To the Members of Aegis Logistics Limited
Report on the Audit of the Standalone Ind AS Financial Statements
We have audited the accompanying Standalone Ind AS Financial Statements of AegisLogistics Limited ("the Company") which comprise the Balance Sheet as at March31 2020 the Statement of Profit and Loss (including Other Comprehensive Income) theStatement of Changes in Equity and the Statement of Cash Flows for the year then ended andnotes to the Standalone Ind AS Financial Statements including a summary of significantaccounting policies and other explanatory information (hereinafter referred to as"the Standalone Ind AS Financial Statements"). In our opinion and to the best ofour information and according to the explanations given to us the aforesaid StandaloneInd AS Financial Statements give the information required by the Companies Act 2013("the Act") in the manner so required and give a true and fair view inconformity with the Indian Accounting Standards prescribed under Section 133 of the Actread with the Companies (Indian Accounting Standards) Rules 2015 as amended ("IndAS") and other accounting principles generally accepted in India of the state ofaffairs (financial position) of the Company as at March 31 2020 the profit and totalcomprehensive income (financial performance) changes in equity and its cash flows for theyear ended on that date.
Basis for Opinion
We conducted our audit of the Standalone Ind AS Financial Statements in accordance withthe Standards on Auditing ("SAs") specified under section 143(10) of the Act.Our responsibilities under those Standards are further described in the Auditor'sResponsibilities for the Audit of the Standalone Ind AS Financial Statements sectionof our report. We are independent of the Company in accordance with the Code of Ethicsissued by the Institute of Chartered Accountants of India (ICAI) together with the ethicalrequirements that are relevant to our audit of Standalone Ind AS Financial Statementsunder the provisions of the Act and the Rules made thereunder and we have fulfilled ourother ethical responsibilities in accordance with these requirements and the ICAI's Codeof Ethics. We believe that the audit evidence we have obtained is sufficient andappropriate to provide a basis for our opinion on Standalone Ind AS Financial Statements.
Key Audit Matters
Key audit matters are those matters that in our professional judgment were of mostsignificance in our audit of the Standalone Ind AS Financial Statements of the currentperiod. These matters were addressed in the context of our audit of the Standalone Ind ASFinancial Statements as a whole and in forming our opinion thereon and we do not provide aseparate opinion on these matters. We have determined the matters described below to bethe key audit matters to be communicated in our report.
|Sr. No. Key Audit Matter ||How the matter was addressed in the Audit |
|1. Accuracy of recognition measurement presentation and disclosures of revenues and other related balances in accordance with Ind AS 115 "Revenue from Contracts with Customers" || |
|The Accounting Standard relating to Revenue Recognition involves key judgments relating to identification of the contracts and performance obligations determination of transaction prices and costs related thereto and also involves enhanced qualitative and quantitative disclosures. ||We assessed the Company's process of revenue recognition in light of the requirements of the revenue accounting standard. |
| ||Our audit approach consisted testing of the design and operating effectiveness of the internal controls and substantive testing as follows: |
| ||Selected a sample of continuing and new contracts and performed the following procedures: |
| ||Analysed and identified the distinct rights and performance obligations arising out of these contracts and compared them with those identified and recorded by the Company |
| ||Considered the terms of the contracts to determine the transaction price including any variable consideration if any and the costs related thereto. |
| ||Samples in respect of revenue recorded were tested including customer acceptances subsequent invoicing and historical trend of collections and disputes. |
| ||We also tested the access and change management controls relating to recording of revenue. |
| ||Disaggregation of revenue by type and service offerings was tested with the performance obligations specified in the underlying contracts. |
| ||We reviewed the collation of information used for preparation of the disclosures required to be made. |
|2. Recoverability of Indirect tax receivables ||Obtained details of the amounts outstanding and verified the same with the claims made with the authorities. |
|As at March 31 2020 the Company has receivable of Rs. 498.13 lakhs with respect to Cenvat Credit Recoverable or Refundable which are pending adjudication. ||Verified the current status of the outstanding amounts as at the year end. |
| ||Obtained details of legal status of disputes wherever applicable from the management. |
| ||We have analysed the submissions to authorities to review the nature of the amounts recoverable the sustainability and the likelihood of recoverability upon final resolution. |
