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SBEC Sugar Ltd.

BSE: 532102 Sector: Agri and agri inputs
NSE: N.A. ISIN Code: INE948G01019
BSE LIVE 10:26 | 16 Aug 11.10 -0.55
(-4.72%)
OPEN

11.10

HIGH

11.10

LOW

11.10

NSE 05:30 | 01 Jan Stock Is Not Traded.
OPEN 11.10
PREVIOUS CLOSE 11.65
VOLUME 200
52-Week high 17.90
52-Week low 8.13
P/E 22.65
Mkt Cap.(Rs cr) 53
Buy Price 0.00
Buy Qty 0.00
Sell Price 11.10
Sell Qty 1800.00
OPEN 11.10
CLOSE 11.65
VOLUME 200
52-Week high 17.90
52-Week low 8.13
P/E 22.65
Mkt Cap.(Rs cr) 53
Buy Price 0.00
Buy Qty 0.00
Sell Price 11.10
Sell Qty 1800.00

SBEC Sugar Ltd. (SBECSUGAR) - Auditors Report

Company auditors report

ToThe Members of SBEC Sugar Limited

Report on the Standalone Financial Statements

We have audited the accompanying financial statements of SBEC Sugar Limited ("thecompany")which comprise the Balance Sheet as at 31 March 2016 the Statement ofProfit and Loss the Cash Flow Statement for the year then ended and a summary ofsignificant 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)of the Companies Act 2013 ("the Act") with respect to the preparation of thesefinancial statements that give a true and fair view of the financial positionfinancialperformance and cash flows of the Company in accordance with 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 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 thereunder.

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 theamountsanddisclosures financialstatements . The proce the -dures selected depend onthe auditor’s judgment including the assessment of the risks of materialmisstatement of the financial statements whether due to fraud or error. In making thoserisk assessments the auditor considers internal financial control relevant to theCompany’s preparation of the financial statements that give true and fair view inorder to design audit procedures that are appropriate in the circumstances. An audit alsoincludes evaluating the appropriateness of accounting policies used and the reasonablenessof the accounting estimates made by Company’s Directors as well as evaluating theoverall presentation of 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 financial statements.

Basis of qualified opinion i. During the year the company has not made provisionfor interest on late payment of cane dues amounting to Rs. 3280.70lacs . Accordingly theexpenses and profit for the year ended on 31st March 2016 would have been lower by Rs3280.70 lacs and its consequential impact on EPS. ii. The company had executed a deed ofassignment with a subsidiary company "SBEC Bioenergy Limited" to transfer itsclaim and all securities and charges created by Modi Industries Limited in its favour fora consideration of Rs.12500 lacs of which Rs. 8300 lacs shall be received as per themutually agreed installments within a period of five years from the date of execution ofthe deed. The company has not not received any amount out of balance amount of Rs 8300lacs till the end of March 31st '2016. There seems to be uncertainty to recover the amountwithin the prescribed timeline and it may affect the ultimate recoverability of thecarrying value of the said amount due from SBEC BioenergyLimited.Thesefinancialstatementsdo not include any adjustments that might result from the 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 therequired and give a true and fair view in conformity with the accounting principlesgenerally accepted in India; a) in the case of the Balance Sheet of the state of affairsof the Company as at March 31 2016; b) in the case oftheStatementofProfit for the yearended on that date; and and Loss ofthe Profit c) in the case of the Cash Flow Statementof the cash flows for the year ended on that date.

Emphasis of Matters

We draw attention to the following matters in the Notes to the financial statements: a)Note no-41 of the statement regarding the company being registered with the Board forIndustrial 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. The statement have been preparedby the management of the company on a going concern basis as the company has continued itsnormal manufacturing during the current year and also generated profits. b) Note No-47 tothe statement regarding accounting of subsidy of Rs. 2167.70 lacs as per PNCM CabinetDecision dated 18th January 2016 issued by State Government of Uttar Pradesh subject toapproval of appropriate authority and the Management is virtually certain regardingrealisation of subsidy. The company has netted off the subsidy from the cost of materialconsumed for the quarter ended 31st March'2016. c) Note No-46 of the statement where theCompany is carrying Rs 1208.12 lacs as assets held for disposal since March'2013. Themanagement expects that the assets will be realized to the extent as stated & does notcall for any provision as on the date of the Balance Sheet.

