INDEPENDENT AUDITOR'S REPORT
M/s Laurel Organics Limited Report on the Financial Statements
We have audited the accompanying financial statements of M/s LAUREL ORGANICS LTD whichcomprise the Balance Sheet as at 31/03/2017 Statement of Profit and Loss and the CashFlow Statement for the year ended on that date and a summary of significant accountingpolicies and other explanatory information.
Management 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 ofthese Financial Statements that give a true and fair view of the financial positionfinancial performance and cash flows of the Company in accordance with the accountingprinciples generally accepted in India including the Accounting Standards specified undersection 133 of the Act read with Rule 7 of the Companies (Accounts) Rules 2014. Thisresponsibility also includes maintenance of adequate accounting records in accordance withthe provisions of the Act for safeguarding the assets of the Company and for preventingand detecting frauds and other irregularities; selection and application of appropriateaccounting policies; making judgments and estimates that are reasonable and prudent; anddesign implementation and maintenance of adequate internal financial controls that wereoperating effectively for ensuring the accuracy and completeness of the accountingrecords relevant to the preparation and presentation of the Financial Statements thatgive a true and fair view and are free from material misstatement whether due to fraud orerror.
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. 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 evidences we have obtained are sufficient and appropriate toprovide a basis for our audit opinion on the Financial Statements.
Basis for Qualified Opinion
The Company has accumulated losses and its net worth has been fully eroded. TheCompany's current liabilities exceeded its current assets as at the balance sheet datebusiness of the Company has remained suspended for major part of the financial year andalso the Company incurred net loss during the current and previous year(s) affecting thegoing concern assumptions. Appropriateness of the assumption of 'going concern' isdependent upon Company's ability to raise sufficient resources/ generate cash flows infuture to meet its obligations. Management of the company has though expressed positivehope in this regard as necessary funds required for upgradation/renovation of plant havebeen infused during the FY by them and phase I of the process has completed and part ofthe plant facility has started yielding revenue during last quarter and therefore thefinancial statements of the Company have been prepared on a going concern basis.
In our opinion and to the best of our information and according to the explanationsgiven to us except for the effects of the matter described in the Basis for QualifiedOpinion paragraph above the 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:
(a) In case of the Balance Sheet of the state of affairs of the Company as at31/03/2017;
(b) In case Statement of Profit and Loss Account Loss of the for the year ended onthat date;
(c) In the case of Cash Flow Statement of the cash flows for the year ended on thatdate.
Report on Other Legal and Regulatory Requirements:
1. As required by the Companies (Auditor's Report) Order 2016 ("the Order")issued by the Government of India in terms of sub-section (11) of section 143 of the Actand on the basis of such checks of the books and records of the Company as we consideredappropriate and according to the information and explanations given to us we give in theAnnexure-I a statement on the matters specified in the paragraphs 3 and 4 of the saidOrder.
2. As required by section 143(3) of the Act we further 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 and the cash flow statementdealt with by 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 2014except for the possible effects of the matter describedin the Basis for Qualified Opinion paragraph;
(e) In our opinion though the matter described in the basis of qualified opinion abovehas potential adverse effect on the functioning of the Company in future the changedmanagement and Board of Directors which has already taken place and ownership changeprocess is under way has expressed their belief that this matter will not have adverseeffect on the functioning of the Company in view of positive steps being undertaken tocomply with all obligations past as well as future and also step-up operations in comingfuture.
(f) On the basis of the written representations received from the directors as on 31March 2017 taken on record by the Board of Directors none of the directors isdisqualified as on 31 March 2017 from being appointed as a director in terms of Section164 (2) of the Companies Act2013.
(g) Report on the internal financial controls under clause (i) of sub-section 3 ofsection 143 of the Companies Act 2013 is enclosed as Annexure-II to this report.
