To the Members of The State Trading Corporation of India Limited
Report on the Standalone Financial Statements
We have audited the accompanying standalone Ind AS financial statements of THE STATETRADING CORPORATION OF INDIA LIMITED ("the Company") which comprise theBalance Sheet as at 31st March 2018 the Statement of Profit and Loss(including Other Comprehensive Income) the Statement of Cash Flow and the Statement ofChanges in Equity for the year then ended and a summary of the significant accountingpolicies and other explanatory information in which are incorporated the returns for theyear ended on that date audited by the branch auditors of Company's eight branches atAhmedabad Bangalore Bhopal Chennai Cochin Hyderabad Kolkata and Mumbai.
Management's Responsibility for the Standalone Ind AS 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 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 accountingprinciples generally accepted in India including the Indian Accounting Standardsspecified under Section 133 of the Act read with relevant rules issued thereunder. Thisresponsibility also includes maintenance of adequate accounting records in accordance withthe provisions of the Act for safeguarding 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 standalone Ind AS financialstatements that give a true and fair view and are free from material misstatement whetherdue to fraud or error.
Our responsibility is to express an opinion on these standalone Ind AS financialstatements based on our audit.
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 thereunder.
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 Standalone Ind AS financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts andthe disclosures in the Standalone Ind AS financial statements. The procedures selecteddepend on the auditor's judgment including the assessment of the risks of materialmisstatement of the Standalone Ind AS financial statements whether due to fraud or error.In making those risk assessments the auditor considers the internal financial controlrelevant to the Company's preparation of the Standalone Ind AS financial statements thatgive a true and fair view in order to design audit procedures that are appropriate in thecircumstances. An audit also includes evaluating the appropriateness of accountingpolicies used and the reasonableness of the accounting estimates made by the Company'sDirectors as well as evaluating the overall presentation of the Standalone Ind ASfinancial statements. We believe that the audit evidence we have obtained is sufficientand appropriate to provide a basis for our audit opinion on the standalone Ind ASfinancial statements.
Basis for Qualified Opinion
(i) Reference is invited to Note no. 9.5 and 26.1 Trade receivable includes Rs.2076.70crore (previous year Rs.1904.24 crores) and other income includes interest of Rs.259.47crore (previous year Rs.231.93) booked during the current year on over dues from one ofthe business associates on account of goods supplied in earlier years. The dues are statedto be secured by EMD of Rs.29.73 crore and personal guarantee of chairman of its holdingcompany. Consequent upon Conciliation Agreement dated 15.11.2011 and further settlementagreement dated 17.05.2012 the entire dues were payable to the company by 10.11.2012.During the year the Business Associate remitted an amount of Rs.100 crore (previous yearRs.70.18 crore) on the directions of Hon'ble Supreme Court. Considering the poor recoverynon-availability of security dispute by party with respect to interest charged and ageof outstanding dues interest income should not be recognized as per concept of prudence.
Considering the overall circumstances surrounding the recoverability of outstandingdues of Rs.2076.70 crores we are not in a position to ascertain whether the amount isfully recoverable or not. We are informed by the management that petition for execution ofdecree as per Conciliation Agreements under the Arbitration and Conciliation Act 1996 hasbeen filed before the Hon'ble Supreme Court wherein it has been held that decree is final.The party has submitted payment proposal before the Hon'ble Apex Court which is stillsubjudice before the Hon'ble Apex Court. Cases U/s 138 of Negotiable Instruments Act arealso filed by the company before the Hon'ble High Court Delhi. The Enforcement Directorateand CBI are also investigating into the matter about cheating and fraud done by the party.We have also been provided affirmative Board Resolution dt. 14.02.2017 and outcome dt.30.05.2017 that all possible efforts are extended for recovery of the dues through legalprocess and company is assured of recovering the dues.
(ii) With respect to contingent assets disclosed the management has not provided anysubstantive evidence in support of probability of recovery hence we are not in a positionto form an opinion thereon.
(iii) Reference is invited to Note 4.1 the company has not made provision of Rs.132.83crores being the amount payable to L&DO for execution of lease deed of company's oneof the property hence to that extent provision for impairment of fixed assets is shortmade.
