Mar 31, 2018
Auditor''s Report
INDEPENDENT AUDITOR''S REPORT To
The Members of K.M. Sugar Mills Ltd.
Report on the Ind AS Financial Statements
We have audited the accompanying Ind AS financial statements of K.M. Sugar Mills Ltd. ("the Company"), which comprise the Balance Sheet as at 31st March, 2018, and the Statement of Profit and Loss (including Other Comprehensive Income), the Statement of Cash Flows and the Statement of Changes in Equity for the year then ended, and a summary of the significant accounting policies and other explanatory information. Management''s Responsibility for the Ind AS Financial Statements
The Company''s Board of Directors is responsible for the matters stated in Section 134(5) of the Companies Act, 2013 ("the Act") with respect to the preparation of these Ind AS financial statements that give a true and fair view of the financial position, financial performance including other comprehensive income, cash flows and changes in equity of the Company in accordance with the accounting principles generally accepted in India, including the Indian Accounting Standards (Ind AS) prescribed under section 133 of the Act read with rules issued thereunder. 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 Ind AS 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 Ind AS financial statements based on our audit. In conducting 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 of the Ind AS financial statements 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 I whether the Ind AS financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and the disclosures in the Ind AS financial statements. The procedures selected depend on the auditor''s judgment, including the assessment of the risks of material misstatement of the Ind AS 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 Ind AS financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of the accounting estimates made by the Company''s Board of Directors, as well as evaluating the overall presentation of the Ind AS 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 Ind AS financial statements.
Opinion
In our opinion, and to the best of our information and according to the explanations given to us, the aforesaid Ind AS financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India of the state of affairs of the Company as at 31st March,
2018, and its profit including other comprehensive income, its cash flows and the changes in equity for the year ended on that date.
Emphasis of Matter
We draw attention on Note No.35.13 to the Ind AS financial statements regarding reversal of interest liability provided in the previous year for Rs.1213.53 lakhs on delayed can payment dues pertaining to cane seasons 2012-13 to 2016-17 on the basis of expert''s opinion sought.
Our opinion is not modified in respect of these matters.
Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditor''s Report) Order, 2016 ("the Order") issued by the Central Government in terms of Section 143(11) of the Act, we give in "Annexure A" a statement on the matters specified in paragraphs 3 and 4 of the Order.
2. As required by Section 143(3) of the Act, we report that:
(a) We have sought and obtained all the information and explanations which to the best of our knowledge and belief were necessary for the 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 including other Comprehensive Income, the ended 31st March, 2018, we report that:
(i) In respect of its fixed assets:
(a) The Company has generally maintained records to show particulars, including quantitative details and situation of fixed assets but its pupation is in progress;
(b) The fixed assets covering significant value were physically verified during the year by the management at such intervals which in our opinion, provides for the physical verification of all the fixed assets at reasonable intervals having regard to the size of the Company and nature of its business. According to the information and explanations given to us, no material discrepancies were noticed on such verification;
(c) According to the information and explanations given to us and on the basis of our examination of the records of the Company, the title deeds of immovable properties are held in the name of company.
(ii) According to the information and explanations given to us, the inventories have been physically verified by the management to the extent practicable at reasonable intervals during the year and as explained, there was no material discrepancies noticed on such verification.
(iii) According to the information and explanations given to us, the Company has not granted secured or unsecured loan to companies, firms, LLP or other parties covered in the register maintained under Section 189 of the Companies Act, 2013.
(iv) In our opinion and according to the information and explanations given to us, the Company is in compliance with the provisions of section 185 and 186 of Companies Act, 2013 as on 31.03.2018 with respect to the loans, investments, guarantees and security.
(v) According to the information and explanations given to us, the Company has not accepted any deposits during the year. Hence, the directives issued by the Reserve Bank of India and the provisions of section 73 to 76 or any other relevant provisions of the Companies Act, 2013 and the rules framed there-under are not applicable to the Company.
(vi) In our opinion and according to the information and explanations given to us, specified cost accounts and records as prescribed by the Central Government in terms of sub-section (1) of section 148 of the Companies Act, 2013 have been prima facie made and maintained by the company. However, we have not, nor we are required, carried out any detailed examination of such accounts and records.
(vii) (a) According to the information and explanations given to us and on the basis of our examination of the records, the Company is generally regular in depositing undisputed statutory dues including statement of cash flows and the statement of changes in equity dealt with by this Report are in agreement with the books of account;
(d) In our opinion, the aforesaid Ind AS financial statements comply with the Indian Accounting Standards specified under section 133 of the Act read with Rules issued thereunder;
(e) On the basis of written representations received from the directors as on March 31, 2018, taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2018, from being appointed as a director in terms of sub-section (2) of Section 164(2) of the Act;
(f) With respect to the adequacy of the internal financial controls over financial reporting of the Company and the operating effectiveness of such controls, refer to our separate Report in "Annexure B". Our report expresses an unmodified opinion on the adequacy and operating effectiveness of the Company''s internal financial controls over financial reporting;
(g) With respect to the other matters to be included in the Auditor''s Report in accordance with Rule
11 of the Companies (Audit and Auditors) Rules,
2014, in our opinion and to the best of our information and according to the explanations given to us:
i. the Company has disclosed the impact of pending litigations on its financial position in its Ind AS financial Statements - Refer Note - 35.5 to the Ind AS financial statements;
ii. the company has made provisions, as required under applicable law or accounting standards, for material foreseeable losses, if any, on long-term contracts including derivative contracts;
iii. there were no amounts which were required to be transferred to the Investor Education and Protection Fund by the Company.
(xii) In our opinion and according to the information and explanations given to us, the Company is not a Nidhi company.
(xiii)According to the information and explanations given to us and based on our examination of the records of the company, transactions with the related parties are in compliance with sections 177 and 188 of the Act where applicable and details of such transactions have been disclosed in the financial statement as required by the applicable accounting standards.
(xiv)According to the information and explanations given to us and based on our examination of the records of the company, the company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures during the year.
(xv) According to the information and explanations given to us and based on our examination of the records of the company, the company has not entered into noncash transactions with directors or persons connected with him.
(xvi) As per our information, the company is not required to be registered under Section 45-1A of the Reserve Bank of India Act, 1934.
Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section 143 of the Companies Act, 2013 ("the Act")
We have audited the internal financial controls over financial reporting of K.M. Sugar Mills Ltd. ("the Company") as of 31 March 2018 in conjunction with our audit of the Ind AS financial statements of the Company for the year ended on that date.
Management''s Responsibility for Internal Financial Controls
The Company''s management is responsible for establishing and maintaining internal financial controls based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls over
(viii)Based on our audit procedure and according to the information and explanations given to us, we are of the opinion that the company has not defaulted in repayment of loans / borrowings to the financial institutions, banks, Government or a debenture holders at the end of year.
(ix) According to the information and explanations given to us, the Company has not raised money by way of term loans during the year.
(x) To the best of our knowledge and according to the information and explanations given to us, no material fraud by the company or on the Company by its officers or employees has been noticed or reported during the course of our audit.
(xi) According to our information and explanations given to us and based on our examination of the records of the Company, managerial remuneration has been paid / provided in accordance with the requisite approvals mandated by the provisions of section 197 read with Schedule V to the Act.
