Home  »  Company  »  Empee Sugars  »  Quotes  »  Auditor Report
Enter the first few characters of Company and click 'Go'

Auditor Report of Empee Sugars and Chemicals Ltd.

Mar 31, 2015

We have audited the accompanying financial statements of EMPEE SUGARS & CHEMICALS LIMITED ("the Company"), which comprise the Balance Sheet for the Year ended as at March 31, 2015, and the Statement of Profit and Loss for the year ended on that date along with the Cash Flow statement annexed thereto, and a summary of significant accounting policies and other explanatory information.

Management's Responsibility for the Financial Statements

The Company's Board of Directors are responsible for the matters stated in Section 134(5) of the Companies Act, 2013 ("the Act") with reference to the preparation of the standalone financial statements that give a true and fair view of the financial position, financial performance and cash flow 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.

Auditors' 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 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 misstatements.

An audit involves performing procedures to obtain audit evidence about the amounts and 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, 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 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.

Basis for Qualified 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 March 31, 2015, and its profit and its cash flow for the year ended 31.03.2015 except:-

a) The accumulated losses of the company have exceeded the net worth of the company. Hence the company has made a reference to BIFR under the sick industrial companies Act. And the Company has been registered under BIFR vide case no:69/2014. However, the accounts have been prepared on a going concern basis.

b) The company has received amount of Rs. 140.37 crores from 7th July 2008 to 30th September 2012 (refer note no 4) towards share application money from holding company Empee Distilleries Ltd. These shares could not be allotted to the applicant company in view of the non-receipt of approval from the SEBI and stock Exchange.

c) Confirmation of Sundry debtors, Trade payables, Advance to suppliers, Cane advances, Harvest Advance and other deposit is subject to confirmation and reconciliation.(refer note no 8, 16, 18 & 38)

Qualified Opinion

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

In our opinion and to the best of our information and according to the explanations given to us, except for the effects of the matter described in the Basis for Qualified Opinion paragraph, 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:

And attention of the members is drawn regarding write off of Rs. 99.10 Crores relating to inventories. As explained by the Management the diminution in realizable value of inventories are due to quality, moisture and GVC Contents of coal, TRS contents in Molasses and ICUMSA in Sugar over the years. The company has written off receivables amounting to Rs. 44 Crores Refer Note No.15, 16 and 21.

a) in the case of the Balance Sheet, of the state of affairs of the Company for the year ended as at March 31, 2015;

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

c) In the case of the cash flow statement, of the cash flows for the year ended on the date

Report on Other Legal and Regulatory Requirements:-

1. As required by the Companies (Auditor's Report) Order, 2015 ("theOrder") 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 statement on the matters specified in paragraphs 4 and 5 of the Order.

2. As required by section 143(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 Balance Sheet, Statement of Profit and Loss, and Cash Flow Statement dealt with by this Report are in agreement with the books of account.

d) Except for the effects / possible effects of the matters described in the Basis of Qualified Opinion, in our opinion, the Balance Sheet, Statement of Profit and Loss and Cash Flow Statement comply with the Accounting Standards referred to in Section 133 of the Companies Act, 2013, read with Rule 7 of the Companies (Accounts) Rules, 2014.

e) On the basis of written representations received from the directors as on March 31,2015, and taken on record by the Board of Directors, none of the directors is disqualified as on March 31,2015, from being appointed as a director in terms of Section (2) of section 164 of the Companies Act, 2013.

f) With respect to the other matters to be included in the Auditors 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 does not have any pending litigations which would impact its financial position except the reference to the BIFR and the proceedings under the SARFAESI Act initiated by the bankers and some of the project creditors have gone to the court for the winding up of the company;

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 to Independent Auditors' Report

(Referred to in paragraph 1 under the heading of "Report on other Legal and Regulatory Requirements" of our Report of even date)

As required by the Companies (Auditor's Report) Order, 2015 issued by the Central Government in terms of section 143 (11) of the Companies Act, 2013 and on the basis of such checks of the books and records of the Company, as we considered appropriate and according to the information and explanations given to us during the course of the audit, we report that,

1. a) The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets on the basis of available information.

b) As explained to us, all the fixed assets have been physically verified by the management in a phased periodical manner, 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 physical verification.

2. a) The inventories have been physically verified during the year by the management. In our opinion, the frequency of verification is reasonable.

b) In our opinion and according to the information and explanations given to us, the procedures of physical verification of inventories 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 has maintained proper records of inventories. As explained to us, there were no material discrepancies noticed on physical verification of inventories as compared to book records.