(iv) Reference is invited to Note no. 9.16 as regard provision of Rs.3.58 crore madeagainst Rs.10.53 crore recoverable from one of the business associate the management hasconsidered Rs.6.13 crore towards value of immovable property provided as security. Sincethe company is not able to sale the property inspite of various auctions hence in ouropinion till realization of such security its value should not be considered forascertainment of provision for doubtful debts. Had the company made the provision of saidamount net profit of current year would have been lower by Rs.5.77 crore retainedearning and trade receivable (current assets) would have been lower by Rs.5.77 crore.
(v) Mumbai branch auditor has reported that debit balances appearing in Bhopal branchpertaining to security deposit and loans & advances of Rs.0.19 crore has not beenwritten off pending approval from competent authority. Had the company written off thesebalances net profit of current year would have been lower by Rs.0.19 crore retainedearning and deposits and loans & advances would have been lower by Rs.0.19 crore.
The cumulative effect of above observations (i) (iii) (iv) & (v) is that netprofit of current year would have been net loss of Rs.357.59 crore retained earning andassets would be lower by Rs.398.26 crore and Rs.265.43 crore respectively and claimspayable would have been higher by Rs.132.83 crore.
Emphasis of Matters
We draw attention to the following matters in the Notes to the standalone Ind ASfinancial statements: a) Reference is invited to Note no. 20.2 & 20.5 the bankaccounts of the company are classified as non performing asset by all the financing banksdue to non payment of dues by the company. The company has prepared the accounts on goingconcern basis considering the various actions being taken by the management under thesupervision of the administrative ministry. b) Reference is invited to Note no. 38.3regarding contingent liability of Rs.83.32 crore payable to foreign supplier as perarbitral award the company has filed an appeal against the arbitration award in theHon'ble Delhi High Court and Company deposited Rs.33.05 crore with court as per directionof Delhi High Court. Court proceedings are completed and Court judgement is reserved. Thetransaction was undertaken on behalf of Department of Fertilizer (DOF) and is beingregularly followed up. Hence no provision is considered necessary. c) Reference ininvited to Note no. 38.4 regarding contingent liability of Rs.90.73 crore along withinterest payable to a foreign supplier on account of import of Pluses in earlier years asper majority arbitration award passed in favour of foreign supplier. The company has filedan appeal against the majority arbitration award in the Hon'ble Delhi High Court. Thistransaction was undertaken on behalf of Ministry of Consumer Affairs (MOCA) which isbeing regularly followed -up.In view of above no provision is considered necessary. d)Reference is invited to Note no.14.2 regarding trade advance of Rs.87.39 crore recoverablefrom one of parties against which the company has initiated legal actions includingcriminal proceedings. Pending outcome of legal steps initiated for recovery fullprovision of Rs.87.39 crore was made in earlier year. However the company was successfulin getting arbitration award of Rs.110.00 crore in its favour along with 12% interest perannum from 1st May 2006 till realization of award which has been objected bythe party and hearing is pending before Hon'ble High Court New Delhi. e) Reference isinvited to Note no. 11.4 regarding Non Current Claim Recoverable under other financialassets Rs.3.92 crore recoverable from one of the business associate and counter claimagainst company for an amount of Rs.39.41 crore ( Rs. 39.41 crore) by an associate.Legal proceedings are going on As per the legal opinion obtained the ultimate outcome ofthe case may be in favour of company. Hence no provision and liability has been recognizedin this respect. f) Reference is invited to Note no. 22.2 regarding claim of Rs.80.03crore towards property tax dues raised by NDMC New Delhi on the company. The company hasmade the part payment of Rs.20 crore pending the review of assessment by NDMC andjudgment of appeals filed there against in Hon'ble Patiala District Court New Delhi. g)Reference is invited to Note no. 9.6 regarding non current trade receivable Rs.568.44crore on account of export of pharma products to foreign buyers on back to back basis. Asthere is default in the payment against export bills by the buyers which have ultimatelygone into liquidation litigation process have been initiated by the Company as well as byIndian Associates and their bankers. A claim of Rs.527.86 crore has been admitted by theliquidator and decree for Rs.62.47 crore by Hon'ble High Court Mumbai. There is howevercorresponding credit balance of Rs.568.44 crore under trade payables. Management does notanticipate any liability on this account. h) Reference is invited to Note no.9.9regarding non current trade receivable of Rs.787.65 crore under the Credit LinkedInsurance Scheme (CLIS) for export of gold jewellery etc. against which correspondingcredit balance of Rs.342.19 crore are available leaving net receivable of Rs.445.46crore. Actions against the Business Associate have been