To the Members of Shree Renuka Sugars Limited
Report on the Audit of the Standalone Ind AS Financial
1. We have audited the accompanying standalone Ind AS financialstatements of Shree Renuka Sugars Limited ("the Company") which comprise theBalance sheet as at March 31 2019 the Statement of Profit and Loss including thestatement of Other Comprehensive Income the Cash Flow Statement and the Statement ofChanges in Equity for the year then ended and notes to the financial statementsincluding a summary of significant accounting policies and other explanatory information.
2. In our opinion and to the best of our information and according tothe explanations given to us the aforesaid standalone Ind AS financial statements givethe information required by the Companies Act 2013 as amended ("the Act") inthe manner so required and give a true and fair view in conformity with the accountingprinciples generally accepted in India of the state of affairs of the Company as at March31 2019 its loss including other comprehensive income its cash flows and the changes inequity for the year ended on that date.
Basis for Opinion
3. We conducted our audit of the standalone Ind AS financial statementsin accordance with the Standards on Auditing (SAs) as specified under section 143(10) ofthe Act. Our responsibilities under those Standards are further described in the'Auditor's Responsibilities for the Audit of the Standalone Ind AS Financial Statements'section of our report. We are independent of the Company
in accordance with the 'Code of Ethics' issued by the Institute ofChartered Accountants of India together with the ethical requirements that are relevant toour audit of the financial statements under the provisions of the Act 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 audit opinion on thestandalone Ind AS financial statements.
Key Audit Matters
4. Key audit matters are those matters that in our professionaljudgment were of most significance in our audit of the standalone Ind AS financialstatements for the financial year ended March 312019. These matters were addressed in thecontext of our audit of the standalone Ind AS financial statements as a whole and informing our opinion thereon and we do not provide a separate opinion on these matters.For each matter below our description of how our audit addressed the matter is providedin that context.
We have fulfilled the responsibilities described in the Auditor'sresponsibilities for the audit of the standalone Ind AS financial statements section ofour report including in relation to these matters. Accordingly our audit included theperformance of procedures designed to respond to our assessment of the risks of materialmisstatement of the standalone Ind AS financial statements. The results of our auditprocedures including the procedures performed to address the matters below provide thebasis for our audit opinion on the accompanying standalone Ind AS financial statements.
|Key audit matters ||How our audit addressed the key audit matter |
|Revaluation of property plant and equipment's' (as described in note 3 of the standalone Ind AS financial statements) || |
|The Company has opted for revaluation model for measuring freehold land buildings and plant and machineries ('PPE) and these assets are carried in the books at the fair value less accumulated depreciation. ||Our audit procedures included the Following: |
| || Read and assessed the Company's accounting policies with respect to PPE for compliance with relevant accounting standards. |
| || We evaluated the design and tested the operative effectiveness of internal controls related to revaluation of PPE. |
|Independent valuations are undertaken at least once in every three years or more frequently if there is an indicator that the fair value has changed significantly. || We obtained from the Company management the report on valuation of PPE performed by an external expert appointed by the Company and have involved our valuation specialists to evaluate the valuation methodology as well as key assumptions used in valuation such as external quotations salvage value type of building construction capacity technology of machines etc. |
|The Company has recognised revaluation surplus of Rs. 563.95 Million (net of tax of Rs. 255.74 Million) based on the valuation done as at March 312019. || |
| || We assessed the impact of changes in key assumptions on the valuation analysis prepared by the Company. |
|Revaluation of PPE is a key audit matter due to its financial magnitude and judgements involved in the assessment of the fair value of these assets. The judgment relates to the valuation methodologies used and the assumptions included in each of those methodologies. || We assessed the competence objectivity and independence oF the external valuer appointed by the Company. |
| || We obtained details oF physical verification oF PPE From the independent valuer and compared the results of the physical verification oF PPE with the listing oF PPE as per the fixed assets register on sample basis. |
