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|BSE 05:30 | 01 Jan|
|NSE 05:30 | 01 Jan|
|BSE: N.A.||Sector: N.A.|
|NSE: N.A.||ISIN Code: N.A.|
|BSE 05:30 | 01 Jan|
|NSE 05:30 | 01 Jan|
To the Members of Upper Ganges Sugar & Industries Limited Report on theFinancial Statements
We have audited the accompanying financial statements of Upper Ganges Sugar &Industries Limited ("the Company") which comprise the Balance Sheet as at March31 2016 the Statement of Profit and Loss and Cash Flow Statement for the year thenended and a summary 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 stated in Section134(5) of the Companies Act 2013 ("the Act") with respect to the preparation ofthese financial statements that give a true and fair view of the financial positionfinancial performance 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 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; andthe design implementation and maintenance of adequate 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.
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 accordancewith the Standards on Auditing issued by the Institute of Chartered Accountants of Indiaas specified under Section 143(10) of the Act. Those Standards require that we comply withethical requirements and plan and perform the audit to obtain reasonable assurance aboutwhether the 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 financialstatements whether due to fraud or error. In making those risk assessments the auditorconsiders 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 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 issufficient and appropriate to provide a basis for our qualified audit opinion on thefinancial statements.
BASIS FOR QUALIFIED OPINION
As indicated in Note 14 to the financial statements the Company continues to carryDeferred Tax Asset (DTA) (net) of ' 7017.61 lacs (after reversal of '199.75 lacs during the year) up to March 312016 based on the future profitabilityprojections made by the management. In our opinion in the absence of virtual certaintyabout the above projections as required in terms of Accounting Standard - 22 had theabove impact been considered loss for the year would have been ' 5898.35 lacs asagainst the reported profit of ' 1119.26 lacs and reserves & surplus as at thebalance sheet date would have been (-) ' 7239.11 lacs as against the reportedfigure of (-) ' 221.50 lacs.
Our audit opinion on the financial statements for the previous year was also qualifiedin respect of the above matter.
In our opinion and to the best of our information and according to the explanationsgiven to us except for the effect of the matter stated in the Basis for Qualified Opinionparagraph the financial statements give the information required by the Act in the mannerso required and give a true and fair view in conformity with the accounting principlesgenerally accepted in India of the state of affairs of the Company as at March 31 2016of its profit and its cash flows for the year ended on that date.
EMPHASIS OF MATTER
We draw attention to Note 36 to the financial statements in respect of composite schemeof arrangement to restructure and de-link the Company's multiple businesses into separateentities w.e.f 1st April 2015 subject to necessary approvals more fully describedtherein. Pending such approvals no adjustment has been made in these accounts. Ouropinion is not qualified 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 sub-section (11) of section 143 ofthe Act we give in the "Annexure 1" a statement on the matters specified inparagraphs 3 and 4 of the Order.
2. 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 purpose of our audit;
(b) Except for the effects of the matter described in the Basis for Qualified Opinionparagraph above in our opinion proper books of account as required by law have been keptby the Company so far as it 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) Except for the effects of the matter stated in the Basis for Qualified Opinionparagraph above in our opinion the aforesaid financial statements comply with theAccounting Standards specified under section 133 of the Act read with Rule 7 of theCompanies (Accounts) Rules 2014;
(e) The matter described in the Basis for Qualified Opinion paragraph above in ouropinion may have an adverse effect on functioning of the Company.
(f) On the basis of written representations received from the directors as on March 312016 and 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) ofthe Act;
(g) The qualification relating to the maintenance of accounts and other mattersconnected therewith are as stated in the Basis for Qualified Opinion paragraph above;
(h) 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 2" to this report;
(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 7 and 35 to the financial statements;
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.
Annexure 1 referred to in paragraph 1 under the heading "Report on Other Legal andRegulatory Requirements" of our report of even date to the members of Upper GangesSugar & Industries Limited as at and 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) Fixed assets were physically verified by the management during the year inaccordance with a planned programme of verifying all of them once in three years which inour opinion is reasonable having regard to the size of the Company and the nature of itsassets. No material discrepancies were noticed on such verification.
(c) According to information and explanations given by the management the title deedsof immovable properties included in Fixed Assets are held in the name of the Companyexcept in respect of land aggregating ' 25.42 lacs where the title deeds are yet tobe executed in favour of the Company. Further in respect of freehold land and leaseholdland aggregating to ' 105.21 lacs of Gross Bock (Net Block '10.66 lacs) as at March31 2016 original title deeds were not available with the Company since as explained thetitle deeds thereof are lying with the banks as security towards various credit facilitiesand hence we are unable to comment on the same
(ii) The management has conducted physical verification of inventory at reasonableintervals during the year and no material discrepancies were noted on such physicalverification except for in one of the units fully detailed in the note 23 to the financialstatements which have been properly dealt with in the books of account.
(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) (b) and (c) of theOrder are not applicable to the Company and hence not commented upon.
