To the Members of Goa Carbon Limited
Report on the Audit of the Financial Statements Opinion
We have audited the financial statements of Goa Carbon Limited (theCompany) which comprise the balance sheet as at 31st March 2019 and thestatement of profit and loss (including other comprehensive income) statement of changesin equity and statement of cash flows for the year then ended and notes to the financialstatements including a summary of the significant accounting policies and otherexplanatory information.
In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid financial statements give the information required by theCompanies Act 2013 (Act) in the manner so required and give a true and fairview in conformity with the accounting principles generally accepted in India of thestate of affairs of the Company as at 31st March 2019 and loss and othercomprehensive income changes in equity and its cash flows for the year ended on thatdate.
Basis for Opinion
We conducted our audit in accordance with the Standards on Auditing (SAs) specifiedunder Section 143(10) of the Act. Our responsibilities under those SAs are furtherdescribed in the Auditor's Responsibilities for the Audit of the Financial Statementssection of our report. We are independent of the Company in accordance with the Code ofEthics issued by the Institute of Chartered Accountants of India together with the ethicalrequirements that are relevant to our audit of the financial statements under theprovisions of the Act and the Rules thereunder and we have fulfilled our other ethicalresponsibilities in accordance with these requirements and the Code of Ethics. We believethat the audit evidence we have obtained is sufficient and appropriate to provide a basisfor our opinion.
Key Audit Matters
Key audit matters are those matters that in our professional judgment were of mostsignificance in our audit of the financial statements of the current period. These matterswere addressed in the context of our audit of the financial statements as a whole and informing our opinion thereon and we do not provide a separate opinion on these matters.
Description of Key Audit Matter
|The key audit matter ||How the matter was addressed in our audit |
|Carrying value of inventories ||In view of the significance of the matter we applied the following audit procedures in this area among others to obtain sufficient appropriate audit evidence: |
|As at 31st March 2019 inventory of finished goods of Rs. 7382 lacs is held across multiple locations. The write down of inventories to net realisable value during the year amounts to ?736 lacs (refer note 10). Inventory should be recorded at the lower of cost and net realisable value being selling price less estimated selling costs. A risk exists that inventories may need to be sold at a price which is below the cost of production. ||- understood business processes surrounding man- agement's review for the valuation of the inventory; |
|As gross margins on sale of Calcinated Petroleum Coke (CPC) can be low and inventory can sometimes be sold at a loss provisions are recorded against inventory to write it down to management's best estimate of its recoverable amount. ||- tested the design implementation and operating effectiveness of controls around inventory provisioning; |
|Recoverable amount estimated by management is subject to various key assumptions such as the length of time required to sell inventories the price level at which inventory will be sold in future and whether inventories will need to be valued below their cost price. ||- selected a sample of inventory items and agreed key input in relation to expected sales price of the inventory to supporting documentation; and |
| ||- performed a retrospective review of prior year provision for indications that current year provision may be materially misstated. |
|Revenue Recognition || |
|The Company's revenue is derived from the sale of Calcinated petroleum coke (CPC). The Company recognises revenue when the control is transferred to the customer. ||Our audit procedures to assess the recognition of revenue included the following: |
|The terms set out in the Company's sales contracts relating to goods acceptance by customers are varied. ||- evaluating the design implementation and op erating effectiveness of key internal controls over the existence accuracy and timing of revenue recognition; |
|Accordingly the terms and conditions of sales contracts may affect the timing of recognition of sales to customers as each sales contract could have different terms relating to customer acceptance of the goods sold. ||- performed substantive test of details over reve- nue recognised through- out the period by select- ing a sample of transac- tions to ensure that the samples selected meet the revenue recognition criteria and are appropri- ately recorded; |
|We identified the recognition of revenue as a key audit matter because revenue is one of the key performance indicators of the Company and is therefore subject to an inherent risk of misstatement to meet targets or expectations and because errors in the recognition of revenue could have a material impact on the Company. ||- tested sample transac- tions around the period end to ensure they were recorded in the correct period; and |
| ||- tested journal entries posted to revenue ac- counts focusing on unu- sual or irregular items if any. |
The Company's management and Board of Directors are responsible for the otherinformation. The other information comprises the information included in the Company'sannual report but does not include the financial statements and our auditors' reportthereon.
Our opinion on the financial statements does not cover the other information and we donot express any form of assurance conclusion thereon.
