To the Members of Granules India Limited
Report on the Standalone Financial Statements
1. We have audited the accompanying standalone financial statements of Granules IndiaLimited ("the Company") which comprises the Balance Sheet as at March 312016the Statement of Profit and Loss and Cash Flow Statement for the year then ended and asummary of significant accounting policies and other explanatory information.
Management's Responsibility for the Standalone Financial Statements
2. The Company's Board of Directors are responsible for the matters stated in Section134(5) of the Companies Act 2013 ("the Act") with respect to the preparation ofthese standalone financial statements that give a true and fair view of the financialposition financial performance and cash flows of the Company in accordance withaccounting principles generally accepted in India including the Accounting Standardsspecified under Section 133 of the Act read with Rule 7 of the Companies (Accounts)Rules 2014. This responsibility also includes maintenance of adequate accounting recordsin accordance with the provisions of the Act for safeguarding of the assets of the Companyand for preventing and detecting frauds and other irregularities; selection andapplication of appropriate accounting policies; making judgments and estimates that arereasonable and prudent; and the design implementation and maintenance of adequateinternal financial controls that were operating effectively for ensuring the accuracy andcompleteness of the accounting records relevant to the preparation and presentation ofthe standalone financial statements that give a true and fair view and are free frommaterial misstatement whether due to fraud or error.
3. 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 thereunder. We conducted our audit inaccordance with the Standards on Auditing issued by the Institute of CharteredAccountants of India as specified under Section 143(10) of the Act. Those Standardsrequire that we comply with ethical requirements and plan and perform the audit to obtainreasonable assurance about whether the standalone financial statements are free frommaterial misstatement.
4. An audit involves performing procedures to obtain audit evidence about the amountsand 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 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 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.
5. 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.
6. In our opinion and to the best of our information and according to the explanationsgiven to us the standalone financial statements give the information required by the Actin the manner so required and give a true and fair view in conformity with the accountingprinciples generally accepted in India of the state of affairs of the Company as at March312016 its Profit and its cash flows for the year ended on that date.
Report on Other Legal and Regulatory Requirements
7. As required by the Companies (Auditor's report) Order 2016 ("the Order")issued by the Central Government of India in terms of sub-section (11) of section 143 ofthe Act we give in the 'Annexure A' a statement on the matters specified in paragraphs 3and 4 of the Order.
8. 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 purpose 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 Statement of Profit and Loss and Cash Flow Statement dealt withby this Report are in agreement with the books of 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 written representations received from the directors as on March 312016 and taken on record by the Board of Directors none of the directors aredisqualified as on March 312016 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 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 disclosed the impact of pending litigations on its financial position inits standalone financial statements - Refer Note 2.40 to the financial statements.
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.
For Kumar & Giri
Date: April 28 2016
Annexure A referred to in paragraph 7 of our report of even date:
(i) (a) The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets.
(b) Fixed assets have been physically verified by the management during the period andno material discrepancies were identified 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 the information and explanationsgiven by the management title deeds of all the immovable properties are held in the nameof the Company.
(ii) (a) The Inventories of raw materials packing materials consumables storeswork-in-progress and finished goods have been physically verified during the year atregular intervals by the management.
(b) The procedures of physical verification of stocks followed by the management arereasonable and adequate in relation to the size of the company and the nature of itsbusiness. In respect of finished goods lying with the consignees the certificate given bythe management is relied upon.
(c) The company is maintaining the proper records for recording the inventory and thediscrepancies noticed on verification of stocks as compared to books were not material andhave been properly dealt with in the books of accounts.
(iii) The Company has granted loans to parties covered in the register maintained undersection 189 of the Act and complied with the provisions of the said Act..
(iv) 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 Act in respect ofloans investments guarantees and security to the extent applicable to it.
(v) According to the information and explanations given to us the company has notaccepted any deposits from the public within the meaning of section 73 to 76 of the Actand the rules framed thereunder. Therefore the provisions of clause 3(v) of the order arenot applicable to the Company.
