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Akzo Nobel India Ltd.

BSE: 500710 Sector: Consumer
NSE: AKZOINDIA ISIN Code: INE133A01011
BSE LIVE 15:40 | 02 Dec 1400.45 -22.55
(-1.58%)
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NSE LIVE 15:46 | 02 Dec 1399.10 -22.15
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OPEN 1420.00
PREVIOUS CLOSE 1423.00
VOLUME 351
52-Week high 1740.00
52-Week low 1204.00
P/E 30.43
Mkt Cap.(Rs cr) 6534.50
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 1420.00
CLOSE 1423.00
VOLUME 351
52-Week high 1740.00
52-Week low 1204.00
P/E 30.43
Mkt Cap.(Rs cr) 6534.50
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Akzo Nobel India Ltd. (AKZOINDIA) - Auditors Report

Company auditors report

To

The Members

Akzo Nobel India Limited

Report on the Financial Statements

We have audited the accompanying financial statements of Akzo Nobel India Limited(‘the Company’) which comprise the Balance Sheet as at 31 March 2016 theStatement of Profit and Loss and the Cash Flow Statement for the year ended and a summaryof the significant accounting policies and other explanatory information.

Management’s responsibility for the Financial Statements

The Company’s Board of Directors is responsible for the matters stated in Section134(5) of the Companies Act 2013 ("the Act") with respect to the preparation ofthese standalone financial statements that give a true and fair view of the financialposition financial performance and cash flows of the Company in accordance with theaccounting principles generally accepted in India including the Accounting Standardsspecified under Section 133 of the Act read with Rule 7 of the Companies (Accounts)Rules 2014. This responsibility also includes maintenance of adequate accounting recordsin accordance with the provisions of the Act for safeguarding the assets of the Companyand for preventing and detecting frauds and other irregularities; selection andapplication of appropriate accounting policies; making judgments and estimates that arereasonable and prudent; and design implementation and maintenance of adequate internalfinancial controls that were operating effectively for ensuring the accuracy andcompleteness of the accounting records relevant to the preparation and presentation ofthe financial statements that give a true and fair view and are free from materialmisstatement whether due to fraud or error.

Auditor’s responsibility

Our responsibility is to express an opinion on these financial statements based on ouraudit. We have taken into account the provisions of the Act the accounting and auditingstandards and matters which are required to be included in the audit report under theprovisions of the Act and the Rules made thereunder.

We conducted our audit in accordance with the Standards on Auditing specified underSection 143(10) of the Act. Those Standards require that we comply with ethicalrequirements and plan and perform the audit to obtain reasonable assurance about whetherthe financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts andthe disclosures in the financial statements. The procedures selected depend on theauditor’s judgment including the assessment of the risks of material misstatement ofthe financial statements whether due to fraud or error. In making those risk assessmentsthe auditor considers internal financial control relevant to the Company’spreparation of the financial statements that give a true and fair view in order to designaudit procedures that are appropriate in the circumstances. An audit also includesevaluating the appropriateness of the accounting policies used and the reasonableness ofthe accounting estimates made by the Company’s Directors as well as evaluating theoverall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the financial statements.

Opinion

In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid financial statements give the information required by the Actin the manner so required and give a true and fair view in conformity with the accountingprinciples generally accepted in India of the state of affairs of the Company as at 31March 2016 its profit and its cash flows for the year ended on that date.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor’s Report) Order 2016 ("theOrder") issued by the Central Government of India in terms of sub-section (11) ofsection 143 of the Act we enclose in the Annexure A a statement on the matters specifiedin paragraphs 3 and 4 of the Order to the extent applicable.

2. As required by section 143(3) of the Act we report to the extent applicable that:

a) we have sought and obtained all the information and explanations which to the bestof 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 theCompany 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 Statementdealt with by this Report are in agreement with the books of account;

d) in our opinion the aforesaid financial statements comply with the AccountingStandards specified under Section 133 of the Act read with Rule 7 of the Companies(Accounts) Rules 2014;

e) on the basis of the written representations received from the directors as on 31March 2016 taken on record by the Board of Directors none of the directors isdisqualified as on 31 March 2016 from being appointed as a director in terms of Section164 (2) of the Act;

f) With respect to the adequacy of the internal financial controls over financialreporting of the Company and the operating effectiveness of such controls refer to ourseparate Report in Annexure B ; and

g) with respect to the other matters to be included in the Auditor’s Report inaccordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014 in our opinionand 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 financialposition in its financial statements - Refer Note 5.1 to the financial statements;

ii. The Company did not have any long term contracts including derivative contracts forwhich there were any material foreseeable losses; and

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

For B S R & Associates LLP
Chartered Accountants
Firm Registration No.: 116231W / W-100024
Rakesh Dewan
Gurgaon Partner
13 May 2016 Membership No.: 092212

Annexure A

(referred to in our Independent Auditor’s Report of even date on the financialstatements of Akzo Nobel India Limited for the year ended 31 March 2016.)

