We have audited the Standalone financial statements of HP
Adhesives Limited ("the Company"), which comprise the
Balance sheet as at 31st March 2025, 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 Standalone
financial statements, including a summary of the material
accounting policies and other explanatory information.
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 ("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 of the Company as at 31st March 2025, and its
profit and other comprehensive income, changes in equity
and its 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 Act.
Our responsibilities under those SAs 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 Standalone 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 on the
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 for the financial year
ended 31 March 2025. 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. For each
matter below, 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 designed to respond to our assessment of the
risks of material misstatement of the financial statements.
The results of our audit procedures, including the procedures
performed to address the matters below, provide the
basis for our audit opinion on the accompanying financial
statements.
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Key Audit Matters
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How Our Audit Addressed the Key Audit Matter
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A. Inventory
(Refer to Note-2.6 for details of the Accounting Policies of inventories and Note-10 of Notes to Standalone financial statements
for relevant disclosures of inventories)
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• The net carrying value of inventory as on 31st March,
2025 is 24.68 % of Total Assets of the Company.
• Volatility in Price of Raw Material which is dependent
upon various domestic & Global market conditions.
• Complexity in Calculation of Inventory Consumption
& Costing involving methodology. Inventory
consumption is calculated using SKU-specific
formulas developed by management. These
formulas are confidential & business sensitive.
The formulas are applied outside of an accounting
environment, maintained & tracked using standalone
on consolidated bases using Excel spreadsheets.
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Our Audit Procedure
In view of the significance of the matter, we applied the following
audit procedures in this area, among others to obtain sufficient
appropriate audit evidence:
• Obtaining methodology of management in integration of
inventory with finance module and assessing the design,
implementation and operating effectiveness of management’s
key internal controls relating to physical verification of
inventories by the management and assessed its consistency
with prior years.
• Conducted analytical reviews of input-output ratios, material
yield trends, and gross margins across key SKUs.
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Key Audit Matters
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How Our Audit Addressed the Key Audit Matter
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• Valuation of WIP & Finished goods involves
auditor’s judgment in evaluating the use of manual
spreadsheets instead of an automated ERP
solution, coupled with SKU-wise traceability and
detailed documentation, that limits the audit trail
and controls creating risk in cost allocation and
valuation
Hence, we determined the Valuation of Inventory as a key
audit matter.
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• Performance of test of details through sample selection of
Stores as part of the inventory verification program, including
verification of inventory from floor to documentary evidence
and vice versa, followed by physical verification of Inventory
lying on Factory Floor & Tin Plant on sample basis subsequent
to year end and performed the roll back procedure.
• In respect of Stock held at various warehouses/depots,
obtained direct confirmation of the inventory held by them at
the year end.
• Evaluating the Valuation policy established by management,
including compliance with the applicable accounting standard
along with the appropriateness of the disclosure in the
standalone financial statements is in accordance with the
applicable financial reporting framework.
• For Valuation, we have test checked samples of the cost of
the finished goods with the estimated net realisable value and
checked if the finished goods were recorded at net realisable
value where the cost was higher than the net realisable value.
• We have relied upon the above procedures and management’s
representation to conclude thereon.
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B. Trade Receivables & ECL Provision:
(Refer to Note-12 of Notes to Standalone financial statements for relevant disclosures of Trade Receivables)
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• Trade receivables and other amounts recoverable
comprise a significant portion of the current
financial assets. As at March 31, 2025 trade
receivables aggregate '4,177.75 lakhs (net of
provision for expected credit losses of ' 522.13
lakhs) and represents 18.36% of the Total value of
Company’s Assets.
• In accordance with Ind AS 109, the Company
applies expected credit loss (ECL) model for re¬
measurement and recognition of impairment loss
for Financial Assets as on each reporting period.
• The complexity in calculation of ECL is mainly
related to calculations performed for different type
of Customer and with different recovery period
for different categories of customers along with
significant risk due to the pervasive nature of
these balances to the financial statements, and the
importance of cash collection with reference to the
working capital management of the business.
Accordingly, we determined audit of trade
receivables & ECI as the key audit matter
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Our Audit Procedure
• Assessed the design and implementation of key controls
around the monitoring of recoverability.
• Discussed with the management regarding the level and
ageing of trade receivables, along with the justification
for calculation of provisioning for expected credit loss on
receivables it impact on current year profit’s with regards to
its appropriateness of receivables provisioning by assessing
recoverability with reference to amount received in respect of
trade receivables.
