Sumuka Agro Industries Ltd Auditors Report.
on Standalone Financial Statements to the Members
We have audited the accompanying standalone financial statements of Sumuka Agro Industries Limited (the Company), comprising the Balance Sheet as at 31st March, 2019, 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, and notes to the financial statements, including a summary of significant accounting policies and other explanatory information (hereafter Standalone Ind-AS Financial Statements).
In our opinion and to the best of our information and according to the explanations given to us, except for the effects of the matter described in the Basis for Qualified Opinion section of our report, the aforesaid Standalone Ind-AS Financial Statements give the information required by the Companies Act, 2013 (hereafter the Act) in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India, of the state of affairs of the Company as at 31st March, 2019, and its loss (including other comprehensive income), changes in equity and its cash flows for the year ended on that date.
Basis for Qualified Opinion
We draw your attention to "Clause H of Note 21" to the Standalone Ind-AS Financial Statements, which indicates that certain companies, to whom the Company had given significant loans and/or advances amounting in total to र 1,92,07,097/- ( 1,92,07,097/- र ), whose names have been stricken-off from the list of registered companies by the Registrar of Companies of Gujarat and Mumbai, operating under the Ministry of Corporate Affairs. These conditions indicate the existence of a material uncertainty of realising such loans/advances. Management has not provided for the losses arising out of non-realisation of such loans/advances but has instead stated them at their carrying amounts, which constitutes a departure from the Accounting Standards prescribed under Section 133 of the Companies Act, 2013. The Companys records indicate that had management recognised such losses in the statement of profit and loss for the year, the carrying amounts of the loans/advances in the balance sheet would have been reduced by the said amounts at 31st March, 2019, and the net income and shareholders equity would have been reduced by the same amounts respectively.
We conducted our audit in accordance with the SAs specified under Section 143 (10) of the Companies Act 2013. Our responsibilities under those standards are further described in the Auditors Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Company in accordance with the ethical requirements that are relevant to our audit of the financial statements as per the Code of Ethics issued by ICAI and under the provisions of the Companies Act, 2013, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the ICAIs Code of Ethics. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our qualified opinion.
Material Uncertainty Relating to Going Concern
We draw your attention to "Clause G of Note 21" in the Standalone Ind-AS Financial Statements, which indicates that the Company has accumulated losses due to which its net worth has been significantly eroded. These conditions indicate the existence of a material uncertainty that may cast a doubt on the Companys ability to continue as a going concern. Our opinion is not modified in this respect.
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the current period. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
The Companys Board of Directors is responsible for matters stated in Section 134(5) of the Companies Act, 2013 (the Act) with respect to the preparation of the said financial statements that give a true and fair view of the financial position, financial performance and cash flows and changes in equity of the Company in accordance with the accounting principles generally accepted in India, including the Indian Accounting Standards specified under Section 133 of the Act, read with Companies (Indian Accounting Standards) Rules, 2015. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding of the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the Board of Directors is responsible for assessing the Companys ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Board of Directors either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.
Those Board of Directors are also responsible for overseeing the Companys financial reporting process.
Our objectives are to obtain reasonable assurance about whether the Standalone Ind-AS Financial Statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Standards on Auditing will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
As part of an audit in accordance with SAs, we exercise professional judgment and maintain professional scepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances. Under section 143(3)(i) of the Companies Act, 2013, we are also responsible for expressing our opinion on whether the company has adequate internal financial controls system in place and the operating effectiveness of such controls.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
Conclude on the appropriateness of managements use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Companys ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors report to the related disclosures in the 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 auditors report. However, future events or conditions may cause the Company to cease to continue as a going concern.
Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
Materiality is the magnitude of misstatements in the financial statements that, individually or in aggregate, makes it probable that the economic decisions of a reasonably knowledgeable user of the financial statements may be influenced. We consider quantitative materiality and qualitative factors in (i) planning the scope of our audit work and in evaluating the results of our work; and (ii) to evaluate the effect of any identified misstatements in the financial statements.
We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.
From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditors report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.
