TO THE MEMBERS OF
CONTAINER CORPORATION OF INDIA LIMITED Report on the Audit of Standalone FinancialStatements Opinion
We have audited the accompanying financial statements of CONTAINER CORPORATION OF INDIALIMITED ("the Company") which comprise the Balance Sheet as at 31st March2020 the Statement of Profit and Loss (including other comprehensive income) Statementof Changes in Equity Statement of Cash Flows for the year then ended and notes to thefinancial statements including a summary of significant accounting policies and otherexplanatory information (hereinafter referred to as "the standalone financialstatements") in which are included the returns for the year ended on that dateaudited by the branch auditors of the Company's regions location at Mumbai (WesternRegion) Chennai (Southern Region) Kolkata (Eastern Region) Noida (North CentralRegion) Nagpur (Central Region) New Delhi (Northern Region) Secunderabad (South CentralRegion) and Ahmedabad (North West Region).
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 Act in the manner so required and give the information required by the CompaniesAct 2013 ("the Act") in manner so required and give a true and fair view inconformity with the accounting principles generally accepted in India of the state ofaffairs of the Company as at 31st March 2020 its profit (including other comprehensiveincome) changes in equity and its cash flows for the year ended on that date.
Basis of Opinion
We conducted our audit of standalone financial statements in accordance with theStandards on Auditing (SAs) specified under section 143(10) of the Companies Act 2013.Our responsibilities under those Standards are further described in the Auditor'sResponsibilities for the Audit of the Standalone Financial Statements section of ourreport. We are independent of the Company in accordance with the Code of Ethics issued bythe Institute of Chartered Accountants of India ("ICAI") together with theethical requirements that are relevant to our audit of the standalone financial statementsunder the provisions of the Act and the Rules made there under and we have fulfilled ourother 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 are those matters that in our professional judgment were of mostsignificance in our audit of the financials statements of the current period. Thesematters were addressed in the context of our audit of the financial statements as a wholeand in forming our opinion thereon and we do not provide separate opinion on thesematters.
We have determined the following matters described to be the key audit matters to becommunicated in our audit report:
|S. No. Key Audit Matters ||Substantive Audit Procedures |
|1 Adoption of Ind AS 116: ||Our audit procedure on adoption of Ind AS 116 include: |
|As described in Note No. 39 to the standalone financial statements the company has adopted IND AS 116 Leases in the current year. The application and transition to this accounting standard is complex and is an area of focus in our audit since the company has a large number of leases with different contractual terms. || Assessed and tested new processes and controls in respect of the lease accounting standard (Ind AS 116); |
| || Assessed the company's evaluation on the identification of leases based on the contractual agreements and our knowledge of the business. |
| || Evaluated the reasonableness of the discounting rate applied in determining the lease liabilities; |
|Ind AS 116 introduces a new lease accounting model wherein lessees are required to recognize a right-of-use (ROU) assets and a lease liability arising from a lease on the balance sheet. The lease liabilities are initially measured by discounting future lease payments during the lease terms as per the contract/arrangement. Adoption of the standard involves judgments and estimates including determination of the discount rates and the lease term. || |
| || Upon transition as at 1st April 2019: |
| ||> Evaluated the method of transition and related adjustments. |
| ||> Tested completeness of the lease data by reconciling the company's operating lease commitments to data used in computing ROU asset and the lease liabilities. |
| || On a statistical sample we performed the following procedures: |
|Additionally the standard mandates detailed disclosures in respect of transition. Refer Note No. 39 to the standalone financial statements. || |
| ||> Assessed the key terms and conditions of each lease with the underlying lease contracts; and |
| ||> Evaluated computation of lease liabilities and challenged the key estimates such as discount rates and the lease term. |
| || Assessed and tested the presentation and disclosure relating to Ind AS 116 including disclosures relating to transition. |
|2 Revenue Recognition: ||Our audit procedure consisted: |
|Western Region The application of the IND AS 115 Revenue Recognition involves certain key judgments relating to identification of distinct performance obligations determination of transaction price of the identified performance obligations satisfaction of performance obligations etc. || Testing of the operating effectiveness of internal controls. We have selected few samples of continuing contract and tested the operating effectiveness of the internal control relating to identification of the distinct performance obligations and determination of transaction price. We carried out a combination of procedures involving enquiry observation and inspection of evidence in respect of operation of these controls. |
| || We read analyzed and identified performance obligations in selected sample contracts. We compared these performance obligations with that identified by the Western Region of the company. We have considered the terms of the contract to determine the transaction price. |
