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Vishnu Chemicals Ltd.

BSE: 516072 Sector: Industrials
NSE: VISHNU ISIN Code: INE270I01014
BSE 00:00 | 24 Apr 2020 Vishnu Chemicals Ltd
NSE 05:30 | 01 Jan 1970 Vishnu Chemicals Ltd

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OPEN 116.00
PREVIOUS CLOSE 121.00
VOLUME 42
52-Week high 162.00
52-Week low 60.90
P/E 9.92
Mkt Cap.(Rs cr) 139
Buy Price 116.05
Buy Qty 5.00
Sell Price 126.90
Sell Qty 5.00
OPEN 116.00
CLOSE 121.00
VOLUME 42
52-Week high 162.00
52-Week low 60.90
P/E 9.92
Mkt Cap.(Rs cr) 139
Buy Price 116.05
Buy Qty 5.00
Sell Price 126.90
Sell Qty 5.00

Vishnu Chemicals Ltd. (VISHNU) - Auditors Report


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Company auditors report

TO

THE MEMBERS OF

VISHNU CHEMICALS LIMITED

Report on the Audit of the Standalone Financial Statements

Opinion

We have audited the accompanying standalone financial statements of Vishnu ChemicalsLimited ("the Company") which comprise the Balance Sheet as at March 31 2019the Statement of Profit and Loss (including Other Comprehensive Income) the Statement ofChanges in Equity and the Statement of Cash Flows for the year ended on that date and asummary of the significant accounting policies and other explanatory information(hereinafter referred to as "the standalone financial statements"). In ouropinion and to the best of our information and according to the explanations given to usthe aforesaid standalone 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 Indian Accounting Standards prescribed under section 133of the 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 March 31 2019 the profit and total comprehensiveincome changes in equity and its cash flows for the year ended on that date.

Basis for Opinion

We conducted our audit of the standalone financial statements in accordance with theStandards on Auditing specified under section 143(10) of the Act (SAs). Ourresponsibilities under those Standards are further described in the Auditor'sResponsibilities for the Audit of the Standalone Financial Statements section of ourreport. We are independent of the Company in accordance with the Code of Ethics issued bythe Institute of Chartered Accountants of India (ICAI) together with the independencerequirements that are relevant to our audit of the standalone financial statements underthe provisions of the Act and the Rules made thereunder and we have fulfilled our otherethical responsibilities in accordance with these requirements and the ICAI's Code ofEthics. We believe that the audit evidence we have obtained is sufficient and appropriateto provide a basis for our audit 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.

1. Recoverability of Export Incentives:

Based on the incentives allowable under the Foreign Trade Policy (FTP) 2015-2020 thecompany claimed export benefits under the MEIS and FMS Schemes. The company recognizesthese as receivable in the year the right to receive is established on completion ofexport of goods.

The amount receivable by the company on account of these incentives was Rs.1217.53 asat 31 March 2018 with a further addition of Rs.573.73 lakhs during the financial year2018-19. While an amount of Rs.907.64 lakhs was received during the year the companydetermined that an amount of Rs.201.47 lakhs pertaining to previous years will not berealized and has written off the same.

This has been considered as a Key Audit matter given the involvement of managementjudgement and estimate and any variation having an impact on the revenue. As part of auditprocedures we obtained all the data regarding filing of claims their acceptance by theconcerned authorities after validating the data filed scrutinized the issues leading towrite off of earlier claims and made an assessment regarding the eventual realisability ofthe present claims that are pending.

2. Evaluation of Disputed tax liabilities:

The Company has material uncertain tax positions including matters under dispute whichinvolves significant judgment to determine the possible outcome of these disputes. As perthe company's assessment based on the legal opinion received it has a good chance ofgetting the demands set aside.

We obtained and reviewed details of completed tax assessments and demands for the yearended March 31 2019 from management. We made an independent assessment to evaluatewhether any change was required to management's position on these disputed tax demands andassess if any provisioning is required.

