To
The Members of
EMPEE SUGARS & CHEMICALS LIMITED
Report on Financial Statements
We have audited the accompanying financial statements of EMPEE SUGARS &
CHEMICALS LIMITED ("the Company"), which comprise the Balance Sheet for the
Year ended as at March 31, 2015, and the Statement of Profit and Loss for the year ended
on that date along with the Cash Flow statement annexed thereto, and a summary of
significant accounting policies and other explanatory information.
Management’s Responsibility for the Financial Statements
The Company’s Board of Directors are responsible for the matters stated in Section
134(5) of the Companies Act, 2013 ("the Act") with reference to the preparation
of the standalone financial statements that give a true and fair view of the financial
position, financial performance and cash flow of the Company in accordance with the
accounting principles generally accepted in India including the Accounting Standards
specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts)
Rules, 2014. This responsibility also includes maintenance of adequate accounting records
in accordance with the provisions of the Act for safeguarding the assets of the Company
and for preventing and detecting frauds and other irregularities; selection and
application of appropriate accounting policies; making judgments and estimates that are
reasonable and prudent; and design, implementation and maintenance of adequate internal
financial controls, that were operating effectively for ensuring the accuracy and
completeness of the accounting records, relevant to the preparation and presentation of
the financial statements that give a true and fair view and are free from material
misstatement, whether due to fraud or error.
Auditors’ Responsibility
Our responsibility is to express an opinion on these standalone financial statements
based on our audit. We have taken into account the provisions of the Act, the accounting
and auditing standards and matters which are required to be included in the audit report
under the provisions of the Act and the Rules made there under. We conducted our audit in
accordance with the Standards on Auditing specified under Section 143(10) of the Act.
Those Standards require that we comply with ethical requirements and plan and perform the
audit to obtain reasonable assurance about whether the financial statements are free from
material misstatements.
An audit involves performing procedures to obtain audit evidence about the amounts and
disclosures in the financial statements. The procedures selected depend on the
auditor’s judgment, including the assessment of the risks of material misstatement of
the financial statements, whether due to fraud or error. In making those risk assessments,
the auditor considers internal financial control relevant to the Company’s
preparation of the financial statements that give a true and fair view in order to design
audit procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on whether the Company has in place an adequate internal financial
controls system over financial reporting and the operating effectiveness of such controls.
An audit also includes evaluating the appropriateness of accounting policies used and the
reasonableness of the accounting estimates made by the Company’s directors, as well
as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to
provide a basis for our audit opinion on the standalone financial statements.
Basis for Qualified Opinion
In our opinion and to the best of our information and according to the explanations
given to us, the aforesaid standalone financial statements give the information required
by the Act in the manner so required and give a true and fair view in conformity with the
accounting principles generally accepted in India, of the state of affairs of the Company
as at March 31, 2015, and its profit and its cash flow for the year ended 31.03.2015
except:-
a) The accumulated losses of the company have exceeded the net worth of the company.
Hence the company has made a reference to BIFR under the sick industrial companies Act.
And the Company has been registered under BIFR vide case no:69/2014. However, the accounts
have been prepared on a going concern basis.
b) The company has received amount of Rs. 140.37 crores from 7th July 2008 to 30th
September 2012 (refer note no 4) towards share application money from holding company
Empee Distilleries Ltd. These shares could not be allotted to the applicant company in
view of the non-receipt of approval from the SEBI and stock Exchange.
c) Confirmation of Sundry debtors, Trade payables, Advance to suppliers, Cane advances,
Harvest Advance and other deposit is subject to confirmation and reconciliation.(refer
note no 8, 16, 18 & 38)
Qualified Opinion
We believe that the audit evidence we have obtained is sufficient and appropriate to
provide a basis for our audit opinion.
