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SBEC Sugar Ltd.

BSE: 532102 Sector: Agri and agri inputs
NSE: N.A. ISIN Code: INE948G01019
BSE LIVE 13:30 | 12 Oct 12.00 -0.40
(-3.23%)
OPEN

12.95

HIGH

12.98

LOW

11.78

NSE 05:30 | 01 Jan Stock Is Not Traded.
OPEN 12.95
PREVIOUS CLOSE 12.40
VOLUME 6503
52-Week high 17.90
52-Week low 8.13
P/E
Mkt Cap.(Rs cr) 57
Buy Price 0.00
Buy Qty 0.00
Sell Price 12.00
Sell Qty 13.00
OPEN 12.95
CLOSE 12.40
VOLUME 6503
52-Week high 17.90
52-Week low 8.13
P/E
Mkt Cap.(Rs cr) 57
Buy Price 0.00
Buy Qty 0.00
Sell Price 12.00
Sell Qty 13.00

SBEC Sugar Ltd. (SBECSUGAR) - Auditors Report

Company auditors report

To The Members of SBEC Sugar Limited

Report on the Standalone Financial Statements

We have audited the accompanying financial statements of SBEC Sugar Limited("the company")which comprise the Balance Sheet as at 31 March 2017 theStatement of Profit and Loss the Cash Flow Statement for the year then ended and asummary of significant accounting policies and other explanatory information.

Management's Responsibility for the Financial Statements

The Company's Board of Directors is responsible for the matters in section 134(5) ofthe Companies Act 2013 ("the Act") with respect to the preparation of thesefinancial statements that give a true and fair view of the financial position financialperformance and cash flows of the Company in accordance with accounting principlesgenerally accepted in India including the Accounting Standards specified under Section133 of the Act read with Rule 7 of the Companies (Accounts) Rules 2014. Thisresponsibility also includes the maintenance of adequate accounting records in accordancewith the provision of the Act for safeguarding of the assets of the Company and forpreventing and detecting the frauds and other irregularities; selection and application ofappropriate accounting policies; making judgments and estimates that are reasonable andprudent; and design implementation and maintenance of internal financial control thatwere operating 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.

Auditor's Responsibility

Our responsibility is to express an opinion on these financial statements based on ouraudit. We have taken into account the provisions of the Act the accounting and auditingstandards and matters which are required to be included in the audit report under theprovisions of the Act and the Rules made there under.

We conducted our audit in accordance with the Standards on Auditing specifiedundersection 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 anddisclosures in the financial statements. The procedures selected depend on the auditor'sjudgment including the assessment of the risks of material misstatement of the financialwhether due to fraud or error. In making those risk assessments the auditor considersinternal financial control relevant to the Company's preparation of the financialstatements that give true and fair view in order to design audit procedures that areappropriate in the circumstances. An audit also includes evaluating the appropriateness ofaccounting policies used and the reasonableness of the accounting estimates made byCompany's Directors as well as evaluating the overall presentation of the financialstatements. We believe that the audit evidence we have obtained is sufficient andappropriate to provide a basis for our audit opinion on the financial -ments.

Basis of qualified opinion

i. The Company has not made provision for interest on late payment of cane dues for theseason 2015-16 of Rs3476.76 and for 2016-17 of Rs 491.91 lacs. Accordingly had theprovision being made the net loss for the year ended on 31st March 2017 would have beenhigher by Rs.3968.67 and its consequential impact on EPS.

ii. The company had executed a deed of assignment with a subsidiary company "SBECBioenergy Limited" to transfer its claim and all securities and charges created byModi Industries Limited in its favour for a consideration of Rs.12500 lacs of which Rs.8300 lacs shall be received as per the mutually agreed installments within a period offive years from the date of execution of the deed. The company has not received any amountout of balance amount of Rs 8300lacs till the end of March31st '2017. There seems to beuncertainty to recover the amount within the prescribed timeline and it may affect theultimate recoverability of the carrying value of the said amount due from SBEC BioenergyLimited. These financial statements do not include any adjustments that might result fromthe uncertainty mentioned above.

