CONCOR Auditors Report

TO THE MEMBERS OF


CONTAINER CORPORATION OF INDIA LIMITED


Report on the Standalone Indian Accounting Standards (Ind AS) Financial Statements


We have audited the accompanying standalone Ind AS financial statements of CONTAINER CORPORATION OF INDIA LIMITED (“the Company”), which comprise the Balance Sheet as at 31 March, 2017, the Statement of Profit and Loss (including other comprehensive income), the Cash Flows Statement and the statement of changes in equity for the year then ended and a summary of the significant accounting policies and other explanatory information (herein after referred to as “Standalone Ind AS Financial Statements”).


Management’s Responsibility for the Standalone Ind AS Financial Statements


The Company''''s Board of Directors is responsible for the matters stated in Section 134(5) of the Companies Act, 2013 (“the Act”) with respect to the preparation and presentation of these standalone Ind AS financial statements that give a true and fair view of the financial position, financial performance (including other comprehensive income), cash flows and changes in equity of the Company in accordance with the accounting principles generally accepted in India, including the Indian Accounting Standards (Ind AS) specified in the Companies (Indian Accounting Standards) Rules, 2015 (as amended) under Section 133 of the Act.


This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding 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 standalone Ind AS financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.


Auditor’s Responsibility


Our responsibility is to express an opinion on these standalone Ind AS financial statements based on our audit. While conducting our audit, we have taken into account the provisions of the Act, the accounting and auditing standards and matters which are required to be included in the audit report under the provisions of the Act and the Rules made there under.


We conducted our audit of standalone Ind AS financial statements in accordance with the Standards on Auditing specified under Section 143(10) of the Act. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the standalone Ind AS financial statements are free from material misstatement.


An audit involves performing procedures to obtain audit evidence about the amounts and the disclosures in the standalone Ind AS financial statements. The procedures selected depend on the auditor''''s judgment, including the assessment of the risks of material misstatement of the standalone Ind AS financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal financial control relevant to the Company''''s preparation of the standalone Ind AS financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of the accounting estimates made by the Company''''s Directors, as well as evaluating the overall presentation of the standalone Ind AS financial statements.


We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the standalone Ind AS financial statements.


Opinion


In our opinion and to the best of our information and according to the explanations given to us, the aforesaid standalone Ind AS financial statements give the information required by 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 31 March 2017, its profit (including other comprehensive income), its cash flows and the changes in equity for the year ended on that date.


Emphasis of Matter


1. We draw attention to the Note no. 53 to the standalone Ind AS financial statements of 31 March, 2017 which describe investment of Rs,54.60 Crore in equity of IGTPL, a joint venture in which the company hold 14.56% equity, whose net worth has been fully eroded i.e. IGTPL is having accumulated losses of Rs,608.46 crore (as per unaudited accounts of F.Y. 2016-17) in which the company''''s share is Rs,88.59 crore, which exceeds the investment in the joint venture as on 31 March, 2017. Management has not recognized any impairment in the value of the assets, as in the opinion of the management, the expected present value of future cash flows exceeds the carrying amount of the asset.


Our opinion is not modified in respect of this matter.


2. We further draw attention to the Note no. 54 to the standalone Ind AS financial statements of 31 March, 2017, regarding non provision for diminution/impairment in the value of investment amounting to Rs,146.62 Crores in equity of M/s Fresh & Healthy Enterprises Limited (FHEL), a wholly owned subsidiary company, whose net worth has been fully eroded. Management has not recognized any impairment in the value of the assets, as in the opinion of the management, the expected present value of future cash flows exceeds the carrying amount of the asset.


Our opinion is not modified in respect of this matter.


Other Matters


The comparative financial information of the Company for the year ended 31 March, 2016 and the transition date opening balance sheet as at 01 April, 2015 included in these standalone Ind AS financial statements, are based on the previously issued statutory financial statements prepared in accordance with the Companies (Accounting Standards) Rules, 2006 (as amended) for the year ended 31 March, 2016 and 31 March, 2015 which were audited by other auditor, on which they have expressed an unmodified opinion dated 25 May, 2016 and 28 May, 2015, respectively. The adjustments to those financial statements for the differences in accounting principles adopted by the Company on transition to the Ind AS have been audited by us, on which we have expressed an unmodified opinion vide our report dated 25 May, 2017. Our opinion is not modified in respect of this matter.


