Opinion
We have audited the accompanying financial statements of Ponni Sugars (Erode) Ltd (“the Company”), which comprise the Balance Sheet as at March 31, 2026, the Statement of Profit and Loss, (including Other Comprehensive Income), the Statement of Changes in Equity and Statement of Cash Flows for the year then ended and notes to the Financial Statements, including a summary of the Material Accounting Policy information and other explanatory information, [hereinafter referred to as Ind AS Financial Statements].
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 Companies Act, 2013 (“Act”) in the manner so required and give a true and fair view in conformity with the Indian Accounting Standards prescribed under section 133 of the Act read with the Companies (Indian Accounting Standards) Rules, 2015, as amended, (“Ind AS”) and other accounting principles generally accepted in India, of the state of affairs of the Company as at March 31, 2026, the Profit (Including Other Comprehensive Income), the changes in Equity, and its cash flows for the year ended on that date.
We conducted our audit in accordance with the Standards on Auditing (SAs) specified under section 143(10) of the Act. Our responsibilities under those Standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Company in accordance with the Code of Ethics issued by the Institute of Chartered Accountants of India together with the ethical requirements that are relevant to our audit of the financial statements under the provisions of the Act and the Rules thereunder, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the Code of Ethics. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Key Audit Matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the Financial Statements of the current period. These matters were addressed in the context of our audit of Financial Statements as a whole, and in forming our opinion thereon and we do not provide a separate opinion on these matters. We have determined the matters described below to be the key audit matters to be communicated in our report.
Response to Key Audit Matters & Conclusion
1. Sale of Bagasse to a Related Party
During the year, the Company has sold Bagasse to Seshasayee Paper and Boards Limited, a related party for an aggregate value of ' 3742 lakhs, pursuant to a long-term agreement.
The transactions has the prior approval of the Audit Committee, Board of Directors and shareholders through postal ballot as applicable.
We understood and tested the design and operating effectiveness of controls as established by the management in determining the various parameters and the price determination.
We have also tested the relevant records and found the price determination is in accordance with the agreement. The transaction amount is within the limits approved by the shareholders.
2. Revenue recognition for Tariff revision
During the year, the company recognised additional revenue of ' 2,975 lakhs relating to the period from August 2012 to 31st March 2025 under exceptional item and ' 326 lakhs for the current financial year (FY 2025-26) included in Revenue from operations with reasonable and reliable estimate of variable consideration under Ind AS -115.
The Company further recognised carrying cost on the above and earlier settled dues as additional income. Of this, ' 1548 lakhs relating to the period from August 2012 to 31st March 2025 is considered as exceptional item and ' 34 lakhs for the current financial year (FY 2025-26) included in other income based on reliable estimate under Ind AS -109.
Revenue recognition as above was based on the APTEL judgement pronounced on 03rd September 2025, which settled the principles and methodology for tariff determination and established an enforceable right in favour of the Company to recover additional tariff.
We have obtained and assessed whether company’s interpretation of the enforceable right to additional tariff is consistent with the terms and directions contained as per the APTEL order therein.
We have assessed the recognition of additional revenue satisfies the five-step revenue recognition model under Ind AS 115, with specific focus on the identification of the performance obligation (supply of power), the determination of transaction price including variable consideration, and the application of the constraint principle under Paragraphs 56 and 57 of Ind AS 115.
We have assessed the reasonableness of management's estimates of additional tariff revenue for prior periods (' 2,975 lakhs) and the current year (' 326 lakhs), by re-performing key calculations, tracing inputs to source data like Tariff orders, Power units sold to TNPDCL in each preceding years, and comparing them against the directions in the APTEL order.
We have evaluated management's assertion that it is highly probable that a significant reversal of cumulative revenue will not occur, by examining the basis and support for the estimated variable consideration, including benchmarking against APTEL's stated principles and directions.
We have also evaluated the treatment of this recognition as a change in accounting estimate under Ind AS 8, recognised prospectively in FY 2025-26 without restatement of prior periods, which is appropriate given the nature of the new information and developments that triggered the recognition.
