To the Members of
Rainbow Papers Limited
Report on the Financial Statements
We have audited the accompanying financial statements of RAINBOW PAPERS LIMITED("the Company") which comprise the Balance Sheet as at March 31 2017 theStatement of Profit and Loss and Cash Flow Statement for the year then ended and asummary of significant accounting 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 Section134(5) of the Companies Act 2013 ("the Act") with respect to the preparationand presentation of these financial statements that give a true and fair view of thefinancial position financial performance and cash flows of the Company in accordance withthe accounting principles generally accepted in India including the Accounting Standardsspecified under Section 133 of the Act read with Rule 7 of the Companies (Accounts)Rules 2014. This responsibility also includes maintenance of adequate accounting recordsin accordance with the provisions of the Act for safeguarding the assets of the Companyand for preventing and detecting frauds and other irregularities; selection andapplication of appropriate accounting policies; making judgments and estimates that arereasonable and prudent; and design implementation and maintenance of adequate internalfinancial controls that were operating effectively for ensuring the accuracy andcompleteness of the accounting records relevant to the preparation and presentation ofthe financial statements that give a true and fair view and are free from materialmisstatement whether due to fraud or error.
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 but not for the purpose of expressing anopinion on whether the Company has in place an adequate internal financial controls systemover financial reporting and the operating effectiveness of such controls.
An audit also includes evaluating the appropriateness of the accounting policies usedand the reasonableness of the accounting estimates made by the Company's Directors aswell as evaluating the overall presentation of the financial statements.
We broadly believe that the audit evidence we have obtained is sufficient andappropriate to provide a basis for our audit opinion.
1. We draw attention to Note No. 36 of the accompanying financial statements in respectof non-provision of interest on NPA accounts of banks of Rs.143.31 Crore. The exactamounts of the said non provisions are not determined and accounted by the company.
In our opinion and to the best of our information and according to the explanationsgiven to us subject to accounting of Inter-division transfer as sales and materialamounting to Rs. 26.80 Lacs and further read with the notes to accounts the aforesaidfinancial statements give the information required by the Act in the manner so requiredand give a true and fair view in conformity with the accounting principles generallyaccepted in India of the state of affairs of the Company as at March 31 2017its loss andits cash flows for the year ended on that date.
Matter of Emphasis:
1. We draw attention to Note No. 35(a)&(e) of the accompanying Financial Statementin respect of Winding up Notices and Notices under the Securitization and Reconstructionof Financial Assets and Enforcement of Security Interest Act 2002 (SARFAESI Act 2002).
2. We draw attention to Note No. 28(a)&(e) of the accompanying Financial Statementin respect of the accounts of Loan Liabilities & borrowings Current liabilitiesTrade receivables Loans and advances given (Including Advance for Land) Balance withRevenue Authority Statutory Dues Long outstanding advances for Capital Goods and Variousother Advances are subject to confirmation from the respective parties.
3. We draw attention to Note No. 38 of the accompanying Financial Statement in respectof assignment/treatment of Debts by Axis Bank.
4. We draw attention to Note No. 41(g) of the accompanying Financial Statement inrespect of cancellation of VAT and CST Number.
5. We draw attention to Note No. 40 of the accompanying Financial Statement in respectof cessation of production on account of Non-Supply of Electricity determination of statusof Impairment of the Assets of the company and further in view of various points under theHead "Matter of Emphasis" the going concern of the company is seriouslyaffected.
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 on the basis of information given to us we give in the Annexure A statement onthe matters specified in the paragraph 3 and 4 of the Order to the extent applicable forthe year under consideration.
2. As required by Section 143 (3) of the Act we broadly report (except otherwisestated) 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) 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 the statement of profit and loss and the cash flow statementdealt with by 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 the written representations received from the directors as on 31March 2017 taken on record by the Board of Directors none of the directors isdisqualified as on 31 March 2017 from being appointed as a director in terms of Section164 (2) of the Act;
(f) With respect to adequacy of the internal financial controls over the financialreporting of the company and the operating effectiveness of such controls refer to ourseparate report in Annexure-B; and
(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;
ii. there are no long term contracts including derivative contracts and accordingly noprovision is required to be made for any loss from the same;
iii. There is no fund which is pending to be transferred to the Investor Education andProtection Fund by the Company; and
iv. The Company has provided requisite disclosures in note-32 to these financialstatements as to the holding of Specified Bank Notes on November 8 2016 and December 302016 as well as dealings in Specified Bank Notes during the period from November 8 2016and December 30 2016. Based on our audit procedures and relying on the managementrepresentation regarding the holding and nature of cash transactions including SpecifiedBank Notes we report that these disclosures are in accordance with the books of accountmaintained by the Company and as produced to us by the Management.
| ||For Mehta Lodha & Co. |
| ||Chartered Accountants |
| ||Firm Regn No: 106250W |
|Place : Ahmedabad ||(Prakash D. Shah) |
|Date : 30th May 2017 ||(Partner) |
| ||Membership No:34363 |
ANNEXURE - B TO THE INDEPENDENT AUDITOR'S REPORT[ANNEXURE B REFERRED TO IN PARAGRAPH 2OF REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENT OF OUR REPORT OF EVEN DATE FOR THEYEAR
ENDED ON 31ST MARCH 2017]
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 RainbowPapers Limited ("the Company") as of 31 March 2017 in conjunction with ouraudit 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 ('ICAI'). These responsibilitiesinclude the design implementation and maintenance of adequate internal financial controlsthat were operating effectively for ensuring the orderly and efficient conduct of itsbusiness including adherence to 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 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 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 judgment including the assessment of the risks ofmaterial misstatement of the financial statements whether due to fraud or error. Webelieve that the audit evidence we have obtained is sufficient and appropriate to providea basis for our audit opinion on the Company's 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 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 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 except otherwise stated orreported to the management an adequate internal financial controls system over financialreporting and such internal financial controls over financial reporting were operatingeffectively as at 31 March 2017 based on the internal control over financial reportingcriteria established by the Company considering the essential components of internalcontrol stated in the Guidance Note on Audit of Internal Financial Controls Over FinancialReporting issued by the Institute of Chartered Accountants of India.
| ||For Mehta Lodha & Co. |
| ||Chartered Accountants |
| ||Firm Regn No: 106250W |
|Place : Ahmedabad ||Prakash D. Shah |
|Date : 30th May 2017 ||(Partner) |
| ||Membership No:34363 |