|3. Uncertain Tax Positions including Deferred Tax and Minimum Alternate Tax Credit (MAT Credit) if any ||Obtained detailed breakup of the amount of tax provisions / payments for various years. |
|There are various complexities involved in recognition and measurement of deferred tax such as assessing the availability of future profits ability of the Company to utilise unused tax credit including MAT credit if any in future. ||Verified the same with the tax returns filed / assessments completed. |
|Further uncertain tax positions including matters under dispute involve significant judgment to ascertain the possible outcome. ||Obtained details of completed assessments and appeals filed and verified the current status of these appeals including the managements expectation of the outcome of these disputes based on past years as well as rulings of various appellate authorities. |
|On account of the complexities involved in significant judgment thereof this is considered as a key audit matter. ||Obtained and verified the working of deferred tax and its appropriateness. |
| ||In the case of deferred tax asset in respect of unutilised tax credits (including MAT credit if any) obtained and verified the basis of the management's assertion as to the availability of profits to offset these credits. |
| ||Verified the accuracy of the calculation of the tax provisions both current and deferred tax. |
|4. Adoption of Ind AS 116 Leases: ||Our audit procedures on the adoption of Ind AS 116 include: |
|The Company has adopted Ind AS 116 -Leases in the current year. The application and transition to this accounting standard is complex and critical in our audit since the Company has a large number of leases with different contractual terms. ||Assessed the Company's evaluation of identification of leases based on contractual agreements and our knowledge of the business; |
|Under Ind AS 116 lessees are required to recognise a right-of-use (ROU) asset and a lease liability arising from a lease on the Balance Sheet. The lease liabilities are initially measured by discounting future lease payments during the lease term as per the contract/ arrangement. Adoption of the standard requires significant judgements and estimates including determination of the discount rates and the lease term. ||We have evaluated the reasonableness of the discount rates applied in determining the lease liabilities. |
|The Standard also mandates detailed disclosures in respect of the transition. [Refer Note 5 (VIII) and Note 44 to the Standalone IND AS Financial Statements] ||Upon transition as at April 1 2019: |
| ||Evaluated the method of transition and related adjustments |
| ||Tested completeness of the lease data by reconciling the Company's operating lease commitments to data used in computing ROU Asset and lease liabilities. |
| ||On statistical sample we performed the following audit procedures: |
| ||Assessed the key terms and conditions of each lease with the underlying lease contracts on test check basis; and |
| ||Evaluated computation of lease liabilities and the key estimates such as discount rates and lease term. |
| ||Assessed and tested the presentation and disclosures related to Ind AS 116 including disclosures relating to transition. |
Information Other than the Financial Statements and the Audit Report thereon
The Company's Board of Directors is responsible for the other information. The otherinformation comprises the information included in the Director's Report but does notinclude the financial statements and our auditors' report thereon.
Our opinion on the financial statements does not cover the other information and wewill not express any form of assurance conclusion thereon.
In connection with our audit of the Standalone Ind AS Financial Statements ourresponsibility is to read the other information and in doing so consider whether theother information is materially inconsistent with the financial statements or ourknowledge obtained in the audit or otherwise appears to be materially misstated.
If based on the work we have performed we conclude that there is a materialmisstatement of other information we are required to report that fact. We have nothing toreport in this regard.
Responsibilities of Management and Those Charged with Governance for the Standalone IndAS Financial Statements
The Company's Board of Directors is responsible for the matters stated in section134(5) of the Act with respect to the preparation of these Standalone Ind AS FinancialStatements that give a true and fair view of the financial position financial performance(including Other Comprehensive Income) changes in equity and cash flows of the Company inaccordance with the Ind AS and other accounting principles generally accepted in Indiaincluding the Accounting Standards specified under section 133 of the Act. Thisresponsibility also includes maintenance of adequate accounting records in accordance withthe provisions of the Act for safeguarding of 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 Standalone Ind AS FinancialStatements that give a true and fair view and are free from material misstatement whetherdue to fraud or error.
