Simbhaoli Sugars Ltd Directors Report.

TO THE MEMBERS OF SIMBHAOLI SUGARS LIMITED

Report on the audit of the Standalone financial statements

Qualified Opinion

1. We have audited the accompanying standalone Ind AS financial statements of Simbhaoli Sugars Limited ("the Company"), which comprise the Balance Sheet as at March 31st, 2020, and the Statement of Profit and Loss (including Other Comprehensive Income), 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 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 effects of the matter described in the basis for qualified opinion paragraph below, the aforesaid Standalone Ind AS financial statements give the information required by the Companies Act, 2013 ("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 (financial position) of the Company as at March 31st, 2020, and total comprehensive loss (comprising of loss and other comprehensive loss), its cash flows and the changes in equity for the year then ended.

Basis for Qualified opinion

i) We draw attention to Note No. 4 of the statement regarding non provisions for impairment in the carrying value of property, plant and equipment. We are not made available of appropriate impairment assessment carried out by the management and accordingly, we are unable to comment on the same including compliance with the Ind AS-36 (‘Impairment of Assets) and any consequential adjustments that may arise in this regard in these financial results.

ii) We draw attention to Note No. 10 of the Statements regarding non-provision of interest expense amounting Rs.13,146.17 Lakhs (Previous year Rs. 12,336.46 Lakhs) on certain borrowings for the year ended March 2020 for the reasons stated in the said note. The total amount of interest expense not provided for in the accounts aggregates to Rs. 37,454.23 Lakhs till 31st March 2020(Previous year Rs.24,307.59 Lakhs). Had the aforesaid interest expense been provided for, the Finance Cost, Net Loss after tax and Total Comprehensive Loss for the year ended March 31st, 2020 would have been increased by Rs. 13,146.17 Lakhs (P.Y. Rs. 12,336.46 Lakhs), the Current Financial Liability as at March, 2020 would have been increased and shareholders funds as at March 31st, 2020 would have been decreased by Rs. 37,454.23 Lakhs (P.Y. 24,307.59 Lakhs)

iii) We draw attention to Note No. 24 of the statement regarding non provision of disputed value of bagasse amounting to Rs. 253.13 Lakhs, sold to Simbhaoli Power Private Limited, a subsidiary company, for the reasons stated in the said note. Consequently, the revenue for the year has been overstated; Net loss and total comprehensive Income for the year has been understated; Receivables and total equity as at March 31st, 2020 has been overstated by the aforesaid amount.

iv) We draw attention to Note No.6, of the Statement regarding non- provision of interest liability in respect of delayed payment of sugarcane price for the reasons stated in the said note. The amount of interest not provided for in the books has not been ascertained. Our report is modified in respect of above matters

Material Uncertainty related to Going Concern:

As stated in Note No. 4, the financial statement of the company has been prepared on going concern basis. Events or conditions as set forth in Note No. 4 indicate that a material uncertainty exists that may cast significant doubt on the companys ability to continue as going concern. The ability of the Company to continue as going concern depends on the decision of National Company Law Tribunal under the Insolvency and Bankruptcy Code 2016, the companys ability to get its borrowings restructured as stated in the said note and turnaround of the sugar and distilleries operation on sustainable basis.

Our report is not modified in respect of the above matter.

Others Matter

We draw your attention to Note No. 4 to the financial statement, which describes the Managements assessment of the impact of COVID -19 pandemic and the resultant lock-down on the significant uncertainties involved in preparing the financial statements. Based on the information available on this date, Management believes that no further adjustments are required to the financial statement. However, in view of very uncertain economic environment, a definitive assessment of the impact is highly dependent upon circumstances as they evolve in future and actual results may differ from those estimated as at the date of approval of these 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 financial statements of the current period. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matter:

