To the Members of Huhtamaki PPL Limited Report on the Financial Statements
We have audited the accompanying financial statements of Huhtamaki PPL Limited("the Company") which comprise the Balance Sheet as at 31stDecember 2016 the Statement of Profit and Loss and Cash Flow Statement for the year thenended and a summary of significant accounting policies and other explanatory informationin which are incorporated the financial information of erstwhile Positive PackagingIndustries Limited and Webtech Labels Private Limited (hereinafter referred to as"erstwhile Positive" and "erstwhile Webtech") for the year ended onthat date consequent to obtaining necessary regulatory approvals for their amalgamationinto the Company with effect from 1st April 2017 with the appointed date of30th January 2015 and 1st April 2015 respectively. This report isissued in supersession of our earlier report dated 21st February 2017 to theextent of matters stated in emphasis of matter paragraph below.
Management's Responsibility for the Financial Statements
The Company's Board of Directors is responsible for the matters stated in Section134(5) of the Companies Act 2013 ("the Act") with respect to the preparation ofthese financial statements that give a true and fair view of the financial positionfinancial performance and cash flows of the Company in accordance with accountingprinciples generally accepted in India including the Accounting Standards specified undersection 133 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 of the assets of the Company and for preventingand detecting frauds and other irregularities; selection and application of appropriateaccounting policies; making judgments and estimates that are reasonable and prudent; andthe design implementation and maintenance of adequate internal financial control thatwere operating effectively for ensuring the accuracy and completeness of the accountingrecords relevant to the preparation and presentation of the financial statements thatgive a true and fair view and are free from material misstatement whether due to fraud orerror.
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 and auditingstandards and matters which are required to be included in the audit report under theprovisions of the Act and the Rules made thereunder. We conducted our audit in accordancewith the Standards on Auditing issued by the Institute of Chartered Accountants of Indiaas specified under Section 143(10) of the Act. Those Standards require that we comply withethical requirements and plan and perform the audit to obtain reasonable assurance aboutwhether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts anddisclosures in the financial statements. The procedures selected depend on the auditor'sjudgment including the assessment of the risks of material misstatement of the financialstatements whether due to fraud or error. In making those risk assessments the auditorconsiders internal financial control relevant to the Company's preparation of thefinancial statements that give a true and fair view in order to design audit proceduresthat are appropriate in the circumstances. An audit also includes evaluating theappropriateness of accounting policies used and the reasonableness of the accountingestimates made by the Company's Directors as well as evaluating the overall presentationof the financial statements. We believe that the audit evidence we have obtained issufficient and appropriate to provide a basis for our audit opinion on the financialstatements.
In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid financial statements give the information required by the Actin the manner so required and give a true and fair view in conformity with the accountingprinciples generally accepted in India of the state of affairs of the Company as at 31stDecember 2016 its profit and its cash flows for the year ended on that date.
Emphasis of Matter
We draw attention to Note 50 to the financial statements. The financial statements ofthe Company for the year ended 31st December 2016 were earlier approved by theBoard of Directors at its meeting held on 21st February 2017. Those financialstatements have been revised by the Company so as to give effect to the Schemes ofArrangement for amalgamation under Sections 391 to 394 read with Sections 100 to 104 ofthe Companies Act 1956 and Section 52 of the Companies Act 2013 of erstwhile Positive(a wholly owned subsidiary) and erstwhile Webtech (a 51% owned subsidiary) into theCompany consequent to obtaining necessary regulatory approvals for their amalgamationwith effect from 1st April 2017 with the appointed date of 30thJanuary 2015 and 1st April 2015 respectively. As a result the aforesaidfinancial statements are revised by the Company to give effect to the said Scheme ofArrangement for amalgamation. Accordingly we are issuing this Revised Report on theRevised Financial Statements for the financial year ended 31st December 2016in supersession of the original report dated 21st February 2017 which herebystands withdrawn.
Our opinion is not modified in respect of these matters.
Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditor's Report) Order 2016 ("the Order")issued by the Central Government of India in terms of sub-section (11) of section 143 ofthe Act we give in the Annexure 1 a statement on the matters specified in paragraphs 3and 4 of the Order.
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 account;
(d) In our opinion the aforesaid financial statements comply with the AccountingStandards specified under section 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 31stDecember 2016 and taken on record by the Board of Directors none of the directors isdisqualified as on 31st December 2016 from being appointed as a director interms of section 164 (2) of the Act;
(f) With respect to the adequacy of the internal financial controls over financialreporting of the Company and the operating effectiveness of such controls refer to ourseparate Report in "Annexure 2" to this report;
(g) 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 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 financialposition in its financial statements Refer Note 32 to the financial statements;
ii. The Company did not have any long-term contracts including derivative contracts forwhich there were any material foreseeable losses;
iii. There has been no delay in transferring amounts required to be transferred tothe Investor Education and Protection Fund by the Company; and
iv. The Company has provided requisite disclosures in Note 52 to these financialstatements as to the holding of Specified Bank Notes on 8th November 2016 and30th December 2016 as well as dealings in Specified Bank Notes during theperiod from 8th November 2016 to 30th December 2016. Based on ouraudit procedures and relying on the management representation regarding the holding andnature of cash transactions including Specified Bank Notes we report that thesedisclosures are in accordance with the books of accounts maintained by the Company and asproduced to us by management.
For S R B C & CO LLP
ICAI Firm Registration Number: 324982E/E300003
per Vijay Maniar
Membership Number: 36738
Date: 20th April 2017
ANNEXURE TO THE AUDITORS' REPORT
ANNEXURE 1 REFERRED TO IN PARAGRAPH 1 UNDER THE HEADING "REPORT ON OTHER LEGAL ANDREGULATORY REQUIREMENTS" OF OUR REPORT OF EVEN DATE.
Re: Huhtamaki PPL Limited (the Company')
(i) (a) The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets.
(b) Fixed assets have been physically verified by the management during the year and nomaterial discrepancies were identified on such verification.
(c) According to the information and explanations given by the management the titledeeds of immovable properties other than self-constructed buildings included in fixedassets are held in the name of the Company except in case of immovable properties with agross block value of Rs. 3093.38 Lacs (net block Rs. 303.30 Lacs) as at 31stDecember 2016 acquired on account of amalgamation for which the Company is in theprocess of registering the title deeds in its name.
(ii) The management has conducted physical verification of inventory at reasonableintervals during the year and no material discrepancies were noticed on such physicalverification.
(iii) According to the information and explanations given to us the Company has notgranted any loans secured or unsecured to companies firms Limited LiabilityPartnerships or other parties covered in the register maintained under section 189 of theCompanies Act 2013. Accordingly the provisions of clause 3(iii) (a) (b) and (c) of theOrder are not applicable to the Company and hence not commented upon.
(iv) In our opinion and according to the information and explanations given to usthere are no loans investments guarantees or securities granted in respect of whichprovisions of section 185 and 186 of the Companies Act 2013 are applicable and hence notcommented upon.
(v) The Company has not accepted any deposits from the public.
(vi) We have broadly reviewed the books of account maintained by the Company pursuantto the rules made by the Central Government for the maintenance of cost records undersection 148(1) of the Companies Act 2013 related to manufacture and are of the opinionthat prima facie the specified accounts and records have been made and maintained. Wehave not however made a detailed examination of the same.
(vii) (a) Undisputed statutory dues including provident fund employees' stateinsurance income-tax sales-tax service tax duty of custom duty of excise value addedtax cess and other statutory dues have generally been regularly deposited with theappropriate authorities though there has been delay in one instance towards payment ofservice tax.
(b) According to the information and explanations given to us no undisputed amountspayable in respect of provident fund employees' state insurance income-tax service taxsales-tax duty of custom duty of excise value added tax cess and other statutory dueswere outstanding at the year end for a period of more than six months from the date theybecame payable.
