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Auditor Report of Hindustan Organic Chemicals Ltd.
Mar 31, 2025
1. We have audited the accompanying Standalone Financial
Statements of HINDUSTAN ORGANIC CHEMICALS LIMITED (CIN:
L99999KL1960GOI082753) (âthe Companyââ) which comprises of the
Balance Sheet as at 31st March, 2025, the Statement of Profit and Loss
(including Other Comprehensive Income) for the year ended 31st March
2025 the Cash Flow Statement, the Statement of Changes in Equity
for the year ended and notes to the Standalone Financial Statements
including material accounting policies and other explanatory information
(hereinafter referred to as âthe Standalone Financial Statementsâ).
2. In our opinion and to the best of our information and according to the
explanations given to us, the aforesaid Standalone Financial Statements
give the information required by the Companies Act, 2013 (âthe Actâ)
in the manner so required and give a true and fair view in conformity
with the Indian Accounting Standards (âInd AS'') specified under Section
133 of the Act read with the Companies (Indian Accounting Standards)
Rules, 2015 and other accounting principles generally accepted in
India, of the state of affairs of the Company as at 31 March 2025, and
its profit (including other comprehensive income), its cash flows and the
changes in equity for the year ended on that date.
Basis for Opinion
3. We conducted our audit in accordance with the Standards on Auditing
(SAs) specified under section 143(10) of the Act. Our responsibilities
under those Standards are further described in the Auditorâs
Responsibilities 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 the Institute of Chartered
Accountants of India together with the ethical requirements that are
relevant to our audit of the Standalone Financial Statements under the
provisions of the Companies Act, 2013 and the Rules thereunder, and
we have fulfilled our other ethical responsibilities in accordance with
these requirements and the Code of Ethics. We believe that the audit
evidence we have obtained is sufficient and appropriate to provide a
basis for our opinion.
Emphasis of Matters
4. Attention is drawn to note no. 30(a) and 35(vii)(viii) of the accompanying
standalone financial statements regarding the waiver of principal of
loan and preference shares, interest and penal interest amounting to
Rs.1,35,136.71 lakhs due to Government of India as on 30.09.2024.
5. Attention is drawn to note no. 47 of the accompanying standalone
financial statements regarding the registration of satisfaction of
charge with the Registrar of Companies (ROC). The company is in
correspondence with the Ministry regarding certain formalities in this
regard.
6. Attention is drawn to note no. 32(b) of the accompanying standalone
financial statements. The company has advanced loan amounting to
Rs. 453.01 lakhs to its subsidiary at an interest rate ranging from 10.25
to 14.50 %. As the subsidiary has failed to pay interest, the company
has stopped charging interest on the loan from the year 2023-24.
7. Attention is drawn to note no. 41 of the accompanying standalone
financial statements regarding composition of the Board of Directors
which is not in compliance with the provisions of the Companies Act
2013 and SEBI (LODR) Regulations, 2015.
8. Attention is drawn to note no. 56 of the accompanying standalone
financial statements. The standalone financial statements approved by
the Board of Directors have not been reviewed by the Audit Committee,
as required under section 177 of the Companies Act, 2013 and clause
A (5) of the Part C of the Schedule II of the Securities and Exchange
Board of India (Listing Obligations and Disclosure Requirements)
Regulations, 2015. We are informed that the Audit Committee is not
functional due to the absence of the independent directors of the
company.
9. Attention is drawn to note no. 42 of the accompanying standalone
financial statements detailing the status of implementation to the
Government approved restructuring plan.
Our opinion is not modified in respect of the above matters.
Key Audit Matters
10. Key audit matters are those matters that, in our professional judgement,
were of most significance in our audit of the Standalone Financial
Statements for the financial year ended March 31, 2025. These
matters were addressed in the context of our audit of the Standalone
Financial Statements as a whole, and in forming our opinion thereon,
and we do not provide a separate opinion on these matters. We have
determined the matters described below to be the key audit matters to
be communicated in our report.
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The Key Audit Matter |
How the matter was addressed in |
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Exceptional Item and Other (Refer note no.17 of the standalone ⢠The waiver of loan, preference ⢠The company had an outstanding |
Our audit procedures including and ⢠We have examined digitally ⢠Examined the letter send by the |
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Recognition, Measurement, and Depreciation of PPE ⢠The company, being an asset- ⢠The company was shut down ⢠The audit was mainly focused |
Our audit procedures included and were not limited to the following: ⢠Evaluating management''s ⢠We also tested a sample of PPE ⢠We assessed the consistency ⢠We verified the compliance with |
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Valuation of Inventory See Note 6 to the Standalone Financial Statements ⢠The verification and valuation of ⢠Indirect production costs are ⢠The inventory levels of major raw ⢠The meter readings are recorded ⢠Inventories are valued at lower ⢠In addition, management |
Our audit procedures included and ⢠Obtaining an understanding of ⢠Reviewing data from software ⢠Testing the design, ⢠Testing and cross verifying on ⢠Testing on a sample basis the ⢠Testing the net realizable value ⢠Being a party to the physical Based on the above procedures |
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Evaluation of Provisions, Refer Note 2(d) and note 35 to the ⢠The Company has various ⢠The Company also has various |
Our audit procedures included and ⢠Assessing the management''s ⢠We received a statement of |
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⢠The evaluation of the Company''s |
⢠We evaluated management''s |
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position |
and determination |
assessments including advice/ |
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of possible outcome of these |
opinion obtained from external |
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disputes |
and provisions and |
consultants/legal advisors with |
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related |
disclosures, if any, |
respect to prospects of success |
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required |
to be made in the |
of appeals and tax proceedings. |
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books involves significant |
⢠We involved our internal experts |
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position on the select litigations |
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Information Other than the Financial Statements and Auditorâs Report
thereon:
11. The Company''s management and Board of Directors are responsible for
the other information. The other information comprises the information
included in the Company''s annual report, but does not include the
Standalone Financial Statements and our auditors'' report thereon. The
said other information is expected to be made available to us after the
date of this audit report.
Our opinion on the Standalone Financial Statements does not cover
the other information and we do not express any form of assurance
conclusion thereon.
In connection with our audit of the Standalone Financial Statements, our
responsibility is to read the other information when made available to
us and, in doing so, consider whether the other information is materially
inconsistent with the Financial Statements or our knowledge obtained
in the audit or otherwise appears to be materially misstated. If, based
on the work we have performed, we conclude that there is a material
misstatement of this other information, we are required to report that
fact.
Responsibility of Management and Those Charged with Governance
for Standalone Financial Statements:
12. The Company''s Board of Directors are responsible for the matters stated
in Section 134(5) of the Act with respect to the preparation of these
Standalone Financial Statements that give a true and fair view of the
financial position, financial performance and cash flows of the Company
in accordance with the accounting principles generally accepted in
India, including the Accounting Standards specified under Section 133
of the Act, read with Rule 7 of Companies (Accounts) Rules, 2014.
This responsibility also includes maintenance of adequate accounting
records in accordance with the provisions of the Act for safeguarding
the assets of the Company and for preventing and detecting frauds and
other irregularities; selection and application of appropriate accounting
policies; making judgments and estimates that are reasonable and
prudent; and design, implementation and maintenance of adequate
internal financial controls, that were operating effectively for ensuring
the accuracy and completeness of the accounting records, relevant to
the preparation and presentation of the Financial Statements that give
a true and fair view and are free from material misstatement, whether
due to fraud or error.
In preparing the Standalone Financial Statements, management is
responsible for assessing the company''s ability to continue as a going
concern, disclosing, as applicable, matters related to going concern
and using the going concern basis of accounting unless management
either intends to liquidate the company or to cease operations, or has
no realistic alternative but to do so.
Those Board of Directors are also responsible for overseeing the
company''s financial reporting process.
Auditorâs Responsibility for the Audit of Standalone Financial
Statements:
13. Our objectives are to obtain reasonable assurance about whether the
Standalone Financial Statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an auditor''s
report that includes our opinion. Reasonable assurance is a high
level of assurance, but is not a guarantee that an audit conducted in
accordance with SAs will always detect a material misstatement when it
exists. Misstatements can arise from fraud or error and are considered
material if, individually or in the aggregate, they could reasonably be
expected to influence the economic decisions of users taken on the
basis of these Standalone Financial Statements.
As part of an audit in accordance with SAs, we exercise professional
judgment and maintain professional skepticism throughout the audit.
We also:
⢠Identify and assess the risks of material misstatement of the
Standalone Financial Statements, whether due to fraud or error,
design and perform audit procedures responsive to those risks,
and obtain audit evidence that is sufficient and appropriate to
provide a basis for our opinion. The risk of not detecting a material
misstatement resulting from fraud is higher than for one resulting
from error, as fraud may involve collusion, forgery, intentional
omissions, misrepresentations, or the override of internal control.
⢠Obtain an understanding of internal control relevant to the audit
in order to design 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
has adequate internal financial controls system in place and the
operating effectiveness of such controls.
⢠Evaluate the appropriateness of accounting policies used and the
reasonableness of accounting estimates and related disclosures
made by management.
⢠Conclude on the appropriateness of management''s use of
the going concern basis of accounting and, based on the audit
evidence obtained, whether a material uncertainty exists related
to events or conditions that may cast significant doubt on the
Company''s ability to continue as a going concern. If we conclude
that a material uncertainty exists, we are required to draw attention
in our auditor''s report to the related disclosures in the Standalone
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''s report. However,
future events or conditions may cause the Company to cease to
continue as a going concern.
⢠Evaluate the overall presentation, structure and content of the
Standalone Financial Statements, including the disclosures,
and whether the Standalone Financial Statements represent the
underlying transactions and events in a manner that achieves fair
presentation.
14. We communicate with those charged with governance regarding,
among other matters, the planned scope and timing of the audit and
significant audit findings, including any significant deficiencies in
internal control that we identify during our audit.
15. We also provide those charged with governance with a statement
that we have complied with relevant ethical requirements regarding
independence, and to communicate with them all relationships
and other matters that may reasonably be thought to bear on our
independence, and where applicable, related safeguards.
16. From the matters communicated with those charged with governance,
we determine those matters that were of most significance in the audit
of the Standalone Financial Statements of the current period and are
therefore the key audit matters. We describe these matters in our
auditor''s report unless law or regulation precludes public disclosure
about the matter or when, in extremely rare circumstances, we determine
that a matter should not be communicated in our report because the
adverse consequences of doing so would reasonably be expected to
outweigh the public interest benefits of such communication.
Report on other legal and regulatory requirements
17. As required by the Companies (Auditor''s Report) Order, 2020 (âThe
Orderâ) issued by the Central Government of India in terms of Section
143(11) of the Act, we give a statement on the matters specified in
paragraphs 3 and 4 of the Order to the extent applicable attached as
Annexure 1.
18. As required by the directions and sub directions issued by the office of
the Comptroller & Auditor General of India under section 143 (5) of the
Act, we give in the âAnnexure 2â a statement on the matters referred in
those directions.
19. 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 best of our knowledge and belief were necessary for
the purpose of our audit;
b) In our opinion proper books of account as required by law have
been kept by the Company so far as appears from our examination
of those books;
c) The Balance Sheet, the Statement of Profit and Loss including
Other Comprehensive Income, the Statement of Cash Flows and
Statement of Changes in Equity dealt with by this Report are in
agreement with the relevant books of account.;
d) In our opinion, the aforesaid Financial Statements comply with the
Indian Accounting Standards specified under Section 133 of the
Act, read with Rule 7 of Companies (Accounts), Rules 2014;
e) As per Notification No. G.S.R. 463(E) dated June 5, 2015, the
Government Companies are exempted from provisions of section
164(2) of the Act. Accordingly, we are not required to report
whether any directors are disqualified in terms of provisions
contained in the said section
f) The report on internal financial control as required under clause (i)
of sub section 3 of section 143 of the Act is attached as Annexure
3;
g) Being a Government company, the provisions of section 197 of
the Act with respect to the matters to be included in the Auditors
Report is not applicable vide notification no. G.S.R. 463(E) dated
June 5, 2015 and as amended by notification no. G.S.R. 582(E)
dated June 13, 2017 issued by the Ministry of Corporate Affairs.
h) With respect to other matters to be included in the Auditors Report
in accordance with Rule 11 of Companies (Audit and Auditors)
Rules, 2014, in our opinion and to the best of our information and
according to the explanations given to us:
(i) The company has disclosed the impact of pending litigations
on its financial position in its financial statement.
(ii) The company did not have any long-term contracts including
derivative contracts for which there were any material
foreseeable losses.
(iii) The company has made provisions, as required under
any law or accounting standard, for material foreseeable
losses, if any, on the long-term contracts including derivative
contracts;
(iv) There were no amounts which were required to be transferred
to Investor Education and Protection Fund by the company.
(v) (a) The management has represented that, to the best
of its knowledge and belief, no funds have been
advanced or loaned or invested (either from borrowed
funds or share premium or any other sources or kind
of funds) by the company to or in any other persons
or entities, including foreign entities (âIntermediariesâ),
with the understanding, whether recorded in writing or
otherwise, that the Intermediary shall
⢠directly or indirectly lend or invest in other persons
or entities identified in any manner whatsoever
by or on behalf of the company (âUltimate
Beneficiariesâ) or
⢠provide any guarantee, security or the like on
behalf of the Ultimate Beneficiaries;
(b) The management has represented, that, to the best
of its knowledge and belief, no funds have been
received by the company from any persons or entities,
including foreign entities (âFunding Partiesâ), with
the understanding, whether recorded in writing or
otherwise, that the company shall
⢠directly or indirectly, lend or invest in other persons
or entities identified in any manner whatsoever
by or on behalf of the Funding Party (âUltimate
Beneficiariesâ) or
⢠provide any guarantee, security or the like on
behalf of the Ultimate Beneficiaries;
(c) Based on such audit procedures considered reasonable
and appropriate in the circumstances, nothing has
come to our notice that has caused us to believe that
the representations under sub-clause (v)(a) and (v)(b)
contain any material mis-statement.
(vi) The company has not declared or paid dividend during the
year.
(vii) Based on our examination, which included test checks, the
Company has used accounting software for maintaining its
books of account for the financial year ended March 31,
2025 which has a feature of recording audit trail (edit log)
facility and the same has operated throughout the year for
all relevant transactions recorded in the software except that
audit trail was not enabled at the database level to log direct
data changes, if any. Further, during the course of our audit
we did not come across any instance of the audit trail feature
being tampered with.
For Balan & Co.
Chartered Accountants
FRN 340S
M. Venugopal
Partner
Place: Ernakulam Membership No. 244882
Date: 16.05.2025 UDIN: 25244882BMKTZO9628
Mar 31, 2024
1. We have audited the accompanying Standalone Financial Statements of HINDUSTAN ORGANIC CHEMICALS LIMITED (âthe Companyâ) which Comprises the Balance Sheet as at March 31, 2024, the Statement of Profit and Loss, including the statement of Other Comprehensive Income, the Cash Flow Statement and the Statement of Changes in Equity for the year then ended, and notes to the Standalone Financial Statements, including material accounting policies and other explanatory information (hereinafter referred to as âthe Standalone Financial Statementsâ).
2. In our opinion and to the best of our information and according to the explanations given to us, except for the effects of the matter described in the Basis for Qualified Opinion section of our Report, the aforesaid Standalone Financial Statements give the information required by the Companies Act, 2013 (âthe Actâ) in the manner so required and give a true and fair view in conformity with the Indian Accounting Standards (âInd AS'') specified under Section 133 of the Act read with the Companies (Indian Accounting Standards) Rules, 2015 and other accounting principles generally accepted in India, of the state of affairs of the Company as at 31 March 2024, and its profit (including other comprehensive income), its cash flows and the changes in equity for the year ended on that date.
Basis for Qualified Opinion
3. We draw attention to note no. 11 of the accompanying Standalone Financial Statements regarding the waiver of interest chargeable on loans amounting to Rs. 453.01 lakhs advanced to its subsidiary. As per the provisions of Section 186(7) of the Companies Act, 2013, no loan shall be given at a rate of interest lower than the prevailing yield of one year, three-year, five year or ten-year Government Security closest to the tenor of the loan. In our opinion, the Company has violated the provisions of section 186(7) of the Companies Act, 2013.
Had the impact of the above qualification been considered, as of 31st March 2024, âInterest Receivables from Related Parties'' under âOther Financial Assets'' would have increased by Rs. 57.26 lakhs, âStatutory Receivables - Duties & Taxes, Prepaid Taxes'' under âOther Current Assets'' would have increased by Rs. 6.36 lakhs, shareholder funds would have increased by Rs. 63.62 lakhs, and for the year ended on that date, âInterest Income on Loan to Subsidiary Company'' and net income would have increased by Rs. 63.62 lakhs.
4. We conducted our audit of the Standalone Financial Statements in accordance with the Standards on Auditing (SAs), as specified under section 143(10) of the Act. Our responsibilities under those standards are further described in the Auditor''s Responsibilities for the Audit of the Standalone Financial Statements section of our report. We are independent of the Company in accordance with the âCode of Ethics'' issued by the Institute of Chartered Accountants of India (âICAIâ) together with the ethical requirements that are relevant to our audit of the Standalone Financial Statements under the provisions of the Act and the Rules thereunder, and we have fulfilled our other ethical responsibilities 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 to provide a basis for our opinion on the Standalone Financial Statements.
Material Uncertainty Related to Going Concern
5. We draw attention to Note No. 42 of the accompanying Standalone Financial Statements. During the year, the Company has reported a net profit, including other comprehensive income, of Rs. 388.00 lakhs (previous year net loss, including other comprehensive income, of Rs. 4,239.63 lakhs). Also, the Company has accumulated losses amounting to Rs. 1,07,999.21 lakhs (previous year Rs.
1,07,136.93 lakhs) with a negative net worth of Rs. 96,433.68 lakhs (previous year Rs. 95,571.40 lakhs), excluding other comprehensive income. The Company has a balance under current assets, cash and cash equivalents, and other bank balances amounting to Rs. 22,642.08 lakhs (previous year Rs. 16,730.48 lakhs) as at year-end.
Further, we are informed that the Company, with the approval of the Government of India, is in the process of divesting and selling off its lossmaking unit at Rasayani, Mumbai, which includes assets with a carrying amount of Rs. 94,550.32 lakhs, including 517.819 acres of land owned by the unit. This process is expected to generate sufficient cash flow for the Company. The Kochi unit of the Company is operational, and the Company is currently in the process of implementing the restructuring plan approved by the Central Government. Consequently, the Standalone Financial Statements have been prepared on a going concern basis.
Our conclusion remains unmodified in this regard.
Key Audit Matters
6. Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the Standalone Financial Statements for the financial year ended March 31,2024. These matters were addressed in the context of our audit of the Standalone Financial Statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. For each matter below, our description of how our audit addressed the matter is provided in that context.
7. We have determined the matters described below to be the key audit matters to be communicated in our report. We have fulfilled the responsibilities described in the Auditor''s responsibilities for the audit of the Standalone Financial Statements section of our report, including in relation to these matters. Accordingly, our audit included the performance of procedures designed to respond to our assessment of the risks of material misstatement of the Standalone Financial Statements. The Statements of our audit procedures, including the procedures performed to address the matters below, provide the basis for our audit opinion on the accompanying Standalone Financial Statements.
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The Key Audit Matter |
How the matter was addressed in our audit? |
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Revenue recognition - Discounts, incentives and rebates See Notes 2.2 (a) the Standalone Financial Statements |
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⢠The measurement of revenue, considering discounts, incentives, and rebates provided to customers, is a critical aspect of our audit. ⢠The Company''s extensive presence in diverse marketing regions and the dynamic nature of the competitive business environment contribute to the complexity and judgment involved in assessing various types of discounts, incentives, and rebates. ⢠Consequently, there is an inherent risk of revenue misstatement due to potential variations in the evaluation of these elements. ⢠Given the intricate nature and reliance on judgment in assessing provisions for discounts, incentives, and rebates, this constitutes a key audit matter. |
Our audit procedures, among others included: ⢠We have assessed the Company''s accounting policies relating to revenue, discounts, incentives and rebates by comparing with applicable accounting standards. ⢠We have assessed the design and implementation and tested the operating effectiveness of Company''s internal controls over the provisions, approvals and disbursements of discounts, incentives and rebates. ⢠We have assessed the Company''s computations for accrual of discounts, incentives and rebates, on a sample basis, and compared the accruals made with the approved schemes and underlying documents. |
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The Key Audit Matter |
How the matter was addressed in our audit? |
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Revenue recognition - Discounts, incentives and rebates See Notes 2.2 (a) the Standalone Financial Statements |
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⢠We have compared the historical trend of payments and reversal of discounts, incentives and rebates to provisions made to assess the current year accruals ⢠We have examined the manual journals posted to discounts, rebates and incentives to identify unusual or irregular items. |
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The Key Audit Matter |
How the matter was addressed in our audit? |
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Contingencies, including litigations and tax See Note 2.2 (d) and 34 to the Standalone Financial Statements |
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⢠The Company routinely encounters legal complexities, encompassing disputes, lawsuits, regulatory matters, and other issues inherent in regular business operations. Many of these situations involve intricate details. ⢠Supported by external legal advisors, the Company meticulously evaluates each circumstance to determine whether provisions should be made or contingencies disclosed. ⢠This aspect is crucial for our audit due to the intricate nature of accounting and disclosure concerning potential legal and tax liabilities. The challenge lies in predicting outcomes and estimating financial impacts, especially in unfavourable scenarios. ⢠Furthermore, the financial implications of these legal considerations are, or have the potential to be, significant to the Standalone Financial Statements. Therefore, a thorough examination is essential in ensuring the accuracy of the financial reporting |
Our audit procedures, among others included the following: ⢠We evaluated the design and tested the operating effectiveness of controls relating to identification and evaluation of claims, proceedings and investigations at different levels in the Company, and the measurement of provisions for disputes, potential claims and litigation, contingent liabilities and disclosures ⢠We obtained a list of ongoing litigations from the Company''s in-house legal team. ⢠We selected a sample of litigations based on materiality and performed inquiries with the said counsel on the legal evaluation of these litigations. We compared the evaluation with the provision or disclosure in the Standalone Financial Statements. ⢠We tested the underlying computation of the management in relation to the measurement of provision or the contingency. ⢠We obtained legal letters from the Company''s external legal advisors with respect to the matters included in the summary. Where appropriate, we examined correspondences connected with the cases. ⢠We inspected relevant communication with tax authorities. ⢠We involved our inhouse tax experts in assessing the nature and amount of material tax positions and assessed the technical merits based on the correspondence and assessments from the relevant tax authorities. ⢠We also evaluated the disclosures made in the Standalone Financial Statements. |
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The Key Audit Matter |
How the matter was addressed in our audit |
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Valuation of Inventory See Note 6 to the Standalone Financial Statements |
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⢠The verification and valuation of raw materials, semifinished, and finished goods is a meticulous manual undertaking. During this process, indirect production costs are estimated and integrated into inventory costs, involving judgment and estimation. ⢠The allocation of these costs is subject to uncertainty at the time of estimation. Furthermore, price fluctuations depend on multiple factors, including domestic, global, and various other external factors. ⢠In addition, management exercises judgment in identifying and evaluating obsolete inventories and slow-moving stock items, while also estimating the appropriateness of necessary provisions. Given the subjective nature of these judgments and the inherent uncertainties, we have identified this as a Key Audit Matter. |
Our audit approach, among others involved the following combination of tests of control design, implementation, operating effectiveness, and substantive testing in respect of verification and valuation of inventories: ⢠Understanding and evaluating the design and testing the operating effectiveness of controls over the physical count process and measurement of such inventory; ⢠We evaluated the system of inventory monitoring and control. Reviewing data from software used by the Company such as Distributed Control System for plant operations, independent Programmable Logic Controllers for the safety of the Plant, Tank Level Monitoring System (âLMSâ) for detailed statistics about the stock of raw materials, finished products, and intermediate products, along with various alarms, warnings, and history of the tank operations, etc. ⢠Physically observing inventory measurement and count procedures carried out by management to assess its appropriateness and completeness and performing roll-backward/ roll-forward procedures. ⢠Obtaining and inspecting inventory measurement and physical count Statements, including assessing and evaluating the Statements of analysis performed and adjustments made by the Management in respect of differences between book and physical quantities. ⢠Testing on a sample basis the accuracy of the cost for inventory. Testing the net realizable value by comparing the actual cost with the most recent selling price. Based on the above procedures performed, we did not identify any material exceptions in the measurement of inventory. |
Information Other than the Financial Statements and Auditorâs Report
thereon
8. The Company''s Management and Board of Directors are responsible for the other information. The other information comprises the information included in the Company''s annual report, but does not include the financial statements and auditor''s report(s) thereon. The Company''s annual report is expected to be made available to us after the date of this auditor''s report.
9. Our opinion on the Standalone Financial Statements does not cover the other information and we do not express any form of assurance conclusion thereon.
10. In connection with our audit of the Standalone Financial Statements, our responsibility is to read the other information identified above when it becomes available and, in doing so, consider whether the other information is materially inconsistent with the Standalone Financial Statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated.
Responsibilities of Management and Those Charged with Governance
for the Standalone Financial Statements
11. The Company''s management and Board of Directors are responsible for the matters stated in section 134(5) of the Act with respect to the preparation of these Standalone Financial Statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the accounting principles generally accepted in India, including the Accounting Standards specified under section 133 of the Act.
12. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding of the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the standalone financial statement that give a true and fair view and are free from material misstatement, whether due to fraud or error.
13. In preparing the Standalone Financial Statements, management is responsible for assessing the Company''s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.
14. The Board of Directors are also responsible for overseeing the Company''s financial reporting process.
Auditorâs Responsibilities for the Audit of the Standalone Financial
Statements
15. Our objectives are to obtain reasonable assurance about whether the Standalone Financial Statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor''s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with SAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these Standalone Financial Statements.
16. As part of an audit in accordance with SAs, we exercise professional judgment and maintain professional scepticism throughout the audit. We also:
⢠Identify and assess the risks of material misstatement of the Standalone Financial Statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
⢠Obtain an understanding of internal control relevant to the audit in order to design 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 has adequate internal financial controls with reference to financial statements in place and the operating effectiveness of such controls.
⢠Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the Management and Board of Directors.
⢠Conclude on the appropriateness of the Management and Board of Directors use of the going concern basis of accounting in preparation of Standalone Financial Statements and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company''s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor''s report to the related disclosures in the Standalone 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''s report. However, future events or conditions may cause the Company to cease to continue as a going concern.
