TO
THE MEMBERS OF
RIGA SUGAR COMPANY LIMITED
Report on the Audit of the Ind AS Financial Statements Qualified Opinion
We have audited the accompanying Ind AS financial statements of Riga Sugar Co Ltd
(the Company), which comprise the Balance Sheet as at 31stMarch, 2021, and the
Statement of Profit and Loss (including Other Comprehensive Income), the Statement of
Changes in Equity and Statement of Cash Flows for the year then ended, and notes to the
financial statements, including a summary of the significant accounting policies and other
explanatory information.
In our opinion and to the best of our information and according to the explanations
given to us, except for the effect of the matter described in the basis for Qualified
Opinion section of our report, the aforesaid Ind AS Financial Statements give the
information required by the Companies Act,2013 in the manner so required and give a true
and fair view in conformity with the IndianAccounting Standards prescribed under section
133 of the Act and other principles generally accepted in India, of the state of affairs
of the Company as at March 31, 2021, itsloss including other comprehensive Income, changes
in equity and its cash flows for the year ended on that date.
Basis for Qualified Opinion
Going Concern Assumption in preparation of the Statement
Due to the continuous Losses, Companys Net Worth has been fully eroded[Refer Note
25(8)]. The Company has also defaulted in repayment of Borrowings to the banks and others.
In view of the Management, the Company would be able to continue as a Going Concern with
financial restructuring by the banks and financial assistance from the state and central
government. However, in view of the uncertainties involved, these events and conditions
indicate a material uncertainty which may cast a significant doubt on the Companys
ability to continue as a Going Concern. Accordingly, the use of Going Concern Assumption
of accounting in preparation of the Statement is not adequately and appropriately
supported as per the requirement of Indian Accounting Standard 1 "Presentation of
Financial Statement".
We conducted our audit in accordance with the Standards on Auditing (SAs) specified
under section 143(10) of the Companies Act, 2013. Our responsibilities under those
Standards are further described in the Auditors Responsibilities 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 the Institute of Chartered Accountants of
India together with the ethical requirements that are relevant to our audit of the Ind AS
Financial Statements under the provisions of the Companies Act, 2013 and the Rules
thereunder, and we have fulfilled our other ethical responsibilities in accordance with
these requirements and the ICAIs Code of Ethics. We believe that the audit evidence we
have obtained is sufficient and appropriate to provide a basis for our qualified opinion
on the Ind AS Financial Statements.
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most
significance in our audit of the Ind AS Financial Statements of the current period. These
matters were addressed in the context of our audit of the Ind AS Financial Statements as a
whole, and in forming our opinion thereon, and we do not provide a separate opinion on
these matters.
We have determined the matters described below to be the key audit matters to be
communicated in our report. We have fulfilled the responsibilities described in the
Auditors responsibilities for the audit of the Financial Statements section of our
report, including in relation to these matters. Accordingly, our audit included the
performance of procedures designed to respond to our assessment of the risks of material
misstatement of the Financial Statements. The results of our audit procedures, including
the procedures performed to address the matters below, provide the basis for our audit
opinion on the accompanying Financial Statements.
| Key Audit Matters Addressing the key audit matters |
|
| A. Derecognition of Deferred Tax Assets (Note no. 25(6) of the financial
statements) |
|
| Deferred tax Asset of Rs. 935.52 lakhs derecognized during the year beingcarried
forward in thefinancial statements as at March 31, 2020. |
Our Audit procedures based on which we arrived at the conclusion regarding
reasonableness of the accounting effect on derecognition and disclosures of the Deferred
Tax Assets include the following: |
|
• Utilization of Deferred tax assets have been tested on the basis of internal
forecasts prepared by the Company and probability of future taxable income; |
|
• Critical review of the underlying assumptions for consistency for arriving at
reasonable degree of probability on the matters; |
|
• Requirement of Ind AS 12 "Income Taxes" and application thereof. |
| B. Going Concern Assumption (Note no. 25(8) of the financial statements) |
|
| The Companys current liabilities have exceeded current assets by Rs. 23111.86 lakhs
as on March 31,2021 and net worth fully eroded.The company defaulted in repayment of its
borrowings and also unable to pay its creditors. The operation of factory is also
suspended. These are important for going concern assumption and certain significant aspect
of our audit. |
Our audit procedures included testing managements assumptions on the appropriateness
of the going concern assumptions and reasonableness of the assumptions used, focusing
infinancial restructuring by the banks and financial assistance from the state and
centralgovernment,following procedures were applied in this respect: |
|
• Review of the Debt Restructuring process and steps so far taken by lenders in
this respect. - Core operations of the company and management expectation of
sustainability thereof; |
|
- Minutes of the meetings of the Company with the consortium of lenders; |
|
- Terms & conditions specified in the Holding on operation approved by the
banks(lenders). -Assistance from the state and central government |
|
• Review of disclosures made by the management in the financial statement to
ensure compliances in this respect. |
Information Other than the Ind AS Financial Statements and Auditors Report Thereon
The Companys Board of Directors is responsible for the other information. The other
information comprises the information included the Management Discussion and Analysis,
Boards Report including Annexures to Boards Report, Business Responsibility Report,
Corporate Governance and Shareholders Information, but does not include the Ind AS
Financial Statements and our auditors report thereon.
