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Thiru Arooran Sugars Ltd.

BSE: 507450 Sector: Agri and agri inputs
NSE: THIRUSUGAR ISIN Code: INE409A01015
BSE 00:00 | 31 May Thiru Arooran Sugars Ltd
NSE 05:30 | 01 Jan Thiru Arooran Sugars Ltd
OPEN 7.00
PREVIOUS CLOSE 6.83
VOLUME 3091
52-Week high 9.29
52-Week low 5.29
P/E
Mkt Cap.(Rs cr) 8
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 7.00
CLOSE 6.83
VOLUME 3091
52-Week high 9.29
52-Week low 5.29
P/E
Mkt Cap.(Rs cr) 8
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Thiru Arooran Sugars Ltd. (THIRUSUGAR) - Auditors Report

Company auditors report

To

The Members of

Thiru Arooran Sugars Limited

Report on the Standalone Ind AS Financial Statements

We have audited the accompanying standalone Ind AS financial statements of M/s ThiruArooran Sugars Limited ("the company") which comprise the Balance Sheet asat 31st March 2018 and the Statement of Profit and Loss the statement of changes inEquity the Cash Flow Statement for the year then ended and a summary of significantaccounting policies and other explanatory information (hereinafter referred to as"the standalone Ind AS financial statements").

Management's Responsibility for the Standalone Ind AS financial 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 and cash flows of the Company in accordance withthe accounting principles generally accepted in India including the Indian AccountingStandards (Ind AS) referred to in Section 133 of the Act.

This responsibility also includes maintenance of adequate accounting records inaccordance with the provisions of the Act for safeguarding the assets of the Company andfor preventing and detecting frauds and other irregularities; selection and application ofappropriate accounting policies; making judgments and estimates that are reasonable andprudent; and design implementation and maintenance of adequate internal financialcontrols that were operating effectively for ensuring the accuracy and completeness ofthe accounting records relevant to the preparation and presentation of the standalone IndAS financial statements that give a true and fair view and are free from materialmisstatement whether due to fraud or error.

Auditors' Responsibility

Our responsibility is to express an opinion on these standalone Ind AS financialstatements based on our audit.

We have taken into account the provisions of the Act the accounting and auditingstandards and matters which are required to be included in the audit report under theprovisions of the Act and the Rules made there under.

We conducted our audit in accordance with the Standards on Auditing issued by theInstitute of Chartered Accountants of India. Those Standards require that we comply withethical requirements and plan and perform the audit to obtain reasonable assurance aboutwhether the standalone Ind AS financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts anddisclosures in the standalone Ind AS financial statements. The procedures selected dependon the auditor's judgment including the assessment of the risks of material misstatementof the standalone Ind AS financial statements whether due to fraud or error. In makingthose risk assessments the auditor considers internal control relevant to the Company'spreparation and fair presentation of the standalone Ind AS financial statements that givea true and fair view in order to design audit procedures that are appropriate in thecircumstances. An audit also includes evaluating the appropriateness of accountingpolicies used and the reasonableness of the accounting estimates made by management aswell as evaluating the overall presentation of the standalone Ind AS financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the standalone Ind AS financial statements.

Opinion

In our opinion and to the best of our information and according to the explanationsgiven to us the standalone Ind AS financial statements give the information required bythe Act in the manner so required and give a true and fair view in conformity with theaccounting principles generally accepted in India:

(1) In the case of the Balance Sheet of the state of affairs of the Company as atMarch 31 2018;

(2) In the case of the Statement of Profit and Loss of the loss for the year ended onthat date;

(3) In the case of the Cash Flow Statement of the cash flows for the year ended onthat date.

Material Uncertainty Related to Going Concern:

The Company is facing liquidity issues resulting in instances of default in servicingloan to Banks and others and in discharge of undisputed statutory and other liabilitiesincluding payment of salaries to employees leading to adverse working capital position;the Company's main business is facing headwinds in the form of lower sales realizationscoupled with higher minimum price payable to sugarcane farmers.

The Company has guaranteed the Term Loans Working Capital facilities and TradeAdvances granted to the Associate Company M/s. Shree Ambika Sugars Limited and itsSubsidiary Company M/s. Terra Energy Limited and these Companies are also facing some ofthe issues as stated in the aforesaid para. Subsequently in July 2018 the lender hasinvoked the Bank Guarantee with respect to Trade Advances availed by M/s. Shree AmbikaSugars Limited amounting to $ 537 crores and the Banks in turn have served notice on thatCompany.

The Management of the Company has prepared the annual standalone financial results on agoing concern basis. However the aforesaid events and conditions indicate that a materialuncertainty exists that may cast significant doubt on the Company's ability to continue asa going concern. The appropriateness of assumption of going concern is dependent upon thematerialization of various initiatives being undertaken by the Company including raisingsubstantial long term funds to make the business economically viable. Our opinion is notmodified in respect of this matter.

