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Avadh Sugar & Energy Ltd.

BSE: 540649 Sector: Agri and agri inputs
NSE: AVADHSUGAR ISIN Code: INE349W01017
BSE 00:00 | 30 Sep 500.50 2.70
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OPEN 501.40
PREVIOUS CLOSE 497.80
VOLUME 5474
52-Week high 884.95
52-Week low 396.00
P/E 8.01
Mkt Cap.(Rs cr) 1,002
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OPEN 501.40
CLOSE 497.80
VOLUME 5474
52-Week high 884.95
52-Week low 396.00
P/E 8.01
Mkt Cap.(Rs cr) 1,002
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Avadh Sugar & Energy Ltd. (AVADHSUGAR) - Auditors Report

Company auditors report

To the Members of

Avadh Sugar & Energy Limited

Report on the Audit of the Financial Statements

Opinion

We have audited the financial statements of Avadh Sugar & EnergyLimited (the "Company") which comprise the balance sheet as at 31 March 2022and the statement of profit and loss (including other comprehensive income) statement ofchanges in equity and statement of cash flows for the year then ended and notes to thefinancial statements including a summary of significant accounting policies and otherexplanatory information.

In our opinion and to the best of our information and according to theexplanations given to us the aforesaid financial statements give the information requiredby the Companies Act 2013 ("Act") in the manner so required and give a true andfair view in conformity with the accounting principles generally accepted in India of thestate of affairs of the Company as at 31 March 2022 and its profit and othercomprehensive income changes in equity and its cash flows for the year ended on thatdate.

Basis for Opinion

We conducted our audit in accordance with the Standards on Auditing(SAs) specified under Section 143(10) of the Act. Our responsibilities under those SAs arefurther described in the Auditor's Responsibilities for the Audit of the FinancialStatements section of our report. We are independent of the Company in accordance with theCode of Ethics issued by the Institute of Chartered Accountants of India together with theethical requirements that are relevant to our audit of the financial statements under theprovisions of the Act and the Rules thereunder and we have fulfilled our other ethicalresponsibilities in accordance with these requirements and the Code of Ethics. We believethat the audit evidence obtained by us is sufficient and appropriate to provide a basisfor our opinion on the financial statements.

Key Audit Matters

Key audit matters are those matters that in our professional judgmentwere of most significance in our audit of the financial statements of the current period.These matters were addressed in the context of our audit of the financial statements as awhole and in forming our opinion thereon and we do not provide a separate opinion onthese matters.

Description of Key Audit Matter

Cost of sugar inventory

See note 3.7 and 8 to the financial statements

The Key audit matter How the matter was addressed in our audit
• The cost of sugar inventory is computed separately for each sugar mill of the Company. Further since sugar industry is seasonal in nature significant judgement is involved in determination of cost of inventories. In view of the significance of the matter we applied the following audit procedures in this area among others to obtain sufficient appropriate audit evidence:
• We have identified determining cost of inventories of sugar as a key audit matter because of: • Evaluated the accounting policy of sugar inventory in terms of relevant accounting standard;
• significant judgment involved in determination of cost of conversion. It is affected by variability in seasonal factors including number of sugarcane crushing days recovery of sugar from cane and allocation of cost to by-products based on net realisable value ('NRV') • Tested the design implementation and operating effectiveness of the Company's key controls over computation of cost of sugar inventory for each sugar mill;
• the voluminous data involved and • Tested the cost sheet data of each sugar mill. We assessed the adequacy of the method used relevance and reliability of data and the formula applied for determining the cost of sugar inventory. This included the basis of allocation of cost to by-products based on NRV. In addition we assessed the impact of notifications/ orders of the regulators on cost of sugar inventory. For cost of conversion we assessed the impact of variability in seasonal factors including number of sugarcane crushing days and recovery of sugar from cane.
• the relative significance of the sugar inventory in the financial statements • Assessed the adequacy of related disclosures in the financial statements.