Our opinion on the financial statements does not cover the other information and we do
not express any form of assurance conclusion thereon.
In connection with our audit of the Ind AS Financial Statements, our responsibility is
to read the other information and, in doing so, consider whether the other information is
materially inconsistent with the Ind AS Financial Statements or our knowledge obtained
during the course of our audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material
misstatement of this other information; we are required to report that fact. We have
nothing to report in this regard.
Responsibilities of Management and Those Charged with Governance for the Ind AS
Financial Statements
The Companys Board of Directors is responsible for the matters stated in section
134(5) of the Companies Act, 2013 ("the Act") with respect to the preparation of
these Ind AS Financial Statements that give a true and fair view of the financial
position, financial performance, changes
in equity and cash flows of the Company in accordance with the Indian Accounting
Standards specified under section 133 of the Act and other accounting principles generally
accepted in India. This responsibility also includes maintenance of adequate accounting
records in accordance with the provisions of the Act for safeguarding of 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 statement that give a true and fair view and are free from material
misstatement, whether due to fraud or error.
In preparing the Ind AS Financial Statements, the Board of Directors is responsible for
assessing the Companys ability to continue as a going concern, disclosing, as applicable,
matters related to going concern and using the going concern basis of accounting unless
Board of Directors either intends to liquidate the Company or to cease operations, or has
no realistic alternative but to do so.
The Board of Directors are also responsible for overseeing the Companys financial
reporting process.
Auditors Responsibilities for the Audit of the Ind AS Financial Statements
Our objectives are to obtain reasonable assurance about whether the Ind AS Financial
Statements as a whole are free from material misstatement, whether due to fraud or error,
and to issue an auditors report that includes our opinion. Reasonable assurance is a high
level of assurance, but is not a guarantee that an audit conducted in accordance with SAs
will always detect a material misstatement when it exists. Misstatements can arise from
fraud or error and are considered material if, individually or in the aggregate, they
could reasonably be expected to influence the economic decision of user taken on the basis
of these Ind AS Financial Statements.
As part of an audit in accordance with SAs, we exercise professional judgment and
maintain professional skepticism throughout the audit. We also:
• Identify and assess the risks of material misstatement of the Ind AS Financial
Statements, whether due to fraud or error, design and perform audit procedures responsive
to those risks, and obtain audit evidence that is sufficient and appropriate to provide a
basis for our opinion. The risk of not detecting a material misstatement resulting from
fraud is higher than for one resulting from error, as fraud may involve collusion,
forgery, intentional omissions, misrepresentations, or the override of internal control.
• Obtain an understanding of internal control relevant to the audit in order to
design audit procedures that are appropriate in the circumstances. Under section 143(3)(i)
of the Companies Act, 2013, we are also responsible for expressing our opinion on whether
the company has adequate internal financial controls with reference to Financial Statement
in place and the operating effectiveness of such controls.
• Evaluate the appropriateness of accounting policies used and the reasonableness
of accounting estimates and related disclosures made by management.
• Conclude on the appropriateness of managements use of the going concern basis
of accounting and, based on the audit evidence obtained, whether a material uncertainty
exists related to events or conditions that may cast significant doubt on the Companys
ability to continue as a going concern. If we conclude that a material uncertainty exists,
we are required to draw attention in our auditors report to the related disclosures in
the Ind AS Financial Statements or, if such disclosures are inadequate, to modify our
opinion. Our conclusions are based on the audit evidence obtained up to the date of our
auditors report. However, future events or conditions may cause the Company to cease to
continue as a going concern.
• Evaluate the overall presentation, structure and content of the Ind AS Financial
Statements, including the disclosures, and whether the Ind AS Financial Statements
represent the underlying transactions and events in a manner that achieves fair
presentation.
We communicate with those charged with governance regarding, among other matters, the
planned scope and timing of the audit and significant audit findings, including any
significant deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied
with relevant ethical requirements regarding independence, and to communicate with them
all relationships and other matters that may reasonably be thought to bear on our
independence, and where applicable, related safeguards.