Other Matters:

The Company has not reversed Input Tax Credit with respect to non-payment of value ofsupplies along with tax payable thereon to the suppliers beyond a period of 180 days fromthe date of issue of invoice as stipulated in Section 16 of the Central Goods and ServiceAct 2017 and Tamil Nadu Goods and Services Act 2017. The input credit can be claimedonce the payment is made to the creditors. Our opinion is not modified with respect tothis matter.

The Company being a first time adopter of Ind AS has carried its investments in theSubsidiary Company M/s. Terra Energy Limited and its Associate Company M/s. Shree AmbikaSugars Limited at cost as on the transition date i.e. 01.04.2016 and continued to showinvestments at cost as on 31.03.2017. However as on 31.03.2018 the Company has restatedthe aforesaid investments based on the Net Asset Value and the resulting loss amounting to$ 5.42 crores has been recognized in Other Comprehensive Income for the year ended31.03.2018.

The aforesaid treatment of investments in Associate Company and Subsidiary Company isnot in accordance with Ind AS 101. Ind AS 101 stipulates that the accounting policies usedin its opening Ind AS Balance Sheet shall be applied throughout all periods presented inits first Ind AS financial statements. Had the Company restated the aforesaid investmentto Net Asset value in its Opening Balance Sheet as on 01.04.2016 and Balance sheet as on31.03.2017 the resulting loss for the year ended 31.03.2018 that has to be recognized inOther comprehensive income is $ 32.15 crores. Our opinion is not modified with respect tothis matter.

Report on Other Legal and Regulatory Requirements

(1) As required by the Companies (Auditor's Report) Order 2016 ("the Order")issued by the Central Government of India in terms of sub-section (11) of section 143 ofthe Act we give in the "Annexure A" a statement on the matters specified inthe paragraph 3 and 4 of the order.

(2) As required by Section 143(3) of the Companies Act 2013 we report that :

(a) We have obtained all the information and explanations which to the best of ourknowledge 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 appears from our examination of those books

(c) The Balance Sheet the Statement of Profit and Loss the Statement of changes inequity and the Statement of cash flows dealt with by this Report are in agreement with thebooks of accounts

(d) In our opinion the aforesaid standalone Ind AS financial statements comply withthe Accounting Standards referred to in Section 133 of the Companies Act 2013.

(e) On the basis of written representations received from the directors as on 31stMarch 2018 and taken on record by the Board of Directors none of the directors isdisqualified as on 31st March 2018 from being appointed as a director in terms ofsubsection (2) of section 164 of the Companies Act 2013.

(f) with respect to the adequacy of internal financial controls over financialreporting of the Company & operating effectiveness of such controls refer to ourseparate report in Annexure B

(g) With respect to the other matters to be included in the Auditor's report inaccordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014 to the best ofour information & explanations given to us

i. The Company has disclosed the impact of pending litigations on its financialposition in its standalone Ind AS financial statements- Refer Note 28 and 31.

ii. The Company does not have any long term contracts including derivative contractsfor which they were any material foreseeable losses.

iii. There is no amount required to be transferred to the Investor Education andProtection Fund by the Company.

For Guru & Ram LLP

Chartered Accountants

Firm Registration No.:009723S/S200039

A. Rajasekaran

Partner

Membership No. 025549

Chennai : August 14 2018

Annexure-A to the Auditors' Report

(Referred to in paragraph 1 of our report of even date)

(1) On the basis of such checks as we considered appropriate and according to theinformation and explanation given to us during the course of our audit we report that:

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

(b) The company has a regular programme of physical verification of its fixed assets bywhich fixed assets are verified in a phased manner. In accordance with this programmecertain fixed assets were verified during the year 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) According to the information and explanations given to us the title deeds ofimmovable properties are held in the name of the Company.

(2) The Management has conducted physical verification of inventories at reasonableintervals and on the basis of information and explanation provided to us and the recordsproduced to us no material discrepancies were noticed on such verification

(3) According to the information and explanation given to us the Company has notgranted any loan secured or unsecured to Companies Firms or other parties covered in theregister maintained under section 189 of the Companies Act 2013 and clause(iii)(a)(iii)(b) and (iii)(c) are not applicable.

(4) In our opinion and according to the information and explanation given to us inrespect of investments made by the Company and the guarantee given by the Company for theloans taken by the Holding Company the company has complied with the provisions ofSection 185 and 186 of the Companies Act 2013 as applicable.

(5) The Company has not accepted deposits from the public.

(6) The Central Government has prescribed the maintenance of cost records under subsection (1) of Section 148 of the Companies Act 2013 and such records and accounts havebeen maintained.

However we are not required to and have not carried out any detailed examination ofsuch accounts and records.

