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Fineotex Chemical Ltd.

BSE: 533333 Sector: Industrials
NSE: FCL ISIN Code: INE045J01026
BSE 00:00 | 24 Apr 2020 Fineotex Chemical Ltd
NSE 05:30 | 01 Jan 1970 Fineotex Chemical Ltd

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OPEN 21.80
PREVIOUS CLOSE 21.98
VOLUME 9690
52-Week high 42.00
52-Week low 12.35
P/E 10.30
Mkt Cap.(Rs cr) 236
Buy Price 21.00
Buy Qty 20.00
Sell Price 23.20
Sell Qty 500.00
OPEN 21.80
CLOSE 21.98
VOLUME 9690
52-Week high 42.00
52-Week low 12.35
P/E 10.30
Mkt Cap.(Rs cr) 236
Buy Price 21.00
Buy Qty 20.00
Sell Price 23.20
Sell Qty 500.00

Fineotex Chemical Ltd. (FCL) - Auditors Report


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Company auditors report

To the Members of Fineotex Chemical Limited

Report on the Audit of Standalone Financial Statements

Opinion

We have audited the accompanying standalone financial statements of Fineotex ChemicalLimited (‘the Company’) which comprise the standalone Balance Sheet as at 31stMarch 2019 the standalone statement of Profit and Loss (including Other ComprehensiveIncome) Statement of Changes in Equity and standalone statement of cash flows for theyear then ended and notes to standalone financial statements including a summary of thesignificant accounting 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("the Act") in the manner so required and give a trueand fair view in conformity with the Accounting Standards prescribed under section 133 onthe Act read with the Companies (Indian Accounting Standards) Rules 2015 as amended("Ind AS") and other accounting principles generally accepted in India of thestate of affairs of the Company as at 31st March 2019 and its profit othercomprehensive income the changes in equity and its cash flows for the year ended on thatdate.

Basis for Opinion

We conducted our audit of the standalone financial statements in accordance with theStandards on Auditing (SA’s) specified under section 143(10) of the Act. Ourresponsibilities under those SA’s are further described in the Auditor’sResponsibility for the Audit of the Standalone Financial Statements 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 (ICAI) together with the ethical requirementsthat are relevant to our audit of the standalone financial statements under the provisionsof the Act and the Rules made thereunder and we have fulfilled our other ethicalresponsibilities in accordance with these requirements and the ICAI’s Code of Ethics.We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our opinion on the standalone financial statements.

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 the matters described below to bethe key audit matters to be communicated in our report.

Key Audit Matter How the matter was addressed in our audit
Revenue Recognition Our audit procedures included :
Revenue from sale of goods is recognized when control of the products being sold is transferred to the customer and when there are no longer any unqualified obligations. The performance obligations in the contracts are fulfilled at the time of dispatch delivery or upon formal customer acceptance depending on customer terms. Revenue if one of the key profit drivers and is therefore susceptible to misstatement. • We assessed the appropriateness of the revenue recognition accounting policies including those relating to rebates and discounts by comparing with applicable accounting standards
• We performed substantive testing by selecting samples of revenue transactions recorded during the year by verifying the underlying documents which included goods dispatch notes and shipping documents
Cut-off is the key assertion in so far as revenue recognition is concerned since an inappropriate cut-off can result in material misstatement of results for the year. • We performed cut-off testing for samples of revenue transactions recorded before and after the financial year end date by comparing with relevant underlying documentation which included goods dispatch notes and shipping documents to assess whether the revenue was recognized in the correct period.
Revenue is measured at fair value of the consideration received or receivable after the deduction of any trade discounts volume rebates and any taxes or duties collected on behalf of the government such as goods and services tax etc. Accumulated experience is used to estimate the provisions for discounts and rebates. Revenue is only recognized to the extent that it is highly probable a significant reversal will not occur • We tested the design implementation and operating effectiveness of controls over the calculations of discounts and rebates
• We assessed manual journals posted to revenue to identify unusual items.
Provision for taxation and other significant provisions Our audit procedures included :
• We tested the effectiveness of controls around the recognition of provisions
Accrual for tax and other contingencies requires the management to make judgements and estimates in relation to the issues and exposures arising from a range of matters relating to direct tax indirect tax transfer pricing arrangements claims and other eventualities arising in the regular course of business
• We used our subject matter experts to assess the value of material provisions in light of the nature of the exposures applicable regulations and related correspondence with the authorities.
The key judgements lies in the estimations of the provisions where they may differ from the future obligations. By nature provision is difficult to estimate and includes many variables. • We challenged the assumptions and critical) udgements made by the management which impact their estimate of the provisions required considering judgments previously made by the authorities in the relevant jurisdictions or any relevant opinions given by the Company’s advisors and assessing whether there was an indication of management bias.
• We discussed the status in respect of significant provisions with the Company’s internal tax team and consultant as well.
• We performed retrospective review of management judgements relating to accounting estimate included in the financial statement of prior year and compared with the outcome.

