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Sakthi Sugars Ltd.

BSE: 507315 Sector: Agri and agri inputs
NSE: SAKHTISUG ISIN Code: INE623A01011
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VOLUME 101620
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OPEN 23.00
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VOLUME 101620
52-Week high 34.55
52-Week low 13.40
P/E
Mkt Cap.(Rs cr) 255
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Sakthi Sugars Ltd. (SAKHTISUG) - Auditors Report

Company auditors report

To The Members of Sakthi Sugars Limited

Report on the Audit of the Financial Statements

Qualified Opinion

1. We have audited the accompanying financial statements of SakthiSugars Limited ("the Company") which comprise the Balance Sheet as at March312022 and the Statement of Profit and Loss (including Other Comprehensive Income)Statement of Changes in Equity and Statement of Cash Flows for the year then ended andnotes to the financial statements including a summary of significant accounting policiesand other explanatory information.

2. In our opinion and to the best of our information and according tothe explanations given to us except for the effect/possible effect of the matterdescribed in the Basis for Qualified Opinion section of our report the aforesaidfinancial statements give the information required by the Companies Act 2013 ("theAct") 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 March 31 2022 the loss and total comprehensive income changes in equity and itscash flows for the year ended on that date.

Basis for Qualified Opinion

3. No provision for the expected credit loss/ impairment on interestreceivable from an erstwhile associate company of Rs. 25219.69 lakhs has been recognizedas per the requirement of Ind AS 109 "Financial Instruments". In view ofnonrecoveries non-confirmations/reconciliation from the debtor company initiation oflegal action against the interest claim of the company and in absence of clear forwardlooking information regarding outcome of pending legal actions initiated and time frameand quantum of realisability of the interest receivable we are unable to determine theamount of expected credit loss/ impairment as per the requirements of Ind AS 109"Financial Instruments" and its consequential impact on the loss for the year/accumulated loss. This matter has been also qualified in our audit report for the yearended March 31 2021.

4. Asset Reconstruction Company (India) Limited (the "ARCIL")has invoked the pledge of 63859394 Equity shares of Sakthi Auto Component Limited heldby the Company during the year ended March 31 2021. Pending valuation disposal of sharesby the ARCIL and based on the legal opinion obtained the investment continues to be shownas part of assets classified as held for sale by the company. Since the shares have beentransferred to ARCIL and related OTS agreement is expired we are unable to determine onthe extent of adjustments if any required to be made on the value of investments loanbalances impairment and its impact on the financial statements.

5. We conducted our audit in accordance with the Standards on Auditing(SAs) specified under section 143(10) of the Act. Our responsibilities under thoseStandards are further described in the Auditor's Responsibilities for the Audit of theFinancial 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 (ICAI) together with the ethical requirements that are relevant to our audit of thefinancial statements under the provisions of the Act and the Rules thereunder and we havefulfilled our other ethical responsibilities in accordance with these requirements and theICAI's Code of Ethics. We believe that the audit evidence we have obtained is sufficientand appropriate to provide a basis for our qualified opinion.

Material Uncertainty Related to Going Concern

6. We draw attention to Note 45 of the Financial Statements. Thecompany has incurred net loss of Rs. 15032.47 lakhs during the year ended March 31 2022and as of that date the Company's accumulated losses aggregate to Rs. 84835.20 lakhsresulted in complete erosion of its net worth. Further as of that date company's currentliabilities exceeded its current assets by Rs. 105248.42 lakhs. Significant financialratios are also negative. These factors along with other matters as set forth in said noteraise substantial doubt about the company's ability to continue as a going concern in theforeseeable future. However the company's financial statement has been prepared on goingconcern basis as disclosed by management in said note. Our opinion is not modified inrespect of this matter.

Emphasis of Matter

7. Certain banks have classified its advance to company asNon-Performing Assets and are not charging/applying interest accrued. In order to accountfor all probable liabilities the management in its best judgement has provided interestincluding penal interest as per the terms of original sanction on such borrowings. Themanagement is of the opinion that the difference in interest if any shall be accountedfor as and when the interest is charged or adjusted by the banks. Our opinion is notmodified in respect of this matter.

