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Dwarikesh Sugar Industries Ltd.

BSE: 532610 Sector: Agri and agri inputs
NSE: DWARKESH ISIN Code: INE366A01041
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VOLUME 1483830
52-Week high 75.00
52-Week low 23.00
P/E 15.08
Mkt Cap.(Rs cr) 1,380
Buy Price 0.00
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Sell Price 0.00
Sell Qty 0.00
OPEN 70.00
CLOSE 70.70
VOLUME 1483830
52-Week high 75.00
52-Week low 23.00
P/E 15.08
Mkt Cap.(Rs cr) 1,380
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Dwarikesh Sugar Industries Ltd. (DWARKESH) - Auditors Report

Company auditors report

To The Members of

Dwarikesh Sugar Industries Limited

Report on the audit of the Financial Statements

Opinion

We have audited the accompanying financial statements of DwarikeshSugar Industries Limited ("the Company") which comprise the Balance Sheet as atMarch 31 2020 the Statement of Profit and Loss (including Other Comprehensive Income)the Statement of Changes in Equity and the Statement of Cash Flows for the year ended onthat date and notes to the financial statements including a summary of the significantaccounting policies and other explanatory information (hereinafter referred to as"the financial statements").

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 ("the Act") in the manner so required and give a trueand fair view in conformity with the Indian Accounting Standards prescribed under Section133 of the Act read with the Companies (Indian Accounting Standards) Rules 2015 asamended ("Ind AS") and other accounting principles generally accepted in Indiaof the state of affairs of the Company as at March 31 2020 the profit and totalcomprehensive income changes in equity and its cash flows for the year ended on thatdate.

Basis for Opinion

We conducted our audit of the financial statements in accordance withthe Standards on Auditing specified under Section 143(10) of the Act (SAs). Ourresponsibilities under those Standards are further described in the Auditor'sResponsibilities for the Audit of the financial statements section of our report. We areindependent of the Company in accordance with the Code of Ethics issued by the Instituteof Chartered Accountants of India (ICAI) together with the ethical requirements that arerelevant to our audit of the financial statements under the provisions of the Act and theRules made thereunder and we have fulfilled our other ethical responsibilities inaccordance with these requirements and the ICAI's Code of Ethics.

We believe that the audit evidence obtained by us is sufficient andappropriate to provide a basis for our audit 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 year.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. We have determined the matters described below to be the key audit mattersto be communicated in our report.

Sr. No. Key Audit Matters Auditor's Response
1 Calculation of deferred tax liability on the basis of dual rates Principal Audit Procedures
During the year the Government of India Promulgated the Taxation Laws (Amendment) Ordinance 2019 (enacted into Taxation Laws) (Amendment) Act 2019) has introduced Section 115BAA of the Income Tax Act 1961 in which companies can opt for lower tax rate based on certain conditions such as foregoing exemptions/deductions including deduction under chapter VI A and foregoing the benefits of MAT credit entitlement. Our audit procedures in relation to the recognition of deferred tax assets/liabilities included but were not limited to the following:
As per Para 47 of IND AS 12 and clarifications given in bulletin no 23 of ITFG where a company expects to avail of the lower tax rate only from a later financial year it should apply the lower tax rate in measurement of deferred taxes only to the extent that the deferred tax assets are expected to be realised or deferred tax liabilities are expected to be settled in the periods during which the company expects to be subject to lower tax rate. To the extent deferred tax assets are expected to be realised or deferred tax liabilities are expected to be settled in earlier periods the normal tax rate should be applied. Evaluated the design and tested the operating effectiveness of key controls implemented by the Company over recognition of deferred tax assets based on the assessment of Company's ability to generate sufficient taxable profits in foreseeable future allowing the use of deferred tax assets.
Considered the relevant accounting standards and clarifications given by ITFG for recognition of deferred tax assets and liabilities based on the tax rates expected to be applied at the time of reversal and assessed the appropriateness of the recognition of Deferred Tax Assets/ Liabilities.
Based on the assessment made by the company deferred tax liability/Assets as on March 31 2020 has been calculated on the basis of dual rates as may be applicable in future. Re- measurement of deferred tax assets & liabilities has resulted in reversal of deferred tax liability of Rs. 1315.25 Lakhs. For details: - Refer note no 59 to the financial statements. Evaluated the management's assessment for complying with the prescribed conditions as mentioned in the relevant notification issues by income Tax department. Understood and verified the assumptions taken for preparation of future profit projections utilisation of MAT Credit and for migration to new tax regime as prepared by the management.
Tested the arithmetical accuracy of the calculations performed by the management.
Evaluated management's assessment of time period available for adjustment of such deferred tax assets as per provisions of the Income-tax Act 1961 and appropriateness of the accounting treatment with respect to the recognition of deferred tax assets as per requirements of Ind AS 12 Income Taxes.
Evaluated the appropriateness of the disclosures made in the financial statements in respect of deferred tax assets.
Based on the above procedures performed we are reasonably certain on recognition and disclosure of Deferred Tax Assets/ Liabilities.
2 Determination of net realizable value of inventory of sugar as at the year ended March 31 2020 Principal Audit Procedures
As on March 31 2020 the Company has inventory of sugar with the carrying value Rs. 86296.93 lakhs. The inventory of sugar is valued at the lower of cost and net realizable value.
We understood and tested the design and operating effectiveness of controls as established by the management in determination of net realizable value of inventory of sugar.
We considered the value of the inventory of sugar as a key audit matter given the relative size of the balance in the financial statements and significant judgement involved in the consideration of factors such as minimum sale price monthly quota fluctuation in selling prices and the related notifications of the Government in determination of net realizable value. For details: - Refer note no 11 & 45 (c) to the financial statements. We considered various factors including the actual selling price prevailing around and subsequent to the year-end minimum selling price & monthly quota and other notifications of the Government of India initiatives taken by the Government with respect to sugar industry as a whole.
Based on the above procedures performed the management's determination of the net realizable value of the inventory of sugar as at the year end and comparison with cost for valuation of inventory is considered to be reasonable.

