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COSCO (India) Ltd.

BSE: 530545 Sector: Others
NSE: N.A. ISIN Code: INE949B01018
BSE 00:00 | 27 Sep 143.75 -1.55
(-1.07%)
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NSE 05:30 | 01 Jan COSCO (India) Ltd
OPEN 146.40
PREVIOUS CLOSE 145.30
VOLUME 349
52-Week high
52-Week low
P/E 14.48
Mkt Cap.(Rs cr) 60
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 146.40
CLOSE 145.30
VOLUME 349
52-Week high
52-Week low
P/E 14.48
Mkt Cap.(Rs cr) 60
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

COSCO (India) Ltd. (COSCOINDIA) - Auditors Report

Company auditors report

To the members of Cosco (India) Limited Report on the Audit of the Standalone FinancialStatements

Qualified Opinion

We have audited the accompanying standalone financial statements of Cosco (India)Limited ("the Company") which comprise the Balance Sheet as at March 312020the Statement of Profit and Loss (including Other Comprehensive Income) the Statement ofChanges in Equity and the Statement of Cash Flows for the year ended on that date and asummary of the significant accounting policies and other explanatory information(hereinafter referred to as "the standalone financial statements").

In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid standalone financial statements give the information requiredby the Companies Act 2013 ("the Act")in the mannerso required and give a trueand fairview in conformity with the Indian Accounting Standards prescribed under section133 ofthe Act read with the Companies (IndianAccounting Standards) Rules 2015 asamended ("Ind AS") and other accounting principles generally accepted in Indiaof the state of affairs of the Company as at March 312020 the profit and totalcomprehensive income changes in equity and its cash flows for the year ended on thatdate.

Basis for Qualified Opinion

Due to Covid-19 Pandemic lockdown management could not conduct the physicalverification of inventories on the reporting date. Subsequently management obtainedpermission to restart the operations on limited scale. Management conducted physicalverification of its inventories on April 27 2020 in factory at Gurugram and at otherlocation on different dates (within lockdown period) and applied roll back procedure toreach the reporting date quantity.

We were not able to attend the physical verification as lockdown was effectivetherefore we were unable to verify the existence/condition of inventories of t408 Lakhsraw material t445 Lakhs work-in-progress^ 1322 Lakhs finished goods Rs.2998 Lakhsstock-in-trade and t118 Lakhs store items to determine the adjustments that may berequired to be made in the value of inventory and consequential effect thereof onfinancial statement as on March 31 2020.

We conducted our audit of the standalone financial statements in accordance with theStandards on Auditing specified under section 143(10) of the Act (SAs). Ourresponsibilities under those Standards are further described in theAuditor'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 the independencerequirements that are relevant to our audit of the standalone financial statements underthe provisions 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 qualified opinion on the standalone financial statements.

Emphasis of Matter

Attention is drawn to the Note No 3.1 regarding possession of land in dispute Note No5.3 regarding recoverable amount of land compensation Note No 8.2 & 8.4 regardingvaluation of non-moving and slow moving stock Note No 9.2 regarding provision forexpected credit loss Note No 13.1 regarding reconciliation of GST Input Note No 19.1regarding identification of MSME suppliers Note no 38.3 regarding value of investment inerstwhile subsidiary of company and Note No 38.5 regarding impact of Covid-19.

The internal audit system ofthe company needs to be strengthened in scope coverage andcompliance.

Ouropinion is notqualified in respect of these matters Key Audit Matters

Key audit matters are those matters that in our professional judgment were of mostsignificance in our audit of the standalone financial statements of the current period.These matters were addressed in the context of our audit of the standalone financialstatements as a whole and in forming our opinion thereon and we do not provide aseparate opinion on these matters. For each matter below our description of how our auditaddressed the matter is provided in that context.

The Key Audit Matter

In the ordinary course of business carried out by the company there is alwayspossibility of generation of export surplus and in respect of trading goods of possibilityof defective products/slow moving/non moving goods. Management continues to keep watch onthe same and has designed a policy of valuation of these surplus/defective products/slowmoving/non moving goods on the basis of actual realization from sale of these goods. Thepolicy is determined in note no 2.12ofthe significantAccounting Policy.

