To the Members of CIAN Agro Industries & Infrastructures Limited
Report on the Standalone Ind AS Financial Statements
We have audited the accompanying (Standalone) financial statements of CIAN AgroIndustries & Infrastructures Limited which comprise the Balance Sheet as at March312019 the Statement of Profit and Loss Cash Flow Statement for the year then endedand a summary of significant accounting policies and other explanatory information.
In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid standalone Ind AS financial statements give the informationrequired by the Act in the manner so required and give a true and fair view in conformitywith the accounting principles generally accepted in India including Ind AS ofthe stateof affairs of the Company as at March 312019 and its Profit & Loss and its Cash Flowfor the year ended on that date.
Basis for Opinion
We conducted our audit in accordance with the SAs specified under section 143(10) ofthe Companies Act 2013. Our responsibilities under those standards are further describedin the Auditor's Responsibilities for the audit of the financial statement section of ourreport. We are independent of the company in accordance with the code of ethics issued bythe ICAI together with the ethical requirements that are relevant to our audit of the FSunder the provisions of Companies Act 2013 and the rules there under 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 FS of the current period. These matters wereaddressed in the context of our audit of the financial statement as a whole and informing our opinion thereon and we do not provide a separate opinion on these matters.
Key Audit Matters (KAM)
|Sr. NO. ||Description of Key Audit Matter ||Why the matter was considered to be one of most significance in the audit ||How the matter was addressed in the audit |
|1 ||Investments in shares of subsidiaries: The investments are carried at the cost less impairment provision if any. The Company is responsible for assessing the investments for any Indicators of impairment. However in the light of proposed merger of subsidiaries the management has considered it prudent not to provide for the impairment. ||As at 31st March 2019 the carrying value of investment in subsidiaries was Rs. 1311.08.00 lacs (as at 31st March 2018: Rs.1323.69 lacs) as given in Note 3 of the Financial Statements. These investments form 10.73% (14.31%) of the total assets of the Company and are hence considered to be of one of most significant matters in the audit. ||We have verified the existence and the rights of the Company on the investments in shares of subsidiaries. The Company has initiated a plan of merger of its subsidiaries vizJairamlnfraventuresPvt. Ltd and Purti Agrothech Ltd. with itself as such management considers the Investment in subsidiary companies as unimpaired. |
| || || ||We have reviewed the management's process of identifying indicators of impairment of investments. |
|2 ||Inventory of stores and Spares. ||As at 31st March 2019 the carrying value of Inventory of stores and spares was Rs.2859.72 lacs (as at 31st March 2018: Rs.34.19 lacs) as given in Note 7 of the Financial Statements. These investments form 23.41% (0.37%) ofthe total assets of ||We have verified the documents of ownership of the Items listed under stores and spares. As mentioned in Note 2(a) of Annexure A to the Independent Audit Report the physical verification of the inventory has been carried out and certified by the management. |
| || ||the Company and are hence considered to be of one of most significant matters in the audit. ||We have verified the valuation of the inventory which is in line with the accounting policy of the Company. |
|3 ||Non-Current Liabilities: Secured Loans ||As at 31st March 2019 the carrying value of Term Loan from Yes Bank was Rs.1211.83 lacs (as at 31st March 2018: Rs.NIL lacs) as given in Note 17 of the Financial Statements. These investments form 9.92% (NIL%) of the total Liabilities of the Company and are hence considered to be of one of most significant matters in the audit. ||The Term Loan from Yes Bank utilised as follows: |
| || || ||1. Purchase of immovable property Rs.565.00 Lacs appearing as advance to seller (pending legal formalities for sale) grouped under sundry creditors. |
| || || ||2. Rs. 635.00 Lacs paid towards construction advance to Vendor Company. |
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 theother information and we do 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 report in this regard
Management's Responsibility for the Financial Statements
The Company's Board of Directors is responsible for the matters stated in Section134(5) of the Companies Act 2013 with respect to the preparation of these financialstatements that give a true and fair view of the financial position financial performanceand cash flows of the Company in accordance with the accounting principles generallyaccepted in India including the Accounting Standards specified under Section 133 of theAct read with Rule 7 of the Companies (Accounts) Rules 2014. This responsibility alsoincludes maintenance of adequate accounting records in accordance with the provisions ofthe Act for safeguarding 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 financial statements that give a true and fair viewand 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. Board of Directors is alsoresponsible for overseeing the Company's financial reporting process.