initiated. The matter is beingpursued legally and company is hopeful of recovery. As a measure of abundant caution fullprovision of Rs.445.46 crore being net receivable has been made in earlier year. i)Reference is invited to Note no. 9.7 regarding non current trade receivables of Rs.9.83crore (net of provision for diminution in value of stock) recoverable from one of thebusiness associates for goods sold in earlier years. The overdue is secured by pledge ofstocks in favour of STC. Upon non-payment of overdue receivables legal actions have beeninitiated against the business associate u/s 138 of Negotiable Instruments Act 1881 andcivil hearings are in progress. Another PSU company MSTC had made a claim in respect ofownership of some of the pledged stock sold by the STC to business associate. The case ispending at Hon'ble Mumbai High Court. j) Reference is invited to Note no.9.10 regardingother trade receivables of Rs.41.92 crore on account of export of agro commodities toforeign buyers through Indian business associates against which credit balance of Rs.41.92crore is available under trade payable. The foreign buyer defaulted in making payment andupon non-receipt of the dues from business associate the Company has initiated necessarylegal steps against business associates for recovery. Considering the legal enforceabilityof the agreement and corresponding credit of Rs.41.92 crore no provision is considerednecessary. k) Reference is invited to Note no.11.3 regarding claim recoverable of Rs.5.48crore from one of the business associate on account of quality variations in materialsupplied. Considering the current status no provision is considered necessary by thecompany. l) Reference is invited to Note no.9.2 regarding current trade receivables ofRs.89.75 Crore which is overdue on account of pending reconciliation issues/performanceguarantee. No provision has been considered necessary by the company since the outstandingamount is secured by corresponding credit balance available in sundry creditors. m)Reference is invited to Note no. 9.11 regarding non current trade receivable of Rs.10.21crore recoverable from MARKFED Govt. of Maharashtra (GOM) towards supply of RBD Palmolienunder PDS Scheme during the years 2010-11 and 2011-12 pending for finalreconciliation at their end. Matter is being constantly taken up with MARKFED Govt. ofMaharashtra for recovery. As a matter of prudence full provision of Rs.10.21 crore hasbeen made during the previous year 2016-17. n) The credit of input tax payable torecipient of common maintenance services provided by the company at its Delhi office isnot determined and transferred to recipients as required by Section 171 of Delhi GST Act2017 and CGST Act 2017. o) Reference is invited to Note no. 9.3 regarding non currenttrade receivable of Rs.122.95 crore from one of the business associate for goods sold inthe earlier years which is overdue. STC has filed compliant for commission of offencesunder section 405 406 409 415 & 420 read with sec. 107 120-B 34 of Indian PenalCode in the court of Judicial Magistrate (First Class) against the associate. As a matterof prudence full provision for Rs.122.95 crore had been made in previous year. p)Reference is invited to Note no. 51 & 52 relating to pendingreconciliation/confirmation of balances in parties accounts claims recoverable advancesand current and other liabilities and consequential adjustment that may arise onreconciliation. q) Reference is invited to Note no. 9.8 regarding non current tradereceivables of Rs.17.28 crore recoverable from one of the business associates for goodssold in earlier years. Criminal complaints u/s 138 of Negotiable Instruments Act 1881 andcontempt application filed before Hon'ble High Court New Delhi are under progress againstthe business associate. As a matter of prudence provision for full amount of Rs.17.28crore had been made in previous year.
Our opinion is not modified in respect of these matters.
In our opinion and to the best of our information according to the explanations givento us and except for the matters described in the Basis for Qualified Opinion paragraphreferred above the aforesaid standalone Ind AS financial statements give the informationrequired by the Act in the manner so required and give a true and fair view in conformitywith the accounting principles generally accepted in India of the state of affairs of theCompany as at 31st March 2018 and its profit total comprehensive income itscash flows and the changes in equity for the year ended on that date.
We did not audit the Ind AS financial statements/information of eight branches includedin the standalone Ind AS financial statements of the Company whose Ind AS financialstatements/financial information reflect total assets of Rs.1247.91 crore as at 31stMarch 2018 and total revenues of Rs.7741.43 crore for the year ended on that date asconsidered in the standalone Ind AS financial statements. The Ind AS financialstatements/information of these branches have been audited by the branch auditors whosereports have been furnished to us and our opinion in so far as it relates to the amountsand disclosures included in respect of these branches is based solely on the report ofsuch branch auditors and management replies to the observations of the branch auditors.
