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SKM Egg Products Export (India) Ltd.

BSE: 532143 Sector: Agri and agri inputs
NSE: SKMEGGPROD ISIN Code: INE411D01015
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OPEN 85.00
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VOLUME 22294
52-Week high 98.45
52-Week low 39.45
P/E 14.11
Mkt Cap.(Rs cr) 221
Buy Price 0.00
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Sell Price 0.00
Sell Qty 0.00
OPEN 85.00
CLOSE 85.25
VOLUME 22294
52-Week high 98.45
52-Week low 39.45
P/E 14.11
Mkt Cap.(Rs cr) 221
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

SKM Egg Products Export (India) Ltd. (SKMEGGPROD) - Auditors Report

Company auditors report

TO

THE MEMBERS OF

SKM EGG PRODUCTS EXPORT (INDIA) LIMITED

Report on the Standalone financial statements

Opinion:

We have audited the accompanying standalone financial statements of M/s. SKM EGGPRODUCTS EXPORT (INDIA) LIMITED ("the Company") (Registered Office at133 133/1 Gandhiji Street Erode - 638 001) which comprise the Balance Sheet as atMarch 312020 the Statement of Profit and Loss (Including Other Comprehensive Income)the Statement of changes in equity and Statement of Cash Flows for the year then ended anda summary of the significant accounting policies and other explanatory information(hereinafter referred to as "standalone financial statements").

In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid standalone financial statements give the information requiredby the Companies Act 2013 ("the Act") in the manner so required and give a trueand fair view in conformity with the Indian Accounting Standards prescribed under section133 of the Act read with the Companies (Indian Accounting Standards) Rules 2015 asamended ("Ind AS") and other accounting principles generally accepted in Indiaof the state of affairs of the Company as at 31st March 2020; the Profit and totalcomprehensive income changes in equity and its cash flows for the year ended on thatdate.

Basis for Opinion:

We conducted our audit in accordance with the Standards on Auditing (SAs) specifiedunder Section 143(10) of the Companies Act 2013. Our responsibilities under thoseStandards are further described in the Auditor's Responsibilities for the Audit of theFinancial Statements section of our report. We are independent of the Company inaccordance with the Code of Ethics issued by the Institute of Chartered Accountants ofIndia together with the ethical requirements that are relevant to our audit of thefinancial statements under the provisions of the Companies Act 2013 and the Rules thereunder and we have fulfilled our other ethical responsibilities in accordance with theserequirements and the Code of Ethics. We believe that the audit evidence we have obtainedis sufficient and appropriate to provide a basis for our audit opinion on the standalonefinancial statements.

Key Audit Matters

Key audit matters are those matters that in our professional judgement were of mostsignificance in our audit of the Standalone Financial Statements of the current period.These matters were addressed in the context of our audit of Standalone FinancialStatements as a whole and in forming our opinion thereon and we do not provide a separateopinion on these matters. We have determined the matters described below to be the keyaudit matters to be communicated in our report.

S No Key Audit Matter Auditor's Response
1 Inventory Existence and Valuation:
As on 31st March 2020 the Company carries inventories to the tune of Rs.70.41 crores. • We have attended inventory counts for certain products which we have selected based on financial significance and risk observed management's inventory count procedures to assess the effectiveness selected a sample of inventory products and compared the quantities counted to the quantities recorded and ensured inventory adjustments if any are recorded in the books of accounts.
We considered the amount of inventories as a key audit matter given the relative size of the balance in the financial statements. • With regard to the stocks held in the overseas branch and in transit we have received the certificate from the overseas branch auditor and obtained management representation and verified the relevant documents relating to goods sent from head office to the branch
Also there are complexities and manual process involved in determining inventory quantities on hand and valuation of the same due to the diverse & numerous inventory products and stocks held in overseas branch and price fluctuations of products. Therefore inventory quantities and valuation is identified as a key audit matter. • Reviewed the internal audit report regarding physical verification of inventories and traced adjustments on sample basis.
• Comparative analysis of inventory as at the end of the year with the inventory at the beginning of the year.
• We assessed whether the management's controls relating to inventory's valuation are appropriately designed and implemented and verified the correctness of valuation made by the management on a sample basis with regard to the cost and net realizable value of inventory.
2 Recoverability of Direct tax receivables:
• Obtained the details of completed income tax assessments and demands/refunds as on 31.03.2020 from the management.
The company has certain income tax refund receivables on account of the verdict by the appellate authorities. • We have also reviewed the company's correspondences and appellate orders.
• Ascertained the recoverability of the receivables and ensured appropriate disclosure under Notes on accounts.
3 Evaluation of Contingent liabilities:
The company has an uncertain indirect tax position and other contingent liabilities in respect of bills discounted which involve significant judgment to determine the possible outcome of these matters. • We have also reviewed the company's correspondences and appellate documents and considered legal precedence and other rulings in evaluating management's position on these uncertain tax positions
Obtained the details of completed indirect tax assessments and demands as on 31.03.2020 from the management. • In respect of bills discounted analyzed the history of the business transactions of the company with the debtors whose bills were discounted and the trend of payments made by the debtors in the past and also had taken into account the transactions occurring after the balance sheet date in assessing the recoverability of debtors for the bills discounted.
• Ascertained the chances of crystallization of liability are probable / possible / remote and ensured appropriate disclosure under Notes on accounts.

