Continental Seeds and Chemicals Ltd.
|BSE: 535065||Sector: Others|
|NSE: CONTI||ISIN Code: INE340Z01019|
|BSE 05:30 | 01 Jan||Continental Seeds and Chemicals Ltd|
|NSE 00:00 | 16 Sep||7.45||
Continental Seeds and Chemicals Ltd. (CONTI) - Auditors Report
Company auditors report
TO THE MEMBERS OF
CONTINENTAL SEEDS AND CHEMICALS LIMITED CIN: L01111DL1983PLC015969
Report on the Audit of the Standalone Financial Statements QualifiedOpinion
We have audited the standalone financial statements of CONTINENTALSEEDS AND CHEMICALS LIMITED('the Company') which comprise the balance sheet as at 31stMarch 2020 and the statement of Profit and Loss statement of changes in equity andstatement of cash flows for the year then ended and notes to the financial statementsincluding a summary of significant accounting policies and other explanatory information.
In our opinion except for the possible effects of the matter describedin Basis for Qualified Opinion section of our report the aforesaid standalone financialstatements give the information required by the Act in the manner so required and give atrue and fair view in conformity with the accounting principles generally accepted inIndia of the state of affairs of the Company as at March 31 2020 and profit changes inequity and its cash flows for the year ended on that date.
Basis for Opinion
i. We are unable to observe physical inventories of Stock Tradedgoods finished goods due to COVID 19 and we are also unable to satisfy ourselves byalternative means concerning the inventories held at 31st March 2020 however asexplained by the management physical verification of inventories has been conducted atregular intervals and no material discrepancies were observed.
ii. Balance under Sundry Debtors and Sundry Creditors loans andadvances given by the Company and parties from whom unsecured loans have been taken aresubject to confirmations and adjustments if any required upon such confirmations are notascertainable and hence not provided for.
iii. Certain balances of Sundry debtors to Rs. 44767106/- wereoutstanding as on 31/03/2020. The confirmations from the parties to whom these amount tobe
received have not been made available. Out of such debtors provisionfor doubtful debts should be recognized in respect of debtors outstanding for a period ofthree years or more where no movement has taken place and no confirmations are available.Adjustments if any are not ascertainable and will be provided on identification of suchparties.
iv. The Company is in the violation of Section 185 of the CompaniesAct 2013 as it has provided corporate guarantee along with property to Canara Bank onbehalf of Natural Herbal & Seeds to the tune of Rs.21.00 Crore to obtain the creditfacilities by the sister concern.
v. The Company is in the violation of Section 188 and section 177 ofthe Companies Act 2013 as it has not taken prior approvals of the company by theresolution for the necessary related transactions of exceeding the prescribed limit of 10%of total turnover. During the year company has entered into sales arrangement of Rs.60.31Cr with related party and purchases of Rs.20.06 Cr which are exceeding 10% of totalturnover of Rs.87.91 Cr
We conducted our audit in accordance with the Standards on Auditing(SAs) specified under section 143(10) of the Companies Act 2013. Our responsibilitiesunder those Standards are further described in the Auditor's Responsibilities for theAudit of the Financial Statements section of our report. We are independent of the Companyin accordance with the Code of Ethics issued by the Institute of Chartered Accountants ofIndia together with the ethical requirements that are relevant to our audit of thefinancial statements under the provisions of the Companies Act 2013 and the Rules thereunder and we have fulfilled our other ethical responsibilities in accordance with theserequirements and the Code of Ethics. We believe that the audit evidence we have obtainedis sufficient and appropriate to provide a basis for our qualified opinion.
Key Audit Matters
Key audit matters are those matters that in our professional judgmentwere of most significance in our audit of the financial statements of the current period.These matters were addressed in the context of our audit of the financial statements as awhole and in forming our opinion thereon and we do not provide a separate opinion onthese matters.
Responsibilities of Management and Those Charged with Governance forthe Standalone Financial Statements
The Company's Board of Directors is responsible for the matters statedin section 134(5) of the Companies Act 2013 ("the Act") with respect to thepreparation of these standalone financial statements that give a true and fair view of thefinancial position financial performance changes in equity and cash flows of the Companyin accordance 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 management is responsible for assessing theCompany's ability to continue as a going concern disclosing as applicable mattersrelated to going concern and using the going concern basis of accounting unless managementeither intends to liquidate the Company or to cease operations or has no realisticalternative but to do so.
Auditor's Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether thefinancial 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 financial statements.
As part of an audit in accordance with SAs we exercise professionaljudgment and maintain professional scepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of thefinancial 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 involve collusion forgeryintentional omissions misrepresentations or the override of internal control.