| || Tested the data operating system DTMS |
| ||(Domestic Terminal Management System) and ETMS (Exim Terminal Management System) and also the report generated from the data operating system such as "Container departed and not reached to the Destination report" for the purpose of reversal of the same from income already accounted for. |
| || In case of door to door delivery via rail movement road freight income and charges for the incidental services are accounted for on arrival of container at the originating CONCOR Terminal from customer premises. |
Information Other than the Standalone Financial Statements and Auditor's Report thereon
The Company's Board of Directors is responsible for the other information. The otherinformation comprises the Management Discussion and Analysis Director's Report includingannexure to Director's Report Business Responsibility Report Corporate Governance Tenyears Financial/physical performance and data and letter from CMD included in the annualreport of the company but does not include the standalone financial statements and ourauditor's report thereon. The annual report is expected to be made available to us afterthe date of this auditor's report.
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 our audit of the standalone financial statements our responsibilityis to read the other information identified above when it becomes available and in doingso consider whether the other information is materially inconsistent with the standalonefinancial statements or our knowledge obtained in the audit or otherwise appears to bematerially misstated.
When we read the Annual report if we conclude that there is material misstatementtherein we are required to communicate the matter to those charged with governance andtake necessary actions as per applicable laws and regulations.
Responsibilities of Management and Those Charged with Governance for the StandaloneFinancial Statements
The Company's Board of Directors is responsible for the matters stated in section134(5) of the Companies Act 2013 ("the Act") with respect to the preparation ofthese standalone financial statements that give a true and fair view of the financialposition financial performance changes in equity and cash flows of the Company inaccordance with the accounting principles generally accepted in India including theaccounting Standards specified under Section 133 of the Act. This responsibility alsoincludes maintenance of adequate accounting records in accordance with the provisions ofthe 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 wereoperating effectively for ensuring the accuracy and completeness of the accountingrecords relevant to the preparation and presentation of the financial statements thatgive a true and fair view and are free from material misstatement whether due to fraud orerror.
In preparing the financial statements the Board of Directors is responsible forassessing the Company's ability to continue as a going concern disclosing as applicablematters related to going concern and using the going concern basis of accounting unlessthe Board of Directors either intends to liquidate the Company or to cease operations orhas no realistic alternative but to do so.
The Board of Directors is also responsible for overseeing the Company'sfinancialreporting process Auditor's Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financialstatements as a whole are free from material misstatement whether due to fraud or errorand to issue an auditor's report that includes our opinion. Reasonable assurance is a highlevel of assurance but is not a guarantee that an audit conducted in accordance with SAswill always detect a material misstatement when it exists. Misstatements can arise fromfraud or error and are considered material if individually or in the aggregate theycould reasonably be expected to influence the economic decisions of users taken on thebasis of these 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 financial resultswhether due to fraud or error design and perform audit procedures responsive to thoserisks and obtain audit evidence that is sufficient and appropriate to provide a basis forour opinion. The risk of not detecting a material misstatement resulting from fraud ishigher than for one resulting from error as fraud may involve collusion forgeryintentional omissions misrepresentations or the override of internal control.
Obtain an understanding of internal control relevant to the audit in order todesign audit procedures that are appropriate in the circumstances but not for the purposeof expressing an opinion on the effectiveness of the company's internal control.
Evaluate the appropriateness of accounting policies used and the reasonablenessof accounting estimates and related disclosures made by the Board of Directors.
Conclude on the appropriateness of the Board of Directors' use of the goingconcern basis of accounting and based on the audit evidence obtained whether a materialuncertainty exists related to events or conditions that may cast significant doubt on theCompany's ability to continue as a going concern. If we conclude that a materialuncertainty exists we are required to draw attention in our auditor's report to therelated disclosures in the financial results or if such disclosures are inadequate tomodify our opinion. Our conclusions are based on the audit evidence obtained up to thedate of our auditor's report. However future events or conditions may cause the Companyto cease to continue as a going concern.
