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Auditor Report of IFB Agro Industries Ltd.

Mar 31, 2013

Report on the Financial Statements

1. We have audited the accompanying financial statements of IFB Agro Industries Limited, ("the Company"), which comprise the Balance Sheet as at March 31, 2013 and the Statement of Profit and Loss and Cash Flow Statement for the year then ended, and a summary of significant accounting policies and other explanatory information.

Management''s Responsibility for the Financial Statements

2. Management is responsible for 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 referred to in sub-section (3C) of Section 211 of the Companies Act, 1956 ("the Act"). This responsibility includes the design, implementation and maintenance of internal control 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.

Auditors'' Responsibility

3. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with the Standards on Auditing issued by the Institute of Chartered Accountants of India. 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.

4. An audit involves performing procedures to obtain audit evidence about the amounts and 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 control relevant to the Company''s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

5. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

6. In our opinion and to the best of our information and according to the explanations given to us, the 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:

i. in the case of the Balance Sheet, of the state of affairs of the Company as at March 31, 2013;

ii. in the case of Statement of Profit and Loss, of the profit for the year ended on that date; and

iii. in the case of the Cash Flow Statement, of the cash flows for the year ended on that date

Report on Other Legal and Regulatory Requirements

7. As required by the Companies (Auditor''s Report) Order, 2003 ("the Order") issued by the Central Government of India in terms of sub-section (4A) of Section 227 of the Act, we give in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the Order.

8. As required by Section 227(3) of the Act, we report that:

a. we have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purpose of our audit;

b. 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 those books;

c. the financial statements dealt with by this report are in agreement with the books of account;

d. in our opinion, the financial statements comply with the Accounting Standards referred to in sub-section (3C) of Section 211 of the Act; and

e. on the basis of written representations received from the directors, as on March 31, 2013 and taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2013 from being appointed as a director in terms of clause (g) of sub-section (1) of Section 274 of the Act.

ANNEXURE TO THE INDEPENDENT AUDITORS'' REPORT of even date to the members of IFB Agro Industries Limited, on the financial statements for the year ended March 31, 2013

Based on the audit procedures performed for the purpose of reporting a true and fair view on the financial statements of the Company and taking into consideration the information and explanations given to us and the books of account and other records examined by us in the normal course of audit, we report that

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

(b) The Company has a regular programme of physical verification of its fixed assets under which fixed assets are verified in a phased manner 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 assets. No material discrepancies were noticed on such verification.

(c) In our opinion, a substantial part of fixed assets has not been disposed off during the year.

(ii) (a) The management has conducted physical verification of inventory at reasonable intervals during the year, except for goods-in-transit.

(b) The procedures of physical verification of inventory followed by the management are 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 no material discrepancies between physical inventory and book records were noticed on physical verification.

(iii) (a) The Company has not granted any loan, secured or unsecured to companies, firms or other parties covered in the register maintained under Section 301 of the Act. Accordingly, the provisions of clauses 4(iii)(b) to 4(iii) (d) of the Order are not applicable.

(iv) In our opinion, there is an adequate internal control system commensurate with the size of the Company and the nature of its business for the purchase of inventory and fixed assets and for the sale of goods and services. During the course of our audit, no major weakness has been noticed in the internal control system in respect of these areas.

(v) (a) In our opinion, the particulars of all contracts or arrangements that need to be entered into the register maintained under Section 301 of the Act have been so entered.

(b) In our opinion, the transactions made in pursuance of such contracts or arrangements and exceeding the value of five lakhs in respect of any party during the year have been made at prices which are reasonable having regard to the prevailing market prices at the relevant time.

(vi) The Company has not accepted any deposits from the public within the meaning of Sections 58A and 58AA of the Act and the Companies (Acceptance of Deposits) Rules, 1975. Accordingly, the provisions of clause 4(vi) of the Order are not applicable.

(vii) In our opinion, the Company has an internal audit system commensurate with its size and the nature of its business.

