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Gujarat State Fertilizers & Chemicals

BSE: 500690|NSE: GSFC|ISIN: INE026A01025|SECTOR: Fertilisers
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Auditor's Report (Gujarat State Fertilizers & Chemicals) Year End : Mar '18

Independent Auditors’ Report

TO THE MEMBERS OF GUJARAT STATE FERTILIZERS & CHEMICALS LIMITED Report on the Standalone Ind AS Financial Statements

We have audited the accompanying standalone Ind AS financial statements of GUJARAT STATE FERTILIZERS & CHEMICALS LIMITED (“the Company”), which comprise the Balance Sheet as at March 31, 2018, 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 (herein after referred to as “Standalone Ind AS Financial Statements”).

Management’s Responsibility for the Standalone Ind AS 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 Ind AS financial statements that give a true and fair view of the state of affairs (financial position), profit or loss (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 relevant rules issued there under.

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 Ind AS 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 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 there under.

We conducted our audit of the Standalone Ind AS financial statements 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 standalone Ind AS 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 auditor’s 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 Company’s 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 Company’s Board of 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 in conformity with the accounting principles generally accepted in India, of the state of affairs (financial position) of the Company as at March 31, 2018, and its profit (financial performance including other comprehensive income), its cash flows and the changes in equity for the year ended on that date.

Emphasis of Matter

We draw attention to the following matter in the notes to the standalone Ind AS financial statements:

Note 12 which describes the company’s past subsidy claims matter and the eligibility of claims for the period from March 18, 2013 to March 5, 2017 amounting to - 662.95 Crores pending examination by Fertilizer Industry Coordination Committee. The company is reasonably certain that its subsidy claims for the aforesaid period, which are in line with the claims recently agreed for period from April 01, 2010 to March 17, 2013, will be agreed by the Department of Fertilizers.

Our opinion is not modified in respect of the above matter.

Report on Other Legal and Regulatory Requirements

1. 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 Balance Sheet, the Statement of Profit and Loss (including other comprehensive income), the Cash Flow Statement 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 standalone Ind AS financial statements comply with the Indian Accounting Standards prescribed under Section 133 of the Act read with relevant rules issued there under.

(e) On the basis of the written representations received from the directors as on March 31, 2018 taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2018 from being appointed as a director in terms of Section 164 (2) of the Act;

(f) 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 A”.

(g) 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, as amended, 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 standalone Ind AS financial statements. Refer Note no 39 to the standalone Ind AS financial statement.

II. The Company has made provision, as required under the applicable law or accounting standards, for material foreseeable losses, if any, on long-term contracts including derivative contracts;

III. There has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the company.

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

(Referred to in Paragraph 1(f) under “Report on Other Legal and Regulatory Requirements” section of our Report of even date)

Report on the Internal Financial Controls Over Financial Reporting under Clause (i) of Sub-section 3 of Section 143 of the Companies Act, 2013 (“the Act”)

We have audited the internal financial controls over financial reporting of Gujarat State Fertilizers & Chemicals Limited (“the Company”) as of March 31, 2018 in conjunction with our audit of the Standalone Ind AS financial statements of the Company for the year ended on that date.

Management’s Responsibility for Internal Financial Controls

The Company’s management is responsible for establishing and maintaining 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 (the “Guidance Note”) issued by the Institute of Chartered Accountants of India. 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 company’s 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.

Auditors’ Responsibility

Our responsibility is to express an opinion on the Company’s internal financial controls over financial reporting based on our audit. We conducted our audit in accordance with the Guidance Note and the Standards on Auditing prescribed under section 143(10) of the Companies Act, 2013, to the extent applicable to an audit of internal financial controls. 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 auditor’s judgment, including the assessment of the risks of material misstatement of the standalone Ind AS 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 Company’s audit opinion on the company’s internal financial control system over financial reporting.

Meaning of Internal Financial Controls Over Financial Reporting

A company’s 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 company’s 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 company’s 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, to the best of our information and according to the explanations give to us, the Company has, in all material respects, an adequate internal financial controls system over financial reporting and such internal financial controls over financial reporting were operating effectively as at March 31, 2018, 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.

(Referred to in Paragraph 2 under “Report on Other Legal and Regulatory Requirements” section of our Report of even date)

(i) In respect of its Fixed Assets

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

b) As explained to us, all the fixed assets have been physically verified by the management in a phased periodical manner, which in our opinion is reasonable having regard to the size of the Company and nature of its assets. No material discrepancies were noticed on such physical verification.

c) According to the information and explanations given to us and the records examined by us and based on the examination of register sales deed / transfer deed / letter of award provided to us, we report that, the title deeds, comprising all the immovable properties of land and buildings which are freehold, are held in the name of the Company as at the balance sheet date

In respect of immovable properties of land and buildings that have been taken on lease and disclosed as Property, Plant and Equipment (fixed asset) in the financial statements, the lease agreements are in the name of the company, where the company is the lessee in the agreement, except as stated in table below.

Particulars of the land

Amount f lacs (Carrying amount as at the balance sheet date)

Remarks

Leasehold land at Nandesari

admeasuring to 82,383 square meters

29.39

The title deeds are in the name of Polymer Corporation of Gujarat Limited, erstwhile company that was merged with the Company under Section 391 to 394 of the Companies Act, 1956 in terms of the approval of the Honorable High Court(s) of judicature.

(ii) Inventories

As explained to us, the inventories, except goods-in-transit, were physically verified during the year by the Management at reasonable intervals and no material discrepancies were noticed on physical verification.

(iii) Loans given

According to the information & explanations given to us, the Company has not granted any loans, Secured or unsecured, to companies, firms, Limited Liability Partnerships or other parties covered in the register maintained under Section 189 of the Companies Act, 2013 and hence reporting under clause (iii) (a), (b) and (c) of Paragraph 3 of the order is not applicable.

