To the Members of Chembond Chemicals Limited
Report on the Audit of the Standalone Financial Statements:
We have audited the standalone financial statements of Chembond Chemicals Limited("the Company") which comprise the standalone balance sheet as at 31stMarch 2019 the standalone statement of Profit and Loss the standalone statement ofchanges in equity and the standalone statement of cash flows for the year then ended andnotes to the standalone financial statements including a summary of significantaccounting policies and other explanatory information.
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 andfair view in conformity with the accounting principles generally accepted in India:
a) In the case of the standalone Balance Sheet of the state of affairs of the Companyas at March 31 2019
b) In the case of the standalone Statement of Profit and Loss of the totalcomprehensive loss of the Company for the year ended on that date;
c) In the case of the standalone Statement of Cash Flow of the cash flows of theCompany for the year ended on that date;
d) In the case of the standalone Statement of Changes in Equity of the changes inequity of the Company 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 Standards are furtherdescribed in the Auditor's Responsibilities for the Audit of the Standalone FinancialStatements section of our report.
We are independent of the Company in accordance with the Code of Ethics issued by theInstitute of Chartered Accountants of India together with the ethical requirements thatare relevant to our audit of the standalone financial statements under the provisions ofthe Act and the Rules thereunder and we have fulfilled our other ethical responsibilitiesin accordance with these requirements and the Code of Ethics.
We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our opinion.
Key Audit Matters
Key audit matters are those matters that in our professional judgment were of mostsignificance in our audit of the standalone financial statements of the current period.These matters were addressed in the context of our audit of the standalone financialstatements as a whole and in forming our opinion thereon and we do not provide aseparate opinion on these matters.
We have determined that there are no key audit matters to be communicated in ourreport.
Information Other than the Standalone Financial Statements and Auditor's Report Thereon
The Company's Board of Directors is responsible for the other information. The otherinformation comprises the information included in the Management Discussion and AnalysisBoard's Report including Annexures to Board's Report Corporate Governance andShareholders Information but does not include the standalone financial statements and ourauditor's report thereon.
Our opinion on the standalone financial statements does not cover the other informationand we do not express any form of assurance conclusion thereon.
In connection with our audit of the standalone financial statements our responsibilityis to read the other information and in doing so consider whether the other informationis materially inconsistent with the standalone financial statements or our knowledgeobtained in the audit or otherwise appears to be materially misstated. If based on thework we have performed we conclude that there is a material misstatement of this otherinformation we are required to report that fact. We have nothing to report in thisregard.
Responsibilities of management and Those Charged with Governance for the StandaloneFinancial Statements
The Company's Board of Directors are responsible for the matters stated in section134(5) of the Act with respect to the preparation of these standalone financial statementsthat give a true and fair view of the financial position financial performance totalcomprehensive income changes in equity and cash flows of the Company in accordance withthe accounting principles generally accepted in India including the accounting Standardsspecified 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 ofthe standalone financial statements that give a true and fair view and are free frommaterial misstatement whether due to fraud or error.
In preparing the standalone financial statements management is responsible forassessing the Company's ability to continue as a going concern disclosing as applicablematters related to going concern and using the going concern basis of accounting unlessmanagement either intends to liquidate the Company or to cease operations or has norealistic alternative but to do so. The Board of Directors are also responsible foroverseeing the Company's financial reporting process.
Auditor's Responsibilities for the Audit of the Standalone Financial Statements:
Our objectives are to obtain reasonable assurance about whether the standalonefinancial statements as a whole are free from material misstatement whether due to fraudor error and to issue an auditor's report that includes our opinion. Reasonable assuranceis a high level of assurance but is not a guarantee that an audit conducted in accordancewith SAs will always detect a material misstatement when it exists. Misstatements canarise from fraud or error and are considered material if individually or in theaggregate they could reasonably be expected to influence the economic decisions of userstaken on the basis of these standalone financial statements. ]
As part of an audit in accordance with SAs we exercise professional judgment andmaintain professional skepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of the standalonefinancial statements whether due to fraud or error design and perform audit proceduresresponsive to those risks and obtain audit evidence that is sufficient and appropriate toprovide a basis for our opinion. The risk of not detecting a material misstatementresulting from fraud is higher than for one resulting from error as fraud may involvecollusion forgery intentional omissions misrepresentations or the override of internalcontrol.