(viii) We have broadly reviewed the books of account maintained by the Company pursuant to the Rules made by the Central Government for the maintenance of cost records under clause (d) of sub-section (1) of Section 209 of the Act in respect of Company''s products/services and are of the opinion that, prima facie, the prescribed accounts and records have been made and maintained. However, we have not made a detailed examination of the cost records with a view to determine whether they are accurate or complete.

(ix) (a) The Company is regular in depositing undisputed statutory dues including provident fund, investor education and protection fund, employees'' state insurance, income-tax, sales-tax, wealth tax, service tax, customs duty, excise duty, cess and other material statutory dues, as applicable, with the appropriate authorities. Further, no undisputed amounts payable in respect thereof were outstanding at the year-end for a period of more than six months from the date they become payable.

(x) In our opinion, the Company has no accumulated losses at the end of the financial year and it has not incurred cash losses in the current and the immediately preceding financial year.

(xi) In our opinion, the Company has not defaulted in repayment of dues to any financial institution or a bank or to debenture-holders during the year.

(xii) The Company has not granted any loans and 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 Order are not applicable.

(xiii) In our opinion, the Company is not a chit fund or a nidhi/ mutual benefit fund/ society. Accordingly, provisions of clause 4(xiii) of the Order are not applicable.

(xiv) In our opinion, the Company is not dealing or trading in shares, securities, debentures and other investments. Accordingly, the provisions of clause 4(xiv) of the Order are not applicable.

(xv) The Company has not given any guarantees for loans taken by others from banks or financial institutions. Accordingly, the provisions of clause 4(xv) of the Order are not applicable.

(xvi) The Company did not have any term loans outstanding during the year. Accordingly, the provisions of clause 4(xvi) of the Order are not applicable.

(xvii) In our opinion, no funds raised on short-term basis have been used for long-term investment by the Company.

(xviii)During the year, the Company has made preferential allotment of shares to companies covered in the register maintained under Section 301 of the Act. In our opinion, the price at which shares have been issued is not, prima facie, prejudicial to the interest of the Company.

(xix) The Company has neither issued nor had any outstanding debentures during the year. The Company has issued unsecured, convertible debentures to its holding Company. Accordingly, the provisions of clause 4(xix) of the Order are not applicable.

(xx) The Company has not raised any money by public issues during the year. Accordingly, the provisions of clause 4(xx) of the Order are not applicable.

(xxi) No fraud on or by the Company has been noticed or reported during the period covered by our audit.

For Walker, Chandiok & Co.

Chartered Accountants

Firm’s Registration No. 001076N

per Atul Seksaria

Place : New Delhi Partner

Dated : 30th May, 2013 Membership No 086370


Mar 31, 2012

1. We have audited the attached Balance Sheet of IFB AGRO INDUSTRIES LIMITED ("the Company") as at 31st March, 2012 and also the Statement of Profit and Loss and the Cash Flow Statement of the Company for the year ended on that date, both 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.

2. We conducted our audit in accordance with the auditing standards generally accepted in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatements. 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 the Management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

3. As required by the Companies (Auditor's Report) Order, 2003 (as amended) [the 'Order'] issued by the Central Government of India in terms of sub-section (4A) of Section 227 of the Companies Act, 1956 (the 'Act'), we give in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order.

4. Further to our comments in the Annexure referred to in paragraph 3 above, we report that:

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 audit;

ii. 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;

iii. 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;

iv. In our opinion, the Balance Sheet, the Statement of Profit and Loss and the Cash Flow Statement dealt with by this report comply with the Accounting Standards referred to in Section 211(3C) of the Act;

v. On the basis of written representations received from the Directors as on 31st March,2012 and taken on record by the Board of Directors, read with Note 33 of Notes to Financial Statements, we report that none of the Directors is prima-facie disqualified as on 31st March, 2012 from being appointed as a Director in terms of clause (g) of sub-section (1) of Section 274 of the Act;

vi. In our opinion and to the best of our information and according to the explanations given to us, the said 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:

a) in the case of the Balance Sheet, of the state of affairs of the Company as at 31st March, 2012;

b) in the case of the Statement of Profit and Loss, of the profit of the Company for the year ended on that date; and

c) in the case of the Cash Flow Statement, of the cash flows of the Company for the year ended on that date.