Key Audit Matters

8. Key audit matters are those matters that in our professionaljudgment were of most significance in our audit of the financial statements of thecurrent period. These matters were addressed in the context of our audit of the financialstatements as a whole and in forming our opinion thereon and we do not provide aseparate opinion on these matters. We have determined the matter described below to be thekey audit matter to be communicated in our report..

Key Audit Matter How the matter was addressed in the audit
Assessment of litigations and related disclosure of contingent liabilities Our audit procedures included the following:
[Refer to the accompanying note 1.3 and 42A forming integral part of the Financial Statements] (a) We understood assessed and tested the design and operating effectiveness of key controls surrounding assessment of litigations relating to the relevant laws and regulations;
As on March 31 2022 the Company has exposures towards litigations relating to various matters. (b) We discussed with management the recent developments and the status of the material litigations which were reviewed and noted by the audit committee;
Significant management judgement is required to assess such matters to determine the probability of occurrence of material outflow of economic resources and whether a provision should be recognised or a disclosure should be made. The management judgement is also supported with legal advice in certain cases as considered appropriate. (c) We performed our assessment on a test basis on the underlying calculations supporting the contingent liabilities/ other significant litigations made in the Financial Statements;
As the ultimate outcome of the matters are uncertain and the positions taken by the management are based on the application of their best judgement related legal advice including those relating to interpretation of laws/ regulations it is considered to be a Key Audit Matter. (d) We evaluated management's assessments by understanding precedents set in similar cases and assessed the reliability of the management's past estimates/judgements; and
(e) We assessed the adequacy of the Company's disclosures.
Based on the above work performed management's assessment inrespect of litigations and related disclosures relating to contingent liabilities/other significant litigations in the Financial Statements are considered to be reasonable.

Other Information

9. The Company's Board of Directors is responsible for the otherinformation. The other information comprises the information included in the AnnualReport but does not include the financial statements and our auditor's report thereon.

10. Our opinion on the financial statements does not cover the otherinformation and we do not express any form of assurance conclusion thereon.

11. In connection with our audit of the financial statements ourresponsibility is to read the other information and in doing so consider whether theother information is materially inconsistent with the financial statements or ourknowledge obtained in the audit or otherwise appears to be materially misstated. Ifbased on the work we have performed we conclude that there is a material misstatement ofthis other information we are required to report that fact. We have nothing to report inthis regard.

Responsibilities of Management and Those Charged with Governance forthe Financial Statements

12. The Company's Board of Directors is responsible for the mattersstated in section 134(5) of the Act with respect to the preparation of these financialstatements that give a true and fair view of the financial position financialperformance changes in equity and cash flows of the Company in accordance with theaccounting principles generally accepted in India including the accounting Standardsspecified under section 133 of the Act. This responsibility also includes maintenance ofadequate accounting records in accordance with the provisions of the Act for safeguardingof the assets of the Company and for preventing and detecting frauds and otherirregularities; selection and application of appropriate accounting policies; makingjudgments and estimates that are reasonable and prudent; and design implementation andmaintenance of adequate internal financial controls that were operating effectively forensuring the accuracy and completeness of the accounting records relevant to thepreparation and presentation of the financial statements that give a true and fair viewand are free from material misstatement whether due to fraud or error.

13. In preparing the financial statements the Board of Directors isresponsible for assessing the Company's ability to continue as a going concerndisclosing as applicable matters related to going concern and using the going concernbasis of accounting unless the Board of Directors either intends to liquidate the Companyor to cease operations or has no realistic alternative but to do so.

14. Those Board of Directors are also responsible for overseeing theCompany's financial reporting process.

Auditor's Responsibilities for the Audit of the Financial Statements

15. Our objectives are to obtain reasonable assurance about whether thefinancial statements as a whole are free from material misstatement whether due to fraudor error and to issue an auditor's report that includes our opinion. Reasonable assurance

is a high level of assurance but is not a guarantee that an auditconducted in accordance with SAs will always detect a material misstatement when itexists. Misstatements can arise from fraud or error and are considered material ifindividually or in the aggregate they could reasonably be expected to influence theeconomic decisions of users taken on the basis of these financial statements.

