To the Members of
Magadh Sugar & Energy Limited
Report on the Audit of the Financial Statements
We have audited the accompanying financial statements of Magadh Sugar & EnergyLimited ("the Company") which comprise the Balance sheet as at March31 2021 the Statement of Profit and Loss including the statement of Other ComprehensiveIncome the Cash Flow Statement and the Statement of Changes in Equity for the year thenended and notes to the financial statements including a summary of significantaccounting policies and other explanatory information.
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 accounting principles generally accepted in India of thestate of affairs of the Company as at March 31 2021 its profit including othercomprehensive income its cash flows and the changes in equity for the year ended on thatdate.
Basis for Opinion
We conducted our audit of the financial statements in accordance with the Standards onAuditing (SAs) as specified under section 143(10) of the Act. Our responsibilities underthose Standards are further described in the Auditor's Responsibilities for theAudit of the Financial Statements' section of our report. We are independent of theCompany in accordance with the Code of Ethics' issued by the Institute of CharteredAccountants of India together with the ethical requirements that are relevant to our auditof the financial statements under the provisions of the Act and the Rules there under andwe have fulfilled our other ethical responsibilities in accordance with these requirementsand the Code of Ethics. We believe that the audit evidence we have obtained is sufficientand appropriate 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 judgment were of mostsignificance in our audit of the financial statements for the financial year ended March31 2021. These matters were addressed in the context of our audit of the financialstatements as a whole and in forming our opinion thereon and we do not provide aseparate opinion on these matters. For each matter below our description of how our auditaddressed the matter is provided in that context. We have determined the matters describedbelow to be the key audit matters to be communicated in our report. We have fulfilled theresponsibilities described in the Auditor's responsibilities for the audit of thefinancial statements section of our report including in relation to these matters.Accordingly our audit included the performance of procedures designed to respond to ourassessment of the risks of material misstatement of the financial statements. The resultsof our audit procedures including the procedures performed to address the matters belowprovide the basis for our audit opinion on the accompanying financial statements.
|Key audit matters ||How our audit addressed the key audit matter |
|(a) Determination of net realizable value of inventory of Sugar as at the year ended March 312021 (Refer note 3.7 and 8 of the financial statements) ||Our audit procedures included among others Considering the appropriateness of the Company's accounting policies relating to the valuation of finished goods of sugar and assessing the compliance with the applicable accounting standards. Testing the e3 ectiveness of the Company's control over calculation of cost of 3 nished goods for each sugar unit and estimation of corresponding NRV. |
|The inventory of Sugar is valued at the lower of cost and net realizable value (NRV'). As on March 31 2021 the Company has inventory of Sugar with the carrying value of Rs 61152.29 lakhs. ||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 initiative taken by the Government with respect to sugar industry as a whole. |
|The Sugar industry being seasonal in nature the assessment of carrying value at each reporting date involves ascertainment of cost incurred till that reporting period for each Sugar Unit and estimation of corresponding NRV. ||Based on the above procedures performed we concluded that management's process for determination of NRV and comparing that with cost of inventory of sugar is considered to be reasonable. |
|We considered this to be a key audit matter given the relative size of the balance in the financial statements and significant judgment involved in the consideration of factors such as minimum selling price monthly quota 3 fluctuation in selling prices and the related notification of the Government in determination of net realizable value. || |
|Accounting for Government Grants (Refer note 43 of the financial statements) || |
|The Central Government have issued noti3 cation for assistance to sugar units inter alia export of sugar along with compliance of other conditions to be eligible to get certain government grants to facilitate payment of farmers' dues for sugar season 2020-21. ||Our audit procedures included among others Evaluating eligibility requirements of schemes issued by the Central Government. |
|We determined this to be a matter of significance to our audit due to the quantum of the government grant compliance requirements of the schemes appropriateness of timing of recognition of grant income and also because these are subject to significant judgment of the management. ||Understanding and testing the design and operating effectiveness of controls as established by the management in recognition and assessment of the recoverability of the grant. |
| ||Considering the relevant notifications to ascertain the basis for determination completion of performance obligation and assessing the appropriateness of the management estimates for accounting of government grant and timing of recognition. |
| ||Based on the above procedures performed we concluded that income from grant has been appropriately accounted for. |
The Company's Board of Directors is responsible for the other information. The otherinformation comprises the information included in the Annual report but does not includethe financial statements and our auditor's report thereon. Our opinion on the financialstatements does not cover the other information and we do not express any form ofassurance conclusion thereon. In connection with our audit of the financial statementsour responsibility 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.