Information Other than the Standalone Financial Statements and Auditor's ReportThereon:

The Company's Board of Directors is responsible for the preparation of the otherinformation. The other information comprises the information included in the ManagementDiscussion and Analysis Board's Report including Annexures to Board's Report BusinessResponsibility Report Corporate Governance and Shareholder's Information but does notinclude the standalone financial statements and our auditor'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 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 materialmisstatement of this other information we are required to report that fact. We havenothing to report in this regard.

Management's Responsibility for the Standalone Financial Statements

The Company's Board of Directors is 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 Ind AS and other accounting principles generally accepted in India.

This responsibility also includes maintenance of adequate accounting records inaccordance with the provisions of the Act for safeguarding the assets of the Company andfor preventing and detecting frauds and other irregularities; selection and application ofappropriate accounting policies; making judgments and estimates that are reasonable andprudent; and design implementation and maintenance of adequate internal financialcontrols that were operating effectively for ensuring the accuracy and completeness ofthe accounting records relevant to the preparation and presentation of the standalonefinancial statements that give a true and fair view and are free from materialmisstatement 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. Those Board of Directors are 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 inaccordance with SAs we exercise professional judgment and maintain professionalskepticism throughout the audit. We also:

Identify and assess the risks of material misstatement of the standalone financialstatements whether due to fraud or error design and perform audit procedures responsiveto those risks and obtain audit evidence that is sufficient and appropriate to provide abasis for our opinion. The risk of not detecting a material misstatement resulting fromfraud is higher than for one resulting from error as fraud may involve collusionforgery intentional omissions misrepresentations or the override of internal control.

• Obtain an understanding of internal financial controls relevant• to theaudit in order to design audit procedures that are appropriate in the circumstances. Undersection 143(3)(i) of the Act we are also responsible for expressing our opinion onwhether the Company has adequate internal financial controls system in place and theoperating 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 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 financialstatements that individually or in aggregate makes it probable that the economicdecisions of a reasonably knowledgeable user of the financial statements may beinfluenced. We consider quantitative materiality and qualitative factors in (i) planningthe scope of our audit work and in evaluating the results of our work; and (ii) toevaluate the effect of any identified misstatements in the 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 alsoprovide those charged with governance with a statement that we have complied with relevantethical requirements regarding independence and to communicate with them allrelationships 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 Section 143(3) of the Act based on our audit 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 Statement of Changes in Equity and the Statement of Cash Flow dealt with by thisReport are in agreement with the relevant books of account.

d) In our opinion the aforesaid standalone financial statements comply with the Ind ASspecified under Section 133 of the Act read with Rule 7 of the Companies (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) of theAct.

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 A". Our report expresses an unmodified opinion onthe adequacy and operating effectiveness of the Company's internal financial controls overfinancial reporting.

g) With respect to the other matters to be included in the Auditor's Report inaccordance with the requirements of section 197(16) of the Act as amended:

In our opinion and to the best of our information and according to the explanationsgiven to us the remuneration paid by the Company to its directors during the year is inaccordance with the provisions of section 197 of the Act. h) With respect to the othermatters to be included in the Auditor's Report in accordance with Rule 11 of the Companies(Audit and Auditors) Rules 2014 as amended in our opinion and to the best of ourinformation 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.

ii. The Group did not have any material foreseeable losses on long-term contractsincluding derivative contracts.

iii. There were no amounts which were required to be transferred to the InvestorEducation and Protection Fund by the Holding Company and its subsidiary companyincorporated in India.

2. As required by the Companies (Auditor's Report) Order 2016 ("the Order")issued by the Central Government in terms of Section 143(11) of the Act we give in"Annexure B" a statement on the matters specified in paragraphs 3 and 4 of theOrder.

For Jampani & Associates
Chartered Accountants
(F.R.No. 016581S)
Sd/-
J. Ram Sesh Choudary
Hyderabad Partner
06 May 2019 M.No. 202150

ANNEXURE "A" TO THE INDEPENDENT AUDITOR'S REPORT

(Referred to in paragraph 1(f) under ‘Report on Other Legal and RegulatoryRequirements' section of our report to the Members of Vishnu Chemicals Limited of evendate)

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 VISHNUCHEMCALS LIMITED ("the Company") as of March 31 2019 in conjunction withour audit of the standalone financial statements of the Company for the year ended on thatdate.

