To the Members of Upper Ganges Sugar & Industries Limited Report on the
Financial Statements
We have audited the accompanying financial statements of Upper Ganges Sugar &
Industries Limited ("the Company"), which comprise the Balance Sheet as at March
31, 2016, the Statement of Profit and Loss and Cash Flow Statement for the year then
ended, and a summary of significant accounting policies and other explanatory information.
MANAGEMENTS RESPONSIBILITY 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 financial statements that give a true and fair view of the financial position,
financial performance and cash flows of the Company in accordance with 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 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 control 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 RESPONSIBILITY
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 thereunder. We conducted our audit in accordance
with the Standards on Auditing, issued by the Institute of Chartered Accountants of India,
as 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 about the amounts and
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
financial statements that give a true and fair view in order to design audit procedures
that are appropriate in the circumstances. An audit also includes evaluating the
appropriateness of accounting policies used and the reasonableness of the accounting
estimates made by the Companys Directors, as well as evaluating the overall presentation
of the financial statements. We believe that the audit evidence we have obtained is
sufficient and appropriate to provide a basis for our qualified audit opinion on the
financial statements.
BASIS FOR QUALIFIED OPINION
As indicated in Note 14 to the financial statements, the Company continues to carry
Deferred Tax Asset (DTA) (net) of 7,017.61 lacs (after reversal of
199.75 lacs during the year) up to March 31,2016, based on the future profitability
projections made by the management. In our opinion, in the absence of virtual certainty
about the above projections, as required in terms of Accounting Standard - 22, had the
above impact been considered, loss for the year would have been 5,898.35 lacs as
against the reported profit of 1,119.26 lacs and reserves & surplus as at the
balance sheet date would have been (-) 7,239.11 lacs as against the reported
figure of (-) 221.50 lacs.
Our audit opinion on the financial statements for the previous year was also qualified
in respect of the above matter.
QUALIFIED OPINION
In our opinion and to the best of our information and according to the explanations
given to us, except for the effect of the matter stated in the Basis for Qualified Opinion
paragraph, the 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 March 31, 2016,
of its profit, and its cash flows for the year ended on that date.
EMPHASIS OF MATTER
We draw attention to Note 36 to the financial statements in respect of composite scheme
of arrangement to restructure and de-link the Companys multiple businesses into separate
entities w.e.f 1st April, 2015 subject to necessary approvals, more fully described
therein. Pending such approvals, no adjustment has been made in these accounts. Our
opinion is not qualified in respect of this matter.
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 1" 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 purpose 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, Statement of Profit and Loss, 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 stated in the Basis for Qualified Opinion
paragraph above, in our opinion, the aforesaid financial statements comply with the
Accounting Standards specified under section 133 of the Act, read with Rule 7 of the
Companies (Accounts) Rules, 2014;
(e) The matter described in the Basis for Qualified Opinion paragraph above in our
opinion may have an adverse effect on functioning of the Company.
(f) On the basis of written representations received from the directors as on March 31,
2016, and taken on record by the Board of Directors, none of the directors is disqualified
as on March 31, 2016, from being appointed as a director in terms of section 164 (2) of
the Act;
(g) The qualification relating to the maintenance of accounts and other matters
connected therewith are as stated in the Basis for Qualified Opinion paragraph above;
(h) 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 2" to this report;
(i) 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 7 and 35 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 and Protection Fund by the Company.
|
For S.R.Batliboi & Co. LLP |
|
Chartered Accountants |
| ICAI Firm Registration Number: 301003E/E300005 |
per Kamal Agarwal |
| Place : Kolkata |
Partner |
| Date : May 13, 2016 |
Membership no.: 58652 |
Annexure 1 referred to in paragraph 1 under the heading "Report on Other Legal and
Regulatory Requirements" of our report of even date to the members of Upper Ganges
Sugar & Industries Limited as at and for the year ended March 31, 2016
(i) (a) The Company has maintained proper records showing full particulars, including
quantitative details and situation of fixed assets.
(b) Fixed assets were physically verified by the management during the year in
accordance with a planned programme of verifying all of them once in three years which, in
our opinion, is reasonable having regard to the size of the Company and the nature of its
assets. No material discrepancies were noticed on such verification.
