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Baba Agro Food Ltd.

BSE: 535007 Sector: Agri and agri inputs
NSE: BABAFOOD ISIN Code: INE672X01010
BSE 05:30 | 01 Jan Baba Agro Food Ltd
NSE 05:30 | 01 Jan Baba Agro Food Ltd

Baba Agro Food Ltd. (BABAFOOD) - Auditors Report

Company auditors report

To

The Members of

Baba Agro Food Limited

(Formerly known as Sri Krishna Metcom Limited)

Report on the Audit of the Standalone Financial Statements

Opinion

We have audited the accompanying standalone financial statements of Baba Agro FoodLimited("the Company") which comprise the Balance Sheet as at 31st March2020 the Statement of Profit and Loss Statement of Changes in Equity and Statement ofCash Flow for the year then ended and notes to the standalone financial statementsincluding a summary of significant accounting policies and other explanatory information(hereinafter referred to as "standalone 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 Companies

Act 2013 ("the Act") in the manner so required and give a true and fair viewin conformity with the accounting principles generally accepted in India of the state ofaffairs of the Company as at 31st March 2020 and its profit including othercomprehensive income changes in equity and its cash flow for the year ended on that date.

Basis for Opinion

We conducted our audit in accordance with the Standards on Auditing specified undersection 143(10) of the Act. Our responsibilities under those Standards are furtherdescribed in the

Auditor s Responsibilities for the Audit of the standalone 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 theethical requirements that are relevant to our audit of the standalone financial statementsunder the provisions of the Act and the Rules thereunder and we have fulfilled our otherethical responsibilities in accordance with these requirements and the Code of Ethics. Webelieve that the audit evidence we have obtained is sufficient and appropriate to providea basis for our opinion on the Standalone Financial Statements.

Key Audit Matters

Key audit matters are those matters that in our professional judgement were of mostsignificance in our audit of the Standalone Financial Statements for the financial yearended March 31 2020. These matters were addressed in the context of our audit of theStandalone Financial Statements as a whole and in forming our opinion thereon and we donot provide a separate opinion on these matters. For each matter below our description ofhow our audit addressed the matter is provided in that context.

We have determined the matters described below to be the key audit matters to becommunicated in our report. We have fulfilled the responsibilities described in theAuditors responsibilities for the audit of the Standalone Financial Statements section ofour report including in relation to these matters. Accordingly our audit included theperformance of procedures designed to respond to our assessment of the risks of materialmisstatement of the Standalone Financial Statements. The results of our audit proceduresincluding the procedures performed to address the matters below provide the basis for ouraudit opinion on the accompanying Standalone Financial Statements.

The key audit matters How our audit addressed the key audit matter
1. Uncertainty about Covid 19 pandemic impact on financial position of the company
Inventory: Principal audit procedures performed:
Determination of net realizable value of inventory at the year ended March 31 2020 the Company has inventory with the carrying value Rs. 9937 Lakhs. The inventory is valued at the lower of cost and net realizable value. • We understood and tested the design and operating effectiveness of controls as established by the management in determination of net realizable value of inventory.
We considered the value of the inventory of as a key audit matter given the relative size of the balance in the financial statements and significant judgement involved in the consideration of factors in determination of selling prices such as fluctuation of raw materials prices in the international market and substantial fall into selling prices due to shortage in demands due to Covid 19 pandemic.
• Assessing the appropriateness of Company s accounting policy for valuation of stock-in- trade and compliance of the policy with the requirements of the prevailing accounting standards. We considered various factors including the actual selling price prevailing around and subsequent to the year-end and fixed price contracts with customers whose sales orders are on hand. Compared the cost of the finished goods with the estimated net realizable value and checked if the finished goods were recorded at net realizable value where the cost was higher than the net realizable value.
• For the purpose of determination of cost the Company has considered the prevailing market situation. Based on the above procedures performed the management s determination of the net realizable value of the inventory as at the year end and comparison with cost for valuation of inventory is considered to be reasonable.

Information other than the financial statements and Auditor s report thereon

The Company s Board of Directors is responsible for the other information. The otherinformation comprises the information included in the Company s annual report but doesnot include the standalone financial statements and our auditor s report thereon. Ouropinion on the standalone financial statements does not cover the other information and wedo not express any form of assurance conclusion thereon.