Qualified Opinion

In our opinion and to the best of our information and according to the explanationsgiven to us except for the affects of matter described in the Basis for Qualified Opinionparagraph the aforesaid 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;

a) in the case of the Balance Sheet of the state of affairs of the Company as at March31 2017;

b) in the case of the Statement of Profit and Loss of the Loss for the year ended onthat date; and

c) in the case of the Cash Flow Statement of the cash flows for the year ended on thatdate.

Emphasis of Matters

We draw attention to the following matters in the Notes to the financial statements:

a) note no 40 of the statement regarding the company being registered with the Boardfor Industrial and Financial Reconstruction (BIFR) as per communication received from BIFRvide its letter No. 3/(S-22)/BC/2013 dated 21st August 2013 and consequent to it becominga Sick Industrial u/s 3(1)(0) of SICA as the company's net worth has been eroded and thecompany has incurred cash losses during the prior years. However vide notificationdated25.11.16 the Sick Industrial Companies (Special Provisions) Act 1985 (SICA) was repealedwith effect from 01.12.2016 by Sick Industrial Companies (Special Provisions) Repeal Act2003. In terms of Section 4(b) of the Repeal Act all pending proceedings under theprevious Act (SICA) stands abated. The statement have been prepared by the management ofthe company on a going concern basis as the company has continued its normal manufacturingduring the current year.

b) note no 31(b)of the statement regarding interest payment on cane dues where the HighCourt vide its order dated 9th March 2017 has set aside the decision of State Governmentfor the waiver of Interest for the year 2012-13 2013-14 and 2014-15 and asked the CaneCommissioner to take a final call in the matter pending final order the Company has notmade provision for interest on the late payment of cane dues for years 2012-132013-14and 2014-15.

Our opinion is not modified in respect of these matters.

Report on other Legal and Regulatory Requirements

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 appears from our examination of those books. c) The Balance Sheet theStatement of Profit and Loss and Cash Flow Statement dealt with by this Report are inagreement with the books of account.

d) Except for the effects of the matter described in the Basis for Qualified Opinionparagraph in our opinion the aforesaid financial statements comply with the AccountingStandards specified under Section 133 of the Act read with Rule 7 of the Companies(Accounts) Rules 2014.

e) The going concern matter described in sub-paragraph (a) under the Emphasis ofMatters paragraph above in our opinion may have an adverse effect on the functioning ofthe Company.

f) On the basis of written representations received from the directors as on 31 March2017 taken on record by the Board of Directors none of the directors is disqualified ason 31 March 2017 from being appointed as a director in terms of Section 164(2) of theAct.

g) 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 "C" to this report; and

h) With respect to the other matters included in the Auditor's Report and to our bestof 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 33 (iii) & (iv) to the financialstatements.

ii. The Company did not have any long-term contracts including derivative contracts forwhich there were any material foreseeable losses

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

iv. The Company has provided requisite disclosures financial statements as toholdings as well as dealings in Specified Bank the Notes during the period from 8thNovember 2016 to 30th December 2016. Based on audit procedures and relying on themanagement representation we report that the disclosures are in accordance with books ofaccount maintained by the Company and as produced to us by the Management Refer Note46 tothe financial statements

For Doogar & Associates
Chartered Accountants
Firm Regn. No. 000561N
Sd/-
Mukesh Goel
Place: New Delhi Partner
Dated: 29th May 2017 Membership No.-081810

ANNEXURE "A" TO THE INDEPNDENT AUDITORS' REPORT

(Annexure referred to in our report of even date)

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

(b) Though the Company has a programme of physical verification of its fixed assets inphased manner which in our opinion is reasonable having regard to the size of thecompany and the nature of its assets however the Fixed assets have not been physicallyverified by the management during the year therefore discrepancies if any could not bedetermined.