Recoverability of MAT credit entitlement (a component of deferred taxassets)

See note 2.4. 3.16 and 15 to the financial statements

The Key audit matter How the matter was addressed in our audit
The Company has recognised Minimum Alternate Tax (MAT) credit entitlement (a component of deferred tax assets) as at 31 March 2022. The utilisation of this asset will be through offsetting it when the Company pays taxes under the provision of Income Tax Act 1961. Therefore the recoverability of MAT credit entitlement is dependent upon generation of sufficient future taxable profits within the stipulated period prescribed under the Income Tax Act 1961. In view of the significance of the matter we applied the following audit procedures in this area among others to obtain sufficient appropriate audit evidence:
The Company recognises MAT credit only when and to the extent there is convincing evidence that the Company will pay normal income tax during the period for which the MAT credit can be carried forward for set-off against the normal tax liability. This is based on profit earned during the current year and future profitability projections based on approved business plans. • Evaluated the accounting policy of MAT credit entitlement in terms of relevant accounting standard;
Significant estimation is involved in projecting future taxable profits and other assumptions affected by expected future market or economic conditions. • Tested the design implementation and operating effectiveness of key controls regarding recoverability of MAT credit assets and budgeting procedures upon which the approved business plans are based;
Due to the significant level of judgements involved in this process as detailed above we have identified recoverability of MAT credit entitlement as a key audit matter. • Assessed the profit forecast prepared by the Company by comparing it with the historical trends current year performance and approved future business plans. Our assessment was based on our knowledge of the business and the observable data of the industry;
• Evaluated the Company's estimate regarding the period by which the MAT credit entitlement would be utilised. We compared the Company's assessment to business plans and projections of future taxable profits. We verified such estimate to be within the period prescribed under the Income Tax Act 1961;
• Assessed the adequacy of related disclosures in the financial statements.

Other Information

The Company's Management and Board of Directors are responsible for theother information. The other information comprises the information included in theCompany's annual report but does not include the financial statements and our auditor'sreport thereon.

Our opinion on the financial statements does not cover the otherinformation and we do not express any form of assurance conclusion thereon.

In connection with our audit of the financial statements ourresponsibility is to read the other information and in doing so consider whether theother information is materially inconsistent with the financial statements or ourknowledge obtained in the audit or otherwise appears to be materially misstated. If basedon the work we have performed we conclude that there is a material misstatement of thisother information we are required to report that fact. We have nothing to report in thisregard.

Management's and Board of Directors' Responsibilities for the FinancialStatements

The Company's Management and Board of Directors are responsible for thematters stated in Section 134(5) of the Act with respect to the preparation of thesefinancial statements that give a true and fair view of the state of affairs profit/lossand other comprehensive income changes in equity and cash flows of the Company inaccordance with the accounting principles generally accepted in India including theIndian Accounting Standards (Ind AS) specified under Section 133 of the Act. Thisresponsibility also includes maintenance of adequate accounting records in accordance withthe provisions of the Act for safeguarding of the assets of the Company and for preventingand detecting frauds and other irregularities; selection and application of appropriateaccounting policies; making judgments and estimates that are reasonable and prudent; anddesign implementation and maintenance of adequate internal financial controls that wereoperating effectively for ensuring the accuracy and completeness of the accountingrecords relevant to the preparation and presentation of the financial statements thatgive a true and fair view and are free from material misstatement whether due to fraud orerror.

In preparing the financial statements the Management and Board ofDirectors are responsible for assessing the Company's ability to continue as a goingconcern disclosing as applicable matters related to going concern and using the goingconcern basis of accounting unless the Board of Directors either intends to liquidate theCompany or to cease operations or has no realistic alternative but to do so.

The Board of Directors is also responsible for overseeing the Company'sfinancial reporting process.

Auditor's Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether thefinancial statements as a whole are free from material misstatement whether due to fraudor error and to issue an auditor's report that includes our opinion. Reasonable assuranceis a high level of assurance but is not a guarantee that an audit conducted in accordancewith SAs will always detect a material misstatement when it exists. Misstatements canarise from fraud or error and are considered material if individually or in theaggregate they could reasonably be expected to influence the economic decisions of userstaken on the basis of these financial statements.

As part of an audit in accordance with SAs we exercise professionaljudgment and maintain professional skepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of thefinancial statements whether due to fraud or error design and perform audit proceduresresponsive to those risks and obtain audit evidence that is sufficient and appropriate toprovide a basis for our opinion. The risk of not detecting a material misstatementresulting from fraud is higher than for one resulting from error as fraud may involvecollusion forgery intentional omissions misrepresentations or the override of internalcontrol.

• Obtain an understanding of internal control relevant to theaudit in order to design audit procedures that are appropriate in the circumstances. UnderSection 143(3)(i) of the Act we are also responsible for expressing our opinion onwhether the company has adequate internal financial controls with reference to financialstatements in place and the operating effectiveness of such controls.

