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Alchemist Ltd.

BSE: 526707 Sector: Others
NSE: ALCHEM ISIN Code: INE964B01033
BSE LIVE 12:15 | 11 Dec 14.40 0.49
(3.52%)
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14.10

HIGH

14.60

LOW

14.00

NSE 12:00 | 11 Dec 14.25 0.35
(2.52%)
OPEN

14.00

HIGH

14.55

LOW

14.00

OPEN 14.10
PREVIOUS CLOSE 13.91
VOLUME 5000
52-Week high 30.70
52-Week low 10.35
P/E
Mkt Cap.(Rs cr) 20
Buy Price 14.18
Buy Qty 200.00
Sell Price 14.50
Sell Qty 500.00
OPEN 14.10
CLOSE 13.91
VOLUME 5000
52-Week high 30.70
52-Week low 10.35
P/E
Mkt Cap.(Rs cr) 20
Buy Price 14.18
Buy Qty 200.00
Sell Price 14.50
Sell Qty 500.00

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 ALCHEMIST LIMITED("the Company") which comprise the Balance Sheet as at 31st March2017 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 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. 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

a. The Company has computed the Depreciation on the tangible fixed assets usingstraight line method based on the useful life of the assets as prescribed in Schedule IIof the Companies Act 2013 and the management estimates of useful life for tangible andintangible assets not covered by the Schedule II. However for the assets purchased/commissioned prior to 1st April 2010 the purchase date of assets has been considered as1st April 2010. The same is in violation of Accounting Standard 6-Depreciation Accountingas this treatment not only enhances the useful life of the assets that have already beenconsumed but has an effect over the depreciation computed. The loss to that extent isunder/over stated and similarly the assets the effect however could not be quantified.

b. The Company has not made any provision on the export receivables amounting to Rs.46296.06 lacs outstanding for more than a year as at the year end date. The loss to thatextent 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 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 31st March 2017 and its loss and its cash flowsfor the year ended 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. 803.79 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. 786.86 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. 34 to the standalone financial statements whichstates that "Exceptional items include loss on sale of shares to the tune of Rs.6850.44 lacs of a Subsidiary and an Associate Company. It also includes a loss of Rs.344.51 lacs which pertains to loss on account of plant and machinery sold/discarded by theCompany in respect of its Pharma division. Both these decisions have been takenconsciously with a view to contain losses and monetise assets".

c. Attention is invited to note no. 42 to the standalone financial statements whichstates that "The balances of majority of the Trade Receivables Trade Payables andLoan & Advances made and received are subject to confirmation and as such therebalances are reflected in the Balance Sheet as appearing in the books pendingreconciliation the net effect is unascertainable".

d. Attention is invited to note no. 50 to the standalone financial statements whichstates that "Cash in hand includes cash amounting to Rs. 180.54 lacs which was seizedby the Income tax authorities during the search and seizure operation u/s 132 of theIncome Tax Act 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 (1) (c) of the Act we report that the Company has soldthe shares of its subsidiary Alchemist Foods Limited and its associate Dooteriah andKalaj Valley Tea Estates Private Limited at a price which was less than the price at whichthey were purchased by the Company.

3. 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 the directors as on 31stMarch 2017 taken on record by the Board of Directors none of the directors isdisqualified as on 31st March 2017 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 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. 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.

iv. The Company as detailed in note no. 53 to the standalone financial statements hasmade requisite disclosures in these standalone financial statements as to holdings as wellas dealings in Specified Bank Notes during the period from 8th November 2016to 30th December 2016. Based on the audit procedures performed and taking intoconsideration the information and explanations given to us in our opinion these are inaccordance with the books of account maintained 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: 24th May 2017 Membership Number: 507083

Annexure- A to the Independent Auditors' 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. The material discrepancies noticed have been properly dealt with in the booksof accounts.

iii) According to the information & explanations given to us the Company hasgranted loans secured or unsecured outstanding at year end at Rs. 701.86 lacs to 17parties 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 been definedhowever they are repayable on the mutual agreement of both the parties involved. Moreoverthe loans granted are unsecured and interest free thus the terms of such loans areprejudicial 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 notdefined we are unable to comment on the overdue amount.

iv) The Company has given loans/amount recoverable to/from four parties whose yearendoutstanding balance is Rs.16.61 lacs in contravention of provisions of Section 185 of theCompanies Act 2013.

Further the Company has given interest free loans/amount recoverable to/from 19parties whose yearend outstanding balance is Rs. 760.64 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 given bythe management we report that there has been delays in deposit of undisputed statutorydues including Provident Fund Employees' State Insurance Income-tax Sales-tax ServiceTax Custom Duty Excise Duty Value Added Tax Cess and any other statutory dues to theextent applicable during the financial year. According to the information andexplanations given to us statutory dues amounting to Rs. 17.50 lacs were outstanding ason 31st March 2017 for a period of more than six months from the date itbecame payable.

(b) Details of excise duty which has not been deposited as on 31st March2017 by the Company on account of dispute is given below:

Name of the Statute Nature of the dues Forum where pending Total Amount involved* (in Lacs) Amount paid under protest (in Lacs) Period to which amount relates
Central Excise Act 1944 Excise Duty Commissioner of Central Excise Commissionerate Chandigarh. 17355 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 2017 in repayment ofprinciple and interest is as follows:

Name of Bank - Type of Loan Sanction Amount Default amount as on 31/03/17 Default cleared Amount Default cleared date Default outstanding as on 24/05/17
Bank of India- Working Capital Limited 35000000 820236 820236 06-04-2017 0

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 para 3(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 company therefore the provisions of para 3(xii) of the Order isnot applicable 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 ofpara 3(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: 24th May 2017 Membership Number: 507083

Annexure - B to the Independent Auditors' 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 2017 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. 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 judgment 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 controls systemover financial reporting.

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.

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 31st March 2017based on the internal control over financial reporting criteria established by the Companyconsidering the essential components of internal control stated in the Guidance Note onAudit of Internal Financial Controls over Financial Reporting issued by the Institute ofChartered Accountants of India.

for N. Kumar Chhabra & Co.
Chartered Accountants
Firm's Registration Number: 000837N
CA. Ashish Chhabra
Place of Signature: New Delhi Partner
Date: 24th May 2017 Membership Number: 507083