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Uttam Sugar Mills Ltd.

BSE: 532729 Sector: Agri and agri inputs
NSE: UTTAMSUGAR ISIN Code: INE786F01031
BSE 15:30 | 20 Jan 229.90 3.05
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OPEN 229.65
PREVIOUS CLOSE 226.85
VOLUME 32580
52-Week high 307.25
52-Week low 88.05
P/E 11.83
Mkt Cap.(Rs cr) 877
Buy Price 228.75
Buy Qty 250.00
Sell Price 229.90
Sell Qty 92.00
OPEN 229.65
CLOSE 226.85
VOLUME 32580
52-Week high 307.25
52-Week low 88.05
P/E 11.83
Mkt Cap.(Rs cr) 877
Buy Price 228.75
Buy Qty 250.00
Sell Price 229.90
Sell Qty 92.00

Uttam Sugar Mills Ltd. (UTTAMSUGAR) - Auditors Report

Company auditors report

TO THE SHAREHOLDERS OF UTTAM SUGAR MILLS LIMITED Report on the Audit of the IND ASFinancial Statements Opinion

We have audited the accompanying financial statements of UTTAM SUGAR MILLS LIMITED("the Company") which comprise the Balance Sheet as at March 31 2021 theStatement of Profit and Loss and the Statement of Changes in Equity and the Statement ofCash Flows for the year ended on that date and notes to financial statement including asummary of the significant accounting policies and other explanatory information(hereinafter referred to as "the financial statements").

In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid financial statements give the information required by theCompanies Act 2013 ("the Act") in the manner so required and give a true andfair view in conformity with accounting principles generally accepted in India of thestate of affairs of the Company as at March 31 2021 the profit changes in equity andits cash flows for the year ended on that date.

Basis for Opinion

We conducted our audit of the financial statements in accordance with the Standards onAuditing (SAs) specified under section 143(10) of the Act. Our responsibilities underthose Standards are further described in the Auditor’s Responsibilities for the Auditof the Financial Statements section of our report. We are independent of the Company inaccordance with the Code of Ethics issued by the Institute of Chartered Accountants ofIndia (ICAI) together with the ethical requirements that are relevant to our audit of thefinancial statements under the provisions of the Act and the Rules made thereunder and wehave fulfilled our other ethical responsibilities in accordance with these requirementsand Code of Ethics. We believe that the audit evidence we have obtained is sufficient andappropriate to provide a basis for our audit opinion on the financial statements.

Key Audit Matters

Key audit matters are those matters that in our professional judgment were of mostsignificance in our audit of the financial statements of the current period. These matterswere addressed in the context of our audit of the financial statements as a whole and informing our opinion thereon and we do not provide a separate opinion on these matters. Wehave determined the matters described below to be the key audit matters to be communicatedin our report:-

KEY AUDIT MATTERS AUDITOR’S RESPONSE
1. Revenue recognition Refer to note no. 2.5 to the financial statements. Our audit procedures amongst others included the following:
The Company principally generates revenue from sale of Sugar (domestic and Export) and sale of its By-products sale of distillery products sale of Hand sanitizer sale of jaggery and sale of Power in domestic market. ? Obtaining an understanding of the process relating to recording of sales and testing the design implementation and operating effectiveness of relevant key internal controls over recording of sales;
We identified revenue recognition as a key audit matter because it is one of the key performance indicator of the Company and gives rise to an inherent risk of misstatement to meet expectations or targets. ? Assessing the appropriateness of the Company’s accounting policy for recording of sales and compliance of the policy with applicable accounting standards;
? Comparing a sample of sale transactions recorded during the year with sales orders sales invoices delivery challans and other relevant underlying documents;
? Comparing a sample of sale transactions recorded near the year end with the sales orders sales invoices delivery challans and other relevant underlying documentation to assess if the sale was recorded in the appropriate accounting period;
? Comparing a sample of electricity sales transactions with energy invoices duly verified by Central Power Purchasing Agency (Guarantee) Limited (‘‘CPPA-G’’) and assessed whether the sale was recorded in the appropriate accounting period;
? Inspecting on a sample basis credit notes issued near to and subsequent to year end to evaluate whether the adjustments to sales had been accurately recorded in the appropriate accounting period; and
? Scanning for any manual journal entries relating to sales recorded during and near the year end which were considered to be material or other specific risk based criteria for inspecting underlying documentation.

