You are here » Home » Companies » Company Overview » Supreme Petrochem Ltd

Supreme Petrochem Ltd.

BSE: 500405 Sector: Industrials
NSE: SUPPETRO ISIN Code: INE663A01017
BSE 00:00 | 28 May 151.60 -1.75
(-1.14%)
OPEN

152.55

HIGH

154.00

LOW

151.60

NSE 00:00 | 28 May 150.70 -3.15
(-2.05%)
OPEN

155.25

HIGH

155.25

LOW

150.00

OPEN 152.55
PREVIOUS CLOSE 153.35
VOLUME 925
52-Week high 229.75
52-Week low 113.10
P/E 14.25
Mkt Cap.(Rs cr) 1,463
Buy Price 150.00
Buy Qty 20.00
Sell Price 156.00
Sell Qty 100.00
OPEN 152.55
CLOSE 153.35
VOLUME 925
52-Week high 229.75
52-Week low 113.10
P/E 14.25
Mkt Cap.(Rs cr) 1,463
Buy Price 150.00
Buy Qty 20.00
Sell Price 156.00
Sell Qty 100.00

Supreme Petrochem Ltd. (SUPPETRO) - Auditors Report

Company auditors report

To

The Members of

Supreme Petrochem Limited

Report on the Standalone Financial Statements

Opinion

We have audited the standalone financial statements of Supreme Petrochem Limited (theCompany) which comprise the Balance Sheet as at March 312019 the Statement of Profitand Loss (including other comprehensive income) Statement of Changes in Equity andStatement of Cash Flows for the year then ended and a summary of significant accountingpolicies and other explanatory information (the standalone 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 true and fairview in conformity with the accounting principles generally accepted in India includingthe Indian Accounting Standards specified under section 133 of the Act (Ind AS) of thestate of affairs of the Company as at March 31 2019 and its profit (including othercomprehensive income) changes in equity and its cash flows for the year ended on thatdate.

Basis for Opinion

We conducted our audit in accordance with the Standards on Auditing (SAs) specifiedunder section 143(10) of the Act. Our responsibilities under those Standards are furtherdescribed in the Auditor's Responsibilities for the Audit of the Standalone FinancialStatements section of our report. We are independent of the Company in accordance with theCode of Ethics issued by the Institute of Chartered Accountants of India (ICAI) togetherwith the ethical requirements that are relevant to our audit of the standalone financialstatements under the provisions of the Act and the Rules made thereunder and we havefulfilled our other ethical responsibilities in accordance with these requirements and theICAI's Code of Ethics. We believe that the audit evidence we have obtained is sufficientand appropriate to provide a basis for our opinion.

Key Audit Matters

Key audit matters are those matters that in our professional judgment were of mostsignificance in our audit of the standalone financial statements of the current period.These matters were addressed in the context of our audit of the standalone financialstatements as a whole and in forming our opinion thereon and we do not provide aseparate opinion on these matters. We have determined the matters described below to bekey audit matters to be communicated in our report.

Key Audit Matter description:- How the scope of our audit responded the key audit matter:-
1) Evaluation of Provision and Contingent Liabilities
As at the Balance Sheet date the Company has significant open legal cases and other contingent liabilities as disclosed in note no. 36. The assessment of the existence of the present legal or constructive obligation analysis of the probability of the related payment require the management to make judgement and estimates in relation to the issues of each matter. We have reviewed and held discussions with the management to understand their processes to identify new possible obligations and changes in existing obligations for compliance with the requirements of Ind AS 37 on Provisions Contingent Liabilities and Contingent Assets.
The management with the help of its expert as needed have made such judgements and estimates relating to the likelihood of an obligation arising and whether there is a need to recognize a provision or disclose a contingent liability. We have analysed significant changes from prior periods and obtain a detailed understanding of these items and assumptions applied. We have held regular meetings with the management and key legal personnel responsible for handling legal matters.
Due to the level of judgement relating to recognition valuation and presentation of provision and contingent liabilities this is considered to be a key audit matter. In addition we have reviewed:
• the details of the proceedings before the relevant authorities including communication from the advocates/experts;
• legal advises/opinions obtained by the management as needed from experts in the field of law on the legal cases; • minutes of board meetings including the sub-committees; and
• status of each of the material matters as on the date of the balance sheet.
We have assessed the appropriateness of provisioning based on assumptions made by the management and presentation of the significant contingent liabilities in the financial statements.
2) Valuation of inventory:
Inventory forms a significant part i.e. 20% of the Company's total assets. We have reviewed the stock records and held discussion with the management. We verified arithmetical accuracy of valuation records/reports.
Inventory comprises of Raw Materials Finished Goods Stock in process and Stores and Spares.
Inventories are valued at lower of cost and net realisable value. Styrene Monomer is the main raw material for the Company. For a sample of inventory items we have verified that the weighted average cost calculation by the system in case of inventory is appropriate.
Styrene Monomer which is imported is subject to high price fluctuation risk as well as foreign currency risk. We have reviewed the price movement of Styrene Monomer prices with respect to cost to the Company. Compared such prices with the resent selling prices.
The volatility in the prices of Styrene Monomer may significantly impact the valuation of not only Raw material but also other items of inventory. Compared the value of Finished Goods with the last selling prices of the respective product to determine the basis of valuation adopted.
In determining the net realisable value the management uses data of sales of finished good available which is a management estimate.
We have considered this as a key audit matter due to the significance in the amount of inventory and volatility in the prices of Styrene Monomer.

