PRUDENTIAL SUGAR CORPORATION LIMITED
Report on the Standalone Financial Statements
We have audited the accompanying Standalone Financial Statements of Prudential SugarCorporation Ltd (the company) which comprise the Balance Sheet as at 31st March 2016 theStatement of Profit and Loss and the Cash Flow Statement for the year then ended and asummary of Significant Accounting Policies and other explanatory information.
Management's Responsibility for the Standalone Financial Statements
The Company's Broad of Directors is responsible for the matters stated in Section134(5) of the Companies Act 2013 ("the Act") with respect to the preparation andpresentation of these Standalone Financial Statements that give a true and fair view ofthe financial position financial performance and cash flows of the Company in accordancewith the accounting principles generally accepted in India including the AccountingStandards specified under section 133 of act read with rule 7 of the Companies (Accounts)Rules 2014. This responsibility also included maintenance of adequate accounting recordsin accordance with the provisions of the Act for safeguarding the Assets of the Companyand for preventing and detecting frauds and other irregularities; selection andapplication of appropriate accounting policies; making judgments and estimates that arereasonable and prudent; and design; implementation and maintenance of adequate internalfinancial controls that were operating effectively for ensuring the accuracy andcompleteness of the accounting records relevant to the preparation and presentation ofthe financial statements that give a true and fair view and are free from materialmisstatement whether due to fraud or error.
Our responsibility is to express an opinion on these standalone Financial Statementsbased on our audit. We have taken into account the provisions of the Act the Accountingand Auditing Standards and matters which are required to be included in the audit reportunder the provisions of the Act and the Rules made thereunder.
We conducted our audit in accordance with the Standards on Auditing specified underSection 143 (10) of the Act. Those Standards require that we comply with ethicalrequirements and plan and perform the audit to obtain reasonable assurance about whetherthe financial statements are free from material misstatement.
An Audit involves performing procedures to obtain audit evidence about the amounts andthe disclosures in the financial statements. The procedures selected depend on theauditor's judgement including the assessment of the risks of material misstatement of thefinancial statements weather due to fraud or error. In making those risk assessments theauditor considers internal financial control relevant to the Company's preparation of thefinancial statements that give a true and fair view in order to design audit proceduresthat are appropriate in the circumstances. An audit also includes evaluating theappropriateness of the accounting policies used and the reasonableness of the accountingestimates made by the Company's Directors as well as evaluating the overall presentationof the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for audit opinion on the standalone Financial Statements.
Basis for Qualified Opinion
Regarding Business Transfer Agreement with Natems Sugar Limited pending due to legalorder and other conditions Refer Note No. 23 (d) - impact of the same onAssets/Liabilities and Loss of the Company is unascertained.
The Company has not provided for interest on accrual basis/certain liabilities ReferNote No. 23 (a) the impact is that the Loss for the year is understated by Rs.141.94 lacsand cumulative impact is that the liabilities are understated by Rs.1317.46 lacs.
The Company did not redeem the 16% Redeemable Cumulative Preference Shares as per theterms of issue and did not provide for arrears of dividend thereon. Refer Note No. 23 (a)(4) the impact of which is that the Current Liabilities are understated by Rs.408 lacsand the Capital is overstated by Rs.408 Lacs.
The Company has not accounted for the provisions for retirement benefits as per AS-15Refer to Note No. 23 (g) the impact of which is unascertained.
The Balance of Tade Receivables Trade payables Secured Loans Unsecured Loans Loansand Advances Other Current Assets and Current Liabilities are subject toconfirmation/reconciliation as indicated in Note No. 23 (f) the impact of which isunascertained.
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 Act in the manner so required and give a true and fair view in conformity with theaccounting principles generally accepted in India of the state of affairs of the Companyas at 31st March 2016 and its Loss and its cash flows for the year ended on that date.