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 2016 ("the Order")issued by the Central Government of India in terms of sub-section (11) of section 143 ofthe Act based on our observations reports received from branch auditors in respect ofbranches not visited by us and explanations received from management we give in theAnnexure A' statement on the matters specified in paragraphs 3 and 4 of the Orderto the extent applicable.
2. As required by Section 143 (3) of the Act we report that:
(a) We have sought and obtained all the information and explanations which to the bestof our knowledge and belief were necessary for the purposes of our audit except certainrecords/information at Mumbai branch Chennai branch and balance confirmation of partiesas mentioned in para no. (p) above under Emphasis of Matters.
(b) Except for the effect of the matters described in the Basis for Qualified Opinionparagraph above in our opinion proper books of account as required by law have been keptby the Company so far as it appears from our examination of those books and proper returnsadequate for the purposes of our audit have been received from the branches not visited byus except the system of maintaining stock records by branch with respect to goods keptwith third party needs to be further strengthen.
(c) The reports on the accounts of the branch offices of the Company audited underSection 143(8) of the Act by the branch auditors have been sent to us alongwith managementreplies to the observations of the branch auditors and have been properly dealt with by usin preparing this report.
(d) The Balance Sheet the Statement of Profit and Loss including Other ComprehensiveIncome the Cash Flow Statement and the Statement of Changes in Equity dealt with by thisReport are in agreement with the books of account and with the returns received from thebranches not visited by us.
(e) Except for the effect of the matters described in the Basis for Qualified Opinionparagraph above in our opinion the aforesaid standalone Ind AS financial statementscomply with the Indian Accounting Standards specified under Section 133 of the Act readwith relevant rules issued thereunder.
(f) The matters described in the Basis of Qualified Opinion paragraph above in ouropinion may have an adverse effect on functioning of the company (g) Being a GovernmentCompany section 164(2) of Companies Act 2013 regarding whether any director isdisqualified from being appointed as a director is not applicable to the Company in viewof notification no. G.S.R.463 (E) dt. 05.06.2015.
(h) With respect to the adequacy of the internal financial controls over financialreporting of the Company and the operating effectiveness of such controls refer to ourseparate report in Annexure B' and (i) With respect to the other matters to beincluded in the Auditor's Report in accordance with Rule 11 of the Companies (Audit andAuditors) Rules 2014 in our opinion and to the best of our information and according tothe explanations given to us: i. The Company has disclosed the impact of pendinglitigations on its financial position in its Standalone Ind AS financial statements asreferred to in Note No. 38 38.1 38.2 38.3 & 38.4 to the Standalone Ind AS financialstatements. ii. The Company has made provision as required under the applicable law oraccounting standards for material foreseeable losses if any on long-term contractsincluding derivative contracts. iii. There has been no delay in transferring amountsrequired to be transferred to the Investor Education and Protection Fund by the Company.
3. As required by C&AG of India through directions issued under Section 143(5) ofthe Act we give a report in the attached Annexure C'.
| ||For P. Jain & Company |
| ||Chartered Accountants |
| ||Firm Regn. No.000711C |
| ||(Pankaj Jain) |
| ||Partner |
| ||M. No. 097279 |
|Place : New Delhi || |
|Date : 28.05.2018 || |
ANNEXURE A' TO INDEPENDENT AUDITOR'S REPORT
Re: The State Trading Corporation of India Limited
Referred to in Paragraph 1 under the heading of "Report on Other Legal andRegulatory Requirements" of our report of even date
1. (a) The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets except that absence of proper taggingat Mumbai Branch (b) The fixed assets were physically verified by the management duringthe year. We have been informed that no material discrepancies were noticed on suchphysical verification wherever done except at Mumbai Agra and Jalandhar branch where themanagement is in process of reconciling the discrepancies noticed on such physicalverification. (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 except for immovable properties referred toin Annexure- E whose title deeds are not held in the company's name.
2. As explained to us verification of inventories undertaken by the Company throughsurveyor from time to time. In respect of the goods in the custody of third partiescertificate is obtained from the Clearing & Handling Agents or the warehousingcorporation or from the concerned parties.
