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Indokem Ltd.

BSE: 504092 Sector: Industrials
NSE: N.A. ISIN Code: INE716F01012
BSE 00:00 | 27 Jul 44.95 -0.50
(-1.10%)
OPEN

46.80

HIGH

46.95

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44.00

NSE 05:30 | 01 Jan Indokem Ltd
OPEN 46.80
PREVIOUS CLOSE 45.45
VOLUME 50545
52-Week high 53.40
52-Week low 8.67
P/E 36.84
Mkt Cap.(Rs cr) 109
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 46.80
CLOSE 45.45
VOLUME 50545
52-Week high 53.40
52-Week low 8.67
P/E 36.84
Mkt Cap.(Rs cr) 109
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Indokem Ltd. (INDOKEM) - Auditors Report

Company auditors report

To the Members of Indokem Limited

Report on the Audit of the Financial Statements

Opinion

We have audited the financial statements of Indokem Limited (“the Company”)which comprise the Balance Sheet as at March 31 2020 and the statement of Profit andLoss (including other comprehensive income) statement of cash flows and Statement ofChanges in Equity for the year then ended and notes to the financial statementsincluding a summary of significant accounting policies and other explanatory information.

In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid financial statements give the information required by theCompanies Act 2013 (“the Act”) in the manner so required and give a true andfair view in conformity with the Indian Accounting Standards prescribed under section 133of the Act read with the Companies (Indian Accounting Standards) Rules 2015 as amended(“Ind AS”) and other accounting principles generally accepted in India of thestate of affairs of the Company as at March 312020 the profit and total comprehensiveincome changes in equity and its cash flows for the year ended on that date.

Basis for Opinion

We conducted our audit of the financial statements in accordance with the Standards onAuditing specified under section 143(10) of the Act (SAs). Our responsibilities underthose Standards are further described in the Auditor's Responsibilities for the Audit ofthe Financial Statements section of our report. We are independent of the Company inaccordance with the Code of Ethics issued by the Institute of Chartered Accountants ofIndia (ICAI) together with the independence requirements that are relevant to our audit ofthe financial statements under the provisions of the Act and the Rules made thereunderand we have fulfilled our other ethical responsibilities in accordance with theserequirements and the ICAI's Code of Ethics. We believe that the audit evidence we haveobtained is sufficient and appropriate to provide a basis for our audit opinion on thefinancial statements.

Key Audit Matters

Key audit matters are those matters that in our professional judgment were of mostsignificance in our audit of the financial statements of the current period. These matterswere addressed in the context of our audit of the financial statements as a whole and informing our opinion thereon and we do not provide a separate opinion on these matters. Wehave determined the matters described below to be the key audit matters to be communicatedin our report.

Sr. No Key Audit Matter Auditor's Response
1 Status of contingent claims against the Company pending with high court and uncertain tax positions. It involves high degree of uncertainty and significant judgment over the outcome of the case. Our audit included but was not limited to the following activities:
1. Assessing Management's position through discussions with the external legal opinions obtained by the Company (where considered necessary) on both the probability of success in the aforesaid cases and the magnitude of any potential loss;
2. Discussion with the Management on the development in these litigations during the year ended 31 March 2020;
3. Review of the disclosures made by the Company in the financial statements in this regard;
4. Obtained representation letter from the Management on the assessment of these matters.

Information Other than the Financial Statements and Auditor's Report Thereon

The Company's Board of Directors is responsible for the preparation of the otherinformation. The other information comprises the information included in the ManagementDiscussion and Analysis Board's Report including Annexures to Board's Report CorporateGovernance and Shareholder's Information but does not include the financial statementsand our auditor's report thereon. Our opinion on the financial statements does not coverthe other information and we do not express any form of assurance conclusion thereon. Inconnection with our audit of the financial statements our responsibility is to read theother information and in doing so consider whether the other information is materiallyinconsistent with

the financial statements or our knowledge obtained during the course of our audit orotherwise appears to be materially misstated. If based on the work we have performed weconclude that there is a material misstatement of this other information we are requiredto report that fact.

When we read the above reports if we conclude that there is a material misstatementtherein we are required to communicate the matter to those charged with governance.