Other Information

The Company's Board of Directors is responsible for the other information. The OtherInformation comprises of the Directors' Report Management Discussion & Analysis andChairman's statement (but does not include the financial statements and our auditor'sreport thereon) which we obtained prior to the date of this report. Our opinion on thestandalone financial statements does not cover the Other Information and we do not andwill 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 identified above 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 on the Other Information that we obtained priorto the date of this auditor's report we conclude that if there is a material misstatementof this Other Information we are required to report that fact. We have nothing to reportin this regard.

Responsibilities of Management and Those Charged with Governance for the StandaloneFinancial Statements

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 standalone financial statementsthat give a true and fair view of the financial position financial performance changesin equity cash flows of the Company in accordance with the Ind AS and other accountingprinciples generally accepted in India.

This responsibility also includes maintenance of adequate accounting records inaccordance with the provisions of the Act for safeguarding the assets of the Company andfor preventing and detecting frauds and other irregularities; selection and application ofappropriate accounting policies; making judgments and estimates that are reasonable andprudent; and design implementation and maintenance of adequate internal financialcontrols that were operating effectively for ensuring the accuracy and completeness ofthe accounting records relevant to the preparation and presentation of the standalonefinancial statements that give a true and fair view and are free from materialmisstatement 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.

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. Reasonable assuranceis a high level of assurance but is not a guarantee that an audit conducted in accordancewith SAs will always detect a material misstatement when it exists. Misstatements canarise from fraud or error and are considered material if individually or in theaggregate they could reasonably be expected to influence the economic decisions of userstaken on the basis of these standalone financial statements.

As part of an audit in accordance with SAs we exercise professional judgment andmaintain professional skepticism throughout the audit. We also

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

• Obtain an understanding of internal control relevant to the audit in order todesign audit procedures that are appropriate in the circumstances. Under section 143(3)(i) Act we are also responsible for expressing our 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 we conclude that a material uncertainty existswe are required to draw attention in our auditor's report to the related disclosures inthe standalone 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 the standalonefinancial statements including the disclosures and whether the financial statementsrepresent the underlying transactions and events in a manner that achieves fairpresentation.

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

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

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

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor's Report) Order 2016 ('the Order') issued bythe Central Government of India in terms of section 143(11) of the Act we give in the'Annexure A' a statement on the matters specified in the paragraph 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 Cash Flows and the Statement of Changes in Equity dealt with bythis Report are in agreement with the books of account;

d) In our opinion the aforesaid standalone financial statements comply with theAccounting Standards specified under section 133 of the Act read with rule 7 of theCompanies (Accounts) Rules 2014;

e) On the basis of the written representations received from the directors as on March31 2019 taken on record by the Board of Directors none of the directors is disqualifiedas on March 31 2019 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 over financialreporting of the Company and the operating effectiveness of such controls refer to ourseparate report in 'Annexure B';

g) With respect to the other matters to be included in the Auditor's Report inaccordance 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 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 standalonefinancial position in its standalone financial statements. Refer Note 36 to the financialstatements; and

ii. The Company has made provisions as required under the applicable law or accountingstandards for material foreseeable losses if any on long term contracts includingderivative contracts to the standalone financial statements.

