To the Members of
Avadh Sugar & Energy Limited
REPORT ON THE FINANCIAL STATEMENTS
We have audited the accompanying financial statements of Avadh Sugar & EnergyLimited ("the Company") which comprise the Balance Sheet as at March 31 2017the Statement of Profit and Loss and Cash Flow Statement for the year then ended and asummary of 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 Section134(5) of the Companies Act 2013 ("the Act") with respect to the preparation ofthese financial statements that give a true and fair view of the financialpositionfinancial performance and cash of the Company in accordance with accountingprinciples generally accepted in India including the Accounting Standards specified undersection 133 of the Act read with Rule 7 of the Companies (Accounts) Rules 2014 and theCompanies (Accounting Standards) Amendment
Rules 2016. This responsibility also includes maintenance of adequate accountingrecords in accordance with the provisions of the Act for safeguarding of the assets of theCompany and for preventing and detecting frauds and other irregularities; selection andapplication of appropriate accounting policies; making judgments and estimates that arereasonable and prudent; and the design implementation and maintenance of adequateinternal financial control that were operating effectively for ensuring the accuracy andcompleteness of the accounting records relevant to the preparation and presentation ofthe financial statements that give a true and fair view and are free from materialmisstatement whether due to fraud or error.
Our responsibility is to express an opinion on these financial statements based on ouraudit. We have taken into account the provisions of the Act the accounting and auditingstandards and matters which are required to be included in the audit report under theprovisions of the Act and the Rules made thereunder. We conducted our audit in accordancewith the Standards on Auditing issued by the Institute of Chartered Accountants of Indiaas specified under Section 143(10) of the Act. Those Standards require that we comply withethical requirements and plan and perform the audit to obtain reasonable assurance aboutwhether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts anddisclosures in the financial statements. The procedures selected depend on the auditor'sjudgment including the assessment of the risks of material misstatement of the financialstatements whether due to fraud or error. In making those risk assessments the auditorconsiders internal financial control relevant to the Company's preparation of thefinancial statements that give a true and fair view in order to design audit proceduresthat are appropriate in the circumstances. An audit also includes evaluating theappropriateness of accounting policies used and the reasonableness of the accountingestimates made by the Company's Directors as well as evaluating the overall presentationof the financial statements. We believe that the audit evidence we have obtained issufficient and appropriate to provide a basis for our audit opinion on the financialstatements.
In our opinion and to the best of our information and according to the explanationsgiven to us the financial statements give the information required by the Act in themanner so required and give a true and fair view in conformity with the accountingprinciples generally accepted in India of the state of affairs of the Company as at March312017ofitsprofit flowsfor anditscash 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 ofthe Act we give in the Annexure 1 a statement on the matters specified in paragraphs 3and 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 bestof our knowledge and belief were necessary for the purpose of our audit;
(b) In our opinion proper books of account as required by law have been kept by theCompany so far as it appears from our examination of those books;
(c) The Balance Sheet Statement of Profit and Loss and Cash Flow Statement dealt withby this Report are in agreement with the books of account;
(d) In our opinion the a foresaid financial statements comply with the AccountingStandards specified under section 133 of the Act read with Rule 7 of the Companies(Accounts) Rules 2014and the Companies (Accounting Standards) Amendment Rules 2016;
(e) On the basis of written representations received from the directors as on March 312017 and taken on record by the Board of Directors none of the directors is disqualifiedas on March 31 2017 from being appointed as a director in terms of section 164 (2) ofthe Act;
(f) With respect to the adequacy of the internal financial controls over financialreporting of the Company and the operating effectiveness of such controls refer to ourseparate Report in "Annexure 2" to this report;
(g) With respect to the other matters to be included in the Auditor's Report inaccordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014 in our opinionand to the best of our information and according to the explanations given to us: i. TheCompany has disclosed the impact of pending litigations on its financial position in itsfinancial statements Refer Note 33 to the financial statements;
ii. The Company did not have any long-term contracts including derivative contracts forwhich there were any material foreseeable losses.
iii. There were no amounts which were required to be transferred to the InvestorEducation and Protection Fund by the Company.
iv. The Company has provided requisite disclosures in Note 34 to these financialstatements as to the holding of Specified Bank Notes on November 8 2016 and December 302016 as well as dealings in Specified Bank Notes during the period from November 8 2016to December 30 2016. However as stated in Note 37 to the financial statements amountsaggregating Rs 1.19 lacs as represented to us by the managementhave been utilized forother than permitted transactions (amount paid to various transporters).
Annexure 1 to the Independent Auditors' Report(referred to in our report of even dateto the members of Avadh Sugar & Energy Limited as at and for the year ended 31stMarch 2017)
(i) (a) The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets.
