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United Nilgiri Tea Estates Company Ltd.

BSE: 530470 Sector: Agri and agri inputs
NSE: UNITEDTEA ISIN Code: INE458F01011
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United Nilgiri Tea Estates Company Ltd. (UNITEDTEA) - Auditors Report

Company auditors report

Report on the Audit of the Financial Statements

Opinion

We have audited the accompanying Financial statements of The United Nilgiri Tea EstatesCompany Limited ( the Company ) which comprise the Balance Sheet as at 31stMarch 2019 and the Statement of Profit and Loss (including Other Comprehensive Income)the Cash Flow Statement and the Statement of changes in Equity for the year then ended andnotes to the financial statements and a summary of significant accounting policies andother 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 and fair view inconformity with the Indian Accounting Standards prescribed under section 133 of the Actread with the Companies (Indian Accounting Standards) Rules 2015 as amended ( Ind AS )and other accounting principles generally accepted in India of the state of affairs ofthe Company as at 31st March 2019 and its profit total comprehensive incomeits cash flows and the changes in equity for the year ended on that date.

Basis of Opinion

We conducted our audit of the Financial statements in accordance with the Standards onAuditing specified under section 143(10) of the Act (SAs). 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.

Sl.No Key Audit Matter Auditor's Response
1 Net Realizable Value of Finished Goods Finished goods of inventory (Made Tea) is valued at lower of cost and net realizable value. Considering that there is always a volatility in the selling price of made tea which is dependent upon various market conditions determi- nation of the net realizable value for this involves significant management judgement and therefore has been considered as a Key Audit Matter. Evaluated the design of internal controls relating to the valuation of finished goods of made tea and tested the operating effectiveness of the aforesaid controls. Obtained an understanding of the determination of the net realizable values of the Made tea and assessed and tested the reasonableness of the significant judgements applied by the management. Compared the actual costs incurred to sell after the year end/based on the latest sale transaction to assess the reasonableness of the cost to sell that was estimated and considered by the management. Compared the actual realization after the year end/ latest realization to assess the reasonableness of the net realizable value that was estimated and considered by the management.
The total value of finished goods of Made tea as at 31 March 2019 is Rs.453.03 Lakhs. Also refer to Note 2.10 for the accounting policy on Compared the cost of the finished goods of made tea with the estimated net realizable value and checked if the finished goods were recorded at net realizable value where the cost was higher than the net realizable value.
Assessed the appropriateness of the disclosure in the financial statements in accordance with the

Information other than 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 Annual Report for exampleCorporate Overview Key Highlights Board s Report Report on Corporate GovernanceManagement Discussion & Analysis Report etc. but does not include the FinancialStatements and our auditor s report thereon.

Our Opinion on the Financial Statements does not cover the other information and we donot express any form of assurance conclusion thereon.

In Connection with our audit of the Financial Statements our responsibility is to readthe other information and in doing so consider whether the other information ismaterially inconsistent with the Financial Statements or our knowledge obtained during thecourse of our 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.

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 including othercomprehensive income Cash flows and changes in equity of the Company in accordance withthe Ind AS and other accounting principles generally accepted in India. 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 judgements and estimates that are reasonable and prudent; anddesign implementation and maintenance of adequate internal financial controls that wereoperating effectively for ensuring the accuracy and completeness of the accountingrecords relevant to the preparation and presentation of the Financial Statements thatgive a true and fair view and are free from material misstatement whether due to fraud orerror.

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 misstatements 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 judgement andmaintain professional skepticism throughout the audit we also:

•Identify and assess the risks of material misstatement of the Financial Statementswhether due to fraud or error design and perform audit procedures responsive to thoserisks and obtain audit evidence that is sufficient and appropriate to provide a basis forour opinion. The risk of not detecting a material misstatement resulting from fraud ishigher than for one resulting from error as fraud may involve collusion forgeryintentional omissions misrepresentations or the override of internal control.

•Obtain an understanding of internal financial control relevant to the audit in order todesign audit procedures that are appropriate in the circumstances. Under Section 143(3)(i)of the Act we are also responsible for expressing our opinion on whether the Company hasadequate internal financial controls system in place and the operating effectiveness ofsuch controls.

