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Ponni Sugars (Erode) Ltd.

BSE: 532460 Sector: Agri and agri inputs
NSE: PONNIERODE ISIN Code: INE838E01017
BSE 00:00 | 22 Oct 248.25 6.05
(2.50%)
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241.15

HIGH

252.00

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238.00

NSE 00:00 | 22 Oct 248.90 7.35
(3.04%)
OPEN

245.90

HIGH

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OPEN 241.15
PREVIOUS CLOSE 242.20
VOLUME 10439
52-Week high 382.50
52-Week low 131.15
P/E 8.48
Mkt Cap.(Rs cr) 214
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 241.15
CLOSE 242.20
VOLUME 10439
52-Week high 382.50
52-Week low 131.15
P/E 8.48
Mkt Cap.(Rs cr) 214
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Ponni Sugars (Erode) Ltd. (PONNIERODE) - Auditors Report

Company auditors report

To :

The Members of

PONNI SUGARS (ERODE) LIMITED

Report on the audit of Standalone Ind AS Financial Statements

Opinion

We have audited the accompanying Standalone Ind AS Financial Statements of PONNI SUGARS(ERODE) LIMITED ("the Company") which comprise the Balance Sheet as at March31 2021 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 ended on thatdate and Notes to the Financial Statements including a summary of the 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 Standalone Financial Statements give the information requiredby the Companies Act 2013 ("Act") in the manner so required and give a true andfair view in conformity with the 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 March 31 2021 the Profit (Including OtherComprehensive Income) the changes in Equity and its cash flows for the year ended onthat date.

Basis for Opinion

We conducted our audit in accordance with the Standards on Auditing (SAs) specifiedunder section 143(10) of the Act. Our responsibilities under those Standards are furtherdescribed in the Auditor's Responsibilities for the Audit of the Financial Statementssection of our report. We are independent of the Company in accordance with the Code ofEthics issued by the Institute of Chartered Accountants of India together with the ethicalrequirements that are relevant to our audit of the financial statements under theprovisions of the Act and the Rules there under 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 and appropriate to provide a basisfor our opinion.

Emphasis of Matter - Impact of COVID-19:

• We draw attention to Note No: 41 of the financial statements which describesthe effects of COVID-19 pandemic in the company's production operations and higher cost ofcompliances which does not have any significant impact in the Company's overallperformance during the current period.

• Due to Covid-19 related lockdown we were not able to physically observe thephysical verification of inventory that was carried out by the management at the year end.Consequently we have performed alternate procedures to audit the existence and conditionof inventory as per the guidelines provided in SA 501 "Audit evidence -Specificconsideration for stipulated items" which includes inspection of supportingdocumentation relating to purchases production sales and such other third partyevidences where applicable and have obtained sufficient appropriate audit evidence toissue our unmodified opinion on the standalone financial statements.

Our opinion is not modified in respect of above matters.

Key Audit Matters

Key audit matters are those matters that in our professional judgement were of mostsignificance in our audit of the Financial Statements of the current period. These matterswere addressed in the context of our audit of Financial Statements as a whole and informing our opinion thereon and we do not provide a separate opinion on these matters. Wehave determined the matters described below to be the key audit matters to be communicatedin our report.

Key Audit Matters Response to Key Audit Matters & Conclusion
1. Sale of Bagasse to a Related Party
During the year the company has sold Bagasse to a related party for an aggregate value of Rs. 553 lakhs pursuant to a long-term agreement. We understood and tested the design and operating effectiveness of controls as established by the management in determining the various parameters and the ultimate price determination. We have also tested the relevant records and found the price determination to be in accordance with the agreement
The price of Bagasse is fixed for the year pursuant to the terms of the agreement taking into account the price and the calorific value of fuel supplied by the related party and the calorific value of Bagasse determined by both the parties. Based on the above procedures in our opinion the management's determination of the price of Bagasse for the year is considered to be reasonable.
2. As on 31st March 2021 the inventory of sugar with carrying value Rs.4566 lakhs are valued at lower of cost and net realizable value. We have verified and tested the design and operating effectiveness of controls with regard to the preparation of the cost sheet and the underlying judgments as well as the procedures and the basis for determination of net realizable value.
We considered the value of Inventory of Sugar as key audit matter considering the relative size of it in the financial statements and significant judgments involved in the consideration of factors such as the cost determination selling prices since obtained/ prevailing in determination of net realizable value. Based on the above procedures performed the management's determination of the cost and net realizable value of inventory of Sugar at the end of the year is considered reasonable.
3. As on 31st March 2021 the amount receivable from TANGEDCO a Tamil Nadu State Government entity is Rs. 4160 lakhs (Trade Receivable) to whom the surplus power generated by the Cogeneration Power Plant is sold pursuant to a Power Purchase agreement. Impairment Loss of Rs.172 lakhs have been provided for the above dues in accordance with Ind AS. We have verified the PPA and the records for the quantity of Power wheeled and the related invoices and the related internal controls established by the management. We have also verified that substantial amount of the dues has since been received. We have also tested the judgement made by the management based on the past settlements made by the customer to assess the credit risk and the consequent impairment assessment. Based on these audit procedures the management's estimates of credit risk and impairment assessment is reasonable.
Being a significant account balance and the period of outstanding being long it is considered as a Key audit matter

Information Other Than the Financial Statements and Auditor's Report Thereon

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 standalone financial statements and our auditor's report thereon.

