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SRF Ltd.

BSE: 503806 Sector: Industrials
NSE: SRF ISIN Code: INE647A01010
BSE 00:00 | 27 Mar 2725.25 -42.55
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NSE 00:00 | 27 Mar 2727.00 -44.50
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OPEN 2860.95
PREVIOUS CLOSE 2767.80
VOLUME 9877
52-Week high 4258.90
52-Week low 2201.00
P/E 16.23
Mkt Cap.(Rs cr) 15,665
Buy Price 2655.60
Buy Qty 1.00
Sell Price 2725.25
Sell Qty 10.00
OPEN 2860.95
CLOSE 2767.80
VOLUME 9877
52-Week high 4258.90
52-Week low 2201.00
P/E 16.23
Mkt Cap.(Rs cr) 15,665
Buy Price 2655.60
Buy Qty 1.00
Sell Price 2725.25
Sell Qty 10.00

SRF Ltd. (SRF) - Auditors Report

Company auditors report

To the Members of

SRF limited

Report on the Audit of the Standalone Financial

Statements

Opinion

We have audited the standalone financial statements of SRF Limited("the Company") which comprise the standalone balance sheet as at 31 March2019 and the standalone statement of profit and loss (including other comprehensiveincome) standalone statement of changes in equity and standalone statement of cash flowsfor the year then the standalone financial statements including a summary of thesignificant accounting policies and other explanatory information (hereinafter referred toas ‘‘standalone financial statements'').

In our opinion and to the best of our information and according to theexplanations given to us the aforesaid standalone financial statements give theinformation required by the Companies Act 2013 ("Act") in the manner sorequired and give statements true and of fair view in conformity with theaccounting principles generally accepted in India of the state of affairs of the Companyas at 31 March 2019 and profit and other comprehensive income changes in equity and itscash flows for the year ended on that date.

Basis for opinion

we conducted our audit in accordance with the Standards on Auditing(SAs) specified under Section 143(10) of the Act. our responsibilities under those SAs arefurther described in the Auditor's Responsibilities for the Audit of the StandaloneFinancial Statements section of our report. we are independent of the Company inaccordance with the Code of Ethics issued by the Institute of Chartered Accountants ofIndia together with the ethical requirements that are relevant to our audit of thestandalone financial statements under the ended provisions and of the notes Actand the Rules thereunder and to we have fulfilled our other ethical responsibilities inaccordance with these requirements and the Code of

Ethics. We believe that the audit evidence we have obtained issufficient and appropriate to provide a basis for our opinion.

Key Audit Matters

Key audit matters are those matters that in our professional judgmentwere of most significance in our audit of the standalone financial 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.

The key audit matter How the matter was addressed in our audit
Capital expenditure
The Company's spending on capital projects is significant (refer note 2 to the standalone financial statements). The assessment and timing of whether assets meet the capitalisation criteria set out in relevant Indian accounting standards requires judgement. We have performed the following procedures:
• Assessed the design implementation and tested the operating effectiveness of controls over the application of the policy to expenditure incurred during the year on various projects undertaken by the Company. This includes consideration of the allocation of costs between capital and operating expenditure.
As a result there is a risk that the Company's expenditure on tangible non-current assets is inappropriately capitalised against relevant accounting guidance. • Performed sample tests of capital expenditure on projects including an examination of management's assessment as to whether the project spend including borrowing cost and other allocable expenditure met the recognition criteria set forth in relevant Indian accounting standards.
• For selected projects verified the evidence used to determine the date when assets were available for use.
• For a sample of capital projects inspected capital project authorisation and agreed a sample of project costs to appropriate evidence.
Borrowing derecognition of financial assets and derivative financial instruments
An important element of Company's fund raising strategy includes various types of borrowings including Indian rupee denominated and foreign currency denominated borrowings and a combination rates. The Company's of operations are also exposed to foreign exchange risk. We have performed the following procedures:
• Examined the related contracts.
• Assessed the design implementation and tested the operating effectiveness of controls over the Company's treasury and other management functions which directly impact the relevant account balances and transactions including hedge accounting.
The Company uses derivative financial instruments to manage foreign currency risk and interest rate risk primarily through foreign currency forward exchange contracts and interest rate swaps. • For selected samples obtained external confirmations from counterparties of the year end positions as well as agreed to original agreements.
Further the Company has been using hedge relationship designation as per criteria set out in relevant Indian accounting standards.
Accounting thereof (including derecognition of financial assets/ liabilities) and related presentation and disclosures of these transactions requires judgement. • Performed sample tests of valuation and accounting of these transactions. In doing so we have involved independent valuation specialists to assist us in carrying out aforesaid procedure as considered appropriate.
• Assessed the appropriateness of accounting for these transactions.
• Assessed the appropriateness of the disclosures in the accounts in respect of both non-derivative and derivative financial instruments.

