The Members of Assam Company India Limited
Report on the Standalone Ind AS Financial Statements
We have audited the accompanying standalone Ind AS financial statements of AssamCompany India Limited which comprise the Balance Sheet as at 31st March2018 the Statement of Profit and Loss (including Other Comprehensive Income) the CashFlow Statement and the Statement of Changes in Equity for the financial year then endedand a summary of the significant accounting policies and other explanatory information.
Management's Responsibility for the Standalone 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 standalone Ind AS financial statements that give a true and fair view of the Stateof affairs (financial position) profit or loss (financial performance including othercomprehensive income) cash flows and changes in equity of the Company in accordance withthe accounting principles generally accepted in India including the Indian AccountingStandards (Ind AS) prescribed under Section 133 of the Act. This responsibility alsoincludes maintenance of adequate accounting records in accordance with the provisions ofthe Act for safeguard of the assets of the Company and for preventing and detecting fraudsand other irregularities; selection and application of appropriate accounting policies;making judgments and estimates that are reasonable and prudent; and design implementationand maintenance of adequate internal financial controls that were operating effectivelyfor ensuring the accuracy and completeness of the accounting records relevant to thepreparation and presentation of the standalone Ind AS financial statements that give atrue and fair view and are free from material misstatement whether due to fraud or error.
Our responsibility is to express an opinion on these standalone Ind AS financialstatements based 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 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 and other authoritative pronouncements issued by the Instituteof Chartered Accountants of India. Those Standards require that we comply with ethicalrequirements and plan and perform the audit to obtain reasonable assurance about whetherthe standalone Ind AS financial statements are free from material misstatement
An audit involves performing procedures to obtain audit evidence about the amounts andthe disclosures in the standalone Ind AS financial statements. The procedures selecteddepend on the auditor's judgment including the assessment of the risks of materialmisstatement in the standalone Ind AS financial statements whether due to fraud or error.In making those risk assessments the auditor considers internal financial controlrelevant to the Company's preparation of the standalone Ind AS financial statements thatgive a true and fair view in order to design audit procedures that are appropriate in thecircumstances. An audit also includes evaluating the appropriateness of the accountingpolicies used and the reasonableness of the accounting estimates made by the Company'sDirectors as well as evaluating the overall presentation of 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 Ind AS financial statements.
In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid Standalone Financial Statements give the information requiredby the Act in the manner so required and give a true and fair view in conformity with theaccounting principles generally accepted in India of the state of affairs of the Companyas at 31st March 2018 and its loss and its cash flows for the financial yearended on that date.
Emphasis of Matter
We draw attention to the following matters in the Notes to the financial statements:
a. Without qualifying our opinion we draw attention to Note 47 in the financialthe Company incurred a net loss of Rs. 774.21 Crores during the year ended 31stMarch 2018 and as of that date the Company's current liabilities exceeded its totalassets by Rs. 494.87 Crores. These conditions along with other matters as set forth inthe said Note indicate the existence of a material uncertainty that may cast significantdoubt about the Company's ability to continue as
b. Without qualifying our opinion attention is drawn to Note No. 48 whichindicates that the National Company Law Tribunal (NCLT) Guwahati Branch has by its orderdated 26th October 2017 initiated Corporate Insolvency Resolution Proceedingswhich is under process and we are unable to comment on the impact of the same on thefinancial performance and financial position ofhe company.
c. Without qualifying our opinion attention is drawn to Note No. 40 in relation toadmission of liability amounting to Rs. 319.47 crores on the happening of invocation ofcorporate guarantee given by the company to a third party on behalf of subsidiaries of theCompany accordingly the loss of the Company and liability has increased by the sameamount.
d. Without qualifying our opinion attention is drawn to Note No. 45 in relation tothe Oil and Gas Exploration & Production (E&P) Assets appearing in the CapitalWork in Progress which have been impaired in accordance with the evaluation done by themanagement.
e. Without qualifying our opinion attention is drawn to Note No. 40 in relation tothe interest free loans of Rs. 706.83 crores given to Subsidiaries. According to section186(7) of the Act "No loan shall be given under this section at the rate of interestlower than the prevailing yield of one year three year five year or ten year GovernmentSecurity closer to the tenor of the loan". The impact of this contravention on thefinancial performance and financial position of the company is not ascertainable readily.
