To the Members of Thirumalai Chemicals Limited
Report on the Audit of the Standalone Financial Statements
1. We have audited the accompanying standalone financial statements of ThirumalaiChemicals Limited (the Company') which comprise the Balance Sheet as at 31March 2020 the Statement of Profit and Loss (including Other Comprehensive Income) theCash Flows statement and the Statement of Changes in Equity for the year then ended and asummary of the significant accounting policies and other explanatory information.
2. 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 (Act') in the manner so required and give a true and fairview in conformity with the accounting principles generally accepted in India includingIndian Accounting Standards (Ind AS') specified under section 133 of the Act of thestate of affairs of the Company as at 31 March 2020 and its loss (including othercomprehensive income) its cash flows and the changes in equity for the year ended on thatdate.
Basis for Opinion
3. We conducted our audit in accordance with the Standards on Auditing specified undersection 143(10) of the Act. Our responsibilities under those standards are furtherdescribed in the Auditor's Responsibilities for the Audit of the Financial Statementssection of our report. We are independent of the Company in accordance with the Code ofEthics issued by the Institute of Chartered Accountants of India (ICAI') togetherwith the ethical requirements that are relevant to our audit of the financial statementsunder the provisions of the Act and the rules thereunder and we have fulfilled our otherethical responsibilities in accordance with these requirements and the Code of Ethics. Webelieve that the audit evidence we have obtained is sufficient and appropriate to providea basis for our opinion.
Key Audit Matter
4. 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 financial statements as awhole and in forming our opinion thereon and we do not provide a separate opinion onthese matters.
5. We have determined the matter described below to be the key audit matters to becommunicated in our report.
|Key audit matter ||How our audit addressed the key audit matter |
|Revenue for the Company consists primarily of sale of manufactured goods recognized as per the accounting policy described in Note 2.7 to the accompanying standalone financial statements. Refer Note 21 for details of revenue recognized during the year. ||Our audit work included but was not limited to the following procedures: |
|The Company recognises - revenue from sale of goods when it satisfies its performance obligation in accordance with the principles of Ind AS 115 Revenue from Contracts with Customers adopted by the Company from the current year by transferring the control of goods to its customers through delivery - evidenced by acknowledgement of receipt of goods by such customers. ||- Obtained an understanding of the revenue and receivable business process and assessed the appropriateness of the accounting policy adopted by the company for revenue recognition. |
|Considering the large volume of revenue transactions near - period- end there may be a risk of revenue recognition occurring before the satisfaction of the performance obligations by the company in accordance with the applicable Incoterms. ||- Evaluated design and implementation of the key controls around revenue recognition including controls around contract approvals invoice verification transporter confirmations and customer acknowledgements. |
|Under Standards on Auditing 240 The auditor's responsibilities relating to fraud in an audit of financial statements' there is a presumed risk that revenue may be misstated owing to - the improper recognition of revenue. ||- Tested operating effectiveness of the above identified key controls over revenue recognition near period end. |
|Considering the above factors revenue recognition (cut-off) was identified as a key audit matter for the current year audit. ||- For samples selected from revenue recorded during specific period before and after year end: |
| || verified the customer contracts for delivery terms |
| || verified the customer acknowledgements to evidence proof of delivery for domestic sales at or near period end and tracked shipments through bill of lading for export sales |
| ||- Tested the appropriateness of the disclosures made in the financial statements for revenue recorded during the year. |
6. 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 standalone financial statements and our auditor's report thereon. The Annual Report isexpected to be made available to us after the date of this auditor's report.
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 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.
When we read the Annual Report if we conclude that there is a material misstatementtherein we are required to communicate the matter to those changed with governance.
