We have audited the attached Balance Sheet of M/s. PRIMA AGRO LIMITED,
as at 31st March, 2012 the Profit and Loss Account and the Cash Flow
Statement for the year ended on that date annexed thereto. These
financial statements are the responsibility of the Company''s
management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with auditing standards generally
accepted in India. Those standards require that we plan and perform
the audit to obtain reasonable assurance whether the financial
statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for
As required by the Companies (Auditor''s Report) Order, 2003 issued by
the Central Government of India in terms of sub-section (4A) of section
227 of the Companies Act, 1956, we enclose in the Annexure a statement
on the matters specified in paragraphs 4 and 5 of the said Order.
Further to our comments in the Annexure referred to above, we report
(i) We have obtained all the information and explanations, which to the
best of our knowledge and belief were necessary for the purposes of our
(ii) In our opinion, proper books of account as required by law have
been kept by the company so far as appears from our examination of
(iii) The Balance Sheet, Profit and Loss Account and Cash Flow
Statement dealt with by this report are in agreement with the books of
account; (iv) In our opinion, the Balance Sheet, Profit and Loss
Account and Cash Flow Statement dealt with by this report comply with
the accounting standards referred to in subsection
(3C) of section 211 of the Companies Act, 1956;
On the basis of written representations received from the directors, as
on 31st March, 2011, and taken on record by the Board of Directors, we
report that none of the directors is disqualified as on 31 st March,
2011 from being appointed as a director in terms of clause (g) of
sub-section (1) of section 274 of the Companies Act, 1956;
Non-Current Investments as per Note 10 consist of investment in shares
of Prima Industries Ltd valued at cost amounting to f 1,01,95,280/-. As
on 31st March, 2012, it has been identified that there is a decline in
the value of investment which is not temporary in nature. The standards
laid down by AS -13 on ''Accounting for Investments'' provides that where
the decline in the value of investment is not temporary in nature, then
the carrying amount of investments should be reduced by the amount of
such decline and the resultant reduction should be charged to the
Profit & Loss A/c. The company has not charged such decline to the
Profit and Loss A/c.
Secured loans shown in Note 3 of the Balance sheet includes a Cash
Credit of f 11,88,93,444/- lying with State Bank of India. It is also
disclosed that this cash credit is secured by first charge on the fixed
assets of AFD & by hypothecation of inventories and book debts and a
second charge on the fixed assets of FMD. The value of stock as
certified by the management is f 5,27,277/- and the value of Sundry
Debtors given in Note 14 which is considered good is nil. The secured
value of current assets on which the loan is shown as secured comes to
only f 5,27,277/-, which does not cover the loan outstanding. The
realizable value of security under which this loan has been disclosed
is subject to the point discussed above.
Subject to the above, in our opinion and to the best of our information
and according to the explanations given to us, the said accounts give
the information required by the Companies Act, 1956,in the manner so
required and give a true and fair view in conformity with the
accounting principles generally accepted in India.
(a) in the case of the Balance Sheet, of the state of affairs of the
Company as at 31st March, 2012; and
(b) in the case of the Profit and Loss Account, of the profit for the
year ended that date.
(c) in the case of the Cash Flow Statement, of the cash flows for the
period ended on that date.
ANNEXURE TO AUDITOR''S REPORT
(Referred to in paragraph 3 of our report of even date)
a) The Company has maintained proper records showing full particulars
including quantitative details and situation of fixed assets.
b) All the assets have not been physically verified by the management
during the year but there is a regular programme of verification which,
in our opinion, is reasonable having regard to the size of the company
and the nature of its assets, No material discrepancies were noticed on
c) During the year, the company has not disposed off a major part of
the plant and machinery. Accordingly the provisions of clause 4(i)(c)
of the Companies (Auditor''s Report) Order, 2003 are not applicable to
a) The inventory has been physically verified during the year by the
management. In our opinion, the frequency of verification is
b) The procedure of physical verification of inventories followed by
the management is reasonable and adequate in relation to the size of
the company and the nature of its business.
c) The company is maintaining proper records of inventory and the stock
as disclosed in the financial statements are valued and certified by
the management. The discrepancies noticed on verification between the
physical stocks and book records were not material.
a) The Company has granted the following loans to companies, firms and
other parties covered in the register maintained u/s.301 under the
Companies Act 1956.
