Independent Auditor's Report
To the Members of Mangalam Organics Limited
Report on audit of the Financial Statements
We have audited the accompanying financial statements of Mangalam Organics Limited("the Company") which comprises the Balance Sheet as at March 31 2019 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 significant accounting policies and other explanatoryinformation.
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 ("the act") in the manner so required and give a true andfair view in conformity with the accounting principles generally accepted in India of thestate of affairs of the Company as at March 31 2019 and total comprehensive income(comprising of profit and comprehensive income) changes in equity and its cash flows forthe 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 Companies Act 2013. Our responsibilities under thoseStandards are further described in the Auditor's Responsibilities for the Audit of theFinancial Statements section of our report. We are independent of the Company inaccordance with the Code of Ethics issued by the Institute of Chartered Accountants ofIndia together with the ethical requirements that are relevant to our audit of thefinancial statements under the provisions of the Act and the Rules thereunder and we havefulfilled our other ethical responsibilities in accordance with these requirements and theCode of Ethics. We believe that the audit evidence we have obtained is sufficient andappropriate to provide a basis for our opinion.
The Company's Board of Directors is responsible for the other information. The otherinformation comprises the information included in the "Management Discussion andAnalysis" and "Director's Report" but does not include the financialstatements and our auditor's report thereon.
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.
Responsibility of Management and Those Charged with Governance for the FinancialStatements
The Company's Board of Directors is responsible for the matters stated in section134(5) of the Companies Act 2013 ("the Act") with respect to the preparation ofthese financial statements that give a true and fair view of the financial positionfinancial performance 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 ofadequate accounting records in accordance with the provisions of the Act for safeguardingof the assets of the Company and for preventing and detecting frauds and otherirregularities; selection and application of appropriate implementation and maintenance ofaccounting policies; making judgments and estimates that are reasonable and prudent; anddesign implementation and maintenance of adequate internal financial controls that wereoperating effectively for ensuring the accuracy and completeness of the accountingrecords relevant to the preparation and presentation of the financial statement that givea true and fair view and are free from material misstatement whether due to fraud orerror.
In preparing the financial statements management is responsible for assessing theCompany's ability to continue as a going concern disclosing as applicable mattersrelated to going concern and using the going concern basis of accounting unless managementeither intends to liquidate the Company or to cease operations or has no realisticalternative but to do so.
Those Board of Directors are also responsible for overseeing the company's financialreporting process
Auditor's Responsibility 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 consolidatedfinancial 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 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 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 financialstatements including the disclosures and whether the financial statements represent theunderlying transactions 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 ourauditor's 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
As required by the Companies (Auditor's Report) Order 2016 ("the Order")issued by the Central Government of India in terms of sub-section (11) of section 143 ofthe Companies Act 2013 we give in the Annexure "A" a statement on the mattersspecified in paragraphs 3 and 4 of the Order to the extent applicable.
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 Cash Flow Statement dealt with by thisReport are in agreement with the books of account.
d) In our opinion the aforesaid standalone financial statements comply with theAccounting Standards specified 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 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 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:
1. The Company has disclosed the impact of pending litigations on its financialposition in its financial statements - Refer Note 24 to the financial statements;
2. The Company did not have any long-term contracts including derivative contracts forwhich there were any material foreseeable losses.
3. There were no amounts which were required to be transferred to the InvestorEducation and Protection Fund by the Company during the year ended March 31 2019.
For NGST & Associates
Firm Regn. No 135159W
M. No. 122296
Date: 11th May 2019
ANNEXURE - A TO AUDITOR'S REPORT
(Referred to our report of even date)
The Annexure referred to in our Independent Auditors' Report to the members of theCompany on the 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) According to the information and explanation given to us all the fixed assets havebeen physically verified by the management during the year and we are informed that themanagement on such verification has noticed no material discrepancies. In our opinion thefrequency of verification is reasonable.
c) The title deeds of immovable properties are held in the name of the companyexcept that they are mortgaged to bank as per the report given by the external valuerduring the year and as per the management and we have relied upon the same.
ii) (a) The management has conducted physical verification of inventory at reasonableintervals during the year.