⢠Evaluate the overall presentation, structure and content of the Standalone Financial Statements, including the disclosures, and whether the Standalone Financial Statements represent the underlying transactions and events in a manner that achieves fair presentation.
17. We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
18. We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.
19. From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the Standalone Financial Statements of the current period and are therefore the key audit matters. We describe these matters in our auditors'' report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.
Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditor''s Report) Order, 2020 issued by the Central Government of India in terms of sub-section 11 of section 143 of the Act, we give in the âAnnexure Aâ, a statement on the matters specified in paragraphs 3 and 4 of the Order.
2. As required by the directions and sub directions issued by the office of the Comptroller & Auditor General of India under section 143 (5) of the Act, we give in the âAnnexure Bâ a statement on the matters referred in those directions.
3. 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 best of 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 the Company 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, the Standalone Statement of Cash Flow and Standalone Statement of Changes in Equity dealt with by this Report are in agreement with the books of account.
d) In our opinion, the aforesaid Standalone Financial Statements comply with the Ind AS specified under section 133 of the Act.
e) As per Notification No. G.S.R. 463(E) dated June 5, 2015, the Government Companies are exempted from provisions of section 164 (2) of the Act. Accordingly, we are not required to report whether any directors are disqualified in terms of provisions contained in the said section.
f) With respect to the adequacy of the internal financial controls with reference to Standalone Financial Statements of the Company and the operating effectiveness of such controls, refer to our separate Report in âAnnexure Câ. Our report expresses an unmodified opinion on the adequacy and operating effectiveness of the Company''s internal financial controls with reference to Standalone Financial Statement.
g) Being a Government Company, pursuant to the notification number GSR 463(E) dated 5th June, 2015 issued by the Government of India, the provisions of section 197 of the Act are not applicable to the Company.
h) With respect to the other matters to be included in the Auditor''s Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules, 2014, in our opinion and to the best of our information and according to the explanations given to us:
i. The Company has disclosed the impact of pending litigations on its financial position and disclosed in its Standalone Financial Statements - Refer Note no. 34 of the financial statements on Contingent Liabilities.
ii. The Company did not have any long-term contracts including derivative contracts for which there were any material foreseeable losses.
iii. The Company does not have any amounts required to be transferred to the Investor Education and Protection Fund.
iv. (a) The Management has represented that, to the best of
its knowledge and belief, no funds (which are material either individually or in the aggregate) have been advanced or loaned or invested (either from borrowed funds or share premium or any other sources or kind of funds) by the Company to or in any other person or entity, including foreign entity (âIntermediariesâ), with the understanding, whether recorded in writing or otherwise, that the Intermediary shall, whether, directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Company (âUltimate Beneficiariesâ) or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries;
(b) The Management has represented, that, to the best of its knowledge and belief, no funds (which are material either individually or in the aggregate) have been received by the Company from any person or entity, including foreign entity (âFunding Partiesâ), with the understanding, whether recorded in writing or otherwise, that the Company shall, whether, directly or indirectly, lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party (âUltimate Beneficiariesâ) or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries;
(c) Based on the audit procedures that have been considered reasonable and appropriate in the circumstances, nothing has come to our notice that has caused us to believe that the representations under sub-clause (i) and (ii) of Rule 11(e), as provided under (a) and (b) above, contain any material misstatement.
v. The Company has not declared or paid dividend during the year.
vi. Based on our examination, which included test checks, the Company has used accounting softwares for maintaining its books of account for the financial year ended March 31,2024 which has a feature of recording audit trail (edit log) facility and the same has operated throughout the year for all relevant transactions recorded in the softwares. Further, during the course of our audit we did not come across any instance of the audit trail feature being tampered with.
As proviso to Rule 3(1) of the Companies (Accounts) Rules, 2014 is applicable from April 1, 2023 reporting under Rule 11(g) of the Companies (Audit and Auditors) Rules,2014 on preservation of audit trail as per the statutory requirements for record retention is not applicable for the financial year ended March 31,2024.
21. Non- Compliance of the SEBI Listing Obligation and Disclosure Requirements (LODR) Regulations, 2015;
The Company has not complied with the Regulations 17(1)(a) and 17(1 )(b) in respect of maintenance of an optimum combination of executive and non-executive directors with at least one-woman director and not less than fifty percent of the board of Directors comprised of Independent Directors. Our conclusion is not modified in respect of this matter.
For Paulson and Company
Chartered Accountants FRN 002620S
CA. Paulson K.P.
Partner
Kochi Membership No. 021855
22 May 2024 UDIN: 24021855BKAOAA1083
Mar 31, 2023
Hindustan Organic Chemicals Limited, Kochi Report on the Audit of the Standalone financial statements
Opinion
1. We have audited the accompanying standalone financial statements of M/s. HINDUSTAN ORGANIC CHEMICALS LIMITED (CIN: L99999MH1960GOI011895) (The companyâ) which comprises of: -
(a) The Standalone Balance Sheet as at 31s March, 2023
(b) The Standalone Statement of Profit and Loss for the year (including other comprehensive income) ended 31st March, 2023
(c) Standalone Statement of Change in Equity for the year ended 31s March, 2023
(d) Standalone Cash Flow Statement for the year ended 31a March 2023, and
(e) A Summary of significant accounting policies and other explanatory information
2. In our opinion and to the best of our information and according to the explanations given to us, the aforesaid standalone financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India of the state of affairs of the Company as at March 31, 2023; and its loss, total comprehensive income, the changes in equity and its cash flows for the year ended 31st March, 2023.
Basis for opinion
3. We conducted our audit in accordance with the Standards on Auditing (SAs) specified under section 143(10) of the Companies Act, 2013 (âthe Actâ). Our responsibilities under those Standards are further described in the Auditorâs Responsibilities 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 the Institute of Chartered Accountants of India together with the ethical requirements that are relevant to our audit of the standalone financial statements under the provisions of the act and the Rules thereunder, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the Code of Ethics. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Going Concern
4. During the year, the company has repotted a ''net loss including other comprehensive incomeâ of Rs. 4,239.63 Lakhs (PYRs. 1,015.89 lakhs) and an accumulated loss amounting to Rs.1,07,078.48 lakhs (previous yearRs.1,02,056.08 lakhs). Further, the net worth of the company is negative amounting to Rs. 95,512.95 lakhs (previous year Rs. 90,490.55 lakhs), excluding Other Comprehensive Income'', as a result of the capital erosion due to losses reported by the company over the previous years.
However, we are informed that, the company, with the approval of the Government of India, is in the process of divesting and selling off its loss making unit at Rasayani, Mumbai, which includes assets with carrying amount amounting to Rs. 99,219.74 lakhs, including 551.172 acres of land owned by the unit. This process is expected to generate sufficient cash flow for the company. Further, as reported by the company in Note No. 45 of the Financial Statements, we draw the attention regarding the increased performance of the Manufacturing unit at Kochi. Considering the above, the management has prepared the standalone Ind AS financial statements on going concern basis.
Our opinion is not modified in respect of the above.
Emphasis of Matter
5. We draw attention to the interim financial results published by the company for the Quarter 2 of the current year included a write back of ''provision for statutory liabilityâ created in the previous years amounting to Rs. 530.58 lakhs, which was reported under âOther incomeâ. However, based on further discussions, the management reinstated the said liability in the Quarter 4 and accordingly, the effect of such restatement was reported under âother incomeâ for the said quarter. As the write back as well as its reinstatement occurred in the current year itself, there is no net impact on the financial statements for the current year.
Our opinion is not modified in respect of the above.
Key Audit Matters
6. Key Audit Matters are those matters that, in our professional judgement, were of most significance 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 financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. We have determined the matters described below to be the key audit matters to be communicated in our report.
|
S. No |
The Key Audit Matters |
How our audit addressed the key audit matter |
|
1. |
Investment in Subsidiary Hindustan Fluorocarbons Limited (âHFL") is a subsidiary of the Company, wherein the company holds 56.43% equity shares by way of an investment of Rs. 1,106 lakh, which is classified as a Financial Asset. Subsequent to initial recognition, the investment made at HFL is measured at fair value through other comprehensive income (FVTOCI).As per the provisions of the Ind AS 107/9, the fair value of the financial asset is to be determined every year and accordingly, the carrying amount should be restated. Accordingly, the same has been considered as a key audit matter. |
Our audit procedures included and were not limited to the following: 1. Carried out market research with respect to the volume of quoted shares of HFL being traded on the BSE. 2. Evaluated the future prospects of HFLâs operations in light of CCEA decision dated 29.01.2020 to close down HFL. 3. Assessed the financial statements of HFL to verify whether the assets held for sale as shown in the financial statements exceeds its liability to the extent of the companyâs investment therein. |
|
2. |
Valuation of Inventory LPG, Benzene and chemical based inventory forms a significant part of the Companyâs inventory of which prices are fluctuating in nature and also depends on prices, decisions and conditions of other countries Inventories are valued at lower of cost and net realisable value except raw materials, work-in progress & stores. The audit mainly focused on verification of the cost and net realizable value of the above. |
Our audit procedures included and were not limited to the following: 1. Reviewing data from software used by the company such as Distributed Control System for plant operations, independent PLC for the safety of the Plant, Tank Level Monitoring System âLMSâ for the detailed statistics about stock of raw materials, finished products, and intermediate products along with various alarms, warnings and history of the tank operations etc. 2. Testing the design, implementation and operating effectiveness of key internal financial controls, including controls over valuation of inventory. 3. Testing on a sample basis the accuracy of cost for inventory by verifying the actual purchase cost. Testing the net realizable value by comparing actual cost with most recent selling price. |
|
S. No |
The Key Audit Matters |
How our audit addressed the key audit matter |
|
3. |
Recognition, Measurement, and Depreciation |
Our audit procedures included and were not limited to the following: 1. Evaluating managementâs processes and controls over the identification, capitalization, classification, and subsequent measurement of PPE. We assessed the companyâs policies for determining the initial cost, subsequent measurement, and depreciation of PPE, including the application of appropriate depreciation methods and useful lives. 2. We also tested a sample of PPE additions and disposals to verify the accuracy and completeness of their recognition and measurement. 3. We assessed the consistency of depreciation policies and their compliance with applicable accounting standards and the accuracy of the calculation of depreciation. 4. We verified the compliance with the provisions of Ind AS 16 for adopting the Revaluation model and its impact on the asset disclosures. |
|
of PPE The company, being a asset based entity, the recognition, measurement and depreciation of the PPE is very significant. The audit was mainly focused on the compliance of the provisions of the Ind AS 16 - Property, Plant and Equipments and the other aspects of asset accounting. |
Information Other than the Standalone financial statements and Auditorâs Report thereon
7. The Companyâs management and Board of Directors are responsible for the other information. The other information comprises the information included in the Companyâs annual report, but does not include the standalone financial statements and our auditorsâ report thereon.
8. Our opinion on the standalone financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.
9. In connection with our audit of the standalone financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the standalone financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information; we are required to report that fact. We are not in receipt of other information and therefore we do not comment on the same.
Managementâs responsibility for the standalone financial statements
10. The Companyâs Management and Board of Directors are responsible for the matters stated in Section 134(5) of the act with respect to the preparation of these standalone financial statements that give a true and fair view of the financial position, financial performance including other comprehensive income, cash flows and changes in equity of the Company in accordance with the accounting principles generally accepted in India including the Indian Accounting Standards (Ind AS) specified under Section 133 of the Act.
11. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the standalone financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.
12. In preparing the standalone financial statements, management is responsible for assessing the Companyâs ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.
13. The Board of Directors is also responsible for overseeing the Companyâs financial reporting process.
Auditorâs Responsibility for the Audit of Standalone Financial Statements
14. Our objectives are to obtain reasonable assurance about whether the standalone financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditorâs report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with SAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or
error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these standalone financial statements.
15. As part of an audit in accordance with SAs, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:
⢠Identify and assess the risks of material misstatement of the standalone financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
⢠Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances. Under section 143(3)(i) of the Companies Act, 2013, we are also responsible for expressing our opinion on whether the company has adequate internal financial controls system in place and the operating effectiveness of such controls.
⢠Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management and the Board of Directors
⢠Conclude on the appropriateness of managementâs use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Companyâs ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditorâs report to the related disclosures in the standalone 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 auditorâs report. However, future events or conditions may cause the Company to cease to continue as a going concern.
⢠Evaluate the overall presentation, structure and content of the standalone financial statements, including the disclosures, and whether the standalone financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
16. We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
17. We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.
18. From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the Standalone Financial Statements of the current period and are therefore the key audit matters. We describe these matters in our auditorâs report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.
Report on other legal and regulatory requirements
19. As required by the Companies (Auditorâs Report) Order, 2020 issued by the Central Government of India in terms of sub-section 11 of section 143 of the Act, we give in the âAnnexure Aâ, a statement on the matters specified in paragraphs 3 and 4 of the Order.
20. As required by the directions and sub directions issued by the office of the Comptroller & Auditor General of India under section 143 (5) of the Act, we give in the âAnnexure Bâ a statement on the matters referred in those directions.
21. 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 best of our knowledge and belief were necessary for the purpose of our audit;
b) In our opinion, proper books of account as required by law have been kept by the Company so far as appears from our examination of those books.
c) The Standalone Balance Sheet, Statement of Profit and Loss including Other Comprehensive Income, Statement of changes in Equity, and Statement of Cash Flows dealt with by this Report are in agreement with the books of account.
d) In our opinion, the aforesaid standalone financial statements comply with the Indian Accounting Standards specified under section 133 of the Companies Act, 2013, read with Rule 7 of Companies (Accounts), Rules 2014;
e) As per Notification No. G.S.R. 463(E) dated June 5, 2015, the Government Companies are exempted from provisions of section 164(2) of the Act. Accordingly, we are not required to report whether any directors are disqualified in terms of provisions contained in the said section.
f) The report on internal financial control as required under clause (i) of sub section 3 of section 143 of the Companies Act 2013 is attached as âAnnexure Câ.
g) With respect to other matters to be included in the Auditors Report in accordance with Rule 11 of Companies (Audit and Auditors) Rules, 2014, in our opinion and to the best of our information and according to the explanations given to us:
(i) The company has disclosed the impact of pending litigations on its financial position in its financial statement. - Refer note 36 to the standalone financial statements.
(ii) The company do not have any long-term contracts including derivative contracts for which there were any material foreseeable losses;
(iii) There were no amounts which were required to be transferred to Investor Education and Protection Fund by the company.
(iv) a. The management has represented that, to the best of its knowledge and belief, as disclosed in
note 47 no funds have been advanced or loaned or invested (either from borrowed funds or share premium or any other sources or kind of funds) by the company to or in any other persons or entities, including foreign entities (âIntermediaries"), with the understanding, whether recorded in writing or otherwise, that the Intermediary shall
⢠directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the company (âUltimate Beneficiaries") or
⢠provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries;
b. The management has represented, that, to the best of its knowledge and belief, as disclosed in note 48 no funds have been received by the company from any persons or entities, including foreign entities (âFunding Parties"), with the understanding, whether recorded in writing or otherwise, that the company shall
⢠directly or indirectly, lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party (âUltimate Beneficiaries") or
⢠provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries;
c. Based on such audit procedures considered reasonable and appropriate in the circumstances, nothing has come to our notice that has caused us to believe that the representations under subclause (iv) (a) and (iv) (b) contain any material mis-statement.
(v) No dividend was declared or paid during the year which required compliance with section 123 of the Companies Act, 2013.
(vi) Proviso to Rule 3(1) of the Companies (Accounts) Rules, 2014 for maintaining books of Account using accounting software which has a feature of recording audit trail (edit log) facility is applicable to the Company with effect from April 1, 2023, and accordingly, reporting under Rule 11(g) of Companies (Audit and Auditors) Rules, 2014 is not applicable for the financial year ended March 31, 2023.
22. Non-Compliance of the SEBI Listing Obligation and Disclosure Requirements (LODR) Regulations, 2015:
The Company has not complied with the Regulations 17(1)(a) and 17(1)(b) in respect of maintenance of an oftimum combination of executive and non-executive directors with at least one-woman director and no less than fifty percent of the Board of Directors as non-executive directors and maintenance of at least half of the board of Directors comprised of Independent Directors. (Refer Note 44 to the Standalone Financial Statements).
For Balan & Co. Chartered Accountants
Firm Regn. No.340S
Date: 18-05-2023 Partner (Memb. No: 228702)
Place: Kochi-11 UDIN: 23228702BGXDRK1444
Mar 31, 2018
Report on the Revised Standalone Ind AS Financial Statements
We have audited the accompanying standalone Ind AS financial statements of M/s. Hindustan Organic Chemicals Limited (âthe Companyâ), which comprise the Balance Sheet as at March 31s, 2018, and the Statement of Profit and Loss (including other comprehensive income), the Cash Flow Statement and the Statement of Changes in Equity for the year then ended, and a summary of the significant accounting policies and other explanatory information (hereinafter referred to as âstandalone Ind AS financial statementsâ).
Managementâs Responsibility for the Revised Standalone Financial Statements
The Companyâs Board of Directors is responsible for the matters stated in Section 134(5) of the Companies Act, 2013 (âthe Actâ) with respect to the preparation of these standalone IndAS financial statements to give a true and fair view of the financial position, financial performance including other comprehensive income, cash flows and changes in equity of the Company in accordance with the accounting principles generally accepted in India, including the Indian Accounting Standards (Ind AS) specified under Section 133 of the Act, read with Companies (Indian Accounting Standards) Rules, 2015.
This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding of the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the standalone Ind AS financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.
Auditorâs Responsibility
Our responsibility is to express an opinion on these standalone Ind AS financial statements based on our audit.
We have taken into account the provisions of the Act, the accounting and auditing standards and matters which are required to be included in the audit report under the provisions of the Act and the Rules made thereunder.
We conducted our audit in accordance with the Standards on Auditing specified under Section 143(10) of the Act and other applicable authoritative pronouncements issued by the Institute of Chartered Accountants of India. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and the disclosures in the standalone Ind AS financial statements. The procedures selected depend on the auditorâs judgment, including the assessment of the risks of material misstatement of the standalone Ind AS financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal financial control relevant to the Companyâs preparation of the standalone Ind AS financial statements that give a true and fair view, in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of the accounting estimates made by the Companyâs Directors, as well as evaluating the overall presentation of the standalone Ind AS financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the standalone Ind AS financial statements.
Opinion
In our opinion and to the best of our information and according to the explanations given to us, the aforesaid standalone Ind AS financial statements give the information required by the Act in the manner so required and give a true and fair view inconformity with the accounting principles generally accepted in India including Ind AS, of the financial position of the Company as at 31s March, 2018, and its financial performance including other comprehensive income, its cash flows and the changes in equity for the year ended on that date.
Emphasis of Matter
(a) Attention is drawn to Note no. 31 to the standalone IndAS financial statements which state that the Government of India has approved the restructuring plan of the company which includes closure of all the plants at Rasayani unit except the Conc. Nitric Acid/N2O4 Plant which is now handed over to ISRO and VRS to the employees is also provided except those associated with operation of Conc. Nitric Acid / N2O4 plant at Rasayani and the skeletal staff required to implement the proposed restructuring. However, Kochi unit is operational, in view of this, the financial statement has been prepared on Going Concern basis.
(b) The balances of trade payables, loans & advances and other current assets and other debit/credit balances are pending for confirmations and reconciliation (Note no. 36). The effect on the same on the loss is not ascertainable.
(c) Attention is drawn to Note no. 13(c)(iv) to the standalone IndAS financial statements which state that the Company has made provision for penal interest on Government loan, however, no provision has been made for interest on interest as per the sanction terms of the loan. Interest on interest has not been provided from the year 01.04.2001 to 31.03.2018 amounting to Rs.2,41,63 lakhs, accordingly loss to the said extent over the period of years has not been booked.
Other Matter
We did not audit the IndAS financial statements / information of the Kochi unit included in the standalone IndAS financial statements of the Company whose financial statements / information reflecting the total assets of Rs.20,954.81 lakhs (excluding inter-branch balance) as at 31st March, 2018 and total revenue of Rs.22,525.24 lakhs and total comprehensive loss of â (5,031.52) lakhs for the year ended on that date, as considered in the standalone IndAS financial statement. The IndAS financial statement / information of the unit has been audited by the Independent Branch Auditors whose report has been furnished to us and our opinion in so far as it relates to the amounts and disclosures included in respect of this unit is based solely on the report of such Branch Auditor.
Our opinion is not modified in respect of this matter.
Report on Other Legal and Regulatory Requirements
1. As required by âthe Companies (Auditorâs Report) Order, 2016â, issued by the Central Government of India in terms of sub section (11) of section 143 of the Act (hereinafter referred to as âOrderâ), we give in the Annexure A, statement of the matters specified in paragraphs 3 and 4 of the Order.
2. As required by the directions and sub-directions issued by the office of the Comptroller & Auditor General of India under section 143(5) of the Act, we give in the Annexure B, a statement on the matters referred to in those directions.
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 best of 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 the Company so far as it appears from our examination of those books.
c) The report on the accounts of the Branch office of the Company audited under section 143(8) of the Act by the Branch Auditors have been sent to us and have been properly dealt with by us in preparing this report.
d) The Balance Sheet, Statement of Profit and Loss, the Cash Flow Statement and the statement of changes in equity dealt with by this Report are in agreement with the books of accounts of the company.
e) In our opinion, the aforesaid standalone Ind AS financial statements comply with the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014.
f) As per the notification no. G.S.R. 463(E) dated June 05, 2015, the Government companies are exempted from provisions of section 164(2) of the Act. Accordingly we are not required to report whether any directors are disqualified in terms of provisions contained in the said section.
g) With respect to the adequacy of the internal financial controls over financial reporting of the Company and the operating effectiveness of such controls, refer to our separate report in Annexure C and
h) With respect to the other matters to be included in the Auditorâs Report in accordance with Rule11 of the Companies (Audit and Auditors) Rules, 2014, in our opinion and to the best of our knowledge and belief and according to the information and explanations given to us:
i. The Company has disclosed the impact of pending litigations on it financial position in its financial statements - Refer Note no. 37 to the IndAS financial statements;
ii. The Kochi unit of the Company has entered into long term transmission contract with Gas Authority of India Limited (GAIL) for the supply of Liquefied Natural Gas in the year 2011 for the period of 15 years ending in 2026. Material foreseeable loss on this contract is not quantifiable in current scenario. Other than this, the Company did not have any long-term contracts including derivative contracts for which there were any material foreseeable losses;
iii. There were no amounts which were required to be transferred to the Investor Education and Protection Fund by the Company during the year ended March 31, 2018.
4. Based on the observations of the Comptroller and Auditor General of India, additions/revisions have been carried out. We give in the Annexure D, the statements of the said additions/revisions which has been carried out.
Annexure - A to Independent Auditorsâ Report
(Referred to in Paragraph 1 of the Independent Auditorsâ Report to the Members of even date)
i. (a) The Company has maintained proper records showing full particulars including quantitative details and situation of fixed assets.
(b) The fixed assets have been physically been verified by the management at reasonable intervals.
In Kochi unit, verification of the fixed assets was carried out during the year.
In Rasayani unit, the Company carried out Impairment study by an external independent agency and incorporated impairment losses appropriately in the books of account.
(c) The title deeds of immovable properties are held in the name of the Company.
ii. (a) The inventory has been physically verified by the management at reasonable intervals during the year,
(b) The Company has made proper records of inventory. As explained to us, the discrepancies between the physical inventory and the books records noticed on physical verification were not material.
iii. According to the information and explanations given to us, the Company has granted secured loan to its subsidiary - Hindustan Flurocarbons Ltd (HFL) and unsecured advance in the nature of loan to its joint venture subsidiary company - HOC Chematur Ltd. covered in the register maintained under section 189 of the Companies Act, 2013, in respect of which :
(a) The loan to HFL is interest free to the extent of Rs.2744.06 lakhs under BIFR agreement and has varying interest rates of 10.25% to 14.5% on amount of Rs.453.01 lakhs. Both the principal amount and interest on this loan has not been received by the Company as per stipulation.
(b) The advance to HOC-Chematur Ltd. ofRs.1064.46 lakhs is interest free and there is no stipulation as to repayment of principal. The advance has been fully written off against provision made as it is doubtful recovery.
(c) In both the cases, except follow up, the company has not taken any other steps for recovery of dues.
iv. The Company has not entered into any transaction regarding the provisions of section 185 and 186 of the Companies Act, 2013 except for guarantee given by the Holding Company of Rs.603 lakhs for the loans taken by the subsidiary -HFL, from bank. Based on the information and explanation given to us, the terms and condition of this guarantee are not prejudicial to the interest of the Holding Company.
v. According to information and explanations provided to us, the company has not obtained deposit from public as defined according to the provisions of Section 73 to 76 of the Companies Act, 2013 and the Rules framed thereunder.
vi. We have broadly reviewed the books of accounts maintained by the company in pursuance to the rules made by the Central Government for maintenance of cost records under sub-section (1) of section 148 of the Act, for the certain products of the company and are of the opinion that prima facie and prescribed accounts and records have been maintained. We have not, however, made a detailed examination of the records with a view to determine whether they are accurate or complete.
vii. (a) According to information and explanations given to us and the records of the Company examined by us, in our opinion, the Company is generally regular in depositing the undisputed statutory dues, including provident fund, employeesâ state insurance, duty of customs, duty of excise, income tax, sales tax, service tax, value added tax, goods and service tax, cess and other material statutory dues, as applicable, with the appropriate authorities.
(b) According to the information and explanations given to us, no undisputed amounts payable in respect of provident fund, employeesâ state insurance, duty of customs, duty of excise, income tax, sales tax, service tax, value added tax, goods and service tax, cess and other material statutory dues were in arrears as at March 31st, 2018 for a period of more than six months from the date they became payable.
