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Indag Rubber Ltd.

BSE: 509162 Sector: Others
NSE: N.A. ISIN Code: INE802D01023
BSE 00:00 | 24 Apr Indag Rubber Ltd
NSE 05:30 | 01 Jan Indag Rubber Ltd
OPEN 53.00
PREVIOUS CLOSE 53.50
VOLUME 5910
52-Week high 119.95
52-Week low 45.90
P/E 10.94
Mkt Cap.(Rs cr) 146
Buy Price 52.70
Buy Qty 289.00
Sell Price 58.85
Sell Qty 115.00
OPEN 53.00
CLOSE 53.50
VOLUME 5910
52-Week high 119.95
52-Week low 45.90
P/E 10.94
Mkt Cap.(Rs cr) 146
Buy Price 52.70
Buy Qty 289.00
Sell Price 58.85
Sell Qty 115.00

Indag Rubber Ltd. (INDAGRUBBER) - Auditors Report


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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 Rubber Limited ("theCompany") which comprise the Balance Sheet as at 31st March 2019 the Statement ofProfit and Loss the Statement of Changes in Equity and the Statement of Cash Flows forthe year ended on that date and notes to the financial statements including a summary ofsignificant accounting policies and other explanatory information (hereinafter referred toas "the financial statements").

In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid standalone financial statements give the information requiredby the Companies Act 2013 ("the Act") in the manner so required and give a trueand fair view in conformity with the accounting principles generally accepted in India ofthe state of affairs of the Company as at 31st March 2019 the profit changes in equityand its cash flows for the year ended on that date.

Basis for Opinion

We conducted our audit in accordance with the Standards on Auditing (SAs) specifiedunder section 143(10) of the Act. Our responsibilities under those Standards are furtherdescribed in the Auditor's Responsibilities for the Audit of the Standalone FinancialStatements section of our report. We are independent of the Company in accordance withthe Code of Ethics issued by the Institute of Chartered Accountants of India (ICAI)together with the ethical requirements that are relevant to our audit of the standalonefinancial statements under the provisions of the Act and the Rules thereunder and we havefulfilled our other ethical responsibilities in accordance with these requirements and theCode of Ethics. We believe that the audit evidence we have obtained is sufficient andappropriate to provide a basis for our opinion.

Key Audit Matters

Key audit matters are those matters that in our professional judgment were of mostsignificance in our audit of the standalone financial statements of the current period.These matters were addressed in the context of our audit of the standalone financialstatements as a whole and in forming our opinion thereon and we do not provide aseparate opinion on these matters.

The key audit matters How the matter was addressed in our audit
Investments
The Company held current and non-current investments aggregating to Rs.9910.38 lakhs as on 31st March 2019. Our audit procedures on investments included:
We have determined that fair valuation of investments is a key audit matter specially relating to investment of Rs.1383.43 lakhs in SRL 142 Holdings Ltd. (SRL) by way of fully paid up compulsorily convertible preference shares. SRL has interest in oil production and exploration Company in Nigeria. • In relation to Company's investments in mutual funds amounting to Rs.4264.26 lakhswe verified the fair value as on 31st March 2019 with the net asset value of the units given in the statement of accounts received from the mutual funds.
The oil industry is exposed significantly to macroeconomic factors such as commodity prices currency fluctuations interest rate risk and political developments. The assessment of commercial viability and technical feasibility of exploration oil and gas is complex and includes a number of significant variables. (Refer Notes No.5 and 11 to standalone financial statements) • In the case of fair valuation of investments held in SRL 142 Holdings Limited we tested the valuation prepared by the management with 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 Company the Country risk and regulatory frame work prevailing in Nigeria.