Information Other than the Financial Statements and Auditor'sReport Thereon

The Company's Board of Directors is responsible for the otherinformation. The other information comprises the information included in the ManagementDiscussion and Analysis Board's Report including Annexures to Board's ReportBusiness Responsibility Report Corporate Governance and Shareholder's Informationbut does not include the financial statements and our auditor's report 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 during the course of our audit or otherwise appears to be materiallymisstated. If based on the work we have performed we conclude that there is a materialmisstatement of this other information we are required to report that fact. We havenothing to report in this regard.

Management's Responsibility for the Financial Statements

The Company's Board of Directors is responsible for the mattersstated in Section 134(5) of the Act with respect to the preparation of these financialstatements that give a true and fair view of the financial position financialperformance including other comprehensive income changes in equity and cash flows of theCompany in accordance with the Ind AS and other accounting principles generally acceptedin India. This responsibility also includes maintenance of adequate accounting records inaccordance with the provisions of the Act for safeguarding the assets of the Company andfor preventing and detecting frauds and other irregularities; selection and application ofappropriate accounting policies; making judgments and estimates that are reasonable andprudent; and design implementation and maintenance of adequate internal financialcontrols that were operating effectively for ensuring the accuracy and completeness ofthe accounting records relevant to the preparation and presentation of the financialstatements that give a true and fair view and are free from material misstatement whetherdue to fraud or error.

In preparing the financial statements management is responsible forassessing the Company's ability to continue as a going concern disclosing asapplicable matters related to going concern and using the going concern basis ofaccounting unless management either intends to liquidate the Company or to ceaseoperations or has no realistic alternative but to do so.

The Board of Directors are responsible for overseeing theCompany's financial reporting process.

Auditor's Responsibilities for the Audit of the FinancialStatements

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. Reasonableassurance is a high level of assurance but is not a guarantee that an audit conducted inaccordance with SAs will always detect a material misstatement when it exists.Misstatements can arise from fraud or error and are considered material if individuallyor in the aggregate they could reasonably be expected to influence the economic decisionsof users taken on the basis of these financial statements.

As part of an audit in accordance with SAs we exercise professionaljudgment and maintain professional scepticism 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 financial control relevantto the audit in order to design audit procedures that are appropriate in thecircumstances. Under Section 143(3)(i) of the Act we are also responsible for expressingour opinion on whether the Company has adequate internal financial controls system inplace 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.

• Conclude on the appropriateness of management's use of thegoing concern basis of accounting and based on the audit evidence obtained whether amaterial uncertainty exists related to events or conditions that may cast significantdoubt on the Company's ability to continue as a going concern. If we conclude that amaterial uncertainty exists we are required to draw attention in our auditor'sreport to the related disclosures in the financial statements or if such disclosures areinadequate to modify our opinion. Our conclusions are based on the audit evidenceobtained up to the date of our auditor's report. However future events or conditionsmay cause the Company to cease to continue as a 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.