We have also evaluated management's assessment of the legal position and the likelihood of outcome by considering the legal opinion obtained and discussed the substance of the APTEL judgement with management to corroborate the Company's interpretation of the enforceability of its right to additional tariff.
Based on the procedures performed, we found management's approach to revenue recognition, estimation of variable consideration, application of the constraint under Ind AS 115, classification as a contract asset, and the related disclosures to be consistent with the applicable financial reporting framework.
3. Reversal of MAT Credit and increased tax provision for earlier years
During the year, Assessing Officer (AO) issued a Draft Assessment Order for Assessment Year (AY) 2023-24, making an upward adjustment in respect of the transfer of wet whole bagasse from the sugar unit to the Co-Gen unit. This adjustment has the effect of reducing the Section 80-IA deduction claimed by the Company to Nil, thereby increasing the regular income tax liability for the affected year.
The Company has remeasured the Section 80-IA deduction from FY 2019-20 till the current financial year. As a consequence, the excess of MAT over regular income tax, which formed the basis for recognition of the MAT credit in DTA in those years, is fully eroded. Accordingly, the company reversed MAT credit entitlement of ' 2,053 lakhs through the Statement of Profit and Loss as deferred tax expense for the year ended 31 March 2026 and increased the tax provision for earlier years till FY 2024-25 by ' 634 lakhs.
We have verified the management computation of Current Tax, Deferred Tax and tax relating to earlier years as on 31st March 2026 and the amount determined and charged to Tax Expenses.
We have also reviewed the Draft Assessment Order issued by the AO for AY 2023-24.
We have also assessed the assumptions made by management in remeasuring the Section 80-IA deduction from FY 2019-20 onwards (covering multiple assessment years till the current year) and re-performed the computation of the revised MAT credit position, year-by-year from FY 2019-20 to FY 2024-25, tracing MAT paid, regular income tax, and Section 80-IA deductions to underlying workings, tax returns, and assessment orders, to validate the quantum of ' 2,053 lakhs reversed and increase in earlier years tax provision by ' 634 lakhs
Based on these procedures, the management’s estimate of provision for taxation and deferred tax is found reasonable.
The Company’s Board of Directors is responsible for the other information. The other information comprises the Information included in the Annual Report, but does not include the standalone financial statements and our auditor’s report thereon.
Our opinion on the standalone financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.
In connection with our audit of the standalone financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the standalone financial statements or our knowledge obtained during the course of our audit or otherwise appears to be materially misstated. If, based on the work we have performed, we
conclude that if there is a material mis-statement of this other information, we are required to report that fact. We have nothing to report in this regard.
The Company’s Board of Directors is responsible for the matters stated in Section 134(5) of the Act with respect to the preparation of these Standalone Financial Statements that give a true and fair view of the Financial Position, Financial Performance (including Other Comprehensive Income), Changes in Equity and Cash Flows of the Company in accordance with Ind AS and other accounting principles generally accepted in India. 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 implementation and maintenance of 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 Standalone Ind AS Financial Statements that give a true and fair view and are free from material mis-statement, whether due to fraud or error.
In preparing the Financial Statements, management is responsible for assessing the Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.
The Board of Directors is also responsible for overseeing the Company’s financial reporting process.
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material mis-statement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with SAs will always detect a material mis-statement when it exists. Mis-statements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these Financial Statements.
As part of an audit in accordance with SAs, we exercise professional judgment and maintain professional scepticism throughout the audit.
We also:
• Identify and assess the risks of material misstatement of the Financial Statements, whether
due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material mis-statement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
• Obtain an understanding of internal controls relevant to the audit in order to design audit procedures that are appropriate in the circumstances. Under section 143(3)(i) of the Act, we are also responsible for expressing our opinion on whether the Company has adequate Internal Financial Controls system in place and the operating effectiveness of such controls.
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
• Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the standalone 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’s report. However, future events or conditions may cause the Company to cease to continue as a going concern.