In connection with our audit of the financial statements our responsibility is to readthe other information and in doing so consider whether the other information ismaterially inconsistent with the financial statements or our knowledge obtained in theaudit or otherwise appears to be materially misstated. If based on the work we haveperformed we conclude that there is a material misstatement of this other information weare required to report that fact. We have nothing to report in this regard.
Management's Responsibility for the Financial Statements
The Company's management and Board of Directors are responsible for the matters statedin Section 134(5) of the Act with respect to the preparation of these financial statementsthat give a true and fair view of the state of affairs profit/loss and othercomprehensive income changes in equity and cash flows of the Company in accordance withthe accounting principles generally accepted in India including the Indian AccountingStandards (Ind AS) specified under Section 133 of the Act. This responsibility alsoincludes maintenance of adequate accounting records in accordance with the provisions ofthe Act for safeguarding of the assets of the Company and for preventing and detectingfrauds and other irregularities; selection and application of appropriate accountingpolicies; making judgments and estimates that are reasonable and prudent; and designimplementation and maintenance of adequate internal financial controls that were operatingeffectively for ensuring the accuracy and completeness of the accounting records relevantto the preparation and presentation of the financial statements that give a true and fairview and are free from material misstatement whether due to fraud or error.
In preparing the 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 financial reportingprocess.
Auditor's Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financialstatements as a whole are free from material misstatement whether due to fraud or errorand to issue an auditor's report that includes our opinion. Reasonable assurance is a highlevel of assurance but is not a guarantee that an audit conducted in accordance with SAswill always detect a material misstatement when it exists. Misstatements can arise fromfraud or error and are considered material if individually or in the aggregate theycould reasonably be expected to influence the economic decisions of users taken on thebasis of these 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 financial statementswhether due to fraud or error design and perform audit procedures responsive to thoserisks and obtain audit evidence that is sufficient and appropriate to provide a basis forour opinion. The risk of not detecting a material misstatement resulting from fraud ishigher than for one resulting from error as fraud may involve collusion forgeryintentional omissions misrepresentations or the override of internal control.
- Obtain an understanding of internal control relevant to the audit in order to designaudit procedures that are appropriate in the circumstances. Under Section 143(3)(i) of theAct we are also responsible for expressing our opinion on whether the company 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 reasonableness ofaccounting estimates and related disclosures made by management.
- Conclude on the appropriateness of management's use of the going concern basis ofaccounting and based on the audit evidence obtained whether a material 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 financial statements or if such disclosures are inadequate to modify our opinion.Our conclusions are based on the audit evidence obtained up to the date of our auditor'sreport. However future events or conditions may cause the Company to cease to continue asa going concern.
- Evaluate the overall presentation structure and content of the financial statementsincluding the disclosures and whether the financial statements represent the underlyingtransactions and events in a manner that achieves fair presentation.
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 financial statements of thecurrent period and are therefore the key audit matters. We describe these matters in ourauditors' report unless law or regulation precludes public disclosure about the matter orwhen in extremely rare circumstances we determine that a matter should not becommunicated in our report because the adverse consequences of doing so would reasonablybe expected to outweigh the public interest benefits of such communication.
Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditors' Report) Order 2016 (the Order)issued by the Central Government in terms of Section 143 (11) of the Act we give in theAnnexure A a statement on the matters specified in paragraphs 3 and 4 of theOrder 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 have been kept by theCompany so far as it appears from our examination of those books;
c) The balance sheet the statement of profit and loss (including other comprehensiveincome) the statement of changes in equity and the statement of cash flows dealt with bythis Report are in agreement with the books of account;
d) In our opinion the aforesaid financial statements comply with the Ind AS specifiedunder 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 termsof Section 164(2) of the Act; and
f) With respect to the adequacy of the internal financial controls with reference tofinancial statements of the Company and the operating effectiveness of such controlsrefer to our separate Report in Annexure B.
g) With respect to the other matters to be included in the Auditors' Report inaccordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014 in our opinionand to the best of our information and according to the explanations given to us:
i. The Company has disclosed the impact of pending litigations as at 31stMarch 2019 on its financial position in its financial statements - Refer Note 31 to thefinancial statements;
ii. The Company did not have any long-term contracts including derivative contracts forwhich 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; and
iv. The disclosures in the financial statements regarding holdings as well as dealingsin specified bank notes during the period from 8th November 2016 to 30th December2016 have not been made in these financial statements since they do not pertain to thefinancial year ended 31st March 2019.
h) 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 theremuneration paid by the company to its directors during the current year is in accordancewith the provisions of Section 197 and Schedule V of the Act. The remuneration paid to anydirector is not in excess of the limit laid down under Section 197 and Schedule V of theAct. The Ministry of Corporate Affairs has not prescribed other details under Section197(16) which are required to be commented upon by us.