Name of the statute |
Nature of dues |
Gross demand Amount (Rs.in lakhs ) |
Amount paid under protest (Rs. in lakhs ) |
Period to which pertain |
Forum where dispute is pending |
Entry Tax Act |
Entry Tax |
1.34 |
1.34 |
2012-13 |
Additional. Commissioner (Appeal), Commercial Tax, Faizabad |
Value Added Tax Act |
VAT |
2.04 |
2.04 |
2013-14 |
Additional Commissioner Appeal, Faizabad |
5.23 |
- |
2014-15 |
Additional Commissioner Appeal, Faizabad |
||
30.97 |
- |
2014-15 |
Commercial Tax commissioner, Bihar |
||
Income Tax Act |
Income Tax |
21,585.75 |
2015-16 |
Commissioner of Income (Appeals), Kanpur |
provident fund, employees'' state insurance, income-tax, sales-tax, service tax, duty of customs, duty of excise, value added tax, goods and service tax, cess and any other material statutory dues to the appropriate authorities to the extent these are applicable except some small delays.
According to the information and explanations given to us, no undisputed dues were in arrears as at 31st March, 2018 for a period of more than six months from the date they become payable.
(b) According to the information and explanations given to us, the following dues of income tax, sales tax, duty of excise, service tax and value added tax have not been deposited by the Company on account of disputes:
assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company''s internal financial control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;
(2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company''s assets that could have a material effect on the financial statements.
Inherent Limitations of Internal Financial Controls Over Financial Reporting
Because of the inherent limitations of internal financial controls over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may occur and not be detected. Also, projections of any evaluation of the internal financial controls over financial reporting to future periods are subject to the risk that the internal financial control over financial reporting may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Opinion
In our opinion, to the best of our information and according to the explanation given to us, the Company has, in all material respects, an adequate internal financial controls system over financial reporting and such internal financial controls over financial reporting were operating effectively as at 31st March 2018, based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issued by the Institute of Chartered Accountants of India.
For Agiwal & Associates
Chartered Accountants
(FRN: 000181N)
P.C. Agiwal
Partner
M.No.080475
Place: Lucknow
Date: 22.05.2018
Mar 31, 2015
1. We have audited the accompanying standalone financial statements of
K.M. Sugar Mills Ltd. (the "Company"), which comprise the Balance Sheet
as at 31st March, 2015, the Statement of Profit and Loss and Cash Flow
Statement for the period then ended and a summary of significant
accounting policies and other explanatory information, which we have
signed under reference to this report.
Management's Responsibility for the Standalone Financial Statements
2. The Company's Management is responsible for the preparation of
these standalone financial statements that give a true and fair view of
the financial position, financial performance and cash flows of the
Company in accordance with the accounting principles generally accepted
in India including 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 standalone
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 auditors consider 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 entity's 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.
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 accompanying 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:
(a) in the case of the Balance Sheet, of the state of affairs of the
Company as at 31st March , 2015;
(b) in the case of the Statement of Profit and Loss, of the profit for
the period ended on that date; and
(c) in the case of the Cash Flow Statement, of the cash flows for the
period ended on that date.
Emphasis of Matters
7. We draw attention to the following matters in the Notes to the
standalone financial statements:
(a) Note 2.29(10) to the financial statements which indicates that the
company has accounted for an amount of Rs.782.45 lacs due to the
company from State Government as financial assistance as per
announcement made in this regard. Our opinion is not modified in
respect of these matters.
Other Matters
8. The Ministry of Corporate Affairs had on 1stApril, 2014, vide its
General Circular No.07/2014, Dissemination of Information with regards
to the provisions of the Companies Act, 2013 as notified till date vis
a vis corresponding provisions of the Companies Act, 1956, identified
such sections of the Companies Act, 1956 that would cease / continue to
have effect from 1st April 2014. Accordingly, in terms of the
aforesaid Circular, our reporting in respect of section 227(3)(f) of
the Companies Act, 1956, and Clauses (iii), (v) (a) and (b), (vi),
(viii), (xiv), (xviii) of the Companies (Auditor Report) Order, 2003
(dealing with sections 49, 58A, 58AA, 209(1)(d) and 301 of the
Companies Act, 1956) is only for the period beginning from 1st October
2013 to 31st March, 2014 since as per the aforesaid MCA Circular, these
sections have ceased to have effect from 01st April, 2014.
Report on Other Legal and Regulatory Requirements
9. As required by the Companies (Auditor's Report) Order, 2003, as
amended by the Companies (Auditor's Report) (Amendment) Order, 2004,
issued by the Central Government of India in terms of Section 227(4A)
of the Act (hereinafter referred to as the "Order"), 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, we give in the Annexure a statement on the matters specified in
paragraphs 4 and 5 of the Order.
10. 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 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) In our opinion, the Balance Sheet, Statement of Profit and Loss,
and Cash Flow Statement dealt with by this report comply with the
Accounting Standards referred to in Section 211(3C) of the Act;
(e) On the basis of written representations received from the directors
as on March 31, 2015 taken on record by the Board of Directors, none of
the directors is disqualified as on 31 March, 2015, from being
appointed as a director in terms of Section 274(1)(g) of the Act
[corresponding Section 164 (2) of the Companies Act, 2013].
ANNEXURE TO DRAFT INDEPENDENT AUDITORS' REPORT REFERRED TO IN PARAGRAPH
(9) OF OUR REPORT OF EVEN DATE
Re: K.M. Sugar Mills Ltd. for the period ended 31st March, 2015
(i) (a) The Company has generally maintained records to show
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 in accordance with a regular programme
of verification, which, in our opinion, provides for physical
verification of all the assets at reasonable intervals. Accordingly to
the information and explanation given to us, no material discrepancies
were noticed on such verification.
(c) In our opinion and according to information given to us, the
Company has not disposed off any substantial part of fixed assets
during the year and hence, going concern status of the company is not
affected.
(ii) (a) As explained to us, the inventory has been physically verified
by the management to the extent practicable at reasonable intervals
during the year.
(b) In our opinion and according to information and explanations given
to us, the procedures for physical verification of the inventories
followed by the management are reasonable and adequate in relation to
the size of the Company and the nature of its business.
(c) On the basis of our examination of the records of inventory, we are
of the opinion that the Company is maintaining proper records of
inventory. The discrepancies noticed on verification between the
physical stocks and the book records were not material.
(iii) (a) According to the information and explanations given to us,
the Company has granted unsecured loan to a company covered in the
register maintained under Section 301 of the Companies Act, 1956 and
total amount of Rs.285 lacs was outstanding as on 31.03.2015.
(Previous Year Nil)
(b) In our opinion and according to the information and explanations
given to us, the terms and conditions of the said loan given by the
company were not prima facie prejudicial to interest of the company.
(c) and (d) In our opinion and according to the information and
explanation given to us, the repayment of principal and interest was
not due during the year and there was no overdue amount of principal
and interest at the year end.
(e) According to the information and explanations given to us, the
Company has taken unsecured loans from three parties covered in the
register maintained under Section 301 of the Companies Act, 1956 and a
sum of Rs.154 lacs was outstanding as on 31.03.2015. (Previous Year -
Rs.154 lacs)
(f) to (g) In our opinion and according to the information and
explanations given to us, the terms and conditions of the said loan
taken by the company are not prime facie prejudicial to interest of the
Company. Further, the repayment of these loans is not due hence no
repayment was made during the year.
