To The members of SBEC Sugar Ltd.
We have audited the attached Balance Sheet of SBEC Sugar Ltd. as at
30th June 2009 and also the Profit & Loss Account and the Cash Flow Statement of the
Company for the period ended on that date, annexed thereto.
These financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on our audit.
We have conducted our audit In accordance with auditing standards generally accepted in
India. These Standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material misstatements. An
audit includes examining, on test basis, evidence supporting the amounts and disclosures
in the financial statements. An audit also includes assessing the accounting principles
used and significant estimates made by the management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides reasonable basis for
As required by the Companies (Auditors Report) Order, 2003 as amended by the Companies
Auditor's Report (Amendment) Order, 2004 issued by the Central Government of India, in
terms of Section 227(4A) of the Companies Act, 1956 and on the basis of such checks as we
considered appropriate and according to the information and explanation given to us, we
enclose in the Annexure "A" a statement on the matters specified in paragraph 4
and 5 of the said order.
Further to our comments in the Annexure referred to above, we report that:
a) We have obtained all the information and explanations, which to the best of 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 the
Company so far as appears from our examination of those books;
c) The Balance Sheet, Profit & Loss Account and Cash Flow Statement dealt with by
this report are in agreement with the books of accounts;
d) In our opinion, the Balance Sheet, Profit & Loss Account and Cash Flow
Statement, dealt with by this report, comply with the Accounting Standards referred to in
the Companies (Accounting Standard) Rules, 2006 issued by the Central Government in
exercise of the power conferred under sub-section (1)(a) of section 642 of the Companies
Act, 1956 to the extent applicable except Accounting Standard - 02 "Valuation of
Inventories" (Refer Note No- B-6 of Schedule 13)
e) On the basis of written representations received from the directors as on 30th June
2009 and taken on record by the Board of Directors, we report that none of the directors
is disqualified from being appointed as a director in terms of clause (g) of sub- section
(1) of section 274 of the Companies Act, 1956.
f) In our opinion and to the best of our information and according to the explanations
given to us, the said statements of account, subject to Note No. B-6 - regarding
valuation of closing stock (free Sugar) at market price instead of "lower of cost or
net realizable value" Schedule 13 resulting in overstatement of stock (free sugar) by
Rs. 513.58 lacs & profit for the period of 15 months by Rs. 513.58 lacs.
Subject to above, in our opinion and to the best of our information and explanations
given to us, the said accounts, read with the Accounting policies and notes thereon, give
the information required by the Companies Act, 1956 in the manner so required and give a
true and fair view in conformity with the accounting principles generally accepted in
i) In the case of Balance Sheet, of the state of affairs of the Company as at 30th
ii) In the case of Profit & Loss Account, of the Profit for the period ended on
iii) In the case of Cash Flow Statement, of the cash flows for the period ended on that
||For and on behalf of
||DOOGAR & ASSOCIATES
|Place: New Delhi
||(MUKES H GOYAL)
|Date : 3rd September, 2009
||M.No. : 081810
ANNEXURE "A" TO AUDITORS' REPORT
(Referred to in the Auditors' Report of even date to the members of SBEC Sugar Limited
for the period ended 30th June, 2009)
1 (a) The Company has maintained proper records showing particulars, including
quantitative details and situation of fixed assets.
(b) The Company has a programme of physical verification of its fixed assets in phased
manner which, in our opinion, is reasonable having regard to the size of the Company and
the nature of its assets. Management has physically verified fixed assets during the
period. The discrepancies notice on physical verification of fixed assets as compared to
book records were not material and have been properly dealt with in the books of accounts.
(c) Fixed assets disposed off during the period were insignificant and therefore do not
affect the going concern assumption.
2. (a) The inventory, except material lying with third parties, has been physically
verified by the management during the period. In our opinion, the frequency of such
verification is reasonable.
(b) The procedures for the physical verification of inventory followed by the
management are, in our opinion, reasonable and adequate in relation to the size of the
Company and nature of its business.
(c) In our opinion, the Company is maintaining proper records of inventory. The
discrepancies, if any, noticed on physical verification of inventory as compared to books
records were not material and have been properly dealt with in the books of accounts.
3 (a) The Company has not granted any loan, secured or unsecured to Companies, firms
and other parties covered in the register maintained under section 301 of the Companies
Act, 1956. Accordingly, Paragraph 3 (b),3 (c) & 3 (d) of the order are not applicable.
(b) The company has taken loan from three companies, covered under section 301 of the
Companies Act, 1956. The maximum amount involved during the period was Rs. 100 lacs, Rs.
400 lacs, & Rs. 25 lacs and the period end balance of loan taken from such companies
were Rs. 345.45 lacs, Rs. 64.47 lacs & Rs. 18.71lacs respectively.
(c) In our opinion and according to information and explanations given to us , the rate
of interest and other term & conditions for such loans are not prima facie prejudicial
to the interest of the Company.
