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Indian Sucrose Ltd.

BSE: 500319 Sector: Agri and agri inputs
NSE: OSWALSUG ISIN Code: INE557C01017
BSE 15:40 | 23 Jan 41.45 -1.45
(-3.38%)
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NSE 05:30 | 01 Jan Stock Is Not Traded.
OPEN 42.90
PREVIOUS CLOSE 42.90
VOLUME 9376
52-Week high 62.45
52-Week low 31.85
P/E 3.80
Mkt Cap.(Rs cr) 64
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 42.90
CLOSE 42.90
VOLUME 9376
52-Week high 62.45
52-Week low 31.85
P/E 3.80
Mkt Cap.(Rs cr) 64
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Indian Sucrose Ltd. (OSWALSUG) - Auditors Report

Company auditors report

TO

THE MEMBERS OF INDIAN SUCROSE LIMITED

1. Report on the Standalone Financial Statements

We have audited the accompanying standalone financial statements of Indian SucroseLimited ('the Company') which comprise the Balance Sheet as at 31st March 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.

2. Management's Responsibility for the Standalone 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 preparationand presentation of these standalone financial statements that give a true and fair viewof the financial position financial performance and cash flows of the Company inaccordance with the accounting principles generally accepted in India including theAccounting Standards specified under section 133 of the Act read with Rule 7 of theCompanies (Accounts) Rules 2014. This responsibility also includes maintenance ofadequate accounting records in accordance with the provisions of the Act for safeguardingthe assets of the Company and for preventing and detecting frauds and otherirregularities; selection and application of appropriate accounting policies; makingjudgments and estimates that are reasonable and prudent; and design implementation andmaintenance of adequate internal financial controls that were operating effectively forensuring the accuracy and completeness of the accounting records relevant to thepreparation and presentation of the financial statements that give a true and fair viewand are free from material misstatement whether due to fraud or error.

3. Auditor's Responsibility

Our responsibility is to express an opinion on these standalone financial statementsbased on our audit.

4. 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 there under.

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

6 An audit involves performing procedures to obtain audit evidence about the amountsand the 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.

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

8. Emphasis of Matters:

- The company is holding more than 20% of the paid up share capital of the RangerBreweries Ltd. This company is therefore an associate company. The company is required toprepare consolidated financial statement as per the provisions of Schedule III of theCompanies Act 2013 in terms of clause 6 of the Companies (Accounts) Rules 2014. Thecompany has not prepared the consolidated financial statement because the financialstatements of Ranger Breweries Ltd. have not been finalized till date.

- Basis of Qualified Opinion

a. The Company has granted loan to M/s. Yadu Sugar Ltd. of Rs. 45383952 in thecurrent year. This amount was repaid during the year. However no interest has beencharged on this loan which is prejudicial to the interest of the Company. Moreover therequisite information and other relevant documents have not been provided to us forverification. Accordingly we are unable to comment on terms and conditions of loangranted.

b. The Company has granted loan of Rs. 110585000 to M/s. Cosmos Sugar Pvt. Ltd. inthe financial year 2016-17 which was partly repaid during the year. An amount of Rs.44640000 is still outstanding as on 31.03.2017. But no interest has been charged onthis loan which is prejudicial to the interest of the Company. Moreover the requisiteinformation and other relevant documents are not provided to us for verification.Accordingly we are unable to comment on terms and conditions of loan granted.

c. The Company has granted loan of Rs. 30000000 to M/s. Cosmos Industries Ltd. inthe financial year 2016-17 which was partly repaid during the year. This amount was repaidduring the year. However no interest has been charged on this loan which is prejudicialto the interest of the Company. Moreover the requisite information and other relevantdocuments have not been provided to us for verification. Accordingly we are unable tocomment on terms and conditions of loan granted.

d. As per the Information and explanation given to us by the management the Companyhas provided guarantee in respect of KCC loan secured to the farmers (suppliers) fromBanks. As per Tri-partite agreement between the Indian Sucrose Ltd. farmers and banksthe banks have sanctioned KCC limit to the farmers and credited the same in the IndianSucrose Ltd. The proper records and documents were not produced by the company in respectof such loans for our verification. Accordingly we are unable to comment on the same.Refer Para iv(c) at Annexure- A to Our Report.

e. The company had issued 700000 cumulative 6% preference cumulative shares of Rs.100each in Jan 2011 which were convertible into equity shares at a premium of Rs.4 eachwithin 60 months from the date of issue. These shares have not been converted into equityshares which were due for conversion after the month of Dec 2015. Further the companyhas neither paid nor credited any dividend since the date of issue of 6% preferencecumulative shares.