(c) According to the information and explanations given to us and based on the records of the company examined by us, there are no dues of provident fond, employeesâ state insurance, duty of customs, duty of excise, income tax, sales tax, service tax, value added tax, goods and service tax, cess and other material statutory dues which have not been deposited on account of any disputes other than those shown below:
Rasayani Unit:
|
Sr. No. |
Name of Statute |
Nature of Dues |
Period to which the amount relates (F.Y.) |
Amount of dispute (Rs. In lakhs) |
Forum where the dispute is pending |
|
|
1 |
Central Excise Act, 1944 |
Molten Sulphur Classification |
1997-98 |
15.53 |
Customs, Excise and Service Tax Appellate Tribunal |
|
|
2 |
Central Excise Act, 1944 |
Molten Sulphur Classification |
1994-95 to 1996-97 |
15.53 |
Customs, Excise and Service Tax Appellate Tribunal |
|
|
3 |
Central Excise Act, 1944 |
Shortage of inputs |
1998 to 2001 |
18.66 |
Bombay High Court |
|
|
4 |
Central Excise Act, 1944 |
Shortage of inputs |
2001-02 to 2002-03 |
5.85 |
Bombay High Court |
|
|
5 |
Central Excise Act, 1944 |
ARO Case (Aniline product valuation) |
2003-04 to 2006-07 |
19.29 |
Customs, Excise and Service Tax Appellate Tribunal |
|
|
6 |
Central Excise Act, 1944 |
N2O4 Exemption |
2006-07 to 2007-08 |
104.63 |
Customs, Excise and Service Tax Appellate Tribunal |
|
|
7 |
Central Excise Act, 1944 |
Duty clearance on Molten Sulphur |
1998-99 |
5.05 |
Deputy Commissioner Central Excise |
|
|
8 |
Central Excise Act, 1944 |
Duty clearance on Molten Sulphur |
1998-99 |
2.59 |
Deputy Commissioner Central Excise |
|
9 |
Finance Act, 1994 |
Wrong credit availed |
2007-08 to 2010-11 |
1.44 |
Assistant Commissioner Central Excise |
|
10 |
Finance Act, 1994 |
Cleaning, gardening and Rent-a-cab services |
2009-10 to 2011-12 |
8.88 |
Deputy Commissioner of Central Excise |
|
11 |
Finance Act, 1994 |
Service tax on canteen services |
2006-07 to 2010-11 |
66.96 |
Commissioner of Central Excise, Custom and Service tax |
|
12 |
Finance Act, 1994 |
Capital goods bill of entry wrong address |
2013-14 to 2014-15 |
17.58 |
Commissioner of Central Excise (Appeals) Mumbai |
|
13 |
Finance Act, 1994 |
Credit disallowed |
2006-07 |
9.34 |
CESTAT |
|
14 |
Finance Act, 1994 |
Penalty and interest payment |
2013-14 to 2014-15 |
10.95 |
Superintendent of Service tax |
|
15 |
Finance Act, 1994 |
Molten Sulphur classification |
1999 |
7.62 |
Commissioner of Central Excise |
|
16 |
Finance Act, 1994 |
Shortage of input |
13.64 |
Commissioner of Central Excise |
|
|
17 |
Finance Act, 1994 |
Credit disallowed |
2006-07 |
18.66 |
Commissioner of Central Excise |
|
18 |
Finance Act, 1994 |
Credit disallowed |
2015-16 |
17.80 |
Joint Commissioner of Central Excise |
|
19 |
Finance Act, 1994 |
Works contract services |
8.90 |
Commissioner of Central Excise Appeals |
|
|
20 |
Income Tax Act 1961 |
Penalty under section 271(1)(c) |
1998-1999 |
0.00 |
Before the Income Tax Appellate Tribunal |
|
21 |
Income Tax Act 1961 |
Quantum Appeal |
1998-1999 |
0.00 |
Before High Court |
|
22 |
Income Tax Act 1961 |
Penalty under section 271(1)© R.w.s 263 |
1998-1999 |
0.00 |
Commisioner of Income Tax Appeals, Mumbai |
|
23 |
Income Tax Act 1961 |
Penalty under section 271(1)(c) |
2001-02 |
yet to be determined |
High Court |
|
24 |
Income Tax Act 1961 |
Penalty under section 271(1)(c) |
2002-03 |
4.66 |
Before the Income Tax Appellate Tribunal |
|
25 |
Income Tax Act 1961 |
Quantum Appeal |
2002-03 |
No demand |
Before High Court |
|
26 |
Income Tax Act 1961 |
Penalty under section 271(1)(c) |
2003-04 |
yet to be determined |
Before the Income Tax Appellate Tribunal |
|
27 |
Income Tax Act 1961 |
Quantum Appeal |
2003-04 |
0.00 |
Before High Court |
|
28 |
Income Tax Act 1961 |
Disallowance of expenses |
2005-06 |
0.00 |
|
|
29 |
Income Tax Act 1961 |
Disallowance of expenses |
2006-07 |
0.00 |
High Court |
|
30 |
Income Tax Act 1961 |
Disallowance of expenses |
2005 to 2008 |
0.00 |
High Court |
|
31 |
Income Tax Act 1961 |
Disallowance of expenses |
2008-09 |
0.00 |
Dispute pending before the high court |
|
32 |
Income Tax Act 1961 |
Disallowance of expenses |
2009-10 |
N.A. |
|
|
33 |
Income Tax Act 1961 |
Disallowance of expenses |
2010-11 |
404.71 |
Commisioner of Income Tax Appeals, Mumbai |
|
34 |
Income Tax Act 1961 |
Disallowance of expenses |
2011-12 |
81.03 |
Commisioner of Income Tax Appeals, Mumbai |
|
35 |
Income Tax Act 1961 |
Disallowance of expenses |
2012-13 |
106.51 |
Commisioner of Income Tax Appeals, Mumbai |
|
36 |
Income Tax Act 1961 |
Disallowance of expenses |
2012-13 |
80.71 |
Commisioner of Income Tax Appeals, Mumbai |
|
Kochi Unit: |
|||||
|
1 |
Finance Act, 1994 |
Service tax on Inter unit goods transfer |
2003 to 2006 |
43.36 |
CESTAT, Bangalore |
|
2 |
Finance Act, 1994 |
Tyre re trading charges - Service tax |
2011-12 |
3.17 |
CESTAT, Bangalore |
|
3 |
Finance Act, 1994 |
Service tax on Bus transportation to employees |
2011-12 |
1.10 |
Commissioner (Appeals), Ernakulam |
|
4 |
Finance Act, 1994 |
Tyre re trading charges - Service tax |
2012-13 |
10.96 |
Commissioner (Appeals), Ernakulam |
|
5 |
Finance Act, 1994 |
Disallowance of Cenvat Credit |
2006 to 2013 |
83.32 |
CESTAT, Bangalore |
|
6 |
ESI Corporation |
Payment of ESI contribution during the period from 01.04.1992 to 31.10.1992 |
2004 |
2.17 |
ESI Court, Ernakulam |
|
7 |
Central Sales Tax Act 1956 |
Levy of Interest |
2005-06 |
155.23 |
Tribunal, Dept of Commercial Taxes, Ernakulam |
|
8 |
KVAT Act 2003 |
Levy of Interest |
2005-06 |
152.63 |
Tribunal, Dept of Commercial Taxes, Ernakulam |
|
9 |
Central Sales Tax Act 1956 |
Disallowance of Input tax credit |
2012-13 |
73.36 |
Deputy Commissioner (Appeals), Ernakulam |
|
10 |
KVAT Act 2003 |
Demand u/s 25(1) |
2011-12 |
714.58 |
Commissioner of Commercial Taxes, Thiruvananthpuram |
viii. In our opinion and according to the information and explanations given to us, in absence of adequacy of funds the company has made default in repayment of dues to Government loan as per stipulation. Details of default made by the company are as follows :
(Rs. In Lakhs)
|
S.N. |
Amount of default as at 31st March 2018 |
Period of Default |
|
1 |
61.60 |
2002-03 |
|
2 |
152.60 |
2003-04 |
|
3 |
212.60 |
2004-05 |
|
4 |
268.50 |
2005-06 |
|
5 |
328.50 |
2006-07 |
|
6 |
388.50 |
2007-08 |
|
7 |
448.50 |
2008-09 |
|
8 |
804.50 |
2009-10 |
|
9 |
749.10 |
2010-11 |
|
10 |
749.10 |
2011-12 |
|
11 |
687.50 |
2012-13 |
|
12 |
828.50 |
2013-14 |
|
13 |
768.50 |
2014-15 |
|
14 |
412.00 |
2015-16 |
|
15 |
844.20 |
2016-17 |
|
16 |
1336.40 |
2017-18 |
|
Total |
8980.60 |
ix. The company has not raised any money via initial public offer or by way of further public offer or term loans and hence reporting under para 3(ix) of the Order is not applicable.
x. According to the information and explanations given to us, we have neither come across any instance of material fraud on or by the Company by its officers or employees, noticed or reported during the year, nor have we been informed of any such case by the Management.
xi. The Company has paid or provided managerial remuneration during the year under audit in accordance with the requisite approvals mandated by the provisions of section 197 read with Schedule V to the Companies Act.
xii. In our opinion, the company is not a Nidhi Company. Accordingly, paragraph 3(xii) of the Order is not applicable.
xiii. According to the information and explanations provided to us, and based on our examination of the records of the Company, all transactions with the related parties are in compliance with Section 177 and 188 of Companies Act, 2013 where applicable and the details have been disclosed in the standalone Ind AS financial statements as required by the applicable Indian accounting standards.
xiv. During the year, the Company has not made any preferential allotment or private placement of shares or fully or partly paid convertible debentures and hence reporting under clause 3 (xiv) of the Order is not applicable to the Company.
xv. According to the information and explanations provided to us, and based on our examination of the records of the Company, the company has not entered into any non-cash transactions with directors or persons connected 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 Reserve Bank of India Act, 1934.
Annexure B to the Independent Auditors Report
To the Members of Hindustan Organic Chemicals Limited for the year ended 31st March, 2018 (Referred to in paragraph 2 under Report on Other Legal and Regulatory Requirements)
As required by the directions and sub-directions issued by the Office of the Comptroller and Auditor General of India under Section 143(5) of the Act, we give below our comments on the matter referred therein
1. Whether the Company has clear title/lease deeds for freehold and leasehold respectively? If not please state the area of freehold & leasehold land for which title/lease deeds are not available?
Kochi unit :
Based on the information and explanation given to us we report that the unit has clear title deeds for freehold land. The unit does not have any leasehold land.
Rasayani unit:
Based on the information and explanation given to us we report that the unit has clear title/lease deeds for freehold/ leasehold land.
2. Please report whether there are any cases of waiver/ write off of debts/loans/interest etc., if yes, the reasons there for and the amount involved.
Kochi unit :
According to the information and explanation given to us, there are no write offs of debts in the company.
Rasayani unit :
According to the information and explanation given to us, there are no write offs of debts in the company.
3. Whether proper records are maintained for inventories lying with third parties & assets received as gift from Govt. or other authorities?
Kochi unit :
The unit does not maintain inventory at third party locations. The unit has not received any gift from Government or other authorities.
Rasayani unit :
The unit does not maintain inventory at third party locations. The unit has not received any gift from Government or other authorities.
4. State the area of land under encroachment and briefly explain the steps taken by the Company to remove the encroachment.
Rasayani unit:
As informed to us, in Rasayani unit, land measuring 39.63 acres (approx.) is under encroachment as per the report of the consultant appointed in 2015 and there is public road constructed approximating 10.776 acres. In the financial statements, the land at Rasayani to the extent of 39.63 acres have not been revalued total amounting to Rs.5548.20 lakhs.
The company has during the year, initiated Survey proceedings of land by Government of Maharashtra and the survey of entire land is in progress. The impact in the financial statements on account of the above, if any, would be subject to the final encroachment determined on the completion of the survey.
Annexure - C to Independent Auditorsâ Report
To the Members of Hindustan Organic Chemicals Limited for the year ended 31st March, 2018
(Referred to in Paragraph 3(f) of the Independent Auditorsâ Report of even date)
Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section 143 of the Companies Act, 2013 (âthe Actâ)
1. We have audited the internal financial controls over financial reporting of Hindustan Organic Chemicals Limited (âthe Companyâ) as of March 31st, 2018 in conjunction with our audit of the standalone Ind AS financial statements of the Company for the year ended on that date.
Managementâs Responsibility for Internal Financial Controls
2. The Companyâs management is responsible for establishing and maintaining internal financial controls based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls over Financial Reporting issued by the Institute of Chartered Accountants of India (âICAIâ). These responsibilities include the design, implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the orderly and efficient conduct of its business, including adherence to companyâs policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information, as required under the Companies Act, 2013.
Auditorsâ Responsibility
3. Our responsibility is to express an opinion on the Companyâs internal financial controls over financial reporting based on our audit. We conducted our audit in accordance with the Guidance Note on Audit of Internal Financial Controls over Financial Reporting (the âGuidance Noteâ) and the Standards on Auditing, issued by ICAI and deemed to be prescribed under section 143(10) of the Companies Act, 2013, to the extent applicable to an audit of internal financial controls, both applicable to an audit of Internal Financial Controls and, both issued by the ICAI. Those Standards and the Guidance Note require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether adequate internal financial controls over financial reporting was established and maintained and if such controls operated effectively in all material respects.
4. Our audit involves performing procedures to obtain audit evidence about the adequacy of the internal financial controls system over financial reporting and their operating effectiveness. Our audit of internal financial controls over financial reporting included obtaining an understanding of internal financial controls over financial reporting assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. The procedures selected depend on the auditorâs judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error.
5. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the Companyâs internal financial controls system over financial reporting.
Meaning of Internal Financial Controls over Financial Reporting
6. A companyâs internal financial control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A companyâs internal financial control over financial reporting includes those policies and procedures that
(a) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;
(b) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and
(c) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the companyâs assets that could have a material effect on the financial statements.
Inherent Limitations of Internal Financial Controls over Financial Reporting
7. Because of the inherent limitations of internal financial controls over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may occur and not be detected. Also, projections of any evaluation of the internal financial controls over financial reporting to future periods are subject to the risk that the internal financial control over financial reporting may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Opinion
8. According to the information and explanation given to us, the Company has not established its internal financial control over financial reporting on criteria based on or considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issued by the Institute of Chartered Accountants of India. Because of this reason, we are unable to obtain sufficient appropriate audit evidence to provide a basis for our opinion whether the Company had adequate internal financial controls over financial reporting and whether such internal financial controls were operating effectively as at March 31, 2018.
For M B Agrawal & Co.
Chartered Accountants
FRN No: 100137W
Sd/-
Harshal Agrawal
Place: Mumbai Partner
Date: 27th August, 2018 Membership No: 109438
Mar 31, 2016
To the Members of HINDUSTAN ORGANIC CHEMICALS LIMITED Report on the Financial Statements
We have audited the accompanying Standalone financial statements of HINDUSTAN ORGANIC CHEMICALS LIMITED (âthe Companyâ) which comprise the Balance Sheet as at March 31, 2016, the Statement of Profit and Loss, Cash Flow Statement for the year then ended, and a summary of significant accounting policies and other explanatory information, in which are incorporated the returns for the year ended on that date audited by the Independent branch auditors of the companyâs unit at Kochi.
Managementâs Responsibility for the Standalone Financial Statements
The Companyâs Board of Directors is responsible for the matters stated in Section 134(5) of the Companies Act, 2013 (âthe Actâ) with respect to the preparation of these Standalone financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the accounting principles generally accepted in India, including the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.
Auditorâs Responsibility
Our responsibility is to express an opinion on these Standalone financial statements based on our audit. We have taken into account the provisions of the Act, the accounting and auditing standards and matters which are required to be included in the audit report under the provisions of the Act and the Rules made there under.
We conducted our audit in accordance with the Standards on Auditing specified under Section 143(10) of the Act. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and the disclosures in the financial statements. The procedures selected depend on the auditorâs judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal financial control relevant to the Companyâs preparation of the financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on whether the Company has in place an adequate internal financial controls system over financial reporting and the operating effectiveness of such controls. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of the accounting estimates made by the Companyâs Directors, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit qualified opinion on the Standalone financial statements Basis for Qualified Opinion
(A) No provisions have been made in the standalone financial statements for the following amounts (refer respective notes in the notes to the financial statements)
(i) Penal Interest of Rs. 1475.51 lakhs (previous year ended 31s March 2015 Rs. 1268.87 lakhs) on overdue loan from Government of India.
(ii) Loss on account of Misappropriation of Companyâs funds amounting to Rs. 64.81 lakhs (Previous year ended 31s March 2015, Rs. 64.81 lakhs), pending final report from CBI and outcome of the civil suit.
(iii) Liability of wage revision for the period 1.1.1997 to 31.12.2000 Rs. 1887.79 lakhs (previous year ended 31s March 2015 Rs.1887.79 lakhs) at Rasayani unit
(iv) Liability of the wage Revision for the period 1.1.2007 to 31.3.2008 Rs.161.55 lakhs (previous year ended 31 March 2015 Rs.161.55 lakhs ) to the officers and Rs.148.26 lakhs (previous year ended 31s March 2015 Rs.148.26 lakhs) to staff at Rasayani unit.
The above first four matters were also qualified in Audit report on the financial statements for the year ended March 31, 2015.
Had the above effects of the items referred above been considered, the loss for the year would have been higher by 3737.92 Lakhs (Previous year ended 31s march 2015 - Rs 3531.28 Lakhs)
(B) In absence of adequate profit, Redemption reserve for redemption of 25% of Preference Shares Capital amounting to Rs. 6750 lacs due for redemption during the financial year 2015-16 is not provided in the books.
(C) The Balances of trade payables, loans & advances and other current assets and other debit/ credit balances are pending for confirmations and reconciliations (note no. 43). The effect of the same on the loss is not ascertainable. This matter was also qualified in Audit report on the financial statements for the year ended March 31, 2015.
(D) In absence of current status of pending litigations and financial impact thereof, liabilities under such cases are not ascertainable and the foreseeable loss of the same is not considered while preparing financial results.
(E) The Kochi unit of the company has entered into long term supply contract with Gas Authority of India (GAIL) for supply of Liquefied Natural Gas in 2011 for the period of 15 years ending in 2026. Material foreseeable losses on this contract are not quantifiable in the current scenario.
(F) The Company has not provided any provision during the year for diminution in the value of investments in subsidiaries and also no provision is made against overdue of loans given to them since long.
Qualified Opinion
In our opinion and to the best of our information and according to the explanations given to us, except for the effects of the matters described in the Basis for Qualified Opinion paragraph above, the aforesaid Standalone financial statements give the information required by the Act in the manner so required gives a true & fair view in conformity with the accounting principles generally accepted in India, of the state of affairs of the company as at 31st march, 2016 and its Losses and its Cash flow for the year ended on that date.
Emphasis of Matter
Attention is drawn to note 47 to the standalone financial statements which states that the Company has been declared as SICK unit by BIFR during the year vide its order dated 22nd July, 2015. The net worth of the Company is fully eroded. The Company has incurred cash losses in the current and in previous years. The Companyâs current liabilities exceeded its current assets as at the balance sheet date. These conditions indicate the existence of a material uncertainty that may cast significant doubt on the Companyâs ability to continue as a going concern. However, the financial statements of the Company have been prepared on a going concern basis because the Companyâs management has submitted board approved revival plan to administrative ministry and the same is under process.
In the absence of adequacy of funds, the Company has not paid salaries to employees, dues to many vendors, statutory dues and defaulted to its lenders for more than a year. Further due to inadequate working capital and economic viability of the products, some of the plants of the Company are not utilized appropriately which may lead to obsolesce due to nonworking since long and frequent shutdown in running plants.
Our opinion is not modified in respect of this matter.
Other Matter
We did not audit the financial statements / information of Kochi Unit included in the standalone financial statement of the Company whose financial statement / financial information reflecting the total assets of Rs. 9,929.54 Lakhs (excluding inter-branch balance) as at 31st March, 2016 and total Revenues of Rs. 8,726.57 lakhs for the year ended on that date, as considered in the standalone financial statement. The financial statements/ information of this unit has been audited by the Independent branch auditors whose report has been furnished to us, and our opinion in so far as it relates to the amounts and disclosures included in respect of this unit is based solely on the report of such branch auditor.
Our opinion is not modified in respect of this matter.
The matters described in the Basis for Qualified Opinion paragraph above, and the going concern matter described in the Emphasis of Matter paragraph above, in our opinion, may have an adverse effect on the functioning of the Company. Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditorâs Report) Order, 2016 (âthe Orderâ), as amended, issued by the Central Government of India in terms of sub-section (11) of section 143 of the Act, we give in the âAnnexure Iâ a statement on the matters specified in paragraphs 3 and 4 of the Order, to the extent applicable.
2. As required by the directions and sub-directions issued by the Office of the Comptroller and Auditor General of India under Section 143(5) of the Act, we give in âAnnexure IIâ, a statement on the matters referred to in those directions
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 best of our knowledge and belief were necessary for the purpose of our audit;
b) In our opinion proper books of account as required by law have been kept by the Company so far as it appears from our examination of those books;
c) The report on the accounts of the branch office of the Company audited under section 143(8) of the Act by branch auditors have been sent to us and have been properly dealt with by us in preparing this report.
d) The Balance Sheet, the Statement of Profit and Loss and the Cash Flow Statement dealt with by this Report are in agreement with the books of account
e) In our opinion, the aforesaid Standalone financial statements comply with the Accounting Standards specified under section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014.
f) The conditions specified in section 164(2) of the act in respect of qualifications of directors are not applicable to the company being a Government company.
g) With respect to the adequacy of the internal financial controls over financial reporting of the Company and the operating effectiveness of such controls, refer to our separate Report in âAnnexure IIIâ.
h) With respect to the other matters to be included in the Auditorâs Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules, 2014, in our opinion and to the best of our information and according to the explanations given to us:
i. The Company has disclosed the impact of the pending litigations on the financial position in its financial statement which are contingent in nature ( Refer Note no 44 to the financial statements)
ii. The Kochi unit of the company has entered into long term supply contract with Gas Authority of India (GAIL) for supply of Liquefied Natural Gas in 2011 for the period of 15 years ending in 2026. Material foreseeable losses on this contract are not quantifiable in the current scenario.
iii. There were no amounts which were required to be transferred to the Investor Education and Protection Fund by the Company.
âAnnexure Iâ to the Independent Auditorsâ Report to the Members of Hindustan Organic Chemicals Limited
As referred to in paragraph 1 under the heading âReport on Other Legal & Regulatory Requirementâ of our report of even date and as required by the Companies (Auditorsâ Report) Order, 2016, issued by Central Government in terms of sub section (11) of section 143 of the Companies Act, 2013 (âthe Actâ) and on the basis of such checks as we considered appropriate and according to the information and explanation given to us. We further report that:
1. (a) The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets;
(b) In case of Kochi unit, The Fixed Assets have not been physically verified by the management during the current year.
In case of Rasayani unit, the Company has carried out Impairment study by independent external agency and incorporated provisions as report in their report. In our opinion the verification is reasonable, however it is recommended to implement regular program for verification of fixed assets on periodic basis.
(c) The title deeds of immovable properties are held in the name of the company.
2. (a) The management has conducted the physical verification of inventory at reasonable intervals during the year.
In our opinion the physical verification of inventory followed by the management are reasonable and adequate in relation to the size of the company and the nature of the business,
(b) In case of Rasayani unit the verification for non-working plantsâ storages were not taken by dip measurement instead reliance placed on the meter reading devices installed. The Company has maintained proper records of inventory. As explained to us, the discrepancies between the physical inventory and the physical records noticed on physical verification were not material.
3. As explained to us, the Company has granted secured loans to its subsidiary - Hindustan Flurocarbons Ltd. and unsecured advance in the nature of loan to its joint venture subsidiary company - HOC- Chematur Ltd. Covered in the register maintained under section 189 of the Act.
The loan to Hindustan Fluorocarbons Ltd. is interest free to the extent of Rs. 2744.06 lakhs under BIFR agreement and has varying interest rates of 10.25% to 14.5% on amount of Rs.453.01 lakhs. Both the principal amount and the interest on this loan has not been received by company as per stipulation. The Company has not provided any provision against doubtful of recovery during the current year.
The advance to HOC- Chematur Ltd. of Rs. 1067.46 lakhs is interest free and there is no stipulation as to repayment of principal. The advance has been fully written off against provision made in previous year as it is doubtful of recovery.
In both the above cases, except follow up, the company has not taken any other steps for recovery of dues.
4. According to the information and explanations to us by the management, the company has not entered into any transaction regarding the provisions of section 185 & 186 of the Companies Act, 2013 except for guarantee given by the Holding Company of Rs.1103 Lakhs for the loans taken by subsidiary - Hindustan Fluorocarbons Ltd., from bank. Based on the information and explanations given, the terms and conditions of this guarantee are not prejudicial to the interest of the Holding Company.
5. The Company has not accepted any deposits from the public and hence the directives issued by the Reserve Bank of India and the provisions of Sections 73 to 76 or any other relevant provisions of the Act and the Companies (Acceptance of Deposit) Rules, 2015 with regard to the deposits accepted from the public are not applicable.
6. We have broadly reviewed the books of accounts maintained by the company in pursuance to the rules made by the Central Government for maintenance of cost records under sub-section (1) of Section 148 of the Act, for the certain products of the company and are of the opinion that prima facie and prescribed accounts and records have been maintained. We have not, however made a detailed examination of the records with a view to determine whether they are accurate or complete.