| || We assessed whether the change in valuation was accounted by the Company within the revaluation reserve and statement of comprehensive income as applicable. |
| || We assessed the disclosures in the financial statement For compliance with the requirements of Ind AS. |
|Recoverability of deferred tax assets (as described in note 9 of the standalone Ind AS financial statements) || |
|Deferred tax assets are recognised on tax losses carried forward when it is probable that taxable profit will be available against which the tax losses can be utilised. The Company's ability to recognise deferred tax assets on tax losses carried forward is assessed by management at the end of each reporting period taking into account Forecasts oF Future taxable profits. ||Our audit procedures included the Following: |
| ||Our audit procedures included considering the Company's accounting policies with respect to income taxes. |
| ||We evaluated the design and tested the operative effectiveness internal controls related to income taxes. |
| ||We obtained From the Company management the projections For taxable profits supported by Future business plans. |
|At March 31 2019 net deferred tax assets recognised in the standalone Ind- AS financial statements amounted to Rs. 3148.13 Million. ||We discussed the financial projections and Future business plans with the management. |
| ||We assessed the schedules For the reversal oF temporary differences. |
|The valuation of deferred taxes is based on significant estimates by management regarding availability oF sufficient Future taxable profits and accordingly we have considered this to be a key audit matter. ||We assessed the key assumptions used in the financial projections including recovery rate expected sale realisation for sugar and ethanol by comparing it to the approved business plan and projections used. |
| ||We involved tax specialists who evaluated the tax positions relating to temporary differences on which deFerred tax asset and liability have been recognised by the Company. |
| ||Tested the arithmetical accuracy of the tax computations and future projections oF taxable profits. |
| ||We assessed the disclosures in the financial statement For compliance with the requirements of Ind AS. |
5. 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 standalone Ind AS financial statements and our auditor'sreport thereon. The annual report is expected to be made available to us after the date ofthis auditor's report.
Our opinion on the standalone Ind AS financial statements does notcover the other i^Formatio^ and we do not and will not express any form of assuranceconclusion thereon.
In connection with our audit oF the standalone Ind AS financialstatements our responsibility is to read the other inFormation identified above when itbecomes available and in doing so consider whether such other information is materiallyinconsistent with the standalone Ind AS financial statements or our knowledge obtained inthe audit or otherwise appears to be materially misstated.
When we read the annual report iF we conclude that there is a materialmisstatement therein we are required to communicate the matter to those charged withgovernance and shall comply with the relevant applicable requirements of the Standard onAudit for The Auditor's Responsibility in relation to Other Information in Documentscontaining audited financial statements.
6. Responsibilities of Management For the Standalone Ind ASFinancial Statements
The Company's Board of Directors is responsible for the matters statedin section 134(5) of the Act with respect to the preparation of these standalone Ind ASfinancial statements that give a true and Fair view oF the financial position financialperformance induding other comprehensive income cash flows and changes in equity of theCompany in accordance with the accounting principles generally accepted in Indiaincluding the Indian Accounting Standards (Ind AS) specified under section 133 of the Actread with the Companies (Indian Accounting Standards) Rules 2015 as amended. Thisresponsibility also includes maintenance of adequate accounting records in accordance withthe provisions of the Act for safeguarding of the assets of the Company and for preventingand detecting frauds and other irregularities; selection and application of appropriateaccounting policies; making judgments and estimates that are reasonable and prudent; andthe design implementation and maintenance of adequate internal financial controls thatwere operating eff^ectively for ensuring the accuracy and completeness of the accountingrecords relevant to the preparation and presentation of the standalone Ind AS financialstatements that give a true and fair view and are free from material misstatement whetherdue to fraud or error.
7. In preparing the standalone Ind AS financial statements managementis responsible 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 management either intends to liquidate the Company or to ceaseoperations or has no realistic alternative but to do so.
