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Indo Rama Synthetics (India) Ltd.

BSE: 500207 | NSE: INDORAMA |

Represents Equity.Intra - day transactions are permissible and normal trading is done in this category
Series: EQ | ISIN: INE156A01020 | SECTOR: Textiles - Spinning - Synthetic Blended

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Annual Report

For Year :
2018 2016 2015 2014 2013 2012 2011 2010 2009

Auditor's Report

To the Members of

Indo Rama Synthetics (India) Limited

1. Report on the Standalone Financial Statements

We have audited the accompanying financial statements (standalone financial statements) of Indo Rama Synthetics (India) Limited (the Company), which comprise the Balance Sheet as at 31 March 2016, the Statement of Profit and Loss, the Cash Flow Statement for the year then ended, and a summary of significant accounting policies and other explanatory information.

2. 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 provisions 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.

3. Auditors’ 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. 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.

4. Basis for Qualified Opinion

Attention is drawn to note 39 (b) of the standalone financial statements, which enumerates recognition of interest of '' 10.95 crores for the year ended 31 March 2016 on the insurance claim lodged by the Company with its insurance company for the loss of certain assets and loss suffered due to business interruption at its plant in 2007-08. The said recognition of asset, is not in accordance with accounting principle stated in Accounting Standard 29, ''Provisions, Contingent Liabilities and Contingent Assets''. Had such income not been recognized, the net loss before tax for the year would have been higher by RS, 10.95 crores, the net profit after tax for the year would have been lower by '' 7.16 crores and Reserves and Surplus as at 31 March 2016 would have been lower by RS, 7.16 crores.

5. Qualified Opinion

In our opinion and to the best of our information and

according to the explanations given to us, except for the matter descried 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 31 March 2016, of its profit and its cash flows for the year ended on that date.

6. Emphasis of matter

We draw attention to note 39 (a) of the standalone financial statements which describes the uncertainty related to the outcome of the lawsuit filed by the Company against an insurance company. Our opinion is not modified in respect of this matter.

7. Report on Other Legal and Regulatory Requirements

(i) As required by the Companies (Auditor’s Report) Order, 2016 (''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 I, a statement on the matters specified in paragraphs 3 and 4 of the said Order, to the extent applicable.

(ii) 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. except for the effects of the matter described in the ''Basis for Qualified Opinion'' paragraph above, in our opinion, proper books of account as required by law have been kept by the Company so far as 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, 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 matter described in the ''Basis for Qualified Opinion'' and matter described under ''Emphasis of matter 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 the directors, and taken on record by the Board of Directors, none of the directors

is disqualified as on 31 March 2016 from being appointed 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 adequacy of the internal financial controls over financial reporting of the Company and the operating effectiveness of such controls, refer to our separate report in Annexure II; and

i. with respect to the other matters to be included in the Auditors'' 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 financial statements - Refer notes 36 and 39 to the standalone financial statements;

ii. the Company did not have any long term contracts, including derivative contracts outstanding as at 31 March 2016 for which there were any material foreseeable losses; and

iii. there has been no delay in transferring amounts that were required to be transferred to the Investor Education and Protection Fund by the Company.

(i) (a) According to the information and explanations given to us, the Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets.

(b) As explained to us, the fixed assets are physically verified by the management in accordance with a phased programme designed to cover all items of fixed assets over a period of three years, which, in our opinion, is reasonable having regard to the size of the Company and nature of its fixed assets. In accordance with this programme, certain categories of fixed assets at certain locations have been physically verified bythe management during the year. As informed to us, no material discrepancies were noticed on such verification.

(c) According to the information and explanations given to us and on the basis of our examination of the records of the Company, the title deeds of the immovable properties are held in the name of the Company.

(ii) According to the information and explanations given to us, the inventories, except for goods in transit and stocks lying with third parties, have been physically verified, at reasonable interval by the management during the year. For stocks lying with third parties at the year end, written confirmations are obtained. As informed to us, no material discrepancies were noticed on such verification.

(iii) According to the information and explanations given to us, the Company, during the earlier periods, had granted interest free unsecured loans to a wholly owned subsidiary company covered in the register maintained under Section 189 of the Companies Act, 2013. Further, according to information and explanations given to us:

(a) the terms and conditions of the grant of such loans are not prejudicial to the Company''s interest.

