Report on the Audit of the Standalone Financial Statements
Opinion
We have audited the accompanying standalone financial statements of BHARAT RASAYAN LIMITED ("the Company"), which comprise the standalone Balance Sheet as at March 31,2023, the standalone Statement of Profit and Loss (including Other Comprehensive Income), standalone Statement of Changes in Equity and standalone Statement of Cash Flows for the year then ended, and notes to the standalone financial statements, including a summary of significant accounting policies and other explanatory information.
In our opinion and to the best of our information and according to the explanations given to us, aforesaid standalone Ind AS 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 the Companies (Indian Accounting Standards) Rules, 2015 as amended (IND AS) and other accounting principles generally accepted in India, of the Standalone state of affairs of the Company as at March 31,2023, and Standalone profit, Standalone total comprehensive income, Standalone changes in equity and its Standalone cash flows for the year ended on that date.
Basis for Opinion
We conducted our audit in accordance with the Standards on Auditing (SAs) specified under section 143(10) of the Companies Act, 2013. 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 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 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 on the standalone financial statements.
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of Standalone Ind AS Financial Statements for the financial year ended March 31, 2023. These matters were addressed in the context of our audit of Standalone Ind AS 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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KEY AUDIT MATTERS
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AUDITORS' RESPONSES
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REVENUE RECOGNITION
Refer to Note 2.11 'Revenue Recognition', Note 36 'Key Sources of Estimation Uncertainty' and Note 20 'Revenue from Operations' to the standalone financial statements.
The management is required to make certain judgments in respect of revenue recognition.
Revenue from sale of goods is recognized, when the control of goods is transferred to the customers. In accordance with the accounting policy, control is transferred either when the product is delivered to the customer's site or when the product is shipped, depending on the applicable terms.
Management is required to consider historical experience, specific contractual terms, and future expectations of revenue to determine these estimates.
Revenue recognition involves significant management judgements and estimates and has accordingly been identified as a key audit matter. Also, factors such as the current and expected operating environment, the action of third parties have a significant impact on management's judgment.
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PRINCIPAL AUDIT PROCEDURES
PERFORMED
We obtained an understanding of the company's
process, policies, and procedures in making the
estimates.
• We understood the revenue recognition process, evaluated the design and implementation of internal controls relating to revenue recognized.
• We selected samples and tested the operating effectiveness of internal controls, relating to transfer of control. We carried out a combination of procedures involving enquiry, observation and inspection of evidence in respect of operation of these controls.
• We evaluated and tested the design and operating effectiveness of controls related to these estimates by studying the market conditions and obtaining an understanding of key contractual agreements.
• We tested the relevant information technology general controls, automated controls, and the related information used in recording and disclosing revenue.
• In respect of the selected sample of transactions:
• We obtained the customer contracts and understood the terms and conditions including delivery and shipping terms.
• We tested whether the revenue is recognized upon transfer of control to customer.
• We tested the location wise stocks reports of the Company, for confirmation on sales quantity made during the year.
• We tested on a sample basis (including for sales near to the period end) the acknowledgments of customers.
• We assessed relevant disclosures in the standalone financial statements of the Company.
• We considered the accuracy of management's estimate in previous years by comparing historical accrued liabilities with their subsequent settlement.
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Accuracy of Estimation from the fire accident
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Audit Procedures performed to address the
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at a factory in GIDC, Dahej & related
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key audit matter.
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consequences.
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We reviewed & assessed inquiries made to the
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Refer to Note 29 to the standalone financial
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management on the net releasable value of
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statements
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inventories, and the interim claim (on account)
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On 17th May 2022, an accidental fire broke out in
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amount received from the insurance companies
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one of the Block (out of the four blocks) i.e., Block-
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and recognized at the end of reporting date.
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D at GIDC Dahej, District Bharuch, Gujarat (India).
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The specific tasks we conducted as part of the
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The same has been intimated to the insurance
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assessment of the fire accident at the factory in
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company by the company.
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GIDC, Dahej included:
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The Company was insured for fire incidents
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• Inquired Management about the status of
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including Property, plant & equipment, inventories
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current losses incurred and recognized, and
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and business interruption in full. As on the
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progress of claim made to the insurance
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reporting date, the company is still in the process
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companies.
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of assessing the claim with the surveyor and
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• We also inspected related supporting
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insurance company.
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documents, and management analysis.
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The management has recorded the expenses
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• Assessed the timing and appropriateness of
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amounting to ' 2016.65 lakhs in the profit and
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recognizing the interim claim (on account
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loss account, which includes costs related to
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payment) as income from the insurance
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stocks, firefighting, waste disposal, and other
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company. The company has not yet evaluated
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expenses. Additionally, they have also recognized
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the damage and claim related to Property,
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an interim claim (on account of above said
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Plant, and Equipment since the surveyor work
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expenditure) payment of ' 1582.33 lakhs received
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is still in progress, and the exact amount of
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from the insurance company as on March 31,
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the claim and damage is still not certain.
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2023.