(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 propertiesincluded in fixed assets are held in the name of the company. Some of these title deedsare given as security for securing various facilities sanctioned by banks and accordinglythese original title deeds are kept with Banks as security for the lenders.

ii. The inventory has not been physically verified by the management during the year.

iii. According to the information and explanations given to us the company has notgranted any loans secured or unsecured to companies firms Limited LiabilityPartnerships or other parties covered in the register maintained under section 189 of theCompanies Act 2013. Accordingly the provisions of clause 3(iii) (a) to (c) of the Orderare not applicable to the company and hence not commented upon.

iv. In our opinion and according to the information and explanations given to us thereare no loans investments guarantees and securities granted in respect of whichprovisions of section 185 and 186 of the Companies Act 2013 are applicable and hence notcommented upon.

v. The Company has not accepted any fresh deposits from the public within the meaningof directives issued by the Reserve Bank of India and provisions of sections 73 to 76 orany other relevant provisions of the Companies Act 2013 and the rules framed thereunderare not applicable. The deposits outstanding as at the start of the financial year havebeen repaid during the financial year in full.

vi. We have broadly reviewed the records including the books of account maintained bythe company pursuant to the rules prescribed by the Central Government for the maintenanceof cost records under sub-section (1) of section 148 of the Companies Act 2013 in respectof company's products and are of the opinion that prima facie the prescribed accounts andrecords have been made and maintained.

vii. (a) According to the records of the Company undisputed statutory dues includingprovident fund employees' state insurance income tax sales tax service tax duty ofcustoms duty of excise value added tax cess and other material statutory dues havegenerally been regularly deposited during the year with the appropriate authorities.

(b) According to the information and explanations given to us and as per the books andrecords examined by us the particulars of statutory dues of the specified statue as atthe year which have not been deposited on account of a dispute are referred to inAnnexure "B".

viii. According to the records of the Company examined by us and the information andexplanations given to us in our opinion the Company has not defaulted in repayment ofits dues to Governments banks and financial institutions. The Company has not taken anyloans from debenture holders.

ix. Based on our audit procedures and according to the information and explanationsgiven to us the Company has not raised any money by way of initial public offer / furtherpublic offer. Further based on our audit procedures and according to the information andexplanations given to us and on an overall examination of the balance sheet we reportthat monies raised by way of term loans were applied for the purposes for which those wereraised.

x. During the course of our examination of the books and records of the Company carriedout in accordance with the generally accepted auditing practices in India we have neithercome across any instance of fraud on or by the Company noticed or reported during theyear nor have we been informed of such case by the management

xi. Based on our audit and according to the information and explanations given to uswe report that the managerial remuneration has been paid / provided in accordance with therequisite approvals mandated by the provisions of section 197 read with Schedule V to theCompanies Act 2013.

xii. In our opinion and according to the information and explanations given to us theCompany is not a nidhi company. Therefore the provisions of clause 3(xii) of the orderare not applicable to the Company and hence not commented upon. xiii. Based on our auditprocedures and according to the information and explanations given to us transactionswith the related parties are in compliance with section 177 and 188 of Companies Act 2013where applicable and the details have been disclosed in the notes to the financialstatements as required by the applicable accounting standards.

xiv. According to the information and explanations given to us and on an overallexamination of the balance sheet the company has not made any preferential allotment orprivate placement of shares or fully or partly convertible debentures during the yearunder review and hence reporting requirements under clause 3(xiv) are not applicable tothe company and not commented upon.

xv. Based on our audit procedures and according to the information and explanationsgiven to us the Company has not entered into any non-cash transactions with directors orpersons connected with him.