Information Other than the Financial Statements and Auditor's Report Thereon

The Company's Board of Directors is responsible for the other information. The otherinformation comprises the information included in the Management Discussion and AnalysisBoard's Report including Annexures to Board's Report Business Responsibility ReportCorporate Governance Report and Shareholder Information but does not include thestandalone financial statements and our auditor's report thereon.

Our opinion on the standalone financial statements does not cover the other informationand we do not express any form of assurance conclusion thereon.

In connection with our audit of the standalone financial statements our responsibilityis to read the other information and in doing so consider whether the other informationis materially inconsistent with the standalone financial statements or our knowledgeobtained during the course of our audit or otherwise appears to be materially misstated.If based on the work we have performed we conclude that there is a material misstatementof this other information we are required to report that fact. We have nothing to reportin this regard.

Management's Responsibility for the Standalone 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 standalone financial statements that give a true and fair view of the financialposition financial performance total comprehensive income changes in equity and cashflows of the Company in accordance with the accounting principles generally accepted inIndia including the Accounting Standards specified under Section 133 of the Act. 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 appropriateimplementation and maintenance of accounting policies; making judgments and estimates thatare reasonable and prudent; and design implementation and maintenance of adequateinternal financial controls that were operating effectively for ensuring the accuracy andcompleteness of the accounting records relevant to the preparation and presentation ofthe financial statements that give a true and fair view and are free from materialmisstatement whether due to fraud or error.

In preparing the financial statements management is responsible for assessing theCompany's ability to continue as a going concern disclosing as applicable mattersrelated to going concern and using the going concern basis of accounting unless managementeither intends to liquidate the Company or to cease operations or has no realisticalternative but to do so.

Those Board of Directors are also responsible for overseeing the company's financialreporting process.

Auditor's Responsibility for the Audit of Standalone financial statements:

Our objectives are to obtain reasonable assurance about whether the standalonefinancial statements as a whole are free from material misstatement whether due to fraudor error and to issue an auditor's report that includes our opinion. Reasonable assuranceis a high level of assurance but is not a guarantee that an audit conducted in accordancewith 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.

As part of an audit in accordance with SAs we exercise professional judgment andmaintain professional skepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the standalonefinancial statements whether due to fraud or error design and perform audit proceduresresponsive to those risks and obtain audit evidence that is sufficient and appropriate toprovide a basis for our opinion. The risk of not detecting a material misstatementresulting from fraud is higher than for one resulting from error as fraud may involvecollusion forgery intentional omissions misrepresentations or the override of internalcontrol.

• Obtain an understanding of internal financial controls relevant to the audit inorder to design audit procedures that are appropriate in the circumstances. Under section143(3)(I) of the Act we are also responsible for expressing our opinion on whether theCompany has adequate internal financial controls system in place and the operatingeffectiveness of such controls.

• Evaluate the appropriateness of accounting policies used and the reasonablenessof accounting estimates and related disclosures made by management.

• Conclude on the appropriateness of management's use of the going concern basisof accounting and based on the audit evidence obtained whether a material uncertaintyexists related to events or conditions that may cast significant doubt on the Company'sability to continue as a going concern. If we conclude that material uncertainty existswe are required to draw attention in our auditor's report to the related disclosures inthe standalone financial statements or if such disclosures are inadequate to modify ouropinion. Our conclusions are based on the audit evidence obtained up to the date of ourauditor's report. However future events or conditions may cause the company to cease tocontinue as a going concern.

