Shree Renuka Sugars Ltd Auditors Report.

To the Members of Shree Renuka Sugars Limited

Report on the Audit of the Standalone Ind AS Financial

Statements

Opinion

1. We have audited the accompanying standalone Ind AS financial statements of Shree Renuka Sugars Limited ("the Company"), which comprise the Balance sheet as at March 31 2019, the Statement of Profit and Loss, including the statement of Other Comprehensive Income, the Cash Flow Statement and the Statement of Changes in Equity for the year then ended, and notes to the financial statements, including a summary of significant accounting policies and other explanatory information.

2. In our opinion and to the best of our information and according to the explanations given to us, the aforesaid standalone Ind AS financial statements give the information required by the Companies Act, 2013, as amended ("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, 2019, its loss including other comprehensive income, its cash flows and the changes in equity for the year ended on that date.

Basis for Opinion

3. We conducted our audit of the standalone Ind AS financial statements in accordance with the Standards on Auditing (SAs), as specified under section 143(10) of the Act. Our responsibilities under those Standards are further described in the Auditors Responsibilities for the Audit of the Standalone 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 financial statements under the provisions of the Act 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 audit opinion on the standalone Ind AS financial statements.

Key Audit Matters

4. Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the standalone Ind AS financial statements for the financial year ended March 31,2019. These matters were addressed in the context of our audit of the standalone Ind AS financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. For each matter below, our description of how our audit addressed the matter is provided in that context.

We have fulfilled the responsibilities described in the Auditors responsibilities for the audit of the standalone Ind AS 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 standalone Ind AS 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 standalone Ind AS financial statements.

Key audit matters How our audit addressed the key audit matter
Revaluation of property, plant and equipments (as described in note 3 of the standalone Ind AS financial statements)
The Company has opted for revaluation model for measuring freehold land, buildings and plant and machineries (PPE) and these assets are carried in the books at the fair value less accumulated depreciation. Our audit procedures included the Following:
• Read and assessed the Companys accounting policies with respect to PPE for compliance with relevant accounting standards.
• We evaluated the design and tested the operative effectiveness of internal controls related to revaluation of PPE.
Independent valuations are undertaken at least once in every three years, or more frequently if there is an indicator that the fair value has changed significantly. • We obtained from the Company management, the report on valuation of PPE performed by an external expert appointed by the Company and have involved our valuation specialists to evaluate the valuation methodology as well as key assumptions used in valuation such as external quotations, salvage value, type of building construction, capacity, technology of machines etc.
The Company has recognised revaluation surplus of Rs. 563.95 Million (net of tax of Rs. 255.74 Million) based on the valuation done as at March 31,2019.
• We assessed the impact of changes in key assumptions on the valuation analysis prepared by the Company.
Revaluation of PPE is a key audit matter due to its financial magnitude and judgements involved in the assessment of the fair value of these assets. The judgment relates to the valuation methodologies used and the assumptions included in each of those methodologies. • We assessed the competence, objectivity and independence oF the external valuer appointed by the Company.
• We obtained details oF physical verification oF PPE From the independent valuer and compared the results of the physical verification oF PPE with the listing oF PPE as per the fixed assets register on sample basis.
• We assessed whether the change in valuation was accounted by the Company within the revaluation reserve and statement of comprehensive income as applicable.
• We assessed the disclosures in the financial statement For compliance with the requirements of Ind AS.
Recoverability of deferred tax assets (as described in note 9 of the standalone Ind AS financial statements)
Deferred tax assets are recognised on tax losses carried forward when it is probable that taxable profit will be available against which the tax losses can be utilised. The Companys ability to recognise deferred tax assets on tax losses carried forward is assessed by management at the end of each reporting period, taking into account Forecasts oF Future taxable profits. Our audit procedures included the Following:
Our audit procedures included considering the Companys accounting policies with respect to income taxes.
We evaluated the design and tested the operative effectiveness internal controls related to income taxes.
We obtained From the Company management the projections For taxable profits supported by Future business plans.
At March 31, 2019, net deferred tax assets recognised in the standalone Ind- AS financial statements amounted to Rs. 3,148.13 Million. We discussed the financial projections and Future business plans with the management.
We assessed the schedules For the reversal oF temporary differences.
The valuation of deferred taxes is based on significant estimates by management regarding availability oF sufficient Future taxable profits and accordingly, we have considered this to be a key audit matter. We assessed the key assumptions used in the financial projections, including recovery rate, expected sale realisation for sugar and ethanol by comparing it to the approved business plan and projections used.
We involved tax specialists who evaluated the tax positions relating to temporary differences on which deFerred tax asset and liability have been recognised by the Company.
Tested the arithmetical accuracy of the tax computations and future projections oF taxable profits.
We assessed the disclosures in the financial statement For compliance with the requirements of Ind AS.