 

2. Capitalization of property plant and equipment Refer note no. 3 to the financial statements. Our audit procedures amongst others included the following:
The Company has made significant capital expenditure on New Plant modernization and replacement of plant and equipment. ? Obtaining an understanding of and testing the design implementation and operating effectiveness of management’s key internal control over capital expenditure;
We identified capitalization of property plant and equipment as a key audit matter because there is a risk that amounts being capitalized may not meet the capitalization criteria with related implications on depreciation charge for the year. ? Comparing on sample basis the costs incurred on projects with supporting documentation and contracts;
? Assessing the nature of costs incurred for the capital projects for appropriateness by comparing on sample basis amounts recorded with underlying documentation and considering that the expenditure meets the criteria for capitalization as per the applicable accounting standards;
? Inspecting supporting documents for the date Of capitalization when project assets were ready for its intended use to assess that depreciation commenced and further capitalization of costs ceased from that date and to assess the useful life assigned by management including testing the calculation of related depreciation.

 

3. Valuation of Inventories Refer note no. 9 to the financial statements. Our audit procedures amongst others included the following:
We identified valuation of inventories as a key audit matter as it involves significant management judgments in determining the carrying value of stock. ? Assessing the appropriateness of Company’s accounting policy for valuation of stock and compliance of the policy with the requirements of the prevailing accounting standards;
? Obtaining an understanding of internal controls over valuation of stock and testing on a sample basis their design implementation and operating effectiveness;
? Obtaining an understanding and assessing reasonableness of the management’s determination of net realizable value (NRV) and the key estimates adopted including future selling prices and costs necessary to make the sales and their basis; and
? Comparing the NRV on a sample basis to the cost of stock-in-trade to assess whether any adjustments are required to the value of stock in trade in accordance with the accounting policy.

Information Other than the Financial Statements and Auditor’s Report Thereon

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 ReportBusiness Responsibility Report Corporate Governance Report and Shareholder’sInformation but does not include the financial statements and our auditor’s reportthereon.

Our opinion on the financial statements does not cover the other information and we donot express any form of assurance conclusion thereon. In connection with our audit of thefinancial statements our responsibility is to read the other information and in doingso consider whether the other information is materially inconsistent with the financialstatements or our knowledge obtained during the course of our audit or otherwise appearsto be materially misstated. If based on the work we have performed we conclude thatthere is a material misstatement of this other information we are required to report thatfact. We have nothing to report in this regard.

Management’s Responsibility for the Financial Statements

The Company’s Board of Directors is responsible for the matters stated in section134(5) of the Act with respect to the preparation of these financial statements that givea true and fair view of the financial position financial performance changes in equityand cash flows of the Company in accordance with the accounting principles generallyaccepted in India including the Indian accounting standards (Ind AS) specified undersection 133 of the Act. This responsibility also includes maintenance of adequateaccounting records in accordance with the provisions of the Act for safeguarding theassets of the Company and for preventing and detecting frauds and other irregularities;selection and application of appropriate accounting policies; making judgments andestimates that are reasonable and prudent; and design implementation and maintenance ofadequate internal financial controls that were operating effectively for ensuring theaccuracy and completeness of the accounting records relevant to the preparation andpresentation of the financial statements that give a true and fair view and are free frommaterial misstatement whether due to fraud or error. In preparing the financialstatements management is responsible for assessing the Company’s ability to continueas a going concern disclosing as applicable matters related to going concern and usingthe going concern basis of accounting unless management either intends to liquidate theCompany or to cease operations or has no realistic alternative but to do so.

The Board of Directors are responsible for overseeing the Company’s financialreporting process.

Auditor’s Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the 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 ahigh level of assurance but is not a guarantee that an audit conducted in accordance withSAs will always detect a material misstatement when it exists. Misstatements can arisefrom fraud 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 financial statements.

As part of an audit in accordance with SAs we exercise professional judgment andmaintain professional scepticism throughout the audit. We also:

? Identify and assess the risks of material misstatement of the financial statementswhether due to fraud or error design and perform audit procedures responsive to thoserisks and obtain audit evidence that is sufficient and appropriate to provide a basis forour opinion. The risk of not detecting a material misstatement resulting from fraud ishigher than for one resulting from error as fraud may involve collusion forgeryintentional omissions misrepresentations or the override of internal control.

? Obtain an understanding of internal financial controls relevant to the audit in orderto 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 whetherthe Company has adequate internal financial controls system in place and the operatingeffectiveness of such controls.

? Evaluate the appropriateness of accounting policies used and the reasonableness ofaccounting 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 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 theCompany to cease to continue as a going concern.

? Evaluate the overall presentation structure and content of the financial statementsincluding the disclosures and whether the financial statements represent the underlyingtransactions and events in a manner that achieves fair presentation.

