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Alchemist Ltd.

BSE: 526707 Sector: Others
NSE: ALCHEM ISIN Code: INE964B01033
BSE LIVE 15:28 | 28 Apr 21.80 0.25
(1.16%)
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22.80

HIGH

22.80

LOW

21.50

NSE 15:54 | 28 Apr 21.75 0
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OPEN

22.15

HIGH

22.20

LOW

21.75

OPEN 22.80
PREVIOUS CLOSE 21.55
VOLUME 5684
52-Week high 31.30
52-Week low 19.15
P/E
Mkt Cap.(Rs cr) 29.56
Buy Price 21.80
Buy Qty 574.00
Sell Price 22.00
Sell Qty 200.00
OPEN 22.80
CLOSE 21.55
VOLUME 5684
52-Week high 31.30
52-Week low 19.15
P/E
Mkt Cap.(Rs cr) 29.56
Buy Price 21.80
Buy Qty 574.00
Sell Price 22.00
Sell Qty 200.00

Alchemist Ltd. (ALCHEM) - Auditors Report

Company auditors report

TO

THE MEMBERS OF

ALCHEMIST LIMITED

Report on the Standalone Financial Statements

We have audited the accompanying standalone financial statements of ALCHEMISTLIMITED ("the Company") which comprise the Balance Sheet as at 31stMarch2016 the Statement of Profit and Loss the Cash Flow Statement and a summary of thesignificant 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 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 standalone financial statementsbased on our audit.

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 accordancewith the Standards on Auditing specified under Section 143(10) of the Act. Those Standardsrequire that we comply with ethical requirements and plan and perform the audit to obtainreasonable assurance about whether the financial statements are free from materialmisstatement.

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 of thefinancial statements whether due to fraud or error. In making those risk assessments theauditor considers internal financial control relevant to the Company's preparation of thefinancial statements that give a true and fair view in order to design audit proceduresthat are appropriate in the circumstances. An audit also includes evaluating theappropriateness of the accounting policies used and the reasonableness of the accountingestimates made by the Company's Directors as well as evaluating the overall presentationof the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate toprovide 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 Section55 of the Act as out of the total value of preference shares (including premium) amountingto Rs.53.56 lacs redeemed during the year Rs.51.34 lacs has been redeemed otherwise thanout of the profits of the Company which would otherwise be available for dividend or outof the proceeds of a fresh issue of shares made for the purpose of such redemption.

The Company has computed the Depreciation on the tangible fixed assets using straightline method based on the useful life of the assets as prescribed in Schedule II of theCompanies Act 2013 and the management estimates of useful life for tangible andintangible assets not covered by the Schedule II. However for the assetspurchased/commissionedprior to 1st April 2010 the purchase date of assets hasbeen considered as 1st April 2010. The same is in violation of AccountingStandard 6-Depreciation Accounting as this treatment not only enhances the useful life ofthe assets that have already been consumed but has an effect over the depreciationcomputed. The loss to that extent is under/over stated and similarly the assets theeffect however could not be quantified.

The Company has not made any provision on the export receivables amounting toRs.47363.02 lacs outstanding for more than a year as at the year end date. The loss tothat extent is under stated and similarly the receivables the effect however could not bequantified.

Qualified Opinion

In our opinion and to the best of our information and according to the explanationsgiven to us except for the effects of the matter described in the Basis for QualifiedOpinion paragraph above the aforesaidstandalone financial statements give the informationrequired by the Act in the manner so required and give a true and fair view in conformitywith the accounting principles generally accepted in India of thestate of affairs of theCompany as at 31st March 2016 and its loss and its cash flows for the yearended on that date.

Emphasis of Matters

a. Attention is invited to note no. 14 and 32 to the standalone financial statementswherein "the entire Capital advances amounting to Rs.796.63 lacs have been consideredas good and realisable by the Company. The Company has indicated it has undertaken legalaction against one party whose outstanding is Rs.459.80 lacs".