(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 if any on itsfinancial position in its financial statements.
ii. The Company did not have long-term contracts including derivatives contracts forwhich there were material foreseeable losses.
iii. No amount is required to be transferred to the Investor Education and ProtectionFund by the Company as on 31 March 2017.
iv. the Company has provided requisite disclosures as below as to holdings as well asdealings in Specified Bank Notes during the period from 8 November 2016 to 30 December2016 and these are in accordance with the books of accounts maintained by the Company:
| ||SBNs ||Other denomination notes ||Total |
|Closing cash in hand as on 08.11.2016 ||240000 ||9195 ||249195 |
|(+) Permitted receipts ||Nil ||213550 ||213550 |
|(-) Permitted payments ||Nil ||212538 ||212538 |
|(-) Amount deposited in Banks ||240000 ||Nil ||240000 |
|Closing cash in hand as on 30.12.2016 ||Nil ||10207 ||10207 |
| ||For A K Jalan & Associates |
| ||Chartered Accountants |
| ||(FRN 500107N) |
|Place: New Delhi || |
|Date : 30/05/2017 ||Sd/- |
| ||(CA A K JalanFCA)Partner |
| ||Membership No.052776 |
Annexure referred to in Paragraph (1) under Report on Other Legal and RegulatoryRequirements of our Report of even date to the members of LAUREL ORGANICS LTD on theaccounts for the year ended 31st March 2017.
Report under the Companies (Auditor's Report) Order 2016 under sub-section (11) ofsection 143 of the Act of the Companies Act 2013 ("the Act")
On the basis of such checks as we considered appropriate and according to theinformation and explanations given to us during the course of our audit we report that:
1. Fixed Assets:
(a) The company has maintained records showing full particulars including quantitativedetails and situation of its Fixed Assets on computer assisted system.
(b) As per information and explanations given to us the Fixed Assets of the Companyhave been physically verified by the management during the year and it seems that theprocedure of physical verification employed was reasonable having regard to the size ofthe Company and the nature of its assets. No material discrepancies were found on suchverification.
(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.
As per information and explanation given to us the inventories were physicallyverified during the year by the Management at reasonable intervals and no materialdiscrepancies were noticed on physical verification.
3. Loans granted by the Company:
As per information and explanations given to us the company has not granted loanssecured or unsecured to companies firms LLP or other parties covered in the registermaintained under section 189 of the Companies Act 2013. Therefore paragraph 3(iii) ofthe order is not applicable.
4. Loans to Directors and Investment by company:
As per information and explanations given and books and records examined by us no loanhas been given to directors and company has made no investment. Hence paragraph 3(iv) ofthe order is not applicable.
5. Acceptance of Deposits:
The company has not accepted deposits from the public and therefore the directions ofthe Reserve Bank of India and the provisions of sections 73 to 76 or any other relevantprovisions of the Companies Act 2013 and the rules framed thereunder are not applicableto the Company. Hence paragraph 3(v) of the order is not applicable.
6. Maintenance of Cost Records:
The Central Govt. has prescribed Rules for the maintenance of the cost records u/s148(1) of the Companies Act2013. Company has appointed Cost Audit for the Financial Year2013-14 and thereafter due to upward change in the quantum of applicability of provisionsunder which the Company does not fall no audit was appointed.
7. In respect of Statutory Dues:
(a) According to the information and explanation given to us and on the basis of ourexamination of records of the Company the Company is generally regular in depositing theundisputed statutory dues as applicable with appropriate authorities in India.
(b) According to the information and explanation given to us and the records of theCompany examined by us no disputed statutory dues were outstanding for payments beforeany forum for relief or otherwise.
8. Repayment of Loans:
Company has not raised term loans from Banks/Financial Institutions during the yearunder audit. Hence paragraph 3(viii) of the order is not applicable.
9. Utilisation of IPO and further Public offer:
In terms of the information and explanations given to us no moneys have been raised byway of initial public offer or further public offer (including debt instruments) and termloans by the Company during the Financial year under review. However as per membersapproval Company has issued and allotted 0.10% Redeemable Non-Convertible CumulativePreference Shares 4000000 of Rs.10 each for Rs.400 lacs on private placement basisduring the financial year and the funds so raised has been utilized for the purpose forwhich it has been issued.
