The Members of Bannari Amman Sugars Limited
Report on the Audit of the Financial Statements
1. We have audited the accompanying financial statements of Bannari Amman SugarsLimited ("the Company") which comprise the Balance Sheet as at March 31 2019and the Statement of Profit and Loss (including Other Comprehensive Income) Statement ofCash Flows and Statement of Changes in Equity for the year then ended on that date andnotes to the financial statements including a summary of significant accounting policiesand other explanatory information.
2. In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid financial statements give the information required by theCompanies Act 2013 ("the Act") in the manner so required and give a true andfair view in conformity with the accounting principles generally accepted in India of thestate of affairs of the Company as at March 31 2019 and its profit and totalcomprehensive income and its cash flows and changes in equity for the year ended on thatdate.
Basis for Opinion
3. We conducted our audit in accordance with the Standards on Auditing (SAs) specifiedunder section 143(10) of the Act. Our responsibilities under those Standards are furtherdescribed in the Auditor's Responsibilities for the Audit of the Financial Statementssection of our report. We are independent of the Company in accordance with the Code ofEthics issued by the Institute of Chartered Accountants of India (ICAI) together with theethical requirements that are relevant to our audit of the financial statements under theprovisions of the Act and the Rules there under and we have fulfilled our other ethicalresponsibilities in accordance with these requirements and the Code of Ethics. We believethat the audit evidence we have obtained is sufficient and appropriate to provide a basisfor our opinion.
Key Audit Matters
4. Key audit matters are those matters that in our professional judgment were of mostsignificance in our audit of the financial statements of the current period. These matterswere addressed in the context of our audit of the financial statements as a whole and informing our opinion thereon and we do not provide a separate opinion on these matters. Wehave determined the matters described below as the Key Audit Matters of the Company forthe year ended 31.03.2019
|Sl. No. Description of Key Audit Matter ||How the matter was addressed in Audit |
|4.1 Determination of net realizable value of inventory of sugar as at the year ended March 31 2019 ||We understood and tested the design and operating effectiveness of controls as established by the management in preparation of cost sheet and underlying judgement and basis of determination of net realizable value of inventory of sugar. |
|The Company has inventory of sugar with the carrying value Rs. 81961.66 lakhs as on March 31 2019. The inventory of sugar is valued at the lower of Weighted Average cost and net realizable value. ||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 judgement 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 management's determination of the cost and net realizable value of the inventory of sugar as at the year- end is considered to be reasonable. |
|4.2 Recoverability of amount receivable towards supply of Power to TANGEDCO for more than 6 months. ||We understood and verified the design and operating effectiveness of controls as established by the management in recoverability of dues and follow-up thereon. |
|The Company has receivable of Rs.3447.30 lakhs from TANGEDCO due for more than 6 months. ||We considered various factors including the Power Purchase Agreements entered into by the Company monthly invoices records evidencing quantum of power exported by the company and the judgement made by the management on credit risk and impairment based on the historical data relating to settlements by TANGEDCO. |
|We considered the value of receivable from TANGEDCO which is due for more than 6 months as Key Audit Matter. ||Based on the above procedures performed the management's judgement on recoverability of the same is considered to be reasonable. |
Information Other than the Financial Statements and the Auditors' Report thereon
5. The Company's Board of Directors is responsible for the preparation of the otherinformation. The other information comprises the Management Discussion and AnalysisBoard's Report including Annexures to Board's Report Corporate Governance andShareholder's Information but does not include the financial statements and our auditor'sreport thereon which we have obtained prior to the date of this Audit report.
6. Our opinion on the financial statements does not cover the other information and wedo not and will not express any form of assurance conclusion thereon.
7. In connection with our audit of the financial statements our responsibility is toread the other information identified above and in doing so consider whether the otherinformation is materially inconsistent with the financial statements or our knowledgeobtained in the audit or otherwise appears to be materially misstated. Based on the workwe have performed on the other information if we conclude that there is a materialmisstatement if any of this other information we are required to report that fact.
We have nothing to report in this regard.
Management's Responsibilities and those Charged with Governance for the FinancialStatements
8. The Company's Board of Directors is responsible for the matters stated in section134(5) of the Act with respect to the preparation of these financial statements that givea true and fair view of the financial position financial performance changes in equityand cash flows of the Company in accordance with the accounting principles generallyaccepted in India including the Indian Accounting Standards specified under section 133of the Act read with Companies (Indian Accounting Standard) Rules 2015 as amended. Thisresponsibility also includes maintenance of adequate accounting records in accordance withthe provisions of the Act for safeguarding of the assets of the Company and for preventingand detecting frauds and other irregularities; selection and application of appropriateaccounting policies; making judgements and estimates that are reasonable and prudent; anddesign implementation and maintenance of adequate internal financial controls that wereoperating effectively for ensuring the accuracy and completeness of the accountingrecords relevant to the preparation and presentation of the financial statements thatgive a true and fair view and are free from material misstatement whether due to fraud orerror.