As described in Note No 38.4 to the financial statement the Company has adopted Ind AS116 "Leases" w.e.f. April 01 2019. The application and transition of this IndAS is complex therefore we considered as key audit matter.

Howto the matter was addressed in our audit

We have applied the relevant audit procedures and verified the sale of these itemsduring the course of the year to ascertain whether realized value is in accordance withthe policy laid by the company. We have also disclosed this issue vide emphasis of matterparagraph.

Assessed and tested new process and controls in respect of lease accounting standard(IndAS-116).

Assessed the Company's evaluation on the identification of leases based on thecontractual agreements.

Evaluate reasonableness of discount rate applied in determining lease liability.

Checked computation of lease liabilities right-of-use assets interest cost andamortization of right-of-use.

Assessed and tested presentation and disclosures relating to IndAS 116 includingdisclosures relating to transition. Information Other than the Standalone FinancialStatements and Auditor's Report Thereon The Company's Board of Directors is responsiblefor the preparation of the other information. The other information comprises theinformation included in the Company's annual report but does not include the financialstatements and ourauditor's report thereon.

Our opinion on the standalone financial statements does not cover the other informationand we do not express any form ofassurance 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 during the course of our audit or otherwise appears to be materially misstated.

If based on the work we have performed we conclude that there is a materialmisstatement of this other information we are required to report thatfact. We havenothing to report in this regard.

Management's Responsibility for the Standalone Financial Statements

The Company's Board of Directorsis responsible for the matters stated in section 134(5)ofthe Actwith respect to the preparation of these standalone financial statements thatgive a true and fair view of the financial position financial performance totalcomprehensive income changes in equity and cash flows ofthe Company in accordance withthe Ind AS and other accounting principles generally accepted in India. Thisresponsibility also includes maintenance of adequate accounting records in accordance withthe provisions ofthe Act for safeguarding the assets ofthe Company and for preventing anddetecting frauds and other irregularities; selection and application of appropriateaccounting policies; making judgments and estimates that are reasonable and prudent; anddesign implementation 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 standalone financialstatements that give a true and fair view and are free from material misstatement whetherdue to fraud or error.

In preparing the standalone financial statements management 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 unlessmanagement either intends to liquidate the Company or to cease operations or has norealistic alternative but to do so.

The Board of Directors are responsible for overseeing the Company's financial reportingprocess.

Auditor's Responsibilities for the Audit ofthe Standalone Financial Statements

Our objectives are to obtain reasonable assurance about whether the standalonefinancial statements as a whole are free from material misstatement whether due to fraudor error and to issue an auditor's report that includes our opinion. Reasonable assuranceis a high level of assurance but is not a guarantee that an audit conducted in accordancewith SAs will always detect a material misstatement when it exists. Misstatements canarise from fraud or error and are considered material if individually or in theaggregate they could reasonably be expected to influence the economic decisions of userstaken on the basis of these standalone financial statements.

As part of an audit in accordance with SAs we exercise professional judgment andmaintain professional skepticism throughout the audit. We also:

* Identify and assess the risks of material misstatement ofthe standalone financialstatements whether due to fraud or error design and perform audit procedures responsiveto those risks and obtain audit evidence that is sufficient and appropriate to provide abasis for our opinion. The risk of not detecting a material misstatement resulting fromfraud is higher than for one resulting from error as fraud may involve collusionforgery intentional omissions misrepresentations or the override of internal control.

* Obtain an understanding of internal financial controls relevant to the audit in orderto design audit procedures that are appropriate in the circumstances. Under section143(3)(i) of the Act we are also responsible for expressing our opinion on whether theCompany has adequate internal financial controls system in place and the operatingeffectiveness of such controls.

* Evaluate the appropriateness of accounting policies used and the reasonableness ofaccounting estimates and related disclosures made by management.