Responsibilities of Management and Those Charged with Governance for the StandaloneFinancial Statements
7. The accompanying standalone financial statements have been approved by the Company'sBoard of Directors. The Company's Board of Directors is responsible for the matters statedin section 134(5) of the Act with respect to the preparation of these standalone financialstatements that give a true and fair view of the financial position financial performanceincluding other comprehensive income changes in equity and cash flows of the Company inaccordance with the accounting principles generally accepted in India including the IndAS specified under section 133 of the Act. This responsibility also includes maintenanceof adequate accounting records in accordance with the provisions of the Act forsafeguarding of the assets of the Company and for preventing and detecting frauds andother irregularities; selection and application of appropriate accounting policies; makingjudgments and estimates that are reasonable and prudent; and design implementation andmaintenance of adequate internal financial controls that were operating effectively forensuring the accuracy and completeness of the accounting records relevant to thepreparation and presentation of the financial statements that give a true and fair viewand are free from material misstatement whether due to fraud or error.
8. 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.
9. Those Board of Directors is also responsible for overseeing the Companies' ReportingProcess.
Auditor's Responsibilities for the Audit of the Financial Statements
10. 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 withStandards on Auditing will always detect a material misstatement when it exists.Misstatements can arise from fraud or error and are considered material if individuallyor in the aggregate they could reasonably be expected to influence the economic decisionsof users taken on the basis of these financial statements. 11. As part of an audit inaccordance with Standards on Auditing we exercise professional judgment and maintainprofessional skepticism 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 control relevant to the audit in order todesign audit procedures that are appropriate in the circumstances Under section 143(3)(i)of the Act we are also responsible for expressing our opinion on whether the Company hasadequate internal financial controls with reference to financial statements in place andthe operating effectiveness of 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.
12. We communicate with those charged with governance regarding among other mattersthe planned scope and timing of the audit and significant audit findings including anysignificant deficiencies in internal control that we identify during our audit.
13. We also provide those charged with governance with a statement that we havecomplied with relevant ethical requirements regarding independence and to communicatewith them all relationships and other matters that may reasonably be thought to bear onour independence and where applicable related safeguards.
14. From the matters communicated with those charged with governance we determinethose matters that were of most significance in the audit of the financial statements ofthe current period and are therefore the key audit matters. We describe these matters inour auditor's report unless law or regulation precludes public disclosure about the matteror 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
15. As required by section 197(16) of the Act based on our audit we report that theCompany has paid remuneration to its directors during the year in accordance with theprovisions of and limits laid down under section 197 read with Schedule V to the Act.
16. As required by the Companies (Auditor's Report) Order 2016 (the Order')issued by the Central Government of India in terms of section 143(11) of the Act we givein the Annexure A a statement on the matters specified in paragraphs 3 and 4 of the Order.
17. Further to our comments in Annexure A as required by section 143(3) of the Actbased on our audit we report to the extent applicable that:
a) we have sought and obtained all the information and explanations which to the bestof our knowledge and belief were necessary for the purpose of our audit of theaccompanying standalone financial statements;
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 standalone financial statements dealt with by this report are in agreement withthe books of account;
d) in our opinion the aforesaid standalone financial statements comply with Ind ASspecified under section 133 of the Act;
e) on the basis of the written representations received from the directors and taken onrecord by the Board of Directors none of the directors is disqualified as on 31 March2020 from being appointed as a director in terms of section 164(2) of the Act;
f) we have also audited the internal financial controls with reference to financialstatements of the Company as on 31 March 2020 in conjunction with our audit of thestandalone financial statements of the Company for the year ended on that date and ourreport dated 17 June 2020 as per Annexure B expressed unmodified opinion; and
g) with respect to the other matters to be included in the Auditor's Report inaccordance with rule 11 of the Companies (Audit and Auditors) Rules 2014 (as amended) inour opinion and to the best of our information and according to the explanations given tous:
i. the standalone financial statements disclose the impact of pending litigations onthe standalone financial position of the Company as at 31 March 2020 as detailed in Note33 to the standalone financial statements;
ii. the Company did not have any long-term contracts including derivative contracts forwhich there were any material foreseeable losses as at 31 March 2020; and
iii. there has been no delay in transferring amounts required to be transferred tothe Investor Education and Protection Fund by the Company during the year ended 31 March2020;
iv. the disclosure requirements relating to holdings as well as dealings in specifiedbank notes were applicable for the period from 8 November 2016 to 30 December 2016 whichare not relevant to these standalone financial statements. Hence reporting under thisclause is not applicable.