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 andobtained all the information and explanations which to the best of our knowledge andbelief were necessary for the purposes of our audit. b) In our opinion proper books ofaccount as required by law have been kept by the Company so far as appears from ourexamination of those books. c) The Balance Sheet the Statement of Profit and Loss andCash Flow Statement dealt with by this Report are in agreement with the books of account.d) Except for the effects of the matter described in the Basis for Qualified Opinionparagraph financialstate ouropiniontheaforesaid -ments 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) underthe Emphasis of Matters paragraph above in our opinion may have an adverse effect on thefunctioning of the Company. f) On the basis of written representations received from thedirectors as on 31 March 2016 taken on record by the Board of Directors none of thedirectors is disqualified as on 31 March 2016 from being appointed as a director interms of Section 164(2) of theAct. g) With respect to the adequacy of the internalfinancial controls over financial reporting of the Company and the operating effectivenessof such controls refer to our separate Report in Annexure "C" to this report;and h) With respect to the other matters included in the Auditor’s Report and to ourbest of our information and according to the explanations given to us: i. The Company hasdisclosed the impact of pending litigations on its financial position in its financialstatements Refer Note 32 (iii) & (iv) to the financial statements. ii. The Company didnot have any long-term contracts including derivative contracts for which there were anymaterial foreseeable losses iii. There were no amounts which were required to betransferred to the Investor Education and Protection Fund by the Company.

For Doogar & Associates
Chartered Accountants
Firm Regn. No. 000561N
Sd/-
Mukul Marwah
Place: New Delhi Partner
Dated: 30th May 2016 Membership No.-511239

ANNEXURE TO AUDITORS’ REPORT

(Annexure referred to in our report of even date) i.(a) The Company has maintainedproper records showing particulars including quantitative details and situation of fixedassets. (b) Though the Company has a programme of physical verification of its fixedassets in phased manner which in our opinion is reasonable having regard to the size ofthe company and the nature of its assets however the Fixed assets have not beenphysically verified by the management during the year therefore discrepancies if anycould not be determined.

(c) According to the information and explanation given to us and on the basis of ourexamination of the records of the Company the title deed of immovable properties includedin fixed assets are held in the name of the company. Some of these title deeds are givenas security for securing various facilities sanctioned by banks and accordingly theseoriginal title deeds are kept with Banks as security for the lenders. ii. The inventoryhas not been physically verified by the management during the year. iii. According to theinformation and explanations given to us the company has not granted any loans securedor unsecured to companies firms Limited Liability Partnerships or other parties coveredin the register maintained under section 189 of the Companies Act 2013. Accordingly theprovisions of clause 3(iii) (a) to (c) of the Order are not applicable to the company andhence not commented upon. iv. In our opinion and according to the information andexplanations given to us there are no loans investments guarantees and securitiesgranted in respect of which provisions of section 185 and 186 of the Companies Ac 2013 areapplicable and hence not commented upon. v. The Company has not accepted any freshdeposits from the public within the meaning of directives issued by the Reserve Bank ofIndia and provisions of sections 73 to 76 or any other relevant provisions of theCompanies Act 2013 and the rules framed thereunder are not applicable. The depositsoutstanding as at the start of the financial year have been repaid during the financialyear in vi. We have broadly reviewed the records including the books of accountmaintained by the company pursuant to the rules prescribed by the Central Government forthe maintenance of cost records under sub-section (1) of section 148 of the Companies Act2013 in respect of company’s products and are of the opinion that prima facie theprescribed accounts and records have been made and maintained. vii.(a)According to therecords of the Company undisputed statutory dues including provident fundemployees’ state insurance income tax sales tax service tax duty of customs dutyof excise value added tax cess and other material statutory dues have generally beenregularly deposited during the year with the appropriate authorities.

(b) According to the information and explanations given to us the company has not paidWater Cess of Rs. 562265 and interest of Rs. 159674 to U.P. Pollution Control Boardfor the year 2012-13 for which a fresh demand order dated 16the Feb 2015 has been receivedby the company.