Other information

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

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

In connection with our audit of the standalone financial statementsour responsibility is to read the other information and in doing so consider whether theother information is materially inconsistent with the standalone financial statements orour knowledge obtained in the audit or otherwise appears to be materially misstated.

If based on the work we have performed we conclude that there is amaterial misstatement of this other information we are required to report that fact. Wehave nothing to report in this regard.

Management's Responsibility for the Standalone Financial Statements

The Company's management and Board of Directors are responsible for thematters stated in Section

134(5) of the Act with respect to the preparation of these standalonefinancial statements that give a true and fair view of the state of affairs profit andother comprehensive income changes in equity and cash flows of the Company in accordancewith the accounting principles generally accepted al India including the IndianAccounting Standards (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 of the assets of the Company and for preventing and detectingfrauds and other irregularities; selection and application of appropriate accountingpolicies; making judgments and estimates that are reasonable and prudent; and designimplementation and maintenance of adequate internal financial controls that were operatingeffectively for ensuring the accuracy and completeness of the accounting records relevantto the preparation and presentation of financial statements the standalone that give atrue and fair view and are free from material misstatement whether due to fraud or error.

In preparing the standalone financial statements management and Boardof Directors are responsible for assessing the Company's ability to continue as a goingconcern disclosing as applicable matters related to going concern and using the goingconcern basis of accounting unless management either intends to liquidate the Company orto cease operations or has no realistic alternative but to do so.

Board of Directors is also responsible for overseeing the Company'sfinancial reporting process.

Auditor's Responsibilities for the Audit of the Standalone FinancialStatements

Our objectives are to obtain reasonable assurance about whether thestandalone financial statements as a whole are free from material misstatement whetherdue to fraud or error and to issue an auditor's report that includes our opinion.Reasonable assurance is a high level of assurance but is not a guarantee that an auditconducted in accordance with SAs will always detect a material misstatement when itexists. Misstatements can arise from fraud or error and are considered material ifindividually or in the aggregate they could reasonably be expected to influence theeconomic decisions of users taken on the basis of these standalone financial statements.

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

Identify and assess the risks of material misstatement of thestandalone 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 misstatement resulting from fraudis higher than for one resulting from error as fraud may involve collusion forgeryintentional omissions misrepresentations or the override of internal control.

Obtain an understanding of internal control relevant to the audit inorder to design audit procedures that are appropriate in the circumstances. Under Section143(3)(i) of the Act we are also responsible for expressing our opinion on whether thecompany has adequate internal financial controls with reference to financial statements inplace and the operating effectiveness of such controls.

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

Conclude on the appropriateness of management's use of the goingconcern basis of accounting and based on the audit evidence obtained whether a materialuncertainty exists related to events or conditions that may cast significant doubt on thecontinue as a going concern. If we conclude that a material uncertainty exists we arerequired to draw attention in our auditor's report to the related disclosures in thestandalone financial statements or if such disclosures are inadequate to modify ouropinion. our conclusions are based on the audit evidence obtained up to the date of ourauditor's report. However future events or conditions may cause the Company to cease tocontinue as a going concern.

Evaluate the overall presentation structure and content of thestandalone financial statements including the disclosures and whether the standalonefinancial statements represent the underlying transactions and events in a manner thatachieves fair presentation.

We communicate with those charged with governance regarding amongother matters the planned scope and timing of the audit and significant audit findingsincluding any significant that we identify during our audit.

We also provide those charged with governance with a statement that wehave complied with relevant ethical requirements regarding independence and tocommunicate with them all relationships and other matters that may reasonably be thoughtto bear on our independence and where applicable related safeguards.

From the matters communicated with those charged with governance wedetermine those matters that were of most significance in the audit of the standalonefinancial period and are therefore the key audit matters. we describe these matters in ourauditors' 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.

Other Matter

The comparative standalone financial statements of the Company for theyear ended 31 March 2018 prepared in accordance with Ind AS included in these standalonefinancial statements were audited by the predecessor auditor who expressed an unmodifiedopinion thereon as per their report dated 17 May 2018.

Our opinion is not modified in respect of this matter.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditors' Report) order 2016("the order") issued by the Central

Government in terms of Section 143(11) of the Act we give in the"Annexure A" a statement on the matters specified in paragraphs 3 and 4 of theorder to the extent applicable.