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 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. As r equired by the Companies (Auditor’s Report) Order 2016 ("theOrder") issued by the Central Government in terms of Section 143(11) of the Act wegive in "Annexure A" a statement on the matters specified in paragraphs 3 and 4of the Order.

2. As r equired by Section 143(3) of the Act based on our audit we report that:

a) W e 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.

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 Statement of Changes in Equityand the Statement of Cash Flow dealt with by this Report are in agreement with therelevant books of account.

d) In our opinion the aforesaid financial statements comply with the Ind AS specifiedunder Section 133 of the Act read with Rule 7 of the Companies (Accounts) Rules 2014.

e) On the basis of the written representations received from the directors as on March31 2021 taken on record by the Board of Directors none of the directors is disqualifiedas on March 31 2021 from being appointed as a director in terms of Section 164 (2) of theAct.

f) With r espect 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 B ".

g) With r espect 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 opinionand to the best of our information and according to the explanations given to us theremuneration paid by the Company to its directors during the year is in accordance withthe provisions of section 197 of the Act.

h) With r espect 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 no. 23 & 24 to the financialstatement).

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

iii. The company was not required to transfer any amount to the Investor Education andProtection Fund.

For SSVS & Co.

Chartered Accountants

Firm Registration No. 021648C

(Vipul Sharma) F.C.A.

Partner

Membership No. 74437

Place : Noida

Dated : 14th June 2021

UDIN No. : 21074437AAAACF7994

ANNEXURE TO THE AUDITORS’ REPORT Annexure A to the Auditors’ Report

(Referred to in paragraph (1) of our Report on other legal and regulatory requirementof even date to the shareholders of UTTAM SUGAR MILLS LIMITED for the period ended31st March 2021) 1.

a) The Company has maintained records showing particulars including quantitativedetails and situation of its principal Property Plant and Equipment accordingly theProperty Plant and Equipment are physically verified by the management according to aphased programme designed to cover all the items over a period of three yearswhich in our opinion is reasonable having regards to the size of the Company and thenature of its assets. Pursuant to the programme a portion of the Property Plantand Equipment has been physically verified by the management during the year and nomaterial discrepancies have been noticed on such verification.

b) The title deeds of the immovable property as disclosed in the Property Plant andEquipment (note No.4A to the Ind AS financial statements) are held in the name ofthe Company except for the following freehold land:

Property Description Balance Sheet Value (Rs in Lakhs)
1. At Village–Barkatpur Pudrikhurd. Pargana-Kiratpur Tehsil- Najibabad Distt- Bijnor (U.P) Khasra No-122 0.11

However the Company is in process to register this land in name of the Company.

2. (a) The physical verification of inventory has been conducted by the management atreasonable intervals.

( b) On the basis of our examination in our opinion discrepancies noticed on suchphysical verification of inventory as compared to the book records were notmaterial and have been properly dealt with in the books of account.

3. According to information made available to us the Company has not granted any loanor advance in the nature of Loan secured or unsecured to Companies firm LimitedLiability partnerships or other parties covered in the register maintained under section189 of the Act accordingly Para 3(iii)(a) to (c) of the Order are not applicable to theCompany.

4. On the basis of information and explanations given to us the Company has compliedwith the provisions of Section 185 and 186 of the Companies Act 2013 in respect ofinvestment made during the year. Further no Loan Guarantee and Security has been made bythe Company.

5. On the basis of information and explanations given to us and our scrutiny ofCompany’s records in our opinion the Company has not accepted any public depositswithin the meaning of section 73 to 76 or any other relevant provisions of the Act and therules frames there under. The directives issued by the Reserve Bank of India are notapplicable to the Company.

6. W e have broadly reviewed the books of account maintained by the Company in respectof products pursuant to the order made by the Central Government for the maintenance ofthe cost records under section 148(1) of the Act and are of the opinion that prima-faciethe prescribed account and records have been maintained and are being made up. We howeveras not required have not made a detailed examination of such records with a view todetermine whether these are accurate or complete.

7. (a) According to the information and explanations given to us the Company isgenerally regular in depositing with appropriate authorities undisputed statutory duesincluding Provident Fund Income Tax Customs Duty Excise Duty Goods and service taxValue added Tax Cess and other statutory dues applicable to it. As explained to us theprovisions of Employees State Insurance are not applicable to the Company. Further therewere no arrears of undisputed statutory dues outstanding as at 31st March 2021for a period of more than six months from the date they became payable.

