TO THE MEMBERS OF ARIES AGRO LIMITED
Report on the Standalone Financial Statements
We have audited the accompanying standalone financial statements of ARIES AGROLIMITED ("the Company") which comprise the Balance Sheet as at 31st March2016 the Statement of Profit and Loss and the Cash Flow Statement for the year thenended and a summary of the signifi cant accounting policies and other explanatoryinformation.
Managements Responsibility for the Standalone Financial Statements
The Companys Board of Directors is responsible for the matters stated in Section134(5) of the Companies Act 2013 ("the Act") with respect to the preparationand presentation of these standalone financial statements that give a true and fair viewof the financial position financial performance and cash fl ows of the Company inaccordance with the accounting principles generally accepted in India including theAccounting Standards specifi ed under Section 133 of the Act read with Rule 7 of theCompanies (Accounts) Rules 2014. This responsibility also includes maintenance ofadequate accounting records in accordance with the provisions of the Act for safeguardingthe assets of the Company and for preventing and detecting frauds and otherirregularities; selection and application of appropriate accounting policies; makingjudgements 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 financial statements that give a true and fair viewand are free from material misstatement whether due to fraud or error.
Our responsibility is to express an opinion on these standalone financial statementsbased on our audit. We have taken into account the provisions of the Act the accountingand auditing standards and matters which are required to be included in the audit reportunder the provisions of the Act and the Rules made there under. We conducted our audit inaccordance with the Standards on Auditing specifi ed under Section 143(10) of the Act.Those Standards require that we comply with ethical requirements and plan and perform theaudit to obtain reasonable assurance about whether the financial statements are free frommaterial misstatement. An audit involves performing procedures to obtain audit evidenceabout the amounts and the disclosures in the financial statements. The procedures selecteddepend on the auditors judgement including the assessment of the risks of materialmisstatement of the financial statements whether due to fraud or error. In making thoserisk assessments the auditor considers internal financial control relevant to theCompanys preparation of the financial statements that give a true and fair view inorder to design audit procedures that are appropriate in the circumstances but not forthe purpose of expressing an opinion on whether the Company has in place an adequateinternal financial controls system over financial reporting and the operatingeffectiveness of such controls. An audit also includes evaluating the appropriateness ofthe accounting policies used and the reasonableness of the accounting estimates made bythe Companys Directors as well as evaluating the overall presentation of thefinancial statements. We believe that the audit evidence we have obtained is suffi cientand appropriate to provide a basis for our audit opinion on the standalone financialstatements.
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 Act in the manner so required and give a true and fair view in conformity with theaccounting principles generally accepted in India: (a) in the case of the BalanceSheet of the state of affairs of the Company as at 31st March 2016; (b) inthe case of the Statement of Profit and Loss of the Profit of the Company for the yearended on that date; and (c) in the case of the Cash Flow Statement of the cash fl ows ofthe Company for the year ended on that date.
Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditors Report) Order 2015 ("theOrder") issued by the Central Government of India in terms of Sub section (11) ofSection 143 of the Act we give in the Annexure A a statement on the matters specifi edin 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 havesought and obtained all the information and explanations which to the best of ourknowledge 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 [and proper returnsadequate for the purposes of our audit have been received from the branches not visited byus].
(c) The Balance Sheet the Statement of Profit and Loss and the Cash Flow Statementdealt with by this Report are in agreement with the books of account.
(d) In our opinion the Balance Sheet the Statement of Profit and Loss and the CashFlow Statement comply with the Accounting Standards specifi ed under Section 133 of theAct read with Rule 7 of the Companies (Accounts) Rules 2014.
(e) On the basis of the written representations received from the directors as on 31stMarch 2016 taken on record by the Board of Directors none of the directors aredisqualifi ed as on 31st March 2016 from being appointed as a director interms of Section 164(2) of the Act and (f) With respect to the adequacy of the internalfinancial controls over financial reporting of the Company and the operating effectivenessof such controls refer to our separate report in "Annexure B": and (g) withrespect to the other matters to be included in the Auditors Report in accordancewith Rule 11 of the Companies (Audit and Auditors) Rules 2014 in our opinion and to thebest 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 as referred to in the notes to accounts of thesefinancial statements.
ii. The Company has made provision as required under the applicable law or accountingstandards for material foreseeable losses if any on long-term contracts includingderivative contracts.
iii. There has been no delay in transferring amounts required to be transferred tothe Investor Education and Protection Fund by the Company.
ANNEXURE "A" to the Independent Auditors Report
The Annexure referred to in our Independent Auditors Report to the members of theCompany on the standalone financial statements for the year ended 31st March2016 we report that:
i. (a) The company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets.