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

a) We have sought and obtained all the information and explanationswhich to the deficiencies in internal control best of our knowledge and belief werenecessary for the purposes of our audit;

b) In our opinion proper books of account as required by law have beenkept by the

Company so far as it appears from our examination of those books;

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

d) In our opinion the aforesaid standalone financial statements complywith the Ind AS specified under Section 133 of the Act;

e) on the basis of the written representations received from thedirectors as on 31

March 2019 taken on record by the Board of Directors none of thedirectors is disqualified as on 31 March 2019 from being appointed as a director in termsof Section 164(2) of the Act;

f) with respect to the adequacy of the internal financial controls withreference to financial statements of the Company and the operating effectiveness of suchcontrols refer to our separate Report in "Annexure B".

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

i. The Company has disclosed the impact of pending litigations as at 31March 2019 on its financial position in its standalone financial statements - Refer Note31 to the standalone financial statements;

ii. The Company has made provision as required under the applicablelaw or accounting standards for material foreseeable losses if any on long-termcontracts including derivative contracts- Refer Note 38 to the standalone financialstatements;

iii. There has been no delay in transferring amounts required to betransferred to the Investor Education and Protection Fund by the Company. iv. Thedisclosures in the standalone financial statements regarding holdings as well as dealingsin specified bank notes during the period from 8 November 2016 to 30 December 2016 havenot been made in these financial to the

4. with respect to the matter to be included in the Auditors' Reportunder Section 197(16):

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.

For B S R & Co. LLP

Chartered Accountants

ICAI Firm Registration No.: 101248w/w-100022

Kaushal Kishore

Partner

Membership No. 090075

Place: Gurugram

Date: 13 May 2019

Annexure A

to the Independent Auditors' report on the standalone financialstatements of SRF Limited for the year ended 31 March 2019

Statement on matters specified in paragraphs 3 and 4 of the Companies(Auditors' Report) Order 2016 ("the Order") issued by the Central Government interms of Section 143 (11) of the Act (Referred to in paragraph 1 under ‘Report onOther Legal and Regulatory Requirements' section of our report of even date)

(i) a) According to the information and explanations given to us theCompany has maintained proper records showing full particulars including quantitativedetails and situation of fixed assets (property plant and equipment).

b) According to the information and explanations given to us theCompany has a regular programme of physical verification of its property plant andequipment by which all fixed assets (property plant and equipment) are verified in aphased manner over a period of three years. In our opinion this periodicity of physicalverification reasonable having regard to the size of the Company and the nature of itsassets. In accordance with this programme certain assets have been physically verified bythe Management during the current year. As informed to us no material discrepancies werenoticed on such verification

c) According to the information and explanations given to us and therecords examined by us and based on the examination of the registered sale deed / transferdeed / conveyance deed/ lease deed provided to us we report that the title deedscomprising all the immovable properties of land and buildings which are freehold/leasehold are held in the name of the Company as at the balance sheet date except thefollowing:

Particulars of the land and building

Gross Block 31 March 2019

Net Block Remarks 31 March 2019

(Rs. in Crores)

(Rs. in Crores)
Registered Officebuilding located at Mayur Vihar New Delhi

4.21

4.08 The Company has got possession letter however execution of conveyance deed in the name of the Company is under process.
Land at Gummudipoondi

1.21

1.21 out of the Industrial Free hold land measuring 32.41 acres at the Company's plant in Gummidipoondi the Company does not have clear title to 2.43 acres.
Land at Bharuch Dahej

95.74 (Carried cost)

95.74 The execution of lease deed of land in (Carried cost) respect of 1081250 square meters of leasehold land allotted to the Company by Gujarat Industrial Development Corporation at Dahej Gujarat is pending.

(ii) The inventories except goods in transit have been physicallyverifiedby limited the management during the year. In our opinion the frequency of suchverification the information and explanations given to us the discrepancies noticed onverification the physical stocks and the book records were not material and have beenproperly dealt with in the books of account.

(iii) The Company has not granted any loans secured or unsecured tocompanies firms liability partnerships or other parties covered in is reasonable. theregister maintained under Section 189 of theAccording to Companies Act 2013. Accordinglyparagraph 3 (iii) of the order is not applicable. between

(iv) In our opinion and according to the information and explanationsgiven to us the Company has complied with the provisions of Sections 185 and 186 of theCompanies Act 2013 in respect of grant of loans making investments and providingguarantees and securities.

(v) According to the information and explanations given to us theCompany has not accepted any deposits from the public. Accordingly paragraph 3(v) of theOrder is not applicable.