For Walker Chandiok & Co LLP
Firm's Registration No.: 001076N/N500013
Sumesh E S
Membership No.: 206931
Date: 17 June 2020
Annexure A to the Independent Auditor's Report of even date to the members ofThirumalai Chemicals Limited on the standalone financial statements for the year ended 31March 2020
Based on the audit procedures performed for the purpose of reporting a true and fairview on the financial statements of the Company and taking into consideration theinformation and explanations given to us and the books of account and other recordsexamined by us in the normal course of audit and to the best of our knowledge and beliefwe report that:
(i) (a) The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets.
(b) All fixed assets have not been physically verified by the management during theyear however there is a regular program of verification once in 3 years which in ouropinion is reasonable having regard to the size of the Company and the nature of itsassets. No material discrepancies were noticed on such verification.
(c) The title deeds of all the immovable properties (which are included under the headProperty plant and equipment') are held in the name of the Company.
(ii) In our opinion the management has conducted physical verification of inventory atreasonable intervals during the year except for goods-in-transit and stocks lying withthird parties. For stocks lying with third parties at the year- end written confirmationshave been obtained by the management. No material discrepancies were noticed on theaforesaid verification.
(iii) The Company has granted unsecured loans to companies covered in the registermaintained under Section 189 of the Act; and with respect to the same:
(a) in our opinion the terms and conditions of grant of such loans are not prima facieprejudicial to the company's interest.
(b) the schedule of repayment of principal and payment of interest has not beenstipulated and hence we are unable to comment as to whether repayments/ receipts of theprincipal amount and the interest are regular;
(c) there is no overdue amount in respect of loans granted to such companies.
(iv) In our opinion the Company has complied with the provisions of Sections 185 and186 of the Act in respect of loans investments guarantees and security.
(v) In our opinion the Company has not accepted any deposits within the meaning ofSections 73 to 76 of the Act and the Companies (Acceptance of Deposits) Rules 2014 (asamended). Accordingly the provisions of clause 3(v) of the Order are not applicable.
(vi) 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 undersubsection (1) of Section 148 of the Act in opinion that prima facie the prescribedaccounts and records have been made and maintained. However we have not made a detailedexamination of the cost records with a view to determine whether they are accurate orcomplete.
(vii) (a) The Company is regular in depositing undisputed statutory dues includingprovident fund employees' state insurance income-tax sales-tax service tax duty ofcustoms duty of excise value added tax cess and other material statutory dues asapplicable to the appropriate authorities. Further no undisputed amounts payable inrespect thereof were outstanding at the year-end for a period of more than six months fromthe date they become payable.
(b) The dues outstanding in respect of income-tax sales- tax service-tax duty ofcustoms duty of excise and value added tax on account of any dispute are as follows:
Statement of Disputed Dues
|Name of the statute ||Nature of dues ||Amount (Rs.) ||Amount paid including Interest (Rs.) ||Period to which the amount relates ||Forum where dispute is pending |
|Central Sales Tax Act 1956 ||Tax dues || |
|Nil ||2000-01 to 2005-06 ||High Court Chennai |
|Tamil Nadu General Sales Tax Act 1959 ||Tax dues || |
|418329 ||2006-07 ||Appellate Deputy Commissioner (CT) Vellore |
|Tamil Nadu Value Added Tax 2006 ||Tax dues || |
|486453 ||2006-07 to 2008- 09; 2013-14 to 2014-15 ||Appellate Deputy Commissioner (CT) Vellore |
|Central Sales Tax Act 1956 ||Tax dues || |
|346120 ||2006-07; ||Appellate Deputy Commissioner (CT) Vellore |
|Income Tax Act 1961 ||Tax dues ||86212845 ||49457564 ||2014-15; 2011-13 to 2016-17 to 2017-18 ||CIT(A) Mumbai |
(viii) The Company has not defaulted in repayment of loans or borrowings to any bank orfinancial institution or government during the year. The Company did not have anyoutstanding debentures during the year.
