The Members Of CIAN Agro Industries& Infrastructure Limited
Report on the Financial Statements
We have audited the accompanying (Standalone) financial statements of CIAN AgroIndustries & Infrastructures Limited which comprise the Balance Sheet as at March 312017 the Statement of Profit and Loss Cash Flow Statement for the year then ended and asummary of significant accounting policies and other explanatory information.
Management's Responsibility for the Financial Statements
The Company's Board of Directors is responsible for the matters stated in Section134(5)ofthe Companies Act 2013 with respect to the preparation of these financialstatements that give a true and fair view of the financial position financial performanceand cash flows of the Company in accordance with the accounting principles generallyaccepted in India including the Accounting Standards specified under Section 133 of theAct read with Rule 7 of the Companies (Accounts) Rules 2014. This responsibility alsoincludes maintenance of adequate accounting records in accordance with the provisions ofthe Act for safeguarding the assets of the Company and for preventing and detecting fraudsand other 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 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 financial statements based on ouraudit.
We 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.
We conducted our audit in accordance with the Standards on Auditing specified underSection 143(10) of the Act. Those Standards require that we 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 andthe disclosures in the financial statements. The procedures selected depend on theauditor's judgment including the assessment of the risks of material misstatement of thefinancial statements whether due to fraud or error. In making those risk assessments theauditor considers 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 anopinion on whetherthe Company has in place an adequate internal financial controls systemoverfinancial reporting and the operating effectiveness of such controls. An audit alsoincludes evaluating the appropriateness of the accounting policies used and thereasonableness of the accounting estimates made by the Company's Directors as well asevaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the standalone financial statements
In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid financial statements give the information requiredbytheActinthe manner so required and give a true and fair view in conformity with theaccounting principles generally accepted in India of the state of affairs of the Companyas at March 312017 and its Profit/Loss and its Cash Flow for the year ended on thatdate.
EMPHASIS OF MATTER
Without qualifying our opinion attention is drawn to the following matters:
A) Note No. A. 10 to the financial statements: On the basis of legal and professionalopinion during the year company had written off the unconfirmed/ unreconciled old debitbalances of Sundry Debtors and Advances amounting to Rs. 11296017/-and also writtenback unconfirmed/unreconciled old credit balances amounting to Rs. 17813381/-.
B) Loans and Advances includes VAT Claims Receivable amounting to Rs. 3087864/- thedetails of which are not available. However according to management as the previousyears' VAT assessments are not completed these are not provided for.
Ouropinion is not qualified in respect of above matters.
Report on Other Legal and Regulatory Requirements
1. As required bythe Companies (Auditor's Report) Order 2016 as amended issued bytheCentral Government of India in terms of sub-section (11) of section 143 of the Ad we givein the "Annexure A" a statement on the matters specified in paragraphs 3 and 4of the Order.
2. As required by section 143 (3) of the Act we report that:
a. We have sought except for the matters described in the basis for Qualified Opinionparagraph have obtained all the information and explanations which to the best of ourknowledge and belief were necessary for the purpose of our audit;
b. Except for the possible effects of the matters described in the Basis of QualifiedOpinion paragraph In our opinion proper books of account as required by law have been keptby the Company so far as it appears from our examination of those books;
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. Except for the possible effects of the matters as described in the Basis ofQualified opinion paragraph In our opinion the aforesaid (Standalone) financialstatements comply with the Accounting Standards specified under section 133 of the Actread with Rule 7 of the Companies (Accounts) Rules 2014.
e. On the basis of written representations received from the directors as on March 312017 taken on record bythe 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 to ourseparate Report in "Annexure B".
g. 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 does not have any pending litigations which would impact its financialposition.
ii. The Company did not have any long-term contracts including derivative contracts forwhich there were any material foreseeable losses.
iii. There were no amounts which were required to be transferred to the InvestorEducation and Protection Fund by the Company.
"Annexure A" to the Independent Auditors' Report
Referred to in paragraph 1 under the heading 'Report on Other Legal & RegulatoryRequirement' of our report of even date to the financial statements of the Company for theyear ended March 312017:
1) IN respect of Fixed Assets:
(a) The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets;
(b) The Fixed Assets have been physically verified by the management in a phasedmanner designed to cover all the items over a period of one year which in our opinionis reasonable having regard to the size of the company and nature of its business.Pursuant to the program the fixed asset have been physically verified by the managementduring the year and no material discrepancies between the books records and the physicalfixed assets have been noticed as confirmed bythe management.
(c) The title deeds of immovable properties are held in the name of the company.
2) In respect of Inventory:
(a) The stocks have been physically verified during the year by the management atreasonable intervals. Inour opinion the frequency of verification is reasonable.
(b) The procedures of physical verification of inventory followed bythe management arereasonable and adequate in relation to the size of the company and nature of its business.
(c) On the basis of our examination of the inventory records of the company we are ofthe opinion that the company is maintaining proper records of its inventory. As informedto us there were no discrepancies noticed on physical verification between the physicalstock and the book records.
