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Everest Organics Ltd.

BSE: 524790 Sector: Health care
NSE: N.A. ISIN Code: INE334C01029
BSE 00:00 | 16 Apr 249.25 14.80
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NSE 05:30 | 01 Jan Everest Organics Ltd
OPEN 227.00
PREVIOUS CLOSE 234.45
VOLUME 15408
52-Week high 335.00
52-Week low 80.00
P/E 12.89
Mkt Cap.(Rs cr) 199
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 227.00
CLOSE 234.45
VOLUME 15408
52-Week high 335.00
52-Week low 80.00
P/E 12.89
Mkt Cap.(Rs cr) 199
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Everest Organics Ltd. (EVERESTORGANICS) - Auditors Report

Company auditors report

TO THE MEMBERS OF EVEREST ORGANICS LIMITED.

QUALIFIED OPINION

We have audited the accompanying financial statements of Everest Organics Limited(“the Company”) which comprise the Balance Sheet as at March 31 2020 theStatement 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.

In our opinion and to the best of our information and according to the explanationsgiven to us except for the possible effects of the matter described in the Basis forQualified Opinion paragraph the aforesaid financial statements give the informationrequired by the Companies Act 2013 as amended (“the Act”)in the manner sorequired and give a true and fair view in conformity with the accounting principlesgenerally accepted in India of the state of affairs (financial position) of the Companyas at March 31 2020 and its profit (financial performance including other comprehensiveincome) its cash flows and the changes in equity for the year ended on that date.

BASIS FOR QUALIFIED OPINION:

As stated in Note 27 (C)(xvi)(a) to the financial statements of the Company as at March31 2020 under report the outstanding amount in connection with liability for payment ofGratuity stands at Rs.100.18 Lakhs. As against the said liability of Rs.100.18 Lakhs thecompany has deposited only part of the liability with the LIC Gratuity Fund that isRs.70.31 Lakhs and for the remaining liability of Rs.29.87 Lakhs payment is yet to be madeas on that date. Further the provision for the year is made as per the assessment of themanagement but not as per the actuarial valuation as required under the Indian AccountingStandards.

As per the requirement of the Indian Accounting Standard-19 on Employee Benefits suchliability should have been deposited in total in a fund as against a partial sum. Ouraudit opinion on the financial statements for the year ended March 312020 is qualified inrespect of this matter.

The management is of the opinion the entire liability in this regard has been providedand hence does not have any impact on the profit and loss account of the company for theyear and the Balance Sheet of the Company as on March 312020.

We conducted our audit of the financial statements in accordance with the Standards onAuditing specified under section 143(10) of the Act (SAs). Our responsibilities underthose Standards are further described in the Auditor's Responsibilities for the Audit ofthe Financial Statements section of our report. We are independent of the Company inaccordance with the Code of Ethics issued by the Institute of Chartered Accountants ofIndia (ICAI) together with the ethical requirements that are relevant to our audit of thefinancial statements under the provisions of the Act and the Rules there under and wehave fulfilled our other ethical responsibilities in accordance with these requirementsand the ICAI Code of Ethics. We believe that the audit evidence we have obtained issufficient and appropriate to provide a basis for our opinion on the financial statements.

EMPHASIS MATTER :

We draw attention to the matter stated against note No 27(C)(xii) under Notes tofinancial statements wherein it states that the company has applied to enhance theproduction capacity from it's existing capacity with the Pollution control authorities andthe matter is under review. The management has initiated the processes and is confident toreceive the necessary approvals in this regard.

Opinion is not modified in respect of this matter.

KEY AUDIT MATTERS:

Key audit matters are those matters that in our professional judgment were of mostsignificance in our audit of the financial statements of the current period. These matterswere addressed in the context of our audit of the financial statements as a whole and informing our opinion thereon and we do not provide a separate opinion on these matters. Wehave determined the matter described below to be the key audit matter to be communicatedin our report.

