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Indo Rama Synthetics (India) Ltd.

BSE: 500207 Sector: Industrials
NSE: INDORAMA ISIN Code: INE156A01020
BSE LIVE 15:42 | 18 Aug 27.55 -0.20
(-0.72%)
OPEN

27.05

HIGH

27.75

LOW

27.05

NSE 15:52 | 18 Aug 27.45 -0.35
(-1.26%)
OPEN

27.80

HIGH

27.80

LOW

27.05

OPEN 27.05
PREVIOUS CLOSE 27.75
VOLUME 12108
52-Week high 42.60
52-Week low 27.05
P/E
Mkt Cap.(Rs cr) 418
Buy Price 0.00
Buy Qty 0.00
Sell Price 27.55
Sell Qty 400.00
OPEN 27.05
CLOSE 27.75
VOLUME 12108
52-Week high 42.60
52-Week low 27.05
P/E
Mkt Cap.(Rs cr) 418
Buy Price 0.00
Buy Qty 0.00
Sell Price 27.55
Sell Qty 400.00

Indo Rama Synthetics (India) Ltd. (INDORAMA) - Auditors Report

Company auditors 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 financialstatements") of Indo Rama Synthetics (India) Limited ("the Company") whichcomprise the Balance Sheet as at 31 March 2016 the Statement of Profit and Loss the CashFlow Statement for the year then ended and a summary of significant accounting policiesand 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 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 hows 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.

3. Auditors’ 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 accountingand auditing standards and matters which are required to be included in the audit reportunder the provisions 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's preparation ofthe financial statements that give a true and fair view in order to design auditprocedures that are appropriate in the circumstances. An audit also includes evaluatingthe appropriateness of the accounting policies used and the reasonableness of theaccounting estimates made by the Company's Directors as well as evaluating the overallpresentation ofthe 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.

4. Basis for Qualified Opinion

Attention is drawn to note 39 (b) ofthe standalone financial statements whichenumerates recognition of interest of ' 10.95 crores for the year ended 31 March 2016 onthe insurance claim lodged by the Company with its insurance company for the loss ofcertain assets and loss suffered due to business interruption at its plant in 2007-08. Thesaid recognition of asset is not in accordance with accounting principle stated inAccounting Standard 29 'Provisions Contingent Liabilities and Contingent Assets'. Hadsuch income not been recognised the net loss before tax for the year would have beenhigher 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 ' 7.16crores.

5. Qualified Opinion

In our opinion and to the best of our information and according to the explanationsgiven to us except for the matter descried in the 'Basis for Qualified Opinion' paragraphabove the aforesaid standalone financial statements give the information required by theAct in the manner so required and give a true and fair view in conformity with theaccounting principles generally accepted in India ofthe state of affairs of the Companyas at 31 March 2016 of its profit and its cash hows for the year ended on that date.

6. Emphasis of matter

We draw attention to note 39 (a) of the standalone financial statements which describesthe uncertainty related to the outcome ofthe lawsuit filed by the Company against aninsurance company. Ouropinion is not modified in respect of this matter.

7. ReportonOtherLegalandRegulatory Requirements

(i) 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 give in the Annexure I a statement on the matters specified inparagraphs 3 and 4 of the said Order to the extentapplicable.

(ii) As required by section 143(3) oftheActwe reportthat:

a. we have sought and obtained all the information and explanations which to the bestof 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 keptby 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 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 Opinion'paragraph in our opinion the aforesaid standalone financial statements comply with theAccounting Standards specified under Section 133 of the Act read with Rule 7 oftheCompanies (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 onthe functioning of the Company;

f. on the basis of the written representations received from the directors and takenon record by the Board of Directors none of the directors is disqualified as on 31 March2016 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 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 II"; and

i. with respect to the other matters to be included in the Auditors' 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 notes 36 and 39 to the standalone financialstatements;

ii. the Company did not have any long term contracts including derivative contractsoutstanding 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 betransferred to the Investor Education and Protection Fund by the Company.

For B S R and Associates

Chartered Accountants

ICAI Firm registration number: 128901W

Jiten Chopra

Partner

Membership No.: 092894

Place: Gurgaon

Date: 18 May 2016

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

(b) As explained to us the fixed assets are physically verified by the management inaccordance with a phased programme designed to cover all items of fixed assets over aperiod of three years which in our opinion is reasonable having regard to the size ofthe Company and nature of its fixed assets. In accordance with this programme certaincategories offixed assets at certain locations have been physically verified by themanagement during the year. As informed to us no material discrepancies were noticed onsuch 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 properties areheld in the name of the Company.

(ii) According to the information and explanations given to us the inventories exceptfor goods in transit and stocks lying with third parties have been physically verifiedat reasonable interval by the management during the year. For stocks lying with thirdparties at the year end written confirmations are obtained. As informed to us nomaterial discrepancies were noticed on such verification.