SI. No Name of the Company Relationship Year end
/Firm orOther Parties Balance
1. Prima Industries Ltd Associate 3,82,95,900
2. Prima Beverages (P) Ltd. Associate 30,87,778
b) The following are the particulars of loans taken by the company from
companies, and other parties covered in the register maintained u/s.301
under the Companies Act, 1956
No Name of the Party Relationship Yearend
with the Company Balance
1. Sanjay Gupta Managing Director 45,12,717
2. Swati Gupta Relative of
Managing Director 253,709
c) In our opinion, the rate of interest and the terms and conditions on
which loans have been taken from/ granted to companies, other parties
listed in register maintained u/s. 301 of the Companies Act, 1956 are
not able to report, prima facie, prejudicial to the interest of the
Company, since the terms are not defined.
d) The Company is not receiving/paying any interest on such loans and
there is no stipulation as to repayment of principal in respect of
loans granted to/taken from parties listed in the register maintained
under Section 301 of the Companies Act 1956, hence we ore unable to
comment on the regularity of repayment of principal in respect of the
iv. In our opinion and according to the information and explanations
given to us, there are adequate internal control procedures
commensurate with the size of the company and the nature of its
business with regard to purchases of inventory, fixed assets and with
regard to the sale of goods. During the course of our- audit, we have
not observed any continuing failure to correct major weaknesses in the
internal control system of the company.
a) In our opinion and according to the information and explanations
given to us, the particulars of all contracts or arrangements that need
to be entered in the register maintained under Section 301 of the
Companies Act, 1956 have been so entered.
b) In our opinion and according to the information and explanations
given to us, the transactions made in pursuance of contracts and
arrangements entered in the register maintained u/s 301 of the
Companies Act, 1956 and exceeding the value of five lakh rupees in
respect of any party during the year have been made at prices which are
reasonable having regard to prevailing market prices at the relevant
vi. The company has not accepted any deposit from the public hence the
directions issued by the Reserve Bank of India and provisions of
Section 58A and 58AA and other relevant provisions of the Companies
Act, 1956 and the Rules formed thereunder are not applicable to this
vii. The company does not have adequate internal audit system
commensurate with the size and nature of its business.
viii. The Central Government has not prescribed maintenance of cost
records under Section 209(1) (d) of the Companies Act 1956 for the
products of the Company.
a) According to the information and explanations furnished to us,
during the year, undisputed statutory dues including provident fund,
investor education protection fund, employees state insurance, income
tax, sales tax, wealth tax, customs duty, excise duty, cess and other
material statutory dues applicable to it have been deposited with
appropriate authorities and there has been no serious delays.
Further, since the Central Government has till date not prescribed the
amount of cess payable u/s 441A of the Companies Act, 1956, we are not
in a position to comment upon the regularity or otherwise of the
company in depositing the same.
b) According to the information and explanation given to us, there are
no dues of sale tax, income tax, customs duty, wealth tax, excise duty
and cess which have not been deposited on account of any dispute.
x. In our opinion, the company has accumulated losses to the extent of
Rs. 19,75,95,483/-. The accumulated losses of the company are more than
fifty per cent of its paid up capital and free reserves.
xi. In our opinion and according to the information and explanations
given to us, the company during the year has defaulted in repayment of
dues to the following banks and financial institutions:
Bank/ Financial Institution Balance Outstanding as at 31
1. State Bank of India 11,88,93,444
xii, According to the information and explanations furnished to us, the
company has not granted any loans or advances on the basis of security
by way of pledge of shares, debentures and other securities/Accordingly
the provisions of clause 4(xii) of the Companies (Auditor''s Report)
Order, 2003 are not applicable to the company.
xiii. In our opinion, the company is not a chit fund or a Nidhi/
mutual benefit fund/society. Therefore, the provisions of clause
4(xiii) of the Companies (Auditor''s Report) Order. 2003 are not
applicable to the company.
xiv. In our opinion the company is not dealing in shares, securities,
debentures and other investments. Accordingly the provisions of clause
4(xiv) of the Companies (Auditor''s Report) Order, 2003 are not
applicable to the company.
xv. In our opinion, the company has not given guarantees for loans
taken by others from banks or financial institutions.
xvi. In our opinion, the term loans have been applied for the purpose
for which they were raised.
xvii. According to the information and explanations given to us and on
an overall examination of the balance sheet of the company, we report
that no funds raised on short-term basis have been used for long-term
xviii. The company has not made any preferential allotment of shares to
parties & companies covered in the Register maintained u/s. 301 of the
Act. Accordingly the provisions of clause 4 (xviii) of the Companies
(Auditor''s Report) Order, 2003 are not applicable to the Company.
xix. The company has not issued any debentures and hence the provisions
of clause 4(xix) of the Companies (Auditor''s Report) Order, 2003 are
not applicable to the company.
xx. The company has not raised any money from public issues during the
year. Accordingly the provisions of clause 4(xx) of the Companies
(Auditor''s Report) Order, 2003 are not applicable to the company.
xxi. According to the information and explanations given to us, no
fraud on or by the company has been noticed or reported during the
course of our audit.
For VIJAYAKUMAR & EASWARAN
CA K. EASWARAN PILLAI, F.C.A.
PARTNER Membership No: 022062