8. Those Board of Directors are also responsible for overseeing theCompany's financial reporting process.
Auditor's Responsibilities for the Audit of the Standalone Ind ASFinancial Statements
9. Our objectives are to obtain reasonable assurance about whether thestandalone Ind AS financial statements as a whole are free from material misstatementwhether due to fraud or 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 standalone Ind AS financialstatements.
10. As part of an audit in accordance with SAs we exerciseprofessional judgment and maintain professional skepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of thestandalone Ind AS financial statements whether due to fraud or error design and performaudit procedures responsive to those risks and obtain audit evidence that is sufficientand appropriate to provide a basis for our opinion. The risk of not detecting a materialmisstatement resulting from fraud is higher than for one resulting from error as fraudmay involve collusion forgery intentional omissions misrepresentations or the overrideof internal control.
Obtain an understanding of internal control relevant to theaudit in order to design audit procedures that are appropriate in the circumstances. Undersection 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.
Evaluate the appropriateness of accounting policies used and thereasonableness of accounting estimates and related disclosures made by management.
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.
Evaluate the overall presentation structure and
content of the standalone Ind AS financial statements including thedisclosures and whether the standalone Ind AS financial statements represent theunderlying transactions and events in a manner that achieves fair presentation.
11. We communicate with those charged with governance regarding amongother matters the planned scope and timing of the audit and significant audit findingsinduding any significant deficiencies in internal control that we identiFy during ouraudit.
12. 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.
13. From the matters communicated with those charged with governancewe determine those matters that were of most significance in the audit of the standaloneInd AS financial statements for the financial year ended March 312019 and are thereforethe key audit matters. We describe these matters in our auditor's report unless law orregulation precludes public disclosure about the matter or when in extremely rarecircumstances we determine that a matter should not be communicated in our report becausethe adverse consequences of doing so would reasonably be expected to outweigh the publicinterest benefits of such communication.
Report on Other Legal and Regulatory Requirements
14. 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 of the Act we give in the "Annexure 1" a statement on thematters specified in paragraphs 3 and 4 of the Order.
15. 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 including theStatement of Other Comprehensive Income the Cash Flow Statement and Statement of Changesin Equity dealt with by this Report are in agreement with the books of account;
(d) In our opinion the aforesaid standalone Ind AS financialstatements comply with the Accounting Standards specified under Section 133 of the Actread with Companies (Indian Accounting Standards) Rules 2015 as amended;
(e) On the basis of the written representations received from thedirectors as on March 312019
taken on record by the Board of Directors none of the directors isdisqualified as on March 312019 from being appointed as a director in terms of Section164 (2) of the Act;
(f) With respect to the adequacy of the internal financial controlsover financial reporting of the Company with reference to these standalone Ind ASfinancial statements and the operating effectiveness of such controls refer to ourseparate Report in "Annexure 2" to this report;
(g) In our opinion to the best of our information and explanationgiven to us the remuneration paid to the Chairman and the Whole-time Director for theyear ended March 31 2019 are in excess of the limits applicable under section 197 oftheAct read with Schedule V thereto by Rs. 6.92 Million and Rs. 21.15 Million. We areinformed by the management that it proposes to obtain approval of the shareholders in ageneral meeting by way of a special resolution;
(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 asamended in our opinion and to the best of our information and according to theexplanations given to us:
(i) The Company has disclosed the impact of pending litigations on itsfinancial position in its standalone Ind AS financial statements
- Refer Note 38 to the standalone Ind AS financial statements;
(ii) The Company has made provision as required under the applicablelaw or accounting standards for material foreseeable losses if any on long-termcontracts including derivative contracts
- Refer Note 24 to the standalone Ind AS financial statements;
(iii) There were no amounts which were required to be transferred tothe Investor Education and Protection Fund by the Company.
|For S R B C & CO LLP |
|Chartered Accountants |
|ICAI Firm Registration Number: 324982E/E300003 |
|Shyamsundar Pachisia |
|Membership Number: 049237 |
|Place of Signature: Mumbai |
|Date: May 16 2019 |