Materiality is the magnitude of misstatements in the financialstatements that individually or in aggregate makes it probable that the economicdecisions of a reasonably knowledgeable user of the financial statements may beinfluenced. We consider quantitative materiality and qualitative factors in (i) planningthe scope of our audit work and in evaluating the results of our work; and (ii) toevaluate the effect of any identified misstatements in the financial statements.

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 publicdisclosure about the matter or when in extremely rare circumstances we determine that amatter should not be communicated in our report because the adverse consequences of doingso would 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 2016("the Order") issued by the Central Government in terms of Section 143(11) ofthe Act we give in "Annexure A" a statement on the matters specified inparagraphs 3 and 4 of the Order.

2. As required by Section 143(3) of the Act based on our audit wereport that: a) We have sought and obtained all the information and explanations which tothe best of our knowledge and belief were necessary for the purposes of our audit of theaforesaid financial statements; b) In our opinion proper books of account as required bylaw have been kept by the Company so far as it appears from our examination of thosebooks; c) The balance sheet the statement of profit and loss including othercomprehensive income statement of changes in equity and the statement of cash flow dealtwith by this Report are in agreement with the relevant books of account; d) In ouropinion the aforesaid financial statements comply with the Ind AS specified under Section133 of the Act read with relevant Rules issued thereunder; e) On the basis of the writtenrepresentations received from the directors as on March 31 2020 taken on record by theBoard of Directors none of the directors is disqualified as on March 31 2020 from beingappointed as a director in terms of Section 164 (2) of the Act; f ) With respect to theadequacy of the internal financial controls over financial reporting of the Company andthe operating effectiveness of such controls refer to our separate Report in"Annexure B". Our report expresses an unmodified opinion on the adequacy andoperating effectiveness of the Company's internal financial controls over financialreporting; g) With respect to the other matters to be included in the Auditor'sReport in accordance with the requirements of Section 197(16) of the Act as amended: Inour opinion and to the best of our information and according to the explanations given tous the remuneration paid by the Company to its directors during the year is in accordancewith the provisions of Section 197 of the Act; and h) With respect to the other matters tobe included in the Auditor's Report in accordance with Rule 11 of the Companies(Audit and Auditors) Rules 2014 as amended in our opinion and to the best of ourinformation and according to the explanations given to us: i. The Company has disclosedthe impact of pending litigations as at March 31 2020 on its financial position in itsfinancial statements – Refer Note 40 41 and 42 to the financial statements; ii. TheCompany did not have any long-term contracts including derivative contracts for whichthere were any material foreseeable losses; and iii. There has been no delay intransferring amounts required to be transferred to the Investor Education and ProtectionFund by the Company during the year ended March 31 2020.

For NSBP & CO.
Chartered Accountants
Firm's Registration No. 001075N
Deepak K. Aggarwal
Place: New Delhi Partner
Date: June 10 2020 Membership No. 095541
UDIN : 20095541AAAADD3088

"Annexure A" to the Independent Auditor's Report to themembers of Dwarikesh Sugar Industries Limited dated June 10 2020.

Report on the matters specified in paragraph 3 of the Companies(Auditor's Report) Order 2016 ("the Order') issued by the CentralGovernment of India in terms of section 143(11) of the Companies Act 2013 ("theAct") as referred to in paragraph 1 of ‘Report on Other Legal and RegulatoryRequirements' section

(i) (a) The Company has maintained proper records showing fullparticulars including quantitative details and situation of fixed assets. (b) The fixedassets are physically verified by the management according to a phased program designed tocover all the items over a period of three years which in our opinion is reasonablehaving regard to the size of the Company and the nature of its assets. Pursuant to theprogram the fixed assets have been physically verified by the management during the yearand no material discrepancies were noticed on such verification discrepancies have dulybeen adjusted in the financials.

(c) According to the information and explanation given to us and on thebasis of our examination of the records of the Company the title deed of immovableproperties is held in the name of the company.

(ii) In our opinion and according to the information and ex planationsgiven to us the procedures of physical verification of inventories followed by themanagement are reasonable and adequate in relation to the size of the Company and thenature of its business. The discrepancies noticed on verification between the physicalstocks and the book records were not material and have been properly dealt with in thebooks of account. In view of the lockdown restriction imposed by the Government ourattendance at the physical inventory verification done by the management wasimpracticable. Related alternate audit procedures were therefore relied up on to obtainassurance over the existence and condition of inventory at the year end.