* Conclude on the appropriateness of management's use of the going concern basis ofaccounting and based on the audit evidence obtained whether a material uncertaintyexists related to events or conditions that may cast significant doubt on the Company'sability to continue as a going concern. If we conclude that a material uncertainty existswe are required to draw attention in our auditor's report to the related disclosures inthe standalone financial statements or if such disclosures are inadequate to modify ouropinion. Our conclusions are based on the audit evidence obtained up to the date of ourauditor's report. However future events or conditions may cause the Company to cease tocontinue as a going concern.

* Evaluate the overall presentation structure and content of the standalone financialstatements including the disclosures and whether the standalone financial statementsrepresent the underlying transactions and events in a manner that achieves fairpresentation.

Materiality is the magnitude of misstatements in the standalone financial statementsthat individually or in aggregate makes it probable that the economic decisions of areasonably knowledgeable user of the financial statements may be influenced. We considerquantitative materiality and qualitative factors in (i) planning the scope of our auditwork and in evaluating the results of our work; and (ii) to evaluate the effect of anyidentified misstatements in the financial statements.

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 ouraudit.

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 standalone financial statementsof the current period and are therefore the key audit matters. We describe these mattersin our auditor's report unless law or regulation precludes public disclosure about thematter or when in extremely rare circumstances we determine that a matter should not becommunicated in our report because the adverse consequences of doing so would reasonablybe expected to outweigh the public interest benefits ofsuch communication.

Report on Other Legal and Regulatory Requirements

I. 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 inthe paragraph 3 and 4 of the order.

II. With respect to matter to be included in theAuditor's report under section 197(16)of theAct:

In our opinion and according to the information and explanations given to us themanagerial remuneration for the year ended March 31 2020 has been paid/provided by theCompany to its directors in accordance with the provisions of section 197 read withSchedule V to theAct.

III. Asrequired bySection 143 (3) of theAct we report that:

(a) we have sought and obtained all the information and explanations which to the bestof our knowledge and beliefwere necessary for the purposes of our audit.

(b) er books of account as required by law have been kept by the Company so far as itappears from our examination of those books;

(c) the balance sheet the statement of profit and loss including other comprehensiveincome statement of changes in equity and the statement of cash flow dealt with by thisReport are in agreement with the books of account;

(d) in our opinion the aforesaid standalone financial statements comply with theAccounting Standards specified under Section 133oftheAct.

(e) on the basis of the written representations received from the directors as on 31March 2020 taken on record by the Board of Directors none of the directors isdisqualified as on 31 March 2020 from being appointed as a director in terms of Section164 (2) of 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"; and

(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 has disclosed the impact of pending litigations on its financialposition in its financial statements;

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 V. P. Jain & Associates
Chartered Accountants
Firm's registration number: 015260N
Sarthak Madaan
Partner
Membership number: 547131
Place: New Delhi
Date: 31st July 2020

Annexure - A to the Auditors' Report

Statement of the matters specified in paragraph 3 and 4 of the Companies (Auditor'sreport) Order 2016 ('the

Order')

The Annexure referred to in Independent Auditors' Report to the members of the Cosco(India) Limited ("the

company") on the standalone financial statements for the year ended 31 March 2020we report that:

(i) In respect of fixed assets:

(a) The Company has maintained proper records showing full particulars includingquantitative details and situation offixed assets.

(b) The Company has a regular programme of physical verification of its fixed assets bywhich fixed assets are verified in a phased manner which in our opinion is reasonablehaving regard to the size of the Company and the nature of its assets. Pursuant to thesaid programme certain fixed assets were physically verified by the Management during theyear. The management needs to ensure that entire fixed assets are verified over a periodof time in phased manner. According to the information and explanations given to us nomaterial discrepancies were noticed on such verification.

(c) According to the information and explanations given to us and on the basis of ourexamination of the records of the Company and certificate provided by the bank the titledeeds of immovable properties are held in the name of the Company. Original copy of titledeed has not been produced as the same is deposited as security with bank under loanagreement as confirmed by the management & Bank.

