THE MEMBERS OF
COASTAL CORPORATION LIMITED VISAKHAPATNAM
Report on the Standalone Ind AS financial statements
We have audited the accompanying standalone Ind AS financial statementsof COASTAL CORPORATION LIMITED ("the Company") which comprise theBalance Sheet as at March 31 2020 the Statement of Profit and Loss (including OtherComprehensive Income) the Statement of Changes in Equity and the Statement of Cash flowsfor the year ended on that date and a summary of the significant accounting policies andother explanatory information (hereinafter referred to as "the standalone Ind ASfinancial statements").
In our opinion and to the best of our information and according to theexplanations given to us the accompanying standalone Ind AS financial statements give theinformation required by the Companies Act 2013 ("the Act") in the manner sorequired and give a true and fair view in conformity with the Indian Accounting Standardsprescribed under section 133 of the Act read with the Companies (Indian AccountingStandards) Rules 2015 as amended ("Ind AS") and other accounting principlesgenerally accepted in India of the state of affairs of the Company as at March 31 2020the profit and total comprehensive income changes in equity and its cash flows for theyear ended on that date.
Basis for Opinion
We conducted our audit of the standalone Ind AS financial statements inaccordance with the Standards on Auditing (SAs) specified under section 143(10) of theAct. Our responsibilities under those Standards are further described in the Auditor'sResponsibilities for the Audit of the Standalone Ind AS 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 the ethicalrequirements that are relevant to our audit of the financial statements under theprovisions of the Act and the Rules made thereunder and we have fulfilled our otherethical responsibilities in accordance with these requirements and the ICAI's Code ofEthics. We believe that the audit evidence we have obtained is sufficient and appropriateto provide a basis for our audit opinion on the standalone Ind AS financial statements.
Key Audit Matters
Key audit matters are those matters that in our professional judgmentwere of most significance in our audit of the standalone Ind AS financial statements ofthe current period. These matters were addressed in the context of our audit of thestandalone Ind AS financial statements as a whole and in forming our opinion thereon andwe do not provide a separate opinion on these matters. We have determined the mattersdescribed below to be the key audit matters to be communicated in our report.
|Key Audit Matter ||How our audit addressed the Key Audit Matter |
|1 Adoption of Ind AS 116 "Leases" || |
|Accuracy of identification classification measurement presentation and disclosures of lease transactions in view of adoption of Ind AS 116 "Leases" ||We assessed the various Company's process and contracts entered with various property owners to identify the impact of adoption of the new accounting standard. |
|The application of the above new accounting standard involves certain key judgements relating to identification of contracts which contains lease classification of leases the appropriateness of the basis used to measure the right of use asset and lease liability at the date of initial application. ||Our audit approach consisted testing of the design and operating effectiveness of the internal controls and substantive testing as follows: |
|Refer: Note 4 to the Standalone Ind AS financial statements || Evaluated the design of internal controls relating to implementation of the new accounting standard. |
| || We have gone through the terms of the lease contracts of continuing and new contracts and tested the operating effectiveness of the internal controls relating to identification classification and measurement of lease contracts. |
| || We evaluated the methodology and assumptions used by management including reasonableness of the lease term lease rentals discount rate applied by comparing it with the incremental borrowing rate for a similar period. |
| || We tested the calculation of the right of use assets and lease obligations based on the assumptions applied. Conclusion: Based on the work performed we found management's assessment to be reasonable based on available evidence. |
|2 Valuation of Investments in Unquoted Equity Shares of M/s Coastal Developers Pvt Ltd and M/s Seagold Aqua Farms India Pvt Ltd || |
|The valuation of the investments involves judgement and continues to be an area of inherent risk because quoted prices are not readily available. ||We assessed the managements' approach to valuation for these investments by performing the following procedures: |
|Refer: Note 49.2 to the Standalone Ind AS financial statements || Understood and evaluated the procedure followed by the management to gather the data inputs used in the valuation models. |
| || We assessed the appropriateness of the methodology applied in determining the fair value of the investments. |
| || We evaluated the methodology and assumptions used by management including reasonableness of the market value considered for immovable properties by comparing it with the guideline values determined by the State Government for similar properties. |
| || We tested the calculation of the fair value based on the assumptions applied. |
| || We found the disclosures in the standalone Ind AS financial statements to be appropriate. Conclusion: |
