To the Members of
M/S. SUNIL AGRO FOODS LIMITED
We have audited the accompanying Standalone financial statements of M/s. Sunil AgroFoods Limited (the Company) which comprises the Balance Sheet as atMarch 31 2020 the Statement of Profit and Loss (including Other Comprehensive Income)the Statement of changes in Equity and the Statement of Cash Flows for the year then endedand notes to the financial statements including a summary of significant accountingpolicies and other explanatory information.
In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid financial statements give the information required by the Actin the manner so required and give a true and fair view in conformity with the accountingprinciples generally accepted in India of the state of affairs of the Company as at 31March 2020 and its Profit total comprehensive income the changes in equity and its cashflows for the year ended onthatdate.
Basis for Qualified Opinion
We conducted our audit of the standalone financial statements in accordance with theStandards on Auditing (SAs) specified under section 143(10) of the Companies Act 2013.Our responsibilities under those Standards are further described in the Auditor'sResponsibilities for the Audit of the Financial Statements section of our report. We areindependent of the Company in accordance with the Code of Ethics issued by the Instituteof Chartered Accountants of India together with the ethical requirements that are relevantto our audit of the financial statements under the provisions of the Companies Act 2013and the Rules thereunder and we have fulfilled our
other ethical responsibilities in accordance with these requirements and the Code ofEthics. We believe that the audit evidence we have obtained is sufficient and appropriateto provide a basis forouropinion.
The Company has not made provisions for Bad debt of Rs 9756685/ in case of one debtorMaiyas Beverage and Foods Private Limited which was referred to NCLT under IndianBankruptcy Code and NCLT has passed the order on 10th May 2019. As per NCLT order only15.14% amount is payable to all the Sundry Creditors of Maiyas Beverage and Foods PrivateLimited. Company's total outstanding against Maiyas Beverage and Foods Private Limited atthe time of referral to NCLT stood Rs.11497390/-. Due to this Company's profit andSundry debtors are overstated by Rs. 9756685/
Key Audit Matters
Key audit matters are those matters that in our professional judgment were of mostsignificance in our audit of the financial statements of the current period. These matterswere addressed in the context of our audit of the financial statements as a whole and informing our opinion thereon and we do not provide a separate opinion on these matters.For each matter below our description of how our audit addresses the matter is providedin that context.
We have determined the matters described below to be the key audit matters to becommunicated in our report. We have fulfilled the responsibilities for the audit of theStandalone Financial Statements section of our report including in relation to thesematters. Accordingly our audit included the performance of procedures designed to respondto our assessment of the risks of material misstatement of the Standalone FinancialStatements. The results of our audit procedures including the procedures performed toaddress the matters below provide the basis for our audit opinion on the accompanyingStandalone Financial Statements.
The Company has certain significant open legal proceedings under arbitration forvarious complex matters with the Government of India and other parties continuing fromearlier years which areas under:
a) Claims against the Company from the Central Excise Department related to period from05/08/2010 to 31/10/2013.The company has filed an appeal against the order demandinginterest and penalty with the Customs Excise and Service Tax Appellate Tribunal. (ReferNote 33)
Due to the complexity involved in these litigation matters management's judgementregarding recognition and measurement of provisions for these legal proceedings isinherently uncertain and might change over time as the outcomes of the legal cases anddetermined. Accordingly it has been considered as a Key Audit Matter.
Our Audit procedures included and were not limited to the following :
Discussion with the management on the development in these litigations duringthe year ended March 312020
Review of the disclosures made by the Company in the Financial Statements inthis regard.
Obtained representation letter from the management on the assessment of thesematters.
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 Board's Report including Annexure to the Board's Report but does not includethe 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 in the audit or otherwise appears to be materially misstated.
If based on the work we have performed we conclude that there is a materialmisstatement of this other information; we are required to report that fact. We havenothing to report in this regard.
Responsibility of Management 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 including other comprehensive income cash flows andchanges in equityof the Company in accordance with the Indian Accounting standards (IndAS) prescribed under section 133 of the Act read with the Companies (Indian Accountingstandards)Rules 2015 as amended and other accounting principles generally accepted inIndia.
This responsibility also includes maintenance of adequate accounting records inaccordance with the provisions of the Act for safeguarding of the assets of the Companyand for
preventing and detecting frauds and other irregularities; selection applicationimplementation and maintenance of appropriate of accounting policies; making judgments andestimates that are reasonable and prudent; and design implementation and maintenance ofadequate internal financial controls that were operating effectively for ensuring theaccuracy and completeness of the accounting records relevant to the preparation andpresentation of the standalone financial statement that give a true and fair view and arefree from material misstatement 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.
The Board of Directors is also responsible for overseeing the company's financialreporting process.