In preparing the Standalone Ind AS Financial Statements the Management is responsiblefor assessing the Company's ability to continue as a going concern disclosing asapplicable matters related to going concern and using the going concern basis ofaccounting unless Management either intends to liquidate the Company or to ceaseoperations or has no realistic alternative but to do so.
The Board of Directors are also responsible for overseeing the Company's financialreporting process.
Auditor's Responsibilities for the Audit of the Standalone Ind AS Financial Statements
Our objectives are to obtain reasonable assurance about whether the Standalone Ind ASFinancial Statements as a whole are free from material misstatement whether due to fraudor error and to issue an auditor's report that includes our opinion. Reasonable assuranceis a high level of assurance but is not a guarantee that an audit conducted in accordancewith SAs will always detect a material misstatement when it exists. Misstatements canarise from fraud or error and are considered material if individually or in theaggregate they could reasonably be expected to influence the economic decisions of userstaken on the basis of these Standalone Ind AS Financial Statements.
As part of an audit in accordance with SAs we exercise professional judgment andmaintain professional scepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of the Standalone Ind ASFinancial Statements whether due to fraud or error design and perform audit proceduresresponsive to those risks and obtain audit evidence that is sufficient and appropriate toprovide a basis for our opinion. The risk of not detecting a material misstatementresulting from fraud is higher than for one resulting from error as fraud may involvecollusion forgery intentional omissions misrepresentations or the override of internalcontrol.
Obtain an understanding of internal financial controls relevant to the audit in orderto design audit procedures that are appropriate in the circumstances. Under section143(3)(i) of the Companies Act 2013 we are also responsible for expressing our opinionon whether the company has adequate internal financial controls with reference to theStandalone Ind AS Financial Statements in place and the operating effectiveness of suchcontrols.
Evaluate the appropriateness of accounting policies used and the reasonableness ofaccounting estimates and related disclosures made by management.
Conclude on the appropriateness of management's use of the going concern basis ofaccounting and based on the audit evidence obtained whether a material uncertainty existsrelated to events or conditions that may cast significant doubt on the Company's abilityto continue as a going concern. If we conclude that a material uncertainty exists we arerequired to draw attention in our auditor's report to the related disclosures in theStandalone Ind AS Financial Statements or if such disclosures are inadequate to modifyour opinion. Our conclusions are based on the audit evidence obtained up to the date ofour auditor's report. However future events or conditions may cause the Company to ceaseto continue as a going concern.
Evaluate the overall presentation structure and content of the Standalone Ind ASFinancial
Statements including the disclosures and whether the Standalone Ind AS FinancialStatements represent the underlying transactions and events in a manner that achieves fairpresentation.
We communicate with those charged with governance regarding among other matters theplanned scope and timing of the audit and significant audit findings including anysignificant deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have compliedwith relevant ethical requirements regarding independence and to communicate with them allrelationships and other matters that may reasonably be thought to bear on our independenceand where applicable related safeguards.
From the matters communicated with those charged with governance we determine thosematters that were of most significance in the audit of the Standalone Ind AS FinancialStatements of the current period and are therefore the key audit matters. We describethese matters in our auditor's report unless law or regulation precludes public disclosureabout the matter or when in extremely rare circumstances we determine that a mattershould not be communicated in our report because the adverse consequences of doing sowould reasonably be expected to outweigh the public interest benefits of suchcommunication.
On account of lockdown consequent to outbreak of Covid-19 pandemic we were unable toparticipate in the year end physical verification of inventory that was carried out by theManagement. Consequently we have performed alternate procedures as per the guidanceprovided in SA 501 "Audit Evidence Specific Consideration for SelectedItems" to audit the existence of inventory as at the year end and have obtainedsufficient appropriate audit evidence to issue our unmodified opinion on the financialstatements.