• Evaluate the appropriateness of accounting policies used and thereasonableness of accounting estimates and related disclosures made by the Management andBoard of Directors.

• Conclude on the appropriateness of the Management and Board ofDirectors use of the going concern basis of accounting in preparation of financialstatements and based on the audit evidence obtained whether a material uncertaintyexists related to events or conditions that may cast significant doubt on the Company'sability to continue as a going concern. If we conclude that a material uncertainty existswe are required to draw attention in our auditor's report to the related disclosures inthe financial statements or if such disclosures are inadequate to modify our opinion.Our conclusions are based on the audit evidence obtained up to the date of our auditor'sreport. However future events or conditions may cause the Company to cease to continue asa going concern.

• Evaluate the overall presentation structure and content of thefinancial statements including the disclosures and whether the financial statementsrepresent the underlying transactions and events in a manner that achieves fairpresentation.

We communicate with those charged with governance regarding amongother matters the planned scope and timing of the audit and significant audit findingsincluding any significant deficiencies in internal control that we identify during ouraudit.

We also provide those charged with governance with a statement that wehave complied with relevant ethical requirements regarding independence and tocommunicate with them all relationships and other matters that may reasonably be thoughtto bear on our independence and where applicable related safeguards.

From the matters communicated with those charged with governance wedetermine those matters that were of most significance in the audit of the financialstatements of the current period and are therefore the key audit matters. We describethese matters in our auditor's report unless law or regulation precludes public disclosureabout the matter or when in extremely rare circumstances we determine that a mattershould not be communicated in our report because the adverse consequences of doing sowould reasonably be expected to outweigh the public interest benefits of suchcommunication.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor's Report) Order 2020("the Order") issued by the Central Government of India in terms of Section 143(11) of the Act we give in the "Annexure A" a statement on the mattersspecified in paragraphs 3 and 4 of the Order to the extent applicable.

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

a) We have sought and obtained all the information and explanationswhich to the best of our knowledge and belief were necessary for the purposes of ouraudit.

b) In our opinion proper books of account as required by law have beenkept by the Company so far as it appears from our examination of those books.

c) The balance sheet the statement of profit and loss (including othercomprehensive income) the statement of changes in equity and the statement of cash flowsdealt with by this Report are in agreement with the books of account.

d) In our opinion the aforesaid financial statements comply with theInd AS specified under Section 133 of the Act.

e) On the basis of the written representations received from thedirectors as on 31 March 2022 taken on record by the Board of Directors none of thedirectors is disqualified as on 31 March 2022 from being appointed as a director in termsof Section 164(2) of the Act.

f) With respect to the adequacy of the internal financial controls withreference to financial statements of the Company and the operating effectiveness of suchcontrols refer to our separate Report in "Annexure B".

(B) With respect to the other matters to be included in the Auditor'sReport in accordance with Rule 11 of the Companies (Audit and Auditor's) Rules 2014 inour opinion and to the best of our information and according to the explanations given tous:

a) The Company has disclosed the impact of pending litigations as at 31March 2022 on its financial position in its financial statements - Refer Note 39 to thefinancial statements.

b) The Company did not have any long-term contracts includingderivative contracts for which there were any material foreseeable losses.

c) There were no amounts which were required to be transferred to theInvestor Education and Protection Fund by the Company.

d) (i) The management has represented that to the best of itsknowledge and belief no funds have been advanced or loaned or invested (either fromborrowed funds or share premium or any other sources or kind of funds) by the Company toor in any other persons or entities including foreign entities("Intermediaries") with the understanding whether recorded in writing orotherwise that the Intermediary shall:

• directly or indirectly lend or invest in other persons orentities identified in any manner whatsoever ("Ultimate Beneficiaries") by or onbehalf of the Company or

• provide any guarantee security or the like to or on behalf ofthe Ultimate Beneficiaries.

(ii) The management has represented that to the best of its knowledgeand belief no funds have been received by the Company from any persons or entitiesincluding foreign entities ("Funding Parties") with the understanding whetherrecorded in writing or otherwise that the Company shall:

• directly or indirectly lend or invest in other persons orentities identified in any manner whatsoever ("Ultimate Beneficiaries") by or onbehalf of the Funding Party or

• provide any guarantee security or the like from or on behalf ofthe Ultimate Beneficiaries.