(b) As explained to us there is no material discrepancy noticed on physicalverification of inventory as compared to book records.
iii) (a) In our opinion and according to the information and explanation given to usthe company has not granted any secured or unsecured loans to companies firms limitedliability partnerships or other parties covered in the register maintained under section189 of the Companies Act 2013 and therefore clause iii b and iii c are not applicable.
iv) In our opinion and according to the information and explanation provided to us inrespect of loans investments guarantees and security the provisions of section 185 and186 of the Companies Act 2013 have been complied with.
v) In our opinion and according to the information and explanation given to us by themanagement the company has not accepted any deposit from the public and therefore thedirectives issued by the Reserve Bank of India and the provisions of sections 73 to 76 orany other relevant provisions of the Act and the rules framed there under are notapplicable.
vi) The Central Government has prescribed maintenance of the cost records under subsection (1) of section 148 of the Companies Act 2013 in respect to the company'sproducts. We have broadly reviewed the books of accounts & records maintained by thecompany in this connection and are of the opinion that prima facie the prescribedaccounts and records have been made & maintained. We have however not made a detailedexamination of the records with a view to determining whether they are accurate orcomplete.
vii) (a) According to the records of the Company undisputed statutory dues includingprovident fund investor education and protection fund employees state insurance incometax custom duty and goods and service tax and other material statutory dues applicable toit have generally been regularly deposited with the appropriate authorities and noundisputed amounts payable in respect of these were outstanding at the year end for aperiod of more than six months from the date they became payable.
(b) According to the information and explanation given to us there are no duesoutstanding of income-tax sales-tax service tax customs duty excise duty and cess onaccount of any dispute except as stated below:-
|Name of the statute ||Nature of dues ||Amount of demand ||Payment of demand ||Period to which the amount relate ||Forum where dispute is pending |
|The Central Excise Act 1944 ||Camphor Price difference - Excise duty ||6452240 ||1112067 (Our Cum duty calculation as per supreme court order) ||February 2004 to May 2005 ||CESTAT |
|The Central Excise Act 1944 ||Excise duty ||109199456 ||NIL ||April 1999 to August 2003 ||High Court |
|The Central Excise Act 1944 ||Excise Duty ||16888229 ||14558818 (Cum duty) ||September 2003 to November 2004 ||High Court |
|The Central Excise Act 1944 ||Excise Duty ||8144105 ||7001466 (Cum duty) ||December 2004 to September 2005 ||CESTAT |
|The Central Excise Act 1944 ||Interest ||16838001 ||16838001 ||July 1999 to January 2004 ||Commissioner of Central Excise and Customs (Appeals) for excess calculation of Interest of Rs. 9130615/- paid under protest. |
|The Central Excise Act 1944 ||Interest ||22073762 ||22074070 ||September 2003 to November 2004 ||CESTAT |
viii) According to the records of the Company examined by us and the information andexplanation given to us the Company has not defaulted in repayment of dues to financialinstitutions or banks. Further the Company has not issued any debenture.
ix) The Company did not raise any money by way of initial public offer or furtherpublic offer (including debt instruments). As per the information and explanation given tous by the management term loans were applied for the purpose for which the loans wereobtained.
x) During the course of our examination of the books and records of the company andaccording to the information and explanation given to us we have neither come across anyinstances of fraud on or by the company or any fraud on the company by its officers oremployees which has been noticed or reported during the current year nor we have beeninformed of such case by the management.
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 financial statements as required by the applicableaccounting standards.
xiv) This clause is not applicable since the Company has not made any preferentialallotment or private placement of shares or fully or partly convertible debentures duringthe year under review.
xv) The Company has not entered into non-cash transactions with directors or personsconnected with him. Accordingly paragraph 3(xv) of the 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.
For NGST & Associates
M. Ship No. 122296
Date: 11th May 2019
ANNEXURE - B TO THE AUDITORS' REPORT
Report on the Internal Financial Controls under Clause (I) of Sub-Section 143 of theCompanies Act 2013 ("The Act")
We have audited the internal financial controls over financial reporting of MangalamOrganics Limited ('the Company') as of 31 March 2019 in conjunction with our audit ofthe financial statements of the Company for the year ended on that date.
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 ('ICAI'). These responsibilitiesinclude the design implementation and maintenance of adequate internal financial controlsthat were operating effectively for ensuring the orderly and efficient conduct of itsbusiness including 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.
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 on Audit of Internal Financial Controls over Financial Reporting(the "Guidance Note") and the Standards on Auditing issued by ICAI and deemedto be prescribed under section 143(10) of the Companies Act 2013 to the extentapplicable to an audit of internal financial controls both applicable to an audit ofInternal Financial Controls and both issued by the Institute of Chartered Accountants ofIndia. 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 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 financial statements for external purposes in accordance with generallyaccepted accounting principles. A company's internal financial control over financialreporting includes those policies and procedures that:
pertain to the maintenance of records that in reasonable detail accurately andfairly reflect the transactions and dispositions of the assets of the company;
Provide reasonable assurance that transactions are recorded as necessary topermit preparation of 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
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 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 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 31 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.
For NGST & Associates
Bhupendra Gandhi Partner
M. Ship No. 122296
Date: 11th May 2019