To the Members of Vinati Organics Limited
We have audited the Separate financial statements (also known asStandalone Financial Statements) of VINATI ORGANICS LIMITED ("the Company")which comprise the Balance Sheet as at 31st March 2021 the Statement of Profit and Loss(including other Comprehensive Income) Statement of Changes in Equity and Statement ofCash Flows for the year then ended and a summary of significant accounting policies andother explanatory information.
In our opinion and to the best of our information and according to theexplanations given to us the aforesaid standalone Ind AS financial statements give theinformation required by the Companies Act 2013 ("the Act") in the manner sorequired and give a true and fair view in conformity with the Indian Accounting Standards(Ind AS) prescribed under Section 133 of the Act read with Companies (Indian AccountingStandards) Rules 2015 as amended and other accounting principles generally accepted inIndia of the state of affairs (financial position) of the Company as at 31st March 2021and its profit(financial performance including other comprehensive income) the changes inequity and its cash flows for the year ended on that date.
Basis for Opinion
We conducted our audit of the standalone Ind AS financial statements inaccordance with the Standards on Auditing (SAs) specified under Section 143(10) of theAct. Our responsibilities under those Standards are further described in theAuditor's Responsibilities for the Audit of the Standalone Ind AS 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 independence requirements that are relevant to our audit of the financialstatements under the provisions of the Act and the Rules thereunder and we have fulfilledour other ethical responsibilities in accordance with these requirements and theICAI's Code of Ethics. We believe that the audit evidence we have obtained issufficient and appropriate to provide a basis for our audit opinion on the Standalone IndAS financial statements.
Key Audit Matters
Key audit matters are those matters that in our professional judgmentwere of most significance in our audit of the 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.
|Key Audit Matter ||Our Response |
|Defined benefit obligation || |
|The valuation of the retirement benefit schemes in the Company is determined with reference to various actuarial assumptions including discount rate future salary increases rate of inflation mortality rates and attrition rates. Due to the size of these schemes small changes in these assumptions can have a material impact on the estimated defined benefit obligation. ||We have examined the key controls over the process involving member data formulation of assumptions and the financial reporting process in arriving at the provision for retirement benefits. We tested the controls for determining the actuarial assumptions and the approval of those assumptions by senior management. We found these key controls were designed implemented and operated effectively and therefore determined that we could place reliance on these key controls for the purposes of our audit. |
| ||We tested the employee data used in calculating the obligation and where material we also considered the treatment of curtailments settlements past service costs remeasurements benefits paid and any other amendments made to obligations during the year. From the evidence obtained we found the data and assumptions used by management in the actuarial valuations for retirement benefit obligations to be appropriate. |
|2 Evaluation of uncertain tax positions ||Principal Audit Procedures |
|The Company has uncertain tax positions including matters under dispute which involves significant judgment to determine the possible outcome of these disputes. ||We performed the following substantive procedures: |
| ||Obtained details of completed tax assessments and demands upto March 31 2021 from management. We involved our internal experts to examine the management's underlying assumptions in estimating the tax provision and the possible outcome of the disputes. Our internal experts also considered legal precedence and other rulings in evaluating management's position on these uncertain tax positions. Additionally we considered the effect of new information in respect of uncertain tax positions as at March 31 2021 to evaluate whether any change was required to management's position on these uncertainties. |
| ||Conclusion |
| ||We agree with management's evaluation. |
Information Other than the Financial Statements and Auditor'sReport thereon
The Company's Board of Directors is responsible for thepreparation of the other information. The other information comprises the informationincluded in the Board's Report including Annexures to Board's Report but doesnot include the Standalone Ind AS financial statements and our auditor's reportthereon.
Our opinion on the Standalone Ind AS financial statements does notcover the other information and we do not express any form of assurance conclusionthereon.
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 Ind AS financialstatements or our knowledge obtained during the course of our audit or otherwise appearsto be materially misstated.
When we read the Board report including Annexures to Board Report ifwe conclude that there is a material misstatement therein we are required to communicatethe matter to those charged with governance.
