The Members of Genera Agri Corp Limited.
Report on the Audit of the Standalone Financial Statements
We have audited the standalone financial statements of Genera Agri Corp Limited("the Company") which comprise the Standalone Balance Sheet as at 31 March2020 and the Standalone Statement of Profit and Loss (including other comprehensiveincome) the statement of Changes in Equity and the statement of Cash flows for the yearended on that date and a summary of the significant accounting policies and otherExplanatory information ( herein after referred to as " the stand alone financialstatements").
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 manner so required and give a trueand fair view in conformity with the accounting Standards prescribed under section 133 ofthe act read with the companies ( Indian Accounting Standard s ) Rules 2015 as amended ("Ind AS") and other accounting principles generally accepted in India of thestate of affairs of the Company as at 31 March 2020 and profit and other comprehensiveincome changes in equity and its cash flows for the year ended on that date.
Basis for Qualified Opinion
Facts of the case:
(i) The company had advanced certain amounts as Inter-Corporate loans totaling Rs.1037.35 lakhs which are outstanding since long time. In our opinion Company's effortsin recovering the same are not fully yielding desired results. The management is yet toassess the change in risk of default and resultant expected credit loss allowance on suchloans and advances. Had the aforesaid assets been provided for impairment loss after taxfor the quarter ended on September 30 2019 would have been higher by Rs.1 037.35 lakhsand other equity would have been lower by Rs. 1037.35 lakhs.
(ii) The company had given advances for land totalling Rs. 641.11 lakhs which areoutstanding since long time. Considering the fact that these are outstanding since longtime and Company's efforts in recovering the same are not fully yielding desired results.The possible loss on account of this has not been recognized in the financial statements.
According to the management it is not possible to estimate the losses and consequentlyquantify the amount of provision required in the above cases.
Had the company estimated and provided for the losses as mentioned (i) to (ii) abovethe profit stated in the statement of Profit and Loss would have been lower by suchamount; the amount of other non- current assets in the Balance Sheet would have been lowerby the amount of provision with respect to item mentioned in paragraph (i) above; theamount of Long-term loans and advances in the Balance Sheet would have been lower by theamount of provision with respect to item mentioned in paragraph (ii) above.
We conducted our audit of standalone financial statements in accordance with theStandards on Auditing (SAs) specified under Section 143(10) of the Act.
Our responsibilities under those SAs are further described in the Auditor'sResponsibilities for the Audit of the Standalone Financial Statements section of ourreport. We are independent of the Company in accordance with the Code of Ethics issued bythe Institute of Chartered Accountants of India together with the ethical requirementsthat are relevant to our audit of the standalone financial statements under the provisionsof the Act and the Rules there under and we have fulfilled our other ethicalresponsibilities in accordance with these requirements and the Code of Ethics. We believethat the audit evidence we have obtained is sufficient and appropriate to provide a basisfor our audit opinion on the standalone financial statements.
Key Audit Matters
Key audit matters (KAM') are those matters that in our professional judgmentwere of most significance in our audit of the standalone financial statements of thecurrent period. These matters were addressed in the context of our audit of the standalonefinancial statements as a whole and in forming our opinion thereon and we do not providea separate opinion on these matters.
We have determined the Matter Described below to be the key audit matters Communicatedin Our report. We have fulfilled the responsibilities described in the auditor'sresponsibilities for the audit of standalone Ind As financial statements financialstatements section of our reports including in relation to these matters. Accordingly ouraudit include the performance of procedures designed to respond to our assessment of risksof material mis statement of standalone Ind AS financial Statements the results of ouraudit Procedures including the procedures prescribed to address the matters belowprovide the basis for our audit opinion on the accompanying standalone Ind AS Financialstatements.
|Key Audit Matters ||How Our Audit Addressed the Key Audit matter |
|Identification and disclosures of Related Parties ||Our Audit procedures amongst others included the following |
|1. The Company has related party transactions which include amongst others sale and purchase of Goods/services to its subsidiaries associates joint ventures and other related parties and lending and borrowing to its subsidiaries associates and joint ventures . ||1. Evaluated the design and tested the operating effectiveness of controls over identification and disclosure of related Party Transactions. |
|2. We focused on identification and disclosure of related parties in accordance with relevant accounting standards as key audit matter. ||2. Obtained a list of related parties from the companies' management and traced the related parties to declaration given by the directors where applicable and to Note 2.4 of the standalone Ind AS financial statements . |
| ||3. Read minutes of the Meeting of the Board of Directors and Audit Committee. |
| ||4. Tested material creditors/debtors loan outstanding / loans taken to evaluate existence of any related Party transactions given to the Board of Directors and audit committee. |
| ||5. Evaluated the disclosures in the standalone Ind As financial Statements for compliance with Ind AS 24. |
Information other than the Standalone Financial Statements and Auditor's Reportthereon.