From the matters communicated with those charged with governance, we determine those
matters that were of most significance in the audit of the financial statements for the
financial year ended March 31,2021 and are therefore the key audit matters. We describe
these matters in our auditors report unless law or regulation precludes public disclosure
about the matter or when, in extremely rare circumstances, we determine that a matter
should not be communicated in our report because the adverse consequences of doing so
would reasonably be expected to outweigh the public interest benefits of such
communication.
Report on Other Legal and Regulatory Requirements
1) As required by the Companies (Auditors Report) Order, 2016 ("the Order"),
issued by the Central Government of India in terms of sub-section (11) of section 143 of
the Companies Act,2013, we give in "Annexure-A", a statement on the matters
specified in paragraphs 3 and 4 of the Order to the extent applicable.
2) As required by Section 143(3) of the Act, we report that:
(a) We have sought and 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 it appears from our examination of those books.
(c) The Balance Sheet, the Statement of Profit and Loss, the Statement of Changes in
Equity and the Cash Flow Statement dealt with by this Report are in agreement with the
books of account.
(d) Except for the effects of the matter described in the Basis for Qualified Opinion
paragraph above, in our opinion, the aforesaid financial statements comply with the
Accounting Standards specified under Section 133 of the Act, read with Companies (Indian
Accounting Standards) Rules, 2015, as amended.
(e) On the basis of the written representations received from the directors as on 31st
March, 2021, none of the directors is disqualified as on 31stMarch, 2021 from being
appointed as a director in terms of Section 164(2) of the Act.
(f) With respect to the adequacy of the internal financial controls over financial
reporting of the Company and the operating effectiveness of such controls, refer to our
separate Report in "Annexure -B".
(g) With respect to the other matters to be included in the Auditors Report in
accordance with the requirements of section 197(16) of the Act (as amended), the Company
has paid remuneration to its director during the year is in accordance with the provisions
of this section ,and is in limit laid down under this section.
(h) 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 has disclosed the impact of pending litigations on its financial
position in its financial statements as at 31st March 2021[Refer Note No. 25(1)to the
financial statements].
(ii) The Company did not have any long term contracts including derivative contracts
for which there were any material foreseeable losses.
(iii) There has been no delay in transferring amounts, required to be transferred, to
the Investor Education and Protection Fund by the Company as at 31 st March,2021.
|
For Salarpuria & Partners |
|
Chartered Accountants (Firm ICAI Regd No. 302113E) |
|
Nihar Ranjan Nayak |
| Place : Kolkata |
Membership No. 57076 Partner |
| Date : 23.06.2021 |
UDIN : 21057076AAAACX3623 |
ANNEXURE - ‘A TO THE INDEPENDENT AUDITORS REPORT
(Referred to in Paragraph 1 under "Report on Other Legal and Regulatory
Requirements" section of our Report of even date)
The Annexure referred to in Independent Auditors Report to the members of the Company
on the financial statements for the year ended 31st March, 2021, we report that:
i) (a) The Company hasmaintained proper records showing full particulars, including
quantitative details and situation of fixed assets.
(b) As explained to us, the fixed assets have been physically verified by the
management at reasonable intervals, in a phased verification program, which, in our
opinion, is reasonable, looking to the size of the Company and after following restriction
of Covid-19 guidelines .According to the information and explanations given to us, no such
material discrepancies noticed on such verification.
(c) According to the information and explanations given to us, the title deeds of
immovable propertiesare held in the name of company.
ii) As explained to us, inventories have been physically verified during the year by
the management, which, in our opinion, is reasonable and after considering restrictions of
Covid-19 guidelines, the discrepancies which were noticed have been properly dealt with in
the books of account.
iii) The Company has not granted unsecured loan during the year to parties, covered in
the register maintained under section 189 of the Companies Act, 2013.So comments on terms
and conditions of loan granted and repayment of principal and interest does not arise.
However, the loans granted to a company register maintained under section 189 of the
companies Act,2013 in earlier year which is written off during the year[Refer Note No.
