To the Members of
BANCO PRODUCTS (INDIA) LIMITED
Report on the Audit of the Standalone Financial Statements
We have audited the accompanying standalone financial statements of Banco Product(India) Limited ("the Company") which comprise the Balance Sheet as at 31 March2019 and the Statement of Profit and Loss (including other comprehensive income)Statement of Cash Flows and Statement of Changes in Equity for the year then ended asummary of significant accounting policies and other explanatory information (hereinafterreferred to as "the 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 trueand fair view in conformity with the Indian Accounting Standards prescribed under section133 of the Act read with the Companies (Indian Accounting Standards) Rules 2015 asamended (Ind AS) and other accounting principles generally accepted in Indiaof the state of affairs of the Company as at 31 March 2019 and its profit TotalComprehensive Income its cash flows and the changes in equity for the year ended on thatdate.
Basis for Opinion
We conducted our audit of the standalone financial statements in accordance with theStandards on Auditing specified under section 143(10) of the Act (SAs). Ourresponsibilities under those Standards are further described in the AuditorsResponsibility for the Audit of the Standalone Financial Statements section of our report.We are independent of the Company in accordance with the Code of Ethics issued by theInstitute of Chartered Accountants of India (ICAI) together with the ethical requirementsthat are relevant to our audit of the standalone financial statements under the provisionsof the Act and the Rules made thereunder and we have fulfilled our other ethicalresponsibilities in accordance with these requirements and the ICAIs Code of Ethics.We believe that the audit evidence obtained by us is sufficient and appropriate to providea basis for our opinion on the standalone financial statements.
Emphasis of Matter
We draw attention to note No. 44 of the Standalone Financial Statement with respect toCompanies application under Section 245C(1) of the Income Tax Act 1961 before theHonble Income Tax Settlement Commission. Our opinion is not modified in respect ofthis matter.
Key Audit Matters
Key audit matters are those matters that in our professional judgment were of mostsignificance in our audit of the standalone financial statements of the current period.These matters were addressed in the context of our audit of the standalone financialstatements 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.
|The key audit matters ||How our audit addressed the key audit matters |
|Revenue Recognition || |
|Revenue is one of the key profit drivers and is therefore susceptible to misstatement. Cut-off is the key assertion in so far as revenue recognition is concerned since an inappropriate cut-off can result in material misstatement of results for the year. ||Our audit procedures with regard to revenue recognition included testing controls automated and manual around dispatches/ deliveries inventory reconciliations and circularization of receivable balances substantive testing for cut-offs and analytical review procedures. |
|Adoption of Ind AS 115- Revenue from Contracts with Customers || |
|The Company has adopted Ind AS 115 Revenue from Contracts with Customers which is the new revenue accounting standard. The application and transition to this accounting standard is complex and is an area of focus in the audit. ||Our audit procedures on adoption of Ind AS 115 Revenue from contracts with Customers which is the new revenue accounting standard include - |
|The revenue standard establishes a comprehensive framework for determining whether how much and when revenue is * recognized. This involves certain key judgments relating to identification of distinct performance obligations determination of transaction price of identified performance obligation the appropriateness of the basis used to measure * revenue recognized over a period. Additionally the standard mandates robust disclosures in respect of revenue and periods over which the remaining * performance obligations will be satisfied subsequent to the balance sheet date. ||* Evaluated the design and implementation of the processes and internal controls relating to implementation of the new revenue accounting standard:- |
| ||* Evaluated the detailed analysis performed by management on revenue streams by selecting samples for the existing contracts with customers and considered revenue recognition policy in the current period in respect of those revenue streams; |
| ||* Evaluated the changes made to IT systems to reflect the changes required in revenue recognition as per the new accounting standard; |
| ||* Evaluated the cumulative effect adjustments as at 1 April 2018 for compliance with the new revenue standard; and |
|The Company adopted Ind AS 115 and applied the available exemption provided therein to not restate the comparative periods. The effect on adoption of Ind-AS 115 was insignificant. ||* Evaluated the appropriateness of the disclosures provided under the new revenue standard and assessed the completeness and mathematical accuracy of the relevant disclosures. |
|Evaluation of uncertain tax positions || |