16. As part of an audit in accordance with SAs we exerciseprofessional judgment and maintain professional skepticism throughout the audit. We also:

(a) Identify and assess the risks of material misstatement of thefinancial statements whether due to fraud or error design and perform audit proceduresresponsive to those risks and obtain audit evidence that is sufficient and appropriate toprovide a basis for our opinion. The risk of not detecting a material misstatementresulting from fraud is higher than for one resulting from error as fraud may involvecollusion forgery intentional omissions misrepresentations or the override of internalcontrol.

(b) Obtain an understanding of internal financial controls relevant tothe audit in order to design audit procedures that are appropriate in the circumstances.Under section 143(3)(i) of the Act we are also responsible for expressing our opinion onwhether the Company has adequate internal financial controls system in place and theoperating effectiveness of such controls.

(c) Evaluate the appropriateness of accounting policies used and thereasonableness of accounting estimates and related disclosures made by management.

(d) Conclude on the appropriateness of management's use of the goingconcern basis of accounting and based on the audit evidence obtained whether a materialuncertainty exists related to events or conditions that may cast significant doubt on theCompany's ability to continue as a going concern. If we conclude that a materialuncertainty exists we are required to draw attention in our auditor's report to therelated disclosures in the financial statements or if such disclosures are inadequate tomodify our opinion. Our conclusions are based on the audit evidence obtained up to thedate of our auditor's report. However future events or conditions may cause the Companyto cease to continue as a going concern.

(e) Evaluate the overall presentation structure and content of thefinancial statements including the disclosures and whether the financial statementsrepresent the underlying transactions and events in a manner that achieves fairpresentation.

17. We communicate with those charged with governance regarding amongother matters the planned scope and timing of the audit and significant audit findingsincluding any significant deficiencies in internal control that we identify during ouraudit.

18. We also provide those charged with governance with a statement thatwe have complied with relevant ethical requirements regarding independence and tocommunicate with them all relationships and other matters that may reasonably be thoughtto bear on our independence and where applicable related safeguards.

19. From the matters communicated with those charged with governancewe determine those matters that were of most significance in the audit of the financialstatements of the current period 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

20. As required by the Companies (Auditor's Report) Order 2020("the Order") issued by the Central Government of India in terms of sub-section(11) of section 143 of the Act we give in the "Annexure A" a statement on thematters specified in paragraphs 3 and 4 of the Order to the extent applicable.

21. In our opinion and according to the information and explanationsgiven to usthe Company has not paid/provided any managerial remuneration during the year.Hence the reporting requirement under Section 197(16) of the Act does not arise.

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

(a) We have sought and obtained all the information and explanationswhich to the best of our knowledge and belief were necessary for the purposes of ouraudit.

(b) In our opinion proper books of account as required by law havebeen kept by the Company so far as it appears from our examination of those books.

(c) The Balance Sheet the Statement of Profit and Loss (includingOther Comprehensive Income) the Statement of Changes in Equity and the Cash FlowStatement dealt with by this Report are in agreement with the books of account.

(d) In our opinion except for the effect/possible effect of thematters described in the Basis for Qualified Opinion paragraph above the aforesaidfinancial statements comply with the Ind AS specified under Section 133 of the Act.

(e) The matters described in the Basis for Qualified Opinion paragraphabove in our opinion may not have an adverse effect on the functioning of the company.

(f) On the basis of the written representations received from thedirectors as on March 31 2022 taken on record by the Board of Directors none of thedirectors is disqualified as on March 312022 from being appointed as a director in termsof Section 164(2) of the Act.

(g) With respect to the adequacy of the internal financial controlsover financial reporting of the Company and the operating effectiveness of such controlsrefer to our separate Report in "Annexure B".

(h) With respect to the other matters to be included in the Auditor'sReport in accordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014 inour opinion and to the best of our information and according to the explanations given tous:

(i) The Company has disclosed the impact of pending litigations on itsfinancial position in its financial statements - Refer Note 42A to the financialstatements;

(ii) The Company did not have any long-term contracts includingderivative contracts for which there were any material foreseeable losses;

(iii) There were no amounts which were required to be transferred tothe Investor Education and Protection Fund by the Company.

