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Kohinoor Foods Ltd.

BSE: 512559 Sector: Agri and agri inputs
NSE: KOHINOOR ISIN Code: INE080B01012
BSE 00:00 | 02 Dec 53.85 -0.65
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NSE 00:00 | 02 Dec 53.65 -0.90
(-1.65%)
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OPEN 53.15
PREVIOUS CLOSE 54.50
VOLUME 6038
52-Week high 133.40
52-Week low 7.77
P/E 47.24
Mkt Cap.(Rs cr) 200
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 53.15
CLOSE 54.50
VOLUME 6038
52-Week high 133.40
52-Week low 7.77
P/E 47.24
Mkt Cap.(Rs cr) 200
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Kohinoor Foods Ltd. (KOHINOOR) - Auditors Report

Company auditors report

TO THE MEMBERS OF KOHINOOR FOODS LIMITED

QualifiedOpinion.

We have audited the accompanying Standalone financial statements ofKohinoor Foods Limited ("the Company") which comprise the Standalone BalanceSheet as at March 31st 2022 the Standalone Statement of Profit and Loss (including OtherComprehensive Income) the Standalone Cash Flow Statement and the standalone Statement ofChanges in equity for the year then ended anda summary of the significantaccountingpoliciesandotherexplanatoryinformation.

In our opinion and to the best of our information and according to theexplanations given to us except for the effects/possible effects of the matters describedin paragraph under 'Basis for Qualified Opinion' the aforesaid standalone financialstatements give the information required by the Act in the manner so required and give atrue and fair view in conformity with the accounting principles generally accepted inIndia including the IndAS of the financial position of the Company as at March 31st2022 and its standalone profit/loss including other comprehensive income its standalonecash flows and the changes in equity for the year ended on that date.

Basis for Qualified opinion

1. In reference to Note No. 41 in the statement discloses themanagement's assessment ofthe company's ability to continue as going concern. Themanagement's assessment of going concern is based on the OTS by the lead bank PNB and theinterest shown by prospective investors in the company. However in view of default inre-payment of borrowings continuous losses negative cash flows and negative net worthand due to financial constraints material uncertainty exists about the company's abilityto continue as going concern and the decision of the management of the company to preparethe accounts ofthe company on going concern basis. There may arise a need to adjust therealizable value of assets and liabilities in the event of failure of assumption as togoing concern.

2. As stated in Note No.27 of StandaloneAudited Financial Results Lossofthe company is understated by Rs.10588 lakhs (approx.) due to non-provisioning ofinterest on bank loans for the period from 01/04/2021 to 31/03/2022 and Rs.34079 lakhs(approx.) from the date on which the account of the company was classified as NPA to theperiod covered under audit due to non-provisioning of interest on bank loans after theaccounts ofthe company were classified as NPA. Further no provision has been made towardspenal interest any other penalty etc. as may be charged by lenders. In the absence ofcomplete statement of account from the bank the above amount has been arrived as percalculation made by the company. With the limited information the aggregate amountun-provided in books of account of the company is not ascertainable with accuracy.

Emphasis of Matters

We drawyour attention tothe following matters in theNotes tothefinancial statements:

(1) The company has not made Provision for the demand raised by variousauthorities (Such as Income Tax Vat etc.) as the matters are pending before variousappellate forums. We are unable to comment upon possible impact of non-provision in thestandalone financial statement for the yearended 31st March 2022.

(2) We draw attention to Note No. 16 of the statement of the companythat the lead consortium bank Punjab National Bank "erstwhile known as Oriental Bankof Commerce" has filed an application against company under section 7 of theInsolvency and Bankruptcy code 2016 before National company LawTribunal (NCLT) Chandigarhbench and the matter is adjourned to 06thOct 2022.

(3) With reference to Note no. 16 against amount payable to Bankmanagement has raised certain disputes towards overcharging of Interest. As on datecompany has paid INR 40.09 crores to banks in the no-lien account the said amount hasbeen netted offin thetotal outstanding of Loan repayable on Demand from Banks.