Management's Responsibility for the Standalone FinancialStatements
The Company's Board of Directors is responsible for the mattersstated in section 134(5) of the Act with respect to the preparation of these standaloneInd AS financial statements that give a true and fair view of the financial positionfinancial performance (including other comprehensive income) changes in equity and cashflows of the Company in accordance with the Ind AS and other accounting principlesgenerally accepted in India. This responsibility also includes maintenance of adequateaccounting records in accordance with the provisions of the Act for safeguarding of theassets of the Company and for preventing and detecting frauds and other irregularities;selection and application of appropriate accounting policies; making judgments andestimates that are reasonable and prudent; and design implementation and maintenance ofadequate internal financial controls that were operating effectively for ensuring theaccuracy and completeness of the accounting records relevant to the preparation andpresentation of the Standalone Ind AS Financial Statements that give a true and fair viewand are free from material misstatement whether due to fraud or error.
In preparing the Standalone Ind AS 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 responsible for overseeing theCompany's financial reporting process.
Auditor's Responsibility for the audit of the Standalone financialstatements
Our objectives are to obtain reasonable assurance about whether theStandalone Ind AS financial statements as a whole are free from material misstatementwhether due to fraud or error and to issue an auditor's report that includes ouropinion. Reasonable assurance is a high level of assurance but is not a guarantee that anaudit conducted 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 Ind AS financialstatements.
Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditor's Report) Order2016("the Order") issued by the Central Government in terms of Section 143 (11)of the Act we give in "Annexure A" - a statement on the matters specified inparagraphs 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 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 (including othercomprehensive income) Statement of Changes in Equity and the Cash Flow Statement dealtwith by this Report are in agreement with the books of account.
d) In our opinion the aforesaid standalone Ind AS financial statementscomply with the Indian Accounting Standards prescribed under Section 133 of the Act.
e) On the basis of the written representations received from thedirectors as on 31st March 2021 taken on record by the Board of Directors none of thedirectors is disqualified as on 31st March 2021 from being appointed as a director interms of 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".
g) With respect to the other matters to be included in theAuditor's Report in accordance with the requirements of Section 197(16) of the Actas amended.
In our opinion and to the best of our information and according to theexplanations given to us the remuneration paid by the Company to its directors during theyear is in accordance with the provisions of Section 197 of the Act. The remuneration paidto any director is not in excess of the limit laid down under Section 197 of the Act.
h) With respect to the other matters to be included in theAuditor's Report in accordance with Rule 11 of the Companies (Audit and Auditors)Rules 2014 as amended in our opinion and to the best of our information and accordingto the explanations given to us:
a. The Company has disclosed the impact of pending litigations on itsfinancial position in its Standalone Ind AS financial statements Refer Note 28 (i)to the Standalone Ind AS financial statements;
b. The Company has long-term contracts including derivative contractsfor which there were no material foreseeable losses; and
c. There has been no delay in transferring amounts required to betransferred to the Investor Education and Protection Fund by the company
For M M NISSIM & CO LLP
(Firm Regn. No. 107122W/W100672)
Mem. No.: 036490
Mumbai 13th May 2021
UDIN : 21036490AAAAFN9521
Appendix A-Auditor's Responsibilities for the Audit of theStandalone Financial Statements
As part of an audit in accordance with SAs we exercise professionaljudgement and maintain professional scepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of thefinancial 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 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 thegoing concern basis of accounting and based on the audit evidence obtained whether amaterial uncertainty exists related to events or conditions that may cast significantdoubt on the Company's ability to continue as a going concern. If we conclude that amaterial uncertainty exists we are required to draw attention in our auditor'sreport to the related disclosures in the financial statements or if such disclosures areinadequate to modify our opinion. Our conclusions are based on the audit evidenceobtained upto the date of our auditor's report. However future events or conditionsmay cause the Company to cease to continue as a going concern.
Evaluate the overall presentation structure and content of theStandalone Ind AS financial statements including the disclosures and whether theStandalone Ind AS financial statements represent the underlying transactions and events ina manner that achieves 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 de_ciencies 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 Standalone IndAS financial statements of the current period and are therefore the key audit matters. Wedescribe these matters in our auditor's report unless law or regulation precludespublic disclosure about the matter or when in extremely rare circumstances we determinethat a matter should not be communicated in our report because the adverse consequences ofdoing so would reasonably be expected to outweigh the public interest benefits of suchcommunication.