|The Company has periodic challenges by tax authorities on a range of tax matters during the normal course of business including transfer pricing and indirect tax matters. These involve significant management judgment to determine the possible outcome of the uncertain tax positions consequently having an impact on related accounting and disclosures in the standalone financial statements. ||Our audit procedures include the following substantive procedures:- |
| ||* Obtained understanding of key uncertain tax positions; |
| ||* Read and analysed key correspondences external legal opinions / consultations by management for key uncertain tax positions; |
| ||* Discussed with appropriate senior management and evaluated management's underlying key assumptions in estimating the tax provisions; |
| ||* Assessed managements estimate of the possible outcome of the disputed cases; |
| ||* Tested the effectiveness of controls around the recognition of provisions and recording and re-assessment of contingent liabilities; |
| ||* Used our subject matter experts to assess the value of material provisions in light of the nature of the exposures applicable regulations and related correspondence with the authorities; |
| ||* We challenged the assumptions and critical judgements made by management which impacted their estimate of the provisions required considering judgements previously made by the authorities in the relevant jurisdictions or any relevant opinions given by the Company's advisors and assessing whether there was an indication of management bias; |
| ||* Discussed the status in respect of significant provisions with the Company's internal tax and legal team; |
| ||* Performed retrospective review of management judgements relating to accounting estimate included in the financial statement of prior year and compared with the outcome. |
|Related Party Transactions || |
|During the year the Company has sold its investments in shares of Lake Mineral (Mauritius) Limited (Subsidiary Company) and Kilimanjaro ||Our audit procedures include the following substantive procedures:- |
|Biochem Limited (Indirect Subsidiary) to Agro Scientific Investments Limited (Entity in which promoter/promoter group is having controlling interest). The transaction is subject to regulatory and necessary approvals. Determination of transaction price for such related party transactions outside the normal course of business is a key audit matter considering the significance of the transaction value and the significant judgements involved in determining the transaction value. ||* Performed test of controls over related party transactions through inspection of evidence of performance of these controls. |
| ||* Read the valuation reports and fairness opinion obtained from independent valuers and assessed the objectivity and competence of the independent valuers. |
| ||* Read the approvals obtained from Board of Directors and regulatory approvals for the transactions. |
| ||* Read the Share Purchase Agreement entered with Agro Scientific Investments Limited (Entity in which promoter/ promoter group is having controlling interest). |
| ||* Ensure realization of sales consideration. |
| ||* Assessed the disclosures in accordance with Ind AS 24 |
| ||"Related Party Disclosures". |
Information Other than the Financial Statements and Auditors Report Thereon
The Companys Board of Directors is responsible for the other information. Theother information comprises Boards Report Report on Corporate governance andBusiness Responsibility report but does not include the consolidated financial statementstandalone financial statements and our auditors report thereon.
Our opinion on the financial statements does not cover the other information and we donot 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 during the course of our audit or otherwise appears to be materially misstated.If based on the work we have performed we conclude that there is a material misstatementof this other information we are required to report that fact. We have nothing to reportin this regard.
Managements Responsibility for the Financial Statements
The Companys Board of Directors is responsible for the matters stated in section134(5) of the Act with respect to the preparation of these standalone financial statementsthat give a true and fair view of the financial position financial performance includingother comprehensive income cash flows and changes in equity of the Company in accordancewith the Ind AS and other accounting principles generally accepted in India. Thisresponsibility also includes maintenance of adequate accounting records in accordance withthe provisions of the Act for safeguarding the assets of the Company and for preventingand detecting frauds and other irregularities; selection and application of appropriateaccounting policies; making judgments and estimates that are reasonable and prudent; anddesign implementation and maintenance of adequate internal financial controls that wereoperating effectively for ensuring the accuracy and completeness of the accountingrecords relevant to the preparation and presentation of the standalone financialstatements that give a true and fair view and are free from material misstatement whetherdue to fraud or error.
