The Members of VADIVARHE SPECIALITY CHEMICALS LIMITED
Report on the Audit of the Standalone Financial Statements
We have audited the standalone financial statements of VADIVARHE SPECIALITY CHEMICALSLIMITED which comprise the standalone balance sheet as at March 31 2020 and thestandalone statement of profit and loss (including other comprehensive income)standalonestatement of changes in equity and standalone statement of cash flows for the year thenended and notes to the standalone financial statements including a summary of thesignificant accounting policies and other explanatory information (herein referred to as"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 required bythe Companies Act 2013 ("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 2020 and 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 in accordance with the Standards on Auditing (SAs) specifiedunder Section 143(10) of the Act. Our responsibilities under those SAs 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 together with theethical requirements that are relevant to our audit of the standalone 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 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 a separateopinion on these matters.
Description of Key Audit Matter
Revenue recognition (refer notes 3)
|The Key Audit Matter ||How the matter is addressed in our audit |
|Revenue is recognised when the control over the underlying products has been transferred to the customer. ||Our audit procedures included: |
| ||- Focusing on the Company's revenue recognition for compliance with AS; |
| ||- Testing the design implementation and operating effectiveness of the Company's manual and automated (Information Technology - IT) controls on recording revenue. We focused on controls around the timely and accurate recording of sales transactions. |
|The sales have been reduced but it won't affect the going concern status of the company. The sales have been affected due to following reasons identified by the management: ||Reduction in sales has been covered in notes on accounts point no 3. We analysed the management's report to gain an understanding of the inputs and processes underpinning the cash flow model prepared for the purpose of going concern asssessment. |
|i. Expiry and non-renewal of service contract in 2019 || |
|ii. COVID-19 lockdown has resulted in cancellation/ delay in export orders. || |
INFORMATION OTHER THAN THE STANDALONE FINANCIAL STATEMENTS AND AUDITORS' REPORT THEREON
The company's management and board of directors are responsible for the otherinformation. The other information comprises the information included in the company'sannual report but does not include the financial statements and our auditors' reportthereon.
Our opinion on the standalone financial statements does not cover the other informationand we do not express any form of assurance conclusion thereon.
MANAGEMENT'S AND BOARD OF DIRECTORS RESPONSIBILITY FOR THE STANDALONE FINANCIALSTATEMENTS
in connection with our audit of the standalone financial statements our responsibilityis to read the other information and in doing so consider whether the other information ismaterially inconsistent with the standalone financial statements or our knowledge obtainedin the audit or otherwise appears to be the company's management and board of directorsare responsible for the matters stated in section 134(5) of the act with respect to thepreparation of these standalone financial statements that give a true and fair view of thestate of affairs profit and other comprehensive income changes in equity and cash flows ofthe company in accordance with the accounting principles generally accepted in Indiaincluding the Indian accounting standards (Ind AS) specified under section 133 of the act.
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 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 of thestandalone financial 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 and Board of Directors are responsiblefor assessing the Company's ability to continue as a going concern disclosing asapplicable matters related to going concern and using the going concern basis ofaccounting unless management either intends to liquidate the Company or to ceaseoperations or has no realistic alternative but to do so.
The Board of Directors is 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 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 they couldreasonably be expected to influence the economic decisions of users taken on the basis ofthese 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 therisks of material misstatement of the standalone financial statements whether due to fraudor error design and perform audit procedures responsive to those risks and obtain auditevidence that is sufficient and appropriate to provide a basis for our opinion. The riskof not detecting a material misstatement resulting from fraud is higher than for oneresulting from error as fraud may involve collusion forgery intentional omissionsmisrepresentations or the override of internal control.
Obtain an understanding of internal control relevant to the audit in order to designaudit procedures that are appropriate in the circumstances. Under Section 143(3)(i) of theAct we are also responsible for expressing our opinion on whether the Company has adequateinternal financial controls with reference to financial statements in place and theoperating effectiveness of such controls.