Information Other than the Financial Statements and Auditor’s Report Thereon

The Company’s management and Board of Directors are responsible for the otherinformation. The other information comprises the information included in theCompany’s annual report but does not include the standalone financial statements andour auditor’s report thereon.

Our opinion on the standalone financial statements does not cover the other informationand we do not and will 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 during the course of our audit or otherwise appears to be materially misstated.If based on the work we have performed we conclude that there is a material misstatementof this other information we are required to report that fact. We have nothing to reportin this regard.

Management’s Responsibility for the Standalone Financial Statements

The Company’s management and Board of Directors are responsible for the mattersstated in Section 134(5) of the Companies Act 2013 ("the Act") with respect tothe preparation and presentation of these standalone financial statements that give a trueand fair view of the financial position financial performance including othercomprehensive income cash flows and changes in equity of the Company in accordance withIndian Accounting Standards (Ind AS) prescribed under Section 133 of the Act read withCompanies (Indian Accounting Standards) Rules 2015 as amended and other accountingprinciples generally accepted in India. This responsibility also includes maintenance ofadequate accounting records in accordance with the provisions of the Act for safeguardingthe assets of the Company and for preventing and detecting frauds and otherirregularities; selection and application of appropriate accounting policies; makingjudgments and estimates that are reasonable and prudent; and design implementation andmaintenance of adequate internal financial controls that were operating effectively forensuring the accuracy and completeness of the accounting records relevant to thepreparation and presentation of the standalone financial statements that give a true andfair view and are free from material misstatement whether due to fraud or error.

In preparing the standalone financial statements management and Board of Directors areresponsible 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.

Board of Directors is also responsible for overseeing the Company’s financialreporting process.

Auditor’s Responsibility for 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. Reasonableassurance is a high level of assurance but is not a guarantee that an audit conducted inaccordance with SAs will always detect a material misstatement when it exists.Misstatements can arise from fraud or error and are considered material if individuallyor in the aggregate they could reasonably be expected to influence the economic decisionsof users taken on the basis of these 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 with reference to financial statements in place andthe operating effectiveness of such controls

• Evaluate the appropriateness of accounting policies used and the reasonablenessof accounting estimates and related disclosures made by management.

• Conclude on the appropriateness of management’s use of the going concernbasis 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 conditionsmay cause the Company to cease to continue 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.

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 aboutthe matter or when in extremely rare circumstances we determine that a matter should notbe communicated in our report because the adverse consequences of doing so wouldreasonably be expected to outweigh the public interest benefits of such communication.

Report on Other Legal and Regulatory Requirements

1. As required by Section 197(16) of the Act we report that the Company has paidremuneration to its directors during the year in accordance with the provisions of andlimits laid down under Section 197 read with Schedule V to the Act.

2. As required by the Companies (Auditor’s Report) Order 2016 ("theOrder") issued by the Central Government of India in terms of sub-section (11) ofsection 143 of the Act we give in the "Annexure A" a statement on the mattersspecified in the paragraph 3 and 4 of the order.

3. 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 (including other comprehensive income) standalone statement of changesin equity and standalone statement of cash flow dealt with by this Report are in agreementwith the books of account;

(d) In our opinion the aforesaid standalone financial statements comply with theIndian Accounting Standards prescribed under Section 133 of the Act

(e) On the basis of the written representations received from the directors as on 31stMarch 2019 taken on record by the Board of Directors none of the directors isdisqualified as on 31st March 2019 from being appointed as a director in terms of Section164 (2) of the 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"; and

(g) With respect to the other matters to be included in the Auditor’s Report inaccordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014 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 (if any) as at 31stMarch 2019 on its financial position in its standalone financial statements - Refer Note36 to the 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 has been no delay in transferring amounts required to be transferred to theInvestor Education and Protection Fund.

For UKG & Associates
Chartered Accountants
Firm Regn No : 123393W
Champak K. Dedhia
Place: Mumbai Partner
Date: 14th May 2019 Membership No: 101769

ANNEXURE - A TO THE INDEPENDENT AUDITORS’ REPORT

The Annexure referred to in Independent Auditors’ Report to the members of theCompany on the standalone financial statements for the year ended 31st March 2019 wereport that:

(i) (a) The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets

(b) The Company has a regular programme of physical verification of its fixed assets bywhich fixed assets are verified in a phased manner over a period of three years. In ouropinion this periodicity of physical verification is reasonable having regard to the sizeof the Company and the nature of its assets.

(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 areheld in the name of the Company.

(ii) The inventory except goods-in-transit has been physically verified by themanagement during the year. In our opinion the frequency of such verification isreasonable. In respect of inventory lying with the third parties these have substantiallybeen confirmed by them. The discrepancies noticed on verification between the physicalstocks and the books records were not material.

(iii) According to 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 theAct. Accordingly paragraph 3 (iii) of the Order is not applicable to the Company.

(iv) The Company has not granted any loans or provided any guarantees or security tothe parties covered under section 185 of the Act. The Company has complied with theprovisions of section 186 of the Act in respect of investments made or loans or guaranteeor security provided to the parties covered under section 186.