The comparative financial information of the Company for the year ended 31stMarch 2017 and the transition date opening balance sheet as at 1st April 2016included in these Ind AS financial statements are based on the previously issuedstatutory financial statements for the years ended 31st March 2017 and 31stMarch 2016 prepared in accordance with the Companies (Accounting Standards) Rules 2006(as amended) which were audited by us on which we expressed an unmodified opinion dated30th May 2017 and 27th May 2016 respectively. The adjustments tothose financial statements for the differences in accounting principles adopted by theCompany on transition to the Ind AS have been audited by us.
Report on Other Legal and Regulatory Requirements
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 statement on the matters specified in paragraphs 3 and4 of the Order.
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 the Cash Flow Statement andthe Statement of Changes in Equity dealt with by this Report are in agreement with thebooks of account and with the returns received from branches not visited by us.
(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) The impact of the matters described in the Emphasis of Matter paragraph above isnot ascertainable in some cases and therefore we are unable to express an opinion if thesewill have an adverse effect on the functioning of the Company.
(f) On the basis of the written representations received from the directors as on 31stMarch 2018 taken on record by the Board of Directors none of the directors isdisqualified as on 31stMarch 2018 from being appointed as a director in termsof Section 164 (2) of the Act.
(g) 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 A". (h) With respect to the other matters to beincluded in the Auditor's Report in accordance with Rule 11 of the Companies (Audit andAuditors) Rules 2014 as amended from time to time in our opinion and to the best of ourinformation and according to the explanations given to us:
i. The Company has disclosed the impact of pending litigations on its financialstatements Refer Note 36 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 has been no delay in transferring amounts required to be transferred tothe Investor Education and Protection Fund by the Company.
| ||For De Chakraborty & Sen |
| ||Chartered Accountants |
| ||FRN: 303029E |
| ||(Srijit Chakraborty) |
|Place: Kolkata ||(Partner) |
|Date: 30th May 2018 ||(Membership No. 055317) |
Annexure to the Independent Auditor's Report
(Referred to in paragraphs in relation to Report on Other Legal and RegulatoryRequirements of our report of even date to the member of Assam Company India Limited onthe financialstatements ended on 31st March 2018)
i) a) The company has maintained proper records showing full particulars includingquantitative details and situation of Fixed Assets other than Oil and Gas Division.However a list of fixed assets acquired for Oil & Gas Operation is maintained.
b) The Fixed Assets of the company have been physically verified by the managementperiodically in phased manner which in our opinion is reasonable having regard to thesize of the company and the nature of its assets. In respect of assets physicallyverified the details have been compared with the book records and discrepancies noticedwere not material and have been properly dealt with in the books of account.
c) The conveyance of any immovable property is not pending except the acquisition ofland from Digulturung Thanai and Nudwa tea estates measuring about 4.45 Hector 5.95Hector and 9.18 Hector respectively through Oil India Limited which is in progress. ii)Physical verification of inventory has been conducted at reasonable intervals during theyear by the management except for Oil and Gas Division.
iii) The Company has given interest free loan to 8 subsidiaries and 1 Step-downSubsidiary amounting to Rs. 706.83 crores.
a) In our opinion and according to information and explanations given to us the rateof interest and other terms and conditions of loans given by the company secured orunsecured are generally not prejudicial to the interest of the company.
b) The loans are interest free in violation to section to section 186(7) and arerepayable on demand;
c) As the loans are repayable on demand and no call has been made no amount isoverdue; however a provision of Rs. 455.34 Crores being doubtful of recovery out ofsuch loans to subsidiaries has been created in the Balance Sheet.
iv) In respect of loans investments guarantees and security provisions of section 185and 186 of the Companies Act 2013 have been generally complied with; with the exception ofinterest free loans of Rs. 706.83 crores given to 8 subsidiaries and 1 step-downsubsidiary which is in contravention to section 186(7) of the Act.
v) The Company has not accepted any deposits from the public except for Rs. 0.71 Croresbeing loan taken from five non-corporate entities at its tea estates that were identifiedon test check.
vi) We have broadly reviewed the accounts maintained by the company in respect of teaproducts where pursuant to the Rules made by the Central Government of India themaintenance of cost records has been prescribed under sub-section (1) of Section 148 ofthe Act and are of the opinion that prima facie the prescribed accounts and records havebeen made and maintained. We have not however made a detailed examination of the recordswith a view to determine whether they are accurate or complete. No cost record has beenmaintained with respect to its oil and gas products.
