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Riga Sugar Company Ltd.

BSE: 507508 Sector: Agri and agri inputs
NSE: N.A. ISIN Code: INE909C01010
BSE 00:00 | 09 Dec 7.20 0.34
(4.96%)
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NSE 05:30 | 01 Jan Riga Sugar Company Ltd
OPEN 6.87
PREVIOUS CLOSE 6.86
VOLUME 18139
52-Week high 13.35
52-Week low 6.00
P/E
Mkt Cap.(Rs cr) 10
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 6.87
CLOSE 6.86
VOLUME 18139
52-Week high 13.35
52-Week low 6.00
P/E
Mkt Cap.(Rs cr) 10
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Riga Sugar Company Ltd. (RIGASUGARCO) - Auditors Report

Company auditors report

TO

THE MEMBERS OF

RIGA SUGAR COMPANY LIMITED

Report on the Audit of the Ind AS Financial Statements Qualified Opinion

We have audited the accompanying Ind AS financial statements of Riga Sugar Co Ltd(''the Company'') which comprise the Balance Sheet as at 31stMarch 2021 and theStatement of Profit and Loss (including Other Comprehensive Income) the Statement ofChanges in Equity and Statement of Cash Flows for the year then ended and notes to thefinancial statements including a summary of the significant accounting policies and otherexplanatory information.

In our opinion and to the best of our information and according to the explanationsgiven to us except for the effect of the matter described in the basis for QualifiedOpinion section of our report the aforesaid Ind AS Financial Statements give theinformation required by the Companies Act2013 in the manner so required and give a trueand fair view in conformity with the IndianAccounting Standards prescribed under section133 of the Act and other principles generally accepted in India of the state of affairsof the Company as at March 31 2021 itsloss including other comprehensive Income changesin equity and its cash flows for the year ended on that date.

Basis for Qualified Opinion

Going Concern Assumption in preparation of the Statement

Due to the continuous Losses Company's Net Worth has been fully eroded[Refer Note25(8)]. The Company has also defaulted in repayment of Borrowings to the banks and others.In view of the Management the Company would be able to continue as a Going Concern withfinancial restructuring by the banks and financial assistance from the state and centralgovernment. However in view of the uncertainties involved these events and conditionsindicate a material uncertainty which may cast a significant doubt on the Company'sability to continue as a Going Concern. Accordingly the use of Going Concern Assumptionof accounting in preparation of the Statement is not adequately and appropriatelysupported as per the requirement of Indian Accounting Standard 1 "Presentation ofFinancial Statement".

We conducted our audit in accordance with the Standards on Auditing (SAs) specifiedunder section 143(10) of the Companies Act 2013. Our responsibilities under thoseStandards are further described in the Auditor's Responsibilities for the Audit of the IndAS Financial Statements section of our report. We are independent of the Company inaccordance with the Code of Ethics issued by the Institute of Chartered Accountants ofIndia together with the ethical requirements that are relevant to our audit of the Ind ASFinancial Statements under the provisions of the Companies Act 2013 and the Rulesthereunder and we have fulfilled our other ethical responsibilities in accordance withthese requirements and the ICAI's Code of Ethics. We believe that the audit evidence wehave obtained is sufficient and appropriate to provide a basis for our qualified opinionon the Ind AS Financial Statements.

Key Audit Matters

Key audit matters are those matters that in our professional judgment were of mostsignificance in our audit of the Ind AS Financial Statements of the current period. Thesematters were addressed in the context of our audit of the Ind AS Financial Statements as awhole and in forming our opinion thereon and we do not provide a separate opinion onthese matters.

We have determined the matters described below to be the key audit matters to becommunicated in our report. We have fulfilled the responsibilities described in theAuditors' responsibilities for the audit of the Financial Statements section of ourreport including in relation to these matters. Accordingly our audit included theperformance of procedures designed to respond to our assessment of the risks of materialmisstatement of the Financial Statements. The results of our audit procedures includingthe procedures performed to address the matters below provide the basis for our auditopinion on the accompanying Financial Statements.

