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Indokem Ltd.

BSE: 504092 Sector: Industrials
NSE: N.A. ISIN Code: INE716F01012
BSE 00:00 | 20 Jun 15.05 -0.30
(-1.95%)
OPEN

15.05

HIGH

15.10

LOW

15.00

NSE 05:30 | 01 Jan Indokem Ltd
OPEN 15.05
PREVIOUS CLOSE 15.35
VOLUME 800
52-Week high 43.90
52-Week low 15.00
P/E
Mkt Cap.(Rs cr) 37
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 15.05
CLOSE 15.35
VOLUME 800
52-Week high 43.90
52-Week low 15.00
P/E
Mkt Cap.(Rs cr) 37
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Indokem Ltd. (INDOKEM) - Auditors Report

Company auditors report

The Members of INDOKEM LIMITED

Report on the Financial Statements

I have audited the accompanying financial statements of INDOKEM LIMITED whichcomprises Balance as at 31st March 2017 the Statement of Profit and Loss Account for theyear ended 31 st March 2017 Cash Flow Statement for the year ended 31stMarch 2017 and a summary of Significant Accounting Policies and other explanatoryinformation.

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 presentation ofthese financial statements that give a true and fair view of the financial position andfinancial performance in accordance with the accounting principles generally accepted inIndia including the Accounting Standards specified under section 133 of the Act readwith Rule 7 of the Companies (Accounts) Rules 2014. This responsibility also includesmaintenance of adequate accounting records in accordance with the provisions of the Actfor safeguarding the assets of the Company and for preventing and detecting frauds andother irregularities; selection and application of appropriate accounting policies ;making judgments and estimates that are reasonable and prudent; and design implementationand maintenance of adequate internal financial controls that were operating effectivelyfor ensuring the accuracy and completeness of accounting records relevant to thepreparation and presentation of the financial statements that give a true and fair viewand are free from material misstatement whether due to fraud or error.

Auditor's Responsibility

My responsibility is to express an opinion on these financial statements based on myaudit. I have taken into account the provisions of the Act the accounting and auditingstandards and matters which are required to be included in the audit report under theprovisions of the Act and the Rules made there under.

I have conducted the audit in accordance with the Standards on Auditing specified underSection 143 (10) of the Act. those Standards require that I 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 financial control relevant to the Company's preparation of thefinancial statements that give a true and fair view in order to design audit proceduresthat are appropriate in the circumstances but not for the purpose of expressing an opinionon whether the company has in place adequate internal financial controls system overfinancial reporting and the operating effectiveness of such controls. An audit alsoincludes evaluating the appropriateness of accounting policies used and the reasonablenessof the accounting estimates made by the Company's Directors as well as evaluating theoverall presentation of the financial statements.

I believe that the audit evidence I have obtained is sufficient and appropriate toprovide a basis for my opinion.

Opinion

In my opinion and to the best of the information and according to the explanationsgiven to me the financial give the information required by the Act in the manner sorequired and give a true and fair view in conformity with the accounting principlesgenerally accepted in India :

(a) In the case of the Balance Sheet of the state of affairs of the Company as at 31stMarch 2017.

(b) In the case of the Profit and Loss Account of the Profit for the year ended onthat date.

(c) In the case of the Cash Flow Statement of the cash flows for the year ended onthat date.

Emphasis of Matter

Inventories includes inventories of Ankleshwar Plant amounting to Rs. 100 lakhs broughtto Mumbai in earlier years and the same has been valued and certified by the managementonly. (Refer Para No 2 (c) of Note No 28 of Notes to Accounts)

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 sub section (11) of section 143 of the Actwe give in the Annexure A statement on the matters specified in the paragraphs 3 and 4 ofthe Order.