We did not audit the financial statements/information of 8 regions included in the standalone Ind AS financial statements of the Company whose financial statements/financial information reflect total assets of Rs,2700.23 Crore as at 31 March, 2017 and total revenues of Rs,5417.78 Crores for the year ended on that date, as considered in the standalone Ind AS financial statements. The financial statements/information of these regions have been audited by the branch auditors whose reports have been furnished to us, and our opinion in so far as it relates to the amounts and disclosures included in respect of these regions, is based solely on the report of such branch auditors. Our opinion is not modified in respect of this matter.


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 the Act, we give in the “Annexure A”, a statement on the matters specified in the paragraph 3 and 4 of the Order.


2. As required by Section 143(5) of the Act, we give in the “Annexure B”, a statement on the matters specified in the Directions issued by The Comptroller and Auditor General of India, and in our opinion, no action is required to be taken thereon and there is no impact on the accounts and financial statements of the Company.


3. 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 books and proper returns adequate for the purpose of our audit have been received from the regions not visited by us.


(c) The reports on the accounts of regions of the company audited under section 143 (8) of the Act by branch auditors have been sent to us and have been dealt within preparing our report in the manner considered necessary by us.


(d) The Balance Sheet, the Statement of Profit and Loss (including other comprehensive income), the Cash Flow Statement and the statement of changes in equity dealt with by this Report are in agreement with the books of account and with the returns received from the regions not visited by us.


(e) In our opinion, the aforesaid standalone Ind AS financial statements comply with the Indian Accounting Standards specified in the Companies (Indian Accounting Standards) Rules, 2015 (as amended) under Section 133 of the Act.


(f) On the basis of the written representations received from the directors as on 31 March 2017 taken on record by the Board of Directors, none of the directors is disqualified as on 31 March 2017 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 “Annexure C”; and


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


i. the Company has disclosed the impact of pending litigations on its financial position in its standalone Ind AS financial statements-refer note no.-41 to the standalone Ind AS financial statements of 31 March 2017;


ii. the Company is not required to make any provision for any material foreseeable losses under any law or Indian Accounting Standard (Ind AS), on long term contracts. Also the Company is not dealing into derivatives contracts;


iii. there has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the company; and


iv. the Company has provided requisite disclosures in note no. 12 to the Ind AS financial statements as to holdings as well as dealings in Specified Bank Notes during the period from 8 November, 2016 to 30 December, 2016. Based on audit procedures and relying on the management representation, we report that the disclosures are in accordance with books of account maintained by the Company and as produced to us by the Management. However as stated in note no. 12, amount aggregating to SBN ''''62,500/- have been received from transactions which are not permitted.


Referred to Paragraph 1 under the heading of “Report on Other Legal and Regulatory Requirements” of our report of even date


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


(b) The fixed assets have been physically verified by the management in a phased manner, designed to cover all the items over a period of three years, which in our opinion, is reasonable having regards to the size of the company and nature of its business. Pursuant to the programme, a portion of the fixed assets has been physically verified by the management during the year and no material discrepancies were noticed on such verification.


(c) According to the information and explanations given to us and on the basis of our examination of the records of the Company, the title deeds of immovable properties are held in the name of the Company except for items mentioned below:


(Rs, in crores)


































Details of Property



Net Amount



RO Premises at Egmore, Chennai



1.79



Staff Quarters at Chennai



1.14



Jangpura-Building



0.63



Jangpura-Land



0.44



Leasehold Land at Kadakola



19.38



Leasehold Land-MMLP, Vishakhapatnam



93.29



ii. The Company has carried out physical verification of inventory at reasonable intervals and no material discrepancy were noticed during such verification.


iii. The Company has granted unsecured loans to 2 wholly owned subsidiary companies i.e. M/s Fresh & Healthy Enterprises Limited (FHEL) and M/s CONCOR Air Limited.


(a) In our opinion and according to the information and explanations given to us, the terms and conditions of the grant of such loans are not prejudicial to the company''''s interest;


(b) Payments of interest are regular in respect of CONCOR Air Limited. However no payment of interest has been received from FHEL since October, 2015. Payment of Principle is not yet due in both the cases.