(iv) Compliance of Sec. 185 & 186

In our opinion and according to the information and explanations given to us, the compnay has complied with the provisions of sections 185 & 186 of the companies Act, 2013 in respect of grant of loans, making investments and providing guarantees and securities.

(v) Public Deposit

According to the information and explanations given to us, the company has not accepted any deposits during the year. In respect of unclaimed deposits, the company has complied with the proviso of section 73 to 76 or any other relevant provisions of the Companies Act, 2013.

(vi) Cost Records

We have broadly reviewed the cost records maintained by the Company pursuant to the Companies (Cost Records and Audit) Rules, 2014, prescribed by the Central Government under section 148(1 )(d) of the Companies Act, 2013, and are of the opinion that, prima facie, the prescribed accounts and cost records have been made and maintained. We have, however, not made a detailed examination of the cost records with a view to determine whether they are accurate or complete.

(vii) Statutory Dues

According to the information and explanations given to us, in respect of statutory dues:

a) The Company has generally been regular in depositing its undisputed statutory dues including Provident Fund, Income-tax, Sales Tax, Service tax, Customs duty, Excise duty, Value Added Tax, GST, cess and other material statutory dues applicable to it to the appropriate authorities.

b) No undisputed amounts payable in respect of the aforesaid dues were outstanding as at March 31, 2018 for a period of more than six months from the date they became payable.

c) Details of dues of Income-tax, Sales Tax, Service Tax, Customs Duty, Excise Duty and Value Added Tax which have not been deposited as on March 31, 2018 on account of disputes are given below:

Name of Statute

Nature of Dues

Forum where dispute is pending

Period/between various periods to which the amount relates

Amount involved excluding interest and penalty ('' in Lakhs)

Amount unpaid excluding interest and penalty ('' in Lakhs)

Income Tax Act, 1961

Income Tax

Assessing Officer

FY 2016-17

1.68

1.68

Commissioner (Appeals)

FY 2012-13

1,133.90

904.90

Central Excise Act, 1994

Excise Duty

High Court- Ahmadabad

FY 1986 to 1989 FY 1997-2001

3,486.77

1,768.47

CESTAT

FY 2007 to 2009 FY 2011 to 2015

7,259.96

7,243.96

Superintendent / Assistance / Deputy / Joint commissioner of Central Excise

FY1991-1992 FY 1991-1993 FY 1993-1995 FY 2000-2001 FY 2010-2014

146.98

146.98

Finance Act, 1994

Service Tax

Supreme court

Jul-2010 to Mar- 2013

11.51

10.36

CESTAT

FY 2012-2014

159.75

147.5

CESTAT

Sept-2005 to Jun- 2012

134.95

67.95

Commissioner (Appeals)

FY 2015-2017

2.50

2.50

Commissioner (Appeals)

Apr 2013 to Sept 2016

47.01

43.81

Asst. / Deputy / Joint Commissioner

FY 2012-2013

2.11

2.11

Asst. / Deputy / Joint Commissioner

Apr-1998 to Aug-1999 Apr-2005 to Sept-2016

14.67

14.67

Gujarat Value added tax Act, 2003

Gujarat Value Added Tax

Joint / Dy. Commissioner of Commercial Tax

FY 2006-07 to 2012-13

2,886.83

2,586.83

Central Sales Tax Act, 1956

Central Sales Tax

Additional Commissioner of Sales Tax, Delhi

FY 1998-99

0.14

0.14

Central Sales Tax

Assistance Commissioner of Sales Tax, West Bengal

FY 1995-96

2.21

2.21

Central Sales Tax

Joint / Dy. Commissioner of Commercial Tax

FY 2006-07 to 2010-11

2,754.92

2,579.92

(viii) In our opinion and according to the information and explanations given to us, the company has not defaulted in the repayment of loans or borrowings to the financial institutions & banks. The Company has not taken any loans or borrowings from Government and has not issued any debentures.

(ix) In our opinion and according to the information and explanations given to us, the money raised by way of debt instruments & term loans during the year have been applied by the Company for the purpose for which they were raised. During the year, the Company has not raised moneys by way of public offer

(x) In our opinion and according to the information and explanations given to us, no material fraud by the Company or on the Company by its officers or employees has been noticed or reported during the year.

(xi) In our opinion and according to the information & explanations given to us, the company has paid / provided managerial remuneration in accordance with the requisite approvals mandated by the provisions of section 197 read with Schedule V of the Companies Act, 2013.

(xii) The company is not a Nidhi Company and hence reporting under clause (xii) of the paragraph 3 of the order is not applicable.

(xiii) In our opinion and according to the information and explanations given to us, all the transactions with the related parties are in compliance with section 177 and 188 of the Companies Act, 2013 where applicable, and the details of related party transactions have been disclosed in the standalone Ind AS financial statements etc., as required by the applicable accounting standards.

(xiv) During the year company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures and hence reporting under clause (xiv) of paragraph 3 of the order is not applicable.

(xv) In our opinion and according to the information and explanations given to us, during the year, the company has not entered into any non-cash transaction with its directors or persons connected with him and hence reporting under clause (xv) of paragraph 3 of the order is not applicable.

(xvi) In our opinion and according to the information and explanations given to us, the company is not required to be registered under section 45-IA of the Reserve Bank of India Act, 1934.

For T R Chadha & Co LLP

Firm’s Reg. No-: 006711N/N500028

Chartered Accountants

Brijesh Thakkar

Place: Gandhinagar Partner

Date: 16/05/2018 Membership No 135556

Source : Dion Global Solutions Limited
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