• Evaluate the overall presentation structure and content of the standalonefinancial statements including the disclosures and whether the standalone financialstatements represent the underlying transactions and events in a manner that achieves fairpresentation.

We communicate with those charged with governance regarding among other matters theplanned scope and timing of the audit and significant audit findings including anysignificant deficiencies in internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have compliedwith relevant ethical requirements regarding independence and to communicate with themall relationships and other matters that may reasonably be thought to bear on ourindependence and where applicable related safeguards.

From the matters communicated with those charged with governance we determine thosematters that were of most significance in the audit of the standalone financial statementsof the current period and are therefore the key audit matters. We describe these mattersin our auditor's report unless law or regulation precludes public disclosure about thematter or when in extremely rare circumstances we determine that a matter should not becommunicated in our report because the adverse consequences of doing so would reasonablybe expected to outweigh the public interest benefits of such communication.

Other Matters:

We did not audit the financial statements/information of 1 branch (Foreign branch) (InRussia) included in the standalone financial statements of the Company whose financialstatements/financial information reflect total assets of Rs.208322611/- as at 31stMarch 2020 and total revenues of Rs.618504499/- for the year ended on that date asconsidered in the standalone financial statements. The financial statements/information ofthis branch have not been audited by us and has been audited by Russian Auditor whoseaudit report has been furnished to us and our opinion is based on those FinancialStatements received from the Branch Office and certified by the Russian Auditor. Ouropinion is not qualified/modified in respect of this matter.

Report on Other Legal and Regulatory Requirements:

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

a) We have sought and obtained all the information and explanations which to the bestof our knowledge and belief were necessary for the purpose of our audit.

b) In our opinion proper books of account as required by law have been kept by theCompany so far as it appears from our examination of those books and proper returnsadequate for the purposes of our audit have been received from the branches not visited byus.

c) The Balance Sheet the Statement of Profit and Loss (including Other ComprehensiveIncome) Statement of Changes in Equity and the Statement of Cash Flow dealt with by thisReport are in agreement with the books of account and with the returns received from thebranches not visited by us.

d) In our opinion the aforesaid standalone financial statements comply with theAccounting Standards prescribed under Section 133 of the Act read with relevant rulesissued there under.

e) On the basis of written representations received from the directors as on March312020 taken on record by the Board of Directors none of the directors is disqualifiedas on March 312020 from being appointed as a director in terms of Section 164(2) of theAct.

f) 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 A";

g) With respect to the other matters to be included in the Auditor's Report inaccordance with the requirements of section 197(16) of the Act the remunerationpaid/provided during the year to directors is in accordance with the provisions of section197 of the Act.

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

i. The Company has disclosed the impact of pending litigations on its financialposition in its Standalone Ind AS financial statements - Also Refer Note number 2(ii) ofNotes on Accounts to the Standalone Ind AS financial statements;

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

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

2) 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 Companies Act 2013 we give in the "Annexure - B" a statement on thematters specified in paragraphs 3 and 4 of the Order to the extent applicable.

N. PRASANNA VENKATESAN
CHARTERED ACCOUNTANT
Date : 29.06.2020 Membership No.235530
Place : Erode UDIN : 20235530AAAABC9663

ANNEXURE- A

TO THE INDEPENDENT AUDITORS' REPORT ON THE STANDALONE FINANCIAL STATEMENTS OF SKM EGGPRODUCTS EXPORT (INDIA) LIMITED

Referred to in paragraph 1(f) under Report on Other legal and Regulatory Requirementsof our Report of even date

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 M/s. SKMEGG PRODUCTS EXPORT (INDIA) LIMITED("the Company") as of 31 March 2020 inconjunction with our audit of the Standalone financial statements of the Company for theyear 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'). These responsibilitiesinclude the design implementation and maintenance of adequate internal financial controlsthat were operating effectively for ensuring the orderly and efficient conduct of itsbusiness including adherence to company's policies the safeguarding of its assets theprevention and detection of frauds and errors the accuracy and completeness of theaccounting records and the timely preparation of reliable financial information asrequired under the Companies Act 2013.

Auditors' 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") 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 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 have amaterial 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.

Opinion:

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 2020 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.

