FUTURE KAVERI SEED Auditors Report

TO


THE MEMBERS OF


M/S. KAVERI SEED COMPANY LIMITED


Report on the Standalone Ind AS Financial Statements


We have audited the accompanying standalone Ind AS financial statements of M/S. KAVERI SEED COMPANY LIMITED (“the Company”), which comprise the Balance Sheet as at 31st March, 2017, the Statement of Profit and Loss (Including the other comprehensive income), the Cash Flow 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 of these standalone Ind AS financial statements that give a true and fair view of the financial position, financial performance, cash flows and changes in equity of the Company in accordance with the accounting principles generally accepted in India, including the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014. 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 the 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.


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 the 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 including the Ind AS, in the case of the Balance Sheet, of the state of affairs of the Company as at 31st March, 2017, in the case of the Statement of Profit and Loss, of the Profit for the year ended on that date, in the case of the Cash Flow Statement, of the cash flows for the year ended on that date, and in the case of Statement of


Changes in Equity, of the changes in equity of the year ended on that date.


Report on Other Legal and Regulatory Requirements:


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 Companies Act, 2013, we give in the “Annexure - A” a statement on the matters specified in paragraphs 3 and 4 of the Order, to the extent applicable.


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.


(c) The Balance Sheet, the Statement of Profit and Loss, 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 standalone Ind AS financial statements comply with the Indian Accounting Standards specified under section 133 of the Companies Act, 2013, read with Rule 7 of the Companies (Accounts) Rules, 2014.


(e) On the basis of the written representations received from the directors as on 31st March, 2017, and taken on record by the Board of Directors, none of the directors is disqualified as on 31st March, 2017, from being appointed as a director in terms of Section 164 (2) of the Companies Act, 2013.


(f) 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 -B”.


(g) 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 knowledge and belief and according to the information and explanations given to us:


i. The Company does not have any pending litigations which would impact its financial position.


ii. The Company did not have any long-term contracts including derivative contracts for which there were any material foreseeable losses.


iii. There were no amounts which were required to be transferred to the Investor Education and Protection Fund by the Company.


iv. The company has provided requisite disclosures in the Standalone 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.


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


b. The fixed assets were physically verified during the year by the management in accordance with regular programme of verification which, in our opinion, provides for physical verification of the fixed assets at reasonable intervals. According to the information and explanations given to us, 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 records of the company, the title deeds of immovable properties shown in the fixed asset schedule are held in the name of company.


ii. The inventory has been physically verified during the year by the management. In our opinion, the frequency of verification is reasonable. The discrepancies noticed on physical verification between the physical stocks and the book records are not material and they have been properly dealt with in the books of accounts.


iii. The Company has not granted any loans, secured or unsecured to companies, firms, limited liability partnerships or other parties covered in the register maintained under section 189 of the Companies Act, 2013, during the year. Accordingly paragraph 3(iii) of the Order is not applicable to the Company.


iv. According to the information and explanations given to us, The Company has not given any loans, made any investments, given any guarantees and securities to any person to which provisions of the section 185 and 186 of the companies Act 2013 are applicable.


































Name of the Statute



Nature of Dues



Amount ''''



Period to which the amount Relates



Forum where dispute is pending



Central Excise Act



Excise Duty



2,76,58,572*#



April,2010 To March 2014



Directorate General of Central Excise -Intelligence, Zonal Unit, Begumpet, Hyderabad.



Karnataka VAT Act



VAT,Penalty& Interest



5,61,55,366 $



April,2009 To March 2010



Deputy Commissioner of Commercial Taxes (Audit), Davangere, Karnataka



APGST Act



Purchase Tax



22,36,467 &



April,2003 To March 2004



Deputy Commissioner (C.T) , Abids Division, Hyderabad.



*. Net of Amounts paid under protest


#. The company has filed an appeal before Commissioner of Customs & Central Excise , Hyderabad IV Commissioner ate, Hyderabad.


