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Ugro Capital Ltd.

BSE: 511742 Sector: Financials
NSE: N.A. ISIN Code: INE583D01011
BSE 00:00 | 15 Jul 99.00 0.85
(0.87%)
OPEN

100.00

HIGH

100.00

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99.00

NSE 05:30 | 01 Jan Ugro Capital Ltd
OPEN 100.00
PREVIOUS CLOSE 98.15
VOLUME 364
52-Week high 225.00
52-Week low 74.60
P/E 35.74
Mkt Cap.(Rs cr) 698
Buy Price 99.00
Buy Qty 64.00
Sell Price 102.50
Sell Qty 1.00
OPEN 100.00
CLOSE 98.15
VOLUME 364
52-Week high 225.00
52-Week low 74.60
P/E 35.74
Mkt Cap.(Rs cr) 698
Buy Price 99.00
Buy Qty 64.00
Sell Price 102.50
Sell Qty 1.00

Ugro Capital Ltd. (UGROCAPITAL) - Auditors Report

Company auditors report

To The Members of UGRO CAPITAL LIMITED

(formerly known as Chokhani Securities Limited)

Report on the Audit of the Financial Statements

Opinion

We have audited the accompanying financial statements of UGRO CAPITAL LIMITED("the Company") which comprise the Balance Sheet as at 31 March 2019 and theStatement of Profit and Loss and the Cash Flow Statement for the year then ended and asummary of significant accounting policies 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 theCompanies Act 2013 ("the Act") in the manner so required and give a true andfair view in conformity with the Accounting Standards prescribed under section 133 of theAct read with the Companies (Accounting Standards) Rules 2006 as amended("Accounting Standards") and other accounting principles generally accepted inIndia of the state of affairs of the Company as at 31 March 2019 and its profit and itscash flows for the year ended on that date.

Basis for Opinion

We conducted our audit of the financial statements in accordance with the Standards onAuditing (SAs) specified under section 143(10) of the Act. Our responsibilities underthose Standards are further described in the Auditor's Responsibility 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 (ICAI) together with the ethical requirements that are relevant to our audit of thefinancial statements under the provisions of the Act and the Rules made thereunder and wehave fulfilled our other ethical responsibilities in accordance with these requirementsand the ICAI's Code of Ethics. We believe that the audit evidence obtained by us issufficient and appropriate to provide a basis for our audit opinion on the financialstatements.

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. Wehave determined the matter described below to be the key audit matter to be communicatedin our report.

Sr. No. Key Audit Matter Auditor's Response
1 Accounting and valuation for Employee share based payments and disclosure thereon. Principal audit procedures performed:
The company has granted Employee stock options (ESOP's) during the year and elected to account for the options at fair value. The charge to the Profit and Loss account on account of Employee stock options was Rs. 3.00 crores for the year. The company engaged an independent fair value specialist (EFVS) to arrive at the fair value of the option. The fair value was arrived at using the Black Scholes Merton formula. Key inputs considered to determine the fair value which have been disclosed in Note 33 to the financial statements included: We involved our internal experts to test the fair value of the options. The fair value specialist reviewed the estimates used by the EFVS for reasonableness and recomputed the fair value of the options and compared it to the fair value arrived at by the EFVS.
• Exercise price of the option We reviewed the key assumptions used by the EFVS to arrive at the fair value particularly the current price of the underlying shares expected volatility dividends expected expected life of the option.
• Life of the option We recomputed the charge to the current period noting no exceptions. We reviewed the management assessment of the vesting period for the performance linked ESOP's and basis review of the market data for similar comparable companies.
• Current price of the underlying shares We assessed the appropriateness of the related disclosures in note 33 of the financial statements.
• Expected volatility of the underlying shares
• Dividends expected on the shares
• Risk free interest rate for the life of the option.
Basis the fair value arrived at by EFVS the charge for the current period was computed by the company.
In the case of certain ESOP's linked to meeting of certain performance conditions the management has estimated the expected vesting period based on the most likely outcome of the performance condition and accordingly not considered any cost on those options.

