Auditor Report of Ugar Sugar Works Ltd.

Mar 31, 2018

Report on the Financial Statements

We have audited the accompanying Ind AS financial statements of The Ugar Sugar Works Limited (“the Company”), which comprise the Balance Sheet as at 31^st March, 2018 and the Statement of Profit and Loss (including Other Comprehensive Income), the Statement of Cash Flow and the Statement of Changes in Equity for the year then ended and a summary of the significant accounting policies and other explanatory information (hereinafter referred to as “the Ind AS financial statements”).

Management’s Responsibility for the Ind AS Financial Statement

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.

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 thereunder.

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 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 Directors, as well as evaluating the overall presentation of the Ind AS financial statements.

We believe that the audit evidence obtained by us 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 31^st March, 2018 and its loss, total comprehensive loss, its cash flows and the changes in equity for the year ended on that date.

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 of India in terms of sub-section (11) of section 143 of the Act, we give in the “Annexure A”, a statement on the matters specified in paragraphs 3 and 4 of the Order.

2. As required by Section 143(3) of the Act, based on our audit we report, to the extent applicable that:

a. We have sought and obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit.

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

c. The Balance Sheet, the Statement of Profit and Loss including Other Comprehensive Income, the Statement of Cash Flow and Statement of Changes in Equity dealt with by this Report are in agreement with the relevant books of account.

d. In our opinion, the aforesaid Ind AS financial statements comply with the Indian Accounting Standards prescribed under section 133 of the Act.

e. On the basis of the written representations received from the directors as on 31^st March, 2018 taken on record by the Board of Directors, none of the directors is disqualified as on 31^st March, 2018 from being appointed as a director in terms of Section 164(2) of the Act.

f. With respect to the adequacy of the internal financial controls over financial reporting of the Company and the operating effectiveness of such controls, refer to our separate Report in “Annexure B”. 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, as amended, 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 D-1 to Ind AS financial statements;

II. The Company did not have any long-term contracts including derivative contracts for which there were any material foreseeable losses;

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

Annexure “A” to the Independent Auditor’s Report

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

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

(b) The Company has a program of verification of property, plant and equipment to cover all the items in a phased manner over a period of three years which, in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. Pursuant to the program, certain property, plant and equipment were physically verified by the management during the year. 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 the Company.

(ii) The inventory has been physically verified at reasonable intervals by the Management and no material discrepancies were noticed on such verification. In our opinion, the frequency of verification is reasonable and adequate, considering the size of the Company and the nature of its business.

(iii) The Company has not granted any loans, secured or unsecured, to Companies, Firms, Limited Liability Partnerships or other parties covered in the register maintained under Section 189 of the Companies Act. Accordingly, paragraph 3(iii) of the Order is not applicable.

(iv) In our opinion and according to the information and explanations given to us, the Company has complied with the provisions of section 185 and 186 of the Act, in respect of loans, investments, guarantees and security.

(v) According to information and explanation given to us, the Company has not accepted any deposits from public. Accordingly the reporting under Clause 3(v) of the Companies (Auditor’s Report) Order, 2016, is not applicable.

However, 2 (Two) public depositors have not claimed their deposits after maturity as on 31^st March 2018 and the amount outstanding as on that date was Rs.2.62 Lakhs. These amounts are lying with the Company as there is litigation amongst the heirs about the true ownership of the deposits. As informed to us they will be paid as soon as the court order is received.

(vi) The Central Government has specified maintenance of cost records under Sub-Section (1) of Section 148 of the Act and we are of the opinion that prima facie such accounts and records are made and maintained. We have not, however, made a detailed examination of the records with a view to determine whether they are accurate or complete.

(vii) (a) According to the information and explanations given to us and on the basis of our examination of the records of the Company, amounts deducted/ accrued in the books of account in respect of undisputed statutory dues including Provident Fund, Income Tax, Sales Tax, Value Added Tax, Duty of Customs, Duty of Excise, Service Tax, Goods & Service Tax, Cess and any other material statutory dues have been generally regular depositing during the year by the Company with appropriate authorities.

According to the information and explanations given to us, no undisputed amounts payable in respect of statutory dues were in arrears as at 31^st March, 2018 for a period of more than six months from the date they became payable.

Details of dues of Income-tax, Service Tax, Customs Duty, Excise Duty, and Value Added Tax which have not been deposited as on 31^st March, 2018 on account of disputes are given below:

Sl	Name of Statute	Nature of Dues	Amount Rs. Lakh	Period to which the amount relates	Forum where dispute is pending
1	Central Excise Act	Central Excise	14.61	2006-07	CESTAT, Bangalore
2	Central Excise Act	Central Excise	45.84	2007-08	CESTAT, Bangalore
3	Central Excise Act	Central Excise	15.36	2008-09	CESTAT, Bangalore
4	Central Excise Act	Central Excise	3.03	2010-11	CESTAT, Bangalore
5	Central Excise Act	Central Excise	151.34	2008-13	CESTAT, Bangalore
6	Central Excise Act	Central Excise	26.65	2012-13	Asst. Commissioner of Central Excise, Belagavi
7	Central Excise Act	Central Excise	4.92	2010-12	Commissioner of Central Excise (Appeals), Mysore
8	Central Excise Act	Central Excise	16.38	2014	Commissioner of Central Excise (Appeals), Mysore
9	Central Excise Act	Central Excise	19.14	2014-15	Commissioner of Central Excise (Appeals), Mysore
10	Central Excise Act	Central Excise	159.07	2015	Commissioner of Central Excise (Appeals), Mysore
11	Central Excise Act	Central Excise	0.96	2015	Commissioner of Central Excise (Appeals), Mysore
12	Central Excise Act	Central Excise	30.09	2015	Commissioner of Central Excise (Appeals), Mysore
13	Central Excise Act	Central Excise	1.30	2015	Commissioner of Central Excise (Appeals), Mysore
14	Central Excise Act	Central Excise	2.45	2016	Superintendent of CGST and Central Excise(Tech) Belgaum Rural Division, Belgaum
15	Central Excise Act	Central Excise	0.18	2016	Superintendent of Central Excise Range-II Nippani
16	Income Tax Act 1961	Income Tax	189.53	AY 2012-13	Income Tax Appellate Authority, Pune
17	Income Tax Act 1961	Income Tax	9.27	AY 2014-15	Income Tax Appellate Authority, Pune
18	Karnataka Tax on Entry of Goods Act 1979	Commercial Tax	20.14	FY 2011-12	Commissioner of Commercial Taxes (Appeals) Belagavi

(viii) In our opinion and according to the information and explanations given to us, the Company has not defaulted in the repayment of loans or borrowings to financial institutions, banks and government. The Company has not issued any debentures.