(b) These fixed assets were physically verifi ed by the management at reasonableintervals. We have been informed that no material discrepancies were noticed on suchphysical verifi cation.
(c) According to the information and explanation given to us and on the basis of ourexamination of the records of the company the title deeds of immovable properties areheld in the name of the company.
ii. According to the information and explanations provided to us the stock ofinventory has been physically verifi ed during the period by the management at reasonableintervals. No material discrepancies were noticed on physical verifi cation of stocks ascompared to book records.
iii. The Company has granted loans to four companies (subsidiaries) covered inthe Register maintained under Section 189 of the Act 2013.
(a) As per information and explanation provided to us the rate of interest andother terms and conditions on which the loans granted by the Company to the bodiescorporate listed in the register maintained under section 189 of the Act were not primafacie prejudicial to the interest of the company.
(b) As per information and explanation provided to us in the case of loansgranted by the company to the bodies corporate listed in the register maintained undersection 189 of the Act the borrowers have been regular in the payment of principal andinterest as stipulated wherever applicable.
(c) As per the information given by the management there are no overdue amountsfor more than ninety days in respect of the loans granted to the bodies corporate listedin the register maintained under section 189 of the Act.
iv. In our opinion and according to the information and explanations given tous the company has complied with the provisions of section 185 and 186 of the Act withrespect to the loans investments guarantees and securities.
v. According to the information and explanations provided by the company TheCompany has not accepted deposits from the public. Hence the question of compliance withthe directives issued by Reserve Bank of India and provision of sections 73 74 75 and 76of the Companies Act 2013 and the Companies (Acceptance of Deposits) Rules 2014 does notarise. No order has been passed by the National Company Law Tribunal or Company Law Boardor RBI in this regard.
vi. The Company has appointed a cost accountant fi rm to carry out the Cost Audit.We have reviewed the cost records maintained by the Company pursuant to the Companies(Cost Accounting Records) Rules 2014 prescribed by the Central Government under section148 (1) of the Companies Act 2013 and are of the opinion that prima facie the prescribedcost records have been maintained. We have however not made a detailed examination ofthe cost records with a view to determine whether they are accurate or complete
vii. (a) According to the information and explanations given to us and therecords of the company examined by us in our opinion the company is generally regular indepositing statutory dues including Provident Fund Employee State Insurance Income TaxSales Tax Wealth Tax Service Tax Custom Duty Excise Duty Value Added Tax Cess andany other material statutory dues except occasional/ minor delays. As per the informationgiven by the management and apparent from the records the undisputed liabilities as on31st March 2016 is for a period exceeding six months from the date of it becoming payableis NIL.
(b) Details of disputed liability in respect of tax dues on account of Income TaxSales Tax Service Tax Custom Duty Excise Duty Value Added Tax Cess together with thestatus and the Forum before which such dispute is pending as on 31st March 2016 is as perAnnexure I.
viii. The company has not defaulted in repayment of loans or borrowing to afinancial institution banks or Government. The Company has not obtained any borrowingsby way of issue of debentures.
ix. According to the information and explanation provided to us the company didnot raise any money by way of initial public offering or further public offer (includingdebt instruments). The company has taken term loans which have been utilized for thepurpose for which such loans were obtained.
x. During the course of our examination of books and records of the companycarried out in accordance with generally accepted auditing practices in India andaccording to the information and explanations given to us we have neither come across anyinstance of material fraud by the company or on the company by its offi cers or employeesnoticed or reported during the year nor we have been informed of any such case by themanagement.
xi. According to the information and explanations given to us and based on ourexamination of the records of the company the company has paid/provided for managerialremuneration in accordance with the requisites approvals mandated by the provisions ofsection 197 read with Schedule V to the Act.
xii. In our opinion and according to the information and explanations given to usthe company is not a nidhi company. Accordingly paragraph 3(xii) of the Order is notapplicable.
xiii. According to the information and explanations given to us and based on ourexamination of the records of the Company transactions with the related parties are incompliance with sections 177 and 188 of the Act wherever applicable and details of suchtransactions have been disclosed in the financial statements as required by the applicableaccounting standards.
xiv. According to the information and explanations give to us and based on ourexamination of the records of the Company the Company has not made any preferentialallotment or private placement of shares or fully or partly convertible debentures duringthe year.
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 paragraph 3(xv) ofthe Order is not applicable.
xvi. The Company is not required to be registered under section 45-IA of theReserve Bank of India Act 1934.