(c) According to information and explanations given by the management, the title deeds
of immovable properties, included in Fixed Assets are held in the name of the Company
except in respect of land aggregating 25.42 lacs where the title deeds are yet to
be executed in favour of the Company. Further, in respect of freehold land and leasehold
land aggregating to 105.21 lacs of Gross Bock (Net Block 10.66 lacs) as at March
31, 2016, original title deeds were not available with the Company since as explained, the
title deeds thereof are lying with the banks as security towards various credit facilities
and hence we are unable to comment on the same
(ii) The management has conducted physical verification of inventory at reasonable
intervals during the year and no material discrepancies were noted on such physical
verification except for in one of the units fully detailed in the note 23 to the financial
statements which have been properly dealt with in the books of account.
(iii) According to the information and explanations given to us, 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. Accordingly, the provisions of clause 3(iii)(a), (b) and (c) of the
Order are not applicable to the Company and hence not commented upon.
(iv) In our opinion and according to the information and explanations given to us,
there are no loans, investments, guarantees and securities granted in respect of which
provisions of section 185 and 186 of the Companies Act 2013 are applicable and hence not
commented upon.
(v) In respect of deposits accepted in earlier years and repaid during the year, in our
opinion and according to the information and explanations given to us, directives issued
by the Reserve Bank of India and the provisions of section 73 to 76 or any other relevant
provisions of the Companies Act, 2013, and the rules framed there under, to the extent
applicable, have been complied with. We are informed by the management that no order has
been passed by the Company Law Board, National Company Law Tribunal or Reserve Bank of
India or any Court or any other Tribunal.
(vi) We have broadly reviewed the books of account maintained by the Company pursuant
to the rules made by the Central Government for the maintenance of cost records under
section 148(1) of the Companies Act, 2013, in respect of its products and are of the
opinion that prima facie, the specified accounts and records have been made and
maintained. We have not, however, made a detailed examination of the same.
(vii) (a) Undisputed statutory dues including provident fund, employees state
insurance, income-tax, sales-tax, service tax, duty of custom, duty of excise, value added
tax, cess and other material statutory dues have generally been regularly deposited with
the appropriate authorities though there has been a slight delay in a few cases.
(b) According to the information and explanations given to us, no undisputed dues in
respect of provident fund, employees state insurance, income-tax, service tax, sales-tax,
duty of custom, duty of excise, value added tax, cess and other material statutory dues
were outstanding, at the year end, for a period of more than six months from the date they
became payable.
(c) According to the records of the Company, the dues outstanding of income-tax,
sales-tax, service tax, duty on custom, duty of excise and value added tax on account of
any dispute, are as follows:
| Name of the statute |
Nature of dues |
Amount ( in lacs) |
Period to which the amount relates |
Forum where dispute is pending |
| Central Excise and |
Disallowance of Cenvat credit on |
212.42 |
1993-1994 to |
Commissioner (Appeals)/ |
| Customs Act, 1944 |
Certain inputs and capital goods |
|
2015-16 |
CESTAT/High Court |
|
Disallowance of Service Tax on discount to whole sellers and other items |
2.92 |
1997- 1998 to 1998- 1999, 2005-2006 |
CESTAT |
| Prevention of (Water) Pollution Act |
Water Cess |
1.41 |
1989-1990 |
High Court, Allahabad |
| Bihar Sugarcane (Supply & Regulation) Act,1981 |
Interest on Cane cess |
3.37 |
1984-85 to 1986-87, 199192, 1994-95 to 1998-99, 2003-04 & 2004-05 |
Certificate Officer, Samastipur |
| Bihar VAT Act, 2005 |
VAT/ CST on exempted sale, C Form etc. |
16.64 |
2008-09 & 2009-2010 |
Joint Commissioner Commercial Tax (Appeal) |
(viii) According to information and explanations given by the management, we are of the
opinion that the Company has not defaulted in repayment of dues to banks or government.
The Company did not have any outstanding dues in respect of a financial institutions or
debenture holders during the year.
(ix) According to the information and explanations given by the management, term loans
were applied for the purpose for which the loans were obtained. The Company has not raised
any money way of initial public offer / further public offer / debt instruments during the
year.