(iv) In our opinion and according to the information and explanations
given to us, there is adequate internal control system commensurate
with the size of the Company and nature of its business for the
purchase of inventory and fixed assets and for sale of goods and
services. Further, on the basis of our examination of the books and
records of the Company, and according to the information and
explanations given to us, we have neither come across nor have been
informed of any continuing failure to correct major weakness in the
internal control system.
(v) In respect of contracts or arrangements entered in the Register
maintained in pursuance of section 301 of the Companies Act 1956, to
the best of our knowledge and belief and according to the information
and explanations given to us:
a) The particulars in respect of certain contracts or arrangements
referred to in section 301 of the Companies Act, 1956 that needed to be
entered in the register maintained under that section, have been so
entered.
b) As far as we could ascertain on the basis of our selective checking
and according to the information and explanations given to us, the
transaction made in pursuance to aforesaid contracts or arrangements
have been made at the prevailing market prices at the relevant time.
(vi) According to the information and explanations given to us, the
Company has not accepted any deposits from public during the year.
Hence, provisions of section 58A & 58AA or any other relevant
provisions of the Companies Act, 1956 and rules of Companies
(Acceptance of Deposits) Rules, 1975 with regard to the deposits are
not applicable to the Company.
(vii) In our opinion, the internal audit system of the company is
commensurate with the size and nature of the business of the Company.
(viii) We are informed by the management that the required cost records
pursuant to the order made by Central Government under Section
209(1)(d) of the Companies Act, 1956 regarding production have been
maintained by the Company and are of the opinion that prima-facie the
prescribed accounts and records have been maintained. We have not,
however, made a detailed examination of the records with a view to
determine whether they are accurate or complete.
(ix) (a) According to the information and explanation given to us and
the records examined by us, the undisputed statutory dues including
provident fund, investor education and protection fund, income tax,
sales tax, wealth tax, service tax, custom duty, excise duty, cess and
other statutory dues applicable to the company have generally been
regularly deposited with the appropriate authority except small delays
in certain cases and no undisputed amounts payable in respect of the
aforesaid dues were outstanding as at 31st March, 2015 for a period of
more than six months from the date of becoming payable. As informed,
the provisions of the Employees State Insurance Act are not applicable
to the Company.
b) According to the information and explanation given to us, the
particulars of dues of excise duty, entry tax, central sales tax and
income tax outstanding as at 31.03.2015, which have not been deposited
on account of disputes, are as follows :-
Name of the Statute Nature of Dues Amount Forum, where the
(Rs. In dispute is pending
lacs)
Entry Tax Act Entry Tax Commercial Tax
2007-08 0.04 Tribunal, Faizabad
Central Excise Act Excise Duty
F.Y 2005-2006 11.46 Joint Commissioner
FY 2006-07 467.30 CESTAT
FY 2007-08 22.40 CESTAT
July, 2007 to
June 2237.16 Appeal is yet to be
2012 including filed
penalty
July, 2012 to
March, 2013
including 473.43 Appeal is yet to be
penalty filed
Income Tax Act A.Y. 2010-2011 7198.21 CIT(A)
A.Y 2011-2012 7460.05 CIT(A)
A.Y 2012-2013 8087.76 CIT(A)
All aforesaid dues are not accounted for in the books and are shown as
contingent liabilities in Note No. 2.29 (1) of the Standalone Financial
Statements except excise duty demand of Rs.1355.30 lacs raised vide
order dated 31.03.2015 has been duly provided for in the books. [Refer
Note 2.29 (9)].
(x) The Company's accumulated losses as on 31.03.15 are of Rs.4079.23
lacs, which is not less than 50% of its net worth. The Company has not
incurred cash losses during the current financial year as well as in
the immediate preceding financial year.
(xi) Based on our audit procedures and as per information and
explanation given to us by the management, the continuing defaults in
repayments of loans as on 31.03.2015 are as under :
Installments of Rs.1485 lacs against principal loan payable to Sugar
Development Fund (SDF) and interest thereon of Rs.82.28 lacs are not
paid in time and are overdue. (Refer Note 2.3)
(xii) In our opinion and as per information and explanation given to
us, 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, clause 4(xiii) of the
Companies (Auditors' Report) Order, 2003 is not applicable to the
Company.
(xiv) In our opinion and according to the information and explanation
given to us, the Company is not dealing or trading in shares,
securities, debentures and other investments, and hence, the
requirement of Para 4(xiv) of the Companies (Auditors/ Report) Order,
2003 is not applicable to the Company.
(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) According to the information and explanations given to us, term
loans were generally applied for the purpose for which the loans were
obtained.
(xvii) According to the information and explanations given to us and
based on an overall examination of the balance sheet and other relevant
records, we report that no funds raised on short term basis have been
used for long term purposes.
(xviii) During the year, the Company has not made any preferential
allotment of shares to parties and companies covered in the register
maintained under section 301 of the Companies Act, 1956.
(xix) According to the information and explanations given to us, the
company has not issued any debentures during the period covered by our
audit.
(xx) According to the information and explanations given to us, the
company has not raised any money by way of public issue during the
period covered by our audit.
(xxi) According to the information and explanation given to us by the
management, we report that no fraud on or by the Company has been
noticed or reported during the course of our audit.
For Mehrotra & Mehrotra
Chartered Accountants
(FRN - 0226C)
CA. Rajesh Jhalani
Partner
(M.No. 074809)
Place: Lucknow
Date : 28th May, 2015
Sep 30, 2013
Report on the Financial Statements
1. We have audited the accompanying financial statements of K.M. Sugar
Mills Ltd. (the "Company"), which comprise the Balance Sheet as at 30th
September, 2013, 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, which we have
signed under reference to this report.
Management''s Responsibility for the Financial Statements
2. The Company''s 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 Accounting Standards referred to in Section 211(3C) 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 auditors consider 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 accompanying 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 30th September, 2013;
(b) in the case of the Statement of Profit and Loss, of the profit 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
7. As required by the Companies (Auditor''s Report) Order, 2003, as
amended by the Companies (Auditor''s Report) (Amendment) Order, 2004,
issued by the Central Government of India in terms of Section 227(4A)
of the Act (hereinafter referred to as the "Order"), and on the basis
of such checks of the books and g records of the Company as we
considered appropriate and according to the information and
explanations given to us, 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 reportthat:
(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) In our opinion, the Balance Sheet, Statement of Profit and Loss,
and Cash Flow Statement dealt with by this report comply with the
Accounting Standards referred to in Section 211(3C)oftheAct;
(e) On the basis of written representations received from the directors
as on September 30,2013 taken on record by the Board of Directors, none
of the directors is disqualified as on 30th September, 2013, from being
appointed as a director in termsof Section 274(1)(g)oftheAct.
ANNEXURE TO DRAFT INDEPENDENT AUDITORS'' REPORT
REFERRED TO IN PARAGRAPH (7) OF OUR REPORT OF EVEN DATE Re: K.M. Sugar
Mills Ltd. for the year ended 30th September, 2013 (i) (a) The Company
has generally maintained records to show particulars, including
quantitative details and situation of fixed assets but still it is
incomplete and its updation is in progress.
(b) The Fixed Assets of the Company have been physically verified by
the management during the year in accordance with a regular programme
of verification, which, in our opinion, provides for physical
verification of all the assets at reasonable intervals. Accordingly to
the information and explanation given to us, no material discrepancies
were noticed on such verification.
(c) In our opinion and according to information given to us, the
Company has not disposed off any substantial part of fixed assets
during the year and hence, going concern status of the company is not
affected.
