To the members of Kothari Sugars and Chemicals Limited REPORT ON THE AUDIT OF FINANCIALSTATEMENTS
We have audited the Financial Statements of Kothari Sugars and Chemicals Limited(the Company) which comprise the Balance Sheet as at 31st March2020 and the Statement of Profit and Loss (including Other Comprehensive Income)Statement of Changes in Equity and the Statement of Cash Flows for the year then endedand Notes to the Financial Statements including a summary of the Significant AccountingPolicies and other explanatory information (hereinafter referred to as the FinancialStatements).
In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid Financial Statements give the information required by theCompanies Act 2013 (the Act) in the manner so required and give a true andfair view in conformity with the Indian Accounting Standards prescribed under Section 133of the Act read with the Companies (Indian Accounting Standards) Rules 2015 as amended(Ind AS) and other accounting principles generally accepted in India of thestate of affairs of the Company as at 31st March 2020 the Profit (includingOther Comprehensive Income) the changes in Equity and its cash flows for the year endedon that date.
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 Standards arefurther described in the Auditor's Responsibilities for the Audit of the FinancialStatements section of our report. We are independent of the Company in accordancewith the Code of Ethics issued by the Institute of Chartered Accountants of India togetherwith the ethical requirements that are relevant to our audit of the financial statementsunder the provisions of the Act and the Rules thereunder and we have fulfilled our otherethical responsibilities in accordance with these requirements and the Code of Ethics. Webelieve that the audit evidence we have obtained is sufficient and appropriate to providea basis for our opinion on the Financial Statements.
Key Audit Matters
Key audit matters are those matters that in our professional judgment were of mostsignificance in our audit of the Financial Statements of the current period. These matterswere addressed in the context of our audit of the Financial Statements as a whole and informing our opinion thereon and we do not provide a separate opinion on these matters.
We have determined the matters described below to be the key audit matters to becommunicated in our report.
|Key Audit Matter ||Response to Key Audit Matter |
|1. Quantity of raw materials ||We have carried out audit procedures which included: |
|Significant portion of the material procurement is from individual farmers and sugarcanes are accounted on weight- basis. Hence any variance in the ascertainment of the quantity purchased may have a significant impact on the cost of materials. || |
| || Assessment of controls over ascertaining the quantity of purchase for which payment is made. |
| || Assessment of controls over calibration system of the weighing equipment. |
|Contingent liabilities ||We have carried out the validation of the information provided by the management by performing the following procedures: |
|2. The Company has material amounts of disputed statutory levies such as Excise Duty Customs Duty and Electricity taxes which have not been paid pending adjudication by the respective authority. Refer to Note 42 of the Financial Statements. || Examining the relevant documents on record. |
| || Evaluating the reasonableness of the underlying assumptions. |
| || Relying on relevant external evidence available including legal opinion relevant judicial pronouncements and industry practices. |
| || Assessment to confirm that contingencies exist in each case. |
Information other than the financial statements and Auditor's report thereon
The Company's Board of Directors is responsible for the preparation of the otherinformation. The other information comprises the information included in the ManagementDiscussion and Analysis Board's Report including Annexures to Board's Report CorporateGovernance Report and Shareholders' Information but does not include the financialstatements and our auditor's report thereon.
Our opinion on the financial statements does not cover the other information and we donot express any form of assurance conclusion thereon.
In connection with our audit of the financial statements our responsibility is to readthe other information and in doing so consider whether the other information ismaterially inconsistent with the financial statements or our knowledge obtained during thecourse of our audit or otherwise appears to be materially misstated.
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 matters stated in Section134(5) of the Act with respect to the preparation of these Financial Statements that givea true and fair view of the financial position financial performance changes in equityand cash flows of the Company in accordance with the accounting principles generallyaccepted in India including the accounting standards specified under Section 133 of theAct. 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 for assessing theCompany's ability to continue as a going concern disclosing as applicable mattersrelated to going concern and using the going concern basis of accounting unless managementeither intends to liquidate the Company or to cease operations or has no realisticalternative but to do so.
The Board of Directors is also responsible for overseeing the Company's financialreporting process.
Auditor's responsibilities for the audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the FinancialStatements as a whole are free from material misstatement whether due to fraud or errorand to issue an auditor's report that includes our opinion. Reasonable assurance is a highlevel of assurance but is not a guarantee that an audit conducted in accordance with SAswill always detect a material misstatement when it exists. Misstatements can arise fromfraud or error and are considered material if individually or in the aggregate theycould reasonably be expected to influence the economic decisions of users taken on thebasis of these Financial Statements.
