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Frontline Corporation Ltd.

BSE: 532042 Sector: Others
NSE: N.A. ISIN Code: INE092D01013
BSE 12:10 | 20 Sep 16.25 -0.85
(-4.97%)
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NSE 05:30 | 01 Jan Frontline Corporation Ltd
OPEN 16.25
PREVIOUS CLOSE 17.10
VOLUME 659
52-Week high 21.10
52-Week low 6.87
P/E 6.35
Mkt Cap.(Rs cr) 8
Buy Price 16.25
Buy Qty 29.00
Sell Price 17.95
Sell Qty 194.00
OPEN 16.25
CLOSE 17.10
VOLUME 659
52-Week high 21.10
52-Week low 6.87
P/E 6.35
Mkt Cap.(Rs cr) 8
Buy Price 16.25
Buy Qty 29.00
Sell Price 17.95
Sell Qty 194.00

Frontline Corporation Ltd. (FRONTLINECORP) - Auditors Report

Company auditors report

To

The Members of

FRONELINE CORPORATION LIMITED

Ahmedabad

CIN -L63090WB1989PLC099645

Report on the Audit of the Standalone Financial Statements

Qualified Opinion

We have audited the standalone financial statements of FRONTLINE CORPORATIONLIMITED ("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 and to the best of our information and according to the explanationsgiven to us except for the effects of the matter described in the Basis for QualifiedOpinion section of our report the aforesaid standalone financial statements give theinformation required by the Act in the 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 March 31 2020 and loss changes in equity and its cashflows for the year ended on that date.

Basis for Qualified Opinion

1. Note No. 22 to the standalone financial results regarding Non provision ofinterest of Rs. 1182.36 Lacs on NPA accounts for the year under consideration The exactamounts of the said non provisions of interest are not determined and accounted for by theCompany and to that extent Bankers loan liabilities are under stated and loss isunderstated.

2. Note No. 16 to the standalone financial results regarding uncertaintiesrelating to recoverability of loans & advances given to M/s. Gateway Commodities (P)Ltd. amounting to Rs. 229.88 Lacs (Previous year Rs. 514.01 Lacs) and Non Provision ofinterest @ 9% of Rs. 20.69 Lacs as at 31st March 2020.The management has explained thatsuch advances have been given in the normal course of business. The management based oninternal assessments and evaluations have represented that the balance outstandingadvances are still recoverable/ adjustable and that no accrual for diminution of advancesis necessary as at balance sheet date and the aforementioned balances are fullyrecoverable. However we are unable to ascertain whether all the remaining outstandingadvances as above are fully recoverable / adjustable since the outstanding balances asat balance sheet date are outstanding for a long period of time. In the absence ofsufficient appropriate evidence we are unable to comment upon the carrying value of theseloans & advances and recoverability of the aforesaid dues and the consequential impactif any on the accompanying standalone financial statements. Our audit opinion on thestandalone financial statements for the year ended 31st March 2020 was also qualified inrespect of this matter.

3. Note No. 5 to the standalone financial statements regarding taking physical and/ orsymbolical possession and initiating auction process on various assets by lenders; howeverthe company has received stay order against these proceedings and matter is sub-judicialtill date. The management has not performed any impairment assessment for these assets.Accordingly we are unable to ascertain the appropriateness of the carrying value of theseassets and consequential impact if any on the accompanying standalone financialstatements. Our audit opinion on the standalone financial statements for the year ended 31stMarch 2020 was also qualified in respect of this matter.

4. Note No. 35.8 to the standalone financial statements regarding Corporate guaranteegiven against credit facilities availed by an associate concern and non-compliance ofprescribed section under the provisions of the erstwhile Companies Act 1956/ Companies Act2013 respectively and for which the Company not obtained Government approval.

5. Due to uncertain consequence in this matter we are unable to identify impact if anyon standalone financial statement our audit opinion is qualified.

We conducted our audit in accordance with the Standards on Auditing (SAs) specifiedunder section 143(10) of the Companies Act 2013. Our responsibilities under thoseStandards are further described in the Auditor's Responsibilities for the Audit of theFinancial 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 together with the ethical requirements that are relevant to our audit of thefinancial statements under the provisions of the Companies Act 2013 and the Rulesthereunder and we have fulfilled our other ethical responsibilities in accordance withthese requirements and the Code of Ethics. We believe that the audit evidence we haveobtain insufficient and appropriate to provide a basis for our opinion.