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

•Conclude on the appropriateness of management s use of the going concern basis ofaccounting 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 financial statementsincluding the disclosures and whether the financial statements represent the underlyingtransactions 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 described these matters in ourauditor s report unless law or regulation precludes public disclosure about the matter ofwhen 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 including Other ComprehensiveIncome the Cash Flow Statement and Statement of Changes in Equity dealt with by thisReport are in agreement with the books of account.

(d) In our opinion the aforesaid financial statements comply with Indian AccountingStandards (Ind AS) prescribed under Section 133 of the Act.

(e) On the basis of the written representations received from the Directors as on 31stMarch 2019 taken on record by the Board of Directors none of the Directors isdisqualified as on 31stMarch 2019 from being appointed as a Director in termsof Section 164(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 on the adequacyand operating effectiveness of the Company s Internal financial controls over financialreporting.

(g) With respect to the other matters to be included in the Auditors report inaccordance with the requirements of section 197(16) of the Act as amended in our opinionand to the best our information and according to the explanations given to us theremuneration paid/ provided by the Company to its Directors during the year is inaccordance with the provisions of section 197 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) Rule 2014 as amended in ouropinion and to the best of our information and according to the explanations given to us:

(1) The Company has no litigation impacting its financial position;

(2) The Company has made provision as required under the applicable law or accountingstandards for material foreseeable losses if any on long-term contracts includingderivative contracts if any;

(3) There has been no delay in transferring amounts required to be transferred to theInvestor Education and Protection Fund by the Company.

2. As required by the Companies (Auditor s Report) Order 2016 ( the Order ) issued bythe Central Government in terms of Section 143(11) of the Act we give in Annexure B astatement on the matters specified in paragraphs 3 and 4 of the Order.

For K.S. Aiyar & Co
Chartered Accountants
Firm Registration No: 100186W
S. KALYANARAMAN
Date : 29th May 2019 Partner
Place: Chennai Membership No:200565

Annexure A to Independent Auditors Report

(Referred to in paragraph 1 (f) under Report on other Legal and Regulatory Requirementssection of 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 Act2013 ( the Act )

1. We have audited the internal financial controls over financial reporting of TheUnited Nilgiri Tea Estates Company Limited ( the Company ) as of March 31 2019 inconjunction with our audit of the Ind AS Financial Statements of the Company for the yearended on that date.

Management s Responsibility for Internal Financial Controls

2. 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

3. 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 Chartered Accountantsof India and the Standards on Auditing prescribed under section 143(10) of the Act to theextent applicable to an audit of internal financial controls. Those Standards and theGuidance Note require that we comply with ethical requirements and plan and perform theaudit to obtain reasonable assurance about whether adequate internal financial controlsover financial reporting was established and maintained and if such controls operatedeffectively in all material respects.

4. Our audit involves performing procedures to obtain audit evidence about the adequacyof the 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.

5. 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

6. A Company s internal financial controls over financial reporting is a processdesigned to provide reasonable assurance regarding the reliability of financial reportingand the preparation of financial statements for external purposes in accordance withgenerally accepted accounting principles. A company s internal financial controls overfinancial reporting includes those policies and procedures that (1) pertain to themaintenance of records that in reasonable detail accurately and fairly reflect thetransactions and dispositions of the assets of the company; (2) provide reasonableassurance that transactions are recorded as necessary to permit preparation of financialstatements in accordance with generally accepted accounting principles and that receiptsand expenditures 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

7. 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 controlsover financial reporting may become inadequate because of changes in conditions or thatthe degree of compliance with the policies or procedures may deteriorate.

Opinion

8. In our opinion to the best of our information and according to the explanationsgiven to us the Company has in all material respects an adequate internal financialcontrols system over financial reporting and such internal financial controls overfinancial reporting were operating effectively as at March 31 2019 based on the criteriafor internal control over financial reporting established by the Company considering theessential components of internal control stated in the Guidance Note on Audit of InternalFinancial Controls Over Financial Reporting issued by the Institute of CharteredAccountants of India.

