jeypore sugar company ltd Auditors report

To the Members of

THE JEYPORE SUGAR COMPANY LIMITED,

CHENNAI.

Report on the Financial Statements :

1. 1. We have audited the accompanying financial statements of THE JEYPORE SUGAR COMPANY LIMITED (the Company), which comprise the Balance Sheet as at March 31,2018, the Statement of Profit and Loss and the Cash Flow Statement for the year then ended, and a summary of the significant accounting policies and other explanatory information.

Managements Responsibility for the Standalone Financial Statements:

2. 2. 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 standalone financial statements that give a true and fair view of the financial position, financial performance and cash flows 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 standalone financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditors Responsibility:

3. 3. Our responsibility is to express an opinion on these 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 misstatement. An audit involves performing procedures to obtain audit evidence "2 about the amounts and the disclosures in the financial statements. The procedures selected depend on the auditors 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 Companys preparation of the standalone 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 control system over financial reporting and the operating effectiveness of such controls.

An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of the accounting estimates made by the Companys Directors, as well as evaluating the overall presentation of the standalone 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 Disclaimer of Opinion:

4. 4. We are informed that the company has proposed for restructuring by demerging its Pothavaram sugar unit and same is under process. In view of this, the company is in the process of reviewing the carrying amount of its assets in Pothavaram Unit. Pending information about its recoverable amount, we are at present unable to ascertain the adjustment, if any, required to be made to the value of the assets between the carrying amount and its recoverable amount as required to be made as per AS-28 "Impairment of Assets" and its impact, if any, on the Loss for the year, fixed assets and reserves of the company.

5. Though, the companys entire net worth has been completely eroded and has incurred huge cash losses and most of the lenders and the Revenue department of the State Govt, of AP have initiated steps for auctioning both the main operating units of the company, the books of account are maintained under "going concern concept". We are unable to express an opinion on the same.

Basis for Qualified Opinion:

6. During the year the company has capitalized Rs. 23,28,64,304/- as interest on borrowings obtained from various banks, which in our opinion is not as per AS-16 "Borrowings costs", since the active . development of construction of project has been interrupted; which has resulted in understatement of its "loss" and consequential overstatement of "unallocated capital expenditure" to that extent.

7. Attention is invited to the Note No. 17A forming part of accounts, regarding miscellaneous advance given to P Bhaskara Rao (Ex-Vice president of WS sugars unit, Chagallu) amounting to Rs.7,67,56,824/ - which in the opinion of the Board of Directors are fully recoverable. We are unable to express an opinion on the same.

8. As stated in note No 12A, the company has not reviewed deferred tax asset/liability as required by Accounting Standard on "AS 22-Accounting for taxes on income" which is not in compliance with the provisions of section 133 of the Companies Act, 2013.

Qualified Opinion:

9. 9. In our opinion and to the best of our information and according to the explanations given to us, except for the effects of the matters described in the Basis for Disclaimer of Opinion paragraphs (04) and (05) and Basis of Qualified Opinion paragraph (06), (07) and (08) above, the aforesaid 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 31st March, 2017, and its loss and its cash flows for the year ended on that date.

Emphasis of Matters:

10. As stated in note no- 32 to the financial statements, letters of confirmation of balances have not been provided for our verification in respect of various receivables, statutory dues claimed to be paid under protest, payables, amounts outstanding in some of the working capital facilities and term loans obtained from various banks, fixed deposits with banks etc., some of which are to be reconciled.

Our opinion is not modified in the above matter

Report on Other Legal and Regulatory Requirements:

11. 11. 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 Act, we give in theAnnexure-Aa statement on the matters specified in the paragraph 3 and 4 of the Order, to the extent applicable.

12. As required by Section 143 (3) of the Act, we report that:

a) We have sought and, except for the matters described in the Basis for Disclaimer of Opinion paragraph and Basis for Qualified Opinion paragraphs above, obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit.

b) Except for the effects of the matter described in the Basis for Disclaimer of Opinion paragraphs and Basis for Qualified Opinion paragraph above, 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, 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 Disclaimer of Opinion paragraphs and Basis for Qualified Opinion paragraph above, in our opinion, the aforesaid standalone financial statements comply with the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014.

e) The matter described in the Basis for Disclaimer of Opinion paragraphs and Basis for Qualified Opinion paragraph above, in our opinion, may have an adverse effect on the functioning of the Company.

f) On the basis of the written representations received from the directors as on 31st March, 2018 taken on record by the Board of Directors, none of the directors is disqualified as on 31st March, 2018 from being appointed as a director in terms of Section 164 (2) of the Act.

g) With respect to the adequacy of the internal financial controls over financial reporting of the Company and the operating effectiveness of such controls, we are unable to express any opinion as required under section 143 (3) of the Act 2013, as we could not carry-out any verification or review of its internal financial controls over financial reporting as the company has not carried-out any operations for more than nine months during the period under report.