Emphasis of Matters

Your attention is drawn to the following matters in the notes to the financialstatements as fully described therein:

1. Regarding notices issued by lender sunder prescribed provisions of theSecuritization and Reconstruction of Financial Assets and Enforcement of Security Interest(SARFAESI) Act 2002 for non-payment of principal and interest thereon after the due dateby the company and therefore those loan accounts became Non Performing Assets effectivefrom respective dates mentioned in such notice. We are informed that the company haschallenged the notices and the Bank's action to sale these properties of the company byfiling a Securitization Application in the Debts Recovery Tribunal Kolkata which ispending. The lender has also filed an Original Application in the Debts Recovery TribunalKolkata which is pending. The Company has also filed a Civil Suit in Kolkata High Courtagainst lender in regard to Specific Performance of Agreement related to one of theproperty which lender intended to sale. Matter stayed by High Court and the lenderpreferred to file appeal at the Supreme Court against the order of Calcutta High Court.This matter is sub-judice. These factors along-with other matters assets forth in saidnotice raise substantial doubt about the company's ability to continue as a going concernin the foreseeable future. However the company's financial statements have been preparedon going concern basis as disclosed by management in notes.

2. Non Availability of balance confirmation from some of the suppliers and loans &Advances.

Our opinion is not modified with respect to the above matters as listed under Emphasisof Matter.

3. We draw attention to note 2.2 to the standalone Ind AS financial statements whichdescribes the uncertainty caused by Novel Corona virus (COVID-19) pandemic with respectthe carrying amount of receivables unbilled revenues and tangible assets. Our opinion isnot 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.

Information Other than the Standalone Financial Statements and Auditor's Report thereon(Other Information)

The Company's Board of Directors is responsible for the other information. The otherinformation comprises the information included in the Corporate Overview Board's ReportManagement Discussion and Analysis Report and Report on Corporate Governance in the AnnualReport of the Company for the financial year 2019- 2020 but does not include thefinancial statements and our auditor's report thereon. Our opinion on the financialstatements does not cover the other information and we do not express any form ofassurance conclusion thereon. In connection with our audit of the financial statementsour responsibility is to read the other Information and in doing so consider whether theother information is materially inconsistent with the financial statements or ourknowledge obtained in the audit or otherwise appears to be materially misstated. If basedon the work we have performed we conclude that there is a material misstatement of thisother information; we are required to report that fact. We have nothing to report in thisregard.

Management's Responsibility for the Standalone 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 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 statement that givea 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.

That Board of Directors are also responsible for overseeing the Company's financialreporting 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 user taken on thebasis of these financial statements.

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

We also:

(a) Identify and assess the risks of material misstatement of the financial statementswhether 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.

(b) Obtain an understanding of internal control relevant to the audit in order todesign audit procedures that are appropriate in the circumstances. Under section 143(3)(i)of the Companies Act 2013 we are also responsible for expressing our opinion on whetherthe company has adequate internal financial controls system in place and the operatingeffectiveness of such controls.

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

(d) 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 financial statements or if such disclosures are inadequate to modify our opinion.Our conclusions are based on the audit evidence obtained up to the date of our auditor'sreport. However future events or conditions may cause the Company to cease to continue asa going concern.

(e) 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 alsoprovide those charged with governance with a statement that we have complied with relevantethical requirements regarding independence and to communicate with them allrelationships and other matters that may reasonably be thought to bear on ourindependence and where applicable related safe guards.

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 reasonablybe expected to outweigh the public interest benefits of such communication.

Report on Other Legal and Regulatory Requirements

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 Companies Act 2013 we give in the "Annexure - A" a statement on thematters specified in paragraphs 3 and 4 of the Order to the extent applicable.

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.

(c) The Balance Sheet the Statement of Profit and Loss and the Cash Flow Statementdealt with by this Report are in agreement with the books of account.

(d) 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.

(e) On the basis of the written representations received from the directors as on 31stMarch 2020 taken on record by the Board of Directors none of the directors isdisqualified as on 31st March 2020 from being appointed as a director in termsof Section164(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".

(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) Rules2014in our opinion and to the best ofour information and according to the explanations given to us:

(i) The Company does not have any pending litigations which would impact its financialposition.

(ii) The Company did not have any long-term contracts including derivative contractsfor which 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 S M Pansuriya & Co.
Chartered Accountants
Firm Reg. No. 126729W
Sd/-
Snehal Pansuriya
Proprietor
Membership No. - 121039
Place: Ahmedabad
Date: 30th July 2020
UDIN:20121039AAAAAW9231

Annexure -'A'

Annexure to the Independent Auditors' Report of even date on the Financial Statementsof FRONTLINE CORPORATION LIMITED

The Annexure referred to in paragraph 1 under the heading "Report on other legaland regulatory requirements" of our report of even date

(i) (a) The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets relating to the company.