25(16)(b)(1)].
iv) According to the information and explanations given to us, there are no such loans,
investments, guarantees and security for which Section 185 & Section 186 are
applicable.
v) According to the information and explanations given to us, there is no such
deposits, taken by the Company, for which directivesissued by the Reserve Bank of India
and the provisions of sections 73 to 76 or any other relevant provisions of the Companies
Act, 2013 and the rules framed there under, are required to be complied with.
vi) Maintenance of cost records has been specified by the Central Government under
sub-section (1) of section 148 of the Companies Act, 2013 and such accounts and records
have been so made and maintained.
vii) a) According to the records of the Company and as per the information and
explanations given to us, the Company is generally regular in depositing undisputed
statutory dues except in some cases including provident fund, employees state insurance,
goods and services tax, income tax, duty of customs, cess and other statutory dues with
the appropriate authorities. Some delay is noticed in depositing the above however, no
arrears of outstanding statutory dues on the last day of the financial year concerned
exists for a period of more than six months from the date they became payable.
b) On the basis of our examination of the documents and records the following disputed
statutory due which have not been deposited with the appropriate authorities are as under:
The details regarding the Excise Duty, Custom Duty and Service Tax disputed dues are as
follows:
| Name of Statute |
Nature of dues |
Amount of demand (Including Interest & Penalty) (Rs. in Lacs) |
Amount deposited under dispute (Rs. in Lacs) |
Period to which amount relates |
Forum where dispute is pending |
| 1 |
|
|
|
|
|
| VAT |
VAT on SDS @ 12.5% instead of 4% |
95.72 |
35.62 |
2009-10 & 2010-11 |
Commercial Taxes Tribunal, Patna |
| 2 VAT |
VAT on SDS @ 12.5% instead of 4% |
230.65 |
41.73 |
2011-12 |
Commercial Taxes Tribunal, Patna |
| 3 VAT |
VAT on Stock Transfer of RS for CL |
61.84 |
12.99 |
2012-13 |
Commercial Taxes Tribunal, Patna |
| 4 VAT |
VAT on Stock Transfer of RS for CL |
200.15 |
10.00 |
2013-14 |
Commercial Taxes Tribunal, Patna |
| 5 State Excise Dept. |
Inferior Quality of Country Liquor supplied atAraria |
382.49 |
|
2015-16 |
Honble Patna High Court |
| 6 State Excise Dept. |
Inferior Quality of Country Liquor supplied at Seohar |
98.07 |
|
2016-17 |
Honble Patna High Court |
| 7 Employee State Insurance |
Employee State Insurance |
2.30 |
2.30 |
2013-2014to 2017-2018 |
Employee State Insurance Court |
viii) The Company has defaulted in repayment of loans to Banks .The details of the
facts are given as follows:
| Name of the Banks/ Financial Institution |
Loan outstanding as on 31.03.2021 |
Remarks |
| Bank of India(BOI) |
Rs. 6243.08 |
Present status - "Holding on Operation" |
|
lacs |
Both banks served notices under SARFAESI Act,2002 for repayment of their respective
loan |
| Union Bank of India (UBI) |
Rs. 1623.65 lacs |
and as per banks the loan became NPA w.e.f 30th September,2018. As a result, term
loans and working capital loans is shown under Financial Liabilities under Current
liabilities as "Holding on Operation" and subject to confirmation and
reconciliation thereof Refer Note 12A (d)&(e) and Note 14A of the financial
statements. |
Interest payable on above 1078.12 lacs.
Further, the Company hasdefaulted in repayment of Sugar Development Fund (SDF)
amounting to 997.07 lakhs and of1257.88 Lakhs
is still not acknowledged as debt [Refer Note 25(1)(c)]. The company has also defaulted
in repayment of Kisan Credit Card Loans of Rs.
6422.51 Lakhs [Refer Note 25(7)].
ix) To the best of our knowledge and belief and according to the information and
explanations given to us, the Company has not raised any term loan, and it has not raised
any money by way of initial public offer or further public offer during the year. Hence
comment on this clause in not applicable.
x) During the course of our examination of the books and records of the Company,
carried out in accordance with the generally accepted audit practices in India, and
according to the information and explanation given to us, we have neither come across
instance of fraud on the Company or any fraud on the Company by its officers or employees,
noticed or reported during the year, nor have we been informed of such case by the
management.
xi) To the best of ourknowledge and belief, managerial remuneration has been paid/
provided in accordance with the requisite approvals mandated by the provisions of section
197 read with Schedule V to the Companies Act, 2013.
xii) According to the information and explanation given to us, clause (xii) in respect
of Nidhi Company is not applicable to the company. Hence the comment on the said
clausedoes not arise.
xiii) All transactions with the related parties are in compliance with sections 177 and
188 of Companies Act 2013, and have been disclosed in Notes to Accounts as required by Ind
AS 24. [Refer Note 25(16)].
xiv) The company has not made any preferential allotment or private placement of shares
or fully or partly convertible debentures during the year; hence comment on the said
clause of the order is not applicable.
xv) To the best of our knowledge and belief and as per the information and explanations
given to us, the Company has not entered into any non-cash transaction with directors or
persons connected with them.
