FOR THE YEAR ENDED 31ST MARCH 2019
To the members of Kothari Sugars and Chemicals Limited
REPORT ON THE AUDIT OF FINANCIAL STATEMENTS
We have audited the financial statements of Kothari Sugars and Chemicals Limited("the Company") which comprise the Balance Sheet as at 31st March2019 and the Statement of Profit and Loss (including
Comprehensive Income) Statement of Changes in Equity and the Statement of Cash Flowsfor the year then ended and Notes to the Financial Statements including a summary of theSignificant Accounting Policies and other explanatory information (hereinafter referred toas "the Financial Statements").
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 2019 the Profit (includingOther Comprehensive Income) the changes in Equity and its cash flows for the year onthat 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 are further described in the"Auditor's Responsibilities for the Audit of the Financial Statements" sectionof our report. We are independent of the Company in accordance with the Code of Ethicsissued by the Institute of Chartered Accountants of India together with the ethicalrequirements that are relevant to our audit of the financial statements under provisionsof 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 we have obtained is sufficient appropriate to provide a basis forour opinion on theancial fin statement.
Key Audit Matters
Key audit matters are those matters that in our professional judgment were of most
Financial Statements of the current period. These matters were addressed in the contextof our audit of the Financial Statements as a whole and in forming our opinion thereonand 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 |
|Quantity of raw materials Significant portion material procurement is from individual farmers and sugarcanes are ||We have carried out audit of procedures which included: the ? Assessment of controls over ascertaining the quantity of purchase for which payment is made. |
|1. 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 calibration system of the weighing equipment. |
|Contingent liabilities || |
|The Company has material amounts of disputed statutory levies such as Excise Duty Customs Duty and Electricity taxes which 2. have not been paid pending adjudication by the respective authority. ||We have carried out the validation of the information provided by the management by performing the following procedures: |
| ||? Examining the relevant documents on record |
| ||? Evaluating the reasonableness of the underlying assumptions |
|Refer to Note 43 of the financial legal opinion relevant judicial ||? Relying on relevant external evidence available including 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 doesnot cover the other information and we do not express any form of assurance conclusionthereon.
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. in our audit of the
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 atrue and fair view of the financial position financial performance changes in equity andcash flows of
Company in accordance with the accounting principles generally accepted in Indiaincluding the accounting standards specified under Section 133 of the Act. Thisresponsibility also includes maintenance of adequate accounting records in accordance withthe provisions of the Act for safeguarding 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 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 We considerquantitative materiality and financial reporting process
Auditor's responsibilities for the audit of the 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 decisions of users taken on the basis of thesefinancial 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 and appropriate to provide a basis forour opinion. The risk of not detecting a material misstatement resulting from fraud ishigher than for one resulting from error as fraud may involve collusion forgeryintentional omissions misrepresentations or the override of internal control.
Obtain an understanding of internal control 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 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 maybeinfluenced qualitativefactors (i) in planning the scope of our audit and in evaluating the results of our work;and (ii) to evaluate the effect of any identified misstatements in the Financialstatements.
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 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 withtheeconomic them all relationships and other matters that may reasonably be thought to bearon our independence 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-A a statement on the matters specified paragraphs 3 and 4 of the Order to theextent applicable.
2. As required by Section 143(3) of the Act we report that: (a) We have sought andobtained all the information and explanations which to the best of our knowledge andbelief were necessary for the purposes of our audit. (b) In our opinion proper books ofaccount as required by law have been kept by the Company so far as it appears from ourexamination of those books.
(c) The Balance Sheet the Statement of Profit and
Loss (including Other Comprehensive Income) Statement of Changes in Equity and theCash Flow Statement dealt with by this Report are in agreement with the relevant books ofaccount.
(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 2019 taken on record by the Board of Directors none of the directors isdisqualified as on 31 st March 2019 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 statement of the company and the operating effectiveness of such controls referto our separate report in Annexure-B.
Our report expresses an unmodified opinion on the adequacy and operating effectivenessof the Company's internal financial controls 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. TheCompany has disclosed the impact of pending litigations on its financial position in itsfinancial statements - Refer to Note 43 to the financial statements. ii. The Company didnot have any long - term contracts including derivative contracts for which there were anymaterial foreseeable losses. iii. There were no amounts required to be transferred to theInvestor Education and Protection Fund by the Company during the year.
| ||For P.Chandrasekar LLP |
| ||Chartered Accountants |
| ||FRN: 000580S/S200066 |
|Place: Chennai ||S.SRIRAM |
|Date: 21st May 2019 ||Partner |
| ||Membership No.: 205496 |
Annexure - A to the Independent Auditor's Report for the year ended 31stMarch 2019.