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

a. I have obtained all the information and explanations which to the best of myknowledge and belief were necessary for the purpose of audit .

b. In my opinion proper books of accounts as required by law have been kept by theCompany so far as appears from my examination of those books .

c. The Balance Sheet Statement of Profit and Loss and other notes thereon dealt withby this report are in agreement with the books of accounts.

d. In my opinion the Balance Sheet and Statement of Profit and Loss comply with theaccounting standards referred to in the Section 133 of the Companies Act 2013 and readwith Rule No 7 of the Companies Accounting Rules 2014.

e. On the basis of representations received from the directors as on March 31 2017 andtaken on record by the Board of Directors none of the directors is disqualified as onMarch 312017 from being appointed as a director in terms of Section 164(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 ourseparate report in "Annexure B".

g. Other matters to be included in the Auditor's Report in accordance with Rule 11 ofthe Companies (Audit and Auditors) Rules2014:-

i. As per the information and explanations given to me there are no pending litigationsother than those disclosed in the financial statements.

ii. In the opinion of the Company no provision is required under any law or accountingstandards for

material foreseeable losses if any on long term contracts including derivativecontracts;

iii. There are no amounts required to be transferred to Investor Education &Protection Fund during the year;

iv. The Company had provided requisite disclosures in its financial statements as toholdings as well as dealings in Specified th November 2016 to 30th December Bank Notes2016 and are in accordance with the books of accounts maintained by the company.

For Sheth Doctor and Associates
Chartered Accountants
(Firm Regn. No. 124822W)
Paresh S Doctor
Proprietor
Membership No. 36056
Place : Mumbai.
Date : 10th May 2017

ANNEXURE "A" TO THE AUDITOR'S REPORT

(REFERRED TO IN THE REPORT OF EVEN DATE OF THE AUDITORS TO THE MEMBERS OF INDOKEMLIMITED ON THE ACCOUNTS FOR THE PERIOD ENDED 31st March 2017)

1. a) The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets.

b) As explained to me major portion of the fixed assets have been physically verifiedby the management at the year end which in our opinion is reasonable having regard to thesize of the Company and nature of its assets. No material discrepancies were noticed onsuch physical verification.

c) According to the information and explanations given to me and on the basis ofexamination of the records of the Company the title deeds of immoveable properties areheld in the name of the Company other than those disclosed in the table below:

Asset Class No of cases Gross Block Net Block Remarks
(Rs. In lakhs) (Rs. in lakhs)
Building at Essel House Delhi Branch 1 28.40 16.33 Pending completion of the relevant formalities pursuant to the scheme of amalgamation the title remains to be vested in the Company Such assets continue in the name of erstwhile amalgamated Company.

2. a) Inventories have been physically verified during the year by the Management atreasonable intervals. In my opinion the frequency of verification is reasonable.

b) The discrepancies noticed on verification between physical stocks and book recordsare not material and have been adequately dealt with in books of the Company.

3. According to the information and explanations given to me the Company has notgranted any loans secured or unsecured to Companies firms limited liabilitypartnerships or other parties covered in the Register maintained under Section 189 of theCompanies Act 2013 (‘the Act") except for unsecured loan to a Companyamounting to Rs. 271.63 lakhs for which no terms and conditions and repayments schedule isstipulated.

4. In my opinion and according to the information and explanations given to me theCompany has not granted any loans or made any investments or provided any guarantees orsecurity to the parties covered under Section 185 of the Act

5. In my opinion and according to the information and explanations given to me theCompany has not accepted any deposits from the public within the meaning of provisions ofsections 73 to 76 and the rules framed there under. Accordingly paragraph 3(v) of theOrder is not applicable to the Company.

6. As the turnover of the products to which the cost records as per provisions of theSection 148 of the Companies Act 1956 are applicable is below threshold limit theCompany is of opinion that provisions of maintenance of cost records as per the saidsection are not applicable to the Company.

7. a) According to the information and explanations given to me and on the basis ofexamination of the records of the Company the amounts deducted/accrued in the books ofaccount in respect of undisputed statutory dues including provident fund investoreducation and protection fund employee's state insurance income tax sales tax servicetax value added tax custom duty excise duty cess and other statutory dues asapplicable have been generally regularly deposited during the year by the Company withthe appropriate authorities except for delay in many cases. There are dues of Rs. 91.28lakhs towards property tax provident fund damages professional tax etc. outstanding formore than six months out of a sum of Rs. 66.90 lakhs is in the opinion of the managementis of disputed nature and provided only as a prudent norms of accounting.

b) On the basis of my examination of the documents and records there are disputedstatutory due which remains to be deposited with the appropriate authorities as at yearend.

