THE MEMBERS OF
RIGA SUGAR COMPANY LIMITED
We have audited the accompanying Ind AS financial statements of Riga Sugar Co Ltd(''theCompany'') which comprise the Balance Sheet as at 31stMarch 2019 and the Statement ofProfit and Loss (including Other Comprehensive Income) the Statement of Changes in Equityand Statement of Cash Flows for the year then ended and notes to the financialstatements 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 the aforesaid Ind AS Financial Statements give the information required bythe Companies Act2013 in the manner so required and give a true and fair view inconformity with the accounting principles generally accepted in India of the state ofaffairs of the Company as at March 31 2019 and loss total comprehensive income changesin equity and its cash flows for the year ended on that date.
Basis for Opinion
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 Code of Ethics. We believe that the audit evidence we haveobtained is sufficient and appropriate to provide a basis for our opinion on the Ind ASFinancial Statements.
Material Uncertainty Related to Going Concern
We draw attention to Note 11(b) in the Ind AS financial statements which indicatesthat the Company incurred a net loss (including other comprehensive income) of `4644.78/-lakhsduring the year ended March 31 2019 andNet Worth of the Company has also been fullyeroded.The loans from the banks became Non-Performing Asset (NPA) w.e.f. 30.09.2018 andalso called by the bank for repayment [Refer Note 12(d)].As stated in Note 25(8) theseevents or conditions along with other matters indicate that a material uncertaintyexists that may cast significant doubt on the Company's ability to continue as a goingconcern.
The Management of the Company has prepared the statement on going concern basis basedon their assessment of the successful outcome of the restructuring proposal andaccordingly no adjustments have been made to the carrying value of the assets andliabilities and their presentation or classification in the Balance Sheet. Also in caseof defaulted loans the Banks have allowed "Holding on Operation" for the timebeing.
Our opinion is not modified in respect of this matter.
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 that there are no key audit matters to communicate in our report.
Information Other than the Ind AS Financial Statements and Auditor's Report Thereon
The Company's Board of Directors is responsible for the preparation of the otherinformation. The other information comprises the information included in the ManagementDiscussion and Analysis Board's Report including Annexures to Board's Report BusinessResponsibility Report Corporate Governance and Shareholder's Information but does notinclude the Ind AS Financial 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 inaccordance with the Ind AS and other accounting principles generally accepted in India.This responsibility also includes maintenance of adequate accounting records in accordancewith the provisions of the Act for safeguarding of the assets of the Company and forpreventing and detecting frauds and other irregularities; selection and application ofappropriate accounting policies; making judgments and estimates that are reasonable andprudent; and design implementation and maintenance of adequate internal financialcontrols that were operating effectively for ensuring the accuracy and completeness ofthe accounting records relevant of the preparation and presentation of the financialstatement that give a true and fair view and are free from material misstatement whetherdue 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 and auditor's report that includes our opinion. Reasonable assurance is ahigh level of assurance but is not a guarantee that an audit conducted in accordance withAS will 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 system in place and the operatingeffectiveness 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.
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.
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) In our opinion the aforesaid Ind AS financial statements comply with the IndianAccounting Standards prescribed under Section 133 of the Actread with Rule 7 of theCompanies (Accounts) Rules 2014
(e) On the basis of the written representations received from the directors as on 31stMarch 2019 except one (1) who resigned from the Board w.e.f. 11.04.2019 taken on recordby the Board of Directors none of the directors is disqualified as on 31stMarch 2019from being appointed 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 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 2019 [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 31st March 2019.
ANNEXURE- A TOTHEINDEPENDENTAUDITOR SREPORT
(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 2019 we report that:
i) (a) The Company has maintained 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 programme which in ouropinion is reasonable looking to the size of the Company. According to the informationand explanations given to us discrepancies noticed on such verification have beenproperly adjusted in the books of account.
(c) According to the information and explanations given to us the title deeds ofimmovable properties are 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 discrepancies which were noticedhave been properly dealt with in the books of account.
iii) The Company has granted an unsecured loan to a company covered in the registermaintained under section 189 of the Companies Act 2013.
(a) The terms and conditions of the grant of such loans are not prejudicial to thecompany's interest.
(b) The said loans and interest thereon are fully received during the year. In respectof another Company refer Note No. 25(9)(b)(7).