3. a) The company has given interest free loan to one of its Subsidiary Companies of Rs. 44.87 Crores without stipulation as to the repayment of principal.

b) In the light of (a) we do not comment on the principal amount and interest or other conditions or security of loans.

c) In the light of (a) we do not comment on the reasonable steps have been taken by the company for recovery of the principal and interest.

4. In our opinion and according to the explanations given to us the internal control procedure of the Company are commensurate with the size of the company and the nature of its business with regards to Fixed Assets other assets and with regard to the sale of Services. No instance of continuing failure to correct major weakness in internal control was noticed.

5. The Company has not accepted any deposits from the public. Therefore the provisions of section 73 to Section 76 of the Companies Act 2013 and rules framed there under are not applicable.

6. We have broadly reviewed the cost records maintained by the company pursuant to the Companies (Cost Accounting Records) Rules, 2011 prescribed by the Central Government under Section 209(1) (d) of the Companies Act, 1956 and are of the opinion that prima facie the prescribed cost records have been 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 records of the company, there have been delays in depositing the undisputed statutory dues including Provident Fund, Employees' State Insurance, Income Tax, Sales Tax, Wealth Tax, Customs Duty, Excise Duty, Service tax, Cess and other statutory dues with the appropriate authorities. The details of the same are as follows:

Name of the State Act Nature of Dues Amount involved Rs. in Lacs

A.P. Sugar Cane regulation Andhra Pradesh Purchase 522.66 of Sugar Cane Act tax payable

Finance Act, 1994 Service Tax payable - Man 10.54 Power Services

Finance Act, 1994 Service Tax Reverse Charge 2.77 - Legal Services

Finance Act, 1994 Service Tax Reverse Charge 0.57 - Sitting Fees

Finance Act, 1994 Service Tax Reverse Charge 42.41

Income Tax Act, 1961 Tax Deducted at Source 3.29

Name of the State Act Period to which the Status case relates

A.P. Sugar Cane 1994 2001 Paid Rs. 12 Crs regulation of Sugar towards said dues Cane Act

Finance Act, 1994 2013-2014

Finance Act, 1994 2013-2014

Finance Act, 1994 2013-2014

Finance Act, 1994 2014-2015

Income Tax Act, 1961 2014-2015

b) According to the information and explanations given to us and the records of the company examined by us, except the following there are no dues of Income tax, wealth tax, service tax, sales tax, customs duty, excise duty and cess which have not been deposited on account of any dispute.

Name of the State Act Nature of Dues Amount involved Rs. in Lacs

A.P Sugar Cane regulation Andhra Pradesh 729.59 of Sugar Cane Act Purchase tax payable

Name of the State Act Period to which Dispute is the case relates pending before

A.P Sugar Cane regulation 1994 - 2001 Asst Cane of Sugar Cane Act Commissioner

c) The company is not required to transfer any amount to investor education and protection fund as per the relevant provisions of the Companies Act, 1956 (1 of 1956) and rules made there under.

8. The accumulated losses of the company have exceeded the net worth of the company as at the end of the financial year. The company has incurred cash losses in the current year and also in the immediately preceding financial year. The company has made a reference to BIFR.

9. Based on our audit procedures and according to the information and explanations given to us, the bankers of the company have approved CDR (Corporate Debt Restructure) scheme in respect of Ambasamudram project for terms loans amounting to Rs.388.47 Lakhs. As per the scheme, the repayments of interest &Principals have been restructured and the first repayment commences from September, 2014. During the year over dues interest payable amount to Rs.2,827.32lakhsand principal amount of Rs.2,526.37 lakhs.

10. The company has not given guarantee for loans taken by others from In our opinion and according to the information and explanations given to us and based on the information available, no loans and advances have been granted by the company on the basis of security by way of pledge of shares, debentures and other securities.

11. According to the records of the company, the company has not obtained any term loans during the financial year. Hence, comments under the clause are not called for.

12. According to information and explanations furnished to us no fraud on or by the company has been noticed or reported during the year.

For Venkatesh& Co., Chartered Accountants F.R.No.004636S CA Dasaraty V Place:- Chennai M.No.026336 Date:-23/05/2015 Partner


Mar 31, 2014

We have audited the accompanying financial statements of M/s Empee Sugars and Chemicals Ltd, which comprises the Balance Sheet as at March 31, 2014, and the Statement of Profit and Loss and Cash Flow Statement for the year ended, and a summary of significant accounting policies and other explanatory information.