(iv) (a) The Management has represented to us that to the best of itsknowledge and belief otherthan as disclosed

in the notes to the accounts no funds have been advanced or loaned orinvested (either from borrowed funds or share premium or any other sources or kindoffunds) by the Company to or in any other persons or entities including foreign entities("Intermediaries") withthe understanding whether recorded in writing orotherwise that the Intermediary shall whether directly or indirectly lend or invest inother persons or entities identified in any manner whatsoever by or on behalf of theCompany ("Ultimate Beneficiaries") or provide any guarantee security or thelike on behalf of the Ultimate Beneficiaries;

(b) The Management has represented to us that to the best of itsknowledge and belief other than as disclosed in the notes to the accounts no funds (whichare material either individually or in aggregate) have been received by the Company fromany person(s) or entities including foreign entities ("Funding Parties") withthe understanding whether recorded in writing or otherwise that the Company shallwhether directly or indirectly lend or invest in other persons or entities identified inany manner whatsoever by or on behalf of the Funding Party ("UltimateBeneficiaries") or provide any guarantee security or the like on behalf of theUltimate Beneficiaries.

(c) Based on our audit procedure conducted that are consideredreasonable and appropriate in the circumstances nothing has come to our attention thatcause us to believe that the representation under subclause(i) and (ii) of Rule 11 (e) asprovided under paragraph (2) (h) (iv) (a) & (b) above contain any materialmisstatement.

(v) The company has not declared or paid any dividend during the year.Hence the question of compliance under Section 123 of the Act does not arise.

For P.K.NAGARAJAN & CO.
Chartered Accountants
Firm Registration Number: 016676S
S P Muthusami
Coimbatore Partner
25th May 2022 Membership Number: 224171
UDIN : 22224171AJOFPF8862

Annexure - A to the Independent Auditor?s Report

Referred to in paragraph 20 of the Independent Auditor's Report of evendate to the members of Sakthi Sugars Limited on the financial statements for the yearended March 31 2022

i. In respect of the Company's Property Plant and Equipment andIntangible Assets:

(a) (A) The Company has maintained proper records showing fullparticulars including quantitative details and situation of Property Plant and Equipmentand relevant details of right-of-use assets.

(B) The Company does not hold any intangible assets and hence reportingunder this clause is not applicable.

(b) The Company has physically verified Property Plant and Equipmentin regular intervals during the year and no material discrepancies were noticed on suchverification. In our opinion this periodicity of physical verification is reasonablehaving regard to the size of the Company and the nature of its Property Plant andEquipment. In respect of immovable properties taken on lease and disclosed as right-of-useassets in the financial statements the lease agreements are in the name of the company.

(c) According to the information and explanation given to us and on thebasis of our examination of the records of the Company the title deeds of immovableproperties are held in the name of the Company except for the following:

Description of Property Gross carrying value (Rs. in lakhs) Held in the name of Whether promoter director or their relative or employee Period held - indicate range where appropriate Reason for not being held in name of company
Land 2388.70 Sakthi Soyas Limited No Since 01.04.1993 Property acquired pursuant to scheme of amalgamation. The company has taken steps for name change.
Building 956.80 Sakthi Soyas Limited No Since 01.04.1993

(d) The Company has not revalued its Property Plant and Equipment(including Right of Use assets) during the year.

(e) Based on the information and explanations given to us noproceedings have been initiated or are pending against the Company for holding any benamiproperty under the Prohibition of Benami Property Transactions Act 1988 and rules madethereunder.

ii. (a) The physical verification has been conducted at reasonableintervals by the management during the year. In our opinion the coverage and procedure ofsuch verification by management is appropriate. No discrepancies of 10% or more in theaggregate for each class of inventory were noticed as compared to book records.

(b) Based on the information and explanations furnished to us theCompany has not been sanctioned working capital limits in excess of Rs. 5 crore inaggregate at any points of time during the year from banks or financial institutions onthe basis of security of current assets and hence reporting under clause 3(ii)(b) of theOrder is not applicable.

iii. The company has not made investments in provided any guarantee orsecurity or granted any loans or advances in the nature of loans secured or unsecured tocompanies firms Limited Liability Partnerships or any other parties during the year.