Obtain an understanding of internal control relevant to theaudit in order to design audit procedures that are appropriate in the circumstances. Undersection 143(3)(i) of the Companies Act 2013 we are also responsible for expressing ouropinion on whether the company has adequate internal financial controls system in placeand 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 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 statements 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 thefinancial statements including the disclosures and whether the financial statementsrepresent the underlying transactions and events in a manner that achieves fairpresentation.
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 financialstatements of the current
period and are therefore the key audit matters. We describe thesematters in our auditor's report unless law or regulation precludes public disclosure aboutthe matter or when in extremely rare circumstances we determine that a matter should notbe communicated in our report because the adverse consequences of doing so wouldreasonably be expected to outweigh the public interest benefits of such communication.
Report on Other Legal and Regulatory Requirements
1 As required by 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 of the Companies Act 2013 we give in the "Annexure A" astatement on the matters specified in paragraphs 3 and 4 of the Order to the extentapplicable.
2 As required by Section 143(3) of the Act we report 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 havebeen kept by the Company so far as it appears from our examination of those books
(c) The 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 statementscomply with the Accounting Standards specified under Section 133 of the Act read withRule 7 of the Companies (Accounts) Rules 2014.
(e) On the basis of the written representations received from thedirectors as on 31st March 2020 taken on record by the Board of Directors none of thedirectors is disqualified as on 31st March 2020 from being appointed as a director interms of Section 164 (2) of the Act.
(f) With respect to the adequacy of the internal financial controlsover financial reporting of the Company and the operating effectiveness of such controlsrefer to our separate Report in "Annexure B".
(g) With respect to the other matters to be included in the Auditor'sReport in accordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014 inour
opinion and to the best of our information and according to theexplanations given to us:
i. The Company does not have any pending litigations which would impactits financial position
for which there were any material foreseeable losses.
iii. There has been no delay in transferring amounts required to betransferred to the Investor Education and Protection Fund by the Company.
"ANNEXURE A" TO THE INDEPENDENT AUDITORS' REPORT
With reference to the Annexure A referred to in the IndependentAuditor's Report to the
members of the Company on the standalone financial statements for theyear ended 31
March 2020 we report the following:
(i) (a) The company has maintained proper records showing fullparticulars including
quantitative details and situation of fixed assets.
(b) As explained to us fixed assets have been physically verified bythe Management during the year in accordance with the phased programme of verificationadopted by the management which in our opinion provides for physical verification of allthe fixed assets at reasonable intervals. According to the information and explanationsgiven to us no material discrepancies were noticed on such verification.
(c) According to information and explanations given to us and on thebasis of our examination of the records of the company the title deeds of immovableproperties are held in the name of the company.
(ii) The Management physically verified the inventories of finishedgoods semifinished goods and raw materials at regular intervals. No Materialdiscrepancies were reported during such physical verification.
(iii) According to the information and explanations given to us theCompany has not granted any loans to companies firms or other parties covered in theRegister maintained under Section 189 of the Companies Act 2013; and therefore paragraph3(iii) of the Order is not applicable
(iv) The Company has provided continuing corporate guarantee inviolation of provisions of section 185 & 186 on behalf of related partnership firm tothe tune of Rs.21.00 Crore to obtain the credit facilities.(refer additional note no.2.16)
(v) The company has accepted deposits in term of provisions of sections73 to 76 of the companies Act 2013. Further we are informed that no order has beenpassed by the Company Law Board or National Company Law Tribunal or Reserve Bank of Indiaor any Court or any other Tribunal(refer additional note no. 2.17)
(vi) As informed to us the Central Government has not prescribedmaintenance of cost records under sub-section (1) of Section 148 of the Act in respect ofthe activities carried on by the Company.
(vii) (a) According to the records of the company and information andexplanations given
to us the Company has generally been regular in depositing undisputedstatutory dues including Income-tax Tax deducted at sources Tax collected at sourceProfessional Tax Sales Tax value added tax Goods and Service Tax Wealth Tax ServiceTax Custom Duty Excise Duty Cess and other material statutory dues applicable to itwith the appropriate authorities;
(b) According to the information and explanations given to us therewere no disputed amounts payable in respect of Income-tax Wealth Tax Custom Duty ExciseDuty sales tax VAT GST Cess and other material statutory dues in arrears /wereoutstanding as at 31 March 2020 for a period of more than six months from the date theybecame payable.
(viii) According to the information and explanations given to us therewas no default in repayment of dues to the financial institutions or bank. Further thecompany has not issued any Debentures.