7. According to the information and explanations given to us by the management and on the basis of our examination of the books of account carried on by us and records, the Company has been generally regular in depositing undisputed statutory dues including Provident Fund, Service Tax, Duty of Customs, Duty of Excise, except Employees State Insurance, Income-Tax, Sales tax, Value added Tax, cess etc. The company has no been regular in depositing provident fund dues and tax deducted at source with the appropriate authorities during the year. There is no undisputed arrears of statutory dues outstanding as at 31s March, 2016 for the period of more than 6 Months from the date they became payable except for as stated below:
Rasayani Unit
|
Sr. No. |
Name of Statute |
Nature of Dues |
Outstanding Amount (Rs in lakhs) |
|
1 |
The Employeesâ Provident Funds And Miscellaneous Provisions Act, 1952 |
Employees Provident Fund contribution |
2273.37 |
|
2 |
The Employeesâ Provident Funds And Miscellaneous Provisions Act, 1952 |
Employees Pension Fund contribution |
154.83 |
|
3 |
Works Contract Tax Act, 1989 |
Works Contract Tax |
1.29 |
|
4 |
Income Tax Act, 1961 |
Tax deducted at source |
190.59 |
|
Gram Panchayat |
Gram Panchayat Tax |
47.00 |
|
|
Total |
2667.07 |
Kochi Unit
|
Sr. No. |
Name of Statute |
Nature of Dues |
Outstanding Amount (Rs in lakhs) |
|
|
1 |
The Employeesâ Provident Funds And Miscellaneous Provisions Act, 1952 |
Employees Provident Fund contribution |
537.18 |
|
|
2 |
Income Tax Act, 1961 |
TDS - Salary |
93.35 |
|
|
3 |
Excise Act |
Excise duty |
114.89 |
|
|
4 |
Professional Tax |
Professional Tax |
4.49 |
|
|
Total |
749.91 |
(b) According to the information and explanation given to us, there are no disputed dues of income tax, sales tax, service tax, duty of customs duty, excise duty, value added tax and cess which have not been deposited as at 31s March 2016 other than those shown below:
Rasayani Unit
|
Sr. No. |
Name of Statute |
Nature of Dues |
Period to which the dispute relates |
Amount of Dispute (Rs. in lakhs) |
From where dispute is pending |
|
1 |
Central Excise Act, 1944 |
Molten Sulphur Classification |
Feb-97 to Jun-98 |
15.53 |
Customs, Excise and Service Tax Appellate Tribunal |
|
2 |
Central Excise Act, 1944 |
Molten Sulphur Classification |
Sept-94 to Jan-97 |
22.76 |
Customs, Excise and Service Tax Appellate Tribunal |
|
3 |
Central Excise Act, 1944 |
Shortage of Inputs |
1998-01 |
18.66 |
Pending at high court |
|
4 |
Central Excise Act, 1944 |
Shortage of Inputs |
July-01 to Sept.-02 |
5.85 |
Commission rate |
|
5 |
Central Excise Act, 1944 |
ARO Case (Aniline Valuation) |
July,03 to May06 |
19.29 |
Customs, Excise and Service tax appellate |
|
6 |
Central Excise Act, 1944 |
Clearance of SSA to Fertilizer Manufacturing Units |
Sept.,96 to Mar.00 |
112.78 |
Pending remanded by CEGAT but Central Excise department filed appeal in High Court |
|
7 |
Central Excise Act, 1944 |
N2O4 Exemption |
Jan.,06 to Feb.,08 |
104.63 |
Customs, Excise and Service Tax Appellate Tribunal |
|
8 |
Central Excise Act, 1944 |
Duty on clearance on Molten Sulphur |
Nov.,98 to Dec.,98 |
5.05 |
Deputy commissioner central excise |
|
9 |
Central Excise Act, 1944 |
Duty on clearance on Molten Sulphur |
Dec.,98 to Jan.,99 |
2.59 |
Deputy commissioner central excise |
|
10 |
Finance Act 1944 |
Wrong credit avails on Angels, bar and HR coils and Plates |
May-07 to July 10 |
1.44 |
Appeal filed before Assistant commissioner Central Excise |
|
11 |
Finance Act 1944 |
Cleaning, gardening and rent a cab services |
Oct.,9 to Nov.,11 |
8.88 |
Deputy Commissioner Central Excise |
|
12 |
Finance Act 1944 |
Service tax on canteen services |
Feb.07 to Mar.11 |
66.96 |
Commissioner of Central Excise Custom and Service Tax. |
|
13 |
Finance Act 1944 |
Capital goods Bills of entry |
27.11.2013 to 18.12.14 |
17.58 |
Appeal filed before Honâble Comm.C excise Appeals Mumbai.II |
|
14 |
Finance Act, 1994 |
Flood case |
Jan.,2007 |
9.34 |
Appeal is to be filed in CESTATE |
|
15 |
Finance Act, 1994 |
Reversal Penalty and int. payment as O-inO |
Oct.,13 to Mar.15 |
10.95 |
Assistant commissioner Central Excise. |
|
16 |
Finance Act, 1994 |
Molten Sulphur |
1999 |
7.62 |
Commissioner of Central Excise Appeals, Mumbai - II |
|
17 |
Finance Act, 1994 |
Shortage of inputs |
13.64 |
Commissioner of Central Excise |
|
|
18 |
Finance Act, 1994 |
Reversal of cenvat credit |
2006-07 |
18.66 |
Commissioner of Central Excise se |
|
19 |
Finance Act, 1994 |
Service tax credit works |
2015-16 |
17.80 |
Joint commissioner Central Excise |
|
20 |
Finance Act, 1994 |
Contract Service |
8.90 |
Appeal is to be filed before Honâble Comm. Central Excise Appeals Mumbai - II |
|
|
21 |
Income Tax Act, 1961 |
Penalty u/s 271(1)(c) |
A.Y 1999-00 |
91.07 |
Bombay High Court |
|
22 |
Income Tax Act, 1961 |
Penalty u/s 271(1)(c) |
A.Y 1999-00 |
57.55 |
Bombay High Court |
|
23 |
Income Tax Act, 1961 |
Penalty u/s 271(1)(c) |
A.Y 2003-04 |
607.25 |
Bombay High Court |
|
24 |
Income Tax Act, 1961 |
Penalty u/s 271(1)(c) |
A.Y 2004-05 |
63.23 |
Bombay High Court |
|
25 |
Income Tax Act, 1961 |
Disallowance of Expenses |
A.Y. 2011-12 |
404.71 |
Bombay High Court. Awaiting for hearing. |
|
26 |
Income Tax Act, 1961 |
Disallowance of Expenses |
A.Y. 2012-13 |
81.03 |
Bombay High Court. Awaiting for hearing. |
|
27 |
Income Tax Act, 1961 |
Disallowance of Expenses |
A.Y. 2013-14 |
106.51 |
Bombay High Court. Awaiting for hearing. |
|
Total |
1900.26 |
Kochi Unit
|
Sr. No. |
Name of Statute |
Nature of Dues |
Period to which the dispute relates |
Amount of Dispute (Rs. in lakhs) |
Forum where dispute is pending |
|
1 |
ESI Corporation |
ESI contribution of employees |
1.04.92 to 31.10.92 |
2.17 |
Employees Insurance Court (Industrial) |
|
2 |
Finance Act 1994 |
Availing of CEVAT credit on service tax on transportation of final products to Rasayani Depot |
04/03 to 12/06 |
41.47 |
CESTAT, Bangalore |
|
3 |
Finance Act 1994 |
Insurance renewal/ Tyreretrading charge |
07/11 to 05/12 |
3.17 |
CESTAT, Bangalore |
|
4 |
Finance Act 1994 |
Bus, Car transportation to employees |
11/11 to 06/12 |
1.16 |
Commissioner of Central Excise Appeals, Ernakulam |
|
5 |
Finance Act 1994 |
Insurance renewal/Tyrere-tradingcharge |
04/11 to 03/13 |
10.96 |
Commissioner of Central Excise Appeals, Ernakulam |
|
6 |
Finance Act 1994 |
Outdoor Catering/ Insurance renewal &Tyrere-trading charge |
04/06 to 01/13 |
83.33 |
Department filed appeal to CESTAT, Bangalore |
|
7 |
Employees Provident Fund |
Employees Family Pension Scheme- Damage for default payment |
1995 to 1997 |
18.05 |
Appeal filed before High Court, Kerala |
|
8 |
Central Sales Tax Act, 1956 |
Levy of interest- CST |
2005-06 |
155.23 |
Tribunal Dept. of Commercial Taxes, Ernakulam |
|
9 |
KVAT Act, 2003 |
Levy of interest- KVAT |
2005-06 |
152.63 |
Tribunal Dept. of Commercial Taxes, Ernakulam |
|
10 |
KVAT Act, 2003 |
KVAT Act, 2003 - Demand U/S 25(1) |
2011-12 |
714.58 |
Commissioner of commercial taxes - Thiruvanathapuram |
|
11 |
Central Sales Tax Act, 1956 |
Input Tax due from April, 12 to March, 13 |
2012-13 |
73.36 |
D.C (Appeals), Dept. of Commercial Taxes, Ernakulam |
|
Total |
1256.11 |
|
S. No |
Year |
Government Loan ( Rs in Lakhs) |
Canara Bank Loan ( Rs in Lakhs) |
|
7 |
2008-09 |
448.50 |
- |
|
8 |
2009-10 |
804.50 |
- |
|
9 |
2010-11 |
749.10 |
- |
|
10 |
2011-12 |
749.10 |
- |
|
11 |
2012-13 |
687.50 |
- |
|
12 |
2013-14 |
828.50 |
- |
|
13 |
2014-15 |
768.50 |
- |
|
14 |
2015-16 |
412.00 |
58.43 |
|
Total |
6800.00* |
58.43** |
|
âAnnual Installments for various loans ** Monthly Installments of Rs. 5.33 Lakhs
9. In our opinion and according to the information and explanations given to us, the Company has not raised money by way of public issue/ follow-on offer (including debt instruments)/term loan. The company has received Government loan during the year and the same was applied for the purpose for which it was raised.
10. Based on the audit procedures performed and the information & explanations given by the management, we report that no fraud by the company or on the company by its officers or employees has been noticed or reported during the year.
11. Based upon the audit procedures performed and the information and explanations given by the management, the managerial remuneration has been paid or provided in accordance with the requisite approvals mandated by the provisions of section 197 read with Schedule V to the Companies Act.
12. In our opinion, the Company is not a Nidhi Company. Therefore, the provisions of clause 3 (xii) of the Order are not applicable to the Company.
13. In our opinion, all transactions with the related parties are in compliance with section 177 and 188 of Companies Act, 2013 and the details have been disclosed in the Financial Statements as required by the applicable accounting standards.
14. Based upon the audit procedures performed and the information and explanations given by the management, the company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures during the year under review. Accordingly, the provisions of clause 3 (xiv) of the Order are not applicable to the Company and hence not commented upon.
15. Based upon the audit procedures performed and the information and explanations given by the management, the company has not entered into any non-cash transactions with directors or persons connected with him. Accordingly, the provisions of clause 3 (xv) of the Order are not applicable to the Company and hence not commented upon.
16. In our opinion, the company is not required to be registered under section 45IA of the Resen/e Bank of India Act, 1934 and accordingly, the provisions of clause 3 (xvi) of the order are not applicable to the Company and hence not commented upon.
8. In our opinion & according to the information and explanation given to us, in absence of adequacy of funds the company has made default in repayment of dues to banks and government loan as per stipulation and further the company is declared as SICK under BIFR The revival proposal of Company is submitted with administrative Ministry and the same is under process. Details for the default made by the company are as follows:
|
S. No |
Year |
Government Loan ( Rs in Lakhs) |
Canara Bank Loan ( Rs in Lakhs) |
|
1 |
2002-03 |
61.60 |
- |
|
2 |
2003-04 |
152.60 |
- |
|
3 |
2004-05 |
212.60 |
- |
|
4 |
2005-06 |
268.50 |
- |
|
5 |
2006-07 |
328.50 |
- |
|
6 |
2007-08 |
328.50 |
- |
Sub-directions u/s 143(5) of the Companies Act, 2013
1. State the area of land under encroachment and briefly explain the steps taken by the Company to remove the encroachment.
Rasayani Unit:
As informed to us, in Rasayani Unit, 40 acres (approx) land is under encroachment. The management has not taken any effective action for eviction of the encroachers. The land area allotted by the Government of Maharashtra is not earmarked and measured. Detail of encroachment given on approximate basis.
It is recommended to obtain exact measurement report duly certified by collector to earmarked encroached area and fencing of total area. Thereafter actual area of encroachment can be measured correctly.
Kochi Unit:
In Kochi Unit, we are informed that no encroachment of land has been noticed.
2. (i) Whether the amount of (a) bank balances (b) Trade Receivable (c) Trade Payables (d) Loans & Advances for which third party confirmation was not made available has been reported.
Confirmations/ Bank Statements for all bank balances have been received. In case of Kochi unit we have not received any direct confirmation from debtors and creditors. In case of Rasayani unit few creditors have confirmed balances to us, list of which is provided to the management.
|
a) |
Bank Balance |
Confirmation received for all banks |
|
b) |
Trade receivable |
No Confirmation received |
|
c) |
Trade payables |
Confirmation received of 12 parties amounting to Rs 119.43 Lakhs. |
|
d) |
Loan & Advances |
No Confirmation received |
(ii) Where such balance has been confirmed by the respective parties, whether it varies widely from the amounts reflected under respective heads in the financial statements and if so differences to be disclosed.
Rasayani Unit:
Out of the confirmations received on creditors/debtors reconciliation there were 2 parties were variations exceeded Rs. 1 lakh individually. These accounts are yet to be reconciled. They represent a small percentage as compared to the total amount of outstanding.
|
S. No |
Name of Party |
Balance in Books (Rs In Lakhs) |
Balance confirmed Rs In Lakhs) |
Variations (Rs In Lakhs) |
|
1 |
Kaizen Automations |
9.94 |
15.28 |
5.34 |
|
2 |
Hazels Mercantile Limited |
72.69 |
140.48 |
67.79 |
|
Total |
82.63 |
155.76 |
73.13 |
|
3. Independent verification may be made, of information / inputs furnished to actuary viz, number of employees, average salary, retirement age etc. and assumptions made by the actuary regarding the discount rates, future cost increase, mortality rate etc. for arriving at the provisions for liability of retirement benefits viz., gratuity, leave encashment, post-retirement medical benefits etc.
The particulars furnished to the actuary and the assumption made by the actuary for arriving at the provisions for liability of retirement benefits have prima facie been verified by us.
Annexure IIIâ to the Independent Auditorâs Report of even date on the Standalone Financial Statements of HINDUSTAN ORGANIC CHEMICALS LIMITED
Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section 143 of the Companies Act, 2013 (âthe Actâ)
We have audited the internal financial controls over financial reporting of HINDUSTAN ORGANIC CHEMICAL LIMITED as at March 31, 2016 in conjunction with our audit of the standalone financial statements of the Company for the year ended on that date.
Managementâs Responsibility for Internal Financial Controls
The Companyâs management is responsible for establishing and maintaining internal financial controls based on âthe internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls over Financial Reporting issued by the Institute of Chartered Accountants of Indiaâ. These responsibilities include the design, implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the orderly and efficient conduct of its business, including adherence to companyâs policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information, as required under the Companies Act, 2013.
Auditorsâ Responsibility
Our responsibility is to express an opinion on the Companyâs internal financial controls over financial reporting based on our audit. We conducted our audit in accordance with the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting and the Standards on Auditing, issued by ICAI and deemed to be prescribed under section 143(10) of the Companies Act, 2013, to the extent applicable to an audit of internal financial controls, both applicable to an audit of Internal Financial Controls and, both issued by the Institute of Chartered Accountants of India. Those Standards and the Guidance Note require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether adequate internal financial controls over financial reporting was established and maintained and if such controls operated effectively in all material respects.
Our audit involves performing procedures to obtain audit evidence about the adequacy of the internal financial controls system over financial reporting and their operating effectiveness. Our audit of internal financial controls over financial reporting included obtaining an understanding of internal financial controls over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. The procedures selected depend on the auditorâs judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the Companyâs internal financial controls system over financial reporting.
Meaning of Internal Financial Controls over Financial Reporting
A companyâs internal financial control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A companyâs internal financial control over financial reporting includes those policies and procedures that:
(1) Pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;
(2) Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and
(3) Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the companyâs assets that could have a material effect on the financial statements.
Inherent Limitations of Internal Financial Controls over Financial Reporting
Because of the inherent limitations of internal financial controls over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may occur and not be detected. Also, projections of any evaluation of the internal financial controls over financial reporting to future periods are subject to the risk that the internal financial control over financial reporting may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Opinion
In our opinion, the Company does have, an adequate internal financial controls system over financial reporting and such internal financial controls over financial reporting were operating effectively as at March 31, 2016 in material aspects, based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issued by the Institute of Chartered Accountants of India excep as reported below:
- The Company needs to improve system of maintaining status of litigations or legal cases and periodic confirmations from legal consultants/in-charges should be placed in board meeting to ensure adequate provisioning under pending cases.
- The Company should improve system of follow up with all creditors/debtors to ensure periodic reconciliation with parties because very few confirmations received during the year.
- The Company needs to implement program for physical verification of all movable and immovable assets on periodic basis in addition to impairment study done by external independent agency.
- The Company should conduct Quarterly internal audit because no internal audit reports are placed in board meeting during the year due to delay in appointment of internal auditors.
For JMT & Associates
Chartered Accountants
FRN: 104167W
Sd/-
CA Jayesh Shah
Place: Mumbai Partner
Date: 20.05.2016 Membership number: 39910
Mar 31, 2015
We have audited the accompanying standalone financial statements of
Hindustan Organic Chemicals Limited ('the Company'), which comprise the
Balance Sheet as at 31st March, 2015, the Statement of Profit and Loss
and the Cash Flow Statement for the year then ended and a summary of
the significant accounting policies and other explanatory information,
in which are incorporated the Returns for the year ended on that date
audited by the branch auditors of the Company's Unit at Kochi.
Management's Responsibility for the Standalone Financial Statements
The Company's Board of Directors is responsible for the matters stated
in Section 134(5) of the Companies Act, 2013 ('the Act') with respect
to the preparation of these standalone financial statements that give a
true and fair view of the financial position, financial performance and
cash flows of the Company in accordance with the accounting principles
generally accepted in India, including the Accounting Standards
specified under Section 133 of the Act, read with Rule 7 of the
Companies (Accounts) Rules, 2014. This responsibility also includes
maintenance of adequate accounting records in accordance with the
provisions of the Act for safeguarding the assets of the Company and
for preventing and detecting frauds and other irregularities; selection
and application of appropriate accounting policies; making judgments
and estimates that are reasonable and prudent; and design,
implementation and maintenance of adequate internal financial controls,
that were operating effectively for ensuring the accuracy and
completeness of the accounting records, relevant to the preparation and
presentation of the financial statements that give a true and fair view
and are free from material misstatement, whether due to fraud or error.
Auditor's Responsibility
Our responsibility is to express an opinion on these standalone
financial statements based on our audit.
We have taken in to account the provisions of the Act, the accounting
and auditing standards and matters which are required to be included in
the audit report under the provisions of the Act and the Rules made
thereunder.
We conducted our audit in accordance with the Standards on Auditing
specified under Section 143(10) of the Act. Those Standards require
that we comply with ethical requirements and plan and perform the audit
to obtain reasonable assurance about whether the financial statements
are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about
the amounts and disclosures in the financial statements. The procedures
selected depend on the auditor's judgment, including the assessment of
the risks of material misstatement of the financial statements, whether
due to fraud or error. In making those risk assessments, the auditor
considers internal financial control relevant to the Company's
preparation of the financial statements that give a true and fair view
in order to design audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on
whether the Company has in place an adequate internal financial control
system over financial reporting and the operating effectiveness of such
controls. An audit also includes evaluating the appropriateness of the
accounting policies used and the reasonableness of the accounting
estimates made by the Company's Directors, as well as evaluating the
overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and
appropriate to provide a basis for our qualified audit opinion on the
standalone financial statements.
Basis for Qualified Opinion
A) No provisions have been made in the standalone financial statements
for the following amounts (refer respective notes in the notes to the
financial statements);
i) Penal interest of Rs. 1268.87 lakhs (Previous year ended 31st March
2014: Rs. 1062.51 lakhs) on overdue loan from Government of India (note
no. 5A(vi)),
ii) Loss on account of misappropriation of Company's fund amounting to
Rs. 64.81 lakhs (Previous year ended 31st March 2014: Rs. 64.81 lakhs),
pending final report from CBI and outcome of the civil suit (note no.
37),
iii) Liability of wage revision for the period 1.1.1997 to 31.12.2000
Rs.1887.79 lakhs (Previous year ended 31st March 2014: Rs. 1887.79
lakhs) at Rasayani unit (note no. 33A),
iv) Liability of wage revision for the period 1.1.2007 to 31.3.2008
Rs.161.55 lakhs (Previous year ended 31st March 2014: Rs. 161.55 lakhs)
to Officers and Rs. 148.26 lakhs (Previous year ended 31st March 2014:
Rs. 148.26 lakhs) to Staff at Rasayani unit (note no. 33B and 33C).
The above four matters were also qualified in our report on the
financial statements for the year ended 31st March, 2014.
Had the effects of the items mentioned in the paragraphs A) i) to A)
iv) above been considered, the loss for the year would have been higher
by Rs. 3531.28 lakhs (Previous year ended 31st March 2014: Rs. 3324.92
lakhs).
B) The balances of trade receivables, trade payables, loans and
advances and other current assets and other debit / credit balances are
pending for confirmations and reconciliation (note no. 42). The effect
of the same on the loss for the year is not ascertainable.
This matter was also qualified in our report on the financial
statements for the year ended 31st March, 2014.
Qualified Opinion
In our opinion and to the best of our information and according to the
explanations given to us, except for the effects of the matters
described in the Basis for Qualified Opinion paragraph above, the
aforesaid standalone financial statements give the information required
by the Act in the manner so required and give a true and fair view in
conformity with the accounting principles generally accepted in India,
of the state of affairs of the Company as at 31st March, 2015, and its
loss and its cash flows for the year ended on that date.
Emphasis of Matter
Attention is drawn to note 47 to the standalone financial statements
which states that the company has made an application for reference to
Board for Industrial and Financial Reconstruction (BIFR). The net worth
of the Company is fully eroded. The Company has incurred a cash loss in
the current and in previous years. The Company's current liabilities
exceeds its current assets as at the balance sheet date. These
conditions indicate the existence of a material uncertainty that may
cast significant doubt on the Company's ability to continue as a going
concern. However, the financial statements of the Company have been
prepared on a going concern basis for the reasons stated in the said
note. Our opinion is not modified in respect of this matter.
Other Matter
We did not audit the financial statements/information of Kochi Unit
included in the standalone financial statements of the Company whose
financial statements / financial information reflect total assets of
Rs. 78675.65 lakhs as at 31st March, 2015 and total revenues of Rs.
13880.84 lakhs for the year ended on that date, as considered in the
standalone financial statements. The financial statements/ information
of this unit has been audited by the branch auditors whose report has
been furnished to us, and our opinion in so far as it relates to the
amounts and disclosures included in respect of this unit, is based
solely on the report of such branch auditors.
Our opinion is not modified in respect of this matter.
Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditor's Report) Order, 2015 issued
by the Central Government of India in terms of sub section (11) of
section 143 of the Act, we give in Annexure I, a statement on the
matters specified in paragraphs 3 and 4 of the Order, to the extent
applicable.
2. As required by the directions and sub-directions issued by the
Office of the Comptroller and Auditor General of India under Section
143(5) of the Act, we give in Annexure II, a statement on the matters
referred to in those directions.
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 best of 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 the Company so far as it appears from our examination of those
books.
c) The report on the accounts of the branch office of the Company
audited under section 143(8) of the Act by branch auditors have been
sent to us and have been properly dealt with by us in preparing this
report.
d) The Balance Sheet, the Statement of Profit and Loss and the Cash
Flow Statement dealt with by this report are in agreement with the
books of account.
e) In our opinion, the aforesaid standalone financial statements comply
with the Accounting Standards referred to in section 133 of the Act,
read with Rule 7 of the Companies (Accounts) Rules, 2014.
f) The matters described in the Basis for Qualified Opinion paragraph
above, and the going concern matter described in the Emphasis of Matter
paragraph above, in our opinion, may have an adverse effect on the
functioning of the Company.
g) The conditions specified in section 164(2) of the Act in respect of
qualifications of directors is not applicable to the Company being a
government company.
h) With respect to the other matters to be included in the Auditor's
Report in accordance with Rule 11 of the Companies (Audit and Auditors)
Rules, 2014, in our opinion and to the best of our information and
according to the explanations given to us:
i. The Company has disclosed the impact of pending litigations on its
financial position in its financial statements (Refer note 43 to the
financial statements).
ii. The Kochi Unit of the Company has entered into long term supply
contract with Gas Authority of India (GAIL) for supply of Liquefied
Natural Gas in 2011 for a period of 15 years ending in 2026. Material
foreseeable losses on this contract is not quantifiable in the current
scenario. Other than this, the Company did not have any long term
contracts including derivative contracts for which there were any
material foreseeable losses.
iii. There were no amounts which were required to be transferred to the
Investor Education and Protection Fund by the Company during the year.
Annexure I to the Independent Auditor's Report
To the Members of Hindustan Organic Chemicals Limited
As referred to in Paragraph 1 under 'Report on Other Legal and
Regulatory Requirements' in our Auditors' report of even date and as
required by the Companies (Auditor's Report) Order, 2015, issued by the
Central Government in terms of sub section (11) of section 143 of the
Companies Act, 2013 ('the Act') and on the basis of such checks as we
considered appropriate and according to the information and
explanations given to us, we further report that: -
1. (a) The Company has maintained proper records showing full
particulars, including quantitative details and situation of its
fixed assets.
(b) The fixed assets have been physically verified by the management at
reasonable intervals except at Kochi unit where the frequency of
verification needs to be improved. As explained to us, no material
discrepancies were noticed on such verification.
2. (a) The inventory has been physically verified by the management at
reasonable intervals during the year.
(b) In our opinion, the procedures of physical verification of
inventory followed by the management are reasonable and adequate in
relation to the size of the Company and the nature of its business,
except for inventory in storage tanks at Kochi unit which does not have
a system of taking dip measurements. Instead, reliance is placed on the
electronic reading reported by the Distribution Control System.
(c) The Company has maintained proper records of inventory. As
explained to us, the discrepancies between the physical inventory and
the book records noticed on physical verification were not material.
3. As explained to us, the Company has granted secured loan to its
subsidiary - Hindustan Flurocarbons Ltd. and unsecured advance in the
nature of loan to its joint venture subsidiary company - HOC-Chematur
Ltd. covered in the register maintained under section 189 of the Act.
The advance to HOC - Chematur Ltd. of Rs. 1067.46 lakhs is interest
free and there is no stipulation as to the repayment of the principal.
The advance has been fully provided for as it is doubtful of recovery.
The loan to Hindustan Flourocarbon Ltd. is interest free to the extent
of Rs.2744.06 lakhs and has varying interest rates of 10.25% to 14.5%
on amount of Rs. 453.01 lakhs. Both the principal amount and interest
on this loan has not been received by the Company as per stipulation.
In both the above cases, besides writing follow-up letters, the Company
has not taken any other steps for recovery of the dues.
4. In our opinion and according to the information and explanations
given to us, there are adequate internal control systems commensurate
with the size of the Company and the nature of its business for the
purchase of inventory, fixed assets and for the sale of goods and
services. During the course of our audit, we have neither been informed
nor have we observed any continuing failure to correct major weaknesses
in internal control system.
5. The Company has not accepted any deposits from the public within
the meaning of the provisions of Sections 73 to 76 or any other
relevant provisions of the Act and Rules framed thereunder.