 

The key audit matters How the matter was addressed in our audit
Inventories
The Company held inventories of Rs. 3810.49 lakhs as on 31st March 2019. Cost is determined on monthly moving weighted average basis. Our audit procedures included the following:
• We tested the design and effectiveness of controls over the identification of obsolete inventories and obtained an understanding of the Company's process for measuring the amount of write down required.
Given the value of the inventories and number of locations the valuation and existence of inventory is considered a key audit matter. (Refer to Note No.10 to the standalone financial statements).
• We tested sample of inventories to sales subsequent to the year end and ascertained that they were sold at more than their carrying amounts.
• We participated in the physical counts of inventory at plant and selected depots at the year end.
Trade receivables
Management recognized allowances for impairment losses of Rs.42.03 lakhs on trade receivables based on specific known facts or circumstances on customers' abilities to pay. The details of trade receivables and expected credit loss allowances have been disclosed in Note No.12 to the standalone financial statements. Our audit procedures included the following:
• Assessed the recoverability of trade receivables by reference to their historical bad debt expense ageing profiles of the counter parties and historical repayment trends; and
The determination of recoverability of the trade receivables involves significant management judgment and inherent subjectivity given the uncertainty regarding the ability of the trade receivables to settle their debts. Therefore determination of expected credit loss allowance was identified as a key audit matter. • Assessed subsequent collections from customers against the amounts outstanding as at the end of the reporting period.

Information Other than the Standalone 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 and Corporate Governance but does not include thestandalone financial statements and our auditor's report thereon.

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

In connection with our audit of the standalone financial statements our responsibilityis to read the other information and in doing so consider whether the other informationis materially inconsistent with the standalone financial statements or our knowledgeobtained in the audit or otherwise appears to be materially misstated.

If based on the work we have performed we conclude that there is a materialmisstatement of this other information we are required to report that fact. We havenothing to report in this regard.

Responsibilities of Management for the Standalone Financial Statements

The Company's Board of Directors is responsible for the matters stated in section134(5) of the Act with respect to the preparation of these standalone financial statementsthat give a true and fair view of the financial position financial performance (includingother comprehensive income) changes in equity and cash flows of the Company in accordancewith the accounting principles generally accepted in India including the accountingstandards specified under section 133 of the Act. 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; makingjudgments and estimates that are reasonable and prudent; and design implementation andmaintenance of adequate internal financial controls that were operating effectively forensuring the accuracy and completeness of the accounting records relevant to thepreparation and presentation of the standalone financial statements that give a true andfair view and are free from material misstatement whether due to fraud or error.

In preparing the standalone financial statements the Board of Directors is responsiblefor assessing the Company's ability to continue as a going concern disclosing asapplicable matters related to going concern and using the going concern basis ofaccounting unless the Board of Directors either intends to liquidate the Company or tocease operations or has no realistic alternative but to do so.

The Board of Directors are responsible for overseeing the Company's financial reportingprocess.

Auditor's Responsibilities for the Audit of the Standalone Financial Statements

Our objectives are to obtain reasonable assurance about whether the standalonefinancial statements as a whole are free from material misstatement whether due to fraudor error and to issue an auditor's report that includes our opinion. Reasonable assuranceis a high level of assurance but is not a guarantee that an audit conducted in accordancewith SAs will always detect a material misstatement when it exists. Misstatements canarise from fraud or error and are considered material if individually or in theaggregate they could reasonably be expected to influence the economic decisions of userstaken on the basis of these standalone 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 standalonefinancial statements whether due to fraud or error design and perform audit proceduresresponsive to those risks and obtain audit evidence that is sufficient and appropriate toprovide a basis for our opinion. The risk of not detecting a material misstatementresulting from fraud is higher than for one resulting from error as fraud may involvecollusion forgery intentional omissions misrepresentations or the override of internalcontrol.

• 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 standalone financial statements or if such disclosures are inadequate to modify ouropinion. Our conclusions are based on the audit evidence obtained up to the date of ourauditor's report. However future events or conditions may cause the Company to cease tocontinue as a going concern.

• Evaluate the overall presentation structure and content of the standalonefinancial statements including the disclosures and whether the standalone financialstatements represent the underlying transactions and events in a manner that achieves fairpresentation.

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 to communicate with themall relationships 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 standalone financial statementsof the current period and are therefore the key audit matters. We describe these mattersin our auditor's report unless law or regulation precludes public disclosure about thematter or when 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.

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) of the Act we give in"Annexure A" a statement on the matters specified in paragraphs 3 and 4 of theOrder.