Annexure "A" to the Independent Auditor's Report of evendate on the Standalone Ind AS Financial Statements of Vinati Organics Limited i) Inrespect of its Property Plant and Equipment:
a) The company has maintained proper records showing full particularsincluding quantitative details and situation of Property Plant and Equipment;
b) The Assets have been physically verified by the management inaccordance with a regular programme of verification which in our opinion is reasonableconsidering the size and the nature of its business. The frequency of verification isreasonable and no material discrepancies have been noticed on such physical verification;
c) On the basis of our examination of the records of the company thetitle deeds of immovable properties are held in the name of the Company.
ii) The inventory except goods-in-transit has been physically verifiedby the management at reasonable intervals during the year. In our opinion the frequencyof verification is reasonable. No material discrepancies were noticed on such physicalverification. In view of the COVID-19 pandemic we were unable to participate in physicalverification of inventory that was carried out by the management and internal auditors ofthe Company close to the year end. Consequently we have performed alternate procedures toaudit the existence of the inventory as per the guidance provided in the standards onauditing.
iii) The company has granted unsecured loans to two companies coveredin the registered maintained under Section 189 of the Act. The Company has not granted anyloans secured or unsecured to firms Limited Liability Partnerships or other partiescovered in the register maintained under Section 189 of the Act.
a) According to the information and explanations given to us and basedon the audit procedures conducted by us we are of the opinion that the rate of interestand other terms and conditions of unsecured loans granted by the Company to the companiescovered in the register required to be maintained under Section 189 of the Act are notprima facie prejudicial to the interest of the Company.
b) According to the information and explanations given to us and basedon the audit procedures conducted by us the unsecured loans granted to the companies andthe interest thereon are repayable as per contractual terms of the loan agreements. Theborrowers have been regular in payment of principal and interest as per the contractualterms.
c) There are no overdue amounts of more than 90 days in respect of theunsecured loans granted to companies by the Company.
iv) In our opinion and according to the information and explanationsgiven to us the Company has complied with the provisions of Section 185 of the CompaniesAct 2013; in respect of loan granted to a Company (proposed to be amalgamated with theCompany) during the year amounting to Rs 13186.40 Lacs for which approval of theShareholders is sought in the ensuing Annual General Meeting (Refer Note 28(m) to theStandalone Financial Statements). Further the Company has complied with provisions ofSection 186 of the Companies Act 2013 with respect of loan granted and investments madeby the Company.
v) The Company has not accepted any deposits within the meaning ofProvisions of Section 73 to 76 of the Act and the rules framed thereunder from thepublic.
vi) We have broadly reviewed the books of account maintained by thecompany pursuant to the rules made by the Central Government for the maintenance of costrecords under section 148 (1) of the Act and are of the opinion that prima facie theprescribed accounts and records have been made and maintained.
vii) a) The company is regular in depositing undisputed statutory duesincluding Provident Fund Employees' State Insurance Income Tax Sales-Tax ServiceTax Goods & Services Tax duty of customs duty of excise value added tax cess andany other statutory dues with appropriate authorities where applicable. According to theinformation and explanations given to us there are no undisputed amounts payable inrespect of such statutory dues which have remained outstanding as at 31st March 2021 fora period of more than six months from the date they became payable.
b) According to the records of the company the dues outstanding ofincome-tax sales-tax service tax duty of customs duty of excise and value added tax onaccount of any dispute are as follows:
|Statute and nature of dues CUSTOMS ACT 1962 ||Financial year to which the matter pertains ||Forum where the dispute is pending ||Rs Lacs |
|Customs Duty and penalty ||March 2012 to May 2012 ||Appellate Tribunal ||45.08 |
|CENTRAL EXCISE ACT 1944 and Finance Act 1994 || || || |
|Service Tax ||Jan. 2012 to Nov. 2012 ||Appellate Tribunal ||2.36 |
|INCOME TAX 1961 || || || |
|Income Tax ||2008-09 ||Appellate Commissioner ||2.62 |
| ||2009-10 ||Appellate Commissioner ||0.86 |
viii) The company has not defaulted in repayment of its loans orborrowings to banks. The Company does not have any borrowings by way of debentures.
ix) The Company has not raised any moneys by way of Initial publicoffer or further Public offer (Including debt instruments) and term loans during the year.Hence provisions of Clause 3(ix) of the aforesaid order is not applicable to the Company.
x) On the basis of our examination and according to the information andexplanations given to us no fraud by the Company or any material fraud on the company byits officers or employees has been noticed or reported during the year nor have we beeninformed of any such case by the management.
xi) The managerial remuneration has been paid/provided in accordancewith the requisite approvals mandated by the provisions of Section 197 read with ScheduleV to the Act.
xii) The company is not a nidhi Company and accordingly provisions ofclause (xii) of Para 3 of the order are not applicable to the Company.