9. Qualified Opinion

In our opinion and to the best of our information and according to the explanationsgiven to us except the matter described under the paragraph basis of qualified opinionthe aforesaid standalone financial statements give the information required by the Act inthe manner 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 31stMarch 2017 and its profits and its cash flows for the year ended on that date.

Report on Other Legal and Regulatory Requirements

As required by the Companies (Auditor's Report) Order 2016 ("the Order")issued by the Central Government of India in terms of subsection (11) of section 143 ofthe Act we give in the Annexure- A which forms part of this report a statement on thematters specified in the paragraph 3 and 4 of the Order.

10. 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 purposes 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 the statement of profit and loss and the cash flow statementdealt with by this report are in agreement with the books of account;

d. in our opinion the aforesaid standalone financial statements comply with theAccounting Standards specified under section 133 of the Act read with Rule 7 of theCompanies (Accounts) Rules 2014;

e. on the basis of the written representations received from the directors as on 31stMarch 2017 taken on record by the Board of Directors none of the directors isdisqualified as on 31st March 2017 from being appointed as a director in terms ofsub-section (2) of section 164 of the Act; and

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- B"; and

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 2014in our opinionand to the best of our information and according to explanations given to us;

(i) the Company has disclosed the impact of pending litigations on its financialposition in its financial statements - Refer note 34 to the financial statements;

(ii) the Company did not have any long term contracts including derivative contractsfor which there were any material foreseeable losses.

(iii) there has been no delay in transferring amounts required to be transferred tothe Investor Education and Protection Fund by the Company.

(iv) The company had provided requisite disclosure in its financial statements as toholdings as well as dealings in Specified Bank Notes during the period from 8th November2016 to 30 December 2016 and is in accordance with the books of accounts maintained bythe company.

For R. Dewan & Co.
Chartered Accountants
FRN 017883N
Sd/-
(Rajiv Dewan)
Partner
M.No.: 084718
Place: Ludhiana
Date: 30 May 2017

Annexure - A to the Auditors' Report

The Annexure referred to in Independent Auditors' Report to the members of the Companyon the standalone financial statements for the year ended 31st March 2017 we report that:

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

b) According to information and explanations given to us Fixed Assets are verified byrotation every year. No discrepancies were observed in the Fixed Assets physicallyverified during the financial year.

c) According to information and explanations given to us and on the basis of ourexamination of the records of the company the title deeds of immovable properties are heldin the name of the company.

(ii) a) According to information and explanations given to us the inventories havebeen physically verified during the year by the management. In our opinion the frequencyof verification is reasonable.

b) According to the information and explanations given to us no material discrepancieswere noticed on physical verification of inventory as compared to the book records.

(iii) According to the information and explanations given to us and on the basis of ourexamination of the books of accounts we report that the Company has granted unsecuredloan / capital advances to three companies covered in the register maintained undersection 189 of the Companies Act 2013. These loans were granted interest free which isprejudicial to the interest of the company. Moreover the copies of the loan agreementsare not provided to us accordingly we are unable to comment whether the terms andconditions of repayment of principal has been complied with.

