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Gayatri Sugars Ltd.

BSE: 532183 Sector: Agri and agri inputs
NSE: N.A. ISIN Code: INE622E01023
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OPEN 10.60
PREVIOUS CLOSE 10.10
VOLUME 49388
52-Week high 13.68
52-Week low 6.91
P/E
Mkt Cap.(Rs cr) 45
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 10.60
CLOSE 10.10
VOLUME 49388
52-Week high 13.68
52-Week low 6.91
P/E
Mkt Cap.(Rs cr) 45
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Gayatri Sugars Ltd. (GAYATRISUGARS) - Auditors Report

Company auditors report

To the Members of Gayatri Sugars Limited

Report on the Financial Statements

We have audited the accompanying financial statements of Gayatri Sugars Limited("the Company") which comprise the Balance Sheet as at March 31 2017 theStatement of Profit and Loss and the Cash Flow Statement for the year then ended and asummary 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 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 financial positionfinancial performance and cash flows of the Company in accordance with the accountingprinciples generally accepted in India including the Accounting Standards prescribedunder section 133 of the Act.

This responsibility also includes maintenance of adequate accounting records inaccordance with the provisions of the Act for safeguarding the assets of the Company andfor preventing and detecting frauds and other irregularities; selection and application ofappropriate accounting policies; making judgments and estimates that are reasonable andprudent; and design implementation and maintenance of adequate internal financialcontrols that were operating effectively for ensuring the accuracy and completeness ofthe accounting records relevant to the preparation and presentation of the financialstatements that give a true and fair view and are free from material misstatement whetherdue to fraud or error.

Auditor's Responsibility

Our responsibility is to express an opinion on these financial statements based on ouraudit.

In conducting our audit we have taken into account the provisions of the Act theaccounting and auditing standards and matters which are required to be included in theaudit report under the provisions of the Act and the Rules made thereunder.

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

An audit involves performing procedures to obtain audit evidence about the amounts andthe disclosures in the financial statements. The procedures selected depend on theauditor's judgment including the assessment of the risks of material misstatement of thefinancial statements whether due to fraud or error. In making those risk assessments theauditor considers 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 the 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 obtained by us is sufficient and appropriate toprovide a basis for our qualified audit opinion on the financial statements.

Basis for Qualified Opinion

Attention is drawn to Note 33 of the financial statements regarding the High Courtdismissing the writ filed by the Company challenging the levy of electricity duty by theState Government on consumption of electricity by captive generating units the subsequentdismissal of special leave petition by the Hon'ble Supreme Court and the pending matterbefore the Board for Industrial and Financial Reconstruction

(BIFR) being abated. As stated in the said note the Company has treated the estimatedduty amount aggregating ` 283.99lakhs as a Contingent liability.

In view of the above we are unable to comment on the ultimate outcome of the matterand the consequential impact if any on these financial statements.

Qualified Opinion

In our opinion and to the best of our information and according to the explanationsgiven to us except for the possible effects of the matter described in the Basis ofQualified Opinion paragraph above the aforesaid financial statements give the informationrequired by the Act in the manner so required and give a true and fair view in conformitywith the accounting principles generally accepted in India of the state of affairs of theCompany as at March 31 2017 and its profit and its cash flows for the year ended on thatdate.

Emphasis of Matter

We draw attention to the following notes in to the financial statements:

(i) Note 34 of the financial statements which indicates that as at March 31 2017 theaccumulated losses amounting to ` 12804.58 lakhs have completely eroded the net-worth ofthe Company and the current liabilities exceeded the current assets as on that date.These conditions along with other matters as set forth in Note 34 of the financialstatements including dependence on continuous support from its promoters indicate theexistence of a material uncertainty that may cast significant doubt about the Company'sability to continue as a going concern and therefore it may be unable to realise itsassets and discharge its liabilities in the normal course of business. The Board forIndustrial and Financial Reconstruction (BIFR) declared the Company as a sick industrialcompany under section 3 (o) of SICA 1985 vide its order in October 2016. Consequentlythe case filed by the Company under the BIFR stands abated. We have been informed thatbased on its discussions with several lenders/Banks the Company has decided not toinitiate the corporate insolvency resolution process under the Insolvency and BankruptcyCode 2016 before the NCLT.

These financial statements have been prepared on a going concern basis for the reasonsstated in the said Note.