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

• The Company's Board of Directors is responsible for the other information. Theother information comprises the information included in the Management Discussion andAnalysis Board's Report including Annexures to Board's Report Business ResponsibilityReport Corporate Governance and Shareholder's Information but does not include thefinancial statements and our auditor's report thereon. The Management Discussion andAnalysis Board's Report including Annexures to Board's Report Business ResponsibilityReport Corporate Governance and Shareholder's Information is expected to be madeavailable to us after the date of this auditor's report.

• Our opinion on the financial statements does not cover the other information andwe do not and will not express any form of assurance conclusion thereon.

• In connection with our audit of the financial statements our responsibility isto read the other information identified above when it becomes available and in doing soconsider whether the other information is materially inconsistent with the financialstatements or our knowledge obtained during the course of our audit or otherwise appearsto be materially misstated.

• When we read the Management Discussion and Analysis Board's Report includingAnnexures to Board's Report Business Responsibility Report Corporate Governance andShareholder's Information if we conclude that there is a material misstatement thereinwe are required to communicate the matter to those charged with governance as requiredunder SA 720 'The Auditor's responsibilities Relating to Other Information'

Management's Responsibility for the Financial Statements

The Company's Board of Directors is responsible for the matters stated in section134(5) of the Act with respect to the preparation of these financial statements that givea true and fair view of the financial position financial performance and cash flows ofthe Company in accordance with the Accounting Standards and other accounting principlesgenerally accepted in India. This responsibility also includes maintenance of adequateaccounting records in accordance with the provisions of the Act for safeguarding theassets of the Company and for preventing and detecting frauds and other irregularities;selection and application of appropriate 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 financial statement that give a true and fair view and are free frommaterial 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.

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

Auditor's Responsibility for the Audit of the 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. We also:

• Identify and assess the risks of material misstatement of the financialstatements whether due to fraud or error design and perform audit procedures responsiveto those risks and obtain audit evidence that is sufficient and appropriate to provide abasis for our opinion. The risk of not detecting a material misstatement resulting fromfraud is higher than for one resulting from error as fraud may involve collusionforgery intentional omissions misrepresentations or the override of internal control.

• Obtain an understanding of internal financial control 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 the 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 financial statements or if such disclosures are inadequate to modify our opinion.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 financialstatements including the disclosures and whether the financial statements represent theunderlying transactions and events in a manner that achieves fair presentation.

Materiality is the magnitude of misstatements in the financial statements thatindividually or in aggregate makes it probable that the economic decisions of areasonably knowledgeable user of the financial statements may be influenced. We considerquantitative materiality and qualitative factors in (i) planning the scope of our auditwork and in evaluating the results of our work; and (ii) to evaluate the effect of anyidentified misstatements in the 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 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 financial statements of thecurrent period and are therefore the key audit matters. We describe these matters in ourauditor's report unless law or regulation precludes public disclosure about the matter orwhen 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.

Report on Other Legal and Regulatory Requirements

1. As required by Section 143(3) of the Act based on our audit 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.

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.

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

d) In our opinion the aforesaid financial statements comply with the AccountingStandards specified under Section 133 of the Act.

e) On the basis of the written representations received from the directors as on 31March 2019 taken on record by the Board of Directors none of the directors isdisqualified as on 31 March 2019 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 ourseparate Report in "Annexure A". Our report expresses an unmodified opinion onthe adequacy and operating effectiveness of the Company's internal financial controls overfinancial reporting.

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 as amended in our opinionand to the best of our information and according to the explanations given to us theremuneration paid by the Company to its directors during the year is in accordance withthe provisions of section 197 of the Act.

The remuneration paid in excess of the limits specified by Sec 197 of the Act has beenapproved by the Shareholders vide a special resolution. The Board of Directors hasrepresented that the remuneration for the Whole-time Director and CEO was approved bymeans of a special resolution in the Shareholders meeting held on 3 July 2018 and furtherconfirms that the omission in the notice sent to the shareholders and the specialresolution passed at the shareholders meeting due to no explicit mention of the approvalof the remuneration will be rectified by seeking a ratification at the ensuing Annualgeneral meeting.

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 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 on its financialposition in its 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 in terms of Section 143(11) of the Act we give in"Annexure B" a statement on the matters specified in paragraphs 3 and 4 of theOrder.