(iii) Based on such audit procedures as considered reasonable andappropriate in the circumstances nothing has come to our notice that has caused us tobelieve that the representations under sub-clause (d) (i) and (d) (ii) contain anymaterial mis-statement.

e) The dividend declared or paid during the year by the company is incompliance with section 123 of the Act. (C) With respect to the matter to be included inthe Auditor's Report under Section 197(16) of the Act:

In our opinion and according to the information and explanations givento us the remuneration paid by the Company to its directors during the current year is inaccordance with the provisions of Section 197 of the Act. The remuneration paid to anydirector is not in excess of the limit laid down under Section 197 of the Act. TheMinistry of Corporate Affairs has not prescribed other details under Section 197(16) ofthe Act which are required to be commented upon by us.

(Referred to in our report of even date)

(i) (a) (A) The Company has maintained proper records showing fullparticulars including quantitative details and situation of Property Plant andEquipment.

(B) The Company has maintained proper records showing full particularsof intangible assets. As represented to us by the management the Company is in theprocess of updating its records to reflect these details.

(b) According to the information and explanations given to us and onthe basis of our examination of the records of the Company the Company has a regularprogramme of physical verification of its Property Plant and Equipment by which allproperty plant and equipment are verified in a phased manner over a period of 3 years. Inaccordance with this programme certain property plant and equipment were verified duringthe year. In our opinion this periodicity of physical verification is reasonable havingregard to the size of the Company and the nature of its assets. No discrepancies werenoticed on such verification.

(c) According to the information and explanations given to us and onthe basis of our examination of the records of the Company the title deeds of immovableproperties (other than immovable properties where the Company is the lessee and the leasesagreements are duly executed in favour of the lessee) disclosed in the financialstatements are held in the name of the Company except for the following which are notheld in the name of the Company:

Description of property Gross carrying value (Rs in lakhs) Held in the name of Whether promoter director or their relative or employee Period held- indicate range where appropriate Reason for not being held in the name of the Company. Also indicate if in dispute
Freehold Land 822.92 Various farmers No 26 October 2009 Refer Note (a)
Freehold Land 160.88 Estate No 1 June 1991 The matter is sub-judice.
Freehold Land 8.04 Shri Vinod Kumar Beria No 26 October 2009 Registration pending
Freehold Land 4.64 Shri Yogendar Kumar Rakesh No 24 May 2010 Registration pending

(a) The land was acquired through the State Government of Uttar Pradeshon payment made to treasury as directed but possession of the above-mentioned land isstill pending as no consideration has been collected by the farmers from treasury yet.

(d) According to the information and explanations given to us and onthe basis of our examination of the records of the Company the Company has not revaluedits Property Plant and Equipment (including Right of Use assets) or intangible assets orboth during the year.

(e) According to information and explanations given to us and on thebasis of our examination of the records of the Company there are no proceedings initiatedor pending against the Company for holding any benami property under the Prohibition ofBenami Property Transactions Act 1988 and rules made thereunder.

(ii) (a) The inventory except goods-in-transit has been physicallyverified by the management during the year. For goods-in-transit subsequent evidence ofreceipts has been linked with inventory records. In our opinion the frequency of suchverification is reasonable and procedures and coverage as followed by management wereappropriate. No discrepancies were noticed on verification between the physical stocks andthe book records that were more than 10% in the aggregate of each class of inventory.

(b) According to the information and explanations given to us and onthe basis of our examination of the records of the Company the Company has beensanctioned working capital limits in excess of five crore rupees in aggregate from banksor financial institutions on the basis of security of current assets. In our opinion thequarterly returns or statements filed by the Company with such banks or financialinstitutions are in agreement with the books of account of the Company except as follows:

Name of Quarter bank Particulars Amount as per books of account (Rs in lakhs) Amount as reported in the quarterly return/ statement (Rs in lakhs) Amount of difference (Rs in lakhs) Whether return/ statement subsequently rectified
Q4 SBI ICICI Inventories 116973.02 88531.79 28441.23 Not applicable refer to 20(iii) of the financial statements
Q3 Bank DCB 71271.32 56894.57 14376.75
Q2 PNBand 68342.64 54237.26 14105.38
HDFC Bank Q1 115420.02 93880.98 21539.04

(iii) (a) According to the information and explanations given to us andon the basis of our examination of the records of the Company the Company has not madeany investments provided guarantee or security or granted any advances in the nature ofloans secured or unsecured to companies firms limited liability partnerships or anyother parties during the year. Based on the audit procedures carried on by us and as perthe information and explanations given to us the Company has provided loans to employeesaggregating to Rs 162.74 lakhs during the year and the balance outstanding as at 31 March2022 aggregates to Rs 48.59 lakhs.

