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INDEPENDENT AUDITORS' REPORT
The Members, Nagarjuna Agrichem Limited
Report on Financial Statements
We have audited the accompanying standalone financial statements of NAGARJUNA AGRICHEM LIMITED("the Company"), which comprise the Balance Sheet as at 31st March, 2015, the Statement of Profit and Loss, the Cash Flow Statement for the year then ended, and a summary of the significant accounting policies and other explanatory information.
Management's Responsibility for the 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 financial statements that give a true and fair view of the financial position, financial performance and cash flows 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 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.
Our responsibility is to express an opinion on these standalone 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 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 financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and the disclosures in the financial statements. The procedures selected depend on the auditors' judgment, including the assessment of the risks of material misstatement of the 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 financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on whether the Company has in place an adequate internal financial controls system over financial reporting and the operating effectiveness of such controls. 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 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 financial statements.
In our opinion and to the best of our information and according to the explanations given to us, the aforesaid 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 31st March, 2015, and its profit and its cash flows for the year ended on that date.
Emphasis of Matters:
We draw attention to the following matters in the Notes to the financial statements:
Note No. 36 regarding claim lodged with the insurers based on the provisional assessment of loss made by the management of the fire accident in Block No.5 of the Srikakulam factory during the financial year 2012–13 in respect of totally/ partially damaged assets, inventory and other risks and treatment of the same as receivable pending final assessment and acceptance of the same by the insurers, on the date of the Balance Sheet dealt with by this report.
Our opinion is not modified in respect of these matters.
Report on other Legal and Regulatory Requirements:
1. 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, and the Cash Flow Statement dealt with by this Report are in agreement with the books of account.
d) In our opinion, the aforesaid financial statements comply with the Accounting Standards specified under Section 133 of the Act, 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, 2015 taken on record by the Board of Directors, none of the directors is disqualified as on 31st March, 2015 from being appointed as a director in terms of Section 164 (2) of the Act.
f) 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:
a. The Company has disclosed the impact of pending litigations on its financial position in its financial statements – Refer Note 31 to the financial statements;
b. The Company did not have any long–term contracts including derivative contracts for which there were any material foreseeable losses.
c. There has been no delay in transferring the amounts, required to be transferred to the Investor Education and Protection Fund, by the Company.
2. As required by the Companies (Auditor's report) Order 2015, issued by the Government of India in terms of Section 143(11) of the Act we annex hereto a Statement on the matters specified in paragraphs 3 and 4 of the said Order.
ANNEXURE TO THE AUDITORS' REPORT
Referred to in paragraph 2 under the heading of "Report on Other Legal and Regulatory Requirements" of our report of even date.
1. According to the information and explanations furnished to us,
a) The Company has maintained proper records showing full particulars including quantitative details and situation of its fixed assets.
b) The said Fixed assets have been physically verified by the management during the year based on a phased programme of verification over a period of three years, which in our opinion is reasonable having regard to the size of the Company and the nature of its fixed assets. No material discrepancies were noticed in respect of the fixed assets verified during the year and the records in respect thereof.
2. According to the information and explanations furnished to us,
a) Physical verification of its inventories has been conducted during the year by the management. In our opinion, the frequency of the verification is reasonable.
b) In our opinion, the procedures of physical verification of inventories followed by the Management are reasonable and adequate in relation to the size of the Company and nature of its business.
c) In our opinion, the Company is maintaining proper records of inventories. The discrepancies noticed on physical verification of the inventories were not material in relation to the operations of the Company and the same have been properly dealt with in the books of account.
3. According to the information and explanations furnished to us, the company has granted unsecured loan to a Company covered in the register maintained under Section 189 of the Companies Act 2013, in respect of which,
a) The receipt of the principle amounts and interest are not regular and
b) The Principle amount is due to an extent of Rs. 167lakhs out of which Rs. 83 Lakhs is overdue as at the date of Balance Sheet.
c) The interest amount is due to the extent of Rs. 57.99Lakhs which includes overdue amount of Rs. 55.53 Lakhs as at the date of Balance Sheet.
4. In our opinion and according to the information and explanations given to us, there are adequate internal control systems commensurate with the size of the Company and the nature of its business with regard to purchase of inventory and fixed assets and for the sale of goods and services. In our opinion and according to the information and explanations given to us, we have not come across any major weaknesses in the internal control system that continues to remain uncorrected.
5. According to the information and explanations furnished to us, the Company has not accepted deposits covered by sections 73 to 76 of the Companies Act 2013 and the rules framed there under.
6. We have broadly reviewed the books of account maintained by the Company pursuant to the Rules made by the Central Government for maintenance of cost records prescribed under Section 148(1) of the Companies Act, 2013, and are of the opinion that prima facie, the prescribed accounts and records have been made and maintained. We have, however, not made a detailed examination of the cost records with a view to determine whether they are accurate or complete.
7. a) According to the information and explanations furnished to us, the Company is regular in depositing undisputed
statutory dues including Provident Fund, Employees' State Insurance, Income Tax, Wealth Tax, Sales Tax, Value Added Tax, Service Tax, Customs Duty, Excise Duty, Cess and other applicable statutory dues with the appropriate authorities; there are no arrears of such statutory dues as at 31st March, 2015 which are outstanding for a period of more than six months from the date they became payable.
b) According to the information and explanations furnished to us, there are no dues of Income Tax, Sales Tax, Wealth Tax, Service Tax ,Custom Duty ,Excise Duty , or Cess which have not been deposited on account of any dispute pending except the following:
c) According to the information and explanations furnished to us, the amount required to be transferred to the Investor Education and Protection Fund in accordance with the relevant provisions of the Companies Act, 2013 and the Rules made there under has been transferred to the said fund within time.
8. The Company has no accumulated losses as at 31st March, 2015. The Company has not incurred cash losses during the financial year under report but it did in the immediately preceding financial year
9. According to the information and explanations furnished to us, the Company has not defaulted in repayment of dues to any financial institutions or banks.
10. According to the information and explanations furnished to us, the Company has not given any guarantee for loans taken by others from banks or financial institutions.
11. According to the information and explanations furnished to us, Term loans were applied for the purpose for which the loans were obtained.
12. In accordance with the information and explanations given to us and on our examination of the Company's books and records, no fraud on or by the Company has been noticed or reported during the year.
For M.BHASKARA RAO & CO;
Firm Registration Number. 000459 S
Membership No. 26255
Place : Hyderabad
Date : 30th May, 2015