For B S R & Co. LLP
Firm's Registration Number: 101248W/W-100022
Membership No. 113896
Place : Panaji
Date : 22nd April 2019
Annexure A to the Independent Auditors' Report - 31 March 2019
With reference to the Annexure referred to in paragraph 1 in Report on Other Legal andRegulatory Requirements of the Independent Auditors' Report to the members of the Companyon the Ind AS financial statements for the year ended 31 March 2019 we report 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 program of physical verification of its fixed assets bywhich its fixed assets are verified in a phased manner every year. In our opinion thisperiodicity of physical verification is reasonable having regard to the size of theCompany and the nature of its fixed assets. No material discrepancies were noticed on suchverification.
(c) Immovable properties of land and buildings whose title deeds have been pledged assecurity for facilities taken from banks are held in the name of the Company based on theconfirmations directly received by us from banks. In respect of immovable properties ofland that have been taken on lease and disclosed as fixed asset in the financialstatements and the buildings constructed on such leasehold land whose lease deeds havebeen pledged as security for facilities taken from banks the lease agreements are in thename of the Company where the Company is the lessee in the agreement based on theconfirmations directly received by us from banks.
(ii) The inventory has been physically verified by the management during the year. Inour opinion the frequency of such verification is reasonable and there were no materialdiscrepancies noted during such 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 paragraph 3(iii) of the Order is not applicable tothe Company.
(iv) In our opinion and according to the information and explanations given to us theCompany has complied with the provisions of Section 186 of the Companies Act 2013 inrespect of investment made. The Company has not granted any loans or provided anyguarantees and security to which the provisions of Section 185 of the Companies Act 2013apply.
(v) The Company has not accepted any deposits in accordance with the provisions ofSection 73 to 76 of the Act and the rules framed thereunder.
(vi) The Central Government has not prescribed the maintenance of cost records underSection 148(1) of the Act for the goods manufactured by the Company.
(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 Duty of Customs Goods and Service Tax and other materialstatutory dues have generally been regularly deposited during the year by the Company withthe appropriate authorities except in connection with certain employee related dues asmore fully described in note 31 to the financial statements and for Goa Green Cess. Asexplained to us the Company do not have dues on account of Sales Tax Service Tax ValueAdded Tax and Duty of Excise.
According to the information and explanations given to us no undisputed amountspayable in respect of Provident Fund Employees' State Insurance Income Tax Duty ofCustoms Goods and Service Tax and other material statutory dues were in arrears as at 31March 2019 for a period of more than six months from the date they became payable exceptin connection with certain employee related dues as more fully described in note 31 to thefinancial statements and Goa Green Cess. The arrears of Goa Green Cess' outstandingfor more than six months as at 31 March 2019 amounts to Rs. 316 lakhs.
(b) According to the information and explanations given to us there are no dues ofIncome Tax Sales Tax Service Tax Duty of Customs Duty of Excise Goods and Service Taxand Value Added Tax which have not been deposited by the Company with appropriateauthorities on account of any disputes except for the following:
|Name of the statute ||Nature of dues ||Amount (? lakhs) ||Amount paid under protest (' lakhs) ||Period to which the amount relates (Assessment Year) ||Forum where dispute is pending |
|Income Tax Act 1961 ||Income Tax ||901 ||901 ||1995-96 to 2003-04 ||Supreme Court of India |
|Income Tax Act 1961 ||Income Tax ||237 ||237 ||2009-10 ||Bombay High Court |
|Income Tax Act 1961 ||Income Tax ||247 ||247 ||1994-95 ||Assistant Commissioner of Income Tax |
|Income Tax Act 1961 ||Income Tax || || ||2016-17 ||Commissioner of Income Tax (Appeals) Panaji |
* The Commissioner of Income Tax (Appeals) Panaji has partially allowed the grounds ofappeal and the revised order from the Assistant Commissioner of Income Tax is awaited.
(viii) In our opinion and according to the information and explanations given to usthe Company has not defaulted in repayment of dues to the banks. The Company did not haveany loan or borrowings from financial institutions government or any debenturesoutstanding during the year.
(ix) In our opinion and according to the information and explanations given to us theCompany has not raised any money by way of initial public offer or further public offer(including debt instruments) or term loans during the year. Accordingly reporting underthis clause is not applicable to the Company.