Our opinion on the standalone financial statements does not cover the other informationand we do not express any form of assurance conclusion thereon.

In connection with our audit of the standalone financial statements our responsibilityis to read the other information and in doing so consider whether the other informationis materially inconsistent with the standalone financial statements or our knowledgeobtained during the course of our audit or otherwise appears to be materially misstated.If based on the work we have performed we conclude that if 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 Standalone 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 Standalone Financial Statementsthat give a true and fair view of the Financial Position Financial Performance (includingOther Comprehensive Income) Changes in Equity and Cash Flows of the Company in accordancewith Ind AS and other accounting principles generally accepted in India. Thisresponsibility also includes maintenance of adequate accounting records in accordance withthe provisions of the Act for safeguarding of the assets of the Company and for preventingand detecting frauds and other irregularities; selection and application of appropriateimplementation and maintenance of accounting policies; making judgments and estimates thatare reasonable and prudent; and design implementation and maintenance of adequateinternal financial controls that were operating effectively for ensuring the accuracy andcompleteness of the accounting records relevant to the preparation and presentation ofthe Standalone Ind AS Financial Statements that give a true and fair view and are freefrom 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.

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 scepticism 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 Act we are also responsible for expressing our opinion on whether the Company hasadequate Internal Financial Controls system in place and the operating effectiveness ofsuch 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'sability to continue as a going concern. If we conclude that a material uncertainty existswe are required to draw attention in our auditor's report to the related disclosures inthe standalone financial statements or if such disclosures are inadequate to modify ouropinion. Our conclusions are based on the audit evidence obtained up to the date of ourauditor's report. However future events or conditions may cause the Company to cease tocontinue as a 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 standalone financial statementsthat individually 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 in (i) planning the scope of our auditwork and 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.

Report on Other Legal and Regulatory Requirements

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

• We have sought and obtained all the information and explanations which to thebest of our knowledge and belief were necessary for the purposes of our audit.

• 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.

• The Balance Sheet the Statement of Profit and Loss (including OtherComprehensive Income) the Statement of Changes in Equity and the Cash Flow Statementdealt with by this Report are in agreement with the books of account.

• In our opinion the aforesaid standalone Ind AS financial statements comply withthe Indian Accounting Standards prescribed under Section 133 of the Act read with Rule 7of the Companies (Accounts) Rules 2014.

• On the basis of the written representations received from the Directors as on31st March 2021 taken on record by the Board of Directors none of the Directors isdisqualified as on 31st March 2021 from being appointed as a Director in terms of Section164(2) of the Act.

• With respect to the adequacy of the Internal Financial Controls over financialreporting of the Company and the operating effectiveness of such controls refer to ourseparate Report in "Annexure A'.

• 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.

• With respect to the other matters to be included in the Auditors' 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:

• The Company has disclosed the impact of pending litigations on its financialposition in its Ind AS financial statements.

• The Company did not have any long-term contracts including derivative contractsfor which there were any material foreseeable losses.

• There has been no delay in transferring amounts required to be transferred tothe Investor Education and Protection Fund by the company.

• As required by the Companies (Auditors' Report) Order 2016 ("theOrder") issued by the Central Government in terms of Section 143(11) of the Act wegive in "Annexure B" a statement on the matters specified in paragraphs 3 and 4of the Order.

For M/S S. Viswanathan LLP
Regn. No.004770S/S200025
Chartered Accountants
Chella K Srinivasan
Partner
Place : Chennai Membership number: 023305
Date : 7th May 2021 UDIN: 21023305AAAADH6208

"Annexure A" to the Independent Auditor's Report of even date on theStandalone Ind AS financial statements of Ponni Sugars (Erode) Limited

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 over Financial Reporting of PONNISUGARS (ERODE) LIMITED ("the Company") as of March 312021 in conjunction withour audit of the Standalone Ind AS 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 over Financial Reporting criteriaestablished by the Company considering the essential components of Internal Controlstated in the Guidance Note on Audit of Internal Financial Controls Over FinancialReporting issued 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.

Auditor's Responsibility

Our responsibility is to express an opinion on the Company's Internal FinancialControls over Financial Reporting based on our audit. We conducted our audit in accordancewith the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting(the "Guidance Note") and the Standards on Auditing issued by ICAI and deemedto be prescribed under Section 143(10) of the Companies Act 2013 to the extentapplicable to an audit of Internal Financial Controls both applicable to an audit ofInternal Financial Controls and both issued by ICAI. Those Standards and the Guidance Noterequire that we comply with ethical requirements and plan and perform the audit to obtainreasonable assurance about whether adequate Internal Financial Controls over FinancialReporting was established and maintained and if such controls operated effectively in allmaterial respects.

Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe Internal Financial Controls System over Financial Reporting and their operatingeffectiveness. Our audit of Internal Financial Controls over Financial Reporting includedobtaining an understanding of Internal Financial Controls over Financial Reportingassessing the risk that a material weakness exists and testing and evaluating the designand operating effectiveness of internal control based on the assessed risk. The proceduresselected depend on the Auditors' judgement including the assessment of the risks ofmaterial 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 Company's Internal Financial Controls Systemover Financial Reporting.

Meaning of Internal Financial Controls over Financial Reporting

A company's Internal Financial Control over Financial Reporting is a process designedto provide reasonable assurance regarding the reliability of financial reporting and thepreparation of financial statements for external purposes in accordance with generallyaccepted accounting principles. A company's Internal Financial Control over FinancialReporting includes those policies and procedures that:

(i) pertain to the maintenance of records that in reasonable detail accurately andfairly reflect the transactions and dispositions of the assets of the company;

(ii) 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

(iii) 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 over Financial Reporting

Because of the inherent limitations of Internal Financial Controls over FinancialReporting including the possibility of collusion or improper management override ofcontrols material misstatements due to error or fraud may occur and not be detected.Also projections of any evaluation of the Internal Financial Controls over FinancialReporting to future periods are subject to the risk that the Internal Financial Controlover Financial Reporting may become inadequate because of changes in conditions or thatthe degree of compliance with the policies or procedures may deteriorate.

Opinion

In our opinion the Company has in all material respects an adequate InternalFinancial Controls System over Financial Reporting and such Internal Financial Controlsover Financial Reporting were operating effectively as at March 31 2021 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 ICAI.

For M/S S. Viswanathan LLP
Regn. No.004770S/S200025
Chartered Accountants
Chella K Srinivasan
Partner
Place : Chennai Membership number: 023305
Date : 7th May 2021 UDIN: 21023305AAAADH6208

"Annexure B" to the Independent Auditor's Report of even date on theStandalone Ind AS Financial Statements of Ponni Sugars (Erode) Limited.

The Annexure referred to in Paragraph 2 under the heading ‘Report on Other Legaland Regulatory Requirements' of our Report of even date:

(i) (a) The Company is maintaining proper records showing full particulars includingquantitative details and situation of fixed assets;

(b) These fixed assets have been physically verified by the Management at reasonableintervals and no material discrepancies were noticed on 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) The Company has not granted loans to any party covered in the register maintainedunder section 189 of the Companies Act 2013.

(iv) The Company has complied with the provisions of Sections 185 and 186 of theCompanies Act 2013 in respect of investments provided by the Company. The Company hasnot provided any guarantee or security to any company covered under Section 185.

(v) The Company has not accepted any deposits from the public.

(vi) The Central Government has prescribed maintenance of Cost Records underSub-section (1) of Section 148 of the Companies Act 2013 and such accounts and recordshave been made and maintained.

(vii) According to the information and explanations given to us in respect of Statutorydues:

(a) The Company is regular in depositing undisputed statutory dues including ProvidentFund Employees' State Insurance Income Tax Sales Tax Service Tax Duty of CustomsDuty of Excise Value Added Tax Cess Goods and Service Tax and any other Statutory Duesto the appropriate authorities and there were no undisputed amounts payable which were inarrears as at 31st March 2021 for a period of more than six months from the date theybecame payable.

(b) Details of dues of Income Tax or Sales Tax or Service Tax or Duty of Customs orDuty of Excise or Value Added Tax Cess and Goods and Service Tax have not been depositedas on 31st March 2021 on account of disputes are given below:

Name of the Statute Nature of Dues Amount Rs. Lakhs Forum where the dispute is pending Period to which the dues belong
Central Excise Act 1944 Excise Duty 466.74 CESTAT Financial Years 201415 to 2017-18
Tamil Nadu Tax on Consumption or sale of Electricity Act 2003 Electricity Consumption Tax 54.76 High Court Financial Years 200809 to 2010-11

(viii) The Company has not defaulted in repayment of loans or borrowing to a financialinstitution bank Government.

(ix) The Company has not raised any moneys by way of initial public offer or furtherpublic offer (including debt instruments) during the year.

(x) The Company has not noticed any fraud by the Company or any fraud on the Company byits Officers or employees or reported during the year.

(xi) The managerial remuneration has been paid or provided in accordance with therequisite approvals mandated by the provisions of Section 197 read with Schedule V to theCompanies Act 2013.

(xii) The Company is not a Nidhi Company and hence complying with the provisions of theNidhi Rules 2014 does not arise.

(xiii) All transactions with the related parties are in compliance with Sections 177and 188 of the Companies Act 2013 where applicable and the details have been disclosedin the Financial Statements etc. as required by the applicable Accounting Standards.

(xiv) The Company has not made any preferential allotment or private placement ofshares or fully or partly convertible debentures during the year under review.

(xv) The Company has not entered into any non-cash transactions with Directors orpersons connected with him.

(xvi) The Company is not required to be registered under Section 45-IA of the ReserveBank of India Act 1934.

For M/S S. Viswanathan LLP
Regn. No.004770S/S200025
Chartered Accountants
Chella K Srinivasan
Partner
Place : Chennai Membership number: 023305
Date : 7th May 2021 UDIN: 21023305AAAADH6208

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