(b) According to the information and explanations given to us and basedon the audit procedures conducted by us in our opinion the terms and conditions of thegrant of loans during the year are prima facie not prejudicial to the interest of theCompany.

(c) According to the information and explanations given to us and onthe basis of our examination of the records of the Company in case of loans given in ouropinion the repayment of principal and payment of interest has been stipulated and therepayments or receipts have been regular. Further the Company has not given any advancein the nature of loan to any party during the year.

(d) According to the information and explanations given to us and onthe basis of our examination of the records of the Company there is no overdue amount formore than ninety days in respect of loans given. Further the Company has not given anyadvances in the nature of loans to any party during the year.

(e) According to the information and explanations given to us and onthe basis of our examination of the records of the Company there is no loan grantedfalling due during the year which has been renewed or extended or fresh loans granted tosettle the overdues of existing loans given to same parties. Further the Company has notgiven any advances in the nature of loans to any party during the year.

(f) According to the information and explanations given to us and onthe basis of our examination of the records of the Company the Company has not grantedany loans or advances in the nature of loans either repayable on demand or withoutspecifying any terms or period of repayment.

(iv) According to the information and explanations given to us and onthe basis of our examination of records of the Company the Company has neither made anyinvestments nor has it given loans or provided guarantee or security and therefore therelevant provisions of Sections 185 and 186 of the Companies Act 2013 ("theAct") are not applicable to the Company. Accordingly clause 3(iv) of the Order isnot applicable.

(v) The Company has not accepted any deposits or amounts which aredeemed to be deposits from the public. Accordingly clause 3(v) of the Order is notapplicable.

(vi) We have broadly reviewed the books of accounts maintained by theCompany pursuant to the rules prescribed by the Central Government for maintenance of costrecords under Section 148(1) of the Act in respect of its manufactured goods (and/orservices provided by it) and are of the opinion that prima facie the prescribed accountsand records have been made and maintained. However we have not carried out a detailedexamination of the records with a view to determine whether these are accurate orcomplete.

(vii) (a) The Company does not have liability in respect of Servicetax Duty of excise Sales tax and Value added tax during the year since effective 1 July2017 these statutory dues has been subsumed into GST. According to the information andexplanations given to us and on the basis of our examination of the records of theCompany in our opinion amounts deducted / accrued in the books of account in respect ofundisputed statutory dues including Goods and Services Tax ('GST') Provident fundEmployees' State Insurance Income-Tax Duty of Customs Cess and other statutory dueshave been regularly deposited by the Company with the appropriate authorities;

According to the information and explanations given to us and on thebasis of our examination of the records of the Company no undisputed amounts payable inrespect of Goods and Services Tax ('GST') Provident fund Employees' State InsuranceIncome-Tax Duty of Customs Cess and other statutory dues were in arrears as at 31 March2022 for a period of more than six months from the date they became payable.

(b) According to the information and explanations given to us and onthe basis of our examination of the records of the Company statutory dues relating toGoods and Service Tax Provident Fund Employees State Insurance Income-Tax Duty ofCustoms or Cess or other statutory dues which have not been deposited on account of anydispute are as follows:

Name of the Statute Nature of the dues Amount (Rs. in lakhs) Amount paid (Rs. in lakhs)* Period to which the amount relates Forum where dispute is pending
UP Sales Discount on molasses 6.83 0.44 2006-07 Sales Tax Tribunal Lucknow
Tax Act 1948 Taxability on Extra Neutral Alcohol sale 151.22 0.41 2017-18 High Court Lucknow
Central Sales Tax Act 1956 Taxability on alcohol sale and other goods 34.16 29.56 2012-13 Appellate authority upto Commissioner's level
Name of the Statute Nature of the dues Amount (Rs. in lakhs) Amount paid (Rs. in lakhs)* Period to which the amount relates Forum where dispute is pending
Central Excise Act 1944 Disallowance of Cenvat Credit on certain inputs / capital items / input services and others 7.95 - 1977-78 2003-04 2004-05 2006-07 High Court Allahabad and High Court Lucknow
136.89 20.73 1977-78 2005-06 2007-08 and 2008-09 Customs Excise and Service Tax Appellate Tribunal (CESTAT)
69.38 29.25 1994-952003-04 to 2006-07 Appellate authority upto Commissioner's level
Excise duty on waste and loss on storage of molasses etc. 15.27 - 1990-91 CESTAT Allahabad
UP Excise Act 1916 Duty on wastage on reprocessing of Alcohol 135.08 135.08 2018-19 High Court Allahabad
Duty on wastage on reprocessing of Alcohol 69.97 36.97 2019-20 Department of Excise Uttar Pradesh Civil Secretariat Lucknow