S. No. Key Audit Matters Auditors Response
1 Impact of government policies/ notifications on recognition of subsidy accruals/claims and their recoverability Principal Audit Procedures
During the year, the Company has recognized accruals/subsidy claims amounting to Rs. 5,915.84 Lakhs (P.Y. 4,201.83 Lakhs). As at March 31st 2020, the Company has receivables of Rs. 7,292.25 Lakhs relating to such claims which is significant to the financial statements. We understood and tested the design and operating effectiveness of controls as established by management in recognition and assessment of the recoverability of the claims. We evaluated the managements assessment regarding reasonable certainty for complying with the relevant conditions as specified in the notifications/policies and collections.
We consider this as key audit matters because recognition of accruals/claims and assessment of recoverability of the claims is subject to significant judgment of the management. The area of judgment includes certainty around the satisfaction of conditions specified in the notifications/policies, collections, provisions thereof, likelihood of variation in the related computation rates, and basis for determination of accruals/ claims. We considered the relevant notifications/policies issued by various authorities to ascertain the appropriateness of the recognition of accruals/ claims, adjustments to claims already recognized pursuant to changes in the rates and basis for determination of claims.
For details: - Refer Note No. 20 to the Financial Statements. We tested the ageing analysis and assessed the information used by the management to determine the recoverability of the claims by considering claim collection against historical trends.
Based on the fulfilment of the conditions as precedent in relevant notification management is reasonably certain about the recoverability of the claims/ accrual.
Based on the above procedures performed, the managements estimates related to recognition of subsidy accruals/claim and their recoverability is considered to be reasonable.
2. Valuation and determination of inventory Principal Audit Procedures
As on March 31st 2020, the Company has inventory of sugar with the carrying value Rs. 48,795.81 Lakhs which forms major part of the total assets of the company. The inventory of sugar is valued at the lower of cost and net realizable value. We understood and tested the design and operating effectiveness of controls as established by the management for valuation of inventory of sugar.
The Physical Verification of inventory could not be observed by us due to lock-down restrictions at the year-end. We considered various factors including the actual selling price prevailing around and subsequent to the year- end, minimum selling price & monthly quota and other notifications of the Government of India, initiatives taken by the Government with respect to sugar industry as a whole.
We considered the value of the inventory of sugar as a key audit matter given the relative size of the balance in the financial statements and significant judgment involved in the consideration of factors such as minimum sale price, monthly quota, fluctuation in selling prices and the related notifications of the Government in determination of net realizable value. Based on the above procedures performed, the managements determination of the net realizable value of the inventory of sugar as at the year ends and comparison with cost for valuation of inventory is considered to be reasonable.
The Company has procedure of physical verification of inventories at regular intervals. Physical Verification of finished goods, By products across all units were carried out during the month of June 2020 in the presence of independent firm of Chartered Accountants who have been entrusted with the responsibilities of observing and participating in such verification.
We have reviewed the credentials, technical and other expertise of the professional firm deployed for carrying amount and observing verification.
We received the report and certificate submitted by
S. No. Key Audit Matters Auditors Response
Chartered Accountants Firm.
We applied alternate procedures to audit the existence of inventory as per guidance provided in SA 501 "Audit Evidence-. Specific Considerations for Selected Items", which include inspection of supporting documentation relating to purchases, production consumption and sales, results of cyclical count performed by the management through the year and such other third party evidences, as applicable.
While necessary review and other corroborative evidence were obtained and verified, reliance has been placed on professional experts report and conclusion drawn by them on the matter.

Other Information

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 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 financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the 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 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 standalone Ind AS financial statements that give a true and fair view of the state of affairs(financial position) , profit or loss (financial performance including other comprehensive income) changes in equity and cash flows 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.

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 Statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditors responsibilities for the audit of the financial statements

Our objectives are to obtain reasonable assurance about whether the 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 financial statements.

As part of an audit in accordance with SAs, we exercise professional judgment and maintain professional scepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the 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 with reference to financial statements 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 financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in 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 of the current period 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 Act, we give in the "Annexure A" statement on the matters specified in paragraphs 3 and 4 of the Order, to the extent applicable ;

2. 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, in our opinion and to the best of our information and according to the explanations given to us, the remuneration paid by the Company to its directors during the year is in accordance with the provisions of section 197 of the Act and not in excess of the limits laid down therein.

