TO THE MEMBERS OF VALIANT ORGANICS LIMITED
Report on the Audit of the Standalone Financial Statements OPINION
We have audited the accompanying standalone financial statements ofValiant Organics Limited ("the Company") which comprise the Balance Sheet as atMarch 31 2020 the Statement of Profit and Loss and the Cash Flow Statement for the yearended on that date and a summary of the significant accounting policies and otherexplanatory information (hereinafter referred to as "the standalone financialstatements").
In our opinion and best of our information and according to theexplanations given to us the aforesaid standalone financial statements give theinformation required by the Companies Act ("the Act") in the manner so requiredand give a true and fair view in conformity with the accounting principles generallyaccepted in India of the state of affairs of the Company as at 31st March 2020and its profit and its cash flows for the year ended on that date.
BASIS FOR OPINION
We conducted our audit of the standalone financial statements inaccordance with the Standards on Auditing specified under
section 143(10) of the Act (SAs). Our responsibilities under thosestandards are further described in the Auditor's Responsibilities for the audit of theStandalone Financial Statements section of our report. We are independent of the Companyin accordance with the Code of Ethics issued by the Institute of Chartered Accountants ofIndia (ICAI) together with the independence requirements that are relevant to our audit ofthe standalone financial statements under the provisions of the Act and the Rules madethereunder and we have fulfilled our other ethical responsibilities in accordance withthese requirements and the ICAI's Code of Ethics. We believe that the audit evidencewe have obtained is sufficient and appropriate to provide a basis for our audit opinion onthe standalone financial statements.
KEY AUDIT MATTERS
Key audit matters are those matters that in our professionaljudgement were of most significance in our audit of the standalone financial statementsof the current period. These matters were addressed in the context of our audit of thestandalone financial statements as a whole and in forming our opinion thereon and we donot provide a separate opinion on these matters. We have determined the matters describedbelow to be the key audit matters to be communicated in our report.
|Key Audit Matters ||Auditor's Response |
|Accuracy Completeness and disclosure with reference to AS-10 of property plant and Equipment (including Capital Work in progress): ||Our audit procedures amongst others include the following - |
| || Obtaining an understanding of operating effectiveness of management's internal control over capital expenditure. |
|The carrying value of property plant and equipment (including capital work in progress) as on 31.3.2020 of Rs. 38165.04 Lakhs includes Rs. 13830.81 Lakhs capitalised/transferred from capital work in progress during the year. || Obtaining an understanding of management s identification of the costs that can be capitalised and have undertaken substantive audit procedures to verify the capitalisation of these costs. |
|Capital expenditure involves management technical estimates and judgement about capitalisation estimated useful life impairment which has material impact on balance sheet and operating results of the Company. || We assessed the Company's process regarding maintenance of records valuation and accounting of transactions relating to Property Plant and Equipment. |
| || We have reviewed management's judgment pertaining to estimation of useful life and depreciation of the Property Plant and Equipment and checked arithmetical accuracy of related depreciation. |
| || We have verified the capitalisation of borrowings costs incurred on qualifying asset in accordance with the Accounting Standard 16: Borrowing Costs. |
| || Ensuring adequacy of disclosures in the standalone financial statements. |
INFORMATION OTHER THAN THE STANDALONE FINANCIAL STATEMENTS ANDAUDITOR'S REPORT THEREON
The Company's Board of Directors is responsible for the preparation ofthe other information. The other information comprises the information included in theAnnual Report but does not include the standalone financial statements and our auditor'sreport 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.
RESPONSIBILITIES OF MANAGEMENT AND THOSE CHARGED WITH GOVERNANCE FORTHE STANDALONE FINANCIAL STATEMENTS
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 performanceand cash flows ofthe Company in accordance with the accounting principles generallyaccepted in India including the accounting standards specified under section 133 of theAct. 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 judgements 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 true and fair view and are free from material misstatementwhether due to fraud or error.
In preparing the Standalone Financial Statements management isresponsible for assessing the Company's ability to continue as a going concerndisclosing as applicable matters related to going concern and using the going concernbasis of accounting unless management either intends to liquidate the Company or to ceaseoperations or has no realistic alternative but to do so.
The Board of Directors are also responsible for overseeing theCompany's financial reporting process.
auditor's responsibilities for the audit of the
STANDALONE FINANCIAL STATEMENTS
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 scepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of thestandalone financial statements whether due to fraud or error design and perform auditprocedures responsive to those risks and obtain audit evidence that is sufficient andappropriate to provide a basis for our opinion. The risk of not detecting a materialmisstatement resulting from fraud is higher than for one resulting from error as fraudmay involve collusion forgery intentional omissions misrepresentations or the overrideof internal control.
Obtain an understanding of internal financial controls relevantto the audit in order to design audit procedures that are appropriate in thecircumstances. Under section 143(3)(i) of the Act we are also responsible for expressingour opinion on whether the Company has adequate internal financial controls system 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 theCompany's ability to continue as a going concern. If we conclude that a materialuncertainty exists we are required to draw attention in our auditor's report to therelated disclosures in the standalone financial statements or if such disclosures areinadequate to modify our opinion. Our conclusions are based on the audit evidenceobtained up to the date of our auditor's report. However future events or conditions maycause the Company to cease to continue 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 deficiencies in internal control that we identify during ouraudit.
