TO THE MEMBERS OF James Warren Tea Limited
REPORT ON THE STANDALONE IND AS FINANCIAL STATEMENTS
We have audited the accompanying standalone financial statements of JAMES WARREN TEALIMITED ('the Company') which comprise the Balance Sheet as at 31st March 2019 theStatement of Profit and Loss (including Other Comprehensive Income) the Cash FlowStatement and the Statement of Changes in Equity for the year then ended and a summary ofthe significant accounting policies and other explanatory information.
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 true and fairview in conformity with the accounting principles generally accepted in India includingIndian Accounting Standards ('Ind AS') prescribed under section 133 of the Act read withthe Companies (Indian Accounting Standards) Rules 2015 as amended ("Ind AS")of the state of affairs of the Company as at 31st March 2019 its profit including othercomprehensive income its cash flows and the statement of changes in equity for the yearended on that date.
Basis for Opinion
We conducted our audit in accordance with the Standards on Auditing specified undersection 143(10) of the Act. Our responsibilities under those standards are furtherdescribed in the Auditor's Responsibilities for the Audit of the Standalone FinancialStatements section of our report. We are independent of the Company in accordance with theCode of Ethics issued by the Institute of Chartered Accountants of India ('ICAI') togetherwith the ethical requirements that are relevant to our audit of the standalone financialstatements under the provisions of the Act and the rules thereunder and we have fulfilledour other ethical responsibilities in accordance with these requirements and the Code ofEthics. We believe that the audit evidence we have obtained is sufficient and appropriateto provide a basis for our audit opinion on the standalone financial statements.
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 financial statements as awhole and in forming our opinion thereon and we do not provide a separate opinion onthese matters.
|SL No. ||Key Audit Matters ||Auditor's Response |
|1. ||Valuation of biological assets and agricultural produce ||Principal audit procedures performed: Our audit approach was a combination of test of internal controls and substantive procedures including: |
| ||Biological assets of the Company include unharvested green tea leaves which are measured at fair value less costs to sell. || |
| ||The Company's agricultural produce comprises of harvested green leaves and is valued at fair value less cost to sell at the point of harvest. || |
| ||Finished goods produced from agricultural produce are valued at lower of cost arrived at by adding the cost of conversion to the fair value of agricultural produce and the net realisable value. || Obtaining an understanding of the fair value measurement methodologies used and assessing the reasonableness and consistency of the significant assumptions used in the valuation. |
| ||For harvested or unharvested green leaves since there is no active market for own leaves significant estimates are used by management in determining the valuation of biological assets and agricultural produce consumed in manufacture of black tea and therefore has been considered as a key audit matter. || Evaluating the procedures and implementation of Company's controls around the valuation of biological assets and harvested produce. |
| || || Assessing the plucking yields to analyse the fair valuation of biological assets. |
| ||The principal assumptions and estimates in the determination of the fair value include assumptions about the yields and market prices of green leaf and the stage of transformation. The determination of these assumptions and estimates require careful evaluation by management and could lead to material impact on the financial position and the results of the Company. Refer note no 1.2 and 1.16 to the financial statement. || Assessing the basis reasonableness and accuracy of adjustments made to market prices of green leaves considering the quality differential of the Company's production. |
| || || Verifying the consistency of application of the fair value approaches and models over the years. |
Information other than the Standalone Financial Statements and Auditor's Report thereon
The Company's Board of Directors is responsible for the other information. The otherinformation comprises the information included in the Annual Report but does not includethe standalone financial statements and our auditor's 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 financial statements our responsibility is to readthe other information and in doing so consider whether the other information ismaterially inconsistent with the financial statements or our knowledge obtained in theaudit or otherwise appears to be materially misstated. If based on the work we haveperformed we conclude that there is a material misstatement of this other information weare required to report that fact. We have nothing to report in this regard.
Responsibilities of Management for the Standalone Financial Statements
The Company's Board of Directors is responsible for the matters stated in section134(5) of the Act with respect to the preparation of these standalone financial statementsthat give a true and fair view of the state of affairs profit including othercomprehensive income changes in equity and cash flows of the Company in accordance withthe accounting principles generally accepted in India including the Ind AS specifiedunder section 133 of the Act. This responsibility also includes maintenance of adequateaccounting records in accordance with the provisions of the Act for safeguarding of theassets of the Company and for preventing and detecting frauds and other irregularities;selection and application of appropriate accounting policies; making judgments andestimates that are reasonable and prudent; and design implementation and maintenance ofadequate internal financial controls that were operating effectively for ensuring theaccuracy and completeness of the accounting records relevant to the preparation andpresentation of the standalone financial statements that give a true and fair view and arefree from material misstatement whether due 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.
Those Board of Directors are 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 Standards on Auditing will always detect a material misstatement when it exists.Misstatements can arise from fraud or error and are considered material if individuallyor in the aggregate they could reasonably be expected to influence the economic decisionsof users taken on the basis of these standalone financial statements.
As part of an audit in accordance with Standards on Auditing we exercise professionaljudgment and maintain professional skepticism 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 financial controls relevant to the audit inorder to 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 reasonablenessof accounting estimates and related disclosures made by management.
