You are here » Home » Companies » Company Overview » REI Agro Ltd

REI Agro Ltd.

BSE: 532106 Sector: Agri and agri inputs
NSE: REIAGROLTD ISIN Code: INE385B01031
BSE 00:00 | 04 Mar REI Agro Ltd
NSE 05:30 | 01 Jan REI Agro Ltd
OPEN 0.93
PREVIOUS CLOSE 0.94
VOLUME 1526147
52-Week high 0.95
52-Week low 0.00
P/E
Mkt Cap.(Rs cr) 90
Buy Price 0.92
Buy Qty 12500.00
Sell Price 0.94
Sell Qty 167937.00
OPEN 0.93
CLOSE 0.94
VOLUME 1526147
52-Week high 0.95
52-Week low 0.00
P/E
Mkt Cap.(Rs cr) 90
Buy Price 0.92
Buy Qty 12500.00
Sell Price 0.94
Sell Qty 167937.00

REI Agro Ltd. (REIAGROLTD) - Auditors Report

Company auditors report

To The Members of REI AGRO LIMITED

REPORT ON THE STANDALONE FINANCIAL STATEMENTS

We have audited the accompanying financial statements of REI AGRO LIMITED whichcomprise the Balance Sheet as at March 31 2016 and the Statement of Profit and Loss andCash Flow Statement for the year then ended and a summary of significant accountingpolicies and other explanatory information.

MANAGEMENT’S RESPONSIBILITY FOR THE FINANCIAL STATEMENTS

The Company’s Board of Directors is responsible for the matters stated in Section134(5) of the Companies Act 2013 ("the Act") with respect to the preparation ofthese financial statements that give a true and fair view of the financial positionfinancial performance and cash flows of the Company in accordance with the accountingprinciples generally accepted in India including the Accounting Standards specified underSection 133 of the Act read with Rule 7 of the Companies (Accounts) Rules 2014. Thisresponsibility also includes maintenance of adequate accounting records in accordance withthe provisions of the Act for safeguarding of the assets of the Company and for preventingand detecting frauds and other irregularities; selection and application of appropriateaccounting policies; making judgments and estimates that are reasonable and prudent; anddesign implementation and maintenance of adequate internal financial controls that wereoperating effectively for ensuring the accuracy and completeness of the accountingrecords relevant to the preparation and presentation of the financial statements thatgive a true and fair view and are free from material misstatement whether due to fraud orerror.

AUDITOR’S RESPONSIBILITY

Our responsibility is to express an opinion on these financial statements based on ouraudit.

We have taken into account the provisions of the Act the accounting and auditingstandards and matters which are required to be included in the audit report under theprovisions of the Act and the Rules made there under.

We conducted our Audit in accordance with the Standards on Auditing specified underSection 143(10) of the Act. Those Standards require that we comply with ethicalrequirements and plan and perform the audit to obtain reasonable assurance about whetherthe financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts andthe disclosures in the financial statements. The procedures selected depend on theauditor’s judgment including the assessment of the risks of material misstatement ofthe financial statements whether due to fraud or error. In making those risk assessmentsthe auditor considers internal financial control relevant to the Company’spreparation of the financial statements that give a true and fair view in order to designaudit procedures that are appropriate in the circumstances. An audit also includesevaluating the appropriateness of the accounting policies used and the reasonableness ofthe accounting estimates made by the management as well as evaluating the overallpresentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the financial statements.

BASIS FOR QUALIFIED OPINION:-

1) During the year due to sudden death of one of the Independent Director Mr. AsokeChatterjee on 04.08.2015 and subsequently due to resignation of Dr Ing Narpinder KumarGupta on 23.11.2015 Number of Directors on the Board of the Company has reduced to Two{2}only which is not a Competent Board. However the Board have finalized and approved the3rd Quarterly Results with the existing two directors and now submitting the yearlyresults which is again subject to final approval by the duly constituted Board. Meanwhilethe company has communicated and appraised the facts to the Regulatory Authority and alsosought certain waivers and reliefs from the Hon’ble BIFR. Company being a Net Wortheroded Company is registered under Sick Industrial Companies (Special Provisions) Act1985.

