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

Auditor Report of Simbhaoli Sugars Ltd.

Mar 31, 2015

We have audited the accompanying standalone financial statements of SIMBHAOLI SUGARS LIMITED ("the Company"), which comprise the Balance Sheet as at March 31, 2015, the Statement of Profit and Loss and the Cash Flow Statement for the year then ended, and a summary of the significant accounting policies and other explanatory information.

Management's Responsibility for the Standalone 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 standalone financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the accounting principles generally accepted in India, including the Accounting Standards specified under Section 133 of the Act, read with 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 thereunder.

We conducted our audit in accordance with the Standards on Auditing specified under Section 143(10) of the Act. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and the disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal financial control relevant to the Company's preparation of the financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, 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 the accounting policies used and the reasonableness of the accounting estimates made by the Company's Directors, as well as evaluating the overall presentation of the financial statements.

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

Opinion

IIn 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 loss and its cash flows for the year ended on that date.

Emphasis of Matter

We draw attention to the following matters in the Notes to the financial statements:

1. Note 20 in the financial statements which indicates that the Company has accumulated losses and its net worth has been fully eroded, the Company has incurred a net cash loss during the current and previous year(s) and, the Company's current liabilities exceeded its current assets as at the balance sheet date. These conditions, along with other matters set forth in Note 20, indicate the existence of a material uncertainty that may cast significant doubt about the Company's ability to continue as a going concern. However, the financial statements of the Company have been prepared on a going concern basis for the reasons stated in the said Note.

2. Note 4 to the financial statements relating to sale of power co-generation divisions of the Company in an earlier year and the balance interest bearing consideration of Rs. 8,180.15 lacs outstanding as on March 31, 2015, which would be discharged in the manner laid down under the Business Transfer Agreements (BTAs). Out of this, consideration amounting to Rs. 5,682.19 lacs is to be discharged in cash on or before the date falling forty eight months from the date of the BTAs or on achieving the closing in terms of the Joint Venture Agreement with Sindicatum Captive Energy Pte Limited, whichever is earlier.

3. Note 20(b) which sets out the position regarding sugarcane subsidy aggregating Rs. 4,738.67 lacs accounted by the Company in these financial statements. As indicated in this note, necessary adjustments to subsidy so accounted for would be made on settlement and receipt thereof from the State Government.

Our opinion is not qualified in respect of these matters.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor's Report) Order, 2015 ("the Order"), issued by the Central Government of India in terms of sub-section (11) of section 143 of the Act, we give in the Annexure a 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 purposes of our audit.

(b) In our opinion, proper books of account as required by law have been kept by the Company so far as it appears from our examination of those books.

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

(d) In our opinion, the aforesaid standalone financial statements comply with the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014.

(e) The going concern matter described in sub-paragraph

(1) under the Emphasis of Matters paragraph above, in our opinion, may have an adverse effect on the functioning of the Company.

(f) On the basis of the 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 March 31, 2015 from being appointed as a director in terms of Section 164

(2) of the Act.

(g) With respect to the other matters to be included in the Auditor's Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules, 2014, in our opinion and to the best of our information and according to the explanations given to us:

i. The Company has disclosed the impact of pending litigations on its financial position in its financial statements. Refer note 6 and note 18 to the financial statements;

ii. The Company did not have any material foreseeable losses on long-term contracts including derivative contracts;

iii. There has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Company.

(Referred to in paragraph 1 under 'Report on Other Legal and Regulatory Requirements' section of our report of even date)

(i) In respect of the Company's fixed assets:

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

(b) The Company has a programme of physically verifying all its fixed assets over a period of three years, which in our opinion is reasonable having regard to the size of the Company and nature of its fixed assets. In accordance with this programme, certain fixed assets were physically verified by the Management during the year. According to the information and explanations given to us the discrepancies noticed on such verification between the physical balances and the fixed assets records were not material and have been properly dealt with in the books of account.

(ii) In respect of the Company's inventories:

(a) 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 explanation given to us, the procedures of physical verification of inventories followed by the Management were reasonable and adequate in relation to the size of the Company and the nature of its business.

(c) In our opinion and according to the information and explanations given to us, the Company has maintained proper records of its inventories and no material discrepancies were noticed on physical verification.

(iii) According to the information and explanations given to us, the Company has, during the year, granted interest free unsecured loans aggregating Rs 1,515.46 lacs to a wholly owned subsidiary covered in the register maintained under section 189 of the Act. At the year end, the outstanding loan granted to a wholly owned subsidiary aggregates to Rs 2,394.81 lacs. In respect of such loans:

(a) According to the information and explanations given to us, the above loan is repayable on demand and has I not been recalled during the year.

(b) According to the information and explanations given to us, there are no overdue amount remaining outstanding as at the year end.

(iv) In our opinion and according to the information and explanations given to us, there is an adequate internal control system commensurate with the size of the Company and the nature of its business with regard to purchases of inventory and fixed assets and the sale of goods and services. During the course of our audit, we have not observed any major weakness in such internal control system.

(v) According to the information and explanations given to us, the Company has not accepted any deposits from the public during the year.

(vi) We have broadly reviewed the cost records maintained by the Company pursuant to the Companies (Cost Records and Audit) Rules, 2014, as amended and prescribed by the Central Government under sub-section (1) of Section 148 of the Companies Act, 2013, and are of the opinion that, prima facie, the prescribed cost records have been made and maintained. We have, however, not made a detailed examination of the cost records with a view to determine whether they are accurate or complete.

(vii) According to the information and explanations given to us, in respect of statutory dues:

(a) The Company has generally been regular in depositing undisputed statutory dues, including Wealth Tax, Sales Tax, Value Added Tax and other material statutory dues applicable to it and not been regular in depositing dues of Provident Fund, Income-tax, Service Tax, Customs Duty, Excise Duty and Cess with the appropriate authorities. As explained to us, the provisions of the Employees' State Insurance Act, 1948 are not applicable to the Company.

(b) There were no undisputed amounts payable in respect of Provident Fund, Employees' State Insurance, Income-tax, Sales Tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty, Value Added Tax, Cess and other material statutory dues in arrears as at March 31, 2015 for a period of more than six months from the date they became payable.