3. As informed to us the Company has not granted any loans secured or unsecured tocompanies firms limited liability partnerships or other parties covered in the registermaintained under section 189 of the Companies Act 2013 (the Act'). Accordinglyclauses (iii)(a) (b) & (c) of paragraph 3 of the Order are not applicable to theCompany.
4. According to the information and explanations given to us the Company has not givenany loans or made any investments or provided any guarantees or security to the partiescovered under sections 185 and 186 of the Act. Accordingly paragraph 3 (iv) of the Orderis not applicable to the Company.
5. The Company has not accepted any deposits from the public during the year andconsequently the directives issued by Reserve Bank of India the provisions of sections73 to 76 of the Act and rules framed there under are not applicable to the Company.However certain old amount are outstanding in advances from customers/credit balance incustomer account which as explained to us is immaterial and is subject to reconciliationand adjustment if any.
6. As informed by the management the Central Government has not prescribed themaintenance of cost records under section 148 (1) of the Act for the Company.
7. (a) According to the records of the Company undisputed statutory dues includingprovident fund employees' state insurance income-tax sales-tax goods and service tax(GST) service tax duty of customs duty of excise value added tax cess and otherstatutory dues have been generally regularly deposited with the appropriate authorities.There were no undisputed amounts payables in respect of the aforesaid dues which wereoutstanding as at 31st March 2018 for a period of over six months from thedate they became payable except Rs.0.01 crore professional tax payable at Mumbai branch.
(b) According to the information and explanations given to us there are followingdisputed statutory dues aggregating Rs.2.56 crore on account of Income tax Rs.767.15crore on account of Sales tax/VAT Rs.50.73 crore on account of Service tax and Rs.0.06crore under BPDRA which have not been deposited.
|Name of the statute ||Nature of dues ||Amount (Rs. in Crore) ||Period to which the amount relates ||Forum where dispute is pending |
|Income Tax || || || || |
|Income Tax Act ||Income Tax ||1.73 ||2008-09 ||DCIT Delhi |
|Income Tax Act ||Penalty ||0.83 ||2010-11 ||CIT Appeal Delhi |
|Sales Tax || || || || |
|TNGST/AST/CST (Chennai Branch) ||Sales Tax (incl. penalty) ||0.83 ||1974-75 1975-76 1985-86 to 1987-88 1989-90 & 1991-92 ||Hon'ble Madras High Court |
|Central Sales Tax Act (Chennai Branch) ||Central Sales Tax ||0.01 ||1987-88 ||Appellate Tribunal |
|Custom Act (Chennai Branch) ||Custom Duty ||4.16 ||2017-18 ||SLP to be filed in Supreme Court |
|Central Sales Tax Act (Bengaluru Branch) ||Central Sales Tax Interest & Penalty ||0.08 ||2014-15 ||Asstt. Commissioner Commercial Tax |
|Bihar Sales Tax Act (Kolkata Branch) ||Sales Tax ||0.01 ||1989-90 ||Sales Tax Appellate Tribunal |
|Orrisa Sales Tax Act (Kolkata Branch) ||Sales Tax ||0.01 ||1988-89 ||Commissioner (Appeals) Orrissa |
|Central Sales Tax Act (Kolkata Branch) ||Central Sales Tax ||0.02 ||1993-94 to 1995-96 ||Hon'ble Assam High Court |
|Central Sales Tax Act (Kolkata Branch) ||Central Sales Tax ||0.23 ||2003-04 ||Joint Commissioner Sales Tax |
|West Bengal Vat Act/ Central Sales Tax Act (Kolkata Branch) ||Vat & CST ||0.02 ||2011-12 ||Joint Commissioner Commercial Tax |
|Maharashtra Sales Tax Act (Mumbai Branch) ||BST (Sales Tax) ||0.69 ||1992-93 & 1996-97 ||Maharashtra Sales Tax Tribunal |
|Maharashtra Sales Tax Act (Mumbai Branch) ||BST & CST ||46.88 ||1993-94 2000-01 & 2003-04 ||Joint Commissioner Sales Tax |
|Maharashtra Sales Tax Act (Mumbai Branch) ||BST CST & MVAT ||*391.06 ||2004-05 2006-07 2009-10 & 2011-12 ||Joint Commissioner Sales Tax |
|Maharashtra Sales Tax Act (Mumbai Branch) ||CST & WCT ||*290.52 ||2008-09 & 2012-13 ||Deputy Commissioner Sales Tax |
|Maharashtra Sales Tax Act (Mumbai Branch) ||MVAT ||**32.63 ||2006-07 ||Joint Commissioner Sales Tax |
* a stay order has been received against the amounted disputed.