(4) In reference to Note No.47 balances of some debtors and creditorsare subject to theirconfirmations.

(5) In reference to Note no. 30 during the period company has taken theNet impact of Creditors/Debtors balance written off amounting to INR 21.93 Lacs.

(6) In reference to Note no. 38(viii) the amount of cases filedagainst the company includes INR 117 lakhs in respect of M/s.

Regal Kitchen Foods Limited who has filed a petition towards allegedoutstanding against which company is in process of filing its counter claim towards thefinancial losses. Furthermore Company has booked income towards the financial losses ofRs. 387 Lakhs which is to be recoverable from M/s. Regal Kitchen Foods Limited. Case isfiled in District and Session court Faridabad and the Hon'ble court has provided the nextdate ofhearing on 09thSeptember2022.

(7) Note no. 16 of the Balance Sheet stating that the company hasreceived Ex-parte Interim Order dated 25-06-2020 from Debt Recovery Tribunal-III Delhi inthe matter of ICICI Bank Vs. Kohinoor Foods Limited restraining the company fromtransferring/alienating or otherwise dealing with or disposing off or encumbering orcreating any third-party interest with respect of the hypothecated assets/immovableproperties of Company until further orders. In response the company is contesting thematter and has filed its reply before DRT-III Delhi wherein DRT had fixed the next dateofhearing on 31st August 2022.

(8) In reference to Note no. 49 of the Balance Sheet which explains themanagement's assessment of impairment of assets due to COVID 19 pandemic situations. Asper the assessment of the management the recoverable amount of assets is higher than itcarrying value and hence no impairment ofassets needs to be recorded in the financialstatements.

(9) In reference to note no. 28 to the standalone Ind AS financialstatement which explain management's assessment of impairment of assets due to Covid-19pandemic situation. As per assessment of the management the recoverable amount ofassetsis higher than its carrying value and hence no impairment ofassets need to be recorded inthe financial statement except in previous year company recognize the Impairment loss dueto sale of its U.K. based Subsidiary but professional fees with Legal consultancy firm isadjusted out of the remittance due to company in the current year itself by Mills &Reeve (U.K. based Law Firm) amounted to Rs. 185 lacs (with foreign exchange impact on theamount held by the law firm as a security against possible claims in U.K.) is taken intoImpairment loss in current year Profit and Loss Account.

Ouropinion is not modified in respectof these matters.

KeyAudit Matters.

Key audit matters are those matters that in our professional judgmentwere of most significance in our audit of the 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. In addition the matters described in the "basisforqualifiedopinion" and "emphasis of matter" paragraph are bytheir nature are keyaudit matters.

Responsibility of Management's and Those Charged with Governance forthe Standalone Financial Statements

The Company's Board of Directors is responsible for the matters statedin Section 134 (5) of the Companies Act 2013 ("the Act") with respect to thepreparation of these standalone Ind AS financial statements that give a true and fair viewof the financial position financial performance including other comprehensive incomecash flows and changes in equity of the Company in accordance with the Indian AccountingStandards (Ind AS) prescribed under section 133 of the Act read with the Companies (IndianAccounting Standards) Rules 2015 as amended and other accounting principles generallyaccepted in India. This responsibility also includes maintenance of adequate accountingrecords in accordance with the provisions of the Act for safeguarding the assets of theCompany and for preventing and detecting frauds and other irregularities; selection andapplication of appropriate implementation and maintenance of accounting policies; makingjudgments and estimates that are reasonable and prudent; and design implementation andmaintenance of adequate internal financial controls that were operating effectively forensuring the accuracy and completeness of the accounting records relevant to thepreparation and presentation of the Ind AS financial statements that give a true and fairview and are free from material misstatement whether dueto fraud orerror.

In preparing the financial statement management is responsible forassessing the company's ability to continue as a going concern disclosing asapplication matters related to going concern and using the going concern basis ofaccounting unless management either intends to liquidate the company orto ceaseoperations or has no realistic alternative but to do so.

Thus board of directors arealsoresponsible for overseeing the company'sfinancial reporting process.