2) The Company’s Fixed Assets have been hypothecated / pledged with the Banks /Financial Institutions etc against various credit facilities availed by the Company anddue to the accounts being classified as NPA the Bankers / FIs have taken legal actionsfor recovery. Fixed Assets / Inventories are not insured.

3) The Company has not provided Interest on loans availed from Banks and FinancialInstitutions which has been classified as NPA. The Amount not so provided amounts to '1127.42 Crore {including ' 426.07 Crore for previous year} up to 31st March 2016.

4) Provision for Gratuity and Leave Encashment has been made on the basis of estimateand not as per the Actuarial Valuation which is not in consonance with AS -15.

5) The Company had provided Corporate Guarantee to overseas lenders for the borrowingsby its Subsidiary Company namely Ammalay Commodities JLT. The said subsidiary companydefaulted in the repayment of the facilities provided by the lenders and the lenders tothe subsidiary company had invoked the Corporate Guarantee of the Company provided to themamounting to ' 3105.93 Crore against which no provision has been made till the year ended31st March 2016.

6) No balance confirmation and / or Bank Statement of the outstanding loan could beobtained in absence of which we are unable to confirm the correctness of the balancesappearing in the financial statement.

7) The Net Worth of the company has fully eroded and the company’s reference filedbefore the Hon’ble BIFR was registered. The Company’s ability to continue thebusiness as going concern is significantly dependent upon the viability of therestructuring plan as may be approved by the Hon’ble BIFR.

QUALIFIED OPINION:-

In our opinion and to the best of our information and according to the explanationsgiven to us except for the possible effects of the matter described in the’’basis for qualified opinion" paragraph the aforesaid financialstatements give the information required by the Act in the manner so required and give atrue and fair view in conformity with the accounting principle generally accepted inIndia;

a. in the case of the Balance Sheet of the state of affairs of the Company as at March312016

b. in the case of the Statement of Profit and Loss of the loss for the year ended onthat date; and

c. in the case of the Cash Flow Statement of the cash flows for the year ended on thatdate.

EMPHASIS OF MATTER:

We draw attention to the following matters in the Notes to the financial Statements:

1. Note 29.1 to the financial statements that describe that due to liquidity crunchbeing faced by the Company it was not able to procure adequate quantum of Raw Materialfor last two years which has resulted in partly operational of one its unit only at theend of the year.

2. Note 29.2 to the financial statement that the Company has defaulted in payment ofobligations in respect of all the Banks/ Financial Institutions / Non ConvertibleDebentures holders together with interest thereon on due dates. As a result thereof 'allthe Working Capital Banks Term Lenders and NCD Holders had initiated the CorrectiveAction Plan (CAP) through the Joint Lenders Forum (JLF) in accordance with the RBI’sSMA Guidelines dated February 262014. But the same could not be approved. Some of thelender banks have initiated winding up proceedings against the Company for recovery ofdues. Notices have been issued by the lenders U/s 13(4) of Securitization andReconstruction of Financial Assets and Enforcement of Security Interest Act 2002.Thishave adverse effect on the functioning of the Company on going forward basis.

3. Note No 29.5 to the financial statement indicates that the company has accumulatedlosses and its net worth is fully eroded. The Company has incurred net loss during thecurrent year and previous years and Company’s current liabilities exceeded itscurrent assets as at the balance sheet date.

These Conditions along with other matters set out above indicates the existence ofuncertainty that may cast doubt about the Company’s ability to continue as GoingConcern. However the financial statements of the company have been prepared by themanagement on Going Concern Basis.

Our opinion is not modified in respect of these matters.

REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS

1. As required by the Companies (Auditor’s Report) Order 2015 ("theOrder") issued by the Central Government of India in terms of sub-section (11) ofsection 143 of the Act we give in the "Annexure A" a statement on the mattersspecified in paragraphs 3 and 4 of the Order to the extent applicable.