In preparing the standalone financial statements management is responsible forassessing the Companys 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.
Those Board of Directors are also responsible for overseeing the Companysfinancial reporting process.
Auditors Responsibilities for the Audit of the 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 auditors report that includes our opinion. Reasonableassurance is a high level of assurance but is not a guarantee that an audit conducted inaccordance with SAs 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 SAs we exercise professional judgment andmaintain 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 Act we are also responsible for expressing our opinion on whether the company hasadequate internal financial controls with reference to standalone financial statements inplace and the operating effectiveness of such controls.
Evaluate the appropriateness of accounting policies used and the reasonablenessof accounting estimates and related disclosures made by management.
Conclude on the appropriateness of managements use of the going concernbasis of accounting and based on the audit evidence obtained whether a materialuncertainty exists related to events or conditions that may cast significant doubt on theCompanys ability to continue as a going concern. If we conclude that a materialuncertainty exists we are required to draw attention in our auditors report to therelated disclosures in the standalone financial statements or if such disclosures areinadequate to modify our opinion. Our conclusions are based on the audit evidenceobtained up to the date of our auditors report. However future events or conditionsmay cause the Company to cease to continue as a going concern.
Evaluate the overall presentation structure and content of the standalonefinancial statements including the disclosures and whether the standalone financialstatements represent the underlying transactions and events in a manner that achieves fairpresentation.
Materiality is the magnitude of misstatements in the standalone financial statementsthat individually or in aggregate makes it probable that the economic decisions of areasonably knowledgeable user of the standalone financial statements may be influenced. Weconsider quantitative materiality and qualitative factors in (i) planning the scope of ouraudit work and in evaluating the results of our work; and (ii) to evaluate the effect ofany identified misstatements in the standalone financial statements.
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 aboutthe matter or when in extremely rare circumstances we determine that a matter should notbe communicated in our report because the adverse consequences of doing so wouldreasonably be expected to outweigh the public interest benefits of such communication.
Report on Other Legal and Regulatory Requirements
1. As required by Section 143(3) of the Act based on our audit 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 financial statements comply with the IndAS specified under Section 133 of the Act.
(e) On the basis of the written representations received from the directors as on 31stMarch 2019 taken on record by the Board of Directors none of the directors isdisqualified as on 31st March 2019 from being appointed as a director in termsof Section 164 (2) of the Act.
(f) With respect to the adequacy of the internal financial controls over financialreporting of the Company and the operating effectiveness of such controls with respect tofinancial statements refer to our separate Report in Annexure A.
(g) With respect to the other matters to be included in the Auditors 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 theremuneration paid by the Company to its directors during the year is in accordance withthe provisions of section 197 of the Act.
(h) With respect to the other matters to be included in the Auditors 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 litigation on its financial positionin its standalone financial statement. Refer Note of the standalone financialstatements.
ii. The Company did not have any long-term contracts including derivative contracts forwhich there were any material foreseeable losses; and
iii. There has been no delay in transferring amounts required to be transferred tothe Investor Education and Protection Fund by the Company
2. As required by the Companies (Auditors Report) Order 2016 ("theOrder") issued by the Central Government of India in terms of sub-section (11) ofsection 143 of the Act we give in "Annexure B" a statement on thematters specified in paragraphs 3 and 4 of the Order to the extent applicable.
For MANUBHAI & SHAH LLP
CA LAXMINARAYAN P. YEKKALI
M. No: 114753
Mumbai 30th May 2019
ANNEXURE "A" TO THE INDEPENDENT AUDITORS REPORT
(Referred to in 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 BancoProducts (India) Limited ("the Company") as of 31 March 2019 in conjunctionwith our audit of the standalone financial statements of the Company for the year ended onthat date.