In connection with our audit of the standalone financial statements our responsibilityis to read the other information and in doing so consider whether the other informationis materially inconsistent with the standalone financial statements or our knowledgeobtained in the audit or otherwise appears to be materially misstated. If based on thework we have performed we conclude that there is a material misstatement of this otherinformation we are required to report that fact. We have nothing to reporting thisregard.

Responsibilities of Management and Those Charged with Governance for the StandaloneFinancial Statements

The Company s Management and Board of Directors are responsible for the matters statedin section 134(5) of the Act with respect to the preparation of these standalone financialstatements that give a true and fair view of the state of affairs profit / loss changesin equity and cash flow of the Company in accordance with the Accounting Standards andother accounting principles generally accepted in India including the AccountingStandards specified under section 133 of the Act. This responsibility also includesmaintenance of adequate accounting records in accordance with the provisions of the Actfor safeguarding of the assets of the Company and for preventing and detecting frauds andother irregularities; selection and application of appropriate accounting policies; makingjudgments and estimates that are reasonable and prudent; and design implementation andmaintenance of adequate internal financial controls that were operating effectively forensuring the accuracy and completeness of the accounting records relevant to thepreparation and presentation of the standalone financial statements that give a true andfair view and are free from material misstatement whether due to fraud or error.

In preparing the standalone financial statements Management and Board of Directors areresponsible for assessing the Company s ability to continue as a going concerndisclosing as applicable matters related to going concern and using the going concernbasis of accounting unless the Board of Directors either intends to liquidate the Companyor to cease operations or has no realistic alternative but to do so. The Company sManagement and Board of Directors is also responsible for overseeing the Company sfinancial reporting process.

Auditor s Responsibilities for the Audit of the Standalone Financial Statements

Our objectives are to obtain reasonable assurance about whether the standalonefinancial 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 Standards on Auditing will always detect a material misstatement when it exists.Misstatements can arise from fraud or error and are considered material if individuallyor in the aggregate they could reasonably be expected to influence the economic decisionsof users taken on the basis of these standalone financial statements.

As part of an audit in accordance with Standards on Auditing we exercise professionaljudgment and maintain professional skepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the standalonefinancial 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 control relevant to the audit in order todesign audit procedures that are appropriate in the circumstances. Under section 143(3)(i)of the Companies Act 2013 we are also responsible for expressing our opinion on whetherthe company has adequate internal financial controls system in place and the operatingeffectiveness of such controls.

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 uncertaintyexists related to events or conditions that may cast significant doubt on the Company sability to continue as a going concern. If we conclude that a material uncertainty existswe are required to draw attention in our auditor s report to the related disclosures inthe standalone financial statements or if such disclosures are inadequate to modify ouropinion. Our conclusions are based on the audit evidence obtained up to the date of ourauditor s report.

However future events or conditions may cause the Company to cease to continue as agoing concern.

? Evaluate the overall presentation structure and content of the standalone financialstatements including the disclosures and whether the standalone financial statementsrepresent 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 themall relationships and other matters that may reasonably be thought to bear on ourindependence and 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 financial statementsof the current period and are therefore the key audit matters. We describe these mattersin our auditors report unless law or regulation precludes public disclosure about thematter or when in extremely rare circumstances we determine that a matter should not becommunicated in our report because the adverse consequences of doing so would reasonablybe expected to outweigh the public interest benefits of such communication.

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 of theCompanies Act 2013 we give in the "Annexure A" a statement on thematters specified in 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 Changes in Equity and the Cash Flow Statement dealt with by thisReport 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 2015 as amended.

(e) On the basis of the written representations received from the directors as on 31stMarch 2020 taken on record by the Board of Directors none of the directors isdisqualified as on 31st March 2020 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 with reference to these Standalone Financial Statements and theoperating effectiveness of such controls refer to our separate Report in

" Annexure B" to this report.

(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 has disclosed impact of pending litigations under note no. 30ofstandalone financial statements.

(ii) The Company has made provision as at 31st March 2020 as required underthe applicable Law or Accounting Standards for foreseeable losses on long term contractsincluding derivatives contracts.

(iii) There has been no delay in transferring amounts required to be transferred tothe Investor Education and Protection Fund by the Company.

3. With respect to the matter to be included in the Auditors Report under section197(16):

In our opinion and according to the information and explanations given to us theremuneration paid by the Company to its directors during the current year is in accordancewith the provisions of Section 197 of the Act. The remuneration paid to any director isnot in excess of the limit laid down under Section 197 of the Act. The Ministry ofCorporate Affairs has not prescribed other details under Section 197(16) which arerequired to be commented upon by us.

