|
Sr. No. Key Audit Matter
|
How the Key Audit Matter was addressed in our audit
|
|
1 Assessment of contingencies and provision
|
Our audit procedures in respect of this area included but are not
|
|
relating to ongoing litigations for Indirect tax and
|
limited to following:
|
|
other matters
|
1.
|
Obtained a detailed understanding of the managements process
|
|
(Refer notes 8, 22 and 35 to the financial
|
|
for determining provisions and contingent liabilities pertaining
|
|
statements)
|
|
to tax claims and other litigation disputes.
|
|
The Company has various ongoing Indirect tax
|
2.
|
Verified the design, implementation and operating effectiveness
|
|
and other matters under litigation.
|
|
of controls in respect of assessment of indirect tax, other
|
|
The assessment of the likely outcome of the
|
|
matters and provisions related thereon, if any.
|
|
tax and other matters and related outflow of
|
3.
|
Obtained the details and understood the nature of tax positions
|
|
resources that are probable, involve significant
|
|
and litigations pending against the Company by reading the
|
|
management judgment and uncertainty of
|
|
minutes of various meetings and discussing the developments
|
|
assumptions, since they are based on the
|
|
during the year for litigations with the Management, the Audit
|
|
application and interpretation of law.
|
|
Committee and management expert for the future course of
|
|
We have considered this to be a key audit
|
|
action by the Company.
|
|
matter because of the significant impact on
|
4.
|
Read the orders received by the Company from the tax authorities
|
|
the financial statements and uncertainty of the
|
|
and opinions sought from the management's experts.
|
|
possible outcomes.
|
5.
|
Involved auditor's tax experts to assist us in the assessment of the possible outcome of certain cases, evaluation of underlying assumptions in estimating the tax provisions and related expenses thereon.
|
| |
6.
|
Evaluated the evidence supporting the management's judgment about possible outcomes and the reasonableness of the estimates made by them.
|
| |
7.
|
Assessed and validated the appropriateness and adequacy of disclosures in the financial statements in compliance with Ind AS 37 Provisions, Contingent Liabilities and Contingent Assets.
|
|
Sr. No. Key Audit Matter
|
How the Key Audit Matter was addressed in our audit
|
|
2 Management's assessment of appropriateness
|
Our audit procedures in respect of this area included but are not
|
|
of Going Concern assumption
|
limited to following:
|
|
(Refer note 48 to the financial statements)
|
1.
|
Evaluated the design of the relevant internal controls over the
|
|
The evaluation of going concern basis of
|
|
Company's budgeting and forecasting process.
|
|
accounting performed by the Management
|
2.
|
Obtained an understanding of key assumptions adopted by
|
|
of the Company is identified as a key audit
|
|
the Company in preparing the forecasted income statement
|
|
matter because subsequent to the reporting
|
|
and cash flows and assessed the consistency thereof with our
|
|
period, Heubach Group GmbH, a member of
|
|
expectations based on our understanding of the Company's
|
|
the Heubach Group and the holding company of Heubach Holding Switzerland AG (one of the promoter shareholders of the Company and formerly known as Colorants International AG) and Heubach GmbH, have filed an application for the opening of regular insolvency proceedings
|
3.
|
business.
Challenged the forecasted income statement and cash flows by considering plausible changes to the key assumptions adopted by the Company and performed stress testing on the forecasted cash flows.
|
|
over their assets with the competent insolvency
|
4.
|
Tested the inputs and assumptions used by the management in
|
|
court in Braunschweig, Germany together with
|
|
the cash flow forecast against historical performance, budgets,
|
|
certain of their German affiliate companies
|
|
economic and industry indicators, publicly available information,
|
|
and a preliminary insolvency administrator and
|
|
the Company's strategic plans and benchmarking of key market
|
|
custodian has been appointed by the competent
|
|
related conditions.
|
|
court.
|
5.
|
Evaluated disclosures in the financial statements related
|
|
Due to aforesaid events, as part of their going
|
|
compliance with the requirements of the Standards on Auditing
|
|
concern review, the management carried out an internal assessment to ascertain whether these events or conditions, either individually or collectively, cast significant doubt on the company's ability to continue as a going concern for the foreseeable future. The Company has considered the possible effects that may result from the aforesaid events and accordingly has prepared cash flow forecasts for a period of at least twelve months.
|
|
and the applicable financial reporting standards.
|
|
The assessment of the Company's future cash flow projections is subject to significant estimates and judgements. These include sales forecasts, expected margins, working capital requirements and other operating costs. The above has been considered as a key audit matter as ensuring the Company's going concern assessment is complex and involves a high degree of judgment to assess the reasonableness of the cash flow forecasts, and other assumptions used in the Company's going concern analysis.
|
|
|
We have audited the accompanying financial statements of Heubach Colorants India Limited (formerly Clariant Chemicals (India) Limited) ("the Company”), which comprise the Balance Sheet as at March 31, 2024, and the Statement of Profit and Loss, including Other Comprehensive Income, Statement of Changes in Equity and Statement of Cash Flows for the year then ended, and notes to the financial statements, including material accounting policy information and other explanatory information (hereinafter referred to as the "financial statements”).
