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KM Sugar Mills Ltd.

BSE: 532673 Sector: Agri and agri inputs
NSE: KMSUGAR ISIN Code: INE157H01023
BSE LIVE 15:40 | 25 Sep 22.80 -0.95
(-4.00%)
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NSE 15:29 | 25 Sep 22.85 -0.90
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OPEN 24.20
PREVIOUS CLOSE 23.75
VOLUME 84994
52-Week high 37.50
52-Week low 11.03
P/E 7.15
Mkt Cap.(Rs cr) 210
Buy Price 0.00
Buy Qty 0.00
Sell Price 22.80
Sell Qty 2700.00
OPEN 24.20
CLOSE 23.75
VOLUME 84994
52-Week high 37.50
52-Week low 11.03
P/E 7.15
Mkt Cap.(Rs cr) 210
Buy Price 0.00
Buy Qty 0.00
Sell Price 22.80
Sell Qty 2700.00

KM Sugar Mills Ltd. (KMSUGAR) - Auditors Report

Company auditors report

To

The Members of K.M. SugarMills Ltd.

Report on the Standalone Financial Statements

We have audited the accompanying standalone financial statements of K.M. Sugar MillsLtd. (the "Company") which comprise the Balance Sheet as at March 31 2016 theStatement of Profit and Loss and Cash Flow Statement for the year then ended and a summaryof significant accounting policies and other explanatory information.

Management's Responsibility for the Standalone Financial Statements

The Company's Board of Directors is responsible for the matters stated in Section134(5) of the Companies Act 2013 ('the Act') with respect to preparation of thesestandalone financial statements that give a true and fair view of thefinancial positionfinancial performance and cash flows of the Company in accordance with the 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. Thisresponsibility also includes maintenance of adequate accounting records in accordance withthe provisions of the Act for safeguarding of the assets of the Company and for preventingand detecting frauds and other irregularities; selection and application of appropriateaccounting policies; making judgments and estimates that are reasonable and prudent; anddesign implementation and maintenance of adequate internal financial controls that wereoperating effectively for ensuring the accuracy and completeness of the accountingrecords relevant to the preparation and presentation of the financial statements thatgive a true and fair view and are free from material misstatement whether due to fraud orerror.

Auditors' Responsibility

Our responsibility is to express an opinion on these standalone financial statementsbased 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 theAct and the Rules made there-under.

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.

An audit involves performing procedures to obtain audit evidenceabout the amounts andthe disclosures in thefinancial 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 thefinancial statements.

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.

Opinion

In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid standalone financial statements give the information requiredby the Act in the manner so required and give a true and fair view in conformity with theaccounting principles generally accepted in India of the state of affairs of the Companyas at March 312016 and its profit and its cash flows for the yearended on thatdate.

Report on Other Legal and Regulatory Requirements

1. As required by the 'the Companies (Auditor's Report) Order 2016 issued by theCentral Government of India in terms of sub-section (11) of section 143 of the Act(hereinafter referred to as the "Order") we give in the Annexure 'A' astatement on the matters specified in the paragraphs 3 and 4 of the Order to the extentapplicable.

2. As required by section 143(3)oftheActwereportthat:

(a) We have sought and obtained all the information and explanations which to the bestof our knowledge and belief were necessary for the purpose ofouraudit;

(b) In our opinion proper books of account as required by law have been kept by theCompany so far as 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 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 written representations received from the directors as on March 312016 taken on record by the Board of Directors none of the directors is disqualified ason March 312016 from being appointed as a director in terms of sub-section (2) ofSection164 of theAct;

(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 2014 in our opinionand 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 financial position inits financial statements - Refer Para1 ofNote2.29;

ii. Provision has been made in the financial statements as required under theapplicable law or accounting standards for material foreseeable losses on long-termcontracts including derivative contracts;

iii. there were no amounts which were required to be transferred to the InvestorEducation and Protection Fund by the Company.

For Mehrotra & Mehrotra
Chartered Accountants
(FRN - 0226C)
Sanjay K. Rai
Partner
(M. No. 507946)
Place : Lucknow
Date: 30thMay2016

ANNEXURE TO THE INDEPENDENT AUDITORS' REPORT The Annexure 'A'referred to in ourIndependent Auditors' Report to the members of the Company on the financial statements ofK.M. Sugar Mills Ltd. for the year ended 31st March 2016 wereportthat:

(i) Inrespectofits fixed assets:

(a) The Company has generally maintained records to show particulars includingquantitative details and situation of fixed assets but its updation is in progress;

(b) The fixed assets covering significant value were physically verified during theyear by the Management at such intervals which in our opinion provides for the physicalverification of all the Fixed Assets at reasonable intervals having regard to the size ofthe Company and nature of its business. According to the information and explanationsgiven 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 ourexamination of the records of the Company the title deeds ofimmovable properties are heldin the name of company.

(ii) According to the information and explanations given to us the inventories havebeen physically verified by the management to the extent practicable at reasonableintervals during the year and as explained there was no material discrepancies noticed onsuch verification.

(iii) According to the information and explanations given to us the Company has notgranted secured or unsecured loan to a company covered in the register maintained underSection 189 of the Companies Act2013.

(iv) In our opinion and according to the information and explanations given to us theCompany has complied with the provisions of section 185 and 186 of Companies Act 2013with respect to the loans investments guarantees and security.

(v) According to the information and explanations given to us the Company has notaccepted any deposits during the year. Hence the directives issued by the Reserve Bank ofIndia and the provisions of section 73 to 76 or any other relevant provisions of theCompanies Act 2013 and the rules framed there-under are not applicable to the Company.