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 does not have any pending litigations which would impact its financial position except those which are disclosed in the notes 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 were no amounts which were required to be transferred to the Investor Education Protection Fund by the company except an amount of Rs.5,86,915/- which are held in abeyance due to pending legal cases.

i) As required by Rule 11(d) of the Companies (Audit and Auditors) Amendment Rules, 2017, we report that:

The Company has provided requisite disclosures in the financial statements as to holdings as well as dealings in Specified Bank Notes during the period from 8th November, 2016 to 30th December, 2016.

Based on audit procedures and relying on the management representation we report that the disclosures are in accordance with books of account maintained by the Company and as produced to us by the Management.

Place : Camp : Chennai	For B RAH MAYYA & CO.,
Date : 14-11-2018	Chartered Accountants
	Firms Registration No: 000513S
	(Sd.) C.V. Ramana Rao
	Partner
	Membership No: 018545

ANNEXURE-A TO THE INDEPENDENT AUDITORS REPORT:

The Annexure referred in paragraph (11) in our Independent Auditors Report of even date to the members of the Company on the financial statements for the year ended 31 March, 2018, we report that:

i) a) The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets.

b) The fixed assets have been physically verified by the management during the year in accordance with a phased programme of verification, According to the information furnished to us, no material discrepancies between the fixed assets register and the assets physically available were noticed on such verification.

c) We are informed that the title deeds of some of the immovable properties are lodged with the bankers for which confirmation from the bankers has not been furnished to us and the title deeds for the rest of the properties could not be verified as the same are not produced for our verification.

ii) According to the information and explanations furnished to us, the Company has not conducted physical verification of its inventories during the year.

iii) The Company has not granted any loans, secured or unsecured, to Companies, Firms, Limited liability partnerships or other parties covered in the register maintained under section 189 of the Companies Act, 2013. Consequently, clauses 3 (iii) (a), (b) and (c) of the Order are not applicable.

iv) The Company has given corporate guarantee and also offered its properties as security for loans taken by its cane growers from banks. According to the information and explanations given to us, we are of the opinion that the terms and conditions thereof are not prima facie prejudicial to the interests of the company. .

v) The Company has not accepted any deposits from the public and members during the financial year 2017-18. However, in respect of deposits accepted from public and members prior to 1.4.2014, being the date of commencement of Companies Act, 2013, deposits from Shareholders totaling to Rs.31.50 Lakhs are outstanding as on 31.3.2017 out of which Rs. 31.50 Lakhs are due for repayment as per the terms of the said deposits. The company has not filed statement of deposits with the Registrar in Form DPT-4 as required to be filed as per the provisions of section 74(1) (a) of the Act.

The company has received advances against sale of goods amounting to Rs.65.23 Lakhs which are pending for supply of goods for more than a year and outstanding as on 31.3.2017, out of which for Rs 51.02 Lakhs party wise details are not ascertainable. We are informed that all these advances have arisen in respect of sale of goods for which goods were already sold and some balances were outstanding against the supplies.

Subject to the above, the company has complied with the directives issued by Reserve Bank of India and the provisions of sections 73 to 76 or any other relevant provisions of the Act and the rules framed there under. According to the information furnished to us, no order has been passed on the Company by the Company Law Board or National Company Law Tribunal or Reserve Bank of India or any Court or any other Tribunal for non-compliance with the provisions of sections 73 to 76 of the Act.

vi) We have reviewed the books of account relating to materials, labour and other items of cost maintained by the Company pursuant to the Rules made by the Central Government for the maintenance of cost records under sub-section (1) of section 148 of the Companies Act, 2013 (the Act), and we are of the opinion that prima facie the prescribed accounts and records have been made and maintained. However, we have not made a detailed examination of the records.

vii) a) According to the information and explanations given to us and on the basis of examination of the records of the Company, there are non-remittances/ delays in deposit/remittances of amounts deducted/ accrued in the books of account in respect of undisputed statutory dues including provident fund, employees state insurance, income-tax, sales-tax, service tax, duty of customs, duty of excise, value added tax, cess and other material statutory dues during the year by the Company with the appropriate authorities.