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 of India in terms of Sub section (11) of Section 143 ofthe Act we give in the Annexure "A" a Statement on the matters specified in theParagraph 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 to the bestof our knowledge and belief were necessary for the purposes of the 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 and the Cash Flow Statementdealt with by this Report are in agreement with the books of account;
d. In our opinion the aforesaid Standalone Financial Statements comply with theAccounting Standards specified under Section 133 of the Act read with Rule 7 of theCompanies (Accounts) Rules 2014;
e. On the basis of the written representations received from the Directors as on 31stMarch 2016 and taken on record by the Board of Directors none of the Directors isdisqualified as on 31st March 2016 from being appointed as a Director in terms of Section164 (2) of the Act; and
f. 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 B".
g. 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 opinionsand 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 statement - Refer Note No.23 (a) 1 to 7 to the financialstatements;
ii. The company did not have any long-term contracts including derivative contractsthat requires a provision for material foreseeable losses in these financial statements;and
iii. There has been no delay in transferring amounts required to be transferred tothe Investor Education and Protection Fund by the Company.
| ||For Laxminiwas & Jain |
| ||Chartered Accountants |
| ||Firm Registration No. 001859S |
|Place : Hyderabad ||Smt. Sharada G. Patil |
|Date : 24.09.2016 ||Partner |
Annexure "A" to the Independent Auditors' Report of even date on theStandalone Financial Statements of Prudential Sugar Corporation Limited
The annexure referred to in Paragraph 1 under heading "Report on Other LegalRegulatory Requirements" of our report of even date:
i. a. The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets.
b. All fixed assets have not been physically verified by the Management during the yearbut there is a regular programme of verification which in our opinion is reasonablehaving regard to the size of the Company and the nature of the its assets. No materialdiscrepancies were noticed on such verification
c. According to information and explanations given by the management the Title Deeds ofimmovable properties included in fixed assets are held in the name of the Company.
ii. The management has conducted physical verification of inventory at suitableintervals during the year and no material discrepancies were noticed on such verification.
iii. According to the information and explanations given to us the Company has notgranted any loans secured or unsecured to companies firms Limited Liability partnershipsor other parties covered in the register maintained under section 189 of the Act.Accordingly the provisions of clause 3(iii) (a) (b) and (c) are not applicable to theCompany and hence not commented upon
iv. In our opinion and according to the information and explanations given to usprovisions of section 185 and 186 of the Act in respect of loans to directors includingentities in which they are interested and in respected of loans and advances giveinvestments made and guarantees and securities given have been complied by the company.
v. The Company has not accepted any deposits from the public.
vi. We have broadly reviewed the books of accounts maintained by the Company pursuantto the rules made by the Central Government for maintenance of cost records under section148(1) of the Act and are of the opinion that prima facie the prescribed accounts andrecords have been made and maintained. We have not however made a detailed examinationof the records with a view to determine whether they are accurate or complete.
vii. According to the information and explanations given to us in respect of Statutorydues:
a. The Company is generally regular in depositing undisputed statutory dues includingProvident Fund Income Tax Sales Tax Service Tax Duty of Customs Duty of Excise ValueAdded Tax Cess and any other Statuary Dues to the appropriate authority and there wereRs.330.65 lacs and Rs. 41.74 lacs payable on account of Purchase Tax and Income Taxrespectively which were in arrears as at 31st March 2016 for a period of more than 6months from the date they became payable.
b. The Company has not deposited Sales Tax of Rs.11.15 lacs and Purchase Tax ofRs.1174.90 lacs and Income Tax of Rs. 60.62 lacs as on 31st March2016 on account ofDisputes.
viii. The Company has not defaulted in repayment of loan for borrowing to a financialinstitution bank Government or dues to debenture holders except Rs.11.27 lacs payable toIIBI.
ix. In our opinion and according to the information and explanations given by theManagement the Company has utilized the monies raised by way of debt instruments innature of terms loans were applied for the purposes for which those were raised.
x. Based upon the audit procedures performed for the purposes 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 on or by the officers and employees ofthe Company has been noticed 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.