vii) (a) The company is not regular in depositing undisputed statutory duesincluding provident fund employees' state insurance income-tax service tax duty ofcustoms duty of excise cess Goods and Services Tax and any other statutory dues withthe appropriate authorities where the amounts due in respect to Central Sales Tax is Rs.10076166; VAT is Rs. 8969109 Service
Tax is Rs. 6847654 and Provident Fund Rs 329598995 as on the last day of thefinancial year concerned for a period of more than six months from the date they becamepayable. As the Company is undergoing Corporate Insolvency Resolution Process (CIRP) allamounts outstanding as on the date of commencement of CIRP are under a moratorium till theCIRP is complete.
(b) Details of amounts involved and the forum where dispute is pending is mentionedbelow for cases where dues of income tax or sales tax or service tax or duty of customs orduty of excise or value added tax or cess have not been deposited on account of anydispute.
|Sl. No. ||Name of the Statute ||Nature of dues ||Amount Rs. ||Period to which relates ||Forum where dispute is pending |
|1 ||Income Tax Act 1961 ||Income Tax ||102357960 ||2010-11 ||Commissioner of Income Tax (appeals) |
| ||Do ||Do ||53841660 ||2011-12 ||-Do- |
| ||Do ||Do ||35469510 ||2012-13 ||-Do- |
| ||Do ||Do ||84753370 ||2013-14 ||-Do- |
| ||Do ||Do ||87193850 ||2014-15 ||-Do- |
|2. ||Agricultural Income Tax ||Do ||92298080 ||2013-14 ||Hon'ble Guwahati High Court |
| ||Do ||Do ||45182296 ||2014-15 ||-Do- |
|3. ||The West Bengal Sales tax Act 1994 ||West Bengal Sales Tax ||19370205 ||2002-03 ||Sr. Jt. Comm. of Commercial Taxes |
| ||Do ||Do ||1536066 ||2003-04 ||Appellate & Revisional Board of Commercial Taxes |
| ||Do ||Do ||8724464 ||2004-05 ||-Do- |
| ||Do ||Do ||19072936 ||2006-07 ||-Do- |
| ||Do ||Do ||26461472 ||2008-09 ||-Do- |
| ||Do ||Do ||1555430 ||2013-14 ||-Do- |
| ||Do ||Do ||102900058 ||2014-15 ||-Do- |
|4. ||The Central Sales tax Act 1956 ||Central Sales Tax ||168552 ||2002-03 ||Sr. Jt. Comm. of Commercial Taxes |
| ||Do ||Do ||6183248 ||2003-04 ||Appellate & Revisional Board of Commercial Taxes |
| ||Do ||Do ||237701 ||2004-05 ||-Do- |
| ||Do ||Do ||13456558 ||2006-07 ||-Do- |
| ||Do ||Do ||3444736 ||2008-09 ||-Do- |
| ||Do ||Do ||1556162 ||2013-14 ||-Do- |
| ||Do ||Do ||10604309 ||2014-15 ||-Do- |
|5. ||Service Tax Act || ||1225527 ||2013-14 ||Office of the commissioner of Service Tax-II |
| ||Do || ||26379459 ||Oct 2009- Dec 13 ||-Do- |
| ||Do || ||37771996 ||Oct 2009- Sept 15 ||-Do- |
viii) According to the records of the company examined by us and the information andexplanations made available to us at the Balance Sheet date the company has defaultedin repayment of loans from banks and Financial Institutions amounting to Rs.819.45 croresfell due on various dates during the year ending on 31st March 2018 and also inearlier accounting periods as admitted by the Resolution Professional during the course ofCIRP and detailed in the table below. The company has also defaulted in repayment ofprincipal part of the matured Foreign Currency Convertible Bonds amounting to USD 3.1million (Rs.20.16 crores) details of the same is given in note 46 forming part of theFinancial Statements.
|Loans From ||Overdue |
| ||(in Rs. Crores) |
|State Bank of India ||397.52 |
|Bank of Baroda ||142.34 |
|Allahabad Bank Industrial Finance Branch ||113.05 |
|Union Bank of India ||65.24 |
|Central Bank ||61.08 |
|Oriental Bank of Commerce ||26.32 |
|Syndicate Bank ||13.9 |
|TOTAL ||819.45 |
ix) No moneys were raised during the year by way of initial public offer or furtherpublic offer (including debt instruments). No term loan was taken by the Company duringthe Financial Year under review.