In our opinion and to the best of our information and according to the explanations given to us, the aforesaid financial statements give the information required by the Companies Act, 2013 ("the Act'') in the manner so required and give a true and fair view in conformity with the Indian Accounting Standards prescribed under section 133 of the Act read with Companies (Indian Accounting Standards) Rules, 2015, as amended ("Ind AS”) and other accounting principles generally accepted in India, of the state of affairs of the Company as at March 31, 2024, and total comprehensive income (comprising of profit and other
comprehensive income), changes in equity and its cash flows for the year then ended.
Basis for Opinion
We conducted our audit of the financial statements 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 'Auditor's Responsibilities for the Audit of the 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 ("ICAI”) together with the ethical requirements that are relevant to our audit of the 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 obtained by us is sufficient and appropriate to provide a basis for our opinion.
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements for the year ended March 31, 2024. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
Information Other than the Financial Statements and Auditor's Report Thereon
The Company's Board of Directors is responsible for the other information. The other information comprises the information included in the annual report but does not include the financial statements and our auditor's report thereon. The annual report is expected to be made available to us after the date of this auditor's report.
Our opinion on the 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 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 financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated.
When we read the annual report, if we conclude that there is a material misstatement therein, we are required to communicate the matter to those charged with governance under SA 720 'The Auditor's responsibilities Relating to Other Information'.
Responsibilities of Management and Those Charged with Governance for the Financial Statements
The Company's Board of Directors is responsible for the matters stated in section 134(5) of the Act with respect to
the preparation of these financial statements that give a true and fair view of the financial position, financial performance, changes in equity 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. 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 financial statement that give a true and fair view and are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the Management and Board of Directors are 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 the Board of Directors either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.
The Board of Directors is also responsible for overseeing the Company's financial reporting process.
Auditor's Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the 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 financial statements.
We give in "Annexure A” a detailed description of Auditor's responsibilities for Audit of the Financial Statements.
Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditor's Report) Order, 2020 ("the Order”), issued by the Central Government of India in terms of sub-section (11) of section 143 of the Act, we give in "Annexure B” a statement on the matters specified in paragraphs 3 and 4 of the Order, to the extent applicable.
2. As required by Section 143(3) of the Act, we report that:
(a) We have sought and obtained all the information and explanations which to the 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, including daily back-ups of books of accounts and other books and papers maintained in electronic mode, except for the retention of such daily backups as per requirements of Companies Act, 2013 and the matters stated in the paragraph (h)(vi) below on reporting under Rule 11(g). Further, the servers for the back-ups of books of account and other books and papers of the Company maintained in electronic mode are physically located outside India.
(c) The Balance Sheet, the Statement of Profit and Loss including other comprehensive income, the Statement of Changes in Equity and the Statement of Cash Flows dealt with by this Report are in agreement with the books of account.
(d) In our opinion, the aforesaid financial statements comply with the Accounting Standards specified under Section 133 of the Act.
(e) On the basis of the written representations received from the directors as on March 31, 2024 taken on record by the Board of Directors, none of the directors are disqualified as on March 31, 2024 from being appointed as a director in terms of Section 164 (2) of the Act.
(f) The reservation relating to the maintenance of accounts and other matters connected therewith are as stated in paragraph 2(b) above on reporting under Section 143(3)(b) and paragraph 2(h)(vi) below on reporting under Rule 11(g).
(g) With respect to the adequacy of the internal financial controls with reference to financial statements of the Company and the operating effectiveness of such controls, refer to our separate Report in "Annexure C”.
(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 35 to the financial statements;
ii. The Company did not have any long-term contracts including derivative contracts for which there were any material foreseeable losses.
iii. There has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Company.
iv. 1 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 person(s) or entity(ies), including foreign entities ("Intermediaries”), 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 ("Ultimate Beneficiaries”) or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.
2 The Management has represented, that, to the best of its knowledge and belief, no funds have been received by the Company from any person(s) or entity(ies), including foreign entities (Funding Parties), with the understanding, whether recorded in writing or otherwise, as on the date of this audit report, 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 ("Ultimate Beneficiaries”) or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.
3 Based on the audit procedures performed that have been considered reasonable and appropriate in the circumstances, and according to the information and explanations provided to us by the Management in this regard 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 (1) and (2) above, contain any material mis-statement.
v. The Company has neither declared nor paid any dividend during the year.
vi. Based on our examination, the Company has used an accounting software for maintaining its books of account for the year ended March 31, 2024, which has a feature of recording audit trail (edit log) facility. However, the audit trail feature, enabled at application level only with effect from July 11, 2023, and has not been operated at the database level throughout the year to log any direct data changes. Accordingly, the audit trail has not been operated for all relevant transactions recorded in the accounting software throughout the year, as it was enabled at the application level from July 11, 2023.
Further, during the course of our examination, we did not come across any instance of audit trail feature being tampered with in respect of the accounting software, post enablement of the audit trail facility.
As proviso to Rule 3(1) of the Companies (Accounts) Rules, 2014 is applicable from April 01, 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.
3. In our opinion, according to information, explanations given to us, the remuneration paid by the Company to its directors is within the limits laid prescribed under Section 197 read with Schedule V of the Act and the rules thereunder.
For M S K A & Associates
Chartered Accountants ICAI Firm Registration No. 105047W
Vishal Vilas Divadkar
Partner
Membership No. 118247 UDIN: 24118247BKFOJG3371
Place: Mumbai
Date: May 29, 2024
|