(c) Details of dues of Excise Duty, Service Tax, Value Added Tax and Sales Tax (Trade Tax) which have not been deposited as on March 31, 2015 on account of disputes are given below:

Statute Nature of Forum where Period to Amount, Amount the dues dispute is which the involved paid under pending amount (Rs. lacs) protest relates (Rs. lacs)

U P. Trade Act Trade tax Trade Tax Appellate 1984-1985 0.43 0.43

Tribunal 1995-1996 3.18

Central Excise Excise duty Commissioner 2006-2007 39099 45.03 Act (Appeals) 2012-2013 558 Customs, Excise & 2002-2003 0.70 0.70 Service tax Appellate 2004-2005 0.28 0.28

Tribunal 2005-2006 2.77 2.77

2010-2011 9.37 6.56

2007-2011 0.37 -

High Court, 2005-2006 2.78 -

Allahabad 1979-1980 11.01 11.01

Fnance Service Customs, Excise & Act, 1994 Tax Service tax Appellate 2006-2007 83.06 14.87 Tribunal

State Excise Excise Duty High Court, 2001-2002 9.26 - Duty Allahabad

* Amount as per demand orders including interest and penalty wherever indicated in the order.

We are informed that there are no disputed dues in respect of Income-tax, Customs Duty, Wealth Tax and Cess.

In the following instances the concerned statutory authority is in appeal against the favourable order received by the Company.

Statute Nature of Forum where Dispute Period to Amount Dues is pending which the involved amount (Rs. lacs) relates

Central Excise Excise Duty Customs, Excise & 2008-09 71.69 Act Service tax Appellate Tribunal

High Court, Allahabad 1995-1996 9.92

U P. Trade Trade tax High Court, Allahabad 1996-97 59.96 Tax Act

Finance Act, Service 1994 tax Customs, Excise & Service 2006-07 0.42 tax Appellate Tribunal

(d) In our opinion and according to the information and explanations given to us, the amount required to be transferred to investor education and protection fund in accordance with the relevant provisions of the Companies Act, 1956 (1 of 1956) and rules made thereunder has been transferred to such fund within time.

(viii) The accumulated losses of the Company at the end of the current year are not less than fifty percent of its net worth and the Company has incurred cash losses during the financial year covered by our audit and in the immediately preceding financial year.

(ix) On the basis of our audit procedures and as per the information and explanations given by the management, the Company has delayed repayment of dues to banks and financial institutions in respect of term loans, working capital demand loans and interest liabilities.

Lenders Amount (including interest) Period of delays (Rs. lacs)

Banks and financial 1,399.15 01-30 days

institutions 848.30 31-60 days

649.29 61-90 days

551.02 Above 90 days

34,102.57 Not yet paid

The Company has not issued any debentures during the year.

(x) In our opinion and according to the information and explanations given to us, the terms and conditions of the guarantee given by the Company for loan taken by others from banks is not, prima facie, prejudicial to the interests of the Company.

(xi) In our opinion and according to the information and explanations given to us, the term loans have been applied by the Company during the year for the purposes for which they were obtained.

(xii) To the best of our knowledge and belief and according to the information and explanations given to us, no fraud by the Company and no material fraud on the Company has been noticed or reported during the year.

For DELOITTE HASKINS & SELLS

Chartered Accountants

(Firm's Registration No. 015125N)



Jaideep Bhargava

GURGAON Partner

May 30, 2015 (Membership No. 090925)


Mar 31, 2014

We have audited the accompanying financial statements of SIMBHAOLI SUGARS LIMITED ("the Company"), which comprise the Balance Sheet as at March 31, 2014, the Statement of Profit and Loss and the Cash Flow Statement for the year then ended, and a summary of the significant accounting policies and other explanatory information

Management''s Responsibility for the Financial Statements

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 Standards notified under the Companies Act, 1956 ("the Act")(which continue to be applicable in respect of Section 133 of the Companies Act, 2013 in terms of General Circular 15/2013 dated September 13, 2013 of the Ministry of Corporate Affairs) and in accordance with the accounting principles generally accepted in India. 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 the disclosures in the financial statements. The procedures selected depend on the auditor''s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal 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 Company''s internal control. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of the accounting estimates made by the 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 audit opinion.

Opinion

In our opinion and to the best of our information and according to the explanations given to us, the aforesaid 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 31,2014;

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

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

Emphasis of Matter

We draw attention to:

1. Note 27 to the financial statements regarding the Company continuing to incur cash losses, which has resulted in its net worth being fully eroded and its current liabilities being significantly higher than its current assets. However, the financial statements of the Company have been prepared on a going concern basis for the reasons stated in the said Note.

2. Note 23 to the financial statements which sets out the position regarding repudiation by the insurance company of the Company''s insurance claim amounting to Rs. 769 lacs on account of sinking of ship carrying raw sugar purchased by the Company in July 2009. Based on the expert advice, management is confident that the proceedings against the insurer would be settled in favour of the Company and no loss would arise in this regard.

3. Note 4 to the financial statements relating to sale of co- generation divisions of the Company and the balance interest bearing consideration of Rs. 11,204.33 lacs as on March 31, 2014, which would be discharged in the manner laid down under the Business Transfer Agreements (BTAs). Further, a part of the consideration amounting to Rs. 7,873.72 lacs will be discharged in cash on or before the date falling forty eight months from the date of the BTAs or on achieving the closing in terms of the Joint Venture Agreement with Sindicatum Captive Energy Pte Limited, whichever is earlier.

Our opinion is not qualified in respect of these matters.

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 in terms of Section 227(4A) 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 purposes of our audit.

(b) In our opinion, proper books of account as required by law have been kept by the Company so far as it appears from our examination of those books.

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

(d) In our opinion, the Balance Sheet, the Statement of Profit and Loss, and the Cash Flow Statement comply with the Accounting Standards notified under the Act (which continue to be applicable in respect of Section 133 of the Companies Act, 2013 in terms of General Circular 15/2013 dated September 13, 2013 of the Ministry of Corporate Affairs).

(e) On the basis of the written representations received from the directors as on March 31,2014 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 Section 274(1)(g) of the Act.

ANNEXURE TO THE INDEPENDENT AUDITORS'' REPORT (Referred to in paragraph 1 under ''Report on Other Legal and Regulatory Requirements'' section of our report of even date)

Having regard to the nature of the Company''s business/activities/ results during the year, clauses (xiii) and (xiv) of paragraph 4 of the Order are not applicable to the Company.