(x) We report that the Company has noticed/ reported during the year for shortages
amounting to 2,206.08 lacs in the inventory of Finished Goods and Work-inProgress
at one of the units of the Company, resulting out of overstatement of yield recorded in
earlier years as more fully described in Note 23 of the financial statements. The Company
has made necessary accounting adjustments in the financial statements.
(xi) According to the information and explanations given by the management, the
provisions of section 197 read with Schedule V of the Act is not applicable to the company
and hence reporting under clause 3(xi) are not applicable and hence not commented upon.
(xii) In our opinion, the Company is not a nidhi company. Therefore, the provisions of
clause 3(xii) of the order are not applicable to the Company and hence not commented upon.
(xiii) According to the information and explanations given by the management,
transactions with the related parties are in compliance with section 177 and 188 of
Companies Act, 2013 where applicable and the details have been disclosed in the notes to
the financial statements, as required by the applicable accounting standards.
(xiv) According to the information and explanations given to us and on an overall
examination of the balance sheet, the Company has not made any preferential allotment or
private placement of shares or fully or partly convertible debentures during the year
under review and hence not commented upon.
(xv) According to the information and explanations given by the management, the Company
has not entered into any non-cash transactions with directors or persons connected with
him as referred to in section 192 of Companies Act, 2013.
(xvi) According to the information and explanations given to us, the provisions of
section 45-IA of the Reserve Bank of India Act, 1934 are not applicable to the Company.
|
For S.R.Batliboi & Co. LLP |
|
Chartered Accountants |
| ICAI Firm Registration Number: 301003E/E300005 |
per Kamal Agarwal |
| Place : Kolkata |
Partner |
| Date : May 13, 2016 |
Membership no.: 58652 |
Annexure 2 to the Independent Auditors Report (referred to in our report of even date
to the members of Upper Ganges Sugar & Industries Limited as at and for the year ended
31st March, 2016)
Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section
143 of the Companies Act, 2013 ("the Act")
We have audited the internal financial controls over financial reporting of Upper
Ganges Sugar & Industries Limited ("the Company") as of March 31, 2016 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. 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 the 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 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 as specified 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 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 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 authorisations of
management and directors of the company; and (3) provide reasonable assurance regarding
prevention or timely detection of unauthorised 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.
QUALIFIED OPINION
According to the information and explanation given to us and based on our audit, the
following material weakness has been identified as at March 31,2016:
The Companys internal financial controls over recognition of deferred tax asset and
controls over assessing virtual certainty in recognition of deferred tax asset, were not
operating effectively which has resulted in material misstatement whereby the Company has
recognised deferred tax assets without establishing virtual certainty under Accounting
Standard 22 - Accounting for Taxes on Income notified under the Act, read with Rule 7 of
the Companies (Accounts) Rules, 2014.
A material weakness is a deficiency, or a combination of deficiencies, in internal
financial control over financial reporting, such that there is a reasonable possibility
that a material misstatement of the companys annual or interim financial statements will
not be prevented or detected on a timely basis.
In our opinion, the Company has, in all material respects, maintained adequate internal
financial controls over financial reporting as of March 31, 2016, 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, and except for the effects of the material weakness described above
on the achievement of the objectives of the control criteria, the Companys internal
financial controls over financial reporting were operating effectively as of March 31,
2016.
EXPLANATORY PARAGRAPH
We also have audited, in accordance with the Standards on Auditing issued by the
Institute of Chartered Accountants of India, as specified under Section 143(10) of the
Act, the standalone financial statements of Upper Ganges Sugar & Industries Limited,
which comprise the Balance Sheet as at March 31, 2016, and the related Statement of Profit
and Loss and Cash Flow Statement for the year then ended, and a summary of significant
accounting policies and other explanatory information. This material weakness was
considered in determining the nature, timing, and extent of audit tests applied in our
audit of the March 31, 2016 standalone financial statements of Upper Ganges Sugar &
Industries Limited and has affected our opinion on the standalone financial statements of
the company and we have issued a modified opinion on the standalone financial statements
dated May 13, 2016.
|
For S.R.Batliboi & Co. LLP |
|
Chartered Accountants |
| ICAI Firm Registration Number: 301003E/E300005 |
per Kamal Agarwal |
| Place : Kolkata |
Partner |
| Date : May 13, 2016 |
Membership no.: 58652 |
+91-9892691696