| ||Based on the work performed and the evidence obtained we consider the methodology and assumptions used by management to be appropriate. |
|3 Purchase cost of Raw Shrimps || |
|Company procures its principle raw materials from the agents and farmers of aquaculture and the price of the same is highly volatile to the market conditions. ||Our audit approach consisted testing of the design and operating effectiveness of the internal controls and substantive testing as follows: |
|The tentative prices of the raw shrimps are published by the local farmers of aquaculture through online app. acqubrahma.in. Based upon the production requirements export commitments of the company and after considering the tentative prices the management decides the price at which the raw materials have to be procured. || We have evaluated the design and tested the implementation of internal controls relating to procurement of raw materials and payments made to the agents and suppliers of the raw materials with source documentation. |
| || We have performed the test of controls over procurement procedure to evaluate the operating effectiveness of the controls placed in recognition of the purchase costs. |
| || We have performed test of details through correlating the raw materials procured with that of the material processed based on the production reports. |
| || We tested the payments made to the suppliers based on the credit terms of payments.Conclusion: Based on the work performed we found the raw material costs recorded to be correct based on available evidence. |
Information Other than the Standalone Ind AS financial statements andAuditor's Report thereon
The Company's Board of Directors is responsible for thepreparation of the other information. The other information comprises the informationincluded in the Management Discussion and Analysis Board's Report includingAnnexures to Board's Report Business Responsibility Report Corporate Governance andShareholder's Information but does not include the standalone Ind AS financialstatements and our auditor's report thereon.
Our opinion on the standalone Ind AS financial statements does notcover the other information and we do not express any form of assurance conclusionthereon.
In connection with our audit of the standalone Ind AS financialstatements our responsibility is to read the other information and in doing so considerwhether the other information is materially inconsistent with the standalone Ind ASfinancial statements or our knowledge obtained during the course of our audit or otherwiseappears to be materially misstated.
If based on the work we have performed we conclude that there is amaterial misstatement of this "other information" we are required to reportthat fact. We have nothing to report in this regard.
Management's Responsibility for the Standalone Ind AS financialstatements
The Company's Board of Directors is responsible for the mattersstated in section 134(5) of the Act with respect to the preparation of these standaloneInd AS financial statements that give a true and fair view of the financial positionfinancial performance total comprehensive income changes in equity and cash flows of theCompany in accordance with the Ind AS and other accounting principles generally acceptedin India. This responsibility also includes maintenance of adequate accounting records inaccordance with the provisions of the Act for safeguarding the assets of the Company andfor preventing and detecting frauds and other irregularities; selection and application ofappropriate accounting policies; making judgments and estimates that are reasonable andprudent; and design implementation and maintenance of adequate internal financialcontrols that were operating effectively for ensuring the accuracy and completeness ofthe accounting records relevant to the preparation and presentation of the standalone IndAS financial statements that give a true and fair view and are free from materialmisstatement whether due to fraud or error.
In preparing the standalone Ind AS financial statements management isresponsible 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 responsible for overseeing the Company'sfinancial reporting process.
Auditor's Responsibilities for the Audit of the Standalone Ind ASfinancial statements
Our objectives are to obtain reasonable assurance about whether thestandalone Ind AS financial statements are free from material misstatement whether due tofraud or error and to issue an auditor's report that includes our opinion.Reasonable assurance is a high level of assurance but is not a guarantee that an auditconducted in accordance with SAs will always detect a material misstatement when itexists. Misstatements can arise from fraud or error and are considered material ifindividually or in the aggregate they could reasonably be expected to influence theeconomic decisions of users taken on the basis of these standalone Ind AS financialstatements.
As part of an audit in accordance with SAs we exercise professionaljudgment and maintain professional skepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of thestandalone Ind AS financial statements whether due to fraud or error design and performaudit procedures responsive to those risks and obtain audit evidence that is sufficientand appropriate to provide a basis for our opinion. The risk of not detecting a materialmisstatement resulting from fraud is higher than for one resulting from error as fraudmay involve collusion forgery intentional omissions misrepresentations or the overrideof internal control.