(iv) The company has made investment granted the loan and provided guarantee as perdetail below:

a) Investment in shares:

Particulars Amount
Ranger Breweries Ltd Rs.6168532/-
Yadu Resorts Pvt. Ltd. Rs.8054000/-
Versatile Events (P) Ltd. Rs.3300000/-

Investment in Bonds

Particulars Amount
RBI Gold Bonds Rs. 86790/-

b) Loans / Advances granted:

Particulars Amount
Panchvaktra Holdings Rs. 1500000/-
Mr. Brij Bhushan Sharma Rs. 2000200/-
Kunal Breweries Ltd. Rs. 2600000/-
SNG Exim Pvt Ltd. Rs. 500000/-

c) Guarantees:

- The Company has provided guarantee in respect of KCC loan secured to the farmers(suppliers) from Banks. As per Tri-partite agreement between the Indian Sucrose Ltd.farmer and bank the bank will sanction KCC limit to the farmers and credit the same inthe Indian Sucrose Ltd. on account of Agri- Input to be supplied by the Indian SucroseLtd. to farmers and in return the Indian Sucrose Ltd. shall repay the loan to Bank bymaking deduction from amount payable to farmers on account of sugarcane.

During the Year Rs. 17.58 crores was repaid to the bank(net of loans received) and Rs.11.49 crores was disbursed to the farmers (net of amounts recovered) and accordingly thenet debit balance outstanding as on 31.03.2017 was Rs.38.68 crores after adjustingopening debit balance of Rs.9.61 crores which has been shown under the Head "CurrentAsset" in the Financial Statements. As the KCC loan has been sanctioned by the banksto the farmers and the Indian Sucrose Ltd. is only guarantor and moreover the requisiteinformation is not provided for verification by the company accordingly we are unable tocomment whether the farmers loan balances as shown in the Indian Sucrose Ltd. books tallywith the balances as per Bank books.

- The company has provided guarantee to State Bank of India of Rs. 13.69 crore inrespect of a loan provided to M/s Ranger Breweries Limited in the Year 2012-13.

The total amount of investments loans granted and guarantee provided exceeds the limitprovided u/s 186(2). The company has not complied with the requirement of section 186 ofthe Companies Act 2013 pursuant to loans granted guarantees provided and investmentsmade. Further the company has granted loans to the person in whom directors are interestedas detailed below:

Particulars Opening Balance Addition Repayment Balance as on 31.03.2017
Yadu Sugar Ltd. Nil 45383952 45383952 Nil
Cosmos Industries Ltd. Nil 30000000 30000000 Nil
Cosmos Sugar Pvt. Ltd. Nil 110585000 65945000 4464000

However the requirements for granting such loans as provided under section 185 of theCompanies Act 2013 have not been fulfilled. Therefore the provisions of the section 185of the Companies Act 2013 are not complied with.

(v) According to the information and explanations given to us the Company has notaccepted deposits cover under the provisions of sections 73 to 76 other relevantprovisions of the Companies Act 2013 and the rules framed there under. According to theinformation and explanations given to us no order under the aforesaid sections has beenpassed by the Company Law Board National Company Law Tribunal or Reserve Bank of India orany Court or any other Tribunal on the Company.

(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 of the Act and are of the opinion that prima facie the prescribed accountsand records have been made and maintained.

(vii) (a) According to the information and explanations given to us and on the basis ofthe records of the Company examined by us in our opinion the Company has been regular indepositing undisputed statutory dues including provident fund employees' state insuranceincome tax sales tax service tax duty of custom duty of excise value added tax cessand other statutory dues with the appropriate authorities. According to the informationand explanations given to us no undisputed amounts in respect of statutory dues payablewere outstanding as on the last day of the financial year concerned for a period of morethan six months from the date they became payable.

(b) According to the information and explanations given to us there are no dues ofduty of custom income-tax / sales tax / wealth tax / service tax / excise duty / ValueAdded Tax / cess etc. which have not been deposited with the appropriate authorities onaccount of any dispute. However according to information and explanations given to us thefollowing dues of Tax have not been deposited by the company on account of dispute:

Name of Statue Nature of Dues Financial year to which it pertains Amont (Rs. in lacs) Forum where dispute is pending.
Sales Tax Laws Sales tax 1997-98 5.67 Deputy Excise & Taxation Commissioner (Appeal)
Sales Tax Laws Purchase Tax 1999-2000 16.64 Punjab & Haryana High Court.
2000-01 & 2001-02 39.59 DETC Jalandhar
2002-03 & 2003-04 36.73 DETC Jalandhar
2004-05 30.16 DETC Jalandhar
2006-07 157.38 Vat Tribunal Chandigarh
2007-08 163.82 Vat Tribunal Chandigarh
2010-11 232.56 DETC Jalandhar
2011-12 203.41 DETC Jalandhar
Excise & Service Tax Service Tax 2006-11 11.73 CESTAT New Delhi
Direct Taxes Income Tax 2012-13 49.50 CIT (Appeals)-I Ludhiana
Direct Taxes Income Tax 2013-14 5.02 CIT (Appeals)-I Ludhiana
Direct Taxes Income Tax 2014-15 31.91 CIT (Appeals)-I Ludhiana