We draw attention to following matter of the Company.

A) Revenue recognition:

Revenue is recognized when the control over the underlying products has beentransferred to the customer. Due to the Company's sales under various contractual termsand across the country delivery to customers in different regions might take differenttime periods and may result in undelivered goods at the period end. We consider a risk ofmisstatement of the Financial Statements related to transactions occurring close to theyear end as these transactions could be recorded in the incorrect financial period(cut-off). Our tests of detail focused on cut-off samples to verify that only revenuepertaining to current year is recognized based on terms and conditions set out in salescontracts and delivery documents. Performing testing on selected statistical samples ofrevenue transactions recorded during the year.

B) Impairment in evaluation of Investments:

The carrying amount of the investments in unlisted company held at cost and classifiedunder NonCurrent Investments. The Company's investments in unlisted companies aregenerally carried at cost less any impairment. The investments are assessed for impairmentwhen an indicator of impairment exists. With the spread of COVID-19 in India and globallysaid assessment could not be ascertained. It involves significant estimates and judgmentdue to the inherent uncertainty involved in forecasting and discounting future cash flows.Management is of the view that there is no impairment in this regard and the same isrelied upon by the auditors.

C) Raw material Consumption:

Raw material Consumption for the year is recognized based on the product composition atvarious stages and the customers requirement for all the products. The estimates relatingto the charge are important given the significance process knowhow and the distinctiveterms of arrangement with customers. These compositions consumption norms are complex andrequires significant judgement and estimation by the Company for establishing the matchingconcept. An appropriate charge of raw material consumption and accuracy thereof maydeviate due to change in judgements and estimates. Accordingly the same has beenconsidered as a key audit matter.

We obtained Management's calculations for raw material consumption specifications andrelied upon the same.

D) IT Systems and Controls:

We have identified IT Systems and controls over financial reporting as a key auditmatter for the company because it's financial and reporting system should be integratedand must be fundamentally reliant on IT systems and controls to process the voluminousdata specifically with respect to revenue debtors inventory management and raw materialconsumption. Automated

accounting procedures and IT environment controls are required to be modified andimplemented to operate effectively to ensure accurate financial reporting to comply withall the reporting requirements under various statues. We have assessed the management'sposition through discussion with the inhouse and external experts. Management hasinitiated steps to integrate all activities in this regard.

E) Fixed Assets and Capital Work in Progress:

During the year under report the company has capitalized and made additions to fixedassets to the extent of Rs.515.16 Lakhs and has made a further addition of Rs.112.67 lakhsto the Capital Work in Progress being various projects under development. The company hasmade a decommissioning / deletion of assets to the extent of Rs.537.68 lakhs which hasresulted in a charge to Profit and Loss account to the extent of Rs.252.89 lakhs. Thedefinition of asset and recognition thereof measurement of decommissioning provision theentire process involves use of estimates and assumptions relating to timing of suchdeletion / decommissioning of related assets.

The management has initiated the process with the help of technical experts to arriveat a conclusion. due to COVID 19 pandemic the said process is still in the process ofcompletion as regards the asset recognition and re-alignment of Fixed Assets Register asat the close of the financial year. The management is confident to close the processshortly.

Accordingly the same is considered as a key Audit matter.

MANAGEMENT'S RESPONSIBILITY FOR THE FINANCIAL STATEMENTS

The Company's Board of Directors is responsible for the matters stated in Section134(5) of the Companies Act 2013 (“the Act”) with respect to the preparation ofthese financial statements that give a true and fair view of the financial positionfinancial performance and cash flows of the Company in accordance with the accountingprinciples generally accepted in India including the Accounting Standards specified underSection 133 of the Act read with Companies (Indian Accounting Standards) Rules 2015 asamended.

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 financialstatements that give a true and fair view and are free from material misstatement whetherdue to fraud or error.