(b) the interest free loan is to be converted, on mutual agreement, into equity, quasi equity or debentures or repayable by 31 March 2017. Hence, the loan were not due for repayment in the current year in accordance with the stipulations.

(c) There is no overdue for more than ninety days.

(iv) According to the information and explanations given to us and on the basis of our examination of the records of the Company, there are no loans, investments, guarantees, and security where provisions of section 185 and 186 of the Act are required to be complied with. Accordingly, paragraph 3(iv) of the Order is not applicable.

(v) According to the information and explanations given to us, the Company has not accepted any deposits from public during the year.

(vi) We have broadly reviewed the books of account maintained by the Company in respect of products where, pursuant to the rules made by the Central Government, the maintenance of cost records has been prescribed under sub section (1) of section 148 of the Companies Act, 2013 and are of the opinion that, prima facie, the prescribed accounts and records have been made and maintained. However, we have not made a detailed examination of such records with a view to determine whether theyare accurate or complete.

(vii) (a) According to the information and explanations given to us and on the basis of our examination of the records of the Company, amounts deducted/ accrued in the books of account in respect of undisputed statutory dues including Provident Fund, Employees'' State Insurance, Income tax. Sales tax. Service tax. Duty of Customs, Duty of Excise, Value Added Tax, Cess and other material statutory dues, to the extent applicable, have generally been regularly deposited with the appropriate authorities.

According to the information and explanations given to us, no undisputed amounts payable in respect of Provident Fund, Employees ‘State Insurance, Income tax. Sales tax. Service tax. Duty of Customs, Duty of Excise, Value Added tax. Cess and other material statutory dues, to the extent applicable, were in arrears as at 31 March 2016 for a period of more than six months from the date they became payable.

(b) According to the information and explanations given to us, and on the basis of the records of the Company examined by us, there are no dues of Income-tax, Sales-tax, Service tax. Duty of Customs, Value Added Tax, Duty of Excise, which have not been deposited with the appropriate authorities on account of any dispute, excepts mentioned below:

Name of the Statute

Nature of dues

Amount of dispute (RS, Crores) #

Amount paid under protest ('' Crores)

Period to which it relates

Forum where dispute is pending

1.06

-

2002-03

0.38

-

2005-06

Bombay High Court, Nagpur

0.51

-

March 2008-December 2010

Bench

65.77

5.91

1996-97 to

Customs, Excise and Service Tax

The Central Excise Act, 1944

Duty of Excise

2009-10

Appellate Tribunal

17.56

0.08

1996-97 to

Commissioner of Central Excise

2008-09

and Customs (Appeals)

1997-98 to 2010-11

Commissioner/ Assistant

4.97

-

Commissioner/ Deputy Commissioner

Bombay SalesTaxAct,1959/ Central Sales Tax Act, 1956

Sales tax

0.43

0.13

1998-99 to

1999-00

Maharashtra VAT Act, 2002

VAT

22.20

5.60

2006-07, 2008-09 and 2010-11 to 2013-14

Joint Commissioner Sales Tax (Appeals), Nagpur

214.25

-

2006-07

Supreme Court

Customs Act, 1962

Duty of

0.09

-

2002-03

Customs, Excise and Service Tax Appellate Tribunal

Customs

6.01

-

2006-07

Commissioner of Customs

0.04

-

1997- 98 to 1998-99

Assistant Commissioner/ Deputy

10.68

-

2014-15 to 2015-16

Commissioner

0.22

0.08

2004-05 to 2009-10

Customs, Excise and Service Tax Appellate Tribunal

Finance Act, 1994

Service tax

0.22

-

2002-03 to 2005-06

Commissioner, Nagpur

0.18

-

2010-11 to 2013-14

Assistant/ Deputy Commissioner Nagpur

0.26

-

AY 2006-07

Commissioner of Income Tax (Appeals)

Income tax Act, 19611

Income tax

AY 2002-03 to AY

24.55

14.50

2004-05 and AY

2007-08

Income Tax Appellate Tribunal

(viii) According to the information and explanations given to us, the Company has not defaulted in the repayment of loans or borrowings to banks. Further, there are no loans or borrowings from financial institutions or government and there are no dues to debenture holders during the year.

