We have audited the accompanying standalone financial statements of
ALCHEMIST LIMITED (the Company), which comprise the Balance Sheet
as at 31st March, 2015, the Statement of Profit and Loss, the Cash Flow
Statement, and a summary of the significant accounting policies and
other explanatory information for the year then ended.
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 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, read with
Rule 7 of the Companies (Accounts) Rules, 2014. This responsibility
also includes maintenance of adequate accounting records in accordance
with the preparation 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.
Our responsibility is to express an opinion on these standalone
financial statements based on our audit. We have taken into account the
provisions of the Act, the accounting and auditing standards and
matters which are required to be included in the audit report under the
provisions of the Act and the Rules made there under.
We conducted our audit in accordance with the Standards on Auditing
specified under Section 143(10) of the Act. Those Standards require
that we comply with ethical requirements and plan and perform the audit
to obtain reasonable assurance about whether the financial statements
are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about
the amounts and the disclosures in the financial statements. The
procedures selected depend on the auditor''s judgment, including the
assessment of the risks of material misstatement of the financial
statements, whether due to fraud or error. In making those risk
assessments, the auditor considers internal financial control relevant
to the Company''s preparation of the financial statements that give a
true and fair view in order to design audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing
an opinion on whether the Company has in place an adequate internal
financial control system over financial reporting and the operating
effectiveness of such controls. An audit also includes evaluating the
appropriateness of the accounting policies used and the reasonableness
of the accounting estimates made by the Company''s Directors, as well as
evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and
appropriate to provide a basis for our qualified audit opinion on the
standalone financial statements.
Basis for Qualified Opinion
The Company has not complied with the provisions of proviso to sub
section 2 of Section 55 of the Act as out of the total value of
preference shares (including premium) amounting to Rs. 102.20 lacs
redeemed during the year, Rs. 96.84 lacs has been redeemed otherwise
than out of the profits of the Company which would otherwise be
available for dividend or out of the proceeds of a fresh issue of
shares made for the purpose of such redemption. The Company has
advanced as loan an amount of Rs. 13532.17lacs to 16 parties as
interest free unsecured loan, the same is in violation of sub section 7
of Section 186 of the Act. The sub section requires that No loan
shall be given under this section at a rate lower than the prevailing
yield of one year, three year, five year or ten year Government
Security closest to the tenor of the loan.
The Company has computed the Depreciation on the tangible fixed assets
using straight line method based on the useful life of the assets as
prescribed in Schedule II of the Companies Act, 2013 and the management
estimates of useful life for tangible and intangible assets not covered
by the Schedule II. However, for the assets purchased/commissioned
prior to 1st April, 2010, the purchase date of assets has been
considered as 1st April, 2010. The same is in violation of Accounting
Standard 6-Depreciation Accounting as this treatment not only enhances
the useful life of the assets that have already been consumed but has
an effect over the depreciation computed. The loss to that extent is
under/over stated and similarly the assets, the effect however could
not be quantified.
In our opinion and to the best of our information and according to the
explanations given to us, except for the effects of the matter
described in the Basis for Qualified Opinion paragraph above, the
aforesaid standalone financial statements give the information required
by the 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, 2015, and its
loss and its cash flows for the year ended on that date.
Emphasis of Matters
a. Attention is invited to note no. 14 and 33 to the standalone
financial statements wherein the entire Capital advances amounting
to Rs. 797.92 lacs have been considered as good and realisable by the
Company. The Company has indicated it has undertaken legal action
against one party whose outstanding is Rs. 459.80 lacs.
It is relevant to note that out of the total capital advances, advances
amounting to Rs. 784.86 lacs are outstanding for a period of more than
three years. No provision on such capital advances is made.
b. Attention is invited to note no. 18 to the standalone financial
statements which states that Trade receivables amounting to Rs.
21468.10 lacs out of the total trade receivables of Rs. 45529.76 lacs
is outstanding for more than six months from the date they became due
Attention is also invited to note no. 51 wherein the Company has stated
The company extends credit from time to time as per market
practices. In respect of export receivables, credit has been extended
for export sales and regular follow up is being done to recover the
amounts from all the parties involved. The management is confident of
recovering all these dues and hence no provision is considered
necessary against these receivables as of now.
c. Attention is invited to note no. 42 to the standalone financial
statements The balances of majority of the Trade Receivables, Trade
Payables and Loan & Advances made and received, are subject to
confirmation and as such there balances are reflected in the Balance
Sheet as appearing in the books, pending reconciliation, the net effect
Our opinion is not qualified in respect of this matters as stated in
the Emphasis of Matters paragraph.
Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditor''s Report) Order, 2015 (the
Order) issued by the Central Government of India in terms of
sub-section (11) of section 143 of the Act, 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.
(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
(c) The Balance Sheet, the Statement of Profit and Loss, and the Cash
Flow Statement dealt with by this Report are in agreement with the
books of account.
(d) Except for the effects of the matter described in the Basis for
Qualified Opinion paragraph above, in our opinion, the aforesaid
standalone 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) The matters described in the Basis for Qualified Opinion paragraph
and Emphasis of Matters paragraph above, in our opinion, may have an
adverse effect on the functioning of the Company.
(f) On the basis of the written representations received from two
directors as on 31st March, 2015 taken on record by the Board of
Directors, the two directors are not disqualified as on 31st March,
2015 from being appointed as a director in terms of Section 164 (2) of
the Act. However, since the representation from the balance five
directors have not been provided to us, it is not possible for us to
comment as to whether they are qualified to act as a director in terms
of Section 164(2) of the Act.
(g) The qualification relating to the maintenance of accounts and other
matters connected therewith are as stated in the Basis for Qualified
Opinion paragraph above.
(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 standalone financial statements - Refer note
no. 30 to the standalone financial statements.
ii. The Company did not have any long-term contracts including
derivative contracts for which there were any material foreseeable
iii. There has been no delay in transferring amounts, required to be
transferred, to the Investor Education and Protection Fund by the
Annexure to the Independent Auditors'' Report Referred to in paragraph 1
under ''Report on other Legal and Regulatory Requirements'' section of
our report of even date. We report that:
(i) (a) In our opinion and according to the information and
explanations given to us, the Company has maintained fixed asset
register however the same does not specify the quantity and exact
location of the fixed assets.
(b) In our opinion and according to the information and explanations
given to us, the Company has formulated a regular program of
verification by which all the assets of Company have been physically
verified. In our opinion the periodicity of the physical verification
is reasonable having regard to the size of the Company and nature of
its assets. However, since the fixed asset register does not specify
the quantity and exact location of fixed assets, the comparison of the
fixed assets identified during physical verification with the fixed
asset register has not been done. Accordingly, variation could not have
been noticed and hence no adjustment was made in the books.
(ii) (a) In our opinion and according to the information and
explanations given to us, inventories have been physically verified
during the year by the management at reasonable intervals except for
the work in progress inventory.
(b) In our opinion and according to the information and explanations
given to us, the procedures of physical verification of inventories
followed by the management are reasonable and adequate in relation to
the size of the Company and the nature of its business.
(c) In our opinion and on the basis of our examination of the records,
the Company is generally maintaining proper records of its inventories
except for the work in progress inventory. Discrepancies were noticed
on physical verification of stocks by the management as compared to
book records and the same were duly adjusted in the books of accounts.
(iii) (a) According to the information & explanations given to us, the
Company has granted loans, secured or unsecured outstanding at year end
at Rs. 13482.05 to 14 companies covered in the register maintained
under section 189 of the Act.
(b) It has been informed to us that with regard to the loan to
Alchemist Foods Limited, subsidiary of the Company, outstanding at Rs.
12982.61 lacs can be recalled by the Company by giving a prior notice
of at least twelve months, subject to concurrence of the loanee.
However, no documentation to support the claim has been provided to us.
With regard to balance loans it has been informed to us that the terms
of repayment have not been defined, however, they are repayable on the
mutual agreement of both the parties involved. In such circumstances,
we are unable to comment whether receipt of principal is regular.
All the loans made are interest free, hence question of receipt of
interest doesn''t arises.
(c) As mentioned in the above paragraph, since no documented loan
agreement was provided, we are unable to comment on the overdue amount.