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 modify/cease operations or has no realisticalternative but to do so.

Those Board of Directors are also responsible for overseeing the Company's financialreporting process. AUDITORS' RESPONSIBILITY :

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 scepticism throughout the audit. We also:

Identify and assess the risks of material misstatement of the 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 control 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 with reference to financial statements 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 the going concernbasis 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 further events or conditions may cause the companyto cease to continue as a going concern.

Evaluate the overall presentation structure and content of the financialstatements including the disclosures and whether the financial statements represent theunderlying 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 ourauditors' 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 reasonablybe expected to outweigh the public interest benefits of such communication.

REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS:

1) As required by the Companies (Auditors' Report) Order 2016 (“The Order")issued by the Central Government of India in terms of sub-section 11 of Section 143 of theAct we give in the Annexure-A to this report a Statement on the matter specified inParagraph 3 and 4 of the Order to the extent applicable.

2) 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 book;

c. The Balance Sheet the Profit and Loss Statement the Cash Flow Statement and theStatement of Changes in Equity dealt with by this Report are in agreement with the booksof account;

d. In our opinion the aforesaid financial statements comply with the AccountingStandards specified under Section 133 of the Act read with Rule 7 of the Companies(Indian Accounting Standards) Rules 2015;

e. According to the information and explanations given to us On the basis of thewritten representations received by the company from the directors as on March 31 2020taken on record by the Board of Directors none of the director is disqualified as onMarch 31 2020 from being appointed as a director in terms of Section 164(2) of the Act;

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” to this report;

g. with respect to the matters to be included in the Auditor's Report in accordancewith the requirements of section 197(16) of the Act as amended: In our opinion and to thebest of our information and according to the explanations given to us the remunerationpaid by the company to its directors during the year is in accordance with the provisionsof section 197 of the Act.

h. 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 as amended inour opinion and to the best of our information and according to the explanations given tous :

(i) The Company has disclosed the impact of pending litigations on its financialposition in its financial statements as referred to Para 12 of Note No.27to the FinancialStatements.

(ii) The Company does not have any long term contracts including derivative contractsfor which 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..

For SURYAM & CO
Chartered Accountants
FRN : 012181S
Sd/-
(SRINIVAS OLETI)
Place : Hyderabad Partner
Date : 25-06-2020. ICAI M.No.206457
UDIN:20206457AAAAAE4505

ANNEXURE-A

Referred to in paragraph 1 under 'Report on Other Legal and Regulatory Requirements'section of our Report of even date issued to the members of Everest Organics Limited

We report on the matter specified in Paragraphs 3 & 4 of the Companies (AuditorsReport) Order 2016

as under:

i) a) The Company has maintained proper records showing broad particulars includingquantitative details and situation of fixed assets on the basis of available information.However the fixed assets register is to be updated. We are informed by the managementthat the company is in the process of compiling and reconstructing the Fixed AssetsRegister to show full particulars including quantitative details and situation of FixedAssets.

b) As per the information and explanations furnished to us by the management majorityof the fixed assets have been physically verified by the management during the periodunder report. In our opinion the frequency of such physical verification is reasonablehaving regard to the size of the Company and nature of its assets. The discrepanciesnoticed on such verification were identified and charged off to the Profit and lossaccount under report.

c) As per the information and explanations furnished to us by the management the titledeeds of immovable properties are held in the name of the company.

(ii) The physical verification of inventories has been conducted during the year by themanagement in respect of majority of the high value items at reasonable intervals. In ouropinion the frequency of such verification is reasonable.

The discrepancies that were noticed have been properly dealt with in the books ofaccount.

(iii) As per the information and explanations furnished to us by the management and asper the books of account and other documents examined by us the company has not grantedany loans secured or unsecured to companies firms limited partnerships or other partiescovered in the register maintained under Section 189 of the Companies Act 2013.