Management''s Responsibility for the Financial Statements

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 notified under the Companies Act, 1956 read with general circular 8/2014 dated 04th April, 2014 issued by the ministry of Corporate Affairs. 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.

Auditor''s Responsibility

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.

An audit involves performing procedures to obtain audit evidence about the amounts and 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 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 but not for the purpose of expressing an opinion on the effectiveness of the internal control. 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.

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

Basis for Qualified Opinion

a) The company has received amount of Rs. 140.37 crores from 7th july 2008 to 30th September 2012 (refer note no 4) towards share application money from holding company Empee Distilleries Ltd. A reference to note No 4 is made (Notes forming part of financial statements) relating to utilization of share application money pending allotment

b) The accumulated losses of the company have exceeded the net worth of the company. The company has made a reference to BIFR under the sick industrial companies Act. However, the accounts have been prepared on a going concern basis.

c) Balances of Sundry debtors, Trade payables, Advance to suppliers, Cane advances, Harvest Advance and other deposit is subject to confirmation and reconciliation.(refer note no 8, 16, 18 & 38)

Qualified Opinion

In our opinion and to the best of our information and according to the explanations given to us, except for the effects of the matter described in the Basis for Qualified Opinion paragraph, the financial statements give the information required by the Companies Act, 1956 (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 March 31, 2014;

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

(c) 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

1. 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.

2. 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 [and proper returns adequate for the purposes of our audit have been received from branches not visited by us];

c. The Balance Sheet, Statement of Profit and Loss, and Cash Flow Statement dealt with by this Report are in agreement with the books of account;

d. Except for the effects / possible effects of the matter described in the Basis for Qualified Opinion, in our opinion, the Balance Sheet, Statement of Profit and Loss, and Cash Flow Statement comply with the Accounting Standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956 read with general circular 8/2014 dated 04th April, 2014 issued by the Ministry of Corporate Affairs;

e. On the basis of written representations received from the directors as on March 31, 2014, and taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2014, from being appointed as a director in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956.

Annexure to Independent Auditors'' Report

(Referred to in paragraph 1 under the heading of "Report on Other Legal and Regulatory Requirements" of our report of even date to the members of Empee Sugars and Chemicals Ltd., on the financial statement for the year ended March 31, 2014)

i) In respect of Fixed Assets:

a) The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets on the basis of available information

b) As explained to us, all the fixed assets have been physically verified by the management in a phased periodical manner, 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 physical verification.

c) In our opinion, the company has not disposed off a substantial part of its fixed assets during the year and the going concern status of the company is not affected

ii) In respect of its Inventories:

a) The inventories have been physically verified during the year by the management. In our opinion, the frequency of verification is reasonable.

b) In our opinion and according to the information and explanations given to us, the procedures of physical verification of inventories 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 has maintained proper records of inventories. As explained to us, there were no material discrepancies noticed on physical verification of inventories as compared to book records.

iii) In respect of loans and advances, secured or unsecured, granted or taken by the company to/ from companies, firms, or other parties covered in the register maintained under Section 301 of the Companies Act, 1956 :

a) The company has given interest free loan to one of its Subsidiary Companies. In respect of the said loan, the maximum amount outstanding at any time during the year was Rs.3,998.78 (3,304.80).

b) In our opinion and according to the information explanations given to us, the rate of interest and other terms and conditions of the loan given are not prima facie prejudicial to the interest of the company.

c) The terms of arrangement do not stipulate any repayment schedule and is repayable on demand. Accordingly, paragraph 4(iii) (c) of the Order is not applicable to the Company in respect of repayment of principal amount.

d) In respect of the said loans, the same are repayable on demand and therefore the question of overdue amount does not arise.

e) The Company has not taken any loans from the companies, firms and other parties covered in the register maintained under section 301 of the Companies Act, 1956. Consequently, the requirements of Clauses (iii) (f) and (iii) (g) of paragraph 4 of the Order are not applicable.

iv) In our opinion and according to the information and explanations given to us, there is an adequate internal control systems 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, we have not observed any continuing failure to correct major weaknesses in the internal control system of the company.

v) In respect of the contracts or arrangements referred to in Section 301 of the Companies Act, 1956:

a) In our opinion and according to the information and explanations given to us, the transactions made in pursuance of 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 or arrangements entered in the Register maintained under Section 301 of the Companies Act, 1956 and exceeding the value of Rs. 5 Lakhs in respect of each party during the year have been made at prices which appear reasonable as per the information available with the company

vi) According to the information and explanations given to us, the Company has not accepted any deposit from the public. Therefore, the provisions of Clause (vi) of Paragraph 4 of the Order are not applicable to the Company.