(ii) (a) As explained to us, the inventory has been physically verified
by the Management to the extent practicable at reasonable intervals
during the year.
(b) In our opinion and according to information and explanations given
to us, the procedures for physical verification of the inventories
followed by the management are reasonable and adequate in relation to
the size of the Company and the nature of its business.
(c) On the basis of our examination of the records of inventory, we are
of the opinion that the Company is maintaining proper records of
inventory. The discrepancies noticed on verification between the
physical stocks and the book records were not material.
(iii) (a) According to the information and explanations given to us,
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 Companies Act, 1956. (b) to (d) As 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, clauses (iii) (b) to (iii) (d) of paragraph 4 of the
said order are not applicable to the Company.
(e) According to the information and explanations given to us, the
Company has taken unsecured loans from three parties covered in the
register maintained under Section 301 of the Companies Act, 1956 anda
sum of Rs.154 lacs was outstanding as on 30.09.2013. (Previous Year-Rs.
154 lacs).
(f) to (g) In our opinion and according to the information and
explanations given to us, the terms and conditions of the said loan
taken by the company are not prime facie prejudicial to interest of the
Company.
Further, the repayment of these loans is not due hence no repayment was
made during the year.
(iv) In our opinion and according to the information and explanations
given to us, there is adequate internal control system commensurate
with the size of the Company and nature of its business for the
purchase of inventory and fixed assets and for sale of goods and
services. Further, on the basis of our examination of the books and
records of the Company, and according to the information and
explanations given to us, we have neither come across nor have been
informed of any continuing failure to correct major weakness in the
internal control system.
(v) In respect of contracts or arrangements entered in the Register
maintained in pursuance of section 301 of the Companies Act 1956, to
the best of our knowledge and belief and according to the information
and explanations given to us:
a) The particulars in respect of certain contracts or arrangements
referred to in section 301 of the Companies Act, 1956 that needed to be
entered in the register maintained under that section, have been so
entered.
b) As far as we could ascertain on the basis of our selective checking
and according to the information and explanations given to us, the
transaction made in pursuance to aforesaid contracts or arrangements
have been made at the prevailing market prices at the relevant time.
(vi) According to the information and explanations given to us, the
Company has not accepted any deposits from public during the year.
Hence, provisions of section 58A& 58AAor any other relevant provisions
of the Companies Act, 1956 and rules of Companies (Acceptance 6f
Deposits) Rules, 1975 with regard to the deposits are not applicable to
the Company.
(vii) In our opinion, the internal audit system of the company is
commensurate with the size and nature of the business of the Company.
(viii) We are informed by the management that the required cost records
pursuant to the order made by Central Government under Section
209(1)(d) of the Companies Act, 1956 regarding production have been
maintained by the Company and are of the opinion that prima-facie the
prescribed accounts and records have been maintained. We have not,
however, made a detailed examination of the records with a view to
determine whether they are accurate or complete.
(ix) (a) According to the information and explanation given to us and
the records examined by us, the undisputed statutory dues including
provident fund, investor education and protection fund, income tax,
sales tax, wealth tax, service tax, custom duty, exci''O duty, cess and
other statutory dues applicable to the company have generally been
regularly deposited with the appropriate authority except small delays
in certain cases and no undisputed amounts payable in respect of the
aforesaid dues were outstanding as at 30th September, 2013 for a period
of more than six months from the date of becoming payable. As informed,
the provisions of the Employees State Insurance Act are not applicable
to the Company.
b) According to the information and explanation given to us, the
particulars of dues of excise duty, entry tax, central sales tax and
income tax outstanding as at 30.09.2013, which have not been deposited
on account of disputes, are as follows:-
Name of the
Statute Nature of Amount (Rs. Forum, where the
Dues In lacs) dispute is pending
Entry Tax
Act Entry Tax Commercial Tax
2007-08 0.04 Tribunal, Faizabad
2011-12 1.69 Additional Comm.
2012-13 36.00 (A)
Central
Sales
Tax Act CST2009-10 1.90 Additional Comm.
(A)
Central
Excise Act Excise Duty
FY 2005-2006 32.00 Joint Comm. &
FY 2006-07 467.30 CESTAT
Comm.
Excise & FY 2007-08 16.09 CESTAT
CESTAT
Income
Tax Act A.Y. 20 10-11 8378.89 CIT(A)
Total 8933.91
All aforesaid dues are not accounted for in the books of account and
are shown as contingent liabilities in Note No. 2.29 of the
Financial Statements.
(x) The Company''s accumulated losses as on 30.09.2013 are of Rs.4872.15
lacs, which is not less than 50% of its net worth. The Company has not
incurred cash losses during the current financial year as well as in
the immediate preceding financial year.
(xi) Based on our audit procedures and as per information and
explanation given to us by the management, the loans were restructured
under Corporate Debt Restructuring Mechanism (CDR) vide letter of
approval dated 27.03.2012 issued by CDR EG. This CDR package has since
been implemented and necessary impact has been considered in these
financial statements to the extent allowed by the banks. Outstanding
loan amount on account of default is Nil at the year end. Interest of
Rs.33.90 lacs become due as on 30.09.2013 has been subsequently paid.
Other continuing defaults as on 30.09.2013 are given here- under:
Overdue installments amounting to Rs.1173 .43 lacs of various loans
taken from Sugar Development Fund (SDF) could not be paid till
30.09.2013. Further, interest of Rs.211.62 lacs on the said loans was
overdue as on 30.09.2013.
(xii) In our opinion and as per information and explanation given to
us, 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, clause 4(xiii) of the
Companies (Auditors'' Report) Order, 2003 is not applicable to the
Company.
(xiv) In our opinion and according to the information and explanation j
given to us, the Company is not dealing or trading in shares, ,
securities, debentures and other investments, and hence, the
requirement of Para 4(xiv) of the Companies (Auditors/ Report) Order,
2003 is not applicable to the Company.
(xv) According to the information and explanations given to us, the
Company has not given any guarantee for loans taken by others from
banks orfinancial institutions except guarantees given to the bank on
behalf of its employees, who have taken vehicle loans from a bank and a
sum of Rs.0.42 lacs was outstanding at the year-end 30.09.2013 on this
account.
(xvi) According to the information and explanations given to us, term -
loans were generally applied for the purpose for which the loans were
obtained.
(xvii)According to the information and explanations given to us and
based on an overall examination of the balance sheet, cash flow and
other relevant records, we report that no funds raised on short term
basis have been used for long term purposes during the year.
(xviii)During the year, the Company has not made any preferential
allotment of shares to parties and companies covered in the register
maintained under section 301 of the Companies Act, 1956.
(xix) According to the information and explanations given to us, the
company has not issued any debentures during the period covered by our
audit.
(xx) According to the information and explanations given to us, the
company has not raised any money by way of public issue during the
period covered by our audit.
(xxi) Based on the audit procedure performed for the purpose of
reporting the true and fair view of the financial statements and as per
the information and explanation given to us by the management, we
report that no fraud on or by the Company has been noticed or reported
during the course of our audit nor we have been informed of such case
by the management that causes the financial statements to be materially
misstated.
For Mehrotra & Mehrotra
Chartered Accountants FRN:00226C
Sd/-
RajeshJhalani
Place: Lucknow Partner
Date: 28th November, 2013 M. No. 074809
Sep 30, 2012
1. We have audited the attached Balance Sheet of K M Sugar Mills Ltd.
as at 30th September, 2012 and also the Statement of Profit & Loss and
the Cash Flow Statement for the year ended on that date annexed
thereto. These financial statements are the responsibility of the
Company''s management. Our responsibility is to express an opinion on
these financial statements based on our audit.
