Report on the Financial Statements
We have audited the accompanying standalone financial statements of M/s Genera AgriCorp Limited ("the Company") which comprise the Balance Sheet as at 31March 2016 the Statement of Profit and Loss and the Cash Flow Statement for the year thenended and a summary of the 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 preparation andpresentation of these standalone financial statements that give a true and fair view ofthe financial position financial performance 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 read with Rule 7 of the Companies(Accounts) Rules2014. 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.
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 accounting and auditingstandards and matters which are required to be included
in the audit report under the provisions 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 thedisclosures 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 controls 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. An audit also includes evaluating theappropriateness of the accounting policies used and the reasonableness of the accountingestimates made by the Company's Directors as well as evaluating the overall presentationof 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.
Basis for Qualified Opinion
a. The Company carries investments in its wholly owned subsidiaries amounting to Rs.351.38 lakhs which have not commenced any operations since inceptions and company may notfully recover its investments. The company has not made any provision for permanentdiminution in value of the investments.
b. The Company had advanced certain amounts as Inter-Corporate loans totaling Rs.1032.55 Lakhs and had given advances for Land and farmers lease rental deposit totalingRs. 2321.48 Lakhs to field /staff totaling to Rs. 100.11 lakhs which are outstandingsince long time. Considering the fact that these are outstanding since long time andCompany's efforts in recovering the same are not fully yielding desired results. Thepossible loss on account of this has not been recognized in the financial statements.
c. The Company had continued to provide Depreciation as per the rates prescribed inCompanies Act 1956 as against the new rates prescribed in Companies Act 2013. We areunable to quantify the resultant differential impact in the absence of determination ofthe remaining useful life as per the Companies Act 2013 by the Company (Refer Note No2.05) d. The outstanding balances of trade receivables trade payables are subject toconfirmation and reconciliation. The consequential adjustments if any arising out ofthese are not quantifiable.
According to the management it is not possible to estimate the losses and consequentlyquantify the amount of provision required in the above cases.
Had the company estimated and provided for the losses as mentioned (a) to (c) of abovethe profit stated in the statement of profit and loss would have been lower by suchamount; the carrying value of investments in the Balance sheet would have been lower bythe amount of provision with respect to item mentioned in paragraph (a) of the above; theamount of loans and advances in the Balance sheet would have been lower by the amount ofprovision with respect to item mentioned in paragraph (b) of the above; the amount ofFixed assets in the Balance Sheet would have been lower by the depreciation with respectto item mentioned in paragraph (c) of the above.
In our opinion and to the best of our information and according to the explanationsgiven to us except for the effects of the matters described in the "Basis forqualified opinion" paragraph the aforesaid standalone financial statements give theinformation required by the Act in the manner so required and give a true and fair view inconformity with the accounting principles generally accepted in India of the state ofaffairs of the Company as at 31 March 2016 and its profit and its cash flow for the yearended on that date.
Emphasis of Matter
Attention is invited to the following:-
(a) Note No 26 (Contingent Liabilities) relating to the show cause notice issued by theEnforcement Directorate on certain alleged lapses by the company relating to certainfilings under the provisions of Foreign Exchange Management Act the financial impact ofwhich is not quantifiable at the moment;
The corresponding penal consequences presently cannot be determined; accordingly noprovision for any liability and/or adjustment that may result has been made in thestandalone financial statements. Our opinion is not qualified in respect of the aforesaidmatters.
Report on Other Legal and Regulatory Requirements
1. As required by Section 143(3) of the Act we report that:
(a) We have sought and except for the matters described in the Basis for QualifiedOpinion paragraph obtained all the information and explanations which to the best of ourKnowledge and belief were necessary for the purposes of our audit;
(b) Except for the possible effects of the matters described in the Basis for QualifiedOpinion paragraph in our opinion proper books of account as required by law have beenkept by 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 effects of the matters described in the Basis for Qualified opinionparagraph and Emphasis matter paragraph above in our opinion the aforesaid standaloneFinancial Statements comply with the Accounting Standards specified under Section 133 ofthe Act read with Rule 7 of the Companies (Accounts) Rules 2014;
(e) The matter described in the Basis for Qualified Opinion Paragraph above and thematters described under the Emphasis of
Matter paragraph in our opinion may have an adverse effect on the functioning of thecompany;
(f) On the basis of the written representations received from the directors as on31March 2016 taken on record by the Board of Directors none of the directors isdisqualified as on 31March 2016 from being appointed as a director in terms of Section164(2) of the Act;
(g) With respect to the adequacy of internal financial controls over financialreporting of the Company and the operating effectiveness of such controls refer to ourseparate report in "Annexure A"; and
(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 financial positionin its financial statements refer note no 26 to the financial statements;
ii. The Company did not have any long term contracts including derivative contracts forwhich there were any material foreseeable losses; and
iii.There were no amounts which were required to be transferred to the InvestorEducation and Protection Fund by the Company.
2. 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 Companies Act 2013(Act") we give in "Annexure B statement on the matters specified inparagraphs 3 & 4 of the Order.
Annexures to the Independent Auditors' Report
Annexure - A to the Independent Auditors' report on the Internal Financial Controlsunder Clause (i) of Sub-section 3 of Section 143 of the Companies Act 2013 ("theAct")
We have audited the internal financial controls over financial reporting of M/s GeneraAgri Corp Limited ("the company") as of 31 March 2016 in conjunction withour audit of the financial statements of the company for the year ended on that date.