Auditor's Responsibility

Our objectives are to obtain reasonable assurance about whether thefinancial statements as a whole are free from material misstatement whetherdue 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 financial statements.

Report on other Legal and Regulatory Requirements

1. As required by the Companies(Auditor's Report) Order2016 issued bythe Central Government of India in terms of subsection (11) of section 143 of the Act wegive in theAnnexureA a statement on the matters specified in the paragraph 3and4oftheOrder.

2. As required by Section 143(3) oftheAct; we report that:

a) We have sought and obtained all the information and explanationswhich to the best of our knowledge and belief were necessaryforthe purposesofouraudit;except as stated in paraunder the head "BasisforQualified Opinion".

b) Except for the effects/possible effects of the matters described inthe "Basis for Qualified Opinion" paragraph above in our opinion proper booksof account as required by law have been kept by the Company so far as it appears from ourexamination of those books;

c) The standalonefinancial statement dealt within the report are inagreementwith the books of account and return;

d) Except for the effects/possible effects of the matters described inthe "Basis for Qualified Opinion" paragraph in our opinion the aforesaidstandalone financial statements comply with the Ind AS specified under Section 133 of theAct readwith Rule 7 ofthe Companies (Accounts) Rules;

e) The matters described in the "Basis for Qualified Opinion"paragraph above in our opinion may have an adverse effect on thefunctioning oftheCompany.

f) On the basis of the written representations received from thedirectors and taken on record by the Board of Directors none ofthe directors isdisqualified as on March 31st 2022 from being appointed as a director in terms ofSection 164(2) oftheAct;

g) With respect to the adequacy of the internal financial controls overfinancial reporting ofthe Company and the operating effectiveness ofsuch controls refertoourseparate report in "AnnexureA"; and

h) With respect to the other matters to be included in theAuditor'sReport in accordance with Rule 11of the Companies (Audit andAuditors) Rules 2014 inouropinion and to the best ofour information and according to the explanations given tous:

i. The Company has disclosed the impact of pending litigations on itsfinancial position in its financial statements. Refer Note 38 to the financial statements;

ii. Except as matter described under "basis for qualifiedopinion" and "Emphasis of matter" paragraph the company has madeprovision as required under the applicable law or Ind AS for material foreseeablelosses if any on long-term contracts including derivative contracts- Refer Note 31 and36 to the financial statements;

iii. There has been no delay in transferring amounts required to betransferred to the Investor Education and Protection Fund by the Company.

Annexure-A to the Auditor's report (Referred to in our report of evendate)

TheAnnexure referred to in IndependentAuditor's Report to the membersof the company on the standalone financial statement for the year ended 31st March2022we report that:

1. a) The Company has maintained the proper records showing fullparticulars including the quantitative details and situation ofFixedAssets.

b) As explained to us the company have the Programme of physicalverification of its Fixed Assets by which all its fixed assets are verified at reasonableinterval. However we were not provided any physical verification report.

c) According to the information and explanations given to us and on thebasis of our examination of the records of the company the title deeds of immovableproperties are held in the name of the company.

2. a) As explained to us the management at regular intervals duringthe year have physically verified inventories. In our opinion the frequency ofverification is reasonable. However we were not provided any physical verificationreport.

b) In our opinion and on the basis of our examination of the recordsthe company is generally maintaining proper records of its stocks. No discrepancy has beennoticed on verification as such.

3. The Company has not granted any Loans secured or Unsecured tocompanies firms other parties covered in the register maintained under section 189 ofthe Act during the year ended 31st March 2022. Thus paragraph 3(iii) (a) and iii(b) ofthe Order isnot applicable.

4. In our opinion and according to the information and explanationsgiven to us the company has complied with the provisions of section 185 and 186 of theCompanies Act 2013 in respect of grant of Loans making investments and providing theguarantees and securities.

5. According to information and explanation given to us and on thebasis of examination of records we understand that the company has received advance fromcustomer for supply of goods which has been outstanding for more than three hundred andsixty-five days and fall under the definition of deposit u/s 73 to 76 read with ruleframed thereunder. However the company has not complied with regulation u/s 73 to 76 andrule framed thereunder.