(c) Interest amounting to Rs,12.76 Cr is overdue in relation to loan to FHEL for more than ninety days. According to the information and explanations given to us, the company is following up the recovery of overdue amount.


iv. In our opinion and according to the information and explanations given to us, the company has complied with the provisions of section 185 and 186 of the Act, with respect to the loans, investments, guarantees and security.


v. The Company has not accepted any deposits from the public within the meaning of Sections 73,74,75 and 76 of the Companies Act, 2013 and Rules framed there under.


vi. As per the information and explanations given to us, the maintenance of cost records has not been prescribed by the Central Government under section 148(1) of the Companies Act, 2013 for services rendered by the company.


vii. (a) According to the information and explanations given to us and on the basis of our examination of the books of account of the company, except Property tax of Rs,0.26 Crores and Building Worker Cess of Rs,2.53 Crores is outstanding as on 31 March, 2017 for a period of more than six month from the date it became payable, amount deducted/accrued in the books of account in respect of undisputed statutory dues including Provident Fund, Income Tax, Sales tax, Service Tax, Custom Duty, Value Added Tax, Cess and any other statutory dues have generally been regularly deposited during the year by the company with appropriate authorities.


(b) According to the information and explanations given to us, the following dues of Income tax and service tax have not been deposited by the company on account of disputes:






















































































































































































S.


No.



Name of Statue



Nature of dues



Forum where dispute is pending



Period to which amount relates



Amount



1.



Finance Act, 1994



Service Tax



CESTAT,


Bangalore



September 2002 to June 2008



1.48*



CCE (Appeals)



01.05.2003 to 16.07.2003



0.01



CCE



2004-05



0.11



CCE (Appeals)



January 2004-March 2004



0.02



CCE



2005-06



0.20



CESTAT



2007-08 to 2009-10



103.84



DGCEI



Oct. 2010 to Mar. 15



5.13



2.



Income Tax Act, 1961



Income Tax



Supreme Court



A.Y. 2003-04



5.30



A.Y. 2004-05



9.64



A.Y. 2005-06



11.99



A.Y. 2007-08



24.75



ITAT, Delhi



A.Y. 2006-07



98.54



A.Y. 2007-08



95.59



A.Y. 2008-09



2.67



A.Y. 2009-10



0.88



A.Y. 2010-11



121.08



A.Y. 2011-12



165.80



A.Y. 2012-13



24.37



A.Y. 2013-14



15.59



CIT (Appeals)



A.Y. 2014-15



134.59



3.



Jal Sansthan, Kanpur



Water Tax



Allahabad High Court



2000-01 to date



0.69



* one third share of the total disputed amount


viii. The Company has not defaulted in repayment of loans or borrowing to a financial institution, bank, Government or dues to debenture holders during the year.


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. Accordingly, paragraph 3 (ix) of the Order is not applicable.


x. According to the information and explanation given to us by the management and based on the audit procedures performed, no material fraud by the Company or on the Company by its officers or employees has been noticed or reported during the year.


xi. According to the information and explanations given to us and based on our examination of the records of the Company, the Company has paid/provided for managerial remuneration in accordance with the requisite approvals mandated by the provisions of section 197 read with Schedule V to the Act.


xii. In our opinion and according to the information and explanations given to us, the Company is not a nidhi company. Accordingly, paragraph 3(xii) of the Order is not applicable.


xiii. According to the information and explanations given to us and based on our examination of the records of the Company, transactions with the related parties are in compliance with sections 177 and 188 of the Act where applicable and details of such transactions have been disclosed in the Ind AS financial statements as required by the applicable accounting standards.


xiv. According to the information and explanations given to us and based on our examination of the records of the Company, the Company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures during the year.


xv. According to the information and explanations given to us and based on our examination of the records of the Company, the Company has not entered into non-cash transactions with directors or persons connected with him. Accordingly, paragraph 3(xv) of the Order is not applicable.


xvi. The Company is not required to be registered under section 45-IA of the Reserve Bank of India Act 1934.