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

(b) As explained to us the fixed assets of the Company are physically verified by themanagement in accordance with a phased programme designed to cover all items of fixedassets over a period of three years which in our opinion is reasonable having regard tothe size of the Company and nature of its fixed assets. In accordance with the programmeall fixed assets at Company’s manufacturing locations have been physically verifiedby the management during the year. As informed to us no material discrepancies werenoticed on such verification.

(c ) According to the information and explanations given to us and on the basis of ourexamination of the records of the Company the title deeds of the immovable property areheld in the name of the Company except for the following:

( Rs million)
S No Leasehold / Freehold Gross Block as at 31 March 2016 Net Block as at 31 March 2016 Remarks
1 Leasehold land 5.7 4.3 Title in respect of Leasehold land taken over pursuant to the Scheme of Amalgamation (FY 2011-12) is yet to be transferred in the name of the Company.
2 Leasehold land 164 164 The Company has received the final possession of land on 30 March 2016 for which the lease deed is under finalisation.

(ii) (a) According to the information and explanations given to us physicalverification except in case of goods in transit and stocks lying with third parties hasbeen carried out by the management during the year in respect of inventories. For stockslying with third parties as at 31 March 2016 confirmations or statements of account havebeen obtained. According to the information and explanations given to us the proceduresfor physical verification of inventories followed by the management during the year arereasonable and adequate in relation to the size of the Company and the nature of itsbusiness. The discrepancies noticed on verification between the physical stocks and thebook records were not material.

(iii) The Company has not granted any loans secured or unsecured to companies firmslimited liability partnership or other parties covered in the register maintained undersection 189 of the Act during the year ended 31 March 2016. Thus paragraph 3(iii) of theOrder is not applicable.

(iv) According to the information and explanations given to us the Company has notgiven any loans to any parties specified under section 185 of the Act. Further guaranteeor security provided and the investments made by the Company are in compliance withsection 185 and 186 of the Act.

(v) As per the information and explanations given to us the Company has not acceptedany deposits as mentioned in the directives issued by the Reserve Bank of India and theprovisions of sections 73 to 76 or any other relevant provisions of the Act and the rulesframed thereunder.

(vi) We have broadly reviewed the books of account maintained by the Company in respectof products where pursuant to the rules made by the Central Government the maintenanceof cost records has been prescribed under section under sub-section (1) to Section 148 ofthe Act in respect of activities of the Company and are of the opinion that prima faciethe prescribed accounts and records have been made and maintained. However we have notmade a detailed examination of such records with a view to determine whether they areaccurate or complete.

(vii) (a) According to the information and explanations given to us and on the basis ofour examination of the records of the Company amounts deducted/accrued in the books ofaccount in respect of undisputed statutory dues including Provident Fund Income-taxSales tax Value Added Tax Service tax duty of Excise duty of Customs Employees’State Insurance Cess and other material statutory dues have been generally been regularlydeposited during the year by the Company with the appropriate authorities though there hasbeen a slight delay in a few cases.

According to the information and explanations given to us there are no undisputedamounts payable in respect of Provident Fund Income-tax Sales-tax Service tax ValueAdded Tax duty of Customs duty of Excise Employees’ State Insurance Cess andother material statutory dues were in arrears as at 31 March 2016 for a period of morethan six months from the date they became payable.

(b) According to the information and explanations given to us there are no dues ofIncome tax Sales Tax Value Added tax Service tax duty of Customs duty of Excise andCess which have not been deposited with the appropriate authorities on account of anydispute except for the following:

(Amounts in Rs million)
Name of the Statute Nature of the dues Amounts involved Amount paid under protest Period to which the amount relates Forum where dispute is pending
Income tax Act 1961 Income tax 161 121 2008-09 2010-11 First Appellate level
1445 857 1996-97 1997-98 1999- 00 2002-03 to 2007-08 2009-10 2010-11 2011-12 Tribunal
The Finance Act 1994 Service tax 31 1 2004-05 2005-06 2007- 08 to 2014-15 First Appellate level
The Central Excise Act 1944 Excise duty 2 - 2006-07 2007-08 First Appellate level
13 - 2001-02 2002-03 2004- 05 2005-06 Second Appellate level
73 - 1991-92 to 1996-97 2004- 05 to 2008-09 Tribunal
Sales Tax Act Sales tax 231 17 2000-01 2003-04 2004- 052006-07 to 2015-16 First Appellate level
265 23 1976-77 1979-80 1980-81 1982-83 to 1999-00 2002-03 2005- 06 to 2012-13 Second Appellate level
20 5 2004-05 to 2006-07 2009-10 2012-13 Tribunal
12 - 2005-06 2006-07 2012- 13 High Court

(viii) In our opinion and according to the information and explanations given to usthe Company has not defaulted in repayment of loans or borrowings to banks. The Companydid not have any outstanding dues to any financial institutions government or debentureholders during the year.

(ix) The Company did not raise any money by way of initial public offer or furtherpublic offer (including debt instruments) and term loans during the year. Accordinglyparagraph 3 (ix) of the Order is not applicable.