6. According to the information and explanations given to us the costrecords specified by the central Government under sub section (1) of section 148 of thecompaniesAct have been made and maintained by the company. However we have not made thedetailed examination of the cost records with a viewto determine whether they are accurateorcomplete.

7. (a) According to the information and explanations given to us and onthe basis of our examination of the records of the company the company is not regular indepositing undisputed statutory dues including provident fund employees state insuranceincome-tax Wealth Tax Service Tax Goods and Service Tax (GST) State Insurance VATPF. ESI Customs Duty Excise Duty Cess and other statutory dues to the appropriateauthority. However the arrears of the outstanding statutory dues as on the last day ofthe financial year are due for a period of less than six months from the date they becomepayable.

(b) According to the information and explanations given to us thereare dues of Income Tax Sales Tax VAT Customs Excise which has not been deposited withthe appropriate authorities on account of disputes refer to Note no. 38(C)(i) of financialstatement.

8. On the basis ofAudit procedures and as per the information gatheredand explanations received we are of the opinion that the company has defaulted in therepayment of loans or borrowing to bank and financial institutions. The total amountdue tothe consortium led by Punjab National Bank is INR 64334 Lakhs.

9. The Company did not raise moneys by way of initial public offer orfurther public offer. However company has not raised any term loan during the yearunderAudit.

10. According to the information and explanations given to us duringthe course of our audit no frauds on the company by its officer or by the Company havebeen noticed or reported during the year.

11. In our opinion and according to the information and explanationgiven to us the Company has paid or provided managerial remuneration in accordance withthe requisite approvals mandated by the provisions of Section 197 read with Schedule V tothe CompaniesAct 2013.

12. In ouropinion the Company is nota Nidhi Company.Accordinglyprovisions of clause 3(xii) of the Order are notapplicable.

13. In our opinion and according to the information and explanationgiven to us the Company's transactions with its related parties are in compliance withSection 177 and 188 of the Companies Act 2013 where applicable and details of relatedparty transactions have been disclosed in financial statements etc. as required by theapplicable Ind AS 24. (Kindly refer note no. 33 offinancial statements).

14. During the year the Company has not made any preferential allotmentor private placement of shares or fully or partly convertible debentures and hencereporting under clause (xiv) of paragraph 3 of the Order is not applicable to the Company.

15. In ouropinion and according to the information and explanationgiven to us during the year the Company has not entered into any non-cash transactionwith its directors or persons connected with him and hence reporting under the provisionsof section 192 ofCompaniesAct2013. The provisions of Clause 3(xv) ofparagraph 3 oftheOrder are not applicable to the company.

16. The company is not required to be registered under section 45-IAofthe Reserve Bank of IndiaAct 1934.

Annexure - B to the Auditors' Report Report on the Internal FinancialControls under Clause (lof Sub-section 3 of Section 143 of the Companies Act 2013("the Act")

In conjunction with our audit of the standalone financial statements ofthe Company as of and for the year ended 31st March 2022 we have audited the internalfinancial controls over financial reporting of Kohinoor Food Limited.

Management's Responsibility for Internal Financial Controls

The respective Board of Directors of the Company are responsible forestablishing and maintaining internal financial controls based on the internal controlover financial reporting criteria established by the holding Company considering theessential components of internal control stated in the Guidance Note on Audit of InternalFinancial Controls over Financial Reporting issued by the Institute of CharteredAccountant of India ("ICAI"). These responsibilities include the designimplementation and maintenance of adequate internal financial controls that were operatingeffectively for ensuring the orderly and efficient conduct of its business includingadherence to the company's policies the safeguarding of its assets the prevention anddetection of frauds and errors the accuracy and completeness of the accounting recordsand the timely preparation of reliable financial information as required under thecompaniesAct 2013.

Auditors' Responsibility

Our responsibility is to express an opinion on the internal financialcontrols over financial reporting of the Company based on our audit.