For DELOITTE HASKINS & SELLS LLP
Chartered Accountants
(Firm's Reg. No. 117366W/W-100018)
Anjum A. Qazi
Mumbai Partner
2 May 2019 (Membership No.104968)

ANNEXURE "A" TO THE INDEPENDENT AUDITOR'S REPORT

(Referred to in paragraph 1 (f) under ‘Report on Other Legal andRegulatory Requirements' section of our report of even date)

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

We have audited the internal financial controls over financial reporting of UGROCAPITAL LIMITED ("the Company") as of 31 March 2019 in conjunction with ouraudit 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. These responsibilities includethe design implementation and maintenance of adequate internal financial controls thatwere operating effectively for ensuring the orderly and efficient conduct of its businessincluding adherence to company's policies the safeguarding of its assets the preventionand detection of frauds and errors the accuracy and completeness of the accountingrecords and the timely preparation of reliable financial information as required underthe Companies Act 2013.

Auditor's Responsibility

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

Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal financial controls system over financial reporting and their operatingeffectiveness. Our audit of internal financial controls over financial reporting 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 judgement 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 in terms of their reports referredto in the Other Matters paragraph below is sufficient and appropriate to provide a basisfor our audit opinion on the Company's internal financial controls system over financialreporting.

Meaning of Internal Financial Controls Over Financial Reporting

A company's internal financial control over financial reporting is a process designedto provide reasonable assurance regarding the reliability of financial reporting and thepreparation of financial statements for external purposes in accordance with generallyaccepted accounting principles. A company's internal financial control over financialreporting includes those policies and procedures that (1) pertain to the maintenance ofrecords that in reasonable detail accurately and fairly reflect the transactions anddispositions of the assets of the company; (2) provide reasonable assurance thattransactions are recorded as necessary to permit preparation of financial statements inaccordance with generally accepted accounting principles and that receipts andexpenditures of the company are being made only in accordance with authorisations ofmanagement and directors of the company; and (3) provide reasonable assurance regardingprevention or timely detection of unauthorised acquisition use or disposition of thecompany's assets that could have a material effect on the financial statements.

Inherent Limitations of Internal Financial Controls Over Financial Reporting

Because of the inherent limitations of internal financial controls over financialreporting including the possibility of collusion or improper management override ofcontrols material misstatements due to error or fraud may occur and not be detected.Also projections of any evaluation of the internal financial controls over financialreporting to future periods are subject to the risk that the internal financial controlover financial reporting may become inadequate because of changes in conditions or thatthe degree of compliance with the policies or procedures may deteriorate.

Opinion

In our opinion to the best of our information the Company has in all materialrespects an adequate internal financial controls system over financial reporting and suchinternal financial controls over financial reporting were operating effectively as at 31March 2019 based on the criteria for internal financial control over financial reportingestablished 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.

For DELOITTE HASKINS & SELLS LLP
Chartered Accountants
(Firm's Reg. No. 117366W/W-100018)
Anjum A. Qazi
Mumbai Partner
2 May 2019 (Membership No.104968)

ANNEXURE "B" TO THE AUDITOR'S REPORT

(Referred to in paragraph 2 under ‘Report on Other Legal and RegulatoryRequirements' section of our report of even date)

Report on Companies (Auditor's Report) Order 2016 (‘the Order') issued bythe Central Government in terms of Section 143(11) of the Companies Act 2013 (‘theAct') of UGRO CAPITAL LIMITED (‘the Company')

(i) In respect of its fixed assets:

(a) The Company has maintained proper records showing full particulars includingquantitative details and situation of the fixed assets.

(b) The Company has a program of verification of fixed assets to cover all the items ina phased manner over a period of three years which in our opinion is reasonable havingregard to the size of the Company and the nature of its assets. Pursuant to the programcertain fixed assets were physically verified by the Management during the year. Accordingto the information and explanations given to us no material discrepancies were noticed onsuch verification.

(c) The Company does not have any immovable properties of freehold or leasehold landand building and hence reporting under clause (i) (c) of the CARO 2016 is not applicable.

(ii) The Company does not have any inventory and hence reporting under clause (ii) ofthe CARO 2016 is not applicable.