(iii) The Company has not granted any loans secured or unsecured tocompanies firms and limited liability partnership or other parties covered in theregistered maintained under section 189 of the Act. Accordingly clauses 3 (iii) (a) to(c) of the Order are not applicable.

(iv) As per the information and explanation given to us and on thebasis of our examination of the records the company has complied with provision ofsection 185 and 186 of the Act with respect to the loans and investment made.

(v) In our opinion and according to explanation given to us As thecompany has not accepted deposits as per directives issued by the Reserve Bank of Indiaand provisions of sections 73 to 76 or any other provisions of the Companies Act and rulesframed there under.

(vi) We have broadly reviewed the books of account relating tomaterials labour and other items of cost maintained by the Company as specified by theCentral Government of India under section 148(1) of the Act and are of the opinion thatprima facie the prescribed accounts and records have been made and maintained. We havenot however made a detailed examination of the records with a view to determine whetherthey are accurate and complete.

(vii) (a) According to the information and explanations given to us andthe records of the Company examined by us in our opinion the Company is generallyregular in depositing undisputed statutory dues in respect of provident fund income taxsales tax service tax customs duty goods and service tax excise duty value added taxcess and other material statutory dues as applicable with the appropriate authorities.Employees' state insurance is not applicable on the company. Further there were noundisputed amounts outstanding at the year-end for a period of more than six months fromthe date they became payable. b) According to the information and explanations given to usand as per the books and records examined by us there are no dues of Custom Duty IncomeTax and Cess which have not been deposited on account of any dispute except thefollowing in respect of disputed Excise Duty Service Tax and Sales Tax along with theforum where dispute is pending:

Name of the statue Nature of dues Amount Period to which the amount pertains Forum where dispute is pending
( Rs. in Lakhs) *
Central Excise Act 1944 Excise duty and penalty 12.16 June 07 to August 08 CESTAT Mumbai
Central Excise Act 1944 Excise duty and penalty 14.25 Apr-11 to Sep-11 Apr-10 to Sep-10 Apr-09 to Sep-09 Jan- 07 to Feb-07 Apr-06 to Dec-06 Apr-11 to Sep-11 Apr-10 to Sep-10 Apr-09 to Sep-09. AC/DC
Finance Act 1994 Service Tax 3.25 Jun-16 to Jun-17 AC/DC
Central Excise Act 1944 Excise duty and penalty 7.73 Nov-07 to Aug-08 Jan-07 to Oct-07 Nov-07 to Aug-08 Commissioner
Mar-07 Apl-07 to Dec-07 (Appeals) Meerut
Central Excise Act 1944 Excise duty 1.21 Jun-05 to Mar-06 Transfer to AC/DC from CESTAT Delhi
Finance Act 1994 Service Tax 0.33 Jul-15 to May-16 CESTAT Allahabad

* Net of amounts paid under protest.

(viii) According to the information and explanations given to us and asper the books and records examined by us the Company has not defaulted in repayments ofits dues to Governments banks and financial institution. The Company does not have anydebenture.

(ix) According to the information and explanations given by themanagement the Company has not raised any monies by way of initial public offer orfurther public offer during the financial year and the terms loans raised by the Companyhave been applied for the purpose for which they are were obtained. Where such end use hasbeen stipulated by the lender(s).

(x) In our opinion and on the basis of information and explanationsgiven to us no cases of fraud by the Company or fraud on the Company by its officers oremployees has been noticed or reported during the year.

(xi) According to the information and explanations given to us themanagerial remuneration has been paid and provided in accordance with the requisiteapprovals as mandated by the provisions of section 197 read with Schedule V to the Act.

(xii) As the Company is not a Nidhi Company hence clause (xii) of theOrder is not applicable to the Company.

(xiii) According to the information and explanations given to us alltransactions with the related parties are in compliance with sections 177 and 188 of Actas applicable and the details have been disclosed in these financial statements asrequired by the applicable accounting standards.

(xiv) According to the information and explanations given to us and onan overall examination of the balance sheet the company has not made any preferentialallotment or private placement of shares or fully or partly convertible debentures duringthe year under review and hence reporting requirements under clause 3(xiv) are notapplicable to the company and not commented upon.

