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Sukhjit Starch & Chemicals Ltd.

BSE: 524542 Sector: Others
NSE: N.A. ISIN Code: INE450E01011
BSE 00:00 | 18 May 233.85 -0.35
(-0.15%)
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244.75

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244.75

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NSE 05:30 | 01 Jan Sukhjit Starch & Chemicals Ltd
OPEN 244.75
PREVIOUS CLOSE 234.20
VOLUME 2302
52-Week high 245.00
52-Week low 142.60
P/E 19.80
Mkt Cap.(Rs cr) 345
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 244.75
CLOSE 234.20
VOLUME 2302
52-Week high 245.00
52-Week low 142.60
P/E 19.80
Mkt Cap.(Rs cr) 345
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Sukhjit Starch & Chemicals Ltd. (SUKHJITSTARCH) - Auditors Report

Company auditors report

To

The Members of

The Sukhjit Starch & Chemicals Limited Phagwara

REPORT ON THE STANDALONE FINANCIAL STATEMENTS :

OPINION

We have audited the attached standalone financial statements of The Sukhjit Starch& Chemicals Limited (the Company) as at March 31 2020 which comprise the BalanceSheet the Statement of Profit and Loss the Statement of Changes in Equity and theStatement of Cash Flow and a summary of significant accounting policies and otherexplanatory information. (herein after referred to as ''the standalone Ind AS financialStatement'').

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 Act 2013 (the 'Act') in the manner so required and give a true and fairview in conformity with the accounting standards prescribed under section 133 of the Actread with the Companies (Indian Accounting Standards) Rules 2015 as amended ('Ind AS')and other accounting principles generally accepted in India of the state of affairs ofthe Company as at March 31 2020 the profit and total comprehensive income changes inequity and its cash flows for the year ended on that date.

BASIS FOR OPINION

We conducted our audit of the Ind AS financial statements in accordance with theStandards on Auditing ('SAs') as specified under section 143(10) of the Act. Ourresponsibilities under those Standards are further described in the 'Auditor'sResponsibilities for the Audit of the Ind AS Financial Statements' section of our report.We are independent of the Company in accordance with the 'Code of Ethics' issued by theInstitute of Chartered Accountants of India together with the ethical requirements thatare relevant to our audit of the financial statements under the provisions of the Act andthe Rules thereunder and we have fulfilled our other ethical responsibilities inaccordance with these requirements and ICAI's Code of Ethics. We believe that the auditevidence we have obtained is sufficient and appropriate to provide a basis for our auditopinion on the Ind AS financial statements.

KEY AUDIT MATTERS

Key audit matters are those matters that in our professional judgment were of mostsignificance in our audit of the standalone financial statements of the current period.These matters were addressed in the context of our audit of the standalone financialstatements as a whole and in forming our opinion thereon and we do not provide aseparate opinion on these matters.We have determined the matters described below to be thekey audit matters to be communicated in our report.

Key Audit Matters Auditor's Response
Revenue recognition
Accuracy of recognition measurement presentation and disclosures of revenues and other related balances in view of adoption of Ind AS 115 ''Revenue from Contracts with Customers''. Our audit procedures selected a sample of sales contracts/ sales orders and tested the operating effectiveness of the internal control relating to identification of the distinct performance obligations and determination of transaction price;

Obtained confirmations from customers on sample basis to support existence assertion of trade receivables and

Auditor's Response Key Audit Matters
assessed the relevant disclosures made in the financial statements; to ensure revenue from contracts with customers are in accordance with the requirements of relevant accounting standards.

We have been able to conclude that revenue has been recognised in accordance with the revenue recognition policy and accounting standards.