2. As required by section 143(3) of the Act we report that:

a) We have sought and obtained and except for the matters described in the basis forQualified Opinion paragraph all the information and explanations which to the best of ourknowledge and belief were necessary for the purpose of our audit;

b) Except for the possible effects of the matter described in the basis for QualifiedOpinion Paragraph above in our opinion proper books of account as required by law havebeen kept by the Company so far as appears from our examination of those books

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

d) Except for the possible effects of the matter described in the basis for QualifiedOpinion Paragraph in our opinion the aforesaid standalone financial statement complywith the Accounting Standards specified under section 133 of the Act read with Rule 7 ofthe Companies (Accounts) Rules2014;

e) The matter described in the basis for Qualified Opinion paragraph above in ouropinion may have an adverse effect on the functioning of the Company.

f) The Company has defaulted in redemption of Non Convertible Debenture{"NCD"} on due date and payment of interest due thereon and dividend onpreference share and such default has continued for more the one year. In terms of Section164 (2) of the Companies Act2013 the Directors of the Company are not eligible to bere-appointed as directors of the Company. As per the legal opinion obtained by thecompany the existing directors of the company may

continue to hold their position as Directors till their reappointment date

g) With respect to the adequacy of Internal Financial Controls over Financial Reportingof the Company and the operating effectiveness of such controls refer to our separatereport in "Annexure B".

h) With respect to other matters to be included in the Auditor’s Report inaccordance with Rule 11 of the Companies (Audit and Auditors) Rule 2014in our opinion andto the best of our information and according to the explanations given to us:

i) The Company has disclosed the impact of pending litigations on its financialposition in its financial statements-Refer Note No. 28 & 29 to the financialstatements.

ii) The Company did not have long-term contracts including derivative contracts forwhich there were any material foreseeable losses.

iii) There has been some delay in transferring amounts required to be transferred tothe Investor Education & Protection Fund by the Company.

For P. K. LILHA & CO.
Chartered Accountants
Firm Reg. No.: 307008E
Sd/-
(CA. P. K. LILHA)
Place: Kolkata Partner
Date: 31.05.2016 M. No. 011092

"ANNEXURE a"

to the auditors' report

The Annexure referred to in our Independent Auditors’ Report to the members of theCompany on the financial statements for the year ended 31st March 2016 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) It has been confirmed by the Management that three Title Deeds in respect free holdland are not in the name of the company. The Gross Block / Net Block of these FreeholdLand amounts to ' 177.01 Crore as on 31.03.2016.

c) All the fixed assets have not been physically verified by the management during theyear but there is a regular programme of verification which in our opinion is reasonablehaving regard to the size of the Company and the nature of its assets. No materialdiscrepancies were noticed on such verification.

ii. In respect of its Inventories:

a) As explained to us the Inventories have been physically

verified by the management at reasonable intervals. In our opinion the frequency ofverification is reasonable.

b) The procedure of physical verification of inventories followed by the management isreasonable and adequate in relation to the size of the Company and the nature of itsbusiness.

iii) As informed to us the Company during the year has not granted any loan securedor unsecured to companies firms Limited Liability Partnership or other parties coveredin register maintained under section 189 of the Companies Act 2013. Accordingly theprovisions of sub clause (iii) (b) & (c) of the Companies (Auditors Report) order2013 (as amended) are not applicable.

iv) In respect of loans investments guarantees and security provisions of section185 and 186 of the Companies Act 2013 have been complied with. However the company duringthe year has not given loan or provided guarantee or security to any person or other bodycorporate and not made any investment.

v) The Company has not accepted any deposit from the public; therefore the provisionsof clause (v) of the order are not applicable to the company

vi) We have broadly reviewed the Books of Accounts maintained by the company in respectof generation of

electricity where pursuant to the rules made by the Central Government of India themaintenance of Cost Records have been prescribed U/s 148(1) of the Act and are of theopinion that prima facie the prescribed accounts and records have been made andmaintained. We have not however made a detailed examination of the records with a viewto determine whether they are accurate or complete.