Managements Responsibility for Internal Financial Controls
The Companys 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 (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 companys policies the safeguardingof its 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 Companies Act 2013.
Our responsibility is to express an opinion on the Companys internal financialcontrols over financial reporting of the Company based on our audit. We conducted ouraudit in accordance with the Guidance Note on Audit of Internal Financial Controls OverFinancial Reporting (the "Guidance Note") issued by the Institute of CharteredAccountants of India and the Standards on Auditing prescribed under Section 143(10) of theCompanies Act 2013 to the extent applicable to an audit of internal financial controls.Those Standards and the Guidance Note require that we comply with ethical requirements andplan and 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 of internal financial controls over financial reportingassessing the risk that a material weakness exists and testing and evaluating the designand operating effectiveness of internal control based on the assessed risk. The proceduresselected depend on the auditors judgement including the assessment of the risks ofmaterial misstatement of the financial statements whether due to fraud or error.
We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the Companys internal financial controlssystem over financial reporting.
Meaning of Internal Financial Controls over Financial Reporting
A companys internal financial control over financial reporting is a processdesigned to provide reasonable assurance regarding the reliability of financial reportingand the preparation of financial statements for external purposes in accordance withgenerally accepted accounting principles. A companys internal financial control overfinancial reporting includes 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 authorisations of management and directors of the company; and
(3) Provide reasonable assurance regarding prevention or timely detection ofunauthorised acquisition use or disposition of the companys assets that could havea 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 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 and such internal financial controls over financialreporting were operating effectively as at 31st March 2019 based on the criteria forinternal financial control over financial reporting established by the Company consideringthe essential components of internal control stated in the Guidance Note on Audit ofInternal Financial Controls Over Financial Reporting issued by the Institute of CharteredAccountants of India.
For MANUBHAI & SHAH LLP
CA LAXMINARAYAN P. YEKKALI
M. No: 114753
Mumbai 30th May 2019
ANNEXURE - "B" TO INDEPENDENT AUDITORS REPORT
(Referred to in Paragraph 2 under "Report on Other Legal and RegulatoryRequirements of the Independent Auditors Report of even date)
I. (a) The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets
(b) The Company has a regular programme of physical verification of its fixed assets bywhich fixed assets are verified in a phased manner over a period of three years. In ouropinion this periodicity of physical verification is reasonable having regard to the sizeof the Company and the nature of its assets. No material discrepancies were noticed onsuch verification.
(c) In our opinion and according to the information and explanations given to us and onthe basis of our examination of the records of the Company the title deeds of immovableproperties are held in the name of the Company.
II. The inventory except goods-in-transit and stock lying with third parties havebeen physically verified by the management during the year. In our opinion the frequencyof such verification is reasonable. For stock lying with the third parties at the yearend written confirmations have been obtained. The discrepancies noticed on verificationbetween the physical stock and book records were not material and have been properly dealtwith in books of account.
III. According to the information and explanations given to us the Company has notgranted any loans Secured or unsecured to companies firm Limited liability Partnershipsor other parties covered in the register maintained under section 189 of the CompaniesAct 2013 the Act.
IV. In our opinion and according to the information and explanations given to us theCompany has complied with the provisions of section 185 and 186 of the Act with respectto the loans investments guarantees and security as applicable.
V. In our opinion and according to the information and explanations given to us theCompany has not accepted any deposits from the public in accordance with the provisions ofsection 73 to 76 or any other relevant provision of the act and the rules framed thereunder. Accordingly Paragraph 3(v) of the order is not applicable to the company.
VI. We have broadly reviewed the books of accounts maintained by the company pursuantto the rules prescribe by the central government for the maintenance of cost records undersection 148(1) of the Act and are of the opinion that prime facie the prescribed accountsand records have been made and maintained. We have not however made detailed examinationof the records with a view to determine whether they are accurate or complete.