Responsibilities of Management and those charged with governance for the FinancialStatements
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 including othercomprehensive income cash flows and changes in equity of the Company in accordance withthe accounting principles generally accepted in India including the Indian AccountingStandards (Ind AS) specified under section 133 of the Act read with the Companies (IndianAccounting Standards) Rules 2015 as amended. This responsibility also includesmaintenance of adequate accounting records in accordance with the provisions of the Actfor safeguarding of the assets of the Company and for preventing and detecting frauds andother irregularities; selection and application of appropriate accounting policies; makingjudgments and estimates that are reasonable and prudent; and the design implementationand maintenance of adequate internal financial controls that were operating effectivelyfor ensuring the accuracy and completeness of the accounting records relevant to thepreparation and presentation of the financial statements that give a true and fair viewand are free from material misstatement whether due 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.
Those Board of Directors are 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 financial statementswhether due to fraud or error design and perform audit procedures responsive to thoserisks and obtain audit evidence that is sufficient 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 anunderstanding of internal control relevant to the audit in order to design auditprocedures that are appropriate in the circumstances. Under section 143(3)(i) of the Actwe are also responsible for expressing our opinion on whether the Company has adequateinternal financial controls system in place and the operating effectiveness of suchcontrols.
Evaluate the appropriateness of accounting policies used and the reasonableness ofaccounting estimates and related disclosures made by management. Conclude on theappropriateness of management's use of the going concern basis of accounting and based onthe audit evidence obtained whether a material uncertainty exists related to events orconditions that may cast significant doubt on the Company's ability to continue as a goingconcern. If we conclude that a material uncertainty exists we are required to drawattention in our auditor's report to the related disclosures in the financial statementsor if such disclosures are inadequate to modify our opinion. Our conclusions are basedon the audit evidence obtained up to the date of our auditor's report. However futureevents or conditions may cause the Company to cease to continue as a going concern.Evaluate the overall presentation structure and content of the financial statementsincluding the disclosures and whether the financial statements represent the underlyingtransactions and events in a manner that achieves fair presentation. Materiality is themagnitude of misstatements in the financial statements that individually or in aggregatemakes it probable that the economic decisions of a reasonably knowledgeable user of thefinancial statements may be influenced. We consider quantitative materiality andqualitative factors in (i) planning the scope of our audit work and in evaluating theresults of our work; and (ii) to evaluate the effect of any identifi ed misstatements inthe 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 for thefinancial year ended March 31 2021 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 2016 ("theOrder") issued by the Central Government of India in terms of subsection (11) ofsection 143 of the Act we give in the "Annexure 1"a statement on the mattersspecified in paragraphs 3 and 4 of the Order to the extent applicable.
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 tothe best of 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 bythe Company so far as it appears from our examination of those books;
(c) The Balance Sheet the Statement of Profit and Loss including the Statement ofOther Comprehensive Income the Cash Flow Statement and Statement of Changes in Equitydealt with by this Report are in agreement with the books of account;
(d) In our opinion the aforesaid financial statements comply with theAccounting Standards specified under Section 133 of the Act read with Companies (IndianAccounting Standards) Rules 2015 as amended;
(e) On the basis of the written representations received from the directors as onMarch 31 2021 taken on record by the Board of Directors none of the directors isdisqualified as on March 31 2021 from being appointed as a director in terms of Section164 (2) of the Act;
(f) With respect to the adequacy of the internal financial controls of theCompany with reference to these financial statements and the operating effectiveness ofsuch controls refer to our separate Report in "Annexure 2" to thisreport;
(g) In our opinion the managerial remuneration for the year ended March 31 2021has been paid / provided by the Company to its directors in accordance with the provisionsof section 197 read with Schedule V to 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 as amended inour opinion and to the best of our information and according to the explanations given tous:
i. The Company has disclosed the impact of pending litigations on its financialposition in its financial statements Refer Note 38 to the financial statements;
ii. The Company did not have any long-term contracts including derivative contracts forwhich there were any material foreseeable losses;
iii. There were no amounts which were required to be transferred to the InvestorEducation and Protection Fund by the Company.
