Alchemist Realty Ltd.
|BSE: 532114||Sector: Infrastructure|
|NSE: N.A.||ISIN Code: INE646D01024|
|BSE 00:00 | 28 Feb||Alchemist Realty Ltd|
|NSE 05:30 | 01 Jan||Alchemist Realty Ltd|
|BSE: 532114||Sector: Infrastructure|
|NSE: N.A.||ISIN Code: INE646D01024|
|BSE 00:00 | 28 Feb||Alchemist Realty Ltd|
|NSE 05:30 | 01 Jan||Alchemist Realty Ltd|
To the Members of Alchemist Realty Limited.
Report on the Financial Statements as per Ind AS
We have audited the accompanying Standalone Financial Statements of Alchemist RealtyLimited ("the Company") which comprise the Balance Sheet as at March312018 and the Statement of Profit and Loss and Cash Flow Statement for the year thenended and a summary of 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 Indian AccountingStandard Ind AS specified under Section 133 of the Act read with the provision of theCompanies (Accounts) Rules 2014. This responsibility includes the maintenance of adequateaccounting records in accordance with the provision of the Act for safeguarding of theassets of the Company and for preventing and detecting the frauds and otherirregularities; selection and application of appropriate accounting policies; makingjudgments and estimates that are reasonable and prudent; and design implementation andmaintenance of internal financial control that were operating effectively for ensuringthe accuracy and completeness of the accounting records relevant to the preparation andpresentations of the financial statements that give a true and fair view and free frommaterial misstatement 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 accounting and auditingstandards and matters which are required to be included in the audit report under theprovisions of the Act and 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 anddisclosures in the financial statements. The procedures selected depend on the auditor'sjudgment including the assessment of the risks of material misstatement of the financialstatements whether due to fraud or error. In making those risk assessments the auditorconsiders internal control relevant to the Company's preparation and fair presentation ofthe financial statements in order to design audit procedures that are appropriate in thecircumstances but not for the purpose of expressing an opinion on the effectiveness ofthe entity's internal control. An audit also includes evaluating the appropriateness ofaccounting policies used and the reasonableness of the accounting estimates made bymanagement as well as evaluating 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 audit opinion on the Standalone financial statement.
Basis of Qualified Opinion
a) Attention is invited to Note No 10 of the financial statements Trade receivablesamounting to Rs. 15205.27 Lakhs out of which export debtors for merchant trade transactionare Rs. 14902.25 Lakhs and other receivables are Rs. 303.00 Lakhs which are outstandingfor more than six months from the date they become due from payment. Credit was extendedfor export sales in the normal course of the business however it apparently got stuck.The Company has initiated legal recourse against the defaulting customers and is regularlyfollowing up on the same. The management is confident of recovering all such dues andhence no provision is considered necessary.
"These are long outstanding and we are unable to comment of the recoverability ofthe same for which no provision has been created for doubtful trade receivables."
The loss to that extent is under stated and similarly the receivables the effecthowever could 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 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 March 312018 and its loss and its Cash Flow for the yearended on that date.
Emphasis of the Matter
a. Attention is invited to Note No 55.1 and 5.2 of the financial statements whereinamount of Rs. 6089.62 Lakhs has been shown under the head of long term advances "outof which Rs. 1249.40 Lakhs has been given to various parties and the matter is Sub-Judicein various courts for acquiring properties and advances amounting to Rs. 1842.97 Lakhsgiven to various other parties but the sale deeds for properties has not been executed sofar in favor of the Company". These advances have been considered as good by themanagement of the Company. It is relevant to point out that these are material advancesand are pending since long more than three years and the management has not made anyprovision for the same.
Attention is also invited to Note No 5.3 of the financial statements for amount shownunder the head "long term advance Rs. 1887.92 Lakhs given to various partieson account of franchisee fee and other expenses for acquiring rights of Realogy Corpn.Inc. USA for their brand (Century 21) which is recoverable from its Subsidiary Century 21Properties (India) Pvt. Ltd as and when the rights will be transferred to it". It isrelevant to note that the amount has been advanced since long and rights have not beentransferred so far. b. We draw attention to Note 5.4 the Company has advanced as loan asum of Rs. 952.83 Lakhs to two parties as interest free unsecured loan the same is inviolation of Sub Section Rs. of Section 186 of the Companies Act 2013. This Sub Sectionrequires the "No loans shall be given under this section at a rate lower than theprevailing yield of one year three year five year or ten year Government Securityclosest to the tenure of the loan.
Our opinion is not modified in respect of these matters.
Report on Other Legal and Regulatory Requirement's
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 the paragraph3 and 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 our knowledge and belief were necessary for the purpose of our audit;
b) In our opinion proper books of account as required by law have been kept by theCompany so far as appears from our examination of those books.
c) The Balance Sheet Statement of Profit and Loss and Cash Flow Statement dealt withby 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 Indian Accounting Standards (Ind As) specified under Section 133 of the Companies Act2013 read with Rule Rs. of the Companies (Accounts) Rules 2014;
e) The matters described in the basis for Qualified Opinion paragraph andEmphasis of matter paragraph above in our opinion can adversely affect the functioningof the Company.
f) On the basis of written representations received from the Directors as on March312018 and taken on record by the Board of Directors none of the Directors isdisqualified as on March 31 2018 from being appointed as a Director in terms of Section164(2) of the Companies Act 2013.