(b) According to the information and explanations given to us the disputed statutorydues of Sales tax Excise duty and Income Tax aggregating to Rs. 51.37 Lakhs that have notbeen deposited are given below: -

Name of Statute Nature of Dues Amount (Rs. In Lakhs) Forum where dispute is pending
Sales Tax Laws Sales Tax/ Entry Tax 7.45 High Court
Central Excise Act 1944 Excise Duty/Service tax 9.11 Commissioner (Appeal)
Goods and Service Tax GST 4.03 High Court
1.91 Addl. Commissioner (Appeal)
Income Tax Act 1961 Income Tax 28.87 Commissioner (Appeal)
Total 51.37

Further in respect of Custom Duty Value added Tax and Cess Good and Service Tax ithas been informed that there are no dues which have not been deposited on account of anydispute.

8. In our opinion and according to the information and explanations given to us therewere no delay in repayment of dues to Banks/others except Uttarakhand State Govt. SoftLoan amounting to 1081.51 Lakhs [Refer Note No. 17(ii) B] which continues to be unpaid.

The Company has not issued any debentures.

9. Based upon the audit procedures performed and the information and explanations givenby the management the Company has not raised moneys by way of initial public offer orfurther public offer including debt instruments. The term loans were applied for thepurpose for which they were taken.

10. During the course of our examination of the books and records of the Companycarried out in accordance with the generally accepted auditing practices in India andaccording to the information and explanation given to us we have neither come across anyinstance of material fraud by the Company or on the Company by its officers or employeesnoticed or reported during the year nor have we been informed of any such case by themanagement.

11. Based upon the audit procedures performed and the information and explanationsgiven by the management the managerial remuneration has been paid or provided inaccordance with the requisite approvals mandated by the provisions of section 197 readwith Schedule V to the Companies Act 2013.

12. In our opinion the Company is not a Nidhi Company. Therefore the provisions ofclause 3 (xii) of the Order are not applicable to the Company.

13. In our opinion all transactions with the related parties are in compliance withsection 177 and 188 of Companies Act 2013 and the details have been disclosed in theFinancial Statements as required by applicable Indian Accounting Standard.

14. Based upon the audit procedures performed and the information and explanationsgiven by the management the Company has not made any preferential allotment or privateplacement of shares or fully or partly convertible debentures during the year underreview. Accordingly the provisions of clause 3 (xiv) of the Order are not applicable tothe Company and hence not commented upon.

15. Based upon the audit procedures performed and the information and explanationsgiven by the management during the year the Company has not entered into any non-cashtransactions with directors or persons connected with him. Accordingly the provisions ofclause 3 (xv) of the Order are not applicable to the Company and hence not commented upon.16. In our opinion the Company is not required to be registered under section 45 IA ofthe Reserve Bank of India Act 1934 and accordingly the provisions of clause 3 (xvi) ofthe Order are not applicable to the Company and hence not commented upon.

For SSVS & Co.

Chartered Accountants

Firm Registration No. 021648C

(Vipul Sharma) F.C.A.

Partner

Membership No. 74437

Place : Noida

Dated : 14th June 2021

UDIN No. : 21074437AAAACF7994

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 UttamSugar Mills Limited ("the Company") as at 31st March 2021 inconjunction with our audit of the financial statements of the Company for the period endedon 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 (‘ICAI’). Theseresponsibilities include the design implementation and maintenance of adequate internalfinancial controls that were operating effectively for ensuring the orderly and efficientconduct of its business including adherence to Company’s policies the safeguardingof its assets the prevention and detection of frauds and errors the accuracy andcompleteness of the accounting records and the timely preparation of reliable financialinformation as required under the 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 both applicable to an audit ofInternal Financial Controls and both issued by the Institute of Chartered Accountants ofIndia. Those Standards and the Guidance Note require that we comply with ethicalrequirements and plan and perform the audit to obtain reasonable assurance about whetheradequate internal financial controls over financial reporting was established andmaintained and if such controls operated effectively in all material respects. Our auditinvolves performing procedures to obtain audit evidence about the adequacy of the internalfinancial controls system over financial reporting and their operating effectiveness. Ouraudit 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 financial statements whether due to fraud or error. We believe thatthe audit evidence we have obtained is sufficient and appropriate to provide a basis forour audit opinion on the Company’s internal financial controls system 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 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 authorizations of management and directors of the Company; and

(3) provide reasonable assurance regarding prevention or timely detection ofunauthorized 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 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 31st March 2021based on the internal control over financial reporting criteria established by the Companyconsidering the essential components of internal control stated in the Guidance Note onAudit of Internal Financial Controls Over Financial Reporting issued by the Institute ofChartered Accountants of India.

For SSVS & Co.

Chartered Accountants

Firm Registration No. 021648C

(Vipul Sharma) F.C.A.

Partner

Membership No. 74437

Place : Noida

Dated : 14th June 2021

UDIN No. : 21074437AAAACF7994

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