(iv) As per the information and explanations furnished to us by the management and asper the books of accounts and other documents examined by us the company has not givenany loans made investments given guarantees securities to the parties to whichprovisions of Sections 185 and 186 of the Companies Act 2013 are applicable.

(v) According to the information and explanations given to us the Company has notaccepted deposits to which the directives issued by the Reserve Bank of India and theprovisions of Section 73 to 76 or the other relevant provisions of the Companies Act andthe rules framed there under wherever applicable from the public.

However there are certain unsecured loans accepted from Directors and their relativesand also in the form of employee security deposits amounting to Rs.440.47 lakhs as at31-03-2020(Rs.339.69 lakhs as at 31-03-2019).

(vi) As per the information and explanations furnished to us prima facie it appearsthat the company broadly meets the requirement prescribed by the Central Government undersection 148(1) of the Companies Act 2013 read with Companies (Cost Records and Audit)Rules 2014. We have however not made a detailed examination of such cost recordsmaintained by the company.

(vii) a) As per the information and explanations furnished to us by the managementaccording to the records of the Company undisputed statutory dues including ProvidentFund Employees' State

Insurance Income Tax(Except FBT of Rs.2.20 lakhs) Goods and Service Tax duty ofCustoms and other statutory dues have been generally deposited with the appropriateauthorities. However according to the information and explanations given to us no otherundisputed amounts payable in respect of the aforesaid dues were outstanding as at31-03-2020 for a period of more than six months from the date they became payable.

(b) As per the information and explanations furnished to us by the management thereare no dues of income tax sales tax or service tax or duty of customs or duty of exciseor value added tax that have not been deposited on account of any dispute.

(Viii) As per the information and explanations given to us the company has notdefaulted in repayment of loansor borrowings to the Banks or Government. The company hasnot made any borrowings from the financial institutions or debenture holders.

(ix) During the year the company has not raised money by way of initial public offer orfurther public offer (including debt instruments). As per the information and explanationsgiven to us the term loans raised during the year were applied for the purposes for whichthe same were raised.

(x) During the year under review no fraud by the company or on the company by itsofficers or employees has been noticed or reported.

(xi) As per the information and explanations given to us by the management themanagerial remuneration has been paid or provided in accordance with the requisiteapprovals mandated by the provisions of section 197of the Companies Act.

(xii) The Company is not a Nidhi company. Hence Clause (xii) is not applicable to thecompany.

(xiii) As per the information and explanations given to us and based on our audit inour opinion the transactions with the related parties are in compliance with sections 177and 188 of Companies Act 2013 where applicable and the details have been disclosed in theFinancial Statements etc. as required by the applicable accounting standards.

(Xiv) During the year the Company has not made any preferential allotment or privateplacement of shares or fully or partly paid convertible debentures and hence reportingunder clause 3 (xiv) of the Order is not applicable to the Company.

(xv) As per the information and explanations given to us the company has not enteredinto any non-cash

transactions with directors or persons connected with them.

(xvi) The company is not required to be registered under section 45-IA of the ReserveBank of India Act

1934.

For SURYAM & CO
Chartered Accountants
FRN : 012181S
Sd/-
(SRINIVAS OLETI)
Place : Hyderabad Partner
Date : 25-06-2020. ICAI M.No.206457
UDIN:20206457AAAAAE4505

Annexure-B

Referred to in paragraph 2(f) under 'Report on Other Legal and RegulatoryRequirements' section of our Report of even date issued to the members of Everest OrganicsLimited

Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section143 of the Companies Act 2013 ("the Act”) :

We have audited the internal financial controls over financial reporting of EverestOrganics Limited (“the Company”) as of March 312020 in conjunction with ouraudit of the financial statements of the Company for the year ended on that date.