The Company's management and Board of Directors are responsible for the otherinformation. The other information comprises the information included in the managementDiscussion and Analysis. Board's report including Annexures to the Board's Report BusinessResponsibility Report Corporate Governance and Shareholders' Information but does notinclude the standalone financial statements and our auditors' report thereon.
Our opinion on the standalone financial statements does not cover the other informationand we do not express any form of assurance conclusion thereon.
In connection with our audit of the standalone financial statements our responsibilityis to read the other information and in doing so consider whether the other informationis materially inconsistent with the standalone financial statements or our knowledgeobtained in the 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 that fact. We have nothing to report in this regard.
Management's and Board of Directors' Responsibility for the Standalone FinancialStatements
The Company's management and Board of Directors are responsible for the matters statedin section 134(5) of the Act with respect to the preparation of these standalone financialstatements that give a true and fair view of the state of affairs profit/loss (includingother comprehensive income) changes in equity and cash flows of the Company in accordancewith the accounting principles generally accepted in India including the IndianAccounting Standards (Ind AS) specified under section 133 of the Act. This responsibilityalso includes maintenance of adequate accounting records in accordance with the provisionsof the 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 were operatingeffectively for ensuring the accuracy and completeness of the accounting records relevantto the preparation and presentation of the standalone financial statements that give atrue and fair view and are free from material misstatement whether due to fraud or error.
In preparing the standalone financial statements management and Board of Directors areresponsible for assessing the Company's ability to continue as a going concerndisclosing as applicable matters related to going concern and using the going concernbasis of accounting unless management and the Board of Directors either intend toliquidate the Company or to cease operations or has no realistic alternative but to doso.
The Board of Directors is also responsible for overseeing the Company's financialreporting process
Auditor's Responsibilities for the Audit of the 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 scepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of the 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 control relevant to the audit in order to designaudit procedures that are appropriate in the circumstances. Under section 143(3)(I) of theAct we are also responsible for expressing our opinion on whether the Company has inplace adequate internal financial controls with reference to standalone financialstatements and the operating effectiveness of such controls.
Evaluate the appropriateness of accounting policies used and the reasonableness ofaccounting estimates and related disclosures made by management and Board of Directors inthe standalone financial statements.
Conclude on the appropriateness of management's and Board of Director's use of thegoing concern basis of accounting and based on the audit evidence obtained whether amaterial uncertainty exists related to events or conditions that may cast significantdoubt on the Company's ability to continue as a going concern. If we conclude that amaterial uncertainty exists we are required to draw attention in our auditor's report tothe related disclosures in the standalone financial statements or if such disclosures areinadequate to modify our opinion. Our conclusions are based on the audit evidenceobtained up to the date of our auditor's report. However future events or conditions maycause the Company to cease to continue 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.
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 standalone financial statementsof the current period and are therefore the key audit matters. We describe these mattersin our auditors' 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 of such communication.
Report on Other Legal and Regulatory Requirements
1. 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 standalone balance sheet the standalone statement of profit and loss (includingother comprehensive income) the standalone statement of changes in equity and thestandalone statement of cash flows dealt with by this Report are in agreement with thebooks of account.
(d)In our opinion the aforesaid standalone financial statements comply with the Ind ASspecified under section 133 of the Act.
(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 the Act. (f)With respect to the adequacy of the internal financial controls withreference to standalone financial statements of the Company and the operatingeffectiveness of such controls refer to our separate Report in "Annexure B"(g)With respect to the other matters to be included in the Auditors 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 provisions ofsection 197 of the Act.
(h) With respect to the other matters to be included in the Auditors' Report inaccordance with Rule 11 of the
Companies (Audit and Auditors) Rules 2014 in our opinion and to the best of ourinformation and according to the explanations given to us:
i.The Company has disclosed the pending litigations on its financial position in itsstandalone financial statements in Note No 2.2
ii.The Company has made provisions as required under the applicable law or or Ind Asor accounting standards for material foreseeable losses if any on long-term contracts.
iii.There were no amounts which were required to be transferred to the InvestorEducation and Protection Fund by the Company. iv.The disclosures in the standalonefinancial statements regarding holdings as well as dealings in specified bank notes duringthe period from 8 November 2016 to 30 December 2016 have not been made in these standalonefinancial statements since they do not pertain to the financial year ended 31 March 2020.