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 directives issued 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 customscess and other statutory dues with theappropriate authorities. Some delay is noticed in depositing the above however no arrearsof outstanding statutory dues on the last day of the financial year concerned exists for aperiod 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) ||Amount deposited under dispute ||Period to which amountrelates ||Forum where dispute is pending |
| || ||(Rs. in Lacs) ||(Rs. in Lacs) || || |
|1 VAT ||VAT ||25.87 ||25.87 ||2004-05 ||Hon'ble Patna High Court |
|2 VAT ||VAT on SDS @ 12.5% instead of 4% ||95.72 ||35.62 ||2009-10&2010-11 ||CommercialTaxesTribunal Patna |
|3 VAT ||VAT on SDS @ 12.5% instead of 4% ||230.65 ||41.73 ||2011-12 ||CommercialTaxesTribunal Patna |
|4 VAT ||VATon Stock Transfer of RS for CL ||61.84 ||12.99 ||2012-13 ||CommercialTaxesTribunal Patna |
|5 VAT ||VATon Stock Transfer of RS for CL ||200.15 ||10.00 ||2013-14 ||CommercialTaxesTribunal Patna |
|6 Central Government ||Demandunderrule6(3) LSPEF Act ||42.56 ||- ||Nov 13 to Jun 17 ||CESTAT Kolkata |
|7 Central Excise ||CentgralCredit taken on Service Tax on Transportation ||64.05 ||- ||2012-13 to2015-16 (uptoFeb16) ||Excise Commissioner (Appeal)Patna |
|8 State Excise Dept. ||InferiorQualityof CountryLiquor suppliedatAraria ||382.49 ||- ||2015-16 ||Hon'ble Patna High Court |
|9 State Excise Dept. ||InferiorQualityof CountryLiquor suppliedatSeohar ||98.07 ||- ||2016-17 ||Hon'ble Patna High Court |
|10 Employee State Insurance ||Employee State Insurance ||3.07 ||0.77 ||2013-2014to 2017-2018 ||Employee State InsuranceCourt |
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 31.03.2019 ||Interest outstanding as on 31.03.2019 ||Remarks |
|Bank of India(BOI) ||Rs. 6788.60 lacs ||Rs. 211.88 lacs ||Present status - "Holding on Operation" Both banks served notice under SARFAESIAct2002 for repayment of their respective loan and as per banks the loan became NPA w.e.f 30th |
|Union Bank of India (UBI) ||Rs. 2368.58 lacs ||Rs. 115.08 lacs ||September 2018. 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 12 (d)&( e) to the financial statements. |
Further the Company has defaulted in repayment of Sugar Development Fund (SDF)amounting to Rs. 951.11 lakhs and of Rs. 934.12 Lakhs is still not acknowledged as debt[Refer Note 25(1)(c)]. The company has also defaulted in repayment of Kishan Credit Loans[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 is 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 our knowledge 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 said clausedoes 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(9)].
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.
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 Reporton Other Legal and Regulatory Requirements of our Report of even date)
We have audited the internal financial controls over financial reporting of Riga SugarCo Ltd("the Company") as of 31st March 2019 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.
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 ofrecords that in reasonable detail accurately and fairly reflect the transactions anddispositions of the assets of the company; (2) provide reasonable assurance thattransactions are recorded as necessary to permit preparation of financial statements inaccordance with generally accepted accounting principles and that receipts andexpenditures of the company are being made only in accordance with authorizations ofmanagement and directors of the company; and (3) provide reasonable assurance regardingprevention or timely detection of unauthorized acquisition use or disposition of thecompany's assets that could have a material 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.
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 2019 based on theinternal control over financial reporting criteria established by the Company consideringthe essential components of internal control stated in the Guidance Note on Audit ofInternal Financial Controls Over Financial Reporting issued by the Institute of CharteredAccountants of India.
|For Salarpuria & Partners || |
|Chartered Accountants || |
|(Firm ICAI Regd No. 302113E) || |
|UDIN : 19057076AAAABS7460 || |
| ||Nihar Ranjan Nayak |
| ||Partner |
| ||(Membership No. : 57076) |
|Place : Kolkata || |
|Date : 12.07.2019 || |