3. 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) Except for the effects of the matter described in the 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 (including other comprehensive loss), the Statement of Changes in Equity and 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 standalone financial statements comply with the Accounting Standards specified under Section 133 of the Act.

(e) The qualifications relating to the maintenance of accounts and other matters connected therewith are as stated in the Basis for Qualified Opinion paragraph above.

(f) On the basis of the written representations received from the directors as on March 31st, 2020 taken on record by the Board of Directors, none of the directors is disqualified as on March 31st, 2020 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 with reference to financial statement of the Company and the operating effectiveness of such controls, refer to our separate Report in "Annexure B".

(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. Refer Note no. 6 to the financial statement.

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.

For MITTAL GUPTA & CO.
Chartered Accountants
(Firms Registration No. 01874C)
(B. L. Gupta)
Partner
Place : Kanpur (Membership No. 073794)
Date : July 30, 2020 UDIN: 20073794AAAABP5936

Annexure - ‘A to the Independent Auditors Report

(The "Annexure A" referred to in our Independent Auditors Report of even date to the members of the Company on the standalone financial statements for the year ended 31st March, 2020.)

i. In respect of companys fixed assets:

a) The Company has maintained proper records showing full particulars, including quantitative details and situation of property, plant & equipment.

b) The Company has a phased program of physical verification of its property, plant & equipment which, in our opinion, is reasonable having regard to the size of the company and the nature of its assets. Pursuant to the program, certain property, plant &equipment were physically verified by the management during the year. According to the information and explanations given to us, no material discrepancies were noticed on such verification.

c) The title deeds of all immovable properties, as disclosed in the financial statements except in case of an immovable properties situated at Brijnathpur having carrying amount of Rs. 8.62 Lakhs, are held in the name of the company

ii. The inventories (other than lying with third parties) have been physically verified by the management at reasonable interval during the year. In our opinion and according to the information and explanations given to us, the frequency of such verification is reasonable. As explained to us, no material discrepancies were noticed on physical verification of inventories as compared to book records.

iii. According to the information and explanations given to us and based on our examinations of the records, in our opinion, the Company has not granted any secured or unsecured loan to the companies, firms, limited liability partnership and other parties covered in the register maintained under section 189 of the Companies Act, 2013. Accordingly paragraph 3(iii), of the said order is not applicable to the company.

iv. According to the information and explanations given to us and based on our examinations of the records, in our opinion, the company has complied with the provisions of the Section 185 and 186 of the Companies Act, 2013 in respect to loans and investments made, guarantee and securities provided by it.

v. According to the information and explanations given to us, in our opinion, the Company has not accepted any deposit in contravention of the directives issued by the Reserve Bank of India and the provisions of sections 73 to 76 or any other relevant provisions of the Act and rules framed there under. As informed to us, no order has been passed by the Company Law Board or National Company Law Tribunal or Reserve Bank of India or any court or any other Tribunal in this connection.

vi. We have broadly reviewed the cost records maintained by the Company pursuant to the Companies (Cost records and Audit) Rules, 2014 under section 148 of the Companies Act and are of the opinion that, prima facie, the prescribed cost record have been made and maintained. We have however, not made a detailed examination of the cost records with a view to determine whether they are accurate or complete.

vii. In respect of statutory dues:

a) According to the information and explanations given to us and based on our examinations of the records, in our opinion, the Company has generally been regular in depositing undisputed statutory dues in respect of provident fund, investor education and protection fund, employees state insurance, income tax, sales tax, services tax, customs duty, excise duty, value added tax, cess, goods and services tax and other material statutory dues, as applicable, with the appropriate authorities though there has been slight delay in few cases. There are no undisputed statutory dues as referred to above as at 31st March,2020 outstanding for a period of more than six months from the date they become payable except for the following:

(Amount in Lakhs.)
Purchase Tax 15.34
Import Duty 416.37
TDS Demand 0.48
Vat Payable 9.87
Kerala Turnover Tax 74.71

b) According to the information and explanations given to us, the particulars of Income tax, Service-tax, Sales-tax, Custom Duty, Excise Duty, Entry tax, Value Added Tax, Goods and Service Tax as at 31st March, 2020 which have not been deposited on account of any dispute, are as reported in Note No.16 to the accompanying financial statements.