(b) As explained to us all the fixed assets have been physically verified by themanagement in a phased periodical manner which in our opinion is reasonable havingregard to the size of the company and nature of its assets. No material discrepancies werenoticed on such physical verification. However UCO bank has taken symbolic possession ofsome of the fixed assets specified in the note of Fixed Assets which are provided ascollateral security against credit facility enjoyed by Fairdeal Supplies Limited andPunjab & Sind Bank has taken physical possession of the fixed assets specified in thenote of fixed assets. In our opinion this periodicity of physical verification isreasonable having regard to the size of the company and the nature of its assets.

(c) According to information and explanations given to us and on the basis of ourexamination of the conveyance deeds provided to us we report that the title deedscomprising of the immovable properties of land and building which are free hold are heldin the name of the company as at the balance sheet date except the following propertieswhose title have not been conveyed in the name of the company having total carrying valueof Rs. 91150/- as at 31stMarch 2020.

Sr. No. Description of Property Status of Ownership Carrying value (Rs.)
1 Agriculture Land Situated at Village Lakpath Dist. Bhuj in the state of Gujarat In the subject land no agreement entered with the company. However unregistered Irrevocable Power of attorney is in the name of Mr. Pawankumar Agrawal on behalf of the company. The titles have not been conveyed in the name of thecompany. 91150/-

(ii) Inventories

As explained to us the company has conducted physical verification at reasonableintervals in respect of inventory. In our opinion the frequency of such verification isreasonable. In our opinion and according to the information and explanations given to usthe discrepancies noticed on such verification which were not material have beenproperly dealt with in the books of account.

(iii) According to the information and explanations given to us the Company has notgranted any loans secured or unsecured to Companies firms Limited LiabilityPartnerships or other parties covered in the register maintained under section 189 of theAct and hence provisions of Clause 3(iii) of the aforesaid Order are not applicable to theCompany.

(iv) According to information and explanation given to us the Company had givencorporate guarantee of Rs. 318.00 Crore for credit facilities availed by its group companynamely Fairdeal Supplies Limited from bank.

(v) According to the information and explanations given to us the company has notaccepted any deposits from the public within the meaning of section 73 to 76 of the actand Rules framed there under to the extend notified. Accordingly the Paragraph 3(v) ofthe Order is not applicable to the Company.

(vi) To the best of our knowledge and based on the information and explanation given tous the provision of maintenance of cost records under sub-section (1) of section 148(1)of the Act is not applicable to the company.

(vii) In our opinion and according to information and explanation given to us and onthe basis of our examination of records of the Company the company is generally regularin depositing undisputed statutory dues including Provident fund Employee's stateinsurance Income Tax Sales Tax Service Tax Duty of customs Duty of Excise Valueadded tax entry tax cess and other material statutory dues with the appropriateauthorities though there has been a slight delay in few cases with regards to value addedtax entry tax service tax Goods and Service tax and income tax(tax deducted atsource).

According to the information and explanation given to us no undisputed amount payablein respect of Provident fund Employee's state insurance Income Tax Sales Tax ServiceTax Duty of customs Duty of Excise Value added tax entry tax cess and other materialstatutory dues were in arrears of statutory dues as at 31st March 2020 exceptas under mentioned were outstanding for a period of more than 6 Months from the date theybecomes payable.

Nature of Dues Amount (Rs.)
Service Tax 22928.37/-

(viii) According to the information and explanation given to us and as per the recordsof the Company examined by us the Company has defaulted in repayment of due to bank /financial institutions and banks. Details are given below:

Name of lending Financial Institute and Nature of Account Amount of Default in repayment Period of Default Remarks
Punjab & Sind Bank - Packing Credit Rs. 200000000 01-04-2012 to 31-03-2020 Exclusive of interest up to 31.03.2020. Loan recalled on 31.03.2012
Punjab & Sind bank - CCPH 000315 Rs. 150333129 01-04-2012 to 31.03.2020 Exclusive of interest up to31.03.2020. Loan recalled on 31.03.2012

The Company has not issued any debentures.

(ix) According to information and explanation given to us the Company has not raisedmoney by way of initial public offer or further public offer (including debt instruments).In our opinion and According to information and explanation given to us on an overallbasis the term loans were applied by the company during the year for the purposes forwhich those were obtained.