(ix) In our opinion and according to the information and explanations given to us, the term loans taken by the Company have been applied for the purpose for which they were raised. The Company has not raised money by way of further public offer (including debt instruments) during the year.

(x) According to the information and explanations given to us, no fraud by the Company or on the Company by its officers or employees has been noticed or reported during the year.

(xi) In our opinion and according to the information and explanations given to us, the Company has paid/ provided managerial remuneration in accordance with the requisite approvals mandated by the provisions of section 197 read with Schedule V to the Companies Act, 2013.

(xii) In our opinion and according to the information and explanations given to us, the Company is not a Nidhi Company. Accordingly, paragraph 3(xii) of the Order is not applicable.

(xiii) In our opinion and according to the information and explanations given to us, the Company is in compliance with Section 177 and 188 of the Companies Act, 2013 where applicable, for all transactions with the related parties and the details of related party transactions have been disclosed in the Ind AS financial statements as required by the applicable accounting standards.

(xiv) During the year the Company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures and hence reporting under paragraph 3(xiv) of the Order is not applicable to the Company.

(xv) In our opinion and according to the information and explanations given to us, during the year the Company has not entered into any non-cash transactions with its directors or persons connected with him. Accordingly, paragraph 3(xv) of the Order is not applicable.

(xvi) In our opinion, the Company is not required to be registered under section 45-IA of the Reserve Bank of India Act, 1934 and accordingly, the provisions of clause 3(xvi) of the Order are not applicable to the Company and hence not commented upon.

“Annexure - B” to the Independant Auditors’ Report

(Referred to in paragraph 2(f) under ‘Report on Other Legal and Regulatory Requirements’ section of our report of even date)

Report on the Internal Financial Controls Over Financial Reporting 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 The Ugar Sugar Works Limited (“the Company”) as of 31^st 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 Financial Reporting (the “Guidance Note”) issued by the Institute of Chartered Accountants of India. These responsibilities include the design, implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the orderly and efficient conduct of its business, including adherence to Company’s policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information, as required under the Companies Act, 2013.

Auditor’s Responsibility

Our responsibility is to express an opinion on the Company’s internal financial controls over financial reporting based on our audit. We conducted our audit in accordance with the Guidance Note issued by the Institute of Chartered Accountants of India and the Standards on Auditing prescribed under Section 143(10) of the Companies Act, 2013, to the extent applicable to an audit of internal financial controls. Those Standards and the Guidance Note require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether adequate internal financial controls over financial reporting was established and maintained and if such controls operated effectively in all material respects.

Our audit involves performing procedures to obtain audit evidence about the adequacy of the internal financial controls system over financial reporting and their operating effectiveness. Our audit of internal financial controls over financial reporting included obtaining an understanding of internal financial controls over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the Company’s internal financial controls system over financial reporting.

Meaning of Internal Financial Controls Over Financial Reporting

A Company’s internal financial control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A Company’s internal financial control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorisations of management and directors of the Company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorised acquisition, use, or disposition of the Company’s assets that could have a material effect on the financial statements.

Inherent Limitations of Internal Financial Controls Over Financial Reporting

Because of the inherent limitations of internal financial controls over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may occur and not be detected. Also, projections of any evaluation of the internal financial controls over financial reporting to future periods are subject to the risk that the internal financial control over financial reporting may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Opinion

In our opinion the company has, in all material aspects, an adequate financial controls system over financial reporting and such internal financial controls over financial reporting were operating effectively as at March 31, 2018 except that there is scope for improvement in certain areas which require strengthening of controls 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. We have considered these weaknesses identified in determining the nature, timing and extent of audit tests applied in our audit of the March 31, 2018 standalone financial statements of the Company, and these weaknesses do not affect our opinion on the financial statements of the company.

For Kirtane & Pandit LLP

Chartered Accountants

Firm Reg. No. 105215W / W100057

Parag Pansare

Place : Pune Partner

Date : 25-05-2018 Membership No: 117309

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Mar 31, 2015

We have audited the accompanying financial statements of The Ugar Sugar Works Limited ("the Company"), which comprise the Balance Sheet as at 31st March, 2015, the Statement of Profit and Loss, 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 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 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 of 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 financial statements based on our audit. We have taken into account the provisions of the Act, the accounting and auditing standards and matters which are required to be included in the audit report under the provisions of the Act and the Rules made there under.

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

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

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

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 of the state of affairs of the Company as at 31st March, 2015, and its loss and its cash flows for the year ended on that date.

Disputed Liability in respect of Cane Price for the Season 2013-14

We draw the attention of the members to Note No. D-2 of Notes to Financial Statements regarding disputed differential liability in respect of Cane Price amounting to Rs. 4,657.94 lakh for Ugar Unit and Jewargi Unit. The Government of Karnataka had notified cane price for the season 2013 14 @ Rs. 2,500 per MT, ex field, for sugar factories in Northern Karnataka, which is more than that actually paid / provided for by the Company; and @ Rs. 2,500 per MT, ex-gate, for sugar factories in Southern Karnataka.

As explained to us, having regard to prevalent declining sugar prices, the sugar factories have filed appeal with the Division Bench of the Hon'ble High Court of Karnataka, through their Association, against the declaration of the State Government and decision of the Single Judge of the Hon'ble High Court ruling in favour of the State Government.

Further in case of Jewargi Unit, currently considered as Northern Karnataka and cane price being declared on ex-field basis, petition has been filed with Hon'ble High Court to consider it as a factory in Southern Karnataka for paying cane price on ex-gate basis.

The ultimate outcome of the above matters cannot presently be determined and the matters being sub judice, provision for any liability that may arise in this respect, will be made on final resolution of the issue.

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 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 paragraph 3 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 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) On the basis of the written representations received from the directors as on 31st March, 2015 taken on record by the Board of Directors, none of the directors is disqualified as on31st March, 2015 from being appointed as a director in terms of Section 164 (2) of the Act.

f) 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 D-1&2 to the financial statements;

ii. The Company did not have any long-term contracts including derivative contracts for which there were any material foreseeable losses.