(7) (a) The Company is not regular in depositing undisputed statutory dues includingProvident fund Income-tax Sales tax Service tax Goods and Services tax Value addedtax and Cess with the appropriate authorities during the year and the arrears ofoutstanding statutory dues as on the last day of the financial year concerned for a periodof more than six months from the date they become payable are as under :

Nature of Dues Amount in $
1 Excise Duty 11176779
2 Value Added Tax & Central Sales Tax 8826150
3 Cane cess 10502234

(b) There are no dues of Income Tax Sales Tax Value added tax duty of customsexcise service tax cess or other statutory dues that have not been deposited on accountof any dispute except the following :

Name of the Statute Central Excise Act 1944 Nature of the dues Cenvat on materials and penalty Amount Forum where dispute is pending Central Excise and Service Tax Appellate Tribunal Chennai
$
1786537
Finance Act 1994 Service tax on Goods transport 363998 Supreme Court
Tamil Nadu General Sales Tax Act 1959 Waiver of purchase tax on cane 102597189 High Court of Madras
Tamil Nadu General Sales Tax Act 1959 Purchase tax on cane 843950 Deputy Commissioner (CT) (Appeals)
Income Tax Act 1961 Income tax 33291 Commissioner of Income tax (Appeals)
Finance Act 1994 Service tax on Cane harvesting charges 104714986 Central Excise and Service Tax Appellate Tribunal Chennai
Income Tax Act 1961 Tax and interest for Assessment Year 2013-14 25015710 Commissioner of Income Tax (Appeals)
Finance Act 1994 Service tax on cane transport 1519555 Central Excise and Service Tax Appellate Tribunal Chennai.

(8) The Company has defaulted in the repayment of dues to the banks and financialinstitutions.

(9) The Company has not raised any money by way of initial public offer or furtherpublic offer (including debt instruments). As per the records of the Company the termloans availed during the year were applied for the purpose for which those are raised.

(10) To the extent of our knowledge and as per the explanations given to us no materialfraud on or by the Company has been noticed or reported during the course of our audit.

(11) As explained to us the Company has paid/ provided remuneration to its managerialpersonnel in accordance with the requisite approval mandated by the provisions of Section197 read with Schedule V of the Companies Act 2013.

(12) In our opinion and according to the information and explanations given to us thecompany is not a Nidhi company. Accordingly paragraph 3(xii) of the Order is notapplicable.

(13) According to the information and explanations given to us and based on ourexamination of the records of the Company transactions with related parties are incompliance with Section 177 and 188 of the Act and details of such transactions have beendisclosed in the standalone Ind AS financial statements as required by the applicableaccounting standards.

(14) The Company has not made any preferential allotment or private placement of sharesor fully or partly convertible debentures during the year under review.

(15) The Company has not entered into any non-cash transaction either with thedirectors or any persons connected with them.

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

For Guru & Ram LLP

Chartered Accountants

Firm Registration No.:009723S/S200039

A. Rajasekaran

Partner

Membership No. 025549

Chennai : August 14 2018

Annexure - B to the Auditors' Report

Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section143 of the Companies Act 2013 ("the Act")

We have audited the internal financial controls over financial reporting of ThiruArooran Sugars Limited ("the Company") as of 31 March 2018 in conjunctionwith our audit of the standalone Ind AS financial statements of the Company for the yearended 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 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.

Auditors' 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 issued by ICAI and deemedto be prescribed under section 143(10) of the Companies Act 2013 to the extentapplicable to an audit of internal financial controls. 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.

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 included obtaining anunderstanding of internal financial controls over financial reporting assessing the riskthat a material weakness exists and testing and evaluating the design and operatingeffectiveness of internal control based on the assessed risk. The procedures selecteddepend on the auditor's judgment including the assessment of the risks of materialmisstatement of the standalone Ind AS financial statements whether due to fraud or error.

We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the company's internal financial controls systemover financial reporting.

Meaning of Internal Financial Controls Over Financial Reporting

A company's internal financial control over financial reporting is a process designedto provide reasonable assurance regarding the reliability of financial reporting and thepreparation of financial statements for external purposes in accordance with generallyaccepted accounting principles. A company's internal financial control over financialreporting includes those policies and procedures that:

(1) Pertain to the maintenance of records that in reasonable detail accurately andfairly reflect the transactions and dispositions of the assets of the company;

(2) Provide reasonable assurance that transactions are recorded as necessary to permitpreparation of financial statements in accordance with generally accepted accountingprinciples and that receipts and expenditures of the company are being made only inaccordance with authorisations of management and directors of the company; and

(3) Provide reasonable assurance regarding prevention or timely detection ofunauthorised acquisition use or disposition of the company's assets that could have amaterial 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 2018 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 Guru & Ram LLP Chartered Accountants

Firm Registration No.:009723S/S200039

A. Rajasekaran

Partner

Membership No. 025549

Chennai : August 14 2018

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