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 statements of the current period and are therefore the key audit matters. Wedescribe these matters in our auditor's report unless law or regulation precludes publicdisclosure about the matter or when in extremely rare circumstances we determine that amatter should not be communicated in our report because the adverse consequences of doingso would reasonably be expected to outweigh the public interest benefits of suchcommunication.
REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS
1. As required by the Companies (Auditor's Report) Order 2016("the Order") issued by the Central Government in terms of Section 143(11) ofthe Act we give in 'Annexure A" a statement on the matters specified in paragraphs 3and 4 of the Order.
2. As required by Section 143(3) of the Act based on our audit wereport that:
a) We have sought and obtained all the information and explanationswhich to the best of our knowledge and belief were necessary for the purposes of ouraudit.
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 Balance Sheet the Statement of Profit and Loss and Cash FlowStatement dealt with by this report are in agreement with the relevant books of account.
d) In our opinion the aforesaid standalone financial statements complywith the Accounting Standards specified under Section 133 of the Act read with Rule 7 ofthe Companies (Accounts) Rules 2014.
e) On the basis of the written representations received from thedirectors as on March 31 2020 taken on record by the Board of Directors none of thedirectors is disqualified as on March 31 2020 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 overfinancial reporting of the Company and the operating effectiveness of such controls referto our separate Report in 'Annexure B". Our report expresses an unmodified opinion onthe adequacy and operating effectiveness of the Company's internal financial controls overfinancial reporting.
g) With respect to the other matters to be included in the Auditor'sReport in accordance with the requirements ofsection 197(16) ofthe Act as amended in ouropinion and to the best of our information and according to the explanations given to usthe remuneration paid by the Company to its directors during the year is in accordancewith the provisions of Section 197 of the Act.
h) With respect to the other matters to be included in the Auditor'sReport in accordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014 asamended in our opinion and to the best of our information and according to theexplanations given to us:
i. The Company does not have pending litigations which would impact itsfinancial position.
ii. The Company did not have any long-term contracts includingderivative contracts for which there are any material foreseeable losses.
iii. There were no amounts which were required to be transferred to theInvestor Education and Protection Fund by the Company.
For Gokhale & Sathe
Chartered Accountants Firm Reg. No.: 103264W
Membership No: 123215 UDIN: 20123215AAAAAQ7806
Place: Mumbai Date: 8th May 2020
Annexure A to the Independent Auditor's Report
(Referred to in paragraph 1 under Report on Other Legal andRegulatory Requirements' section of our report to the Members of Valiant Organics Limitedof even date)
i. In respect of the Company's fixed assets:
a) The Company has maintained proper records showing full particularsincluding quantitative details and situation of its fixed assets.
b) The Company has phased programme of physical verification of fixedassets by which all fixed assets are verified over a period of three years and no materialdiscrepancies were noted on such physical verification. In our opinion periodicity ofphysical verification is reasonable having regard to the size of the Company and nature ofthe assets.
c) According to the information and explanations given to us and on thebasis of examination of the records of the Company title deeds of immovable propertiesare held in the name of the Company except for Plots no. 750/751/2701/2703/2611 SarigamGIDC Sarigam Valsad Gujarat 396155 purchased during the year and the below mentionedimmovable properties the title of which is in the name of erstwhile entities merged withthe Company. According to the explanation obtained from management in view of mergerthrough court order leasehold rights are deemed to be transferred to the Company. Theprocedures for transferring the titles of these immovable properties in the name of theCompany are in progress.
|Sr. No. ||Description/Location |
|1 ||Plot No. 286/2 & A-1 322/11 at Vapi GIDC |
|2 ||Plot no A1/210 231232233235236 at Vatva Ahmedabad GIDC |
ii. The stock of inventory has been physically verified during the yearby the Management at reasonable intervals. In our opinion the procedures of physicalverification of inventory followed by the management are reasonable and adequate inrelation to the size of the Company and the nature of its business. The discrepanciesnoticed on physical verification of stocks as compared to book records were not materialand have been properly dealt with the books of accounts.
iii. According to the information and explanations given to us theCompany has not granted loans to any parties /entities covered in the register maintainedunder section 189 of the Companies Act2013.
iv. In our opinion and according to the information and explanationgiven to us the Company has complied with provisions of Section 185 and 186 of the Act inrespect of grant of loans making investments and providing guarantees and securities asapplicable.
v. The Company has not accepted deposits from the public during theyear and hence the directives issued by the Reserve Bank of India and the provision ofsection 73 to 76 any other relevant provisions of the At and the Companies (Acceptance ofDeposit ) Rules 2015 with regards to the deposits accepted from the public are notapplicable.
vi. The Company has maintained cost records as required under subsection (1) of Section 148 of the Companies Act 2013. However we have not carried out adetailed examination of such records.
