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Indag Rubber Ltd.

BSE: 509162 Sector: Others
NSE: N.A. ISIN Code: INE802D01023
BSE 12:37 | 30 Nov 77.00 -0.20
(-0.26%)
OPEN

78.70

HIGH

79.00

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76.90

NSE 05:30 | 01 Jan Indag Rubber Ltd
OPEN 78.70
PREVIOUS CLOSE 77.20
VOLUME 12821
52-Week high 117.30
52-Week low 71.20
P/E 17.54
Mkt Cap.(Rs cr) 202
Buy Price 76.90
Buy Qty 2.00
Sell Price 77.00
Sell Qty 1511.00
OPEN 78.70
CLOSE 77.20
VOLUME 12821
52-Week high 117.30
52-Week low 71.20
P/E 17.54
Mkt Cap.(Rs cr) 202
Buy Price 76.90
Buy Qty 2.00
Sell Price 77.00
Sell Qty 1511.00

Indag Rubber Ltd. (INDAGRUBBER) - Auditors Report

Company auditors report

To The Members of Indag Rubber Limited

Report on the Audit of the Standalone Financial Statements

Opinion

We have audited the standalone financial statements of Indag RubberLimited ("the Company") which comprise the Balance Sheet as at 31stMarch 2021 the Statement of Profit and Loss the Statement of Changes in Equity and theStatement of Cash Flows for the year ended on that date and notes to the standalonefinancial statements including a summary of significant accounting policies and otherexplanatory information.

In our opinion and to the best of our information and according to theexplanations given to us the aforesaid standalone financial statements give theinformation required by the Companies Act 2013 ("the Act") in the manner sorequired and give a true and fair view in conformity with the accounting principlesgenerally accepted in India of the state of affairs of the Company as at 31stMarch 2021 and the profit changes in equity and its cash flows for the year ended on thatdate.

Basis for Opinion

We conducted our audit in accordance with the Standards on Auditing(SAs) specified under section 143(10) of the Act. Our responsibilities under thoseStandards are further described in the Auditor's Responsibilities for the Audit ofthe Standalone Financial Statements section of our report. We are independent of theCompany in accordance with the Code of Ethics issued by the Institute of CharteredAccountants of India (ICAI) together with the ethical requirements that are relevant toour audit of the standalone financial statements under the provisions of the Act and theRules thereunder and we have fulfilled our other ethical responsibilities in accordancewith these requirements and the Code of Ethics. We believe that the audit evidence we haveobtained is sufficient and appropriate to provide a basis for our opinion.

Key Audit Matters

Key audit matters are those matters that in our professional judgmentwere most significance in our audit of the standalone financial statements of the currentperiod. These matters were addressed in the context of our audit of the standalonefinancial statements as a whole and in forming our opinion thereon and we do not providea separate opinion on these matters.

