We have audited the accompanying financial statements of EMPEE SUGARS &
CHEMICALS LIMITED ("the Company"), which comprise the Balance Sheet for
the Year ended as at March 31, 2015, and the Statement of Profit and
Loss for the year ended on that date along with the Cash Flow statement
annexed thereto, and a summary of significant accounting policies and
other explanatory information.
Management's Responsibility for the Financial Statements
The Company's Board of Directors are responsible for the matters stated
in Section 134(5) of the Companies Act, 2013 ("the Act") with reference
to the preparation of the standalone financial statements that give a
true and fair view of the financial position, financial performance and
cash flow of the Company in accordance with the accounting principles
generally accepted in India including the Accounting Standards
specified under Section 133 of the Act, read with Rule 7 of the
Companies (Accounts) Rules, 2014. This responsibility also includes
maintenance of adequate accounting records in accordance with the
provisions of the Act for safeguarding the assets of the Company and
for preventing and detecting frauds and other irregularities; selection
and application of appropriate accounting policies; making judgments
and estimates that are reasonable and prudent; and
design,implementation and maintenance of adequate internal financial
controls, that were operating effectively for ensuring the accuracy and
completeness of the accounting records, relevant to the preparation and
presentation of the 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 standalone
financial statements based on our audit. We have taken into account the
provisions of the Act, the accounting and auditing standards and
matters which are required to be included in the audit report under the
provisions of the Act and the Rules made there under. We conducted our
audit in accordance with the Standards on Auditing specified under
Section 143(10) of the Act. Those Standards require that we comply with
ethical requirements and plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free
from material misstatements.
An audit involves performing procedures to obtain audit evidence about
the amounts and disclosures in the financial statements. The procedures
selected depend on the auditor's 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 Company's
preparation of the financial statements that give a true and fair view
in order to design audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on
whether the Company has in place an adequate internal financial
controls system over financial reporting and the operating
effectiveness of such controls. An audit also includes evaluating the
appropriateness of accounting policies used and the reasonableness of
the accounting estimates made by the Company's 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 audit opinion on the standalone
financial statements.
Basis for Qualified Opinion
In our opinion and to the best of our information and according to the
explanations given to us, the aforesaid standalone 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, 2015, and its profit and its cash flow for the year ended
31.03.2015 except:-
a) The accumulated losses of the company have exceeded the net worth of
the company. Hence the company has made a reference to BIFR under the
sick industrial companies Act. And the Company has been registered
under BIFR vide case no:69/2014. However, the accounts have been
prepared on a going concern basis.
b) The company has received amount of Rs. 140.37 crores from 7th July
2008 to 30th September 2012 (refer note no 4) towards share application
money from holding company Empee Distilleries Ltd. These shares could
not be allotted to the applicant company in view of the non-receipt of
approval from the SEBI and stock Exchange.
c) Confirmation of Sundry debtors, Trade payables, Advance to
suppliers, Cane advances, Harvest Advance and other deposit is subject
to confirmation and reconciliation.(refer note no 8, 16, 18 & 38)
Qualified Opinion
We believe that the audit evidence we have obtained is sufficient and
appropriate to provide a basis for our audit opinion.
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, 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:
And attention of the members is drawn regarding write off of Rs. 99.10
Crores relating to inventories. As explained by the Management the
diminution in realizable value of inventories are due to quality,
moisture and GVC Contents of coal, TRS contents in Molasses and ICUMSA
in Sugar over the years. The company has written off receivables
amounting to Rs. 44 Crores Refer Note No.15, 16 and 21.
a) in the case of the Balance Sheet, of the state of affairs of the
Company for the year ended as at March 31, 2015;
b) in the case of the Profit and Loss Account, of the Loss for the year
ended on that date; and
c) In the case of the cash flow statement, of the cash flows for the
year ended on the date
Report on Other Legal and Regulatory Requirements:-
1. As required by the Companies (Auditor's Report) Order, 2015
("theOrder") 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 4 and 5 of the Order.
2. As required by section 143(3) of the Act, we report that:
a) We have obtained all the information and explanations which to the
best of our knowledge and belief were necessary for the purpose of our
audit.
b) In our opinion proper books of account as required by law have been
kept by the Company so far as 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 / possible effects of the matters described
in the Basis of Qualified Opinion, in our opinion, the Balance Sheet,
Statement of Profit and Loss and Cash Flow Statement comply with the
Accounting Standards referred to in Section 133 of the Companies Act,
2013, read with Rule 7 of the Companies (Accounts) Rules, 2014.
e) On the basis of written representations received from the directors
as on March 31,2015, and taken on record by the Board of Directors,
none of the directors is disqualified as on March 31,2015, from being
appointed as a director in terms of Section (2) of section 164 of the
Companies Act, 2013.
f) With respect to the other matters to be included in the Auditors
Report in accordance with Rule 11 of the companies (Audit and Auditors)
Rules, 2014, in our opinion and to the best of our information and
according to the explanations given to us:-
i. the company does not have any pending litigations which would
impact its financial position except the reference to the BIFR and the
proceedings under the SARFAESI Act initiated by the bankers and some of
the project creditors have gone to the court for the winding up of the
company;
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;
Annexure to Independent Auditors' Report
(Referred to in paragraph 1 under the heading of "Report on other Legal
and Regulatory Requirements" of our Report of even date)
As required by the Companies (Auditor's Report) Order, 2015 issued by
the Central Government in terms of section 143 (11) of the Companies
Act, 2013 and on the basis of such checks of the books and records of
the Company, as we considered appropriate and according to the
information and explanations given to us during the course of the
audit, we report that,
1. a) The Company has maintained proper records showing full
particulars, including quantitative details and situation of fixed
assets on the basis of available information.
b) As explained to us, all the fixed assets have been physically
verified by the management in a phased periodical manner, 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
physical verification.
