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Ruchi Soya Industries Ltd.

BSE: 500368 Sector: Industrials
NSE: RUCHISOYA ISIN Code: INE619A01027
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VOLUME 131031
52-Week high 31.80
52-Week low 18.50
P/E
Mkt Cap.(Rs cr) 747
Buy Price 22.35
Buy Qty 2569.00
Sell Price 0.00
Sell Qty 0.00
OPEN 22.45
CLOSE 22.40
VOLUME 131031
52-Week high 31.80
52-Week low 18.50
P/E
Mkt Cap.(Rs cr) 747
Buy Price 22.35
Buy Qty 2569.00
Sell Price 0.00
Sell Qty 0.00

Ruchi Soya Industries Ltd. (RUCHISOYA) - Auditors Report

Company auditors report

To

The Members of

RUCHI SOYA INDUSTRIES LIMITED

REPORT ON THE STANDALONE FINANCIAL STATEMENTS

We have audited the accompanying Standalone Financial Statements of RUCHI SOYAINDUSTRIES LIMITED ("the Company") which comprise the Balance Sheet as atMarch 31 2016 the Statement of Profit and Loss the Cash Flow Statement for the yearthen ended and a summary of the significant accounting policies and other explanatoryinformation in which are incorporated the returns of the Company's branches at Peddapuramand Ampapuram for the year ended on that date audited by the branch auditors.

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 preparation ofthese standalone financial statements that give a true and fair view of the financialposition financial performance and cash flows of the Company in accordance with theaccounting principles generally accepted in India including the Accounting Standardsspecified under Section 133 of the Act read with Rule 7 of the Companies (Accounts)Rules 2014. This responsibility also includes maintenance of adequate accounting recordsin accordance with the provisions of the Act for safeguarding the assets of the Companyand for preventing and detecting frauds and other irregularities; selection andapplication of appropriate accounting policies; making judgments and estimates that arereasonable and prudent; and design implementation and maintenance of adequate internalfinancial controls 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.

AUDITOR'S RESPONSIBILITY

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

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.

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

BASIS FOR QUALIFIED OPINION

Attention is drawn to:

(a) Note 34 and 35 to the financial statements: Employee costs includes remuneration ofRs.129.32 lakh (of which Rs.27.51 lakh has been paid) to the Managing Director of theCompany in excess of the limits prescribed under section 197 of the Companies Act 2013.The Company proposes to apply to the Central Government for the necessary approval for theremuneration in excess of permissible limits and also obtain sanction of the members inthe ensuing General Meeting.

(b) Note 34 and 36 to the financial statements: Out of the excess remuneration ofRs.187.37 lakh paid to the Managing Director of the Company in the preceding year theCentral Government has since partially approved remuneration of Rs.112.46 lakh. Thebalance amount of

Rs.74.91 lakh has been written back and is included in the Statement of Profit and Lossunder the head Exceptional Items and is shown as recoverable from the Managing Directorunder the head Short-term Loans and Advances in Note 19. The Company has again applied tothe Central Government approval of balance amount of Rs.74.91 lakh.

(c) In respect of advances amounting Rs.49969.15 lakh included under other advancesrecoverable in cash or kind under Note 19 Short Term Loans and Advances no confirmationshave been received.

DISCLAIMER OF OPINION

During the year the Company discovered misappropriation of funds by inflating theexpenses to the tune of approximately Rs.900.00 lakh by some of the employees at two ofits branches situated in the State of Andhra Pradesh audited by branch auditors. TheCompany has filed a First Information Report with Criminal Investigation Department (CID)Andhra

Pradesh. The matter is under investigation by CID. The Company has recovered an amountof Rs.164.06 lakh from the concerned employees till date which has been disclosed as anExceptional Item in the Statement of Profit and Loss. We are unable to comment on impactif any on the financial statements for the year ended March 31 2016. The Branch Auditorshave also expressed Disclaimer of Opinion in this matter.

QUALIFIED OPINION

Except as stated in the ‘Basis for Qualified Opinion Rs.paragraph and‘Disclaimer of Opinion' paragraph in our opinion and according to the informationand explanations given to us the aforesaid standalone financial statements give theinformation required by the Act in the manner so required and give a true and fair view inconformity with the accounting principles generally accepted in India of the state ofaffairs of the Company as at March 31 2016 and its loss and its cash flows for the yearended on that date.

EMPHASIS OF MATTER

Without qualifying our opinion attention is drawn to :

(i) Note 2 (M) the Scheme of Amalgamation and Arrangement between Mac Oil Palm Limitedand the Company and their respective shareholders sanctioned by the Hon'ble High Court ofJudicature at Mumbai in an earlier year pursuant to which an amount of Rs.13018.00 lakh(previous year Rs.14115.43 lakh) has been debited to Business Development Reserve.

