THE MEMBERS OF
NATH PULP AND PAPER MILLS LIMITED
Report on the Financial Statements
We have audited the accompanying financial statements of NATH PULP AND PAPER MILLSLIMITED ("the Company) which comprise the Balance Sheet as at 31stMarch 2016 the Statement of Profit and Loss the Cash Flow Statement for the year endedand a summary of the significant accounting policies and other explanatory information.
Managements Responsibility for the Financial Statements
The Companys Board of Directors are responsible for the matters stated in Section134(5) of the Companies Act 2013 ("die Act") with respect to the preparation ofthese financial statements that give a true and fan- view of the financial positionfinancial performance and cash flows of the Company in accordance with the 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; 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 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 there under.
We conducted our audit in accordance with the Standards on Auditing specified underSection 143(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 misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts andthe disclosures in the financial statements. The procedures selected depend on theauditors judgment including the assessment of the risks of material misstatement ofthe financial statements whether due to fraud or error. In making those risk assessmentsthe auditor considers internal financial control relevant to the Companyspreparation of the financial statements that give a true and fair view in order to designaudit procedures that are appropriate in the circumstances. An audit also includesvaluating the appropriateness of the accounting policies used and the reasonableness ofthe accounting estimates made by the Companys Directors as well as evaluating theoverall 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.
Basis for qualified opinion
(a) The accumulated losses of the Company exceed its net worth. The financialstatements have however been prepared by the management on a going concern basis asexplained in Note No. 27.11 of notes on financial statements. Should however the Companybe unable to continue as a going concern the extent of effect of the resultantadjustments on the assets and liabilities as at the end of the year and profit afterexceptional items for the year has not been ascertained presently.
(b) In respect of inter-corporate Loans / Advances prima-facie the company has notcomplied with section 186 of the Act in as much as these are interest free loans forwhich approval of the financial institutions has not been obtained (Refer Note No. 27.09of notes on financial statements). Maximum amount outstanding during the year Rs.27184055 (as at 31st March 2015 Rs. 19977545) and amount outstanding as atthe close of the year Rs. 4549976 (as at 31st March 2015 Rs. 19284743)
(c) Default made by the Company in repayment of installments to Financial Institutionsand the right to revoke the concessions granted under the BIFR scheme and non-provision ofliability on account of interest/premium. Refer note no. 27.14.
(d) Recognition of overdue payment of the financial institutions as on 31stMarch 2016 as Long term borrowings instead of current liabilities as required underSchedule III.
(e) We Eire unable to express sin opinion as to when and to what extent the DeferredTax Assets recognized of Rs. 138539331 would reverse as there is no virtual certaintyas contemplated in Accounting StandEird (AS) 22 of "Account for Taxes on Income"issued by CompEmies (Accounting Standard) Rules 2006.
In our opinion and to the best of our information and according to the explanationsgiven to us except for the effects of the matter described in the Basis for QusdifiedOpinion paragraph above the aforesaid financial statements give the information requiredby the Act in the manner so required and give a true Etnd fsur view in conformity with theaccounting principles generally accepted in India of the state of affairs of the Companyas at 31st March 2016 and its loss and its cash flows for the year ended onthat date.
Report on Other Legal and Regulatory Requirements
1) As required by the CompEmies (Auditors Report) Order 2016 ("theOrder") issued by the CentrEd Government of India in Terms of sub section (11) ofsection 143 of the Act we give in the Annexure A a statement of the matters specified inthe paragraph 3 and 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 purposes of our audit.
(b) Except for the effects of the matter described in the Basis for Queilified OpinionpEiragraph above in our opinion proper books of account as required by law have beenkept by the CompEmy so far as it appeEirs from our examination of those books.
(c) The Balance Sheet the Statement of Profit and Loss and the Cash Flow Statementdealt with by this Report are in agreement with the books of account.
(d) Except for the effects of the matter described in the Basis for Qualified Opinionparagraph above in our opinion the aforesaid finEmcial statements comply with theAccounting StEmdEirds specified under Section 133 of the Act read with Rule 7of theCompanies (Accounts) Rules 2014.
(e) The matter described in the Basis for Qualified Opinion paragraph above in ouropinion may have an adverse effect on the functioning of the Company.
(f) On the basis of the written representations received from the directors as on 31stMarch 2016 taken on record by the Board of Directors none of the directors isdisqualified as on 31stMarch 2016 from being appointed as a director in termsof Section 164 (2) of the Act.