(c) According to the records of the Company the dues of income-tax sales-tax servicetax duty of custom duty of excise value added tax and cess on account of any disputeare as follows:
|Name of Statute ||Nature of Dues ||Period to which the amount relates ||Forum where dispute is pending ||Amount Rs. In Lacs |
|Income Tax Act. 1961 ||Income Tax ||2001-2002 ||ITAT ||23 |
| || ||2007-2009 ||High Court ||67 |
| || ||2007-2014 ||CIT (Appeals) ||857 |
|State and Central Sales Tax Act ||VAT/CST ||2003-2005 ||Deputy Commissioner ||27 |
| || ||2007-2008 2010-2011 ||Joint Commissioner (Appeals) ||42 |
| || ||2011-2013 ||Deputy Commissioner (Appeals) ||96 |
| || ||2005-2008 ||Sales tax Appellate Tribunal ||34 |
|Finance Act 1994 - Service Tax ||Service Tax ||2007-2016 ||Commissioner (Appeals) ||130 |
| || ||2008-2014 ||Joint Secretary ||2 |
| || ||2008-2014 ||Customs Excise and Service Tax Appellate Tribunal ||8 |
|Central Excise Act 1944 ||Excise Duty ||1989-2014 ||Customs Excise and Service Tax Appellate Tribunal ||945 |
| || ||1997-2015 ||Commissioner (Appeals) ||41 |
| || ||1998-1999 ||Commissioner ||5 |
| || ||2008-2010 ||Joint Secretary ||4 |
| || ||2001-2006 ||High Court ||2 |
| || ||1998-1999 2004-2005 2009-2010 ||Deputy Commissioner ||3 |
|Customs Act 1962 ||Customs Duty ||2012-2013 ||Customs Excise and Service Tax Appellate Tribunal ||3 |
| || ||2005-2011 ||Commissioner (Appeals) ||26 |
(viii) In our opinion and according to the information and explanations given by themanagement the Company has not defaulted in repayment of loans or borrowing to afinancial institution bank or government or dues to debenture holders.
(ix) According to the information and explanations given by the management the Companyhas not raised any money by way of initial public offer / further public offer / debtinstruments and term loans hence reporting under clause (ix) is not applicable to theCompany and hence not commented upon.
(x) Based upon the audit procedures performed for the purpose of reporting the true andfair view of the financial statements and according to the information and explanationsgiven by the management we report that no fraud by the Company or no material fraud onthe Company by the officers and employees of the Company has been noticed or reportedduring the year.
(xi) According to the information and explanations given by the management themanagerial remuneration has been paid/ provided in accordance with the requisite approvalsmandated by the provisions of section 197 read with Schedule V to the Companies Act 2013.
(xii) In our opinion the Company is not a nidhi company. Therefore the provisions ofclause 3(xii) of the order are not applicable to the Company and hence not commented upon.
(xiii) According to the information and explanations given by the managementtransactions with the related parties are in compliance with section 177 and 188 ofCompanies Act 2013 where applicable and the details have been disclosed in the notes tothe financial statements as required by the applicable accounting standards.
(xiv) According to the information and explanations given to us and on an overallexamination of the balance sheet the Company has not made any preferential allotment orprivate placement of shares or fully or partly convertible debentures during the yearunder review and hence reporting requirements under clause 3(xiv) are not applicable tothe Company and hence not commented upon.
(xv) According to the information and explanations given by the management the Companyhas not entered into any non-cash transactions with directors or persons connected withhim as referred to in section 192 of Companies Act 2013.
(xvi) According to the information and explanations given to us the provisions ofsection 45-IA of the Reserve Bank of India Act 1934 are not applicable to the Company.