Auditor's Responsibility for the Audit of the Standalone Financial Statements
Our objectives are to obtain reasonable assurance about whether the financialstatements as a whole are free from material misstatement whether due to fraud or errorand to issue an auditor's report that includes our opinion. Reasonable assurance is a highlevel of assurance but is not a guarantee that an audit conducted in accordance with SAswill always detect a material misstatement when it exists. Misstatements can arise fromfraud or error and are considered material if individually or in the aggregate theycould reasonably be expected to influence the economic decisions of users taken on thebasis of these financial statements.
As part of an audit in accordance with SAs we exercise professional judgment andmaintain professional skepticism throughout the audit.
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 control relevant to the audit in order todesign audit procedures that are appropriate in the circumstances but not for the purposeof expressing an opinion on the effectiveness of the entity's internal 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 a 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 our auditor'sreport. However future events or conditions may cause the Company to cease to continue asa 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.
Materiality is the magnitude of misstatements in the standalone financial statementsthat individually or in aggregate makes it probable that the economic decisions of areasonably knowledgeable user of the standalone financial statements may be influenced. Weconsider quantitative materiality and qualitative factors in (i) planning the scope of ouraudit work and in evaluating the results of our work; and (ii) to evaluate the effect ofany identified misstatements in the standalone financial statements.
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 identifyduringouraudit.
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.
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 of theCompanies Act 2013 we give in the Annexure 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 all the information and explanations which to thebestofourknowledgeand belief were necessary for the purposes of our audit.
b. Except for the effect of the matters described in basis of qualified opinionparagraph above In our opinion proper books of account as required by law havebeen kept by the Company so far as it appears from our examination of those books
c. The Balance Sheet the Statement of Profit and Loss including other ComprehensiveIncome Statement of changes in Equity and the Statement of Cash Flow dealtwith by thisReport are in agreementwith the books of account.
d. In our opinion the aforesaid standalone financial statements comply with the IndianAccounting Standards specified under Section 133 of the Act read with the Companies(Indian Accounting standards) Rules 2015
e. On the basis of the written representations received from the directors as on 31stMarch 2020 taken on record by the Board of Directors none of the directors isdisqualified as on 31st March 2020 from being appointed as a director in terms of Section164 (2) of the Act.
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 our separate Report in AnnexureB. Our Report expresses an Qualified opinion on the adequacy and operatingeffectiveness of the company's internal financial controls over financial reporting.
g. 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 as amended inour opinion and to the best of our information and according to the explanations given tous:
i. The Company has disclosed the impact of pending litigations which could impact itsfinancial position as mentioned in note no.33 Contingent Liability.
ii. The Company did not have any long-term contracts including derivatives contractsfor which there were any material foreseeable losses.
iii. There were no amounts which were required to be transferred to the InvestorEducation and Protection Fund by the Company
|ForGRV&PK. Chartered Accountants |
|Kamal Kishore |
|M N.205819 |
|Place: Bangalore |
|Date: 22/06/2020 |
Annexure -A to the Independent Auditors' Report
The Annexure referred to in Independent
Auditors' Report to the members of M/s. Sunil
Agro Foods Limited (the Company) on the
standalone financial statements for the year
ended 31 March 2020 we report that:
(a) The company has maintained proper
records showing full particulars including quantitative details and situation of fixedassets;
(b) These fixed assets have been physically verified by the management at reasonableintervals; no material discrepancies were noticed on such verification.
(c) According to the information and explanations given to us and on the basis of ourexamination of the records of the company the title deeds of immovable properties areheld in the name of the company.
(ii) (a) On basis of information and explanation given to us Physical verification ofInventory has been conducted at reasonable intervals by the management.
(b) Procedure of physical verification of Inventory followed by the management isreasonable & adequate in relation to the size of company and nature of its business.
(c) In our opinion and according to the information and explanations given to us theCompany has maintained proper records of its inventories and no material discrepancieswere noticed on physical verification of stocks as compared to book records.
(iii) In our opinion and according to the information and explanations given to usTheCompany has not granted any unsecured loans to any of the parties covered in the Registermaintained under Section 189 of the Companies Act 2013. Accordingly clause (iii) of theorder is not applicable.
(iv) In our opinion and according to the information and explanations given to us thecompany has not provided any loans guarantees and Investments to which the provision ofsec 185 of the act apply. However regarding loans guarantees and Investments to whichthe provision of sec 186 apply such investment are within the limit provided under Section186 of the act.
(v) The company has not received any public deposits during the year to which section73 to 76 or any other relevant provisions of the act are applicable. Accordingly clause(v)ofthe order is notapplicable.