(b) Fixed assets were physically verified by the management during the year inaccordance with a planned programme of verifying all of them once in three years which inour opinion is reasonable having regard to the size of the Company and the nature of itsassets. No material discrepancies were noticed on such verification.
(c) According to information and explanations given by the management the title deedsof immovable properties included in Property Plant & Equipment which are transferredto
Company pursuant to Scheme of arrangement
(Refer Note 2 (ii) to the Financial Statements) are not held in the name of theCompany. As explained to us steps are being taken to complete the name transferformalities.
(ii) The management has conducted physical verification of inventory at reasonableintervals during the year and no material discrepancies were noticed on such physicalverification.
(iii) According to the information and explanations given to us the Company has notgranted any loans secured or unsecured to companies firms Limited LiabilityPartnerships or other parties covered in the register maintained under section 189 of theCompanies Act 2013. Accordingly the provisions of clause 3(iii)(a) (b) and (c) of theOrder are not applicable to the Company and hence not commented upon.
(iv) In our opinion and according to the information and explanations given to us theCompany has not advanced loans to directors including entities in which they areinterested to which provisions of section 185 of the Companies Act 2013 apply and hencenot commented upon. Provisions of section 186 of the Companies Act 2013 in respect ofinvestments made have been complied with by the company. There are no loans and guaranteesand securities granted in respect of which provisions of Section 186 are applicable andhence not commented upon.
(v) The Company has not accepted any deposits within the meaning of Sections 73 to 76of the Act and the Companies (Acceptance of Deposits) Rules 2014 (as amended).Accordingly the provisions of clause 3(v) of the Order are not applicable.
(vi) We have broadly reviewed the books of account maintained by the Company pursuantto the rules made by the Central Government for the maintenance of cost records undersection 148(1) of the Companies Act 2013 related to manufacture of its products and areof the opinion that prima facie the specified accounts and records have been made andmaintained. We have not however done a detailed examination of the same.
(vii) (a) Undisputed statutory dues including provident fund employees' stateinsurance income-tax sales-tax service tax duty of custom duty of excise value addedtax cess and other material statutory dues have generally been regularly deposited withthe appropriate authorities though there has been a slight delay in a few cases.
(b) According to the information and explanations given to us no undisputed amountspayable in respect of provident fund employees' state insurance income-tax service taxsales-tax duty of custom duty of excise value added tax cess and other materialstatutory dues were outstanding at the year end for a period of more than six monthsfrom the date they became payable.
According to the records of the Company the dues outstanding in respect of sales taxincome tax custom duty wealth tax service tax excise duty value added tax & cesson account of any dispute are as follows :-
|Name of the statute ||Nature of dues ||Amount Rs ( in lacs) ||Period to which the amount relates ||Forum where dispute is pending |
|U.P Tax on Entry of ||Interest Demand on Entry Tax on ||14.62 ||2000-01 2006-07 2008-09 ||High Court Lucknow |
|Goods Act 2007 ||Sugar || ||2009-10 2011-12 2012-13 ||Tribunal Lucknow |
|Central Sales Tax Act 1956 ||Taxability on alcohol sale ||10.47 ||1977-78 to 1981-82 ||Appellate Tribunal Lucknow |
| ||Central Sales Tax demand on Stock transfer ||5.95 ||2006-07 ||TribunalLucknow |
|Central Excise Act 1944 ||Disallowance of CENVAT Credit on Certain inputs / capital items / input services ||450.98 ||1977-78 1991-92 2002-03 to 2005-06 & 2010-11 ||Commissioner (Appeals) / CESTAT / High Court Allahabad |
| ||Excise Duty on burnt / waste and loss on storage of molasses etc. ||15.27 ||1990-91 ||High CourtLucknow |
| ||Demand towards differential amount of sugar cess on duty paid stock ||43.47 ||2007-08 ||CESTAT |
(viii) In our opinion and according to information and explanations given by themanagement the Company has not defaulted in repayment of dues to bank or government. TheCompany did not have any outstanding dues in respect of financial institutions ordebenture holders during the year. (ix) In our opinion and according to the informationand explanations given by the management term loans were applied for the purpose forwhich the loans were obtained. The Company has not raised any money by way of initialpublic offer / further public offer / debt instruments during the year. (x) Based upon theaudit procedures performed for the purpose of reporting the true and fair view of thefinancial statements and according to the information and explanations given by themanagement we report that no fraud by the
Company or no material fraud on the Company by the officers and employees of theCompany has been noticed or reported during the year.
(xi) Read with note 31(h) to the financial statements and according to the informationand explanations given by the management the managerial remuneration has been paid /provided in accordance with the requisite approvals mandated by the provisions of section197 read with Schedule V to the Companies Act 2013.