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

Annexure to the Auditors' Report

(Referred to in paragraph 1 of our report on Other Legal and Regulatory Requirements, of even date)

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

(b) A major portion of Fixed assets have been physically verified during the year and reconciled with the book records. According to information and explanations given to us and records produced to us for our verification, discrepancies were not, in our opinion, material and the same have been properly dealt with in the books of account.

(ii) (a) The inventory was physically verified during the year by the Management. In our opinion, the frequency of verification is reasonable.

(b) The procedures of physical verification of inventory followed by the Management are reasonable and adequate in relation to the size of the Company and the nature of its business.

(c) The Company is maintaining proper records of inventory. The discrepancies noticed on verification between the physical stocks and the book records were not material.

(iii) According to information and explanations given to us, the Company has not granted any loans, secured or unsecured to the companies, firms or other parties covered in the register maintained under section 189 of the Companies Act, 2013. Accordingly, the reporting under Clause 3(iii)(a) and (b) of the Companies (Auditor's Report) Order, 2015, is not applicable.

(iv) In our opinion and according to the information and explanations given to us, there are adequate internal control systems commensurate with the size of the Company and nature of its business, for purchase of inventory and fixed assets and for sale of goods and services. There is no continuing failure to correct major weaknesses in internal control system.

(v) According to information and explanations given to us, the Company has not accepted any deposits from public. Accordingly the reporting under Clause 3(v) of the Companies (Auditor's Report) Order, 2015, is not applicable.

(vi) We have broadly reviewed the books of account relating to materials, labour and other items of cost, maintained by the Company pursuant to the rules made by the Central Government for maintenance of cost records under section 148(1) of the Companies Act, 2013 and we 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 records with a view to determine whether they are accurate and complete.

(vii) (a) The Company is generally regular in depositing with appropriate authorities undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Income Tax, Sales Tax, Cane Purchase Tax, Wealth Tax, Custom Duty, Service Tax, Excise Duty, Cess and other material statutory dues applicable to it.

(b) According to information and explanations given to us, there are no dues of income tax, sales tax, wealth tax, service tax, customs duty, excise duty and cess, which have not been deposited on account of any dispute other than those mentioned below:

Nature of Dues Name of Statute Period to which Amount the amount relates Rs. Lakh

Central Excise Central Excise Act 2003 to 2005 80.91

Central Excise Central Excise Act 2005 to 2009 19.57

Central Excise Central Excise Act 2006-07 14.61

Central Excise Central Excise Act 2007-08 45.84

Central Excise Central Excise Act 2008-09 15.36

Central Excise Central Excise Act 2009-10 5.57

Central Excise Central Excise Act 2010-11 3.03

Central Excise Central Excise Act 2010-11 3.39

Central Excise Central Excise Act 2008-2013 151.34

Central Excise Central Excise Act 2008-2011 7.89

Central Excise Central Excise Act 2012 7.56

Income Tax Income Tax Act, 1961 AY 2011-12 15.74

Income Tax Income Tax Act, 1961 AY 2012-13 17.45

Income Tax Income Tax Act, 1961 AY 2012-13 189.53

Nature of Dues Forum where dispute is pending

Central Excise Commissioner of Central Excise, Belgaum

Central Excise CESTAT, Bangalore

Central Excise CESTAT, Bangalore

Central Excise CESTAT, Bangalore

Central Excise CESTAT, Bangalore

Central Excise CESTAT, Bangalore

Central Excise CESTAT, Bangalore

Central Excise CESTAT, Bangalore

Central Excise CESTAT, Bangalore

Central Excise Commissioner of Central Excise, Belgaum

Central Excise Addl. Commissioner of Central Excise, Belgaum

Income Tax Commissioner of Income Tax (Appeals), Kolhapur

Income Tax Commissioner of Income Tax (Appeals), Kolhapur

Income Tax Commissioner of Income Tax (Appeals), Kolhapur

(c) The amount required to be transferred to the Investor Education and Protection Fund in accordance with the relevant provisions of the Companies Act, 2013 and rules made there under has been transferred to such fund within time.

(viii) The accumulated losses of the Company as at the end of the Financial Year 2014-15 are not more than 50% of its Net Worth. The Company has not incurred cash losses during the financial year but has incurred cash loss in the immediately preceding financial year.

(ix) In our opinion and according to information and explanations given to us, the Company has not defaulted in repayment of dues to a financial institution or bank. The Company has no debenture-holders.

(x) In our opinion, the terms and conditions on which the Company has given guarantees for loans taken by others from banks or financial institutions are not prejudicial to the interest of the Company

(xi) In our opinion, term loans were applied for the purpose for which the loans were obtained.

(xii) According to information and explanations given to us, no fraud on or by the Company has been noticed or reported during the course of our audit.

For M/s. P. G. Bhagwat Chartered Accountants Firm Registration No.101118W

Nikhil M. Shevade Place : Pune (Partner) Date: 29.05.2015 Memb. No. 217379

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Mar 31, 2014

We have audited the accompanying financial statements of The Ugar Sugar Works Ltd. ("the Company"), which comprise the Balance Sheet as at 31st March, 2014 the Statement of Profit and Loss for the period 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 referred to in sub-section (3C) of section 211 of the Companies Act, 1956 ("the Act"). This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditors'' Responsibility

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

Without qualifying our opinion, we draw the attention of the members to Note No. C (2) of Notes to Financial Statements, regarding disputed differential liability in respect of Cane Price amounting to Rs. 9,036.41 lakh. The Government of Karnataka has notified cane price for the season 2013-14 @ Rs. 2,500 per MT, ex-field, for sugar factories in Northern Karnataka, which is more than that actually paid by the Company. As explained to us, it is not viable to pay the notified rate, having regard to ruling sugar prices, and the sugar factories have filed petition with the High Court of Karnataka, through their Association, against the decision of the Government. The Company has been advised that it has a strong case in its favour. The ultimate outcome of the matter cannot presently be determined and the matter being sub-judice, provision for any liability that may arise in this respect, is not considered necessary.

Report on Other Legal and Regulatory Requirements

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

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

a. We have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the 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, 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, Statement of Profit and Loss, and the Cash Flow Statement comply with the Accounting Standards referred to in sub-section (3C) of section 211 of the Act.

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

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

Annexure to the Auditors'' Report

(Referred to in paragraph 1 of our report on Other Legal and Regulatory Requirements, of even date)

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

(b) A major portion of Fixed assets has been physically verified during the year and reconciled with the book records. According to information and explanations given to us and records produced to us for our verification, discrepancies were not, in our opinion, material and the same have been properly dealt with in the books of account.