The key audit matters How the matter was addressed in our audit
Investments
The company has long term investments in a subsidiary and a Joint Venture amounting to Rs. 1645.35 lakhs. These investments are carried at cost less provision for impairment loss if any. These long-term investments are tested for impairment periodically as changes in business environment including due to the effect of second wave of Covid-19 could have significant impacton these investments which could result in impairment requiring adjustment to their carrying amount. The calculation of impairment charge requires significant judgments of management with respect to determine recoverable amount of these investments. Compared the carrying amount of investments with audited financial statements of investee companies to verify whether their net assets being an approximation of their minimum recoverable amount were in excess of their carrying amount;- Obtained and reviewed recoverable amount as determined by the management for each instrument; and - Verified the method of determining recoverable amount and key assumptions used therein through historical information approved budget growth rate used to support revenue discount rate and any other relevant information as applicable.
The company has long term investment carried at fair value of Rs. 1617.10 lakhs (Cost Rs. 1202 lakhs) in SRL 142 Holdings Ltd. a related party by way of fully paid up compulsorily convertible preference shares. SRL has interest in oil production and exploration Company in Nigeria. In the case of fair valuation of investments held in SRL 142 Holdings Limited we tested the valuation prepared by the management with inputs from SRL which included reference to estimated oil resources market price of crude oil and gas prevailing in the international market the rupee US Dollar exchange rate assumptions as to future production of oil and gas capital expenditure to be incurred contracts entered into by the Nigerian Oil Company the Country risk and regulatory frame work prevailing in Nigeria.
The oil industry is exposed significantly to macroeconomic factors such as commodity prices currency fluctuations interest rate risk political developments etc. The assessment of commercial viability and technical feasibility of exploration oil and gas is complex and includes a number of significant variables.
Inventories
The Company carries inventory of finished goods raw materials work in progress valued at Rs. 3599.45 lakhs as at March 31 2021. Such inventory is held at Nalagarh Plant and warehouses/ depots in various cities in India as at the reporting date. Considering the number of locations and the level of inventory held at factory and warehouses as well as the physical verification of inventory at these locations the risk of existence of such inventory and the identification of non-moving obsolete / damaged inventory and overall valuations is a significant area of audit. The inventory valuation also requires management estimates towards write down of inventory items to its net realizable value (wherever applicable) and allowance for slow moving or non-moving inventory. Considering the relative significance of the Inventory to the Standalone financial statements we have considered the inventory as key audit matter. • Our audit response in respect of testing the existence and valuation of inventory and allowance for slow / non-moving inventory and obsolescence consisted of following procedures:
• Procedures to test the existence of inventory relevant internal controls including physical verification process that is performed annually by management at various locations and the testing of automated recording of sales and purchase transactions in the IT system.
• We observed the physical verification of inventory conducted by the management at Nalagarh Plant. Our procedures in this regard included: - Observing compliance of stock count instructions by management personnel; observing steps taken by management to ascertain the existence inventory on the date of the count (including identification of non-moving obsolete / damaged inventory);
• We performed cut off testing for purchase and sales transactions made near the reporting date to assess whether transactions are recorded in the correct period by testing shipping records sales / purchase invoices for sample transactions.
Trade Receivables
The Company trade receivables at year end amount to Rs. 2945.97 lakhs. Judgment is required to evaluate whether any allowance should be made to reflect the risk of non-recoverability towards expected audit loss Expected Credit Loss (ECL). The Company recognizes loss allowance for trade receivables. In view of the significance of the matter we applied the following key audit procedures:
Assessment of the recoverability of trade receivables is inherently subjective and requires significant management judgment regarding financial position of entities from whom these balances are recoverable terms of underlying arrangements overdue balances market conditions etc. • Obtaining an understanding of and assessing the process implementation and operating effectiveness of the Company's key internal controls over the process of estimating the loss allowance for trade receivables and other financial assets including adherence to the requirements of the relevant accounting standards
• Assessing the Company's methodology for provisioning towards trade receivables.
• Understanding the key inputs used in the provisioning by the Company such as repayment history terms of underlying arrangements overdue balances market conditions.
• Obtaining an understanding and assessing the reasonableness of the provisioning process as well as key judgments and assumptions used by the management for circulating expected credit loss relating to trade receivables.
• Assessing the disclosures made as per the relevant accounting standards.

Information Other than the Standalone Financial Statements andAuditor's Report Thereon

The Company's Board of Directors is responsible for the otherinformation. The other information comprises the information included in the ManagementDiscussion and Analysis Board's Report and Corporate Governance but does notinclude the standalone financial statements and our auditor's report thereon.

Our opinion on the standalone financial statements does not cover theother information and we do not express any form of assurance conclusion thereon.

In connection with our audit of the standalone financial statementsour responsibility is to read the other information and in doing so consider whether theother information is materially inconsistent with the standalone financial statements orour knowledge obtained in the audit or otherwise appears to be materially misstated.