For S R B C & CO LLP
ICAI Firm registration number: 324982E/E300003
per Vijay Maniar
Membership Number: 36738
Date: 20th April 2017
ANNEXURE 2 TO THE INDEPENDENT AUDITOR'S REPORT OF EVEN DATE ON THE REVISED FINANCIALSTATEMENTS OF HUHTAMAKI PPL LIMITED
Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section143 of the Companies Act 2013 ("the Act")
We have audited the internal financial controls over financial reporting of HuhtamakiPPL Limited ("the Company") as of 31st December 2016 in conjunctionwith our audit of the financial statements of the Company for the year ended on that date.
Management's Responsibility for Internal Financial Controls
The Company's Management is responsible for establishing and maintaining internalfinancial controls based on the internal control over financial reporting criteriaestablished by the Company considering the essential components of internal control statedin the Guidance Note on Audit of Internal Financial Controls Over Financial Reportingissued by the Institute of Chartered Accountants of India. These responsibilities includethe design implementation and maintenance of adequate internal financial controls thatwere operating effectively for ensuring the orderly and efficient conduct of its businessincluding adherence to the Company's policies the safeguarding of its assets theprevention and detection of frauds and errors the accuracy and completeness of theaccounting records and the timely preparation of reliable financial information asrequired under the Companies Act 2013.
Our responsibility is to express an opinion on the Company's internal financialcontrols over financial reporting based on our audit. We conducted our audit in accordancewith the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting(the "Guidance Note") and the Standards on Auditing as specified under section143(10) of the Companies Act 2013 to the extent applicable to an audit of internalfinancial controls and both issued by the Institute of Chartered Accountants of India.Those Standards and the Guidance Note require that we comply with ethical requirements andplan and perform the audit to obtain reasonable assurance about whether adequate internalfinancial controls over financial reporting was established and maintained and if suchcontrols operated effectively in all material respects.
Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal financial controls system over financial reporting and their operatingeffectiveness. Our audit of internal financial controls over financial reporting includedobtaining an understanding of internal financial controls over financial reportingassessing the risk that a material weakness exists and testing and evaluating the designand operating effectiveness of internal control based on the assessed risk. The proceduresselected depend on the auditor's judgement including the assessment of the risks ofmaterial misstatement of the financial statements whether due to fraud or error.
We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the internal financial controls system overfinancial reporting.
Meaning of Internal Financial Controls Over Financial Reporting
A company's internal financial control over financial reporting is a process designedto provide reasonable assurance regarding the reliability of financial reporting and thepreparation of financial statements for external purposes in accordance with generallyaccepted accounting principles. A company's internal financial control over financialreporting includes those policies and procedures that (1) pertain to the maintenance ofrecords that in reasonable detail accurately and fairly reflect the transactions anddispositions of the assets of the company; (2) provide reasonable assurance thattransactions are recorded as necessary to permit preparation of financial statements inaccordance with generally accepted accounting principles and that receipts andexpenditures of the company are being made only in accordance with authorisations ofmanagement and directors of the company; and (3) provide reasonable assurance regardingprevention or timely detection of unauthorised acquisition use or disposition of thecompany's assets that could have a material effect on the financial statements.
Inherent Limitations of Internal Financial Controls Over Financial Reporting
Because of the inherent limitations of internal financial controls over financialreporting including the possibility of collusion or improper management override ofcontrols material misstatements due to error or fraud may occur and not be detected.Also projections of any evaluation of the internal financial controls over financialreporting to future periods are subject to the risk that the internal financial controlover financial reporting may become inadequate because of changes in conditions or thatthe degree of compliance with the policies or procedures may deteriorate.
In our opinion the Company has in all material respects an adequate internalfinancial controls system over financial reporting and such internal financial controlsover financial reporting were operating effectively as at 31st December 2016based on the internal control over financial reporting criteria established by the Companyconsidering the essential components of internal control stated in the Guidance Note onAudit of Internal Financial Controls Over Financial Reporting issued by the Institute ofChartered Accountants of India.
For S R B C & CO LLP
ICAI Firm Registration Number: 324982E/E300003
per Vijay Maniar
Membership Number: 36738
Date: 20th April 2017