(d) In respect of loan taken, as explained to us the same is re-payable on demand.
4. In our opinion, and according to the information and explanations given to us during
the course of audit, there are adequate internal control procedures commensurate with the
size of the Company and the nature of its business with regard to purchase of inventory
and fixed assets and for the sale of goods. We did not observe any major weakness in
internal control during the course of our audit.
5. (a) Based upon the audit procedures applied by us and according to the information
and explanations given to us, we are of the opinion that the transactions required to be
entered into the register maintained under section 301 of the Companies Act, 1956 have
(b) In our opinion, and according to the information and explanation given to us, the
transactions made in pursuance of contracts or arrangements entered in the register
maintained under section 301 of the Companies Act, 1956 and aggregating during the period
to rupees five lacs or more in respect of each party have been made at prices which are
reasonable having regard to market prices for such transactions, prevailing at the
relevant time, where such market prices are available.
6. The Company has accepted deposits from public and in our opinion Company has
complied with the provisions of section 58A and 58AA of the Companies Act, 1956 and the
Companies (Acceptance of Deposits) Rules, 1975.
7. In our opinion, the Company has an internal audit system, commensurate with the size
and nature of its business.
8. We have broadly reviewed the Cost Accounting records, including the books o1 account
maintained by the company pursuant o t the rules prescribed by the Central Government for
the maintenance of cost records under clause (d) of sub-section 209 of the Act, and are of
the opinion that prima facie the prescribed accounts and records have been made and
maintained. We, are however, not required to make a detailed examination of such books and
9. (a) According to the information & explanations given to us, no undisputed
amount payable in respect of Provident Fund, Income Tax, Wealth Tax, Service Tax, Sales
Tax, Custom Duty, Excise Duty, Cess and other undisputed Statutory dues were outstanding,
at the period end, for a period more than six months from the date they become payable.
(b) According to the information and explanations given to us and the records of the
company examined by us, the particulars of statutory dues of the specified status as at
the end of the period, which have not been deposited on account of a dispute are referred
to in "Annexure - B".
10. There are accumulated losses in the Company. The Company has not incurred any cash
loss during this (period 15) months however the company has incurred cash losses during
the immediately preceding period (18 months).
11. According to the information and explanations given to us and as per the books and
records examined by us, the Company has not defaulted in repayment of dues to any
financial institution or bank.
12. According to the information and explanations given to us, the Company has not
granted any loans and advances on the basis of security by way of pledge of shares,
debentures and other securities.
13. The Company does not fall within the category of chit fund/ Nidhi/ Mutual Benefit/
Society and hence the related reporting requirements are not applicable.
14. According to the information and explanations given to us, the Company is not
dealing or trading in shares, securities, debentures and other investments and hence the
related reporting requirements are not applicable.
15. The Company has provided guarantee to SREI and the Government of Jharkhand in
respect of loans taken by SBEC Bioenergy Limited (a subsidiary company) and Bihar Sponge
Iron Limited respectively. The Company has also provided guarantee to PNB against OTS of
M/s Modi Industries Ltd. (Steel Division) terms and conditions of the guarantees are prima
facie, not prejudicial t o the interest of the Company.
16. In our opinion, and according to the information and explanations given to us, the
term loans raised during the period by the company have been applied for the purpose for
which the said loans were obtained, where the lender has stipulated such end use.
17. According to the information and explanations given to us and as per the books and
records examined by us, no funds raised on short-term basis have been used for long-term
investment by the company.
18. The Company has not made any preferential allotment of shares to parties and
Companies covered in the registered maintained under section 301 of the Companies Act,
19. The Company has not issued debentures of any type during the period.
20. The Company has not raised any money by public issue, during the period.
21. Based on our examination of the books and records of the Company and according to
the information and explanations given t o us, no fraud on or by the Company has been
noticed or reported during the period.
||For and on behalf of
|Place: New Delhi
|Date : 3rd September, 2009
||M.No. : 081810
ANNEXURE "B" TO AUDITORS' REPORT
Referred in Paragraph 9(b) of Annexure "A" a statement on the matters
specified in the Companies (Auditors' Report) Order, 2003 as amended by the Companies
Auditor's Report (Amendment) Order, 2004 of SBEC Sugar Limited for the period ended 30th
|Name of the Statute
||Name of Dues
||Amount Rs. Lakhs
||Period to which amount relates
||Forum where dispute is pending
|Service Tax Act
||01.10.1999 to 31.03.2003
||Commissioner, Central Excise, Meerut
|Central Excise and Custom Act
||Demand of Custom duty on import of capital goods against EPCG License
||01.04.1997 to 30.06.1998
||The Supreme Court of India
|U P Tax on Entry of Goods Act
||Entry Tax on Machinery
||Trade Tax Tribunal, Meerut