(viii) According to the information and explanations given to us and onthe basis of our examination of the records of the Company the Company has notsurrendered or disclosed any transactions previously unrecorded as income in the books ofaccount in the tax assessments under the Income Tax Act 1961 as income during the year.

(ix) (a) According to the information and explanations given to us andon the basis of our examination of the records of the Company the Company has notdefaulted in repayment of loans and borrowing or in the payment of interest thereon to anylender.

(b) According to the information and explanations given to us and onthe basis of our examination of the records of the Company the Company has not beendeclared a wilful defaulter by any bank or financial institution or government orgovernment authority.

(c) In our opinion and according to the information and explanationsgiven to us by the management term loans were applied for the purpose for which the loanswere obtained.

(d) According to the information and explanations given to us and on anoverall examination of the balance sheet of the Company we report that no funds raised onshort-term basis have been used for long-term purposes by the Company.

(e) The Company does not hold any investment in any subsidiaryassociate or joint venture (as defined under the Act) during the year ended 31 March 2022.Accordingly clause 3(ix)(e) and 3(ix)(f) are not applicable.

(x) (a) The Company has not raised any moneys by way of initial publicoffer or further public offer (including debt instruments) Accordingly clause 3(x)(a) ofthe Order is not applicable.

(b) According to the information and explanations given to us and onthe basis of our examination of the records of the Company the Company has not made anypreferential allotment or private placement of shares or fully or partly convertibledebentures during the year. Accordingly clause 3(x)(b) of the Order is not applicable.

(xi) (a) Based on examination of the books and records of the Companyand according to the information and explanations given to us no fraud by the Company oron the Company has been noticed or reported during the course of the audit.

(b) According to the information and explanations given to us noreport under sub-section (12) of Section 143 of the Act has been filed by the auditors inForm ADT-4 as prescribed under Rule 13 of the Companies (Audit and Auditors) Rules 2014with the Central Government.

(c) As represented to us by the management there are no whistle blowercomplaints received by the Company during the year.

(xii) According to the information and explanations given to us theCompany is not a Nidhi Company. Accordingly clauses 3(xii)(a) to 3(xii)(c) of the Orderis not applicable.

(xiii) In our opinion and according to the information and explanationsgiven to us the transactions with related parties are in compliance with Section 177 and188 of the Act where applicable and the details of the related party transactions havebeen disclosed in the financial statements as required by the applicable accountingstandards.

(xiv) (a) Based on information and explanations provided to us and ouraudit procedures in our opinion the Company has an internal audit system commensuratewith the size and nature of its business.

(b) We have considered the internal audit reports of the Company issuedtill date for the period under audit.

(xv) In our opinion and according to the information and explanationsgiven to us the Company has not entered into any non-cash transactions with its directorsor persons connected to its directors and hence provisions of Section 192 of the Act arenot applicable to the Company.

(xvi) (a) The Company is not required to be registered under Section45-IA of the Reserve Bank of India Act 1934. Accordingly clause 3(xvi)(a) of the

Order is not applicable.

(b) The Company is not required to be registered under Section 45-IA ofthe Reserve Bank of India Act 1934. Accordingly clause 3(xvi)(b) of the Order is notapplicable.

(c) The Company is not a Core Investment Company (CIC) as defined inthe regulations made by the Reserve Bank of India. Accordingly clause 3(xvi)(c) of theOrder is not applicable.

(d) According to the information and explanations provided to us theGroup (as per the provisions of the Core Investment Companies (Reserve Bank) Directions2016) has more than one CIC as part of the Group. The Group has 2 CICs as part of theGroup.

(xvii) The Company has not incurred cash losses in the current and inthe immediately preceding financial year.

(xviii) There has been no resignation of the statutory auditors duringthe year. Accordingly clause 3(xviii) of the Order is not applicable.