• Analysing the aging schedule of trade receivable, past
collection, records, methodology used management, industry
boom and concentration of customers’ credit risk along with
sample balance confirmations.
• We evaluated the reasonableness of the Management
estimates by understanding the process of ECL estimation
and tested the controls around data extraction and validation.
• Audited disclosures included in the Ind AS Standalone financial
statements in respect of movement of expected credit losses.
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INFORMATION OTHER THAN THE STANDALONE FINANCIAL
STATEMENTS AND AUDITOR'S REPORT THEREON
The Company’s 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, Board’s Report including Annexures
to Board’s Report, Corporate Governance and Shareholder’s
Information, but does not include the Standalone financial
statements and our auditor’s 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 such 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 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 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, 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
thereunder.
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 the 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 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
alternative but to do so.
The Board of Directors is responsible for overseeing the
Company’s financial reporting process.
AUDITOR'S 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
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 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 SAs, we exercise professional judgment and maintain
professional skepticism throughout the audit. We also -
• 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.
• 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 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, 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 auditors’
report. However future events or conditions may cause
the Company to cease to continue as a going concern.
• Evaluate the overall presentation, structure and
content of the AS 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
iv) (a) The Management has represented that,
to the best of its knowledge and belief,
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 or entity, including
foreign entity ("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 its knowledge and
belief, no funds (which are material
either individually or in the aggregate)
have been received by the Company
from any person or entity, 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;
(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
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.
REPORT ON OTHER LEGAL AND REGULATORY
REQUIREMENTS
(!) As required by the Companies (Auditor’s Report) Order,
2020 (the "Order") issued by the Central Government
in terms of Section 143(11) of the Act, we give in
"Annexure A" a statement on the matters specified in
paragraphs 3 and 4 of the Order.
(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
except for the matters stated in paragraph (i)(vi)
below on reporting under Rule 11 (g);
c) The Balance Sheet, the Statement of Profit
and Loss including the Statement of Other
Comprehensive Income, the Cash Flow Statement
and Statement of Changes in Equity dealt with by
this Report are in agreement with the books of
account.
d) In our opinion, the aforesaid Ind AS Standalone
financial statements comply with the Indian
Accounting Standards specified under Section
133 of the Act, read with Companies (Indian
Accounting Standards) Rules, 2015, as amended;
e) On the basis of the written representations
received from the directors as on 31 March, 2025
taken on record by the Board of Directors, none of
the directors is disqualified as on 31 March, 2025
from being appointed as a director in terms of
Section 164(2) of the Act;
f) The modification relating to the maintenance of
accounts and other matters connected therewith
are as stated in the paragraph (b) above on
reporting under Section 143(3)(b) and paragraph
(i)(vi) below on reporting under Rule 11 (g);
g) With respect to the adequacy of the internal
financial controls with reference to standalone
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 with reference to
standalone financial statements.
h) 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/period is in accordance with the
provisions of section 197 read with Schedule V to
the Act to extent applicable.
i) With respect to the other matters to be included in
the Auditor’s report in accordance with Rule 11 of
the Companies (Audit and Auditor’s) 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 litigation on its financial position in
its Financial Statements- Refer Note No.39
to the Financial Statements.
ii) The Company did not have any material
foreseeable losses on long term contracts
including derivative contracts.
iii) There were no amounts which required to
be transferred to the Investor Education and
Protection Fund by the Company.
representations under sub-clause (i)
and (ii) of Rule 11 (e), as provided under
(a) and (b) above, contain any material
misstatement.
v) As stated in note 48 to the accompanying
standalone financial statements :
• No dividend has been proposed/
declared by the company during the
year.
• 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.
vi) Based on our examination which includes
test checks, the company has accounting
software for maintaining its Books of
Accounts which has a feature of recording
Audit trail (Edit log) facility and the same
has been operated throughout the year
for the relevant transactions recorded in
the software except for other software
used by company to maintain payroll and
inventory records as described in Note 61
to the financial statements. Further, during
the course of our audit we did not come
across any instance of the audit trail feature
being tampered with and the audit trail has
been preserved by the Company as per the
statutory requirements for record retention.
For Priya Choudhary & Associates LLP
Chartered Accountants
(FRN- 011506C/C400307)
Vaibhav Choudhary
(Partner)
M. No.: 407543
Place: Bhilwara (Raj.)
Date: 13/05/2025
UDIN: 25407543BMRJMQ6010
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