(v) In our opinion and according to the information and explanations given to us theCompany has not accepted any deposits from the public within the meaning of the directivesissued by the Reserve Bank of India provisions of section 73 to 76 of the Act any otherrelevant provisions of the Act and the relevant rules framed thereunder.

(vi) We have broadly reviewed the records maintained by the company pursuant to therules prescribed by Central Government for maintenance of cost records under section148(1) of the Act and are of the opinion that prima facie the prescribed accounts andrecords have been made and maintained. However we have not made a detailed examination ofthe records.

(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 employees stateinsurance income-tax sales tax value added tax duty of customs duty of exciseservice tax cess and other material statutory dues have been regularly deposited duringthe year by the Company with the appropriate authorities.

According to the information and explanations given to us no undisputed amountspayable in respect of provident fund employees state insurance income tax goods andservice tax duty of customs cess professional tax and other material statutory dueswere in arrears as at 31 March 2019 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 materialdues of income tax sales tax value added tax service tax goods and service tax dutyof customs duty of excise which have not been deposited with the appropriate authoritieson account of any dispute.

(viii) According to the information and explanations given to us the Company has nottaken any loans or borrowings from any financial institution bank or Government nor hasit issued any debentures. Accordingly paragraph 3 (viii) of the Order is not applicableto the Company.

(ix) The Company has not raised any moneys by way of initial public offer furtherpublic offer (including debt instruments) or term loans during the year. Accordinglyparagraph 3 (ix) of the Order is not applicable to the Company.

(x) According to the information and explanations given to us no material fraud by theCompany or on the Company by its officers or employees has been noticed or reported duringthe course of our audit.

(xi) According to the information and explanations give 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.

(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 by theapplicable Indian Accounting Standards.

(xiv) According to the information and explanations give 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 non-cashtransactions with directors or persons connected with him. Accordingly paragraph 3(xv) ofthe Order is not applicable.

(xvi) The Company is not required to be registered under section 45-IA of the ReserveBank of India Act 1934. Accordingly paragraph 3(xvi) of the Order is not applicable tothe Company.

For UKG & Associates
Chartered Accountants
Firm Regn No : 123393W
Champak K. Dedhia
Place: Mumbai Partner
Date: 14th May 2019 Membership No: 101769

ANNEXURE - B TO THE AUDITORS’ REPORT

Report on the Internal Financial Controls under Clause (i) of Subsection 3 of Section143 of the Companies Act 2013 ("the Act")

Opinion

We have audited the internal financial controls over financial reporting of FineotexChemical Limited ("the Company") as of 31st March 2019 in conjunction with ouraudit of the standalone financial statements of the Company for the year ended on thatdate.

In our opinion the Company has in all material respects an adequate internalfinancial controls system over financial reporting and such internal financial controlsover financial reporting were operating effectively as at 31st March 2019 based on theinternal control over financial reporting criteria established by the Company consideringthe essential components of internal control stated in the Guidance Note on Audit ofInternal Financial Controls Over Financial Reporting issued by the Institute of CharteredAccountants of India.

Management’s Responsibility for Internal Financial Controls

The Company’s management and the Board of Director are responsible forestablishing and maintaining internal financial controls based on the internal financialcontrols with reference to financial statements 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 (‘ICAI’). These responsibilities include thedesign implementation and maintenance of adequate internal financial controls that wereoperating effectively for ensuring the orderly and efficient conduct of its businessincluding adherence to company’s policies the safeguarding of its assets theprevention and detection of frauds and errors the accuracy and completeness of theaccounting records and the timely preparation of reliable financial information asrequired under the Companies Act 2013.

Auditors’ Responsibility

Our responsibility is to express an opinion on the Company’s internal financialcontrols over financial reporting based on our audit. We have conducted our audit inaccordance with the Guidance Note on Audit of Internal Financial Controls over FinancialReporting (the "Guidance Note") and the Standards on Auditing issued by ICAIand deemed to be prescribed under section 143(10) of the Companies Act 2013 to theextent applicable to an audit of internal financial controls both applicable to an auditof Internal Financial Controls and both issued by the Institute of Chartered Accountantsof India. 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 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 controlssystem over financial reporting.

Meaning of Internal Financial Controls with reference to Financial Statements

A company’s internal financial controls with reference to financial statements isa process 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 financialcontrols with reference to financial statements include 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) providereasonable assurance that transactions are recorded as necessary to permit preparation offinancial statements in accordance with generally accepted accounting principles and thatreceipts and expenditures of the company are being made only in accordance withauthorisations of management and directors of the company; and (3) provide reasonableassurance regarding prevention or timely detection of unauthorised acquisition use ordisposition of the company’s assets that could have a material effect on thefinancial 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.

For UKG & Associates
Chartered Accountants
Firm Regn No : 123393W
Champak K. Dedhia
Place: Mumbai Partner
Date: 14th May 2019 Membership No: 101769


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