(c) 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 theinformation and explanations given to us the Company has not raised any money by way ofinitial public offer / further public offer. Further based on our audit procedures andaccording to the information and explanations given to us and on an overall examination ofthe balance sheet we report that monies raised by way of term loans were applied for thepurposes for which those were raised. x. During the course of our examination of the booksand records of the Company carried out in accordance with the generally accepted auditingpractices in India we have neither come across any instance of fraud on or by the Companynoticed or reported during the year nor have we been informed of such case by themanagement xi. Based on our audit and according to the information and explanations givento us we report that the managerial remuneration has been paid / provided in accordancewith the requisite approvals mandated by the provisions of section 197 read with ScheduleV to the Companies Act 2013. xii. In our opinion and according to the information andexplanations given to us the Company is not a nidhi company. Therefore the provisions ofclause 3(xii) of the order are not applicable to the Company and hence not commented upon.xiii Based on our audit procedures and according to the information and explanations givento us transactions with the related parties are in compliance with section 177 and 188 ofCompanies Act 2013 where applicable and the details have been disclosed in the notes tothe financial statements as required by the applicable accounting standards. xiv.According to the information and explanations given to us and on an overall examination ofthe balance sheet the company has not made any preferential allotment or privateplacement of shares or fully or partly convertible debentures during the year under reviewand hence reporting requirements under clause 3(xiv) are not applicable to the companyand not commented upon. xv. Based on our audit procedures and according to theinformation and explanations given to us the Company has not entered into any non-cashtransactions with directors or persons connected with him. xvi. According to theinformation and explanations given to us the Company is not required to be registeredunder section 45-IA of the Reserve Bank of India Act 1934.

For Doogar & Associates
Chartered Accountants
Firm Regn. No. 000561N
Sd/-
Mukul Marwah
Place: New Delhi Partner
Dated: 30th May 2016 Membership No.-511239

ANNEXURE "B" TO AUDITORS’ REPORT

Referred in Paragraph VII(C) of Annexure "A" a statement on the mattersspecified in the Companies (Auditors’ Report) Order 2016for the year ended 31stMarch 2016.

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 790.53 2010-11 Application 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 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
Central Excise 1944 Cess on Sugar 4.35 01.01.2009- 30.09.2009 Appeal filed before CESTAT by the department against the Commissioner (Appeals) Meerut
Finance Act 1994 Service tax Credit taken in invoice beyond 6 month 53.49 Dec 2013 Objection raised by central Excise
Dec 2014 Auditors. Appeal to be filed
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 on Lease rent 1.21 April 2011 Appeal filed before Commissioner (Appeals) Meerut.
March 2012
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 thefinancial statements 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 internalfinancial controls over financial reporting of SBEC Sugar Limited ("theCompany") as of March 31 2016 in conjunction with our audit of the financialstatements 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 -cial reporting criteria established by the Company considering the essentialcomponents of internal control stated in the Guidance Note on Audit of Internal FinancialControls Over Financial Reporting issued by the Institute of Chartered Accountants ofIndia. 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 the Company’spolicies the safeguarding of its assets the prevention and detection of frauds anderrors the accuracy and completeness of the accounting records and the timelypreparation of reliable 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 Auditingas 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 theiroperatingeffectiveness.Ourauditofinternalfinancialcontrols over financial reportingincluded obtaining an understanding of risk that a material weakness exists and testingand evaluating the design and overfinancialinternalfinancial operating effectiveness ofinternal control based on the assessed risk. The procedures selected depend on theauditor’s judgement including the assessment of the risks of material misstatementof the financial statements whether due to fraud or error. We believe that the auditevidence we have obtained is sufficientand appropriate to provide a basis controls overfinancial reporting.

Meaning of Internal Financial Controls Over Financial Reporting control overfinancial reporting is a process designed to provide reasonable assurance regarding thereliability of Acompany'sinternalfinancial financial reporting and the preparation offinancial statements for external purposes in accordance with generally acceptedaccounting princi-control over financial ples.Acompany'sinternalfinancial reportingincludes those policies and procedures that (1) pertain to the maintenance of recordsthat 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 reporting may becomeinadequate because of changes in conditions or that the degree of compliance with thepolicies 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 March 31 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 Doogar & Associates
Chartered Accountants
Firm Regn. No. 000561N
Sd/-
Mukul Marwah
Place: New Delhi Partner
Dated: 30th May 2016 Membership No.-511239