(iii) According to the information and explanations given to us the Company hasgranted secured loans to companies covered in the register maintained under section 189of the Companies Act 2013 in respect of which:

a) The terms and conditions of the grant of such loans are in our opinion primafacie not prejudicial to the Company's interest.

b) The schedule of repayment of principal and payment of interest has been stipulatedand receipts of principal amounts and interest have been regular as per stipulations.

c) There is no amount overdue for more than 90 days at the balance sheet date.

(iv) The provisions of section 185 and 186 of the Companies Act 2013 is not applicableto the Company. Consequently provisions of para 3(iv) of the Order is not applicable tothe Company.

(v) According to the information and explanations given to us the Company has notaccepted any deposit during the year and does not have unclaimed deposits as at 31 March2019 and therefore reporting under clause 3(v) of the Order is not applicable to theCompany.

(vi) Having regard to the nature of the Company's business / activities reportingunder clause (vi) CARO 2016 is not applicable.

(vii) According to the information and explanations given to us in respect of statutorydues:

(a) The Company has generally been regular in depositing undisputed statutory duesincluding Provident Fund Employees' State Insurance Income-tax Goods and Service taxcess and other material statutory dues applicable to it to the appropriate authorities.

(b) There were no undisputed amounts payable in respect of Provident Fund Employees'State Insurance Income-tax cess Goods and Service tax and other material statutory duesin arrears as at 31 March 2019 for a period of more than six months from the date theybecame payable.

(c) There are no dues of Income-tax cess and Goods and Service tax as on 31 March 2019on account of any dispute.

(viii) In our opinion and according to the information and explanations given to usthe Company has not defaulted in the repayment of loans or borrowings to financialinstitutions banks and government and dues to debenture holders.

(ix) In our opinion and according to the information and explanations given to usmoney raised by way of term loans have been applied by the Company during the year for thepurposes for which they were raised other than temporary deployment pending applicationof proceeds. The Company did not raise money by way of initial public offer (includingdebt instruments) during the year.

(x) To the best of our knowledge and according to the information and explanationsgiven to us no fraud by the Company and no material fraud on the Company by its officersor employees has been noticed or reported during the year.

(xi) In our opinion and according to the information and explanations given to us theCompany has paid managerial remuneration in accordance with the requisite approvalsmandated by the provisions of section 197 read with Schedule V to the Companies Act 2013.In respect of the remuneration to the whole-time director and CEO the Board of Directorshas represented that the remuneration was approved by means of a special resolution in theShareholders meeting held on July 3 2018 and further confirmed that the omission in thenotice sent to the shareholders and the special resolution passed at the shareholdersmeeting due to not having an explicit mention of the remuneration /approval of theremuneration will be rectified by seeking a ratification at the ensuing Annual generalmeeting.

(xii) The Company is not a Nidhi Company and hence reporting under clause (xii) of theCARO 2016 Order is not applicable.

(xiii) In our opinion and according to the information and explanations given to us theCompany is in compliance with Section 188 and 177 of the Companies Act 2013 whereapplicable for all transactions with the related parties and the details of related partytransactions have been disclosed in the financial statements etc. as required by theapplicable accounting standards.

(xiv) According to the information and explanations given to us the Company has madepreferential allotment and private placement of shares and fully convertible debenturesduring the year under review.

In respect of the above issue we further report that:

a) the requirement of Section 42 of the Companies Act 2013 as applicable have beencomplied with; and

b) the amounts raised have been applied by the Company during the year for the purposesfor which the funds were raised other than temporary deployment pending application.

(xv) In our opinion and according to the information and explanations given to usduring the year the Company has not entered into any non-cash transactions with itsdirectors or persons connected with him and hence provisions of section 192 of theCompanies Act 2013 are not applicable.

(xvi) The Company is required to be registered under section 45-IA of the Reserve Bankof India Act 1934 and it has obtained the registration.

For DELOITTE HASKINS & SELLS LLP
Chartered Accountants
(Firm's Reg. No. 117366W/W-100018)
Anjum A. Qazi
Mumbai Partner
2 May 2019 (Membership No.104968)