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 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 management's use of the going concern basisof accounting 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 ourauditors' 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 standalonefinancial statements including the disclosures and whether the standalone financialstatements represent the underlying transactions and events in a manner that achieves fairpresentation.
We communicate with those charged with governance regarding among other matters theplanned scope and timing of the audit and significant audit findings including anysignificant deficiencies in internal control that we identify during our audit. We alsoprovide those charged with governance with a statement that we have complied with relevantethical requirements regarding independence and to communicate with them allrelationships and other matters that may reasonably be thought to bear on ourindependence and where applicable related safeguards. From the matters communicated withthose charged with governance we determine those matters that were of most significancein the audit of the standalone financial statements of the current period and aretherefore the key audit matters. We describe these matters in our auditors' report unlesslaw or regulation precludes public disclosure about the matter or when in extremely rarecircumstances we determine that a matter should not be communicated in our report becausethe adverse consequences of doing so would reasonably be expected to outweigh the publicinterest benefits of such communication.
Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditor's Report) Order 2016 as amended issued bythe Central Government of India in terms of sub-section (11) of section 143 of the Act wegive in the "Annexure A" a statement on the matters specified in paragraphs 3and 4 of the Order.
2. As required by section 143 (3) of the Act we report that:
3. 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.
a) We have sought and obtained all the information and explanations which to the bestof our knowledge and belief were necessary for the purpose 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 Ind AS Balance Sheet the Statement of Profit and Loss and the CashFlow Statement dealt with by this Report 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 2014.
e) On the basis of written representations received from the directors as on March312019 taken on record by the Board of Directors none of the directors is disqualifiedas on March 312019 from being appointed as a director in terms of Section 164 (2) of theAct.
f) With respect to the adequacy of the internal financial controls over financialreporting of the Company and the operating effectiveness of such controls refer to ourseparate Report in "Annexure B".
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 does not have any pending litigations which would impact its financialposition.
ii. The Company did not have any long-term contracts including derivative contracts forwhich there were any material foreseeable losses.
iii. There were no amounts which were required to be transferred to the InvestorEducation and Protection Fund by the Company.
|For P. G. Joshi & Co ||Ashutosh Joshi |
|Chartered Accountants ||Partner |
|FRN: 104416W ||M. No.: 038193 |
| ||Place: Nagpur |
| ||Date: 30th May 2019 |
"Annexure A" to the Independent Auditors' Report
Referred to in paragraph 1 under the heading 'Report on Other Legal & RegulatoryRequirement' of our report of even date to the financial statements of the Company for theyear ended March 312019:
1) In respect of Fixed Assets:
(a) The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets;
(b) The Fixed Assets have been physically verified by the management in a phasedmanner designed to cover all the items over a period of one year which in our opinionis reasonable having regard to the size of the company and nature of its business.Pursuant to the program the fixed asset has been physically verified by the managementduring the year and no material discrepancies between the books records and the physicalfixed assets have been noticed as confirmed by the management.
(c) The title deeds of immovable properties are held in the name of the company.
2) In respect of Inventory:
(a) The stocks have been physically verified during the year by the management atreasonable intervals. In our opinion the frequency of verification is reasonable.
(b) The procedures of physical verification of inventory followed by the management arereasonable and adequate in relation to the size of the company and nature of its business.
(c) On the basis of our examination of the inventory records of the company we are ofthe opinion that the company is maintaining proper records of its inventory. As informedto us there were no material discrepancies noticed on physical verification between thephysical stock and the book records. Minor discrepancies were appropriately adjusted inthe books.
3) The Company has not granted any loans secured or unsecured to companies firmsLimited Liability partnerships or other parties covered in the Register maintained undersection 189 of the Act. Accordingly the provisions of clause 3 (iii) (a) to (C) of theOrder are not applicable to the Company and hence not commented upon.
4) 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 Companies Act 2013In respect of loans investments guarantees and security.
5) The Company has not accepted any deposits from the public and hence the directivesissued by the Reserve Bank of India and the provisions of Sections 73 to 76 or any otherrelevant provisions of the Act and the Companies (Acceptance of Deposit) Rules 2015 withregard to the deposits accepted from the public are not applicable.
6) As informed to us the maintenance of Cost Records has not been specified by theCentral Government under subsection (1) of Section 148 of the Act in respect of theactivities carried on by the company.