Responsibilities of Management and Those Charged with Governance for the FinancialStatements

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 financial statements that give a true and fair view of the financial positionfinancial performance and cash flows of the Company in accordance with the accountingprinciples generally accepted in India including the accounting Standards specified undersection 133 of the Act. This responsibility also includes maintenance of adequateaccounting records in accordance with the provisions of the Act for safeguarding of theassets of the Company and for preventing and detecting frauds and other irregularities;selection and application of appropriate accounting policies; making judgments andestimates that are reasonable and prudent; and design implementation and maintenance ofadequate internal financial controls that were operating effectively for ensuring theaccuracy and completeness of the accounting records relevant to the preparation andpresentation of the financial statements that give a true and fair view and are free frommaterial misstatement whether due to fraud or error.

In preparing the financial statements the Board of Directors is responsible forassessing the Company's ability to continue as a going concern disclosing as applicablematters related to going concern and using the going concern basis of accounting unlessthe Board of Directors either intends to liquidate the Company or to cease operations orhas no realistic alternative but to do so.

The Board of Directors is also responsible for overseeing the Company's financialreporting process.

Auditor's Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the financialstatements as a whole are free from material misstatement whether due to fraud or errorand to issue an Auditor's Report that includes our opinion. Reasonable assurance is a highlevel of assurance but is not a guarantee that an audit conducted in accordance with SAswill always detect a material misstatement when it exists. Misstatements can arise fromfraud or error and are considered material if individually or in the aggregate theycould reasonably be expected to influence the economic decisions of users taken on thebasis of these financial statements.

As part of an audit in accordance with SAs we exercise professional judgment andmaintain professional skepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the financialstatements whether due to fraud or error design and perform audit procedures responsiveto those risks and obtain audit evidence that is sufficient and appropriate to provide abasis for our opinion. The risk of not detecting a material misstatement resulting fromfraud is higher than for one resulting from error as fraud may involve collusionforgery intentional omissions misrepresentations or the override of internal control.

• Obtain an understanding of internal financial controls relevant to the audit inorder to design audit procedures that are appropriate in the circumstances. Under section143(3)(i) of the Act we are also responsible for expressing our opinion on whether theCompany has adequate internal financial controls system in place and the operatingeffectiveness of such controls.

• Evaluate the appropriateness of accounting policies used and the reasonablenessof accounting estimates and related disclosures made by Management.

• Conclude on the appropriateness of Management's use of the going concern basisof accounting and based on the audit evidence obtained whether a material uncertaintyexists related to events or conditions that may cast significant doubt on the Company'sability to continue as a going concern. If we conclude that a material uncertainty existswe are required to draw attention in our auditor's report to the related disclosures inthe financial statements or if such disclosures are inadequate to modify our opinion.Our conclusions are based on the audit evidence obtained up to the date of our auditor'sreport. However future events or conditions may cause the Company to cease to continue asa going concern.

• Evaluate the overall presentation structure and content of the financialstatements including the disclosures and whether the financial statements represent theunderlying transactions and events in a manner that achieves fair presentation.

Materiality is the magnitude of misstatements in the financial statements thatindividually or in aggregate makes it probable that the economic decisions of areasonably knowledgeable user of the financial statements may be influenced. We considerquantitative materiality and qualitative factors in (i) planning the scope of our auditwork and in evaluating the results of our work; and (ii) to evaluate the effect of anyidentified misstatements in the financial statements.

We communicate with those charged with governance regarding among other matters theplanned scope and timing of the audit and significant audit findings including anysignificant deficiencies in internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have compliedwith relevant ethical requirements regarding independence and communicate with them allrelationships and other matters that may reasonably be thought to bear on ourindependence and where applicable related safeguards.

From the matters communicated with those charged with governance we determine thosematters that were of most significance in the audit of the financial statements of thecurrent period and are therefore the key audit matters. We describe these matters in ourauditor's report unless law or regulation precludes public disclosure about the matter orwhen in extremely rare circumstances we determine that a matter should not becommunicated in our report because the adverse consequences of doing so would reasonablybe expected to outweigh the public interest benefits of such communication.

Other Matter

The Ministry of home affairs vide order No.40-3 / 2020 dated 24.03.2020 notifiednationwide lockdown in India to contain the outbreak of COVID 19 due to which we were notable to attend the physical verification of inventory carried out by the Managementsubsequent to the year end. Consequently we have performed alternate procedures to auditthe existence of inventory as per the guidance provided in SA 501 “Audit Evidence -Specific considerations for selected items” and have obtained sufficient appropriateaudit evidence to issue our unmodified opinion on these financial statements.