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 account 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 Statement of Changes in Equityand the Statement of Cash Flow dealt with by this Report are in agreement with the booksof account;

d) in our opinion the aforesaid standalone financial statements comply with theAccounting Standards specified under section 133 of the Act read with Rule 7 of theCompanies (Accounts) Rules 2014.

e) on the basis of the written representations received from the directors as on 31stMarch 2019 and taken on record by the Board of Directors none of the directors isdisqualified as on 31st March 2019 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 standalone financial statements. Refer Note 36 to the standalone financialstatements;

ii. The Company did not have any long-term contracts including derivative contracts forwhich there were any material foreseeable losses;

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

For Khanna & Annadhanam

Chartered Accountants (Firm's Regn. No. 001297N)

(Sanjeev Srivastava)

Partner

Membership No.502238

Place: New Delhi

Date: April 20 2019

ANNEXURE A TO THE INDEPENDENT AUDITOR'S REPORT

Referred to in paragraph ‘Report on Other Legal and Regulatory Requirements' ofour report of even date to the members of Indag Rubber Limited on the standalone Ind ASfinancial statements as of and for the year ended 31stMarch 2019

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

(b) All fixed assets have not been physically verified by the management during theyear but there is a regular programme of verification which in our opinion is reasonablehaving regard to the size of the Company and the nature of its assets. No materialdiscrepancies were noticed on such verification.

(c) Based on our audit procedures performed for the purpose of reporting the true andfair view of the financial statements and according to information and explanations givenby the management the title deeds of immovable properties are held in the name of theCompany.

ii) The management has conducted physical verification of inventory at reasonableintervals during the year and no material discrepancies were noticed on such physicalverification.

iii) According to the information and explanations given to us 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. Accordingly the provisions of clause 3(iii)(a) (b) and (c) of theOrder are not applicable to the Company and hence not commented upon.

iv) In our opinion and according to the information and explanations given to us thereare no loans and securities granted in respect of which provisions of Section 185 and 186of the Companies Act 2013 are applicable. In our opinion and according to the informationand explanations given to us the Company has complied with provisions of section 186 ofthe Companies Act 2013 in respect of guarantees given and investments made.

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

vi) We have broadly reviewed the books of account maintained by the Company pursuant tothe rules made by the Central Government for the maintenance of cost records under Section148(1) of the Companies Act 2013 related to the manufacture of products and are of theopinion that prima facie the prescribed accounts and records have been made andmaintained. We have not however made a detailed examination of the same.

vii) (a) The Company is generally regular in depositing with appropriate authoritiesundisputed statutory dues including provident fund employees' state insuranceincome-tax duty of customs goods and service tax cess and other material statutory duesapplicable to it.

(b) According to the information and explanations given to us no undisputed amountspayable in respect of provident fund employees' state insurance income-tax duty ofcustoms goods and service tax cess and other material statutory dues were outstanding atthe year end for a period of more than six months from the date they became payable.

(c) According to the records of the Company the dues outstanding of income-taxsales-tax service tax duty of customs excise duty goods and service tax value addedtax and cess on account of any dispute are as follows:

Name of the statute Nature of dues Amount Period to which the amount relates Forum where dispute is pending
(Rs. in lakh)
Income Tax Act 1961 Himachal Pradesh Tax on entry of Goods into Local Area Act 2010 Income tax demand 139.15 A.Y.1998-99 Delhi High Court
Entry Tax 793.35 March 2011 F.Y 2011-12 to 2016-2017 and April to June 2017. Shimla High Court

 

Name of the statute Nature of dues Amount Period to which the amount relates Forum where dispute is pending
(Rs. in lakh)
Central Excise Act 1944 Excise Duty 6.71 April 2006 to March 2009 Customs Excise and Service Tax Appellate Tribunal Chandigarh
Gujrat Sales Tax Act 1969 Non-Submission of C Forms 29.78 F.Y. 2002-03 Deputy Commissioner Vadodara

viii) Based on our audit procedures performed for the purpose of reporting the true andfair view of the financial statements and according to information and explanations givenby the management we are of the opinion that the Company has not defaulted in repaymentof dues to any bank. Further the Company does not have any debentures and loan fromfinancial institution or government.

ix) Based on our audit procedures performed for the purpose of reporting the true andfair view of the financial statements and according to the information and explanationsgiven by the management the Company has not raised any money by way of initial publicoffer / further public offer / debt instruments and term loans and hence reporting underclause is not applicable to the Company and hence not commented upon.

x) Based upon the audit procedures performed for the purpose of reporting the true andfair view of the financial statements and according to the information and explanationsgiven by the management we report that no fraud on or by the officers and employees ofthe Company has been noticed or reported during the year.

xi) Based on our audit procedures performed for the purpose of reporting the true andfair view of the financial statements and according to the information and explanationsgiven by the management we report that the managerial remuneration has been paid /provided in accordance with the requisite approvals mandated by the provisions of Section197 read with Schedule V to the Companies Act 2013.