vii) In respect of Statutory Dues:-

a) According to the information and explanations given to us and on the basis ofexamination of records of the Company amount deducted / accrued in the books of accountsin respect of undisputed statutory dues including Provident Fund Employees StateInsurance Income Tax Sales Tax Service Tax Duty of Customs Duty of Excise ValueAdded Tax Cess and other material statutory dues have been regularly deposited withappropriate authorities during the year except Dividend Distribution Tax Payable as setout below. As explained to us the Company did not have any dues on account of Duty ofCustom and Duty of Excise as they were not applicable.

Particulars Amount (Rs)
Dividend Distribution Tax Payable
(DDT) (Inclusive of Interest )
F.Y 2011-12 114026220/-
F.Y 2012-13 104390201/-
218416421/-

b) According to information and explanation given to us and records of the Companyexamined by us the following disputed amount of statutory dues which have not beendeposited.

Name of the Statute Nature of Dues Amount (Rs in Lacs) Period to which it relates Forum where Dispute is Pending
PDIF Local 119.00 2008-09 Punjab & Haryana
Act Tax High Court
Sales Tax Local 144.00 2008-09 Punjab & Haryana
Tax High Court
Sales Tax Local 36.53 2011-12 ***
Tax
Sales Tax HVAT 118.33 2012-13 ***
Sales Tax CST 1462.01 2012-13 ***

*** The Company is in process of filing Appeal before the Competent Authority.

viii) The company has defaulted in repayment of loans or borrowing to the financialinstitutions/ bank / Government and Debenture holder in respect of secured / unsecuredloans. There loan have been classified as NPA and therefore no statement of Accounts orBalance confirmation could be made available. The company has therefore not providedInterest of ' 1127.42 Crore computed on the basis of last available rates. The applicabledetails of defaults as at 31.03.2016 are as under exclusive of interest thereon asstated above:

a) To Banks Rs. 4745.24 Crores

 

Bank Names (Lender wise details) Principal Outstanding
(in Cr.)
Andhra Bank 84.34
Axis Bank 165.54
Bank of Baroda 321.40
Bank of Maharashtra 74.95
Central Bank of India 227.76
Corporation Bank 535.18
Dena Bank 114.00
Dhanlaxmi Bank 69.67
IDBI Bank 39.13
IFCI Ltd. 40.53
Indian Overseas Bank 426.30
Indusind Bank 132.92
ING Vysya Bank 80.14
Jammu & Kashmir Bank 237.68
Karur Vysya Bank 110.50
Lakshmi Vilas Bank 52.59
State Bank of Bikaner & Jaipur 337.08
State Bank of Patiala 283.17
State Bank of Travancore 75.29
UCO Bank 903.95
Union Bank of India 209.28
United Bank of India 223.84
TOTAL 4745.24

 

b) To Debenture Holders Rs. 524.35 Crores
c) To FCCB Holders Rs. 667.20 Crores

ix) The Company did not raise any money by way of Initial Public Offer or FurtherPublic Offer (including debt instruments) and term loans during the year. AccordinglyParagraph 3(ix) of the order is not applicable.

x) According to the information and explanations given to us no material fraud on orby the company by its officers or employees has been noticed or reported during the courseof our audit.

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) According to the information and explanations given to us the Company is not aNidhi Company.Accordingly; paragraph 3(xii) of the order is not applicable.

xiii) According to the information and explanations given to us and based on ourexamination of the records of the Company transactions with related parties are incompliance with sections 177 and 188 of the Act where applicable and details of suchtransactions have been disclosed in the financial statements as required by the applicableAccounting 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) As per information and explanations given to us and based on our examination of therecords of the Company the company has not entered into any non cash transactions withthe Directors or persons connected with him. Accordingly Paragraph 3 (xv) of the order isnot applicable.

xvi) The Company is not required to be registered U/s 45-IA of the Reserve Bank ofIndia Act 1934.