xvi) The Company is not required to be registered under section 45-IA of the Reserve
Bank of India Act, 1934.
|
For Salarpuria & Partners |
|
Chartered Accountants (Firm ICAI Regd No. 302113E) |
|
Nihar Ranjan Nayak |
| Place : Kolkata |
Membership No. 57076 Partner |
| Date : 23.06.2021 |
UDIN : 21057076AAAACX3623 |
ANNEXURE B TO THE INDEPENDENT AUDITORS REPORT
Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of section
143 of the Companies Act, 2013 ("the Act")
(Referred to Paragraph 2(g) of Report on Other Legal and Regulatory Requirements of our
Report of even date)
We have audited the internal financial controls over financial reporting of Riga Sugar
Co Ltd("the Company") as of 31st March, 2021 in conjunction with our audit of
the Ind AS financial statements of the Company for the year ended on that date.
Managements Responsibility for Internal Financial Controls
The Companys management is responsible for establishing and maintaining internal
financial controls based on the internal control over financial reporting criteria
established by the Unit considering the essential components of internal control stated in
the Guidance Note on Audit of Internal Financial Controls over Financial Reporting issued
by the Institute of Chartered Accountants of India (ICAI). These responsibilities
include the design, implementation and maintenance of adequate internal financial controls
that were operating effectively for ensuring the orderly and efficient conduct of its
business, including adherence to Units policies, the safeguarding of its assets, the
prevention and detection of frauds and errors, the accuracy and completeness of the
accounting records, and the timely preparation of reliable financial information, as
required under the Companies Act, 2013.
Auditors Responsibility
Our responsibility is to express an opinion on the Companys internal financial
controls over financial reporting based on our audit. We conducted our audit in accordance
with the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting
(the "Guidance Note") and the Standards on Auditing, issued by ICAI and deemed
to be prescribed under section 143(10) of the Companies Act, 2013, to the extent
applicable to an audit of internal financial controls, both applicable to an audit of
Internal Financial Controls and, both issued by the Institute of Chartered Accountants of
India. Those Standards and the Guidance Note require that we comply with ethical
requirements and plan and perform the audit to obtain reasonable assurance about whether
adequate internal financial controls over financial reporting was established and
maintained and if such controls operated effectively in all material respects.
Our audit involves performing procedures to obtain audit evidence about the adequacy of
the internal financial controls system over financial reporting and their operating
effectiveness. Our audit of internal financial controls over financial reporting included
obtaining an understanding of internal financial controls over financial reporting,
assessing the risk that a material weakness exists, and testing and evaluating the design
and operating effectiveness of internal control based on the assessed risk. The procedures
selected depend on the auditors judgment, including the assessment of the risks of
material misstatement of the Ind AS financial statements, whether due to fraud or error.
We believe that the audit evidence we have obtained is sufficient and appropriate to
provide a basis for our audit opinion on the Companys internal financial controls system
over financial reporting.
Meaning of Internal Financial Controls over Financial Reporting
A companys internal financial control over financial reporting is a process designed
to provide reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with generally
accepted accounting principles. A companys internal financial control over financial
reporting includes those policies and procedures that
(1) pertain to the maintenance of records that, in reasonable detail, accurately and
fairly reflect the transactions and dispositions of the assets of the company;
(2) provide reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with generally accepted accounting
principles, and that receipts and expenditures of the company are being made only in
accordance with authorizations of management and directors of the company; and
(3) provide reasonable assurance regarding prevention or timely detection of
unauthorized acquisition, use, or disposition of the companys 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 financial
reporting, including the possibility of collusion or improper management override of
controls, material misstatements due to error or fraud may occur and not be detected.
Also, projections of any evaluation of the internal financial controls over financial
reporting to future periods are subject to the risk that the internal financial control
over financial reporting may become inadequate because of changes in conditions, or that
the degree of compliance with the policies or procedures may deteriorate.
Opinion
In our opinion, the Company has, in all material respects, an adequate internal
financial controls system over financial reporting and such internal financial controls
over financial reporting were operating effectively as at 31st March, 2021, based on the
internal control over financial reporting criteria established by the Company considering
the essential components of internal control stated in the Guidance Note on Audit of
Internal Financial Controls Over Financial Reporting issued by the Institute of Chartered
Accountants of India.
|
For Salarpuria & Partners |
|
Chartered Accountants (Firm ICAI Regd No. 302113E) |
|
Nihar Ranjan Nayak |
| Place : Kolkata |
Membership No. 57076 Partner |
| Date : 23.06.2021 |
UDIN : 21057076AAAACX3623 |
+91-9892691696