ANNEXURE TO AUDITORS' REPORT

[Referred to in paragraph 3 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) According to the information and explanations given to us, the fixed assets of the Company have been physically verified by the Management during the year and no material discrepancies between the book records and the physical inventory have been noticed. In our opinion, the frequency of verification is reasonable.

(c) There was no substantial disposal of fixed assets during the year.

(ii) (a) According to the information and explanations given to us, the inventory (excluding inventory lying with third parties) has been physically verified by the Management during the year. In respect of inventory lying with third parties, it has been confirmed by them. In our opinion, the frequency of verification is reasonable.

(b) The procedures of physical verification of inventory followed by the Management are 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 no material discrepancies were noticed on physical verification.

(iii) The Company has neither granted nor taken any loans, secured or unsecured, to or from companies, firms or other parties covered in the register maintained under section 301 of the Act. Accordingly, clauses 4 (iii) (a) to (g) of the Order are not applicable to the Company.

(iv) In our opinion and according to the information and explanations given to us, there exists an adequate internal control system commensurate with the size of the Company and the nature of its business with regard to purchase of inventory, fixed assets and with regard to the sale of goods and services. During the course of our audit, we have neither come across nor have we been informed of any continuing failure to correct major weaknesses in such internal control system of the Company.

(v) (a) According to the information and explanations given to us, the particulars of contracts or arrangements referred to in section 301 of the Act, have been entered in the Register required to be maintained under that section.

(b) In our opinion and according to the information and explanations given to us, the transactions made in pursuance of such contracts or arrangements, exceeding the value of Rs. five lakh in respect of any party during the year, have been entered into at prices which are reasonable having regard to the prevailing market prices at the relevant time.

(vi) The Company has not accepted any deposits from the public and hence the directives issued by the Reserve Bank of India and the provisions of Section 58A, 58AA or any other relevant provisions of the Act and the rules framed there under, are not applicable to the Company.

(vii) In our opinion, the Company has an internal audit system commensurate with its size and nature of its business.

(viii) The maintenance of cost records has been prescribed by the Central Government under clause (d) of sub-section (1) of Section 209 of the Act, from the current financial year in respect of the Company. Such accounts and records are in the process of being made and maintained.

(ix) According to the books and records as produced before and examined by us and the information and explanations given to us:-

(a) The Company is regular in depositing undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Employees' State Insurance, Income tax, Sales tax, Wealth tax, Service tax, Custom duty, Excise duty, Cess and other statutory dues with the appropriate authorities. There are no undisputed amounts payable in respect of above, outstanding as at 31st March, 2012, for a period of more than six months from the date they became payable.

(b) The dues as at 31st March, 2012, of Income tax, Sales tax/VAT, Wealth tax, Service tax, Custom duty, Excise duty and Cess, which have not been deposited on account of any dispute are as follows :

Name of Nature of Amount Period to which the Forum where Statute Dues (Rs. in Lacs) amount relates dispute is pending (Financial Year)

West Bengal Demand 374.61 2004-05 West Bengal Commercial Sales Tax Act, including Taxes Appellate and 1994 interest & Revisional Board penalty

West Bengal Demand 344.66 2005-06 West Bengal Commercial Sales Tax Act, including Taxes Appellate and 1994 interest & Revisional Board penalty

West Bengal Demand 41.38 2006-07 West Bengal Commercial Sales Tax Act, including Taxes Appellate and 1994 interest & Revisional Board penalty

West Bengal Demand 406.02 2007-08 West Bengal Commercial Sales Tax Act, including Taxes Appellate and 1994 interest & Revisional Board penalty