(c) The fixed assets which were disposed off during the year do not form substantial part of the fixed assets owned by the Company.

(ii) (a) The inventory was physically verified during the year by the Management. In our opinion, the frequency of verification is reasonable.

(b) The procedures of physical verification of inventory followed by the Management are reasonable and adequate in relation to the size of the Company and the nature of its business.

(c) The Company is maintaining proper records of inventory. The discrepancies noticed on verification between the physical stocks and the book records were not material.

(iii) The Company has neither granted nor taken any loans, secured or unsecured, to / from companies, firms or other parties covered in the register maintained as per section 301 of the Companies Act, 1956. Consequently, clauses (iii)(b), (iii)(c), (iii)(d), (iii)(e), (iii)(f), (iii)(g) of paragraph 4 of the Order are not applicable.

(iv) In our opinion and according to the information and explanations given to us, there were adequate internal control systems commensurate with the size of the Company and nature of its business with regard to purchase of inventory and fixed assets and for sale of goods and services. During the course of the audit, we have not observed any continuing failure to correct major weaknesses in internal control system.

(v) (a) According to the information and explanations given to us, we are of the opinion that the particulars of contracts or arrangements required to be entered in the register referred to in section 301 of the Act have been so entered; and

(b) According to the information and explanations given to us, the transactions made in pursuance of such contracts or arrangements have been made at prices which are reasonable having regard to the prevailing market prices at the relevant time.

(vi) In our opinion and according to the information and explanations given to us, the Company has complied with the directives issued by the Reserve Bank of India and provisions of section 58A, 58AA or any other relevant provisions of the Companies Act, 1956 and the Companies (Acceptance of Deposits) Rules, 1975, with regard to deposits accepted from the public.

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

viii) We have broadly reviewed the books of account relating to materials, labour and other items of cost, maintained by the Company pursuant to the rules made by the Central Government for maintenance of cost records under section 209(1) (d) of the Companies Act, 1956 and we 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 records with a view to determine whether they are accurate and complete.

(ix) (a) The Company is generally regular in depositing with appropriate authorities undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Income Tax, Sales Tax, Cane Purchase Tax, Wealth Tax, Custom Duty, Service Tax, Excise Duty, Cess and other material statutory dues applicable to it.

(b) According to information and explanations given to us, there are no dues of income tax, sales tax, wealth tax, service tax, customs duty, excise duty and cess, which have not been deposited on account of any dispute other than those mentioned below:

(x) The accumulated losses of the Company as at the end of the Financial Year 2013-14 are not more than 50% of its Net Worth. However, the Company has incurred cash losses during the financial year but not in the immediately preceding financial year.

(xi) In our opinion and according to information and explanations given to us, the Company has not defaulted in repayment of dues to a financial institution or bank. The Company has no debenture-holders.

(xii) According to information and explanations given to us, the Company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities. Accordingly, the provisions of clause 4(xii) of the Companies (Auditors'' Report) Order, 2003, are not applicable to the Company.

(xiii) In our opinion, the Company is not a chit fund or a nidhi / mutual benefit fund / society. Accordingly, the provisions of clause 4(xiii) of the Companies (Auditors'' Report) Order, 2003, are not applicable to the Company.

(xiv) According to information and explanations given to us, the Company is not dealing in or trading in shares, securities, debentures and other investments. Accordingly, the provisions of clause 4(xiv) of the Companies (Auditors'' Report) Order, 2003, are not applicable to the Company.

(xv) In our opinion, the terms and conditions on which the Company has given guarantees for loans taken by others from banks or financial institutions are not prejudicial to the interest of the Company. However, as informed to us, in case of corporate guarantee given to Bank of India, Ratnagiri, the Bank has invoked the guarantee and the Company has fully discharged its obligation in April 2013.

(xvi) In our opinion, term loans were applied for the purpose for which the loans were obtained.

(xvii)The funds raised on short-term basis, other than Current Maturities of long term debts, have not been utilised for long-term investment.

(xviii) According to information and explanations given to us, the Company has not made any preferential allotment of shares to parties and companies covered under section 301 of the Companies Act, 1956.

(xix) According to information and explanations given to us, the Company has not issued any debentures. Accordingly, the provisions of clause 4(xix) of the Companies (Auditors'' Report) Order, 2003, are not applicable to the Company.

(xx) According to information and explanations given to us, the Company has not made any public issue of its shares to raise money. Accordingly, the provisions of clause 4(xx) of the Companies (Auditors'' Report) Order, 2003 are not applicable to the Company.

(xxi) According to information and explanations given to us, no material fraud on or by the Company has been noticed or reported during the course of our audit.

For M/s P. G. Bhagwat

Chartered Accountants, Firm Registration No. 101118W

Nikhil M. Shevade Place: Pune Partner Date: 23-05-2014 Membership No. 217379

---

Mar 31, 2013

Report on the Financial Statements

We have audited the accompanying financial statements of The Ugar Sugar Works Ltd. ("the Company"), which comprise the Balance Sheet as at 31 st March, 2013 the Statement of Profit and Loss for the period 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 referred to in sub-section (3C) of section 211 of the Companies Act, 1956 ("the Act"). This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditors'' Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with the Standards on Auditing issued by the Institute of Chartered Accountants of India. Those Standards require that we comply with the 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 the 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 the Management, as well as eval uating 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 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 generall y accep ted in India:

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

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

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

Report on Other Legal and Regulatory Requirements

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

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

a. We have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the 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, 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, Statement of Profit and Loss, and the Cash Flow Statement comply with the Accounting Standards referred to in sub-section (3C) of section 211 of the Act.

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

Annexure to the Auditors'' Report

(Referred to in our report of even date)

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

(b) Fixed assets have been physically verified during the year and reconciled with the book records. According to information and explanations given to us and records produced to us for our verification, discrepancies were not, in our opinion, material and the same have been properly dealt with in the books of account.

(c) The fixed assets which were disposed off during the year do not form substantial part of the fixed assets owned by the Company.

(ii) (a) The inventory was physically verified during the year by the Management. In our opinion, the frequency of verification is reasonable.

(b) The procedures of physical verification of inventory followed by the Management are reasonable and adequate in relation to the size of the Company and the nature of its business.

(c) The Company is maintaining proper records of inventory. The discrepancies noticed on verification between the physical stocks and the book records were not material.