Key Audit Matters Addressing the key audit matters
A. Derecognition of Deferred Tax Assets (Note no. 25(6) of the financial statements)
Deferred tax Asset of Rs. 935.52 lakhs derecognized during the year beingcarried forward in thefinancial statements as at March 31 2020. Our Audit procedures based on which we arrived at the conclusion regarding reasonableness of the accounting effect on derecognition and disclosures of the Deferred Tax Assets include the following:
• Utilization of Deferred tax assets have been tested on the basis of internal forecasts prepared by the Company and probability of future taxable income;
• Critical review of the underlying assumptions for consistency for arriving at reasonable degree of probability on the matters;
• Requirement of Ind AS 12 "Income Taxes" and application thereof.
B. Going Concern Assumption (Note no. 25(8) of the financial statements)
The Company's current liabilities have exceeded current assets by Rs. 23111.86 lakhs as on March 312021 and net worth fully eroded.The company defaulted in repayment of its borrowings and also unable to pay its creditors. The operation of factory is also suspended. These are important for going concern assumption and certain significant aspect of our audit. Our audit procedures included testing management's assumptions on the appropriateness of the going concern assumptions and reasonableness of the assumptions used focusing infinancial restructuring by the banks and financial assistance from the state and centralgovernmentfollowing procedures were applied in this respect:
• Review of the Debt Restructuring process and steps so far taken by lenders in this respect. - Core operations of the company and management expectation of sustainability thereof;
- Minutes of the meetings of the Company with the consortium of lenders;
- Terms & conditions specified in the Holding on operation approved by the banks(lenders). -Assistance from the state and central government
• Review of disclosures made by the management in the financial statement to ensure compliances in this respect.

Information Other than the Ind AS 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 the Management Discussion and AnalysisBoard's Report including Annexures to Board's Report Business Responsibility ReportCorporate Governance and Shareholder's Information but does not include the Ind ASFinancial Statements and our auditor's report thereon.

Our opinion on the financial statements does not cover the other information and we donot express any form of assurance conclusion thereon.

In connection with our audit of the Ind AS Financial Statements our responsibility isto read the other information and in doing so consider whether the other information ismaterially inconsistent with the Ind AS Financial Statements or our knowledge obtainedduring the course 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.

Responsibilities of Management and Those Charged with Governance for the Ind ASFinancial Statements

The Company's Board of Directors is responsible for the matters stated in section134(5) of the Companies Act 2013 ("the Act") with respect to the preparation ofthese Ind AS Financial Statements that give a true and fair view of the financialposition financial performance changes

in equity and cash flows of the Company in accordance with the Indian AccountingStandards specified under section 133 of the Act and other accounting principles generallyaccepted in India. This responsibility also includes maintenance of adequate accountingrecords in accordance with the provisions of the Act for safeguarding of the assets of theCompany and 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 statement that give a true and fair view and are free from materialmisstatement whether due to fraud or error.

In preparing the Ind AS Financial Statements the Board of Directors is responsible forassessing the Company's ability to continue as a going concern disclosing as applicablematters related to going concern and using the going concern basis of accounting unlessBoard of Directors either intends to liquidate the Company or to cease operations or hasno realistic alternative but to do so.

The Board of Directors are also responsible for overseeing the Company's financialreporting process.

Auditor's Responsibilities for the Audit of the Ind AS Financial Statements

Our objectives are to obtain reasonable assurance about whether the Ind AS 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 decision of user taken on the basisof these Ind AS 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 Ind AS 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 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 on whetherthe company has adequate internal financial controls with reference to Financial Statementin place and the operating 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'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 Ind AS 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 Ind AS FinancialStatements including the disclosures and whether the Ind AS Financial Statementsrepresent the underlying transactions and events in a manner that achieves fairpresentation.

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 312021 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 ("the Order")issued by the Central Government of India in terms of sub-section (11) of section 143 ofthe Companies Act2013 we give in "Annexure-A" 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 to the bestof our knowledge and belief were necessary for the purposes of our audit.

(b) In our opinion proper books of account as required by law have been kept by theCompany so far as it appears from our examination of those books.

(c) The Balance Sheet the Statement of Profit and Loss the Statement of Changes inEquity and the Cash Flow Statement dealt with by this Report are in agreement with thebooks of account.

(d) Except for the effects of the matter described in the Basis for Qualified Opinionparagraph above 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 on 31stMarch 2021 none of the directors is disqualified as on 31stMarch 2021 from beingappointed as a director in terms of Section 164(2) of the Act.