(vi) The Central Government has prescribed maintenance of cost records under theprovisions of Section 148(1) of the Companies Act 2013 in respect of manufacturingactivities of the company. The company has maintained accounts and records of suchactivities.
(vii) (a) The company is regular in depositing with appropriate authorities undisputedstatutory dues including Provident Fund Employees State Insurance Income tax WealthTax Sales tax Service tax Customs Duty Excise Duty Cess and other applicablestatutory dues with the appropriate authorities. According to the information andexplanations given to us no undisputed amounts payable in respect of outstanding statutorydues as at the last day of the year ending 31.03.2016 for period exceeding 6 months fromthe date they became payable.
(b) Reference is invited to Note No.2.40 regarding pending litigations with variousauthorities in respect of Income- tax Customs duty Sales tax Service tax Excise dutyCess.
(viii) According to the records of the Company examined by us and the information andexplanations given to us the Company has not defaulted in repayment of dues to anyfinancial institution bank Government or debenture holders as at the Balance Sheet date.
(ix) According to the information and explanations given to us and based on ourverification the Company has not raised moneys by way of public issue and moneys raisedby way of term loans were applied for the purpose for which the loans were obtained.
(x) Based upon the audit procedures performed for the purpose of reporting the true andfair view of the financial statements and as per the information and explanations given bythe management we report that no fraud on or by the Company has been noticed or reportedduring the year.
(xi) In our opinion the managerial remuneration has been paid or provided inaccordance with the requisite approvals mandated by the provisions of section 197 readwith Schedule V of the Companies Act 2013.
(xii) In our opinion the Company is not a chit fund or a nidhi / mutual benefit fund /society. Therefore the provisions of clause 3(xii) of the Order are not applicable to theCompany.
(xiii) In our opinion all the transactions with the related parties are in compliancewith section 177 and 188 of the Act where applicable and the details have been disclosedin the notes to the financial statements as required by applicable accounting standards.
(xiv) During the year the Company has made preferential allotment of warrants topromotors and promotor group entities numbering 4095230 warrants @ 84.91 each and18656000 warrants @ 95.30 each totalling to H21256.43 lakhs. Out of the said warrantsa total of 4095230 at H84.91 each and 7255000 at H95.30 each were converted intoequity shares of H1/- each. The company has complied with the requirement of section 42 ofthe Companies Act 2013 for the allotment of warrants/shares and has applied the fundsreceived there from for the purpose for which the funds were raised.
(xv) According to the information and explanations given to us and on an overallexamination of the financial statements of the Company we report that the Company has notentered into any non-cash transaction with directors or persons connected with him.
(xvi) In our opinion the Company is not required to be registered under section 45-IAof the Reserve Bank of India Act 1934.
For Kumar & Giri
Date: April 28 2016
Annexure to the independent auditors report of even date on the Standalonefinancial statements of Granules India Limited
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 GranulesIndia Limited ("the Company") as of March 312016 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 essential components of internal control stated in theGuidance Note on Audit of Internal Financial Controls over Financial Reporting issued bythe Institute of Chartered Accountants of India. These responsibilities include thedesign implementation and maintenance of adequate internal financial controls that wereoperating 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.
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 as specified under section143(10) of the Act to the extent applicable to an audit of internal financial controlsboth applicable to an audit of Internal Financial Controls and both issued by theInstitute of Chartered Accountants of India. Those Standards and the Guidance Note requirethat we comply with ethical requirements and plan and perform the audit to obtainreasonable assurance about whether adequate internal financial controls over financialreporting was established and maintained and if such controls operated effectively in allmaterial 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 misstatements 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 controls 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 thattransaction 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 authorisations ofmanagement and directors of the Company; and (3) provide reasonable assurance regardingprevention or timely detection of unauthorised acquisitions 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 limitation 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 to 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 March 31 2016 based on theinternal controls 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 Kumar & Giri
Date: April 28 2016