Obtain an understanding of internal financial controls relevantto the audit in order to design audit procedures that are appropriate in thecircumstances. Under section 143(3)(i) of the Act we are also responsible for expressingour opinion on whether the Company has adequate internal financial controls system inplace and the operating effectiveness of such controls.
Evaluate the appropriateness of accounting policies used and thereasonableness of accounting estimates and related disclosures made by management.
Conclude on the appropriateness of management's use of thegoing concern basis of accounting and based on the audit evidence obtained whether amaterial uncertainty exists related to events or conditions that may cast significantdoubt on the Company's ability to continue as a going concern. If we conclude that amaterial uncertainty exists we are required to draw attention in our auditor'sreport to the related disclosures in the standalone Ind AS financial statements or ifsuch disclosures are inadequate to modify our opinion. Our conclusions are based on theaudit evidence obtained up to the date of our auditor's report. However futureevents or conditions may cause the Company to cease to continue as a going concern.
Evaluate the overall presentation structure and content of thestandalone Ind AS financial statements including the disclosures and whether thestandalone Ind AS financial statements represent the underlying transactions and events ina manner that achieves fair presentation.
Materiality is the magnitude of misstatements in the standalone Ind ASfinancial statements that individually or in aggregate makes it probable that theeconomic decisions of a reasonably knowledgeable user of the standalone Ind AS financialstatements may be influenced. We consider quantitative materiality and qualitative factorsin (i) planning the scope of our audit work and in evaluating the results of our work; and(ii) to evaluate the effect of any identified misstatements in the standalone Ind ASfinancial statements.
We communicate with those charged with governance regarding amongother matters 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 wehave complied with relevant ethical requirements regarding independence and tocommunicate with them all relationships and other matters that may reasonably be thoughtto bear on our independence and where applicable related safeguards.
From the matters communicated with those charged with governance wedetermine those matters that were of most significance in the audit of the standalone IndAS financial statements of the current period and are therefore the key audit matters. Wedescribe these matters in our auditor's report unless law or regulation precludespublic disclosure about the matter or when in extremely rare circumstances we determinethat a matter should not be communicated in our report because the adverse consequences ofdoing so would reasonably be expected to outweigh the public interest benefits of suchcommunication.
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 in terms of Section 143(11) ofthe Act we give in "Annexure- A" a statement on the matters specified inparagraphs 3 and 4 of the Order.
2. As required by Section 143(3) of the Act based on our audit wereport that:
a) We have sought and obtained all the information and explanationswhich to the best of our knowledge and belief were necessary for the purposes of ouraudit.
b) In our opinion proper books of account as required by law have beenkept by the Company so far as it appears from our examination of those books.
c) The Balance Sheet the Statement of Profit and Loss including OtherComprehensive Income Statement of Changes in Equity and the Statement of Cash Flow dealtwith by this Report are in agreement with the relevant books of account.
d) In our opinion the aforesaid standalone Ind AS financial statementscomply with the Ind AS specified under Section 133 of the Act read with Rule 7 of theCompanies (Accounts) Rules 2014.
e) On the basis of the written representations received from thedirectors as on March 31 2020 taken on record by the Board of Directors none of thedirectors is disqualified as on March 31 2020 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 overfinancial reporting of the Company and the operating effectiveness of such controls referto our separate Report in "Annexure B". Our report expresses an unmodifiedopinion on the adequacy and operating effectiveness of the Company's internalfinancial controls over financial reporting.
g) With respect to the other matters to be included in theAuditor's Report in accordance with the requirements of section 197(16) of the Actas amended: The remuneration paid to the Directors by the company is in accordance withthe provisions of the sec.197.
h) With respect to the other matters to be included in theAuditor's Report in accordance with Rule 11 of the Companies (Audit and Auditors)Rules 2014 as amended in our opinion and to the best of our information and according tothe explanations given to us:
i. The Company does not have any pending litigations that would impactits financial position.
ii. The Company has made provision as required under the applicablelaw or accounting standards for material foreseeable losses if any on long-termcontracts including derivative contracts.
iii. There is no amount which is required to be transferred to theInvestor Education and Protection Fund by the company.