(iii) The Company has neither granted nor taken any loans, secured or unsecured, to / from companies, firms or other parties covered in the register maintained as per section 301 of the Companies Act, 1956. Consequently, clauses (iii)(b), (iii)(c), (iii)(d), (iii)(e), (iii)(f), (iii)(g) of paragraph 4 of the Order are not applicable.

(iv) In our opinion and according to the information and explanations given to us, there were adequate internal control systems commensurate with the size of the Company and nature of its business with regard to purchase of inventory and fixed assets and for sale of goods and services. During the course of the audit, we have not observed any continuing failure to correct major weaknesses in internal control system.

(v) (a) According to the information and explanations given to us, we are of the opinion that the particulars of contracts or arrangements required to be entered in the register referred to in section 301 of the Act have been so entered; and

(b) According to the information and explanations given to us, the transactions made in pursuance of such contracts or arrangements have been made at prices which are reasonable having regard to the prevailing market prices at the relevant time.

(vi) In our opinion and according to the information and explanations given to us, the Company has complied with the directives issued by the Reserve Bank of India and provisions of section 58A, 58AA or any other relevant provisions of the Companies Act, 1956 and the Companies (Acceptance of Deposits) Rules, 1975, with regard to deposits accepted from the public.

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

(viii) We have broadly reviewed the books of account relating to materials, labour and other items of cost, maintained by the Company pursuant to the rules made by the Central Government for maintenance of cost records under section 209(1) (d) of the Companies Act, 1956 and we 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 records with a view to determine whether they are accurate and complete.

(ix) (a) The Company is generally regular in depositing with appropriate authorities undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Income Tax, Sales Tax, Cane Purchase Tax, Wealth Tax, Custom Duty, Service Tax, Excise Duty, Cess and other material statutory dues applicable to it.

(b) According to information and explanations given to us, there are no dues of income tax, sales tax, wealth tax, service tax, customs duty, excise duty and cess, which have not been deposited on account of any dispute other than those mentioned below:

Nature of Dues Name of Statute Period to which the amount relates

Central Excise Central Excise Act 2000-01

Central Excise Central Excise Act 2003 to 2005

Central Excise Central Excise Act 2005 to 2009

Central Excise Central Excise Act 2006-07

Central Excise Central Excise Act 2007-08

Central Excise Central Excise Act 2008-09

Central Excise Central Excise Act 2009-10

Central Excise Central Excise Act 2009-10

Central Excise Central Excise Act 2010-11

Central Excise Central Excise Act 2010-11

Central Excise Central Excise Act 2010-11

Central Excise Central Excise Act 2010-11

Central Excise Central Excise Act 2011-12

Central Excise Central Excise Act 2010 to 2012

Cane Purchase The Karnatakat 2002-03 Tax Sales Tax Ac 2003-04

Name Amount Forum where Rs. Lakh dispute is pending

Central Excise 0.94 Commissioner of Central Excise (Appeals)

Central Excise 80.91 Commissioner of Central Excise, Belgaum

Central Excise 19.57 CESTAT, Bangalore

Central Excise 14.61 CESTAT, Bangalore

Central Excise 45.84 CESTAT, Bangalore

Central Excise 15.36 CESTAT, Bangalore

Central Excise 2.76 Commissioner of Central Excise, Belgaum

Central Excise 5.57 CESTAT, Bangalore

Central Excise 3.23 Commissioner of Central Excise, Belgaum

Central Excise 2.80 Commissioner of Central Excise, Belgaum

Central Excise 3.03 CESTAT, Bangalore

Central Excise 3.39 CESTAT, Bangalore

Central Excise 1.86 CESTAT, Bangalore

Central Excise 194.66 Asst. Commissioner of Central Excise, Belgaum

Central Excise 37.72 High Court of Karnataka,

Central Excise 35.12 Dharwad Bench

(x) The Company has no accumulated losses as on 31-03-2013. The Company has not incurred cash losses during the financial year and in the immediately prece ding financial year.

(xi) In our opinion and according to information and explanations given to us, the Company has not defaulted in repayment of dues to a financial institution or ban k. The Company ha s no debent ure-holders.

(xii) According to information and explanations given to us, the Company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities. Accordingly, the provisions of clause 4(xii) of the Companies (Auditors'' Report) Order, 2003, are not applicable to the Company.

(xiii) In our opinion, the Company is not a chit fund or a nidhi / mutual benefit fund / society. Accordingly, the provisions of clause 4(xiii) of the Compani es (Auditors'' Report) Order, 2003, are not applicable to the Company.

(xiv) According to information and explanations given to us, the Company is not dealing in or trading in shares, securities, debentures and other investments. Accordingly, the provisions of clause 4(xiv) of the Companies (Auditors'' Report) Orde r, 2003, are not applicable to the Compan y.

(xv) In our opinion, the terms and conditions on which the Company has given guarantees for loans taken by others from banks or financial institutions are not prejudicial to the interest of the Company. However, as informed to us, in case of corporate guarantee given to Bank of India, Ratnagiri, the Bank has invoked the guarantee and the Company has fully discharged its obligation in April 20 13.

(xvi) In our opi nion, term loans were app lied for t he purpose for which the loans were obtained.

(xvii) The funds raised on short-term basis have not been utilised for long-term investment.

(xviii) According to information and explanations given to us, the Company has not made any preferential allotment of shares to parties and companies covered u nder section 301 o f the Companies Act, 1956.

(xix) According to information and explanations given to us, the Company has not issued any debentures. Accordingly, the provisions of clause 4(xix) of the Companies (Auditors'' Report) Order, 2003, are not applicable to the Company.

(xx) According to information and explanations given to us, the Company has not made any public issue of its shares to raise money. Accordingly, the provisions of clause 4(xx) of the Companies (Auditors'' Report) Order, 2003 are not applicable to the Company.

(xxi) According to information and explanations given to us, no material fraud on or by the Company has been noticed or reported during the course of our audit.