N. PRASANNA VENKATESAN
CHARTERED ACCOUNTANT
Date : 29.06.2020 Membership No.235530
Place : Erode UDIN : 20235530AAAABC9663

"ANNEXURE B"

TO THE INDEPENDENT AUDITOR'S REPORT ON THE STANDALONE INDAS FINANCIAL STATEMENTS OF SKMEGG PRODUCTS EXPORT (INDIA) LIMITED

Referred to in Paragraph 2 under the Heading of "Report on Other Legal andRegulatory Requirements" section of our report of even date

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 Companies Act 2013 we report that

1. a. The Company is maintaining proper records showing full particulars includingquantitative details and situation of fixed assets.

b. The fixed assets have been physically verified by the management at reasonableintervals and no material discrepancies were noticed on such verifications.

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.

2. The Management has conducted physical verification of inventory at reasonableintervals and no material discrepancies were noticed on physical verification.

3. The Company during the year has not granted any secured or unsecured loans tocompanies firms Limited Liability Partnerships or other parties covered in the registermaintained under Section 189 of the Companies Act.

4. The Company during the year has not granted any loans or made any investments orgiven any security or guarantees and hence Section 185 and 186 of the Companies Act 2013are inapplicable.

5. The Company has not accepted any deposits from the public and hence this clause isinapplicable.

6. The Central Government has specified the maintenance of Cost Records undersub-section (1) of section 148 of the Companies Act and such accounts and records havebeen made and maintained.

7. a. According to the records of the company the company is regular in depositingundisputed statutory dues including provident fund employee state insurance income-taxsales-tax service Tax duty of customs duty of excise value added tax cess and otherstatutory dues to the extent applicable with the appropriate authorities. According tothe information and explanation given to us no undisputed amounts payable in respect ofthe aforesaid dues were outstanding as at 31st March 2020 for a period of more than sixmonths from the date they became payable.

b. Disputed dues of income-tax sales-tax service Tax duty of customs duty ofexcise value added tax cess and other statutory dues if any pending as at 31st March2020 are given below:

Nature of the Statute Nature of dues Forum where the dispute is pending Period to which the amount relates Amount (Rs)
Central Excise Act 1944 Excise Duty CESTAT Chennai November 2011 to March 2014 558575/-
High Court of Chennai January 2005 to April 2006 200863/-
High Court of Chennai July 2005 to March 2006 792817/-
CESTAT Chennai April 2006 to March 2016 1800280/-
Finance Act 1994 Service Tax Deputy Commissioner of Central Excise Salem April 2014 to September 2014 736203/-
CESTAT Chennai August 2012 to March 2015 4396748/-
Assistant Commissioner of Central Excise & GST Erode. April 2015 to March 2017 3964111/-

8. The company has not defaulted in repayment of loans or borrowings to FinancialInstitutions banks or government.

9. The company during the year has not raised any money through Initial or FurtherPublic Offer (including debt instruments) and hence this clause is inapplicable in as muchas it deals with raising of money through public offer and its subsequent application.Based on our audit procedures we are of opinion that term loans borrowed by the companywere applied for the purposes for which those are raised.

10. According to the information and explanation given to us and from the auditprocedures adopted by us we are of opinion that no fraud by the company or no fraud onthe company by its officers or employees has been noticed or reported during the year.

11. The managerial remuneration has been paid or provided in accordance with therequisite approvals mandated by the provisions of section 197 read with Schedule V to thecompanies Act2013.

12. The Company is not a "Nidhi company" and hence the Nidhi Rules 2014 areinapplicable and consequently this clause is inapplicable to the company.

13. According to the information and explanation given to us all transactions with therelated parties are in compliance with Section 177 and 188 of the Companies Act 2013wherever applicable and the details have been disclosed in the financial statements asrequired by the applicable accounting standards.

14. The company has not made any preferential allotment or private placement of sharesor fully or partly convertible debentures during the year under review and hence thisclause is inapplicable to the company.

15. According to the information and explanation given to us and from our auditobservation we are of opinion that the company has not entered into any non-cashtransactions with its directors or persons connected with them and hence Section 192 ofthe Companies Act 2013 and this clause are inapplicable to the company.

16. The company is not a Non-banking financial company and hence the company is notrequired to be registered under section 45-IA of the Reserve Bank of India Act 1934 andhence the requirement to get registered under Reserve Bank of India Act 1934 does notarise.

N. PRASANNA VENKATESAN
CHARTERED ACCOUNTANT
Date : 29.06.2020 Membership No.235530
Place : Erode UDIN : 20235530AAAABC9663

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