If based on the work we have performed we conclude that there is amaterial misstatement of this other information we are required to report that fact. Wehave nothing to report in this regard.

Management's Responsibilities for the Standalone FinancialStatements

The Company's Board of Directors is responsible for the mattersstated in section 134(5) of the Act with respect to the preparation of these standalonefinancial statements that give a true and fair view of the financial position financialperformance (including other comprehensive income) changes in equity and cash flows ofthe Company in accordance with the accounting principles generally accepted in Indiaincluding the accounting standards specified under section 133 of the Act. Thisresponsibility also includes maintenance of adequate accounting records in accordance withthe provisions of the Act for safeguarding the assets of the Company and for preventingand detecting frauds and other irregularities; selection and application of appropriateaccounting policies; making judgments and estimates that are reasonable and prudent; anddesign implementation and maintenance of adequate internal financial controls that wereoperating effectively for ensuring the accuracy and completeness of the accountingrecords relevant to the preparation and presentation of the standalone financialstatements that give a true and fair view and are free from material misstatement whetherdue to fraud or error.

In preparing the standalone financial statements the Board ofDirectors is responsible for assessing the Company's ability to continue as a goingconcern disclosing as applicable matters related to going concern and using the goingconcern basis of accounting unless the Board of Directors either intends to liquidate theCompany or to cease operations or has no realistic alternative but to do so.

The Board of Directors are responsible for overseeing theCompany's financial reporting process.

Auditor's Responsibilities for the Audit of the StandaloneFinancial Statements

Our objectives are to obtain reasonable assurance about whether thestandalone financial statements as a whole are free from material misstatement whetherdue to fraud or error and to issue an auditor's report that includes our opinion.Reasonable assurance is a high level of assurance but is not a guarantee that an auditconducted in accordance with SAs will always detect a material misstatement when itexists. Misstatements can arise from fraud or error and are considered material ifindividually or in the aggregate they could reasonably be expected to influence theeconomic decisions of users taken on the basis of these standalone financial statements.

As part of an audit in accordance with SAs we exercise professionaljudgment and maintain professional skepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of thestandalone financial statements whether due to fraud or error design and perform auditprocedures responsive to those risks and obtain audit evidence that is sufficient andappropriate to provide a basis for our opinion. The risk of not detecting a materialmisstatement resulting from fraud is higher than for one resulting from error as fraudmay involve collusion forgery intentional omissions misrepresentations or the overrideof internal control.

• Obtain an understanding of internal financial controls relevantto the audit in order to design audit procedures that are appropriate in thecircumstances. Under section 143(3)(i) of the Act we are also responsible for expressingour opinion on whether the Company has adequate internal financial controls system inplace and the operating effectiveness of such controls.

• Evaluate the appropriateness of accounting policies used and thereasonableness of accounting estimates and related disclosures made by management.

• Conclude on the appropriateness of management's use of thegoing concern basis of accounting and based on the audit evidence obtained whether amaterial uncertainty exists related to events or conditions that may cast significantdoubt on the Company's ability to continue as a going concern. If we conclude that amaterial uncertainty exists we are required to draw attention in our auditor'sreport to the related disclosures in the standalone financial statements or if suchdisclosures are inadequate to modify our opinion. Our conclusions are based on the auditevidence obtained up to the date of our auditor's report. However future events orconditions may cause the Company to cease to continue as a going concern.

• Evaluate the overall presentation structure and content of thestandalone financial statements including the disclosures and whether the standalonefinancial statements represent the underlying transactions and events in a manner thatachieves fair presentation.

We communicate with those charged with governance regarding amongother matters the planned scope and timing of the audit and significant audit findingsincluding any significant deficiencies in internal control that we identify during ouraudit.

We also provide those charged with governance with a statement that wehave complied with relevant ethical requirements regarding independence and tocommunicate with them all relationships and other matters that may reasonably be thoughtto bear on our independence and where applicable related safeguards.