For AGRAWAL SHUKLA & CO.
Chartered Accountants
Firm Registration number: 0326151E
Pankaj Kumar Agrawal
Partner
Membership No.062658
Place : Mumbai
UDIN: 20062658AAAAAE9925
Date: 27thJuly 2020

ANNEXURE "A" TO THE INDEPENDENT AUDITORS REPORT ON THE STANDALONE FINANCIALSTATEMENTS OF Baba Agro Food Limited

(Referred to in Paragraph 1 under the "Report on Other Legal and RegulatoryRequirements" section of our report of even date) (i) In respect of its fixed assets:

a) The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets on the basis of available information.

b) As explained to us all the fixed assets have been physically verified by themanagement in a phased periodical manner which in our opinion is reasonable having regardto the size of the Company and nature of its assets. No material discrepancies werenoticed on such physical verification.

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.

(ii) In respect of inventories:

In our opinion during the year the inventories have been physically verified by themanagement at reasonable intervals and according to explanation given to us no materialdiscrepancies were noticed during the year on such verification.

(iii) According to the information and explanations given to us the Company has notgranted any loans secured or unsecured to companies firms or other parties covered inthe register maintained under Section 189 of the Companies Act 2013 and hence clause iii(a)iii (b) and iii(c) of the Order not applicable to the Company.

(iv) In our opinion and according to the information and explanations given to us inrespect of loans investments guarantees and security the provisions of sections 185 and186 of the Act have been complied with.

(v) According to the information and explanations given to us the Company has notaccepted any deposit from the public. Therefore the provisions of Clause (v) of paragraph3 of the Order are not applicable to the Company.

(vi) The maintenance of cost records has not been specified by the Central Governmentunder section 148(1) of the Companies Act 2013 for the business activities carried out bythe Company. Thus reporting under clause 3(vi) of the order is not applicable to theCompany.

(vii) In respect of statutory dues:

a) According to the records of the Company undisputed statutory dues includingProvident Fund Employees' State Insurance Income Tax Sales Tax Service Tax Goods andService Tax Duty of Customs Duty of Excise Value Added Tax Cess and other materialstatutory dues have been generally regularly deposited with the appropriate authorities.According to the information and explanations given to us no undisputed amounts payablein respect of the aforesaid dues were outstanding as at 31st March 2020 for a period ofmore than six months from the date of becoming payable.

b) There are no dues of Income Tax Sales Tax Wealth Tax and Service Tax duty ofCustoms Duty of Excise Value Added Tax and Cess which have not been deposited as on 31stMarch 2020 on account of any dispute.

(viii) Based on our audit procedures and the information and explanations provided bythe management we are of the opinion that the company has not defaulted in repayment ofloans or borrowing to financial institutions banks and Government. The Company does nothave any debenture holders.

(ix) In our opinion and according to the information and explanations given to us theterm loans raised during the year have been applied for the purpose for which those loanswere raised. The company has not raised money by way of initial public offer or furtherpublic offer including debt instruments.

(x) In our opinion and according to the information and explanations given to us nofraud by the Company or on the Company by the officers and employees of the Company hasbeen noticed or reported during the year.

(xi) In our opinion and according to the information and explanations given to us themanagerial remuneration has been paid or provided in accordance with the requisiteapprovals mandated by the provisions of section 197 read with Schedule V to the Act.

(xii) The Company is not a Nidhi Company and hence reporting under clause (xii) ofparagraph 3 of the Order is not applicable.

(xiii) In our opinion and according to the information and explanations given to us the

Company s transactions with its related parties are in compliance with Sections 177 and

188 of the Act where applicable and details of related party transactions have beendisclosed in the standalone financial statements etc. as required by the applicableaccounting standards.

(xiv) The Company has not made any preferential allotment or private placement ofshares or fully or partly convertible debentures during the year. Therefore provisions ofclause (xiv) of paragraph 3 of the Order are not applicable to the Company.

(xv) In our opinion and according to the information and explanations given to usduring the year the Company has not entered into any non-cash transactions with itsdirectors or persons connected with him and hence reporting under clause (xv) of paragraph3 of the Order is not applicable to the Company.

(xvi) In our opinion and according to the information and explanations given to us theCompany is not required to register under section 45-1A of the Reserve Bank of India Act1934.