It is relevant to note that out of the total capital advances advances amounting toRs.784.06 lacs are outstanding for a period of more than three years. No provision on suchcapital advances is made.

b. Attention is invited to note no. 42 to the standalone financial statements "Thebalances of majority of the Trade Receivables Trade Payables and Loan & Advances madeand received are subject to confirmation and as such there balances are reflected in theBalance Sheet as appearing in the books pending reconciliation the net effect isunascertainable".

c. Attention is invited to note no. 50 to the standalone financial statements "Theeconomic downturn has impacted the international trade operations of the company. Takingcue the company has initiated many cost cutting measures including downsizing and vacationof office premises. During the year the company has vacated some office premises. Sincethe company had made some leasehold improvements to the same the company had to take awrite off of these leasehold improvements and accordingly has incurred a loss of Rs.278.49lacs reflected under Exceptional Items."

d. Attention is invited to note no. 51 to the standalone financial statements"Company's wholly owned foreign subsidiary "Alchemist Enterprise (S) PTELtd." is in the process of winding up. In the process the WOS has stopped operationsand closed its bank accounts. A trade receivable of US$ 4.00 lacs standing in its booksagainst which the payment of Rs.265.33 lacs has been received by Alchemist Limited. Suchamount received has been reflected as "Closure proceeds of WOS" under OtherCurrent Liabilities until the process of winding up of the company is completed."

e. Attention is invited to note no. 52 to the standalone financial statements"Cash in hand includes cash amounting to Rs.180.54 lacs which was seized by theIncome tax authorities during the search and seizure operation u/s 132 of the Income TaxAct 1961 during the month of June 2014."

Our opinion is not qualified in respect of the matters as stated in the Emphasis ofMatters paragraph.

Report on Other Legal and Regulatory Requirements

1. 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 ofthe Act we give in the Annexure A a statement on the matters specified in paragraphs 3and 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 bestof ourknowledge 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 bythis Report are in agreement with the books of account.

(d) Except for the effects of the matter described in the Basis for Qualified Opinionparagraphabovein our opinion the aforesaid standalone financial statements comply withthe Accounting Standards specified under Section 133 of the Act read with Rule 7 of theCompanies (Accounts) Rules 2014.

(e) The matters described in the Basis for Qualified Opinion paragraph and Emphasis ofMatters paragraph above in our opinion may have an adverse effect on the functioning ofthe Company.

(f) On the basis of the written representations received from the directors as on 31stMarch 2016 taken on record by the Board of Directors none of the directors isdisqualified as on 31st March 2016 from being appointed as a director in termsof Section 164 (2) of the Act.

(g) The qualification relating to the maintenance of accounts and other mattersconnected therewith are as stated in the Basis for Qualified Opinion paragraph above.

(h) 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".

(i) 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 thebest ofour information and according to the explanations given to us:

i. The Company has disclosed the impact of pending litigations on its financialposition in its standalone financial statements - Refer note no.29 to the standalonefinancial statements.

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

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

for N. Kumar Chhabra & Co.
Chartered Accountants
Firm's Registration Number: 000837N
CA. Ashish Chhabra
Place of Signature: New Delhi Partner
Date: 10th May 2016 Membership Number: 507083

Annexure- A to the Independent Auditor's Report

Referred to in paragraph 1 under ‘Report on other Legal and RegulatoryRequirements' section of our report of even date.

We report that:

(i) (a) In our opinion and according to the information and explanations given to usthe Company has maintained fixed asset register however the same does not specify thequantity and exact location of the fixed assets.

(b) In our opinion and according to the information and explanations given to us theCompany has not physically verified the fixed assets during the year. In our opinion theperiodicity of the physical verification is not reasonable having regard to the size ofthe Company and nature of its assets.

(c) In our opinion and according to the information and explanation given to us theCompany holds valid title for all the immovable properties in the books of the Companyexcept for one land valuing Rs.55.59 lacs the title deed of which has not been producedbefore us for our verification of the same.