6. We have broadly reviewed the books of accounts maintained by the
Company in pursuance to the rules made by the Central Government for
the maintenance of cost records under sub section (1) of section 148 of
the Act, for certain products of the Company and are of the opinion
that prima facie the prescribed accounts and records have been made and
maintained. We have not, however, made a detailed examination of the
records with a view to determine whether they are accurate or complete.
7. a) According to the information and explanations given to us by the
management and on the basis of examination of the books of accounts
carried out by us, the Company has been regular in depositing
undisputed statutory dues including Employees' State Insurance,
Sales-tax, Wealth-Tax, Service Tax, Custom Duty, Excise Duty, Value
Added Tax, Cess and other statutory dues, as applicable, with the
appropriate authorities. The Company has not been regular in depositing
Provident Fund dues and tax deducted at source with the appropriate
authorities during the year. There were no undisputed arrears of
statutory dues outstanding as at 31st March, 2015 for a period of more
than six months from the date they became payable except for as stated
below:
Rasayani Unit :
Sr. Name of Statute Nature of Dues Outstanding
No. Amount
(Rs. in
lakhs)
1 The Employees' Provident Funds Employees 1467.67
And Miscellaneous Provisions Provident Fund
Act, 1952 contribution
2 The Employees' Provident Funds Employees Pension 26.18
And Miscellaneous Provisions Fund contribution
Act, 1952
3 MVAT Act, 2002 w.e.f 2005 Works Contract Tax 0.48
4 Income Tax Act, 1961 Tax deducted at 67.94
source
5 Gram Panchayat Gram Panchayat 42.49
Tax
Total 1604.76
Kochi Unit:
Sr. Name of Statute Nature of Dues Outstanding
No. Amount
(Rs. in lakhs)
1 The Employees' Provident Funds Employees 221.67
And Miscellaneous Provisions Provident Fund
Act, 1952 contribution
2 Income Tax Act, 1961 TDS - Salary 16.76
b) According to the information and explanations given to us by
management and the records of the Company examined by us, there were no
disputed dues in respect of Income-tax, Sales-tax, Wealth-tax, Service
Tax, Custom Duty, Excise Duty, Value Added Tax and Cess which have not
been deposited as at 31st March, 2015 other than those shown below :
Rasayani Unit:
Sr. Name of Statute Nature of Dues Period to
No. which the
dispute
relates
1 Central Excise Act, Molten Sulphur Feb-97 to
1944 Classification Jun-98
2 Central Excise Act, Molten Sulphur Sept-94 to
1944 Classification Jan-97
3 Central Excise Act, Molten Sulphur 1999-00
1944 Classification
4 Central Excise Act, Shortage of
1944 Inputs
5 Central Excise Act, Shortage of 1998-01
1944 Inputs
6 Central Excise Act, Shortage of Jul-01 to
1944 Inputs Sept-02
7 Central Excise Act, ARO Case Jul-03 to
1944 (Aniline Valuation) May-06
8 Central Excise Clearance of Sept-96 to
Act, 1944 SSA to fertilizer Mar-00
manufacturing
units
9 Central Excise Reversal of 2006-07
Act, 1944 Cenvat Credit
availed on inputs
lost in flood
10 Central Excise N2O4 Jan-06 to
Act, 1944 Exemptiom Feb-08
11 Central Excise Duty on Nov-98 to
Act, 1944 Clearance of Dec-98
Molten Sulphur
12 Central Excise Duty on Jan-99
Act, 1944 Clearance of
Molten Sulphur
13 Finance Act, 1994 Wrong credit May-07 to
availed on Jul-10
Angels, bars and
HR coils and plates
14 Finance Act, 1994 Cleaning, Oct-09 to
gardening and Nov-11
Rent-a-cab
services
15 Finance Act, 1994 Service Tax on Feb-07 to
canteen services Mar-11
16 Finance Act, 1994 Capital Goods 27/11/2013
Bill of Entry to
wrong address 18/12/2014
17 Finance Act, 1994 Flood Case Jan 07
18 Finance Act, 1994 Reversal Penalty Oct 13 to
and Interest Mar 15
payment
19 Income Tax Act, Penalty u/s A.Y 1999-
1961 271(1)(c) 00
20 Income Tax Act, Penalty u/s A.Y 1999-
1961 271(1)(c) 00
21 Income Tax Act, Penalty u/s A.Y 2003-
1961 271(1)(c) 04
22 Income Tax Act, Penalty u/s A.Y 2004-
1961 271(1)(c) 05
Sr. Name of Statute Amount of Forum where
No. Dispute dispute is pending
(Rs. in
lakhs)
1 Central Excise Act, 15.53 Customs, Excise and
1944 Service Tax Appellate
Tribunal
2 Central Excise Act, 22.76 Customs, Excise and
1944 Service Tax Appellate
Tribunal
7.62 Commissionerate
3 Central Excise Act,
1944
13.64 Commissionerate
4 Central Excise Act,
1944
18.66 High Court
5 Central Excise Act,
1944
5.85 High Court
6 Central Excise Act,
1944
19.29 Customs, Excise and
7 Central Excise Act, Service Tax Appellate
1944
Tribunal
112.78 High Court
8 Central Excise
Act, 1944
18.66 Commissionerate
9 Central Excise
Act, 1944
104.63 Customs, Excise and
10 Central Excise Service Tax Appellate
Act, 1944
Tribunal
5.05 Deputy
11 Central Excise Commissioner
Act, 1944 Central Excise
12 Central Excise 2.59 Deputy
Act, 1944 Commissioner
Central Excise
13 Finance Act, 1994 1.44 Assistant
Commissioner
Central Excise
14 Finance Act, 1994 8.88 Deputy
Commissioner
Central Excise
15 Finance Act, 1994 66.96 Commissioner of
Central Excise,
Custom and Service Tax
16 Finance Act, 1994 17.58 Commissioner of
Central Excise
Appeals, Mumbai - II
17 Finance Act, 1994 9.34 Appeal to be filed in
CESTAT
18 Finance Act, 1994 10.95 Assistant
Commissioner of
Central Excise and
Superintendent Service
tax of central Excise
Total 462.21
19 Income Tax Act, 91.07 Bombay High Court
1961
20 Income Tax Act, 57.55 Bombay High Court
1961
21 Income Tax Act, 607.25 Bombay High Court
1961
22 Income Tax Act, 63.23 Bombay High Court
1961
Total 819.10
Kochi Unit:
Sr. Name of Statute Nature of Dues Period to
No. which the
dispute
relates
1 ESI Corporation ESI contribution 1.04.92 to
of employees 31.10.92
2 Finance Act 1994 Availing of 04/03 to
CEVAT credit on 12/06
service tax on
transportation of
final products to
Rasayani Depot
3 Finance Act 1994 Insurance 07/11 to
renewal/Tyre 05/12
retrading charge
4 Finance Act 1994 Bus, Car 11/11 to
transportation to 06/12
employees
5 Finance Act 1994 Insurance 04/11 to
renewal/Tyre 03/13
retrading charge
6 Finance Act 1994 Outdoor Catering/ 04/06 to
Insurance 01/13
renewal & Tyre
retrading charge
7 Employees Employees 1995 to 1997
Provident Fund Family Pension
Scheme- Damage
for default
payment
8 Central Sales Tax Trade Discount 2005-06
Act, 1956 given through
credit notes
disallowed- CST
9 Central Sales Tax Turnover 2005-06
Act, 1956 assessed @
12.50% against
4%- CST
10 KVAT Act, 2003 Turnover 2005-06
assessed at
higher rate and
miscellaneous
income assessed to
tax - KVAT
11 Central Sales Tax Turnover 2005-06
Act, 1956 assessed @
12.50% against
10%- CST
12 Central Sales Tax Levy of interest- 2005-06
Act, 1956 CST
13 KVAT Act, 2003 Levy of interest- 2005-06
KVAT
14 Central Sales Tax Trade Discount 2006-07
Act, 1956 given through
credit notes
disallowed- CST
15 Central Sales Tax Levy of interest- 2006-07
Act, 1956 CST
16 Central Sales Tax Trade Discount 2007-08
Act, 1956 given through
credit notes
disallowed- CST
17 KVAT Act, 2003 Disallowance of 2008-09
input tax credit
18 KVAT Act, 2003 Disallowance of 2009-10
input tax credit
19 KVAT Act, 2003 Input Tax Refund 2011-12
due from October,
11 to March, 12
20 Central Sales Tax Input Tax due 2012-13
Act, 1956 from April, 12 to
March, 13
Sr. Name of Statute Amount of Forum where
No. Dispute dispute is
(Rs. in lakhs) pending
1 ESI Corporation 2.17 Employees
Insurance Court
(Industrial)
Total 2.17
2 Finance Act 1994 39.57 CESTAT,
Bangalore
3 Finance Act 1994 3.17 CESTAT,
Bangalore
4 Finance Act 1994 1.10 Commissioner
of Central
Excise Appeals,
Ernakulam
5 Finance Act 1994 10.96 Commissioner
of Central
Excise Appeals,
Ernakulam
6 Finance Act 1994 77.06 Department filed
appeal to CESTAT,
Bangalore
Total 131.86
7 Employees 18.05 Appeal filed
Provident Fund before High
Court, Kerala
Total 18.05
8 Central Sales Tax 53.71 D.C (Appeals),
Act, 1956 Dept. of
Commercial
Taxes,Ernakulam
9 Central Sales Tax 0.33 D.C (Appeals),
Act, 1956 Dept. of
Commercial
Taxes, Ernakulam
10 KVAT Act, 2003 2.06 D.C (Appeals),
Dept. of
Commercial
Taxes, Ernakulam
11 Central Sales Tax 0.07 D.C (Appeals),
Act, 1956 Dept. of
Commercial
Taxes, Ernakulam
12 Central Sales Tax 155.23 Tribunal Dept.
Act, 1956 of Commercial
Taxes, Ernakulam
13 KVAT Act, 2003 152.63 Tribunal Dept.
of Commercial
Taxes, Ernakulam
14 Central Sales Tax 79.68 D.C (Appeals),
Act, 1956 Dept. of
Commercial
Taxes, Ernakulam
15 Central Sales Tax 11.87 D.C (Appeals),
Act, 1956 Dept. of
Commercial Taxes,
Ernakulam
16 Central Sales Tax 6.70 D.C (Appeals),
Act, 1956 Dept. of
Commercial
Taxes, Ernakulam
17 KVAT Act, 2003 1.28 D.C (Appeals),
Dept. of
Commercial Taxes,
Ernakulam
18 KVAT Act, 2003 0.90 D.C (Appeals),
Dept. of
Commercial Taxes,
Ernakulam
19 KVAT Act, 2003 104.66 D.C (Appeals),
Dept. of
Commercial
Taxes, Ernakulam
20 Central Sales Tax 73.36 D.C (Appeals),
Act, 1956 Dept. of
Commercial
Taxes, Ernakulam
Total 642.48
(c) There were no amounts which were required to be transferred to the
Investor Education and Protection Fund by the Company in accordance
with the relevant provisions of the Act and the rules made thereunder
8. The accumulated losses of the Company at the year-ended exceed its
paid-up capital and reserves and its net worth is fully eroded. The
Company has incurred cash losses during the year and also in the
immediately preceding financial year.
9. In our opinion and according to the information and explanations
given to us, the Company has not defaulted in repayment of dues to
banks and financial institutions and debenture holders (bond holders)
during the year.
10. According to the information and explanations given to us, the
Company has given guarantee of Rs. 1103 lakhs for loan taken by
subsidiary - Hindustan Flurocarbons Ltd., from bank. Based on the
explanations given to us, in our opinion, the terms and conditions of
this guarantee are not prejudicial to the interest of the Company.
11. In our opinion, the term loans have been generally applied for the
purposes for which they were obtained by the Company. However, we have
noticed deviations in the amounts applied for individual purposes.
12. According to the information and explanations given to us, no
material fraud on or by the Company has been noticed during the course
of our audit or reported during the year.
For Ford, Rhodes, Parks & Co.
Chartered Accountants
Firm's Registration No. 102860W
Sd/-
Shrikant Prabhu
Place : Mumbai Partner
Date : 28th May, 2015 Membership No. 35296
Mar 31, 2014
We have audited the accompanying financial statements of Hindustan
Organic Chemicals Limited ("the Company"), which comprises the Balance
Sheet as at 31st March, 2014 and the Statement of Profit and Loss and
Cash Flow Statement for the year then ended, and a summary of
significant accounting policies and other explanatory information.
Management''s Responsibility for the Financial Statement Management is
responsible for the preparation of these financial statements that give
a true and fair view of the financial position, financial performance
and cash flows of the Company in accordance with the Accounting
Standards notified under the Companies Act,1956 ("the Act") read with
the General Circular 15/2013 dated 13th September,2013 of the Ministry
of Corporate Affairs in respect of Section 133 of the Companies Act,
2013 and in accordance with the accounting principles generally
accepted in India. This responsibility includes the design,
implementation and maintenance of internal control relevant to the
preparation and presentation of the financial statements that give a
true and fair view and are free from material misstatement, whether due
to fraud or error. Auditor''s Responsibility
Our responsibility is to express opinion on theses financial statements
based on our audit. We conducted our audit in accordance with Standards
on Auditing issued by the Institute of Chartered Accountants of India.
Those Standards require that we comply with ethical requirements and
plan and perform the audit to obtain reasonable assurance about whether
the financial statements are free from material misstatement.
An audit involves performing procedure to obtain audit evidence about
the amounts and disclosures in the financial statements. The procedures
selected depend on the auditor''s judgment, including the assessment of
the risks of material misstatement of the financial statements, whether due
to fraud or error. In making those risk assessments, the auditor considers
internal control relevant to the Company''s preparation and fair presentation
of the financial statements in order to design audit procedures that are
appropriate in the circumstances. An audit also includes evaluating the
appropriateness of accounting policies used and the reasonableness of
the accounting estimates made by management, as well as evaluating the
overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and
appropriate to provide a basis for our qualified audit opinion.
Basis for Qualified Opinion
A) No provisions has been made in the financial statements for the
following amounts (refer respective notes in the notes to the financial
statements);
i) Penal interest of Rs. 1062.51 lacs on overdue loan from Government
of India (note no. 5A(iv)),
ii) Loss on account of misappropriation of Company''s fund amounting to
Rs. 64.81 lacs, pending final report from CBI and outcome of the civil
suit (note no. 37),
iii) Liability of wage revision for the period 1.1.1997 to 31.12.2000
Rs. 1887.79 lacs at Rasayani unit (note no. 33A),
iv) Liability of wage revision for the period 1.1.2007 to 31.3.2008 Rs.
161.55 lacs to Officers and Rs. 148.26 lacs to Staff at Rasayani unit
(note no. 33B and 33C),
v) Claims of JNPT short provided amounting to Rs. 1351.08 lacs in
respect of;
a) Lease rentals and escalation on leased land (note no.34F(ii)),
b) Water charges
B) Capital work in progress includes an amount of '' 2978.91 lacs
incurred on JNPT tank terminal project. The construction has been
suspended for more than six years and the lease has been called off by
the lessor - JNPT after the expiry of the lease period in June 2010.
The status of the project is stagnant, incomplete and of no utility
since long. No provision is made for the impairment in the value of
this asset, if any, pending ascertainment of the recoverable amount
(note no. 34F(i)),
C) The Balances of trade receivables, trade payables, loans and
advances and other current assets and other debit / credit balances are
pending for confirmations and reconciliation (note no. 42),
D) We further report that, had the effects of the items mentioned in
the paragraphs (A) above been considered, the loss for the year would
have been higher by Rs. 4676 lacs, resulting into a loss of Rs.
22361.28 lacs and the accumulated loss as at the year-end would have
been higher by the same amount i.e Rs. 4676 lacs. Further, the
long-term liabilities /provisions as at the year-end would have been
higher by Rs. 4676 lacs.
E) We also further report that the effect of the items mentioned in
paragraphs (B) and (C) above on the loss for the year and on the
balance sheet is not ascertainable.
F) Wage arrears in respect of Rasayani unit of the Company which had
not been provided in earlier years amounting to 40.73 lacs in case of
employees for the period 1.1.1997 to 31.12.2000, Rs. 3.19 lacs for the
period 1.1.2007 to 31.3.2008 in case of Officers and Rs. 0.67 lacs for
the period 1.1.2007 to 31.3.2008 in case of Staff has been paid /
provided during the year and charged as current year wage expense in
the Statement of profit and loss. In our opinion, the same should have
reflected as a prior period expense item as the Company should have
made provision for the same in earlier years (note no. 33)
Qualified Opinion
In our opinion and to the best of our information and according to the
explanations given to us, except for the possible effects of the
matters described in the Basis for Qualified Opinion paragraph, the
financial statements give the information required by the Act in the
manner so required and give a true and fair view in conformity with the
accounting principles generally accepted in India:
i) in the case of the Balance sheet, of the state of affairs of the
Company as at 31st March, 2014;
ii) in the case of the Statement of Profit and Loss, of the loss for
the year ended on that date; and
iii) in the case of the Cash Flow Statement, of the cash flows for the
year ended on that date.
Emphasis of Matter
Attention is drawn to note 47 to the financial statements which states
that the financial statements have been prepared on going concern
basis, although the net worth of the Company is fully eroded, for
reasons stated in the said note.
Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditor''s Report) Order, 2003 ("the
Order") issued by the Central Government of India in terms of sub
section (4A) of section 227 of the Act, we give in the Annexure a
statement on the matters specified in paragraph 4 and 5 of the order.
2. As required by section 227(3) of the Companies Act, 1956, we report
that:
a) we have obtained all the information and explanations, which to the
best of our knowledge and belief were necessary for the purposes of our
audit except for the matters described in the Basis for Qualified
Opinion paragraph;
b) in our opinion, proper books of account as required by law have been
kept by the Company so far as appears from our examination of those
books;
bb) the report on the accounts of the branch offices audited under
section 228 by a person other than the company''s auditor has been
forwarded to us as required by clause (c) of sub-section (3) of section
228 of the Act and have been dealt with in preparing our report in the
manner considered necessary by us;
c) the Balance Sheet, the Statement of Profit and Loss and Cash Flow
Statement dealt with by this report are in agreement with the books of
account;
d) except for the possible effects of the matters described in the
Basis for Qualified Opinion paragraph, in our opinion, the Balance
Sheet, Statement of Profit and Loss and Cash Flow Statement comply with
the Accounting Standards notified under the Act read with the General
Circular 15/2013 dated 13th September, 2013 of the Ministry of
Corporate Affairs in respect of Section 133 of the Companies Act, 2013;
e) the conditions specified in section 274(1)(g) of the Companies Act,
1956 in respect of qualifications of directors is not applicable to the
Company being a government company.
ANNEXURE TO THE AUDITORS'' REPORT
(REFERRED TO IN PARAGRAPH 1 ABOVE)
As required by the Companies (Auditor''s Report) Order, 2003 issued by
the Central Government in terms of Section 227 (4A) of the Companies
Act, 1956 ("the Act"), as amended to date, and on the basis of such
checks as we considered appropriate and according to the information
and explanations given to us during the course of the audit, we further
report that: -
1. (a) The Company has maintained proper records showing full
particulars, including quantitative details and situation of its fixed
assets.
(b) As explained and inform to us, the management has conducted
physical verification of major items of fixed assets during the year
and we are informed that no material discrepancies were noticed on such
verification.
(c) During the year, the Company has not disposed off a substantial
part of fixed assets so as to affect the going concern status of the
Company.
2. (a) The inventory has been physically verified by the management at
reasonable intervals during the year.
(b) In our opinion, the procedures of physical verification of
inventory followed by the management are reasonable and adequate in
relation to the size of the Company and the nature of its business,
except for inventory in storage tanks at Kochi unit which does not have
system of taking dip measurements. Instead, Reliance is placed on the
electronic reading reported by the Distribution Control System.
(c) The Company has maintained proper records of inventory. As
explained to us, the discrepancies between the physical inventory and
the book records noticed on physical verification were not material and
have been properly dealt with in the books of accounts.
3. (a) Based on information, the company has not granted any loans,
secured or unsecured, to companies, firms, or other parties listed in
the register maintained under Section 301 of the Companies Act, 1956
and as such clauses (iii)(b),(c) and (d) are not applicable..
(b) Based on information, the Company has not taken any loans, secured
or unsecured, from companies, firms or other parties listed in the
registered maintained under Section 301 of the Companies Act, 1956 and
as such clauses (iii)(f) and (g) are not applicable.
4. In our opinion and according to the information and explanations
given to us, there are adequate internal control systems commensurate
with the size of the Company and the nature of its business for the
purchase of inventory, fixed assets and for the sale of goods and
services. During the course of our audit, we have neither been informed
nor have we observed any continuing failure to correct major weaknesses
in internal control system.
5. According to the information and explanations given to us there were
no transactions that need to be entered into registered maintained
under Section 301 of the Companies Act, 1956. Sub Clause (b) of clause
(v) is hence not applicable.
6. In our opinion and according to the information and explanations
given to us, Company has not accepted any deposits from the public.
Hence the provisions of section 58A, 58AA of the Companies Act, 1956
with regard to acceptance of deposits from the public and the rules
framed there under, to the extent applicable, except Rule 3A of the
Companies (Acceptance of Deposits) Rules, 1975 regarding investment in
liquid asset, are not applicable. We have been informed by the
management that no orders have been received by the company, from
Company law Board, National Company Law Tribunal or Reserve Bank of
India or any court or any other tribunal under section 58A and 58AA.
7. The Company has an internal audit system, which, in our opinion, is
commensurate with its size and nature of its business.
8. We have broadly reviewed the books of accounts maintained by the
Company in pursuance to the rules made by the Central Government for
the maintenance of cost records under section 209 (1) (d) of the
Companies Act, 1956 for certain products of the Company and are of the
opinion that prima facie the prescribed accounts and records have been
made and maintained. We have not, however made a detailed examination
of records with a view to determine whether they are accurate or
complete.
9. a) According to the information and explanations given to us and on
the basis of the examination of the books of account carried out by us,
the Company has been generally regular in depositing undisputed
statutory dues including Investor Education and Protection Fund,
Employees'' State Insurance, Income-tax, Sales-tax, Wealth Tax, Service
Tax, Custom Duty, Excise Duty, Cess and other statutory dues with the
appropriate authorities. The Company has not been regular in depositing
Provident Fund dues with the appropriate authorities during the year.