West Bengal Demand 509.76 2008-09 Additional Commissioner of Sales Tax Act, including Commercial Taxes (Appeals) 1994 interest & penalty

Central Sales Demand 9.08 2005-06 West Bengal Commercial Tax Act, 1956 including Taxes Appellate and interest & Revisional Board penalty

Central Sales Demand 1.32 2007-08 West Bengal Commercial Tax Act, 1956 including Taxes Appellate and interest & Revisional Board penalty

West Bengal Demand 131.00 2005-06 West Bengal Commercial VAT Act, including Taxes Appellate and 2003 interest & Revisional Board penalty

West Bengal Demand 5.75 2006-07 West Bengal Commercial VAT Act, including Taxes Appellate and 2003 interest & Revisional Board penalty

West Bengal Demand 183.37 2007-08 West Bengal Commercial VAT Act, including Taxes Appellate and 2003 interest & Revisional Board penalty

West Bengal Demand 557.93 2008-09 Additional Commissioner of VAT Act, including Commercial Taxes (Appeals) 2003 interest & penalty

The Bengal Duty 10.95 1998-99 Commissioner, Department Excise Act, against of Excise, Government of 1909 transit West Bengal wastage

Income Tax Income Tax 914.46 2008-09 CIT (Appeals), Kolkata Act, 1961

(x) The Company has neither accumulated losses as at 31st March, 2012 nor it has incurred cash losses during the financial year ended on that date or in the immediately preceding financial year.

(xi) The Company has not defaulted during the year in repayment of dues to a financial institution, bank or debenture holders.

(xii) The Company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

(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 Order are not applicable to the Company.

(xiv) In respect of dealing or trading in shares, securities, debentures and other investments, in our opinion and according to the information and explanations given to us, proper records have been maintained of the transactions and contracts and timely entries have been made therein. The shares, securities, debentures and other investments have been held by the Company in its own name.

(xv) According to the information and explanations given to us, the Company has not given any guarantee for loans taken by others from banks or financial institutions.

(xvi) The Company did not have any term loans outstanding during the year.

(xvii) In our opinion and according to the information and explanations given to us and on an overall examination of the Balance Sheet of the Company, we report that funds raised on short-term basis have prima facie not been used during the year for long-term investment.

(xviii)The Company has not made any preferential allotment of shares to parties and companies covered in the Register maintained under Section 301 of the Act.

(xix) The Company has not issued any debentures and accordingly, clause 4 (xix) of the Order is not applicable to the Company.

(xx) The Company has not raised any money during the year by public issues.

(xxi) During the course of our examination of the books and records of the Company, carried out in accordance with the generally accepted auditing practices in India and according to the information and explanations given to us, we have neither come across any instance of fraud on or by the Company, noticed or reported during the year, nor have we been informed of any such case by the Management.

For Haribhakti & Co.

Chartered Accountants

Firm's Registration No 103523W

Anand Kumar Jhunjhunwala

Kolkata Partner

Dated : 29th May, 2012 Membership No 56613


Mar 31, 2011

1. We have audited the attached Balance Sheet of IFB Agro Industries Limited, as at 31st March, 2011 and the related Profit and Loss Account and Cash Flow Statement for the year ended on that date annexed thereto. These financial statements are the responsibility of the Companys management. Our responsibility is to express an opinion on these financial statements based on our audit.

2. 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 about whether the financial statements are free of material misstatement. An audit includes examining, on 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 our opinion.

3. As required by the Companies (Auditors Report) Order, 2003 (the Order) (as amended) issued by the Central Government of India in terms of sub-section (4A) of Section 227 of the Companies Act, 1956 of India (the Act), we give in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order.