2. a) The inventories have been physically verified during the year by
the management. In our opinion, the frequency of verification is
reasonable.
b) In our opinion and according to the information and explanations
given to us, the procedures of physical verification of inventories
followed by the management are reasonable and adequate in relation to
the size of the company and the nature of its business.
c) The company has maintained proper records of inventories. As
explained to us, there were no material discrepancies noticed on
physical verification of inventories as compared to book records.
3. a) The company has given interest free loan to one of its
Subsidiary Companies of Rs. 44.87 Crores without stipulation as to the
repayment of principal.
b) In the light of (a) we do not comment on the principal amount and
interest or other conditions or security of loans.
c) In the light of (a) we do not comment on the reasonable steps have
been taken by the company for recovery of the principal and interest.
4. In our opinion and according to the explanations given to us the
internal control procedure of the Company are commensurate with the
size of the company and the nature of its business with regards to
Fixed Assets other assets and with regard to the sale of Services. No
instance of continuing failure to correct major weakness in internal
control was noticed.
5. The Company has not accepted any deposits from the public.
Therefore the provisions of section 73 to Section 76 of the Companies
Act 2013 and rules framed there under are not applicable.
6. We have broadly reviewed the cost records maintained by the company
pursuant to the Companies (Cost Accounting Records) Rules, 2011
prescribed by the Central Government under Section 209(1) (d) of the
Companies Act, 1956 and are of the opinion that prima facie the
prescribed cost records have been maintained. We have, however not made
a detailed examination of the cost records with a view to determine
whether they are accurate or complete.
7. a) According to the records of the company, there have been delays
in depositing the undisputed statutory dues including Provident Fund,
Employees' State Insurance, Income Tax, Sales Tax, Wealth Tax, Customs
Duty, Excise Duty, Service tax, Cess and other statutory dues with the
appropriate authorities. The details of the same are as follows:
Name of the State Act Nature of Dues Amount
involved
Rs. in Lacs
A.P. Sugar Cane regulation Andhra Pradesh Purchase 522.66
of Sugar Cane Act tax payable
Finance Act, 1994 Service Tax payable - Man 10.54
Power Services
Finance Act, 1994 Service Tax Reverse Charge 2.77
- Legal Services
Finance Act, 1994 Service Tax Reverse Charge 0.57
- Sitting Fees
Finance Act, 1994 Service Tax Reverse Charge 42.41
Income Tax Act, 1961 Tax Deducted at Source 3.29
Name of the State Act Period to
which the Status
case relates
A.P. Sugar Cane 1994 2001 Paid Rs. 12 Crs
regulation of Sugar towards said dues
Cane Act
Finance Act, 1994 2013-2014
Finance Act, 1994 2013-2014
Finance Act, 1994 2013-2014
Finance Act, 1994 2014-2015
Income Tax Act, 1961 2014-2015
b) According to the information and explanations given to us and the
records of the company examined by us, except the following there are
no dues of Income tax, wealth tax, service tax, sales tax, customs
duty, excise duty and cess which have not been deposited on account of
any dispute.
Name of the State Act Nature of Dues Amount involved
Rs. in Lacs
A.P Sugar Cane regulation Andhra Pradesh 729.59
of Sugar Cane Act Purchase tax payable
Name of the State Act Period to which Dispute is
the case relates pending before
A.P Sugar Cane regulation 1994 - 2001 Asst Cane
of Sugar Cane Act Commissioner
c) The company is not required to transfer any amount to investor
education and protection fund as per the relevant provisions of the
Companies Act, 1956 (1 of 1956) and rules made there under.
8. The accumulated losses of the company have exceeded the net worth
of the company as at the end of the financial year. The company has
incurred cash losses in the current year and also in the immediately
preceding financial year. The company has made a reference to BIFR.
9. Based on our audit procedures and according to the information and
explanations given to us, the bankers of the company have approved CDR
(Corporate Debt Restructure) scheme in respect of Ambasamudram project
for terms loans amounting to Rs.388.47 Lakhs. As per the scheme, the
repayments of interest &Principals have been restructured and the first
repayment commences from September, 2014. During the year over dues
interest payable amount to Rs.2,827.32lakhsand principal amount of
Rs.2,526.37 lakhs.
10. The company has not given guarantee for loans taken by others from
In our opinion and according to the information and explanations given
to us and based on the information available, no loans and advances
have been granted by the company on the basis of security by way of
pledge of shares, debentures and other securities.
11. According to the records of the company, the company has not
obtained any term loans during the financial year. Hence, comments
under the clause are not called for.
12. According to information and explanations furnished to us no fraud
on or by the company has been noticed or reported during the year.
For Venkatesh& Co.,
Chartered Accountants
F.R.No.004636S
CA Dasaraty V
Place:- Chennai M.No.026336
Date:-23/05/2015 Partner
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