In our opinion and to the best of our information and according to the explanations
given to us, except for the effects of the matter described in the Basis for Qualified
Opinion paragraph, the financial statements give the information required by the Act in
the manner so required and give a true and fair view in conformity with the accounting
principles generally accepted in India:
And attention of the members is drawn regarding write off of Rs. 99.10 Crores relating
to inventories. As explained by the Management the diminution in realizable value of
inventories are due to quality, moisture and GVC Contents of coal, TRS contents in
Molasses and ICUMSA in Sugar over the years. The company has written off receivables
amounting to Rs. 44 Crores Refer Note No.15, 16 and 21.
a) in the case of the Balance Sheet, of the state of affairs of the Company for the
year ended as at March 31, 2015;
b) in the case of the Profit and Loss Account, of the Loss for the yearended on that
date; and
c) In the case of the cash flow statement, of the cash flows for the year ended on the
date
Report on Other Legal and Regulatory Requirements:-
1. As required by the Companies (Auditor’s Report) Order, 2015
("theOrder") issued by the Central Government of India in terms of sub-section
(11) of section 143 of the Act, we give in the Annexure a statement on the matters
specified in paragraphs 4 and 5 of the Order.
2. As required by section 143(3) of the Act, 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 purpose 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, Statement of Profit and Loss, and Cash Flow Statement dealt with
by this Report are in agreement with the books of account.
d) Except for the effects / possible effects of the matters described in the Basis of
Qualified Opinion, in our opinion, theBalanceSheet, Statement of Profit and Loss and Cash
Flow Statement comply with the Accounting Standards referred to in Section 133 of the
Companies Act, 2013, read with Rule 7 of the Companies (Accounts) Rules, 2014.
e) On the basis of written representations received from the directors as on March 31,
2015, and taken on record by the Board of Directors, none of the directors is disqualified
as on March 31, 2015, from being appointed as a director in terms of Section (2) of
section 164 of the Companies Act, 2013.
f) With respect to the other matters to be included in the Auditors Report in
accordance with Rule 11 of the companies (Audit and Auditors) Rules, 2014, in our opinion
and to the best of our information and according to the explanations given to us:-
i. the company does not have any pending litigations which would impact its financial
position except the reference to the BIFR and the proceedings under the SARFAESI Act
initiated by the bankers and some of the project creditors have gone to the court for the
winding up of the company;
ii. The company did not have any long-term contracts including derivative contracts for
which there were any material foreseeable losses;
iii. There were no amounts which were required to be transferred to the Investor
Education and Protection fund by the company;
|
For Venkatesh& Co., |
|
Chartered Accountants |
|
F.R.No.004636S |
|
CA Dasaraty V |
| Place:- Chennai |
M.No.026336 |
| Date:-23/05/2015 |
Partner |
Annexure to Independent Auditors’ Report
(Referred to in paragraph 1 under the heading of "Report on other Legal and
Regulatory Requirements" of our Report of even date)
As required by the Companies (Auditors Report) Order, 2015 issued by the Central
Government in terms of section 143 (11) of the Companies Act, 2013 and on the basis of
such checks of the books and records of the Company, as we considered appropriate and
according to the information and explanations given to us during the course of the audit,
we report that,
1. a) The Company has maintained proper records showing full particulars, including
quantitative details and situation of fixed assets on the basis of available information.
b) As explained to us, all the fixed assets have been physically verified by the
management in a phased periodical manner, which in our opinion is reasonable, having
regard to the size of the company and the nature of its assets. No material discrepancies
were noticed on such physical verification.
2. a) The inventories have been physically verified during the year by the management.
In our opinion, the frequency of verification is reasonable.
b) In our opinion and according to the information and explanations given to us, the
procedures of physical verification of inventories followed by the management are
reasonable and adequate in relation to the size of the company and the nature of its
business.
c) The company has maintained proper records of inventories. As explained to us, there
were no material discrepancies noticed on physical verification of inventories as compared
to book records.
3. a) The company has given interest free loan to one of its Subsidiary Companies of
Rs. 44.87 Crores without stipulation as to the repayment of principal.
b) In the light of (a) we do not comment on the principal amount and interest or other
conditions or security of loans.
c) In the light of (a) we do not comment on the reasonable steps have been taken by the
company for recovery of the principal and interest.