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 a test basis, evidence supporting the amounts
and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for
ouropinion.
3. As required by the Companies (Auditor''s Report) Order, 2003, as
amended by Companies (Auditor''s Report) (Amendment) Order, 2004, issued
by the Central Government of India in terms of sub-section (4A) of
Section 227 of the Companies Act, 1956 and on the basis of such checks
of books and records of the company as we considered appropriate and
according to the information and explanations given to us, we enclose
in the Annexure hereto a statement on the matters specified in
paragraphs 4 and 5 of the said Order.
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 appears from our examination of the
books of the Company;
(iii) The Balance Sheet, Statement of Profit & Loss and Cash Flow
Statement dealt with by this report are in agreement with the books of
account of the Company;
(iv) In our opinion, the Balance Sheet, Statement of Profit & Loss and
Cash Flow Statement dealt with by this report comply with the
Accounting Standards referred to in sub- section (3C) of Section 211 of
the Companies Act, 1956;
(v) On the basis of the written representation received from the
Directors of the Company and taken on record by the Board of Directors,
we report that none of the director is disqualified as on 30th
September, 2012 from being appointed as a director in terms Section
274(1 )(g) of the Companies Act, 1956;
(vi) In our opinion and to the best of our information and according to
the explanations given to us, the said accounts give the information
required by the 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 the Balance Sheet, of the state of affairs of the
Company as at 30th September, 2012;
(ii) In the case of the Statement of Profit & Loss, of the loss for the
year ended on that date; and
(iii) In the case of Cash Flow Statement, of the cash flows for the
year ended on that date.
ANNEXURE TO THE AUDITORS'' REPORT
Statement referred to in our report of even date to the members of K.M.
Sugar Mills Ltd. on the accounts for the year ended 30th September,
2012.
(i) (a) The Company has generally maintained records to show
particulars, including quantitative details and situation of fixed
assets but still it is incomplete and its updation is pending.
(b) The Fixed Assets of the Company have been physically verified by
the management during the year as per information provided to us and as
explained no material discrepancies were noticed on such verification.
(c) In our opinion and according to information given to us, the
Company has not disposed off any substantial part of fixed assets
during the year and hence, going concern status of the company is not
affected.
(ii) (a) As explained to us, the inventory has been physically verified
by the Management to the extent practicable at reasonable intervals
during the year.
(b) In our opinion and according to information and explanations given
to us, the procedures for physical verification of the inventories
followed by the management are reasonable and adequate in relation to
the size of the Company and the nature of its business.
(c) On the basis of our examination of the records of inventory, we are
of the opinion that the Company is maintaining proper records of
inventory. The discrepancies noticed on verification between the
physical stocks and the book records were not material.
(iii) (a) According to the information and explanations given to us,
the Company has granted unsecured loan to a party covered in the
register maintained under Section 301 of the Companies Act, 1956 but
nothing was outstanding as on 30.09.2012 against the said loan. The
maximum amount outstanding during the year was Rs.9.04 lacs. (Previous
Year outstanding: Rs.9.04lacs).
(b) to (d) In our opinion and according to the information and
explanations given to us, the terms and conditions of the said loan
given by the company were not prime facie prejudicial to interest of
the Company except that it was interest free loan.
(e) According to the information and explanations given to us, the
Company has taken unsecured loans during the year from three parties
covered in the register maintained under Section 301 of the Companies
Act, 1956 and a sum of Rs.154 lacs was outstanding as on 30.09.2012.
The maximum amount outstanding during the year was also Rs.154.00 lacs.
(Previous Year- Rs.Nil).
(f) to (g) In our opinion and according to the information and
explanations given to us, the terms and conditions of the said loan
taken by the company are not prime facie prejudicial to interest of the
Company. Further, the repayment of these loans is not due hence no
repayment was made during the year.
(iv) In our opinion and according to the information and explanations
given to us during the course of audit, there is adequate internal
control system commensurate with the size of the Company and nature of
its business for the purchase of inventory and fixed assets and for
sale of goods and services. Further, on the basis of our examination of
the books and records of the Company, and according to the information
and explanations given to us, we have neither come across nor have been
informed of any continuing failure to correct major weakness in the
internal control system.
(v) In respect of contracts or arrangements entered in the Register
maintained in pursuance of section 301 of the Companies Act 1956, to
the best of our knowledge and belief and according to the information
and explanations given to us:
a) The particulars in respect of certain contracts or arrangements
referred to in section 301 of the Companies Act, 1956 that needed to be
entered in the register maintained underthat section, have been so
entered.
b) As far as we could ascertain on the basis of our selective checking
and according to the information and explanations given to us, the
transaction made in pursuance to aforesaid contracts or arrangements
have been made at the prevailing market prices at the relevant time.
(vi) According to the information and explanations given to us, the
Company has not accepted any deposits from public during the year
within the meaning of Section 58A, 58AA and any other relevant
provisions of the Companies Act, 1956 and the rules framed there-under.
(vii) In our opinion, the Company''s existing in-house internal audit
system does not cover major areas of operations and which requires to
be strengthened to make it commensurate with the size and nature of the
business of the Company.
(viii) We are informed by the management that the required cost records
pursuant to the order made by Central Government under Section
209(1)(d) of the Companies Act, 1956 regarding production have been
maintained by the Company and are of the opinion that prima-facie the
prescribed accounts and records have been maintained. We have not,
however, made a detailed examination of the records with a view to
determine whether they are accurate or complete.
(ix) (a) According to the information and explanation given to us and
the records examined by us, the undisputed statutory dues including
provident fund, investor education and protection fund, income tax,
sales tax, wealth tax, service tax, custom duty, excise duty, cess and
other statutory dues applicable to the company have generally been
regularly deposited with the appropriate authority except small delays
in certain cases and no undisputed amounts payable in respect of the
aforesaid dues were outstanding as at 30th September, 2012 for a period
of more than six months from the date of becoming payable. As informed,
the provisions of the Employees State Insurance Ad are not applicable
to the Company.
b) According to the information and explanation given to us, the
particulars of dues of excise duty, entry tax and income tax
outstanding as at 30.09.2012, which have not been deposited on account
of disputes, are as follows:-
Name of the
Statute Nature of Amount Forum, where the
Dues (Rs. in dispute is pending
lacs)
Entry Tax Act Entry Tax-A.Y 0.04 Commercial Tax
2007-08 Tribunal, Faizabad
Excise Act Excise Duty
F.Y 2005-2006 32.00 Joint Commissioner
and CESTAT
FY 2006-07 467.30 Asst. Commissioner
and CESTAT
FY 2007-08 16.09 CESTAT
Income Tax A.Y. 2009-10 5969.00 CIT(A)
Total 6484.43
All aforesaid dues are not accounted for in the books of account and
are shown as contingent liabilities in Note No. 2.29 of the Financial
Statements.
(x) The Company has incurred losses amounting to Rs.624.21 lacs during
the financial year ended 30.09.2012 and its accumulated losses as on
30.09.2012 are more than 100% of its net worth. The Company has not
incurred cash losses during the current financial year as well as in
the immediate preceding financial year.
