The Members of Ultramarine & Pigments Limited Report on the Audit of the Standalone Financial Statements
Report on the Audit of the Standalone Financial Statements Opinion
We have audited the accompanying Standalone Financial Statements of Ultramarine & Pigments Limited ("the Company"), which comprise the Standalone Balance Sheet as at 31st March, 2025, the Standalone Statement of Profit and Loss (including other Comprehensive income), the Standalone Statement of Changes in Equity and the Standalone Statement of Cash Flows for the year then ended on 31st March 2025, including a summary of the material accounting policies and other explanatory information (hereinafter referred to as "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 31st March, 2025, its profit (including other comprehensive income), the 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 (SAs) specified under Section 143(10) of the Act. 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 ethical 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 ICAI's Code of Ethics. We believe that the audit evidence obtained by us 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 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. Against Key audit matter, our description of how our audit addressed the matter is provided in that context.
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 design to respond to our assessment of the risks of material misstatement of the standalone financial statements.
The results of our audit procedures, including the procedures perform to address the matter below, provide the basis of our audit opinion on the accompanying financial statement.
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S. No.
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Key Audit Matter
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Auditor's Response
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1.
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Inventory of Raw Materials, Work in Progress and Finished Goods - Refer Point 3.7 of Material Accounting Policy
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The company holds significant inventory of pigments and surfactants, which are subject to valuation at the lower of cost or net realizable value (NRV). Estimating NRV involves management judgments related to market conditions, aging, and future demand. Given the magnitude and the estimation involved, we considered this a key audit matter.
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Our audit procedures included, among others:
Ý Evaluating the inventory valuation methodology adopted by the company.
Ý Testing inventory samples for cost computation and checking the consistency of cost formula.
Ý Assessing management's process for estimating NRV including ageing analysis and market trends.
Ý Attending physical inventory counts at selected locations and testing reconciliation with accounting records.
Ý Reviewing write-downs and assessing their reasonableness.
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2.
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Revenue Recognition - Refer point 3.11 of Material Accounting Policy
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Revenue from sale of pigments and surfactants is recognized when control of the goods is transferred to the customers in accordance with Ind AS 115. Given the diversified customer base, varying contractual terms including delivery obligations, discounts, and rebates, there is a risk of improper timing or measurement of revenue. As revenue is a key performance indicator and subject to judgment in terms of satisfaction of performance obligations, this area is considered significant for our audit.
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Our audit procedures included, among others:
Ý Evaluating the appropriateness of the company's accounting policy for revenue recognition.
Ý Testing design and operating effectiveness of key controls over revenue recognition.
Ý Performing substantive testing on sales transactions around year-end to verify the timing of revenue recognition.
Ý Reviewing customer contracts to evaluate the identification and satisfaction of performance obligations.
Ý Assessing the adequacy of the related disclosures in the financial statements.
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3.
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Deferred Tax Assets/Liabilities - Refer Point 3.9 of Material Accounting Policy
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The recognition and measurement of deferred tax assets and liabilities involve significant judgment, particularly in assessing the recoverability of deferred tax assets arising from timing differences and MAT credit entitlement. These assessments depend on future taxable income projections and tax planning strategies, and hence this area involves significant estimation uncertainty.
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Our audit procedures included, among others:
Ý Understanding and evaluating the process for identifying temporary differences
Ý Testing the arithmetical accuracy of deferred tax calculations.
Ý Verifying compliance with applicable tax laws and reviewing the adequacy of related disclosures.
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4.
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Expected Credit Loss - Refer point 3.5 of Material Accounting Policy
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The company applies the expected credit loss model under Ind AS 109 for its trade receivables. Estimating ECL involves historical credit loss experience, forward-looking information, and customer-specific risks. Given the judgment involved and the materiality of receivables, this is considered a key audit matter.
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Our audit procedures included, among others:
Ý Evaluating the company's impairment policy and ECL model for trade receivables.
Ý Testing the aging of receivables and validating historical loss rates.
Ý Assessing forward-looking information used in the ECL estimation.
Ý Performing a sensitivity analysis of key assumptions.
Ý Reviewing adequacy and completeness of disclosures related to credit risk.
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Information other than the Standalone Financial Statements and Auditors' Report thereon
The Company's Management and 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, Directors' Report including Annexures thereto, Corporate Governance and Shareholder's Information, but does not include the Standalone Financial Statements and our auditor's report thereon. The other information is expected to be made available to us after the date of this Auditors' 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 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. If, based on the work we 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.
On receipt of other information, if we conclude that there is a material misstatement therein, we are required to communicate the matter to those charged with governance and we shall:
(a) If the material misstatement is corrected, perform necessary procedure to ensure the correction; or
(b) If the material misstatement is not corrected after communicating the matter to those charged with governance, take appropriate action considering our legal rights and obligations, to seek to have the uncorrected material misstatement appropriately brought to the attention of users for whom this Auditors' report is prepared.