(ix). In our opinion the Company has applied moneys raised by way of term loans forthe purpose for which they were raised. The Company did not raise moneys by way of initialpublic offer/ further public offer (including debt instruments) during the year.
(x) No fraud by the Company or on the Company by its officers or employees has beennoticed or reported during the period covered by our audit.
(xi) Managerial remuneration has been paid and provided by the Company in accordancewith the requisite approvals mandated by the provisions of Section 197 of the Act readwith Schedule V to the Act.
(xii) In our opinion the Company is not a Nidhi Company. Accordingly provisions ofclause 3(xii) of the Order are not applicable.
(xiii) In our opinion all transactions with the related parties are in compliance withSections 177 and 188 of Act where applicable and the requisite details have beendisclosed in the financial statements etc. as required by the applicable Ind AS.
(xiv) During the year the Company has not made any preferential allotment or privateplacement of shares or fully or partly convertible debentures.
(xv) In our opinion the Company has not entered into any non-cash transactions withthe directors or persons connected with them covered under 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 Walker Chandiok & Co LLP
Firm's Registration No.: 001076N/N500013
Sumesh E S
Membership No.: 206931
Date: 17 June 2020
Annexure B to the Independent Auditor's Report of even date to the members ofThirumalai Chemicals Limited on the standalone financial statements for the year ended 31March 2020
Independent Auditor's Report on the Internal Financial Controls with reference to thestandalone financial statements under Clause (i) of Sub-section 3 of Section 143 of theCompanies Act 2013 (the Act')
1. In conjunction with our audit of the standalone financial statements of ThirumalaiChemicals Limited (the Company') as at and for the year ended 31 March 2020 we haveaudited the internal financial controls with reference to financial statements of theCompany as at that date.
Responsibility of Management and Those Changes with Governance for Internal FinancialControl
2. The Company's Board of Directors is responsible for establishing and maintaininginternal financial controls based on IFCoFR criteria established by the companyconsidering the essential components of internal financial controls stated in the GuidanceNote on Audit of IFCoFR issued by the Institute of Chartered Accountants of India. Theseresponsibilities include the design implementation and maintenance of adequate internalfinancial controls that were operating effectively for ensuring the orderly and efficientconduct of the Company's business including adherence to the 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 financial information as required under the Act.
Auditor's Responsibility for the Audit of the Internal Financial Controls withreference to the Financial Statements
3. 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 Standards on Auditing issued by the Institute of CharteredAccountants of India (ICAI') prescribed under Section 143(10) of the Act to theextent applicable to an audit of internal financial controls with reference to financialstatements and the Guidance Note on Audit of Internal Financial Controls Over FinancialReporting (the Guidance Note') issued by the ICAI. Those Standards and the GuidanceNote require that we comply with ethical requirements and plan and perform the audit toobtain reasonable assurance about whether adequate internal financial controls withreference to financial statements were established and maintained and if such controlsoperated effectively in all material respects.
4. Our audit involves performing procedures to obtain audit evidence about the adequacyof the internal financial controls with reference to financial statements and theiroperating effectiveness. Our audit of internal financial controls with reference tofinancial statements includes 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 financial statements whether due to fraud or error.
5. 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 withreference to financial statements.
Meaning of Internal Financial Controls with Reference to Financial Statements
6. A company's internal financial controls 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 include 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 expenditures 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
7. 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.
8. In our opinion the Company has in all material respects in all material respectsadequate internal financial controls with reference to financial statements and suchcontrols were operating effectively as at 31 March 2020 based on IFCoFR criteriaestablished by the Company considering the essential components of internal financialcontrols stated in the Guidance Note issued by ICAI.
For Walker Chandiok & Co LLP
Firm's Registration No.: 001076N/N500013
Sumesh E S
Membership No.: 206931
Date: 17 June 2020.