Had the Scheme approved by the Hon'ble High Court not prescribed the accountingtreatment described in Note 2(M) to the financial statements the accumulated balance inthe General Reserve and Securities Premium account as at March 31 2016 would have beenhigher by Rs.5193.54 lakh and Rs.23842.30 lakh respectively loss for the year wouldhave been higher by Rs.10307.05 lakh the accumulated balance in Statement of Profit andLoss as at March 31 2016 would have been lower by Rs.29957.07 lakh the balance inRevaluation Reserve would have been higher by Rs.11954.28 lakh and the balance inBusiness Development Reserve would have been Rs.Nil.

However the aggregate balance in Reserves and Surplus as at March 31 2016 would haveremained the same.

(ii) Note 30 (B)(b)(iii) in respect of advances of Rs.49969.15 lakh given to suppliersfor supply of castor seeds against firm commitments. There is a substantial volatility inthe market price of the said commodity as compared to the contracted price. The amount ofloss that may be incurred on purchase of the said goods cannot be ascertained at thisstage.

OTHER MATTERS

We did not audit the financial statements of two branches included in the standalonefinancial statements of the Holding Company whose financial statements reflect total netassets of Rs.28517.42 lakh as at March 31 2016 and total revenues from operations ofRs.2786.07 lakh for the year ended on that date. The financial statements of thesebranches have been audited by the branch auditors whose reports have been furnished to usand our opinion in so far as it relates to the amounts and disclosures included in respectof these branches is based solely on the report of the branch auditors.

Our opinion is not modified in respect of this matter.

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 section 143(11) of the Act we givein the "Annexure A'' a statement on the matters specified in the paragraph 3and 4 of the Order to the extent applicable.

2. As required by Section 143 (3) of the Act we report that:

a) We have sought and except for the matters described in the basis for QualifiedOpinion paragraph and Disclaimer of Opinion paragraph have obtained all the informationand explanations which to the best of our knowledge and belief were necessary for thepurposes of our audit.

b) Except for the possible effects of the matters described in the Basis of QualifiedOpinion paragraph and Disclaimer of Opinion paragraph above in our opinion proper booksof account as required by law have been kept by the Company so far as it appears from ourexamination of those books and proper returns adequate for the purposes of our audit havebeen received from the branches not visited by us.

c) The reports on the accounts of the branch offices of the Company audited underSection 143(8) of the Act by branch auditors have been sent to us and have been properlydealt with by us in preparing this report.

d) 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 and with the returnsreceived from the branches not visited by us.

e) Except for the possible effects of the matters as described in the Basis ofQualified opinion paragraph in our opinion the Balance sheet Statement of Profit andLoss and Cash flow statement of the standalone financial statements comply with theAccounting Standards specified under Section 133 of the Act read with Rule 7 of theCompanies (Accounts) Rules 2014.

f) The matters described in the ‘Basis of Qualified Opinion paragraph' above inour opinion may have an adverse effect on the functioning of the Company.

g) On the basis of the written representations received from the directors as on March31 2016 taken on record by the Board of Directors none of the directors is disqualifiedas on March 31 2016 from being appointed as a director in terms of Section 164(2) of theAct.

h) With respect to the adequacy of the internal financial control over financialreporting of the Company and the operating effectiveness of such controls refer to ourseparate Report in "Annexure B".

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 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 its financialposition in its financial statements — Refer Note 30 relating to ContingentLiabilities and Commitments;

ii. The Company has made provision as required under applicable law or accountingstandard for foreseeable losses if any on long term contracts including derivativecontracts.

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

For P. D. Kunte & Co. (Regd.)
Chartered Accountants
Firm Registration No. 105479W
D.P. Sapre
Place : Mumbai Partner
Date : May 30 2016 Membership No. 40740

‘Annexure A' to Independent Auditors' Report

Referred to in paragraph 1 of the Report on Other Legal and Regulatory Requirements ofeven date to the members of RUCHI SOYA INDUSTRIES LIMITED on the financialstatements for the year ended March 31 2016.

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

(b) As explained to us the fixed assets of the Company have been physically verifiedby the Management during / at the end of the year which in our opinion is reasonablehaving regard to the size of the Company and the nature of its assets. No materialdiscrepancies between the book records and the physical inventory have been noticed. Inour opinion the frequency of verification is reasonable.