Report on other legal and regulatory requirements
(1) As required by the Companies (Auditors Report) Order, 2016 (CARO) issued by the Central Government of India in terms of section 143 (11) of the Act, we give in the Appendix A, a statement on the matters specified in paragraphs 3 and 4 of CARO, 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 the best of 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 the Company so far as it appears from our examination of those book;
(c) The Balance Sheet, the Statement of Profit and Loss (including other comprehensive income), and the Cash Flow Statement and the Statement of Changes in Equity, dealt with by this Report are in agreement with the books of account;
(d) In our opinion, the aforesaid financial statements comply with the applicable Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014.
(e) The matter under the Emphasis of Matters paragraph above, in our opinion depending on the potential outcome, may have an adverse effect on the functioning of the Company.
(f) On the basis of the written representations received from the directors and taken on record by the Board of Directors, none of the directors is disqualified as on 31st March, 2019 from being appointed as a director in terms of Section 164 (2) of the Act.
(g) With respect to the adequacy of the internal financial controls over financial reporting of the Company and the operating effectiveness of such controls, refer to our separate Report in Appendix B.
(h) With respect to the other matters to be included in the Auditors Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules, 2014, as explained by the Board of Directors of the Company and based on the extent of information and explanations made available to us:
(i) The Company does not have any pending litigations which would impact its financial position;
(ii) The Company has not entered in any long term contracts including derivative contracts;
(iii) There were no amounts which were required to be transferred to the Investor Education and Protection Fund by the Company.
For Haren Shah & Co
(H. J. Shah)
(M. No. 35158)
Mumbai, May 30th, 2019
"Appendix A" to Independent Auditors Report dated 30th May, 2019 of Sumuka Agro Industries Limited
(referred to in paragraph 1 under the heading Other Legal and Regulatory Requirements):
In our opinion, subject to the extent of information and explanations available or provided to us, we report that:
(i) Regarding fixed assets:
(a) The Company has maintained necessary record showing particulars, including quantitative details and situation of fixed assets.
(b) We are informed that, the management has conducted physical verification of the fixed assets during the year and no material discrepancies were found on such verification.
(c) The Company does not have any immovable properties.
(ii) We are informed that, the management has conducted physical verification of inventory during the year and any material discrepancies if noticed on such verification, have been properly dealt with in the books of account.
(iii) The company has not granted any loans, secured or unsecured, to companies, firms, LLPs or other parties covered in the register maintained under section 189 of the Act, consequently sub-clauses (a) to (c) of this clause, are not applicable.
(iv) The Company has not given loans to its directors nor provided any guarantee or security, in connection with a loan, to any other body corporate or person. The aggregate of investments made in other body corporates and loans and advances given (refer clause F and O of Note 21) to other body corporates and persons, are in excess of limits specified under section 186 (2), and such loans/advances are interest free.
(v) The Company has not accepted any deposits in terms of directives issued by Reserve Bank of India and the provisions of sections 73 to 76 of the Act and the rules framed there under.
(vi) We are informed that the central government has not prescribed maintenance of cost records under section 148(1) of the Act, which has been relied upon.
(vii) In respect of statutory dues:
(a) We are informed that the laws relating to provident fund, employees state insurance, sales tax, service tax, customs duty, excise duty and cess, are not applicable to the Company, which has been relied on. The Company is generally regular in depositing undisputed statutory dues including income tax and value added tax, with the appropriate authorities during the year. We do not have information as regards any other statutory dues.
(b) Similarly, there are no dues of income tax or value added tax, that have not been deposited on account of any dispute.
(viii) The Company has no dues payable to financial institution, bank, government or debenture holders.
(ix) The Company did not raise any money by way of initial public offer or further public offer (including debt instruments) and term loans during the year.
(x) We are informed that there have been no cases of fraud on or by the Company noticed or reported during the year, which has been relied upon.
(xi) We are informed that the remuneration paid by the Company to its directors including KMP during the year, is in accordance with the provisions of section 197 of the Act, which has been relied upon.
(xii) We are informed that the Company is not a Nidhi company, which has been relied upon.
(xiii) We are informed that the transactions with related parties (refer in clause J of Note 21), are in compliance with sections 177 and 188 of the Act (to the extent applicable), which has been relied upon, and appropriate disclosures as per Ind-AS 24, have been provided in the standalone financial statements.
(xiv) The Company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures during the year.
(xv) We are informed that the Company has not entered into non-cash transactions with directors or persons connected with him, which has been relied upon.
(xvi) The Company is not required (refer clause N of Note 21) to be registered under section 45-IA of the Reserve Bank of India Act, 1934.