(i) In respect of its fixed assets:

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

(b) As explained to us, the Company has a programme of physically verifying all its fixed assets over a period of three years, which in our opinion is reasonable having regard to the size of the Company and the nature of its fixed assets. In accordance with this programme, some of the fixed assets were physically verified by the management during the year. The discrepancies noticed on such verification between the physical balances and fixed assets records were not material and have been properly dealt with in the books of account.

(c) The fixed assets disposed off during the year, in our opinion, do not constitute a substantial part of the fixed assets of the Company and such disposal has, in our opinion, not affected the going concern status of the Company.

(ii) In respect of its inventory:

(a) During the year, the inventories have been physically verified 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 were reasonable and adequate in relation to the size of the Company and the nature of its business.

(c) In our opinion and according to the information and explanations given to us, the Company has maintained proper records of its inventories and no material discrepancies were noticed on physical verification, other than the shortage of finished goods in the sugar units of the Company amounting to Rs. 1,058.36 lacs arising from alleged irregularities by certain senior executives which have been detected by the Management of the Company, which has been properly dealt with in the books of account and included under the head ''Exceptional Items''.

(iii) In respect of loans, secured or unsecured, granted by the Company to companies, firms or other parties covered in the Register under Section 301 of the Companies Act, 1956, according to the information and explanations given to us:

(a) The Company has granted interest free unsecured loan of Rs. 398.01 lacs to three companies during the year. The maximum amount involved during the year was Rs. 1,177.09 lacs (three companies) and the year end balance was Rs. 1,036.43 lacs (three companies).

(b) The rate of interest and other terms and conditions of such loans are, in our opinion, prima facie not prejudicial to the interests of the Company.

(c) The receipts of principal amounts and interest have been as per stipulations.

(d) As per the information and explanations given to us and records of the Company, there are no overdue amounts in respect of the above loan, including interest thereon.

In respect of loans, secured or unsecured, taken by the Company from companies, firms or other parties covered in the Register maintained under Section 301 of the Companies Act, 1956, according to the information and explanations given to us:

(a) The Company had taken interest free unsecured loans from two Directors. The maximum amount involved during the year was Rs. 1,835.61 lacs (two Directors) and the year end balance was Rs. 1,200.61 lacs (two Directors).

(b) The terms and conditions of such loans are, in our opinion, prima facie not prejudicial to the interests of the Company.

(c) The payments of the principal amounts in respect of such loans are as per stipulations.

(iv) In our opinion and according to the information and explanations given to us, there is an adequate internal control system commensurate with the size of the Company and the nature of its business with regard to purchases of inventory and fixed assets and the sale of goods. There are no sales of services. During the course of our audit, we have not observed any major weakness in such 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 of contracts or arrangements referred to Section 301 that need to be entered in the Register maintained under the said Section have been so entered.

(b) Where each of such transaction (excluding loans reported under paragraph (iii) above) is in excess of Rs. 5 lakhs in respect of any party, the transactions have been made at prices which are prima facie reasonable having regard to the prevailing market prices at the relevant time other than certain purchases which are of special nature for which comparable quotations are not available and in respect of which we are unable to comment if the transactions have been carried out at prices having regard to 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 the public during the year.

(vii) In our opinion, the internal audit functions carried out during the year by a firm of Chartered Accountants appointed by the Management have been commensurate with the size of the Company and the nature of its business.

(viii) We have broadly reviewed the costs records maintained by the Company pursuant to the Companies (Cost Accounting Records) Rules, 2011 and the Cost Accounting

Records (Sugar Industry) 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 made and 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) According to the information and explanations given to us in respect of statutory dues:

(a) The Company has generally been regular in depositing undisputed dues, including Provident Fund, Investor Education and Protection Fund, Employees'' State Insurance, Income-tax, Sales Tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty, Cess and other material statutory dues applicable to it with the appropriate authorities.

(b) There were no undisputed amounts payable in respect of Provident Fund, Investor Education and Protection Fund, Employees'' State Insurance, Income-tax, Sales tax, Wealth Tax, Service tax, Customs Duty, Excise Duty, Cess and other material statutory dues in arrears as at March 31, 2014 for a period of more than six months from the date they became payable.

(c) Details of dues of Sales Tax (Trade Tax), Excise Duty and Service tax which have not been deposited as on March 31,2014 on account of disputes are given below:

Statute Nature or Forum where Period to the dues dispute is which the pending amount relates

U. P Trade Act Trade tax Trade Tax Applellate 1984-1985 Tribunal _

Trade Tax Appellate 1995-1996 Tribunal "

Central Excise Excise duty Additional 2008-2009 Act Commissioner Commissioner 2006-2007 (Appeals)

Customs, Excise & 2002-2003 Service tax Appellate'' Tribunal Customs, Excise & 2004-2005 Service tax Appellate Tribunal High Court 1979-1980 Allahabad

Finance Act, Service tax Commissioner 2006-2007 1994 (Appeals)

State Excise Excise duty High Court, 2001-2002 Act Allahabad High Court, 2009-2010 Allahabad

Statute Amount Amount involved paid under (Rs. lacs) protest (Rs. lacs)

U. P Trade Act 0.43 0.43

3.18 -

Central Excise 34722 4.76

390799 45703

0760 0760

0728 0728

11.01 11.01

Finance Act, 83706 10781

State Excise 9.26 -

8.08 -

We are informed that there are no disputed dues in respect of Income-tax, Wealth Tax, Customs Duty and Cess7

In the following instances the concerned statutory authority is in appeal against the favourable order received by the Company7

Statute Nature of Forum where Dispute Period to Amount Dues is pending which the involved amount (Rs.lacs) relates

Central Excise Excise Duty Customs, Excise & 2008-09 71.69 Act Service tax Appellate Tribunal

U, P Trade Trade tax High Court, Allahabad 1996-97 59,96 Tax Act

Finance Act, Service tax Customs, Excise & Service 2006-07 0742" 1994 tax Appellate Tribunal

(x) The accumulated losses of the Company at the end of the current year are not less than fifty percent of its net worth

and the Company has incurred cash losses during the financial year covered by our audit and in the immediately preceding financial year7

(xi) On the basis of our audit procedures and as per the information and explanations given by the management, the Company has delayed repayment of dues to banks and financial institutions in respect of term loans, working capital demand loans and interest liabilities7

The following are the details of the delays:

Lenders Amount (including interest) Period of delays (Rs. lacs)

3,288798 01-30 days

Banks 1,529-86 31-60 days

557-99 61-90 days

4379 Not yet paid

The Company has not issued debentures during the year7

(xii) As the Company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities, paragraph 4 (xii) of the Order is not applicable7

(xiii) In our opinion and according to the information and explanations given to us, the terms and conditions of the guarantees given by the Company for loans taken by others from banks or financial institutions are not, prima facie, prejudicial to the interests of the Company.