10. Reporting of Fraud:
According to the information and explanations given to us and based on the auditprocedures performed and representation obtained from the management we report that thefraud on or by the Company having material misstatement on the financial statements hasnot been noticed or reported during the year under audit.
11. Approval of Managerial Remuneration:
In our opinion and according to the information and explanations given to us nomanagerial remuneration has been paid or provided in terms of section 197 read withSchedule V to the Companies Act2013.
12. Nidhi Company:
In terms of the information and explanations given the Company is not a Nidhi Company.Hence paragraph 3(xii) of the order is not applicable.
13. Related Party Transactions:
As per information and explanations given and the books and records examined by us westate that transactions with the related parties are in compliance with section 188 ofCompanies Act 2013 and proper disclosure have been made in the Financial Statement underaudit at appropriate places(s).
14. Private Placement or Preferential Issues:
As per information and explanations given to us the company has not made preferentialallotment or private placement of equity shares or fully or partly convertible debenturesduring the year under review. However private placement of 0.10% RedeemableNon-Convertible Cumulative Preference Shares 4000000 of Rs.10 each for Rs.400 lacs hasbeen made by the Company during the year under review as per the approval of the membersby way of a resolution passed in their extra ordinary general meeting held on 30/03/2016and necessary compliance in the matter has been done.
15. Non Cash Transactions:
As per information and explanations given and the books and records examined by us westate that the company has not entered into any non-cash transactions with directors orpersons connected with them. Hence paragraph 3(xv) of the order is not applicable.
16. Register under RBI Act 1934:
The company is not required to be registered under section 45-IA of the Reserve Bank ofIndia Act 1934. Hence paragraph 3(xvi) of the order is not applicable.
For A K Jalan & Associates
(CA A K JalanFCA)Partner
ANNEXURE-II Annexure referred to in Paragraph [2(f)] under Report on Other Legal andRegulatory Requirements of our Report of even date to the members of LAUREL ORGANICS LTDon the accounts for the year ended 31st March 2017.
Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section143 of the Companies Act 2013 ("the Act")
We have examined the internal financial controls over financial reporting of M/s LAURELORGANICS LTD ('the Company') as on 31-Mar-2017 in connection with our audit of thestandalone 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. These responsibilities include the design implementation andmaintenance of adequate internal financial controls that were operating effectively forensuring the orderly and efficient conduct of its business including adherence tocompany's policies the safeguarding of its assets the prevention and detection of fraudsand errors the accuracy and completeness of the accounting records and the timelypreparation of reliable financial information as required under the Companies Act 2013.Auditors' Responsibility Our responsibility is to express an opinion on the Company'sinternal financial controls over financial reporting based on our audit. We conducted ouraudit in accordance with the Guidance Note on Audit of Internal Financial Controls OverFinancial Reporting (the "Guidance Note") and the Standards on Auditing issuedby ICAI and deemed to be prescribed under section 143(10) of the Companies Act 2013 tothe extent applicable to an audit of internal financial controls both applicable to anaudit of Internal Financial Controls and both issued by the Institute of CharteredAccountants of India. Those Standards and the Guidance Note 168 require that we complywith ethical requirements and plan and perform the audit to obtain reasonable assuranceabout whether adequate internal financial controls over financial reporting wasestablished and maintained and if such controls operated effectively in all materialrespects. Our audit involves performing procedures to obtain audit evidence about theadequacy of the internal financial controls system over financial reporting and theiroperating effectiveness. Our audit of internal financial controls over financial reportingincluded obtaining an understanding of internal financial controls over financialreporting assessing the risk that a material weakness exists and testing and evaluatingthe design and operating effectiveness of internal control based on the assessed risk. Theprocedures selected depend on the auditor's judgment including the assessment of therisks of material 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 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 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-Mar-2017.
| ||For A K Jalan & Associates |
|Place: New Delhi ||Chartered Accountants |
|Date : 30/05/2017 ||(FRN 500107N) |
| ||Sd/- |
| ||(CA A K JalanFCA) |
| ||Partner |
| ||Membreship No.052776 |