Further to our comments in the paragraph 3 above, we report that :

4.1 We have obtained all the information and explanations, which to the best of our knowledge and belief were necessary for the purposes of our audit;

4.2 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 those books;

4.3 The Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this report are in agreement with the books of account;

4.4 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 Section 211(3C) of the Act;

4.5 On the basis of the written representations received from the Directors as on 31st March,2011 and taken on record by the Board of Directors, read with No.16 of Schedule 13 we report that none of the Directors is prima-facie disqualified as on 31st March 2011 from being appointed as a Director in terms of clause (g) of sub-section (1) of Section 274 of the Act;

4.6 In our opinion and to the best of our information and according to the explanations given to us, the said Financial Statements together with the notes thereon 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:

i) in the case of the Balance Sheet, of the state of affairs of the Company as at 31st March 2011,

ii) in the case of the Profit and Loss Account, of the profit for the year ended on that date; and

iii) in the case of the Cash Flow Statement, of the cash flows for the year ended on that date.



ANNEXURE TO AUDITORS REPORT

Referred to in paragraph 3 of the Auditors Report of even date to the members of IFB Agro Industries Limited on the financial statements for the year ended 31st March 2011.

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

(b) The fixed assets of the Company have been physically verified by the management during the year at reasonable intervals and as informed, no material discrepancies were noticed on such verification.

(c) There was no substantial disposal of fixed assets during the year.

2. (a) The inventory (excluding stock with third parties) has been physically verified by the management during the year. In respect of inventory lying with third parties, these have been confirmed by them. In our opinion, the frequency of verification is reasonable.

(b) In our opinion, the procedures of physical verification of inventory followed by the management are reasonable and adequate in relation to the size of the Company and nature of its business.

(c) The Company is maintaining proper records of inventory and no material discrepancies were noticed on physical verification.

3. The Company has not granted any loans, secured or unsecured to companies, firms or other parties covered in the register maintained under section 301 of the Act. Accordingly, clauses (iii) (a) to (iii) (d) of the Order are not applicable to the Company

e) The Company has taken interest bearing unsecured loan from one Company covered in the register maintained under section 301 of the Act. The maximum amount involved during the year was Rs.13,500 thousand and the year-end balance of loan taken from such Company was Nil.

f) In our opinion, the rate of interest and other terms and conditions, are prima-facie not prejudicial to the interest of the Company.

g) The principal amount including interest has been fully repaid during the year.

4. In our opinion and according to the information and explanation given to us, there exists an adequate internal control system commensurate with the size of the Company and the nature of its business with regard to purchase of inventory, fixed assets and with regard to the sale of goods and services. During the course of our audit, we have neither come across nor have we been informed of any instances of major weaknesses in the internal control system, which would require corrective action, in respect of these areas.

5. (a) According to the information and explanations given to us, we are of the opinion that the particulars of contracts or arrangements referred to in section 301 of the Companies Act, 1956 and exceeding the value of five lakh rupees in respect of any party have been entered in the register required to be maintained under that section.

(b) In our opinion and according to the information and explanations given to us, the transactions made in pursuance of such contracts or arrangements exceeding value of five lakh rupees have been entered into during the financial year at prices which are reasonable having regard to the prevailing market prices at the relevant time.

6. The Company has not accepted any deposit from the public within the purview of Section 58A of the Act and the Companies (Acceptance of Deposit) Rules,1975 during the year under review.

7. In our opinion, the Companys present internal audit system is commensurate with its size and nature of its business.

8. The Central Government has not prescribed the maintenance of cost records under clause (d) of sub-section (1) of section 209 of the Act for any of the products of the Company.

9. According to the books and records as produced and examined by us and also on the basis of management representations: -

(a) The Company is regular in depositing undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Employees State Insurance, Income tax, Sales tax, Wealth tax, Service tax, Custom duty, Excise duty, Cess and other statutory dues with the appropriate authorities and there are no undisputed amounts payable in respect of above, outstanding at the year end for a period of more than six months from the date they became payable. We are informed that the Companys application towards renewal of exemption from the operation of the Employees State Insurance Act at its factory at Nurpur is still pending, as indicated in Note No 9 of Schedule 13.