ANNEXURE-A TO THE INDEPENDENT AUDITORS' REPORT
The Annexure A referred to in our Independent Auditor's reportof even date to the members of COASTAL CORPORATION LIMITED VISAKHAPATNAM for the yearended 31 March 2020. We report that:
i) a) The Company has maintained proper records showing fullparticulars including quantitative details and situation of fixed assets.
b) The fixed assets have been physically verified by the managementduring the year. According to the information furnished to us no material discrepancieshave been noticed on such verification.
c) The title deeds in respect of all immovable properties are held inthe name of the company.
ii) Physical verification of inventory has been conducted during theyear by the management at reasonable intervals.
The discrepancies noticed on such verification between the physicalstocks and the book records were not material.
iii) The Company has granted an unsecured loan in an earlier year toits wholly owned Subsidiary company covered in the register maintained under section 189of the Companies Act 2013.
a. The amount outstanding as at 31.03.2020 is Rs. 1594.27 lakhs andbased on the information and explanations given by the management the terms andconditions are not prejudicial to the interest of the company.
b. No interest has been recovered during the financial year as thecompany has initiated the process of the merger of the said subsidiary w. e. f. 01stApril 2019. The terms of repayment of loan has not been scheduled as the same wasadvanced to its wholly owned subsidiary company. Accordingly clause 3(iii)(c) of theOrder is not applicable to the company in respect of repayment of the principal amount.
iv) The company has provided guarantee in an earlier year in connectionwith a term loan taken by its wholly owned subsidiary company. According to theinformation and explanations given to us and on the basis of examination of the records ofthe company the provisions of section 185 of the Companies Act 2013 have been compliedwith. The investments made by the company in earlier years do not exceed the limitsprescribed under section 186 of the Companies Act 2013.
v) The Company has not accepted any deposits from the public.Consequently the clause 3(v) of the order is not applicable to the Company.
vi) To the best of our knowledge and as explained to us the CentralGovernment has not prescribed maintenance of cost records for the company undersub-section (1) of section 148 of the Companies Act 2013.
vii) a) According to the information and explanations given to us andon the basis of examination of the records of the Company amounts deducted/ accrued inthe books of account in respect of undisputed statutory dues including provident fundemployees' state insurance income-tax sales-tax service tax duty of customs dutyof excise value added tax cess and other material statutory dues have been regularlydeposited during the year by the Company with the appropriate authorities.
According to the information and explanations given to us noundisputed amounts are payable in respect of income tax sales tax service tax duty ofcustoms duty of excise value added tax or cess and other material statutory dues whichwere in arrears as at 31st March 2020 for a period of more than six months fromthe date they became payable.
b) As at 31st March 2020 there have been no disputed dueswhich have not been deposited with the respective authorities in respect of Income taxService tax duty of customs duty of excise value added tax and Cess except thefollowing:
|Name of the Statute ||Nature of Dues ||Amount in Lakhs ||Period to which ||Forum where dispute is pending the amount relates |
|Income Tax Act 1961 ||Income Tax ||5.02 ||AY 2017-18 ||Commissioner of Income Tax (Appeals) Visakhapatnam |
|Income Tax Act 1961 ||Income Tax ||0.95 ||AY 2018-19 ||Asst. Commissioner Circle 1(1) Visakhapatnam |
viii) The Company has not defaulted in repayment of any loaninstallments in respect of term loans taken from financial institutions and banks.
ix) The Company did not raise any money by way of initial public offeror further public offer (including debt instruments) whereas term loans raised during thefinancial year under report have been applied for the purposes for which they were raised.
x) During the course of our examination of the books of account andrecords of the Company carried out in accordance with the generally accepted auditingpractices in India and according to the information and explanations given to us we haveneither come across any instance of material fraud by the Company or on the Company by itsofficers or employees has been noticed or reported during the course of our audit.
xi) According to the information and explanations given to us and basedon our examination of the records of the Company the Company has paid/provided formanagerial remuneration in accordance with the requisite approvals mandated by theprovisions of section 197 read with Schedule V to the Act.
xii) In our opinion the company is not a Nidhi Company. Consequentlythe clause 3(xii) of the order is not applicable.
xiii) According to the information and explanations given to us and onoverall examination of the records of the Company we report that all transactions withrelated parties are in compliance with the provisions of sections 177 and 188 of theCompanies Act 2013 and the related party disclosures as required by relevant IndianAccounting Standards are disclosed in the standalone Ind AS financial statements.
xiv) The Company has not made any preferential allotment or privateplacement of shares or fully/partly convertible debentures during the year under review.Consequently the clause 3(xiv) of the order is not applicable.
xv) The Company has not entered into any noncash transactions with thedirectors or persons connected with them during the year under report. Consequently theclause 3(xv) of the order is not applicable.
xvi) The Company is not required to be registered under section 45-IAof the Reserve Bank of India Act 1934.