Other Information:
a) The Company's management and Board of Directors are responsible for the preparation of the other information. The other information comprises the information included in the Board's Report including Annexures to Board's Report and Shareholder's Information, but does not include the Standalone Financial Statements and our auditor's report thereon.
b) Our opinion on the Standalone Financial Statements does not cover the other information and we do not express any form of assurance conclusion thereon.
c) In connection with our audit of the 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.
d) 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.
Responsibilities of Management and those charged with Governance for the Standalone Financial Statements
The Company's Management and Board of Directors is 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), total comprehensive income, changes in equity and cash flows of the Company in accordance with the Ind AS and other accounting principles generally accepted in India, including the Ind AS. 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 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 the Board of Directors 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 Board of Directors either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.
These Board of Directors are also responsible for overseeing the Company's financial reporting process.
Auditors' Responsibility 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 or error, and to issue an auditors' 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 Standards on Audit (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 Standards on Audit (SAs), we exercise professional judgment and maintain professional skepticism throughout the audit. We also:
Ý 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.
Ý Obtain an understanding of internal financial 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.
Ý Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
Ý 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 auditors' 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.
Ý 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.
Materiality is the magnitude of misstatements in the standalone financial statements that, individually or in aggregate, makes it probable that the economic decisions of a reasonably knowledgeable user of the standalone financial statements may be influenced. We consider quantitative materiality and qualitative factors in (i) planning the scope of our audit work and in evaluating the results of our work; and (ii) to evaluate the effect of any identified misstatements in the Standalone 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 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.
Other Matters
1. The financial results for the year ended March 31, 2024, have been audited by the predecessor auditor M/s. Brahmayya & Co., who have expressed an unmodified opinion on such standalone financial results of the company vide their report dated 16th May 2024. Accordingly, we do not express any opinion on the figures reported in the statement for the year ended 31st March 2024.
Our opinion on the Statement is not modified in respect of the above matter.
Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditors' Report) Order, 2020 ("the Order") issued by Central Government 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. A) 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 accounts as required by law have been kept by the Company so far as it appears from our examination of those books including for the matters stated in the paragraph 2(k)(vi) below on reporting under Rule 11(g) of the Companies (Audit and Auditors) Rules, 2014, as amended;
c. The Balance Sheet, Statement of Profit and Loss including statement of other comprehensive income, Cash Flow Statement and the Statement of Changes in Equity dealt with by this Report are in agreement with the books of accounts;
d. In our opinion, the aforesaid standalone financial statements comply with the Indian Accounting Standards specified under section 133 of the Act, read with the Companies (Indian Accounting Standards) Rules 2015, as amended;
e. On the basis of written representations received from the directors as on March 31, 2025, and taken on record by the Board of Directors, none of the directors are disqualified as on March 31, 2025, 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 with reference to these standalone financial statements and the operating effectiveness of such controls, refer to our separate report in "Annexure-II" to this report.
g. In our opinion the managerial remuneration for the year ended March 31, 2025 has been paid/ provided by the company to its directors in accordance with the provisions of Section 197 read with Schedule V to the Act.
(B) 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.
iii. There has been no delay in transferring amounts, required to be transferred to the Investors Education and Protection Fund by the company.
(a) The Management has represented that, to the best of its knowledge and belief, other than as disclosed in the notes to accounts, 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(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, that, to the best of it's knowledge and belief, other than as disclosed in the notes to accounts, no funds (which are material either individually or in the aggregate) have been received by the Company from any person(s) or entity(ies), including foreign entity ("Funding Parties"), 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 ("Ultimate Beneficiaries") or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries; and
(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. 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) 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 amount of dividend proposed is in accordance with section 123 of the Act, as applicable until the date of this report.
vi. Based on our examination which included test checks, except for the instance mentioned below and as explained in note 57 of the financial statements, the Company has used accounting software for maintaining its books of account, which have a feature of recording audit trail (edit log) facility and the same has operated throughout the year for all relevant transactions recorded in the respective software subject to the following observations:
a) Audit Trail (Edit Logs) feature of the accounting software is enabled at the database level on 19th August 2024.
b) Audit Trail (Edit Logs) feature of the accounting software is enabled for some of the masters on 13th May 2025 which were not earlier enabled.
In respect of the accounting software maintained by a third-party service provider, we have placed reliance on the report of the service organization's auditor. As per the said auditor's report, the audit trail (edit log) feature was operating throughout the year, was not tampered with, and records have been maintained for the period as required by statutory requirements.
During the course of performing our procedures, we did not notice any instance of the audit trail feature being tampered with or not preserved by the Company in accordance with applicable statutory requirements. Additionally, subject to above observations, the audit trail has been preserved by the company as per the statutory requirements for record retention.
For Sundaram & Srinivasan,
Chartered Accountants, Firm Regn. No. 004207S
P Menakshi Sundaram
Partner
Place : Chennai M No. 217914
Date : 21st May, 2025 UDIN: 25217914BMKYLL9881
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