(xi) Based on our audit procedures and as per information and
explanation given to us by the management, we are of the opinion that
the Company has defaulted in repayment of the dues to the Financial
Institutions and Banks during the year and details of continuing
defaults as on 30.09.2012 are given here-under:-
a) Overdue installments amounting to Rs.968.43 lacs of various loans
taken from Sugar Development Fund (SDF) could not be paid till
30.09.2012. Further, interest ofRs.244.28 lacs on the said loans was
overdue as at 30.09.2012. (Refer Note No.2.3 of the financial
statements for continuing defaults in repayment of installments and
interest.)
b) The company has defaulted in repayment of installments and interest
of Term Loan taken from Punjab National Bank (PNB) and principal $um
and interest towards Corporate Loans taken from PNB and Allahabad Bank.
Subsequently,these loans were restructured under Corporate Debt
Restrucuring Mechanism (CDR) vide letter of apprioval dated 27.03.2012
issued by CDR EG. This GQft package has been partly implemented during
the year and nowthere is no default at the year-end except non-payment
of an installment'' (Rs.7.00 lacs) of FITL and Interest (Rs.5.29 lacs),
which became due on 30.09.2012. (Refer Note No.2.3 and 2.7 of the
financial statements for continuing defaults in repayment of
installments and interest).
(xii) In our opinion and as per information and explanation given to
us, 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, clause 4(xiii) of the
Companies (Auditors'' Report) Order, 2003 is not applicable to the
Company.
(xiv) In our opinion and according to the information and explanation
given to us, the Company is not dealing or trading in shares,
securities, debentures and other investments, and hence, the
requirement of Para 4(xiv) of the Companies (Auditors/ Report) Order,
2003 is not applicable to the Company.
(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 except guarantees given to the banks on
behalf of its employees, who have taken vehicle loans from a bank and a
sum of Rs.0.41 lacs was outstanding at the year-end 30.09.2012 on this
account.
(xvi) According to the information and explanations given to us, term
loans were generally applied for the purpose for which the loans were
obtained.
(xvii) According to the information and explanations given to us and
based on an overall examination of the balance sheet, cash flow and
other relevant records, we report that no funds raised on short term
basis have been used for long term purposes during the year.
(xviii)During the year, the Company has not made any preferential
allotment of shares to parties and companies covered in the register
maintained under section 301 of the Companies Act, 1956.
(xix) According to the information and explanations given to us, the
company has not issued any debentures during the period covered by our
audit.
(xx) According to the information and explanations given to us, the
company has not raised any money by way of public issue during the
period covered by our audit.
(xxi) Based on the audit procedure perfoimed for the purpose of
reporting the true and fair view of the financial Statements and as per
the information and explanation given to us by the management, we
report that no fraud on or by the Company has been noticed or reported
during the course of our audit nor we have been informed of such case
by the management that causes the financial statements to be materially
misstated.
For Mehrotra & Mehrotra
Chartered Accountants
FRN: 00226C
Sd/-
Rajesh Jhalani
Race: Lucknow M. No. 074809
Date. 30th November, 2012 Partner
Sep 30, 2010
1. We have audited the attached Balance Sheet of K M SUGAR MILLS
LIMITED as at 30th September, 2010 and also the Profit & Loss Account
and the 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 a test basis, evidence supporting the amounts
and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for
our opinion.
3. As required by the Companies (Auditors Report) Order, 2003, as
amended by Companies (Auditors Report) (Amendment) Order, 2004, issued
by the Central Government of India in terms of sub-section (4A) of
Section 227 of the Companies Act, 1956 and on the basis of such checks
of books and records of the company as we considered appropriate and
according to the information and explanations given to us, we enclose
in the Annexure hereto a statement on the matters specified in
paragraphs 4 and 5 of the said Order.
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 appears from our examination of the
books of the Company;
(iii) The Balance Sheet, Profit & Loss Account and
Cash Flow Statement dealt with by this report are in agreement with the
books of account of the Company; (iv) In our opinion, the Balance
Sheet, Profit & Loss Account and Cash Flow Statement dealt with by this
report comply with the Accounting Standards referred to in sub-section
(3C) of Section 211 of the Companies Act, 1956;
(v) On the basis of the written representation received from the
Directors of the Company and taken on record by the Board of Directors,
we report that none of the director is disqualified as on 30th
September, 2010 from being appointed as a director in terms Section
274(1 )(g) of the Companies Act, 1956;
(vi) In our opinion and to the best of our information and according to
the explanations given to us, the said financial statements read
together with the Notes to the Accounts in Schedule 17 give the
information required by the Companies Act, 1956 in the manner so
required and give a true and fair view in conformity with the
accounting principles generally accepted in India:-
(i) In the case the Balance Sheet, of the state of affairs of the
Company as at 30th September, 2010;
(ii) In the case of the Profit & Loss Account, of the loss for the year
ended on that date; and
(iii) In the case of Cash Flow Statement of the cash flows for the year
ended on that date.
ANNEXURE TO THE AUDITORS REPORT
(Referred to in paragraph 3 of our report of even date)
(i) (a) The Company has generally maintained records to show
particulars, including quantitative details and situation of fixed
assets but still it is incomplete and its updation is pending.
(b) The Fixed Assets of the Company have been physically verified by
the management during the year as per information provided to us and as
explained no material discrepancies were noticed on such verification.
(c) In our opinion and according to information given to us, the
Company has not disposed off any substantial part of fixed assets
during the year and hence, going concern status of the company is not
affected.
(ii) (a) As explained to us, the inventory has been physically verified
by the Management to the extent practicable at reasonable intervals
during the year or at the end of the year.
(b) According to information and explanations given to us, the
procedures for physical verification of the inventories followed by the
management are reasonable and adequate in relation to the size of the
Company and the nature of its business.
(c) On the basis of our examination of the records of inventory, we are
of the opinion that the Company is maintaining proper records of
inventory. The discrepancies noticed on verification between the
physical stocks and the book records were not material.
(iii) (a) According to the information and explanations given to us,
the Company has granted an unsecured loan to a company covered in the
register maintained under Section 301 of the Companies Act, 1956 and a
sum of Rs. 10.88 lacs was outstanding as on 30.09.2010 (Previous year
outstanding Rs.10lacs).
(b)to{d)ln our opinion and according to the information and
explanations given to us, the terms and conditions of the said loan
given by the company are not prime facie prejudicial to interest of the
Company except that it is interest free loan but however, the repayment
is within the terms and conditions of the loan.
(e) According to the information and explanations given to us, the
Company has not taken during the year any loans, secured or unsecured
from companies, firms or other parties covered in the register
maintained under Section 301 of the Companies Act, 1956. Accordingly,
the provisions of clause (f) and (g) of the order are not applicable.
(iv) In our opinion and according to the information and explanations
given to us during the course of audit, there is adequate internal
control system commensurate with the size of the Company and nature of
its business for the purchase of inventory and fixed assets and for
sale of goods and services. Further, on the basis of our examination
of the books and records of the Company, and according to the
information and explanations given to us, we have neither come across
nor have been informed of any continuing failure to correct major
weakness in the internal control system.
(v) In respect of contracts or arrangements entered in the Register
maintained in pursuance of section 301 of the Companies Act 1956, to
the best of our knowledge and belief and according to the information
and explanations given to us:
a) The particulars in respect of certain contracts or arrangements
referred to in section 301 of the Companies Act, 1956 that needed to be
entered in the register maintained under that section, have been so
entered.
b) As far as we could ascertain on the basis of our selective checking
and according to the information and explanations given to us, the
transaction made in pursuance to aforesaid contracts or arrangements
have been made at the prevailing market prices at the relevant time.