(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 physically verified by the Management atregularb) As explained to us these fixed intervals; as informed to us no materialdiscrepancies were noticed on such verification.
c) The title deeds of immovable properties are held in the name of the Company. ii. TheManagement has conducted physical verification of inventory at reasonable intervals and nomaterial 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 p artnerships 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 2019 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 2019 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 ||78.69 ||CESTAT ||1993-94 to 1996-97 2003-04 2006-07 |
|Central Excise Act 1944 ||Excise Duty ||116.68 ||Assistant Commissioner ||1996-97 1997-98 2010-11 2003-04 |
| || || ||Central Excise ||2004-05 2014-15 |
|Central Excise Act 1944 ||Excise Duty ||438.36 ||Joint/ Assistant Commissioner ||2003-04 to 2011-12 |
|Central Excise Act 1944 ||Excise Duty ||21.89 ||Central Excise High Court Madras ||1995-96 1998-99 1999-2000 2002-03 |
|Central Excise Act 1944 ||Excise Duty ||128.19 ||Supreme Court Commissioner ||1995-96 to 1998-99 |
|Central Excise Act 1944 ||Excise Duty ||6.57 ||(Appeals) Central Excise ||2014-15 |
|Finance Act 1994 ||Service Tax ||1.32 ||CESTAT ||2011-12 |
|Tamil Nadu Tax on Consumption or Sale of Electricity Act 2003 ||Electricity consumption tax ||335.19 ||Supreme Court ||2003-04 to 2017-18 |
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 ouropinion and according to the information and explanations given to us the Company has notraised monies by way of initial public offer or further public offer (including debtinstruments) during the year. The term loans availed were applied for the purposes forwhich they were raised. x. Based upon the audit procedures performed for the purpose ofreporting the true and fair view of the financial statements and as per the informationand explanations given to us by the Management no fraud by the Company and no fraud onthe Company by its officers or employees has been noticed or reported during the year. xi.In our opinion and according to the information and explanations given to us managerialremuneration paid or provided has been in accordance with the requisite approvals mandatedby the provisions of Section 197 read with Schedule V to the Companies Act 2013. xii.The Company is not a Nidhi Company and hence compliance with the provisions of the NidhiRules is not applicable. xiii. In our opinion and according to the information andexplanations given to us all transactions with related parties are in compliance withSections 177 and 188 of the Companies Act 2013 where applicable and the details have beendisclosed in the financial statements 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 andaccording to the information and explanations given to us during the year the Company hasnot entered into any non-cash transactions with its directors or persons connected withhim which will come under the purview of Section 192 of the Companies Act 2013. xvi. TheCompany is not required to be registered under Section 45-IA of the Reserve Bank of IndiaAct 1934.
| ||For P.CHANDRASEKAR LLP |
| ||Chartered Accountants |
| ||(FRN : 000580S/S200066) |
|Place : Chennai ||S.SRIRAM |
|Date : 21st May 2019 ||Partner |
Annexure - B to the Independent Auditor's Report for the year ended 31stMarch 2019.
(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 ("the Company") as of 31stMarch 2019 in conjunction with our audit of the Ind AS financial tatements 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 Reporting issuedby the Institute of Chartered Accountants of
India ("ICAI"). These responsibilities include the design implementation andmaintenance of adequate internal financial controls that were operating effectively forensuring the orderly and efficient conduct of its business including adherence toCompany's policies the safeguarding of its assets the prevention and detection of fraudsand errors the accuracy and completeness of the accounting records and the timelypreparation of reliable financial information as requirednder the Companies Act 2013. u
Our responsibility is to express an opinion on the Company's internal financialcontrols with reference to the 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 to the extent applicable to a n audit of internalfinancial controls both applicable to an audit of
Internal Financial Controls and both issued by the Institute of Chartered Accountantsof India. 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 with reference to financial statements were in placeand 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 and appropriate toprovide a basis for our audit opinion on the Company's internal financial controls withreference to financial statements.
Meaning of Internal Financial Controls with reference to Financial Statements
A company's internal financial controls with reference to financialtatements aredesigned to provide reasonable assurance regarding the reliability of financial reportingand the preparation of financialtatements 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) pertainto the maintenance of records that in reasonable detail accurately and fairly reflectthe transactions and dispositions of the assets of the company; b) provide reasonableassurance that transactions are recorded as necessary to permit preparation of financialstatements in accordance with generally accepted accounting principles and that receiptsand expenditures of the company are being made only in accordance with authorisations ofmanagement and directors of the company; and c) provide reasonable assurance regardingprevention or timely detection of unauthorised acquisition use or disposition of thecompany's assets that could have a material effect on the financial statements.
Inherent Limitations of Internal Financial Controls 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 with referenceto financial statements to future periods are subject to the risk that the internalfinancial controls with reference to financial statements may become inadequate because ofchanges in conditions or that the degree of compliance with the policies or proceduresmay deteriorate.
In our opinion the Company has in all material respects adequate internalfinancialcontrols with reference to financialstatements and such internal financialcontrols were operating effectively as at 31 st March 2019 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 P.CHANDRASEKAR LLP |
| ||Chartered Accountants |
| ||(FRN : 000580S/S200066) |
|Place : Chennai ||S.SRIRAM |
|Date : 21st May 2019 ||Partner |
| ||Membership No. 205496 |