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 cost records maintained by the company pursuant to the Companies (Cost Accounting Records) Rules, 2011 prescribed by the Central Government under Section 209(1)(d) of the Companies Act, 1956 and are of the opinion that prima facie the prescribed cost records have been maintained. We have, however not made a detailed examination of the cost records with a view to determine whether they are accurate or complete.

ix) In respect of statutory dues

a) According to the records of the company, undisputed statutory dues including Provident Fund, Employees'' State Insurance, Income Tax, Sales Tax, Wealth Tax, Customs Duty, Excise Duty, Service tax, Cess and other statutory dues have been generally regularly deposited with the appropriate authorities.

b) According to the information and explanations given to us, undisputed dues in respect of provident fund, investor education and protection fund, employees'' state insurance, income tax, wealth tax, service tax, customs duty, excise duty, cess and other statutory dues which were outstanding, at the yearend for a period of more than six months from the date they became payable is as follows.

Name of the Nature of Dues Amount involved Period to Status State Act Rs. in Lacs which the case relates

A.P. Sugar Cane Andhra Pradesh 522.66 1994-2001 Paid regulation of Purchase tax Rs.1.2 Sugar Cane Act payable Crores towards said dues Finance Act,1994 Service Tax 10.54 2013-2014 Reverse

Charge - Man Power Services

Finance Act,1994 Service Tax 2.77 2013-2014 Reverse

Charge - Legal Services

Finance Act,1994 Service Tax 0.57 2013-2014 Reverse Charge - Sitting Fees

c) According to the information and explanations given to us and the records of the company examined by us, except the following there are no dues of Income tax, wealth tax, service tax, sales tax, customs duty, excise duty and cess which have not been deposited on account of any dispute.

Name of the Nature of Dues Amount involved Period to Dispute State Act Rs. in Lacs which the is case pending relates before

A.P. Sugar Cane Andhra Pradesh 729.59 1994-2001 Asst regulation of Purchase tax Cane Sugar Cane Act payable Commis- sioner

x) The accumulated losses of the company have exceeded the net worth of the company as at the end of the financial year. The company has incurred cash losses in the current year and also in the immediately preceding financial year.

xi) Based on our audit procedures and according to the information and explanations given to us, the bankers of the company have approved CDR (Corporate Debt Restructure) scheme in respect of Ambasamudram project for terms loans amounting to Rs.388.47 Crores. As per the scheme, the repayments of interest & principals have been restructured and the first repayment commences from September, 2014. In respect of the repayment of the Naidupet project Loan and SDF Loan principalamount of Rs.454.81 lakhs and interest of Rs.346.80 lakhs are pending to be paid.

xii) In our opinion and according to the information and explanations given to us and based on the information available, no loans and advances have been granted by the company on the basis of security by way of pledge of shares, debentures and other securities.

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

xiv) In our opinion, the company is not dealing in or trading in shares, securities, debentures and other investments. Therefore, the provisions of clause 4 (xiv) of the Companies (Auditors'' Report) Order, 2003 are not applicable to the company.

xv) According to the information and explanations given to us, the company has given guarantee for loan taken by its subsidiary from the financial institution. In our opinion, the terms and conditions on which the guarantees given are not prima facie prejudicial to the interest of the company.

xvi) On the basis of review of utilization of funds on an overall basis, in our opinion, the term loans taken by the company were applied for the purposes for which the loans were obtained.

xvii) On the basis of review of utilization of funds on an overall basis, in our opinion, the funds raised on short term basis have not been used for long term investment

xviii) According to the information and explanations given to us, the company has not made preferential allotment of shares to parties and companies covered in the register maintained under Section 301 of the Act. The company has received share application money of Rs. 14,036.50 Lakhs in the earlier years which is pending allotment.

xix) The company has not issued any debentures during the year.

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

xxi) During the course of our 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.