(ii) As explained to us the company as part of its policy conducts physicalverification of inventory on the last date of every quarter. In our opinion the inventoryhas been physically verified at reasonable interval. Due to lockdown on account ofCovid-19 pandemic management could not conduct physical verification of inventory at 31stMarch 2020. Management conducted physical verification of inventory subsequent to thereporting date and applied roll back procedures to reach reporting date quantity and foundno material discrepancies. We were not able to attend the physical verification aslockdown was effective on the date of physical verification by the management. Thereforewe were unable to verify the existence/condition of inventories and accordingly we havequalified the report regarding this (refer basis for qualified opinion).

(iii) The Company has not granted loans to parties covered in the register maintainedunder section 189 of the CompaniesAct 2013 ('theAct'). Thus paragraph 3(iii) of theOrder is not applicable to the Company.

(iv) In our opinion and according to the information and explanations given to us theCompany has not given any loans and made any investment within the meaning of section 185& 186 of the Act. Thus paragraph 3(iv) of the Order is not applicable to the Company.

(v) According to the information and explanation given to us the company has notaccepted any deposits during the year. Thus paragraph 3(v) of the Order is not applicableto the Company.

(vi) It is certified by the management that company is not required to maintain thecost records prescribed under section 148 (1) of the CompaniesAct 2013 since the same hasnot been specified by the Central Government. We have relied upon the assertions of themanagement.

(vii) In respect of statutory dues:

(a) According to the information and explanations given to us and on the basis of ourexamination of the records of the Company the company has generally been regular indepositing undisputed statutory dues including provident Fund Employees State insuranceincome tax sales tax wealth tax service tax duty of customs duty of excise valueadded tax cess and other material statutory dues applicable to it with the appropriateauthorities. There were no undisputed amounts payable in respect of the aforesaidstatutory dues in arrears as at 31.03.2020 for a period of more than six months from thedate they became payable.

(b) According to the information and explanations given to us there are no dues ofincome tax sales tax wealth tax service tax duty of customs duty of excise valueadded tax cess which have not been deposited as at 31.03.2020 on account of disputesexcept following:

Name of statute Nature of dues Amount ( Rs. in lakhs) Period Forum where dispute is pending
The Income Tax Act 1961 Income tax 23 Assessment Year 2018-19 Commissioner of Income Tax (Appeals)

(viii) According to the information and explanations given to us the Company has notdefaulted in repayment of loans or borrowing to a financial institution bank Governmentduring the year.

(ix) The company has not obtained any term loan during the year so this paragraph ofthe Order is not applicable.

(x) According to the information and explanations given to us no material fraud by theCompany or on the Company by its officers or employees has been noticed or reported duringthe course of our audit.

(xi) According to the information and explanations given to us and based on ourexamination of the records of the Company the Company has paid/provided managerialremuneration within the meaning of section 197 read with Schedule V to theAct.

(xii) In our opinion and according to the information and explanations given to us theCompany is not a nidhi company. Accordingly paragraph 3(xii) of the Order is notapplicable.

(xiii) According to the information and explanations given to us and based on ourexamination of the records of the Company transactions with the related parties are incompliance with sections 177 and 188 of the Act where applicable and details of suchtransactions have been disclosed in the financial statements as required by the applicableaccounting 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.

(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 non-cashtransactions with directors or persons connected with them.Accordingly paragraph 3(xv)ofthe Order is notapplicable.

(xvi) The Company is not required to be registered under section 45-IAof the ReserveBank of IndiaAct 1934.

For V. P. Jain & Associates
Chartered Accountants
Firm's registration number: 015260N
Sarthak Madaan
Partner
Membership number: 547131
Place: New Delhi
Date: 31st July 2020

Annexure - B to the Auditors' Report

Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section143 of the

Companies Act 2013 ("the Act")

Opinion

We have audited the internal financial controls with reference to standalone financialstatements of Cosco (India) Limited ("the Company") as of March 312020 inconjunction with our audit of the standalone financial statements of the Company for theyear ended on that date.

