Ugar Sugar Works

1.  We have audited the attached Balance Sheet of The Ugar Sugar Works
 Limited as at 31st March 2009 and the Profit and Loss Account for the
 year ended on that date and the Cash Flow Statement for the year ended
 on that date annexed thereto. These financial statements are the
 responsibility of the Companys Management.  Our responsibility is to
 express an opinion on these financial statements based on our audit.
 
 2.  We conducted our audit in accordance with auditing standards
 generally accepted in India. Those Standards require that we plan ?nd
 perform the audit to obtain reasonable assurance about whether the
 financial statements are free of material misstatements. An audit
 includes examining, on a test basis, evidence supporting the amounts
 and disclosures in the financial statements. An audit also includes
 assessing the accounting principles used and significant estimates made
 by management, as well as evaluating the overall financial statement
 presentation. We believe that our audit provides a reasonable basis for
 our opinion.
 
 3.  As required by the Companies (Auditors Report) Order, 2003 [as
 amended by the Companies (Auditors Report) (Amendment) Order, 2004]
 issued by the Central Government of India in terms of sub-section (4A)
 of section 227 of the Companies Act, 1956 we enclose in the Annexure a
 statement on the matters specified in paragraphs 4 and 5 of the said
 Order.
 
 4.  Further to our comments in the Annexure referred to in paragraph 3
 above, we report that:
 
 (i) 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;
 
 (ii) 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 such
 books;
 
 (iii) the Balance Sheet, Profit and Loss Account and Cash Flow
 Statement dealt with by this report are in agreement with the books of
 account of the Company;
 
 (iv) in our opinion, the Balance Sheet, Profit and Loss Account and
 Cash Flow Statement dealt with by this report comply with the
 accounting standards referred to in sub-section 3C of section 211 of
 the Companies Act, 1956;
 
 (v) on the basis of the written representations received from the
 directors, as on 31s1 March, 2009, and taken on record by the Board of
 Directors, we report that none of the directors is disqualified as on
 31st March, 2009, from being appointed as a director in terms of clause
 (g) of sub-section (1) of section 274 of the Companies Act, 1956;
 
 (vi) in our opinion and to the best of our information and according to
 the explanations given to us, the accounts, read together with the
 notes thereon give the information required by the Companies Act, 1956,
 in the manner so required and give a true and fair view in conformity
 with the accounting principles generally accepted in India:
 
 a) in the case of the Balance Sheet, of the state of affairs of the
 Company as at 31st March, 2009;
 
 b) in the case of the Profit and Loss Account, of the profit 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 that date.
 
 
 ANNEXURE TO AUDITORS REPORT
 
 (Referred to in paragraph 3 of our report of even date)
 
 (i) (a) The Company has maintained proper records showing full
 particulars including quantitative details
 
 and situation of fixed assets.
 
 (b) Fixed assets have not been physically verified during the year. The
 fixed assets were verified in the previous year, however,
 reconciliation of the same with book records has not yet been done.
 
 (c) The fixed assets which were disposed off during the year do not
 form substantial part of the fixed assets owned by the Company.
 
 (ii) (a) The inventory was physically verified during the year by the
 Management. In our opinion, the
 
 frequency of verification is reasonable.
 
 (b) The procedures of physical verification of inventory 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 is maintaining proper records of inventory. The
 discrepancies noticed on verification between the physical stocks and
 the book records were not material.
 
 (iii) The Company has neither granted nor taken any loans, secured or
 unsecured, to /from companies, firms or other parties covered in the
 register maintained as per section 301 of the Companies Act, 1956.
 Consequently, clauses (iii)(b), (iii)(c), (iii)(d), (iii)(f), (iii)(g)
 of paragraph 4 of the Order are not applicable.
 
 (iv) In our opinion and according to the information and explanations
 given to us, there were adequate internal control systems commensurate
 with the size of the Company and nature of its business with regard to
 purchase of inventory and fixed assets and for sale of goods and
 services. During the course of the audit, we have not observed any
 continuing failure to correct major weaknesses in internal control
 system.
 
 (v) (a) According to the information and explanations given to us, we
 are of the opinion that the particulars
 
 of contracts or arrangements referred to in section 301 of the Act have
 been entered in the register required to be maintained under that
 section; and
 
 (b) According to the information and explanations given to us, the
 transactions made in pursuance of such contracts or arrangements have
 been made at prices which are reasonable having regard to the
 prevailing market prices at the relevant time.
 