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

For Doogar & Associates
Chartered Accountants
Firm Regn. No. 000561N
Sd/-
Mukesh Goel
Place: New Delhi Partner
Dated: 29th May 2017 Membership No.-081810

ANNEXURE "B" TO AUDITORS' REPORT

Referred in Paragraph VII(B) of Annexure "A" a statement on the mattersspecified in the Companies (Auditors' Report) Order 2016 for the year ended 31st March2017.

Name of the Statute Name of Dues Amount (Rs. in Lacs) Period to which amount relates Forum where dispute is pending
UP VAT Act 2008 Entry tax imposed on Sugar Purchase and sold 760.56 2010-11 Application to be Filed for reopen the same u/s 32
UP VAT Act 2008 VAT imposed on Molasses Bagasse and old scrap sold 622.68 2010-11 Application to be Filed for reopen the same u/s 32
UP VAT Act 2008 CST imposed on Molasses sold 70.00 2010-11 Application Filed for reopen the same u/s 32
UP VAT Act 2008 VAT imposed on bagasse given to M/s SBEC Bioenergy 43.47 2008-09 Appeal filed before Honorable High Court by Commercial Tax Department against order passed by Member Commercial Tax Tribunal
Central Excise 1944 Cenvat Credit taken on HR plates Angles Shape section 13.88 2012-13 Appeal filed before Commissioner Central Excise.
Central Excise 1944 Excise duty on removal for Bagasse & Press Mud 88.64 2015-16 Show Cause Notice Received & reply submitted
Finance Act 1994 Service tax Credit taken in invoice beyond 6 month 8.59 Dec 2013 Dec 2014 Application filed before Assistant Commissioner Division-1 Meerut on 25.02.16
Finance Act 1994 Service Tax on Commission 16.83 01.04.2008-01.12.2010 Appeal filled before Commissioner (Appeals) Meerut
Finance Act 1994 Service Tax on Lease Rent 7.24 2012-13 Appeal filed before Commissioner (Appeals) Meerut.
Finance Act 1994 Service Tax Credit taken on Construction Work 3.29 2009-10 Appealfiled Commissioner before Appeals-1
Finance Act 1994 Service Tax Credit taken on Sugar Sales Commission 18.97 2009-10 Reply Submitted before Joint Commissioner Meerut.
Finance Act 1994 Service Tax Credit taken on Sugar Sales Commission 18.78 2014-15 Reply Submitted before Joint Commissioner Meerut
Finance Act 1994 Service Tax Credit Taken on Modinagar Site 3.49 2014-15 Appeal rejected by Commissioner Appeal-1
Finance Act 1994 Service Tax on Commission 150.88 2003-04 CESTAT has sent back the case to Commissioner Appeals Meerut-1 for Remand

Annexure ‘C' to the independent auditor's report of even date on the financialstatements of SBEC Sugar 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 SBEC SugarLimited ("the Company") as of March 31 2017 in conjunction with our audit ofthe 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 the 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.

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 as specified under section143(10) of the Companies Act 2013 to the extent applicable to an audit of internalfinancial controls both applicable to an audit of Internal Financial Controls and bothissued by the Institute of Chartered Accountants of India. Those Standards and theGuidance Note require that we comply with ethical requirements and plan and perform theaudit to obtain reasonable assurance about whether adequate internal financial controlsover financial reporting was established and maintained and if such controls operatedeffectively in all material respects.

An 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 theoperating 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. Webelieve that the audit evidence we have obtained is sufficientand appropriate to provide abasis controls 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 reporting may become inadequatebecause of changes in conditions or that the degree of compliance with the policies orprocedures 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 March 31 2017 based on theinternal control over financial reporting criteria established by the Company consideringthe essential components of internal control stated in the Guidance Note on Audit ofInternal Financial Controls Over Financial Reporting issued by the Institute of CharteredAccountants of India.

For Doogar & Associates
Chartered Accountants
Firm Regn. No. 000561N
Sd/-
Mukesh Goel
Place: New Delhi Partner
Dated: 29th May 2017 Membership No.-081810