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 177 and188 of Companies Act 2013 where applicable and the details have been disclosed in theFinancial Statements etc. as required by the applicable Accounting Standards.
xiv. The Company has not made any preferential allotment or private placement of sharesor fully or partly convertible debentures during the year under review.
xv. The Company has not entered into any non-cash transactions with Director or personsconnected with him.
xvi. The Company is not required to be registered under Section 45-1A of The ReserveBank of India Act 1934.
Annexure "B" to the Independent Auditors' Report of even date on theStandalone Financial Statements of Prudential Sugar Corporation 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 PrudentialSugar Corporation Limited ("the Company") as of March 31 2016 in conjunctionwith our audit of the Standalone Financial Statements of the Company for the year ended onthe 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). These responsibilitiesinclude the design implementation and maintenance of adequate internal financial controlsthat were operating effectively for ensuring the orderly and efficient conduct of itsbusiness including adherence to Company's policies the safeguarding of its assets theprevention and detection of frauds and errors the accuracy and completeness of theaccounting records and the timely preparation of reliable financial information asrequired under Companies Act 2013. Auditors Responsibility
Our responsibility is to express an opinion on the company's internal financial controlover financial reporting based on our audit. We conducted our audit in accordance with theGuidance Note on Audit of Internal Financial Controls Over Financial Reporting (the"Guidance Note") and the Standard on Auditing issued by ICAI and deemed to beprescribed under section 143 (10) of the Companies Act 2013 to the extent applicable toan audit of Internal Financial Controls both applicable to an audit of Internal FinancialControls and both issued by the Institute of Chartered Accountants of India. ThoseStandards and the Guidance Note require that we comply with ethical requirements and planand perform the audit to obtain reasonable assurance about whether adequate internalfinancial controls over financial reporting was established and maintained and if suchcontrols operated effectively in all material respects. Our audit involves performingprocedures to obtain audit evidence about the adequacy of the internal financial controlssystem over financial reporting and their operating effectiveness. Our audit of internalfinancial controls over financial reporting included obtaining an understanding ofinternal financial controls over financial reporting assessing the risk that a materialweakness exists and testing and evaluating the design and operating effectiveness ofinternal control based on the assessed risk. The procedures selected depend on theAuditor's judgment including the assessment of the risks of material misstatement of thefinancial statements weather 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 the 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 authorizations of the management and Directors of the company; and
iii. provide reasonable assurance regarding prevention or timely detection ofunauthorized acquisition use or disposition of the company's assets that could have amaterial effect on the financial statements.
Inherent Limitations of Internal Financial Control 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 misstatement due to error or fraud may occur and not be detected. Alsoprojections of any evaluation of the internal financial controls over financial reportingto future periods are subject to the risk that the internal financial control overfinancial reporting may become inadequate because of changes in conditions or that thedegree of compliance with the policies are procedures may deteriorate.
In our opinion the Company has in all material respects an adequate internalfinancial control system over financial reporting and such internal financial controlsover financial reporting were operating effectively as at March 31 2016 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 Control Over Financial Reporting issued by the Institute of CharteredAccountants of India.
We also have audited in accordance with the Standards on Auditing issued by theInstitute of Chartered Accountants of India as specified under Section 143(10) of theAct the financial statement of the Company which comprise the Balance Sheet as at March312016 and the related Statement of Profit and Loss and Cash Flow Statement for the yearthen ended and a summary of significant accounting policies and other explanatoryinformation and our report as of date expressed an unqualified opinion thereon.
| ||For Laxminiwas & Jain |
| ||Chartered Accountants |
| ||Firm Registration No. 001859S |
|Place : Hyderabad ||Smt. Sharada G. Patil |
|Date : 24.09.2016 ||Partner |
| ||Membership No. 015332 |