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 31st March2017 the Statement of Profit and Loss the Cash Flow Statement for the year ended and asummary of the significant accounting policies and other explanatory information.
Management's Responsibility for the Financial Statements
The Company's Board of Directors are 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 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 theauditor's judgment including the assessment of the risks of material misstatement of thefinancial statements whether due to fraud or error. In making those risk assessments theauditor considers 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 valuating theappropriateness of the 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 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. 28.11 Should however the Company be unable to continue as a goingconcern the extent of effect of the resultant adjustments on the assets and liabilitiesas at the end of the year and loss after exceptional items for the year has not beenascertained 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. Maximum amountoutstanding during the year Rs _________ (previous year Rs. 27184055) and amountoutstanding as at the close of the year Nil (previous year Rs. 4549976). Refer note no28.09
(c) The Company has defaulted in repayment of installment to the Financial Institutionsconsequently the Financial Institutions have a right to revoke the concessions grantedunder the Sanctioned Scheme by Hon'ble BIFR. Further the Company has not provided forliability on account of interest to the extent of Rs. 31932740/-.Refer note no. 28.13.
Had this observation made by us been considered the loss for the year would have beenRs. 180930984/- (as against reported loss figure of Rs. 148998244) accumulatedlosses would have been Rs 291614770/- (as against reported figure of Rs. 259682030)and secured loans under Long Term Borrowings would have been Rs. 521684568/- (asagainst reported figure of Rs.489751828/-) . (d) The Company has classified borrowingsof Rs. 270000000 payable to a Financial Institution as on 31st March 2017as Long Term Borrowings which ought to have been classified as Short Term borrowing asrequired under Schedule III of the Act. Refer Note no. 3.
(e) We are unable to express an opinion as to when and to what extent the Deferred TaxAssets recognized of Rs.195907053 would reverse as there is no virtual certainty ascontemplated in Accounting Standard (AS) 22 of "Account for Taxes on Income"issued by Companies (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 QualifiedOpinion paragraph above the aforesaid financial statements give the information requiredby the Act in the manner so required and give a true and fair view in conformity with theaccounting principles generally accepted in India of the state of affairs of the Companyas at 31st March 2017 and its loss and its cash flows for the year ended onthat date.
Emphasis of Matter
We draw attention to:-
Note No 28.07 to the financial statements which describes that Trade Payable TradeReceivable Deposits Loans and Advances are subject to confirmation and reconciliation.
Our opinion is not qualified 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 A a statement of the matters specified in the paragraph3 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 forthe effects of the matter described in the Basis for Qualified Opinion paragraph above inour opinion proper books of account as required by law have been kept by the Company sofar as it appears from our examination of those books. (c) The Balance Sheet theStatement of Profit and Loss and the Cash Flow Statement dealt with by this Report are inagreement with the books of account. (d) Except for the effects of the matter described inthe Basis for Qualified Opinion paragraph above in our opinion the aforesaid financialstatements comply with the Accounting Standards specified under Section 133 of the Actread with Rule 7of the Companies (Accounts) Rules 2014. (e) On the basis of the writtenrepresentations received from the directors as on 31st March 2017 taken on record by theBoard of Directors none of the directors is disqualified as on 31st March2017 from being appointed as a director in terms of Section 164 (2) of the Act. (f) Withrespect to the adequacy of the internal financial controls over financial reporting of thecompany and the operating effectiveness of such controls refer to our separate report in"Annexure B" and (g) With respect to the other matters to be included in theAuditor's Report in accordance with Rule11 of the Companies (Audit and Auditors) Rules2014 in our opinion and to the best of our information and according to the explanationsgiven to us: i. The Company has disclosed the impact of pending litigations on itsfinancial position in its financial statements Refer Note 28.01 to the financialstatements; ii.The Company does not have long term contracts or derivative contracts whichrequire provision. iii. There is no amount required to be transferred to investoreducation and protection fund.
For Gautam N Associates
F. R. No. 103117W
CA Gautam Nandawat
M. No. 032742
Date: - 30/05/2017
Annexure A to the Auditors' Report
The Annexure referred to in Independent Auditors' Report to the members of NATH PULPAND PAPER MILLS LIMITED ("the Company") for the year ended on 31stMarch 2017. We report that: (i) (a) The company is maintaining proper records showing fullparticulars including quantitative 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 two 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 corporate listed in the register maintained under section 189 of the Act were notprima facie prejudicial to the interest of the Company looking to long term businessexigencies/purposes.
b)In the case of the loans granted to the bodies corporate listed in the registermaintained under section 189 of the Act the borrowers have been regular in the payment ofthe principal 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 of the Act with respect to theloans and investment made except certain interest free loans given to the bodiescorporate.
(v) The Company has not accepted deposits within the meaning of sections 73 to 76 orany other relevant provisions of the Act and the rules framed there under.
(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 not 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 except the following which have notbeen deposited and are outstanding for a period of more than six months from the date theybecame payable at the close of the year.
|Name of the Statute ||Nature of the dues ||Amount (Rs.) |
|1 The Employees' Provident Funds and Miscellaneous Provisions Act 1952 ||Employees Contribution to Provident Fund ||65096 |
|2 The Maharashtra State tax on Professional Trades Calling and Employment Act 1975 ||Professional Tax ||36027 |
(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 ||Period to which the Amount Relates |
|Sales Tax ||Joint Commissioner of Sales Tax ||7353940 ||1989-1990 |
| ||(Appeal) Aurangabad. ||7444447 ||1991-1992 |
| || ||766900 ||2006-2007 |
| || ||1469710 ||2007-2008 |
| || ||1091057 ||2011-2012 |
|Excise Duty ||Customs Excise & Service Tax Appellate Tribunal Mumbai. ||3244508 ||2006-2007 |
|Service Tax ||Commissioner of Central Excise (Appeal) Nagpur ||1172414 ||July 2012- March 2015 |
(viii) In our opinion and according to the information and explanations given to usthe Company has not defaulted in payment of dues to bank or debenture holders except duesto the financial institutions. Refer Note no. 28.13.
(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 is 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 Gautam N Associates |
| ||Chartered Accountants FRN 103117W |
|Place: Aurangabad ||CA Gautam Nandawat M. No. 032742 |
|Date: - 30/05/2017 ||[Partner] |
Annexure-- - B to the Auditors' Report
Report on the Internal Financial Control under clause (i) of Sub-- -section 3 ofsection 143 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 2017 inconjunction with our audit of the financial statements of the Company for the year endedon that date.
Management'ss 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 (ICAI'). Theseresponsibilities include the design implementation and maintenance of adequate internalfinancial control that were operating effectively for ensuring the orderly and efficientconduct of its business including adherence of company's policies the safeguarding ofits assets the prevention and detection of frauds and errors the accuracy andcompleteness of the accounting records and the timely preparation of reliable financialinformation as required 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 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 Internalnternal 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.
In our opinion to the best of our information and according to the explanation givento us the Company has in all material respects an adequate internal financial controlssystem over financial reporting and such internal financial controls over financialreporting were operating effectively as at 31st March 2017 based on theinternal control over financial reporting criteria established by the company consideringthe essential components of internal control stated in the Guidance Note on Audit OfInternal Financial Controls Over Financial Reporting issued by the ICAI.
For Gautam N Associates Chartered Accountants FRN 103117W
Partner Membership No 032742
Dated: 30.05.2017 7 77