Evaluate the overall presentation structure and content of the standalonefinancial results including the disclosures and whether the financial results representthe underlying transactions and events in a manner that achieves fair presentation.
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 financial statements of thecurrent period and are therefore the key audit matters. We describe these matters in ourauditor's report unless law or regulation precludes public disclosure about the matter orwhen in extremely rare circumstances we determine that a matter should not becommunicated in our report
because the adverse consequences of doing so would reasonably be expected to outweighthe public interest benefits of such communication.
Emphasis of Matter
We draw attention to the following matters related to our scope with respect to auditof financial statements of the Company.
a) As reported by the Auditor of North Central Region of the company due to outbreakof pandemic Covid 19 and consequent countrywide lockdown enforced by Government of India.Due to this we could not carryout normal audit procedures by visiting the CCI-NCR Officeand audit was carried out using "Work from Home" approach. Interview/discussionwith client via video conferencing/call conferencing and other verbal communications.Further on account of pandemic "Covid 2019" and nationwide lockdown imposed bygovernment the audit process has been modified wherein certain documents/records etcwere verified in electronic mode and have relied on the representations received from thecompany for the accuracy and authenticity.
b) Balances of Sundry Debtors Sundry Creditors and Advance to Other Parties includingRailways are subject to confirmation and reconciliation as referred to note no.59 (b).These balances include outstanding for more than 3 years. The effect of the same is notascertainable.
Our opinion is not modified in respect of these matters.
We did not audit the financial statements/ information of 8 regions included in thestandalone financial statements of the Company whose financial statements/financialinformation reflect total assets of Rs. 3818.01 Cr. as at 31st March 2020 and totalrevenue of Rs. 6518.06 Cr. the year ended on that date as considered in the standalonefinancial statements. The financial statements/information of these regions have beenaudited by the branch auditors whose reports have been furnished to us and our opinion inso far as it relates to the amounts and disclosures included in respect of these regionsis based solely on the report of such branch auditors.
Our opinion is not modified in respect of this matter.
Report on Other Legal and Regulatory Requirements:
1. As required by the Companies (Auditor's Report) order 2016 ("the Order")issued by the Central Government of India in terms of sub-section (11) of section 143 ofthe Act we give in the "Annexure A"a statement on the matters specified inparagraphs 3 and 4 of the order to the extent applicable.
2. The Comptroller & Auditor General of India has issued directions indicating theareas to be examined in terms of Sub section (5) of Section 143 of the Act compliance ofwhich are set out in "Annexure-B".
3. 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 and proper returnsadequate for the purposes of our audit have been received from the branches not visited byus.
(c) The reports on the accounts of the regions of the Company audited under Section143(8) of the Act by branch auditors have been sent to us and have been properly dealtwith by us in preparing this report.
(d) The Balance Sheet the Statement of Profit and Loss (including other comprehensiveincome) the Statement of Changes in Equity and the Cash Flow Statement dealt with by thisReport are in agreement with the books of account and with the returns received from theregions not visited by us.
(e) 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.
(f) As per the notification number G.S.R. 463(E) dated 5th June 2015 issued byMinistry of Corporate Affairs section 164(2) of the Act regarding the disqualificationsof Directors is not applicable to the Company since it is a Government Company.
(g) With respect to the adequacy of internal financial controls over financialreporting of the Company and the operating effectiveness of such controls refer to ourseparate Report in "Annexure C".
(h) With respect to the other matters to be included in the Auditor's Report as pernotification number G.S.R. 463 (E) dated 5th June 2015 issued by Ministry of CorporateAffairs section 197(16) of the Act regarding the Managerial Remuneration is notapplicable to the Company since it is a Government Company.
(i) With respect to the other matters to be included in the Auditor's Report inaccordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014 in our opinionand to the best of our information and according to the explanations given to us:
i. The Company has disclosed the impact of pending litigations/arbitrations on itsfinancial position in its financial statements - Refer Note 42 to the financialstatements;
ii. The Company did not have any long-term contracts including derivative contracts forwhich there were any material foreseeable losses.
iii. There has been no delay in transferring amounts required to be transferred tothe Investor Education and Protection Fund by the Company.