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 control refer to ourseparate report in Annexure "B and
i) With respect to the other matters included in the Auditor's Report in accordancewith Rule 11 of Companies (Audit and Auditors) Rules 2014 in our opinion and to the bestof our information and according to explanations given to us:
i. The Company has not disclosed the impact of pending litigations in its financialstatements with respect to suits on or by the Company in respect of suits filed by thecompany for acquisition of properties or recovery of advances as referred to in Note 5.1and 5.2 of the financial statements.
ii. The Company did not have any long term contracts including derivative contracts forwhich there were any material foreseeable losses.
iii. There no amounts which required to be transferred to the Investor Education andProtection Fund by the Company.
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:
1. (a) The Company has maintained proper records showing full particulars includingquantitative details and situation of its fixed assets.
(b) As explained to us fixed assets have been physically verified by the management atreasonable intervals; no material discrepancies were noticed on such verification.
(c) In our opinion and according to the information and explanations given to us theCompany does not have any immovable properties in its name. Therefore para 3 (1) (c) arenot applicable
2. As explained to us inventories have been physically verified during the year by themanagement at reasonable intervals and no material discrepancy was noticed on physicalverification of stocks by the management as compared to book records.
3. According to information and explanations given to us the Company has grantedunsecured loan to two Subsidiary Company i.e. Alchemist Hill Resorts Private Limited andCentury 21 Properties India Private Limited (party covered under Section 189 of thecompanies Act. 2013) amounting to Rs. 952.83 Lakhs.
a) The terms and conditions on which these loans have been given appears to beprejudicial to the interest of the Company as the loans are not carrying any interest.
b) No Schedule for repayment of principal and interest has been stipulated however ithas been informed to us that these loans have been given in accordance with the agreementwhich intra-alia provides these loans are interest fee in lieu of option to convert theminto equity shares at valuations which will compensate the Company for the interestcomponent. In such circumstances we are unable to comment whether the receipt of principleand interest is regular.
c) We are unable to comment on the overdue amount of principle and interest more thanninety days as loans have been given to companies on mutual inter-alia agreements asinformed to us however necessary documents terms and conditions on which loans have beengiven have not been made available to us.
4. The Company has not given any loans to Directors or to any other persons in whom theDirector is interested or given any guarantee or provided any security in connection withany loan taken by him or such person as covered under Section 185 of the Companies act2013 however the Company has given loan to Subsidiaries a sum of Rs. 952.83 Lakhs asinterest free unsecured loan the same is in violation of Sub Section (7) of Section 186of the Companies Act 2013.
5. 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.
6. The Company is not required to maintain cost records as specified by the CentralGovernment under Sub Section (1) of Section 148 of the Act. Therefore the provisions ofpara 3(vi) of the Order is not applicable to the Company.
7. (a) Based on our audit procedures and on the information and explanations given bythe management and on the basis of our examination of records of the Company amountdeducted/accrued in the books of accounts in respect of undisputed statutory duesincluding Provident Fund Employees' State Insurance Income-tax Sales- tax Service TaxCustom Duty Excise Duty Value Added Tax Cess and any other statutory dues required tobe deposited have been deposited with some delays.
According to the information and explanation given to us no undisputed amount payablein respect of provident fund income tax service tax cess of other material dues we inarrears as at 31st March 2018 for a period of more than six months from thedate they become payable.
(b) Based on our audit procedures and on the information and explanations given by themanagement there are no dues outstanding in respect of Income Tax Sales Tax ServiceTax Customs Duty Excise Duty Value Added Tax Cess or any other Statutory dues to bedeposited on account of any dispute.
8. The Company has not obtained loans during the year and neither any dues/loans wereoutstanding from financial institution bank Government or debenture holders thereforethe provisions of para 3(viii) of the Order is not applicable to the Company.
9. The Company did not raise any money by way of initial public offer or further publicoffer (including debt instruments) and term loans during the year therefore theprovisions of para 3(ix) of the Order is not applicable to the Company.
10. According to the information and explanations given to us no fraud by the Companyor on the Company by its officers or employees has been noticed or reported during theyear.
11. The Company has paid any managerial remuneration during the financial year ending31st March 2018 however the Company has sought the necessary approval andmandated as per the provisions of Section 197 read with schedule V of the Companies Act2013.
12. 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.
13. 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.
14. 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.
15. 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.
16. The Company is not required to be registered under Section 45-IA of the ReserveBank of India Act 1934.
Annexure - B to the 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 have audited the internal financial controls over financial reporting of AlchemistRealty Limited ("the Company") as of 31st March 2018 in conjunctionwith our audit of the standalone financial statements of the Company for the year ended onthat 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.
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.
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 2018based 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 ICAI.