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In our view the inventory write-offs resulting from
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Hence, the company is not in a position to quantify
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the fire and the recognition of the interim claim
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the exact amount of loss at the end of reporting
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(on account payment) amount were reasonable,
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date.
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and the corresponding disclosure was adequate.
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The estimation of outstanding damage and claims from insurance company involves significant judgement and uncertainties relating to the timing of Recognizing damages, claims and future payments from Insurance companies.
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Information Other than the Standalone Financial Statements and Auditor's Report Thereon
• The Company's management & Board of Directors is responsible for the other information. The other information obtained at the date of this Auditor's Report is in Director's Report, Corporate Governance Report, and Management Discussion & Analysis Report, but does not include the Standalone Ind AS Financial Statements and our Auditor's Report thereon.
• Our opinion on Ind AS 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 and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained during the course of our audit or otherwise appears to be materially misstated. If based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report the fact. We have nothing to report in this regard.
Other Matter
The financial statements of Bharat Rasayan Limited for the year ended March 31, 2022, were audited by another auditor M/s R.D. Garg & Co. who expressed an unmodified opinion on those statements on March 31, 2022.
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 (including other comprehensive income), Standalone changes in equity and Standalone 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 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 Standalone Ind AS Financial Statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.
In preparing Standalone Ind AS 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 alternatives but to do so.
The Board of Directors is also responsible for overseeing the company's financial reporting process. Auditor's Responsibility for the Audit of Standalone Financial Statements
Our objectives are to obtain reasonable assurance about whether Standalone Ind AS 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. 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 Ind AS 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 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 an 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, we are of the opinion that the company is able to
continue as a going concern. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report.
• Evaluate the overall presentation, structure, and content of the financials including the disclosures, and whether Standalone Ind AS financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
Materiality is the magnitude of misstatements in Standalone Ind AS financial statements that individually or in aggregate, makes it probable that the economic decisions of a reasonably knowledgeable user of Standalone Ind AS financial statements may be influenced. We consider quantitative materiality and qualitative factors in (i) planning the scope of our audit work and evaluating the results of our work; and
(ii) evaluating the effect of any identified misstatements in the financial statements.
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.
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.
From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of Standalone Ind AS 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
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 Companies Act, 2013, we give in the "Annexure 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 of the aforesaid Standalone financial statements.
(b) In our opinion, proper books of account as required by law relating to the preparation of aforesaid Standalone Ind AS Financial Statements have been kept so far as it appears from our examination of those books and the reports of the other auditors.
(c) The Standalone Balance Sheet, the Standalone Statement of Profit and Loss (including other comprehensive income), the Standalone Statement of Changes in Equity and the Standalone Cash Flow Statement dealt with by this Report are in agreement with the relevant books of account maintained for the purpose of preparation of the Standalone financial statements.
(d) In our opinion, 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.
(e) On the basis of the written representations received from the Directors as of 31st March 2023 taken on record by the Board of Directors, none of the Directors is disqualified as of 31st March 2023 from being appointed as Director in terms of Section 164(2) of the Act;
(f) With respect to the adequacy of the internal financial controls with reference to Standalone Ind AS Financial Statements of the Company and the operating effectiveness of such controls, refer to our separate Report in "Annexure B". Our report expresses an unmodified opinion on the adequacy and operating effectiveness of the Company's internal financial controls over financial reporting;
(g) With respect to the other matters to be included in the Auditor's Report in accordance with the requirements of section 197(16) of the Act, as amended:
In our opinion and to the best of our information and according to the explanations given to us, the remuneration paid by the Company to its directors during the year is in accordance with the provisions of section 197 of the Act;
(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, 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 financial statements.
(ii) The Company did not have any long-term contracts including derivative contracts for which there were any material foreseeable losses; and
(iii) There has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Company.
(iv) (a) The management has represented, to the best of its knowledge and belief, other than
as disclosed in the notes to the accounts, that 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, whether, 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;
(b) The management has represented, to the best of its knowledge and belief, other than as disclosed in the notes to the accounts, that no funds have been received by the Company from any person(s) or entity(ies), including foreign entities ("Intermediaries"), 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 ("Ultimate Beneficiaries") or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries;
(c) Based on the reasonable and appropriate audit procedures considered in the circumstances, nothing has come to our notice that has caused us to believe that the representations under sub-clause (i) and (ii) contain any material mis-statement.
(v) The dividend declared by the Company is in compliance with sec.123 of the Act.
(a) The final dividend proposed in the previous year, declared and paid by the Company during the year is in accordance with Section 123 of the Act, as applicable.
(b) No interim dividend was declared and paid by the Company during the year.
(c) As stated in Note 13.3 to the standalone financial statements, the Board of Directors of the Company have proposed final dividend for the year which is subject to the approval of the members at the ensuing Annual General Meeting. The dividend proposed is in accordance with Section 123 of the Act, as applicable.
3. 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.
For B.K. Goel & Associates
CHARTERED ACCOUNTANTS FIRM REG. NO. 016642N
Sd/-
NEW DELHI B.K. Goel
MAY 30, 2023 Proprietor
UDIN : 23082081BGWNFH4720 Membership No:082081
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