7) (a) According to information and explanations given to us and on the basis of ourexamination of the books of account and records the Company has been generally regularin depositing undisputed statutory dues including Provident Fund Employees StateInsurance Income Tax Sales Tax Service Tax Goods &Service Tax(GST) and any otherstatutory dues with the appropriate authorities. According to the information andexplanations given to us no undisputed amounts payable in respect of the above were inarrears as at March 312019 for a period of more than six months from the date on whenthey become payable.
b) According to the information and explanation given to us there are no dues ofincome tax sales tax service tax goods & service tax outstanding on account of anydispute.
8) In our opinion and according to the information and explanations given to us theCompany has not defaulted in the repayment of dues to banks. The Company has taken TermLoans from Banks and outstanding as on 31st March 2019 is as follows:
|1. ||Nagpur Nagrik Sahakari Bank ||Rs. 979264.00 |
|2. ||Samruddhi Co-Op Bank ||Rs. 443044.00 |
|3. ||Yes Bank ||Rs. 88867945.00 |
|4. ||Yes Bank ||Rs. 32315616.00 |
|5. ||HDFC Vehicle loan ||Rs. 7653134.67.00 |
9) Based upon the audit procedures performed and the information and explanations givenby the management the company has not raised moneys by way of initial public offer orfurther public offer including debt instruments. Term Loans taken from Banks have beenutilised for the purpose they were raised.
10) Based upon the audit procedures performed and the information and explanationsgiven by the management we report that no fraud by the Company or on the company by itsofficers or employees has been noticed or reported during the year.
11) Based upon the audit procedures performed and the information and explanationsgiven by the management the managerial remuneration has been paid or provided inaccordance with the requisite approvals mandated by the provisions of section 197 readwith Schedule V to the Companies Act;
12) In our opinion the Company is not a Nidhi Company. Therefore the provisions ofclause 4 (xii) of the Order are not applicable to the Company.
13) In our opinion all transactions with the related parties are in compliance withsection 177 and 188 of Companies Act 2013 and the details have been disclosed in theFinancial Statements as required by the applicable accounting standards.
14) Based upon the audit procedures performed and the information and explanationsgiven by the management the company has not made any preferential allotment or privateplacement of shares or fully or partly convertible debentures during the year underreview. Accordingly the provisions of clause 3 (xiv) of the Order are not applicable tothe Company and hence not commented upon.
15) Based upon the audit procedures performed and the information and explanationsgiven by the management the company has not entered into any non-cash transactions withdirectors or persons connected with him. Accordingly the provisions of clause 3 (xv) ofthe Order are not applicable to the Company and hence not commented upon.
16) In our opinion the company is not required to be registered under section 45 IA ofthe Reserve Bank of India Act 1934 and accordingly the provisions of clause 3 (xvi) ofthe Order are not applicable to the Company and hence not commented upon.
For and on behalf of
P. G. Joshi & Co
M. No.: 038193
Date: 30th May 2019
"Annexure B" to the Independent Auditor's Report of even date on theStandalone Financial Statements of CIAN Agro Industries & Infrastructures Limited
Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section143 of the Companies Act 2013
We have audited the Internal financial controls over financial reporting of CIAN AgroIndustries & Infrastructures Limited as of March 312019 in conjunction with our auditof the standalone 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 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 financialcontrols over financial reporting based on our audit. We conducted our audit in accordancewith the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting(the "Guidance Note") and the Standards on Auditing issued by ICAI and deemedto be prescribed under section 143(10) of the Companies Act 2013 to the extentapplicable to an audit of internal financial controls both applicable to an audit ofInternal Financial Controls and both issued by the Institute of Chartered Accountants ofIndia. Those Standards and the Guidance Note require that we comply with ethicalrequirements and plan and perform the audit to obtain reasonable assurance about whetheradequate internal financial controls over financial reporting was established andmaintained and if such controls 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 auditor's judgment 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 Company's internal financial controls systemover financial reporting. However properly documented processes/ policies for recordingof purchase Sales Manufacturing activity inventory payroll statutory compliances etc.were not available for our verification.
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.
Emphasis of Matter
Attention is drawn to non-availability of properly documented processes/ policies forrecording of purchase Sales Manufacturing activity inventory payroll statutorycompliances etc. Tracking of processes to confirm controls was not possible in absence ofsuch documentation. Attention is also drawn in respect of accounting software where nocontrols are in place and everyone is allowed to pass and rectify the entries in thesystem. Log regarding the changes made in the system not maintained.However our opinionin not qualified on the above matters.
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 312019 based on theinternal control over financial reporting criteria 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 and on behalf of P. G. Joshi& Co
M. No.: 038193
Date: 30th May 2019