 (vi) In our opinion and according to the information and explanations
 given to us, the Company has complied with the directives issued by the
 Reserve Bank of India and provisions of section 58A, 58AA or any other
 relevant provisions of the Companies Act, 1956 and the Companies
 (Acceptance of Deposits) Rules, 1975, with regard to deposits accepted
 from the public.
 
 (vii) In our opinion, the Company has an internal audit system
 commensurate with its size and nature of its business.
 
 (viii) We have broadly reviewed the books of account relating to
 materials, labour and other items of cost, maintained by the Company
 pursuant to the rules made by the Central Government for maintenance of
 cost records under section 209(1) (d) of the Companies Act, 1956 and we
 are of the opinion that prima facie the prescribed accounts and records
 have been made and maintained.
 
 (ix) (a) The Company is regular in depositing with appropriate
 authorities undisputed statutory dues including
 
 Provident Fund, Investor Education and Protection Fund, Employees
 State Insurance, Income Tax, Sales Tax, Wealth Tax, Custom Duty, Excise
 Duty, Cess and other material statutory dues applicable to it except
 for delays in remittance of Income Tax deducted at source and Tax
 collected at source.
 
 (b) According to information and explanations given to us, there are no
 dues of income tax, sales tax, wealth tax, service tax, customs duty,
 excise duty and cess, which have not been deposited on account of any
 dispute other than those mentioned below:
 
 Nature of dues       Name of Statute     Period to which
                                         the amount relates
 
 Central Excise       Central Excise Act                 2000-01
 Central Excise       Central Excise Act                 2003-05
 Central Excise       Central Excise Act                 2006-07
 Central Excise       Central Excise Act                 2007-08
 Central Excise       Central Excise Act                 2008-09
 
 Forum where
 Rs. in Lakh    dispute is pending
 
 0.94           Commissioner of
                Central Excise
                (Appeals)
 80.91          Commissioner of
                Central Excise,
                Belgaum
 26.31          CESTAT (Bangalore)
 22.92          CESTAT (Bangalore)
 13.36          Joint Commissioner
                of Central Excise,
                Belgaum
 
 (x) In our opinion, the accumulated losses of the Company are not more
 than fifty percent of its net worth. The Company has not incurred cash
 losses during the financial year and in the immediately preceding
 financial year.
 
 (xi) In our opinion and according to information and explanations given
 to us, the Company has not defaulted in repayment of dues to a
 financial institution or bank. The Company has no debenture-holders.
 
 (xii) According to information and explanations given to us, the
 Company has not granted loans and advances on the basis of security by
 way of pledge of shares, debentures and other securities. Accordingly,
 the provisions of clause 4(xii) of the Companies (Auditors Report)
 Order, 2003, are not applicable to the Company.
 
 (xiii) In our opinion, the Company is not a chit fund or a nidhi /
 mutual benefit fund / society. Accordingly, the provisions of clause
 4(xiii) of the Companies (Auditors Report) Order, 2003, are not
 applicable to the Company.
 
 (xiv) According to information and explanations given to us, the
 Company is not dealing in or trading in shares, securities, debentures
 and other investments. Accordingly, the provisions of clause 4(xiv) of
 the Companies (Auditors Report) Order, 2003, are not applicable to the
 Company.
 
 (xv) In our opinion, the terms and conditions on which the Company has
 given guarantees for loans taken by others from banks or financial
 institutions are not prejudicial to the interest of the Company.
 
 (xvi) In our opinion, term loans were applied for the purpose for which
 the loans were obtained
 
 (xvii) The funds raised on short-term basis have not been used for
 long-term investment.
 
 (xviii) According to information and explanations given to us, the
 Company has not made any preferential allotment of shares to parties
 and companies covered under section 301 of the Companies Act, 1956.
 
 (xix) According to information and explanations given to us, the
 Company has not issued any debentures.  Accordingly, the provisions of
 clause 4(xix) of the Companies (Auditors Report) Order, 2003, are not
 applicable to the Company.
 
 (xx) According to information and explanations given to us, the Company
 has made right issue of its shares and the proceeds have been utilized
 for the purpose stated in the offer documents.
 
 (xxi) According to information and explanations given to us, no
 material fraud on or by the Company has been noticed or reported during
 the course of our audit.
 
                                    For M/s P. G. Bhagwat
                                    Chartered Accountants
                                            M. K. Shevade
 Place: Panhala                                   Partner
 Date : 13-06-2009                   Membership No.  18651