(vi) According to the information and explanations given to us, the
Company has not accepted any deposits from public during the year
within the meaning of Section 58A, 58AA and any other relevant
provisions of the Companies Act, 1956 and the rules framed there-under.
(vii) In our opinion, the Companys existing in-house internal audit
system does not cover all the areas and which requires to be
strengthened to make it commensurate with the size and nature of the
business of the Company.
(viii) We are informed by the management that the required cost records
pursuant to the order made by Central Government under Section 209(1
(d) of the Companies Act, 1956 regarding production have been
maintained by the Company and are of the opinion that prima-facie the
prescribed accounts and records have been maintained. We have not,
however, made a detailed examination of the records with a view to
determine whether they areaccurateorcomplete.
(ix) (a) According to the information and explanation given to us and
the records examined by us, the undisputed statutory dues including
provident fund, investor education and protection fund, income tax,
sales tax, wealth tax, service tax, custom duty, excise duty, cess and
other statutory dues applicable to the company have generally been
regularly deposited by it with the appropriate authority except delays
in certain cases. As informed, the provisions of the Employees State
Insurance Act are not applicable to the Company.
(b) According to the information and explanation given to us, there is
no material undisputed amount payable in respect of aforesaid dues
which were outstanding for a period of more than six months as on
30.09.2010.
(c) According to the information and explanation given to us, the
particulars of dues of excise duty, sales tax, trade tax and income tax
outstanding as at 30.09.2010, which have not been deposited on account
of dispute, are as follows:-
Name of the Staute Natute of Dues Amount Forum, where the
(Rs ln Lacs) dispute is
pending
Central Excise Act, Cenvat Matter 0.51 The Commissioner
1944 2005-06 (Appeals),
Allahabad
U.P. Trade Tax, Trade Tax-F.Y. 22.13 The Joint
Commissioner
Act, 1948 2005-06 and
2006-07 (Appeals), Faizabad
Entry Tax Act Entry Tax-F.Y. 260.31 The Joint
Commissioner
2005-06 and
2006-07 (Appeals), Faaabad
Demand is
stayed by the
Hanbte Allahabad
High Court
Entry Tax-F.Y. 67.74 The Joint
Commissioner
2007-08 (Appeals),
Faizabad
Central Sales CTS 87.84 The Joint
Commissioner
Tax Act (Appeals),
Faizabad
Income Tax Income Tax 61.67 The Commissioner
of
Act, 1961 income Tax
(Appeals)
Total 500.20
All aforesaid dues are not accounted for in the books of account and
are shown as contingent liabilities in the Schedule 17-Notes to
Accounts.
(x) The Company has incurred losses amounting to Rs. 1829.71 lacs
during the financial year ended 30.09.2010 and its accumulated losses
as on 30.09.2010 are more than 50% of its net worth. The Company has
incurred cash losses during the current financial year. However, there
was no cash loss in the immediately preceding financial year ended
30.09.2009.
(xi) Based on our audit procedures and as per information and
explanation given to us by the management, we are of the opinion that
the Company has defaulted in repayment of the dues to the Financial
Institutions and Banks as per details given here-under:-
a) The term loan installments of Rs.223.43 lacs payable during the year
towards loan from Sugar Development Fund (SDF) could not be paid till
30.09.2010. Further, interest of Rs.108.06 lacs on the said loan was
overdue as at 30.09.2010.
b) As per revised terms and conditions of the term loan availed from
bank, the interest of Rs.65.61 lacs on the said term loan was overdue
as at 30.09.2010.
(xii) In our opinion and as per information and explanation given to
us, 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, clause 4(xiii) of the
Companies (Auditors Report) Order, 2003 is not applicable to the
Company.
(xiv) In our opinion, the Company is not dealing or trading in shares,
securities, debentures and other investments, and hence, the
requirement of Para 4(xiv) of the Companies (Auditors/ Report) Order,
2003 is not applicable to the Company.
(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 except guarantees given to the banks on
behalf of its employees, who have taken vehicle loans from the banks
and a sum of Rs.6.84 lacs was outstanding at the year end 30.09.2010 on
this account.
(xvi) According to the information and explanations given to us, term
loans were generally applied for the purpose for which the loans were
obtained.
(xvii) According to the information and explanations given to us and
based on an overall examination of the balance sheet, cash flow and
other relevant records, we report that the funds of Rs.700 lacs
(approx.) raised on short term basis have been used during the year for
long term purposes.
(xviii) During the year, the Company has not made any preferential
allotment of shares to parties and companies covered in the register
maintained under section 301 of the Companies Act, 1956.
(xix) According to the information and explanations given to us, the
company has not issued any debentures during the period covered by our
audit.
(xx) According to the information and explanations given to us, the
company has not raised any money by way of public issue during the
period covered by ouraudit.
(xxi) Based on the audit procedure performed for the purpose of
reporting the true and fair view of the financial statements and as per
the information and explanation given to us by the management, we
report that no fraud on or by the Company has been noticed or reported
during the course of our audit nor we have been informed of such case
by the management that causes the financial statements to be materially
misstated.
For Mehrotra & Mehrotra
Chartered Accountants
Sd/-
Rajesh Jhalani
Partner
Membership No.74809
Place: Lucknow
Dated: 30th November, 2010
Sep 30, 2009
1. We have audited the attached Balance Sheet of K.M. SUGAR MILLS
LIMITED as at 30th September, 2009 and also the Profit & Loss Account
and the 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 out 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 a test basis, evidence supporting the amounts
and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for
our opinion.
3. As required by the Companies (Auditors Report) Order,2003, as
amended by Companies (Auditors Report) (Amendment) Order, 2004, Issued
by the Central Government of India in terms of sub-section (4A) of
Section 227 of the Companies Act, 1956 and on the basis of such checks
of books and records of the company as we considered appropriate and
according to the information and explanations given to us. We enclose
in the Annexure hereto 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 out
audit.
(ii) In our opinion proper books of account as required by law have
been kept by the Company so far as appears from our examination of the
books of the Company.
(iii) The Balance Sheet, Profit & Loss Account and Cash Flow Statement
dealt with by this report are in agreement with the books of account of
the Company:
(iv) In our opinion, the Balance Sheet, Profit & Loss Account and Cash
Flow Statement dealt with by the this report comply with the Accounting
Standards referred to in sub-section (3C) of Section 211 of the
companies Act, 1956.
(v) On the basis of the written representation received from the
Directors of the Company and taken on record by the Board of Directors,
we report that none of the director is disqualified as on 30th
September, 2009 from being appointed as a director in terms Section 274
(l)(g) of the Companies Act, 1956
(vi) In our opinion and to the best of our information and according to
the explanations given to us, the said financial statements read
together with the Notes to the Accounts in Schedule 17 give the
information required by the Companies Act, 1956 in the manner so
required and given a true and fair view in conformity with the
accounting principles generally accepted in India:-
(i) In the case the Balance Sheet, of the state of affairs of the
Company as at 30th September, 2009
(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 Cash Flow Statement, of the cash flow for the year
ended on that date.
ANNEXURE TO THE AUDITORS REPORT
(i) (a) The Company has generally maintained records to show
particulars including quantitative details and situation of fixed
assets but still it is incomplete and its update is pending.
(b) The Fixed Assets of the Company have been physically verified by
the management during the year as per information provided to us and as
explained no material discrepancies were noticed on such verification.