(xv) In our opinion and on the basis of information and explanationsgiven to us the Company has not entered into non-cash transactions with directors andpersons connected with him. Hence the provisions of section 192 of Act are notapplicable.

(xvi) In our opinion and on the basis of information and explanationsgiven to us the Company is not required to be registered under section 45-IA of theReserve Bank of India Act 1934.

For NSBP & CO.
Chartered Accountants
Firm's Registration No. 001075N
Deepak K. Aggarwal
Place: New Delhi Partner
Date: June 10 2020 Membership No. 095541
UDIN : 20095541AAAADD3088

"Annexure B" to the Independent Auditor's Report to themembers of Dwarikesh Sugar Industries Limited dated June 10 2020.

Report on the Internal Financial Controls under Clause (i) ofSub-section 3 of Section 143 of the Companies Act 2013 ("the Act") as referredto in paragraph 1(f) of ‘Report on Other Legal and Regulatory Requirements'section

We have audited the internal financial controls over financialreporting of Dwarikesh Sugar Industries Limited ("the Company") as of March 312020 in conjunction with our audit of the Ind AS financial statements of the Company forthe year ended on that date.

Management's Responsibility for Internal Financial Controls

The Board of Directors of the Company is responsible for establishingand maintaining internal financial controls based on the internal control over financialreporting criteria established by the Company considering the essential components ofinternal control stated in the "Guidance Note on Audit of Internal Financial ControlsOver Financial Reporting issued by the Institute of Chartered Accountants of India".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 the 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 Act.

Auditor's Responsibility

Our responsibility is to express an opinion on the Company'sinternal financial controls over financial reporting of the Company based on our audit.

We conducted our audit in accordance with the Guidance Note on Audit ofInternal Financial Controls Over Financial Reporting (the "Guidance Note") andthe Standards on Auditing as specified under section 143(10) of the Act to the extentapplicable to an audit of internal financial controls both applicable to an audit ofInternal Financial Controls and both issued by the Institute of Chartered Accountants ofIndia. Those Standards and the Guidance Note require that we comply with ethicalrequirements and plan and perform the audit to obtain reasonable assurance about whetheradequate internal financial controls over financial reporting was established andmaintained and if such controls operated effectively in all material respects.

Our audit involves performing procedures to obtain audit evidence aboutthe adequacy of the internal financial controls system over financial reporting and theiroperating effectiveness.

Our audit of internal financial controls over financial reportingincluded obtaining an understanding of internal financial controls over financialreporting 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 ofthe risks of material misstatement of the financial statements whether due to fraud orerror.

We believe that the audit evidence we have obtained is sufficient andappropriate to provide a basis for our audit opinion on the Company's internalfinancial controls system over financial reporting.

Meaning of Internal Financial Controls over Financial Reporting

A companys' internal financial control over financial reporting isa process designed to provide reasonable assurance regarding the reliability of financialreporting and the preparation of financial statements for external purposes in accordancewith generally accepted accounting principles. A company's' internal financialcontrol over financial reporting includes those policies and procedures that:

a) pertain to the maintenance of records that in reasonable detailaccurately and fairly reflect the transactions and dispositions of the assets of thecompany;

b) provide reasonable assurance that transactions are recorded asnecessary to permit preparation of financial statements in accordance with generallyaccepted accounting principles and that receipts and expenditures of the company arebeing made only in accordance with authorizations of management and directors of thecompany; and

c) provide reasonable assurance regarding prevention or timelydetection of unauthorized acquisition use or disposition of the company's assetsthat could have a material effect on the financial statements.

Inherent Limitations of Internal Financial Controls over FinancialReporting

Because of the inherent limitations of internal financial controls overfinancial reporting including the possibility of collusion or improper managementoverride of controls material misstatements due to error or fraud may occur and not bedetected. Also projections of any evaluation of the internal financial controls overfinancial reporting to future periods are subject to the risk that the internal financialcontrol over financial reporting may become inadequate because of changes in conditionsor that the degree of compliance with the policies or procedures may deteriorate.

Opinion

In our opinion to the best of our information and according to theexplanations given to us the Company has in all material respects an adequate internalfinancial controls system over financial reporting and such internal controls overfinancial reporting were operating effectively as at March 31 2020 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 NSBP & CO.
Chartered Accountants
Firm's Registration No. 001075N
Deepak K. Aggarwal
Place: New Delhi Partner
Date: June 10 2020 Membership No. 095541
UDIN : 20095541AAAADD3088

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