viii. According to the information and explanations given to us and as per examination of records, the Company has defaulted in repayment of loans and borrowings to banks and Government. Details of defaults in respect of principal and interest dues to Government and banks are stated in Note No.10 to accompanying financial statements. The Company has not borrowed any money by way of issue of debentures.

ix. According to the information and explanations given to us and as per examination of records and as per examination of records, the company did not raise any money by way of initial public offer or further public offer (including debt instruments) or term loans during the year. Accordingly, paragraph 3(ix) of the order is not applicable to the company.

x. To the best of our knowledge and belief and according to the information and explanations given to us, no material fraud by the Company or on the Company by its officers or employees has been noticed or reported during the year.

xi. The Company has paid/ provided for managerial remuneration in accordance with the requisite approvals mandated by the provisions of Section 197 read with Schedule V to the Act.

xii. The Company is not a Nidhi Company. Accordingly the paragraph 3 (xii) of the Order is not applicable to the Company.

xiii. According to the information and explanations given to us, all transactions with the related parties are in compliance with the provisions of sections 177 and 188 of the Act as applicable, and the details of such related party transactions have been disclosed in the financial statements under Note no11 as required by the applicable Indian Accounting Standard (Ind AS) 24, Related Party Disclosures specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014.

xiv. According to the information and explanations given to us, the Company has not made any preferential allotment or private placement of shares fully or partly convertible debentures during the year under review. Accordingly, the provisions of Clause 3(xiv) of the Order are not applicable to the Company.

xv. In our opinion and on the basis of information and explanation given to us, the Company has not entered into any noncash transactions with its Directors or persons connected to its directors and hence provisions of section 192 of the Companies Act, 2013 are not applicable to the Company.

xvi. The Company is not required to be registered under Section 45-IA of the Reserve Bank of India Act, 1934. Accordingly the provisions of Clause 3(xvi) of the Order are not applicable to the Company.

For MITTAL GUPTA & CO
Chartered Accountants
(Firms Registration No. 01874C)
(B. L. Gupta)
Place : Kanpur Partner
Date : July 30, 2020 (Membership No. 073794)

Annexure - ‘B to the Independent Auditors Report

(The Annexure - ‘B referred to in our Independent Auditors Report to the members of the Company on the standalone financial statements for the year ended March 31,2020)

Report on the Internal Financial Control under clause (i) of sub-section 3 of section 143 of the Companies Act, 2013 ("the Act")

We have audited the internal financial controls with reference to financial statements of Simbhaoli Sugars Limited ("the Company") as of 31st March, 2020 in conjunction with our audit of the standalone 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 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 (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 Companys 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 with reference to financial statement, 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 ICAI. 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 with reference to financial statement 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 control system with reference to financial statement and their operating effectiveness. Our audit of internal financial control with reference to financial statement included obtaining an understanding of internal financial control with reference to financial statement, 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 judgement, including the assessment of the risks of material misstatement of the 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 with reference to financial statement.

Meaning of Internal Financial Controls with reference to financial statement

A Companys internal financial control with reference to financial statement 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 with reference to financial statement 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 with reference to financial statement

Because of the inherent limitations of internal financial controls with reference to financial statement, 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 with reference to financial statement to future periods are subject to the risk that the internal financial controls 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 except for the matters described in the Basis for Qualified Opinion, Material Uncertainty on Going Concern paragraph, the Company has, in all material respects, an adequate internal financial controls system with reference to financial statement and such internal financial controls with reference to financial statement were operating effectively as at 31st March, 2020, based on the internal controls with reference to financial statement criteria established by the Company considering the components of internal controls stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issued by the ICAI.

For MITTAL GUPTA & CO
Chartered Accountants
(Firms Registration No. 01874C)
(B. L. Gupta)
Place : Kanpur Partner
Date : July 30, 2020 (Membership No. 073794)