(b) As at 31st March 2011, there are no dues of Income tax, Sales tax/VAT, Wealth tax, Service tax, Custom duty, Excise duty and Cess, which have not been deposited on account of any dispute other than as stated below :

Name of Nature of Amount Period to which the Forum where

Statute Dues (Rs. 000) amount relates dispute is pending west Bengal Demand 37,461 2004-05 West Bengal Commercial Sales Tax Act, including interest & Taxes Appellate and 1994 penalty Revisional Board

West Bengal Demand 34,466 2005-06 West Bengal Commercial Sales Tax Act, including interest & Taxes Appellate and 1994 penalty Revisional Board

Central Sales Demand 908 2005-06 West Bengal Commercial, Tax Act, 1956 including interest & Taxes Appellat eand, penalty Revisional Board

West Bengal Demand 13,100 2005-06 West Bengal Commercial, VAT Act, including interest & Taxes Appellate and, 2003 penalty Revisional Board

West Bengal Demand 575 2006-07 West Bengal Commercial, VAT Act, including interest & Taxes Appellate and, 2003 penalty Revisional Board

West Bengal Demand 4,138 2006-07 Additional Commissioner of Sales Tax Act, including interest & Commercial Taxes,

1994 penalty West Bengal

The Bengal Duty 1,095 1998-99 Commissioner, Department of Excise Act, against transit Excise, Government of 1909 wastage West Bengal

10. As per the books of account, the Company has neither accumulated loss as at 31st March 2011 nor it has incurred any cash loss either during the financial year ended on that date or in the immediately preceding financial year.

11. The Company has not defaulted during the year in repayment of its dues to any financial institution or bank. The Company does not have any debentures outstanding as on 31st March 2011.

12. The Company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

13. In our opinion, the Company is not a chit fund or a nidhi / mutual benefit fund / society. Accordingly, clauses (xiii) (a) to (xiii) (d) of the Order are not applicable to the Company.

14. Based on our examination of the records and evaluation of the related internal controls, the Company has maintained proper records of transactions in respect of dealing in investments and timely entries have been made therein. The shares which are held by the Company, are in the Companys name.

15. According to the information and explanations given to us, the company has not given any guarantee for loans taken by others from banks or financial institutions during the year.

16. On the basis of review of utilisation of funds pertaining to term loans on overall basis and related information as made available to us, the term loans taken by the Company have been applied for the purposes for which they are obtained.

17. On the basis of review of utilisation of funds on an overall basis, related information as made available to us and as represented to us by the management, the funds raised on short term basis have not been applied during the year for long term investments.

18. The Company has not made during the year any preferential allotment of shares to parties and companies covered in the register maintained under Section 301 of the Act.

19. The Company has not issued any debentures and accordingly the question of creation of security or charge in this regard does not arise.

20. The Company has not raised any money through a public issue during the year.

21. During the course of examination of the books of account carried out in accordance with the generally accepted auditing practices in India and according to the information and explanations given to us, we have neither come across any instance of fraud on or by the Company, noticed or reported during the year nor have we been informed of any such case by the management.

For Haribhakti & Co.

Chartered Accountants

Firm Reg. No. 103523W Anand Kumar Jhunjhunwala

Kolkata Partner

Date: 26th May, 2011 Membership No.56613


Mar 31, 2010

1. We have audited the attached Balance Sheet of IFB Agro Industries Limited, as at 31st March, 2010 and the related Profit and Loss Account and Cash Flow Statement for the year ended on that date annexed thereto. These financial statements are the responsibility of the Companys management. Our responsibility is to express an opinion on these financial statements based on our audit.

2. 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 about whether the financial statements are free of material misstatement. An audit includes examining, on 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 our opinion.

