The Members of
OCEAN AGRO (INDIA) LIMITED
1. We have audited the accompanying standalone financial statements of Ocean Agro(India) Limited (the Company') which comprise the balance sheet as at 31 March 2017the statement of profit and loss (including other comprehensive income) and the cash flowstatement for the year then ended and a summary of significant accounting policies andother explanatory information.
2. Management's Responsibility for the Financial Statements
The Company's Board of Directors is responsible for the matters stated in Section 134(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 including other comprehensive income cash flows andchanges in equity of the Company in accordance with the accounting principles generallyaccepted in India including the Accounting Standards specified under Section 133 of theAct read relevant rules issued thereunder. This responsibility also includes maintenanceof adequate accounting records in accordance with the provisions of the Act forsafeguarding the assets of the Company and for preventing and detecting frauds and otherirregularities; selection and application of appropriate 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 standalone financial statements that give a true andfair view and are free from material misstatement whether due to fraud or error.
3. Auditor's Responsibility
Our responsibility is to express an opinion on these standalone financial statementsbased on our audit. We have taken into account the provision of the Act the accountingand auditing standards and matters which are required to be included in the audit reportunder the provisions of the Act and the Rules made thereunder. We conducted our audit inaccordance with the standards on auditing specified under section 143(10) of the act.Those Standards require that we comply with ethical requirements and plan and perform theaudit to obtain reasonable assurance about whether the financial statements are free frommaterial misstatement. An audit involves performing procedures to obtain audit evidenceabout the amounts and disclosures in the financial statements. The procedures selecteddepend on the auditor's judgment including the assessment of the risks of materialmisstatement of the standalone financial statements whether due to fraud or error. Inmaking those risk assessments the auditor considers internal financial control relevantto the Company's preparation of the standalone financial statements that give a true andfair view in order to design audit procedures that are appropriate in the circumstances.An audit also includes evaluating the appropriateness of accounting policies used and thereasonableness of the accounting estimates made by management as well as evaluating theoverall presentation of the financial statements.
4. Qualified Opinion
As confirmed by the company they have carried out investigation in respect of oldoutstanding debtors through a management team and taken incentive steps to recover oldoutstanding debtors and reviving those customers by supply of goods to them. Pursuant toscheme and work carried out by the company they hope to recover old outstanding dues fromold debtors and therefore after a detailed analytical review of recovering the same aprovision of 25% of total outstanding debtors i.e. Rs. 236 Lacs (approx) would be requiredto be made out of which Rs.80 Lacs is provided as provision of bad and doubtful debtsduring the year. Company intends to provide Rs.80 Lacs in phased manner of 3 to 5 yearswith a constant review of debtor's provision vis-a -vis settlement process with the olddebtors with new incentives .To that extent Rs.867 Lacs remains unprovided. A sum ofRs.69.73 Lacs is already written off as bad debts out of accumulated provision ofRs.114.23 Lacs leaving balance provision of Rs.44.49 Lacs. In our opinion and to the bestof our information and according to the explanations given to us except for the effectsof the matter described in the Qualified opinion paragraph the financial statements givethe information required by the Act in the manner so required and give a true and fairview in conformity with the accounting principles generally accepted in india: (i) in thecase of the balance sheet of the state of affairs of the Company as at 31 March 2017; (ii) in the case of the statement of profit and loss of the profit for the year ended onthat date; and (iii) in the case of the cash flow statement of the cash flows for theyear ended on that date.
5. Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditor's Report) Order 2016 ("theOrder") issued by the Central Government of India in terms of Section 143(11) of theAct. we give in the Annexure A Statement on the matters specified in paragraphs 3 and 4 ofthe Order.
2. As required by section 143(3) of the Act we report that:
a. We have obtained all the information and explanations which to the best of ourknowledge 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 appears from our examination of those books; c. The balance sheetstatement of profit and loss and cash flow statement dealt with by this Report are inagreement with the books of account; d. In our opinion the aforesaid standalone financialstatements comply with the Accounting Standards specified under Section 133 of the Actread with the relevant Rule issued thereunder; e. On the basis of the writtenrepresentations received from the directors and taken on record by the Board of Directorsnone of the directors is disqualified as on 31 March 2017 from being appointed as adirector in terms of Section 164 (2) of the Act; f. With respect to the adequacy of theinternal financial controls over financial reporting of the Company and the operatingeffectiveness of such controls refer to our separate report in "Annexure B";and i. "The Company has disclosed the impact of pending litigations on its financialposition in its financial statements. ii The Company did not have any long-term contractsincluding derivative contracts for which there were any material foreseeable losses; and
iii The Company is not required to transfer amount to investor education and protectionfund.
| ||For Ambalal M. Shah & Co. |
| ||Chartered Accountants |
|Place : Vadodara ||CA. Ashok A. Jain |
|Date :29th May 2017 ||Partner |
| ||M. No. 030389 |
ANNEXURE - A TO THE AUDITORS' REPORT
(Referred to in Paragraph (1) of our report of even date)
The Annexure referred to in our report to the members of Ocean Agro ( India ) Limited(the Company') for the year ended 31 March 2017. We report that:
I. In respect of its fixed assets -
a) The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets.
b) The Company has a regular program of physical verification of its fixed assets bywhich fixed assets are verified in a phased manner over a period of three years. Inaccordance with this program certain fixed assets were verified during the year and nomaterial discrepancies were noticed on such verification. In our opinion this periodicityof physical verification is reasonable having regard to the size of the Company and thenature 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 a) As explained to us the inventories have been physically verified at reasonableintervals by the management during the year. In respect of substantial portion of thestock lying with agents Certificates containing details of stock have been received.
b) In our opinion and according to the information and explanations given to us theprocedures of physical verification of inventory followed by the management are reasonableand adequate as regards the size of the company and the nature of its business..
c) In our opinion and according to the information and explanations given to us thecompany is maintaining proper records of its inventories and no material discrepancieswere noticed on physical verification.