For Venkatesh & Co., Chartered Accountants F.R.No.004636S CA Dasaraty V M.No.026336 Partner Place :- Chennai Date :- 09/08/2014


Mar 31, 2013

We have audited the accompanying financial statements of M/s Empee Sugars and Chemicals Ltd, which comprises the Balance Sheet as at March 31, 2013, and the Statement of Profit and Loss and Cash Flow Statement for the eighteen months period then ended, and a summary of significant accounting policies and other explanatory information.

Managements Responsibility for the Financial Statements

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 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

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.

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 Companys 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.

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

Basis for Qualified Opinion

a) The company has received amount of Rs. 140.37 crores from 7th july 2008 to 30th September 2012 (refer note no 4) towards share application money from holding company Empee Distilleries Ltd. A reference to note No 4 is made (Notes forming part of financial statements) relating to utilization of share application money pending allotment.

b) The accumulated losses of the company have exceeded the net worth of the company. The company has not made a reference to tribunal in this regard. However, taking into account the share application money of Rs. 140.37 Crores, the management is of the view that there is no erosion of networth requiring the company to make a reference to the BIFR.

Qualified Opinion

In our opinion and to the best of our information and according to the explanations given to us, except for the effects of the matter described in the Basis for Qualified Opinion paragraph, 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:

(a) in the case of the Balance Sheet, of the state of affairs of the Company as at March 31, 2013;

(b) in the case of the Statement of Profit and Loss, of the loss for the eighteen months period ended on that date; and

(c) in the case of the Cash Flow Statement, of the cash flows for the eighteen months period ended on that date.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditors 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.

2. 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 [and proper returns adequate for the purposes of our audit have been received from branches not visited by us];

c. the Balance Sheet, Statement of Profit and Loss, and Cash Flow Statement dealt with by this Report are in agreement with the books of account;

d. Except for the effects / possible effects of the matter described in the Basis for Qualified Opinion, in our opinion, the Balance Sheet, Statement of Profit and Loss, and Cash Flow Statement comply with the Accounting Standards referred to in subsection (3C) of section 211 of the Companies Act, 1956;

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 Companies Act, 1956.

f. Since the Central Government has not issued any notification as to the rate at which the cess is to be paid under section 441A of the Companies Act, 1956 nor has it issued any Rules under the said section, prescribing the manner in which such cess is to be paid, no cess is due and payable by the Company.

Annexure to Independent Auditors'' Report

(Referred to in paragraph 1 under the heading of Report on Other Legal and Regulatory Requirements of our report of even date to the members of Empee Sugars and Chemicals Ltd., on the financial statement for the year ended March 31, 2013)

i) In respect of Fixed Assets:

a) The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets on the basis of available information

b) As explained to us, all the fixed assets have been physically verified by the management in a phased periodical manner, 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 physical verification.

c) In our opinion, the company has not disposed off a substantial part of its fixed assets during the year and the going concern status of the company is not affected

ii) In respect of its Inventories:

a) The inventories has been physically verified during the year by the management. In our opinion, the frequency of verification is reasonable.

b) In our opinion and according to the information and explanations given to us, the procedures of physical verification of inventories 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 has maintained proper records of inventories. As explained to us, there were no material discrepancies noticed on physical verification of inventories as compared to book records.

iii) In respect of loans and advances, secured or unsecured, granted or taken by the company to/ from companies, firms, or other parties covered in the register maintained under Section 301 of the Companies Act, 1956 :

a) The company has given interest free loan to one of its Subsidiary Companies. In respect of the said loan, the maximum amount outstanding at any time during the year was Rs. 3304.80 and the year end balance is Rs. 3304.80.

b) In our opinion and according to the information explanations given to us , the rate of interest and other terms and conditions of the loan given are not prima facie prejudicial to the interest of the company.

c) The terms of arrangement do not stipulate any repayment schedule and is repayable on demand. Accordingly, paragraph 4 (iii) (c ) of the Order is not applicable to the Company in respect of repayment of principal amount.

d) In respect of the said loans, the same are repayable on demand and therefore the question of overdue amount does not arise. In respect of interest, there are no overdue amounts.

e) The Company has not taken any loans from the companies, firms and other parties covered in the register maintained under section 301 of the Companies Act, 1956. Consequently, the requirements of Clauses (iii) (f) and (iii) (g) of paragraph 4 of the Order are not applicable.

iv) In our opinion and according to the information and explanations given to us, there is an adequate internal control systems 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, we have not observed any continuing failure to correct major weaknesses in the internal control system of the company. v) In respect of the contracts or arrangements referred to in Section 301 of the Companies Act, 1956 :

a) In our opinion and according to the information and explanations given to us, the transactions made in pursuance of 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 or arrangements entered in the Register maintained under Section 301 of the Companies Act, 1956 and exceeding the value or 5 Lakhs in respect of each party during the year have been made at prices which appear reasonable as per the information available with the company

vi) According to the information and explanations given to us, the Company has not accepted any deposit from the public. Therefore, the provisions of Clause (vi) of Paragraph 4 of the Order are not applicable to the Company.