3. As required by the Companies (Auditors Report) Order, 2003 (the Order) issued by the Central Government of India in terms of Section 227(4A) of the Companies Act, 1956 of India (the Act) and on the basis of such checks as we considered appropriate and according to the information and explanations given to us, we further report that :- 3.1 (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 during the year at reasonable intervals and as informed, no material discrepancies were noticed on such verification.

(c) There was no substantial disposal of fixed assets during the year.

3.2 (a) The management has conducted physical verification of inventory at reasonable intervals during the year.

(b) In our opinion, the procedures of physical verification of inventory followed by the management are reasonable and adequate in relation to the size of the Company and nature of its business.

(c) The Company is maintaining proper records of inventory and no material discrepancies were noticed on physical verification.

3.3 According to the information and explanations given to us, the Company has not granted any loans, secured or unsecured to companies, firms or other parties covered in the register maintained under section 301 of the Act. Accordingly, clauses (iii)(a) to (iii)(d) of the Order are not applicable to the Company.

e) The Company has taken interest bearing unsecured loan from two associate concerns aggregating to Rs.85,000 thousand.

f) In our opinion, the rate of interest and other terms and conditions, are not prima-facie prejudicial to the interest of the Company.

g) The principal amount including interest has been fully repaid during the year.

3.4 In our opinion and according to the information and explanation given to us, there are adequate internal control system commensurate with the size of the Company and the nature of its business, for the purchase of inventory and fixed assets and for the sale of goods and services. Further, during the course of our audit we have not come across of any instances of major weaknesses in the internal control system, which would require corrective action, in respect of these areas.

3.5 (a) On the basis of our examination of the books of account, we are of the opinion that the particulars of contracts or

arrangements referred to in section 301 of the Act, and exceeding the value of five lakh rupees in respect of any party have been entered in the register required to be maintained under that section.

(b) In our opinion, the transactions made in pursuance of such contracts or arrangements have been made at prices which are reasonable having regard to the prevailing market prices at the relevant time.

3.6 In our opinion and according to the information and explanations given to us, the Company has not accepted any deposit from the public within the purview of Section 58A of the Act and the Companies (Acceptance of Deposit) Rules,1975 during the year under review.

3.7 In our opinion, the Companys present internal audit system is commensurate with its size and nature of its business.

3.8 The Central Government has not prescribed the maintenance of cost records under clause (d) of sub-section (1) of section 209 of the Act for any of the products of the Company.

3.9 According to the books and records as produced and examined by us and also on the basis of management representations: -

(a) The Company is regular in depositing undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Employees State Insurance, Income tax, Sales tax, Wealth tax, Service tax, Custom duty, Excise duty, Cess and other statutory dues with the appropriate authorities and there are no undisputed amounts payable in respect of above, outstanding at the year end for a period of more than six months from the date they became payable. We are informed that the Companys application towards renewal of exemption from the operation of the Employees State Insurance Act at its factory at Noorpur is still pending, as indicated in Note No 10 of Schedule 13.

(b) As at 31st March 2010, there are no dues of Income tax, Sales tax, Wealth tax, Service tax, Custom duty, Excise duty and Cess, which have not been deposited on account of any dispute other than as stated below :