From the matters communicated with those charged with governance wedetermine those matters that were of most significance in the audit of the standalonefinancial statements of the current period and are therefore the key audit matters. Wedescribe these matters in our auditor's report unless law or regulation precludespublic disclosure about the matter or when in extremely rare circumstances we determinethat a matter should not be communicated in our report because the adverse consequences ofdoing so would reasonably be expected to outweigh the public interest benefits of suchcommunication.

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 in terms of Section 143(11) ofthe Act we give in "Annexure A" a statement on the matters specified inparagraphs 3 and 4 of the Order.

2. As required by Section 143(3) of the Act we report that:

a) we have sought and obtained all the information and explanationswhich to the best of our knowledge and belief were necessary for the purposes of ouraudit;

b) in our opinion proper books of account as required by law have beenkept by the Company so far as it appears from our examination of those books;

c) the Standalone Balance Sheet the Standalone Statement of Profit andLoss Standalone Statement of Changes in Equity and the Standalone Statement of Cash Flowdealt with by this Report are in agreement with the books of account;

d) In our opinion the aforesaid standalone financial statements complywith the Ind AS specified under Section 133 of the Act.

e) on the basis of the written representations received from thedirectors as on 31st March 2021 taken on record by the Board of Directors noneof the directors is disqualified as on 31st March 2021 from being appointed asa director in terms of Section 164(2) of the Act;

f) with respect to the adequacy of the internal financial controls withreference to financial statements of the Company and the operating effectiveness of suchcontrols refer to our separate Report in "Annexure B";

g) With respect to the other matters to be included in theAuditor's Report in accordance with the requirements of section 197(16) of the Actas amended:

In our opinion and to the best of our information and8 according to theexplanations given to us the remuneration paid by the Company to its directors during theyear is in accordance with the provisions of section 197 of the Act.

h) with respect to the other matters to be included in theAuditor's Report in accordance with Rule 11 of the Companies (Audit and Auditors)Rules 2014 in our opinion and to the best of our information and according to theexplanations given to us:

i. The Company has disclosed the impact of pending litigations on itsfinancial position in its standalone financial statements. Refer Note 36 to the standalonefinancial statements;

ii. The Company did not have any long-term contracts includingderivative contracts for which there were any material foreseeable losses;

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

ANNEXURE A TO THE INDEPENDENT AUDITOR'S REPORT

(Referred to in paragraph ‘Report on Other Legal and RegulatoryRequirements' of our report of even date)

(i) (a) The Company has maintained proper records showing fullparticulars including quantitative details and situation of fixed assets.

(b) All fixed assets have not been physically verified by themanagement during the year but there is a regular programme of verification which in ouropinion is reasonable having regard to the size of the Company and the nature of itsassets. No material discrepancies were noticed on such verification.

(c) Based on our audit procedures performed for the purpose ofreporting the true and fair view of the financial statements and according to informationand explanations given by the management the title deeds of immovable properties are heldin the name of the Company.

(ii) The management has conducted physical verification of inventory atreasonable intervals during the year and no material discrepancies were noticed on suchphysical verification.

(iii) According to the information and explanations given to us theCompany has not granted any loans secured or unsecured to companies firms LimitedLiability Partnerships or other parties covered in the register maintained under Section189 of the Companies Act 2013. Accordingly the provisions of clause 3(iii)(a) (b) and(c) of the Order are not applicable to the Company and hence not commented upon.

iv) In our opinion and according to the information and explanationsgiven to us there are no loans and securities granted in respect of which provisions ofSection 185 and 186 of the Companies Act 2013 are applicable. In our opinion andaccording to the information and explanations given to us the Company has complied withprovisions of section 186 of the Companies Act 2013 in respect of guarantees given andinvestments made.

(v) The Company has not accepted any deposits from the public.

(vi) We have broadly reviewed the books of account maintained by theCompany pursuant to the rules made by the Central Government for the maintenance of costrecords under Section 148(1) of the Companies Act 2013 related to the manufacture ofproducts and are of the opinion that prima facie the prescribed accounts and recordshave been made and maintained. We have not however made a detailed examination of thesame.