Referred to Paragraph 2 under the heading of “Report on Other Legal and Regulatory Requirements” of our report of even date


According to the information and explanations given to us we report as under:


























S.


No.



Areas Examined



Observations/Findings



1.



Whether the company has clear title/lease deeds for freehold and leasehold land respectively? If not please state the area of freehold and leasehold land for which title/lease deeds are not available.



The Company has clear title/ lease deeds for freehold and leasehold properties respectively except 6 properties, where some of the compliances to establish clear title/execution of lease deed in favour of the company are pending. Out of these 6 properties, 2 cases pertain to allotment of land, one at Vishakhapatnam admeasuring 98 acres and another at Kadakola admeasuring 55.55 acres.



2.



Whether there are any cases of waiver/write off of debts/ loans/ interest etc. if yes, the reasons there for and amount involved.



Yes, there were waivers of terminal service charges amounting to Rs,38,07,403/- and warehousing charges amounting to Rs,8,30,960/during the F.Y. 2016-17. It is reported to be business practice being followed by the company. Further interest amounting to Rs,24,61,685/has been waived in relation to the loan to wholly owned subsidiary, due to reduction in interest rate as per the approval of competent authority.


Rs,1,12,085/- towards doubtful debts has been written off during the F.Y. 2016-17 as per the approval of competent authority.


There are refunds of terminal service charges amounting to Rs,5,84,83.061/- and warehousing charges amounting to Rs,3,57,300/during the year which are duly approved by competent authority.



3.



Whether proper records are maintained for inventories lying with third parties & assets received as gifts/grants from the Govt. or other authorities.



(a) There are no inventories lying with third parties.


(b) The company has not received any assets as gifts from Govt. or other authorities. Proper records have been maintained in case of grant received.



Report on the Internal Financial Controls 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 CONTAINER CORPORATION OF INDIA LIMITED (“the Company”) as of 31 March 2017 in conjunction with our audit of the standalone Ind AS financial statements of the Company for the year ended on that date.


Management’s Responsibility for Internal Financial Controls


The Company''''s management is responsible for establishing and maintaining internal financial controls based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls over Financial Reporting issued by the Institute of Chartered Accountants of India (“ICAI”). These responsibilities include the design, implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the orderly and efficient conduct of its business, including adherence to company''''s policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information, as required under the Companies Act, 2013.


Auditors’ Responsibility


Our responsibility is to express an opinion on the Company''''s internal financial controls over financial reporting based on our audit. We conducted our audit in accordance with the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting (the “Guidance Note”) and the Standards on Auditing, issued by ICAI and deemed to be prescribed under section 143(10) of the Companies Act, 2013, to the extent applicable to an audit of internal financial controls, both applicable to an audit of Internal Financial Controls and, both issued by the Institute of Chartered Accountants of India. Those Standards and the Guidance Note require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether adequate internal financial controls over financial reporting was established and maintained and if such controls operated effectively in all material respects.


Our audit involves performing procedures to obtain audit evidence about the adequacy of the internal financial controls system over financial reporting and their operating effectiveness. Our audit of internal financial controls over financial reporting included obtaining an understanding of internal financial controls over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. The procedures selected depend on the auditor''''s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error.


We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the Company''''s internal financial controls system over financial reporting.


Meaning of Internal Financial Controls over Financial Reporting


A company''''s internal financial control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company''''s internal financial control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records 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 permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company''''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 financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may occur and not be detected. Also, projections of any evaluation of the internal financial controls over financial reporting to future periods are subject to the risk that the internal financial control over financial reporting may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.


Opinion


In our opinion, the Company has, in all material respects, an adequate internal financial controls system over financial reporting and such internal financial controls over financial reporting were operating effectively as at 31 March, 2017, based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issued by the Institute of Chartered Accountants of India.


For Arun K Agarwal & Associates


Chartered Accountants


(Firm''''s Registration No. 003917N)


sd/-


Arun Kumar Agarwal


Place: New Delhi


Date: 25- May 2017 (Partner)


Membership. No. 082899

CIN: U67190WB2003PTC096617. Trading in Commodities is done through our Group Company Dynamic Commodities Pvt. Ltd. The company is also engaged in Proprietory Trading apart from Client Business.
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