(iv) In our opinion and according to the information and explanations
given to us, there is an adequate internal control procedure
commensurate with the size of the Company and the nature of its
business, for the purchase of inventories & fixed assets and payment
for expenses & for the sale of goods and services. During the course of
our audit, no major instance of continuing failure to correct any
weaknesses in the internal controls has been noticed.
(v) The Company has not accepted deposits. Hence the provisions of
Section 73 to 76 or any other relevant provisions of the Act and the
rules framed there under are not applicable to the Company.
(vi) We have broadly examined the cost records maintained by the
Company specified by the Central Government under sub section (1) of
section 148 of the Act and are of the opinion that, prima facie, the
prescribed accounts and records have been made and maintained. We have
however, not made a detailed examination of the records with a view to
determine whether they are accurate or complete.
(vii) (a) Based on our audit procedures and on the information and
explanations given by the management, we report that undisputed
statutory dues including Provident Fund, Employees'' State Insurance,
Income-tax, Sales-tax, Wealth Tax, Service Tax, Custom Duty, Excise
Duty, Value Added Tax, Cess and any other statutory dues, to the extent
applicable, have generally been regularly deposited with the
appropriate authorities, though there have been slight delays in few
cases. According to the information and explanations given to us there
was an amount of Rs. 1.79 lacs pertaining to labour cess outstanding as
on 31s March, 2015, for a period of more than six months from the date
it became payable.
(b) Details of excise duty which has not been deposited as on 31s
March, 2015 by the Company on account of dispute is given below:
Name of the Nature of Forum where Total Amount
Statute the dues pending involved*
Central Excise Commissioner of 173.55
Excise Act, Duty Central Excise
Name of the
Statute Amount paid Period to which
under protest amount relates
1944 63.13 December, 2007 to
* Amount as per demand order, not including interest and penalty as not
quantified in the demand order.
(c) According to the information and explanations given by the
management, the amount which was required to be transferred to the
Investor Education and Protection Fund by the Company was transferred
(viii) The accumulated losses of the Company as at the end of the
financial year are less than fifty percent of the net worth of the
Company. The Company has incurred cash loss during the financial year
covered by our audit but not in the immediately preceding financial
(ix) Based on our audit procedures and on the information and
explanations given by the management, we are of the opinion that,
during the year there have been delays in repayment of dues by the
Company to financial institutions, banks or debenture holders. The
details of the continuing default as on 31s March, 2015 in repayment of
principle and interest is as follows:
Details of continuing default as on 31st March, 2015 in repayment of
loans and interest:
amount as Default
Name of Bank - Type of Loan Amount on 31/03/15 Amount
Punjab National Bank -
Project Term Loan 210000000 8074085 3,986,703
UCO Bank - Vehicle Loan 612000 39177 0
UCO Bank - Vehicle Loan 1143000 81270 0
UCO Bank - Vehicle Loan 716000 61176 0
UCO Bank - Vehicle Loan 529000 42528 0
Total 213000000 8298236 3,986,703
Name of Bank - Type of Loan Default cleared Default outstanding
date as on 28/05/15
Punjab National Bank - Project
Term Loar 19/5/15 4,087,382
UCO Bank - Vehicle Loan - 39,177
UCO Bank - Vehicle Loan - 81,270
UCO Bank - Vehicle Loan - 61,176
UCO Bank - Vehicle Loan - 42,528
Total 4,311, 533
(x) According to the information and explanations given to us, the
Company has given guarantee for loan taken by others from banks or
financial institutions to an extent of Rs. 2761.99 lacs. The terms and
conditions of the guarantees issued except for guarantees amounting to
Rs. 700.00 lacs are not prejudicial to the interest of the Company. The
Company could not have issued guarantees for Rs. 700.00 lacs as the
same is in violation of the requirements of Section 185 of the Act.
(xi) Based on our audit procedures and on the information and
explanation given by the management, we report that the term loans have
been applied for the purpose for which they were raised.
(xii) Based on the audit procedures performed and the information and
explanations given to us, we report that no fraud on or by the Company
has been noticed or reported during the year, nor have we been informed
of such case by the management.
For N. Kumar Chhabra & Co.
Firm''s Registration Number: 000837N
CA. Ashish Chhabra
Membership Number: 507083
Place of Signature: New Delhi
Date: 28th May, 2015