For M/s P. G. Bhagwat

Chartered Accountants,

Firm Registration No. 101118W

Nikhil M. Shevade

Partner

Place : Panhala Membership No. 217379

Date : 29-05-2013

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Mar 31, 2012

1. We have audited the attached Balance Sheet of The Ugar Sugar Works Limited as at 31st March, 2012 and the Statement of Profit and Loss for the year ended on that date 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 misstatements. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by 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 the 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 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 that:

(i) 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;

(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 such books;

(iii) 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 of the Company;

(iv) 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 sub-section 3C of section 211 of the CompaniesAct, 1956;

(v) on the basis of the written representations received from the directors, as on 31st March, 2012, and taken on record by the Board of Directors, we report that none of the directors is disqualified as on 31* March, 2012, from being appointed as a director in terms of clause (g) of sub-section (1) of section 274 of the CompaniesAct, 1956;

(vi) in our opinion and to the best of our information and according to the explanations given to us, the accounts, read together with the notes thereon 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:

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

b) in the case of the Statement of Profit and Loss, ofthe profit for the year ended onthat date; and

c) in the case of the 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 maintained proper records showing full particulars including quantitative details and situation of fixed assets.

(b) Fixed assets have been physically verified during the year and reconciled with the book records. According to information and explanations given to us and records produced to us for our verification, discrepancies were not, in our opinion, material and the same have been properly dealt with in the books of account.

(c) The fixed assets which were disposed off during the year do not form substantial part of the fixed assets owned by the Company.

(ii) (a) The inventory was physically verified during the year by the Management. In our opinion, the frequency of verification is reasonable.

(b) The procedures of physical verification of inventory followed by the Management are reasonable and adequate in relation to the size of the Company and the nature of its business.

(c) The Company is maintaining proper records of inventory. The discrepancies noticed on verification between the physical stocks and the book records were not material.

(iii) The Company has neither granted nor taken any loans, secured or unsecured, to /from companies, firms or other parties covered in the register maintained as per section 301 of the Companies Act, 1956. Consequently, clauses (iii)(b), (iii)(c), (iii)(d), (iii)(e), (iii)(f), (iii)(g) of paragraph 4 of the Order are not applicable.

(iv) In our opinion and according to the information and explanations given to us, there were adequate internal control systems commensurate with the size of the Company and nature of its business with regard to purchase of inventory and fixed assets and for sale of goods and services. During the course of the audit, we have not observed any continuing failure to correct major weaknesses in internal control system.

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

(b) According to the information and explanations given to us, the transactions made in pursuance of such contracts or arrangements have been made at prices which are reasonable having regard to the prevailing market prices at the relevant time.

(vi) In our opinion and according to the information and explanations given to us, the Company has complied with the directives issued by the Reserve Bank of India and provisions of section 58A, 58AA or any other relevant provisions of the Companies Act, 1956 and the Companies (Acceptance of Deposits) Rules, 1975, with regard to deposits accepted from the public.

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

(viii) We have broadly reviewed the books of account relating to materials, labour and other items of cost, maintained by the Company pursuant to the rules made by the Central Government for maintenance of cost records under section 209(1) (d) of the Companies Act, 1956 and we are of the opinion that prima facie the prescribed accounts and records have been made and maintained.

(ix) (a) The Company is generally regular in depositing with appropriate authorities undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Employees’ State Insurance, Income Tax, Sales Tax, Wealth Tax, Custom Duty, Service Tax, Excise Duty, Cess and other material statutory dues applicable to it.

(b) According to information and explanations given to us, there are no dues of income tax, sales tax, wealth tax, service tax, customs duty, excise duty and cess, which have not been deposited on account of any dispute other than those mentioned below:

Nature of Dues Name of Statute Period to which Amount Forum where the amount Rs. Lakh dispute is pending relates

Central Excise Central Excise Act 2000-01 0.88 Commissioner of Central Excise (Appeals)

Central Excise Central Excise Act 2003-04 80.91 Commissioner of Central Excise, Belgaum

Central Excise Central Excise Act 2006-07 26.31 CESTAT, Bangalore

Central Excise Central Excise Act 2007-08 22.92 CESTAT, Bangalore

Central Excise Central Excise Act 2008-09 13.36 Joint Commissioner of Central Excise, Belgaum

Central Excise Central Excise Act 2009-10 2.76 Joint Commissioner of Central Excise, Belgaum

Central Excise Central Excise Act 2010-11 8.82 Joint Commissioner of Central Excise, Belgaum

Central Excise Central Excise Act 2009-10 2.78 Joint Commissioner of Central Excise, Belgaum

Service Tax Central Excise Act 2008-09 21.11 Additional Commissioner of Central Excise, Belgaum

Central Excise Central Excise Act 2010-11 3.42 Asst. Commissioner of Central Excise, Belgaum

(x) In our opinion, the accumulated losses of the Company are not more than fifty percent of its net worth. The Company has not incurred cash losses during the financial year and in the immediately preceding financial year.

(xi) In our opinion and according to information and explanations given to us,the Company has not defaulted in repayment of dues to a financial institution or bank. The Company has no debenture-holders.

(xii) According to information and explanations given to us, the Company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities. Accordingly, the provisions of clause 4(xii) of the Companies (Auditors’ Report) Order, 2003, are not applicable to the Company.

(xiii) In our opinion, the Company is not a chit fund or a nidhi / mutual benefit fund / society. Accordingly, the provisions of clause 4(xiii) of the Companies (Auditors’ Report) Order, 2003, are not applicable to the Company.

(xiv) According to information and explanations given to us, the Company is not dealing in or trading in shares, securities, debentures and other investments. Accordingly, the provisions of clause 4(xiv) of the Companies (Auditors’ Report) Order, 2003, are not applicable to the Company.

(xv) In our opinion, the terms and conditions on which the Company has given guarantees for loans taken by others from banks or financial institutions are not prejudicial to the interest of the Company. However, as informed to us, in case of corporate guarantee for Rs. 726.14 lakh given to Bank of India, Ratnagiri, the Bank is likely to invoke the guarantee for the loan outstanding since the said company has defaulted in repayment of loans.

(xvi) In our opinion, term loans were applied for the purpose for which the loans were obtained.

(xvii) The funds raised on short-term basis have not been utilised for long-term investment.

(xviii) According to information and explanations given to us, the Company has not made any preferential allotment of shares to parties and companies covered under section 301 of the CompaniesAct, 1956.

(xix) According to information and explanations given to us, the Company has not issued any debentures. Accordingly, the provisions of clause 4(xix) of the Companies (Auditors’ Report) Order, 2003, are not applicable to the Company.

(xx) According to information and explanations given to us,the Company has not made any public issue of its shares to raise money. Accordingly, the provisions of clause 4(xx) of the Companies (Auditors’ Report) Order, 2003 are not applicable to the Company.

(xxi) According to information and explanations given to us, no material fraud on or by the Company has been noticed or reported during the course of our audit.