There were no undisputed arrears of statutory dues outstanding as at
31st March, 2014, for a period of more than six months from the date
they became payable except for as stated below :
Rasayani Unit :
Sr. Name of Statute Nature of Dues Outstanding
No. Amount
(Rs. in lacs)
1 The Employees'' Provident Funds Employees 451.57
And Miscellaneous Provisions Provident Fund
Act, 1952 contribution
2 The Employees'' Provident Funds Employees Pension 4.86
And Miscellaneous Provisions Fund contribution
Act, 1952
3 Gram Panchayat Gram Panchayat 5.05
Tax
Total 461.48
b) According to the information and explanations given to us by
management and the records of the Company examined by us, there were no
disputed dues in respect of Income Tax, Sales- tax, Wealth Tax, Service
Tax, Custom Duty, Excise Duty and Cess which have not been deposited as
on 31st March, 2014, except as stated below:
A. Rasayani Unit :
Sr. Name of Statute Nature of Dues Period to which the
No. dispute relates
1 Central Excise Act, 1944 Molten Sulphur Feb-97 to Jun-98
Classification
2 Central Excise Act,1944 Molten Sulphur Sept-94 to Jan-97
Classification
3 Central Excise Act, 1944 Molten Sulphur 1999-00
Classification
4 Central Excise Act, 1944 Shortage of Inputs
5 Central Excise Act, 1944 Shortage of Inputs 1998-01
6 Central Excise Act, 1944 Shortage of Inputs Jul-01 to Sept-02
7 Central Excise Act, 1944 ARO Case Jul-03 to May-06
(Aniline Valuation)
8 Central Excise Act, 1944 Clearance of SSA to Sept-96 to Mar-00
fertilizer
manufacturing units
9 Central Excise Act, 1944 Reversal of Cenvat 2006-07
Credit availed on
inputs lost in flood
10 Central Excise Act, 1944 N2O4 Exemptiom Jan-06 to Feb-08
11 Central Excise Act, 1944 Duty on Clearance Nov-98 to Dec-98
of Molten Sulphur
12 Central Excise Act, 1944 Duty on Clearance Jan-99
of Molten Sulphur
13 Finance Act, 1994 Wrong credit availed May-07 to Jul-10
on Angels, bars and
HR coils and plates
14 Finance Act, 1994 Cleaning, gardening Oct-09 to Nov-11
and Rent-a-cab
services
15 Finance Act, 1994 Service Tax on Feb-07 to Mar-11
canteen services
16 Income Tax Act, 1961 Penalty u/s 271(1)(c) A.Y 1999-00
17 Income Tax Act, 1961 Penalty u/s 271(1)(c) A.Y 1999-00
18 Income Tax Act, 1961 Penalty u/s 271(1)(c) A.Y 2003-04
19 Income Tax Act, 1961 Penalty u/s 271(1)(c) A.Y 2004-05
Sr. Name of Statute Amount of Dispute Forum where
No. (Rs. in lacs) dispute is pending
1 Central Excise Act, 1944 15.53 Customs, Excise and
Service Tax
Appellate Tribunal
2 Central Excise Act,1944 22.76 Customs, Excise and
Service Tax
Appellate Tribunal
3 Central Excise Act, 1944 7.62 Commissionerate
4 Central Excise Act, 1944 13.64 Commissionerate
5 Central Excise Act, 1944 18.66 High Court
6 Central Excise Act, 1944 5.85 High Court
7 Central Excise Act, 1944 19.29 Customs, Excise and
Service Tax
Appellate Tribunal
8 Central Excise Act, 1944 112.78 Commissionerate
9 Central Excise Act, 1944 18.66 Commissionerate
10 Central Excise Act, 1944 104.63 Customs, Excise and
Service Tax
Appellate Tribunal
11 Central Excise Act, 1944 5.05 Deputy Commissioner
Central Excise
12 Central Excise Act, 1944 2.59 Deputy Commissioner
Central Excise
13 Finance Act, 1994 1.44 Assistant Commissioner
Central Excise
14 Finance Act, 1994 8.88 Deputy Commissioner
Central Excise
15 Finance Act, 1994 66.96 Commissioner of
Central Excise, Custom
and Service Tax
Total 405.68
16 Income Tax Act, 1961 91.07 Commissioner of
Income Tax
Appeals, Mumbai
17 Income Tax Act, 1961 57.55 Income Tax Appellate
Tribunal, Mumbai
18 Income Tax Act, 1961 607.25 Commissioner of
Income Tax
Appeals, Mumbai
19 Income Tax Act, 1961 63.23 Commissioner of
Income Tax
Appeals, Mumbai
Total 819.10
B. Kochi Unit :
Sr. Name of Statute Nature of Dues Period to which the
No. dispute relates
1 ESI Corporation ESI contribution of 1.04.92 to 31.10.92
employees
2 Finance Act 1994 Availing of CEVAT credit 04/03 to 12/06
on service tax on
transportation of final
products to Rasayani Depot
3 Finance Act 1994 Insurance renewal/ 07/11 to 05/12
Tyre retrading charge
4 Finance Act 1994 Bus, Car transportation 11/11 to 06/12
to employees
5 Finance Act 1994 Insurance renewal/ 04/11 to 03/13
Tyre retrading charge
6 Employees Provident Employees Family Pension 1995 to 1997
Fund Scheme-Damage for
default payment
7 Income Tax Act, 1961 Short Payment of TDS A.Y2008-09 & 2009-10
8 Central Sales Trade Discount given 2005-06
Tax Act, 1956 through credit notes
disallowed - CST
9 Central Sales Turnover assessed 2005-06
Tax Act, 1956 @ 12.50% against 4%-CST
10 KVAT Act, 2003 Turnover assessed at 2005-06
higher rate and
miscellaneous income
assessed to tax - KVAT
11 Central Sales Turnover assessed @12.50% 2005-06
Tax Act, 1956 against 10% - CST
12 Central Sales Tax Levy of interest-CST 2005-06
Act, 1956
13 KVAT Act, 2003 Levy of interest-CST 2005-06
14 Central Sales Trade Discount given 2006-07
Tax Act, 1956 through credit notes
disallowed - CST
15 Central Sales Levy of interest-CST 2006-07
Tax Act, 1956
16 Central Sales Trade Discount given 2007-08
Tax Act, 1956 through credit notes
disallowed- CST
17 KVAT Act, 2003 Disallowance of input 2008-09
tax credit
18 KVAT Act, 2003 Disallowance of input 2009-10
tax credit
19 KVAT Act, 2003 Tax assessed at 2011-12
higher rate
20 Central Sales Non-submission of C-form 2011-12
Tax Act, 1956 and C- form rejected
21 Central Sales Non-submission of C-form 2012-13
Tax Act, 1956
Sr. Name of Statute Amount of Dispute Forum where
No. (Rs. in lacs) dispute is pending
1 ESI Corporation 2.17 Employees Insurance
Court (Industrial)
Total 2.17
2 Finance Act 1994 37.68 CESTAT, Bangalore
3 Finance Act 1994 8.19 CESTAT, Bangalore
4 Finance Act 1994 0.57 Commissioner of Central
Excise Appeals, Ernakulam
5 Finance Act 1994 10.96 Commissioner of Central
Excise Appeals, Ernakulam
Total 57.40
6 Employees Provident 18.05 Appeal fi led before
Fund High Court, Kerala
Total 18.05
7 Income Tax Act, 1961 3.55 Commissioner of Income
Tax Appeals, Ernakulam
Total 3.55
8 Central Sales 53.71 D.C (Appeals), Dept. of
Tax Act, 1956 Commercial Taxes, Ernakulam
9 Central Sales 0.33 D.C (Appeals), Dept. of
Tax Act, 1956 Commercial Taxes, Ernakulam
10 KVAT Act, 2003 2.06 D.C (Appeals), Dept. of
Commercial Taxes, Ernakulam
11 Central Sales 0.07 D.C (Appeals), Dept. of
Tax Act, 1956 Commercial Taxes, Ernakulam
12 Central Sales Tax 155.23 Tribunal Dept. of
Act, 1956 Commercial Taxes, Ernakulam
13 KVAT Act, 2003 152.63 Tribunal Dept. of
Commercial Taxes, Ernakulam
14 Central Sales 79.68 D.C (Appeals), Dept. of
Tax Act, 1956 Commercial Taxes, Ernakulam
15 Central Sales 11.87 D.C (Appeals), Dept. of
Tax Act, 1956 Commercial Taxes, Ernakulam
16 Central Sales 6.70 D.C (Appeals), Dept. of
Tax Act, 1956 Commercial Taxes, Ernakulam
17 KVAT Act, 2003 1.28 D.C (Appeals), Dept. of
Commercial Taxes, Ernakulam
18 KVAT Act, 2003 0.90 D.C (Appeals), Dept. of
Commercial Taxes, Ernakulam
19 KVAT Act, 2003 75.76 D.C (Appeals), Dept. of
Commercial Taxes, Ernakulam
20 Central Sales 28.90 D.C (Appeals), Dept. of
Tax Act, 1956 Commercial Taxes, Ernakulam
21 Central Sales 302.99 D.C (Appeals), Dept. of
Tax Act, 1956 Commercial Taxes, Ernakulam
Total 872.11
10. The accumulated losses of the Company at the year-ended exceed its
paid-up capital and reserves and its net worth is fully eroded. The
Company has incurred cash losses during the year and also in the
immediately preceding financial year.
11. Based on our audit procedures and the information and explanations
given to us, we are of the opinion that the Company has not defaulted
in repayment of its dues to the bond holders during the current year.
12. According to the information and explanations given to us, adequate
documents and records are maintained for loans granted to subsidiary
company and others on the basis of security given to them.
13. Clause (xiii) of the Order is not applicable as the Company is not
a chit fund company or nidhi / mutual benefit fund / society.
14. The Company is not dealing in or trading in shares, securities,
debentures and other investments.
15. According to the information and explanations given to us, the
Company has given guarantee of Rs. 1103 lacs for loan taken by
subsidiary - Hindustan Flurocarbons Ltd., from State Bank of Hyderabad.
Based on the explanations given to us, in our opinion, the terms and
conditions of this guarantee are not prejudicial to the interest of the
Company.
16. In our opinion and according to the information and explanations
given to us, the term loans raised by the Company during the year were
applied for the purposes for which the loans were obtained.
17. According to the information and explanations given to us and on an
overall examination of the balance sheet of the Company, we report that
no funds raised on short-term basis have been used for long- term
investment.
18. The Company has not made any preferential allotment of shares to
parties and companies covered in the register maintained under Section
301 of the Act during the year.
19. The Company has raised Rs. 10,000 lacs through issue of bonds
during the year, which is guaranteed by the Government of India by way
of registered bond trust deed.
20. The Company has not raised any money by public issue during the
year.
21. Based upon the audit procedures performed for the purpose of
reporting the true and fair view of the financial statements and as per
the information and explanations furnished by the management, we report
that no fraud has been noticed or reported by the Company during the
year.
For Ford, Rhodes, Parks & Co.
Chartered Accountants
Firm''s Registration No. 102860W
Sd/-
Shrikant Prabhu
Place : Mumbai Partner
Date : 29th May, 2014 Membership No. 35296
Mar 31, 2013
Report on Financial Statements
We have audited the accompanying fi nancial statements of Hindustan
Organic Chemicals Limited ("the Company"), which comprises the Balance
Sheet as at 31st March, 2013 and the Statement of Profi t and Loss and
Cash Flow Statement for the year then ended, and a summary of signifi
cant accounting policies and other explanatory information.
Management''s Responsibility for the Financial Statement
Management is responsible for the preparation of these fi nancial
statements that give a true and fair view of the fi nancial position,
fi nancial performance and cash fl ows of the Company in accordance
with the Accounting Standards referred to in sub section (3C) section
211 of the Companies Act, 1956 ("the Act"). This responsibility
includes the design, implementation and maintenance of internal control
relevant to the preparation and presentation of the fi nancial
statements that give a true and fair view and are free from material
misstatement, whether due to fraud or error.
Auditor''s Responsibility
Our responsibility is to express opinion on theses fi nancial
statements based on our audit. We conducted our audit in accordance
with Standards on Auditing issued by the Institute of Chartered
Accountants of India. Those Standards require that we comply with
ethical requirements and plan and perform the audit to obtain
reasonable assurance about whether the fi nancial statements are free
from material misstatement.
An audit involves performing procedure to obtain audit evidence about
the amounts and disclosures in the fi nancial statements. The
procedures selected depend on the auditor''s judgment, including the
assessment of the risks of material misstatement of the fi nancial
statements, whether due to fraud or error. In making those risk
assessments, the auditor considers internal control relevant to the
Company''s preparation and fair presentation of the fi nancial
statements in order to design audit procedures that are appropriate in
the circumstances. An audit also includes evaluating the
appropriateness of accounting policies used and the reasonableness of
the accounting estimates made by management, as well as evaluating the
overall presentation of the fi nancial statements.
We believe that the audit evidence we have obtained is suffi cient and
appropriate to provide a basis for our qualifi ed audit opinion.
Basis for Qualifi ed Opinion
A) No provisions has been made in the fi nancial statements for the
following amounts (refer respective notes in the notes to the fi
nancial statements);
i) Penal interest of Rs. 830.30 lacs on overdue loan from Government of
India (note no. 5A(ii)),
ii) Loss on account of misappropriation of Company''s fund amounting to
Rs. 64.81 lacs, pending fi nal report from CBI and outcome of the civil
suit (note no. 37),
iii) Liability of wage revision for the period 1.1.1997 to 31.12.2000 Rs.
1928.51 lacs at Rasayani unit (note no. 33A),
iv) Liability of wage revision for the period 1.1.2007 to 31.3.2008 Rs.
164.74 lacs to Offi cers and Rs. 148.93 lacs to Staff at Rasayani unit
(note no. 33B and 33C),
v) Claims of JNPT short provided amounting toRs. 1137.83 lacs in respect
of;
a) Lease rentals and escalation on leased land (note no. 34E),
b) Water charges and
c) Way leave charges
B) Capital work in progress includes an amount of Rs. 2978.91 lacs
incurred on JNPT tank terminal project. The construction has been
suspended for more than fi ve years and the lease has been called off
by the lessor - JNPT after the expiry of the lease period in June 2010.
The status of the project is stagnant, incomplete and of no utility
since long. No provision is made for the impairment in the value of
this asset, if any, pending ascertainment of the recoverable amount
(note no. 34E),
C) The Balances of trade receivables, trade payables, loans and
advances and other current assets and other debit / credit balances are
pending for confi rmations and reconciliation (note no. 42),
D) We further report that, had the effects of the items mentioned in
the paragraphs (A) above been considered, the loss for the year would
have been higher by Rs. 4275.12 lacs, resulting into a loss of Rs. 18074.03
lacs and the accumulated loss as at the year-end would have been higher
by the same amount i.e Rs. 4275.12 lacs. Further, the long-term
liabilities / provisions as at the year-end would have been higher by Rs.
4275.12 lacs.
E) We also further report that the effect of the items mentioned in
paragraphs (B) and (C) above on the loss for the year and on the
balance sheet is not ascertainable.
F) Wage arrears in respect of Rasayani unit of the Company which had
not been provided in earlier years amounting toRs. 379.57 lacs in case of
employees for the period 1.1.1997 to 31.12.2000, Rs. 114.22 lacs for the
period 1.1.2007 to 31.3.2008 in case of Offi cers and Rs. 97.38 lacs for
the period 1.1.2007 to 31.3.2008 in case of Staff has been paid /
provided during the year and charged as current year wage expense in
the Statement of profi t and loss. In our opinion, the same should have
refl ected as a prior period expense item as the Company should have
made provision for the same in earlier years.
Qualified Opinion
In our opinion and to the best of our information and according to the
explanations given to us, except for the possible effects of the
matters described in the Basis for Qualifi ed Opinion paragraph, the fi
nancial statements give the information required by the Act in the
manner so required and give a true and fair view in conformity with the
accounting principles generally accepted in India:
i) in the case of the Balance sheet, of the state of affairs of the
Company as at 31st March, 2013;
ii) in the case of the Statement of Profi t and Loss, of the loss for
the year ended on that date; and
iii) in the case of the Cash Flow Statement, of the cash fl ows for the
year ended on that date.
Emphasis of Matter
Attention is drawn to note 48 to the fi nancial statements which states
that the fi nancial statements have been prepared on going concern
basis, although the net worth of the Company is fully eroded, for
reasons stated in the said note.
Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditor''s Report) Order, 2003 ("the
Order") issued by the Central Government of India in terms of sub
section (4A) of section 227 of the Act, we give in the Annexure a
statement on the matters specifi ed in paragraph 4 and 5 of the order.
2. As required by section 227(3) of the Companies Act, 1956, we report
that:
a) we have obtained all the information and explanations, which to the
best of our knowledge and belief were necessary for the purposes of our
audit except for the matters described in the Basis for Qualifi ed
Opinion paragraph;
b) in our opinion, proper books of account as required by law have been
kept by the Company so far as appears from our examination of those
books;
c) the Balance Sheet, the Statement of Profi t and Loss and Cash Flow
Statement dealt with by this report are in agreement with the books of
account;
d) except for the possible effects of the matters described in the
Basis for Qualifi ed Opinion paragraph, in our opinion, the Balance
Sheet, Statement of Profi t and Loss and Cash Flow Statement comply
with the Accounting Standards referred to in sub-section (3C) of
section 211 of the Companies Act, 1956;
e) the conditions specifi ed in section 274(1)(g) of the Companies Act,
1956 in respect of qualifi cations of directors is not applicable to
the Company being a government company.
f) Since the Central Government has not issued any notifi cation as to
the rate at which the cess is to be paid under section 441A of the
Companies Act, 1956 nor has it issued any Rules under the said section,
prescribing the manner in which such cess is to be paid, no cess is due
and payable by the Company.
ANNEXURE TO THE AUDITORS'' REPORT
As required by the Companies (Auditor''s Report) Order, 2003 issued by
the Central Government in terms of Section 227 (4A) of the Companies
Act, 1956 (the Act), as amended to date, and on the basis of such
checks as we considered appropriate and according to the information
and explanations given to us during the course of the audit, we further
report that: -
1. (a) The Company has maintained proper records showing full
particulars, including quantitative details and situation of its fi xed
assets.
(b) As explained and inform to us, the management has conducted
physical verifi cation of major items of fi xed assets during the year
and we are informed that no material discrepancies were noticed on such
verifi cation.
(c) During the year, the Company has not disposed off a substantial
part of fi xed assets so as to affect the going concern status of the
Company.
2. (a) The inventory has been physically verifi ed by the management
at reasonable intervals during the year.
(b) In our opinion, the procedures of physical verifi cation of
inventory followed by the management are reasonable and adequate in
relation to the size of the Company and the nature of its business,
except for inventory in storage tanks at Kochi unit which does not have
system of taking dip measurements. Instead, reliance is placed on the
electronic reading reported by the Distribution Control System.
(c) The Company has maintained proper records of inventory. As
explained to us, the discrepancies between the physical inventory and
the book records noticed on physical verifi cation were not material
and have been properly dealt with in the books of accounts.
3. (a) Based on information, the company has not granted any loans,
secured or unsecured, to companies, fi rms, or other parties listed in
the register maintained under Section 301 of the Companies Act, 1956
and as such clauses (iii)(b),(c) and (d) are not applicable..
(b) Based on information, the Company has not taken any loans, secured
or unsecured, from companies, fi rms or other parties listed in the
register maintained under Section 301 of the Companies Act, 1956 and as
such clauses (iii)(f) and (g) are not applicable..
4. In our opinion and according to the information and explanations
given to us, there are adequate internal control systems commensurate
with the size of the Company and the nature of its business for the
purchase of inventory, fi xed assets and for the sale of goods and
services. During the course of our audit, we have neither been informed
nor have we observed any continuing failure to correct major weaknesses
in internal control system.
5. According to the information and explanations given to us there
were no transactions that need to be entered into register maintained
under Section 301 of the Companies Act, 1956, Sub Clause (b) of clause
(v) is hence not applicable.
6. In our opinion and according to the information and explanations
given to us, Company has not accepted any deposits from the public.
Hence the provisions of section 58A, 58AA of the Companies Act, 1956
with regard to acceptance of deposits from the public and the rules
framed there under, to the extent applicable, except Rule 3A of the
Companies (Acceptance of Deposits) Rules, 1975 regarding investment in
liquid asset, are not applicable. We have been informed by the
management that no orders have been received by the company, from
Company law Board, National Company Law Tribunal or Reserve Bank of
India or any court or any other tribunal under section 58A and 58AA.
7. The Company has an internal audit system, which, in our opinion, is
commensurate with its size and nature of its business.
8. We have broadly reviewed the books of accounts maintained by the
Company in pursuance to the rules made by the Central Government for
the maintenance of cost records under section 209 (1) (d) of the
Companies Act, 1956 for certain products of the Company and are of the
opinion that prima facie the prescribed accounts and records have been
made and maintained. We have not, however made a detailed examination
of records with a view to determine whether they are accurate or
complete.
9. a) According to the information and explanations given to us and on
the basis of the examination of the books of account carried out by us,
the Company has been generally regular in depositing undisputed
statutory dues including Provident Fund, Investor Education and
Protection Fund, Employees'' State Insurance, Income-tax, Sales-tax,
Wealth Tax, Service Tax, Custom Duty, Excise Duty, Cess and other
statutory dues with the appropriate authorities. There were no
undisputed arrears of statutory dues outstanding as at 31st March,
2013, for a period of more than six months from the date they became
payable.
b) According to the information and explanations given to us by
management and the records of the Company examined by us, there were no
disputed dues in respect of Income Tax, Sales- tax, Wealth Tax, Service
Tax, Custom Duty, Excise Duty and Cess which have not been deposited as
on 31st March, 2013, except as stated below:
A. Rasayani Unit :
Sr. Name of Statute Nature of Dues Period to which the /
No. dispute relates
1 Custom Act, 1962 Custom Duty on Import
of PNT 1995-96
Total
2 Central Excise
Act, 1944 Molten Sulphur
Classification Feb-97 to Jun-98
3 Central Excise
Act, 1944 Molten Sulphur
Classification Sept-94 to Jan-97
4 Central Excise
Act, 1944 Molten Sulphur
Classification 1999-00
5 Central Excise
Act, 1944 Shortage of Inputs
6 Central Excise
Act, 1944 Shortage of Inputs 1998-01
7 Central Excise
Act, 1944 Shortage of Inputs Jul-01 to Sept-02
8 Central Excise
Act, 1944 ARO Case (Aniline
Valuation) Jul-03 to May-06
9 Central Excise
Act, 1944 Clearance of SSA to
fertilizer Sept-96 to Mar-00
manufacturing units
10 Central Excise
Act, 1944 Reversal of Cenvat
Credit availed 2006-07
on inputs lost
in flood
11 Central Excise
Act, 1944 N2O4 Exemption Jan-06 to Feb-08
12 Central Excise
Act, 1944 Duty on Clearance of
Molten Nov-98 to Dec-98
Sulphur
13 Central Excise
Act, 1944 Duty on Clearance of
Molten Jan-99
Sulphur
14 Finance Act, 1994 Wrong credit availed
on Angels, May-07 to Jul-10
bars and HR coils
and plates
15 Finance Act, 1994 Cleaning, gardening
and Rent-a- Oct-09 to Nov-11
cab services
16 Finance Act, 1994 Service Tax on canteen
services Feb-07 to Mar-11
Total
17 Income Tax Act, 1961 Penalty u/s 271(1)(c) A.Y 1999-00
18 Income Tax Act, 1961 Penalty u/s 271(1)(c) A.Y 1999-00
19 Income Tax Act, 1961 Penalty u/s 271(1)(c) A.Y 2003-04
20 Income Tax Act, 1961 Penalty u/s 271(1)(c) A.Y 2004-05
Total
21 Central Sales
Tax Act, 1956 CST F.Y 2004-05
Total
B. Kochi Unit :
Sr. Name of Statute Nature of Dues Period to which the
No. dispute relates
1 ESI Corporation ESI contribution of
employees 1.04.92 to 31.10.92
2 Central Excise Act,
1944 Disallowance of CENVAT
Credit availed 2004-05
on the ground that
duty is paid by debiting
DEPB license
3 Finance Act 1994 Non payment of Service
Tax on 4/06 to 3/08
commercial coaching/
training (1.92 6.01)
4 Finance Act 1994 Non payment of Service
Tax on 04/08 to 03/09
commercial coaching/
training and renting of
immovable property to
Sterling Gas
Name of Statute Amount of Dispute Forum where dispute is
(Rs. in lacs) pending
Custom Act,1962 10.80 Customs, Excise and
Service Tax Appellate
Tribunal
10.80
Centarl Excise Act,1944 15.53 Customs, Excise and
Service
Central Excise Act,1944 Tax Appellate Tribunal
Centarl Excise Act,1944 22.76 Customs, Excise and
Service
Tax Appellate Tribunal
Centarl Excise Act,1944 7.62 Commissionerate
Centarl Excise Act,1944 13.64 Commissionerate
Central Excise Act,1944 18.66 High Court
Central Excise Act,1944 5.85 High Court
Central Excise Act,1944 19.29 Customs, Excise and
Service
Tax Appellate Tribunal
Central Excise Act,1944 112.78 Commissionerate
Central Excise Act.1944 18.66 Commissionerate
Central Excise Act,1944 104.63 Customs, Excise and
Service Tax Appellate
Tribunal
Central Excise Act,1944 5.05 Deputy Commissioner
Central Excise
Central Excise Act,1944 2.59 Deputy Commissioner
Central Excise
Finance Act,1944 1.44 Assistant Commissioner
Central
Excise
Finance Act,1944 8.88 Deputy Commissioner
Central Excise
Finance Act,1944 66.96 Commissioner of Central
Excise, Custom and
Service Tax
424.34
Income Tax Act,1961 91.07 Commissioner of Income
Tax Appeals, Mumbai
Income Tax Act,1961 57.55 Income Tax Appellate
Tribunal, Mumbai
Income Tax Act,1961 607.25 Commissioner of Income
Tax Appeals, Mumbai
Income Tax Act,1961 63.23 Commissioner of Income
Tax Appeals, Mumbai
819.10
Central Sales Tax Act,1956 5.70 Assistant Commissioner
of Sale Tax
5.70
Name of Statute Amount of Dispute Forum where dispute is
(Rs. in lacs) pending
ESI Corporation 2.17 Employees Insurance
Court (Industrial)
Central Excise Act,1944 13.35 Appeal with CESTAT,
Bangalore. Remanded to
J.C.Ex Ernakulam
Finance Act 1994 8.75 Commissioner of
Central Excise
Appeals, Ernakulam
Finance Act 1994 2.14 Asst.Commissioner of
Central
Excise, Muvattupuzha
Sr. Name of Statute Nature of Dues Period to which the
No. dispute relates
5 Finance Act 1994 Availing of CEVAT credit
on outdoor 04/06 to 11/08
catering services
(16.59 32.89)
6 Finance Act 1994 Availing of CEVAT credit
on outdoor 12/08 to 09/09
catering services
7 Finance Act 1994 Availing of CEVAT credit
on service tax 04/03 to 12/06
on transportation of
final products to
Rasayani Depot
8 Central Excise
Act 1944 Duty on sale of waste/scrap 5/09 to 1/02 and
5/02 to 3/03
9 Customs Act 1962 Demand to remit duty
for excess quantity Nov.08
of imported Benzene
10 Finance Act 1994 Availing of CENVAT credit
on Hiring of 01/09 to 12/09
Bus, Car and on
Capital Goods
11 Finance Act 1994 Service Tax on commercial
coaching, 04/09 to 03/10
renting of immovable
property
12 Finance Act 1994 Availing of CENVAT credit
on outdoor 10/09 to 09/10
catering, insurance, etc
13 Finance Act 1994 Availing of CENVAT credit
on Hiring of 01/10 to 11/10
Bus, Car, etc
14 Central Excise
Act 1944 Excess amount collected
from Rasayni 03/10
Sales
15 Finance Act 1994 Service Tax on commercial
coaching, 04/10 to 03/11
renting of immovable
property
16 Finance Act 1994 Bus, Car transportation to
employees 12/10 to 10/11
17 Finance Act 1994 Insurance renewal/Tyre
retrading charge 07/11 to 05/12
18 Finance Act 1994 Bus, Car transportation
to employees 11/11 to 06/12
19 Finance Act 1994 Commercial coaching,
renting of 04/11 to 03/12
immovable property
Total
Name of Statute Amount of Dispute Forum where dispute is
(Rs. in lacs) pending
Finance Act 1944 57.12 Commissioner of Central
Excise Appeals, Erankulam
Finance Act 1944 27.99 Commissioner of Central
Excise Appeals, Erankulam
Finance Act 1944 35.79 Commissioner of Central
Excise Appeals, Erankulam
Central Excise Act 1994 1.78 CESTAT, Bangalore appeal
filed by the department
Customs Act 1962 1.01 Commissioner of Central
Excise Appeals, Erankulam
Finance Act 1994 3.61 Commissioner of Central
Excise Appeals, Erankulam
Finance Act 1994 2.03 Deputy Commissioner of
Central Excise
Finance Act 1994 18.57 Commissioner of Central
Excise Appeals, Erankulam
Finance Act 1994 2.55 Deputy Commissioner of
Central Excise
Central Excise Act 1944 0.28 Deputy Commissioner of
Central Excise
Finance Act 1994 1.83 Commissioner of Central
Excise Appeals
Finance Act 1994 1.22 Commissioner of Central
Excise Appeals
Finance Act 1994 6.31 Commissioner of Central
Excise Appeals
Finance Act 1994 0.35 Commissioner of Central
Excise Appeals
Finance Act 1994 1.42 Commissioner of Central
Excise Appeals
188.17
10. The accumulated losses of the Company at the year-ended exceed its
paid-up capital and reserves and its net worth is fully eroded. The
Company has incurred cash losses during the year and also in the
immediately preceding fi nancial year.
11. Based on our audit procedures and the information and explanations
given to us, we are of the opinion that the Company has not defaulted
in repayment of its dues to the bond holders during the current year.
12. According to the information and explanations given to us,
adequate documents and records are maintained for loans granted to
subsidiary company and others on the basis of security given to them.
13. Clause (xiii) of the Order is not applicable as the Company is not
a chit fund company or nidhi / mutual benefi t fund / society.
14. The Company is not dealing in or trading in shares, securities,
debentures and other investments.
15. According to the information and explanations given to us, the
Company has given guarantee of Rs. 1253 lacs for loan taken by subsidiary
- Hindustan Flurocarbons Ltd., from State Bank of Hyderabad. Based on
the explanations given to us, in our opinion, the terms and conditions
of this guarantee are not prejudicial to the interest of the Company.
