AUDIT COMMITTEE CHARTER of Harinagar Sugar Mills Limited

1. PREFACE :
   
   
   1. HARINAGAR SUGAR MILLS LIMITED (“HSML” or “the Company”) believes in the conduct of its affairs in a fair and transparent manner by adopting the highest standards of professionalism, honesty and integrity.
      
      
   2. Section 177 of the Companies Act 2013, dealing with Audit Committee, has come into force from 1st April 2014 and mandates the Terms of Reference of the Audit Committee shall be in writing.
      
      
   3. Accordingly, this Audit Committee Charter (“AC Charter”) has been formulated setting out the scope for the Audit Committee to deal with the matters which are prescribed under the Companies Act 2013.
      
      
   4. The AC Charter will be posted on the Company’s website at www.harinagar.co.in
      
      
2. PRIMARY OBJECTIVES
   
   The Audit Committee assists the Board in its responsibility for overseeing the quality and integrity of the accounting, auditing and reporting practices of the Company and its compliance with the legal and regulatory requirements. The Committee's purpose is to oversee the accounting and financial reporting process of the Company, the audits of the Company's financial statements, the appointment, independence, performance and remuneration of the statutory auditors including the Cost auditors, the performance of internal auditors and the Company's risk management policies.
   
   
3. COMPOSITION :
   
   
   1. The Audit Committee shall comprise of three Directors as members of the Committee, out of which two thirds of the members will be independent. (The criteria of independence would be decided upon by the Board of Directors and in accordance with the Companies Act 2013, Rules made thereunder and such other legal and regulatory requirement that may be applicable to the Company).
      
      
   2. All members of Audit Committee shall be financially literate and at least one member to have accounting or related financial management expertise. “Financially literate” means the ability to read and understand the basic financial statement, as prescribed under the Companies Act 2013.
   
   
   3. The members of the Audit Committee shall elect a Chairperson from amongst themselves. The Chairperson of the Audit Committee shall be an Independent Director.
      
      
   4. The Chairperson of the Audit Committee shall be present at Annual General Meeting to answer shareholder queries.
      
      
   5. Board’s Report shall disclose the composition of Audit Committee.
      
      
4. SECRETARY
   
   The Chief Accountant shall act as Secretary to the Audit Committee.
   
   
5. MEETINGS :
   
   
   1. The Audit Committee shall meet at least Three (3) times in a year and not more than four (4) months shall elapse between two successive meetings.
      
      
   2. The Audit Committee shall meet periodically with management, the internal auditor and the external auditor as deemed fit by it.
      
      
   3. The Auditors, the Internal Auditor and Cost Auditors, and Financial Officer shall attend and participate at meetings of the Committee, if required. The Committee may invite such of the executives, as it considers appropriate, to be present at the meetings. The right to vote shall vest only with the members of the Committee.
      
      
   4. The auditors of the Company and key managerial personnel shall have a right to be heard in the meetings of the Audit Committee when it considers the auditor’s report but shall not have a right to vote.
      
      
6. QUORUM :
   
   The quorum necessary for transacting business at a meeting of the Committee shall be two members or one-third of the members of the Audit Committee, but there should be a minimum of two Independent Directors present at the meeting. A duly convened meeting of the Committee at which the requisite quorum is present shall be competent to exercise all or any of the authorities, powers and discretions vested in or exercisable by the Committee.
   
   
7. ANNUAL GENERAL MEETING
   
   The Chairman of the Committee shall attend the Annual General Meetings to answer shareholder queries and provide any clarifications on matters relating to audit.
   
   
8. POWERS OF THE AUDIT COMMITTEE
   
   The Committee shall act and have powers in accordance with the terms of reference specified in writing, by the Board, which shall include the following :-
   
   
   1. To investigate any activity within the scope of this Charter or referred to it by the Board and for this purpose, shall have full access to information contained in the books of accounts and the Company’s personnel
      
      
   2. To seek information from any employee or director of the Company, to perform its duties effectively and have direct access to such employee or director.
      
      
   3. To secure assistance and attendance of outsiders with relevant knowledge/expertise in accounting, legal or other matters, if it considers necessary.
      
      
   4. To engage independent counsel and other advisors as it deems appropriate to perform its duties and responsibilities.
      
      
   5. To approve appointment of CFO or any other person heading the finance function or discharging that function after assessing the qualifications, experience and background, etc. of the candidate.
      
      
9. ROLE OF AUDIT COMMITTEE
   
   The role of the Audit Committee shall include the following :
   
   
   1. Oversight of the Company’s financial reporting process and the disclosures of its financial information to ensure that the financial statement is correct, sufficient and credible;
      
      
   2. Recommendation for the appointment, remuneration and terms of appointment of auditors of the Company;
      
      
   3. Reviewing with the management, the annual financial statements and auditor’s report thereon before submission to the board for approval, with particular reference to:
      
      
      1. Matters required to be included in the Director’s Responsibility Statement to be included in the Board’s report in terms of clause (c) of sub-section 3 of Section 134 of the Companies Act, 2013.
         