(ii) Note 37 of the financial statements in respect of the remuneration paid toExecutive Director reappointed during the year (designated as Managing Director w.e.f.August 29 2016) in excess of the limits specified in Schedule V of the Companies Act2013 by ` 38.45 lakhs. The said appointment and payment/provision of remuneration wasapproved by the shareholders in the Annual General Meeting held on September 26 2016. TheCompany has sought the necessary approval from Central Government whose response ispending.

Our opinion is not modified in respect of these matters.

Report on Other Legal and Regulatory Requirements

1. As required by Section 143 (3) of the Act based on our audit we report that: a) Wehave sought and except for the matter described in the Basis for Qualified Opinionparagraph above obtained all the information and explanations which to the best of ourknowledge and belief were necessary for the purposes of our audit. b) Except for thepossible effects of the matter described in the Basis for Qualified Opinion paragraphabove 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 theStatement of Profit and Loss and the Cash Flow Statement dealt with by this Report are inagreement with the books of account.

d) Except for the possible effects of the matter described in the Basis for QualifiedOpinion paragraph above in our opinion the aforesaid financial statements comply withthe Accounting Standards prescribed under section 133 of the Act. e) The going concernmatter described in sub-paragraph (i) under the Emphasis of Matters paragraph above inour opinion may have an adverse effect on the functioning of the Company. f) On the basisof the written representations received from the directors as on March 31 2017 taken onrecord by the Board of Directors none of the directors is disqualified as on March 312017 from being appointed as a director in terms of Section 164 (2) of the Act. g) Thequalification relating to the maintenance of accounts and other matters connectedtherewith are as stated in the Basis for Qualified Opinion paragraph above. h) Withrespect to the adequacy of the internal financial controls over financial reporting of theCompany and the operating effectiveness of such controls refer to our separate Report in"Annexure A". Our report expresses a qualified opinion on the adequacy andoperating effectiveness of the Company's internal financial controls over financialreporting. i) 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 as amendedinour opinion and to the best of our information and according to the explanations given tous: i. The Company has disclosed the impact of pending litigations on its financialposition in its financial statements; ii. The Company did not have any long-term contractsincluding derivative contracts for which there were any material foreseeable losses. iii.There has been no delay in transferring amounts required to be transferred to theInvestor Education and Protection Fund by the Company. iv. The Company has providedrequisite disclosures in the financial statements as regards its holding and dealings inSpecified Bank Notes as defined in the Notification S.O. 3407(E) dated the 8th November2016 of the Ministry of Finance during the period from 8th November 2016 to 30th December2016.

Based on audit procedures performed and the representations provided to us by theManagement we report that the disclosures are in accordance with the books of accountmaintained by the Company.

2. As required by the Companies (Auditor's Report) Order 2016 ("the Order")issued by the Central Government in terms of Section 143(11) of the Act we give in"Annexure B" a statement on the matters specified in paragraphs 3 and 4 of theOrder.

For DELOITTE HASKINS & SELLS
Chartered Accountants
(Firm's Registration No.008072S)
(Sumit Trivedi)
(Partner)
(Membership No. 209354)
Place : Hyderabad
Date : 29th May 2017

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)

Report on the Internal Financial Controls Over Financial Reporting under Clause (i) ofSub-section 3 of Section 143 of the Companies Act 2013 ("the Act")

We have audited the internal financial controls over financial reporting of GayatriSugars Limited ("the Company") as of March 31 2017 in conjunction with ouraudit 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 based on the internal control over financial reporting criteriaestablished by the Company considering the essential components of internal control statedin the Guidance Note on Audit of Internal Financial Controls Over Financial Reportingissued by the Institute of Chartered Accountants of India. These responsibilities includethe design implementation and maintenance of adequate internal financial controls thatwere operating effectively for ensuring the orderly and efficient conduct of its businessincluding adherence to company's policies the safeguarding of its assets the preventionand detection of frauds and errors the accuracy and completeness of the accountingrecords and the timely preparation of reliable financial information as required underthe Companies Act 2013.

Auditor's Responsibility

Our responsibility is to express an opinion on the Company's internal financialcontrols over financial reporting based on our audit. We conducted our audit in accordancewith the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting(the "Guidance Note") issued by the Institute of Chartered Accountants of Indiaand the Standards on Auditing prescribed under Section 143(10) of the Companies Act 2013to the extent applicable to an audit of internal financial controls. Those Standards andthe Guidance Note require that we comply with ethical requirements and plan and performthe audit to obtain reasonable assurance about whether adequate internal financialcontrols over financial reporting was established and maintained and if such controlsoperated 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 we have obtained is sufficient and appropriate toprovide a basis for our qualified audit opinion on the Company's internal financialcontrols system over financial reporting.