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

For G.M. Kapadia & Co.
Chartered Accountants
Firm Registration No.104767 W
Atul Shah
Place: Mumbai Partner
Date: April 26 2019 Membership No. 039569

ANNEXURE A TO THE INDEPENDENT AUDITOR'S REPORT

Referred to in paragraph 1 under ‘Report on Other Legal & RegulatoryRequirements' of our report on even date to the members of the Company on standalonefinancial statements for the year ended March 312019.

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

(b) As informed to us the property plant and equipment have been physically verifiedby the management during the period according to a phased programme. In our opinion suchprogramme is reasonable having regard to the size of the Company and the nature of itsassets. We have been further informed that no material discrepancies were noticed on suchverification by the management between the book records and physical verification.

(c) According to the information and explanation given to us and on the basis of ourexamination of records of the Company the title deeds of immovable properties classifiedas property plant and equipment are held in the name of the Company.

(ii) The inventory has been physically verified at reasonable intervals by themanagement during the period. In our opinion the frequency of verification is reasonable;The discrepancies noticed on physical verification as compared to the book records werenot material and have been properly dealt with in the books of account.

(iii) The Company has not granted loans secured or unsecured to companies firmslimited liability partnerships or other parties covered in the register maintained undersection 189 of the Act. Hence the question of reporting under sub clauses (a) (b) &(c) of the clause 3(iii) of the Order does not arise

(iv) The Company has not granted any loans or under section 185 made any investmentprovide any guarantee or security. Hence the question of reporting under clause 3(iv) ofthe Order does not arise.

(v) In our opinion and according to the information and explanations given to us theCompany has complied with the directives issued by the Reserve Bank of India and theprovisions of sections 73 to 76 or any other relevant provisions of the Act and the rulesframed there under to the extent applicable. We are informed by the Management that noorder has been passed by the Company Law Board or National Company Law Tribunal or ReserveBank of India or any court or any other Tribunal in this regard.

(vi) We have broadly reviewed accounts and records maintained by the Company pursuantto rules made by the Central Government for the maintenance of cost records under Section148(1) of the Act in respect of Company's products to which the said rules are madeapplicable and are of the opinion that prima facie the prescribed accounts and recordshave been made and maintained. We have however not made a detailed examination ofrecords with a view to determine whether they are accurate.

(vii) (a) According to the information and explanations given to us and according tothe records of the Company examined by us in our opinion the Company is generallyregular in depositing with the appropriate authorities undisputed statutory dues includingProvident Fund Employees' State Insurance Income- tax Sales Tax According to theinformation and explanations given to us no undisputed amounts payable in respect ofaforesaid dues were outstanding as at March 31 2019 for a period of more than 6 monthsfrom the date they became payable.

(b) According to the information and explanations given to us the particulars ofstatutory dues that have not been deposited on account of disputes are as under:

Sr. No Statutes Nature of Dues Period Amount (Rs. In lakhs) Forum where disputes pending
1 Central Excise Act 1944 Excise Duty demand April-2001-Nov-2012 426.2 CESTAT
Jul-13 7.56 CESTAT
2 Service Tax (Finance Act 1994) Service Tax and penalty. April-2005-Sep-2009 14.92 CESTAT
- - Sep-2004-Aug-2013 452.45 CESTAT
April-2003-Mar-2005 188.42 CESTAT
April-2011-Mar-2013 222.57 CESTAT
Sep-2013-May-2015 117.57 CESTAT
June-2015-May-2016 1.25 CESTAT
June-2016-June-2017 8.79 Commissioner Office (SCN)
3 Central Excise Act 1944 (Tamil Nadu) Excise duty demand Mar-08 23.16 Madras H.C.
4 Service Tax (Finance Act 1994) Service Tax and penalty. June 2009-Feb 2010 3.84 CESTAT
5 Tamil Nadu VAT Act 2006 VAT and penalty. 2010-2011 7.43 Deputy Commissioner (Commercial tax)
2009-2010 0.61 Deputy Commissioner (Appeals)
2010-2011 0.65 Deputy Commissioner (Appeals)
2011-2012 1.99 Deputy Commissioner (Appeals)
2012-2013 1.98 Deputy Commissioner (Appeals)
2013-2014 10.48 Deputy Commissioner (Appeals)
2014-2015 2.27 Deputy Commissioner (Appeals)
2015-2016 3.72 Deputy Commissioner (Appeals)
2014-2015 1.49 Deputy Commissioner (Appeals)
2012-2013 1.99 Additional Commissioner
6 Income Tax Act 1961 Income Tax interest and penalty. 2007-2008 191.9 Commissioner of Income Tax (Appeal)
7 GST Act Refund claim of CVD & SAD 2016-2017 68.96 High Court

(viii) Based on our audit procedure and according to the information and explanationgiven to us the Company has not defaulted in repayment of loans or borrowings tofinancial institutions banks and Government. The Company has not raised any funds throughdebentures.