3) The Company has not granted any loans secured or unsecured to companies firmsLimited Liability partnerships or other parties covered in the Register maintained undersection 189 of the Act. Accordingly the provisions of clause 3 (iii)
(a) to (C) of the Order are not applicable to the Company and hence not commented upon.
4) In our opinion and according to the information and explanations given to us thecompany has complied with the provisions of section 185 and 186 of the Companies Act 2013In respect of loans investments guarantees and security.
5) The Company has not accepted any deposits from the public and hence the directivesissued by the Reserve Bank of India and the provisions of Sections 73 to 76 or any otherrelevant provisions of the Act and the Companies (Acceptance of Deposit) Rules 2015 withregard to the deposits accepted from the public are not applicable.
6) As informed to us the maintenance of Cost Records has not been specified by theCentral Government under subsection (1) of Section 148 of the Act in respect of theactivities earned on bythe company.
7) (a) According to information and explanations given to us and on the basis of ourexamination of the books of account and records the Company has been generally regularin depositing undisputed statutory dues including Provident Fund Employees StateInsurance Income-Tax Sales tax Service Tax Duty of Customs Duty of Excise Valueadded Tax Cess Professions and any other statutory dues with the appropriate authorities.According to the information and explanations given to us no undisputed amounts payablein respect of the above were in arrears as at March 312017 for a period of more than sixmonths from the date on when they become payable.
(b) According to the information and explanation given to us there are no dues ofincome tax sales tax service tax duty of customs duty of excise value added taxoutstanding on account of any dispute.
8) In our opinion and according to the information and explanations given to us theCompany has not defaulted in the repayment of dues to banks.
9) Based upon the audit procedures performed and the information and explanations givenby the management the company has not raised moneys by way of initial public offer orfurther public offer including debt instruments. Term Loans taken from Banks have beenutilised for the purpose they were raised.
10) Based upon the audit procedures performed and the information and explanationsgiven by the management we report that no fraud by the Company or on the company by itsofficers or employees has been noticed or reported during the year.
11) Based upon the audit procedures performed and the information and explanationsgiven by the management the managerial remuneration has been paid or provided inaccordance with the requisite approvals mandated by the provisions of section 197 readwith Schedule V to the Companies Act;
12) In our opinion the Company is not a N id hi Company. Therefore the provisions ofclause 4 (xii) of the Order are not applicable to the Company.
13) In ouropinion all transactions with the related parties are in compliance withsection 177 and 188 of Companies Act 2013 and the details have been disclosed in theFinancial Statements as required by the applicable accounting standards.
14) Based upon the audit procedures performed and the information and explanationsgiven by the management the company has not made any private placement of shares or fullyor partly convertible debentures during the year under review.
The Hon'ble BIFR on 20"'July 2016 approved a Scheme of Revival in which theCompany has converted its Unsecured Loans of Rs. 199052950/-into Equity Shares onPreferential Basis. It also granted exemption to the Company from the provisions ofCompanies Act 2013 and SEBI (Substantial Acquisition of Shares and Take over) Guidelinesregarding preferential allotment of Equity shares to Promoters Promoter groups and theirAssociates. Accordingly the provisions of clause 3 (xiv) of the Order are not applicableto the Company and hence not commented upon.
15) Based upon the audit procedures performed and the information and explanationsgiven by the management the company has not entered into any non-cash transactions withdirectors or persons connected with him. Accordingly the provisions of clause 3 (xv)oftheOrder are not applicable to the Company and hence not commented upon.
16) In ouropinion the company is not required to be registered under section 45lAofthe Reserve Bank of India Act 1934 and accordingly the provisions of clause 3 (xvi)of the Order are not applicable to the Company and hence not commented upon.
"Annexure B" to the Independent Auditor's Report of even date on theStandalone Financial Statements of CIAN Agro Industries & Infrastructures LimitedReport on the Internal Financial Controls under Clause (1) of Sub-section 3 of Section 143of the Companies Act 2013
We have audited the Internal financial controls over financial reporting of CIAN AgroIndustries & Infrastructures Limited as of March 312017 in conjunction with our auditof the standalone 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 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 requiredunderthe Companies Act 2013.
Our responsibility is to express an opinion on the Company's internal financialcontrols overfinancial 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 overfinancial 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 overfinancial 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 judgment 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. However properly documented processes/ policies for recordingof purchase Sales Manufacturing activity inventory payroll statutory compliances etc.were not available for our verification.
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 overfinancialreporting 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 overfinancialreporting 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 controloverfinancial reporting may become inadequate because of changes in conditions or thatthe degree of compliance with the policies or procedures may deteriorate.
Emphasis of Matter
Attention is drawn to note no A.17 of the Notes to Accounts where Standard OperatingProcedures (SOPs) are being reviewed for strengthening of internal controls. Tracking ofinter SOP processes to confirm controls was not possible in absence of such documentation.
Our opinion however is not qualified in respect of above matter.
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 March 312016 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 bythe Institute of CharteredAccountants of India.
Forand on behalf of
P. G. Joshi & Co
Atul A. Joshi
Membership number: 108849