$. The company has submitted application to the Deputy Commissioner of Commercial Taxes, Davangere, Karnataka for rectification of the Assessment Order. &. The company has filed appeal before Hon''''ble High Court of Andhrapradesh, Hyderabad.


v. According to the information and explanations given to us, the Company has not accepted any deposit from the public. Therefore, the provisions of Clause (v) of paragraph 3 of the CARO 2016 are not applicable to the Company.


vi. According to the information and explanations given to us, the maintenance of cost records under sub-section (1) of section 148 of the Companies Act, 2013, has not been prescribed by the Central Government for the Company.


vii.


a. The Company is regular in depositing with appropriate authorities'''' undisputed statutory dues, including provident fund, Employees'''' state insurance, income-tax, sales-tax, service tax, customs duty, duty of excise, Value added tax, cess and other material statutory dues as applicable to it. According to the information and explanations given to us, there are no undisputed amounts payable in respect aforesaid dues, as at 31st March, 2017 for a period of more than six months from the date they became payable.


b. According to the information and explanations given to us, there are no dues of income-tax, service tax and customs duty, which have not been deposited on account of any dispute. However, according to information and explanations given to us, the following dues of Sales tax and Duty of Excise have not been deposited by the company an account of disputes.


viii. Based on our audit procedures and according to the information and explanations given to us, we are of the opinion that the Company has not defaulted in repayment of dues to financial institutions, banks, Government or dues to debenture holders.


ix. I n our opinion and according to the information and explanations given to us, the Company has utilized the money raised by way of the term loans for the purposes for which they were raised and has not raised money by way of initial public offer/further public offer (Including debt instruments) during the year. Accordingly, the provisions of Clause 3(ix) of the Order are not applicable to the Company.


x. I n our opinion and according to the information and explanations given to us, no fraud by the Company or no material fraud on the Company by its officers or employees has been noticed or reported during the year.


xi. I n our opinion and according to the information and explanations given to us, Managerial remuneration paid or provided with requisite approvals mandated in the provision of section 197 read with schedule V to the Companies Act 2013.


xii. I n our opinion, the company is not a nidhi, therefore provisions of clause 3(xii) of companies (Auditors Report) Order, 2016 as amended are not applicable to the company.


xiii. I n our opinion and according to the information and explanations given to us, all transactions entered by related parties are in compliance with section 177 and 188 of Companies Act, 2013 where applicable and the details have been disclosed in the Standalone Ind AS financial Statements as required by applicable accounting standards.


xiv. According to the information and explanations given to us, the company has not made any preferential allotment of shares or private placement of shares or fully or partly convertible debentures during the year under the review. Therefore, the provisions of clause 3(xiv) of the Order are not applicable to the Company.


xv. According to the information and explanations given to us, during the year the company has not entered in to any non-cash transactions with directors or persons connected with him. Accordingly, paragraph - 3(xv) of the order is not applicable.


xvi. I n our opinion and according to the information and explanations given to us, the company is not required to be registered under section 45-IA of the Reserve Bank of India Act, 1934. Accordingly, the provisions of Clause 3(xvi) of the Order are not applicable to the Company.


Referred to in the Independent Auditor''''s Report of even date to the members of Kaveri Seed Company Limited on the standalone Ind AS financial statements for the year ended March 31, 2017.


Report on the Internal Financial Controls under Clause (1) of Sub-section 3 of Section 143 of the Act


1. We have audited the internal financial controls over financial reporting of Kaveri Seed Company Limited (“the company”) as of March 31, 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


2. 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 [the “Guidance Note”] issued by the Institute of Chartered Accounts 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 preventing 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.


Auditor''''s Responsibility


3. 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 ICAI. 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.


4. 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 depending on the auditor''''s judgment, including the assessment of the risks of the material misstatement of the Standalone Ind AS financial statements, whether due to fraud or error.


5. 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


6. 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 purpose 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 transaction are recorded as necessary to permit preparation of financial statements in accordance with Generally Accepted Accounting Principles, and that receipts and expenditure of the company are being made only in accordance with authorizations of the 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


7. 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, projection 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


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


For P R REDDY & CO


Firm Regn No.003268S


CHARTERED ACCOUNTANTS


sd/-


P. RAGHUNADHA REDDY


Place: Hyderabad, Partner


Date: 24th May, 2017 . Membership No. 23758

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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