** the matter is reminded back to the nodal office in charge for fresh assessment
|Name of the statute Service Tax ||Nature of dues ||Amount Rs. ( in Crore) ||Period to which the amount relates ||Forum where dispute is pending |
|Finance Act 1994 (Kolkata Branch) ||Service Tax ||7.29 ||2005-06 & 2006-07 ||CESTAT |
|Finance Act 1994 ||Service Tax ||7.96 ||2007-08 to 2013-14 ||Commissioner Service Tax |
|Finance Act 1994 ||Service Tax ||3.54 ||2014-15 ||Principal Commissioner Service Tax |
|Finance Act 1994 (Mumbai Branch) ||Service Tax ||*16.54 ||01.10.2004 to 31.03.2011 ||Service Tax Appellate Tribunal Mumbai |
|Finance Act 1994 (Mumbai Branch) ||Service Tax ||*0.13 ||01.04.2011 to 31.03.2012 ||Service Tax Appellate Authority Mumbai |
|Finance Act 1994 (Mumbai Branch) ||Service Tax ||**14.03 ||01.04.2012 to 31.03.2015 ||Service Tax Assessing Authority Mumbai |
|Finance Act 1994 (Mumbai Branch) ||Service Tax ||**1.24 ||01.04.2015 to 30.06.2017 ||Joint Commissioner of CGST & Central Excise Mumbai |
|Certificate Dues Liability || || || |
|BPDRA ||Certificate Dues Liability ||0.06 ||1971-72 & 1976-77 to 1978-79 ||Concerned Department |
* Appeal rejected and branch has contested / in process of contesting the order ** Showcause notice received
8. In our opinion and according to the information and explanations given to us theCompany has defaulted in repayment of loans or borrowing to banks as mentioned below. TheCompany does not have any loans or borrowing from any financial institution or governmentor dues to debenture holders during the year
|Name of the bank/ financial institution ||Amount of instalment/ interest due (Rs. In Crore) ||Due date ||Date of payment ||Delay (days) |
|Exim Bank (Instalment) ||5.00 ||03.10.2017 ||23.10.2017 ||20 |
|Exim Bank (Instalment) ||5.00 ||01.01.2018 ||Not paid ||- |
|Exim Bank (Interest) ||1.25 ||03.10.2017 ||10.10.2017 ||7 |
|Exim Bank (Interest) ||1.27 ||04.12.2017 ||Not paid ||- |
|Exim Bank (Interest) ||1.08 ||01.01.2018 ||Not paid ||- |
|Exim Bank (Interest) ||1.21 ||01.02.2018 ||Not paid ||- |
|Exim Bank (Interest) ||1.10 ||01.03.2018 ||Not paid ||- |
|Exim Bank (Interest) ||1.24 ||03.04.2018 ||Not paid ||- |
|Exim Bank (Interest) ||0.11 ||Various dates as referred above ||Not paid ||- |
|Bank of Baroda ||56.26 ||Invocation of BG ||Not paid ||- |
|Syndicate Bank ||25.41 ||Working capital loans ||Not paid ||- |
|Indian Overseas Bank ||215.95 ||Working capital loans ||Not paid ||- |
|Union Bank of India ||308.19 ||Working capital loans ||Not paid ||- |
|Indian Bank ||10.12 ||Working capital loans ||Not paid ||- |
9. The Company did not raise any money by way of initial public offer or further publicoffer (including debt instruments). 10. According to the information and explanationsgiven to us no material fraud by the company or on the Company by its officers oremployees has been noticed or reported during the course of our audit except fraud ofRs.5.63 crore by a business associate in Kolkata.
11. In our opinion and according to the information and explanations given to us theCompany has paid / provided for managerial remuneration in accordance with the requisiteapprovals mandated by the provisions of Section 197 read with Schedule V to the Act.
12. 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 not applicable to the Company.
13. According to the information and explanations given to us and based on ourexamination of the records of the Company transactions with the related parties aregenerally in compliance with sections 177 and 188 of the Act where applicable and detailsof such transactions have been disclosed in the Ind AS financial statements as required bythe applicable accounting standards. 14. According to the information and explanationsgiven to us and based on our examination of the records of the Company the Company hasnot made any preferential allotment or private placement of shares or fully or partlyconvertible debentures during the year.