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 cost records maintained by the company pursuant to the Companies (Cost Accounting Records) Rules, 2011 prescribed by the Central Government under Section 209(1)(d) of the Companies Act, 1956 and are of the opinion that prima facie the prescribed cost records have been maintained. We have, however not made a detailed examination of the cost records with a view to determine whether they are accurate or complete.

ix) In respect of statutory dues :

a) According to the records of the company, 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 statutory dues have been generally regularly deposited with the appropriate authorities.

b) According to the information and explanations given to us, undisputed dues in respect of provident fund, investor education and protection fund, employees state insurance, income tax, wealth tax, service tax, customs duty, excise duty, cess and other statutory dues which were outstanding, at the year end for a period of more than six months from the date they became payable is as follows.

Name of the Amount involved Period to which State Act Nature of Dues in Lacs the case relates Status

A.P. Sugar Cane Andhra Pradesh regulation of Purchase tax 522.66 1994-2001 Paid Rs.81.49 Sugar Cane Act payable Lakhs towards said dues

b) According to the information and explanations given to us and the records of the company examined by us, except the following there are no dues of Income tax, wealth tax, service tax, sales tax, customs duty, excise duty and cess which have not been deposited on account of any dispute.

Name of the Nature of Dues Amount involved Period to which Dispute is State Act Rs. in Lacs the case relates pending before

A. P. Sugar Cane Andhra Pradesh 1994-2001 Asst Cane regulation of Purchase tax 729.59 Commissioner Sugar Cane Act payable

X) The accumulated losses of the company have exceeded the net worth of the company as at the end of the financial year. The company has incurred cash losses in the current year and also in the immediately preceding financial year.

xi) Based on our audit procedures and according to the information and explanations given to us, the bankers of the company have approved CDR (Corporate Debt Restructure) scheme in respect of Ambasamudram project. As per the scheme, the repayments of interest & principals have been restructured. Considering the above, the company has paid its dues to banks/financial institutions.

xii) In our opinion and according to the information and explanations given to us and based on the information available, no loans and advance have been granted by the company on the basis of security by way of pledge of shares, debentures and other securities.

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

xiv) In our opinion, the company is not dealing in or trading in shares, securities, debentures and other investments. Therefore, the provisions of clause 4 (xiv) of the Companies (Auditors Report) Order, 2003 are not applicable to the company.

xv) According to the information and explanations given to us, the company has given guarantee for loan taken by its subsidiary from the financial institution. In our opinion, the terms and conditions on which the guarantees given are not prima facie prejudicial to the interest of the company.

xvi) On the basis of review of utilization of funds on an overall basis, in our opinion, the term loans taken by the company were applied for the purposes for which the loans were obtained.

xvii) On the basis of review of utilization of funds on an over all basis, in our opinion, the funds raised on short term basis have not been used for long term investment

xviii) According to the information and explanations given to us, the company has not made preferential allotment of shares to parties and companies covered in the register maintained under Section 301 of the Act. The company has received share application money of Rs. 14,036.50 Lakhs pending allotment.

xix) The company has not issued any debentures during the year.

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

xxi) During the course of our 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.

Place: Chennai For D Sampathkumar & Co.,

Date : 11.05.2013 Chartered Accountants

(Firm Registration No :003556S)

M K Ravindran

(Partner)

M.No: 020887


Mar 31, 2010

1. I have audited the attached Balance Sheet of M/ s.EMPEE SUGARS AND CHEMICALS LIMITED as at 31st March, 2010 and the annexed Profit and Loss Account and the Cash Flow Statement for the year ended on that date, all of which I have signed under reference to this report. These financial statements are the responsibility of the management of the Company. My responsibility is to express an opinion on these financial statements based on the audit.

2. I have conducted the audit in accordance with auditing standards generally accepted in India. Those Standards require that I plan and perform the audit to obtain reasonable assurance about 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. I believe that the audit provides a reasonable basis for my opinion.

