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SBEC Sugar Ltd.

BSE: 532102 Sector: Agri and agri inputs
NSE: N.A. ISIN Code: INE948G01019
BSE 00:00 | 02 Jul 7.62 0.14
(1.87%)
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7.48

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7.62

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7.48

NSE 05:30 | 01 Jan SBEC Sugar Ltd
OPEN 7.48
PREVIOUS CLOSE 7.48
VOLUME 274
52-Week high 8.57
52-Week low 3.34
P/E
Mkt Cap.(Rs cr) 36
Buy Price 7.30
Buy Qty 181.00
Sell Price 7.62
Sell Qty 1.00
OPEN 7.48
CLOSE 7.48
VOLUME 274
52-Week high 8.57
52-Week low 3.34
P/E
Mkt Cap.(Rs cr) 36
Buy Price 7.30
Buy Qty 181.00
Sell Price 7.62
Sell Qty 1.00

SBEC Sugar Ltd. (SBECSUGAR) - Auditors Report

Company auditors report

To The Members of SBEC Sugar Limited

Qualified Opinion

We have audited the accompanying standalone financial statements of M/s SBEC SUGARLIMITED ('the Company') which comprise the Balance Sheet as at 31 March 2019 and theStatement of Profit and Loss (including Other Comprehensive Income) the Statement ofChanges in Equity and the Statement of Cash flows for the year ended including a summaryof the significant accounting policies and other explanatory information (hereinafterreferred to as "the Standalone Ind AS Financial Statements").

In our opinion and to the best of our information and according to the explanationsgiven to usexcept for the possible effects of the matter described in the BasisforQualified Opinion section of our report the aforesaid standalone financial statementsgive the information required by the Companies Act2013 ("the Act") in themanner so required and give a true and fair view in conformity with the Indian AccountingStandards prescribed under section 133 of the Act read with the Companies (IndianAccounting Standards) Rules 2015as amended ("Ind AS") and other accountingprinciples generally accepted in India of the state of affairs of the Company as at 31March 2019the loss and total comprehensive income(loss) changes in equity and its cashflows for the year ended on that date.

Basis for Qualified Opinion

1) During the year ended 31st March 2019 the Company has not made provision forinterest on late payment of cane dues amounting to Rs. 574.01lacs for sugar season2018-19 and Rs. 3797.83 lacsfor sugar season 2017-18 had the company made provisions theexpense and loss for the year ended 31st March 2019 would have been higher by Rs. 4371.84lacs respectively and its consequential impact on EPS.

2) The company has taken the debt of IDBI PNB & IFCI in Modi Industries Limited.As at 31st March 2019 the company has net exposure of Rs.14685lacs. No Interest on thesaid amount has been provided as there is no reasonable certainty of its collection sincethe net worth of Modi Industries Limited has been completely eroded. Recoverability of theabove balance is also doubtful. However no provisions for doubtful debts were made in thefinancial statements of the company and consequently we are unable to opine on theappropriateness of the same and its consequential impact on the financial statements.

We conducted our audit of the standalone Ind AS financial statements in accordance withthe Standards on Auditing (SAs) specified under section 143(10) of the Act. Ourresponsibilities under those Standards are further described in the Auditor'sResponsibilities for the Audit of the Standalone Financial Statements section of ourreport. We are independent of the Company in accordance with the Code of Ethics issued bythe Institute of Chartered Accountants of India (ICAI) together with the ethicalrequirements that are relevant to our audit of the Standalone Financial Statements underthe provisions of the Act and the Rules made thereunder and we have fulfilled our otherethical responsibilities in accordance with these requirements and the Code of Ethics. Webelieve that the audit evidence we have obtained is sufficient and appropriate to providea basis for our audit opinion on the standalone Ind AS financial statements.

Emphasis of Matters

We draw attention to the following matters in t he Notes to the financial statements:

a) Note no (d)of the standalone Audited financial statement regarding interest paymenton cane dues where the Hon'ble High Court vide its order dated 9th March 2017 has setaside the decision of State Government for the waiver of Interest for the year 2012-132013-14 and 2014-15 and asked the Cane Commissioner to take a final call in the matterpending final order the Company has not made provision for interest on the late paymentof cane dues for years 2012-13 2013-14 and 2014-15. The Hon'ble Supreme Court vide itsorder dated 23rd April 2018 has upheld the Hon'ble High Court order dated 9th March2017. The matter is still sub-judice.

Our opinion is not modified in respect of abovematter.

Key Audit Matters

Key audit matters are those matters that in our professional judgment were of mostsignificance in our audit of the standalone Ind AS financial statements of the currentperiod. We have determined that except for the matter described in the "Basis forQualified Opinion" section there are no other key audit matters to communicate inour report.