Obtain an understanding of internal control relevant to the audit in order todesign audit procedures that are appropriate in the circumstances. Under section 143(3)(i)of the Act we are also responsible for expressing our opinion on whether the Company hasadequate internal financial controls system in place and the operating effectiveness ofsuch controls.
Evaluate the appropriateness of accounting policies used and the reasonablenessof accounting estimates and related disclosures made by management.
Conclude on the appropriateness of management's use of the going concern basisof accounting and based on the audit evidence obtained whether a material uncertaintyexists related to events or conditions that may cast significant doubt on the Company'sability to continue as a going concern. If we conclude that a material uncertainty existswe are required to draw attention in our auditor's report to the related disclosures inthe standalone financial statements or if such disclosures are inadequate to modify ouropinion. Our conclusions are based on the audit evidence obtained up to the date of ourauditor's report. However future events or conditions may cause the Company to cease tocontinue as a going concern.
Evaluate the overall presentation structure and content of the standalonefinancial statements including the disclosures and whether the standalone financialstatements represent the underlying transactions and events in a manner that achieves fairpresentation.
Materiality is the magnitude of misstatements in the standalone financial statementsthat individually or in aggregate makes it probable that the economic decisions of areasonably knowledgeable user of the standalone financial statements may be influenced. Weconsider quantitative materiality and qualitative factors in (i) planning the scope of ouraudit work and in evaluating the results of our work; and (ii) to evaluate the effect ofany identified misstatements in the standalone financial statements.
We communicate with those charged with governance regarding among other matters theplanned scope and timing of the audit and significant audit findings including anysignificant deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have compliedwith relevant ethical requirements regarding independence and to communicate with themall relationships and other matters that may reasonably be thought to bear on ourindependence and where applicable related safeguards.
From the matters communicated with those charged with governance we determine thosematters that were of most significance in the audit of the standalone financial statementsof the current period and are therefore the key audit matters. We describe these mattersin our auditor's report unless law or regulation precludes public disclosure about thematter or when in extremely rare circumstances we determine that a matter should not becommunicated in our report because the adverse consequences of doing so would reasonablybe expected to outweigh the public interest benefits of such communication.
Report on Other Legal and Regulatory Requirements
1. As required by Companies (Auditor's Report) Order 2016 ("the Order")issued by the Central Government of India in terms of subsection (11) of section 143 ofthe Act we give in the Annexure A a statement on the matters specified in the paragraph3 and 4 of the Order to the extent applicable.
2. As required by Section 143 (3) of the Act we report that:
a. We have sought and obtained all the information and explanations which to the bestof our knowledge and belief were necessary for the purposes of our audit;
b. In our opinion proper books of account as required by law relating to preparation ofthe standalone financial statements have been kept by the Company so far as it appearsfrom 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 cash flow statement dealt with by this Report are in agreement with the booksof account maintained for the purpose of preparation of these standalone financialstatements;
d. In our opinion the aforesaid standalone financial statements comply with the IndianAccounting Standards specified under Section 133 of the Act read with Rule 7 of theCompanies (Accounts) Rules 2014.
e. On the basis of the written representations received from the directors as on March31 2019 taken on record by the Board of Directors none of the directors is disqualifiedas on March 31 2019 from being appointed as a director in terms of Section 164 (2) ofthe Act;
f. With respect to the adequacy of the internal financial controls over financialreporting of the Company and the operating effectiveness of such controls refer to ourseparate report in "Annexure B";
3. 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 on its financialposition in its standalone financial statements - Refer Note no. 45 to the standalonefinancial statements;
ii. the Company does not have any long-term contracts including derivative contractsfor which there were any material foreseeable losses.
iii. there has been no delay in transferring amounts required to be transferred tothe Investor Education and Protection Fund by the Company.
4. With respect to the matter to be included in the Auditors' Report under section197(16):
In our opinion and according to the information and explanations given to us theCompany has paid and / or provided remuneration to its directors during the year ended 31stMarch 2019 in accordance with the provisions of Section 197 of the Act.