3. As required by the Companies (Auditors Report) Order, 2003 issued by the Government of India in terms of section 227(4A) of The Companies Act, 1956 ((the Act) and on the basis of such checks as I considered appropriate and according to the information and explanations given to me, I set out 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, I report that: (a) I have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of my audit; (b) In my 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 Balance Sheet and Profit and Loss Account dealt with by this report are in agreement with the books of account;

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

(e) On the basis of written representations received from the directors, as on 31st March, 2010,and taken on record by the Board of Directors of the Company, none of the directors is 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;

(f) In my opinion and to the best of my information and according to the explanations given to me, the Balance Sheet, the Profit and Loss Account and the Cash Flow Statement together with the Notes thereon and attached thereto, give in the prescribed manner the information required by the Act 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 & 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 Flow for the year ended on that date.

TO THE MEMBERS OF EMPEE SUGARS AND CHEMICALS LTD ANNEXURE TO THE AUDITORS REPORT

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

b) As explained to me, the Company has a programme of physically verifying all of its fixed assets once in a period of three years, and in accordance therewith, major portion of fixed assets were physically verified by the management during the period. In my opinion, the frequency of verification is reasonable having regard to the size of the Company and nature of its assets. The discrepancies noticed on such verification were not material and have been properly dealt with in the books of account.

c) During the period, the Company has not disposed of substantial part of fixed assets.

ii) a) The inventories have been physically verified during the year by the management at reasonable intervals except stock lying with outside parties for which confirmation has been obtained.

b) In my opinion and according to the information and explanations given to me, the procedure of physical verification of stocks followed by the management are reasonable and adequate in relation to the size of the Company and nature of its business.

c) On the basis of my examination, I am of the opinion that the Company is maintaining proper records of inventory. No material discrepancies were noticed on verification between the physical stocks and the book records.

iii) The Company has granted unsecured loans and advances to companies, firms or other parties.

These loans and advances are prima facie and not prejudicial to the interests of the Company.

iv) On the basis of information and explanations given to me, I am of the opinion that the Company has an adequate internal control system commensurate with the size of the Company and the nature of its business.

v) Based on the audit procedure applied by me and according to information and explanations given to me, there is no contract entered into by the Company required to be entered in the Register of Contracts under Section 301 of the Act.

vi) The Company has not accepted any deposit within the meaning of Section 58A or any other relevant provisions of the Act and the rules framed thereunder.

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

(viii) I have broadly reviewed the books of account maintained by the Company in respect of products where pursuant to the rules made by the Central Government, the maintenance of cost records has been prescribed under section 209(1 )(d) of the Act and I am of the opinion that, prima facie, the prescribed accounts and records have been made and maintained.

ix) According to the records, the Company is regular in depositing statutory dues viz. Provident Fund, Income Tax, Sales Tax, Service Tax, Excise Duty, Cess, Fringe Benefit Tax and other statutory dues with appropriate authorities.

(x) The Company has accumulated losses and has not incurred any cash losses during the period covered by our audit and the company has also not incurred cash loss in the immediately preceding financial year.

(xi) In my opinion and according to the information and explanations given to me, the Company has not defaulted in the repayment of dues to Banks.

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

(xiii) The provisions of any special statue applicable to Chit Fund, Nidhi or Mutual Benefit Society are not applicable to this Company.

(xiv) The Company is not dealing or trading in shares, securities, debentures or other investments. However, the investments made by the Company in shares and other investments have been held by the Company in its own name.

(xv) According to the records of the Company and according to the information and explanations given to me, the Company has not given any guarantee for loans taken by others from bank or financial institutions.

(xvi) On the basis of our examination and according to the information and explanation given to me, the company has availed term loan during the period covered by the audit.

(xvii) According to the information and explanations given to me and on an overall examination of the balance sheet of the Company, I report that no funds raised on short term basis have been used for long term purposes.

(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 secured debentures.

(xx) The Company has not raised any money by public issue during the period covered by the audit report.

(xxi) To the best of my knowledge and belief and according to the information and explanations given to me, no fraud on or by the Company has been noticed or reported during the period.

Sd/- R.RAJAGOPALAN

Chartered Accountant

Membership No.018422

15, Station Road, West Mambalam, Chennai - 600 033.

The 29th day of May, 2010



 
Subscribe now to get personal finance updates in your inbox!