(ix) The Company has not raised money raised by way of initial public offer or furtherpublic offer (including debt instruments) nor any term loan during the period under audit.Accordingly paragraph 3(ix) of the Order is not applicable.

(x) During the course of our examination of the books and records of the Companycarried out in accordance with the generally accepted auditing practices in India andaccording to the information and explanations given to us no fraud on or by the Companyhas been noticed or reported during the period by the Company.

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

(xii) The Company is not a chit fund or a Nidhi Company. Hence the question ofreporting under clause 3(xii) of the Order does not arise.

(xiii) The Company has complied with the provisions of sections 177 and 188 of the Actin respect of transactions with the related parties and the details have been disclosed inthe Financial Statements etc. as required by the applicable accounting standards.

(xiv) The Company has not made any preferential allotment or private placement ofshares or fully or partly convertible debentures during the period.

(xv) The Company has not entered into any non-cash transactions with directors orpersons connected with him covered under the provisions of section 192 of the Act.

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

For G.M. Kapadia & Co.
Chartered Accountants
Firm Registration No.104767 W
Atul Shah
Place: Mumbai Partner
Date: April 26 2019 Membership No. 039569

ANNEXURE B TO THE INDEPENDENT AUDITOR'S REPORT

Report on the Internal Financial Controls under section 143(3)(i) of the Act

We have audited the internal financial controls over financial reporting of SupremePetrochem Limited (the Company) as of March 31 2019 in conjunction with our audit ofthe standalone financial statements of the Company for the year 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 controls 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 ('Guidance Note') issued by the Institute of Chartered Accountants of India('ICAI'). These responsibilities include the design implementation and maintenance ofadequate internal financial controls that were operating effectively for ensuring theorderly and efficient conduct of its business including adherence to Company's policiesthe safeguarding of its assets the prevention and detection of frauds and errors theaccuracy and completeness of the accounting records and the timely preparation ofreliable financial information as required under the Companies Act 2013.

Auditor's Responsibility

Our responsibility is to express an opinion on the Company's internal financialcontrols with reference to financial statements based on our audit. We conducted our auditin accordance with the Guidance Note on audit of Internal Financial Controls OverFinancial Reporting (the 'Guidance Note') and the Standards on Auditing issued by ICAI anddeemed to be prescribed under section 143(10) of the Companies Act 2013 to the extentapplicable to an audit of internal financial controls both applicable to an audit ofInternal financial controls and both issued by ICAI. Those Standards and the Guidance Noterequire that we comply with ethical requirements and plan and perform the audit to obtainreasonable assurance about whether adequate internal financial controls with reference tofinancial statements was established and maintained and if such controls operatedeffectively in all material respects.

Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal financial controls system with reference to financial statements and theiroperating effectiveness. Our audit of internal financial controls with reference tofinancial statements included obtaining an understanding of internal financial controlswith reference to 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's judgment including the assessment ofthe risks of material misstatement of the standalone financial statements whether due tofraud or error.

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

Meaning of Internal Financial 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 standalone financial statements for external purposes inaccordance with generally accepted accounting principles. A Company's internal financialcontrols with reference to financial statements includes those policies and proceduresthat (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) providereasonable assurance that transactions are recorded as necessary to permit preparation ofstandalone financial statements in accordance with generally accepted accountingprinciples and that receipts and expenditures of the Company are being made only inaccordance with authorizations of management and directors of the Company; and (3) providereasonable assurance regarding prevention or timely detection of unauthorized acquisitionuse or disposition of the Company's assets that could have a material effect on thestandalone 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 2019 based on the internal control with reference to financial statementscriteria established by the Company considering the essential components of internalcontrols stated in the Guidance Note.

For G.M. Kapadia & Co.
Chartered Accountants
Firm Registration No.104767 W
Atul Shah
Place: Mumbai Partner
Date: April 26 2019 Membership No. 039569