Annexure I to Clause vii(b) of Auditors Report
Details of disputed statutory dues outstanding as on 31st March 2016
|Nature of Dues ||Period to which payment relates ||Forum where is the dispute pending ||Particulars of Dispute ||Tax Outstanding Rs. |
|Sales Tax (Kanpur) ||1994 1995 ||Assessing Authority (5) - Commercial Tax Department on interstate Kanpur ||C Form (DC) Asst. Applicability of of sale poultry products ||93173 |
|Sales Tax (Kanpur) ||1985-1986 ||Tribunal ||Classifi cation of goods ||175000 |
| || || ||Total ||268173 |
|Income Tax ||2006-07 ||Income Tax Appellate Tribunal ||Disallowance of Notional Interest on Advances given ||441660 |
|Income Tax ||2008-09 ||Commissioner of Income (Appeals) XXII Mumbai ||Tax Dissallowance of deduction u/s 35D. ||3040640 |
|Income Tax ||2009-10 ||Commissioner of Income (Appeals) XXII Mumbai ||Tax Dissallowance of deduction u/s 35D. ||2592730 |
|Income Tax ||2010-11 ||Commissioner of Income (Appeals) XXI Mumbai ||Tax Dissallowance of deduction u/s 35D. ||2698410 |
|Income Tax ||2012-13 ||Dispute Resolution Panel Mumbai || I (1) Transfer Pricing adjustment ||16183543 |
| || || ||(2) Disallowance of deduction u/s 35D || |
| || || ||(3) Disallowance u/s 2(24)(x) r.w.s 36(1) (va) and || |
| || || ||(4) Disallowance u/s 14A r.w.r 8D. || |
| || || ||Total ||24956983 |
|Central Excise & Customs ||2011-12 & 2012-13 ||Central Excise & Service Appealete Tribunal (CESTAT) ||Tax Classifi cation of Goods Imported ||2991582 |
|Central Excise & Customs ||March 2011 to October 2012 ||Central Excise & Service Appealete Tribunal (CESTAT) ||Tax Classifi cation of Goods Manufactured ||38104558 + 38104558 (Penalty) |
| || || ||Total ||79200698 |
ANNEXURE "B"to the Independent Auditors Report
Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section143 of the Companies Act 2013 ("the Act")
We have audited the internal financial controls over financial reporting of Aries AgroLimited ("the Company") as of 31 March 2016 in conjunction with our audit of thestandalone financial statements of the Company for the year ended on that date.
Managements Responsibility for Internal Financial Controls
The Companys 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 effi cientconduct of its business including adherence to companys policies the safeguardingof its assets the prevention and detection of frauds and errors the accuracy andcompleteness of the accounting records and the timely preparation of reliable financialinformation as required under the Companies Act 2013.
Our responsibility is to express an opinion on the Companys 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 auditinvolves performing procedures to obtain audit evidence about the adequacy of the internalfinancial controls system over financial reporting and their operating effectiveness. Ouraudit of internal financial controls over financial reporting included 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 control based on the assessed risk. The procedures selecteddepend on the auditors judgment including the assessment of the risks of materialmisstatement of the financial statements whether due to fraud or error. We believe thatthe audit evidence we have obtained is suffi cient and appropriate to provide a basis forour audit opinion on the Companys internal financial controls system over financialreporting.
Meaning of Internal Financial Controls over Financial Reporting
A companys internal financial control over financial reporting is a processdesigned to provide reasonable assurance regarding the reliability of financial reportingand the preparation of financial statements for external purposes in accordance withgenerally accepted accounting principles. A companys internal financial control overfinancial reporting includes those policies and procedures that (1) pertain to themaintenance of records that in reasonable detail accurately and fairly refl ect thetransactions and dispositions of the assets of the company; (2) provide reasonableassurance that transactions are recorded as necessary to permit preparation of financialstatements in accordance with generally accepted accounting principles and that receiptsand expenditures of the company are being made only in accordance with authorisations ofmanagement and directors of the company; and (3) provide reasonable assurance regardingprevention or timely detection of unauthorised acquisition use or disposition of thecompanys assets that could have a material effect on the financial statements.
Inherent Limitations of Internal Financial Controls over Financial Reporting
Because of the inherent limitations of internal financial controls over financialreporting including the possibility of collusion or improper management override ofcontrols material misstatements due to error or fraud may occur and not be detected.Also projections of any evaluation of the internal financial controls over financialreporting to future periods are subject to the risk that the internal financial controlover financial reporting may become inadequate because of changes in conditions or thatthe degree of compliance with the policies or procedures may deteriorate.
In our opinion the Company has in all material respects an adequate internalfinancial controls system over financial reporting and such internal financial controlsover financial reporting were operating effectively as at 31 March 2016 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 Kirti D. Shah & Associates |
| ||Chartered Accountants |
| ||Firm Registration No. 115133W |
| ||Kirti D. Shah |
|Place : Mumbai ||Proprietor |
|Date : 30th May 2016 ||Membership No. 032371 |