(viii) According to the information and explanations given to us the Company has notdefaulted in repayment of loans or borrowings to a financial institution bank orgovernment. The Company has not issued any debentures during the year or in the precedingyear.

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

(x) According to the information and explanations given to us no fraud by the companyor on the company by its officers or employees has been noticed or reported during thecourse of our audit.

(xi) According to the information and explanations given to us the company has paid /provided for the managerial remuneration in accordance with the requisite approvalsmandated by the provisions of section 197 read with Schedule V to the Companies Act 2013.

(xii) According to the information and explanation given to us the company is not aNidhi Company. Therefore the provisions of paragraph 3(xii) of the Order are notapplicable.

(xiii) According to the information and explanations given to us and based on ourexamination of the records of the company transactions with the related parties are incompliance with section 177 and 188 of the Act where applicable and the details of thetransactions have been disclosed in the financial statements as required by the applicableaccounting standards.

(xiv) According to the information and explanations given to us the company has notmade preferential allotment or private placement of shares or fully or partly convertibledebentures during the year under audit. Thus the provisions of paragraph 3(xii) of theOrder are not applicable.

(xv) According to information and explanations given to us and based on ourexamination of the records of the company the company has not entered into non-cashtransactions with director or person connected with him. Accordingly provisions ofparagraph 3 (xv) of the Order are not applicable.

(xvi) According to the information and explanation given to us the company is notrequired to be registered under section 45-IA of the Reserve Bank of India Act 1934.

For R. Dewan & Co.
Chartered Accountants
FRN 017883N
(Rajiv Dewan)
Partner
M.No.: 084718
Place: Ludhiana
Date: 30th May 2017

Annexure - B to the Auditors' Report

Report on the Internal Financial Controls under Clause (i) of Subsection 3 of Section143 of the Companies Act 2013 ("the Act")

1. We have audited the internal financial controls over financial reporting of IndianSucrose Limited ("the Company") as of 31st March 2017 in conjunction with ouraudit of the standalone financial statements of the Company for the year ended on thatdate.

2. 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 Reporting (the"Guidance Note") issued by the Institute of Chartered Accountants of India('ICAI'). These responsibilities include the design implementation and maintenance ofadequate internal financial controls that were operating effectively for ensuring theorderly and efficient conduct of its business including adherence to company's policiesthe safeguarding of its assets the prevention and detection of frauds and errors theaccuracy and completeness of the accounting records and the timely preparation ofreliable financial information as required under the Companies Act 2013.

3. Auditors' 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 and the Standards on Auditing issued by ICAI and deemed to beprescribed under section 143(10) of the Companies Act 2013 to the extent applicable toan audit of internal financial controls both applicable to an audit of Internal FinancialControls and both issued by the Institute of Chartered Accountants of India. ThoseStandards and the Guidance Note require that we comply with ethical requirements and planand 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.

4. Our audit involves performing procedures to obtain audit evidence about the adequacyof the 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 judgment including the assessment of the risks ofmaterial misstatement of the financial statements whether due to fraud or error.

5. We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the Company's internal financial controls systemover financial reporting.

6. 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 of records that in reasonable detail accurately andfairly reflect the transactions and dispositions of the assets of the company;

(2) provide reasonable assurance that transactions are recorded as necessary to permitpreparation of financial statements in 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) provide reasonable assurance regarding prevention or timely detection ofunauthorised acquisition use or disposition of the company's assets that could have amaterial effect on the financial statements.

7. 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.

8. Opinion

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 31st March 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 R. Dewan & Co.
Chartered Accountants
FRN 017883N
(Rajiv Dewan)
Partner
M.No.: 084718
Place: Ludhiana
Date: 30th May 2017