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Coral Newsprints Ltd.

BSE: 530755 Sector: Industrials
NSE: N.A. ISIN Code: INE715D01019
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Coral Newsprints Ltd. (CORALNEWSPRINT) - Auditors Report

Company auditors report

To the Members of Coral Newsprints Limited

Report on the Financial Statements

We have audited the accompanying financial statements of Coral Newsprints Limitedwhich comprise the Balance Sheet as at March 31 2015 and the Statement of Profit andLoss the Cash Flow statement for the year then ended and a summary of significantaccounting policies and other explanatory information.

Management's Responsibility for the Financial Statements

The Company's Board of Directors is responsible for the matters stated in section 135(5) of the Companies Act 2013 (the Act) with respect to the preparation and presentationof these financial statements that give a true and fair view of the financial positionfinancial performance & cash flows of the Company in accordance with the Accountingprinciples generally accepted in India including the Accounting Standards specified undersection of the Act read with Rule 7 of the Companies (Accounts) Rules 2014. Thisresponsibility also includes maintenance of adequate accounting records in accordance withthe provisions of the act for safeguarding the assets of the company and for preventingand detecting frauds and other irregularities; section and application of appropriateaccounting policies making judgment 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 statement that'sgive a true and fair view from material material misstatement whether due to fraud orerror.

Auditor's Responsibility

Our responsibility is to express an opinion on these financial statements based on ouraudit. We have taken into account the provisions of the Act the accounting & auditingstandards & the matters which are required to be included in the audit report underthe provisions of the Act & the Rules made thereunder.

We conducted our audit in accordance with the Standards on Auditing specified u/s 143sub-section 10 of the Act. Those Standards require that we comply with ethicalrequirements and plan and perform the audit to obtain reasonable assurance about whetherthe financial statements are free from material mis-statement.

An audit involves performing procedures to obtain audit evidence about the amounts anddisclosures in the financial statements. The procedures selected depend on auditor'sjudgment including the assessment of the risks of material mis-statement of the financialstatements whether due to fraud or error. In making those risk assessments the auditorsconsider internal financial controls relevant to the Company's preparation of thefinancial statements that gave a true & fair view in order to design audit proceduresthat are appropriate in the circumstances but not for the purpose of expressing anopinion. A whether the company has in place and adequate internal financial controlssystem over financial reporting and the operating effectiveness of such controls. An auditalso includes evaluating the appropriateness of accounting policies used and thereasonableness of the accounting estimates made by Company's Directors as well asevaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the financial statements.

Opinion

In our opinion and to the best of our information and according to the explanationsgiven to us the financial statements given the information required by the Act in themanner so required and give a true and fair view in conformity with the accountingprinciples generally accepted in India:

a) In the case of the Balance Sheet of the state of affairs of the Company as at March31 2015; b) In the case of Statement of the Profit and Loss of the loss of the Companyfor the year ended on that date; and c) In the case of the Cash Flow Statement of thecash flows for the year ended on that date.

Report on Other legal and Regulatory Requirements

1. As required by the Companies (Auditor's Report) Order 2015 issued by the CentralGovernment of India in terms of sub-section (11) of section 143 of the Act (hereinafterreferred to the "Order we give in the Annexure a statement on the matters specifiedin paragraphs 3 and 4 of the Order to the extent applicable.

2. 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 purpose 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 statement of Profit and Loss and Cash Flow Statement dealt withby this report are in agreement with the books of accounts.

d) in our opinion the aforesaid financial statements comply with the AccountingStandards specified u/s 133 of the Act read with Rule 7 of the Companies (Accounts)Rules 2014.

e) on the basis of written representations received from the directors as on March 312015 and taken on record by the Board of Directors none of the directors is disqualifiedas on March 31 2015 from being appointed as a director in terms of section 164(2) of theAct.

f) 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 too 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 Statement - Refer Note 28 to the Financial Statements.

ii) In our opinion and as per the information and explanations provides to us thecompany has not entered into any long term contracts including derivative contractsrequiring provision under applicable laws or Accounting Standards for materialforeseeable losses. and

iii) There were no amounts which were required to be transferred to the investorEducation and Protection fund by the Company.

ANNEXURE TO THE INDEPENDENT AUDITORS' REPORT

(Referred to paragraph 1 under section (Report on Other Legal and RegulatoryRequirements of our report of even date)

1.1 The Company is maintaining proper records showing full particulars includingquantitative details and situation of fixed assets.

1.2 All the fixed assets have been physically verified by the management at reasonableintervals and no material discrepancies were noticed on such verification.

2.1 As the company has not purchased / sold goods during the year nor is there anyopening stock requirement of reporting on physical verification of stocks or maintenanceof inventory records in our opinion does not arise.

3. As informed to us the company has not granted any loans secured or unsecured tocompanies firms or other parties covered in the register maintained under section 189 ofthe Companies Act. Accordingly the sub clauses (a) and (b) are not applicable to thecompany.

4. In our opinion and according to the information and explanations given to us thereis an adequate internal control system commensurate with the size of the company and thenature of its business for the purchase of inventories fixed assets and for the sale ofgoods and services. During the course of our audit we have not observed any continuingfailure to correct major weaknesses in the internal control system.