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 of the Companies Act 2013 we give in theAnnexure - A a statement on

the matters specified in paragraphs 3 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 purposes of our audit.

b. In our opinion proper books of accounts 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 Statement of Cash Flowdealt with by this Report are in agreement with the books of accounts.

d. In our opinion the aforesaid financial statements comply with the Indian AccountingStandards specified under Section 133 of the Act.

e. On the basis of the written representations received from the Directors as on 31stMarch 2020 taken on record by the Board of Directors none of the Directors isdisqualified as on 31st March 2020 from being appointed as a Director in terms of Section164(2) of the Act.

f. 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”.

g. With respect to the other matters to be included in the Auditor's Report inaccordance with the requirements of section 197(16) of the Act as amended:

In our opinion and to the best of our information and according to the explanationsgiven to us the remuneration paid by the Company to its Directors during the year is inaccordance with the provisions of section 197 of the Act.

h. With respect to the other matters to be included in the Auditor's Report inaccordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014 in our opinionand to the best of our information and according to the explanations given to us:

i. The Company has disclosed the impact of pending litigations on its financialposition in its financial statements - Refer Note 23 to the financial Statements.

ii. The Company did not have any long-term contracts including derivative for whichthere were any material foreseeable losses.

iii. The Company is not required to transfer any amount to the investor Education andProtection Fund during the year ended March 312020.

For C N K & Associates LLP

Chartered Accountants FRN: 101961W / W-100036

Sd / -

Manish Sampat

Partner

Membership number: 101684

Place : Mumbai

Date : July 16 2020

UDIN: 20101684AAAADD2351

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)

(i) (a) The Company is maintaining proper records showing full particulars includingquantitative details and situation

of fixed assets;

(b) As explained to us all the Fixed Assets have not been physically verified by theManagement during the year but there is a regular program of verification which in ouropinion is reasonable having regard to the size of the Company and nature of its assets.No material discrepancies were noticed on such physical verification.

(c) According to the information and explanations given to us and on the basis of ourexamination of the records the title deeds of the immovable properties other than thosedisclosed below are in the name of the Company.

Asset Class No. of Cases Gross Block (in Lakhs) Net Block (in Lakhs) Remarks
Buildings 2 133.60 106.55 The Company became the owners of the premises by virtue of Scheme of Amalgamation of M / s. Manish Dyes Products Private Limited and M / s. Ramakem Limited with the Company. However pending completion of the relevant registration formalities the immovable properties continue to be in the name of the erstwhile amalgamated Companies.

(ii) As informed to us the inventory has been physically verified by the Management atreasonable intervals during the year discrepancies noticed on verification between thephysical stocks and the book records were not material in relation to the size of theCompany and the same have been properly dealt with in the books of accounts.

(iii) According to the information and explanations provided to us the Company has notgranted any loans secured or unsecured to Companies firms or other parties covered inregister maintained under section 189 of the Act. Accordingly the provisions of clause3(iii) are not applicable to the Company.

(iv) According to the information and explanations provided to us the Company hascomplied with provisions of Section 185 & 186 of the Companies Act 2013 in respect ofloans investments guarantees and securities.

(v) According to the information and explanations provided to us the Company has notaccepted any deposits within the meaning of Sections 73 to 76 of the Act and the rulesframed there under to the extent notified.

(vi) According to the information and explanations given to us the Company is notrequired to maintain cost records pursuant to the Companies (Cost Records and Audit)Amendment Rules 2016 and prescribed by the Central Government under sub-section (1) ofsection 148 of the Companies Act 2013;

(vii) According to the information and explanation given to us in respect of statutorydues

a) According to the information and explanation given to us and the records of theCompany examined by us in our opinion the Company is generally regular in depositingundisputed statutory dues including employees' provident fund employees' state insuranceincome-tax sales-tax service tax duty of customs duty of excise value added taxgoods and service tax and other statutory dues as applicable except in case of taxdeducted at source employees' Provident fund Professional tax and Employee StateInsurance Corporation where the delay in deposits of tax were observed ranging from 1 to161 days. There were no undisputed amounts payable with respect to employees' providentfund employees' state insurance income-tax sales-tax goods and service tax servicetax duty of customs duty of excise value added tax cess and any other statutory duesin arrears as at March 312020 for a period of six months from the date they becamepayable.