As part of an audit in accordance with SAs we exercise professional judgment andmaintain professional skepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of the FinancialStatements whether due to fraud or error design and perform audit procedures responsiveto those risks and obtain audit evidence that is sufficient and appropriate to provide abasis for our opinion. The risk of not detecting a material misstatement resulting fromfraud is higher than for one resulting from error as fraud may involve collusionforgery intentional omissions misrepresentations or the override of internal control.
Obtain an understanding of internal controls relevant to the audit in order todesign audit procedures that are appropriate in the circumstances. Under Section 143(3)
(i) of the Companies Act 2013 we are also responsible for expressing our opinion onwhether the Company has adequate internal financial controls system in place and theoperating effectiveness of such controls.
Evaluate the appropriateness of accounting policies used and the reasonablenessof accounting estimates and related disclosures made by management.
Conclude on the appropriateness of management's use of the going concern basisof accounting and based on the audit evidence obtained whether a material uncertaintyexists related to events or conditions that may cast significant doubt on the Company's tocontinue as a going concern. If we conclude that a material uncertainty exists we arerequired to draw attention in our auditor's report to the related disclosures in theFinancial Statements or if such disclosures are inadequate to modify our opinion. Ourconclusions 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 the FinancialStatements including the disclosures and whether the Financial Statements represent theunderlying transactions and events in a manner that achieves fair presentation.
Materiality is the magnitude of misstatements in the Financial Statements thatindividually or in aggregate makes it probable that the economic decisions of areasonably knowledgeable user of the Financial Statements may be influenced. We considerquantitative materiality and qualitative factors (i) in planning the scope of our auditand in evaluating the results of our work; and (ii) to evaluate the effect of anyidentified misstatements in the Financial Statements.
We communicate with those charged with governance regarding among other matters theplanned scope and timing of the audit and significant audit findings including anysignificant deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have compliedwith relevant ethical requirements regarding independence and to communicate with themall relationships and other matters that may reasonably be thought to bear on ourindependence and where applicable related safeguards.
From the matters communicated with those charged with governance we determine thosematters that were of most significance in the audit of the Financial Statements of thecurrent period and are therefore the key audit matters. We describe these matters in ourauditor's report unless law or regulation precludes public disclosure about the matter orwhen in extremely rare circumstances we determine that a matter should not becommunicated in our report because the adverse consequences of doing so would reasonablybe expected to outweigh the public interest benefits of such communication.
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) of the Act we give in Annexure-Aa statement on the matters specified in paragraphs 3 and 4 of the Order to the extentapplicable.
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 purposes of our audit.
(b) In our opinion proper books of account as required by law have been kept by theCompany so far as it appears from our examination of those books.
(c) The Balance Sheet the Statement of Profit and Loss (including Other ComprehensiveIncome) the Statement of Changes in Equity and the Cash Flow Statement dealt with by thisReport are in agreement with the relevant books of account.
(d) In our opinion the aforesaid Financial Statements comply with the AccountingStandards specified under Section 133 of the Act read with Rule 7 of the Companies(Accounts) Rules 2014
(e) On the basis of the written representations received from the Directors as on 31stMarch 2020 taken on record by the Board of Directors none of the Directors isdisqualified as on 31st March 2020 from being appointed as a Director in termsof Section 164(2) of the Act.
(f) With respect to the adequacy of internal financial controls with reference tofinancial statements of the Company and the operating effectiveness of such controlsrefer to our separate report in Annexure-B. Our report expresses an unmodifiedopinion on the adequacy and operating effectiveness of the Company's internal financialcontrols with reference to financial statements.
(g) With respect to the other matters to be included in the Auditor's Report inaccordance with the requirements of Section 197(16) of the Act as amended:
In our opinion and to the best of our information and according to the explanationsgiven to us the remuneration paid by the Company to its Directors during the year is inaccordance with the provisions of Section 197 of the Act.
(h) 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 to Note 42 to the financial statements.
(ii) The Company did not have any long-term contracts including derivative contractsfor which there were any material foreseeable losses.
(iii) There were no amounts required to be transferred to the Investor Education andProtection Fund by the Company during the year.
| ||For P. Chandrasekar LLP |
| ||Chartered Accountants |
| ||FRN: 000580S/S200066 |
| ||S. SRIRAM |
| ||Partner |
|Place: Chennai ||Membership No.: 205496 |
|Date: 17th June 2020 ||UDIN: 20205496AAAABZ1413 |
Annexure - A to the Independent Auditor's Report for the year ended 31stMarch 2020.
