TO THE MEMBERS OF Bharat Agri Fert and Realty Limited
Report on the audit of the Standalone Financial Statements
We have audited the standalone financial statements of Bharat Agri Fert and RealtyLimited ("the Company")which comprise the Standalone Balance Sheet as at 31March 2020 and the Standalone Statement of Profit and Loss (including other comprehensiveincome)Standalone Statement of Changes in Equity and Standalone Statement of Cash Flowsfor the year then ended and notes to the standalone financial statements including asummary of the significant accounting policies and other explanatory information(hereinafter referred 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 accounting principles generally accepted in India ofthe state of affairs of the Company as at 31 March 2020 and loss and other comprehensiveincome changes in equity and its cash flows for the year ended on that date.
Matter of Emphasis:
a) Loan to an Associate Company - Mol Chem Ltd i. As per the agreement dated 28thMay 2015 the Company had given loan to M/s Mol Chem Ltd aggregating to Rs.8.25 Crore. Theloan was repayable over a period of five years. Delays/defaults were observed in paymentof interest and in view of this the Company had amended agreement. However same was notcomplied by M/s Mol Chem Ltd. In view of this the said loan was recalled on 31/08/2019.The Loan amount is Rs.8.99 Crores as at 31st March 2020.The management of Company hasinformed that all necessary steps are taken by the Company and is hopeful about recoveryof the said loan given to M/s Mol Chem Ltd.
b) Trade Receivable: ii. Certain trade receivables aggregating to Rs.50.00 lacs areold where there is no recovery or slow recovery of the overdue trade receivables. Themanagement of Company is hopeful about recovery of the said old trade receivable.
Our opinion is not modified in respect of this matter.
Basis for Opinion
We conducted our audit in accordance with the Standards on Auditing (SAs) specifiedunder Section 143(10) of the Act. Our responsibilities under those SAs are furtherdescribed in the Auditor's Responsibilities for the Audit of the Standalone FinancialStatements section of our report. We are independent of the Company in accordance withthe Code of Ethics issued by the Institute of Chartered Accountants of India together withthe ethical requirements that are relevant to our audit of the standalone financialstatements under the provisions of the Act and the Rules thereunder and we have fulfilledour other ethical responsibilities in accordance with these requirements and the Code ofEthics. We believe that the audit evidence we have obtained is sufficient and appropriateto provide a basis for our opinion.
Key Audit Matters
Key audit matters ('KAM') are those matters that in our professional judgment were ofmost significance in our audit of the standalone financial statements of the currentperiod. These matters were addressed in the context of our audit of the standalonefinancial statements as a whole and in forming our opinion thereon and we do not providea separate opinion on these matters.
a) Interest on partly secured loan given to an Associate M/s Mol chem Ltd (Refer tonote 6 and 32 in the Standalone Financial Statement)
The Company had given a partly secured loan to an Associate Company M/s Mol chem Ltdwith Principal amount outstanding of Rs. 8.99 Crores (incl Interest ) as on 31st March2020 .
The Management is confident of recovering the Interest amounts in a very short periodof time based on the communication with and promise receireceived from the BorrowerAssociate Company. We have considered this to be a Key Audit Matter considering themateriality of the amounts which remained unpaid for a long period of time. How our auditaddressed the key audit matter Our procedure included the following: Obtained anunderstanding of the matter from the management.
1. All the relevant documents and correspondence.
2. Follow up steps taken by the Company.
Based on the above procedures performed we noted that the Management assessment ofrecovery of unpaid Interest is reasonable.
The Company's management and Board of Directors are responsible for the otherinformation. The other information comprises the information included in the Company'sannual report but does not include the standalone financial statements and our auditors'report thereon.
Our opinion on the standalone financial statements does not cover the other informationand we do not express any form of assurance conclusion thereon. In connection with ouraudit of the standalone financial statements our responsibility is to read the otherinformation and in doing so consider whether the other information is materiallyinconsistent with the standalone financial statements or our knowledge obtained in theaudit or otherwise appears to be materially misstated. If based on the work we haveperformed we conclude that there is a material misstatement of this other information weare required to report that fact. We have nothing to report in this regard.