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 as necessary to permit preparation of financial statements inaccordance with generally accepted accounting principles and that receipts andexpenditures of the company are being made only in accordance with authorisations ofmanagement and directors of the company; and (3) provide reasonable assurance regardingprevention or timely detection of unauthorised acquisition use or disposition of thecompany'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 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 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.

Basis for Qualified opinion

According to the information and explanations given to us and based on our auditmaterial weaknesses have been identified as at March 31 2017 relating to inadequateinternal financial controls over financial reporting in respect of certain reconciliationsbetween various accounting systems and period end adjustments as fully described in Note38 to the financial statements and Management's assessment of estimating potentialliability relating to a disputed matter as described in Note 33 to the financialstatements.

A ‘material weakness' is a deficiency or a combination of deficiencies ininternal financial control over financial reporting such that there is a reasonablepossibility that a material misstatement of the company's annual or interim financialstatements will not be prevented or detected on a timely basis.

Qualified opinion

In our opinion to the best of our information and according to the explanations givento us except for the possible effects of the material weaknesses described in Basis forQualified Opinion paragraph above on the achievement of the objectives of the controlcriteria the Company has maintained in all material respects adequate internalfinancial controls over financial reporting and such internal financial controls overfinancial reporting were operating effectively as of March 31 2017 based on the internalcontrol over financial reporting criteria established by the Company considering theessential components of internal control stated in the Guidance Note on Audit of InternalFinancial Controls Over Financial Reporting issued by the Institute of CharteredAccountants of India. We have considered the material weaknesses identified and reportedabove in determining the nature timing and extent of audit tests applied in our audit ofthe financial statements of the Company for the year ended March 31 2017 and thesematerial weaknesses did not affect our opinion on the said financial statements of theCompany except in respect of the qualification relating to the Management's assessment ofestimating potential liability relating to a disputed matter in respect of which we haveissued a qualified opinion on the financial statements of the Company.

For DELOITTE HASKINS & SELLS
Chartered Accountants
(Firm's Registration No.008072S)
(Sumit Trivedi)
(Partner)
(Membership No. 209354)
Place : Hyderabad
Date : 29th May 2017

ANNEXURE "B" TO THE INDEPENDENT AUDITOR'S REPORT

(Referred to in paragraph 2 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 includingquantitative details and situation of the fixed assets.

(b) The fixed assets were physically verified during the year by the Management inaccordance with a regular programme of verification which in our opinion provides forphysical verification of all the fixed assets at reasonable intervals. According to theinformation and explanations given to us no material discrepancies were noticed on suchverification.

(c) According to the information and explanations given to us and the records examinedby us we report that the title deeds comprising all the immovable properties of landand buildings are held in the name of the Company as at the balance sheet date.

Immovable properties of land whose title deeds have been pledged as security for loansare held in the name of the Company based on the confirmations directly received by usfrom lenders.

(ii) As explained to us the inventories were physically verified during the year bythe Management at reasonable intervals and no material discrepancies were noticed onphysical verification.

(iii) The Company has not granted any loans secured or unsecured to companies firmsLimited Liability Partnerships or other parties covered in the register maintained underSection 189 of the Companies Act 2013.

(iv) In our opinion and according to the information and explanations given to us theCompany has complied with the provisions of Sections 185 and 186 of the Companies Act2013 in respect of grant of loans making investments and providing guarantees andsecurities as applicable except in respect of the guarantees amounting to ` 90 lakhsgiven to a party on behalf of cane suppliers for financing arrangements which owing to thebrought forward losses is in excess of the limits specified under Section 186 of the Act.However the Management is of the view that such guarantees are within the limitsspecified in Section 186.

(v) According to the information and explanations given to us the Company has notaccepted any deposit during the year.

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

(vii) According to the information and explanations given to us in respect ofstatutory dues:

(a) The Company has generally been regular in depositing undisputed statutory duesincluding Provident Fund Employees' State Insurance Income-tax Sales Tax Service TaxCustoms Duty Excise Duty Value Added Tax cess and other material statutory duesapplicable to it to the appropriate authorities except for dues relating to CaneDevelopment Council Fund and Income Tax. .

