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NEPC Agro Foods Ltd.

BSE: 500452 Sector: Agri and agri inputs
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NEPC Agro Foods Ltd. (NEPCAGRO) - Auditors Report

Company auditors report


The shareholders of


We have audited the attached Balance Sheet of NEPC AGRO FOODS LIMITED as on 31st March2014 and also the Profit & Loss Account and the Cash Flow Statement of the Company forthe year ended on that date annexed thereto. These financial statements are theresponsibility of the Company's management. Our responsibility is to express an opinion onthese financial statements based on our audit.

1. We conducted our audit in accordance with auditing standards generally accepted inIndia. Those standards require that we plan and perform the audit to obtain reasonableassurance about whether the financial statements are free of material misstatement. Anaudit includes examining on a test basis evidence supporting the amounts and disclosuresin the financial statements. An audit also includes assessing the accounting principlesused and significant estimates made by the management as well as evaluating the overallfinancial statement presentation. We believe that our audit provides a reasonable basisfor our opinion.

2. As required by the Companies (Auditors' Report) Order. 2003 issued by the CentralGovernment of India in terms of sub-section (4A) of Section 227 of the Companies Act.1956. we enclose in the Annexure a statement on the matters specified in paragraph 4 and 5of the said order to the extent applicable.

3. Further to our comments in the Annexure referred to in paragraph (2) above wereport that:

a. We have obtained all the information and explanations which to the best ourknowledge and belief were necessary for the purposes of our audit:

b. In our opinion the company has kept proper books of accounts as required by law sofar as appears from our examination of the books.

c. The Balance Sheet the Profit and Loss account. Cash flow statement dealt with bythis report are in agreement with the Books of account.

d. In our opinion the Balance Sheet the Profit and Loss account and Cash Flowstatement dealt with by this report comply with the accounting standards referred to insub-section 3 (C) of Section 211 of the Companies Act 1956 to the extent made mandatorysubject to what is stated in para vi(e). vi(i) below.

e. Based on the written representations received from the directors and taken on recordby the Board of Directors we report that none of the directors are disqualified as on 31s'March 2014 from being appointed as directors in terms of clause (g) of sub-section 1 ofSection 274 of the Companies Act 1956.

4. Attention of the members is invited to the following notes which have been explainedin Note 10 - Significant Accounting Policies and Notes on Accounts.

a) Note 11.2 & 2.1 - regarding pending confirmation and reconciliations if any inrespect of secured and unsecured loans sundry debtors loans and advances certain bookbalances deposits and current liabilities;

b) Note No.11.4 - regarding non-recognition of permanent diminution in the book valueof investments amount unascertainable in the absence of value indicators in respect ofthe said investments;

c) Note No.II.5.1 - regarding non-provision in the accounts towards certain debtorsconsidered doubtful of recovery amounting to Rs. 131.61 lacs - Gross (Previous year 131.61lacs) since the management is hopeful of their full recovery;

d) Note No.II.5.2 - regarding non-provision in the accounts towards certain loans &Advances considered doubtful of recovery amounting to Rs. 1664.91 lacs (previous year -Rs. 1682.92 lacs) since the management is hopeful of their full recovery:

e) Note No.11.8 - regarding non-provision of retirement benefits in the financialstatements on accrual basis which is in contravention with the provisions stipulated inAccounting Standard 15 - Accounting for retirement benefits - amount unascertainable(Previous year - amount unascertainable);

f) Note No.11.9-regarding non-disclosure of the requirements stipulated in AccountingStandard 17 - Segmental reporting issued by the Institute of Chartered Accountants ofIndia;

g) Note No. II. 10 - regarding provision of depreciation on the fixed assets of theCompany;

h) Note No.II. 11 - regarding non-provision of Interest penal interest etc on Securedand Unsecured Loans resulting in under statement of expenses for the year and the Securedand Unsecured Loans -Amount unascertainable (Previous year - amount unascertainable);

i) Note No.II. 13 - regarding non recognition of Impairment of Assets even though theconditions of the same exists which is in contravention with the provisions stipulated inAccounting Standard 28 - Impairment of Assets issued by the Institute of CharteredAccountants of India resulting in over statement of Fixed Assets and over statement ofProfits for the year-Amount unascertainable;

5. In our opinion and to the best of our information and according to the explanationsgiven to us the said accounts subject to what is stated in paragraph 4 above havingconsequential impact (presently unascertainable) on the profit for the year accumulatedlosses investments fixed assets loans and net current assets of the Company and readtogether with other Significant Accounting Policies and other Notes thereon given in Note19 give the information as required by the Companies Act 1956 in the manner so requiredand give a true and fair view in conformity with the accounting principles generallyaccepted in India;

a) in the case of the Balance Sheet of the state of affairs of the Company as at 31s1March 2014;

b) in case of the Profit & Loss Account of the Profit of the Company for the yearended on 3 Is' March 2014;

c) In the case of Cash Flow Statement of the cash flows for the year ended on thatdate.