vii. According to the information and explanations given to us inrespect of statutory dues:
a) The Company is regular in depositing undisputed statutory duesincluding the Provident Fund Employees' State Insurance Income tax Goods andService Tax Customs Duty Cess and any other statutory dues applicable to appropriateauthorities. Further no undisputed amounts payable in respect thereof were outstanding atthe year-end for a period of more than six months from the date they become payable.
b) There were no arrears in respect of Provident Fund Employees'State Insurance Income Tax Goods and Service Tax Customs Duty Cess and other materialstatutory dues in arrears as at March 31 2020 on account of dispute.
viii. In our opinion and according to the information and explanationgiven to us the Company has not defaulted in repayment of dues for loans taken fromfinancial institutions or banks.
ix. In our opinion and according to the information and explanationgiven to us the Company has utilized the monies raised by way of term loans for thepurpose for which they were raised. The Company did not raise any money by way of publicoffer or further public offer (including debt instruments) during the year.
x. To the best our knowledge and according to the information andexplanations given to us no fraud by the Company or no
material fraud on the Company by its officers or employees has beennoticed or reported during the year.
xi. According to the information and explanations given by themanagement the managerial remuneration has been paid/provided in accordance with therequisite approvals mandated by the provisions of section 197 read with schedule V to theCompanies Act 2013.
xii. As the Company is not a Nidhi Company the provisions of para3(xii) of the Order is not applicable to the Company.
xiii. According to the information and explanations given to us andbased on our examination of the records of the Company transactions with the relatedparties are in compliance with sections 177 and 188 of the Act where applicable anddetails of such transactions have been disclosed in the financial statements as requiredby the applicable accounting standards.
xiv. According to the information and explanations 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 paid convertibledebentures during the year. However the Company has allotted equity shares optionallyconvertible preferential shares (OCPS) and redeemable non-cumulative preference shares(RNPS) pursuant to the scheme of amalgamation to the shareholders of amalgamating company.
xv. According to the information and explanation given to us theCompany has not entered into non-cash transactions with directors or persons connectedwith him. Accordingly paragraph 3(xv) of the Order is not applicable.
xvi. The Company is not required to be registered under section 45-IAof the Reserve Bank of India Act 1934
For Gokhale & Sathe
Firm Reg. No.: 103264W
Membership No: 123215
Date: 8th May 2020
Annexure B to the Independent Auditor's Report
(Referred to in paragraph 2(f) under 'Report on Other Legal andRegulatory Requirements' section of our report to the Members of Valiant Organics Limitedof even date)
Report on the Internal Financial Controls with reference to financialstatements under Clause (i) of Sub-section 3 of Section 143 of the Companies Act 2013("the Act")
We have audited the internal financial controls over financialreporting of Valiant Organics Limited ("the Company") as of March 31 2020 inconjunction with our audit of the Standalone Financial statements of the Company for theyear ended on that date.
MANAGEMENT'S RESPONSIBILITY FOR INTERNAL FINANCIAL CONTROLS
The Company's management is responsible for establishing andmaintaining internal financial controls based on the internal control over financialreporting criteria established by the Company considering the essential components ofinternal control stated in the Guidance Note on Audit of Internal Financial Controls OverFinancial Reporting issued by the Institute of Chartered Accountants of India (ICAI).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 respective company'spolicies the safeguarding of its assets the prevention and detection of frauds anderrors the accuracy and completeness of the accounting records and the timelypreparation of reliable financial information as required under the Act.
Our responsibility is to express an opinion on the internal financialcontrols over financial reporting of the Company based on our audit. We conducted ouraudit in accordance with the Guidance Note on Audit of Internal Financial Controls OverFinancial Reporting (the "Guidance Note") issued by the Institute of CharteredAccountants of India and the Standards on Auditing prescribed under Section 143(10) of theAct to the extent applicable to an audit of internal financial controls. Those Standardsand the Guidance Note require 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 aboutthe adequacy of the internal financial controls system over financial reporting and theiroperating effectiveness. Our audit of internal financial controls over financial reportingincluded obtaining an understanding of internal financial controls over financialreporting 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.
We believe that the audit evidence we have obtained is sufficient andappropriate to provide a basis for our audit opinion on the internal financial controlssystem over financial reporting.
MEANING OF INTERNAL FINANCIAL CONTROLS OVER FINANCIAL REPORTING
A company's internal financial control over financial reporting 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 control overfinancial reporting includes those policies and procedures that (1) pertain to themaintenance of records that in reasonable detail accurately and fairly reflect thetransactions and dispositions of the assets of the company; (2) provide reasonableassurance that transactions are recorded as necessary to permit preparation of financialstatements in accordance with generally accepted accounting principles and that receiptsand expenditures 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 FINANCIALREPORTING
Because of the inherent limitations of internal financial controls overfinancial reporting 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 overfinancial reporting to future periods are subject to the risk that the internal financialcontrol over financial reporting may become inadequate because of changes in conditionsor that the degree of compliance with the policies or procedures may deteriorate.
In our opinion the Company has in all material respects an adequateinternal financial controls system over financial reporting and such internal financialcontrols over financial reporting were operating effectively as at March 31 2020
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.
For Gokhale & Sathe
Chartered Accountants Firm Reg. No.: 103264W
Membership No: 123215
Date: 8th May 2020