15. According to the information and explanations given to us and based on ourexamination of the records of the Company the Company has not entered into non-cashtransactions with directors or persons connected with him. Accordingly paragraph 3 (xv)of the Order is not applicable to the Company.
16. The Company is not required to be registered under section 45-1A of the ReserveBank of India Act 1934
| ||For P. Jain & Company |
| ||Chartered Accountants |
| ||Firm Regn. No.000711C |
| ||(Pankaj Jain) |
|Place : New Delhi ||Partner |
|Date : 28.05.2018 ||M. No. 097279 |
ANNEXURE-B' TO THE INDEPENDENT AUDITORS' REPORT
Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section143 of the Companies Act 2013 ("the Act")
We have audited the internal financial controls over financial reporting of TheState Trading Corporation of India Limited ("the Company") as on 31stMarch 2018 in conjunction with our audit of the Ind AS financial statements of theCompany 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 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 auditinvolves performing procedures to obtain audit evidence about the adequacy of the internalfinancial controls system over financial reporting and their operating effectiveness. Ouraudit of internal financial controls over financial reporting included obtaining anunderstanding of internal financial controls over financial reporting assessing the riskthat a material weakness exists and testing and evaluating the design and operatingeffectiveness of internal control based on the assessed risk. The procedures selecteddepend on the auditor's judgement including the assessment of the risks of materialmisstatement 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 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 (IFCFR)
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.
Basis for Qualified Opinion
(i) Following design gap are noticed in IFCFR such as lawyer's certificate not taken inlitigation cases monitoring and record keeping of pledged/owned inventory not maintainedageing analysis and reconciliation with vendors not reviewed manual calculations forleaves no HR Software insurance of goods IT policy not documented disaster managementplan not documented no data backup for divisions other than corporate accounts databackup of accounting records not maintained for branches maker checker mechanism not inplace for sales invoicing fixed assets tag numbers not maintained in fixed assetsregister the risk control matrix neither been reviewed nor updated huge gap in timelines fixed by the corporate account and actual reporting of financials by the divisionsand branches etc.
(ii) With respect to Mumbai branch of the Company the branch auditor has reportedcertain material weaknesses in internal financial control over financial reporting such asinadequate- IT & general controls internal control system with regards to pledgedinventory including maintenance of adequate records and physical verification customeracceptance credit evaluation and establishing customer credit limit internal auditcoverage large financial exposure in litigated matters & pending statutory litigationinvolving tax demands financial reporting system compliance with statutory duesmaintenance of case wise legal expenses register maintenance of fixed asset register nonavailability of required information and documents in respect of old outstanding securitydeposit EMD advances and other deposit received and paid.
(iii) Reference is invited to Note no. 51 & 52 relating to pending reconciliation/confirmation of balances in parties accounts claims recoverable advances and current andother liabilities and consequential adjustment that may arise on reconciliation. Amaterial weakness' is a deficiency or a combination of deficiencies in internalfinancial control over financial reporting such that there is a reasonable possibilitythat a material misstatement of the Company's annual or interim financial statements willnot be prevented or detected on a timely basis.
In our opinion the Company has except for effects of the material weaknessesdescribed above on achievement of the objectives of the control criteria in all materialrespects an adequate internal financial controls system over financial reporting and suchinternal financial controls over financial reporting were operating effectively as at 31stMarch 2018 based on the internal control over financial reporting criteria establishedby the Company considering the essential components of internal control stated in theGuidance Note on Audit of Internal Financial Controls Over Financial Reporting issued bythe Institute of Chartered Accountants of India.
Our aforesaid report under Section 143(3)(i) of the Act on the adequacy and operatingeffectiveness of the internal financial controls over financial reporting insofar as itrelates to eight branches at Ahmedabad Bangalore Bhopal Chennai Cochin HyderabadKolkata and Mumbai is based on the corresponding reports of the auditors of such branchesand management replies to the observations of the branch auditors.
| ||For P. Jain & Company |
| ||Chartered Accountants |
| ||Firm Regn. No.000711C |
| ||(Pankaj Jain) |
|Place : New Delhi ||Partner |
|Date : 28.05.2018 ||M. No. 097279 |