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

xiii) Based on our audit procedures performed for the purpose of reporting the true andfair view of the financial statements and according to the information and explanationsgiven by the management transactions with the related parties are in compliance withSection 177 and 188 of Companies Act 2013 where applicable and the details have beendisclosed in the notes to the financial statements as required by the applicableaccounting standards.

xiv) According to the information and explanations given to us and on an overallexamination of the balance sheet the Company has not made any preferential allotment orprivate placement of shares or fully or partly convertible debentures during the yearunder review and hence not commented upon.

xv) Based on our audit procedures performed for the purpose of reporting the true andfair view of the financial statements and according to the information and explanationsgiven by the management the Company has not entered into any non-cash transactions withdirectors or persons connected with him.

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

For Khanna & Annadhanam

Chartered Accountants (Firm's Regn. No. 001297N)

(Sanjeev Srivastava)

Partner

Membership No.502238

Place: New Delhi

Date: April 20 2019

ANNEXURE B TO THE INDEPENDENT AUDITOR'S REPORT

Referred to in paragraph ‘Report on Other Legal and Regulatory Requirements' ofour report of even date to the members of Indag Rubber Limited on the standalone Ind ASfinancial statements as of and for the year ended 31stMarch 2019

Report on the Internal Financial Controls Over Financial Reporting under Clause (i) ofSub-section 3 of Section 143 of the Companies Act 2013("the Act")

We have audited the internal financial controls over financial reporting of IndagRubber Limited ("the Company") as of 31st March 2019 in conjunction withouraudit of the standalone Ind AS 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. These responsibilities includethe design implementation and maintenance of adequate internal financial controls thatwere operating effectively for ensuring the orderly and efficient conduct of its businessincluding adherence to company's policies the safeguarding of its assets the preventionand detection of frauds and errors the accuracy and completeness of the accountingrecords and the timely preparation of reliable financial information as required underthe Act.

Auditor's Responsibility

Our responsibility is to express an opinion on the internal financial controls overfinancial reporting of the Company based on our audit. We conducted our audit inaccordance with the Guidance Note on Audit of Internal Financial Controls Over FinancialReporting (the "Guidance Note") issued by the Institute of Chartered Accountantsof India and the Standards on Auditing prescribed under Section 143(10) of the Act to theextent applicable to an audit of internal financial controls both applicable to an auditof Internal Financial Controls and both issued by the Institute of Chartered Accountantsof India. 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 judgement including the assessment of the risks ofmaterial misstatement of the financial statements whether due to fraud or error.

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

Meaning of Internal Financial Controls Over Financial Reporting

A company's internal financial control over financial reporting is a process designedto provide reasonable assurance regarding the reliability of financial reporting and thepreparation of financial statements for external purposes in accordance with generallyaccepted accounting principles. A company's internal financial control over financialreporting includes those policies and procedures that

(1) pertain to the maintenance 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 authorisations of management and directors of the company; and

(3) provide reasonable assurance regarding prevention or timely detection ofunauthorised 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 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.

Opinion

In our opinion the Company has in all material respects an adequate internalfinancial controls system over financial reporting and such internal financial controlsover financial reporting were operating effectively as at 31st March 2019 based on theinternal control over financial reporting criteria established by the Company consideringthe essential components of internal control stated in the Guidance Note on Audit ofInternal Financial Controls Over Financial Reporting issued by the Institute of CharteredAccountants of India.

For Khanna & Annadhanam

Chartered Accountants (Firm's Regn. No. 001297N)

(Sanjeev Srivastava)

Partner

Membership No.502238

Place: New Delhi Date: April 20 2019