Management's Responsibility for Internal Financial Controls

The Board of Directors of the Company is responsible for establishing and maintaininginternal financial controls based on the internal control over financial reportingcriteria established by the Company considering the essential components of internalcontrol stated in the Guidance Note on Audit of Internal Financial Controls Over FinancialReporting issued by the Institute of Chartered Accountants of India. 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 respective 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 Companies Act 2013.

Auditor's Responsibility

Our responsibility is to express an opinion on the internal financial controls overfinancial reporting of the Company based on our audit. We conducted our audit inaccordance with the Guidance Note on Audit of Internal Financial Controls Over FinancialReporting (the "Guidance Note") issued by the Institute of Chartered Accountantsof India and the Standards on Auditing prescribed under Section 143(10) of the CompaniesAct 2013 to the extent applicable to an audit of internal financial controls. ThoseStandards and the Guidance Note require that we comply with ethical requirements and planand perform the audit to obtain reasonable assurance about whether adequate internalfinancial controls over financial reporting was established and maintained and if suchcontrols 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 judgement including the assessment of the risks ofmaterial misstatement of the financial statements whether due to fraud or error. Webelieve that the audit evidence we have obtained is sufficient and appropriate to providea basis for our audit opinion on the internal financial controls system over financialreporting of the Company.

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

(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 financial statements in accordance with generally accepted accountingprinciples and that receipts and expenditures of the company are being made only inaccordance 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 financial statements.

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.

Opinion

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 on Audit of Internal FinancialControls Over Financial Reporting issued by the Institute of Chartered Accountants ofIndia.

For Jampani & Associates
Chartered Accountants
(F.R.No. 016581S)
Sd/-
J. Ram Sesh Choudary
Hyderabad Partner
06 May 2019 M.No. 202150

ANNEXURE "" TO THE INDEPENDENT AUDITOR'S REPORT

(Referred to in paragraph 2 under ‘Report on Other Legal and RegulatoryRequirements' section of our report to the Members of Vishnu Chemicals Limited of evendate)

i. In respect of the Company's fixed assets:

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

(b) The Company has a program of verification to cover all the items of fixed assets ina phased manner which in our opinion is reasonable having regard to the size of theCompany and the nature of its assets.

Pursuant to the program certain fixed assets were physically verified by themanagement during the year. According to the information and explanations given to us nomaterial discrepancies were noticed on such verification.

(c) According to the information and explanations given to us the records examined byus and based on the examination of the conveyance deeds/registered sale deed provided tous we report that the title deeds comprising all the immovable properties of land andbuildings which are freehold are held in the name of the Company as at the balance sheetdate.

ii. According to the information and explanations given to us the inventories havebeen physically verified at reasonable intervals by the management and no materialdiscrepancies were noticed on such verification.

iii. According the information and explanations given to us the Company has grantedinterest free unsecured loan to its wholly owned subsidiary covered in the registermaintained under section 189 of the Companies Act 2013.

The total loan amount granted in the earlier years and the actual balance outstandingat the end of the year is Rs.989 lakhs (with an amortised value of Rs.722.22 lakhs).According to the information and explanations the terms and conditions of the grant of theloan are not prima facie prejudicial to the interests of the company. However as nospecific terms and conditions with regard to the repayment have been specified we are notable to comment on the compliance with schedule of repayment and overdue amount.

iv. In our opinion and according to the information and explanations given to us theCompany has complied with the provisions of Sections 185 and 186 of the Act in respect ofgrant of loans making investments and providing guarantees and securities as applicable.

v. According to the information and explanations provided to us the Company has notaccepted deposits in terms of the directives issued by Reserve Bank of India and theprovisions of sections 73 to 76 or any other relevant provisions of the Act and the rulesframed there under and therefore the provisions of the clause 3 (v) of the Order are notapplicable to the Company.