Management's Responsibility for Internal Financial Controls

The Company's management is responsible for establishing and maintaining internalfinancial controls based on the internal control over financial reporting criteriaestablished by the Company considering the essential components of internal control statedin the Guidance Note on Audit of Internal Financial Controls over Financial Reportingissued by the Institute of Chartered Accountants of India. These responsibilities includethe design implementation and maintenance of adequate internal financial controls thatwere operating effectively for ensuring the orderly and efficient conduct of its businessincluding adherence to company's policies the safeguarding of its assets the preventionand detection of frauds and errors the accuracy and completeness of the accountingrecords and the timely preparation of reliable financial information as required underthe Companies Act 2013.

Auditors' Responsibility

Our responsibility is to express an opinion on the Company's internal financialcontrols over financial reporting based on our audit. We conducted our audit in accordancewith the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting(the “Guidance Note”) and the Standards on Auditing issued by the Institute ofChartered Accountants of India and deemed to be prescribed under Section 143(10) of theCompanies Act 2013 to the extent applicable to an audit of internal financial controlsboth issued by the Institute of Chartered Accountants of India. Those Standards and theGuidance Note require that we comply with ethical requirements and plan and perform theaudit to obtain reasonable assurance about whether adequate internal financial controlsover financial reporting was established and maintained and if such controls operatedeffectively in all material respects.

Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal financial controls system over financial reporting and their operatingeffectiveness. Our audit of internal financial controls over financial reporting includedobtaining an understanding of internal financial controls over financial reportingassessing the risk that a material weakness exists and testing and evaluating the designand operating effectiveness of internal control based on the assessed risk. The proceduresselected depend on the auditor's judgment including the assessment of the risks ofmaterial misstatement of the financial statements whether due to fraud or error.

We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the Company's internal financial controls systemover financial reporting.

Meaning of Internal Financial Controls over Financial Reporting

A company's internal financial control over financial reporting is a process designedto provide reasonable assurance regarding the reliability of financial reporting and thepreparation of financial statements for external purposes in accordance with generallyaccepted accounting principles. A company's internal financial control over financialreporting includes those policies and procedures that pertain to the maintenance ofrecords that in reasonable detail accurately and fairly reflect the transactions anddispositions of the assets of the company;

1. 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

2. Provide reasonable assurance regarding prevention or timely detection ofun-authorized acquisition use or disposition of the company's assets that could have amaterial effect on the financial statements.

Inherent Limitations of Internal Financial Controls over Financial Reporting

Because of the inherent limitations of internal financial controls over financialreporting including the possibility of collusion or improper management override ofcontrols material misstatements due to error or fraud may occur and not be detected.Also projections of any evaluation of the internal financial controls over financialreporting to future periods are subject to the risk that the internal financial controlover financial reporting may become inadequate because of changes in conditions or thatthe degree of compliance with the policies or procedures may deteriorate.

Opinion :

In our opinion the company has in all material respects an adequate internalfinancial controls system over financial reporting and such internal financial controlsover financial reporting were operating effectively as at March 312020 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. However the following internal financial controls are essential anddesirable.

a) The system of physical verification of fixed assets tagging of fixed assets andcomputerization of records needs to be implemented to be commensurate with the size of thecompany & level of operations.

b) The system of physical verification of inventories tagging of inventoriesrecognition & valuation of inventories needs to be further improved to be commensuratewith the size of company &level of operations.

c) The system of obtaining periodical confirmation of balances from Debtors CreditorsAdvances Deposits etc. and the consequential reconciliations and adjustments thereofneeds to be improved to be commensurate with the size of company.

d) The system of obtaining comparative quotations from different independent partiesand keeping them on record needs to be further strengthened to be commensurate with thesize of the company and nature of operations of the Company.

e) The method of customer evaluation needs to be further improved for extending creditto the customers..

For SURYAM & CO
Chartered Accountants
FRN : 012181S
Sd/-
(SRINIVAS OLETI)
Place : Hyderabad Partner
Date : 25-06-2020. ICAI M.No.206457
UDIN:20206457AAAAAE4505

.