2.As required by the Companies (Auditor's Report) Order 2016("the Order ")issued by the central Government in terms of Section 143 (11) of the Act we give inAnnexure A" a statement on the Matters Specified In Paragraphs 3 and 4 of the Order.
For N G Rao & Associates
Firm Registration No: 009399S
(G Nageswara Rao)
Membership No: 207300
Annexure A to the Independent Auditors' Report
With reference to the Annexure A referred to in the Independent Auditors' Report to themembers of the Company on the standalone financial statements for the year ended 31 March2020 we report the following:
1.(a) The Company has not maintained proper records showing full particulars includingquantitative details and situation of property plant and equipment.
(b) The title deeds of the immovable Property are held in the name of the company.
(c) The Company has a regular programme of physical verification of its property plantand equipment by which all property plant and equipment are verified in a phased mannerover a period of three years. In our opinion this periodicity of physical verification isreasonable having regard to the size of the Company and the nature of its assets. Pursuantto the programme certain property plant and equipment were physically verified duringthe year and no material discrepancies were noticed on such verification.
2. As informed by the company the physical verification of inventory excluding Stockwith third parties has been conducted at reasonable intervals by the management. Howeverthe physical verification report has not been shared with us.
3. 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. Accordingly the provisions of paragraph 3(iii) (a) (b) and (c) of the Order are notapplicable to the Company
4. In our opinion and according to the information and explanations given to us theCompany has complied with the provisions of section 185 and 186 of the act in respect ofgrant of loans making investments and providing guarantees and securities as applicable.
5. The Company has not accepted any deposits from the public within the meaning of thedirectives issued by the Reserve Bank of India provisions of sections 73 to 76 of theAct any other relevant provisions of the Act and the relevant rules framed there under.
6. The central government has not prescribed the maintenance of cost records undersection 148(1) of the act for any of the services rendered by the company .
7. According to the information and explanations given to us and on the basis of ourexamination of the books of account and records the company has not been regular indepositing undisputed statutory dues including Provident Fund Employees State InsuranceIncome-Tax Sales tax Semce Tax Duty of customs Duty of Excise value added tax. cessand any other statutory dues with the appropriate authorities.
According ro the information and explanations given to us undisputed amounts payablein respect of the above were income tax pertaining to the financial year ended 31 March2012 amounting to 463 Lakhs and income tax pertaining to the financial year ended 3lMarch 13 amounting to 2.66 Lakhs were in arrears as at March 31 2018 for a period ofmore than six months from the date on when they become payable.
According to the information and explanation given to us. Following are the due amountspertaining to the Income Tax which have not been deposited on account of dispute for whichappeals are pending before the Hon'ble Income Tax Appellate Tribunal.
|Sl. No Assessment year ||Tax Demand against which appeal was preferred ( All Rs in lakhs) |
|1 2007-08 ||52.49 |
|2 2008-09 ||32.14 |
|3 2009-10 ||240.55 |
|4 2010-11 ||1138.02 |
|5 2011-12 ||652.08 |
|6 2012-13 ||935.29 |
|7 2013-14 ||408.41 |
8. In our opinion and according to the information and explanations given to us theCompany has not defaulted in the repayment of loans or borrowings to banks. There are nodues to debenture holders during the year.
9. In our opinion and according to the information and explanations given to us theCompany did not raise any money by way of initial public offer or further public offer(including debt instruments) and term loans during the year. Accordingly paragraph 3(ix)of the Order is not applicable to the Company.
10. To the best of our knowledge and according to the information and explanationsgiven to us no material fraud by the Company or on the Company by its officers oremployees has been noticed or reported during the course of our audit.
11. In our opinion and according to the information and explanations given to us andbased on examination of the records of the Company the Company has paid/providedmanagerial remuneration in accordance with the requisite approvals mandated by theprovisions of section 197 read with Schedule V to the Act.
12. According to the information and explanations given to us in our opinion theCompany is not a Nidhi Company as prescribed under section 406 of the Act. Accordinglyparagraph 3(xii) of the Order is not applicable to the Company.
13. According to the information and explanations given to us and based on ourexamination of the records of the
Company all transactions with the related parties are in compliance with sections 177and 188 of the Act where applicable and details of such transactions have been disclosedin the standalone financial statements as required by the applicable accounting standards.