Nature of Dues Amount Period to which amount relates Forum where the dispute is pending
(Rs. in lakhs)
Income Tax 2.09 2006-07 Income Tax Appellant Tribunal
32.76 2009-10 Commissioner of Income Tax (Appeals)
430.30 2011-12 Commissioner of Income Tax (Appeals)
36.25 2013-14 Commissioner of Income Tax (Appeals)
Income Tax 30.13 2001-02 Commissioner of Income Tax (Appeals
28.06 2002-03 Commissioner of Income Tax (Appeals)
32.51 2003-04 Commissioner of Income Tax (Appeals)
30.60 2004-05 Commissioner of Income Tax (Appeals)
42.17 2005-06 Commissioner of Income Tax (Appeals)
41.68 2006-07 Commissioner of Income Tax (Appeals)
11.92 2007-08 Commissioner of Income Tax (Appeals)
22.18 2008-09 Commissioner of Income Tax (Appeals)
28.73 2009-10 Commissioner of Income Tax (Appeals)
8.59 2010-11 Commissioner of Income Tax (Appeals)
Sales Tax 9.92 1990-91 Sales Tax Tribunal
11.53 1995-96 Assistant Commissioner (Appeals)
7.50 2002-03 Sales Tax Tribunal
1.54 2004-05 Assistant Commissioner (Appeals)
Service Tax 2.78 2004-05 Service Tax and Excise Tribunal

8. According to the information and explanations given to me and on the basis ofexamination of the records the Company has not defaulted during the year in repayment ofloans and borrowings from banks. The Company does not have any loans or borrowings fromfinancial institutions or government or dues to debenture holders during the year exceptfor vehicle loans from a bank where no default in repayment is found.

9. According to the information and explanations given to me and on the basis ofexamination of the records the Company has not raised any monies by way of initialpublic offers (including debt instruments) and has not obtained any term loans during theyear. Accordingly Paragraph 3(ix) of the Order is not applicable to the Company.

10. During the course of my examination of the books and records of the Companycarried out in the accordance with the generally accepted audit practices in India andaccording to the information and explanations given to me I have neither come across anyinstance of material fraud by the Company or on the Company by its officers or employeesnoticed or reported during the year nor I have been informed of any such case by themanagement.

11. In my opinion and according to the information and explanations given to me themanagerial remuneration has been paid or provided in accordance with the requisiteapprovals mandated by the provisions of section 197 read with schedule V to the Act.

12. In my opinion and according to the information and explanations given to me theCompany is not a Nidhi Company and the Nidhi Rules 2014 are not applicable to it.Accordingly Paragraph 3(xii) of the Order is not applicable to the Company.

13. In my opinion and according to the information and explanations given to me theCompany has entered into transactions with related parties in compliance with theprovisions of Sections 177 and 188 of the Act where applicable and the details of suchrelated party transactions have been disclosed in the financial statements as required byAccounting Standard (AS) 18RelatedPartyDisclosuresspecifiedunder Section 133 of the Actread with Rule 7 of the Companies (Accounts) Rules 2014.

14. According to the information and explanations given to me and based on theexamination 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. Accordingly Paragraph 3(xiv) of the Order is not applicable to the Company.

15. According to the information and explanations given to me and based on theexamination of the records of the Company the Company has not entered into non cashtransactions with directors or persons connected with them. Accordingly Paragraph 3(xv) ofthe Order is not applicable to the Company.

16. In my opinion and according to the explanations given to me the Company is notrequired to be registered under section 45-IA of the Reserve Bank of India Act 1934.Accordingly Paragraph 3(xvi) of the Order is not applicable to the Company.

For Sheth Doctor and Associates
Chartered Accountants
(Firm Regn. No. 124822W)
Paresh S Doctor
Proprietor
Membership No. 36056
Place : Mumbai.
Date : 10th May 2017

ANNEXURE "B" TO THE INDEPENDENT AUDITOR'S REPORT OF EVEN DATE ON THEFINANCIAL STATEMENTS OF INDOKEM LIMITED

(REFERED TO IN PARAGRAPH 1(F) UNDER ‘REPORT ON OTHER LEGAL AND REGULATOR YREQUIREMENTS' OF OUR REPORT OF EVEN DATE)

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

I have audited the internal financial controls over financial reporting of IndokemLimited ("the Company") as at March 31 2017 in conjunction with myaudit of the financial statements of the Company for the year ended on that date.