xiii) On the basis of our examination and according to the informationand explanations given to us we report that all the transaction with the related partiesare in compliance with Section 177 and 188 of the Act and the details have been disclosedin the Financial statements in Refer Note 28(f) as required by the applicable accountingstandards.
xiv) The company has not made any preferential allotment or privateplacement of share or fully or partly paid convertible debentures during the year andaccordingly provisions of clause (xiv) of Para 3 of the Order are not applicable to theCompany.
xv) Based on our examination of the records of the company the companyhas not entered into any non-cash transactions with directors or persons connected withthe directors. Accordingly provisions of clause (xv) of Para 3 of the Order are notapplicable to the company.
xvi) The company is not required to be registered under section 45-IAof the Reserve Bank of India Act1934 and accordingly provisions clause (xvi) of Para 3of the Order are not applicable to the Company.
For M M NISSIM & CO LLP
(Firm Regn. No. 107122W/W100672)
Mem. No.: 036490
Mumbai 13th May 2021
UDIN : 21036490AAAAFN9521
"Annexure B" to the Independent Auditor's Report of evendate on the Standalone Ind AS Financial Statements of Vinati Organics Limited
Report on the Internal Financial Controls Over Financial Reportingunder Clause (i) of Sub-section 3 of Section 143 of the Companies Act 2013 ("theAct")
We have audited the internal financial controls with reference toStandalone Ind AS Financial Statements of VINATI ORGANICS LIMITED ("theCompany") as of March 31 2021 in conjunction with our audit of the standalone Ind ASfinancial statements of the Company for the year ended on that date.
In our opinion the Company has in all material respects an adequateinternal financial controls system with reference to Standalone Ind AS financialstatements and such internal financial controls were operating effectively as at March 312021 based on the internal control with reference to Standalone Ind AS financialstatements criteria established by the Company considering the essential components ofinternal control stated in the Guidance Note issued by the ICAI.
Management's Responsibility for Internal Financial Controls
The Company's management and the Board of Directors is responsiblefor establishing and maintaining internal financial controls based on the internal controlwith reference to Standalone Ind AS Financial Statements criteria established by theCompany considering the essential components of internal control stated in the GuidanceNote. 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'spolicies the safeguarding of its assets the prevention and detection of frauds anderrors the accuracy and completeness of the accounting records and the timely preparationof reliable financial information as required under the Act.
Our responsibility is to express an opinion on the Company's internalfinancial controls with reference to Standalone Ind AS financial statements based on ouraudit. We conducted our audit in accordance with the Guidance Note and the Standards onAuditing prescribed under section 143(10) of the Companies Act 2013 to the extentapplicable to an audit of internal financial controls with reference to standalonefinancial statements. Those Standards and the Guidance Note require that we comply withethical requirements and plan and perform the audit to obtain reasonable assurance aboutwhether adequate internal financial controls with reference to Standalone Ind AS financialstatements 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 with reference toStandalone Ind AS Financial Statements included obtaining an understanding of internalfinancial controls with reference to standalone financial statements assessing the riskthat a material weakness exists and testing and evaluating the design and operatingeffectiveness of internal control based on the assessed risk. The procedures selecteddepend on the auditor's judgement including the assessment of the risks of materialmisstatement 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 Company's internalfinancial controls with reference to Standalone Ind AS financial statements.
Meaning of Internal Financial Controls with reference to StandaloneFinancial Statements
A company's internal financial control with reference to Standalone IndAS financial statements is a process designed to provide reasonable assurance regardingthe reliability of financial reporting and the preparation of Standalone Ind AS FinancialStatements for external purposes in accordance with generally accepted accountingprinciples. A company's internal financial control with reference to Standalone Ind ASFinancial Statements 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 StandaloneInd AS Financial Statements in accordance with generally accepted accounting principlesand that receipts 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 standalonefinancial statements.
Inherent Limitations of Internal Financial Controls with reference toStandalone Financial Statements
Because of the inherent limitations of internal financial controls withreference to Standalone Ind AS financial statements including the possibility ofcollusion or improper management override of controls material misstatements due to erroror fraud may occur and not be detected. Also projections of any evaluation of theinternal financial controls with reference to Standalone Ind AS financial statements tofuture periods are subject to the risk that the internal financial control with referenceto Standalone Ind AS financial statements may become inadequate because of changes inconditions or that the degree of compliance with the policies or procedures maydeteriorate.
For M M NISSIM & CO LLP
(Firm Regn. No. 107122W/W100672)
Mem. No.: 036490
Mumbai 13th May 2021
UDIN : 21036490AAAAFN9521