9. In preparing the financial statements the Board of Directors is responsible forassessing the Company's ability to continue as a going concern disclosing as applicablematters related to going concern and using the going concern basis of accounting unlessthe Board of Directors either intends to liquidate the Company or to cease operations orhas no realistic alternative but to do so.
10. Those Board of Directors are also responsible for overseeing the Company'sfinancial reporting process.
Auditor's Responsibilities for the Audit of the Financial Statements
11. Our objectives are to obtain reasonable assurance about whether the financialstatements as a whole are free from material misstatement whether due to fraud or errorand to issue an auditor's report that includes our opinion. Reasonable assurance is a highlevel of assurance but is not a guarantee that an audit conducted in accordance with SAswill always detect a material misstatement when it exists. Misstatements can arise fromfraud or error and are considered material if individually or in the aggregate theycould reasonably be expected to influence the economic decisions of users taken on thebasis of these financial statements.
12. As part of an audit in accordance with SAs we exercise professional judgement andmaintain professional skepticism throughout the audit. We also:
a) Identify and assess the risks of material misstatement of the financial statementswhether due to fraud or error design and perform audit procedures responsive to thoserisks and obtain audit evidence that is sufficient and appropriate to provide a basis forour opinion. The risk of not detecting a material misstatement resulting from fraud ishigher than for one resulting from error as fraud may involve collusion forgeryintentional omissions misrepresentations or the override of internal control.
b) Obtain an understanding of internal financial controls relevant to the audit inorder to design audit procedures that are appropriate in the circumstances. Under section143(3)(i) of the Act we are also responsible for expressing our opinion on whether theCompany has adequate internal financial controls system in place and the operatingeffectiveness of such controls.
c) Evaluate the appropriateness of accounting policies used and the reasonableness ofaccounting estimates and related disclosures made by management.
d) Conclude on the appropriateness of management's use of the going concern basis ofaccounting and based on the audit evidence obtained whether a material uncertaintyexists related to events or conditions that may cast significant doubt on the Company'sability to continue as a going concern. If we conclude that a material uncertainty existswe are required to draw attention in our auditor's report to the related disclosures inthe 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 auditor'sreport. However future events or conditions may cause the Company to cease to continue asa going concern.
e) Evaluate the overall presentation structure and content of the financialstatements including the disclosures and whether the financial statements represent theunderlying transactions and events in a manner that achieves fair presentation.
13. We communicate with those charged with governance regarding among other mattersthe planned scope and timing of the audit and significant audit findings including anysignificant deficiencies in internal control that we identify during our audit.
14. We also provide those charged with governance with a statement that we havecomplied with relevant ethical requirements regarding independence and to communicatewith them all relationships and other matters that may reasonably be thought to bear onour independence and where applicable related safeguards.
15. From the matters communicated with those charged with governance we determinethose matters that were of most significance in the audit of the financial statements ofthe current period and are therefore the key audit matters. We describe these matters inour auditor's report unless law or regulation precludes public disclosure about the matteror when in extremely rare circumstances we determine that a matter should not becommunicated in our report because the adverse consequences of doing so would reasonablybe expected to outweigh the public interest benefits of such communication.
Report on Other Legal and Regulatory Requirements
16. As required by the Companies (Auditor's Report) Order 2016 ("theOrder") issued by the Central Government of India in terms of sub-section (11) ofsection 143 of the Companies Act 2013 we give in the "Annexure A" a statementon the matters specified in paragraphs 3 and 4 of the Order to the extent applicable.
17. 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 bestof 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 theCompany so far as it appears from our examination of those books.
c) The Balance Sheet the Statement of Profit and Loss (including Other ComprehensiveIncome) the Statement of Changes in Equity and the Cash Flow Statement dealt with by thisReport are in agreement with the books of account.
d) In our opinion the aforesaid financial statements comply with the Indian AccountingStandards specified 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 March31 2019 taken on record by the Board of Directors none of the Directors is disqualifiedas on March 31 2019 from being appointed as a director in terms of Section 164(2) of theAct.
f) With respect to the adequacy of the internal financial controls over financialreporting of the Company and the operating effectiveness of such controls refer to ourseparate Report in "Annexure B".
g) With respect to the other matters to be included in the Auditor's Report inaccordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014 in our opinionand 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 financialposition in its financial statements - Refer Note No. 33 to the financial statements;
ii) The Company did not have any long-term contracts including derivative contracts forwhich there were any material foreseeable losses;
iii) There has been no delay in transferring amounts required to be transferred to theInvestor Education and Protection Fund by the Company.