For AGRAWAL SHUKLA & CO.
Chartered Accountants
Firm Registration number: 0326151E
Pankaj Kumar Agrawal
Partner
Membership No.062658
Place : Mumbai
UDIN:20062658AAAAAE9925
Date: 27thJuly 2020

ANNEXURE "B" TO THE INDEPENDENT AUDITOR S REPORT ON THE STANDALONE FINANCIAL

STATEMENTS OF Baba Agro Food Limited

(Referred to in paragraph 2 (f) under Report on Other Legal and Regulatory Requirementsof our report of even date)

Report on the Internal Financial Controls Over Financial Reporting under Clause (i) ofSub-section

3 of Section 143 of the Companies Act 2013 ("the Act")

We have audited the internal financial controls over financial reporting of BabaAgro Food Limited("the Company") as of 31st March 2020 in conjunction withour audit of the standalone financial statements of the Company for the year ended on thatdate.

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 Reporting (the"Guidance Note") issued by the Institute of Chartered Accountants of India.These responsibilities include the design implementation and maintenance of adequateinternal financial controls that were operating effectively for ensuring the orderly andefficient conduct of its business including adherence to

Company s policies the safeguarding of its assets the prevention and detection offrauds and errors the accuracy and completeness of the accounting records and the timelypreparation of reliable financial information as required under the Companies Act 2013.

Auditor s Responsibility

Our responsibility is to express an opinion on the Company's internal financialcontrols over financial reporting with reference to these Standalone Financial Statementsbased on our audit. We conducted our audit in accordance with the Guidance Note and theStandards on Auditing prescribed under Section 143(10) of the Companies Act 2013 to theextent applicable to an audit of internal financial controls. Those Standards and theGuidance Note require that we comply with ethical requirements and plan and perform theaudit to obtain reasonable assurance about whether adequate internal financial controlsover financial reporting with reference to these Standalone Financial Statements wasestablished and maintained and if such controls operated effectively in all materialrespects.

Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal financial controls system over financial reporting with reference to theseStandalone Financial Statements and their operating effectiveness. Our audit of internalfinancial controls over financial reporting included obtaining an understanding ofinternal financial controls over financial reporting with reference to these StandaloneFinancial Statements assessing the risk that a material weakness exists and testing andevaluating the design and operating effectiveness of internal control based on theassessed risk. The procedures selected depend on the auditor s judgement including theassessment of the risks of material misstatement of the standalone financial statementswhether 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 with reference to these Standalone Financial Statements.

Meaning of Internal Financial Controls over Financial Reporting

A Company's internal financial control over financial reporting with reference to theseStandalone Financial Statements is a process designed to provide reasonable assuranceregarding the reliability of financial reporting and the preparation of standalonefinancial statements for external purposes in accordance with generally acceptedaccounting principles.

A Company's internal financial control over financial reporting with reference to theseStandalone Financial Statements includes those policies and procedures that (1) pertain tothe maintenance of records that in reasonable detail accurately and fairly reflect thetransactions and dispositions of the assets of the Company; (2) provide reasonableassurance that transactions are recorded as necessary to permit preparation of standalonefinancial statements in accordance with generally accepted accounting principles and thatreceipts and expenditures of the Company are being made only in accordance withauthorizations of management and directors of the Company; and (3) provide reasonableassurance regarding prevention or timely detection of unauthorized acquisition use ordisposition of the Company's assets that could have a material effect on the standalonefinancial statements.

Inherent Limitations of Internal Financial Controls over Financial Reporting withreference to these Standalone Financial Statements.

Because of the inherent limitations of internal financial controls over financialreporting with reference to these Standalone 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 these Standalone Financial Statements to future periods are subject to the risk thatthe internal financial control over financial reporting with reference to these StandaloneFinancial Statements may become inadequate because of changes in conditions or that thedegree of compliance with the policies or procedures may deteriorate.

Opinion

In our opinion to the best of our information and according to the explanations givento us the Company has in all material respects an adequate internal financial controlssystem over financial reporting with reference to these Standalone Financial Statementsand such internal financial controls over financial reporting were operating effectivelyas at 31st March 2020 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.

For AGRAWAL SHUKLA & CO.
Chartered Accountants
Firm Registration number: 0326151E
Pankaj Kumar Agrawal
Partner
Membership No.062658
Place : Mumbai
UDIN: 20062658AAAAAE9925
Date: 27th July 2020