(x) According to the information and explanations given to us there has been no fraudby the company and neither any fraud on the Company by its officers or employees has beennoticed or reported during year.

(xi) According to information and explanations given to us and on the basis of ourexamination of the records of the Company the managerial remuneration has been providedand paid by the Company in accordance with the provisions of section 197 read withSchedule V to the Act.

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

(xiii) According to the information and explanations given to us and on the basis ofour examination of the records of the Company transactions with the related parties arein compliance with Section 177 and 188 of the Act where applicable and the details havebeen disclosed in the financial statements as required by the applicable accountingstandards.

(xiv) According to the information and explanation given to us and on the basis of ourexamination of the records of the Company the Company has not made any preferentialallotment or private placement of shares or fully or partly convertible debentures duringthe year. Accordingly paragraph 3(xiv) of the Order is not applicable.

(xv) According to the information and explanations given to us the Company has notentered into any non-cash transactions with directors or person connected with him coveredby Section 192 of the Act. Accordingly paragraph 3(xv) of the Order is not applicable.

(xvi) According to the information and explanations given to us the Company is notrequired to be registered under section 45-IA of the Reserve Bank of India Act 1934.

For B S R & Associates LLP
Chartered Accountants
Firm Registration No.: 116231W / W-100024
Rakesh Dewan
Gurgaon Partner
13 May 2016 Membership No.: 092212

Annexure B

(referred to in our Independent Auditor’s Report of even date on the financialstatements of Akzo Nobel India Limited for the year ended 31 March 2016) Report on theInternal Financial Controls under Clause (i) of Sub-section 3 of Section 143 of theCompanies Act 2013 ("the Act")

We have audited the internal financial controls over financial reporting of Akzo NobelIndia Limited ("the Company") as of 31 March 2016 in conjunction with our auditof the 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 internalfinancial controls based on the internal control over financial reporting criteriaestablished by the Company considering the essential components of internal control statedin the Guidance Note on Audit of Internal Financial Controls Over Financial Reportingissued by the Institute of Chartered Accountants of India (‘ICAI’). Theseresponsibilities include the design implementation and maintenance of adequate internalfinancial controls that were operating effectively for ensuring the orderly and efficientconduct of its business including adherence to Company’s policies the safeguardingof its assets the prevention and detection of frauds and errors the accuracy andcompleteness of the accounting records and the timely preparation of reliable financialinformation as required under the Companies Act 2013.

Auditors’ Responsibility

Our responsibility is to express an opinion on the Company’s internal financialcontrols over financial reporting based on our audit. We conducted our audit in accordancewith the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting(the "Guidance Note") and the Standards on Auditing issued by ICAI and deemedto be prescribed under section 143(10) of the Companies Act 2013 to the extentapplicable to an audit of internal financial controls both applicable to an audit ofInternal Financial Controls and both issued by the Institute of Chartered Accountants ofIndia. Those Standards and the Guidance Note require that we comply with ethicalrequirements and plan and perform the audit to obtain reasonable assurance about whetheradequate internal financial controls over financial reporting was established andmaintained and if such controls operated effectively in all material respects.

Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal financial controls system over financial reporting and their operatingeffectiveness. Our audit of internal financial controls over financial reporting includedobtaining an understanding of internal financial controls over financial reportingassessing the risk that a material weakness exists and testing and evaluating the designand operating effectiveness of internal control based on the assessed risk. The proceduresselected depend on the auditor’s judgement including the assessment of the risks ofmaterial misstatement of the financial statements whether due to fraud or error.

We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the Company’s internal financial controlssystem over financial reporting.

Meaning of Internal Financial Controls over Financial Reporting

A company’s internal financial control over financial reporting is a processdesigned to provide reasonable assurance regarding the reliability of financial reportingand the preparation of financial statements for external purposes in accordance withgenerally accepted accounting principles. A company’s internal financial control overfinancial reporting includes those policies and procedures that (1) pertain to themaintenance of records that in reasonable detail accurately and fairly refiect thetransactions and dispositions of the assets of the company; (2) provide reasonableassurance that transactions are recorded as necessary to permit preparation of financialstatements in accordance with generally accepted accounting principles and that receiptsand expenditure of the company are being made only in accordance with authorisations ofmanagement and directors of the company; and (3) provide reasonable assurance regardingprevention or timely detection of unauthorised acquisition use or disposition of thecompany’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 financialreporting including the possibility of collusion or improper management override ofcontrols material misstatements due to error or fraud may occur and not be detected.Also projections of any evaluation of the internal financial controls over financialreporting to future periods are subject to the risk that the internal financial controlover financial reporting may become inadequate because of changes in conditions or thatthe degree of compliance with the policies or procedures may deteriorate.

Opinion

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

For B S R & Associates LLP
Chartered Accountants
Firm Registration No.: 116231W / W-100024
Rakesh Dewan
Gurgaon Partner
13 May 2016 Membership No.: 092212

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