Evaluate the appropriateness of accounting policies used and the reasonableness ofaccounting estimates and related disclosures made by management.
Conclude on the appropriateness of management's use of the going concern basis ofaccounting and based on the audit evidence obtained whether a material uncertainty existsrelated to events or conditions that may cast significant doubt on the Company's abilityto continue as a going concern. If we conclude that a material uncertainty exist 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 the standalone financialstatements including the disclosures and whether the standalone 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 the mallrelationships and other matters that may reasonably be thought to bear on our independenceand 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 auditors' 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 (Auditors' Report) Order 2016 ("the Order")issued by the Central Government in terms of Section 143 (11) of the Act we give inthe" Annexure A" a statement on the matters specified in paragraphs 3 and 4 ofthe Order to the extent applicable.
(A) 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 standalone balance sheet the standalone statement of profit and loss (includingother comprehensive income) the standalone statement of changes in equity and thestandalone statement of cash flows dealt with by this Report are in agreement with thebooks of account.
d. In our opinion the aforesaid standalone financial statements comply with the Ind ASspecified under Section 133 of the Act.
e. On the basis of the written representations received from the directors as on April1 2020 taken on record by the Board of Directors none of the directors is disqualified ason March 31 2020 from being appointed as a director in terms of Section 164(2) of the Act.
f. With respect to the adequacy of the internal financial controls with reference tofinancial statements of the Company and the operating effectiveness of such controls referto our separate Report in "Annexure B".
(B) With respect to the other matters to be included in the Auditors' 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 has disclosed the impact of pending litigations as at March 31 2010 onits financial position in its standalone financial statements;
ii. The Company has made provision as required under the applicable law or accountingstandards for material foreseeable losses if any on long-term contracts includingderivative contracts;
iii. There were no amounts to be transferred to the Investor Education and ProtectionFund by the Company.
iv. The reporting on disclosures relating to Specified Bank Notes is not applicable tothe
Company for the year ended March 31 2020
(C) With respect to the matter to be included in the Auditors' Report underSection197(16) of the Act: In our opinion and according to the information andexplanations given to us the remuneration paid by the Company to its directors during thecurrent year is in accordance with the provisions of Section 197 of the Act. Theremuneration paid to any director is not in excess of the limit laid down under Section197 of the Act. The Ministry of Corporate Affairs has not prescribed other details underSection 197(16) of the Act which are required to be commented upon by us.
FOR BHALCHANDRA D KARVE & ASSOCIATES
(FIRM'S REGISTRATION NO. 135281W)
CA BHALCHANDRA D KARVE
ANNEXURE A TO THE INDEPENDENT AUDITOR'S REPORT MARCH 31ST 2020
With reference to the Annexure A referred to in the Independent Auditors' Report to themembers of the VADIVARHE SPECIALITY CHEMICALS LIMITED on the Standalone FinancialStatements for the year ended March 31 2020 we report the following:
(a) The Company has maintained proper records showing full particulars includingquantitative details and situation of property plant and equipment and investmentproperties.
(b) The Company has a programme of physical verification of its property plant andequipment and investment properties by which the property plant and equipment andinvestment properties are verified by the management according to a phased programmedesigned to cover all the items over a period of three years. In our opinion thisperiodicity of physical verification is reasonable having regard to the size of theCompany and the nature of its assets. In accordance with the policy the Company hasphysically verified certain property plant and equipment and investment properties duringthe year and we are informed that the discrepancies were not material and have beenproperly dealt with in the books of account.
(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 immovable properties of landand buildings as disclosed in Note 4 to the Standalone Financial Statements are held inthe name of the Company
(ii) The inventory except for goods-in-transit and stocks lying with third partieshas been physically verified by the management during the year. In our opinion thefrequency of such verification is reasonable. The discrepancies noticed on verificationbetween the physical stocks and the book records were not material and have been properlydealt with in the books of account.