(Referred to in paragraph 1 under Report on Other Legal and RegulatoryRequirements" section of our report to the Members of Kothari Sugars andChemicals Limited of even date)
(i) In respect of the Company's fixed assets:
a) The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets.
b) As explained to us these fixed assets have been physically verified by theManagement at regular intervals; as informed to us no material discrepancies were noticedon such verification.
c) The title deeds of immovable properties are held in the name of the Company.
(ii) The Management has conducted physical verification of inventory at reasonableintervals and no material discrepancies were noticed.
(iii) According to the information and explanations given to us and on the basis of ourexamination of the books of account the Company has not provided any loans secured orunsecured to companies firms limited liability partnerships or other parties covered inthe register maintained under Section 189 of the Companies Act 2013.
(iv) The Company has complied with the provisions of Section 186 of the Companies Act2013 in respect of investments made by the Company. The Company has not provided any loansor guarantee or security to any company covered under Section 185 of the Companies Act2013.
(v) The Company has not accepted any deposits from public.
(vi) On the basis of the records produced to us we are of the opinion that primafacie the cost records prescribed by the Central Government under sub-section (1) ofSection 148 of the Companies Act 2013 have been maintained. However we have not carriedout any detailed examination of such records.
(vii) According to the information and explanations given to us in respect of statutorydues:
a) The Company is regular in depositing with the appropriate authorities the undisputedstatutory dues including Provident Fund Income Tax Customs Duty Goods and Service Taxand other applicable Cess. To the best of our knowledge and according to the informationand explanations given to us there were no undisputed amounts payable which were inarrears as at 31st March 2020 for a period of more than six months from thedate they become payable.
b) Details of dues of various taxes viz. Income Tax Sales Tax VAT Service TaxCustoms Duty Excise Duty not deposited as on 31st March 2020 on account ofdisputes are given below:
|Name of the Statute ||Nature of the Dues ||Amount ( Rs lakh ) ||Forum where the dispute is pending ||Period to which the dues belong to |
|Central Excise Act 1944 ||Excise Duty ||80.76 ||Commissioner of Appeals ||April 1997 to December 1997 |
|Central Excise Act 1944 ||Excise Duty ||439.25 ||Supreme Court ||June 2006 - March 2015 |
|Central Excise Act 1944 ||Excise Duty ||3.86 ||High Court Madras ||Oct' 1999 to Mar' 2000 |
|Central Excise Act 1944 ||Excise Duty ||128.18 ||Supreme Court ||October Rs 1995 to December Rs 1999 |
|Finance Act 1994 ||Service Tax ||1.32 ||CESTAT ||Mar 2011 to May 2011 |
|Tamilnadu Tax on Consumption or sale of electricity Act2003 ||Electricity Consumption Tax ||262.26 ||Supreme Court ||June 2003 - March 2018 |
(viii) On the basis of verification of records and according to the information andexplanations given to us the Company has not defaulted in repayment of loans or borrowingto a financial institution bank Government or dues to debenture holders
(ix) In our opinion and according to the information and explanations given to us theCompany has not raised monies by way of initial public offer or further public offer(including debt instruments) during the year. The term loans availed were applied for thepurposes for which they were raised.
(x) Based upon the audit procedures performed for the purpose of reporting the true andfair view of the Financial Statements and as per the information and explanations given tous by the Management no fraud by the Company and no fraud on the Company by its officersor employees has been noticed or reported during the year.
(xi) In our opinion and according to the information and explanations given to usmanagerial remuneration paid or provided has been in accordance with the requisiteapprovals mandated by the provisions of Section 197 read with Schedule V to the CompaniesAct 2013.
(xii) The Company is not a Nidhi Company and hence compliance with the provisions ofthe Nidhi Rules is not applicable.
(xiii) In our opinion and according to the information and explanations given to usall transactions with related parties are in compliance with Sections 177 and 188 of theCompanies Act 2013 where applicable and the details have been disclosed in the FinancialStatements as required by the applicable accounting standards.
(xiv) During the year the Company has not made any preferential allotment or privateplacement of shares or fully or partly convertible debentures.
(xv) In our opinion and according to the information and explanations given to usduring the year the Company has not entered into any non-cash transactions with itsDirectors or persons connected with him which will come under the purview of Section 192of the Companies Act 2013.