Information Other than the Standalone Ind AS Financial Statements and Auditor's Reportthereon

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 standalone Ind AS financial statements and our auditor's report thereon.

Our opinion on the standalone financial statements does not cover the other informationand we do not express any form of assurance conclusion thereon. In connection with ouraudit of the standalone Ind AS financial statements our responsibility is to read theother information and in doing so consider whether the other information is materiallyinconsistent with the standalone financial statements or our knowledge obtained during thecourse of our audit or otherwise appears to be materially misstated. If based on the workwe have performed we conclude that there is a material misstatement of this otherinformation we are required to report that fact. We have nothing to report in thisregard.

Responsibilities of Management and Those Charged with Governance for the StandaloneFinancial 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 standalone Ind AS financial statements that give a true and fair view of thefinancial position financial performance total comprehensive income changes in equityand cash flows of the Company in accordance with the Indian Accounting Standards (Ind AS)and other accounting principles generally accepted in India including the AccountingStandards specified under section 133 of the Act. This responsibility also includesmaintenance of adequate accounting records in accordance with the provisions of the Actfor safeguarding the assets of the Company and for preventing and detecting frauds andother irregularities; selection and application of appropriate accounting policies; makingjudgements and estimates that are reasonable and prudent; and the design implementationand maintenance of adequate internal financial controls that were operating effectivelyfor ensuring the accu- racy and completeness of the accounting records relevant to thepreparation and presentation of the standalone Ind AS financial statements that give atrue and fair view and are free from material misstatement whether due to fraud or error.

In preparing the standalone Ind AS financial statements management 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 unlessmanagement either intends to liquidate the Company or to cease operations or has norealistic 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 Standalone Financial Statements

Our objectives are to obtain reasonable assurance about whether the standalone Ind ASfinancial 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 assuranceis a high level of assurance but is not a guarantee that an audit conducted in accordancewith SAs will always detect a material misstatement when it exists. Misstatements canarise from fraud or error and are considered material if individually or in theaggregate they could reasonably be expected to influence the economic decisions of userstaken on the basis of these standalone financial statements.

As a part of an audit in accordance with SAs we exercise professional judgement andmaintain professional skepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the standalonefinancial 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.

• Obtain an understanding of internal financial controls relevant to the audit inorder to design audit procedures that are appropriate in the circumstances. Under section143(3)(i) of the Act we are also responsible for expressing our opinion on whether theCompany and its subsidiary companies which are companies incorporated in India hasadequate internal financial controls system in place and the operating effectiveness ofsuch controls.

• Evaluate the appropriateness of accounting policies used and the reasonablenessof accounting estimates and related disclosures made by management.

• Conclude on the appropriateness of management's use of the going concern basisof accounting and based on the audit evidence obtained whether a material uncertaintyexists related to events or conditions that may cast significant doubt on the Company'sability to continue as a going concern. If we conclude that a material uncertainty existswe are required to draw attention in our auditor's report to the related disclosures inthe standalone financial statements or if such disclosures are inadequate to modify ouropinion. Our conclusions are based on the audit evidence obtained up to the date of ourauditor's report. However future events or conditions may cause the Company to cease tocontinue as a going concern.

• Evaluate the overall presentation structure and content of the standalonefinancial statements including the disclosures and whether the standalone financialstatements represent 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 of thecurrent period and are therefore the key audit matters. We describe these matters in ourauditor's report unless law or regulation precludes public disclosure about the matter orwhen in extremely rare circumstances we determine that a matter should not becommunicated in our report because the adverse consequences of doing so would reasonablybe expected to outweigh the public interest benefits of such communication. Report onOther Legal and Regulatory Requirements 1. As required by Section 143(3) of the Actbased on our audit 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 purpose 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 including Other ComprehensiveIncome Statement of Changes in Equity and the Statement of Cash Flows dealt with by thisReport are in agreement with the books of account.

(d) In our opinion the aforesaid standalone financial statements comply with theIndian Accounting Standards specified under Section 133 of the Act read with theCompanies (Indian Accounting Standards) Rules 2015 as amended.

(e) On the basis of the written representations received from the Directors as on 31stMarch 2019 taken on record by the Board of directors none of the Directors isdisqualified as on 31st March 2019 from being appointed as a Director in terms of section164(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 A". Our report expresses an unmodified opinion onthe adequacy and operating effectiveness of the internal financial control over financialreporting of those companies for reasons stated therein.

(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:

In our opinion and to the best of our information and according to the explanationsgiven to us the remuneration paid by the Company to its directors during the year is inaccordance with the provisions of section 197 of the Act.

(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 as amended 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 its financialposition in its financial statements - Refer Note 27to the financial statements.

ii. The Company did not have any long-term contracts including derivative contracts forwhich there were any material foreseeable losses.

iii. There were no amounts which were required to be transferred to the InvestorEducation and Protection Fund by the Company.