(iv) In our opinion and according to the information and explanations given to usthere are 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) In respect of deposits accepted in earlier years and repaid during the year in ouropinion and according to the information and explanations given to us directives issuedby the Reserve Bank of India and the provisions of section 73 to 76 or any other relevantprovisions of the Companies Act 2013 and the rules framed there under to the extentapplicable have been complied with. We are informed by the management that no order hasbeen passed by the Company Law Board National Company Law Tribunal or Reserve Bank ofIndia or any Court or any other Tribunal.
(vi) We have broadly reviewed the books of account maintained by the Company pursuantto the rules made by the Central Government for the maintenance of cost records undersection 148(1) of the Companies Act 2013 in respect of its products and are of theopinion that prima facie the specified accounts and records have been made andmaintained. We have not however made a detailed examination of the same.
(vii) (a) Undisputed statutory dues including provident fund employees' stateinsurance income-tax sales-tax service tax duty of custom duty of excise value addedtax cess and other material statutory dues have generally been regularly deposited withthe appropriate authorities though there has been a slight delay in a few cases.
(b) According to the information and explanations given to us no undisputed dues inrespect of provident fund employees' state insurance income-tax service tax sales-taxduty of custom duty of excise value added tax cess and other material statutory dueswere outstanding at the year end for a period of more than six months from the date theybecame payable.
(c) According to the records of the Company the dues outstanding of income-taxsales-tax service tax duty on custom duty of excise and value added tax on account ofany dispute are as follows:
(viii) According to information and explanations given by the management we are of theopinion that the Company has not defaulted in repayment of dues to banks or government.The Company did not have any outstanding dues in respect of a financial institutions ordebenture holders during the year.
(ix) According to the information and explanations given by the management term loanswere applied for the purpose for which the loans were obtained. The Company has not raisedany money way of initial public offer / further public offer / debt instruments during theyear.
(x) We report that the Company has noticed/ reported during the year for shortagesamounting to ' 2206.08 lacs in the inventory of Finished Goods and Work-inProgressat one of the units of the Company resulting out of overstatement of yield recorded inearlier years as more fully described in Note 23 of the financial statements. The Companyhas made necessary accounting adjustments in the financial statements.
(xi) According to the information and explanations given by the management theprovisions of section 197 read with Schedule V of the Act is not applicable to the companyand hence reporting under clause 3(xi) are not applicable and hence not commented upon.
(xii) In our opinion 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) According to the information and explanations given by the managementtransactions 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 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 not commented upon.
(xv) According to the information and explanations given by the management the Companyhas not entered into any non-cash transactions with directors or persons connected withhim as referred to in section 192 of Companies Act 2013.
(xvi) According to the information and explanations given to us the provisions ofsection 45-IA of the Reserve Bank of India Act 1934 are not applicable to the Company.
Annexure 2 to the Independent Auditors' Report (referred to in our report of even dateto the members of Upper Ganges Sugar & Industries Limited as at and for the year ended31st March 2016)
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 UpperGanges Sugar & Industries Limited ("the Company") as of March 31 2016 inconjunction with our audit of the standalone financial statements of the Company for theyear 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.
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.
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 judgement 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 internal financial controls system overfinancial 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.
According to the information and explanation given to us and based on our audit thefollowing material weakness has been identified as at March 312016:
The Company's internal financial controls over recognition of deferred tax asset andcontrols over assessing virtual certainty in recognition of deferred tax asset were notoperating effectively which has resulted in material misstatement whereby the Company hasrecognised deferred tax assets without establishing virtual certainty under AccountingStandard 22 - Accounting for Taxes on Income notified under the Act read with Rule 7 ofthe Companies (Accounts) Rules 2014.
A 'material weakness' is a deficiency or a combination of deficiencies in internalfinancial control over financial reporting such that there is a reasonable possibilitythat a material misstatement of the company's annual or interim financial statements willnot be prevented or detected on a timely basis.
In our opinion the Company has in all material respects maintained adequate internalfinancial controls over financial reporting as of March 31 2016 based on the internalcontrol over financial reporting criteria established by the Company considering theessential components of internal control stated in the Guidance Note on Audit of InternalFinancial Controls Over Financial Reporting issued by the Institute of CharteredAccountants of India and except for the effects of the material weakness described aboveon the achievement of the objectives of the control criteria the Company's internalfinancial controls over financial reporting were operating effectively as of March 312016.
We also have audited in accordance with the Standards on Auditing issued by theInstitute of Chartered Accountants of India as specified under Section 143(10) of theAct the standalone financial statements of Upper Ganges Sugar & Industries Limitedwhich comprise the Balance Sheet as at March 31 2016 and the related Statement of Profitand Loss and Cash Flow Statement for the year then ended and a summary of significantaccounting policies and other explanatory information. This material weakness wasconsidered in determining the nature timing and extent of audit tests applied in ouraudit of the March 31 2016 standalone financial statements of Upper Ganges Sugar &Industries Limited and has affected our opinion on the standalone financial statements ofthe company and we have issued a modified opinion on the standalone financial statementsdated May 13 2016.