(c) In our opinion and according to the information and explanations given to usexcept for the instances listed below the title deeds of immovable properties asdisclosed in Note 11 of the standalone financial statements are held in the name of theCompany:

(Rs. in lakh)
Particulars Leasehold Land Freehold Land Buildings Total
Total Number of Cases 3 1 4
Gross Block as on March 31 2016 176.88 4.73 181.61
Net Block as on March 31 2016 105.32 4.73 110.05

ii. The inventory (other than goods in transit and stocks with third parties) has beenphysically verified by the Management during / at the end of the year. In our opinion thefrequency of verification is reasonable. In respect of inventory lying with third partiesthese have substantially been confirmed by them. As explained to us there were nomaterial discrepancies noticed on physical verification of inventory as compared to thebook records.

iii. The Company has granted unsecured loans to three Companies covered in the registermaintained under section 189 of the Companies Act 2013.

(a) In our opinion the rate of interest charged in respect of these loans is primafacie not prejudicial to the interests of the Company. There are no other terms andconditions stipulated in respect of these loans.

(b) In respect of these loans there is no stipulation as to the repayment of theprincipal amount and payment of interest. Hence we have not commented on regularity ofrepayment of principal amounts and payment of interest in respect of these loans.

(c) In view of our comments in sub-clause (b) above clause (c) of paragraph 3 of theOrder is not applicable to the Company for the year under audit.

iv. In respect of loans investments guarantees and security the Company has compliedwith the provisions of Section 185 and 186 of the Companies Act 2013.

v. The Company has not accepted deposits within the meaning of section 73 to 76 of theCompanies Act 2013 and the rules framed there under. Hence clause (v) of the Order isnot applicable to the Company for the year under audit.

vi. We have broadly reviewed the cost records made and maintained by the Companypursuant to the Rules prescribed by the Central Government under sub-section (1) ofsection 148 of the Companies Act 2013. We have however not made a detailed examinationof 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 the records ofthe Company examined by us in our opinion the Company is generally regular in depositingundisputed statutory dues including provident fund employee's state insurance income-tax sales-tax service tax duty of customs duty of excise value added tax cess andany other statutory dues with the appropriate authorities. Except for statutory duesamounting to Rs.0.83 lakh there are no amounts outstanding as at March 31 2016 forperiod of more than six months from the date they became payable.

(b) According to the information and explanations given to us there are no dues ofincome tax sales tax wealth tax service tax duty of customs duty of excise valueadded tax or cess that have not been deposited on account of any dispute except asfollows:

Name of the Statute Nature of Dues Amount

Disputed (Rs.in lakh)

Period to Which Dispute relates Forum Where Dispute is Pending
The Central Sales Tax Act 1956 VAT Act and Local Sales Tax Acts Vat Tax/Sales Tax/Entry Tax/ Sales Tax Demand and penalty as applicable. 10169.12 1999-00 to 2015-16 High Court
11072.04 1997-98 to 2013-14 Tribunal
7817.54 2001-02 to 2013-14 Commissioner Appeals
16527.18 1997-98 to 2014-15 DC Appeals /Joint Commissioner (Appeals)
615.65 2005-062007-08 2010-11 and 2013-14 Assessment
329.36 2002 to 2006 Settlement Commission
The Central Excise Act 1944 Excise Duty 445.32 2004-05 2005-06 High Court
5444.46 2001-02 to 2014-15 Tribunal
321.75 2005-06 to 2014-15 Commissioner (Appeals)
Service Tax under Finance Act 1994 Service Tax 216.88 2002-03 2008-09 to 2012-13 Tribunal Commissioner) (Appeals
427.97 2006-07 to 2013-14 2014-15
The Customs Custom Duty 1354.92 2001-022002-03 Supreme Court
Duty Act 1962 2003-04 & 2015-16
1104.48 2001-02 and 2007-08 High Court
13067.74 1998-992003-04 to 2006-07 and 2012-13 to 2013-14 Tribunal CESTAT
189.42 2003-04 2006-07 2013-14 Commissioner (Appeals)
334.04 2001-02 2004-05 and 2009-10 AC Appeals/DC Appeals
The Income Tax Act 1961 Income Tax 29712.42 2007-08 to 2013-14. Commissioner Appeals
50.32 2007-08 AC Appeals/DC Appeals
34.74 2006-07 to 2014-15 Assessment
Other Acts Octroi/ Electricity Duty/ Local Body Tax/ Biological Diversity Act/ Stamp Act 12.25 2004-2005 Supreme Court
52542.79 2005-06 2006-07 2010-11 2012-13 to 2014-15 High Court
16.54 2004-2006 Tribunal
16.34 2013-14 Assessment
Total 151823.27

viii. Except for instances of delay in repayment of principal amounts and payment ofinterest given below the Company has not defaulted in repayment of dues to banks.