• Evaluate the overall presentation, structure and content of the Financial Statements, including the disclosures, and whether the Financial Statements represent the underlying transactions and events in a manner that achieves fair presentation.
Materiality is the magnitude of mis-statements in the standalone financial statements that, individually or in aggregate, makes it probable that the economic decisions of a reasonably knowledgeable user of the Financial Statements may be influenced. We consider quantitative materiality and qualitative factors in (i) planning the scope of our audit work and in evaluating the results of our work; and (ii) to evaluate the effect of any identified misstatements in the Financial Statements.
We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings including any significant deficiencies in Internal Control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.
1. 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 purposes of our audit.
(b) 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, the Statement of Profit and Loss (including Other Comprehensive Income), the Statement of Changes in Equity and the Cash Flow Statement dealt with by this Report are in agreement with the books of account.
(d) In our opinion, the aforesaid standalone Ind AS financial statements comply with the Indian Accounting Standards prescribed 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 31st March, 2026 taken on record by the Board of Directors, none of the Directors is disqualified as on 31st March 2026 from being appointed as a Director in terms of Section 164(2) of the Act.
(f) With respect to the adequacy of the Internal Financial Controls with reference to the financial statements of the Company, and the operating effectiveness of such controls, refer to our separate Report in “Annexure A’.
(g) With respect to the other matters to be included in the Auditor’s Report in accordance with the requirements of section 197(16) of the Act, as amended:
In our opinion and to the best of our information and according to the explanations given to us, the remuneration paid by the Company to its directors during the year is in accordance with the provisions of section 197 of the Act.
(h) 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 no.31 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 has been no delay in transferring amounts required to be transferred to the Investor Education and Protection Fund by the Company.
iv) (a) The management has represented that,
to the best of its knowledge and belief, as disclosed in Note No. 36 to the financial statements no funds have been advanced or loaned or invested (either from borrowed
funds or share premium or any other sources or kind of funds) by the Company to or in any other persons or entities, including foreign entities (“Intermediaries”), with the understanding, whether recorded in writing or otherwise, that the intermediary shall, whether directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Company (“Ultimate Beneficiaries”) or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.
(b) The management has represented that, to the best of its knowledge and belief, as disclosed in Note No.36 to financial statements no funds have been received by the Company from any persons or entities, including foreign entities (“Funding Parties”), with the understanding, whether recorded in writing or otherwise, that the Company shall, whether, directly or indirectly, lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party (“Ultimate Beneficiaries”) or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries ; and
(c) Based on such audit procedures we have considered reasonable and appropriate in the circumstances; nothing has come to our notice that has caused us to believe that the representations under sub-clause
(i) and (ii) of Rule 11(e) contain any material mis-statement.
v) The final dividend paid by the Company during the year relating to financial year 2025 is in accordance with section 123 of the Companies Act 2013. As stated in Note No.
12(f) to financial statements, the Board of Directors of the Company have proposed final dividend for the year which is subject to the approval of the members at the ensuing Annual General Meeting. The dividend proposed is in accordance with section 123 of the Act.
vi) Proviso to Rule 3(1) of the Companies (Accounts) Rules, 2014 for maintaining books of account using accounting software which has a feature of recording audit trail (edit log) facility is applicable to the Company with effect from April 1, 2023. Based on our examination which included test checks, the company has used accounting software for maintaining its books of account which has a feature of recording audit trail (edit log) facility and the same has operated throughout the year for all relevant transactions recorded in the software and the audit trial feature has not been tampered with and the audit trial has been preserved by the company as per the statutory requirements for record retention. Further, during the course of our audit we did not come across any instance of audit trail feature being tampered with.
2. As required by the Companies (Auditor’s Report) Order, 2020 (“the Order”) issued by the Central Government in terms of Section 143(11) of the Act, we give in “Annexure B” a statement on the matters specified in paragraphs 3 and 4 of the Order.
For M/s S Viswanathan LLP
Regn No.004770S/S200025 Chartered Accountants
Raghavendran Chella Krishnan
Partner
Chennai Membership No.208562
11th May 2026 UDIN: 26208562EOKRCP7323