Taking into account the installed capacities of various units of company we have verified that the company duly maintains the raw material inventory levels for an appropriate period. Inventory record and existence
We also observed a sample of management's inventory count procedures to assess compliance with the Company process and made enquiries regarding nonmoving inventory items. The Company recognised inventory in the books of accounts which is held by Company's units across India. Within each storage location inventory is stored in warehouses / sheds. We opted this matter because of the significance of the inventory balance to the profit statement of financial position and complexity involved in determining inventory quantities on hand due to the diversity of inventory storage locations particularly the company's basic raw material being an agri-produce.
Further we have also evaluated a selection of controls over inventory existence across the Company. There were no significant exceptions noted from these procedures.
Our audit procedures included implementation and operating effectiveness of controls in respect of review of capital WIP particularly in respect of timing of the capitalization and recording of additions to items of various categories of PPE with source documentation.
We test checked the source documentation to determine whether the expenditure is of capital nature and has been appropriately approved and segregated into appropriate categories. Capital work-in-progress/Property Plant and Equipment (PPE)
Our audit procedures on adoption of Ind AS 116 include: The Company is setting up its 5th manufacturing facility in Punjab. The project needs to be capitalized and depreciated once the assets are ready for use as intended by the management. Any inappropriate timing of capitalization of the project and/or classification of categories of items of PPE may result in material misstatement of Capital work-in-progress/ PPE with a consequent impact on depreciation charge and results for the year.
- Assessed the key terms and conditions of each lease with the underlying lease contracts; and
- Evaluated computation of lease liabilities and challenged the key estimates such as discount rates and the lease term. Adoption of Ind AS 116 Leases
The Company has adopted Ind AS 116 Leases (Ind AS 116) in the current year which does away the difference of operating lease and financial lease. The application and transition to this accounting standard is an area of focus in our audit.
Ind AS 116 introduces a new lease accounting model wherein lessees are required to recognise a right-of-use (ROU) asset and a lease liability arising from a lease on the balance sheet.
The lease liabilities are initially measured by discounting future lease payments during the lease term as per the contract/ arrangement.

 

INDEPENDENT AUDITORS' REPORT OTHER INFORMATION

The Company's Board of Directors is responsible for the other information. The otherinformation comprises the information included in the Management Discussion and AnalysisBoard's Report including Annexures to Board's Report Business Responsibility ReportCorporate Governance and Shareholder's Information but does not include the financialstatements and our auditor's report thereon.

Our opinion on the Ind AS financial statements does not cover the other information andwe do not 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 financial statements or our knowledge obtained in theaudit or otherwise appears to be materially misstated. If based on the work we haveperformed we conclude that there is a material misstatement of this other information weare required to report that fact. We have nothing to report in this regard.

MANAGEMENT'S RESPONSIBILITY FOR THE FINANCIAL STATEMENTS :

The Company's Management is responsible for the matters stated in Section 134(5) of theCompanies Act 2013 ('the Act') with respect to the preparation of these financialstatements that give a true and fair view of the state of affairs profit/ loss (includingother comprehensive income) changes in Equity and cash flow of the Company in accordancewith the accounting principles generally accepted in India including the India AccountingStandards (Ind AS) specified under Section 133 of the Act. This responsibility alsoincludes maintenance of adequate accounting records in accordance with the provisions ofthe Act for safeguarding the assets of the Company and for preventing and detecting fraudsand other irregularities; selection and application of appropriate accounting policies;making judgments and estimates that are reasonable and prudent; and design implementationand maintenance of adequate internal financial controls that were operating effectivelyfor ensuring 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.

In preparing the Ind AS financial statements management is responsible for assessingthe Company's ability to continue as a going concern disclosing as applicable mattersrelated to going concern and using the going concern basis of accounting unless managementeither intends to liquidate the Company or to cease operations or has no realisticalternative but to do so.

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

Our objectives are to obtain reasonable assurance about whether the Ind AS financialstatements as a whole are free from material misstatement whether due to fraud or errorand to issue an auditor's report that includes our opinion. Reasonable assurance is a highlevel of assurance but is not a guarantee that an audit conducted in accordance with SAswill always detect a material misstatement when it exists. Misstatements can arise fromfraud or error and are considered material if individually or in the aggregate theycould reasonably be expected to influence the economic decisions of users taken on thebasis of these Ind AS financial statements.

As part of an audit in accordance with Standards on Auditing we exercise professionaljudgment and maintain

professional skepticism throughout the audit. We also :

•Rs.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.

•Rs.Obtain an understanding of internal financial controls relevant to the auditin 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.

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

•Rs.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.