(ii) In our opinion and according to the information and explanations given to usinventories have been physically verified during the year by the management at reasonableintervals except for the work in progress inventory. The material discrepancies noticedhave been properly dealt with in the books of accounts.

(iii) According to the information & explanations given to us the Company hasgranted loans secured or unsecured outstanding at year end at Rs.33.39 lacs to 10companies covered in the register maintained under section 189 of the Act.

(a) It has been informed to us that the terms of repayment have not beendefinedhowever they are repayable on the mutual agreement of both the parties involved.Moreover the loans granted are unsecured and interest free thus the terms of such loansare prejudicial to the interests of the Company.

(b) All the loans made are interest free and schedule of repayment are not definedhence the timeliness of repayment cannot be commented upon.

(c) As mentioned in the above paragraphs since terms of repayment of loans are notdocumented we are unable to comment on the overdue amount.

(iv) The Company has given loans/amount recoverable to/from three parties whose yearend outstanding balance is Rs.2.62 lacs and has given corporate guarantee for Rs.375.00lacs for loan obtained by one party in contravention of provisions of Section 185 of theCompanies Act 2013.

Further the Company has given interest free loans/amount recoverable to/from 15parties whose year end outstanding balance is Rs.80.81 lacs which is in contravention ofsub section 7 of section 186 of the Companies Act 2013 which requires that "No loanshall be shall be given under this section at a rate of interest lower than the prevailingyield of one year three year five year or ten year Government Security closest to thetenor of the loan".

(v) The Company has not accepted deposits. Hence the provisions of Section 73 to 76 orany other relevant provisions of the Act and the rules framed there under are notapplicable to the Company.

(vi) We have broadly examined the cost records maintained by the Company specified bythe Central Government under sub section (1) of section 148 of the Act and are of theopinion that prima facie the prescribed accounts and records have been made andmaintained. We have however not made a detailed examination of the records with a view todetermine whether they are accurate or complete.

(vii) (a) Based on our audit procedures and on the information and explanations givenby the management we report

that undisputed statutory dues including Provident Fund Employees' State InsuranceIncome-tax Sales-tax Service Tax Custom Duty Excise Duty Value Added Tax Cess andany other statutory duesto the extent applicablehave generally been regularly depositedwith the appropriate authorities though there have been slight delays in few cases.Accordingto the information and explanations given to usno statutory dues were outstanding as on31stMarch 2016 for a period of more than six months from the date it becamepayable.

(b) Details of excise duty which has not been deposited as on 31st March2016 by the Company on account of dispute is given below:

Name of the Statute Nature of the dues Forum where pending Total Amount involved* (Rs. in Lacs) Amount paid under protest (Rs. in Lacs) Period to which amount relates
Central Excise Act 1944 Excise Duty Commissioner of Central Excise Commissionerate Chandigarh. 173.55 63.13 December 2007 to September 2012

* Amount as per demand order not including interest and penalty as not quantified inthe demand order.

(viii) Based on our audit procedures and on the information and explanations given bythe management we are of the opinion that during the year there have been delays inrepayment of dues by the Company to financial institutions banks or debenture holders.The details of the continuing default as on 31st March 2016 in repayment ofprinciple and interest is as follows:

Name of Bank - Type of Loan Sanction Amount Default amount as on 31/03/16 Default cleared Amount Default cleared date Default outstanding as on 10/05/16
Punjab National Bank - Project Term Loan 210000000 11364337 3845524 28-04-2016 7518813
UCO Bank - Vehicle Loan 612000 22996 12000 12-04-2016 10966
UCO Bank - Vehicle Loa 1143000 58342 23000 12-04-2016 35342
UCO Bank - Vehicle Loa 716000 49198 17000 25-04-2016 32198
Total 212471000 11494873 3897524 7597349

(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 therefore theprovisions of para3(ix) of the Order is not applicable to the Company.