(iii) According to the information and explanations given to us the Company duringthe earlier periods had granted interest free unsecured loans to a wholly ownedsubsidiary company covered in the register maintained under Section 189 of the CompaniesAct 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 theCompany's interest.

(b) the interest free loan is to be converted on mutual agreement into equity quasiequity or debentures or repayable by 31 March 2017. Hence the loan were not due forrepayment 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 ourexamination of the records of the Company there are no loans investments guaranteesand security where provisions of section 185 and 186 of the Act are required to becomplied with. Accordingly paragraph 3(iv) of the Order is not applicable.

(v) According to the information and explanations given to us the Company has notaccepted any deposits from public during the year.

(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 sub section (1) of section 148 of the CompaniesAct 2013 and are of the opinion that prima facie the prescribed accounts and recordshave been made and maintained. However we have not made a detailed examination of suchrecords 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 ofour examination of the records of the Company amounts deducted/ accrued in the books ofaccount in respect of undisputed statutory dues including Provident Fund Employees' StateInsurance Income tax. Sales tax. Service tax. Duty of Customs Duty of Excise ValueAdded Tax Cess and other material statutory dues to the extent applicable havegenerally been regularly deposited with the appropriate authorities.

According to the information and explanations given to us no undisputed amountspayable 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 materialstatutory dues to the extent applicable were in arrears as at 31 March 2016 for a periodof 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 therecords of the Company examined by us there are no dues of Income-tax Sales-tax Servicetax. Duty of Customs Value Added Tax Duty of Excise which have not been deposited withthe appropriate authorities on account ofany dispute exceptas 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
1996-97 to Customs Exciseand ServiceTax
The Central Excise Act Duty ofExcise 1944 2009-10 Appellate Tribunal
17.56 0.08 1996-97 to 2008-09 CommissionerofCentral Excise and Customs (Appeals)
4.97 - 1997-98 to 2010-11 Commissioner/ Assistant Commissioner/ Deputy Commissioner
Bombay SalesTaxAct1959/ CentralSalesTaxAct 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
Duty of Customs 0.09 - 2002-03 Customs Exciseand ServiceTax Appellate Tribunal
CubLumb AuL 1962 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 Exciseand ServiceTax Appellate Tribunal
FinanceAct 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 1961* Income tax 24.55 14.50 AY 2002-03 to AY 2004-05 and AY 2007-08 Income Tax Appellate Tribunal

* excluding caseswhere losses / unabsorbed depreciation have been adjusted bythe taxauthoritieswithout raisingany demands though disputed by the Company.

• including interest/ penaltieswhere quantified and demanded by authorities.

(viii) According to the information and explanations given to us the Company has notdefaulted in the repayment of loans or borrowings to banks. Further there are no loans orborrowings from financial institutions or government and there are no dues to debentureholders during the year.

(ix) According to the information and explanations given to us the term loan taken bythe Company have been applied for the purposes for which they were raised. The Company hasnot 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 Companyand on the Company by its officers or employees has been noticed or reported during theyear.

(xi) According to the information and explanations given to us and on the basis of ourexamination 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 theCompanies Act 2013 except ' 0.62 crores which has been paid as Managerial Remuneration bythe Company to one of its directors for services rendered subsequent to remunerationperiod approved by the Central Government vide approval SRH B61072120/4/2013-CL VII. TheCompany is in the process of obtaining requisite renewal of such approval subsequent to 31March 2016.

(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 information and explanations given to us and on the basis of ourexamination of the records of the Company all transactions with the related parties arein compliance with section 177 and 188 of the Act where applicable and the details havebeen disclosed in the standalone financial statements as required by the applicableaccounting standards.

(xiv) According to information and explanations given to us the Company has not madeany preferential allotment or private placement of shares or fully or partly convertibledebentures 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 enteredinto any non-cash transactions with directors or persons connected with him. Accordinglyparagraph 3(xv) of the Order is not applicable.

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

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

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

We have audited the internal financial controls over financial reporting of IndoRama Synthetics (India) Limited ("the Company") as of 31 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 overfinancial reporting criteriaestablished by the Company considering the essential components of internal control statedin the Guidance Note on 'Audit of Internal Financial Controls Over Financial Reporting'issued by the Institute of Chartered Accountants of India. These responsibilities includethe design implementation and maintenance of adequate internal financial controls thatwere operating effectively for ensuring the orderly and efficient conduct of its businessincluding adherence to company's policies the safeguarding of its assets the preventionand detection of frauds and errors the accuracy and completeness of the accountingrecords and the timely preparation of reliable financial information as required underthe Act.

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 Act to the extent 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 ifsuch 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 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 Limitationsoflnternal Financial Controls Over Financial Reporting

Because ofthe 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 controloverfinancial 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 and Associates
Chartered Accountants
ICAI Firm registration number: 128901W
Jiten Chopra
Place: Gurgaon Partner
Date: 18 May 2016 Membership No.: 092894