For P. K. LILHA & CO.
Chartered Accountants
Firm Reg. No.: 307008E
Sd/-
(CA. P. K. LILHA)
Place : Kolkata Partner
Date : 31.05.2016 M. No. 011092

"ANNEXURE B"

to the independent auditor's report

Report on the Internal Financial Controls Over Financial Reporting under Clause (i) ofSub-section 3 of Section 143 of the Companies Act 2013 ("the Act").

We have audited the internal financial controls over financial reporting of REI AgroLtd. ("the Company’) as of March 31 2016 in conjunction with our audit of thefinancial statements of the Company for the year ended on 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 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 safeguardingof its 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.

AUDITOR’S RESPONSIBILITY

Our responsibility is to express an opinion on the Company’s internal financialcontrols over financial reporting based on our audit. We conducted our audit in accordancewith the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting(the "Guidance Note") issued by the Institute of Chartered Accountants of India(ICAI) and the Standards on Auditing prescribed under Section 143(10) of the CompaniesAct 2013 to the extent applicable to an audit of internal financial controls. ThoseStandards and the Guidance Note require that we comply with ethical requirements and planand perform the audit to obtain reasonable assurance about whether adequate internalfinancial controls over financial reporting was established and maintained and if suchcontrols operated effectively in all material respects.

Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal financial controls system over financial reporting and their operatingeffectiveness. Our audit of internal financial controls over financial reporting

included 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 whether due to fraud or error.

We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our qualified audit opinion on the Company’s internal financialcontrols system over financial reporting.

MEANING OF INTERNAL FINANCIAL CONTROLS OVER FINANCIAL REPORTING

A company’s internal financial control over financial reporting is a processdesigned to provide reasonable assurance regarding the reliability of financial reportingand the preparation of financial statements for external purposes in accordance withgenerally accepted accounting principles.

A company’s internal financial control over financial reporting includes thosepolicies and procedures that:

(1) pertain to the maintenance of records that in reasonable detail accurately andfairly reflect the transactions and dispositions of the assets of the company;

(2) provide reasonable assurance that transactions are recorded as necessary to permitpreparation of financial statements in accordance with generally accepted accountingprinciples and that receipts and expenditures of the company are being made only inaccordance with authorizations of management and directors of the company; and

(3) provide reasonable assurance regarding prevention or timely detection ofunauthorized acquisition use or disposition of the company’s assets that could havea 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.

QUALIFIED OPINION

According to the information and explanations given to us and based on our audit thefollowing material weakness has been identified in the Company’s internal financialcontrols over financial reporting as at March 31st 2016:

i) As required u/s 138 of the Companies Act 2013 Internal Audit has not beenconducted by the Company

A "material weakness" is a deficiency or a combination of deficiencies inInternal Financial Control over Financial Reporting such that there is a reasonablepossibility that a material misstatement of the Company’s Annual or Interim FinancialStatements will not be prevented or detected on a timely basis.

OPINION

In our opinion except for the possible effects of the material we akne s s de s crib ed as ab ove on the achievement of the objectives of the control criteria the Company hasmaintained in all material respects adequate Internal Financial Controls over FinancialReporting and such Internal Financial control over financial reporting were operatingeffectively as of March 31 2016 based on "the internal control over financialreporting criteria established by the Company considering the essential components ofinternal control stated in the Guidance Note on Audit of Internal Financial Controls OverFinancial Reporting issued by the Institute of Chartered Accountants of India"(ICAI).

We have considered the material weakness identified and reported above in determiningthe nature timing and extent of Audit tests applied in our Audit of the March 31 2016financial statements of the Company and the material weakness does not affect our opinionon the financial statements of the Company.

For P. K. LILHA & CO.
Chartered Accountants
Firm Reg. No.: 307008E
Sd/-
(CA. P. K. LILHA)
Place : Kolkata Partner
Date : 31.05.2016 M. No. 011092