Report on the Standalone Financial Statements
We have audited the accompanying standalone financial statements of Cosco (India) Limited (‘the
Company’), which comprise the balance sheet as at 31 March 2018, the statement of profit and loss and
the cash flows and changes in equity of the Company in accordance with the Indian Accounting Standards (Ind
AS) prescribed under section 133 of the Act read with the Companies (Indian Accounting Standards) Rules 2015,
as amended, and a summary of 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 and presentation of these
standalone 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 the 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 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.
Auditor’s Responsibility
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
thereunder.
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 auditor’s 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. 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 standalone financial statements.
Opinion
In our opinion and to the best of our information and according to the explanations given to us, the
aforesaid standalone 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 2018 and its profit, total comprehensive income, the
changes in equity and its cash flows for the year ended on that date.
Emphasis of Matter
- Attention is drawn to the Note No. 7.2 & 7.4 regarding non moving inventories, Note No 8.2 regarding
provision for expected credit loss, Note No 11.1 regarding land compensation receivable, Note No. 18.1 trade
payable to MSME, Note No 19.1(b) regarding other liabilities, and Note No 42.2 regarding value of investment
in erstwhile subsidiary of company.
- The Internal Audit system of the company needs to be strengthened in scope, coverage and
compliance.
Our opinion is not qualified in respect of these matters
Report on Other Legal and Regulatory Requirements
I. 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.
II. 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 including other comprehensive income,
statement of changes in equity and the statement of cash flow dealt with by this Report are in agreement with
the books of account;
(d) in our opinion, the aforesaid standalone financial statements comply with the Indian Accounting
Standards (Ind AS) specified under Section 133 of the Act, read with the Companies (Indian Accounting
Standards) Rules, 2015;
(e) on the basis of the written representations received from the directors as on 31 March 2018 taken
on record by the Board of Directors, none of the directors is disqualified as on 31 March 2018 from being
appointed as a director in terms of Section 164 (2) of the Act;
(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”; and
(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 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
financial statements;
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.
Annexure - A to the Auditors’ Report
The Annexure referred to in Independent Auditors’ Report to the members of the Company on the
standalone financial statements for the year ended 31st March 2018, we report that:
(i) In respect of fixed assets:
(a) The Company has maintained proper records showing full particulars, including quantitative details
and situation of fixed assets.
The Company has a regular programme of physical verification of its fixed assets by which fixed assets
are verified in a phased manner, which, in our opinion, is reasonable having regard to the size of the
Company and the nature of its assets. In accordance with this programme, certain fixed assets were verified
by the management during the year. According to the information and explanations given to us, no material
discrepancies were noticed on such verification.
(b) According to the information and explanations given to us and on the basis of our examination of
the records of the Company and certificate provided by the bank, the title deeds of immovable properties are
held in the name of the Company. Original copy of title deed has not been produced as the same is deposited
as security with bank under loan agreement as confirmed by the management & Bank.
(ii) In respect of its inventories:
(a) As explained to us, the inventories of finished goods, semi-finished goods, stores, spare parts
and raw materials were physically verified at the end of the year by the Management. In case of inventories
lying with third parties, certificates of stocks holding have been received.
(b) In our opinion and according to the information and explanation given to us, the procedures of
physical verification of inventories followed by the Management were reasonable and adequate in relation to
the size of the Company and the nature of its business.
(c) In our opinion and according to the information and explanations given to us, the Company has
maintained proper records of its inventories and no material discrepancies were noticed on physical
verification.
(iii) The Company has not granted loans to parties covered in the register maintained under section
189 of the Companies Act, 2013 (‘the Act’). Thus, paragraph 3(iii) of the Order is not applicable
to the Company
(iv) In our opinion and according to the information and explanations given to us, the Company has not
given any loans and made any investment within the meaning of section 185 & 186 of the Act. Thus, paragraph
3(iv) of the Order is not applicable to the Company.
(v) According to the information and explanation given to us, the company has not accepted any
deposits from the public. Thus, paragraph 3(v) of the Order is not applicable to the Company.
(vi) It has been certified by the management that company is not required to maintain the cost records
prescribed under sub section (1) of the section 148 of the companies Act, 2013, since the same has not been
specified by the Central Government. We have relied upon the assertions of the management.
(vii) In respect of statutory dues:
(a) According to the information and explanations given to us and on the basis of our examination of the
records of the Company, the company has generally been regular in depositing undisputed statutory dues,
including provident Fund, Employees State insurance, income tax, sales tax, wealth tax, service tax, duty of
customs, duty of excise, value added tax, cess and other material statutory dues applicable to it with the
appropriate authorities. There were no undisputed amounts payable in respect of the aforesaid statutory dues
in arrears as at 31.03.2018 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, sales
tax, wealth tax, service tax, duty of customs, duty of excise, value added tax, cess which have not been
deposited as at 31.03.2018 on account of any dispute.
(viii) According to the information and explanations given to us, the Company has not defaulted in
repayment of loans or borrowing to a financial institution, bank, Government during the year.
(ix) The company has not obtained any term loan during the year, so this para of order is not
applicable.
(x) According to the information and explanations given to us, no material fraud by the Company or on
the Company by its officers or employees has been noticed or reported during the course of our audit.
(xi) According to the information and explanations give 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 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-IAof the Reserve Bank of India Act
1934.
Annexure - B to the Auditors’ Report 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 Cosco (India) Limited
(“the Company”) as of 31 March 2018 in conjunction with our audit of the standalone 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 authorisations of management
and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection
of unauthorised acquisition, use, or disposition of the company’s assets that could have a material
effect on the financial statements.
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 authorisations of management and directors of the company; and (3) provide reasonable
assurance regarding prevention or timely detection of unauthorised 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, except in certain areas as stated below an
adequate internal financial controls system over financial reporting and such internal financial controls
over financial reporting were operating effectively as at 31 March 2018, 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.
- Inventory Levels : needs to be monitored more effectively.
- The documentation and MIS : need improvement in respect of Annual procurement & Expense budget,
Procurement Budgeting & Planning of Traded Goods, Quotation Management, Negotiation & Selection, Contract
labour management,
- Dealers selection and Appointment: needs improvement to prevent appointment of non credit worth ness
dealer.
- HR (attendance monitoring & performance review): needs improvement w.r.t. modification of attendance
sheet to prevent excess payment of salary.
- Fixed Assets Physical verification: needs improvement to see all items of fixed assets are physically
verified in scale of 3 years.
For V. P. Jain & Associates
Chartered Accountants
Firm’s
registration number: 015260N
Swati Madan
Partner
Membership number: 521697
Place: New Delhi
Date: 30th May 2018
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