(x) During the course of our examination of the books and records of the Companycarried out in accordance with the generally accepted auditing practices in India andaccording to the information and explanations given to us we have neither come across anyinstance of material fraud by the Company or on the Company by its officers or employeesnoticed or reported during the year nor have we been informed of any such case by themanagement.

(xi) According to the information and explanations give to us and based on ourexamination of the records of the Company the Company has not paid / provided formanagerial remuneration during the financial year. Accordingly the Paragraph 3(xi) of theorder is not applicable to the Company.

(xii) According to the information and explanations give to us the Company is not aNidhi Company. Accordingly the Paragraph 3(xii) of the Order is not applicable to theCompany.

(xiii) According to the information and explanations give to us The Company hasentered into the transaction with the related parties in compliance with the provisions ofthe Section 177 and 188 of the Act where applicable and the relevant details have beendisclosed in the standalone IndAS financial statements as required under applicableAccounting standard specified under Section 133 of the Act read with Rule 7 of theCompanies (Accounts) Rules 2014 as applicable by the applicable Indian AccountingStandards.

(xiv) According to the information and explanations give to us the Company has notmade any preferential allotment or private placement of shares or fully or partlyconvertible debentures during the year under review and hence provisions of the paragraph3(xiv) of the Order is not applicable to the Company.

(xv) According to the information and explanations give to us the Company has notentered into any non-cash transactions with its directors or the persons connected withhim during the year and hence provisions of paragraph 3(xv)of the Order is not applicableto the Company.

(xvi) According to the information and explanations give to us the Company is notrequired to be registered Section 45-IA of the Reserve Bank of India Act 1934 and henceprovisions of paragraph 3(xvi) of the Order is not applicable to the Company.

For S M Pansuriya & Co.
Chartered Accountants
Firm Reg. No. 126729W
Sd/-
Snehal Pansuriya
Proprietor
Membership No. - 121039
Place: Ahmedabad
Date: 30th July 2020
UDIN:20121039AAAAAW923

ANNEXURE - B to the Independent Auditor's Report of even date on the StandaloneFinancial Statement of M/s FRONTLINE CORPORATIONLIMITED.

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 FRONTLINECORPORATION LIMITED ('the Company') as of 31st March 2020 in conjunction withour audit of the standalone IndAs financial statements of the Company for the year endedon 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 Reporting (TheGuidance Note) issued by the Institute of Chartered Accountants of India (ICAI). Theseresponsibilities include the design implementation and maintenance of adequate internalfinancial controls that were operating effectively for ensuring the orderly and efficientconduct of its business including adherence to company's policies the safeguarding ofits assets the prevention and detection of frauds and errors the accuracy andcompleteness of the accounting records and the timely preparation of reliable financialinformation as required under the Companies Act 2013 (the "Act").

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 and the Standards on Auditing issued by ICAI and deemed to beprescribed under section 143(10) of the Companies Act 2013 to the extent applicable toan audit of internal financial controls both applicable to an audit of Internal FinancialControls and both issued by the Institute of Chartered Accountants of India. 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 standalone Ind AS financial statements whether due to fraudor 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:

(1) pertain to the maintenance of records that in reasonable detail accuratelyand fairly reflect the transactions and dispositions of the assets of the Company;

(2) provide reasonable assurance that transactions are recorded as necessary topermit preparation of financial statements in accordance with generally acceptedaccounting principles and that receipts and expenditures of the company are being madeonly in accordance with authorizations of management and directors of the company; and

(3) Provide reasonable assurance regarding prevention or timely detection ofunauthorized 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 according to the information and explanations given to us and based onour audit the following material weaknesses have been identified as at 31stMarch 2020:

Qualified Opinion

a) The company did not have internal control system for loans and Guarantee with regardto identification and assessment of credit worthiness. Further the internal control systemregarding measures adopted for recovery is not adequate. These could potentially result inmaterial misstatements in company's net worth and loans balances.

In our opinion because of the effect of the material weaknesses described above on theachievement of the objectives of the control criteria the company has not maintainedadequate and effective internal financial control over financial reporting as of March 312020.

We have considered the material weaknesses identified and reported above in determiningthe nature timing and extent of audit tests applied in our audit of the March 31 2020financial statement of the company and these material weaknesses have affected ouropinion on the financial statement of the company and we have issued qualified opinion onthe financial statements.

For S M Pansuriya & Co.
Chartered Accountants
Firm Reg. No.126729W
Sd/-
Snehal Pansuriya
Proprietor
Place: Ahmedabad Date: Membership No. - 121039
30th July 2020
UDIN: 20121039AAAAAW9231

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