(a) The company has not provided loans or provided advances in thenature of loans or stood guarantee or provided security to any other entity during theyear. However the company had granted unsecured loans in earlier years to one entity. Theloan has been fully repaid and there is an outstanding balance of Rs. 25219.69 lakhstowards interest as at the balance sheet date.

(b) In our opinion the terms and conditions of the grant of aforesaidloan are not prejudicial to the Company's interest.

(c) In respect of the aforesaid loan no schedule of repayment ofprincipal and payment of interest has been stipulated. The principal amount of the loanhas already been fully repaid and interest has been charged after the repayment ofprincipal. As per the representation of the management of the company the interest hasbecome due and payable on demand.The Company has demanded payment of interest as on dateand the receipt of the same is not regular.

(d) In respect of the aforesaid loan the entire amount of interest isoverdue for more than 90 days and the Company has initiated legal actions for recovery ofthe outstanding interest.

(e) No loan granted by the Company which has fallen due during theyear has been renewed or extended or fresh loans granted to settle the overdues ofexisting loans given to the same parties.

(f) The aforesaid loan is repayable on demand and the company has notgranted any loans without specifying any terms or period of repayment. The aggregateamount of loans granted as repayable on demand to a related party is Rs. 25219.69 lakhsand percentage thereof is 100% to the total loans granted.

iv. In our opinion and according to the information and explanationsgiven to us the Company has complied with the provisions of Sections 185 and 186 of theAct in respect of loans granted investments made and guarantees and securitiesprovided wherever applicable.

v. According to the information and explanations given to us theCompany has not accepted any deposits or amounts which are deemed to be deposits withinthe meaning of provisions of sections 73 to 76 or any other relevant provisions of the Actand the Rules framed thereunder.

vi. We have broadly reviewed the cost records maintained by the companyspecified under sub-section (1) of Section 148 of the Act and are of the opinion thatthe prescribed accounts and records have been made and maintained.

vii. (a) According to the information and explanations given to us andon the basis of our examination of the records of the

Company the company is generally regular in depositing undisputedstatutory dues including goods and service tax provident fund employees' stateinsurance income-tax sales-tax service tax duty of customs duty of excise valueadded tax cess and other material statutory dues as applicable to the appropriateauthorities except undisputed statutory dues relating to provident fund income-tax andgoods and services tax that have not generally been regularly deposited during the year bythe Company with the appropriate authorities.

According to the information and explanations given to us arrears ofundisputed statutory dues as at March 31 2022 outstanding for a period of more than sixmonths from the date they became payable are mentioned below:

Name of the Statute Nature of dues Amount (Rs.in lakhs) Period to which the amount relates
Tamil Nadu Tax on Consumption Electricity Generation Tax 233.71 June 30 2016 to September 30 2021
or Sale of Electricity Act 2003 Interest on Electricity Generation Tax 65.04 June 30 2016 to September 30 2021

(b) According to the information and explanations given to us and therecords of the Company examined by us details of statutory dues referred to in sub-clause(a) above which have not been deposited as on March 31 2022 on account of disputes aregiven below:

S. Name of the Statute No. Nature of dues Amount (Rs.in lakhs) Period to which the amount relates Forum where the dispute is pending
1. The Central Excise Act 1944 Excise Duty 767.85 22.29 2007-08 2010-12 & 2015-17 2010-11 to 2015-16 CESTAT Chennai Commissioner of Central Excise (Appeals) Bhubaneshwar
2. The Central Goods and Services Tax Act 2017 CGST 469.24 August 2017 and December 2017 Commissioner of Central Excise (Appeals) Coimbatore
3. Tamil Nadu General Sales Tax Act 1959 Sales Tax 28.24 2000-01 Additional Commissioner (CT)/(RP) Chennai
4. The Bihar & Orissa Excise Act 1915 Excise Duty 12.63 2002-03 High Court of Orissa Cuttack

viii. According to the information and explanations given to us and therecords of the Company examined by us there were no transactions relating to previouslyunrecorded income that have been surrendered or disclosed as income during the year in thetax assessments under the Income Tax Act 1961:

ix. (a) According to the records of the Company examined by us and theinformation and explanations given to us the Company

has defaulted in repayment of loans or other borrowings or in thepayment of interest to any lender during the year. The defaults by the Company as at thebalance sheet date are as under:

Nature of Borrowings Name of Lender Amount not paid on due date (Rs. in lakhs) Whether principal or interest No. of days delay or unpaid Remarks if any
Term Loan from Bank Axis Bank Limited 3402.62 Principal 134 Paid on 29.03.2022
Term Loan from Bank Axis Bank Limited 746.00 Interest 135 Paid on 30.03.2022
Term Loan from Bank Punjab National Bank 2000.37 Principal 83 Paid on 24.03.2022
Term Loan from Bank Punjab National Bank 32.45 Interest 94 Paid on 31.03.2022
Term Loan from Financial Institution Asset Reconstruction Company (India) Limited [HDFC Bank Limited] 1392.17 Principal 182
Term Loan from Financial Institution Asset Reconstruction Company (India) Limited [HDFC Bank Limited] 6863.82 Interest 182
Term Loan from Financial Institution Asset Reconstruction Company (India) Limited [Canara Bank] 5512.87 Principal 182
Term Loan from Financial Institution Asset Reconstruction Company (India) Limited [Canara Bank] 17495.59 Interest 182
Term Loan from Financial Institution Asset Reconstruction Company (India) Limited [State Bank of India] 4843.48 Principal 182
Term Loan from Financial Institution Asset Reconstruction Company (India) Limited [State Bank of India] 15029.54 Interest 182
Term Loan from Financial Institution Asset Reconstruction Company (India) Limited [IDBI Bank Limited] 2384.92 Principal 182
Term Loan from Financial Institution Asset Reconstruction Company (India) Limited [IDBI Bank Limited] 10715.25 Interest 182
Term Loan from Financial Institution Asset Reconstruction Company (India) Limited [Indian Overseas Bank] 4367.46 Principal 182
Term Loan from Financial Institution Asset Reconstruction Company (India) Limited [Indian Overseas Bank] 12609.59 Interest 182
Term Loan from Financial Institution Asset Reconstruction Company (India) Limited [Allahabad Bank] 1229.25 Principal 182
Term Loan from Financial Institution Asset Reconstruction Company (India) Limited [Allahabad Bank] 3454.79 Interest 182
Term Loan from Financial Institution Edelweiss Asset Reconstruction Limited [IDFC Limited] 1984.09 Principal 151
Term Loan from Financial Institution Edelweiss Asset Reconstruction Limited [IDFC Limited] 1576.22 Interest 151
Term Loan from Financial Institution Edelweiss Asset Reconstruction Limited [Oriental Bank of Commerce] 2360.41 Principal 151
Term Loan from Financial Institution Edelweiss Asset Reconstruction Limited [Oriental Bank of Commerce] 1677.40 Interest 151
Term Loan from Government Sugar Development Fund 3614.56 Principal 3243
Term Loan from Government Sugar Development Fund 4784.61 Interest 3608
Term Loan from Government Sugar Development Fund 801.86 Principal 2960
Term Loan from Government Sugar Development Fund 1039.53 Interest 3691

(b) According to the information and explanations given to us theCompany has not been declared willful defaulter by any bank or financial institution orany other lender.

(c) In our opinion and according to the information and explanationsgiven to us the term loans have been applied for the purposes for which they wereobtained.

(d) On an overall examination of the financial statements of theCompany funds raised on short-term basis have prima facie not been used during the yearfor long-term purposes by the Company.

(e) According to the information and explanations given to us theCompany does not have any subsidiaryassociate or joint venture. Accordingly therequirement to report on clause 3(ix)(e) of the Order is not applicable to the Company.