For Bathiya & Associates LLP
Firm Registration No. 101046W / W100063
Jatin A. Thakkar
Membership No.: 134767
Place : Mumbai
Date : 18th May 2019
ANNEXURE - A TO THE INDEPENDENT AUDITORS' REPORT
(Referred to in paragraph 1 under Report on Other Legal and RegulatoryRequirements' section of our report of even date for the year
ended March 31 2019)
Report on Companies (Auditor's Report) Order 2016 ("the Order") issued bythe Central Government of India in terms of
Section 143(11) of the Companies Act 2013 ("the Act") of the Company.
(i) In respect of Fixed Assets:
(a) The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets.
(b) As per the information and explanations given to us some of the fixed assets ofthe Company have been physically verified during the year by the management in accordancewith a phased program of verification designed to cover all assets over a period of threeyears which in our opinion is reasonable having regard to the size of the Company andthe nature of its assets. No material discrepancies were noticed on physical verification.
(c) According to the information and explanations given to us and on the basis of ourexamination of the conveyance deeds / registered sale deed provided to us we report thatthe title deeds comprising all the immovable properties of land and buildings which arefreehold are held in the name of the Company as at the balance sheet date. In respect ofimmovable properties of land and building that have been taken on lease and disclosed asfixed assets in the standalone financial statements the lease agreements are in the nameof the Company.
(ii) In respect of its Inventories:
As per the information and explanations given to us the inventories have beenphysically verified during the year by the management. The intervals at which theinventories have been verified are in our opinion reasonable in relation to the size ofthe Company and the nature of its business. The Company is maintaining proper records ofinventory and no material discrepancies were noticed on physical verification.
(iii) The Company has not granted any loans secured or unsecured to companies firmsLimited Liability Partnerships or other parties covered in the register maintained undersection 189 of the Act. Accordingly clause (iii) (a) (b) and (c) of the Order are notapplicable to the Company.
(iv) In our opinion and according to the information and explanations given to us theCompany has complied with the provisions of Section 185 and 186 of the Act in respect ofloans investments guarantees and security given for the year under report.
(v) In our opinion and according to the information and explanations given to us theCompany has not accepted any deposits from the public during the year under sections 73 to76 or any other relevant provisions of the Act and the rules framed thereunder. Thereforeclause (v) of the Order is not applicable to the Company.
(vi) On the basis of explanation and representation given by the management and on ourbroad review of the cost records maintained by the Company pursuant to the Companies (costrecords and audit) Rules 2014 prescribed by the Central Government under Section 148(1)of the Act we are of the opinion that prima facie the prescribed cost records have beenmade and maintained. We have however not made a detailed examination of the cost recordswith a view to determine whether they are accurate or complete.
(vii) In respect of statutory dues:
(a) As per information and explanations given to us undisputed statutory duesincluding provident fund employees' state insurance income tax profession tax Goodsand Service Tax custom duty cess and other statutory dues applicable to the Company havegenerally been regularly deposited with the appropriate authorities though there has beendelays in deposit in a few cases which are not serious. Further there are no undisputedamounts payable in respect of above mentioned statutory dues which were in arrears as at31st March 2019 for a period of more than six months from the date they becamepayable.
(b) According to the information and explanation given to us there are no dues ofincome tax sales tax service tax Goods and Service Tax custom duty excise duty andcess which have not been deposited on account of any dispute except in the case of thefollowing disputes which are pending:
|Name of statute ||Nature of the Dues ||Amount (र in lakhs) ||Period to which the amount relates ||Forum where dispute is pending |
|Income Tax Act 1961 ||Income Tax ||7.34 ||FY 2012-13 ||Commissioner of Income Tax(Appeals) |
|Income Tax Act 1961 ||Income Tax ||15.49 ||FY 2011-12 ||Commissioner of Income Tax(Appeals) |
|Central Excise Act 1944 ||Excise ||13.02 (0.98 paid) ||June 2012 to February 2015 ||Commissioner of Central Excise(Appeals) Vadodara |
|Central Excise Act 1944 ||Excise ||1.88 |
|June 2012 to February 2014 ||Commissioner of Central Excise(Appeals) Vadodara |
|The Gujarat Value Added Tax Act 2003 ||Sales Tax ||0.24 ||FY 2013-14 ||The Deputy Commissioner ofState Tax Range-12 Vadodara |
|TOTAL || ||37.97 || || |
(viii) In our opinion and according to the information and explanations given to us andon the basis of our examination of the books of accounts and the records of the Companythe Company has not defaulted in repayments of dues to the banks. The Company has nottaken any loan or borrowings either from financial institutions or from the government andhas not issued any debentures.
