To,
The Members,
NGL FINE-CHEM LIMITED
REPORTONTHESTANDALONEFINANCIALSTATEMENTS
Opinion
We have audited the accompanying standalone financial statements of M/S. NGL
FINE-CHEM LIMITED (the Company"), which comprise the Balance Sheet as at March
31, 2023, the Statement of Profit and Loss (including Other Comprehensive Income), the
Statement of Changes in Equity and the Statement of Cash Flows for the year ended on that
date, and a summary of the significant accounting policies and other explanatory
information (hereinafter referred to as "the standalone financial statements").
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 ("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 state of affairs of the Company as at March 31, 2023, the profit and total
comprehensive income, changes in equity and its cash flows for the year ended on that
date.
Basis for Opinion
We conducted our audit of the standalone financial statements in accordance with the
Standards on Auditing specified under section 143(10) of the Act (SAs). Our
responsibilities under those Standards are further described in the Auditors
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 (ICAI) together with the independence
requirements that are relevant to our audit of the standalone financial statements under
the provisions of the Act and the Rules made thereunder, and we have fulfilled our other
ethical responsibilities in accordance with these requirements and the ICAIs Code of
Ethics. We believe that the audit evidence we have obtained is sufficient and appropriate
to provide a basis for our audit opinion on the standalone financial statements.
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of 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.
| Key Audit Report |
How was the matter addressed in our audit |
| Revenue Recognition |
Our audit procedures, among other things, included the following: |
| Revenue is recognized upon transfer of control of promised goods to
customers in an amount that reflects the consideration which the Company expects to
receive in exchange for those goods. Revenue is measured based on transaction price, which
is the consideration, adjusted for rebates, discounts and incentives as also estimated
sales returns. |
| • Considered the appropriateness of the Companys accounting policies regarding
revenue recognition |
| • Testing controls, automated and manual, arounddispatches/
deliveries/shipments inventory reconciliations and process of confirmation of receivable
balances, testing for cut-offs and analytical review procedures. |
| Revenue is one of the key profit drivers and therefore, accounting of
revenue is considered as a key audit matter. |
| • Assessed the disclosures in accordance with the requirements of Ind
AS 115 on "Revenue from Contracts with Customers". |
| [Refer Note 2.07 to the financial statements] |
| Valuation of inventories |
Our audit procedures, among other things, included the following. |
| The Company has complex product manufacturing process and thus, the
overhead absorption over each process is quite complex and more particularly, to have the
basis of absorption. The Company has worked out the overhead absorption cost rate based on
the consumption of electricity of each process and apply the same for all other overheads. |
| • Evaluated the appropriateness of the basis applied to arrive at the overhead
absorption rate; |
| • Examined the workings of the absorption of over heads to arrive at the cost of
inventories. |
| • Our audit methodology involves process adopted to ascertain and
evaluate the methods used are reasonable and absorbs overheads in an appropriate &
logical manner. |
| Due to significance of arriving at the overhead absorption rate for the
valuation of inventories, it is considered to be a key audit matter. |
| • Assessed the disclosures in accordance with the requirements of Ind
AS 2 on "Inventories". |
| [Refer Note 2.06 to the financial statements] |
| Key Audit Report |
How was the matter addressed in our audit |
| Allowance for Expected Credit Loss of Trade Receivables |
Our audit procedures included, among others, the following : |
| Provision for impairment by way of Allowance for Expected Credit Loss (ECL) of Trade
Receivables require - |
• Obtained sufficient and appropriate audit evidence about whether policies,
operational procedures, internal control |
| • the appropriateness of accounting policiesfor determination of
Allowance for ECL; • operational procedures and systems of internal control in
estimation of ECL. |
systems and other relative assumptions for estimation and determination of Allowance
for ECL are reasonable. |
| • Objectively evaluated the estimates made in the broader context of the
financial statements as a whole; |
| • estimation of expected losses and appropriate assumptions and significant
judgments on the recoverability of receivables; |
• Assessed the estimates and assumptions adopted by the Company in determining
the need to recognize a provision and, where applicable, its amount; |
| • the completeness, accuracy, relevance and reliability of historical
information; |
• Evaluated the completeness of disclosures in respect of Allowance
for Expected Credit Loss. |
| • the Companys overall review of the estimate; and |
| • the clarity and reasonableness of related ECL disclosures. |
| In view of the determination of the basis and quantum of Allowance of ECL, it is a
significant item in the financial statements and hence, considered to be a key audit
matter. |
| [Refer Note 2.15 to the standalone financial statements] |
Information Other than the Standalone Financial Statements and Auditors Report Thereon
The Companys Board of Directors is responsible for the preparation of the other
information. The other information comprises the information included in the Management
Discussion and Analysis, Boards Report including Annexures to Boards Report, Business
Responsibility Report, Corporate Governance and Shareholders Information, but does not
include the standalone financial statements and our auditors report thereon.
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 and, in doing so, consider whether the other information
is materially inconsistent with the standalone 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 that fact. We have
nothing to report in this regard.
Managements Responsibility for the Standalone Financial Statements
The Companys Board of Directors is responsible for the matters stated in Section
134(5) of the Companies Act, 2013 ("the Act") with respect to 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 Indian Accounting Standards (Ind AS) prescribed
under Section 133 of the Act, read with the Companies (Indian Accounting Standard) Rules,
2015 as amended, and other accounting principles generally accepted in India.
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 Companys 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.
The Board of Directors are responsible for overseeing the Companys financial reporting
process.
Auditors Responsibilities for the Audit of the Standalone Financial Statements
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
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