(f) According to the information and explanations given to us theCompany does not have any subsidiaryassociate or joint venture. Accordingly therequirement to report on clause 3(ix)(f) of the Order is not applicable to the Company.

x. (a) The Company has not raised moneys by way of initial public offeror further public offer (including debt instruments) during

the year and hence reporting under clause 3(x)(a) of the Order is notapplicable.

(b) The Company has not made any preferential allotment or privateplacement of shares or convertible debentures (fully or partly or optionally) during theyear and hence reporting under clause 3(x)(b) of the Order is not applicable.

xi. (a) To the best of our knowledge and according to the informationand explanations given to us no fraud by the Company or any fraud on the Company has beennoticed or reported during the year. Accordingly reporting under clause 3(xi)(a) and(b)ofthe Order is not applicable to the Company.

(b) According to the information and explanations given to us noreport under sub-section (12) of section 143 of the Companies Act has been filed in FormADT-4 as prescribed under rule 13 of Companies (Audit and Auditors) Rules 2014 with theCentral Government during the year. Accordingly the reporting under clause 3(xi)(b) ofthe Order is not applicable to the Company.

(c) According to the information and explanations given to us and asrepresented by the management no whistle-blower complaints have been received during theyear by the Company. Accordingly the reporting under clause 3(xi)(c) of the Order is notapplicable to the Company.

xii. In our opinion the Company is not a Nidhi Company. Accordinglythe reporting under clause 3 (xii)(a) to (c) of the Order is not applicable to theCompany.

xiii. According to the information and explanations given to us andbased on our examination of the records of the Company transactions with the relatedparties are in compliance with sections 177 and 188 of the Act. The details of suchtransactions have been disclosed in the financial statements as required by the applicableaccounting standards.

xiv. (a) In our opinion and according to the information andexplanations given to us the Company has an internal audit system commensurate with thesize and nature of its business.

(b) We have considered the internal audit reports for the year underaudit issued to the Company during the year and till date in determining the naturetiming and extent of our audit procedures.

xv. According to the information and explanations given to us and basedon our examination of the records of the Company the Company has not entered intonon-cash transactions with directors or persons connected with him. Accordingly thereporting under clause 3(xv) of the Order is not applicable to the Company.

xvi. (a) In our opinion the Company is not required to be registeredunder section 45-IA of the Reserve Bank of India Act 1934.

Hence reporting under clause 3(xvi)(a) (b) and (c) of the Order isnot applicable to the Company.

(b) In our opinion there is no core investment company within theGroup (as defined in the Core Investment Companies (Reserve Bank) Directions 2016) andaccordingly the reporting under clause 3(xvi)(d) of the Order is not applicable to theCompany.

xvii. The Company has incurred cash loss of Rs.16635.04 lakhs duringthe financial year covered by our audit and Rs.18277.59 lakhs in the immediately precedingfinancial year.

xviii. There has been no resignation of the statutory auditors duringthe year. Accordingly the reporting under clause (xviii) of the Order is not applicableto the Company.

xix. On the basis of the financial ratios ageing and expected dates ofrealization of financial assets and payment of financial liabilitiesother informationaccompanying the financial statements and our knowledge of the Board of Directors andManagement plans and based on our examination of the evidence supporting the assumptionsthe Company's ability to meet its obligation will depend on restructuring ofborrowings/liabilities expected sale of investments core and non-core assets and sale ofunits.We further state that our reporting is based on the facts up to the date of theaudit report and we neither give any guarantee nor any assurance that all liabilitiesfalling due within a period of one year from the balance sheet date will get dischargedby the Company as and when they fall due.

xx. In our opinion and according to the information and explanationsgiven to us the Company is not required to spend on CSR activity based on the criteriaprescribed under Section 135 of the Companies Act 2013 and hence reporting under clause3(xx)(a) and 3(xx)(b) of the Order is not applicable to the Company.

Annexure - B to the Independent Auditor?s Report

Referred to in paragraph 22(g) of the Independent Auditor's Report ofeven date to the members of Sakthi Sugars Limited on the financial statements for the yearended March 31 2022

Report on the Internal Financial Controls under Clause (i) ofSub-section 3 of Section 143 of the Companies Act 2013

("the Act??)

