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Alchemist

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« Mar 14
Auditor's Report (Alchemist) Year End : Mar '15
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.
 
 Auditor''s'' Responsibility
 
 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.
 
 Qualified Opinion
 
 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
 for payment.
 
 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
 is unascertainable.
 
 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
 those books.
 
 (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
 losses.
 
 iii. There has been no delay in transferring amounts, required to be
 transferred, to the Investor Education and Protection Fund by the
 Company.
 
 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*
                                                       (Rs. Lacs)
 
 Central           Excise          Commissioner of       173.55
 Excise Act,       Duty            Central Excise
 1944                              Commissionerate,
                                   Chandigarh.
 
 
 
 Name of the
 Statute            Amount paid       Period to which
                    under protest     amount relates
                    (Rs. Lacs)
 
 Central
 Excise Act,
 1944                  63.13          December, 2007 to
                                      September, 2012
 
 * 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
 within time.
 
 (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
 year.
 
 (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:
 
                                     Sanction    Default 
                                                  amount as   Default 
                                                              cleared
 
 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.
 
 Chartered Accountants
 
 Firm''s Registration Number: 000837N
 
 CA. Ashish Chhabra
 
 Partner
 
 Membership Number: 507083
 
 Place of Signature: New Delhi
 
 Date: 28th May, 2015
 
 
 
Source : Dion Global Solutions Limited
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