(xix According to the information and explanations given to us and onthe basis of the financial ratios ageing and expected dates of realisation of financialassets and payment of financial liabilities other information accompanying the financialstatements our knowledge of the Board of Directors and management plans and based on ourexamination of the evidence supporting the assumptions nothing has come to our attentionwhich causes us to believe that any material uncertainty exists as on the date of theaudit report that the Company is not capable of meeting its liabilities existing at thedate of balance sheet as and when they fall due within a period of one year from thebalance sheet date. We however state that this is not an assurance as to the futureviability of the Company. We further state that our reporting is based on the facts up tothe date of the audit report and we neither give any guarantee nor any assurance that allliabilities falling due within a period of one year from the balance sheet date will getdischarged by the Company as and when they fall due.

(xx) In our opinion and according to the information and explanationsgiven to us there is no unspent amount under sub-section (5) of Section 135 of the Actpursuant to any project. Accordingly clauses 3(xx)(a) and 3(xx)(b) of the Order are notapplicable.

Annexure - B to the Independent Auditors' report on FinancialStatements

Opinion

We have audited the internal financial controls with reference tofinancial statements of Avadh Sugar & Energy Limited ("the Company") as of31 March 2022 in conjunction with our audit of the financial statements of the Company forthe year ended on that date.

In our opinion the Company has in all material respects adequateinternal financial controls with reference to financial statements and such internalfinancial controls were operating effectively as at 31 March 2022 based on the internalfinancial controls with reference to financial statements 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 (the "Guidance Note").

Management's Responsibility for Internal Financial Controls

The Company's management and the Board of Directors are responsible forestablishing and maintaining internal financial controls based on the internal financialcontrols with reference to financial statements criteria established by the Companyconsidering the essential components of internal control stated in the Guidance Note.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 (hereinafterreferred to as "the Act").

Auditors' Responsibility

Our responsibility is to express an opinion on the Company's internalfinancial controls with reference to financial statements based on our audit. We conductedour audit in accordance with the Guidance Note and the Standards on Auditing prescribedunder section 143(10) of the Act to the extent applicable to an audit of internalfinancial controls with reference to financial statements. 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 controlswith reference to financial statements were established and maintained and whether suchcontrols operated effectively in all material respects.

Our audit involves performing procedures to obtain audit evidence aboutthe adequacy of the internal financial controls with reference to financial statements andtheir operating effectiveness. Our audit of internal financial controls with reference tofinancial statements included obtaining an understanding of such internal financialcontrols assessing the risk that a material weakness exists and testing and evaluatingthe design and operating effectiveness of internal control based on the assessed risk. Theprocedures selected depend on the auditor's judgement including the assessment of therisks of material misstatement of the financial statements whether due to fraud or error.

We believe that the audit evidence we have obtained is sufficient andappropriate to provide a basis for our audit opinion on the Company's internal financialcontrols with reference to financial statements.

Meaning of Internal Financial controls with Reference to FinancialStatements

A company's internal financial controls with reference to financialstatements is a process designed to provide reasonable assurance regarding the reliabilityof financial reporting and the preparation of financial statements for external purposesin accordance with generally accepted accounting principles. A company's internalfinancial controls with reference to financial statements include those policies andprocedures that (1) pertain to the maintenance of records that in reasonable detailaccurately and fairly reflect the transactions and dispositions of the assets of thecompany; (2) provide reasonable assurance that transactions are recorded as necessary topermit preparation of financial statements in accordance with generally acceptedaccounting principles and that receipts and expenditures of the company are being madeonly in accordance with authorisations of management and directors of the company; and (3)provide reasonable assurance regarding prevention or timely detection of unauthorisedacquisition use or disposition of the company's assets that could have a material effecton the Financial statements.

Inherent Limitations of Internal Financial controls with Reference toFinancial Statements

Because of the inherent limitations of internal financial controls withreference to financial statements including the possibility of collusion or impropermanagement override of controls material misstatements due to error or fraud may occurand not be detected. Also projections of any evaluation of the internal financialcontrols with reference to financial statements to future periods are subject to the riskthat the internal financial controls with reference to financial statements may becomeinadequate because of changes in conditions or that the degree of compliance with thepolicies or procedures may deteriorate.

For B S R & Co. LLP
Chartered Accountants
Firm's Registration No. 101248W/W-100022
Jayanta Mukhopadhyay
Partner
Place: Kolkata Membership No. 055757
Date: 10 May 2022 UDIN - 22055757AIROGV2213

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