Other InFormation

5. The Companys Board of Directors is responsible for the other inFormation. The other inFormation comprises the inFormation included in the annual report, but does not include the standalone Ind AS financial statements and our auditors report thereon. The annual report is expected to be made available to us after the date of this auditors report.

Our opinion on the standalone Ind AS financial statements does not cover the other i^Formatio^ and we do not and will not express any form of assurance conclusion thereon.

In connection with our audit oF the standalone Ind AS financial statements, our responsibility is to read the other inFormation identified above when it becomes available and, in doing so, consider whether such other information is materially inconsistent with the standalone Ind AS financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated.

When we read the annual report, iF we conclude that there is a material misstatement therein, we are required to communicate the matter to those charged with governance and shall comply with the relevant applicable requirements of the Standard on Audit for The Auditors Responsibility in relation to Other Information in Documents containing audited financial statements.

6. Responsibilities of Management For the Standalone Ind AS Financial Statements

The Companys Board of Directors is responsible for the matters stated in section 134(5) of the Act with respect to the preparation of these standalone Ind AS financial statements that give a true and Fair view oF the financial position, financial performance induding other comprehensive income, cash flows and changes in equity of the Company in accordance with the accounting principles generally accepted in India, including the Indian Accounting Standards (Ind AS) specified under section 133 of the Act read with the Companies (Indian Accounting Standards) Rules, 2015, as amended. 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 the design, implementation and maintenance of adequate internal financial controls, that were operating eff^ectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the standalone Ind AS financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

7. In preparing the standalone Ind AS financial statements, management 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 management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.

8. Those Board of Directors are also responsible for overseeing the Companys financial reporting process.

Auditors Responsibilities for the Audit of the Standalone Ind AS Financial Statements

9. Our objectives are to obtain reasonable assurance about whether the standalone 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 decisions of

users taken on the basis of these standalone Ind AS financial statements.

10. 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 standalone 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 Act, 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 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 standalone Ind AS financial statements, including the disclosures, and whether the standalone Ind AS financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

11. We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, induding any significant deficiencies in internal control that we identiFy during our audit.

12. 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.

13. From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the standalone Ind AS financial statements for the financial year ended March 31,2019 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

14. 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 the "Annexure 1" a statement on the matters specified in paragraphs 3 and 4 of the Order.

15. 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 including the Statement of Other Comprehensive Income, the Cash Flow Statement and Statement of Changes in Equity dealt with by this Report are in agreement with the books of account;

(d) In our opinion, the aforesaid standalone Ind AS 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 March 31,2019

taken on record by the Board of Directors, none of the directors is disqualified as on March 31,2019 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 with reference to these standalone Ind AS financial statements and the operating effectiveness of such controls, refer to our separate Report in "Annexure 2" to this report;

(g) In our opinion, to the best of our information and explanation given to us, the remuneration paid to the Chairman and the Whole-time Director for the year ended March 31, 2019 are in excess of the limits applicable under section 197 ofthe Act, read with Schedule V thereto, by Rs. 6.92 Million and Rs. 21.15 Million. We are informed by the management that it proposes to obtain approval of the shareholders in a general meeting by way of a special resolution;

(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, as amended 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 standalone Ind AS financial statements

- Refer Note 38 to the standalone Ind AS financial statements;

(ii) The Company has made provision, as required under the applicable law or accounting standards, for material foreseeable losses, if any, on long-term contracts including derivative contracts

- Refer Note 24 to the standalone Ind AS financial statements;

(iii) There were no amounts which were required to be transferred to the Investor Education and Protection Fund by the Company.

For S R B C & CO LLP
Chartered Accountants
ICAI Firm Registration Number: 324982E/E300003
Shyamsundar Pachisia
Partner
Membership Number: 049237
Place of Signature: Mumbai
Date: May 16, 2019