For M/s P G. Bhagwat

Chartered Accountants,

Place: Mumbai

Date: 15-05-2012 M. K. Shevade

Partner

Membership No. 18651

Firm Registration No. 101118W

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Mar 31, 2011

1. We have audited the attached Balance Sheet of The Ugar Sugar Works Limited as at 31st March, 2011 and the Profit and Loss Account for the year ended on that date 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 misstatements. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by 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 the 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 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 that:

(i) 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;

(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 such books;

(iii) the Balance Sheet, Profit and 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 and 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 representations received from the directors, as on 31st March, 2011 and taken on record by the Board of Directors, we report that none of the directors is disqualified as on 31st March, 2011, from being appointed as a director in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956;

(vi) in our opinion and to the best of our information and according to the explanations given to us, the accounts, read together with the notes thereon 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:

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

b) in the case of the Profit and Loss Account, 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.

Annexure to the Auditors' Report (Referred to in paragraph 3 of our report of even date)

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

(b) Fixed assets have been physically verified during the year and reconciled with the book records. According to information and explanations given to us and records produced to us for our verification, discrepancies were not, in our opinion, material and the same have been properly dealt with in the books of account.

(c) The fixed assets which were disposed off during the year do not form substantial part of the fixed assets owned by the Company.

(ii) (a) The inventory was physically verified during the year by the Management. In our opinion, the frequency of verification is reasonable.

(b) The procedures of physical verification of inventory followed by the Management are reasonable and adequate in relation to the size of the Company and the nature of its business.

(c) The Company is maintaining proper records of inventory. The discrepancies noticed on verification between the physical stocks and the book records were not material.

(iii) The Company has neither granted nor taken any loans, secured or unsecured, to /from companies, firms or other parties covered in the register maintained as per section 301 of the Companies Act, 1956. Consequently, clauses (iii)(b), (iii)(c), (iii)(d), (iii)(e), (iii)(f), (iii)(g) of paragraph 4 of the Order are not applicable.

(iv) In our opinion and according to the information and explanations given to us, there were adequate internal control systems commensurate with the size of the Company and nature of its business with regard to purchase of inventory and fixed assets and for sale of goods and services. During the course of the audit, we have not observed any continuing failure to correct major weaknesses in internal control system.

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

(b) According to the information and explanations given to us, the transactions made in pursuance of such contracts or arrangements have been made at prices which are reasonable having regard to the prevailing market prices at the relevant time.

(vi) In our opinion and according to the information and explanations given to us, the Company has complied with the directives issued by the Reserve Bank of India and provisions of section 58A, 58AA or any other relevant provisions of the Companies Act, 1956 and the Companies (Acceptance of Deposits) Rules, 1975, with regard to deposits accepted from the public.

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

(viii) We have broadly reviewed the books of account relating to materials, labour and other items of cost, maintained by the Company pursuant to the rules made by the Central Government for maintenance of cost records under section 209(1) (d) of the Companies Act, 1956 and we are of the opinion that prima facie the prescribed accounts and records have been made and maintained.

(ix) (a) The Company is regular in depositing with appropriate authorities undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Employees' State Insurance, Income Tax, Sales Tax, Wealth Tax, Custom Duty, Service Tax, Excise Duty, Cess and other material statutory dues applicable to it except for delays in remittance of Income Tax deducted at source.

(b) According to information and explanations given to us, there are no dues of income tax, sales tax, wealth tax, service tax, customs duty, excise duty and cess, which have not been deposited on account of any dispute other than those mentioned below:

Nature of Name of Statute Period to Amount Forum where dispute is Dues which the Rs. is pending amount Lakh relates

Central Excise Central Excise Act 2000-01 0.94 Commissioner of Central Excise (Appeals)

Central Excise Central Excise Act 2003-04 80.91 Commissioner of Central Excise, Belgaum

Central Excise Central Excise Act 2006-07 26.31 CESTAT, Bangalore

Central Excise Central Excise Act 2007-08 22.92 CESTAT, Bangalore

Central Excise Central Excise Act 2008-09 13.36 Joint Commissioner of Central Excise, Belgaum

Central Excise Central Excise Act 2009-10 2.76 Joint Commissioner of Central Excise, Belgaum

Central Excise Central Excise Act 2010-11 8.82 Joint Commissioner of Central Excise, Belgaum

Central Excise Central Excise Act 2009-10 2.78 Joint Commissioner of Central Excise, Belgaum

Service Tax Central Excise Act 2008-09 21.11 Additional Commissioner of Central Excise, Belgaum

(x) In our opinion, the accumulated losses of the Company are not more than fifty percent of its net worth. The Company has not incurred cash losses during the financial year and in the immediately preceding financial year.

(xi) In our opinion and according to information and explanations given to us, the Company has not defaulted in repayment of dues to a financial institution or bank. The Company has no debenture- holders.

(xii) According to information and explanations given to us, the Company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities. Accordingly, the provisions of clause 4(xii) of the Companies (Auditors' Report) Order, 2003, are not applicable to the Company.

(xiii) In our opinion, the Company is not a chit fund or a nidhi / mutual benefit fund / society. Accordingly, the provisions of clause 4(xiii) of the Companies (Auditors' Report) Order, 2003, are not applicable to the Company.

(xiv) According to information and explanations given to us, the Company is not dealing in or trading in shares, securities, debentures and other investments. Accordingly, the provisions of clause 4(xiv) of the Companies (Auditors' Report) Order, 2003, are not applicable to the Company.

(xv) In our opinion, the terms and conditions on which the Company has given guarantees for loans taken by others from banks or financial institutions are not prejudicial to the interest of the Company.

(xvi) In our opinion, term loans were applied for the purpose for which the loans were obtained.

(xvii) The funds raised on short-term basis have not been utilised for long-term investment.

(xviii) According to information and explanations given to us, the Company has not made any preferential allotment of shares to parties and companies covered under section 301 of the Companies Act, 1956.

(xix) According to information and explanations given to us, the Company has not issued any debentures. Accordingly, the provisions of clause 4(xix) of the Companies (Auditors' Report) Order, 2003, are not applicable to the Company.

(xx) According to information and explanations given to us, the Company has not made any public issue of its shares to raise money. Accordingly, the provisions of clause 4(xx) of the Companies (Auditors' Report) Order, 2003, are not applicable to the Company.