Management's Responsibility for the Standalone Financial 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 (includingother comprehensive income) changes in equity and cash flows of the Company in accordancewith the accounting principles generally accepted in India including the IndianAccounting Standards (Ind AS) specified under Section 133 of the Act. This responsibilityalso includes maintenance of adequate accounting records in accordance with the provisionsof the Act for safeguarding of the assets of the Company and for preventing and detectingfrauds and other irregularities; selection and application of appropriate accountingpolicies; making judgments and estimates that are reasonable and prudent; and designimplementation and maintenance of adequate internal financial controls that were operatingeffectively for ensuring the accuracy and completeness of the accounting records relevantto the preparation and presentation of the standalone financial statements that give atrue and fair 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 management either intends to liquidate the Company or to ceaseoperations or has no realistic alternative but to do so. The Board of Directors is alsoresponsible for overseeing the Company's financial 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 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 financial statements. As part of an audit inaccordance with SAs we exercise professional judgment and maintain professionalscepticism throughout the audit. We also:
-Identify and assess the risks of material misstatement of the standalone financialstatements whether due to fraud or error design and perform audit procedures responsiveto those risks and obtain audit evidence that is sufficient and appropriate to provide abasis for our opinion. The risk of not detecting a material misstatement resulting fromfraud is higher than for one resulting from error as fraud may involve collusionforgery intentional omissions misrepresentations or the override of internal control.Obtain an understanding of internal control relevant to the audit in order to design auditprocedures that are appropriate in the circumstances. Under Section 143(3)(i) of the Actwe are also responsible for expressing our opinion on whether the Company has adequateinternal financial controls with reference to standalone financial statements in place andthe operating effectiveness 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 tocontinue as a going 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 othermatters the planned scope and timing of the audit and significant audit findingsincluding any significant deficiencies in internal control that we identify during ouraudit. We also provide those charged with governance with a statement that we havecomplied with relevant ethical requirements regarding independence and to communicatewith them all relationships and other matters that may reasonably be thought to bear onour independence and where applicable related safeguards. From the matters communicatedwith those charged with governance we determine those matters that were of mostsignificance in the audit of the standalone financial statements of the current period andare therefore the key audit matters. We describe these matters in our auditors' reportunless law or regulation precludes public disclosure about the matter or whenin extremelyrare circumstances we determine that a matter should not be communicated in our reportbecause the adverse consequences of doing so would reasonably be expected to outweigh thepublic interest benefits of such communication.
Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditors' Report) Order 2016 ("the Order")issued by the Central Government of India in terms of Section 143(11) of the Act we givein the "Annexure A" a statement on the matters specified in paragraphs 3and 4 of the Order to the extent applicable.
(A) 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 Standalone Balance Sheet the Standalone Statement of Profit and Loss(including other comprehensive income) the Standalone Statement of Changes in Equity andthe Standalone Statement of Cash Flows dealt with by this Report are in agreement with thebooks 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 31March 2020 taken on record by the Board of Directors none of the directors isdisqualified as on 31 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 with reference tostandalone financial statements of the Company and the operating effectiveness of suchcontrols refer to our separate Report in "Annexure B".
(B) 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 in our opinionand to the best of our information and according to the explanations given to us: i. TheCompany has disclosed the impact of pending litigations as at 31 March 2020 on itsfinancial position in its standalone financial statements - Refer Note 31 to thestandalone financial statements; ii. The Company did not have any long term contractsincluding derivative contracts for which there were any material foreseeable losses; iii.There has been no delay in transferring amounts required to be transferred to theInvestor Education and Protection Fund by the Company; and iv. The disclosures in thestandalone financial statements regarding holdings as well as dealings in specified banknotes during the period from 8 November 2016 to 30 December 2016 have not been made inthese standalone financial statements since they do not pertain to the financial yearended 31 March 2020.
(C) With respect to the matter to be included in the Auditors' Report under Section197(16) of the Act:
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.
Annexure - A to the Independent Auditors' Report
The Annexure referred to in Independent Auditors' Report to the members of the Companyon the standalone IND AS financial statements for the year ended 31st March 2020 wereport that: ii) In respect of Company's property plant and equipment: (a) The Company hasgenerally maintained proper records showing full particulars including quantitativedetails and situation of property plant and equipment.
(b) The Company has a regular programme of physical verification of its property plantand equipment by which property plant and equipment are verified in a phased manner over aperiod of three years. In our opinion this periodicity of physical verification isreasonable having regard to the size of the Company and the nature of its assets. Inaccordance with this programme certain property plant and equipment were verified duringthe year and no material discrepancies were noticed on such verification.
(c) According to the information and explanations 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 Company's inventories:
The inventory has been physically verified by the management at reasonable intervalsduring the year. In our opinion the frequency of such verification is reasonable.
The discrepancies noticed on verification between the physical stocks and the bookrecords were not material.
(iii) in respect of loans secured or unsecured granted to companies firms LimitedLiability Partnerships or other parties covered in register maintained under section 189of the Act: The Company has granted loan to a company (associate) covered in the registermaintained under section 189 of the Act.
(a) In our opinion the rate of interest and other terms and conditions on which theloans had been granted to a company (associate) listed in the register maintained underSection 189 of the Act are not prima facie prejudicial to the interest of the Company.
(b) Schedule of repayment of principal and payment of interest has been stipulated.Quarterly interest payment with one-year moratorium is stipulated. Principal is repayablewithin a period of five years from the date of disbursement. Delays/defaults were observedin payment of interest and in view of this the Company had amended agreement. Howeversame was not complied by M/s Mol Chem Ltd. In view of this the said loan was recalled on31/08/2019. The Loan amount is Rs.8.99 Crores as at 31st March 2020.
(c) As the principal is recalled as stated above. Interest aggregating to Rs.0.74 Croreis overdue till date. The Company has taken reasonable steps for recovery. (iv) TheCompany has not granted any loans or provided any guarantees or security to the partiescovered under Section 185 of the Act. The Company has complied with the provisions ofSection 186 of the Act in respect of investments made or loans or guarantee or securityprovided to the wholly owned subsidiary covered under Section 186.
