a Nidhi Company. Accordingly paragraph 3(xii) of the Order is notapplicable.

xiii. According to the information and explanations given to us and based on ourexamination of the records of the Company transactions with the related parties are incompliance with sections 177 and 188 of the Act where applicable and details of suchtransactions have been disclosed in the financial statements as required by the applicableaccounting standards.

xiv. a. In our opinion the company has an adequate internal audit system commensuratewith the size and nature of its business;

b. We have considered the reports of the Internal Auditors for the period under audit.;

xv. According to the information and explanations given to us and based on ourexamination of the records of the Company the Company has not entered into any non-cashtransactions with its Directors or persons connected with them. Therefore the provisionof clause 3{xv) of the Order is not applicable;

xvi. a. In our opinion the Company is not required to be registered under section45-IA of the Reserve Bank of India Act 1934. Accordingly para 3(xvi) (a) of the Order isnot applicable.

b. The Company is not engaged in any Non-Banking Financial or Housing Financeactivities. Accordingly para 3 (xvi)(b) of the Order is not applicable.

c. The company is not a Core Investment Company (CIC) as defined in the regulationsmade by the Reserve Bank of India. Hence Para 3(xvi) (c) of the said Order is notapplicable.

d. The Company is not part of any group (as per the provisions of the Core InvestmentCompanies (Reserve Bank) Directions 2016 as amended). Accordingly para 3(xvi) (d) of thesaid Order is not applicable.

xvii The company has incurred cash losses during the immediately preceding financialyear amounting to Rs. 2.00 lakhs but has not incurred any cash losses during the currentfinancial year.

xviii. There is no resignation of statutory auditors of the Company during the year.

xix. On the basis of the financial ratios ageing and expected dates of realisation offinancial assets and payment of financial liabilities other information accompanying thefinancial statements and our knowledge of the Board of Directors and Management plans andbased on our examination of the evidence supporting the assumptions nothing has come toour attention which causes us to believe that any material uncertainty exists as on thedate of the audit report indicating that Company is not capable of meeting its liabilitiesexisting at the date of balance sheet as and when they fall due within a period of oneyear from the balance sheet date. We further state that our reporting is based on thefacts up to the date of the audit report and we neither give any guarantee nor anyassurance that all liabilities falling due within a period of one year from the balancesheet date will get discharged by the Company as and when they fall due.

xx. The Company has insufficient profits in the past three financial years there is norequirement for spending any amount towards Corporate Social Responsibility (CSR) as perthe Act. Hence reporting under clause 3(xx)(a) and (b) of the Order is not applicable forthe year.

xxi. The Company does not have subsidiaries associates or joint ventures. Hence para 3{xxi} of the above said Order with regard to qualifications or adverse remarks in CAROreports of the companies included in the consolidated financial statements is notapplicable.

for BRAHMAYYA & CO.
Chartered Accountants
Firm's Regn No. 000513S
(K.SHRAVAN)
Partner
Place : HYDERABAD Membership No.215798
Date : 20.5.2022 UDIN: 22215798AJHIDH8812

ANNEXURE – B TO THE AUDITOR'S REPORT

Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section143 of the Companies Act 2013 ("the Act")

We have audited the internal financial controls with reference to financial statementsof SOUTHERN MAGNESUIM AND CHEMICALS LIMITED ("the Company") as of March 31 2022in conjunction with our audit of the financial statements of the Company for the yearended 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 with reference to financial statementscriteria established by the Company considering the essential components of internalcontrol stated in the Guidance Note on Audit of Internal Financial Controls Over FinancialReporting issued 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 Act.

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 Auditingprescribed under Section 143(10) of the Act to the extent applicable to an audit ofinternal financial controls with reference to financial statements both issued by ICAI.Those Standards and the Guidance Note require that we comply with ethical requirements andplan and perform the audit to obtain reasonable assurance about whether adequate internalfinancial controls with reference to financial statements was established and maintainedand if such controls operated effectively in all material aspects.

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 internal financial controls withreference to these financial statements assessing the risk that a material weaknessexists and testing and evaluating the design and operating effectiveness of internalcontrol based on the assessed risk. The procedures selected depend on the auditor'sjudgement including the assessment of the risks of material misstatement of the financialstatements whether due to fraud and error. We believe that the audit evidence we haveobtained is sufficient and appropriate to provide a basis for our audit opinion on theCompany's financial controls with 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 controlswith reference to financial statements includes those policies and procedures that: (1)pertain to the maintenance of records that in reasonable detail accurately and fairlyreflect the transactions and dispositions of the assets of the company; (2) providereasonable assurance that transactions are recorded as necessary to permit preparation offinancial statements in accordance with generally accepted accounting principles and thatreceipts and expenditure of the Company are being made only in accordance withauthorisations of management and directors of the Company; and (3) provide reasonableassurance regarding prevention or timely detection of unauthorised acquisition use ordisposition of the Company's assets that could have a material effect on the financialstatements.

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 control with reference to financial statements may become inadequatebecause of changes in conditions or that the degree of compliance with policies orprocedures may deteriorate.

Opinion

In our opinion the Company has in all material respects an adequate internalfinancial controls with reference to financial statements and such internal financialcontrols with reference to financial statements were operating effectively as at March 312022 based on the internal control over financial reporting criteria established by theCompany considering the essential components of internal control stated in the GuidanceNote on Audit of Internal Financial Controls Over Financial Reporting issued by the ICAI.

for BRAHMAYYA & CO.
Chartered Accountants
Firm's Regn No. 000513S
(K.SHRAVAN)
Partner
Place : HYDERABAD Membership No.215798
Date : 20.5.2022 UDIN: 22215798AJHIDH8812

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