| ||For P K NAGARAJAN & Co. |
| ||Chartered Accountants |
| ||Firm Reg. No: 016676S |
| ||P K Nagarajan |
|Place : Coimbatore ||Partner |
|Date : 29.05.2019 ||M.No. 25679 |
Annexure - A to the Independent Auditors' Report
Referred to in paragraph 16 of the Independent Auditors' Report of even date to themembers of Bannari Amman Sugars Limited on the Ind AS financial statements for the yearended March 31 2019
i. a) The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets.
b) The Company has a regular programme of physical verification of its fixed assets bywhich all fixed assets are verified in a phased manner. In accordance with this programmecertain fixed assets were verified by the management during the year and no materialdiscrepancies were noticed on such verification. In our opinion this periodicity ofphysical verification is reasonable having regard to the size of the Company and thenature of its assets.
c) In our opinion and according to the information and explanations given to us and onthe basis of examination of the records of the company the title deeds of immovableproperties are held in the name of the company.
ii. The inventory has been physically verified by the management at reasonableintervals during the year. No material discrepancy was noticed on physical verification ofstocks by the management as compared to book records.
iii. In our opinion and according to the information and explanations given to us andon the basis of our examination of the books of account the Company has not granted anyloans secured or unsecured to companies firms Limited Liability partnerships or otherparties listed in the register maintained under section 189 of the Companies Act 2013('the Act'). Consequently the provisions of paragraph 3(iii) of the Order are notapplicable to the Company.
iv. In our opinion and according to the information and the explanations given to usthe Company has not granted any loans or provided any guarantees or securities to theparties covered under the section 185 of the Act. The Company has complied with theprovisions of section 186 of the Act in respect of investments made or loans or guaranteeor security provided.
v. The Company has not accepted any deposits from the public.
vi. As per the information and explanation given by the management maintenance of costrecords has been prescribed by the Central Government and we are of the opinion that primafacie the prescribed accounts and records have been made and maintained under section148(1) of the Act by the company.
vii. a) According to the information and explanations given to us and on the basis ofour examination of the records of the Company the undisputed statutory dues includingprovident fund Employee's State Insurance Income tax Goods and Service Tax duty ofcustoms duty of excise and any other material statutory dues as applicable have beenregularly deposited during the year by the Company with the appropriate authorities.
According to the information and explanations given to us no undisputed amountspayable in respect of provident fund Employee's State Insurance Income tax Goods andService Tax duty of customs duty of excise and other material statutory dues were inarrears as at 31st March 2019 for a period of more than six months from the date theybecame payable.
b) According to the information and explanations given to us the company has nodisputed dues of income tax or duty of customs or duty of excise or Goods and Service Taxthat have not been deposited on account of matters pending before appropriate authority.
viii. According to the information and explanations given to us the Company has notdefaulted in repayment of dues to financial institutions banks and Government during theyear. The company has not issued any debentures.
ix. The Company has not raised any money by way of Initial Public Offer or furtherpublic offer (including Debt instruments) during the year. According to the informationand explanations given to us the term loans availed during the year have been applied forthe purposes for which those were obtained.
x. According to the information and explanations given to us no fraud by the Companyor on the Company by its officers or employees has been noticed or reported during theyear.
xi. According to the information and explanations given to us and based on theexamination of the records the Company has paid/provided for managerial remuneration inaccordance with the requisite approvals mandated by the provisions of Section 197 readwith Schedule V to the Act.
xii. In our opinion and according to the information and explanations given to us theCompany is not a Nidhi Company. Accordingly para 3(xii) of the Order is not applicable.
xiii. According to the information and explanations given to us and based on ourexamination of the records of the Company transactions with the related parties are incompliance with sections 177 and 188 of the Act. The details of such related partytransactions have been disclosed in the financial statements as required under the IndianAccounting Standard 24 (Related Party Disclosures).
xiv. According to the information and explanations given to us and based on ourexamination of the records the Company has not made any preferential allotment or privateplacement of shares or fully or partly convertible debentures during the year underreview. Accordingly para 3(xiv) of the Order is not applicable.
xv. According to the information and explanations given to us and based on ourexamination of the records the Company has not entered into non-cash transactions withthe Directors or persons connected with them. Accordingly para 3(xv) of the Order is notapplicable.
xvi. The Company is not required to be registered under section 45-IA of the ReserveBank of India Act 1934. Accordingly the para 3(xvi) of the Order are not applicable tothe Company.
| ||For P K NAGARAJAN & Co. |
| ||Chartered Accountants |
| ||Firm Reg. No: 016676S |
| ||P K Nagarajan |
|Place : Coimbatore ||Partner |
|Date : 29.05.2019 ||M.No. 25679 |