According to the information and explanations given to us, the details of undisputed amounts payable in respect of income tax, sales tax, service tax, duty of customs, duty of excise, value added tax or cess and other material statutory dues which were in arrears as at 31 st March 2018 for a period of more than six months from the date they became payable are as under:

					(Amounts in Rupees)
SI. Num	Nature of statute	Nature of dues	Total amount	Period to which the amount relates	Due date
1.	AP tax on entry of goods into local areas Act, 2001	Entry Tax	134914	2005-06	Various dates
2	Income tax Act, 1961	TDS on payments to professionals	2060	2010	Various dates
3	Income tax Act, 1961	TDS	30000	For the montl of July, 2015	1 07.082015

b) As at 31st March 2018, there have been no disputed dues, which have not been deposited with the respective authorities in respect of Income tax, Wealth-tax, Service tax, duty of customs, duty of excise, value added tax and Cess, except the following:

SI. Num	Nature of dispute and period to which dispute relate	Name of Statute	Disputed amount (Amount paid under Protest)	Pending before
1	Sales Tax 1995-96	Orissa sales Tax Act, 1947	20021670(8000000 paid under protest)	Honble High Court of Odisha
2	Income Tax (MAT credit) Asst Year 2009-10	Income Tax Act, 1961	1102828 (728716 paid under protest)	Honble CIT(A), Visakhapatnam
3	Income Tax, Asst Year 2005-06 & 2006-07	Income Tax Act, 1961	3132488 (1566243 paid under protest)	Honble High Court of Andhra pradesh & Telangana
4	Non-Agricultural land Tax, 1978-79 to 1987-88	AP Non-Agricultural land Tax	272115	Court of Andhra pradesh & Telangana
5	VATTDS, 2011-12	AP VAT Act, 2005	620669	Honble Supreme Court of India
6	CENVAT credit for the period from Dec, 2009 to March, 2011)	Central Excise Act, 1944	72051702 (stay granted by CEST AT for demand)	Honble CEST AT, Bangalore
7	CEN VAT credit for the period from July, 2007 to March, 2009	Central Excise Act, 1944	4048908	Commissioner of central Excise, Guntur
8	Service Tax for the period from April, 2005 to Feb, 2008	Finance Act, 1994	1610484	Commissioner of central Excise, Guntur
9	AP Entry tax for the period 2003-04	AP tax on entries act, 2001	1113465	Honble High court of Telangana
10	Income tax	Income Tax Act, 1961	369051	ITAT, Visakhapatnam

viii) According to the information and explanations given to us and as per the books and records examined by us, the company made considerable delays and continuing defaults in repayment of its dues to banks. The company has not borrowed any amounts from financial institutions and by way of issue of debentures.

The lender wise details of period and amount of default are as under:

	(Amount in Rupees)
Name of Lenders	Amount of default (Principal) as at 31st March, 2018	Amount of default (Interest) as at 31st March, 2018	Period of default
A. Term Loans from:
IDBI Bank Limited	73,90,54,000	35,43,95,020	From 01.04.2015 onwards
Andhra Bank Limited	26,16,27,000	14,63,43,230	From 01.09.2015 onwards
Bank of Baroda	23,84,84,000	14,54,09,781	From 01.05.2015 onwards
Indian overseas bank	4,07,00,000	15,18,282	From 01.11.2015 onwards
Bank of India	42,41,65,000	15,92,08,000	From 01.04.2015 onwards
B. Working capital facilities classified as "Non-Performing Assets" by Banks
Bank of India	30,00,00,000	5,47,84,354	-
Bank of Baroda	-	27,19,863	-
IDBI Bank Limited	31,00,00,000	14,81,23,370	-
Andhra Bank	12,00,00,000	87163548	-
South India Bank	6,00,00,000	2,57,87,854	-
DCCB LIT	10,00,00,000	3,45,73,926	-
Indian Overseas Bank	19,01,48,000	6,97,95,728	-

ix) According to the information and explanations given to us, the term loans obtained by the Company during the year have been applied for the purpose for which they were obtained.

x) During the course of our examination of the books and records of the Company, carried out in accordance with the Generally Accepted Auditing Practices in India, and according to the information and explanations given to us, we have not come across any instance of fraud on or by the Company, noticed or reported during the year, nor have we been informed of such case by the management.

xi) According to the information and explanations given to us and based on our examination of the records of the Company, the Company has not paid/provided for any managerial remuneration. Consequently 3(xi) is not applicable.

xii) In our opinion, the company is not a Nidhi Company. Consequently the clause 3(xii) of the order is not applicable.

xiii) According to the information and explanations given to us and on overall examination of the records of the Company, we report that all transactions with related parties are in compliance with the provisions of sections 177 and 188 of the Companies Act, 2013 and the related party disclosures as required by relevant Accounting Standards are disclosed in the financial statements.

xiv) The Company has not made any preferential allotment or private placement of shares or fully/partly convertible debentures during the year under review. Consequently the clause 3(xiv) of the order is not applicable.

xv) The Company has not entered into any non cash transactions with the directors or persons connected with them during the year under report. Consequently the clause 3(xv) of the order is not applicable.

xvi) The Company is not required to be registered under section 45-IA of the Reserve Bank of India Act, 1934. Consequently the clause 3(xvi) of the order is not applicable.

	For BRAHMAYYA& CO.,
	Chartered Accountants
	Firm Regn. No. 000513S
Place: Chennai	(Sd.) C. V. Ramana Rao
Date -.14-11-2018	Partner
	Membership No.018545