(ix) On the basis of records of the Company examined by us and according to theinformation and explanations given to us the Company has not raised money by way ofinitial public offer or further public offer (including debt instruments) or term loanduring the year. Therefore the clause (ix) of the aforesaid Order is not applicable tothe Company.
(x) During the course of our examination of the books and records of the Companycarried out in accordance with the generally accepted auditing practices in India andaccording to the information and explanations given to us we have neither come across anyinstances of fraud by the Company or any fraud on the Company by its officers or employeesnoticed or reported during the year nor we have been informed of such case by themanagement.
(xi) On the basis of records of the Company examined by us and according to theinformation and explanations given to us the managerial remuneration has been paid and/orprovided in accordance with the requisite approvals mandated by the provisions of Section197 read with Schedule V to the Act.
(xii) The Company is not a Nidhi company hence the clause (xii) of the aforesaid Orderis not applicable to the Company.
(xiii) On the basis of records of the Company examined by us and according to theinformation and explanations given to us the Company has entered into all transactionswith related parties in compliance with Section 177 and Section 188 of the Act whereapplicable and the same is disclosed in the standalone financial statements as required bythe applicable accounting standards.
(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 preferentialallotments or private placement of shares or fully or partly convertible debentures duringthe year under review. Therefore clause (xiv) of the aforesaid Order is not applicable tothe Company.
(xv) On the basis of records of the Company examined by us and according to theinformation and explanations given to us we are of the opinion that the Company has notentered into any non-cash transactions with directors or persons connected with directors.Therefore clause (xv) of the aforesaid Order is not applicable to the Company.
(xvi) The Company is not required to be registered under Section 45-IA of the ReserveBank of India Act 1934 hence clause (xvi) of the aforesaid Order is not applicable tothe Company.
For Bathiya & Associates LLP
Firm's registration number: 101046W/W100063
Jatin A. Thakkar
Membership Number: 134767
Date: 18th May 2019
Annexure - B to the Independent Auditors' Report
(Referred to in paragraph 2(f) under Report on Other Legal and RegulatoryRequirements' section of our report of even date for the year ended March 31 2019)
Report on the Internal Financial Controls over Financial Reporting under Clause (i) ofSub-section 3 of Section 143 of the Companies Act 2013 ("the Act")
We have audited the internal financial controls over financial reporting of ChembondChemicals Limited ("the Company") as of March 31 2019 in conjunction with ouraudit of the standalone financial statements of the Company for the year ended on thatdate.
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 (the Guidance Note').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 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.
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 and the Standards on Auditing deemed to be prescribed undersection 143(10) of the Act to the extent applicable to an audit of internal financialcontrols. Those Standards and the Guidance Note require that we comply with ethicalrequirements and plan and perform the audit to obtain reasonable assurance about whetheradequate internal financial controls over financial reporting was established andmaintained and if such controls operated effectively in all material 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 auditors' judgment including the assessment of the risks ofmaterial misstatement of the standalone financial statements whether due to fraud orerror.
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 standalone financial statements for external purposes in accordance withgenerally accepted accounting principles. A Company's internal financial control overfinancial reporting includes those policies and procedures that:
(1) Pertain to the maintenance of records that in reasonable detail accurately andfairly reflect the transactions and dispositions of the assets of the Company;
(2) Provide reasonable assurance that transactions are recorded as necessary to permitpreparation of standalone financial statements in accordance with generally acceptedaccounting principles and that receipts and expenditures of the Company are being madeonly in accordance with authorisations of Management and directors of the Company; and
(3) Provide reasonable assurance regarding prevention or timely detection ofunauthorised acquisition use or disposition of the Company's assets that could have amaterial effect on the standalone 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 to the best of our information and according to the explanations givento us the Company has in all material respects an adequate internal financial controlssystem over financial reporting and such internal financial controls over financialreporting were operating effectively as at March 31 2019 based on the internal controlover financial reporting criteria established by the Company considering the essentialcomponents of internal control stated in the Guidance Note.
For Bathiya & Associates LLP
Firm Registration No. 101046W / W100063
Jatin A. Thakkar
Membership No.: 134767
Place : Mumbai
Date : 18th May 2019