(ix) According to the information and explanations given to us, the term loan taken by the Company have been applied for the purposes for which they were raised. The Company has not raised any moneys by way of initial public offer or further public offer.

(x) According to the information and explanations given to us, no fraud by the Company and on the Company by its officers or employees has been noticed or reported during the year.

(xi) According to the information and explanations given to us and on the basis of our examination of the records of the Company, the managerial remuneration has been paid / provided in accordance with the provisions of section 197 read with Schedule V to the Companies Act, 2013 except '' 0.62 crores which has been paid as Managerial Remuneration by the Company to one of its directors for services rendered subsequent to remuneration period approved by the Central Government vide approval SRH B61072120/4/2013-CL VII. The Company is in the process of obtaining requisite renewal of such approval subsequent to 31 March 2016.

(xii) According to the information and explanations given to us, the Company is not a Nidhi Company. Accordingly, paragraph 3(xii) of the Order is not applicable.

(xiii) According to information and explanations given to us and on the basis of our examination of the records of the Company, all transactions with the related parties are in compliance with section 177 and 188 of the Act where applicable and the details have been disclosed in the standalone financial statements, as required by the applicable accounting standards.

(xiv) According to information and explanations given to us, the Company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures during the year. Accordingly, paragraph 3(xiv) of the Order is not applicable.

(xv) According to information and explanations given to us, the Company has not entered into any non-cash transactions with directors or persons connected with him. Accordingly, paragraph 3(xv) of the Order is not applicable.

(xvi) According to information and explanations given to us, the Company is not required to be registered under section 45-IA of the Reserve Bank of India Act, 1934.

Report on the Internal Financial Controls under Clause (i) of Subsection 3 of Section 143 of the Companies Act, 2013 (the Act”)

We have audited the internal financial controls over financial reporting of Indo Rama Synthetics (India) Limited (the Company) as of 31 March 2016 in conjunction with our audit of the standalone financial statements of the Company for the year ended on that date.

Management’s Responsibility for Internal Financial Controls

The Company''s management is responsible for establishing and

maintaining internal financial controls based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on ''Audit of Internal Financial Controls Over Financial Reporting'' issued by the Institute of Chartered Accountants of India. These responsibilities include the design, implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the orderly and efficient conduct of its business, including adherence to company''s policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information, as required under the Act.

Auditors’ Responsibility

Our responsibility is to express an opinion on the Company''s internal financial controls over financial reporting based on our audit. We conducted our audit in accordance with the Guidance Note on ''Audit of Internal Financial Controls Over Financial Reporting'' (the Guidance Note) and the Standards on Auditing, issued by ICAI and deemed to be prescribed under section 143(10) of the Act, to the extent applicable to an audit of internal financial controls and both issued by the Institute of Chartered Accountants of India. Those Standards and the Guidance Note require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether adequate internal financial controls over financial reporting was established and maintained and if such controls operated effectively in all material respects.

Our audit involves performing procedures to obtain audit evidence

about the adequacy of the internal financial controls system over financial reporting and their operating effectiveness. Our audit of internal financial controls over financial reporting included obtaining an understanding of internal financial controls over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. 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.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the Company''s internal financial controls system over financial reporting.

Meaning of Internal Financial Controls Over Financial Reporting

A company''s internal financial control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company''s internal financial control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company''s assets that could have a material effect on the financial statements.

Inherent Limitations of internal Financial Controls Over Financial Reporting

Because of the inherent limitations of internal financial controls over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may occur and not be detected. Also, projections of any evaluation of the internal financial controls over financial reporting to future periods are subject to the risk that the internal financial control over financial reporting may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Opinion

In our opinion, the Company has, in all material respects, an adequate internal financial controls system over financial reporting and such internal financial controls over financial reporting were operating effectively as at 31 March 2016, based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on ''Audit of Internal Financial Controls Over Financial Reporting'' issued by the Institute of Chartered Accountants of India.

For B S R and Associates

Chartered Accountants

ICAI Firm registration number: 128901W

Jiten Chopra

Place: Gurgaon Partner

Date: 18 May 2016 Membership No.: 092894