For K.S. Aiyar & Co
Chartered Accountants
Firm Registration No: 100186W
S. KALYANARAMAN
Date : 29th May 2019 Partner
Place: Chennai Membership No:200565

Annexure B to the Independent Auditors Report

[Referred to in paragraph 2 under Report on other Legal and Regulatory Requirementssection of our report of even date]

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

(b) Some of the fixed assets were physically verified during the year by the Managementin accordance with a programme of verification which in our opinion provides for physicalverification of all the fixed assets at reasonable intervals. According to the informationand explanations given to us no material discrepancies were noticed on such verification.

(c) According to the information and explanations given to us and the records examinedby us and based on the examination of the registered sale deed/transfer deed/ conveyancedeed provided to us we report that the title deeds comprising all the immovableproperties of land and buildings which are freehold are held in the name of the Companyas at the balance sheet date.

(ii) As explained to us the inventories were physically verified during the year bythe Management at reasonable intervals and no material discrepancies were noticed onphysical verification.

(iii) The Company has not granted any loans secured or unsecured to companies firmsLimited Liability Partnerships or other parties covered in the register maintained underSection 189 of the Act.

(iv) In our opinion and according to the information and explanations given to us theCompany has not granted any loans or provided guarantees and hence the provisions ofSection 185 is not applicable. The Company has made investments which are within limitsprescribed under section 186 of the Companies Act 2013.

(v) According to the information and explanations given to us the Company has notaccepted any deposits from the public during the year.

(vi) The maintenance of cost records has been specified by the Central Government undersection 148 (1) of the Companies Act 2013 for tea and tea products. We have broadlyreviewed the cost records maintained by the Company pursuant to the Companies (CostRecords and Audit) Rules 2014 as amended prescribed by the Central Government undersub-section (1) of Section 148 of the Companies Act 2013 and are of the opinion thatprima facie the prescribed cost records have been made and maintained. We havenot made adetailed examination of the cost records with a view to determine whether they areaccurate or complete.

(vii) According to the information and explanations given to us and the records of theCompany examined by us in respect of statutory dues:

(a) The Company has generally been regular in depositing undisputed statutory duesincluding Provident Fund Income-tax Goods and Service Tax Customs Duty Cess and othermaterial statutory dues applicable to it to the appropriate authorities.

(b) According to the information and explanations given to us and the records of theCompany examined by us there are no undisputed amount payable in respect of ProvidentFund Income-tax Goods and Service Tax Customs Duty Cess and other material statutorydues in arrears as at March 31 2019 for a period of more than six months from the datethey became payable.

(c) There are no disputed dues of Provident Fund Income-tax Goods and Service TaxCustoms Duty Cess and other material statutory dues.

(viii) According to the records of the Company examined by us and the information andexplanation given to us the Company has not taken any loans or borrowings from financialinstitution or bank or Government or has not issued any debentures. Hence reporting underclause (viii) of the Order is not applicable to the Company.

(ix) In our opinion and according to the information and explanations given to us theCompany has not raised money by way of initial public offer or further public offer(including debt instruments) or term loans and hence reporting under clause (ix) of theorder is not applicable.

(x) During the course of our examination of the books and records of the Companycarried out in accordance with the generally accepted auditing practices in India andaccording to the information and explanations given to us we have neither come across anyinstance of material fraud by the Company or on the Company by its officers or employeesnoticed or reported during the year nor have we been informed of any such case by theManagement.

(xi) 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.

(xii) As the Company is not a Nidhi Company and the Nidhi Rules 2014 are notapplicable to it the provisions of Clause (xii) of the Order is not applicable to theCompany.

(xiii) In our opinion and according to the information and explanations given to us theCompany is in compliance with the provisions of Sections 177 and 188 of the Act whereapplicable for all the transactions with related parties and the details of relatedparties transactions have been disclosed in the financial statements as required underIndian Accounting Standard (Ind AS) 24 Related Party Disclosures specified under Section133 of the Act.

(xiv) During the year the Company has not made any preferential allotment or privateplacement of shares or fully or partly convertible debentures during the year under audit.Accordingly the provisions of Clause (xiv) of the Order are not applicable to theCompany.

(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 section 192 of the Act are notapplicable.

(xvi) The Company is not required to be registered under Section 45-IA of the ReserveBank of India Act 1934.

For K.S. Aiyar & Co
Chartered Accountants
Firm Registration No: 100186W
S. KALYANARAMAN
Date : 29th May 2019 Partner
Place: Chennai Membership No:200565