•Rs.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 standalone financial statementsof the current period and are therefore the key audit matters. We describe these mattersin our auditor's report unless law or regulation precludes public disclosure about thematter or when 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 ON OTHER LEGAL AND REGULATORY REQUIREMENTS :

1.Rs.As required by the companies (Auditor's Report) order 2016 (''the order'') issuedby the Central Government of India in terms of sub section (11) of section 143 of theCompanies Act 2013. We enclose in Annexure A statement on the matters specified inparagraphs 3 & 4 of the said order.

2.Rs.As required by section 143(3) of the Act we report that :

1.Rs.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;

2.Rs.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.

3.Rs.The Balance Sheet the Profit and Loss Statement and the Cash Flow Statementdealt with by this Report are in agreement with the books of account.

4.Rs.In our opinion the aforesaid standalone financial statements comply with theAccounting Standards specified under Section 133 of the Act.

5.Rs.On the basis of the written representations received from the directors as onMarch 31 2020 taken on record by the Board of Directors none of the directors isdisqualified as on March 31 2020 from being appointed as a director in terms of Section164 (2) of the Act.

6.Rs.With respect to the adequacy of the internal financial controls over financialreporting of the Company and the operating effectiveness of such controls refer to ourspecific report in ''Annexure B''.

7.Rs.In our opinion the managerial remuneration for the year ended March 312020 hasbeen paid / provided by the Company to its directors in accordance with the provisions ofsection 197 read with Schedule V to the Act; and

8.Rs.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)Rs.The Company has disclosed the impact of pending litigations on its financialposition in its financial statements as referred to in note to the financial statements.

(ii)Rs.The Company has made provision as required under the applicable law oraccounting standards for material foreseeable losses if any and as required onlong-term contracts.

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

FOR VSAP & ASSOCIATES
CHARTERED ACCOUNTANTS
Sd/-
(AMIT CHADHA)
Partner
Place : Phagwara Memb. No. 507087
Dated : 12th June 2020 UDIN. 20507087AAAAEJ4556

ANNEXURE A TO THE AUDITORS' REPORT :

The Annexure referred to in our Independent Auditors' Report to the members of TheSukhjit Starch & Chemicals Limited on the standalone financial statements for the yearended 31st March 2020 we report that:

1.Rs.(a) The Company has maintained proper records showing full particulars includingquantitative details and

situation of fixed assets.

(b)Rs.As per information given to us the physical verification of fixed assets hasbeen done by the management at reasonable intervals and no material discrepancies werenoticed on such verification. In our opinion this periodicity of physical verification isreasonable having regard to the size of the Company and the nature of its assets.

(c)Rs.According to the information and explanations given to us and on the bases of ourexamination of the records of the Company the title deeds of immovable properties areheld in the name of the Company.

2.Rs.The Company has conducted physical verification of stock of finished goodsstores spare parts and raw materials at reasonable intervals. In our opinion thefrequency of verification is reasonable.

3.Rs.In our opinion and according to the information and explanation given to us theCompany has neither granted or taken any loans secured or unsecured to or from theCompanies firms or other parties covered in the register maintained under section 189 ofthe Companies Act 2013 (''the Act'').

4.Rs.According to the information and explanations given to us there is no loan to anydirector including entities in which the directors are interested. So the provisions ofsection 185 and 186 of the Act in respect of the said loans and advances giveninvestments made guarantees & securities given are not applicable to the Company.

5.Rs.In our opinion and according to the information and explanations given to us thecompany has complied with the directives issued by the Reserve Bank of India and theprovisions of sections 73 to 76 or any other relevant provisions of the Companies Act2013 and the rules framed there under with regard to the deposits accepted from public.

6.Rs.The Central Government has prescribed the maintenance of accounts and cost recordsunder section 148(1) of the Act which has been duly complied by the Company.

7.Rs.(a) According to the information and explanations given to us and on the basis ofour examination of the

records of the Company amounts deducted / accrued in the books of account in respectof undisputed Statutory dues including Provident Fund Income Tax Sales Tax Service TaxDuty of Customs Value Added Tax Cess and other material Statutory dues have beenregularly deposited during the year by the Company with the appropriate authorities. Asexplained to us the Company did not have any outstanding dues on account of employees'state insurance and duty of excise.

According to the information and explanations given to us no undisputed amountspayable in respect of Provident Fund Income Tax Sales Tax Service Tax Duty of CustomsValue Added Tax Cess and other material Statutory dues were in arrears as at 31 March2020 for a period of more than six months from the date they became payable.