(vi) In our opinion and according to the information and explanations given to usspecified accounts and records as prescribed by the Central Government in terms ofsub-section (1) of section 148 of the Companies Act 2013 have been prima facie made andmaintained by the company. However we have not nor we are required carried out anydetailed examination of such accounts and records.

(vii) (a) According to the information and explanations given to us and on the basis ofour examination of the records the Company is generally regular in depositing undisputedstatutory dues including provident fund employees' state insurance income-taxsales-tax service tax duty of customs duty of excise value added tax cess and anyother material statutory dues to the appropriate authorities to the extent these areapplicable.

According to the information and explanations given to us no undisputed dues were inarrears as at 31st March 2016 fora period of more than six months from the date theybecome payable.

(b) However according to the information and explanations given to us the followingdues of income tax sales tax duty of excise service tax and value added tax have notbeen deposited by the Company on account of disputes:

Name of the statute Nature of dues Amount (Rs. in lacs) Period to which pertain Forum where dispute is pending
Entry Tax Act Entry Tax 1.34 2012-13 Addl. Commissioner (Appeal) Faizabad
Income Tax Act Income Tax 7198.21 2009-10 Commissioner of
Income Tax 7460.05 2010-11 Income (Appeals)
Income Tax 8087.76 2011-12 Kanpur
Income Tax 8555.32 2012-13
Central Excise Act Service Tax 11.46 2004-06 Joint Commissioner Lucknow
Service Tax 2.01 2006-07 CESTAT New Delhi
Cenvat Credit 461.01 2006-07 CESTAT New Delhi
Excise Duty 16.09 2007-08 CESTAT New Delhi
Cenvat credit 27.94 2008-10 CESTAT New Delhi
Cenvat credit 1.06 2009-10 Commissioner (Appeal) Lucknow
Excise Duty 2212.55 2007-12 CESTAT New Delhi
Excise Duty 455.68 2012-13 CESTAT New Delhi
Total 34490.48

*Netofamounts paid in protest

(viii) Based on our audit procedure and according to the information and explanationsgiven to us we are of the opinion that the Company has defaulted in repayment of loans /borrowings to the financial institution bank Government or a debenture holder as perdetails given here-under:

Name of Bank/lnstitution Amount overdue as on 31.03.2016 Default is on payment of Defaults period
Sugar Development Find (Central 1485.00 lacs Principal 05.03.2011 to 05.03.2015
Govt of India) 243.29 lacs Interest 05.03.2015 Id 05.03.2016

(ix) According to the information and explanations given to us the Company has raisedmoney by way of term loans during the year and to the best of our knowledge and accordingto the information and explanations given to us the term loans were applied for thepurpose for which those were raised.

(x) To the best of our knowledge and according to the information and explanationsgiven to us no material fraud by the company or on the Company by its officers oremployees has been noticed or reported during the course of our audit.

(xi) According to our information and explanations given to us and based on ourexamination of the records of the Company managerial remuneration has been paid /provided in accordance with the requisite approvals mandated by the provisions of section197 read with Schedule VtotheAct.

(xii) In our opinion and according to the information and explanations given to us theCompany is not a Nidhi company.

(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 sections 177 and 188 of the Act where applicable and details of suchtransactions have been disclosed in the financial statement as required by the applicableaccounting standards.

(xiv) According to the information and explanations given to us and based on ourexamination of the records of the company the company has not made any preferentialallotment or private placement of shares or fully or partly convertible debentures duringthe year.

(xv) According to the information and explanations given to us and based on ourexamination of the records of the company the company has not entered into non-cashtransactionswith directors or persons connected with him.

(xvi) As per our information the company is not required to be registered underSection 45-1A of the Reserve Bank of IndiaAct 1934.

For Mehrotra & Mehrotra
Chartered Accountants
(FRN - 0226C)
Sanjay K. Rai
Partner
(M. No. 507946)
Place : Lucknow
Date: 30thMay2016

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")

We have audited the internal financial controls over financial reporting of K.M. SugarMills Limited ("the Company") as of 31 March 2016 in conjunction with our auditof the standalone financial statements of the CompanyFor the yearended on thatdate.

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 ('ICAI'). These responsibilitiesinclude the design implementation and maintenance of adequate internal financial controlsthat were operating effectively for ensuring the orderly and efficient conduct of itsbusiness including adherence to company's policies the safeguarding of its assets theprevention and detection of frauds and errors the accuracy and completeness of theaccounting records and the timely preparation of reliable financial information asrequired under the Companies Act 2013.

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 on Audit of Internal Financial Controls over Financial Reporting(the "Guidance Note") and the Standards on Auditing issued by ICAI and deemedto be prescribed under section 143(10) of the Companies Act 2013 to the extentapplicable to an audit of internal financial controls both applicable to an audit ofInternal Financial Controls and both issued by the Institute of Chartered Accountants ofIndia. Those Standards and the Guidance Note require that we comply with ethicalrequirements and plan and perform the audit to obtain reasonable assurance about whetheradequate internal financial controls over financial reporting was established andmaintained and if such controls 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 judgment including the assessment of the risks ofmaterial misstatement of the financial statements whether due to fraud or error. Webelieve that the audit evidence we have obtained is sufficient and appropriate to providea basis for our audit opinion on the Company's internal financial controls system overfinancial reporting.

Meaning of Internal Financial Controls over Financial Reporting

Acompany's internal financial control over financial reporting is a process designed toprovide 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 authorizations ofmanagement and directors of the company; and (3) provide reasonable assurance regardingprevention or timely detection of unauthorized 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.

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 31 March 2016 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 Mehrotra & Mehrotra
Chartered Accountants
(FRN - 0226C)
CA Sanjay K. Rai
Partner
(M. No. 507946)
Place : Lucknow
Date: 30th May 2016