Particulars of Loans

M

Amount of continuing default as on larch 31 2016 and paid subsequently (Rs. in lakh)

Due Date of Payment Actual date of Payment
Of Principal Amount Of Interest accrued
1. ECB II from DBS Bank Ltd. 1724.66 141.09 29-Mar-2016 11-Apr-2016
2. ECB I from Standard Chartered Bank 994.99 8.15 29-Mar-2016 28-Apr-16
3. Standard Chartered Bank Mumbai 4581.75 - 22-Mar-2016 12-May-2016

The Company has neither borrowed from financial institutions nor issued any debentures.

ix. During the year the Company has not raised any money by way of initial publicoffer further public offer (including debts instruments). The term loans raised duringthe year have been applied for the purpose for which those were raised.

x. During the course of examination of the books and records of the Company carriedout in accordance with the generally accepted auditing practices in India and accordingto the information and explanations given to us except for the matter relating to two ofthe branches (Refer Note 37) no material fraud by the Company or on the Company by itsofficers or employees has been noticed or reported during the course of our audit.

xi. The remuneration to Managing Director of the Company for the current year providedin the financial statements is in excess of limits permissible under section 197 andSchedule V of the Companies Act 2013 by Rs.129.32 lakh. Of the total excess amountRs.27.51 lakh has been paid to the Managing Director. The Company proposes to apply to theCentral Government for the necessary approval and also obtain sanction of the members inthe ensuing General Meeting.

Further out of the excess remuneration of Rs.187.37 lakh paid to the Managing Directorof the Company in the preceding year the Central Government has since partially approvedremuneration of Rs.112.46 lakh. The balance amount of Rs.74.91 lakh has been written backand is included in the Statement of Profit and Loss under the head Exceptional Items andis shown as recoverable from the Managing Director under the head Short-term Loans andAdvances in Note 19. The Company has again applied to Central Government for approval ofthe balance amount.

xii. In our opinion and according to the information and explanations given to us theCompany is not a Nidhi Company. Accordingly paragraph 3(xii) of the Order is notapplicable to the Company for the year under audit.

xiii. According to the information and explanations given to us and based on ourexamination of records of the Company transactions with the related parties are incompliance with section 177 and section 188 of Companies Act 2013 and the details havebeen disclosed in the Financial Statements etc. as required by the applicable accountingstandards.

xiv. Based upon the audit procedures performed and the information and explanationsgiven by the management the Company has not made any preferential allotment or privateplacement of shares or fully or partly convertible debentures during the year under audit.Accordingly the provisions of clause (xiv) of the Order are not applicable to the Companyfor the year under audit.

xv. Based upon the audit procedures performed and according to the information andexplanations given by the management the Company has not entered into any noncashtransactions with directors or persons connected with them. Accordingly the provisions ofclause (xv) of the Order are not applicable to the Company for the year under audit.

xvi. In our opinion the Company is not required to be registered under section 45-IAof the Reserve Bank of India Act 1934 and accordingly the provisions of clause 3 (xvi)of the Order are not applicable to the Company for the year under audit.

For P. D. Kunte & Co. (Regd.)
Chartered Accountants
Firm Registration No. 105479W
D.P. Sapre
Place : Mumbai Partner
Date : May 30 2016 Membership No. 40740

"Annexure B" to the Independent Auditors' Report of even date on theStandalone Financial Statements of Ruchi Soya Industries Limited

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 RuchiSoya Industries Limited ("the Company") as of March 31 2016 in conjunctionwith our audit of the standalone financial statements of the Company for the year ended onthat date.

MANAGEMENT'S RESPONSIBILITY FOR INTERNAL FINANCIAL CONTROLS

The Company's management is responsible for establishing and maintaining internalfinancial controls based on internal control over financial reporting criteria establishedby the Company considering the essential components of internal control stated in theGuidance Note on Audit of Internal Financial Controls Over Financial Reporting issued bythe Institute of Chartered Accountants of India (ICAI).

These responsibilities include the design implementation and maintenance of adequateinternal financial controls that were operating effectively for ensuring the orderly andefficient conduct of its business including adherence to Company's policies thesafeguarding 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.

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") 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.

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.

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.

OPINION

According to the information and explanations given to us and based on the audit oftest of controls except for strengthening of documentation of policies regardingdelegation of authority & access rights to financial records and process for archivalof records & periodic review which we are informed will be put in place by accountingyear ending March 31 2017 in our opinion the Company has in all material respects anadequate internal financial controls system over financial reporting and such internalfinancial controls over financial reporting were operating effectively as at March 312016 based on the internal control over financial reporting criteria established by theCompany considering the essential components of internal control stated in the GuidanceNote on Audit of Internal Financial Controls Over Financial Reporting issued by theInstitute of Chartered Accountants of India.

For P. D. Kunte & Co. (Regd.)
Chartered Accountants
Firm Registration No. 105479W
D.P. Sapre
Place: Mumbai Partner
Date : May 30 2016 Membership No.40740