In our opinion the Company generally has in all material respects except certainareas as stated below an adequate internal financial controls system over financialreporting and such internal financial controls over financial reporting were operatingeffectively as at31 March 2020 based on the internal control overfinancial reportingcriteria established by the Company considering the essential components of internalcontrol stated in the Guidance Note on Audit of Internal Financial Controls Over FinancialReporting issued by the Institute of Chartered Accountants of India (the "GuidanceNote").

> Inventory Levels : needs to be monitored more effectively.

> Documentation and MIS : need improvement in respect of Annual procurement ofmaterials & Expense budget Procurement Budgeting & Planning of Traded GoodsObtention of Quotation Management Negotiation & Selection.

> Dealers selection and Appointment: needs improvement to prevent appointment ofnon-credit worthiness dealer.

> Monitoring of Trade receivables: Old Trade receivables outstanding for more thanone or two years need to be followed up for recovery on priority basis.

> HR (attendance monitoring & performance review): needs improvement w.r.t.modification of attendance sheet to prevent excess payment of salary; performancedocumentation should be designed scientifically

> Fixed Assets Physical verification: needs improvement to see all items of fixedassets are physically verified in scale of 3 years.

> Contract Labour Management: need improvement to prevent penal provision for noncompliance of statutory laws by contractor.

Management's Responsibility for Internal Financial Controls

The Company's Management is responsible for establishing and maintaining internalfinancial controls based on the internal financial controls with reference to standalonefinancial statements criteria established by the Company considering the essentialcomponents of internal control stated in the Guidance Note. 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 CompaniesAct 2013.

Auditors' Responsibility

Our responsibility is to express an opinion on the Company's internal financialcontrols with reference to standalone financial statements based on our audit. Weconducted our audit in accordance with the Guidance Note and the Standards on Auditing asprescribed under section 143(10) of the Act to the extent 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 the ethicalrequirements and plan and perform the audit to obtain reasonable assurance about whetheradequate internal financial controls with reference to standalone financial statements wasestablished and maintained and if such controls operated effectively in all materialrespects.

Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal financial controls with reference to standalone financial statements andtheir operating effectiveness. Our audit of internal financial controls with reference tostandalone financial statements included obtaining an understanding of such internalfinancial 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 and appropriate toprovide a basis for our audit opinion on the Company's internal financial controls withreference to standalone financial statements.

Meaning of Internal Financial Controls with reference to Standalone FinancialStatements

A company's internal financial control with reference to standalone financialstatements is a process designed to provide reasonable assurance regarding the reliabilityof financial reporting and the preparation of financial statements for external purposesin accordance with generally accepted accounting principles. A company's internalfinancial control over financial reporting includes those policies and procedures that (1)pertain to the maintenance of records that in reasonable detail accurately and fairlyreflect the transactions and dispositions of the assets of the company; (2) providereasonable assurance that transactions are recorded as necessary to permit preparation offinancial statements in accordance with generally accepted accounting principles and thatreceipts and expenditures of the company are being made only in accordance withauthorizations of management and directors of the company; and (3) provide reasonableassurance regarding prevention or timely detection of unauthorized acquisition use ordisposition of the company's assets that could have a material effect on the financialstatements.

Inherent Limitations of Internal Financial Controls with reference to StandaloneFinancial Statements

Because of the inherent limitations of internal financial controls with reference tostandalone financial statements including the possibility of collusion or impropermanagement override of controls material misstatements due to error or fraud may occurand not be detected. Also projections of any evaluation of the internal financialcontrols with reference to standalone financial statements to future periods are subjectto the risk that the internal financial controls with reference to standalone financialstatements may become inadequate because of changes in conditions or that the degree ofcompliance with the policies or procedures may deteriorate.

For V. P. Jain & Associates
Chartered Accountants
Firm's registration number: 015260N
Sarthak Madaan
Partner
Membership number: 547131
Place: New Delhi
Date: 31st July 2020

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