1) We have audited the attached Balance Sheet of K.C.P.SUGAR AND
INDUSTRIES CORPORATION LIMITED, as at 31st March, 2011, and the Profit
and Loss Account and also the Cash Flow Statement for the year ended on
that date annexed thereto. These financial Statements are the
responsibility of the Company''s management. Our responsibility is to
express an opinion on these financial statements based on our audit.
2) We conducted our audit in accordance with the auditing standards
generally accepted in India. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. 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
3) As required by the Companies (Auditor''s Report) order, 2003 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
4) Further to our comments in the Annexure referred to above, we report
i) We have obtained all the information and explanations, which to the
best of our knowledge and belief were necessary for the purposes of our
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
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;
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 written representations received from the directors,
of the company as at 31st March, 2011 and taken on record by the board
of directors, we report that none of the directors is disqualified as
on 31st March 2011 from being appointed as a director in terms of under
clause (g) of sub section (1) of sect ion 274 of the companies act,
vi) In our opinion and to the best of our information and according to
the explanations given to us, the said accounts together with the notes
and Accounting Polices 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, 2011 and
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 Statements, of the Cash Flows for the
year ended on that date.
ANNEXURE TO THE AUDITORS'' REPORT REFERRED TO IN PARAGRAPH 3 OF OUR
REPORT OF EVEN DATE
i) In respect of Fixed assets:
a) The Company has maintained proper records showing full particulars
including Quantitative details and situation of fixed assets.
b) All the assets have not been physically verified by the Management
during the year but there is a regular programme of verification which,
in our opinion, is reasonable having regard to the size of the company
and the nature of its assets. Material discrepancy noticed between
book balance and physical assets of fixed assets have been properly
dealt with in the books of accounts.
c) During the year, the Company has not disposed off any substantial
part of Fixed Assets. ii) In respect of inventory:
a) The inventory has been physically verified during the year by the
management. In our opinion, the frequency of verification is
b) 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) On the basis of our examination of the records of inventory, we are
of the opinion that 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) In respect of Loans:
a) According to the information and explanations given to us, the
Company has granted loan to two companies, covered in the register
maintained under section 301 of the companies act,1956.The maximum
amount involved during the year was Rs.6,37,46,574 and the year-end
balance of the loans granted to such parties was Rs.7,00,000.
b) In our opinion, the rate of interest and other terms and conditions
of such loans are not prima facie, prejudicial to the interest of the
c) The companies have repaid the principal amount as stipulated and
have also been regular in the payment of interest to the company.
d) There is no overdue amount in excess of Rs.1 lakh in respect of the
e) The Company has not taken any loans, from companies, firms or other
parties, covered in the register maintained u/s 301 of the companies
Act,1956,except an amount of Rs.3.00 Crores(Rupees Three crores only)
from a Director of the company in accordance with the companies
(Acceptance of Deposits)Rules 1975.
In our opinion, the rate of interest and other terms and conditions on
which loans (deposits)have been taken by the company from the parties
covered in the register maintained under section 301 of the companies
act, 1956 are not, prima facie, prejudicial to the interest of the
The company is regular in repaying the principal amounts as stipulated
and has been regular in the payment of interest.
iv) In our opinion and according to the information and explanations
given to us, there are adequate internal control procedures
commensurate with the size of the Company and the nature of its
business for the purchase of inventory and fixed assets , for sale of
goods and services. During the course of our audit, we have not
observed any continuing failure to correct major weaknesses in internal
control system of the company.
v) a) According to the information and explanations given to us, we are
of the opinion that the transactions that need to be entered into the
register maintained under section 301 of the Companies Act, 1956 have
been so entered.
b) In our opinion and according to the information and explanations
given to us, the transactions made in pursuance of contracts or
arrangements entered into the register in pursuance of Section 301 of
the Companies Act, 1956 and exceeding the value of Rupees five lakhs in
respect of any party during the year, have been made at prices which
are reasonable having regard to the prevailing market prices at the
vi) In our opinion and according to the information and explanations
given to us, the company has complied with the provisions of section
58A and 58AA and other applicable provisions of the Companies Act,1956
and Companies (Acceptance of Deposits) Rules,1975 with regard to the
deposits accepted from the public. According to the information
furnished to us, the Company Law Tribunal or Reserve Bank of India or
any court or any other Tribunal has passed no order on the company.
vii) In our opinion, the Company has an internal audit system
commensurate with the size and nature of its business.
viii) We have broadly reviewed the books of account and records
maintained by the company at its Sugar, Distillery, and Power
generation units pursuant to the Rules made by the Central Government
for the 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) According to the records of the Company, 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, Service tax, Custom
duty, Excise Duty, cess and other material statutory dues applicable to
it except the following:
Nature of the Amount Period to
which the Date of
Name of the
statute Due date
dues Rs amount
Agri Non Agri Land 10,42,933 FY 1993-94
to On 30th
of Not paid
Assessment Assessment Tax 1999-2000,
and each year,
on receipt the date
Act 2005-06. of demand report
b) According to the information and explanation given to us no
undisputed amounts payable in respect of Income tax, Sales tax, wealth
tax, Service tax, Customs Duty and Excise Duty and Cess were in
arrears, as at 31-03-2011 for a period of more than six months from the
date they became payable.
c) According to the information given to us, there no dues of Income
tax, Sales tax, Wealth tax, Service tax, Excise duty Customs duty and
Cess which have not been deposited on account of any dispute.
x) The company has no accumulated losses and has not incurred cash
losses during the financial year covered by our audit and the
immediately preceding financial year.
xi) Based on our audit procedures and on the basis of information and
explanations given by the Management, we are of the opinion that the
Company has not defaulted in repayment of dues to financial
institutions or banks.
xii) According to the information and explanations given to us, the
Company has not granted any loans or advances on the basis of security
by way of pledge of shares, debentures or other securities.
xiii) In our opinion, the company is not a Chit Fund or a Nidhi /Mutual
Benefit Fund/Society. Therefore, the provisions of clause 4(xiii) of
the Companies (Auditor''s Report) Order, 2003 are not applicable to the
xiv) The nature of Company''s business/activities during the year does
not include dealing in shares, securities, debentures or other
investments. Accordingly, the requirements of clause 4(xiv) of the
Companies (Auditor''s Report) Order, 2003 are not applicable to the
xv) According to the information and explanations given to us, the
company has not given any guarantees for loans taken by others from
banks or financial institutions.
xvi) According to the information and explanations given to us the
company did not avail of any term loans during the year under report.
xvii) According to the information and explanations given to us and on
an overall examination of the Balance Sheet of the Company, we report
that no funds raised on short-term basis have been used for long-term
investment by the Company.
xviii) According to the information and explanations given to us, the
Company has not made any preferential allotment of shares to parties
covered in the register maintained under section 301 of the Companies
xix) The Company has not issued any debentures during the year under
xx) The Company has not raised any money by way public issue during the
year and hence the question of disclosure and verification of end use
of such moneys does not arise during the year.
xxi) Based upon the audit procedures performed and information and
explanations given by the Management, we report that no fraud on or by
the Company has been noticed or reported during the course of our
Place : Chennai For B Purushottam & Co.
Date : 27th May, 2011. Chartered Accountants,
(M. No. 26785)