(g) The qualification relating to the maintenance of accounts and other mattersconnected therewith Eire as stated in the Basis for Qualified Opinion paragraphabove.
(h) 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 B" and
(i) With respect to the other matters to be included in the Auditors Report inaccordance with Rulel 1 of the Companies (Audit and Auditors) Rules 2014 in our opinionand to the best of our information Eind according to the explEmations given to us:
i. The Company has disclosed the impact of pending litigations on its financialposition in its financial statements -Refer Note 27.01 to the finEmcial statements;
| ||For R. B. Sharma & Co. |
| ||Chartered Accountants |
| ||F. R. No. 109971W |
|Place: Aurangabad ||CA Umesh Sharma M. No. 104605 |
|Date: - 30/05/2016 ||[Partner] |
Annexure A to the Auditors Report
The Annexure referred to in Independent Auditors Report to the members of NATHPULP AND PAPER MILLS LIMITED ("the Company") for the year Ended on 31stMarch 2016. We report that:
(i) (a) The company is maintaining proper records showing full particulars includingquantitative details and situation of fixed assets;
(b) These fixed assets have been physically verified by the management at reasonableintervals; no material discrepancies were noticed on such verification;
(c) According to the information and explanations given to us and on the basis of ourexamination of the records of the company the title deeds of immovable properties areheld in the name of the company.
(ii) The inventory has been physically verified by the management at reasonableintervals during the year. No material discrepancies were noticed on such verification;
(iii) The company has granted interest free unsecured loans to 2 bodies corporatecovered in the register maintained under section 189 of the Companies Act 2013 ("theAct").
a) In our opinion the terms and conditions on which the loans had been granted to thebodies corporates listed in the register maintained under section 189 of the Act were notprima facie prejudicial to the interest of the Company.
b) In the case of the loans granted to the bodies corporates listed in the registermaintained under section 189 of the Act the borrowers have been regular in the payment ofthe principal and interest as stipulated.
c) There are no overdue amounts in respect of the loan granted to a body corporatelisted in the register maintained under section 189 of the Act.
(iv) In our opinion and according to the information and explanation given to us thecompany has complied with the provisions of section 185 and 186 of the Act with respectto the loans and investment made.
(v) The company has not accepted any deposits from the public. Hence this clause is notapplicable.
(vi) We have broadly reviewed the cost records maintained by the company pursuant tothe order of the Central Government under sub-section (1) of section 148 of the CompaniesAct and are the opinion that prima facie the prescribed records have been made andmaintained. We are however not required to make a detailed examination of the recordswith a view to determine whether they are accurate or complete.
(vii) (a) The company is regular in depositing Custom Duty Excise Duty and otherapplicable Cesses. The company is hot regular in depositing undisputed statutory duesincluding provident fund income- tax sales-tax service tax value added tax and anyother statutory dues with the appropriate authorities. However there are statutory duesoutstanding as at the last day of the financial year concerned for a period of more thansix months Rs. 65096 for Employees Contribution to Provident Fund Rs. 66614 forEmployers Contribution to Provident Fund and Profession Tax Rs. 39752 from the datethey became payable.
(b) According to the records of the company there are no dues of income tax or salestax or service tax or duty of customs or duty of excise or value added tax or cess whichhave not been deposited on account of any dispute except the followings:
|Particulars ||Forum where the dispute is pending ||Amount Rs. ||Period to which the Amount Relates |
|Sales Tax ||Joint Commissioner of Sales Tax ||7353940 ||1989-1990 |
| ||(Appeal) Aurangabad. ||2568662 ||1990-1991 |
| || ||7444447 ||1991-1992 |
|Excise Duty ||Customs Excise & Service Tax Appellate Tribunal Mumbai. ||3244508 ||2006-2007 |
(viii) The Company has received sanctioned Rehabilitation scheme by Honble BIFRvide sanction order dt. 14/02/12. The Company has also received sanction of ModifiedRehabilitation Scheme by Honble BIFR on 01st July 2013. Considering thesame the Company has defaulted as at the year-end in repayment of dues to financialinstitutions. Reference is invited to Note No. 3 and 27.14 of notes to financialstatements.
(ix) The company did not raise any money by way of initial public offer or furtherpublic offer (including debt instrument) and term loans during the year. Accordinglyparagraph 3 (ix) of the order is not applicable.