14. According to the information and explanations give to us based on our examinationof the records of company the company has not made any preferential allotment or privateplacement of shares or fully or partly convertible debentures during the year.
15. 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-cash transactions with directors orpersons connected with him. Accordingly paragraph 3(xv) of the Order is not applicable tothe Company.
16. According to the information and explanations given to us the Company is notrequired to be registered under section 45-IA of the Reserve Bank of India Act 1934.
For N G Rao & Associates Chartered Accountants
G. Nageswara Rao Partner
Membership No. 207300 UDIN: 20207300AAAARV2954
Place: Hyderabad. Date: 06.11.2020.
Annexure B to the Independent Auditors' report of event of event date on the financialstatement of Genera Agri Corp Limited.
Report on the internal financial controls with reference to the aforesaid standalonefinancial statements under Clause (i) of Sub-section 3 of Section 143 of the CompaniesAct 2013 ( "the Act")
(Referred to in paragraph 1(A)(f) under Report on Other Legal and RegulatoryRequirements' section of our report of even date)
We have audited the internal financial controls with reference to standalone financialstatements of Genera Agri Corp Limited ("the Company") as of 31 March 2020 inconjunction with our audit of the standalone financial statements of the Company for theyear then ended.
In our opinion the Company has in all material respects adequate internal financialcontrols with reference to standalone financial statements and such internal financialcontrols were operating effectively as at 31 March 2020 based on the internal financialcontrols with reference to standalone financial statements criteria established by theCompany considering the essential components of internal control stated in the GuidanceNote on Audit of Internal Financial Controls Over Financial Reporting issued by theInstitute of Chartered Accountants of India (the "Guidance Note").
Management's Responsibility for Internal Financial Controls
The Company's management and the Board of Directors are responsible for establishingand maintaining internal financial controls based on the internal financial controls withreference to standalone financial statements criteria established by the Companyconsidering the essential components of internal control stated in the Guidance Note.These responsibilities include the design implementation and maintenance of adequateinternal financial controls that were operating effectively for ensuring the orderly andefficient conduct of its business including adherence to the Company's policies thesafeguarding of its assets the prevention and detection of frauds and errors theaccuracy and completeness of the accounting records and the timely preparation ofreliable financial information as required under the Companies Act 2013 (hereinafterreferred to as "the Act").
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 Auditingprescribed under section 143(10) of the Act to the extent applicable to an audit ofinternal financial controls with reference to standalone financial statements. 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 with reference to standalone financial statements were established andmaintained and whether such controls operated effectively in all material respects.
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 controls assessing the risk that a material weakness exists and testing andevaluating the design and operating effectiveness of internal control based on theassessed risk. The procedures selected depend on the auditor's judgement including theassessment of the risks of material misstatement of the standalone financial statementswhether due to fraud or error. Our audit of internal financial controls with reference tostandalone financial statements included obtaining an understanding of such internalfinancial controls assessing the risk that a material weakness exists and testing andevaluating the design and operating effectiveness of internal control based on theassessed risk. The procedures selected depend on the auditor's judgement including theassessment of the risks of material misstatement of the standalone financial statementswhether 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 controls with reference to standalone financialstatements is a process designed to provide reasonable assurance regarding the reliabilityof financial reporting and the preparation of standalone financial statements for externalpurposes in accordance with generally accepted accounting principles. A company's internalfinancial controls with reference to standalone financial statements include thosepolicies and procedures that
(1) pertains to the maintenance of records that in reasonable detail accurately andfairly reflect the transactions and dispositions of the assets of the company; (2) providereasonable assurance that transactions are recorded as necessary to permit preparation ofstandalone financial statements in accordance with generally accepted accountingprinciples and that receipts and expenditures of the company are being made only inaccordance with authorisations of management and directors of the company; and (3) providereasonable assurance regarding prevention or timely detection of unauthorised acquisitionuse or disposition of the company's assets that could have a material effect on thestandalone financial statements.
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.
In Our Opinion The Company has in all material aspects adequate internal financialcontrols System over financial reporting and such internal financial controls overfinancial reporting were operating effectively as at March 31 2020 based on the internalcontrol over financial reporting criteria established by the company considering theessential components of internal stated in the Guidance note on Audit of internalFinancial controls Over Financial Reporting issued by the Institute of CharteredAccountant of India.
For N G Rao & Associates. Chartered Accountants
(G. Nageswara Rao) Partner