We conducted our audit in accordance with the Guidance Note onAudit ofInternal Financial Controls over Financial Reporting ("the Guidance Note")issued by the ICAI and the Standards of Auditing issued by the ICAI and deemed to beprescribed under section 143(10) of the CompaniesAct 2013 to the extent applicable to anaudit of internal financial controls both issued by the ICAI. Those Standards and theGuidance Note require that we comply with ethical requirements and plan and perform theaudit to obtain the reasonable assurance about whether adequate internal financialcontrols over financial reporting was established and maintained and if such controlsoperated effectively in all material respects.

Our audit involves performing procedures to obtain audit evidence aboutthe adequacy of the internal financial controls system over financial reporting and theiroperating effectiveness. Our audit of internal financial controls over financial reportingincluded obtaining an understanding of internal financial controls over financialreporting assessing the risk that a material weakness exists and testing and evaluatingthe design and operating effectiveness of internal control based on the assessed risk. Theprocedures selected depend on the auditor's judgment including the assessment of therisks of material misstatement of the financial statements whetherdue to fraud or error.

We believe that the audit evidence we have obtained is sufficient andappropriate to provide a basis for our audit opinion on the internal financial controlssystem overfinancial reporting of the Holding Company.

Meaning of Internal Financial Controls Over Financial Reporting

Acompany's internal financial control overfinancial reporting is aprocess designed to provide reasonable assurance regarding the reliability of financialreporting and the preparation of financial statements for external purposes in accordancewith generally accepted accounting principles. A company's internal financial control overfinancial reporting 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 authorisations ofmanagement and directors of the company; and (3) provide reasonable assurance regardingprevention or timely detection of unauthorised acquisition use or disposition of thecompany's assets that could have a material effect on the financial statements.

Inherent Limitations of Internal Financial Controls Over FinancialReporting

Because of the inherent limitations of internal financial controls overfinancial reporting including the possibility of collusion or improper managementoverride of controls material misstatements due to error or fraud may occur and not bedetected. Also projections of any evaluation of the internal financial controlsoverfinancial reporting to future periods are subject to the risk that the internalfinancial control over financial reporting may become inadequate because of changes inconditions or that the degree of compliance with the policies or procedures maydeteriorate.

Basis of Qualified Opinion

We draw our attention to paragraph of "Basis for qualifiedopinion" of our main report and the same to be read with our comments as statedbelow:

According to information and explanations given to us and based on ouraudit the following material weakness has been identified asat31st March 2022.

1. The Company did not have an appropriate internal control system for

(a) Customeracceptance;

(b) Customercreditevaluation;

(c) Establishing customer credit limitfor sales;

(d) Acceptance ofgoods by customers and transferof risk & reward atthe time of sales.

This could potentially result in the company recognising revenuewithout establishing reasonable certainty of ultimate collection.

2. The Company did not have any internal control systemforfollow-up/recovery/adjustment of old outstanding receivables and payables includingbalance confirmation and reconciliation.

A'Material weakness' is a deficiency or a combination of deficiencyin internal financial control over financial reporting such that there is a reasonablepossibility that a material misstatement of the company's annual financial statement willnot be prevented or detective on timely basis.

QualifiedOpinion

In our opinion except for the effects/possible effects of basis ofqualified opinion the holding Company has maintained in all material respects adequateinternal financial controls system over financial reporting and such internal financialcontrols over financial reporting were operating effectively as at 31st March 2022 basedon the internal control over financial reporting criteria established by the Companyconsidering the essential components of internal control stated in the Guidance Note onAudit of Internal Financial Controls Over Financial Reporting issued by the Institute ofCharteredAccountantsof India.

We have considered the material weaknesses identified and reportedabove in determining the nature timing and extent of audit tests applied in our audit ofthe March 312022standalone financial statements of the group and these materialweaknesses does notaffectouropinion on thestandalone financial statements of the company.

Place: New Delhi FORM/S N.C. RAJ & ASSOCIATES
Date: 30/5/2022 (CHARTERED ACCOUNTANTS)
FRN NO.: 002249N
Sd/-
(CA. Sanjay Garg)
Partner
Membership No. 088636
UDIN: 22088636AJWTHP1542

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