ANNEXURE 1 REFERRED TO IN PARAGRAPH 1 UNDER THE HEADING "REPORT ON OTHER LEGAL ANDREGULATORY REQUIREMENTS" OF OUR REPORT OF EVEN DATE TO THE MEMBERS OF MAGADH SUGAR& ENERGY LIMITED AS AT AND FOR THE YEAR ENDED MARCH 31 2021
(i) (a) The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets.
(b) Fixed assets were physically veri3 ed by the management during the year inaccordance with a planned programme of verifying all of them once in three years which inour opinion is reasonable having regard to the size of the Company and the nature of itsassets. No material discrepancies were noticed on such verification.
(c) According to the information and explanations given to us and on the basis of ourexamination of the records of the Company the title deeds of immovable propertiesincluded in property plant and equipment are held in the name of the company exceptFreehold Land of Rs. 385.07 lakhs are not held in the name of the Company. As explained tous revenue receipts in the name of the Company pursuant to Scheme of arrangement inearlier year is in process as on the Balance Sheet date.
(ii) The management has conducted physical verification of inventory at reasonableintervals during the year and no material discrepancies were noticed on such physicalverification.
(iii) According to the information and explanations given to us the Company has notgranted any loans secured or unsecured to companies firms Limited LiabilityPartnerships or other parties covered in the register maintained under section 189 of theCompanies Act 2013. Accordingly the provisions of clause 3(iii)(a) (b) and (c) of theOrder are not applicable to the Company and hence not commented upon. (iv) In our opinionand according to the information and explanations given to us there are no loansinvestments guarantees and securities granted in respect of which provisions of section185 and 186 of the Companies Act 2013 are applicable and hence not commented upon.
(v) The Company has not accepted any deposits within the meaning of Sections 73 to 76of the Act and the Companies (Acceptance of Deposits) Rules 2014 (as amended).Accordingly the provisions of clause 3(v) of the Order are not applicable.
(vi) We have broadly reviewed the books of account maintained by the Company pursuantto the rules made by the Central Government for the maintenance of cost records undersection 148(1) of the Companies Act 2013 related to manufacture of its products and areof the opinion that prima facie the specified accounts and records have been made andmaintained. We have not however done a detailed examination of the same.
(vii) (a) Undisputed statutory dues including provident fund employees' stateinsurance income-tax sales-tax service tax duty of custom duty of excise value addedtax Goods & Service Tax cess and other material statutory dues have generally beenregularly deposited with the appropriate authorities.
(b) According to the information and explanations given to us no undisputed amountspayable in respect of provident fund employees' state insurance income-tax service taxsales-tax duty of custom duty of excise value added tax Goods and Service Tax cessand other material statutory dues were outstanding at the year end for a period of morethan six months from the date they became payable.
(c) According to the records of the Company the dues outstanding in respect of salestax income tax custom duty wealth tax service tax excise duty value added tax Goodsand Service Tax & cess on account of any dispute are as follows :
|Name of Statue ||Nature of dues ||Amount in Rs. Lakhs ||Period to which amount relates ||Forum where dispute is pending |
|Bihar VAT Act 2005 ||Di3 erential VAT on Denatured Sprit. VAT on exempted Sales. ||72.86 ||2008-09 to 2011-12 ||Appellate tribunal Patna / Joint Commissioner Appeals. |
|Bihar Molasses (Control) Act 1947 ||Administration Charges on Molasses ||116.29 ||1995-96 to 1999-2000 ||Supreme Court of India |
|The Bihar Electricity Duty Act 1948 ||Demand for Electricity Duty on Sale of Electricity ||162.99 ||2009-10 to 2012-13 ||Supreme Court of India |
|Central Excise Act 1944 ||Disallowance of CENVAT credit on certain input / capital items / input services. ||535.07 ||2004-05 to 2007- 08 October 2014 to December 2016 ||CESTAT / Commissioner (Appeal) |
|Bihar Sugarcane (Supply & Regulation) Act 1981 ||Interest on Cane cess ||3.37 ||1984-85 to 1986-87 1991-92 1994-95 to 1998- 99 2003-04 & 2004-05. ||Certifi cate O3 cer Samastipur |
(viii) In our opinion and according to information and explanations given by themanagement the Company has not defaulted in repayment of dues to bank or government. TheCompany did not have any outstanding dues in respect of financial institutions ordebenture holders during the year.