For M.Dinesh Kumar & Co.

Chartered Accountant

M. Dinesh Kumar

Membership No: 222084

Place : Chennai

Date : 30-07-2014

Annexure to the Auditor's Report

(as referred to in Paragraph 3 of the Auditor's Report of even date)

In terms of the information and explanation given to us and the books and recordsexamined by us and on the basis of such checks as we considered appropriate we furtherreport as under:-

1. In respect of its fixed assets:

a) The company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets.

b) In our opinion the company has not disposed off substantial part of fixed assetsduring the year.

2. In respect of inventories

a) As there is no Stock hence this clause is not applicable.

3. (i) As per the records verified by us the Company has not taken interest-free loansSecured or Unsecured from the parties covered in the register maintained under section 301of the Companies Act 1956.

(ii) The Company has not granted interest-free advances to any of the related partiescovered in the register maintained under Section 301 of the Companies Act 1956.

b) The Terms & Conditions of such loans / advances are in our opinion primafacie not prejudicial to the interest of the Company.

c) In the absence of schedule for the repayment of the said advances the regularity ofthe repayment of the same cannot be commented upon.

d) Based on the information / explanation given to us there were no transactionsinvolving purchase or sale of goods or provision of services during the year whichaggregate to Rs.5 lakhs or above entered into with parties listed in the registermaintained under Section 301 of the Companies Act 1956 during the year under review.

4. In our opinion and according to the information and explanations given to us. thereare adequate internal control procedures commensurate with the size of the company andnature of its business for the purchase of inventory and fixed assets and for sale ofgoods. During the course of audit we have not observed any continuing failure to correctmajor weakness in internal control.

5. The company has not accepted any deposits from the public.

6. In our opinion internal audit system of the company is commensurate with its sizeand nature of business.

7. We have carried out a limited review of the books of accounts and cost recordsmaintained by the company pursuant to the rules made by the Central government formaintenance of cost records under Section 209 (1) (d) of the Companies Act 1956 and we areof the opinion that prima facie the prescribed accounts and records were maintained. Wehave not made a detailed examination of the same.

8. According to the information and explanations given to us there are undisputedstatutory dues payable in respect of Provident Fund Employees State Insurance. Customsduty. Excise duty. Income tax. Sales tax. Wealth Tax. Cess which are outstanding for aperiod of more than 6 months from the date they became payable.

Following are the details of disputed statutory dues which have not been deposited onaccount of desputes as listed below:

Name of the Statue Nature Amount (in lakhs) Period
1 Provident Fund Act Provident Fund 163.37 Various Period
2 TNGST Sales Tax 4.00 Various Period
3 Gratuity Gratuity 146.00 Various Period
4 Income Tax Income Tax 242.76 Various Period

9. The Company has accumulated losses as on 31st March 2014 which are not more thanfifty percent of the net worth.

10. The Company has defaulted in repayment of dues to financial institutions and Banks.The overdue amounts as per the books of accounts produced before us and the year ofdefault as per the details made available to us by the Company are as follows:

a) Financial Institutions : 4058.87 Lakhs Ranging from 4 to 10 years

11. The company has not granted loans and advances on the basis of securities by way ofpledge of shares and other securities.

12. The company is not a chit fund or a nidhi/mutual benefit fund society. Thereforethe provisions of clause 4 (xiii) of the Order are not applicable to the company.

13. The company is not dealing in or trading in shares and securities and otherinvestments. Accordingly the provisions of Clause 4 (xiv) of the Order are not applicableto the company.

14. According to the information given to us the company has not given guarantees forloans taken by others from Banks and other Financial Institutions.

15. The company has not raised any new term loans during the year.

16. According to the information and explanations given to us no funds raised onshort-term basis have been used for long-term investments or vice-versa during the year.

17. The company has not made preferential allotment of shares during the year toparties and companies covered in the register maintained under Section 301 of theCompanies Act 1956.

18. The company has not issued any debentures and hence the provisions of Clause 4(xix)of the Order are not applicable to the company.

19. The company has not raised any money by public issues during the year.

20. To the best of our knowledge and belief and according to the information andexplanations given to us no fraud on or by the company has been noticed or reportedduring the course of our audit.

For M.Dinesh Kumar & Co.

Chartered Accountant

M.Dinesh Kumar

Membership No: 222084

Place: Chennai

Date : 30-07-2014