16. In our opinion and according to the information and explanations
given to us, the term loans raised by the Company during the year were
applied for the purposes for which the loans were obtained.
17. According to the information and explanations given to us and on
an overall examination of the balance sheet of the Company, we report
that no funds raised on short-term basis have been used for long-term
investment.
18. The Company has not made any preferential allotment of shares to
parties and companies covered in the register maintained under Section
301 of the Act during the year.
19. The Company has raised Rs. 10,000 lacs through issue of bonds during
the year, which is guaranteed by the Government of India by way of
registered bond trust deed.
20. The Company has not raised any money by public issue during the
year.
21. Based upon the audit procedures performed for the purpose of
reporting the true and fair view of the fi nancial statements and as
per the information and explanations furnished by the management, we
report that no fraud has been noticed or reported by the Company during
the year.
For Ford, Rhodes, Parks & Co.
Chartered Accountants
Firm''s Registration No. 102860W
Sd/-
S.B.Prabhu
Place : Mumbai Partner
Date : 29th May, 2013 Membership No. 35296
Mar 31, 2012
1. We have audited the attached Balance Sheet of Hindustan Organic
Chemicals Limited as at 31st March, 2012, together with the Statement
of Profit and Loss of the Company for the year ended on that date
annexed thereto and the Cash Flow statement of the Company for the year
ended on that date, in which is incorporated the Balance Sheet,
Statement of Profit and Loss and the Cash Flow Statement of the branch
audited by other independent auditors, whose report we have considered
in preparing this report. These financial statements are the
responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audit.
2. We conducted our audit in accordance with auditing standards
generally accepted in India. Those Standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for
our opinion.
3. As required by the Companies (Auditor's Report) Order, 2003
issued by the Central Government in terms of Section 227(4A) of the
Companies Act, 1956, as amended to date; we annex hereto a statement on
the matters specified in paragraphs 4 and 5 of the said Order.
4. Further to our comments in the annexure referred to in paragraph
(3) above, we report that:
a) We have obtained all the information and explanations which to the
best of 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 the Company so far as appears from our examination of the
books;
c) The Balance Sheet and the Statement of Profit and Loss dealt with by
this report are in agreement with the books of account;
d) In our opinion, the Balance Sheet, Statement of Profit and Loss and
Cash Flow Statement dealt with by this report are in compliance with
the accounting standard referred to in Section 211 (3C) of the
Companies Act, 1956.
e) The conditions specified in Section 274(1)(g) of the Companies Act,
1956 in respect of qualifications of directors is not applicable to the
Company being a government company.
f) No provision has been made in the financial statements for the
following amounts (refer respective notes in the notes to the financial
statements):
i) Penal interest of Rs. 672.56 lacs on overdue loan from Government of
India (note no 4B(ii)),
ii) Loss on account of misappropriation of Company's fund amounting
to Rs. 64.81 lacs, pending final report from CBI and outcome of the civil
suit (note no.37),
iii) Liabilities of wages revision for the period 1.01.1997 to
31.12.2000. Rs. 2308.08 lacs at Rasayani unit (note no. 33A),
iv) Liabilities of wages revision for the period 1.01.2007 to 31.3.2008
Rs. 278.96 lacs. to Officers and Rs. 246.31 lacs to Staff at Rasayani unit
(note no.33B and 33C),
v) Claims of JNPT short provided in respect of:
a) Minimum guaranteed throughput charges of Rs. 1612.50 lacs,
b) Lease rentals and escalation on leased land of Rs. 621.55 lacs, (note
no. 34E)
c) Water charges of Rs. 0.65 lacs, and
d) Way leave charges of Rs. 297.10 lacs,
g) Capital work in progress includes an amount of Rs. 2976.65 lacs
incurred on JNPT tank terminal project. The construction has been
suspended for more than four years and the lease has been called off by
the lessor - JNPT after the expiry of the lease period in June 2010.
The status of the project is stagnant, incomplete and of no utility
since long. No provision is made for the impairment in the value of
this asset, if any, pending ascertainment of the recoverable amount
(note no. 34E).
h) The balances of sundry debtors, sundry creditors, loans and
advances, other current assets and other debit / credit balances are
pending confirmation and reconciliations (note no.42).
i) We further report that had the effects of the items mentioned in
paragraph (f) above been considered, the loss for the year would have
been higher by Rs. 6102.52 lacs, resulting into a loss of Rs. 13909.37 lacs
and the accumulated loss as at the year-end would have been higher by
the same amount i:e Rs. 6102.52 lacs. Further, the long-term liabilities
/ provisions as at the year-end would have been higher by Rs. 6102.52
lacs.
We also report that the effect of the items mentioned in paragraphs (g)
and (h) above on the loss for the year and on the Balance Sheet is not
ascertainable. j) Wage arrears in respect of the kochi unit of the
Company which had not been provided in earlier years amounting to Rs.
93.69 lacs has been paid / provided during the year and charged as
current years wage expense in the statement of profit and loss. In our
opinion, the same should have reflected as a prior period expense item
as the Company should have made provision for the same in earlier
years. k) Subject to our comments in paragraphs (f) to (j) above, in
our opinion and to the best of our information and according to the
explanations given to us, the financial statements read together with
the notes thereon, give the information required by the Companies Act,
1956, in the manner so required and give a true and fair view in
conformity with the accounting principles generally accepted in India:
i) in the case of the Balance Sheet, of the state of affairs of the
Company as at 31st March, 2012;
ii) in the case of the Statement of Profit and Loss, of the loss for
the year ended on that date, and
iii) in the case of the Cash Flow Statement, of the cash flows for the
year ended on that date.
Annexure to the Auditors' Report
(Referred to in paragraph 3 thereof)
As required by the Companies (Auditor's Report) Order, 2003 issued by
the Central Government in terms of Section 227(4A) of the Companies
Act, 1956 (the Act), as amended to date, and on the basis of such
checks as we considered appropriate and according to the information
and explanations given to us during the course of the audit, we further
report that: -
1. (a) The Company has maintained proper records showing full
particulars, including quantitative details and situation of its fixed
assets.
(b) As explained and informed to us, the management has conducted
physical verification of major items of fixed assets during the year
and we are informed that no material discrepancies were noticed on such
verification.
(c) During the year, the Company has not disposed off a substantial
part of fixed assets so as to affect the going concern status of the
Company.
2. (a) The inventory has been physically verified by the management at
reasonable intervals during the year.
(b) In our opinion, the procedures of physical verification of
inventory followed by the management are reasonable and adequate in
relation to the size of the Company and the nature of its business,
except for inventory in storage tanks at Kochi unit which does not have
the system of taking dip measurements. Instead, reliance is placed on
the electronic reading reported by the Distribution Control System.
(c) The Company has maintained proper records of inventory. As
explained to us, the discrepancies between the physical inventory and
the book records noticed on physical verification were not material and
have been properly dealt with in the books of accounts.
3. (a) Based on information, the company has not granted any loans,
secured or unsecured, to companies, firms, or other parties listed in
the register maintained under section 301 of the Companies Act, 1956
and as such clauses (iii)(b),(c) and (d) are not applicable.
(b) Based on information, the company has not taken any loans, secured
or unsecured, from companies, firms, or other parties listed in the
register maintained under section 301 of the Companies Act, 1956 and as
such clauses (iii)(f) and (g) are not applicable.
4. In our opinion and according to the information and explanations
given to us, there are adequate internal control systems commensurate
with the size of the Company and the nature of its business for the
purchase of inventory and fixed assets and for the sale of goods and
services. During the course of our audit, we have neither been
informed nor have we observed any continuing failure to correct major
weaknesses in internal control systems.
5. According to the information and explanation given to us there were
no transactions that need to be entered into the register maintained
under section 301 of the Companies Act, 1956. Sub Clause (b) of clause
(v) is hence not applicable.
6. In our opinion and according to the information and explanations
given to us, Company has not accepted deposits from the public. Hence
the provisions of section 58A and 58AA of the Companies Act, 1956 with
regard to acceptance of deposits from public and the rules framed there
under, to the extent applicable, except Rule 3A of the Companies
(Acceptance of deposits) Rules,1975 regarding investment in liquid
assets, are not applicable. We have been informed by the management
that no order has been received by the company, from Company Law Board,
National Company Law Tribunal, or Reserve Bank of India or any court or
any other tribunal under section 58A and 58AA.
7. The Company has an internal audit system, which, in our opinion, is
commensurate with its size and nature of its business.
8. We have broadly reviewed the books of account maintained by the
Company in pursuance to the rules made by the Central Government for
the maintenance of the cost records under section 209 (1) (d) of the
Companies Act, 1956 for certain products of the company and are of the
opinion that prima facie the prescribed accounts and records have been
made and maintained. We have not, however made a detailed examination
of records with a view to determine whether they are accurate or
complete.
9. a) According to the information and explanations given to us and on
the basis of the examination of the books of account carried out by us,
the Company has been generally regular in depositing undisputed
statutory dues including Provident Fund, Investor Education and
Protection Fund, Employees' State Insurance, Income-tax, Sales-tax,
Wealth Tax, Service Tax, Custom Duty, Excise Duty, Cess and other
statutory dues with the appropriate authorities. There were no
undisputed arrears of statutory dues outstanding as at 31st March, 2012
for a period of more than six months from the date they became payable.
b) According to the information and explanations given to us by
management and the records of the Company examined by us, there were no
disputed dues in respect of Income Tax, Sales-tax, Wealth Tax, Service
Tax, Custom Duty, Excise Duty and Cess which have not been deposited as
on 31st March, 2012 except as stated below:
A. Rasayani Unit :
Sr Name of Statute Nature of Period to
No Dues which the
dispute relates
1. Customs Act Custom duty NA
Total
2. Central Excise Act Molten Sulphur 1994-95
Classification
3. Central Excise Act Molten Sulphur 1999-2000
Classification
4. Central Excise Act Shortage of inputs
5. Central Excise Act Shortage of inputs
6. Central Excise Act Shortage of inputs
7. Central Excise Act ARO Case
8. Central Excise Act Clearance of SSA
to fertilizer
manufacturing units
9. Central Excise Act Reversal of 2006-2007
CENVAT Credit availed
on inputs lost in flood.
Total
10. Income Tax Act 1961 Penalty under AY 1999-2000
section 271(1)(c )
11. Income Tax Act 1961 Penalty under AY 2003-04
section 271(1)(c )
12. Income Tax Act 1961 Penalty under AY 2004-05
section 271(1)(c )
13. Income Tax Act 1961 Penalty under AY 1999-00
section 271(1)(c )
14. Income Tax Act 1961 Disallowance of AY 2009-10
Expenses
15. Income Tax Act 1961 Disallowance of AY 2008-09
Expenses
Total
B Kochi Unit :
1. Employees Family Damage for 11/95
Pension Scheme default payment to 12/97
2. ESI Corporation ESI contribution 1.04.92 to
of employees 31.10.92
3. Central Excise Disallowance of 2004-05
Act,1944 CENVAT Credit
availed on the ground
that duty is paid by
debiting DEPB license
4. Finance Act 1994 Non payment of 4/06 to 3/08
Service Tax on
commercial coaching/
training (1.92 6.01)
5. Finance Act 1994 Non payment of 04/08 to
Service Tax on 03/09
commercial coaching/
training and renting of
immovable property to
Sterling Gas
A. Rasayani Unit:
Name of Statute Amount of Forum where dispute is pending
disputes
(Rupees in
lacs)
Customs Act 10.80 Customs, Excise and Service Tax
Appellate Tribunal
Total 10.80
Central Excise Act 15.53 Customs, Excise and Service Tax
Appellate Tribunal
Central Excise Act 7.62 Commissionerate
Central Excise Act 13.64 Commissionerate
Central Excise Act 18.66 High Court
Central Excise Act 5.84 High Court
Central Excise Act 19.28 Customs, Excise and Service Tax
Appellate Tribunal
Central Excise Act 112.78 Commissionerate
Central Excise Act 18.66 Commissionerate
Total 212.01
Income Tax Act 1961 91.08 Commissioner of Income Tax
Appeals, Mumbai
Income Tax Act 1961 607.27 Commissioner of Income Tax
Appeals, Mumbai
Income Tax Act 1961 63.23 Commissioner of Income Tax
Appeals, Mumbai
Income Tax Act 1961 57.55 Income Tax Appellate Tribunal,
Mumbai
Income Tax Act 1961 63.49 Commissioner of Income Tax
Appeals, Mumbai
Income Tax Act 1961 9.60 Commissioner of Income Tax
Appeals, Mumbai
Total 892.22
B Kochi Unit:
Employees Faimly
Pension Scheme 18.05 High Court of Kerala.
ESI Corporation 2.17 Employees Insurance Court
(Industrial)
Central Excise Act,1944 12.17 Appeal with CESTAT, Bangalore.
Remanded to J.C.Ex Ernakulam
Finance Act 1994 8.34 Commissioner of Central Excise
Appeals, Ernakulam
Finance Act 1994 2.00 Asst.Commissioner of Central
Excise, Muvattupuzha
Sr Name of Statute Nature of Period to
No Dues which the
dispute relates
6. Finance Act 1994 Availing of CEVAT 04/06 to
credit on outdoor 11/08
catering services
(16.59 32.89)
7. Finance Act 1994 Availing of CEVAT 12/08 to
credit on outdoor 09/09
catering services
8. Finance Act 1994 Availing of CEVAT 01/05 to
credit on service 08/06
tax on transportation
of final products to
customers premises
9. Finance Act 1994 Availing of CEVAT 04/03 to
credit on service 12/06
tax on transportation
of final products to
Rasayani Depot
10. Finance Act 1994 Security services 02/06 to
and repair works 12/06
at HOC township
11. Central Excise Duty on sale of 5/09 to
Act 1944 waste/scrap 1/02 and
5/02 to 3/03
12. Customs Act 1962 Demand to remit Nov.08
duty for excess
quantity of imported
Benzene
13. Finance Act 1994 Availing of 01/09 to
CENVAT credit 12/09
on Hiring of Bus,
Car and on Capital Goods
14. Finance Act 1994 Service Tax on 04/09 to
commercial 03/10
coaching, renting of
immovable property
15. Finance Act 1994 Availing of 10/09 to
CENVAT credit 09/10
on outdoor catering,
insurance, etc
16. Finance Act 1994 Availing of 01/10 to
CENVAT credit 11/10
on Hiring of Bus,
Car, etc
17. Central Excise Excess amount 03/10
Act 1944 collected from
Rasayni Sales
18. Income Tax Demand for short AY 2008-09
Act 1961 collection/ Non and 2009-10
payment of TDS for
Assessment Year
2008-09 and 2009-10
19. Income Tax Demand for short AY 2008-09
Act 1961 collection/ Non
payment of TDS for
Assessment Year 2008-09
Name of Statute Amount of Forum where dispute is pending
disputes
(Rupees in
lacs)
Finance Act 1994 53.05 Commissioner of Central Excise
Appeals, Erankulam
Finance Act 1994 26.10 Commissioner of Central Excise
Appeals, Erankulam
Finance Act 1994 4.84 Commissioner of Central Excise
Appeals, Erankulam
Finance Act 1994 33.90 Commissioner of Central Excise
Appeals, Erankulam
Finance Act 1994 0.97 Commissioner of Central Excise
Appeals, Erankulam
Central Excise Act,1944 1.37 CESTAT, Bangalore appeal filed
by the department
Customs Act 1962 0.90 Commissioner of Central Excise
Appeals, Erankulam
Finance Act 1994 3.31 Commissioner of Central Excise
Appeals, Erankulam
Finance Act 1994 1.89 Deputy Commissioner of Central
Excise
Finance Act 1994 16.69 Commissioner of Central Excise
Appeals, Erankulam
Finance Act 1994 2.37 Deputy Commissioner of Central
Excise
Central Excise Act 1944 0.26 Deputy Commissioner of Central
Excise
Income Tax Act 1961 3.55 Commissioner of Income Tax
Appeals, Erankulam
Income Tax Act 1961 0.52 Commissioner of Income Tax
Appeals, Erankulam
Sr Name of Statute Nature of Period to
No Dues which the
dispute relates
20. Income Tax Demand for short AY 2011-12
Act 1961 collection/ Non
payment of TDS for
Assessment Year 2011-12
21. Income Tax Demand for short AY 2010-11
Act 1961 collection/ Non
payment of TDS for
Assessment Year 2010-11
22. KVAT Act 2003 Disallowance of AY 2009-10
input tax credit on
sales to SEZ units
23. KVAT Act 2003 Disallowance of AY 2010-11
input tax credit on
computer purchased for
ERP implementation
Total
Name of Statute Amount of Forum where dispute is pending
disputes
(Rupees in
lacs)
Income Tax Act 1961 10.39 Commissioner of Income Tax
Appeals, Erankulam
Income Tax Act 1961 0.40 Commissioner of Income Tax
Appeals, Erankulam
KVAT Act 2003 33.56 D.C. (Appeals), dept. of
Commercial Taxes, Ernakulam
KVAT Act 2003 4.11 D.C. (Appeals), dept. of
Commercial Taxes, Ernakulam
Total 240.91
10. The accumulated losses of the Company at the year-end exceed fifty
percentage of its net worth. During the year, the Company has incurred
cash losses. It has not incurred cash losses as per its financial
statements during the immediately preceding financial year. However,
after giving effect to the qualifications in the auditors' report,
there are cash losses during that year.
11. The Company has not defaulted in repayment of dues to the bond
holders during the current year.
12. According to the information and explanations given to us,
adequate documents and records are maintained for loans granted to
subsidiary company and others on the basis of security given by them.
13. Clause (xiii) of the Order is not applicable as the Company is not
a chit fund company or nidhi / mutual benefit fund / society.
14. The Company is not dealing in or trading in shares, securities,
debentures and other investments.
15. According to the information and explanations given to us, the
Company has given guarantee of Rs.1253 lacs for loan taken by subsidiary
- Hindustan Flurocarbons Ltd from State Bank of Hyderabad. Based on the
explanations given to us, in our opinion, the terms and conditions of
this guarantee are not prejudicial to the interest of the Company.
16. In our opinion and according to the information and explanations
given to us, the term loans raised by the Company during the year were
applied for the purposes for which the loans were obtained.
17. According to the information and explanations given to us and on
an overall examination of the balance sheet of the Company, we report
that no funds raised on short-term basis have been used for long-term
investment.
18. The Company has not made any preferential allotment of shares to
parties and companies covered in the register maintained under Section
301 of the Act during the year.
19. The Company has raised Rs. 10,000 lacs through issue of bonds during
the previous year, which is guaranteed by GOI by way of registered bond
trust deed.
20. The Company has not raised any money by public issue during the
year.
21. Based upon the audit procedures performed for the purpose of
reporting the true and fair view of the financial statements and as per
the information and explanations furnished by the management, we report
that no fraud has been noticed or reported by the Company during the
year.
For Ford, Rhodes, Parks & Co.
Chartered Accountants
Firm's Registration No. 102860W
Sd/-
S.B.Prabhu
Place : Mumbai Partner
Date : 29th May, 2012 Membership No. 35296
Mar 31, 2011
We have audited the attached Balance Sheet of Hindustan Organic
Chemicals Limited. (HOCL) as at 31st March, 2011, the Profit and Loss
Account and also the Cash flow Statement for the year ended on that
date annexed thereto, in which is incorporated the Balance Sheet,
Profit & Loss Accounts and the Cash Flow Statement of the branch
audited by other auditors appointed by the Central Government. In
preparing this report, we have considered the report on the accounts of
the branch audited by the branch auditors together with the particulars
and information relating thereto, furnished to us by the management.
These financial statements are the responsibility of the Company's
Management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We have conducted our audit in accordance with auditing standards
generally accepted in India. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatements. An audit
includes examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made
by the management as well as evaluating the over all financial
statement presentation. We believe that our audit provides a reasonable
basis for our opinion. As required by the Companies ( Auditor's Report
) Order 2003, issued by the Central Government of India in terms of
Section 227 (4A) of the Companies Act, 1956 we annex hereto a statement
on the matters specified in paragraphs 4 and 5 of the said Order.
Further to our comments in the annexure referred above, we report
that:-
a) We have obtained all the information and explanations, which to the
best of our knowledge and belief were necessary for the purposes of our
audit.
b) In our opinion, the Company has kept proper books of account as
required by law so far as appears from our examination of the books and
proper returns adequate for the purpose of our audit have been received
from the units except stated specially in report elsewhere.
c) The Balance sheet, Profit & Loss Account and Cash Flow Statement
dealt with by this report are in agreement with the books of account.
d) In our opinion and to the best of our information and according to
the explanations given to us, the Balance Sheet, Profit & Loss Account
and Cash Flow Statement read with the Schedule 22 Part B, notes thereon
forming part of the accounts comply with the Accounting Standards
referred to in Section 211 (3C) of the Companies Act, 1956.
e) The conditions specified in Section 274(l)(g) of the Companies Act,
1956 in respect of qualifications of directors is not applicable to the
company being government company.
f) Reference is invited to the following Notes on Accounts in Part B of
Schedule 22 with regard to non-provision/pending charge to the Profit
and Loss Account:
i) Note No 4 (b) regarding penal interest of Rs.519.01 lacs on overdue
loan from Government of India,
ii) Note No.8 (c) regarding non provision on account of
misappropriation of Company's fund to the tune of Rs64.81 lacs, pending
final report from CBI and outcome of the civil suit.
iii) Note No. 10 (a) regarding liabilities of wages revision for the
period 1.01.1997 to 31.12.2000 Rs.2308.08 lacs at Rasayani Unit.
Note No. 10 (b) regarding liabilities of wages revision for the period
1.01.2007 to 31.3.2008 Rs. 278.96 lacs to Officers and Rs. 246.31 lacs
to Staff at Rasayani Unit. Note No. 10 regarding liabilities of wages
revision for the balance amount of arrears of pay and allowances
amounting to Rs.98.60 lacs payable to Officers at Kochi Unit. g) In
respect of the following items, no provision/charge to Profit and Loss
Accountshas been done for claims of JNPT of Rs.2007.99 lacs as under:
i. regarding claims of JNPT of minimum guaranteed throughput charges
of Rs.1256.25 lacs.
ii. Regarding short provision of Rs.453.99 lacs on account of lease
rentals and escalation on leased land payable to JNPT
iii regarding claims of of JNPT of water charges of Rs 0.65 lacs and
iv regarding claims of JNPT of way leave charges of Rs 297.10 lacs.
h) Reference is also invited to the following notes on accounts in Part
B precise impact of which on the balance sheet and the Profit and Loss
Accounts could not be ascertained for the reasons stated therein.
i) Note No. 5(b)(1) regarding amount of Rs.2976.65 lacs incurred on
JNPT tank terminal project as expenditure towards construction
continues to appear under Capital work in progress, the construction
has been suspended for more than three years and the lease has been
called off by the lessor JNPT after the expiry of the lease in June
2010. The status of the project is stagnant incomplete and of no
utility since long. No provision is made for the depreciation of the
asset value if any pending ascertainment of recoverable amount which is
the higher of an asset's net selling price and value in use.
ii) Note No.5 (d) of Part 8 - Others, ERP Implementation at Kochi. It
is observed that ERP was implemented w.e.f. 16.09.2010. Data upto
31.08.2010 was transferred to SAP. Further entries upto 31st March 2011
were made in SAP. Since in-depth training to staff for the operation of
SAP was not extended and that an EDP audit of SAP was not implemented
it is recommended that a Migration Audit and EDP Audit be conducted for
ensuring that adequate internal control and data security are in place.
iii) Note No 17 regarding pending confirmation and reconciliation of
balances of sundry debtors, sundry creditors, loans and advances, other
current assets and other debit/credit balances. Further Bank balances
are subject to direct confirmation from the Banks, even though
confirmations are received by the Company.
i) We further report that had the effect of items mentioned at (f) and
(g) above considered, profit for the year would have been decreased by
Rs.5523.76 lacs resulting into a loss of Rs. 2952.17 lacs and the
accumulated loss as at the year end would be higher by the same amount
i.e. Rs. 5523.76 Lacs. Further, the current liabilities/provisions
would have been higher by Rs.'5523.76 lacs and the balance of profit
and loss account in the asset side of the balance sheet would have been
higher by Rs. 5523.76 Lacs.
j) We also report that the effect of items mentioned at (h) above is
not ascertainable.
k) Subject to our comments in para (i) and Q) above, in our opinion and
to the best of our information and according to the explanation given
to us, the said accounts read together with the Significant accounting
policies and Notes on accounts appearing in the Schedule 22, give the
information required by the Companies Act 1956, in the manner so
required and gives the true and fair view in conformity with the
Accounting Principles generally accepted in India:
a. In the case of Balance Sheet, of the state of affairs of the
company as at 31st March 2011
b. In the case of Profit & Loss Account, of the Profit for the year
ended on that date and
c. In the case of the Cash Row Statement, of the cash flows for the
year ended on that date.
COMPANIES (AUDITOR'S REPORT) ORDER, 2003.
Annexure referred to in Paragraph 3 of our Report of even date
(i) (a) The Company has maintained proper records showing full
particulars including quantitative details and situation of fixed
assets.
(i) (b) As explained and informed to us, the Management has conducted
physical verification of major items of fixed assets during the year
and we are informed that no material discrepancies were noticed on such
verification.
(i) (c) No substantial part of the Fixed Asset has been disposed off
during the year so as to affect the going concern.
(ii) (a) As per information and explanation given to us the management
has carried out physical verification of inventories at reasonable
intervals during the year. In our opinion the frequency of such
verifications is reasonable.
(ii) (b) In our opinion the procedure of physical verification of
inventories followed by the management are reasonable and adequate in
relation to the size of the Company and the nature of its business.
However in respect of inventory in storage tanks, Kochi unit does not
have the system of taking dip measurements. Instead, reliance is placed
on the electronic reading reported by the Distribution Control System.
(ii) (c) The company is maintaining proper records of inventories. It
is explained to us that no material discrepancies on such physical
verification were noticed.
(iii) a) Based on information, the company has not granted any loans,
secured or unsecured, to companies, firms, or other parties listed in
the register maintained under Section 301 of the Companies Act, 1956
and as such clauses (Hi)(b), (c)and (d) are not applicable. e) Based
on information, the company has not taken any loans, secured or
unsecured, from companies, firms, or other parties listed in the
register maintained under section 301 of the Companies Act, 1956 and as
such clauses (iii)(f) and (g) are not applicable.