Our opinion is not modified in respect of this matter.
Report on Other Legal and Regulatory Requirements
1. 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 specifiedin paragraphs 3 and 4 of the Order to the extent applicable.
2. 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 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 (including Other ComprehensiveIncome)the Statement of Cash Flows and the Statement of Changes in Equity dealt with bythis Report are in agreement with the relevant books of account.
d) In our opinion the aforesaid Standalone Ind AS Financial Statements comply with theIndian Accounting Standards specified under Section 133 of the Act.
e) On the basis of the written representations received from the directors as on March31 2020 taken on record by the Board of directors none of the directors are disqualifiedas on March 31 2020 from being appointed as a director in terms of Section 164(2) of theAct.
f) With respect to the adequacy of the internal financial controls over financialreporting with reference to the Standalone Ind AS Financial Statements of the Company andthe operating effectiveness of such controls refer to our separate Report in "AnnexureB".
g) With respect to the other matters to be included in the Auditor's Report inaccordance with the requirements of Section 197(16) of the Act as amended in our opinionand to the best of our information and according to the explanations given to us theCompany has not paid / provided remuneration to its directors during the year.
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 as amended inour opinion and to the best of our information and according to the explanations given tous:
i. The Company has disclosed the impact of pending litigations on its financialposition in its Standalone Ind AS Financial Statements Refer Note 40 to theStandalone Ind-AS Financial Statements;
ii. The Company did not have any long-term contracts including derivative contracts forwhich there were any material foreseeable losses;
iii. There has been no delay in transferring amounts required to be transferred tothe Investor Education and Protection Fund by the Company.
Annexure A to Independent Auditor's Report
[Referred to in paragraph 1 under Report on Other Legal and RegulatoryRequirements' in the Independent Auditor's Report of even date to the members of AegisLogistics Limited ("the Company") on the Standalone Ind AS Financial Statementsfor the year ended March 31 2020]
(i) (a) The Company has maintained proper records showing full particulars includingquantitative details and situation of property plant and equipment;
(b) As explained to us the property plant and equipment have been physically verifiedby the management during the year as per regular program of verification which in ouropinion is reasonable having regard to the size of the Company and nature of its assets.No material discrepancies between book records and physical inventory were noticed on suchverification. In our opinion the frequency of verification is reasonable.
(c) According to the information and explanations given to us and the records examinedby us and based on the examination of the registered sale deeds provided to us we reportthat the title deeds comprising all the immovable properties of land and buildings whichare freehold are held in the name of the Company as at the balance sheet date. In respectof immovable properties of land that have been taken on lease and disclosed as Right toUse Asset in the financial statements the lease agreements/ deeds are in the name of theCompany where the Company is the lessee in the arrangement.
(ii) According to the information and explanations provided to us the inventory hasbeen physically verified by the Management during/at the end of the year. In our opinionthe frequency of verification is reasonable. No material discrepancies were noticed onphysical verification of inventory.
(iii) According to the information and explanations given to us the Company hasgranted unsecured interest free loans to companies covered in the register maintainedunder section 189 of the Companies Act 2013 in respect of which:
a) The terms and conditions of the grant of such loans are in our opinion primafacie not prejudicial to the Company's interest.
b) The schedule of repayment of principal has been stipulated and repayments orreceipts of principal amounts have been regular as per stipulations.
c) There is no overdue amount remaining outstanding as at the year-end.
(iv) In our opinion and according to the information and explanations given to us theCompany has complied with the provisions of Sections 185 and 186 of the Companies Act2013 in respect of grant of loans making investments and providing guarantees andsecurities as applicable.
(v) According to the information and explanations given to us the Company has notaccepted any deposits during the year. In respect of unclaimed deposits the Company hascomplied with the provisions of Sections 73 to 76 or any other relevant provisions of theCompanies Act 2013. According to the information and explanations given to us no orderhas been passed by the Company Law Board or National Company Law Tribunal or the ReserveBank of India or any Court or any other Tribunals in this regard in the case of theCompany.