vi. We have broadly reviewed the cost records maintained by the company pursuant tosub-section (1) of section 148 of the Act and are of the opinion that prima facie theprescribed accounts and records have been made and maintained.

vii. According to the information and explanations given to us in respect of statutorydues:

a. The company has generally been Irregular in Depositing Undisputed Statutory Duesincluding Provident Fund Employees State Insurance Income Tax Goods and Service TaxCustoms Duty Cess and other material statutory dues applicable to it with the appropriateauthorities.

b. According to the information and explanations given to us there are no undisputedamounts payable in respect of Provident Fund Employees State Insurance Income Tax Goodsand Service Tax Customs Duty Cess and other material statutory dues in arrears as atMarch 31 2019 for a period of more than six months from the date they became payableexcept Rs.1279.19 lakhs payable towards Income Tax and interest thereon under the IncomeTax Act 1961 for the periods AY 2014-15 to AY 2018-19 which are yet to be paid.

c. Details of dues of Income Tax Sales Tax Service Tax Excise Duty and Value AddedTax which have not been deposited as at March 31 2019 on account of dispute are givenbelow:

Nature of the statute Nature of dues Forum where dispute is pending Period to which the amount relates Amount in lakhs
Income Tax Act 1961 Income tax CPC AY 2015-16 59.61
Income Tax Act 1961 Income tax Assessing Officer AY 2013-14 27.77
Income Tax Act 1961 Income tax Assessing Officer AY 2006-07 46.62
Income Tax Act 1961 Income tax CIT (Appeals) AY 2011-12 163.28 (Rs. 41.98 lakhs deposited)
Central Excise Act 1944 Excise Duty CESTAT 1998-99 53.82 (Rs. 7.00 lakhs deposited)
Sales Tax Act Interest on Sales tax Commissioner 1998-99 7.75 (Rs. 7.75 lakhs deposited)
Sales Tax Act Sales tax High Court 2008-09 124.36 (Rs. 124.36 lakhs deposited)
Sales Tax Act Entry Tax Appellate Commissioner 2014-15 to 2017-18 55.40 (Rs. 6.92 lakhs deposited)
Finance Act 1994 Service Tax CESTAT 2006-2007 to 201011 418.68 Stay granted
Finance Act 1994 Service Tax CESTAT 2011-12 233.94

viii. According to the information and explanations provided to us the Company has notdefaulted in repayment of loans or borrowings to any financial institution or banks.

ix. The Company has not raised moneys by way of initial public offer or further publicoffer (including debt instruments) or term loans and hence reporting under clause 3 (ix)of the Order is not applicable to the Company.

x. To the best of our knowledge and according to the information and explanations givento us and based on the audit procedures performed by us no fraud by the Company or nomaterial fraud on the Company by its officers or employees has been noticed or reportedduring the year.

xi. In our opinion and according to the information and explanations given to us theCompany has paid/provided managerial remuneration in accordance with the requisiteapprovals mandated by the provisions of section 197 read with Schedule V to the Act.

xii. The Company is not a Nidhi Company and hence reporting under clause 3 (xii) of theOrder is not applicable to the Company.

xiii. In our opinion and according to the information and explanations given to us theCompany is in compliance with Section 177 and 188 of the Companies Act 2013 whereapplicable for all transactions with the related parties and the details of related partytransactions have been disclosed in the standalone financial statements as required by theapplicable accounting standards.

xiv. During the year the Company has not made any preferential allotment or privateplacement of shares or fully or partly paid convertible debentures and hence reportingunder clause 3 (xiv) of the Order is not applicable to the Company.

xv. In our opinion and according to the information and explanations given to usduring the year the Company has not entered into any non-cash transactions with itsDirectors or persons connected to its directors and hence provisions of section 192 of theCompanies Act 2013 are 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.

For Jampani & Associates
Chartered Accountants
(F.R.No. 016581S)
Sd/-
J. Ram Sesh Choudary
Hyderabad Partner
06 May 2019 M.No. 202150


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