Referred to Paragraph - 1 under the heading "Report on other Legal and RegulatoryRequirements" of our Report of even dateWe report that:
(i) In respect of the Company's fixed assets:
(a) The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets.
(b) The Company has a programme of physical verification of fixed assets on a yearlybasis which in our opinion is reasonable having regards to the size of the Company andnature of its business. Fixed assets were physically verified by the management during theyear. According to the information and explanations given to us no material discrepancieswere noticed on such verification.
(c) According to 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 except for the items mentioned below:
(Amount in Rs. Crores)
|Details of Property ||Net Amount 31.03.2020 |
|RO Premises at Egmore Chennai ||1.45 |
|Staff Quarters at Chennai ||0.75 |
|Leasehold Land-MMLP Vishakhapatnam ||93.91 |
|Freehold Land-Krishnapatnam Port ||31.21 |
|Leasehold Land at Kodakola ||18.79 |
|Land acquired from New Mangalore Port Trust (NMPT) ||1.24 |
(ii) The Company has carried out physical verification of inventory at reasonableintervals.
(a) As per the information and explanations given to us no material discrepancies werenoticed during such verification.
(b) As per Auditor's Report of Southern Region following items are included in thefinancial statements but not in inventory records.
Goods in transit Rs.594861/-
Inventory held by Third Party Rs. 421250/-
(iii) The Company had granted unsecured loans to wholly owned subsidiary company i.e.M/s Fresh & Healthy Enterprises Limited (FHEL):
(a) In our opinion and according to the information and explanation given to us theCompany the terms and conditions of grants of loans are not prejudicial to the Company'sinterest.
(b) The outstanding loan of Rs.55.89 Crores including interest accrued from the entityFHEL has been converted into equity share capital of FHEL the conversion of loan intoequity is not prejudicial to the Company's interest.
(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 Companies Act 2013in respect of loans investments guarantees and security as applicable.
(v) The Company has not accepted deposits from the public within the meaning ofprovisions of sections 73 to 76
of the Companies Act 2013 and the rules framed there under.
(vi) As per the information and explanations given to us the maintenance of costrecords has not been prescribed by the central Government under subsection (1) of Section148 of the Companies Act 2013 for services rendered by the Company.
(vii) (a) According to information and explanations given to us and on the basis of ourexamination of the books of
account of the Company no amount is outstanding as on 31st March 2020 for a period ofmore than six months from the date of it became payable amount deducted /accrued in thebooks of account in respect of undisputed statutory dues including Provident FundEmployees' State Insurance Income Tax Goods and Service Tax Sales Tax Service TaxCustom Duty Value added Tax Cess and any other statutory dues have been regularlydeposited during the year by the Company with appropriate authorities.
As per Auditor's Report of Southern Region of the company following dues of Servicetax have not been deposited by the Company on account of dispute:
|Name of the Statute ||Nature of Dues ||Amount (Rs.) ||Period to which the amount relates ||Due date |
|Service Tax ||Service Tax and Penalty ||14812667.00** ||Sept. 2002 to June 2008 ||CESTAT Bangalore |
|**1 ||One third share of the total disputed amount || || || |
|**2 ||A stay order has been obtained against the amount disputed and not been deposited by the Joint-Venture. || || || |
(viii) The Company has not defaulted in repayment of loans or borrowings to a financialinstitution bank Government or dues to debenture holders during 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. AccordinglyPara 3(ix) of the order is not applicable.
(x) According to the information and explanations given to us by the management andbased on our examination of the records of the Company no material fraud by the Companyor on the Company by its officers or employees has been noticed or reported during theyear.
(xi) As per Notification dated 5thJune 2015 Section 197of the Act is not applicable incase of a Government Company. Accordingly Para 3 (xi) of the order is not applicable tothe Company.
(xii) In our opinion and according to the information and explanations given to us theCompany is not a Nidhi Company. Accordingly Para 3 (xii) of the Order is not applicableto the Company.