(xvi) The Company is not required to be registered under Section 45-IA of the ReserveBank of India Act 1934.
| ||For P. CHANDRASEKAR LLP |
| ||Chartered Accountants |
| ||(FRN : 000580S/S200066) |
| ||S. SRIRAM |
| ||Partner |
|Place : Chennai ||Membership No.: 205496 |
|Date : 17th June 2020 ||UDIN: 20205496AAAABZ1413 |
Annexure - B to the Independent Auditor's Report for the year ended 31stMarch 2020.
(Referred to in paragraph 2 under Report on Other Legal and RegulatoryRequirements" section of our report to the Members of Kothari Sugars andChemicals Limited of even date)
Report on the Internal Financial Controls with reference to financial statement underSection 143(3)(i) of the Companies Act 2013 (the Act)
We have audited the internal financial controls with reference to Financial Statementsof Kothari Sugars and Chemicals Limited (the Company) as of 31stMarch 2020 in conjunction with our audit of the Ind AS financial statements of the Companyfor the year ended on that date.
Management's Responsibility for Internal Financial Controls
The Company's management is responsible for establishing and maintaining internalfinancial controls based on the internal control over financial reporting criteriaestablished by the Company considering the essential components of internal control statedin the Guidance Note on Audit of Internal Financial Controls over Financial Reportingissued by the Institute of Chartered Accountants of India (ICAI). Theseresponsibilities include the design implementation and maintenance of adequate internalfinancial controls that were operating effectively for ensuring the orderly and efficientconduct of its business including adherence to Company's policies the safeguarding ofits assets the prevention and detection of frauds and errors the accuracy andcompleteness of the accounting records and the timely preparation of reliable financialinformation as required under the Companies Act 2013.
Our responsibility is to express an opinion on the Company's internal financialcontrols with reference to financial statements based on our audit. We conducted ouraudit in accordance with the Guidance Note on Audit of Internal Financial Controls OverFinancial Reporting (the Guidance Note) and the Standards on Auditing issuedby ICAI and deemed to be prescribed under Section 143(10) of the Companies Act 2013 tothe extent applicable to an audit of internal financial controls both applicable to anaudit of Internal Financial Controls and both issued by the Institute of CharteredAccountants of India. Those Standards and the Guidance Note require that we comply withethical requirements and plan and perform the audit to obtain reasonable assurance aboutwhether adequate internal financial controls with reference to financial statements werein place and if such controls were operated effectively in all material respects.
Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal financial controls with reference to financial statements and their operatingeffectiveness. Our audit of internal financial controls with reference to financialstatements included obtaining an understanding of internal financial controls withreference to financial statements assessing the risk that a material weakness exists andtesting and evaluating the design and operating effectiveness of internal control based onthe assessed risk. The procedures selected depend on the auditor's judgment including theassessment of the risks of material misstatement of the financial statements whether dueto 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 Financial Statements
A company's internal financial controls with reference to financial statements aredesigned to provide reasonable assurance regarding the reliability of financial reportingand the preparation of financial statements for external purposes in accordance withgenerally accepted accounting principles. A company's internal financial controls withreference to financial statements includes those policies and procedures that
a) pertain to the maintenance of records that in reasonable detail accurately andfairly reflect the transactions and dispositions of the assets of the company;
b) provide reasonable assurance that transactions are recorded as necessary to permitpreparation of financial statements in accordance with generally accepted accountingprinciples and that receipts and expenditures of the company are being made only inaccordance with authorisations of management and directors of the company; and
c) provide reasonable assurance regarding prevention or timely detection ofunauthorised acquisition use or disposition of the company's assets that could have amaterial effect on the financial statements.
Inherent Limitations of Internal Financial Controls with reference to FinancialStatements
Because of the inherent limitations of internal financial controls with reference tofinancial statements 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 withreference to financial statements to future periods are subject to the risk that theinternal financial controls with reference to financial statements may become inadequatebecause of changes in conditions or that the degree of compliance with the policies orprocedures may deteriorate.
In our opinion the Company has in all material respects adequate internal financialcontrols with reference to financial statements and such internal financial controls wereoperating effectively as at 31st March 2020 based on the internal control overfinancial reporting criteria established by the Company considering the essentialcomponents of internal control stated in the Guidance Note on Audit of Internal FinancialControls over Financial Reporting issued by the Institute of Chartered Accountants ofIndia.
| ||For P. CHANDRASEKAR LLP |
| ||Chartered Accountants |
| ||(FRN :000580S/S200066) |
| ||S. SRIRAM |
| ||Partner |
|Place : Chennai ||Membership No. 205496 |
|Date : 17th June 2020 ||UDIN: 20205496AAAABZ1413 |