(iv) In our opinion and according to the information and explanation
given to us, there is an adequate internal control system for the
purchase of inventories and fixed assets and for the sale of goods and
services commensurate with the size of the Company and the nature of
its business. During the course of our audit, we have not observed any
major weakness in internal control system.
(v) According to the information and explanation given to us there were
no transactions that need to be entered into the register maintained
under section 301 of the Companies Act, 1956. Sub Clause (b) of clause
(v) is hence not applicable.
(vi) In our opinion and according to the information and explanations
given to us, Company has not accepted deposits from the public. Hence
the provisions of section 58A and 58AA of the Companies Act, 1956 with
regard to acceptance of deposits from public and the rules framed
thereunder, to the extent applicable, except Rule 3A of the Companies
(Acceptance of deposits) Rules, 1975 regarding investment in liquid
assets, are not applicable. We have been informed by the management
that no order has been received by the company, from Company Law Board,
National Company Law Tribunal, or Reserve Bank of India or any court or
any other tribunal under Section 58A and 58AA.
(vii) In our opinion the company has an internal audit system
commensurate with its size and nature of its business.
(viii) We have broadly reviewed the books of account maintained by the
company in pursuance to the rules made by the Central Government for
the maintenance of the cost records under section 209 (1) (d) of the
Companies Act, 1956 for certain products of the company and are of the
opinion that prima facie the prescribed accounts and records have been
made and maintained. We have not, however made a detailed examination
of records with a view to determine whether they are accurate or
complete.Cost Audit has been prescribed by the Governmnent of India for
the year 2010-11 for both the units of the Company.
(ix) (a) The company is generally regular in depositing undisputed
statutory dues including investor education and protection fund,
employees state insurance, income tax, sales tax, wealth tax, service
tax, custom duty, excise duty, cess and other statutory dues wherever
applicable with appropriate authorities.
(ix) (b) According to the information and explanations given to us no
undisputed amount payable in respect of sales tax, income tax, wealth
tax, excise duties, custom duties, cess and other statutory dues were
in arrears as at 31st March 2011 for a period of more than six months
from the date they become payable.
(ix) (c) According to the records of the company, details of
outstanding dues of income tax, sales tax, wealth fix, service tax,
custom duty, excise duty and cess which are not been deposited on
account of any dispute are given below:
Sr. Name of Statute Nature of Dues Period to
which Amount of Forum where
dispute is
pending
No. the
disputes disputes
relates (Rs. in
lace)
1. Resayani Unit
1. Customs Act Custom duty NA 10.80 Customs, Excise
and Service Tax
Appellate
Tribunal
Total 10.80
1. Central Excise
Act Molten Sulphur 1994-95 15.53 Customs, Excise
and Service Tax
Appellate
Tribunal
Classification
2. Central Excise
Act Molten Sulphur 1999-2000 7.62 Commisslonerate
Classification
3. Central Excise
Act Shortage of
inputs 13.64 Commissionerate
4. Central Excise
Act Shortage of
inputs 18.66 High Court
5. Central Excise
Act Shortage of
inputs 5.84 High Court
6. Central Excise
Act ARO Case 19.28 Customs, Excise
and Service Tax
Appellate
Tribunal
7. Central Excise
Act Clearance of
SSA to 112.78 Commissionerate
fertilizer
manufacturing
units
8. Central Excise
Act Reversal of
CENVAT Credit 2006-2007 18.66 Commissionerate
availed on
inputs lost in
flood.
Total 212.01
1. Income Tax Act
1961 Penalty under
Section AY
1999-2000 91.08 Commissioner of
Income Tax
Appeals, Mumbai
271(1)(c)
2. Income Tax Act
1961 Penalty under
Section AY
2003-04 607.27 Commissioner of
Income Tax
Appeals, Mumbai
271(1)(c)
3. Income Tax Act
1961 Penalty under
Section AY
2004-05 63.23 Commissioner of
Income Tax
Appeals, Mumbai
271(1)(c)
4. Income Tax Act
1961 Disallowance
of Expenses AY
2007-08 20.78 Income Tax
Appellate
Tribunal,Mumbai
5. Income Tax Act
1961 Disallowance
of Expenses AY
2008-09 1376.95 Commissioner of
Income Tax
Appeals, Mumbai
Total 2159.31
2. Kochi Unit
1. Employees Family Damage for
default
payment 11/95 to
12/97 18.05 High Court of
Kerala.
Pension Scheme
2. ESI Corporation ESI
Contribution
of 1/04/1992 to 2.17 Employees
Insurance Court
(Industrial)
employees 31/10/1992
3. Central Excise
Act,1944 Disallowance
of CENVAT 2004-05 11.09 Appeal with
Customs, Excise
and Service Tax
Appellate
Credit availed
on the ground Tribunal,
Bangalore.
Remanded to
J.C.Ex
Ernakulam
that duty is
paid by
debiting DEPB
license
4. Central Excise
Act,1944 Disallowance
of CENVAT 10/04 to
05/05 0.59 Customs, Excise
and Service Tax
Appellate
Tribunal,
Credit availed
on the ground Bangalore
that duty is
paid by
debiting DEPB
license
5. Finance Act, 1994 Non payment of
Service Tax 4/06 to
3/08 7.93 Commissioner of
Central Excise
Appeals,
Ernakulam
on commercial
coaching /
training
(1.92 6.01)
6. Finance Act,1994 Non payment of
Service Tax 04/08to
03/09 1.86 Asst.
Commissioner of
Central Excise
Muvattupuzha
on commercial
coaching/
training and
renting of
immovable
property to
Sterling Gas
7. Finance Act 1994 Availing of
CEVAT credit on 04/06 to
11/08 49.48 Commissioner of
Central Excise
Appeals,
Erankulam
outdoor
catering
services
(16.59 32.89)
8. Finance Act, 1994 Availing of
CEVAT credit on 12/08 to
09/09 24.21 Commissioner of
Central Excise
Appeals,
Erankulam
outdoor
catering
services
9. Finance Act, 1994 Availing of
CEVAT credit on 01/05 to
08/06 4.55 Commissioner of
Central Excise
Appeals,
Erankulam
service tax on
transportation
of final
products to
customers
premises
10. Finance Act,
1994 Availing of
CEVAT credit on 04/03 to
12/06 32.01 Commissioner of
Central Excise
Appeals,
Erankulam
service tax on
transportation
of final
products to
Rasayani Depot
11. Finance Act 1994 Security
services and
repair 02/06 to
12/06 0.97 Commissioner of
Central Excise
Appeals,
Erankulam
works at HOC
township
12. Central Excise
Act, 1944 Duty on sale
of waste/scrap upto 01/02
and 9.10 CESTAT,
Bangalore appeal
filed by the
department
05/02 to
03/03
13. Customs Act,
1962 Demand to remit
duty for Nov.08 0.79 Commissioner of
Central Excise
Appeals,
Erankulam
excess quantity
of imported
Benzene
14. Finance Act,
1994 Availing of
CENVAT credit 01/09 to
12/09 3.01 Commissioner of
Central Excise
Appeals,
Erankulam
on Hiring of
Bus, Car and on
Capital Goods
15. Finance Act,
1994 Service Tax on
commercial 04/09 to
03/10 1.75 Deputy
Commissioner of
Central Excise
coaching,
renting of
immovable
property
16. Finance Act,
1994 Availing of
CENVAT credit 10/09 to
09/10 14.81 Commissioner of
Central Excise
Appeals,
Erankulam
on outdoor
catering,
insurance, etc
17. Finance Act,
1994 Availing of
CENVAT credit 01/10 to
11/10 2.05 Deputy
Commissioner of
Central Excise
on Hiring of
Bus, Car, etc
18. Central Excise
Act, 1944 Excess amount
collected 03/10 0.24 Deputy
Commissioner of
Central Excise
from Rasayni
Sales
19. Finance Act,
1994 Utilisation of
CENVAT credit 05/09 to
12/09 1.52 Deputy
Commissioner of
Central Excise
for 100%
payment when
only 90% paid
20. Income Tax Act,
1961 Demand for short
collection/ AY 2008-09
and 3.55 Commissioner of
Income Tax
Appeals,
Erankulam
Non payment of
TDS for 2009-10
Assessment Year
2008-09
and 2009-10
Total 189.73
(x) During the year, Company has not incurred cash losses. It has
incurred cash losses during the immediately preceding financial year.
However after giving effect to the qualifications in the auditors
report, there will be cash loss during the year.
(xi) The Company has not defaulted in repayment of dues to the bond
holders during the current year.
(xii) According to the information and explanations given to us,
adequate documents and records are maintained for loans granted to
subsidiary Company on the basis of security given by them.
(xiii) The Company is not a chit fund/nidhi/mutual benefit fund/
society as such clauses (xiii)(a) to (d) are not applicable.
(xiv) The Company is not a trader or dealer in any shares, securities
or debentures of other companies.
(xv) According to the information and explanation given to us, the
Company has given guarantee of Rs.12.53 crores for loan taken by M/s
Hindustan Flurocarbons Ltd. from State Bank of Hyderabad, the terms and
conditions thereof are not prejudicial to the interest of the Company.
(xvi) In our opinion and according to the information and explanation
given to us, the Company has taken term loans during the year and same
were applied for the purpose for which the loans were obtained.
(xvii) Based on our examination of the books of account and Balance
Sheet of the units, we are of the opinion that funds raised oh short
term basis have not been used for long term investments.
(xviii) Company has not made any preferential allotment of shares to
parties/companies covered in the register maintained u/s 301 of the
Companies Act, 1956.
(xix) The Company has raised Rs.100 crores by way of issuing bonds
during the year, which is guaranteed by GOI by way of registered bond
trust deed.
(xx) The Company has not raised any money through public issues during
the year.
(xxi) Based upon the audit procedure performed for the purpose of
reporting the true arid fair view of the financial statements and as
per the information and explanation furnished by the management we
report that no fraud is noticed or reported during the year by the
Company.
For NBS & Co.(FRN 110100W)
Chartered Accountants
Sd/-
Devdas Bhat
Date : 30/05/2011 M.No. 48094
Partner.
Place: DELHI
Mar 31, 2010
We have audited the attached Balance Sheet of Hindustan Organic
Chemicals Limited. (HOCL) as at 31sl March, 2010 the Profit and Loss
Account and also the Cash flow State- ment for the year ended on that
date annexed thereto, in which is incorporated the Balance Sheet,
Profit & Loss a/c and the Cash Flow Statement of the branch audited by
other auditors appointed by the Central Government. In prepar- ing this
report, we have considered the report on the ac- counts of the branch
audited by the branch auditors to- gether with the particulars and
information relating thereto, furnished to us by the management. These
financial state- ments are the responsibility of the Companys Manage-
ment. Our responsibility is to express an opinion on these financial
statements based on our audit.
We have conducted our audit in accordance with auditing standards
generally accepted in India. Those standards require that, we plan
and perform the audit to obtain rea- sonable assurance about whether
the financial statements are free of material misstatements. An audit
includes ex- amining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements. An audit also includes
assessingjhe accounting principles used and sig- nificant estimates
made by the management as well as evaluating the over all financial
statement presentation. We believe that our audit provides a reasonable
basis for our opinion..
As required by the Companies ( Auditors Report) Order 2003, issued by
the Central Government of India in terms Of Section 227 (4A) of the
Companies Act, 1956 we annex hereto a statement on the matters
specified in paragraphs 4 and 5 of the said Order.
Further to our comments in the annexure referred above, . we report
that :-
a) We have obtained all the information and explanations,
which-to the best of our knowledge and belief were
necessary for the purposes of our audit.
b) In our opinion, the Company has kept proper books of account as
required by law so far as appears from our examination of the books and
proper returns adequate for the purpose of our audit have been received
from the units except stated specially in report elsewhere.
c) The Balance sheet, Profit & Loss Account and Cash Flow Statement
dealt with by this report are in agree- ment with the books of account.
d) In our opinion and to the best of our information and according to
the explanations given to us, the Balance Sheet, Profit & Loss account
and Cash Flow State- ment read with the Schedule 22 Part B, notes
thereon forming part of the accounts comply with the Account- ing
Standards referred to in Section 211 (3C) of the Companies Act, 1956.
e) The conditions specified in Section 274(l)(g) of the Companies Act,
1956 in respect of qualifications of di- rectors is not applicable to
the company being govern- ment company.
f) Reference is invited to the following Notes on Accounts in Part B of
Schedule 22 with regard to non-provision/ pending charge to the Profit
and Loss Account:
i) Note No 2 (c) regarding penal interest of Rs.348.37 lacs on overdue
loan from Government of India,
ii) Note No 8 (i) regarding liabilities of wages revision forthe period
1.01.1997 to 31.12.2000 Rs.2308.08 lacs.
The pay scales of the Board level and below Board level executives have
been revised by the Board with effect from 01.01.2007. In exercise of
the pow- ers conferred under Article 139 of the Articles of Association
of the Company, the President has ap- proved the pay revision and
directed the company to implement the pay revision with effect from
01.01.2007 as per DPE guidelines. As per the presidential directive,
fitment benefit proposed shall be payable @15% in the first stage and
the balance fitment benefit shall be paid when the dip in profit is
fully recouped to the original level and the company is able to absorb
the financial bur- den consequent on revision. As per the orders is-
sued by the company in pursuance of the presi- dential directives, the
actual payment of revised salary including fitment benefit payable @
15% in the first stage is payable from 01.08.2009 and the arrears from
01.01.2007 to 31.07.2009 would be considered to be paid in installments
in two finan- cial years, i.e financial year 2010-2011 and 2011- 2012,
subject that the company generates Ad- equate cash resources through
improved produc- tivity and profitability. No provision has been made
by the company for liability arising on account of pay revision
amounting to Rs.772.86 Lakhs for Officers Category and Rs.706.74 lakhs
for Staff/ Workmen of Rasayani and Kochi units for the pe- riod from
01.01.2007 to 31.07.2009 as per presi- dehtial orders. [Refer note 8(i)
and (ii) of Rasayani Unit and Kochi Unit of Part B of Schedule 22 form-
ing part of the accounts wherein the company has taken the view that
the non-provision is in accor- dance with the pay revision order of the
Compe- tent Authority.] Hi) Note No.6 (d) regarding non provision on
account of misappropriation of Companys fund to the tune of Rs64.81
lacs.pending final report from CBI and outcome of the civil suit.
g) In respect of the following items, no provision/charge to profit and
loss a/c has been done,
i. regarding claims of JNPT of minimum guaranteed throughput charges of
Rs. 1284.34 lacs.
ii. Regarding short provision of Rs:426.01 lacs on account of
escalation @ 10% per annum on lease rentals on leased land payable to
JNPT.
iii. Regarding Rs.273.91 lacs on account of decree order passed by the
Civil Court, Panvel in ease of M/s Narendra Construction Company.
h) Reference is also invited to the following notes on ac- counts in
Part B Schedule 22 with regards to pending accounting treatment, the
precise impact of which on the balance sheet and the profit and loss
a/c could not be ascertained for the reasons stated therein. i) Note
No 17 regarding pending confirmation and* reconciliation of balances of
sundry debtors, sun- dry creditors, loans and advances, other current
assets and other debit/credit balances. Further Bank balances are
subject to direct con- firmation from the Banks, even though confirma-
tions are received by the Company.
i) We further report that had the effect of items men- toned at (f) and
(g) above considered, loss forthe year would have been increased by
Rs.6185.12 lacs result- ing into a loss of Rs. 14492.91 lacs and the
accumu- lated loss as at the year end would be higher by the same amount
i:e Rs. 6185.12 Lacs. Further, the cur- rent liabilities/provisions
would have been higher by Rs.6185.12 lacs and the balance of profit
and loss account in the asset side of the balance sheet would have been
higher by Rs.6185.12.
j) We also report that the effect of items mentioned at (h) above is
not ascertainable.
k) Subject to our comments in para (i) and (j) above, in our opinion
and to the best of our information arid ac- cording to the explanation
given to us, the said ac- counts read together with the Significant
accounting policies and Notes on accounts appearing in the Sched- ule
22, give the information required by the Compa- nies Act 1956, in the
manner so required and gives the true and fair view in conformity with
the Accounting Principles generally accepted in India:
In the case of Balance Sheet, of the state of af- fairs of the company
as at 31 st March 2010.
In the case of Profit & Loss account, of the Loss - for the year ended
on that date and
In the case of the Cash Flow Statement, of the cash flows for the year
ended on that date
COMPANIES (AUDITORS REPORT) ORDER, 2003.
Annexure referred to in Paragraph 3 of our Report of even date
(i) (a) The Company has maintained proper records show- ing full
particulars including quantitative details and situ- ation of fixed
assets.
(i) (b) As explained and informed to us, the Management has conducted
physical verification of major items of fixed assets during the year
and we are informed that no material discrepancies were noticed on such
verifica- tion.
(i) (c) NO substantial part of the Fixed Asset has been dis- posed off
during the year so as to affect the going con- cern.
(ii) (a) As per information and explanation given to us the management
has carried out physical verification of inventories at reasonable
intervals during the year. In our opinion the frequency of such
verifications are rea- sonable.
(ii) (b) In our opinion the procedure of physical verification of
inventories followed by the management are reason- able and adequate in
relation to the size of the Com- pany and the nature of its business.
However in re- spect of inventory in storage tanks, Kochi unit does not
have the system of taking dip measurements. In- stead, Reliance is
placed on the electronic reading reported by the Distribution Control
System.
(ii) (c) The company is maintaining proper records of inven- tory. It
is explained to us that no material discrepan- cies on such physical
verification were noticed.
(iii) a) Based on information, the company has not granted any loans,
secured or unsecured, to companies, firms, or other parties listed in
the register maintained under section 301 of the Companies Act, 1956
and as such . clauses (iii)(b),(c) and (d) are not applicable.
e) Based on information, the company has not taken any loans, secured
or unsecured, from companies, firms, or other parties listed in the
register maintained under section 301 of the Companies Act, 1956 and as
such clauses (iii)(f) and (g) are not applicable.
(iv) In our opinion and according to the information and expla- nation
given to us, there is an adequate internal control system for the
purchase of inventories and fixed assets and for the sale of goods and
services commensurate with the size of the company and the nature of
its business. During the course of our audit, we have not observed any
major weakness in internal control system.
(v) According to the information and explanation given to us there were
no transactions that need to.be entered into the register maintained
under section 301 of the Companies Act, 1956. Sub Clause (b) of clause
(v) is hence not appli- cable.
(vi) In our opinion and according to the information and expla- nations
given to us, Company has not accepted deposits from the public. Hence
the provisions of section 58A and 58AA of the Companies Act, 1956 with
regard to accep- tance of deposits from public and the rules framed
there under, to the extent applicable, except Rule 3A of the Com-
panies (Acceptance of deposits) Rules,1975 regarding in- vestment in
liquid assets, are not applicable. We have been informed by the
management that no order has been re- ceived by the company, from
Company Law Board, National Company Law Tribunal, or Reserve Bank of
India or any court or any other tribunal under section 58A and 58AA.
(vii) In our opinion the company has an internal audit system
commensurate with its size and nature of its business.
(viii) We have broadly reviewed the books of account maintained by the
company in pursuance to the rules made by the Cen- tral Government for
the maintenance of the cost records under section 209 (1) (d) of the
Companies Act, 1956 for certain products of the company and are of the
opinion that prima facie the prescribed accounts and records have been
made and maintained. We have not, however made a de- tailed examination
of records with a view to determine whether they are accurate or
complete.
(ix) (a) The company is generally regular in depositing undis- puted
statutory dues including investor education and protection fund,
employees state insurance, income tax, sales tax, wealth tax, service
tax, custom duty, excise duty, cess and other statutory dues wherever
applicable with appropriate authorities. However a unreasonable delay
beyond period of more than two months in de- positing Provident Fund
and general delay in deposit- ing TDS dues of the Company with
appropriate authori- ties is observed.
(ix) (b) According to the information and explanations given to us no
undisputed amount payable in respect of sales tax, income tax, wealth
tax, excise duties, custom du- ties, cess and .other statutory dues
were in arrears as at 31st March 2010 for a period of more than six
months from the date they become payable.
(ix) (c) According to the records of the company, details of out-
standing dues of income tax, sales fax, wealth tax, ser- ! vice tax;
custom duty, excise duty and cess which are not been deposited on
account of any dispute are given below.
SI. Name of Statute Nature of Dues
No.
Rasayani Unit .
1 Customs Act Customs Duty
1. Central Excise Act Molten Sulphur Classification
2. Central Excise Act Molten Sulphur Classification
3. Central Excise Act Shortage of inputs
4. Central Excise Act Shortage of inputs
5. Central Excise Act Shortage of inputs
6. Central Excise Act Shortage of inputs
7. Central Excise Act ARO Case
8. Centraf Excise Act Clearance of SSA to fertilizer
manufacturing units
9. Central Excise Act Reversal of CENVAT
Credit availed on inputs lost in flood.
2.Kocht Unit
1. Employees Family - Damage for default payment
Pension Scheme
2. ESI Contribution of employees 1/
3. Central Excise Act, Disallowance of CENVAT Credit
1944 availed on the ground that duty is
paid by debiting DEPB license
4. Central Excise Act, - Disallowance of CENVAT Credit
1944 availed on the ground that duty is
paid by debiting DEPB license
5. Finance Act 1994 Non payment of Service Tax on
commercial coaching/training
6. Finance Act 1994 Non payment of Service Tax on
commercial coaching/training and
renting of immovable property to Sterling Gas
7. Finance Act 1994 Availing of CEVAT credit on
outdoor catering services
8. Finance Act 1994 Availing of CEVAT credit on outdoor
catering services ;
9. Finance Act 1994 Availing of CEVAT credit ori service tax
on transportation of final products to
customers premises
10. Finance Act 1994 Availing of CEVAT credit on service tax
on transportation of-final products to
Rasayani Depot
11. Finance Act 1994 Security services and repair
works at HOC township
12. Cental Excise Act Duty on sale of waste/scrap upto
1944
13. Cental Excise Act Demand for additional remittance
1944 of 75% on GTA (abatement)
14. Customs Act 1962 Demand to remit duty,for excess
quantity of imported Benzene
nnua/ Report 2009-2010
Name of Statute Period to Amount Forum where
which dispute of Disputes Dispute
relates (Rs. In lacs) is pending
Customs Act NA 10.80 Customs, Excise and
Service Tax
Appellate Tribunal
Total 10.80.
Central Excise Act 1994-95 15.53 Customs, Excise and
Service Tax Appellate
Tribunal
Central Excise Act 1999-2000 7.62 Commissionerate
Central Excise Act 2002-2003 8.82. Commisstonerate
Central Excise Act - 13.64 Commisstonerate
Central Excise Act - 18.66 High Court
Central Excise Act - 5.84 High Court
Central Excise Act - 19.28 Customs, Excise and
Service Tax Appellate
Tribunal
Central Excise Act - 112.78 Commissionerate
Central Excise Act 2006-2007 18.66 Commissionerate
Total 212.01
2.Kocht Unit
Employees Family 11/95to12/97 18.05 High Court of Kerala.
Pension Scheme
ESI Corporation 1/04/1992 to
1944 31/10/1992 2.17 Employees Insurance
Court (Industrial)
Central Excise Act, 2004-05 10.31 Appeal with Customs,
1944 Excise and Service
Tax Appellate Tribunal,
Bangalore. Recommended
to J.C.Ex Ernakulam
Central Excise Act, 10/04 to 05/05 0.59 Customs, Excise and
1944 Service Tax .
Appellate Tribunal,
Bangalore
Finance Act 1994 4/06to3/08 7.64 ommissioner of Central
Excise Appeals, Emakulam
Finance Act 1994 04/08 to 03/09 1.76 Asst.Commissioner of
Central Excise,
Muvattupuzha
Finance Act 1994 04/06 to 11/08 46.90 Commissioner of Central
Excise Appeals, Erankulam
Finance Act 1994 12/08 to 09/09 22.84 Asst.Commissioner of
Central Excise,
Muvattupuzha
Finance Act 1994 01/05 to 08/06 4.34 Commissioner of Central
Excise Appeals,
Erankulam
Finance Act 1994 04/03 to 12/08- 30.65 Commissioner of Central
Excise Appeals,
Erankulam
Finance Act 1994 02/06 to 12/06 0.97 Commissioner of Central
Excise Appeals,
Erankulam
Cental Excise Act 01/02 and 05/02
1944 to 03/03 8.81 CESTAT Bangalore appeal
filed by.the department
Cental Excise Act 04/07 to-02/08 15.79 Joint Commissioner
of Central
1944
Excise Appeals,
Erankulam
Customs act 1962 Now.08 0.71 Commissioner of Central
Excise Appeals,
Erankulam
Total 171.53
(x) During the year, company has incurred cash losses .It has not
incurred cash losses during the immediately pre- ceding financial
year. However, after giving effect to the qualifications in the
auditors report, there will not be any effect on cash loss.
(xi) The company has not defaulted in repayment of dues to the bond
holders during the current year.
(xii) According to.the information and. explanations given to us*,
adequate documents and records are maintained for loans granted to
subsidiary company on the basis of security given by them.
(xiii) The Company is not a chit funti/nidhi/mutual benefit fund/
society as such clauses (xiii) (a) to (d) are not applicable.
(xivj The Company is not a trader or dealer iri any shares, securities
or debentures of other companies.
(xv) According to the information and explanation given to us,
the,company has given guarantee of Rs.3.45 crores for loan taken by IWs
Hindustan Flurocarbons Ltd from State Bank of Hyderabad, the terms and
conditions thereof are not prejudicial to the interest of the com-
pany.
(xvi) In our opinion and according to the information and ex- "
planation givento us, the company has taken term loans during the year
and same were applied for the purpose - - for which the loans were
obtained.
(xvii) Based on our examination of the books of account and Balance
Sheet of the units, we are of the opinion that funds raised on short
term basis have not been used for long term investments.
(xviii) Company has not made any preferential allotment of shares to
parties/companies covered in the register maintained u/s 301 of the
companies Act 1956.
(xix) The company has raised Rs.100 crores by way of issu- ing bonds
during the year, in respect of which proper security is created.
(xx) The company has not raised any money, through public _ issues
during the year.
(xxi) Based upon the audit procedure performed for the pur- pose of
reporting the true and fair view of the financial statements and as per
the information and "explanation furnished by the management we report
that no fraud is noticed or reported during the year by the company.
For NBS & Co
Chartered Accountants
S/d
CA Devdas Bhat
Partner
M.No. 48094
Date : 21 May, 2010
Place : Mumbai
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