5 According to the information and explanations given to us the company has notaccepted any deposits in terms of directives issued by the Reserve Bank of India and theprovisions of sections 73 to 76 or any other relevant provisions of the Companies Act andthe rules framed there under.

6. According to the information and explanations given to us by the management thecompany is not engaged in the production of any such goods or provision of any suchservices for which the Central Government has prescribed particulars relating toutilization of material or labour or other items of cost. Hence the provisions of section148(1) of the Act do not apply to the company. Hence in our opinion no comment onmaintenance of cost records under section 148(1) of the Act is required.

7. The company is generally regular in depositing undisputed statutory dues includingprovident fund. Employees State Insurance. Income-tax Sales-tax Wealth-tax Service-taxduty of customs duty of excise Value Added Tax Cess and other statutory dues with theappropriate authorities except the company is irregular in depositing the previous yeardues related to provident fund and TDS with the appropriate authorities. However there isan arrear of Rs. 466994/- w.r.t Provident fund and Rs. 12374/- w.r.t TDS as on31-03-2015 and we have been informed that there were no other undisputed amounts payablefor a period of more than six months from the date they became payable.

7.2 According to the information and explanations given to us no undisputed amount ispayable in respect of Income-tax or Sales-tax or Wealth Tax or Service Tax or Duty ofcustoms or duty of excise or Value Added Tax or Cess as at 31st March 2015 except :

1. Income Tax (penalty) demand of Rs. 216322/- for the Asstt. year 1996-97 thematter for which is pending before Hon'ble Delhi High Court.

2. Income Tax (penalty) demand of Rs. 269105/- for the Asstt. Year 1995-96 thematter for which is pending before Hon'ble Delhi High Court.

3. Water Cess (UPPPCB) - Rs. 1389212/- pending before BIFR.

4. Sales Tax - Rs. 646883/- pending under appeal.

7.3 In our opinion and according to the information and explanations given to usthere were no amounts which were required to be transferred to the investor Education andProtection fund by the Company.

8. The accumulated losses of the company have exceeded fifty percent of its net worthat the end of the financial year under audit. The company has not incurred cash lossesduring the financial year covered by audit and as well as in the immediately precedingfinancial year.

9. According to the information and explanations given to us the company has notdefaulted in the repayment of dues to a financial institution :

a) Term Loan from PICUP has been settled for OTS (One Time Settlement) vide LetterDated-13.10.2011 for an amount of Rs.200 lacs. Against this the company has paid Rs 30lacs in FY 2011-12 and Rs 170.86 lacs till 31.03.2013 including finance charges.

b) As per letter dated 07.02.2013 received from PICUP the company has to pay RCCollection Charges @ 10% of OTS amount within one month's time as per the rules of thePICUP. The company has informed the PICUP that as per their information there are norecovery certificates pending against any of the Guarantors and requested them to issue NOobjection certificate but PICUP has requested No Due certificate from various Tehsils / DMin respect of dues against guarantors which are still awaited.

Due to above facts finalization of recovery of RC Collection charges is still pendingand hence no provision has been made in books of accounts.

c) The company had already paid OTS amount of UPFC loan in the previous years. Howeverin respect of the DADP interest demanded by UPFC (i.e. Rs. 51.83 lacs) vide its letterdated 24-03-2011 against which the Company has requested for a waiver of 75% vide itsletter dated 04.08.2011 in respect of which BIFR board has directed waiver of 50% of DADPdemand as per its order dated 23-05-2012.

Hence as per the BIFR Board's order DADP demand would comes out to Rs. 25.92 Lacs thecompany has already paid Rs 14.82 lacs till 31-03-2014 & Rs. 1.00 Lacs has been paidduring this financial year.

Further on the basis of BIFR direction the company has requested for a waiver of 50%of DADP amount vide letter dated 09-02-2013 but UPFC rejected the request vide letterdated 04-03-2013 stating that waiver cannot be granted as per approved guidelines of thecorporation.

However UPFC vide its letter dated 10-02-2014 has asked the company to submit fresh OTSwith 10% amount of outstanding principal as earnest money within 50 days of issue of thisletter.

The company has filed its objection against this letter & requested in follow theBIFR Order for waiver of 50% of DADP interest.

BIFR vide its order dated 12-11-2014 has approved the draft Rehabilitation Scheme ofthe company & waived of 50% of the DADP amounting which stood at Rs. 25.92 lacsagainst which the company has paid Rs. 15.82 lacs till 31-03-2015. Against this order ofBIFR the UPFC has approached AIFR & the matter is still under consideration.

d) No confirmation of closing balance was available in respect of interest due to UPFC& due to above facts no provision of DADP interest on UPFC loan was made in the booksof accounts during the year.

10) According to the information and explanations give to us the company has not givenany guarantee for loan taken by others from banks or financial institutions the terms andconditions whereof are prejudicial to the interest of the company.

11) According to the information and explanations given to us no terms loans wereobtained during the year under audit.

12) Based upon the Audit procedures performed and according to the information andexplanation given to us no fraud on or by the company has been noticed or reported duringthe year of our Audit.

For L.N. MALIK & CO
Chartered Accountants
Firm Reg. No:015992N
L.N. MALIK
Place : New Delhi Partner
Date : 29-05-2015 Membership No 10423

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