(xiv) The Company has not taken any term loan during the year. Accordingly, paragraph 4(xvi) of the Order is not applicable.

(xv) In our opinion and according to the information and explanations given to us, and on an overall examination of the Balance Sheet of the Company, we report that fund raised on short term basis aggregating approximately Rs. 74,645.94 lacs have been used for long-term investments/ financing long-term losses.

(xvi) During the year the Company has not made any preferential allotment of shares to the parties and companies covered in the Register maintained under Section 301 of the Companies Act, 1956.

(xvii) The Company has not issued any debentures during the year.

(xviii) The Company has not raised any money by way of public issue during the year.

(xix) To the best of our knowledge and according to the information and explanations given to us, no fraud by the Company and no fraud on the Company has been noticed or reported during the year, other than the shortage of finished goods in the sugar units of the Company amounting to Rs. 1,058.36 lacs arising from alleged irregularities by certain senior executives which have been detected by the Management of the Company, which has been written off in the books of account and included under the head ''Exceptional Items''.

For DELOITTE HASKINS & SELLS Chartered Accountants (Firm''s Registration No.015125N)

Manjula Banerji Gurgaon Partner May 27, 2014 (Membership No.086423)


Mar 31, 2013

Report on the Financial Statements

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

Management''s Responsibility for the Financial Statements

The 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 Section 211(3C) of the Companies Act, 1956 ("the Act") and in accordance with the accounting principle generally accepted in India. This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and fair 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 the disclosures in the financial statements. The procedures selected depend on the auditor''s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal 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 Company''s internal control. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of the accounting estimates made by the 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 audit opinion.

Opinion

In our opinion and to the best of our information and according to the explanations given to us, the aforesaid 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 of the Company for the year ended on that date; and

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

Emphasis of Matter

We draw attention to:

1. Note 4 which explains in detail the exceptional item relating to sale of co-generation divisions of the Company for an aggregate consideration of Rs. 15,978.62 lacs which would be discharged in the manner laid down under the Business Transfer Agreements (BTAs).Further, as indicated in Note 4(b)(iii), a part of the consideration amounting to Rs. 7,873.72 lacs which is interest bearing will be discharged in cash on or before the date falling 48 months from the date of the BTAs or on achieving the closing in terms of the Joint Venture Agreement with Sindicatum Capitive Energy Pte Limited, whichever is earlier.

2. Note 25 regarding the Company''s net worth being substantially eroded and preparation of the financial statements of the Company on a going concern basis for the reasons stated therein.

3. Note 24 which sets out the position regarding repudiation by the insurance company of the balance amount of Rs. 769 lacs of the Company''s insurance claim relating to the sinking of a ship carrying raw sugar purchased by the Company in July 2009. Based on the expert advice, management is confident that the proceedings against the insurer would be settled in favour of the Company and no loss would arise in this regard.

Our opinion is not qualified in respect of these matters.

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 in terms of Section 227(4A) 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 purposes of our audit.

(b) In our opinion proper books of account as required by law have been kept by the Company so far as it appears from our examination of those books.

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

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

(e) On the basis of the written representations received from the directors as on March 31, 2013 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 Section 274(1)(g) of the Act.

Having regard to the nature of the Company''s business/activities /results during the year, clauses (xiii) and (xiv) of paragraph 4 of the Order are not applicable to the Company.

(i) In respect of its fixed assets:

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

(b) As explained to us, the Company has a programme of physically verifying all its fixed assets over a period of three years, which in our opinion is reasonable having regard to the size of the Company and the nature of its fixed assets. In accordance with this programme, some of the fixed assets were physically verified by the management during the year. The discrepancies noticed on such verification between the physical balances and fixed assets records were not material and have been properly dealt with in the books of account.

(c) The fixed assets disposed off during the year, in our opinion, do not constitute a substantial part of the fixed assets of the Company and such disposal has, in our opinion, not affected the going concern status of the Company. J

(ii) In respect of its inventory:

(a) During the year, the inventories have been physically verified 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 were reasonable and adequate in relation to the size of the Company and the nature of its business.

(c) In our opinion and according to the information and explanations given to us, the Company has maintained proper records of its inventories. The discrepancies noticed on physical verification of inventories as compared to book records were not material and have been properly dealt with in the books of account.

(iii) In respect of loans, secured or unsecured, granted by the Company to companies, firms or other parties covered in the Register under Section 301 of the Companies Act, 1956, according to the information and explanations given to us:

(a) The Company has granted unsecured loan of Rs. 1225.70 lacs to two companies during the year. The maximum amount involved during the year was Rs. 1433.14 lacs (two companies) and the year end balance was Rs. 1039.61 lacs (two companies).

(b) The rate of interest and other terms and conditions of such loans are, in our opinion, prima facie not prejudicial to the interests of the Company.

(c) The receipts of principal amounts and interest have been as per stipulations.

(d) As per the information and explanations given to us and records of the Company, there are no overdue amounts in respect of the above loan, including interest thereon.

In respect of loans, secured or unsecured, taken by the Company from companies, firms or other parties covered in the Register maintained under Section 301 of the Companies Act, 1956, according to the information and explanations given to us:

(a) During the year the Company has received unsecured loan aggregating Rs. 1813 lacs from one Director. The maximum amount involved during the year was Rs. 1838.12 lacs (two Directors) and the year end balance was Rs. 1835.61 lacs (two Directors).

(b) The rate of interest and other terms and conditions of such loans are, in our opinion, prima facie not prejudicial to the interests of the Company.

(c) The payments of principal amounts and interest in respect of such loans are as per stipulations.

(iv) In our opinion and according to the information and explanations given to us, there is an adequate internal control system commensurate with the size of the Company and the nature of its business with regard to purchases of inventory and fixed assets and the sale of goods. There are no sales of services. During the course of our audit, we have not observed any major weakness in such 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 of contracts or arrangements referred to Section 301 that need to be entered in the Register maintained under the said Section have been so entered.