Consequently the clause 3(xvi) of the order is not applicable.
Annexure "B" to the Independent Auditors' Report
Report on the Internal Financial Controls over Financial Reportingunder Clause (i) of Sub-section 3 of Section 143 of the Companies Act 2013 ("theAct")
We have audited the internal financial controls over financialreporting of COASTAL CORPORATION LIMITED ("the Company") as of 31stMarch 2020 in conjunction with our audit of the standalone Ind AS financial statements ofthe Company for the year ended on that date.
Management's Responsibility for Internal Financial controls
The Board of directors of the company is responsible for establishingand maintaining internal financial controls based on the internal control over financialreporting criteria established by the Company considering the essential components ofinternal control stated in the Guidance Note on Audit of Internal Financial Controls overFinancial Reporting issued by the Institute of Chartered Accountants of India(ICAI'). These responsibilities include the design implementation andmaintenance of adequate internal financial controls that were operating effectively forensuring the orderly and efficient conduct of its business including adherence tocompany'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.
Our responsibility is to express an opinion on the 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 ICAI and the Standards onAuditing prescribed under section 143(10) of the Companies Act 2013 to the extentapplicable to an audit of internal financial controls. Those Standards and the GuidanceNote require that we comply with ethical requirements and plan and perform the audit toobtain reasonable assurance about whether adequate internal financial controls overfinancial reporting was established and maintained and if such controls operatedeffectively in all material respects.
Our audit involves performing procedures to obtain audit evidence aboutthe adequacy of the internal financial controls system over financial reporting and theiroperating effectiveness. Our audit of internal financial controls over financial reportingincluded obtaining an understanding of internal financial controls over financialreporting assessing the risk that a material weakness exists and testing and evaluatingthe design and operating effectiveness of internal control based on the assessed risk. Theprocedures selected depend on the auditor's judgment including the assessment of therisks of material misstatement of the standalone Ind AS financial statements whether dueto fraud or error.
We believe that the audit evidence we have obtained is sufficient andappropriate to provide a basis for our audit opinion on the Company's internalfinancial controls system over financial reporting.
Meaning of Internal Financial Controls over Financial Reporting
A company's internal financial control over financial reporting isa process designed to provide reasonable assurance regarding the reliability of financialreporting and the preparation of Ind AS standalone Ind AS financial statements forexternal purposes in accordance with generally accepted accounting principles. Acompany's internal financial control over financial reporting includes those policiesand procedures that:
(1) pertain to the maintenance of records that in reasonable detailaccurately and fairly reflect the transactions and dispositions of the assets of thecompany.
(2) provide reasonable assurance that transactions are recorded asnecessary to permit preparation of Ind AS standalone Ind AS financial statements inaccordance with generally accepted accounting principles and that receipts andexpenditures of the company are being made only in accordance with authorisations ofmanagement and directors of the company; and
(3) provide reasonable assurance regarding prevention or timelydetection of unauthorised acquisition use or disposition of the company's assetsthat could have a material effect on the standalone Ind AS financial statements.
Inherent Limitations of Internal Financial Controls over FinancialReporting
Because of the inherent limitations of internal financial controls overfinancial reporting including the possibility of collusion or improper managementoverride of controls material misstatements due to error or fraud may occur and not bedetected. Also projections of any evaluation of the internal financial controls overfinancial reporting to future periods are subject to the risk that the internal financialcontrol over financial reporting may become inadequate because of changes in conditionsor that the degree of compliance with the policies or procedures may deteriorate.
In our opinion to the best of our information and according to theexplanations given to us 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 31 March 2020 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 BRAHMAYYA & CO. |
| ||Chartered Accountants |
| ||Firm Reg. No. 000513S |
| ||Sd/- |
| ||(C V RAMANA RAO) |
| ||Partner |
|Place: Visakhapatnam. ||Membership No.018545 |
|Date: 11th July 2020. ||UDIN: 20018545AAAACB9839 |