(b)Rs.The Company has disputed Liabilities not provided as expense in the accountscomprise of ? 32.27 Crores. The amount mainly includes as under :

-Rs.? 28.93 Crores as disputed Central Excise Duty (excluding penalty &interest)demand raised by the Central Excise Dept. since 01 /04/1997 alleging the sale of MaizeStarch as that of Modified Starch. The Company does not find any substance in the demandas it has been manufacturing Maize Starch by following the standard Wet Milling Processfor the last many decades and the product is sold and accepted by the market as MaizeStarch. So the company does not foresee any liability to crystallize on this account. Thematter is pending with Hon'ble commissioner Goods & Service Tax Ludhiana.

-Rs.Other items related to a demand of ? 0.53 crores raised on sale made through theconsignment agents of the Company which is pending before the Assistant Commissioner.

-Rs.? 2.81 Crores wrongly levied for R&C measures by A.P. Northern PowerDistribution Company Ltd.Nizamabad against exemption enjoyed by the unit the matter ispending before the Hon'ble High Court of Andhra Pradesh.

8.Rs.In our opinion and according to the information and explanations given to us theCompany has not defaulted in the repayment of loans or borrowings to financialinstitutions banks and government. The Company does not have any borrowings fromdebenture holders.

9.Rs.The term loans have been applied for the purpose for which they were obtained. TheCompany has not raised moneys by way of initial public offer or further public offer(including debt instruments).

10.Rs.To the best of our knowledge and according to the information and explanationsgiven to us no fraud by the Company or on the Company by its officers or employees hasbeen noticed or reported during the year.

11.Rs.According to the information and explanations given to us and based on ourexamination of the records of the Company the company has paid / provided for managerialremuneration in accordance with the requisite approvals mandated by the provisions ofSection 197 read with Schedule V to the Act.

12.Rs.The Company is not a Nidhi Company. Accordingly paragraph 3(xii) of the Order isnot applicable.

13.Rs.In our opinion and according to the information and explanations given to us theCompany is in compliance with Section 177 and 188 of the Companies Act 2013 whereapplicable for all transactions with the related parties and the details of related partytransactions have been disclosed in the financial statements etc. as required by theapplicable accounting standards.

14.Rs.During the year the Company has not made any preferential allotment or privateplacement of shares or fully or partly convertible debentures.

15 In our opinion and according to the information and explanations given to us duringthe year the Company has not entered into any non-cash transactions with its directors orpersons connected with them and hence paragraph 3(xv) of the Order is not applicable.

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

FOR VSAP & ASSOCIATES
CHARTERED ACCOUNTANTS
(Firm Registration No. 018705N)
Sd/-
(AMIT CHADHA)
Place : Phagwara. Partner
Dated : 12th June 2020 Memb. No. 507087

ANNEXURE B TO THE AUDITORS' REPORT :

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

We have audited the internal financial controls over financial reporting of The SukhjitStarch & Chemicals Limited (''the Company'') as of March 31 2020 in conjunction withour audit of the standalone financial statements of the Company for the year ended on thatdate.

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 company's policies the safeguarding of its assets the preventionand detection of frauds and errors the accuracy and completeness of the accountingrecords and the timely preparation of reliable financial information as required underthe 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') issued by the Institute of Chartered Accountants of India and theStandards on Auditing prescribed under Section 143(10) of the Companies Act 2013 to theextent applicable to an audit of internal financial controls. 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 were established and maintained and if such controls operatedeffectively 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 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 in reasonable details accurately that 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 to the best of our information and according to the explanations givento us the Company has in all material respects an adequate internal financial controlssystem over financial reporting and such internal financial controls over financialreporting were operating effectively as at March 31 2020 based on the internal controlover financial reporting criteria established by the Company considering the essentialcomponents of internal control stated in the Guidance Note on Audit of Internal FinancialControls Over Financial Reporting issued by the Institute of Chartered Accountants ofIndia.

FOR VSAP & ASSOCIATES
CHARTERED ACCOUNTANTS
(Firm Registration No. 018705N)
Sd/-
(AMIT CHADHA)
Place : Phagwara. Partner
Dated : 12th June 2020 Memb. No. 507087

 

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