(b) There were no undisputed amounts payable in respect of Provident Fund Employees'State Insurance Income-tax Sales Tax Service Tax Customs Duty Excise Duty ValueAdded Tax cess and other material statutory dues in arrears as at March 31 2017 for aperiod of more than six months from the date they became payable except as given below:

Name of the statute Nature of Dues Period to which the amount relates i Amount nvolved ` in lakhs
Income Tax Dividend 2006-07 8.03
Act 1961 Distribution Tax

(c) There are no dues of Income-tax Sales Tax Service Tax Customs Duty Excise Dutyand Value Added Tax as on March 31 2017 on account of disputes except as given below.

Name of the statute Nature of Dues Forum where Dispute is pending Period to which the amount relates Amount involved in lakhs
Central Excise Act 1944 Excise Duty (excluding interest and penalty) Customs Excise and Service Tax Various periods covering the period 58.53
Appellate Tribunal 2006 to 2010
Customs Excise and Service Tax Various years covering the period 80.28
Appellate Tribunal 2008 to 2013

The entire amount of disputed dues aggregating to ` 138.81 lakhs as above has beenstayed for recovery by the relevant authorities.

(viii) In our opinion and according to the information and explanations given to usthe Company has not defaulted in the repayment of loans or borrowings to financialinstitutions banks and government and dues to debenture holders except as under:

Lender Name Principal ` in lakhs Period of default (in days) Interest `in lakhs Period of default (in days)
Bank of Baroda - Term loan 166.67 19-78 15.88 1-60
Andhra Bank-Harvesting Equipment Term loan 23.59 32 1.42 1-60
Andhra Bank-Excise Duty Term loan 52.75 25-84 15.81 1-60
Union Bank of India -Excise Duty Term loan 22.61 20-79 9.74 1-60
Bank of Baroda -Excise Duty Term loan 29.03 14-73 9.45 1-60
State Bank of India -Excise Duty Term loan 24.18 1-60 9.16 1-60
Punjab National Bank -Excise Duty Term loan 4.99 16-44 0.40 1
Andhra Bank - Soft loan 36.40 2-61 22.30 1-60
Union Bank of India -Soft loan 22.35 2-61 13.38 1-60
Bank of Baroda -Soft loan 20.00 2-61 12.46 1-60
State Bank of India -Soft loan 16.70 1-60 12.96 1-60
Punjab National Bank -Soft loan 3.43 3-32 2.01 1-32
Andhra Bank - Corporate loan 39.60 2-61 21.24 1-60
Bank of Baroda -Corporate loan 21.75 1-60 13.55 1-60
State Bank of India -Corporate loan 12.10 31-59 12.61 1-60
Punjab National Bank -Corporate loan 3.73 15-43 1.87 1-32
IFCI - Sugar Development Fund Term Loan 1394.12 134-1230 933.08 134-1230

(ix) In our opinion and according to the information and explanations given to us theterms loans have been applied by the Company during the year for the purposes for whichthey were raised other than temporary deployment pending application of proceeds. Nomoneys were raised by way of initial public offer or further public offer.

(x) To the best of our knowledge and according to the information and explanationsgiven to us no fraud by the Company and no material fraud on the Company by its officersor employees has been noticed or reported during the year.

(xi) In our opinion and according to the information and explanations given to us theCompany has paid managerial remuneration to the Executive Director reappointed during theyear (designated as Managing Director w.e.f. August 29 2016) in excess of the limitsspecified in Schedule V of the Companies Act 2013 by `38.45 lakhs. The said payment/provision of remuneration was approved by the shareholders in the Annual General meetingheld on September 26 2016. The Company has sought the necessary approval from CentralGovernment whose response is pending.

(xii) The Company is not a Nidhi Company and hence reporting under clause (xii) of theOrder is not applicable.

(xiii)In our opinion and according to the information and explanations given to us andhaving regard to our comments in paragraph (xi) above the Company is in compliance withSection

177 and 188 of the Companies Act 2013 where applicable for all transactions with therelated parties and the details of related party transactions have been disclosed in thefinancial statements as required by the applicable accounting standards.

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

(xv) In our opinion and according to the information and explanations given to usduring the year the Company has not entered into any non-cash transactions with itsdirectors or persons connected with him and hence provisions of section 192 of theCompanies Act 2013 are not applicable.

(xvi)The Company is not required to be registered under section 45-I of the ReserveBank of India Act 1934.

For DELOITTE HASKINS & SELLS

Chartered Accountants

(Firm's Registration No. 008072S)

Sumit Trivedi

Partner

Membership No. 209354

Place: Hyderabad

Date:29th May 2017