(x) Based on the audit procedures performed and the information and explanations givento us we report that no fraud on or by the Company has been noticed or reported duringthe year nor have we been informed of such case by the management.

(xi) Based on the audit procedures performed and the information and explanations givento us we report that the managerial remuneration has been paid or provided in accordancewith requisite approvals mandated by the provisions of section 197 read with Schedule V tothe Companies Act 2013.

(xii) In our opinion and according to the information and explanations given to us theCompany is not a nidhi companytherefore the provisions of para3(xii) of the Order is notapplicable to the Company.

(xiii) According to the information and explanations given to us and based on ourexamination of the records of the Company transactions with the related parties are incompliance with sections 177 and 188 of the Act where applicable and details of suchtransactions have been disclosed in the financial statements as required by the applicableaccounting standards.

(xiv) According to the information and explanations given to us and based on 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.

(xv) According to the information and explanations given to us and based on ourexamination of the records of the Company the Company has not entered into non-cashtransactions with directors or persons connected with him therefore the provisions ofpara3(xv) of the Order is not applicable to the Company.

(xvi) The Company is not required to be registered under section 45-IA of the ReserveBank of India Act 1934.

for N. Kumar Chhabra & Co.
Chartered Accountants
Firm's Registration Number: 000837N
CA. Ashish Chhabra
Place of Signature: New Delhi Partner
Date:10th May 2016 Membership Number: 507083

Annexure - B to the Independent Auditor's Report

Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section143 of the Companies Act 2013 ("the Act")

We were engaged to audit the internal financial controls over financial reporting ofAlchemist Limited ("the Company") as of 31st March 2016 inconjunction with our audit of the standalone financial statements of the Company for theyear 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 safeguarding ofits 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 conducted in accordance with theGuidance Note on Audit of Internal Financial Controls over Financial Reporting (the"Guidance Note") and the Standards on Auditing issued by ICAI and deemed to beprescribed under section 143(10) of the Companies Act 2013 to the extent applicable toan audit of internal financial controls both applicable to an audit of Internal FinancialControls and both issued by the Institute of Chartered Accountants of India.

Because of matter described in Disclaimer of Opinion paragraph below we were not ableto obtain sufficient appropriate evidence to provide a basis for an audit opinion oninternal financial controls system over financial reporting of the Company.

Meaning of Internal Financial Controls over Financial Reporting

A company's internal financial control over financial reporting is a process designedto provide reasonable assurance regarding the reliability of financial reporting and thepreparation of financial statements for external purposes in accordance with generallyaccepted accounting principles. A company's internal financial control over financialreporting includes those policies and procedures that (1) pertain to the maintenance ofrecords that in reasonable detail accurately and fairly reflect the transactions anddispositions of the assets of the company; (2) provide reasonable assurance thattransactions are recorded as necessary to permit preparation of financial statements inaccordance with generally accepted accounting principles and that receipts andexpenditures 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.

Disclaimer of Opinion

According to information and explanation given to us the company is under the processof establishing its internal financial controls over financial reporting on criteria basedon or considering the essential components of internal control stated in Guidance Note onAudit of Internal Financial Controls over Financial Reporting issued by the Institute ofChartered Accountants of India. Because of this reason we are unable to obtain sufficientappropriate audit evidence to provide a basis for our opinion whether the Company hadadequate internal financial control over financial reporting and whether such internalfinancial controls were operating effectively as at March 31st 2016.

We have considered the disclaimer reported in determining the nature timing and extentof audit tests applied in our audit of the standalone financial statements of the companyand the disclaimer does not affect our opinion on the standalone financial statements ofthe company.

for N. Kumar Chhabra & Co.
Chartered Accountants
Firm's Registration Number: 000837N
CA. Ashish Chhabra
Place of Signature: New Delhi Partner
Date: 10th May 2016 Membership Number: 507083