(vii) (a) The Company is generally regular in depositing withappropriate authorities undisputed statutory dues including provident fundemployees' state insurance income-tax duty of customs goods and service tax cessand other material statutory dues applicable to it.

b) According to the information and explanations given to us noundisputed amounts payable in respect of provident fund employees' state insuranceincome-tax duty of customs goods and service tax cess and other material statutory dueswere outstanding at the year end for a period of more than six months from the date theybecame payable. The particulars of dues of income-tax sales-tax service tax duty ofcustoms excise duty goods and service tax value added tax and cess as at 31 March 2021which have not been deposited on account of any dispute are as follows:

Name of the statute Nature of dues Amount (Rs. in lakhs) Period to which the amount relates Forum where dispute is pending
Income Tax Act 1961 Income tax demand 139.15 A. Y. 1998-99 Delhi High Court
Income Tax Act 1961 Income tax demand 16.39 A.Y. 2017-18 CIT (Appeals)
Income Tax Act 1961 Income tax demand 8.08 A.Y. 2018-19 CIT (Appeals)
Gujarat Sales Tax Act 1969 Non-Submission of C Forms 32.43 F.Y. 2002-03 Deputy Commissioner Vadodara

(viii) Based on our audit procedures performed for the purpose ofreporting the true and fair view of the financial statements and according to informationand explanations given by the management we are of the opinion that the Company has notdefaulted in repayment of dues to any bank. Further the Company does not have anydebentures and loan from financial institution or government.

(ix) Based on our audit procedures performed for the purpose ofreporting the true and fair view of the financial statements and according to theinformation and explanations given by the management the Company has not raised any moneyby way of initial public offer / further public offer / debt instruments and term loansand hence reporting under clause is not applicable to the Company and hence not commentedupon.

(x) Based upon the audit procedures performed for the purpose ofreporting the true and fair view of the financial statements and according to theinformation and explanations given by the management we report that no fraud on or by theofficers and employees of the Company has been noticed or reported during the year.

(xi) Based on our audit procedures performed for the purpose ofreporting the true and fair view of the financial statements and according to theinformation and explanations given by the management we report that the managerialremuneration has been paid / provided in accordance with the requisite approvals mandatedby the provisions of Section 197 read with Schedule V to the Companies Act 2013.

(xii) In our opinion the Company is not a Nidhi company. Thereforethe provisions of clause 3(xii) of the Order are not applicable to the Company and hencenot commented upon.

(xiii) Based on our audit procedures performed for the purpose ofreporting the true and fair view of the financial statements and according to theinformation and explanations given by the management transactions with the relatedparties are in compliance with Section 177 and 188 of Companies Act 2013 where applicableand the details have been disclosed in the notes to the financial statements as requiredby the applicable accounting standards.

(xiv) According to the information and explanations given to us and onan overall examination of the balance sheet the Company has not made any preferentialallotment or private placement of shares or fully or partly convertible debentures duringthe year under review and hence not commented upon.

(xv) Based on our audit procedures performed for the purpose ofreporting the true and fair view of the financial statements and according to theinformation and explanations given by the management the Company has not entered into anynon-cash transactions with directors or persons connected with him.

(xvi) According to the information and explanations given to us theprovisions of Section 45-IA of the Reserve Bank of India Act 1934 are not applicable tothe Company.

ANNEXURE B TO THE INDEPENDENT AUDITOR'S REPORT

(Referred to in paragraph ‘Report on Other Legal and RegulatoryRequirements' of our report of even date)

Report on the Internal Financial Controls Over Financial Reportingunder Clause (i) of Sub-section 3 of Section 143 of the Companies Act 2013 ("theAct")

We have audited the internal controls over financial reporting of IndagRubber Limited (‘the Company") as of 31st March 2021 in conjunction with ouraudit of the standalone financial statements of the company for the year ended on thatdate.