(c) in our opinion and according to information given to us. the
Company has not disposed off any substantial part of fixed assets
during the year and hence, going concern status of the company is not
affected,
(ii) (a) The inventory has been physically verified by the Management
to the extent practicable at reasonable intervals during the year or at
the end of the year as per information provided to us.
(b) According to information given to us, the procedures for physical
verification of the inventories followed by the management are
reasonable and adequate in relation to the size of the Company and the
nature of its business.
(c) On the basis of out examination of the records of inventory, we are
the opinion that the Company is maintaining proper records of
inventory. The discrepancies noticed on verification between the
physical stocks and the book records were not material.
(iii) (a) According to the information and explanations given to us,
the Company has granted an unsecured loan to a company covered In the
register maintained under section 301 of the Companies Act, 1956 and a
sum of Rs. 10 lacs was outstanding as on 30,09,2009
(b) to (d) In our opinion and according to the information and
explanations given to us, the terms and conditions of the said loan
given by the Company are not prime facie prejudicial to interest of the
Company except that it is interest free loan but however, the repayment
is within the terms and condition of the loan,
(e) According to the information and explanations given to us, the
Company has not taken during the year any loans, secured or unsecured
from companies, firms or other parties covered in the register
maintained under Section 301 of the Companies Act, 1956. Accordingly,
the provisions of clause
(f) and (g) of the order are not applicable. Further, the loans taken
in the immediate preceding financial year ending 30.09.2008 has been
repaid during the year.
(iv) In our opinion and according to the information and explanations
given to us during the course of audit, there is adequate internal
control system commensurate with the size of the Company and nature of
its business for the purchase of inventory and fixed assets and for
sale of goods and services. Further, on the basis of our examination of
the books and records of the Company, and according to the information
and explanations given to us, we have neither come across nor have been
informed of any continuing failure to correct major weakness in the
internal control systems.
(v) {a} As per information and explanations given to us by the
management, we are of the opinion that all the particulars in respect
of certain contracts or arrangements referred to in section 301 of the
Companies Act, 1956 and need to be entered in the register maintained
under that section, have been so entered.
(b) As far as we could ascertain on the basis of our selective checking
and according to the information and explanations given to us, the
transaction made in pursuance to aforesaid contracts or arrangements
have been made at the prevailing market prices at the relevant time.
(vi) According to the information and explanations given to us, the
Company has not accepted any deposits from public during the year
within the meaning of Section 58A, 58AA and any other relevant
provisions of the Companies Act, 1956 and the rules framed there-under.
(vii) In our opinion, the Company has in house internal audit systems
which requires further to strengthen to make it commensurate with the
size and nature of the business of the Company.
(viii) We are informed by the management that the required cost records
pursuant to the order made by Central Government under Section 209(1
)(d) of the Companies Act, 1956 regarding to the production of sugar
have been maintained by the Company and are of the opinion that
prima-facie the prescribed accounts and records have been maintained.
We have not however, made a detailed examination of the records with a
view to determine whether they are accurate or complete.
(ix) (a) According to the information and explanation given to us and
the records examined by us, the undisputed statutory dues including
provident fund, investor education and protection fund, income tax,
sales tax, wealth tax service tax custom duty, excise duty cess and
other statutory dues applicable to the company have generally been
regularly deposited by it with the appropriate authority except delays
in certain cases. As informed the provisions of the Employees State
Insurance Act are not applicable to the Company.
(b) According to the information and explanation given to us, there is
no material undisputed amount payable in respect of aforesaid dues
which were outstanding for a period of more than six months as on
30.09.2009.
(c) According to the information and explanation given to us, the
particulars of dues of excise duty, sales tax, trade tax and income tax
outstanding as at 30.09.2009, which have not been deposited, on account
of dispute are as follows:
Nature of the Nature of Dues Amount Forum, where the dispute
is pending
Statute (Rs. In
Lacs)
Central Excise
Act, Canvat Matter -
2005-06 0.51 The Commissioner (Appeals)
1944 Allahabad
U.P. Trade
Tax, Trade Tax-AY
2005-06 22.13 The Joint Commissioner
(Appeals)
Act,1948 and 2006-07 Faizabad
Entry Tax-AY.
2005-06 260.31 The Joint Commissioner
(Appeals),
and 2006-07 Faizabad Demand is stayed
by the Honble Allahabad
Court
Central
Sales Tax CST 87.84 The Joint Commissioner
(Appeals)
Act Faizabad
Income
Tax Act, Income Tax 60.79 The Commissioner of
income Tax
1961 (Appeals) Faizabad
Total 431.58
All aforesaid dues are not accounted for in the books of account and
are shown as contingent liabilities in the Schedule-17 Notes to
Accounts
(x) The Company has not incurred losses during the financial year
ending 30.09.2009 and its accumulated losses as on 30,09,2009 are not
more then 50% of its net worth. The Company has not incurred cash
losses during the current financial year and in the immediately
preceding financial year ending 30,09.2008
(xi) Based on our audit procedures and as per information and
explanation given to us by the management, we are of the opinion that
the Company has not defaulted in the repayment of the dues to the
financial Institutions and Banks as per details given here-under.
(a) The term loan installment of Rs, 58,43 lacs payable during the year
towards loan from Sugar Development Fund (SDF) could not, be paid till
30.09.2009. Further interest of Rs 115 lacs payable to SDF is also
unpaid till 30,09,2009
(b) The repayment terms of the term loan availed by the company from a
Bank has been rescheduled during the year. As per rescheduled terms the
quarterly installment of Rs. 110 lacs due for payment on 30th June,
2009 was paid with some delay. Further, the interest of Rs. 68.06 lacs
payable on the said term loan was unpaid till 30.09.2009.
(XII) In our opinion and as per information and explanation given to
us, 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 clause 4 (xiir) of the Companies
(Auditors Report) Order 2003 is not applicable to the Company,
(xiv) In our opinion, the Company is not dealing or trading in shares,
securities, debentures and other investments, and hence, the
requirement of Para 4(xiv) of the Companies (Auditors/Report) Order,
2003 is not applicable to the Company,
(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 except guarantees given to the banks on
behalf of its employees, who have taken vehicle loans from the banks
and a sum of Rs 10,48 lacs was outstanding at the year end 30.09.2009
on this account.
(xvi) According to the information and explanations given to us. terms
loans were applied for the purpose for which the loans were obtained,
(xvii) According to the information and explanation given to us and
based on an overall examination of the balance sheet, cash flow and
other relevant records we report that the funds raised on short term
basis have not been used during the year for long term purposes,
(xviii) During the year, the Company has not made any preferential
allotment of shares to parties and companies covered in the register
maintained under section 301 of the Companies Act, 1956.
(xix) According to the information and explanations given to us, the
company has not issued any debentures during .the period covered by our
audit .
(xxi) According to the information and explanations given to us the
company has not raised any money by way of public issue during the
period covered by our audit. (xxi) Based on the audit procedure
performed for the purpose of reporting the true and fair view of the
financial statement and as per the information and explanation given to
us by the management, we report that no fraud on or by the Company has
been noticed or reported during the course of our audit nor we have
been informed of such case by the management that causes the financial
statements to be materially misstated,
For Mehrotra & Mehrotra
Chartered Accountants
sd/-
Rajesh Jhalani
Partner
Membership No. 74809
Place: Lucknow
Dated :19th December, 2009
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