VII. (a) According to the information and explanations given to us and on the basis ofour examination of the records of the Company amounts deducted/ accrued in the books ofaccount in respect of undisputed statutory dues including provident fund income-taxsales tax/value added tax Goods and Service tax duty of customs duty of Excise servicetax cess and other material statutory dues have been regularly deposited during the yearby the Company with the appropriate authorities. According to the information andexplanations given to us no undisputed amounts payable in respect of provident fundincome tax sales tax value added tax Goods and Service tax duty of customs duty ofexcise service tax cess and other material statutory dues were in arrears as at 31 March2019 for a period of more than six months from the date they became payable.
(b) According to the information and explanations given to us dues that have not beendeposited by the company on account of disputes are as follows:
|Name of the Statue ||Nature of Dues ||Amount Rs in Lakhs ||Period to which the amount relates ||Forum where the dispute is pending |
|Central Excise Act 1944 ||Excise Duty Service Tax and Custom Duty ||1777.57 ||Financial Year 2006-2007 till financial year 2018-2019 ||- Rs 803.64 lakhs pending with CESTAT Ahmedabad. |
| || || || ||- Rs 731.83 lakhs pending with Commissioner Central Excise and Custom (Appeal). |
| || || || ||- Rs 2.80 lakhs pending with Superintendent Central Excise and Custom (Appeal). |
| || || || ||- Rs 11.78 lakhs pending with Commissioner (Appeal) Customs Mumbai |
| || || || ||- Rs 227.51 lakhs pending with Gujrat High Court. |
|Sales Tax Act ||VAT/CST ||90.38 ||Financial Year 2008-2009 till 2012-2013 ||- Rs 50.83 lakhs pending with Appellate Tribunal Ahmedabad. |
| || || || ||- Rs 10.20 lakhs pending with JC-Appeal Vadodara. and |
| || || || ||- Rs 29.35 lakhs pending with Commissioner (Appeal) Ranchi. |
|Income Tax Act ||Income Tax ||09.30 ||FY 2011-12 (i.e. AY 2012-13) ||CIT (Appeal) |
VIII. In our opinion and according to the information and explanations given to us theCompany has not defaulted during the year in repayment of dues to the financialinstitution banks and government. The Company did not have any outstanding Debenturesduring the year.
IX. The Company did not raise any money by way of initial public offer or furtherpublic offer (including debt instruments) and term loans during the year.
X. According to the information and explanations given to us no material fraud by theCompany or on the Company by its officers or employees has been noticed or reported duringthe year.
XI. According to the information and explanations give to us and based on ourexamination of the records of the Company the Company has paid/provided for managerialremuneration in accordance with the requisite approvals mandated by the provisions ofsection 197 read with Schedule V to the Act.
XII. According to the information and explanations given to us the Company is not aNidhi company as prescribed under section 406 of the Act. Accordingly Paragraph 3(xii) ofthe Order is not applicable.
XIII. According to the information and explanations given to us and based on ourexamination of the records of the Company transactions with the related parties are incompliance with sections 177 and 188 of the Act where applicable and details of suchtransactions have been disclosed in the financial statements as required by the applicableIndian accounting standards.
XIV. According to the information and explanations give to us and based on ourexamination of the records of the Company the Company has not made any preferentialallotment or private placement of shares or fully or partly convertible debentures duringthe year.
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 any non-cashtransactions with directors or persons connected with them.
XVI. According to the information and explanations give to us The Company is notrequired to be registered under section 45-IA of the Reserve Bank of India Act 1934.Accordingly Paragraph 3(xvi) of the order is not applicable to the company.
For MANUBHAI & SHAH LLP
CA LAXMINARAYAN P. YEKKALI
M. No: 114753
Mumbai 30th May 2019