(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 the requirements of section 197(16) of the Act (as amended) the Companyhas paid remuneration to its director during the year is in accordance with the provisionsof this section and is in limit laid down under this section.

(h) With respect to the other matters to be included in the Auditor's Report inaccordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014 in our opinionand to the best of our information and according to the explanations given to us:

(i) The Company has disclosed the impact of pending litigations on its financialposition in its financial statements as at 31st March 2021[Refer Note No. 25(1)to thefinancial statements].

(ii) The Company did not have any long term contracts including derivative contractsfor which there were any material foreseeable losses.

(iii) There has been no delay in transferring amounts required to be transferred tothe Investor Education and Protection Fund by the Company as at 31 st March2021.

For Salarpuria & Partners
Chartered Accountants (Firm ICAI Regd No. 302113E)
Nihar Ranjan Nayak
Place : Kolkata Membership No. 57076 Partner
Date : 23.06.2021 UDIN : 21057076AAAACX3623

ANNEXURE - ‘A' TO THE INDEPENDENT AUDITOR'S REPORT

(Referred to in Paragraph 1 under "Report on Other Legal and RegulatoryRequirements" section of our Report of even date)

The Annexure referred to in Independent Auditors' Report to the members of the Companyon the financial statements for the year ended 31st March 2021 we report that:

i) (a) The Company hasmaintained proper records showing full particulars includingquantitative details and situation of fixed assets.

(b) As explained to us the fixed assets have been physically verified by themanagement at reasonable intervals in a phased verification program which in ouropinion is reasonable looking to the size of the Company and after following restrictionof Covid-19 guidelines .According to the information and explanations given to us no suchmaterial discrepancies noticed on such verification.

(c) According to the information and explanations given to us the title deeds ofimmovable propertiesare held in the name of company.

ii) As explained to us inventories have been physically verified during the year bythe management which in our opinion is reasonable and after considering restrictions ofCovid-19 guidelines the discrepancies which were noticed have been properly dealt with inthe books of account.

iii) The Company has not granted unsecured loan during the year to parties covered inthe register maintained under section 189 of the Companies Act 2013.So comments on termsand conditions of loan granted and repayment of principal and interest does not arise.However the loans granted to a company register maintained under section 189 of thecompanies Act2013 in earlier year which is written off during the year[Refer Note No.25(16)(b)(1)].

iv) According to the information and explanations given to us there are no such loansinvestments guarantees and security for which Section 185 & Section 186 areapplicable.

v) According to the information and explanations given to us there is no suchdeposits taken by the Company for which directivesissued by the Reserve Bank of Indiaand the provisions of sections 73 to 76 or any other relevant provisions of the CompaniesAct 2013 and the rules framed there under are required to be complied with.

vi) Maintenance of cost records has been specified by the Central Government undersub-section (1) of section 148 of the Companies Act 2013 and such accounts and recordshave been so made and maintained.

vii) a) According to the records of the Company and as per the information andexplanations given to us the Company is generally regular in depositing undisputedstatutory dues except in some cases including provident fund employees' state insurancegoods and services tax income tax duty of customs cess and other statutory dues withthe appropriate authorities. Some delay is noticed in depositing the above however noarrears of outstanding statutory dues on the last day of the financial year concernedexists for a period of more than six months from the date they became payable.

b) On the basis of our examination of the documents and records the following disputedstatutory due which have not been deposited with the appropriate authorities are as under:

The details regarding the Excise Duty Custom Duty and Service Tax disputed dues are asfollows:

Name of Statute Nature of dues Amount of demand (Including Interest & Penalty) (Rs. in Lacs) Amount deposited under dispute (Rs. in Lacs) Period to which amount relates Forum where dispute is pending
1
VAT VAT on SDS @ 12.5% instead of 4% 95.72 35.62 2009-10 & 2010-11 Commercial Taxes Tribunal Patna
2 VAT VAT on SDS @ 12.5% instead of 4% 230.65 41.73 2011-12 Commercial Taxes Tribunal Patna
3 VAT VAT on Stock Transfer of RS for CL 61.84 12.99 2012-13 Commercial Taxes Tribunal Patna
4 VAT VAT on Stock Transfer of RS for CL 200.15 10.00 2013-14 Commercial Taxes Tribunal Patna
5 State Excise Dept. Inferior Quality of Country Liquor supplied atAraria 382.49 ' 2015-16 Hon'ble Patna High Court
6 State Excise Dept. Inferior Quality of Country Liquor supplied at Seohar 98.07 2016-17 Hon'ble Patna High Court
7 Employee State Insurance Employee State Insurance 2.30 2.30 2013-2014to 2017-2018 Employee State Insurance Court

viii) The Company has defaulted in repayment of loans to Banks .The details of thefacts are given as follows:

Name of the Banks/ Financial Institution Loan outstanding as on 31.03.2021 Remarks
Bank of India(BOI) Rs. 6243.08 Present status - "Holding on Operation"
lacs Both banks served notices under SARFAESI Act2002 for repayment of their respective loan
Union Bank of India (UBI) Rs. 1623.65 lacs and as per banks the loan became NPA w.e.f 30th September2018. As a result term loans and working capital loans is shown under Financial Liabilities under Current liabilities as "Holding on Operation" and subject to confirmation and reconciliation thereof Refer Note 12A (d)&(e) and Note 14A of the financial statements.

Interest payable on above 1078.12 lacs.

Further the Company hasdefaulted in repayment of Sugar Development Fund (SDF)amounting to '997.07 lakhs and of'1257.88 Lakhs

is still not acknowledged as debt [Refer Note 25(1)(c)]. The company has also defaultedin repayment of Kisan Credit Card Loans of Rs.

6422.51 Lakhs [Refer Note 25(7)].

ix) To the best of our knowledge and belief and according to the information andexplanations given to us the Company has not raised any term loan and it has not raisedany money by way of initial public offer or further public offer during the year. Hencecomment on this clause in not applicable.

x) During the course of our examination of the books and records of the Companycarried out in accordance with the generally accepted audit practices in India andaccording to the information and explanation given to us we have neither come acrossinstance of fraud on the Company or any fraud on the Company by its officers or employeesnoticed or reported during the year nor have we been informed of such case by themanagement.

xi) To the best of ourknowledge and belief managerial remuneration has been paid/provided in accordance with the requisite approvals mandated by the provisions of section197 read with Schedule V to the Companies Act 2013.

xii) According to the information and explanation given to us clause (xii) in respectof Nidhi Company is not applicable to the company. Hence the comment on the saidclausedoes not arise.

xiii) All transactions with the related parties are in compliance with sections 177 and188 of Companies Act 2013 and have been disclosed in Notes to Accounts as required by IndAS 24. [Refer Note 25(16)].

xiv) The company has not made any preferential allotment or private placement of sharesor fully or partly convertible debentures during the year; hence comment on the saidclause of the order is not applicable.

xv) To the best of our knowledge and belief and as per the information and explanationsgiven to us the Company has not entered into any non-cash transaction with directors orpersons connected with them.

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

For Salarpuria & Partners
Chartered Accountants (Firm ICAI Regd No. 302113E)
Nihar Ranjan Nayak
Place : Kolkata Membership No. 57076 Partner
Date : 23.06.2021 UDIN : 21057076AAAACX3623

ANNEXURE B' TO THE INDEPENDENT AUDITOR'S REPORT

Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of section143 of the Companies Act 2013 ("the Act")

(Referred to Paragraph 2(g) of Report on Other Legal and Regulatory Requirements of ourReport of even date)

We have audited the internal financial controls over financial reporting of Riga SugarCo Ltd("the Company") as of 31st March 2021 in conjunction with our audit ofthe Ind AS financial statements of the Company for 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 Unit considering the essential components of internal control stated inthe Guidance Note on Audit of Internal Financial Controls over Financial Reporting issuedby 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 Unit'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 the Companies Act 2013.

Auditors' 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 the Institute of Chartered Accountants ofIndia. 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 over financial reporting was established andmaintained and if such controls operated effectively in all material 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 auditor's judgment including the assessment of the risks ofmaterial misstatement of the Ind AS 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

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

(2) 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 management and directors of the company; and

(3) 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 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 31st March 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 the Institute of CharteredAccountants of India.

For Salarpuria & Partners
Chartered Accountants (Firm ICAI Regd No. 302113E)
Nihar Ranjan Nayak
Place : Kolkata Membership No. 57076 Partner
Date : 23.06.2021 UDIN : 21057076AAAACX3623

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