III In respect of loans secured or unsecured the company has granted advances forbusiness to a company firms and other parties covered in the register maintained undersection 189 of the act. The total of the year end balance was Rs. 4654172.47 Credit.
a) In our opinion the rate of interest and other terms and conditions on which theloans had been granted to the bodies corporate listed in the register maintained underSection 189 of the Act were not prima facie prejudicial to the interest of the Company
b) In the case of the loans granted to the bodies corporate listed in the registermaintained under section 189 of the Act the borrowers have been regular in the payment ofthe principal and interest as stipulated.
c) There are no overdue amounts in respect of the loan granted to a body corporatelisted in the register maintained under section 189 of the Act.
IV 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 with respectto the loans and investments made.
V The Company has not accepted any deposits from the public.
VI The cost records specified by the Central Government under Section 148(1) of theCompanies Act 2013 in respect of its products not required to maintain.
VII In respect of statutory dues:
a) According to the information and explanations given to us and on the basis of ourexamination of the records of the Company amounts deducted/ accrued in the books ofaccount in respect of undisputed statutory dues including provident fund income-taxsales tax value added tax duty of customs service tax cess and other materialstatutory dues have been regularly deposited during the year by the Company with theappropriate authorities. As explained to us the Company did not have any dues on accountof employees' state insurance and duty of excise.
b) According to the information and explanations given to us there are no dues of dutyof customs which have not been deposited with the appropriate authorities on account ofany dispute. However according to information and explanations given to us the followingdues of income tax and sales tax have not been deposited by the Company on account ofdisputes:
|Sr. No. ||Year ||Liability ||Amount Rs. ||Status |
|1 ||A.Y 2000 - 2001 ||Income Tax ||719311 ||Appeal pending with High Court. Ahmedabad |
|2 ||A.Y 2007 - 2008 ||C.S.T ||275804 ||Appeal pending with Commercial Tax Officer Ghatak (II) Vadodara. |
VIII The Company has not defaulted in repayment of dues to banks and financialinstitutions during the year. The Company has not issued any debentures during the year.
IX The company did not raise any money by way of initial public offer or further publicoffer (including debt instruments) and term loans were applied for the purposes for whichthose are raised during the year.
X According to the information and explanation given to us no material fraud by thecompany or on the company by its officers or employees has been noticed or reported duringthe course of our audit.
XI According to the information and explanations give 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 sections 177 and 188 of the Act where applicable and details of suchtransactions have been disclosed in the standalone financial statements as required by theapplicable accounting standards.
XIV According to the information and explanations give 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 him. Accordingly paragraph 3(xv) ofthe Order is not applicable.
XVI The Company is not required to be registered under section 45-IA of the ReserveBank of India Act 1934.
| ||For Ambalal M. Shah & Co. |
| ||Chartered Accountants |
|Place : Vadodara ||CA. Ashok A. Jain |
|Date :29th May 2017 ||Partner |
| ||M. No. 030389 |
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 (gthe Acth)
We have audited the internal financial controls over financial reporting of Ocean Agro(India) Limited ("the Company") as of 31 March 2017 in conjunction with ouraudit of the Standalone financial statements of the Company for the year ended on thatdate.
Managementfs Responsibility for Internal Financial Controls
The Company's management is responsible for establishing and maintaining internalfinancial controls based on the internal control over financial reporting criteriaestablished by the Company considering the essential components of internal control statedin the Guidance Note on Audit of Internal Financial Controls over Financial Reportingissued by the Institute of Chartered Accountants of India (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.
Our responsibility is to express an opinion on the Company's internal financialcontrols over financial reporting based on our audit. We conducted our audit in accordancewith the Guidance Note on Audit of Internal Financial Controls over Financial Reporting(the "Guidance Note") and the Standards on Auditing issued by ICAI and deemedto be prescribed under section 143(10) of the Companies Act 2013 to the extentapplicable to an audit of internal financial controls both applicable to an audit ofInternal Financial Controls and both issued by the Institute of Chartered Accountants ofIndia. Those Standards and the Guidance Note require that we comply with ethicalrequirements and plan and perform the audit to obtain reasonable assurance about whetheradequate internal financial controls over financial reporting was established andmaintained and if such controls 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 financial statements whether due to fraud orerror.
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 ofrecords that in reasonable detail accurately and fairly reflect the transactions anddispositions of the assets of the company; (2) provide reasonable assurance thattransactions are recorded as necessary to permit preparation of financial statements inaccordance with generally accepted accounting principles and that receipts andexpenditures 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 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.
In our opinion the Company has in all material respects an adequate internalfinancial controls system over financial reporting and such internal financial controlsover financial reporting were operating effectively as at 31 March 2017 based on theinternal control over financial reporting criteria established by the Company consideringthe essential components of internal control stated in the Guidance Note on Audit ofInternal Financial Controls Over Financial Reporting issued by the Institute of CharteredAccountants of India.