We have audited the attached Balance Sheet of INDOKEM LIMITED as at
30th September, 2012, the Profit and Loss Account and also the Cash
Flow Statement of the Company for the period ended on that date annexed
thereto. These financial statements are the responsibility of the
Company''s Management. Our responsibility is to express an opinion on
these financial statements based on our audit.
We conducted our audit in accordance with auditing standards generally
accepted in India. Those Standards require that we plan and perform the
audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for
As required by the Companies (Auditor''s Report) Order, 2003, issued
by the Government of India in terms of sub-section 227(4A) of the
Companies Act, 1956, we enclose in the Annexure a statement on the
matters specified in paragraphs 4 and 5 of the said Order.
Further to our comments in the Annexure referred to in paragraph above,
we report that:
a) We have obtained all the information and explanations, which to the
best of our knowledge and belief were necessary for the purpose of our
audit except for Inventory Records of Ankleshwar Plant as mentioned in
SINo.5(b) of Note No. 26;
b) In our opinion, the Company has kept proper books of accounts as
required by law so far as appears from our examination of those books;
c) The Balance Sheet, Profit and Loss Account anjl Cash Flow Statement
dealt with by this report are in agreement with the books of accounts;
d) In our opinion, the Balance Sheet, the Profit & Loss Account and
Cash Flow Statement dealt with by this report comply with the
Accounting Standards referred to in Section 211 (3C) of the Companies
e) On the basis of the written representation received from the
directors of the Company as at the date of the Report and taken on
record by the Board of Directors we report that no director is
disqualified from being appointed as a director of the company under
clause (g) of sub-section (1) of Section 274 of the of the Companies
f) Value of the Inventory at Ankleshwar Plant amounting to Rs. 457.28
lacs being accepted as certified by the management only as referred in
SI No. 5(b) of Note No. 26;
g) Subject to above, the said accounts, in our opinion and to the best
of our information and according to the explanations given the said
accounts read together with the significant accounting policies and
notes thereon give the information required by the Companies Act, 1956,
in the manner so required, and present a true and fair view, in
conformity with the accounting principles generally accepted in India:
i) In the case of the Balance Sheet, of the state of affairs as at 30*1
ii) In the case of the profit and loss account, of the loss for the
period ended on that date; and
iii) In the case of the Cash Flow Statement, of the cash flows for the
period ended on that date.
ANNEXURE TO THE AUDITORS'' REPORT
(REFERRED TO IN THE REPORT OF EVEN DATE OF THE AUDITORS TO THE MEMBERS
OF INDOKEM LIMITED ON THE ACCOUNTS FOR THE PERIOD ENDED 30st SEPT 2012)
1. The Company has maintained fixed assets register during the period.
The Company has programme for physical verification of its fixed assets
which in our opinion is reasonable having regard to the size of the
Company and the nature of its fixed assets. The Company has disposed
off factory building and plant at Ankleshwar during the period.
Except for Inventories at Ankleshwar Plant as separately referred in SI
No.5(b) of Note No. 26:
a) Inventories have been physically verified at the year end by the
management. In our opinion, the frequency of verification is
b) In our opinion, the procedures of physical verification of
inventories by the management are reasonable and adequate in relation
to the size of the Company and the nature of its business.
c) The Company is maintaining proper records of inventory. The
discrepancies noticed on verification between the physical stocks and
book records were not material.
3. a) The Company had taken loan from three (three) Directors
amounting to Rs. 768.53 Lacs (Rs. 688.83 Lacs) covered in the register
maintained under section 301 of the Companies Act, 1956. The Company
has granted loans to five Companies covered in the register maintained
u/s. 301 of the Companies Act, 1956 amounting to Rs. 159 lacs (Rs. 127.02
lacs), Maximum amount outstanding during the period Rs. 159 lacs
b) In our opinion, the rate of interest and other terms and conditions
on which loans have been taken from directors listed in the register
maintained under section 301 of the Companies Act, 1956 are not, prima
facie, prejudicial to the interest of the Company. The Company has not
charged interest on the Loans given to Companies.
c) There are no stipulations, attached to the loan for its repayment.