         
      2. Changes, if any, in accounting policies and practices and reasons for the same.
         
         
      3. Major accounting entries involving estimates based on the exercise of judgment by management;
         
         
      4. Significant adjustments made in the financial statements arising out of audit findings;
         
         
      5. Compliance with listing and other legal requirements relating to financial statements;
         
         
      6. Disclosures of any related party transactions;
         
         
      7. Qualifications in the draft audit report.
         
         
   4. Reviewing, with the management, periodical financial statements before submission to the Board for approval;
      
      
   5. Reviewing, the adequacy of internal audit function including the structure of the internal audit department, staffing and seniority of the official heading the department, availability and deployment of resources to complete their responsibility and the performance of the out-sourced audit activity;
      
      
   6. Discussion with internal auditors/ internal audit head with respect to the coverage and frequency of internal audits as per the annual audit plan, nature of significant findings and follow up thereof;
      
      
   7. Reviewing, the findings of any internal investigation by the internal auditors into matters where there is suspected fraud or irregularity or a failure of internal control systems of a material nature and reporting the matter to the Board;
      
      
   8. Obtaining an update on the Risk Management Framework and the manner in which risks are being addressed;
      
      
   9. Discussion with the statutory auditors before the audit commences, about the nature and scope of audit as well as post-audit discussions to ascertain any area of concern;
      
      
   10. To review the functioning of the Whistle Blower Mechanism;
       
       
   11. Ensuring the minutes of each Audit Committee Meetings are placed before the Board for noting;
       
       
   12. Compliance with legal and regulatory requirements;
       
       
   13. Approval of appointment of CFO or any other person heading the finance function or discharging the function;
       
       
   14. Reviewing the following information :
       
       
       1. Management discussion and analysis of financial condition and results of operations;
          
          
       2. Statement of significant related party transactions (as defined by the Audit Committee), submitted by management;
          
          
       3. Management letters / letters of internal control weaknesses issued by the statutory auditors;
          
          
       4. Internal audit reports relating to internal control weaknesses; and
          
          
       5. The appointment, removal and terms of remuneration of the internal auditors
          
          
   15. Review the financial statements of subsidiary company.
       
       
   16. Carrying out any other function as is mentioned in the terms of reference of the Audit Committee or specifically asked to by the Board of Directors.
       
       
   17. Carrying out any other function as is mentioned in the terms of reference of the Audit Committee or specifically asked to by the Board of Directors.
       
       
10. WHISTLE BLOWING /VIGIL MECHANISM :
    
    The Committee shall review the company’s arrangement for its Directors/KMP’s & Employees to raise concerns in confidence, about possible wrongdoings in-
    
    
    1. Any Financial Matter (Material or otherwise);
       
       
    2. Accounting;
       
       
    3. Auditing;
       
       
    4. Other related matters.
       
       
    The mechanism shall provide adequate safeguards against victimization of persons who use such mechanism and make provisions for direct access to the Chairman of the Audit Committee in appropriate/ exceptional cases. The Committee to ensure that this arrangement allows independent enquiry/investigation of such matters and appropriate follow up action. In case of any conflict of interest, the Committee Member shall disassociate himself from such enquiry/investigation.
    
    
11. OTHER FUNCTIONS :
    
    
    1. Perform such other activities related to this Charter as requested / assigned by the Board of Directors.
       
       
    2. Carry out additional functions as is contained in any regulatory requirements applicable to the Company or in the terms of reference of the Audit Committee.
       
       
    3. Institute and oversee special investigations as and when needed.
       
       
12. REPORTS :
    
    The Audit Committee will record its summaries of recommendations to the Board which will be incorporated as a part of the minutes of the Board of Directors meeting. Where the Board has not accepted any recommendation of the Audit Committee, it shall disclose in the Board’s Report along with the reasons for it
    
    
13. EVALUATION
    
    
    1. Conduct an annual performance evaluation relative to the Audit Committee’s purpose, duties, responsibilities and effectiveness and recommend any changes it considers necessary for the approval of the Board of Directors.
       
       
    2. The Audit Committee may conduct such evaluation and reviews in such manner as it deems appropriate.
       
       
14. REVIEW OF AUDIT COMMITTEE CHARTER :
    
    The adequacy of this charter shall be reviewed and reassessed by the Audit Committee, at least, annually and appropriate recommendations shall be made to the Board to update the Charter based on the changes that may be brought about to the regulatory framework, from time to time.
    
    

(The Audit Committee Charter is approved by the Board on 31.3.2015)

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Regd. Office: 207, Kalbadevi Road, Mumbai 400 002, India     CIN: U15420MH1933PLC001918