(x) During the course of our examination of the books and records of the Companycarried out in accordance with the generally accepted auditing practices in India andaccording to the information and explanations given to us we have neither come across anyinstance of fraud on or by the Company noticed or reported during the year nor have webeen informed of such case by the management.
(xi) Managerial remuneration has been paid or provided in accordance with the requisiteapprovals mandated by the provisions of section 197 read with schedule V of the CompaniesAct.
(xii) As the Company is not a Nidhi company the provisions of the Nidhi Rules is notapplicable to the Company.
(xiii) All transaction with the related parties are in compliance with section 177 and188 of the Companies Act 2013. The details have been disclosed in the FinancialStatements etc. as required by the Accounting Standard.
(xiv) The company has not made any preferential allotment or private placement ofshares or fully or partly convertible debentures during the year under review.
(xv) The company has not entered into non-cash transactions with directors or personsconnected with him.
(xvi) The company is not required to be registered under section 45-IA of the ReserveBank of India Act 1934.
| ||For R. B. Sharma & Co. |
| ||Chartered Accountants FRN 109971W |
|Place: Aurangabad ||CA Umesh Sharma M. No. 104605 |
|Date: - 30/05/2016 ||[Partner] |
Annexure- B to the Auditors Report
Report on the Internal Financial Control under clause (i) of Sub-section 3 of section143 of the Companies Act 2013 ("the Act")
We have audited the internal financial control over financial reporting of NATH PULPAND PAPER MILLS LIMITED ("the Company") as of 31st March 2016 inconjunction with our audit of the financial statements of the Company for the year endedon that date.
Managements Responsibility for Internal Financial Controls
The Companys 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 (ICAT). These responsibilitiesinclude the design implementation and maintenance of adequate internal financial controlthat were operating effectively for ensuring the orderly and efficient conduct of itsbusiness including adherence of companys policies the safeguarding of its assetsthe prevention 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 Companys 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 issued by ICAI and deemedto be prescribed under section 143(10) of the Companies Act 2013 to the extentapplicable to an audit of internal financial controls both applicable to an audit ofinternal Financial Controls and both issued by the Institute of Chartered Accountants ofIndia. Those Standards and the Guidance Note require that we comply with ethicalrequirements and plan and perform the audit to obtain reasonable assurance about whetheradequate internal financial controls over financial reporting was established andmaintained and if such controls operated effectively in all material respects. Our auditinvolves performing procedures to obtain audit evidence about the adequacy of the internalfinancial controls system over financial reporting and their operating effectiveness. Ouraudit of internal financial controls over financial reporting included obtaining anunderstanding of internal financial controls over financial reporting assessing the riskthat a material weakness exists and testing and evaluating the design and operatingeffectiveness of internal control based on the assessed risk. The procedures selecteddepend on the auditor's judgment including the assessment of the risks of materialmisstatement 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 Company's internal financial controls systemover financial 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 authorizations ofmanagement and directors of the company; and (3) provide reasonable assurance regardingprevention or timely detection of unauthorized 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 future 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.
According to the information and explanations given to us and based on our audit thefollowing material weaknesses have been identified in the operating effectiveness of theCompany's internal financial controls over financial reporting as at March 31 2016:
a) The Companys internal financial controls over the reconciliation of financialinstitutions liabilities credit evaluation provisioning of interest and expensesthereof were not operating effectively which could potentially result in the Companyrecognizing revenue without establishing reasonable certainty of ultimate repayment ofliabilities.
A material weakness' is a deficiency or a combination of deficiencies ininternal financial control over financial reporting such that there is a reasonablepossibility that a material misstatement of the company's annual or interim financialstatements will not be prevented or detected on a timely basis.
In our opinion the Company has in all material respects maintained adequate internalfinancial controls over financial reporting as of March 31 2016 based on ''the internalcontrol over financial reporting criteria established by the Company considering theessential components of internal control stated in the Guidance Note on Audit of InternalFinancial controls Over Financial Reporting issued by the Institute of CharteredAccountants of India" and except for the possible effects of the material weaknessesdescribed above on the achievement of the objectives of the control criteria of theCompanys internal financial controls over financial reporting were operatingeffectively as of March 31 2016. We have considered the material weaknesses indentifiedand reported above in determining the nature timing and extent of audit tests applied inour audit of the March 31 2016 financial statements of the Company and these materialweaknesses does not affect our opinion on the financial statements of the Company.
R. B. Sharma & Co.
CA Umesh Sharma M.No. 104605