2. As required by the Companies (Auditor's Report) Order2016 ("the Order")issued by the Central Government in terms of sub section (11) of section 143 of the Actwe give in "Annexure B" a statement on the matters specified in paragraphs 3 and4 of the Order.

For K. K. Jain & Co.
Chartered Accountants
Firm Registration No. 002465N
(Simmi Jain)
Place: New Delhi Partner
Date: 25th May 2019 Membership No.086496

"Annexure A" to the Independent Auditor's Report of even date on theStandalone Ind AS Financial Statements of SBEC Sugar Limited

Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section143 of the Companies Act 2013 ("the Act") as referred to in paragraph 2(f) of'Report on Other Legal and Regulatory Requirements' section

We have audited the internal financial controls over financial reporting of SBEC SugarLimited ("the Company") as of March 31 2019 in conjunction with our audit ofthe 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 Company considering the essential components of internal control statedin the Guidance Note on Audit of Internal Financial Controls over Financial Reportingissued by the Institute of Chartered Accountants of India. These responsibilities includethe design implementation and maintenance of adequate internal financial controls thatwere operating effectively for ensuring the orderly and efficient conduct of its businessincluding adherence to the Company's policies the safeguarding of its assets theprevention and detection of frauds and errors the accuracy and completeness of theaccounting records and the timely preparation of reliable financial information asrequired under the Companies Act 2013.

Auditor's Responsibility

Our responsibility is to express an opinion on the Company's internal financialcontrols over financial reporting based on our audit. We conducted our audit in accordancewith the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting(the "Guidance Note") and the Standards on Auditing as specified under section143(10) of the Companies Act 2013 to the extent applicable to an audit of internalfinancial controls both applicable to an audit of Internal Financial Controls and bothissued by the Institute of Chartered Accountants of India. Those Standards and theGuidance Note require that we comply with ethical requirements and plan and perform theaudit to obtain reasonable assurance about whether adequate internal financial controlsover financial reporting was established and maintained and if such controls operatedeffectively in all material respects.

An 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 judgement including the assessment of the risks ofmaterial misstatement of the financial statements whether due to fraud or error.

We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the internal financial controls over financialreporting.

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.

Opinion

In our opinion the Company has in all material respects an adequate internalfinancial controls system over financial reporting and such internal financial controlsover financial reporting were operating effectively as at March 31 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.

"Annexure B" to the Independent Auditor's Report to the members of SBEC SugarLimited dated May 25 2019.

Report on the matters specified in paragraph 3 of the Companies (Auditor's Report)Order 2016 ("the Order') issued by the Central Government of India in terms ofsection 143(11) of the Companies Act 2013 ("the Act") as referred to inparagraph 1 of 'Report on Other Legal and Regulatory Requirements' section

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

(b) Though the Company has a programme of physical verification of its fixed assets inphased manner which in our opinion is reasonable having regard to the size of thecompany and the nature of its assets however the Fixed assets have not been physicallyverified by the management during the year therefore discrepancies if any could not bedetermined.

(c) According to information and explanations given to us and on the basis of ourexamination of the records of the Company the title deeds of immovable propertiesincluded in fixed assets are held in the name of the company. Some of these title deedsare given as security for securing various facilities and accordingly these original titledeeds are kept as security for the lenders.

ii. The inventory has not been physically verified by the management during theyear.

iii. According to the information and explanations given to us the company has notgranted any loans secured or unsecured to companies firms Limited LiabilityPartnerships or other parties covered in the register maintained under section 189 of theCompanies Act 2013.

Accordingly the provisions of clause 3(iii) (a) to (c) of the Order are not applicableto the company and hence not commented upon.

iv. In our opinion and according to the information and explanations given to us thereare no loans investments guarantees and securities granted in respect of whichprovisions of section 185 and 186 of the Companies Act 2013 are applicable and hence notcommented upon.

v. The Company has not accepted any fresh deposits from the public within the meaningof directives issued by the Reserve Bank of India and provisions of sections 73 to 76 orany other relevant provisions of the Companies Act 2013 and the rules framed thereunderare not applicable.

vi. We have broadly reviewed the records including the books of account maintained bythe company pursuant to the rules prescribed by the Central Government for the maintenanceof cost records under sub-section (1) of section 148 of the Companies Act 2013 in respectof company's products and are of the opinion that prima facie the prescribed accounts andrecords have been made and maintained.

vii. (a) According to the records of the Company undisputed statutory dues includingprovident fund employees' state insurance income tax sales tax service tax duty ofcustoms duty of excise value added tax cess and other material statutory dues havegenerally been regularly deposited during the year with the appropriate authorities.