x) During the course of our examination of the books and records of the companycarried out in accordance with the generally accepted auditing practices in India andaccording to the information and explanations given to us we have neither come across anyinstance of fraud by the Company or on the company by its officers or employees noticedor reported during the year nor have we been informed of such case by the management.
xi) The managerial remuneration has been paid or provided in accordance with therequisite approvals mandated by the provisions of section 197 read with schedule V to theAct.
xii) The provisions of any special statute applicable to Nidhi Company are notapplicable to the company.
xiii) All transactions with the related parties are in compliance with section 177 and188 of the Companies Act 2013 where applicable and the details have been disclosed in thefinancial statements etc. as required by the applicable accounting standards;
xiv) The company has not made any preferential allotment or private placement of sharesor fully or partly convertible debentures during the year under review
xv) During the course of our examination of the books and records of the companycarried out in accordance with the generally accepted auditing practices in India andaccording to the information and explanations given to us the company has not enteredinto any non-cash transactions with directors or persons connected with such director.
xvi) The company is not required to be registered under section 45-IA of the ReserveBank of India Act 1934.
"Annexure A" to the Independent Auditors' Report of even date on theStandalone Ind AS Financial Statements [Referred to in paragraph (h) under the heading"Report on Other Legal and Regulatory Requirements" of our report of even dateto the members of Assam Company India Limited on the standalone Ind AS financialstatements ended for the year on 31st March 2018]
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 AssamCompany India Limited (the Company) as of 31st March 2018 in conjunction withour audit of the standalone Ind AS financial statements of the Company for the year endedon 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 control statedin the Guidance Note on Audit of Internal Financial Controls Over Financial Reportingissued by the Institute of Chartered Accountants of India. These responsibilities includethe design implementation and maintenance of adequate internal financial controls thatwere operating 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 Companies Act 2013.
Our responsibility is to express an opinion on the Company's internal financialcontrolsover financial reporting based on our audit. We conducted our audit in accordance with theGuidance Note on Audit of Internal Financial Controls Over Financial Reporting (the"Guidance Note") and the Standards on Auditing issued by ICAI and deemed to beprescribed under section 143(10) of the Companies Act 2013 to the extent applicable toan audit of internal financial controls both applicable to an audit of Internal FinancialControls and both issued by the Institute of Chartered Accountants of India. ThoseStandards and the Guidance Note require that we comply with ethical requirements and planand perform the audit to obtain reasonable assurance about whether adequate internalfinancial controls over financial reporting was 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 system over financial reporting and their operatingeffectiveness. Our audit of internal financial controls over financial reporting includedobtaining an understanding assessing the risk that a material weakness exists and testingand evaluating the design and operating effectiveness of internal control 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 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 and subject to the weaknesses stated below the Company has in allmaterial respects an adequate internal financial controls system over financial controlsover reporting and such internal financial reporting were operating effectively as at31st March 2018 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.
a) The Policy on Internal Financial Control and documentation of the Standard OperatingProcesses has been prepared but these are yet to be fully implemented and become fullyoperational.
b) The Internal Audit is not designed to cover the processes and systems to verify thestage and effectiveness of the implementation of the policies and procedures.
c) As the documented policy and procedures on Internal Financial Control are yet to befully implemented we are unable to evaluate the effectiveness of communication anddissemination of information on the same across the organization. However the informalsystem of oral communication and electronic communication is existing which at times iscomplemented by documented communication of information on the various aspects of Internalcontrols.
d) Weakness in control observed in the process of taking loans in from non-corporateentities in violation of Companies (Acceptance of Deposits) Rules 2014 as amended.
e) The evaluation of procurement process conducted by the management reveals that thesystem of tender / multiple quotations to ensure unbiased decision is absent.
f) Recording of cash transactions in timely manner and control over physical cashbalance is lacking at the tea estates.
| ||For De Chakraborty & Sen |
| ||Chartered Accountants |
| ||FRN 303029E |
| ||Srijit Chakraborty |
|Place of Signature: Kolkata ||(Partner) |
|Date: 30th May 2018 ||Membership No. 055317 |