Name of Nature of Amount Period to which the

Statute Dues (Rs. 000) amount relates

West Bengal Demand 2,544 2004-05

Sales Tax Act, including

interest &

1994 penalty

West Bengal Demand 34,466 2005-06

Sales Tax Act, including interest

&

1994 penalty

Central Sales Demand 908 2005-06

Tax Act,1956 including interest

& penalty

West Bengal Demand 1,221 2006-07

VAT Act, including interest

&

2003 penalty

West Bengal Demand 4,138 2006-07

Sales Tax Act, including interest

&

1994 penalty

The Bengal Duty 1,095 1998-99

Excise Act, against transit

1909 wastage



Name of Forum where

Statute dispute is pending

West Bengal Sales Tax

Act,1994 West Bengal Commercial

Taxes Appellate and

West Bengal Sales Tax Revisional Board

Act,1994 Additional Commissioner of

Commercial Taxes,

Central Sales Tax Act,1956 West Bengal

West Bengal Commercial,

Taxes Appellate and,

Revisional Board

West Bengal VAt Act,2003 Additional Commissioner of

Commercial Taxes,

West Bengal

West Bengal Sales Tax Act,1994 Additional Commissioner of

Commercial Taxes,

West Bengal

The Bengal Excise Act,1909 Commissioner, Department of

Excise, Government of

West Bengal

3.10 As per the books of account, the Company has neither accumulated loss as at 31st March 2010 nor it has incurred any cash loss either during the financial year ended on that date or in the immediately preceding financial year.

3.11 The Company has not defaulted during the year in repayment of its dues to any financial institution or bank. The Company does not have any debentures outstanding as on 31st March 2010.

3.12 The Company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

3.13 In our opinion, the Company is not a chit fund or a nidhi / mutual benefit fund / society. Accordingly, clauses (xiii) (a) to (xiii) (d) of the Order are not applicable to the Company.

3.14 In our opinion proper records have been maintained of the transactions and contracts for investments and timely entries have been made therein. The shares and securities, which are held by the Company, are in the Companys name.

3.15 The Company has given corporate guarantees for exposure taken by associate companies from financial institutions and overseas corporate. According to the information and explanations given to us, we are of the opinion that the terms and conditions thereof are not prima facie prejudicial to the interests of the Company.

3.16 On the basis of review of utilisation of funds pertaining to term loans on overall basis and related information as made available to us, the term loans taken by the Company have been applied for the purposes for which they are obtained.

3.17 On the basis of review of utilisation of funds on overall basis, related information as made available to us and as represented to us by the management, the funds raised on short term basis have not been applied during the year for long term investments.

3.18 The Company has not made during the year any preferential allotment of shares to parties and companies covered in the register maintained under Section 301 of the Act.

3.19 The Company has not issued any debentures and accordingly the question of creation of security or charge in this regard does not arise.

3.20 The Company has not raised any money through a public issue during the year.

3.21 During the course of examination of the books of account carried out in accordance with the generally accepted auditing practices in India, we have neither come across any instance of fraud on or by the Company, noticed or reported during the year nor have we been informed of such case by the management.

4. Further to our comments in the paragraph 3 above, we report that :

4.1 We have obtained all the information and explanations, which to the best of our knowledge and belief were necessary for the purposes of our audit;

4.2 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 those books;

4.3 The Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this report are in agreement with the books of account;

4.4 In our opinion, the Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this report have been in compliance with the applicable accounting standards referred to in Section 211(3C) of the Act;

4.5 On the basis of written representation received from the Directors, read with No.17 of Schedule 14 and taken on record by the Board of Directors, we report that none of the Directors are prima-facie disqualified as on 31st March 2010 from being appointed as a Director in terms of clause (g) of sub-section (1) of Section 274 of the Act;

4.6 Attention is drawn to Note No 7 of Schedule-13 regarding change in accounting policy of Certified Emission Reduction (CER). Pursuant to above an amount of Rs. 36,829 thousand has been additionally credited in Profit and Loss Account.

4.7 Attention is drawn to Note No. 16 of Schedule 13 regarding managerial remuneration of one director which is subject to approval of the members in the forthcoming Annual General Meeting.

4.8 In our opinion and to the best of our information and according to the explanations given to us, the said accounts together with the notes thereon 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:

i) in the case of the Balance Sheet, of the state of affairs of the Company as at 31st March 2010,

ii) in the case of the Profit and Loss Account, of the profit for the year ended on that date; and

iii) in the case of the Cash Flow Statement, of the cash flows for the year ended on that date.



For Haribhakti & Co.

Chartered Accountants

Firm Reg. No. 103523W

Anand Kumar Jhunjhunwala Kolkata

Partner

Date: 29th May, 2010 Membership No.56613





 
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