b) According to the information and explanations given to us and the records of theCompany examined by us the particulars of dues of income tax and duty of customs at March312020 which have not been deposited on account of a dispute are as follows:

Name of the Statute Nature of Dues Amount (' in Lakhs) Period to which the amount relates Forum where the matter is pending
Income Tax Act 1961 Income Tax 11.92 2007-08 Commissioner of Income Tax (Appeals)
Income Tax Act 1961 Income Tax 2.09 2006-07 Commissioner of Income Tax (Appeals)
Income Tax Act 1961 Income Tax 40.69 2013-14 Commissioner of Income Tax (Appeals)
The Employees Provident Funds and Miscellaneous Provisions Act 1952 Provident Fund - Ankleshwar 61.37 March 1997 to August 2007 Central Government Industrial Tribunal - Ahmedabad
The Employees Provident Funds and Miscellaneous Provisions Act 1952 Provident Fund - Ankleshwar 3.30 March 2007 to July 2011 Central Government Industrial Tribunal - Ahmedabad

viii) In our opinion the Company has not defaulted in the repayment of loans orborrowings to financial institution banks. The Company has not taken any loans orborrowings from any Government and has not issued any debentures.

(ix) In our opinion and according to the information and explanations given to us theCompany has not raised any money by way of initial public offer or further public offer(including debt instruments) during the year. The term loans availed by the Company havebeen applied for the purposes for which they were obtained.

(x) 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 thecourse of our audit.

(xi) According to the records of the Company examined by us and the information andexplanations given to us the Company has paid / provided for managerial remuneration inaccordance with the requisite approvals mandated by the provisions of Section 197 readwith Schedule V to the Companies Act 2013 (Also refer Note No. 31 of the financialstatements).

(xii) The Company is not a Nidhi Company and therefore the provisions of clause 3 (xii)of the Order are not applicable to the Company.

(xiii) According to the records of the Company examined by us and the information andexplanation given to us all transactions with the related parties are in compliance withsections 177 and 188 of Companies Act 2013 where applicable and the details thereof havebeen disclosed in the Financial Statements etc. as required by the applicable accountingstandards. (Also refer Note No. 29 of the financial statements).

(xiv) The Company has not made any preferential allotment or private placement ofshares or fully or partly convertible

debentures during the year under review. Therefore clause 3(xiv) of the Order is notapplicable to the Company.

(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. Accordingly clause 3(xv) ofthe Order is not applicable to the Company.

(xvi) According to the information and explanations given to us and based on ourexamination of the records of the Company the Company is not required to be registeredunder section 45-IA of the Reserve Bank of India Act 1934.

For C N K & Associates LLP

Chartered Accountants FRN: 101961W / W-100036

Sd / -

Manish Sampat

Partner

Membership number: 101684

Place : Mumbai

Date : July 16 2020

UDIN: 20101684AAAADD2351

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”)

Opinion

We have audited the internal financial controls over financial reporting of IndokemLimited (“the Company”) as of March 31 2020 in conjunction with our audit ofthe financial statements of the Company for the year ended on that date.

In our opinion except in case of inventory where preventive controls need to bestrengthened although mitigating control exists; the Company has in all materialrespects an adequate internal financial controls system over financial reporting and suchinternal financial controls over financial reporting were operating effectively as atMarch 312020 based on the internal control over financial reporting criteria establishedby the Company considering the essential components of internal control stated in theGuidance Note on Audit of Internal Financial Controls Over Financial Reporting issued bythe Institute of Chartered Accountants of India.

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 operating effectiveness. Our audit ofinternal financial controls over financial reporting included obtaining an understandingof internal financial controls over financial reporting assessing the risk that amaterial weakness exists and testing and evaluating the design and operatingeffectiveness of internal control based on the assessed risk. The procedures selecteddepend on the auditor's judgment including the assessment of the risks of materialmisstatement 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 authorizations ofManagement and Directors of the Company; and (3) provide reasonable assurance regardingprevention or timely detection of unauthorized 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.

For C N K & Associates LLP

Chartered Accountants FRN: 101961W / W-100036

Sd / -

Manish Sampat Partner

Membership number: 101684

Place : Mumbai

Date : July 16 2020

UDIN: 20101684AAAADD2351

.