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 responsibilitiesinclude the design implementation and maintenance of adequate internal financial controlsthat were operating effectively for ensuring the orderly and efficient conduct of itsbusiness including adherence to company's policies the safeguarding of its assets theprevention and detection of frauds and errors the accuracy and completeness of theaccounting records and the timely preparation of reliable financial information asrequired under the Act.
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 aspects.
An 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 judgment including the assessment of the risks ofmaterial misstatement of the financial statements whether due to fraud or error. Webelieve that the audit evidence we have obtained is sufficient and appropriate to providea basis for our audit opinion on the company's internal financial controls system overfinancial 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 misstatement due to error or fraud may occur and not be detected. Alsoprojections of any evaluation of the internal financial control over financial reportingmay become inadequate because of changes in conditions or that the degree of compliancewith the policies or procedures may deteriorate.
According to the information and explanation given to us the Company has notestablished its internal financial control over financial reporting on criteria based onor considering the essential components of internal control stated in the Guidance Note onAudit of Internal Financial Control Over Financial Reporting issued by the Institute ofChartered Accountants of India. Because of this reason we are unable to obtain sufficientappropriate audit evidence to provide a basis for our opinion whether the company hadadequate internal financial controls over financial reporting and whether such internalfinancial controls were operating effectively as at March 31 2016.
We have considered the disclaimer reported above in determining the nature timing andextent of audit tests applied in our audit of the financial statements of the Company andthe disclaimer does not affect our opinion on the financial statements of the Company.
Annexure (B) to the Independent Auditor's Report
Referred to in paragraph 2 under the heading "Report on other legal and regulatoryrequirements" of our report of even date to the financial statements of the companyfor the year ended March 31 2016:
(I) (a) The Company has not maintained proper records showing full particularsincluding quantitative details and situation of fixed assets.
(b) As informed to us the Company had not carried out the physical verification ofFixed Assets during the year under review.
(c) The title deeds of immovable properties are not provided to us therefore we areunable to comment upon.
(ii) The management has conducted physical verification of inventory at reasonableintervals during the year. The discrepancies noticed on physical verification of theinventory is compared to books records which has been properly dealt with in the books ofaccount were not material.
(iii) According to the information and explanations given to us the Company has notgranted any loans secured or unsecured to companies firms LLPs or other parties coveredin the register maintained under Section 189 of the Companies Act 2013. Accordingly theprovisions of clause 3(iii)(a)(b) and (c) of the Order are not applicable to the Companyand hence not commented upon.
(iv) In our opinion and according to the information and explanations given to us thecompany has complied with the provisions of section 185 and I86 of the Companies Act 2013In respect of loans investments guarantees and security.
(v) According to the information and explanations given to us the Company has notaccepted any deposits from the public and hence the directives issued by the Reserve Bankof India and the provisions of Sections 73 to 76 or any other relevant provisions of theAct and the Companies (Acceptance of Deposit) Rules 2015 with regard to the depositsaccepted from the public are not applicable.
(vi) As informed to us the maintenance of Cost Records has not been specified by theCentral Government under sub-section (1) of Section 148 of the Act in respect of theactivities carried on by the company.
(vii) (a) According to information and explanations given to us and on the basis of ourexamination of the books of account and records the Company have not been regular indepositing undisputed statutory dues including Provident Fund Employees State InsuranceIncome-Tax Sales tax Service Tax Duty of Customs Duty of Excise Value added Tax Cessand any other statutory dues with the appropriate authorities.
According to the information and explanations given to us undisputed amounts payablein respect of the above were income tax pertaining to the financial year ended 31 March2014 amounting to 2.02 Lakhs and income tax pertaining to the financial year ended 31March 2015 amounting to 5.88 Lakhs were in arrears as at March 31 2016 for a period ofmore than six months from the date on when they become payable.
(b) According to the information and explanation given to us following are the dueamounts pertaining to the Income Tax which have not been deposited on account of disputefor which appeals are pending before the Hon'ble Income Tax Appellate Tribunal.
|SI. No ||Assessment Year ||Tax Demand against which appeal was preferred (all Rs. in Lakhs) |
|1 ||2007-2008 ||97.98 |
|2 ||2008-2009 ||37.87 |
|3 ||2009-2010 ||248.41 |
|4 ||2010-2011 ||662.20 |
|5 ||2011-2012 ||1850.08 |
|6 ||2012-2013 ||1019.84 |
|7 ||2013-2014 ||538.94 |
| ||TOTAL ||4454.82 |
(viii) The Company does not have any loans or borrowings from any financialinstitution banks government or debenture holders during the year. Accordinglyparagraph 3(viii) of the Order is not applicable.
(ix) Based upon the audit procedures performed and the information and explanationsgiven by the management the company has not raised moneys by way of initial public offeror further public offer including debt instruments and term Loans. Accordingly theprovisions of clause 3 (ix) of the Order are not applicable to the Company and hence notcommented upon.
(x) 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 its officers or employees has been noticedor reported during the year.
(xi) According to the information and explanations give to us and based on ourexamination of the records of the Company the Company has paid/provided for managerialremuneration in accordance with the requisite approvals mandated by the provisions ofsection 197 read with Schedule V to the Act.
(xii) In our opinion the Company is not a Nidhi Company. Therefore the provisions ofclause 4 (xii) of the Order are not applicable to the Company.
(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 where 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) In our opinion the company is not required to be registered under section 45 IAof the 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.
| ||For G L N Prasad & Co |
| ||Chartered Accountants |
| ||Firm Reg. no: 015176S |
| ||G L N Prasad |
|Place: Hyderabad ||Partner |
|Date: 30.05.2016 ||Membership No: 214735 |