Management's Responsibility for Internal Financial Controls

The Board of Directors of the Company are responsible for establishingand maintaining the internal financial controls based on the internal control overfinancial reporting criteria established by the respective Companies considering theessential components of internal control stated in the Guidance Note on Audit of InternalFinancial Controls Over Financial Reporting issued by the Institute of CharteredAccountants of India. These responsibilities include the design implementation andmaintenance of adequate internal financial controls that were operating effectively forensuring the orderly and efficient conduct of its business including adherence toCompany's policies the safeguarding of its assets the prevention and detection offrauds and errors the accuracy and completeness of the accounting records and the timelypreparation of reliable financial information as required under the Act.

Auditor's Responsibility

Our responsibility is to express an opinion on the internal financialcontrols over financial reporting of the Company based on our audit. We conducted ouraudit in accordance with the Guidance Note on Audit of Internal Financial Controls OverFinancial Reporting (the "Guidance Note") issued by the ICAI and the Standardson Auditing prescribed under Section 143(10) of the Act to the extent applicable to anaudit of internal financial controls. Those Standards and the Guidance Note require thatwe comply with ethical requirements and plan and perform the audit to obtain reasonableassurance about whether adequate internal financial controls over financial reporting wasestablished and maintained and if such controls operated effectively in all materialrespects.

Our audit involves performing procedures to obtain audit evidence aboutthe adequacy of the internal financial controls system over financial reporting and theiroperating effectiveness. Our audit of internal financial controls over financial reportingincluded obtaining an understanding of internal financial controls over financialreporting assessing the risk that a material weakness exists and testing and evaluatingthe design and operating effectiveness of internal control based on the assessed risk. Theprocedures selected depend on the auditor's judgement including the assessment ofthe risks of material misstatement of the financial statements whether due to fraud orerror.

We believe that the audit evidence we have obtained is sufficient andappropriate to provide a basis for our audit opinion on the Company's internalfinancial controls system over financial reporting.

Meaning of Internal Financial Controls Over Financial Reporting

A company's internal financial control over financial reporting isa process designed to provide reasonable assurance regarding the reliability of financialreporting and the preparation of financial statements for external purposes in accordancewith generally accepted accounting principles. A company's internal financial controlover financial reporting includes those policies and procedures that

(1) pertain to the maintenance of records that in reasonable detailaccurately and fairly reflect the transactions and dispositions of the assets of thecompany;

(2) provide reasonable assurance that transactions are recorded asnecessary to permit preparation of financial statements in accordance with generallyaccepted accounting principles and that receipts and expenditures of the Company arebeing made only in accordance with authorisations of management and directors of thecompany; and

(3) provide reasonable assurance regarding prevention or timelydetection of unauthorised acquisition use or disposition of the Company's assetsthat could have a material effect on the financial statements.

Inherent Limitations of Internal Financial Controls Over FinancialReporting

Because of the inherent limitations of internal financial controls overfinancial reporting including the possibility of collusion or improper managementoverride of controls material misstatements due to error or fraud may occur and not bedetected. Also projections of any evaluation of the internal financial controls overfinancial reporting to future periods are subject to the risk that the internal financialcontrol over financial reporting may become inadequate because of changes in conditionsor that the degree of compliance with the policies or procedures may deteriorate.

Opinion

In our opinion to the best of our information and according to theexplanations given to us 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 March 31 2021 based on theinternal control over financial reporting criteria established by the respective companiesconsidering the essential components of internal control stated in the Guidance Note onAudit of Internal Financial Controls Over Financial Reporting issued by the ICAI.

For Khanna & Annadhanam
Chartered Accountants (Firm Regn. No. 001297N)
B. J. Singh
Place: New Delhi Partner
Date: 8th May 2021 Membership No. 007884 UDIN: 21007884AAAABT7436

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