(b) Where each of such transaction is in excess of Rs.5 lakhs in respect of any party, the transactions have been made at prices which are prima facie reasonable having regard to the prevailing market prices at the relevant time other than in respect of certain purchases for which comparable quotations are not available and in respect of which we are unable to comment.

(vi) According to the information and explanations given to us, the Company has not accepted any deposits from the public during the year.

(vii) In our opinion, the internal audit functions carried out during the year by a firm of Chartered Accountants appointed by the Management have been commensurate with the size of the Company and the nature of its business.

(viii) We have broadly reviewed the books of account maintained by the Company pursuant to the rules made by the Central Government for the maintenance of cost records under Section 209(1)(d) of the Companies Act, 1956 and are of the opinion that prima facie the prescribed accounts and records have been made and maintained. We have, however, not made a detailed examination of the records with a view to determining whether they are accurate or complete.

(ix) According to the information and explanations given to us in respect of statutory dues:

(a) The Company has generally been regular in depositing undisputed dues, including Provident Fund, Investor Education and Protection Fund, Employees'' State Insurance, Income-tax, Sales Tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty, Cess and other material statutory dues applicable to it with the appropriate authorities.

(b) There were no undisputed amounts payable in respect of Provident Fund, Investor Education and Protection Fund, Employees'' State Insurance, Income-tax, Sales tax, Wealth Tax, Service tax, Customs Duty, Excise Duty, Cess and other material statutory dues in arrears as at March 31, 2013 for a period of more than six months from the date they became payable.

(x) The accumulated losses of the Company at the end of the current year are not less than fifty percent of its net worth and the Company has incurred cash losses in the current year and in the immediately preceding financial year.

(xi) During the year, after considering the effect of reschedulement of repayment terms of borrowings from certain banks, approved by the Corporate Debt Restructuring Empowered Group, the details of defaults in repayments of dues are as under:

Lenders Amount (including interest) Period of delays

(Rs. lacs)

Banks 650.65 01-30 days

The Company has not issued debentures during the year.

(xii) As the Company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities, paragraph 4(xii) of the Order is not applicable.

(xiii) In our opinion and according to the information and explanations given to us, the terms and conditions of the guarantees given by the Company for loans taken by others from banks or financial institutions are not, prima facie, prejudicial to the interests of the Company.

(xiv) The Company has not taken any term loan during the year. Accordingly, paragraph 4(xvi) of the Order is not applicable.

(xv) According to the information and explanations given to us, and on an overall examination of the Balance Sheet of the Company, we report that short term funds of Rs. 47,348.64 lacs have been used to finance fixed assets / long term losses.

(xvi) During the previous period, the Company had issued 25,00,000 warrants, carrying an entitlement to subscribe to 1 equity share of Rs. 10 each at a premium of Rs. 36 per share, on preferential basis in accordance with the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009 (as amended) to the parties covered in the Register maintained under Section 301 of the Act. During the year, the Company has issued 6,57,500 equity shares (pursuant to the terms of these warrants) and 32,00,000 preference shares on a preferential basis to the parties covered in the register maintained under Section 301of the Companies Act, 1956. The price at which, these equity shares have been issued is pursuant to the terms of the warrants and these preference shares have been issued at par value, which in our opinion, is not prima facie prejudicial to the interests of the Company.

(xvii) The Company has not issued any debentures during the year.

(xviii)The Company has not raised any money by way of public issue during the year.

(xix) To the best of our knowledge and according to the information and explanations given to us, no fraud by the Company and no material fraud on the Company has been noticed or reported during the year.

For DELOITTE HASKINS & SELLS

Chartered Accountants (Registration No. 015125N)

Manjula Banerji

GURGAON

Partner

May 28 2013 (Membership No. 086423)


Mar 31, 2012

1. We have audited the attached Balance Sheet of SIMBHAOLI SUGARS LIMITED ("the Company") as at March 31, 2012, the Profit and Loss Account and the Cash Flow Statement of the Company for the eighteen months ended on that date, both annexed thereto. These financial statements are the responsibility of the Company's Management. Our responsibility is to express an opinion on these financial statements based on our audit.

2. We conducted our audit in accordance with the auditing standards generally accepted in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatements. An audit includes examining, on a test basis, evidence supporting the amounts and the disclosures in the financial statements. An audit also includes assessing the accounting principles used and the significant estimates made by the Management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

3. Without qualifying our opinion, we draw attention to:

(i) note 23 of schedule 18 which sets out the position regarding repudiation by the insurance company of the Company's insurance claim amounting to Rs. 769 lacs on account of sinking of ship carrying raw sugar purchased by the Company. Pending completion of legal proceedings in the matter, the effect thereof in these accounts cannot be determined at this stage.

(ii) note 24 of schedule 18 regarding the Company's net worth being substantially eroded (fully eroded after giving effect to our qualification in paragraph 5(e) below) and the Company making cash losses during the eighteen months period ended March 31, 2012. However, the financial statements of the Company have been prepared by the Management of the Company on a going concern basis for the reasons stated in the said Note. The ability of the Company to continue as a going concern is dependent upon the successful completion of its business and financial restructuring initiatives, the outcome of the steps being initiated by the State and Central Governments for the sugar industry and the Company's ability to generate sufficient cash flows to meet its future obligations.

4. As required by the Companies (Auditor's Report) Order, 2003 (CARO) issued by the Central Government in terms of Section 227(4A) of the Companies Act, 1956, we enclose in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order.

5. Further to our comments in the paragraph 3 above and Annexure referred to in paragraph 4 above, we report as follows:

(a) 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;

(b) in our opinion, proper books of account as required by law have been kept by the Company so far as it appears from our examination of those books;

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

(d) subject to our comments in paragraph (e) below, in our opinion, the Balance Sheet, the Profit and Loss Account and the Cash Flow Statement dealt with by this report are in compliance with the Accounting Standards referred to in Section 211(3C) of the Companies Act, 1956.