Conclude on the appropriateness of management's use of the going concern basisof accounting 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 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 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.
The financial statements of the Company for the year ended 31st March 2018 wereaudited by the predecessor auditor Singh & Co. who have expressed an opinion onthose financial statements vide their audit report dated 17th May. 2018.
Report on Other Legal and Regulatory Requirements
As required by the Companies (Auditor's Report) Order 2016 ('the Order') issued by theCentral Government of India in terms of section 143(11) of the Act we give in theAnnexure A a statement on the matters specified in paragraphs 3 and 4 of the Order.
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 purpose 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 financial statements dealt with by this report are in agreement withthe books ofaccount;
d. in our opinion the aforesaid standalone financial statements comply with the IndianAccounting Standards specified under Section 133 of the Act read with relevant rule issuedthereunder;
e. on the basis of the written representations received from the directors as on 31stMarch 2019 and taken on record by the Board of Directors none of the directors aredisqualified as on 31st March 2019 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 over financialreporting (IFCoFR) of the Company and the operating effectiveness of such controls referto our separate report in Annexure 'B'.
g. With respect to the other matters to be included in the Auditor's Report inaccordance with the requirements of section 197(16) of the Act as amended:
In our opinion and to the best of our information and according to the explanationsgiven to us the remuneration paid by the Company to its directors during the year is inaccordance with the provisions of 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 in our opinionand to the best of our information and according to the explanations given to us:
i. the Company does not have any pending litigations other than those disclosed in thefinancial statements; which would materially impact its financial position. Refer note no.35 to the financial statement;
ii. the Company has made provision as required under the applicable laws or Ind ASfor material foreseeable losses if any on long-term contracts including derivativecontracts;
iii. there is no amount required to be transferred to the Investor Education andProtection Fund by the Company.
ANNEXURE-A TO THE AUDITORS REPORT
The Annexure referred to in Independent Auditor's Report of even date to the members ofJAMES WARREN TEA LIMITED on the Standalone financial statements for the year ended 31stMarch 2019 :
Based on the audit procedures performed for the purpose of reporting a true and fairview on the standalone financial statements of the Company and taking into considerationthe information and explanations given to us and the books of account and other recordsexamined by us in the normal course of audit we report that:
(i) (a) The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets.
(b) As planned a part of the fixed assets have been physically verified by themanagement during the year and no material discrepancies were noticed on suchverification. In our opinion the planned frequency of verification of the fixed assets isreasonable having regard to the size of the Company and the nature of its assets.
(c) According to the information and explanations given to us and on the basis of ourexamination of the records of the Company the title deeds of immovable properties areheld in the name of the Company.
(ii) The inventories have been physically verified at reasonable intervals during theyear by the management. In our opinion the frequency of verification is reasonable. Thediscrepancies noticed on verification between the physical stock and the book stockwherever ascertained were not significant and have been properly dealt in the books ofaccounts.
(iii) The Company has not granted any loan secured or unsecured to companies firmsLLP or other parties covered in the register maintained under Section 189 of the Act.Accordingly the provisions of clauses 3(iii) (a)(b) and (c) of the Order are notapplicable.
(iv) According to the information and explanations given to us in our opinion inrespect of loans investment guarantees and security provisions of section 185 and 186of the Act have been complied with by the company.
(v) The Company has not accepted any deposits within the meaning of Sections 73 to 76of the Act and the Companies (Acceptance of Deposits) Rules 2014 (as amended).Accordingly the provisions of clause 3(v) of the Order are not applicable.
(vi) The Central Government has prescribed maintenance of cost records under section148(1) of the Act for the Company. We have broadly reviewed such accounts and records andare of the opinion that prima facie the prescribed accounts & records have been made& maintained but no detailed examination of such records and accounts have beencarried out by us.
(vii) (a) According to the information and explanations given to us and on the basis ofour examination of the records of the Company amounts deducted accrued in the books ofaccount in respect of undisputed statutory dues including provident fund employees stateinsurance income-tax sales-tax service tax duty of customs duty of excise valueadded tax Good and Service Tax cess and other material statutory dues as applicablehave generally been regularly deposited to the appropriate authorities. Further noundisputed amounts payable in respect thereof were outstanding on the year-end for aperiod of more than six months from the date they became payable.