4. In our opinion and according to the information and explanations
given to us, there are adequate internal control procedures
commensurate with the size of the Company and the nature of its
business with regard to purchase of stores, raw materials including
components, packing materials, plant and machinery, equipment and other
assets and with regards to sale of goods. During the course of our
audit we have not observed any continuing failure to correct major
weakness in the internal control procedures.
5. a) All the transaction with parties covered under section 301 of
the Companies Act, 1956 have been properly entered in the register
maintained under Section 301 of the Act.
b) In our opinion and according to the information and explanation
given to us, the transaction made in pursuance of contracts or
arrangements entered in the register maintained under section 301 of
the Act, and exceeding the value of five lakh rupees in respect of any
party during the year have been made at prices which are not comparable
in the absence of similar transactions with other parties.
6. The Company has not accepted any deposits from public during the
7. The Company has no internal audit system during the period.
8. The Company, according to the information and explanations given to
us, is maintaining accounts and records prescribed by the Central
Government under section 209 (1)(d) of the Companies Act, 1956. We have
not examined the contents of these accounts and records. ‘
a) Regarding depositing of undisputed statutory dues including
Provident Fund, Employees State Insurance, Income Tax, Sales Tax, and
Professional Tax with appropriate authorities, there were delays,
arrears outstanding in respect of all such statutory dues as at the
last day of the financial year concerned for a period of more than six
months from the date they became payable amounts to Rs. 111.66 lacs (Rs.
b) As at Sept 30, 2012 according to the records of the Company and the
information and explanations given to us, the following are the
particulars of disputed dues (provided / considered contingent
liability as appropriate) on account of sales tax, income tax, customs
duty, wealth tax, excise duty and cess matters that have not been
Name of the
Statute Nature of
involved Forum where the dispute
Sales Tax Act Sales Tax 30.49 Commissioner (Appeals)
Income Tax Act Income Tax 21.89 Commissioner (Appeals)
Service Tax Act Service Tax 2.78 Commissioner (Appeals)
10. The Company has incurred cash loss in the current period as also
in the immediately preceding financial year and the accumulated losses
are more than 50% of its net worth as at 30th Sept 2012.
11. Based on the examination of books of accounts and related records
and according to the information and explanations provided to us, the
Company has defaulted in repayment of dues to Bank and Financial
institutions. Out of total repayments made during the year, a sum of Rs.
20 lacs (99.92) lacs is found delayed on various dates as compared to
its schedule of repayments agreed upon in pursuance to loan agreements
(excluding delays which has been regularized by further arrangements).
Out of total dues, a sum of ^1410.00 lacs (740.65) lacs is found
overdue and in default.
12. The Company has not granted any loans and advances on the basis of
security by way of pledge of shares, debentures and other securities.
13. In our opinion, considering the nature of activities carried on by
the Company during the period, the provisions of any special statute
applicable to chit fund / nidhi / mutual benefit fund / societies are
not applicable to the Company.
14. In our opinion and according to the information and explanations
given to us, the Company is not dealer or trader in securities.
15. The Company has given guarantees (including counter guarantees)
amounting to Rs. 1030 lacs (Rs. 1030 lacs) for loans taken by others from
banks and financial institution (as referred in SI.No.1(e) of Note No.
26) and terms and conditions are not prima facie prejudicial to the
interest of the Company.
16. In our opinion and according to the information and explanations
given to us, no Term Loan has been raised during the period.
17. According to the information and explanations given to us and on
an overall examination of the Balance Sheet of the Company, we report
that no funds raised on short-term basis have been used for long-term
investment. No long-term funds have been used to finance short-term
18. The Company has not made any preferential allotment of shares
during the period to parties and Companies covered in the register
maintained under Section 301 of the Act.
19. The Company has not raised any funds by the way of debenture
during the period.
20. The Company has not raised any money by way of public issue during
21. During the course of our examination of the books of account
carried out in accordance with the generally accepted auditing
practices in India, and according to the information and explanations
given to us, we have neither come across any instance of fraud on or by
the Company, noticed or reported during the period, nor have we been
informed of such case by. the management.
For Sheth Doctor & Associates
(Firm Registration No. 124822W)
Mumbai Paresh S. Doctor
Dated: 9th November, 2012 Membership No. 36056