(vi) The Central Government has prescribed the maintenance of costrecords under sub-section

(1) of Section 148 of the Act for activities carried out by theCompany. We have broadly reviewed the books of account maintained by the Company pursuantto the Rules made by the Central Government for the maintenance of cost records underSection 148 of the Act and are of the opinion that prima facie the prescribed accountsand records have been made and maintained. However we have not made a detailedexamination of the cost records.

(vii) According to the information and explanations given to us inrespect of statutory dues:

(a) According to the information and explanations given to us and onthe basis of our examination of the records of the Company amounts deducted / accrued inthe books of account in respect of undisputed statutory dues including Provident fundEmployees' state insurance Income-tax Sales-tax Goods and Services Tax("GST") Service tax Duty of customs Duty of excise Value added tax Cess andother material statutory dues have generally been regularly deposited during the year bythe Company with the appropriate authorities.

According to the information and explanations given to us noundisputed amounts payable in respect of Provident fund Employees' state insuranceIncome-tax Sales-tax GST Service tax Duty of customs Duty of excise Value added taxCess and other material statutory dues were in arrears as at 31 March 2019 for a period ofmore than six months from the date they became payable.

(b) According to the information and explanations given to us thereare no dues in respect Income-tax Sales-tax Service tax Duty of custom Duty of exciseGST and Value added tax which have not been deposited with the appropriate authorities onaccount of any dispute except for the following:

Name of the Statute Nature of the Dues Forum where Dispute is pending

Period to which the amount relates (various years covering the period)

Amount*

(` Crores)

Central Excise Laws Excise Duty Customs Excise & Service Tax Appellate Tribunal (CESTAT)

1994-2015

15.81

Upto Commissioner (Appeals)

1993-2000

7.65

Service Tax Laws Service Tax Upto Commissioner(Appeals)

2006-2015

1.16

Customs Laws Customs Duty Customs Excise & Service Tax Appellate Tribunal (CESTAT)

2012-2013

1.27

Upto Commissioner (Appeals)

2002-2013

0.18

Sales Tax Laws Sales Tax Sales Tax Appellate Tribunal

1987-2008

0.56

Upto Commissioner (Appeals)

1988-2017

48.38

Income Tax Laws Income Tax Supreme Court

1989-1990

1.13

High Court

2000-2002

3.73

Income Tax Appellate Tribunal (ITAT)

2012-2015

0.11

Others Electricity Cess High Court

2007-2014

0.06

Goods & Service tax Laws Goods & Service tax Upto Commissioner (Appeals)

2018-2019

0.05

The following matters which have been excluded from the above tablehave been decided in favour of the Company but the department has preferred appeals athigher levels. The details are given below:

Name of the Statute Nature of the dues Forum where Dispute is pending

Period to which the amount relates (various years covering the period)

Amount (` Crores)*

Income Tax Laws Income Tax High Court

2003-2004

1.83

Central Excise Laws Excise Duty High Court

1994-1995

1.18

Customs Excise & Service Tax Appellate Tribunal (CESTAT)

1989-1995

2.24

*Amount as per demand orders including interest and penalty whereverquantified in the Order.

(viii) According to the information and explanations given to us theCompany has not defaulted in repayment of loans or borrowings to its bankers or to anyfinancial institutions and dues to debenture holders. The Company did not have any loansor borrowings from government during the year.

(ix) According to the information and explanations given to us and onthe basis of our examination of the records of the Company the term loans have beenapplied by the Company during the year for the purposes for which they were raised.Further the Company has not raised any money by way of initial public offer / furtherpublic offer (including debts instruments) during the year.

(x) According to the information and explanations given to us no fraudby the Company and no fraud on the Company by its officers or employees has been noticedor reported during the year.

(xi) According to the information and explanations given to us and onthe basis of our examination of the records of the Company the managerial remunerationhas been paid or provided by the Company in accordance with the provisions of Section 197read with Schedule V to the Companies Act 2013.

(xii) According to the information and explanations given to us theCompany is not a Nidhi Company.

Accordingly paragraph 3(xii) of the order is not applicable.

(xiii) According to the information and explanations given to us and onthe basis of our examination of the records of the Company all transactions with therelated parties are in compliance with

Section 177 and 188 of the Act where applicable and the details of suchtransactions have been disclosed in the standalone financial statements as required by theapplicable accounting standards.

(xiv) According to the information and explanation given to us andbased on our examination of the records of the Company the Company has not made anypreferential allotment or private placement of shares or fully or partly convertibledebentures under Section 42 of the Act during the year. Accordingly paragraph 3(xiv) ofthe order is not applicable.

