Riga Sugar Company Ltd Auditors Report.
THE MEMBERS OF
RIGA SUGAR COMPANY LIMITED
We have audited the accompanying Ind AS financial statements of Riga Sugar Co Ltd(the Company), which comprise the Balance Sheet as at 31stMarch, 2019, 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, 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 accounting principles generally accepted in India, of the state of affairs of the Company as at March 31, 2019, and loss, total comprehensive income, changes in equity and its cash flows for the year ended on that date.
Basis for Opinion
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 Code of Ethics. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion on the Ind AS Financial Statements.
Material Uncertainty Related to Going Concern
We draw attention to Note 11(b) in the Ind AS financial statements, which indicates that the Company incurred a net loss (including other comprehensive income) of 4,644.78/- lakhsduring the year ended March 31, 2019 andNet Worth of the Company has also been fully eroded.The loans from the banks became Non-Performing Asset (NPA) w.e.f. 30.09.2018 and also called by the bank for repayment [Refer Note 12(d)].As stated in Note 25(8), these events or conditions, along with other matters, indicate that a material uncertainty exists that may cast significant doubt on the Companys ability to continue as a going concern.
The Management of the Company has prepared the statement on going concern basis based on their assessment of the successful outcome of the restructuring proposal and accordingly no adjustments have been made to the carrying value of the assets and liabilities and their presentation or classification in the Balance Sheet. Also, in case of defaulted loans, the Banks have allowed "Holding on Operation" for the time being.
Our opinion is not modified in respect of this matter.
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 that there are no key audit matters to communicate in our report.
Information Other than the Ind AS Financial Statements and Auditors Report Thereon
The Companys Board of Directors is responsible for the preparation of the other information. The other information comprises the information included in 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 Ind AS 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 of 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 and 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 AS 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 system 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.
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.
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) In our opinion, the aforesaid Ind AS financial statements comply with the Indian Accounting Standards prescribed under 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 31st March, 2019 except one (1) who resigned from the Board w.e.f. 11.04.2019, taken on record by the Board of Directors, none of the directors is disqualified as on 31stMarch, 2019 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 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 2019 [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 31st March, 2019.
ANNEXURE- A TOTHEINDEPENDENTAUDITOR SREPORT
(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, 2019, we report that:
i) (a) The Company has maintained 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 programme, which, in our opinion, is reasonable, looking to the size of the Company. According to the information and explanations given to us, discrepancies noticed on such verification have been properly adjusted in the books of account.
(c) According to the information and explanations given to us, the title deeds of immovable properties are 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 discrepancies which were noticed have been properly dealt with in the books of account.
iii) The Company has granted an unsecured loan, to a company, covered in the register maintained under section 189 of the Companies Act, 2013.
(a) The terms and conditions of the grant of such loans are not prejudicial to the companys interest.
(b) The said loans and interest thereon are fully received during the year. In respect of another Company, refer Note No. 25(9)(b)(7).
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 directives issued 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)||Amount deposited under dispute||Period to which amountrelates||Forum where dispute is pending|
|(Rs. in Lacs)||(Rs. in Lacs)|
|1 VAT||VAT||25.87||25.87||2004-05||Honble Patna High Court|
|2 VAT||VAT on SDS @ 12.5% instead of 4%||95.72||35.62||2009-10&2010-11||CommercialTaxesTribunal, Patna|
|3 VAT||VAT on SDS @ 12.5% instead of 4%||230.65||41.73||2011-12||CommercialTaxesTribunal, Patna|
|4 VAT||VATon Stock Transfer of RS for CL||61.84||12.99||2012-13||CommercialTaxesTribunal, Patna|
|5 VAT||VATon Stock Transfer of RS for CL||200.15||10.00||2013-14||CommercialTaxesTribunal, Patna|
|6 Central Government||Demandunderrule6(3) LSPEF Act||42.56||-||Nov 13 to Jun 17||CESTAT, Kolkata|
|7 Central Excise||CentgralCredit taken on Service Tax on Transportation||64.05||-||2012-13 to2015-16 (uptoFeb16)||Excise Commissioner (Appeal),Patna|
|8 State Excise Dept.||InferiorQualityof CountryLiquor suppliedatAraria||382.49||-||2015-16||Honble Patna High Court|
|9 State Excise Dept.||InferiorQualityof CountryLiquor suppliedatSeohar||98.07||-||2016-17||Honble Patna High Court|
|10 Employee State Insurance||Employee State Insurance||3.07||0.77||2013-2014to 2017-2018||Employee State InsuranceCourt|
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 31.03.2019||Interest outstanding as on 31.03.2019||Remarks|
|Bank of India(BOI)||Rs. 6788.60 lacs||Rs. 211.88 lacs||Present status - "Holding on Operation" Both banks served notice under SARFAESIAct,2002 for repayment of their respective loan and as per banks the loan became NPA w.e.f 30th|
|Union Bank of India (UBI)||Rs. 2368.58 lacs||Rs. 115.08 lacs||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 12 (d)&( e) to the financial statements.|
Further, the Company has defaulted in repayment of Sugar Development Fund (SDF) amounting to Rs. 951.11 lakhs and of Rs. 934.12 Lakhs is still not acknowledged as debt [Refer Note 25(1)(c)]. The company has also defaulted in repayment of Kishan Credit Loans [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 is 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 our knowledge 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 clause does 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(9)].
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.
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, 2019 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.
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.
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, 2019, 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|
|(Firm ICAI Regd No. 302113E)|
|UDIN : 19057076AAAABS7460|
|Nihar Ranjan Nayak|
|(Membership No. : 57076)|
|Place : Kolkata|
|Date : 12.07.2019|