(iii) According to the information and explanations given to us the Company has notgranted any loans secured or unsecured to companies firms limited liabilitypartnerships or other parties covered in the register maintained under Section 189 of theCompanies Act 2013 (the Act'). Accordingly paragraphs 3 (iii) (a) (b) and (c) ofthe Order are not applicable to the
(iv) In our opinion and according to the information and explanations given to us theCompany has complied with the provisions of Sections 185 and 186 of the Companies Act2013 in respect of grant of loans making investments and providing guarantees andsecurities as applicable.
(v) In our opinion and according to the information and explanations given to us theCompany has not accepted deposits as per the directives issued by the Reserve Bank ofIndia and the provisions of Sections 73 to 76 or any other relevant provisions of the Actand the rules framed thereunder. Accordingly paragraph 3 (v) of the Order is notapplicable to the
(vi) According to the information and explanations given to us since the company doesnot fulfill the conditions pursuant to the companies (Cost Accounting Record) Rules 2011prescribed by the central Government under sub-section (1) of section 148 of theCompanies Act 2013 for maintenance of the prescribed cost records and therefore such costrecords are not maintained by the company. Accordingly Paragraph 3(vi) of the order is notapplicable.
(vii) (a) According to the information and explanations given to us and on the basis ofour examination of the records of the Company amounts deducted/accrued in the books ofaccount in respect of undisputed statutory dues including Provident fund Profession taxIncome tax Duty of customs Employees' State Insurance Goods and Service tax Cess andother material statutory dues have been regularly deposited during the year with theappropriate authorities.
According to the information and explanations given to us no undisputed amountspayable in respect of Provident fund Profession tax Income-tax Employees' StateInsurance Duty of customs Goods and Service tax Cess and other material statutory dueswere in arrears as at March 31 2020 for a period of more than six months from the datethey became payable.
(b) According to the information and explanations given to us there are no dues ofIncome-tax Sales tax Service tax Duty of customs Duty of excise Goods and Service taxand Value added tax as at March 31 2020 which have not been deposited with theappropriate authorities on account of any dispute.
(viii) In our opinion and according to the information and explanations given to usthe Company has not defaulted in repayment of loans or borrowings to banks. The Companydoes not have any outstanding dues to financial institutions and Government. Further noloans or borrowings were taken from government and there were no debentures issued duringthe year or outstanding as at 31 March 2020.
(ix) According to the information and explanations given to us and based on ourexamination of the records of the Company the Company has not raised any moneys by way ofinitial public o er or further public o er (including debt instruments) Accordinglyparagraph 3 (ix) of the Order is not applicable to the Company.
(x) According to the information and explanations given to us by the management wereport that no material fraud by the Company or on the Company by its officers andemployees has been noticed or reported during the year.
(xi) According to the information and explanations given to us and based on ourexamination of the records of the Company the Company has paid/provided for managerialremuneration in accordance with the requisite approvals mandated by the provisions ofSection 197 read with Schedule V to the Act.
(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 to the Company.
(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 Standalone Financial Statements as required byapplicable Ind AS.
(xiv) According to the information and explanations given to us and based on ourexamination of the records of the Company the Company has not made any preferentialallotment or private placement of shares or fully or partly convertible debentures duringthe year. Accordingly paragraph 3 (xiv) of the Order is not applicable to the Company.
(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 directors or persons connected with them. Accordingly paragraph 3 (xv)of the Order is not applicable to the Company.
(xvi) In our opinion and according to the information and explanations given to us theCompany is not required to be registered under Section 45-IA of the Reserve Bank of IndiaAct 1934. Accordingly paragraph 3 (xvi) of the Order is not applicable to the Company.