(ix) In our opinion and according to the information and explanationsgiven to us 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. Accordinglyparagraph 3(ix) of the Order is not applicable to the Company.
(x) According to the information & explanations given to us nofraud on or by the company has been noticed or reported during the year under report.
(xi) According to the information and explanations given to us theprovisions of section 197 of the Companies Act are applicable upon the company. TheCompany has paid excess remuneration u/s 197 of the Companies Act2013 to the directors inthe F.Y. 2018-19 and F.Y. 2019-20 which has been received back by the Company.
(xii) Since the company is not a Nidhi Company this clause is notapplicable upon it.
(xiii) The transactions with the related parties are not complying withsections 177 and 188 of Companies Act 2013 as the amount of sale and purchasetransactions made with related parties exceeds the prescribed limit of 10% of totalturnover and no prior approval of the company by a resolution has been taken for suchcontracts and arrangements. The details of related party transaction entered into havebeen disclosed in the financial statements as per the applicable accounting standards.
(xiv) During the year the Company has not made any preferentialallotment or private placement of shares or fully or partly paid convertible debenturesand hence reporting under clause 3(xiv) of the Order is not applicable to the Company.
(xv) According to the information and explanations given to us companyhas not entered into any non-cash transactions with the persons connected with directordetails. Therefore the provisions of section 192 of Companies Act 2013 is not requiredto be complied.
(xvi) The Company is not required to be registered under section 45-IAof the Reserve Bank of India Act 1934.
For PMAS And Associates LLP Chartered Accountants
Firm's Regn. No. 024726N/N500068 Sd/-
CA Mohit Rastogi Partner
Membership No. - 514835 New Delhi: 29.07.2020
"ANNEXURE B" TO THE INDEPENDENT AUDITORS' REPORT
Report on the Internal Financial Controls under Clause ( i ) ofSub-section 3 of Section 143 of the Companies Act2013(" the Act " )
We have audited the internal financial controls over financialreporting of Continental Seeds & Chemicals Limited ("the Company") as ofMarch 31 2020 in conjunction with our audit of the Standalone financial statements of theCompany for the year ended on that date.
Management's Responsibility for Internal Financial Controls
The Company's management is responsible for establishing andmaintaining internal financial controls based on Guidance Note on Audit of InternalFinancial Controls over Financial Reporting issued by the Institute of CharteredAccountants of India .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 of fraudsand errors the accuracy and completeness of the accounting records and the timelypreparation of reliable financial information as required under the Companies Act2013.
Our responsibility is to express an opinion on the Company's internalfinancial controls over the financial reporting based on our audit. We conducted our auditin accordance with the Guidance Note on Audit of Internal Financial Controls overFinancial Reporting (the "Guidance Note") and the Standards on Auditing issuedby ICAI and deemed to be prescribed under Section 143(10) of the Companies Act 2013 tothe extent applicable to an audit of internal financial controls both applicable to anaudit of Internal Financial Controls and both issued by the Institute of CharteredAccountants of India. Those Standards and the Guidance Note require that we comply withethical requirements and plan and perform the audit to obtain reasonable assurance aboutwhether adequate 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 aboutthe adequacy of the internal financial controls 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 financial statements whether due to 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 internal financialcontrols system over financial reporting.
Meaning of Internal Financial Controls over Financial Reporting
A company's internal financial control over financial reporting is aprocess designed to provide reasonable assurance regarding the reliability of financialreporting and the preparation of financial statements for external purposes in accordancewith 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 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 financial statements in accordance with generallyaccepted accounting principles and that receipts and expenditures of the company arebeing made only in accordance with authorities of management and directors of the company;and
(3) Provide reasonable assurance regarding prevention or timelydetection of unauthorized acquisition use or disposition of the company's assets thatcould have a material effect on the financial statements.
Inherent Limitations of Internal Financial Controls over FinancialReporting
Because of the inherent limitations of the internal financial controlsover financial 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 the changes inconditions or that the degree of compliance with the policies or procedures maydeteriorate.
In our opinion the Company has in all material respects an adequateinternal financial controls system over financial reporting and such internal financialcontrols over financial reporting were operating effectively as at 31 March 2020 based onthe internal control over financial reporting criteria established by the Companyconsidering the essential components of internal control stated in the Guidance Note onAudit of Internal Financial Controls Over Financial Reporting issued by the Institute ofChartered Accountants of India.
For PMAS And Associates LLP
Firm's Regn. No. 024726N/N500068
CA Mohit Rastogi Partner
Membership No. - 514835
New Delhi: 29.07.2020