Management's Responsibility for Internal Financial Controls

The Company's management is responsible for establishing and maintaining internalfinancial controls over financial reporting criteria established by the Companyconsidering the essential components of internal control stated in the Guidance Note onAudit of Internal Financial Controls Over Financial Reporting issued by the Institute ofChartered Accountants of India. These responsibilities include the design implementationand maintenance of adequate internal financial controls that were operating effectivelyfor ensuring the orderly and efficient conduct of its business including adherence toCompany's policies the safeguarding of its assets the prevention and detection of fraudsand errors the accuracy and completeness of the accounting records and the timelypreparation of reliable financial information as required under the Companies Act 2013.

Auditors' Responsibility

My responsibility is to express an opinion on the Company's internal financial controlsover financial reporting based on our audit. I conducted our audit in accordance with theGuidance Note on Audit of Internal Financial Controls over Financial Reporting (the"Guidance Note") issued by the Institute of Chartered Accountants of India andthe Standards on Auditing prescribed under Section 143(10) of the Companies Act 2013 tothe extent applicable to an audit of internal financial controls. Those Standards andGuidance Note require that I comply with ethical requirements and to obtain reasonableassurance about whether adequate internal financial controls over financial reporting wasestablished and maintained and if such controls operated effectively in all materialrespects.

My audit involves performing procedures to obtain audit evidence about the adequacy ofinternal financial controls system over financial reporting and their effectiveness. Myaudit of internal financial controls over financial reporting includes obtaining anunderstanding of internal financial controls over financial reporting assessing the riskthat a material weakness exists and testing and evaluating the design and operatingeffectiveness of internal controls based on the assessed risk. The procedures selecteddepend upon the auditor's judgment including the assessment of the risks of materialmisstatement of the financial statements whether due to fraud or error.

I believe that the audit evidence I have obtained is sufficient and appropriate toprovide a basis for my audit opinion on the Company's internal financial controls systemover financial reporting system.

Meaning of Internal Financial Controls Over Financial Reporting

A Company's internal financial control over financial reporting is a process designedto provide reasonable assurance the preparation of financial regarding the reliability offinancial statements for external purposes in accordance with generally acceptedaccounting principles. A Company's internal financial control over financial reportingincludes those policies and procedures that

(1) Pertain to the maintenance of records that in reasonable detail accurately andfairly reflect the transactions and dispositions of the assets of the Company;

(2) Provide reasonable assurance that transactions are recorded as necessary to permitpreparation of financial statements in accordance with generally accepted accountingprinciples and that receipts and expenditures of the Company are being made only inaccordance with authorizations of management and directors of the Company; and

(3) Provide reasonable assurance regarding prevention or timely detection ofunauthorized acquisition use or disposition of the Company's assets that could have amaterial 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 may 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 controlsover financial reporting may become inadequate because of the changes in the conditionsor that the degree of compliance with the policies or procedures may deteriorate.

Opinion

Following weaknesses although not material are observed on checking of InternalFinancial Controls and the controls needs to be strengthened:

a) In case of Cash on hand it is observed that entries of cash vouchers are not postedregularly and Cashier is also working as accountant for cash transactions and hencesegregation of duties is required therein.

b) In case of Sales no formal price lists are followed and it is explained that asmost of the products are tailor-made and no uniform pricing is possible. It is alsoobserved that Purchase Orders from customers are not obtained formally in many cases asthe same is explained to have been obtained verbally. Proper controls to be placed onamendment in Delivery Orders while preparing delivery challans at the time of actualdispatches.

c) In case of Purchases of Goods and Fixed Assets process of Selection of the vendorsto be formalized and comparative evaluation process to be introduced except for purchasesof items for which no alternative supplier is available.

With reference to my above comments in my opinion and to the best of my informationand according to the explanations given to me the Company has in all material respectsan adequate internal financial controls system reporting and such internal financialcontrols over financial reporting were operating and such internal over financialfinancial controls over financial reporting were operating effectively as at March 312017 based on the internal financial controls over financial reporting criteriaestablished by the Company considering the essential components of internal financialcontrol stated in the Guidance Note on audit of Internal Financial Reporting issued by theInstitute of Chartered Accountants of India.

I have considered the weaknesses identified and reported above in determining thenature timing and extent of audit tests applied in our audit of the financial statementsof the Company for the year ended on March 31 2017 and the weakness does not affect ouropinion on the said financial statements of the Company.

For Sheth Doctor and Associates
Chartered Accountants
(Firm Regn. No. 124822W)
Paresh S Doctor
Proprietor
Membership No. 36056
Place : Mumbai.
Date : 10th May 2017