(e) Attention is invited to note 25 of schedule 18 wherein it is stated that deferred tax assets (net) amounting to Rs.4,747.83 lacs has been recognised on the basis of future projections prepared based upon the restructuring plans under implementation and taken on record by the Board of Directors and the belief of the Management of the Company that there is a virtual certainty that sufficient future taxable income will be available against which such assets would be realised. However, in our opinion, recognition of such deferred tax assets based on future projections is not in accordance with the principle for recognition of deferred tax assets relating to unabsorbed depreciation and carry forward business losses stated in Accounting Standard 22 "Accounting for Taxes on Income", which requires virtual certainty supported by convincing evidence to be established for recognition of deferred tax assets on such items. Had such deferred tax assets not been recognised, the profit after tax would have been lower and the debit balance in the profit and loss account would have been higher by Rs.4,747.83 lacs and the deferred tax assets would have been lower by a similar amount.

The matter referred to in paragraph (e) above, to the extent covered here above was also subject matter for qualification in our audit report on the financial statements for the year ended September 30, 2010.

(f) Subject to our comment in paragraph (e) above, in our opinion and to the best of our information and according to the explanations given to us, the said accounts give the information required by the Companies Act, 1956 in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:

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

(ii) in the case of the Profit and Loss Account, of the profit of the Company for the eighteen months ended on that date and

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

6. On the basis of the written representations received from the Directors as on March 31, 2012 and taken on record by the Board of Directors, none of the Directors is disqualified as on March 31, 2012 from being appointed as a director in terms of Section 274(1)(g) of the Companies Act, 1956.

ANNEXURE TO THE AUDITORS' REPORT

(Referred to in paragraph 3 of our report of even date)

Having regard to the nature of the Company's business/activities /result, clauses (xiii) and (xiv) of CARO are not applicable.

(i) In respect of its fixed assets:

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

(b) As explained to us, the Company has a programme of physically verifying all its fixed assets over a period of three years, which in our opinion is reasonable having regard to the size of the Company and the nature of its fixed assets. In accordance with this programme, some of the fixed assets were physically verified by the management during the period. The discrepancies noticed on such verification between the physical balances and fixed assets records were not material and have been properly dealt with in the books of account.

(c) The fixed assets disposed off during the period, in our opinion, do not constitute a substantial part of the fixed assets of the Company and such disposal has, in our opinion, not affected the going concern status of the Company.

(ii) In respect of its inventory:

(a) During the period, the inventories have been physically verified 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) In our opinion and according to the information and explanations given to us, the Company has maintained proper records of its inventories. The discrepancies noticed on physical verification of inventories as compared to book records were not material and have been properly dealt with in the books of account.

(iii) In respect of loans, secured or unsecured, granted by the Company to companies, firms or other parties covered in the Register under Section 301 of the Companies Act, 1956, according to the information and explanations given to us:

(a) The Company has granted unsecured loan of Rs. 61.36 lacs to a company during the period. The maximum amount involved during the period was Rs. 428.59 lacs and the period end balance was Rs. 0.11 lacs.

(b) The rate of interest and other terms and conditions of such loans are, in our opinion, prima facie not prejudicial to the interests of the Company.

(c) The receipts of principal amounts and interest have been as per stipulations.

(d) As per the information and explanations given to us and records of the Company, there are no overdue amounts in respect of the above loan, including interest thereon.

In respect of loans, secured or unsecured, taken by the Company from companies, firms or other parties covered in the Register maintained under Section 301 of the Companies Act, 1956, according to the information and explanations given to us:

(a) During the previous year the Company had received unsecured loans from four Directors. The maximum amount involved during the period was Rs. 256 lacs and the period end balance was Rs. 25 lacs.

(b) The rate of interest and other terms and conditions of such loans are, in our opinion, prima facie not prejudicial to the interests of the Company.

(c) The payments of principal amounts and interest in respect of such loans are as per stipulations.

(iv) In our opinion and according to the information and explanations given to us, there is an adequate internal control system commensurate with the size of the Company and the nature of its business with regard to purchases of inventory and fixed assets and the sale of goods. There are no sales of services. During the course of our audit, we have not observed any major weakness in such 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 of contracts or arrangements referred to Section 301 that need to be entered in the Register maintained under the said Section have been so entered.

(b) Where each of such transaction is in excess of Rs.5 lakhs in respect of any party, the transactions have been made at prices which are prima facie reasonable having regard to the prevailing market prices at the relevant time except in respect of certain purchases for which comparable quotations are not available and in respect of which we are unable to comment.

(vi) According to the information and explanations given to us, the Company has not accepted any deposits from the public during the period.

(vii)In our opinion, the internal audit functions carried out during the period by a firm of Chartered Accountants appointed by the Management have been commensurate with the size of the Company and the nature of its business.

(viii)We have broadly reviewed the books of account maintained by the Company pursuant to the rules made by the Central Government for the maintenance of cost records under Section 209(1)(d) of the Companies Act, 1956 and are of the opinion that prima facie the prescribed accounts and records have been made and maintained. We have, however, not made a detailed examination of the records with a view to determining whether they are accurate or complete.

(ix) According to the information and explanations given to us in respect of statutory dues:

(a) The Company has generally been regular in depositing undisputed dues, including Provident Fund, Investor Education and Protection Fund, Employees' State Insurance, Income-tax, Sales Tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty, Cess and other material statutory dues applicable to it with the appropriate authorities.

(b) There were no undisputed amounts payable in respect of Income-tax, Wealth Tax, Customs Duty, Excise Duty, Cess and other material statutory dues in arrears as at March 31, 2012 for a period of more than six months from the date they became payable.

(c) Details of dues of Sales Tax (Trade Tax), Excise Duty and Service tax which have not been deposited as on March 31, 2012 on account of disputes are given below:

Statute Nature of Forum where Period to Dues Dispute is pending which the amount relates

U. P. Trade Trade tax Trade Tax Appellate 1984-1985 Tax Act Tribunal

Trade Tax Appellate 1995-1996 Tribunal

Trade Tax Appellate 2001-2002 Tribunal

Deputy Commissioner 2009-2010 (Appeals)

Central Excise Commissioner 1979-1980 Excise Act Duty (Appeals)

Customs, Excise & 2002-2003 Service tax Appellate Tribunal

Customs, Excise & 2004-2005 Service tax Appellate Tribunal

Commissioner 2008-2009 (Appeals)

Additional 2006-2007 Commissioner

Customs, Excise & 2006-2007 Service tax Appellate Tribunal

Additional 2008-2009 Commissioner

State Excise High Court, 2001-02 Excise Act Duty Allahabad

High Court, Allahabad 2009-10

Statute Amount Amount paid involved under protest (Rs. lacs) (Rs. lacs)

U P Trade 0.43 0.43

3.18 -

3.47 1.60

0.85 0.85

Central Excise Act 11.01 11.01

0.60 0.60

0.28 0.28

71.69 25.21

1.50 -

398.13 52.18

34.22 4.76

State Excise Act 9.26 -

8.08 -

We are informed that there are no dues in respect of Income- tax, Wealth Tax, Customs Duty and Cess.