1. We have audited the internal financial controls over financialreporting of Sakthi Sugars Limited ("the Company") as of March 31 2022 inconjunction with our audit of the financial Statements of the Company for the year endedon that date.

Management?s responsibility for Internal Financial Controls

2. The Company's management is responsible for establishing andmaintaining internal financial controls based on the internal control over financialreporting criteria established by the Company considering the essential components ofinternal control stated in the Guidance Note on Audit of Internal Financial Controls overFinancial Reporting issued by the Institute of Chartered Accountants of India ('ICAI').These responsibilities include the design implementation and maintenance of adequateinternal financial controls that were operating effectively for ensuring the orderly andefficient conduct of its business including adherence to company's policies thesafeguarding of its assets the prevention and detection of frauds and errors theaccuracy and completeness of the accounting records and the timely preparation ofreliable financial information as required under the Act.

Auditor?s Responsibility

3. Our responsibility is to express an opinion on the Company'sinternal financial controls over financial reporting based on our audit. We conducted ouraudit in accordance with the Guidance Note on Audit of Internal Financial Controls overFinancial Reporting (the "Guidance Note") and the Standards on Auditing issuedby ICAI and deemed to be prescribed under section 143(10) of the Act to the extentapplicable to an audit of internal financial controls both applicable to an audit ofInternal Financial Controls and both issued by the ICAI. Those Standards and the GuidanceNote require that we comply with ethical requirements and plan and perform the audit toobtain reasonable assurance about whether adequate internal financial controls overfinancial reporting was established and maintained and if such controls operatedeffectively in all material respects.

4. Our audit involves performing procedures to obtain audit evidenceabout the adequacy of the internal financial controls system over financial reporting andtheir operating effectiveness. Our audit of internal financial controls over financialreporting included obtaining an understanding of internal financial controls overfinancial reporting assessing the risk that a material weakness exists and testing andevaluating the design and operating effectiveness of internal control based on theassessed risk. The procedures selected depend on the auditor's judgment including theassessment of the risks of material misstatement of the financial statements whether dueto fraud or error.

5. We believe that the audit evidence we have obtained is sufficientand appropriate to provide a basis for our audit opinion on the Company's internalfinancial controls system over financial reporting.

Meaning of Internal Financial Controls over Financial Reporting

6. A company's internal financial control over financial reporting is aprocess designed to provide reasonable assurance regarding the reliability of financialreporting and the preparation of financial statements for external purposes in accordancewith generally accepted accounting principles. A company's internal financial control overfinancial reporting includes those policies and procedures that:

(a) pertain to the maintenance of records that in reasonable detailaccurately and fairly reflect the transactions and dispositions of the assets of thecompany;

(b) provide reasonable assurance that transactions are recorded asnecessary to permit preparation of financial statements in accordance with generallyaccepted accounting principles and that receipts and expenditures of the company arebeing made only in accordance with authorisations of management and directors of thecompany; and

(c) provide reasonable assurance regarding prevention or timelydetection of unauthorised acquisition use or disposition of the company's assets thatcould have a material effect on the financial statements.

Inherent Limitations of Internal Financial Controls over FinancialReporting

7. Because of the inherent limitations of internal financial controlsover financial reporting including the possibility of collusion or improper managementoverride of controls material misstatements due to error or fraud may occur and not bedetected. Also projections of any evaluation of the internal financial controls overfinancial reporting to future periods are subject to the risk that the internal financialcontrol over financial reporting may become inadequate because of changes in conditionsor that the degree of compliance with the policies or procedures may deteriorate.

Opinion

8. In our opinion the Company has in all material respects anadequate internal financial controls system over financial reporting and such internalfinancial controls over financial reporting were operating effectively as at March 312022 based on the internal control over financial reporting criteria established by theCompany considering the essential components of internal control stated in the GuidanceNote on Audit of Internal Financial Controls Over Financial Reporting issued by theInstitute of Chartered Accountants of India.

For PK. NAGARAJAN & Co.
Chartered Accountants
Firm Registration Number: 016676S
S P Muthusami
Coimbatore Partner
May 25 2022 Membership Number: 224171
UDIN: 22224171AjOFPF8862

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