For BHALCHANDRA D KARVE & ASSOCIATES
Firm's Registration No: 135281W
CA BHALCHANDRA D KARVE
Membership No: 105965
JUNE 30 2020
UDIN : 20105965AAAACU6838
Annexure - B to the Auditors' Report
Refer to Para 6 (2)(f) of the Independent Auditor's Report of the even date to themembers of Vadivarhe Specialty Chemicals Limited on financial statements for the yearended 31st March 2020
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 over financial Vadivarhe SpecialityChemicals Limited as of 31 March 2020 in conjunction with our audit of the financialstatements 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 control over financial reporting criteriaestablished by the Company considering the essential components of internal control statedin the Guidance Note on Audit of Internal Financial Controls over Financial Reportingissued by the Institute of Chartered
Accountants of India (ICAI'). These responsibilities include the designimplementation and maintenance of adequate internal financial controls that were operatingeffectively for ensuring the orderly and efficient conduct of its business includingadherence to company's policies the safeguarding of its assets the prevention anddetection of frauds and errors the accuracy and completeness of the accounting recordsand the timely preparation of reliable financial information as required under theCompanies Act 2013.
Our responsibility is to express an opinion on the Company's internal financialcontrols over financial reporting based on our audit. We conducted our audit in accordancewith the Guidance
Note on Audit of Internal Financial Controls over Financial Reporting (the"Guidance Note") and the
Standards on Auditing issued by ICAI and deemed to be prescribed under section 143(10)of the Companies Act 2013 to the extent applicable to an audit of internal financialcontrols both applicable to an audit of Internal Financial Controls and both issued bythe Institute of Chartered Accountants of India. 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 over financialreporting was established and maintained and if such controls operated effectively in allmaterial respects.
Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal financial controls system over financial reporting and their operatingeffectiveness. Our audit of internal financial controls over financial reporting includedobtaining an understanding of internal financial controls over financial reportingassessing the risk that a material weakness exists and testing and evaluating the designand operating effectiveness of internal control based on the assessed risk. The proceduresselected depend on the auditor's judgment including the assessment of the risks ofmaterial misstatement of the financial statements whether due to fraud or error.
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 Controls over Financial Reporting
A company's internal financial control over financial reporting is a process designedto provide reasonable assurance regarding the reliability of financial reporting and thepreparation of financial statements for external purposes in accordance with generallyaccepted accounting principles. A company's internal financial control over financialreporting includes those policies and procedures that (1) pertain to the maintenance ofrecords that in reasonable detail accurately and fairly reflect the transactions anddispositions of the assets of the company; (2) provide reasonable assurance thattransactions are recorded as necessary to permit preparation of financial statements inaccordance with generally accepted accounting principles and that receipts andexpenditures of the company are being made only in accordance with authorisations ofmanagement and directors of the company; and (3) provide reasonable assurance regardingprevention or timely detection of unauthorised acquisition use or disposition of thecompany's assets that could have a material effect on the financial statements.
Inherent Limitations of Internal Financial Controls over Financial Reporting
Because of the inherent limitations of internal financial controls over financialreporting including the possibility of collusion or improper management override ofcontrols material misstatements due to error or fraud may occur and not be detected.Also projections of any evaluation of the internal financial controls over financialreporting to future periods are subject to the risk that the internal financial controlover financial reporting may become inadequate because of changes in conditions or thatthe degree of compliance with the policies or procedures may deteriorate.
In our opinion the company has in all material respects an adequate internalfinancial controls systems over financial reporting and such internal financial controlsover financial reporting were operating effectively as at 31st March 2020 based on the internal control over financial reporting criteria established by the companyconsidering the essential components of internal control stated in the guidance note onAudit of Internal Financial controls Over Financial Reporting issued by the Institute ofChartered Accountants of India.
| ||For Bhalchandra D Karve & Associates |
| ||Chartered Accountants |
| ||Firm Registration Number 135281W |
|Date: 30/06/2020 || |
|Place: Nashik || |
| ||CA Bhalchandra D Karve |
| ||Proprietor |
| ||Membership Number 105965 |
| ||UDIN: 20105965AAAACU6838 |