(vi) According to the information and explanations given to us the Company is notrequired to maintain cost records pursuant to Companies (Cost Records and Audit) Rules2014 as amended and prescribed by the Central Government under sub section (1) of Section148 of the Companies Act 2013.
(vii) According to the information and explanations given to us in respect ofstatutory dues:
(a) The Company has been generally regular in depositing undisputed statutory duesincluding Provident fund Employees' state insurance Income Tax Sales Tax Service TaxGoods and Service tax Duty of Customs Duty of Excise Value Added Tax cess and anyother material statutory dues applicable to it to the appropriate authorities. There wereno undisputed amounts payable as on the last day of the financial year for a period ofmore than six months from the date they became payable.
(b) Details of Income Tax Sales Tax Service Tax Goods and Service tax Duty ofCustoms Duty of Excise Value Added Tax have not been deposited as on March 31 2020 onaccount of any dispute are as under:
|Name of the Statute ||Nature of Dues ||Forum where dispute is pending ||Period to which the amount relates ||Amount Involved (Rs. in Lakhs) ||Amount Unpaid (Rs. in Lakhs) |
|Income Tax Act 1961 ||Income Tax ||Income Tax Appellate Tribunal Mumbai ||F.Y. 2012-2013 ||22.86 ||22.86 |
|Income Tax Act 1961 ||Income Tax ||Appellate authority - Commissioner of Income Tax Appeal (2) Mumbai ||F.Y. 2015-2016 ||60.08 ||60.08 |
|Income Tax Act 1961 ||Income Tax ||Appellate authority - Commissioner of Income Tax Appeal (2) Mumbai ||F.Y. 2016-2017 ||25.33 ||22.96 |
| || || || ||108.27 ||105.90 |
(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 loans orborrowings to bank or dues to debenture holders. The Company has not borrowed fromFinancial Institution or Government.
(ix) In our opinion and according to the information and explanations given to us theterm loans have been applied by the Company during the year for the purposes for whichthey were raised. The Company has not raised moneys by way of initial public offer orfurther public offer (including debt instruments).
(x) Based upon the audit procedures performed and the information and explanationsgiven by the management no fraud by the Company or on the Company by its officers oremployees has been noticed or reported during the course of our audit.
(xi) In our opinion and according to the information and explanations given to us theCompany has not paid/provided managerial remuneration during the year.
(xii) The Company is not a Nidhi Company. Accordingly and therefore the provisions ofparagraph 3(xii) of the Order are not applicable to the Company for the year under audit.
(xiii) In our opinion and according to the information and explanations given to usthe Company is in compliance with Section 177 and 188 of the Companies Act 2013 whereapplicable for all transactions with the related parties and the details of related partytransactions have been disclosed in the financial statements etc. as required by theIndian Accounting Standards;
(xiv) Based upon the audit procedures performed and the information and explanationgiven by the management the Company has not made any preferential allotment or privateplacement shares or fully or partly convertible debentures during the year under audit.Accordingly provisions of clause 3(xiv) of the order are not applicable to the Companyfor the year under audit.
(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 clause 3(xv) ofthe Order is not applicable to the Company for the year under audit.
(xvi) In our opinion the Company is not required to be registered under section 45-IAof the Reserve Bank of India Act 1934; Accordingly provisions of clause 3(xvi) of theorder are not applicable to the Company for the year under audit.