4. In our opinion and according to the explanations given to us the internal control
procedure of the Company are commensurate with the size of the company and the nature of
its business with regards to Fixed Assets other assets and with regard to the sale of
Services. No instance of continuing failure to correct major weakness in internal control
was noticed.
5. The Company has not accepted any deposits from the public. Therefore the provisions
of section 73 to Section 76 of the Companies Act 2013 and rules framed there under are not
applicable.
6. We have broadly reviewed the cost records maintained by the company pursuant to the
Companies (Cost Accounting Records) Rules, 2011 prescribed by the Central Government under
Section 209(1) (d) of the Companies Act, 1956 and are of the opinion that prima facie the
prescribed cost records have been maintained. We have, however not made a detailed
examination of the cost records with a view to determine whether they are accurate or
complete.
7. a) According to the records of the company, there have been delays in depositing the
undisputed statutory dues including Provident Fund, Employees’ State Insurance,
Income Tax, Sales Tax, Wealth Tax, Customs Duty, Excise Duty, Service tax, Cess and other
statutory dues with the appropriate authorities. The details of the same are as follows:
| Name of the State Act |
Nature of Dues |
Amount involved |
Period to which the |
Status |
|
|
Rs. in Lacs |
case relates |
|
| A.P. Sugar Cane regulation of Sugar Cane Act |
Andhra Pradesh Purchase tax payable |
522.66 |
1994 - 2001 |
Paid Rs. 1.2 Crs towards said dues |
| Finance Act, 1994 |
Service Tax payable – Man Power Services |
10.54 |
2013-2014 |
|
| Finance Act, 1994 |
Service Tax Reverse Charge – Legal Services |
2.77 |
2013-2014 |
|
| Finance Act, 1994 |
Service Tax Reverse Charge – Sitting Fees |
0.57 |
2013-2014 |
|
| Finance Act, 1994 |
Service Tax Reverse Charge |
42.41 |
2014-2015 |
|
| Income Tax Act, 1961 |
Tax Deducted at Source |
3.29 |
2014-2015 |
|
b) According to the information and explanations given to us and the records of the
company examined by us, except the following there are no dues of Income tax, wealth tax,
service tax, sales tax, customs duty, excise duty and cess which have not been deposited
on account of any dispute.
| Name of the State Act |
Nature of Dues |
Amount involved |
Period to which the case relates |
Dispute is pending before |
|
|
Rs. in Lacs |
|
|
| A.P. Sugar Cane regulation of Sugar Cane Act |
Andhra Pradesh Purchase tax payable |
729.59 |
1994 - 2001 |
Asst Cane Commissioner |
c) The company is not required to transfer any amount to investor education and
protection fund as per the relevant provisions of the Companies Act, 1956 (1 of 1956) and
rules made there under.
8. The accumulated losses of the company have exceeded the net worth of the company as
at the end of the financial year. The company has incurred cash losses in the current year
and also in the immediately preceding financial year. The company has made a reference to
BIFR.
9. Based on our audit procedures and according to the information and explanations
given to us, the bankers of the company have approved CDR (Corporate Debt Restructure)
scheme in respect of Ambasamudram project for terms loans amounting to Rs.388.47 Lakhs. As
per the scheme, the repayments of interest &Principals have been restructured and the
first repayment commences from September, 2014. During the year over dues interest payable
amount to Rs.2,827.32lakhsand principal amount of Rs.2,526.37 lakhs.
10. The company has not given guarantee for loans taken by others from In our opinion
and according to the information and explanations given to us and based on the information
available, no loans and advances have been granted by the company on the basis of security
by way of pledge of shares, debentures and other securities.
11. According to the records of the company, the company has not obtained any term
loans during the financial year. Hence, comments under the clause are not called for.
12. According to information and explanations furnished to us no fraud on or by the
company has been noticed or reported during the year.
|
For Venkatesh& Co., |
|
Chartered Accountants |
|
F.R.No.004636S |
|
CA Dasaraty V |
| Place:- Chennai |
M.No.026336 |
| Date:-23/05/2015 |
Partner |
+91-9892691696
