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 31 March2015 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 preparation 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.
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 accountingand auditing standards and matters which are required to be included in the audit reportunder the provisions of the Act and the Rules made there under.
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 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 but not for the purpose of expressing anopinion on whether the Company has in place an adequate internal financial control systemover financial reporting and the operating effectiveness of such controls. An audit alsoincludes evaluating the appropriateness of the accounting policies used and thereasonableness of the accounting estimates made by the Company's Directors as well asevaluating the overall presentation of 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. 102.20 lacs redeemed during the year Rs. 96.84 lacs has been redeemed otherwisethan out of the profits of the Company which would otherwise be available for dividend orout 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. 13532.17 lacs to 16 parties asinterest free unsecured loan the same is in violation of sub section 7 of Section 186 ofthe Act. The sub section requires that "No loan shall be given under this section ata rate lower than the prevailing yield of one year three year five year or ten yearGovernment Security closest to the tenor of the loan".
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/commissioned prior to 1st April 2010 the purchase date of assets has beenconsidered as 1st April 2010. The same is in violation of Accounting Standard6-Depreciation Accounting as this treatment not only enhances the useful life of theassets 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 howevercould not be quantified.
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 aforesaid standalone financial statements give theinformation required by the Act in the manner so required and give a true and fair view inconformity with the accounting principles generally accepted in India of the state ofaffairs of the Company as at 31 March 2015 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 33 to the standalone financial statementswherein "the entire Capital advances amounting to Rs. 797.92 lacs have beenconsidered as good and realisable by the Company. The Company has indicated it hasundertaken 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 toRs. 784.86 lacs are outstanding for a period of more than three years. No provision onsuch capital advances is made.
b. Attention is invited to note no. 18 to the standalone financial statements whichstates that "Trade receivables amounting to Rs. 21468.10 lacs out of the total tradereceivables of Rs. 45529.76 lacs is outstanding for more than six months from the datethey became due for payment".
Attention is also invited to note no. 51 wherein the Company has stated "Thecompany extends credit from time to time as per market practices. In respect of exportreceivables credit has been extended for export sales and regular follow up is being doneto recover the amounts from all the parties involved. The management is confident ofrecovering all these dues and hence no provision is considered necessary against thesereceivables as of now".
c. 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".
Our opinion is not qualified in respect of this 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 2015 ("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 statement on the matters specified in paragraphs 3 and4 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 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) Except for the effects of the matter described in the Basis for Qualified Opinionparagraph above in 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 two directors as on 31March 2015 taken on record by the Board of Directors the two directors are notdisqualified as on 31 March 2015 from being appointed as a director in terms of Section164 (2) of the Act. However since the representation from the balance five directors havenot been provided to us it is not possible for us to comment as to whether they arequalified 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 mattersconnected 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 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 standalone financial statements Refer note no. 30 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.
Firm's Registration Number: 000837N
CA. Ashish Chhabra
Membership Number: 507083
Place of Signature: New Delhi
Date: 28 May 2015
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 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 formulated a regular program of verification by which all the assets ofCompany have been physically verified. In our opinion the periodicity of the physicalverification is reasonable having regard to the size of the Company and nature of itsassets. However since the fixed asset register does not specify the quantity and exactlocation of fixed assets the comparison of the fixed assets identified during physicalverification with the fixed asset register has not been done. Accordingly variation couldnot 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 usinventories have been physically verified during the year by the management at reasonableintervals except for the work in progress inventory.
(b) In our opinion and according to the information and explanations given to us theprocedures of physical verification of inventories followed by the management arereasonable and adequate in relation to the size of the Company and the nature of itsbusiness.
(c) In our opinion and on the basis of our examination of the records the Company isgenerally maintaining proper records of its inventories except for the work in progressinventory. Discrepancies were noticed on physical verification of stocks by the managementas 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 hasgranted loans secured or unsecured outstanding at year end at Rs. 13482.05 to 14companies 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 Limitedsubsidiary of the Company outstanding at Rs. 12982.61 lacs can be recalled by the Companyby 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 tobalance loans it has been informed to us that the terms of repayment have not beendefined 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'tarises.
(c) As mentioned in the above paragraph since no documented loan agreement wasprovided we are unable to comment on the overdue amount.
(iv) In our opinion and according to the information and explanations given to usthere is an adequate internal control procedure commensurate with the size of the Companyand the nature of its business for the purchase of inventories & fixed assets andpayment for expenses & for the sale of goods and services. During the course of ouraudit no major instance of continuing failure to correct any weaknesses in theinternal controls has been noticed.
(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 FundEmployees' State Insurance Income-tax Sales-tax Wealth Tax Service Tax Custom DutyExcise Duty Value Added Tax Cess and any other statutory dues to the extent applicablehave generally been regularly deposited with the appropriate authorities though therehave been slight delays in few cases. According to the information and explanations givento us there was an amount of Rs. 1.79 lacs pertaining to labour cess outstanding as on 31March 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 31 March 2015 by theCompany on account of dispute is given below:
|Name of the Statute ||Nature of the dues ||Forum where pending ||Total Amount involved* ||Amount paid under protest ||Period to which amount relates |
| || || ||(Rs. Lacs) ||(Rs. Lacs) || |
|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.
(c) According to the information and explanations given by the management the amountwhich was required to be transferred to the Investor Education and Protection Fund by theCompany was transferred within time.
(viii) The accumulated losses of the Company as at the end of the financial year areless than fifty percent of the net worth of the Company. The Company has incurred cashloss during the financial year covered by our audit but not in the immediately precedingfinancial year.
(ix) Based on our audit procedures and on the information and explanations given by themanagement 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 31 March 2015 in repayment of principle andinterest is as follows:
Details of continuing default as on 31st March 2015 in repayment of loans andinterest:
|Name of Bank - Type of Loan ||Sanction Amount ||Default amount as on 31/03/15 ||Default cleared Amount ||Default cleared date ||Default outstanding as on 28/05/15 |
|Punjab National Bank - Project Term Loan ||210000000 ||8074085 ||3986703 ||19/5/15 ||4087382 |
|UCO Bank - Vehicle Loan ||612000 ||39177 ||0 ||- ||39177 |
|UCO Bank - Vehicle Loan ||1143000 ||81270 ||0 ||- ||81270 |
|UCO Bank - Vehicle Loan ||716000 ||61176 ||0 ||- ||61176 |
|UCO Bank - Vehicle Loan ||529000 ||42528 ||0 ||- ||42528 |
|Total ||213000000 ||8298236 ||3986703 || ||4311533 |
(x) According to the information and explanations given to us the Company has givenguarantee for loan taken by others from banks or financial institutions to an extent ofRs. 2761.99 lacs. The terms and conditions of the guarantees issued except for guaranteesamounting to Rs. 700.00 lacs are not prejudicial to the interest of the Company. TheCompany could not have issued guarantees for Rs. 700.00 lacs as the same is in violationof the requirements of Section 185 of the Act.
(xi) Based on our audit procedures and on the information and explanation given by themanagement we report that the term loans have been applied for the purpose for which theywere raised.
(xii) Based on the audit procedures performed and the information and explanationsgiven to us we report that no fraud on or by the Company has been noticed or reportedduring the year nor have we been informed of such case by the management.
For N. Kumar Chhabra & Co.
Firm's Registration Number: 000837N
CA. Ashish Chhabra
Membership Number: 507083
Place of Signature: New Delhi
Date: 28 May 2015