(xxi) According to information and explanations given to us, no material fraud on or by the Company has been noticed or reported during the course of our audit

For M/s P. G. Bhagwat

Chartered Accountants,

Place: Panhala M. K. Shevade

Date: 20-05-2011 Partner

Membership No. 18651

Firm Registration No. 101118W

---

Mar 31, 2010

1. We have audited the attached Balance Sheet of The Ugar Sugar Works Limited as at 31st March, 2010 and the Profit and Loss Account for the year ended on that date 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 misstatements. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by 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 the 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 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 that:

(i) 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;

(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 such books;

(iii) the Balance Sheet, Profit and 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 and 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 representations received from the directors, as on 31s1 March, 2010, and taken on record by the Board of Directors, we report that none of the directors is disqualified as on 31s March, 2010, from being appointed as a director in terms of clause (g) of sub-section (1) of section 274 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 accounts, read together with the notes thereon 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:

a) in the case of the Balance Sheet, of the state of affairs of the Company as at 31s March, 2010;

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

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

Annexure to the Auditors Report

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

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

(b) Fixed assets have been physically verified during the year and reconciled with the book records. According to information and explanations given to us and records produced to us for our verification, discrepancies were not, in our opinion, material and the same have been properly dealt with in the books of account.

(c) The fixed assets which were disposed off during the year do not form substantial part of the fixed assets owned by the Company.

(ii) (a) The inventory was physically verified during the year by the Management. In our opinion, the frequency of verification is reasonable.

(b) The procedures of physical verification of inventory followed by the Management are reasonable and adequate in relation to the size of the Company and the nature of its business.

(c) The Company is maintaining proper records of inventory. The discrepancies noticed on verification between the physical stocks and the book records were not material.

(iii) The Company has neither granted nor taken any loans, secured or unsecured, to /from companies, firms or other parties covered in the register maintained as per section 301 of the Companies Act, 1956. Consequently, clauses (iii)(b), (iii)(c), (iii)(d), (iii)(f), (iii)(g) of paragraph 4 of the Order are not applicable.

(iv) In our opinion and according to the information and explanations given to us, there were adequate internal control systems commensurate with the size of the Company and nature of its business with regard to purchase of inventory and fixed assets and for sale of goods and services. During the course of the audit, we have not observed any continuing failure to correct major weaknesses in internal control system.

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

(b) According to the information and explanations given to us, the transactions made in pursuance of such contracts or arrangements have been made at prices which are reasonable having regard to the prevailing market prices at the relevant time.

(vi) In our opinion and according to the information and explanations given to us, the Company has complied with the directives issued by the Reserve Bank of India and provisions of section 58A, 58AA or any other relevant provisions of the Companies Act, 1956 and the Companies (Acceptance of Deposits) Rules, 1975, with regard to deposits accepted from the public.

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

Annexure to the Auditors Report

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

(viii) We have broadly reviewed the books of account relating to materials, labour and other items of cost, maintained by the Company pursuant to the rules made by the Central Government for maintenance of cost records under section 209(1) (d) of the Companies Act, 1956 and we are of the opinion that prima facie the prescribed accounts and records have been made and maintained.

(ix) (a) The Company is regular in depositing with appropriate authorities undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Employees State Insurance, Income Tax, Sales Tax, Wealth Tax, Custom Duty, Excise Duty, Cess and other material statutory dues applicable to it except for delays in remittance of Income Tax deducted at source and Service Tax.

(b) According to information and explanations given to us, there are no dues of income tax, sales tax, wealth tax, service tax, customs duty, excise duty and cess, which have not been deposited on account ofanydisputeotherthan those mentioned below:

Nature of Dues Name of Statute Period to which Amount Forum where the amount Rs. Lakh dispute is pending relates

Central Excise Central ExciseAct 2000-01 0.94 Commissioner of Central Excise (Appeals)

Central Excise Central ExciseAct 2003-04 80.91 Commissioner of Central Excise, Belgaum

Central Excise Central ExciseAct 2006-07 26.31 CESTAT, Bangalore

Central Excise Central ExciseAct 2007-08 22.92 CESTAT, Bangalore

Central Excise Central ExciseAct 2008-09 13.36 Joint Commissioner of Central Excise, Belgaum

Central Excise Central ExciseAct 2009-10 2.76 Joint Commissioner of Central Excise, Belgaum

Service Tax Central ExciseAct 2008-09 21.11 Additional Commissioner of Central Excise, Belgaum

(x) In our opinion, the accumulated losses of the Company are not more than fifty percent of its net worth. The Company has not incurred cash losses during the financial year and in the immediately preceding financial year.

Annexure to the Auditors Report

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

(xi) In our opinion and according to information and explanations given to us, the Company has not defaulted in repayment of dues to a financial institution or bank. The Company has no debenture-holders.

(xii) According to information and explanations given to us, the Company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities. Accordingly, the provisions of clause 4(xii) of the Companies (Auditors Report) Order, 2003, are not applicable to the Company.

(xiii) In our opinion, the Company is not a chit fund or a nidhi / mutual benefit fund / society. Accordingly, the provisions of clause 4(xiii) of the Companies (Auditors Report) Order, 2003, are not applicable to the Company.

(xiv) According to information and explanations given to us, the Company is not dealing in or trading in shares, securities, debentures and other investments. Accordingly, the provisions of clause 4(xiv) of the Companies (Auditors Report) Order, 2003, are not applicable to the Company.

(xv) In our opinion, the terms and conditions on which the Company has given guarantees for loans taken by others from banks or financial institutions are not prejudicial to the interest of the Company.

(xvi) In our opinion, term loans were applied for the purpose for which the loans were obtained.

(xvii) The funds raised on short-term basis have not been utilised for long-term investment.

(xviii) According to information and explanations given to us, the Company has not made any preferential allotment of shares to parties and companies covered under section 301 of the Companies Act, 1956.

(xix) According to information and explanations given to us, the Company has not issued any debentures. Accordingly, the provisions of clause 4(xix) of the Companies (Auditors Report) Order, 2003, are not applicable to the Company.

(xx) According to information and explanations given to us, the Company has not made any public issue of its shares to raise money. Accordingly, the provisions of clause 4(xx) of the Companies (Auditors Report) Order, 2003 are not applicable to the Company.

(xxi) According to information and explanations given to us, no material fraud on or by the Company has been noticed or reported during the course of our audit

For M/s P. G. Bhagwat Chartered Accountants,

M. K. Shevade

Partner Place: Pune Membership No. 18651

Date: 28-05-2010 Firm Registration No. 101118W