In the following instances the concerned statutory authority is in appeal against the favourable order received by the Company.

Statute Nature of Forum where Period to Amount Dues Dispute is which the involved pending amount (Rs. lacs) relates

U. P. Trade Trade tax High Court, 1996-97 59.96 Tax Act Allahabad

Finance Service tax Customs, 2006-07 0.42 Act, 1994 Excise & Service tax Appellate Tribunal

(x) The accumulated losses of the Company at the end of the current period are not less than fifty percent of its net worth and the Company has incurred cash losses in the current period and in the immediately preceding financial year.

(xi) On the basis of our audit procedures and as per the information and explanations given by the management, the Company has delayed repayment of dues to banks and financial institutions in respect of term loans, working capital demand loans and interest liabilities.

The following are the details of the delays:

Lender Amount (including Period of delays interest) (Rs. Lacs)

Banks 1,394.71 01-30 days

296.53 31-60 days

29.40 61-90 days

The Company has not issued debentures during the period.

(xii)As the Company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities, paragraph 4(xii) of the Order is not applicable

(xiii)As the Company has not given any guarantees given during the period for loans taken by others from banks or financial institutions, paragraph 4(xv) of the Order is not applicable.

(xiv)In our opinion and according to the information and explanations given to us, the term loans have been applied for the purposes for which they were obtained.

(xv)According to the information and explanations given to us and on an overall examination of the Balance Sheet of the Company, we report that short term funds of Rs. 32,444 lacs have been used to finance fixed assets / long term losses.

(xvi)During the period, the Company has issued 25,00,000 warrants, carrying an entitlement to subscribe to 1 equity share of Rs. 10 each at a premium of Rs. 36 per share, on preferential basis in accordance with the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009 (as amended) to the parties covered in the Register maintained under Section 301 of the Act. Pursuant to the terms of these warrants, the Company has issued 13,42,500 equity shares on a preferential basis to the parties covered in the register maintained under Section 301of the Act. In our opinion and as per the information and explanations given to us, the price at which equity shares have been issued are not prima facie prejudicial to the interests of the Company.

(xvii)The Company has not issued any debentures during the period.

(xviii)The Company has not raised any money by way of public issue during the period.

(xix)To the best of our knowledge and according to the information and explanations given to us, no fraud by the Company and no material fraud on the Company has been noticed or reported during the period.

For DELOITTE HASKINS & SELLS

Chartered Accountants

(Registration No. 015125N)

Manjula Banerji

Gurgaon Partner

September 25, 2012

(Membership No. 086423)


Sep 30, 2010

1. We have audited the attached Balance Sheet of SIMBHAOLI SUGARS LIMITED ("the Company") as at September 30, 2010, the Profit and Loss Account and the Cash Flow Statement of the Company for the year ended on that date, both annexed thereto. These financial statements are the responsibility of the 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 the auditing standards generally accepted in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatements. An audit includes examining, on a test basis, evidence supporting the amounts and the disclosures in the financial statements. An audit also includes assessing the accounting principles used and the significant estimates made by the Management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

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

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

(a) 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;

(b) in our opinion, proper books of account as required by law have been kept by the Company so far as it appears from our examination of those books;

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

(d) in our opinion, the Balance Sheet, the Profit and Loss Account and the Cash Flow Statement dealt with by this report are in compliance with the Accounting Standards referred to in Section 211(3C) of the Companies Act, 1956 except for our observation in paragraph 4(f) below;

(e) without qualifying our opinion, we draw attention to:

(i) note 21 in schedule 17 which sets out the position regarding repudiation by the insurance company of the Companys insurance claim amounting to Rs. 4780 lacs on account of sinking of ship carrying raw sugar purchased by the Company. Pending completion of legal proceedings in the matter, the effect thereof in these accounts cannot be determined at this stage.

(ii) note 22 in schedule 17 relating to accounting for cane purchase liability for the sugar season 2007-08 at Rs. 110 per quintal instead of State Advised Price of Rs. 125 per quintal fixed by the Uttar Pradesh State Government. Pending completion of legal proceedings in the matter, the effect thereof on these accounts cannot be determined at this stage.

(f) as indicated in note 20 of schedule 17, the Companys management is confident that given the cyclicality of sugar industry, steps taken by the management and after considering the future projections taken on record by the Board of Directors, sufficient future taxable income will be available against which deferred tax asset (net) of Rs. 7,040.49 Lacs will be realized in the future. Accordingly, the Company has recognized such deferred tax credit in these accounts. However, in our opinion, recognition of such deferred tax credit is not in line with the virtual certainty requirement of Accounting Standard 22 "Accounting for Taxes on Income". Had such deferred tax credit not been recognized, loss after tax and debit balance in profit and loss account would have been higher by Rs. 7,040.49 lacs and deferred tax asset would have been lower by the same amount.

Subject to the foregoing, in our opinion and to the best of our information and according to the explanations given to us, the said accounts give the information required by the Companies Act, 1956 in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:

(i) in the case of the Balance Sheet, of the state of affairs of the Company as at September 30, 2010;

(ii) in the case of the Profit and Loss Account, of the loss of the Company for the year ended on that date and

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

5. On the basis of the written representations received from the Directors as on September 30, 2010 taken on record by the Board of Directors, none of the Directors is disqualified as on September 30, 2010 from being appointed as a director in terms of Section 274(1)(g) of the Companies Act, 1956.

ANNEXURE TO THE AUDITORS REPORT (Referred to in paragraph 3 of our report of even date)

Having regard to the nature of the Companys business /activities/ result, clauses (xiii) and (xiv) of CARO are not applicable.

(i) In respect of its fixed assets:

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

(b) As explained to us, the Company has a programme of physically verifying all its fixed assets over a period of three years, which in our opinion is reasonable having regard to the size of the Company and the nature of its fixed assets. In accordance with this programme, some of the fixed assets were physically verified by the management during the year. The discrepancies noticed on such verification between the physical balances and fixed assets records were not material and have been properly dealt with in the books of account.