(xii) In our opinion the Company is not a nidhi company. Therefore the provisions ofclause 3(xii) of the order are not applicable to the Company and hence not commented upon.
(xiii) According to the information and explanations given by the managementtransactions with the related parties are in compliance with section 177 and 188 ofCompanies Act 2013 where applicable and the details have been disclosed in the notes tothe financial statements as required by the applicable accounting standards.
(xiv) According to the information and explanations given to us and on an overallexamination of the balance sheet the Company has not made any preferential allotment orprivate placement of shares or fully or partly convertible debentures during the yearunder review and hence not commented upon. (xv) According to the information andexplanations given by the management the Company has not entered into any non-cashtransactions with directors or persons connected with him as referred to in section 192 ofCompanies Act 2013. (xvi) According to the information and explanations given to us theprovisions of section 45-IA of the Reserve Bank of India Act 1934 are not applicable tothe Company.
Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section143 of the Companies Act 2013 ("the Act")
We have audited the internal financial controls over financial reporting of Avadh Sugar& Energy Limited ("the Company") as of March 31 2017 in conjunction withour audit of the 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 internalfinancial controls internal control over financial reporting criteria the Companyconsidering the essential components of internal control stated in the Guidance Note onAudit of Internal Financial Controls Over Financial Reporting issued by the Institute ofChartered Accountants of India. These responsibilities include the design implementationand maintenance of adequate internal financial controls that were operating effectivelyfor ensuring the orderly and efficient conduct of its business including adherence to theCompany's policies the safeguarding of its assets the prevention and detection of fraudsand errors the accuracy and completeness of the accounting records and the timelypreparation of reliable financial information as required under the Companies Act 2013.
Our responsibility is to express an opinion on the Company's internal financialcontrols over financial reporting based our audit. We conducted our audit in accordancewith the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting(the "Guidance Note") and the Standards on Auditing as specified under section143(10) of the Companies Act 2013 to the extent applicable to an audit of internalfinancial controls and both issued by the Institute of Chartered Accountants of India.Those Standards and the Guidance Note require that we comply with ethical requirements andplan and perform the audit to obtain reasonable assurance about whether adequate internalfinancial controls over financial reporting was established and maintained and if suchcontrols operated effectively in all material respects.
Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal financial controls system over financial reporting and their operatingeffectiveness. Our audit of internal financial controls over financial reporting includedobtaining an understanding of internal financial controls over financial reportingassessing the risk that a material weakness exists and testing and evaluating the designand operating effectiveness of internal control based on the assessed risk. The proceduresselected depend on the auditor's judgement including the assessment of the risks ofmaterial misstatement of the financial statements whether due to fraud or error.
We believe that the audit evidence wehaveobtainedissufficient and appropriate toprovide a basis for our audit opinion on the internal financial controls system overfinancial
MEANING OF INTERNAL FINANCIAL CONTROLS OVER FINANCIAL REPORTING
A company's internal financial control over financial reporting is a process designedto provide reasonable assurance regarding the reliability of financial reporting and thepreparation of financial statements for external purposes in accordance with generallyaccepted accounting principles. A company's internal financial control over financialreporting includes those policies and procedures that (1) pertain to the maintenance ofrecords that in reasonable detail accurately and fairly reflect the transactions anddispositions of the assets of the company; (2) provide reasonable assurance thattransactions are recorded based as necessary on the to permit preparation offinancial statements in establishedby accordance with generally accepted accountingprinciples and that receipts and expenditures of the company are being made only inaccordance with authorisations of management and directors of the company; and (3) providereasonable assurance regarding prevention or timely detection of unauthorised acquisitionuse or disposition of the company's assets that could have a material effect on thefinancial statements.
INHERENT LIMITATIONS OF INTERNAL FINANCIAL CONTROLS OVER FINANCIAL REPORTING
Because of the inherent limitations of internal financial controls over financialreporting including the possibility of collusion or improper management override ofcontrols material misstatements due to error or fraud may occur and not be detected.Also projections of any evaluation of the internal financial controls over financialreporting to future periods on are subject to the risk that the internal financial controlover financial reporting may become inadequate because of changes in conditions or thatthe degree of compliance with the policies or procedures may deteriorate.
In our opinion the Company has in all material respects an adequate internalfinancial controls system over financial reporting and such internal financial controlsover financial reporting were operating effectively as at March 31 2017 based on theinternal control over financial reporting criteria established by the Company consideringthe essential components of internal control stated in the Guidance Note on Audit ofInternal Financial Controls Over Financial Reporting issued by the Institute of CharteredAccountants of India.
For S.R. Batliboi & CO. LLP
ICAI Firm Registration Number: 301003E/E300005
per Kamal Agarwal
Membership Number: 58652
Place of Signature: Kolkata
Date: May 23 2017 .