(b) According to the information and explanations given to us and as per the books andrecords examined by us the particulars of statutory dues of the specified statue as atthe year which have not been deposited on account of a dispute are referred to in "AnnexureC".

viii. According to the records of the Company examined by us and the information andexplanations given to us in our opinion the Company has not defaulted in repayment ofits dues to Governments banks and financial institutions. The Company has not taken anyloans from debenture holders.

ix. Based on our audit procedures and according to the information and explanationsgiven to us the Company has not raised any money by way of initial public offer / furtherpublic offer. Further based on our audit procedures and according to the information andexplanations given to us and on an overall examination of the balance sheet we reportthat monies raised by way of term loans were applied for the purposes for which those wereraised.

x. During the course of our examination of the books and records of the Company carriedout in accordance with the generally accepted auditing practices in India we have neithercome across any instance of fraud on or by the Company noticed or reported during theyear nor have we been informed of such case by the management

xi. Based on our audit and according to the information and explanations given to uswe report that the managerial remuneration has been paid / provided in accordance with therequisite approvals mandated by the provisions of section 197 read with Schedule V to theCompanies Act 2013.

xii. In our opinion and according to the information and explanations given to us theCompany is not a nidhi company. Therefore the provisions of clause 3(xii) of the orderare not applicable to the Company and hence not commented upon.

xiii Based on our audit procedures and according to the information and explanationsgiven to us transactions with the related parties are in compliance with section 177 and188 of Companies Act 2013 where applicable and the details have been disclosed in thenotes to the financial statements as required by the applicable accounting standards.

xiv. According to the information and explanations given to us and on an overallexamination of the balance sheet the company has not made any preferential allotment orprivate placement of shares or fully or partly convertible debentures during the yearunder review and hence reporting requirements under clause 3(xiv) are not applicable tothe company and not commented upon.

xv. Based on our audit procedures and according to the information and explanationsgiven to us the Company has not entered into any non-cash transactions with directors orpersons connected with him.

xvi. According to the information and explanations given to us the Company is notrequired to be registered under section 45-IA of the Reserve Bank of India Act 1934.

For K. K. Jain & Co.
Chartered Accountants
Firm Registration No. 002465N
(Simmi Jain)
Place: New Delhi Partner
Date: 25th May 2019 Membership No.086496

"ANNEXURE C" TO AUDITORS' REPORT

Referred in Paragraph VII(B) of Annexure "A" a statement on the mattersspecified in the 31st March 2019.

Name of The Statue Name of Dues Amount ( Rs. in Lacs) Period to which amount relates Forum where dispute is pending
UP VAT Act 2008 VAT imposed on Bagasse given to M/s SBEC Bioen- ergy Ltd 43.47 2008-09 Appeal filed before Honorable High Court by Commercial Tax department against order passed by Member Commercial Tax Tribunal Meerut
Finance Act 1994 Service Tax Credit Taken on Modinagar Site 3.49 2014-15 Appeal filed before CESTAT Allahabad
Finance Act 1994 Service Tax on Commission 150.88 2003-04 CESTAT has sent back the case to Com- missioner Central Excise and Service Tax Meerut-1 for Remand
Finance Act 1994 Service tax Credit taken in invoice beyond 6 month 44.90 Dec 2013 – Dec 2014 Application filed before Assistant Com- missioner Central Excise & Service Tax Division-1 Meerut on 25.02.2016
Central Excise 1944 Excise Duty on removal of Bagasse and Press-mud 75.24 2015-16 Appeal allowed by Commissioner Ap- peals Meerut vide order dt. 30.11.18 and Commissioner CGSTMeerut filled appeal before CESTAT Allahabad vide Appeal No.70247/2019
Finance Act 1994 Service Tax on Lease Rent 16.83 01.04.2008- 01.12.2010 Appeal Allowed by way of Remand by CESTAT Delhi
Finance Act 1994 Service Tax on Lease Rent 7.24 2012-13 Appeal Allowed by way of Remand by CESTAT Delhi
Central Excise 1944 Cenvat Credit taken on HR plates Angles Shape sec- tion 15.54 2015-17 SCN Reply Submitted before Deputy Commissioner CGST Division Shamli.
Central Excise 1944 Excise Duty on removal of Bagasse and Press-mud 42.21 01.12.2016to 31.01.2017 SCN Reply Submitted on 18.12.18 before Deputy Commissioner CGST Division Shamli.
Central Excise 1944 Excise Duty on removal of Bagasse and Press-mud 24.90 01.02.2017to28.02.2017 SCN Reply Submitted on 12.02.19 before Deputy Commissioner CGST Division Shamli.

 

For K. K. Jain & Co.
Chartered Accountants
Firm Registration No. 002465N
(Simmi Jain)
Place: New Delhi Partner
Date: 25th May 2019 Membership No.086496