Annexure B to Independent Auditor's Report
[Referred to in paragraph 2(f) under Report on Other Legal and RegulatoryRequirements' in the Independent Auditor's Report of even date to the members of AegisLogistics Limited ("the Company") on the Standalone Ind AS Financial Statementsfor the year ended March 31 2020]
Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section143 of the Act
We have audited the internal financial controls with reference to the Standalone Ind ASFinancial Statements of Aegis Logistics Limited ("the Company") as of March 312020 in conjunction with our audit of the Standalone Ind AS Financial Statements of theCompany 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 controlsstated in the Guidance Note on Audit of Internal Financial Controls over FinancialReporting issued by the Institute of Chartered Accountants of India (ICAI'). Theseresponsibilities include the design implementation and maintenance of adequate internalfinancial controls that were operating effectively for ensuring the orderly and efficientconduct of its business including adherence to Company's policies the safeguarding ofits assets the prevention and detection of frauds and errors the accuracy andcompleteness of the accounting records and the timely preparation of reliable financialinformation as required under the Act.
Our responsibility is to express an opinion on the Company's internal financialcontrols over financial reporting with reference to the Standalone Ind AS FinancialStatements based on our audit. We conducted our audit in accordance with the Guidance Noteon Audit of Internal Financial Controls over Financial Reporting (the "GuidanceNote") and the Standards on Auditing specified under Section 143(10) of the Act tothe extent applicable to an audit of internal financial controls over financial reportingboth issued by the ICAI. Those Standards and the Guidance Note require that we comply withethical requirements and plan and perform the audit to obtain reasonable assurance aboutwhether adequate internal financial controls over financial reporting with reference tothe Standalone Ind AS Financial Statements were established and maintained and if suchcontrols operated effectively in all material respects.
Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal financial controls over financial reporting with reference to the StandaloneInd AS Financial Statements and their operating effectiveness. Our audit of internalfinancial controls over financial reporting with reference to the Standalone Ind ASFinancial Statements included obtaining an understanding of internal financial controlsover financial reporting with reference to the Standalone Ind AS Financial Statementsassessing the risk that a material weakness exists and testing and evaluating the designand operating effectiveness of internal control over financial reporting based on theassessed risk. The procedures selected depend on the auditor's judgment including theassessment of the risks of material misstatement of the financial statements whether dueto 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 overfinancial reporting with reference to the Standalone Ind AS Financial Statements.
Meaning of Internal financial controls over financial reporting with reference to theStandalone Ind AS Financial Statements
A company's internal financial controls over financial reporting with reference to theStandalone Ind AS Financial Statements is a process designed to provide reasonableassurance regarding the reliability of financial reporting and the preparation offinancial statements for external purposes in accordance with generally acceptedaccounting principles. A company's internal financial control over financial reportingincludes those policies and procedures that:
1. Pertain to the maintenance of records that in reasonable detail accurately andfairly reflect the transactions and dispositions of the assets of the company;
2. Provide reasonable assurance that transactions are recorded as necessary to permitpreparation of financial statements in accordance with generally accepted accountingprinciples and that receipts and expenditures of the company are being made only inaccordance with authorizations of management and directors of the company; and
3. Provide reasonable assurance regarding prevention or timely detection ofunauthorized acquisition use or disposition of the company's assets that could have amaterial effect on the financial statements.
Inherent Limitations of Internal financial controls over financial reporting withreference to the Standalone Ind AS Financial Statements
Because of the inherent limitations of internal financial controls over financialreporting with reference to the Standalone Ind AS Financial Statements including thepossibility of collusion or improper management override of controls materialmisstatements due to error or fraud may occur and not be detected. Also projections ofany evaluation of the internal financial controls over financial reporting with referenceto the Standalone Ind AS Financial Statements to future periods are subject to the riskthat the internal financial control over financial reporting may become inadequate becauseof changes in conditions or that the degree of compliance with the policies or proceduresmay deteriorate.
In our opinion the Company has in all material respects an adequate internalfinancial controls over financial reporting with reference to the Standalone Ind ASFinancial Statements and such internal financial controls over financial reporting withreference to financial statements were operating effectively as at March 31 2020 basedon the internal control over financial reporting criteria established by the Companyconsidering the essential components of internal control over financial reporting statedin the Guidance Note on Audit of Internal Financial Controls Over Financial Reportingissued by the ICAI.