(c) In our opinion and according to the information and explanations given to us, a substantial part of the fixed assets has not been disposed off by the Company during the year.

(ii) In respect of its inventory:

(a) During the year, the inventories have been physically verified by the management except for the stocks lying with third parties where confirmations have been received in most of the cases. In our opinion, the frequency of verification is reasonable.

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

(c) In our opinion and according to the information and explanations given to us, the Company has maintained proper records of its inventories. The discrepancies noticed on physical verification of inventories as compared to book records were not material and have been properly dealt with in the books of account.

(iii) In respect of loans, secured or unsecured, granted by the Company to companies, firms or other parties covered in the Register under Section 301 of the Companies Act, 1956, according to the information and explanations given to us:

(a) The Company has granted unsecured loan of Rs. 285 lacs to a party during the year. The maximum amount involved during the year and the year end balance was Rs. 285 lacs.

(b) The rate of interest and other terms and conditions of such loans are, in our opinion, prima facie not prejudicial to the interests of the Company.

(c) The receipts of principal amounts and interest have been as per stipulations.

(d) As per the information and explanations given to us and records of the Company, there are no overdue amounts in respect of above loan, including interest thereon.

In respect of loans, secured or unsecured, taken by the Company from companies, firms or other parties covered in the Register maintained under Section 301 of the Companies Act, 1956, according to the information and explanations given to us:

(a) The Company had taken interest free unsecured loans from four Directors. The maximum amount involved during the year was Rs. 320 lacs and the year end balance was Rs. 256 lacs.

(b) The terms and conditions of such interest free loans taken are, in our opinion, prima facie not prejudicial to the interests of the Company.

(c) The payments of principal amounts of such interest free loans are as per stipulations.

(iv) In our opinion and according to the information and explanations given to us, there is an adequate internal control system commensurate with the size of the Company and the nature of its business with regard to purchases of inventory and fixed assets and the sale of goods. There are no sales of services. During the course of our audit, we have not observed any major weakness in such 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 there are no contracts or arrangements that need to be entered into the Register maintained under the said Section.

(vi) According to the information and explanations given to us, the Company has not accepted any deposit from the public during the year.

(vii)In our opinion, the internal audit functions carried out during the year by firm of Chartered Accountants appointed by the Management have been commensurate with the size of the Company and the nature of its business.

(viii) We have broadly reviewed the books of account maintained by the Company pursuant to the rules made by the Central Government for the maintenance of cost records under Section 209(1)(d) of the Companies Act, 1956 and are of the opinion that prima facie the prescribed accounts and records have been made and maintained. We have, however, not made a detailed examination of the records with a view to determining whether they are accurate or complete.

(ix) According to the information and explanations given to us in respect of statutory dues:

(a) The Company has been regular in depositing undisputed dues, including provident fund, investor education and protection fund, employees state insurance, income-tax, sales tax, wealth tax, customs duty, excise duty, cess, entry tax, purchase tax and other material statutory dues applicable to it except for tax deducted at source, service tax and trade tax where there have been few delays in depositing these with the appropriate authorities.

(b) There were no undisputed amounts payable in respect of income-tax, wealth tax, custom duty, excise duty, cess and other material statutory dues in arrears as at September 30, 2010 for a period of more than six months from the date they became payable.

(c) Details of dues of sales tax (trade tax), excise duty and service tax which have not been deposited as on September 30, 2010 on account of disputes are given below:

Statute Nature of Forum where Period to Amount Amount Dues Dispute is which the involved paid pending amount (Rs. lacs) under relates protest (Rs. lacs)

U. P. Trade Trade tax Trade Tax 1984-85 0.43 0.43 Tax Act Appellate Tribunal

Tade Tax 1995-96 3.18 - Appellate Tribunal

High Court 2000-01 2.17 1.08

Trade Tax 2001-02 3.47 1.60 Appellate Tribunal

Deputy 2009-10 0.85 0.85 Commissioner (Appeals)

Central Excise Commissioner 1979-80 11.01 - Excise Act Duty (Appeals)

Customs, Excise 2002-03 0.60 0.60 & Service tax Appellate Tribunal

Customs, 2004-05 0.28 0.28 Excise & Service Tax Appellate Tribunal

Commissioner 2008-09 66.78 25.21 (Appeals)

Additional 2006-07 1.50 - Commissioner

Customs, 2006-07 132.71 52.18 Excise & Service Tax Appellate Tribunal

Additional 2008-09 34.22 4.76 Commissioner

Finance Service tax Additional 2006-07 0.42 - 1994 Act Commissioner

State Excise High Court, 2001-02 9.26 - Excise Act Duty Allahabad

High Court, 2009-10 8.08 - Allahabad

In the following instances the concerned statutory authority is in appeal against favourable order received by the Company.

Statute Nature of Forum where Period to Amount Dues Dispute is which the involved pending amount (Rs. lacs) relates

U. P. Trade Trade tax High Court, 1996-97 59.96 Tax Act Allahabad

(x) The accumulated losses of the Company at the end of the financial year are not less than fifty percent of its net worth and the Company has incurred cash losses in the financial year. However, the Company has not incurred cash losses in the immediately preceding financial year.

(xi) In our opinion and according to the information and explanations given to us, during the year, there are minor delays in repayment of dues to banks and financial institutions. The Company has not issued debentures during the year.

(xii) As the Company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities, paragraph 4(xii) of the Order is not applicable.

(xv) As the Company has not given any guarantees during the year for loans taken by others from banks or financial institutions, paragraph 4(xv) of the Order is not applicable.

(xvi) In our opinion and according to the information and explanations given to us, the term loans have been applied for the purposes for which they were obtained.

(xvii) According to the information and explanations given to us and on an overall examination of the Balance Sheet of the Company, we report that short term funds of Rs. 20,208 lacs have been used to finance fixed assets / long term losses.

(xviii) The Company has not made any preferential allotment of shares during the year.

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

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

(xxi) To the best of our knowledge and according to the information and explanations given to us, no fraud by the Company and no fraud on the Company has been noticed or reported during the year.

For Deloitte Haskins & Sells

Chartered Accountants

(Registration No. 015125N)

Jaideep Bhargava

Place: Gurgaon Partner

Date : November 29, 2010 (Membership No. 90295)

 
Subscribe now to get personal finance updates in your inbox!