(vi) As informed to us the Central Government has not prescribed maintenance of costrecords under subsection (1) of Section 148 of the Act in respect of the activitiescarried on by the Company.
(vii) (a) According to the records of the company
and information and explanations given to us and on the basis of our examination of therecords of the company the Company has generally been regular in depositing undisputedstatutory dues including Provident Fund employees state insurance (ESI) InvestorEducation and Protection Fund Income-tax Tax
deducted at sources Tax collected at source Professional Tax GST Cess and othermaterial statutory dues applicable to it with the appropriate authorities. As explainedto us the company did not have any dues on account of employee's state insurance and dutyof excise.
(b) According to the information and
explanations given to us there were no undisputed amounts payable in respect ofProvident fund Income-tax Custom Duty sales tax VAT GST Cess and other materialstatutory dues in arrears /were outstanding as at 31 March 2020 for a period of more thansix months from the date they became payable.
(c) According to the information and
explanations given to us details of disputed Excise duty which have not been depositedas on 31st March 2020 on account of any dispute are given below:
|Name of Statute ||Nature of the dues ||Disputed amount pending ||Period to which the amount relates (Financial Years) ||Forum where dispute is pending. |
|Central Excise Act 1944 ||Central Excise duty Excise duty Penalty Excise duty Interest ||Rs. 19551297/- Rs. 19551297/- Department yet to quantify the interest liability ||05/08/2010 to 31/10/2013 Until payment made ||Appeal against order is pending before CESTAT |
(viii) In our opinion and according to the information and explanations given to usthe company has not defaulted in the repayment of dues to financial institutions andbanks.
(ix) No money has been raised by way of initial public offer or further public offer(including debt instruments) during the year and Term Loans has been utilized for thepurposes for which they were raised during the year.
(x) To the best of our knowledge and according to the information and explanationsgiven to us no material fraud by the Company and no material fraud on the Company by itsofficers or employees has been noticed or reported during the course ofouraudit.
(xi) According to the information and explanations given to us and based on ourexamination of the records of the company the managerial remuneration has been provided inaccordance with the requisite approvals mandated by the provisions of Sec 197 read withSchedule V to the Act with respect to Managerial Remuneration.
(xii) In our opinion and according to the information and explanations given to us thecompany is not a Nidhi Company. Accordingly clause (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 the 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 under review. Accordingly clause (xiv) of the order is not applicable.
(xv) According to the information and explanations given to us and based on ourexamination of the records of the company the company has not entered into any non-cashtransactions with directors or persons connected with him. Accordingly clause (xv) of theorder is not applicable.
(xvi) The company is not required to be registered under section 45-IA of the ReserveBank of India Act 1934.
|Chartered Accountants |
|Kamal Kishore |
|M N.205819 |
|UDIN: 20205819AAAACV8770 |
|Place: Bangalore |
|Date: 22/06/2020 |
Annexure - B to the Auditor's 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 M/s.Sunil Agro Foods Limitedfthe Company) as of 31 March 2020 in conjunction withour audit of the standalone financial statements of the Company for the year ended on thatdate.
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.
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 of Internal Financial Controls and both issued by the Instituteof Chartered Accountants of India. Those Standards and the Guidance Note require that wecomply with ethical requirements and plan and perform the audit to obtain reasonableassurance about whether adequate internal financial controls over financial reporting wasestablished and maintained and if such controls operated effectively in all materialrespects.
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 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 systemoverfinancial 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 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 authorisations of management and directors of the company; and (3) providereasonable assurance regarding prevention or timely detection of unauthorised acquisitionuse or disposition of the company's assets that could have a material effect on thefinancial 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. According to theinformation and explanation given to us and based on our audit the following materialweaknesses have been identified as at March 31st 2020
a) The company did not have an appropriate internal control system for obtainingexternal balance confirmation on periodic basis. This could potentially result ininaccurate assets and liabilities disclosed in the books of accounts.
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 financial statements will not beprevented ordetected on a timely basis.
In our opinion except for the effects/ possible effects of the material weaknessesdescribed above on the achievement of the objectives of the control criteria theCompany has in all material respects an adequate internal financial controls system overfinancial reporting and such internal financial controls over financial reporting wereoperating effectively as at 31 March 2020 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.
We have considered the material weaknesses identified and reported above in determiningthe nature timing and extent of audit tests applied in our audit of the March 31 2020standalone financial statements of the Company and our aforesaid report and opinion onInternal Financial Control over Financial Reporting should be read in conjunction with ourreport of even date issued on the standalone financial statements of the Company.
|Chartered Accountants |
|Kamal Kishore |
|M N.205819 |
|UDIN: 20205819AAAACV8770 |
|Place: Bangalore |
|Date: 22/06/2020 |