(v) In our opinion and according to the information and explanations given to us theCompany has not accepted any deposits from the public. Accordingly paragraph 3 (v) of theOrder is not applicable to the Company. (vi) We have broadly reviewed the books ofaccounts and records maintained by the Company pursuant to the Rules prescribed by theCentral Government under sub section (1) of section 148 of the Act and are of the opinionthat prima facie the prescribed accounts and records have been made and maintained.However we have not made a detailed examination of the records.
(vii) in respect of statutory dues:
(a) According to the information and explanations given to us and on the basis of ourexamination 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 duty of excise duty of customs service tax GSTprofessional tax cess and other material statutory dues have been generally regularlydeposited during the year by the Company with the appropriate authorities. According tothe information and explanations given to us no undisputed amounts payable in respect ofprovident fund income tax sales tax value added tax duty of excise duty of customsservice tax GST professional tax cess and other material statutory dues were in arrearsas at 31 March 2020 for a period of more than six months from the date they becamepayable.
(b) According to the information and explanations given to us there are no materialstatutory dues which have not been deposited with the appropriate authorities on accountof any dispute other than the following dues of VAT: (viii) According to the informationand explanations given to us the Company has not defaulted any loans or borrowings fromany financial institution banks government or debenture holders during the year.
(ix) The Company did not raise any moneys by way of initial public offer or furtherpublic offer (including debt instruments) or by way of 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 course of our audit.
|Name of the Statute ||Nature of Dues ||Period to which it pertains ||Forum where dispute is pending ||Amount (exl interest and penalty (Rs.in lakhs) |
|The Maharashtra ||Local body Tax ||2013-2014 ||Asstt.Commissioner Thane ||1.40 |
|Value Added Tax Act 2002 ||(LBT) ||2014-2015 ||Municipal Corporation Thane ||15.61 |
| || || ||Total ||17.01 |
(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) In our opinion and according to the information and explanations given to us theCompany is not a nidhi company. Accordingly paragraph 3(xii) of the Order is notapplicable.
(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. The details of suchrelated party transactions have been disclosed in the financial statements as requiredunder Indian Accounting standard (IND AS) 24 Related Party Disclosure specified underSection 133 of the Act read with Rule 7 of the Companies (Accounts) Rules 2014.
(xiv) According to the information and explanations given to us and based on ourexamination of the records of the Company the Company has not made any preferentialallotment of shares. The Company has not made private placement of partly or fullyconvertible debentures during the year under review. (xv) According to the information andexplanations given to us and based on our examination of the records of the Company theCompany has not entered into non-cash transactions with directors or persons connectedwith him.
Annexure B to the Independent Auditor's Report of even date on the standalone Ind ASFinancial Statements of Bharat Agri Fert and Realty Limited
Report on the Internal Financial Controls under Clause (i) of Subsection 3 of Section143 of the Companies Act 2013 ("the Act") We have audited the internalfinancial controls over financial reporting of Bharat Agri Fert & Realty Limited("the Company") as of March 31 2020 in conjunction with our audit of thestandalone Ind AS financial statements of the Company 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 control statedin the Guidance Note on Audit of Internal Financial Controls over Financial Reporting('Guidance Note') issued by the Institute of Chartered Accountants of India ('ICAI').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 thesafeguarding of its assets the prevention and detection of frauds and errors theaccuracy and completeness of the accounting records and the timely preparation ofreliable financial information as required under the Act.
Our responsibility is to express an opinion on the Company's internal financialcontrols over financial reporting based on our audit. We conducted our audit in accordancewith the Guidance Note and the Standards on Auditing issued by ICAI and deemed to beprescribed under Section 143 (10) of the Act to the extent applicable to an audit ofinternal financial controls both applicable to an audit of Internal Financial Controlsand both issued by the ICAI. Those Standards and the Guidance Note require that we complywith ethical requirements and plan and perform the audit to obtain reasonable assuranceabout whether adequate internal financial controls over financial reporting 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 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 auditor's judgment including the assessment of the risks ofmaterial misstatement of the standalone Ind AS financial statements whether due to fraudor 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 standalone Ind AS financial statements for external purposes in accordancewith the generally accepted accounting principles. A Company's internal financial controlover financial 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 standalone Ind AS financial statements in accordance with generallyaccepted accounting principles and that receipts and expenditures of the Company arebeing made only in accordance with authorisations of management and directors of theCompany; and
3. provide reasonable assurance regarding prevention or timely detection ofunauthorised acquisition use or disposition of the Company's assets that could have amaterial effect on the standalone Ind AS 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 the Company has in all material respects an adequate internalfinancial controls system over financial reporting and such internal financial controlsover financial reporting were operating effectively as at March 31 2020 based on theinternal control over financial reporting criteria established by the Company consideringthe essential components of internal control stated in the Guidance Note issued by theICAI.
|FOR VERMA MEHTA & ASSOCIATES |
|Chartered Accountants |
|Firm's Registration No: 112118W |
|Vimlesh Mehta |
|Place: Mumbai |
|Date:29 July 2020 |