(ix) In our opinion and according to the information and explanations given by themanagement term loans were applied for the purpose for which the loans were obtained. TheCompany has not raised any money by way of initial publicprofiter / further publicprofiter/ debt instruments during the year.
(x) Based upon the audit procedures performed for the purpose of reporting the true andfair view of the financial statements and according to the information and explanationsgiven by the management we report that no fraud by the Company or no material fraud onthe Company by theprofit cers and employees of the Company has been noticed or reportedduring the year.
(xi) According to the information and explanations given by the management themanagerial remuneration has been paid / provided in accordance with the requisiteapprovals mandated by the provisions of section 197 read with Schedule V to the CompaniesAct 2013. (xii) In our opinion the Company is not a nidhi company. Therefore theprovisions of clause 3(xii) of the order are not applicable to the Company and hence notcommented upon.
(xiii) According to the information and explanations given by the managementtransactions with the related parties are in compliance with section 177 and 188 ofCompanies Act 2013 where applicable and the details have been disclosed in the notes tothe financial statements as required by the applicable accounting standards.
(xiv) According to the information and explanations given to us and on an overallexamination of the balance sheet the Company has not made any preferential allotment orprivate placement of shares or fully or partly convertible debentures during the yearunder review and hence not commented upon.
(xv) According to the information and explanations given by the management the Companyhas not entered into any non-cash transactions with directors or persons connected withhim as referred to in section 192 of Companies Act 2013.
(xvi) According to the information and explanations given to us the provisions ofsection 45-IA of the Reserve Bank of India Act 1934 are not applicable to the Company.
ANNEXURE 2 TO THE INDEPENDENT AUDITOR'S REPORT OF EVEN DATE ON THE FINANCIAL STATEMENTSOF MAGADH SUGAR & ENERGY LIMTED
Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section143 of the Companies Act 2013 ("the Act")
We have audited the internal financial controls with reference to financial statementsof Magadh Sugar and Energy Limited ("the Company") as of March 31 2021 inconjunction with our audit of the financial statements of the Company for the year endedon 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 with reference to financial statementscriteria established by the Company considering the essential components of internalcontrol stated in the Guidance Note on Audit of Internal Financial Controls over FinancialReporting issued by the Institute of Chartered Accountants of India. 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 the Company's policies the safeguardingof its 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 our auditin accordance with the Guidance Note on Audit of Internal Financial Controls OverFinancial Reporting (the "Guidance Note") and the Standards on Auditing asspecified under section 143(10) of the Companies Act 2013 to the extent 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 wasestablished and maintained and if such controls operated effectively in all materialrespects.
Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal financial controls system with reference to financial statements and theiroperating 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 and appropriate toprovide a basis for our audit opinion on the internal financial controls system withreference to financial statements.
Meaning of Internal Financial Controls with reference to financial statements
A company's internal financial control with reference to financial statement is aprocess 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 financial control withreference to financial statements includes those policies and procedures that (1) pertainto the maintenance of records that in reasonable detail accurately and fairly reflectthe transactions and dispositions of the assets of the company; (2) 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 (3) provide reasonable assurance regardingprevention or timely detection of unauthorised acquisition use or disposition of thecompany's assets that could have a material effect on the financial statements.
Inherent Limitations of Internal Financial Controls 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 control 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 an adequate internalfinancial controls system with reference to financial statements and such internalfinancial controls were operating effectively as at March 31 2021 based on the internalcontrol with reference to financial statements criteria established by the Companyconsidering the essential components of internal control stated in the Guidance Note onAudit of Internal Financial Controls Over Financial Reporting issued by the Institute ofChartered Accountants of India.
| ||FOR Singhi & Co. |
| ||Chartered Accountants |
| ||Firm Registration No.302049E |
| ||(Pradeep Kr. Singhi ) |
| ||Partner |
|Place: Kolkata ||Membership No. 50773 |
|Date: May 11 2021 ||UDIN: 21050773AAAAAB3604 |