(b) According to the information and explanations given to us the following duesoutstanding in respect of income-tax sales-tax service tax duty of customs duty ofexcise value added tax and cess on account of any dispute are as follows:
|Name of the Statute ||Nature of Dues ||Amount (Rs. In Lakhs) ||Period to which the amount relates ||Forum where dispute is pending |
|Central Sales Tax Act 1956 ||Sales Tax ||45.77 ||1990-91 & 2004-05 ||Hon'ble High Court Guwahati |
|Central Sales Tax Act 1956 ||Sales Tax ||39.96 ||1990-91 1994-95 1995-96 and 1996-97 ||Deputy Commissioner of Taxes (Appeal) Tinsukia (Assam) |
|Central Sales Tax Act (West Bengal) Rules 1958 ||Sales Tax ||7.91 ||2014-15 ||Deputy Commissioner of Taxes (Appeal) Kolkata (West Bengal) |
|Assam Entry Tax Act 2008 ||Entry Tax ||1.35 ||2008-09 ||Deputy Commissioner of Taxes (Appeal) Doom Dooma (Assam) |
|Income Tax Act 1961 ||Income Tax ||82.65 ||A.Y. 2012-13 ||Commissioner of Income Tax (Appeals) |
|Income Tax Act 1961 ||Income Tax ||36.52 ||A.Y. 2013-14 ||Income Tax Appellate Tribunal |
(viii) According to the records of the Company examined by us and the information andexplanation provided to us the company has not availed any term loan from any FinancialInstitution Bank or Government nor has issued any debenture during the year nor isanything outstanding as on the balance sheet date.
(ix) The Company did not raise any money by way of initial public offer or furtherpublic offer (including debt instrument) during the year.
(x) During the course of our examination of the books and records of the Companycarried out in accordance with generally accepted auditing practices in India andaccording to the information and explanations given to us we have neither come across antinstances of fraud by the Company or any fraud on the company by its officer or employeesnoticed or reported during the year nor we have been informed of any such case by themanagement.
(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 for managerialremuneration in accordance with the requisite approvals mandated by the provisions ofsection 197 read with schedule V to the Act.
(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 section 177 and 188 of the Act where applicable and details of suchtransactions have been disclosed in the financial statements as required by the applicableIndian accounting 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.
(xvi) The Company is not required to be registered under section 45-IA of the ReserveBank of India Act 1934.
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")
In conjunction with our audit of the standalone financial statements of JAMES WARRENTEA LIMITED ("the Company") as of and for the year ended 31st March 2019 wehave audited the internal financial controls over financial reporting (IFCoFR) of thecompany as of 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 ICAI. These responsibilities include the design implementation and maintenanceof adequate internal financial controls that were operating effectively for ensuring theorderly and efficient conduct of its business including adherence to company's policiesthe safeguarding 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.
Our responsibility is to express an opinion on the Company's IFCoFR based on our audit.We conducted our audit in accordance with the Guidance note on Audit of Internal FinancialControls over Financial Reporting (the "Guidance Note") and Standards onAuditing issued by the Institute of Chartered Accountants of India (ICAI) and deemed tobe prescribed under section 143(10) of the Companies Act 2013 to the extent applicableto an audit of IFCoFR and the Guidance Note on Audit of Internal Financial Controls OverFinancial Reporting (the "Guidance Note") issued by the ICAI. Those Standardsand the Guidance Note require that we comply with ethical requirements and plan andperform the audit to obtain reasonable assurance about whether adequate IFCoFR 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 IFCoFR and their operating effectiveness. Our audit of IFCoFR included obtaining anunderstanding of IFCoFR assessing the risk that a material weakness exists and testingand evaluating the design and operating effectiveness of internal control based on theassessed risk. The procedures selected depend on the auditor's judgment including theassessment of the risks of material misstatement of the financial statements whether dueto fraud or error.
We believe that the audit evidences we have obtained are sufficient and appropriate toprovide a basis for our audit opinion on the Company's IFCoFR.
Meaning of Internal Financial Controls over Financial Reporting
A company's IFCoFR is a process designed to provide reasonable assurance regarding thereliability of financial reporting and the preparation of standalone financial statementsfor external purposes in accordance with generally accepted accounting principles. Acompany's IFCoFR includes those policies and procedures that (1) pertain to themaintenance of records that in reasonable detail accurately and fairly reflect thetransactions and dispositions of the assets of the company; (2) provide reasonableassurance that transactions are recorded as necessary to permit preparation of financialstatements in accordance with generally accepted accounting principles and that receiptsand expenditures of the company are being made only in accordance with authorizations ofmanagement and directors of the company; and (3) provide reasonable assurance regardingprevention or timely detection of unauthorized acquisition use or disposition of thecompany's assets that could have a material effect on the standalone financial statements.
Inherent Limitations of Internal Financial Controls over Financial Reporting
Because of the inherent limitations of IFCoFR including the possibility of collusionor improper management override of controls material misstatements due to error or fraudmay occur and not be detected. Also projections of any evaluation of the IFCoFR to futureperiods are subject to the risk that IFCoFR may become inadequate because of changes inconditions or that the degree of compliance with the policies or procedures maydeteriorate.
In our opinion the Company has in all material respects adequate internal financialcontrols over financial reporting and such internal financial controls over financialreporting were operating effectively as at 31st March 2019 based the internal controlover financial reporting criteria established by the Company considering the essentialcomponents of internal control stated in the Guidance Note on Audit of Internal FinancialControls Over Financial Reporting issued by ICAI.
| ||For B. Chhawchharia & Co |
| ||Chartered Accountants |
| ||Firm's Registration No.: 305123E |
| ||Sd/- |
| ||S.K. Chhawchharia |
|Place: Kolkata ||Partner |
|Dated the 11th day of May 2019 ||Membership No. 008482 |