(xv) According to the information and explanations given to us duringthe year the Company has not entered into any non-cash transactions with its directors orpersons connected with them.

Accordingly paragraph 3 (xv) of the Order and provisions of Section192 of the Companies Act 2013 are not applicable.

(xvi) According to the information and explanations given to us theCompany is not required to be registered under Section 45-IA of the ReserveBank of IndiaAct 1934.

For B S R & Co. LLP

Chartered Accountants

ICAI Firm Registration No.: 101248w/w-100022

Kaushal Kishore
Place: Gurugram Partner
Date: 13 May 2019 Membership No. 090075

Annexure B

to the Independent Auditors' report on the standalone financialstatements of SRF Limited for the year ended 31 March 2019

Report on the internal financial controls with reference to theaforesaid standalone financial statements under Clause (i) of Sub-section 3 of Section143oftheCompaniesAct 2013

(Referred to in paragraph 2(f) under ‘Report on Other Legal andRegulatory Requirements' section of our report of even date) opinion

We have audited the internal financial controls with reference tofinancial statements of SRF Limited ("the Company") as of 31 March 2019 inconjunction withal our audit of the standalone financial statements of the al statementswere Company for the year ended on that date.

In our opinion the Company has in all material respects adequateinternal financial controls with reference to financial statements and such internalfinancial controls were operating effectively as at 31 March 2019 based on the internalfinancial controls with reference to financial statements criteria established by theCompany considering the essential components of internal control stated in the Guidance

Note on Audit of Internal Financial Controls Over Financial Reportingissued by the Institute of Chartered Accountants of India (the "Guidance Note").

Management's Responsibility for Internal Financial Controls

The Company's management and the Board of Directors are responsible forestablishing and maintaining internal financial controls based on the internal financialcontrols with reference to financial statements criteria established by the Companyconsidering the essential components of internal control stated in the Guidance Note.These responsibilities include the design implementation and maintenance of adequateinternal financial controls that were operating effectively for ensuring the orderly andefficient conduct of its business including adherence to company's policies thesafeguarding of its assets the prevention and detection of frauds and errors theaccuracy and completeness of the accounting records and the timely preparation ofreliable information as required under the Companies Act 2013 (hereinafter referred toas "the Act").

Auditors' Responsibility

Our responsibility is to express an opinion on the

Company's internal financial controls with reference to financial ouraudit in accordance with the Guidance Note and the Standards on Auditing prescribed underSection 143(10) of the Act to the extent applicable to an audit of internal financialcontrols with reference to statements. Those Standards and the Guidance Note require thatwe comply with ethical requirements and plan and perform the audit to obtain reasonablefinancial assurance about whether adequate internal controls with reference to establishedand maintained and whether such controls operated effectively in all material respects.

Our audit involves performing procedures to obtain audit evidence aboutthe adequacy of the internal financial controls with reference to financial statements andtheir operating effectiveness. Our audit of internal financial controls with reference tofinancial statements included obtaining an understanding of such internal financialcontrols assessing the risk that a material weakness exists and testing and evaluatingthe design and operating effectiveness of internal control based on the assessed risk. Theprocedures selected depend on the auditor's judgement including the assessment of therisks of material misstatement of the standalone financial statements whether due tofraud or error.

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

Meaning of Internal Financial Controls with Reference to FinancialStatements

A company's internal financial controls with reference to financialstatements is a process designed to provide reasonable assurance regarding the reliabilityof financial reporting and the preparation of financial statements for external purposesin accordance with financial generally accepted accounting principles. A company'sinternal financial controls with reference to financial statements include those policiesand procedures that (1) pertain to the maintenance of records that in reasonable detailaccurately and fairly reflect the transactions and dispositions of the assets of thecompany; (2) provide reasonable assurance that transactions are recorded as necessary topermit preparation of financial statements in accordance with generally acceptedaccounting principles and that receipts and expenditures of the company are being madeonly in accordance with authorisations of management and directors of the company; and (3)provide reasonable assurance regarding prevention or timely detection of unauthorisedacquisition use or disposition of the company's assets that could have a material effecton the financial statements.

Inherent Limitations of Internal Financial Controls with Reference toFinancial

Statements

Because of the inherent limitations of internal controls with referenceto financial 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.

For B S R & Co. LLP

Chartered Accountants ICAI Firm Registration No.: 101248w/w-100022

Kaushal Kishore
Place: Gurugram Partner
Date: 13 May 2019 Membership No. 090075