(xiii) According to the information and explanations given to us and based on ourexamination of the records of the Company the transactions with the related parties arein compliance with sections 177 and 188 of the Act where applicable and details of suchtransactions have been disclosed in the standalone financial statements as required by theapplicable Indian Accounting Standards.
(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 or private placement of shares or fully or partly convertible debentures duringthe year under review. Accordingly Para 3 (xiv) of the Order is not applicable to theCompany.
(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 him. Accordingly Para 3 (xv) of theOrder is not applicable to the Company.
(xvi) The Company is not required to be registered under Section 45-IA of the ReserveBank of India Act 1934.
ANNEXURE B TO THE INDEPENDENT AUDITOR'S REPORT
Referred to Paragraph 2 under the heading of "Report on other Legal and RegulatoryRequirements" of our Report of even date.
According to the information and explanations given to us we report as under:
|S.No. Areas Examined ||Observations/Findings |
|1. Whether the company has system in place to process all the accounting transactions through IT systemRs If yes the implications of processing of accounting transactions outside IT system on the integrity of the accounts along with the financial implications if any may be stated. ||The Company has system in place to process all the accounting transactions through IT system i.e. Oracle. The operational entries of the company like revenue customer ledger account predeposits accounts etc have been recorded in a separate IT system (viz. DTMS ETMS and CCLS) other than financial reporting IT system (viz. Oracle). At each month end a consolidated entry is being posted in Oracle' based on the summary generated in DTMS ETMS and CCLS systems. Further payroll of the Company is maintained through RAMCO system and spares inventory of the Company is maintained through Maximo. However the Company has adequate internal control system to verify correctness of the entries collated and posted in Oracle. |
|2. Whether there is any restructuring of an existing loan or cases of waiver/write off of debts/loans/interest etc. made by a lender to the company due to company's inability to repay the loanRs If yes the financial impact may be stated. ||According to the information and explanation given to us and based on our examination of records of the Company there has been no restructuring/ waiver/ write off of any existing loan taken by the Company. |
|3. Whether funds received/receivable for specific schemes from central/state agencies were properly accounted for/utilized as per terms and conditionsRs List the cases of deviation. ||The Company based on the information and explanation furnished to us by the management there were no such funds received / receivable towards any specific scheme from Central / State Agencies by the company during the financial year 2019-20. As per Auditor's Report of Eastern Region the grant received in 2010 of which Rs.646278/- remain unutilized till 2018-19 has been recorded as Miscellaneous Income in the current financial year. |
Referred to Paragraph - 3(g) under the heading of "Report on other Legal andRegulatory Requirements" 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 Control over financial reporting of CONTAINERCORPORATION OF INDIA LIMITED ("the Company") as of 31st March 2020 inconjunction with our audit of the standalone financial statements of the Company for theyear 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 respective company's policies the safeguarding of its assets theprevention and detection of frauds and errors the accuracy and completeness of theaccounting records and the timely preparation of reliable financial information asrequired under the Companies Act 2013.
Our responsibility is to express an opinion on the internal financial controls overfinancial reporting of the Company based on our audit. We conducted our audit inaccordance with the Guidance Note on Audit of Internal Financial Controls Over FinancialReporting (the "Guidance Note") issued by the Institute of Chartered Accountantsof India and the Standards on Auditing prescribed under Section 143(10) of the CompaniesAct 2013 to the extent applicable to an audit of internal financial controls. ThoseStandards and the Guidance Note require that we comply with ethical requirements and planand 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 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 internal financial controls system overfinancial reporting of the Company.
Meaning of Internal Financial Controls over Financial Reporting
A company's internal financial controls 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 controls 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 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 authorizations of management and directors of the company; and (3) providereasonable assurance regarding prevention or timely detection of unauthorized acquisitionuse or disposition of the company's assets that could have a material effect on thefinancial 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 internal financial controls overfinancial reporting may become inadequate because of changes in conditions or that thedegree of compliance with the policies or procedures may deteriorate.
In our opinion and to the best of our information and according to the explanationsgiven to us the Company has in all material respects an adequate internal financialcontrols system over financial reporting and such internal financial controls overfinancial reporting were operating effectively as at 31st 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.