(x) According to the information and explanations given to us no fraud by the Companyor on the Company by its officers or employees has been noticed or reported during theyear.
(xi) In our opinion and according to the information and explanations given to us themanagerial remuneration is paid or provided in accordance with the requisite approvalsmandated by the provisions of Section 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 as per the Act. Accordingly paragraph 3(xii) of the Orderis not applicable to the Company.
(xiii) In our opinion and according to the information and explanations given to usall transactions with related parties are in compliance with Section 177 and 188 of theAct and the details as required by the applicable accounting standards have beendisclosed in the Ind AS financial statements.
(xiv) According to the information and explanations given to us the Company has notmade any preferential allotment or private placement of shares or fully or partiallyconvertible debentures during the year. Accordingly reporting under this clause is notapplicable to the Company.
(xv) According to the information and explanations given to us the Company has notentered into any non-cash transactions with directors or persons connected with themduring the year. Accordingly paragraph 3(xv) of the Order is not applicable to theCompany.
(xvi) In our opinion and according to the information and explanations given to us theCompany is not required to register under Section 45-IA of the Reserve Bank of India Act1934.
For B S R & Co. LLP
Firm Registration No: 101248W/ W-100022
| ||Swapnil Dakshindas |
|Date : 22 April 2019 ||Partner |
|Place : Panaji ||Membership No: 113896 |
Annexure B to the Independent Auditors' report on the
Financial Statements of Goa Carbon Limited for the period ended 31 March 2019
Report on the internal financial controls with reference to the aforesaid financialstatements under Clause (i) of Sub-section 3 of Section 143 of the Companies Act 2013
(Referred to in paragraph 2(f) under Report on Other Legal and RegulatoryRequirements' section of our report of even date)
We have audited the internal financial controls with reference to financial statementsof Goa Carbon Limited (the Company) as of 31 March 2019 in conjunction withour audit of the financial statements of the Company for the year ended on that date.
In our opinion the Company has in all material respects adequate internal financialcontrols with reference to financial statements and such internal financial controls wereoperating effectively as at 31 March 2019 based on the internal financial controls withreference to financial statements criteria established by the Company considering theessential components of internal control stated in the Guidance Note on Audit of InternalFinancial Controls Over Financial Reporting issued by the Institute of CharteredAccountants of India (the Guidance Note).
Management's Responsibility for Internal Financial Controls
The Company's management and the Board of Directors are responsible for establishingand maintaining internal financial controls based on the internal financial controls withreference to financial statements criteria established by the Company considering theessential components of internal control stated in the Guidance Note. Theseresponsibilities include the design implementation and maintenance of adequate internalfinancial controls that were operating effectively for ensuring the orderly and efficientconduct of its business including adherence to company's policies the safeguarding ofits assets the prevention and detection of frauds and errors the accuracy andcompleteness of the accounting records and the timely preparation of reliable financialinformation as required under the Companies Act 2013 (hereinafter referred to asthe Act).
Our responsibility is to express an opinion on the Company's internal financialcontrols with reference to financial statements based on our audit. We conducted our auditin accordance with the Guidance Note and the Standards on Auditing prescribed underSection 143(10) of the Act to the extent applicable to an audit of internal financialcontrols with reference to financial statements. Those Standards and the Guidance Noterequire that we comply with ethical requirements and plan and perform the audit to obtainreasonable assurance about whether adequate internal financial controls with reference tofinancial statements were established and maintained and whether such controls operatedeffectively in all material respects.
Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal financial controls with reference to financial statements and their operatingeffectiveness. Our audit of internal financial controls with reference to financialstatements included obtaining an understanding of such internal financial controlsassessing 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 judgement 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 withreference to financial statements.
Meaning of Internal Financial controls with Reference to Financial Statements
A company's internal financial controls with reference to financial statements 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 controlswith reference to financial statements include those policies and procedures that (1)pertain to the maintenance of records that in reasonable detail accurately and fairlyreflect 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 the financialstatements.
Inherent Limitations of Internal Financial controls with Reference to FinancialStatements
Because of the inherent limitations of internal financial controls with reference tofinancial statements 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 withreference to financial statements to future periods are subject to the risk that theinternal financial controls with reference to financial statements may become inadequatebecause of changes in conditions or that the degree of compliance with the policies orprocedures may deteriorate.
For B S R & Co. LLP
Firm Registration No: 101248W/ W-100022
| ||Swapnil Dakshindas |
|Place : Panaji ||Partner |
|Date : 22 April 2019 ||Membership No: 113896 |