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Rainbow Papers Ltd.

BSE: 523523 Sector: Industrials
NSE: RAINBOWPAP ISIN Code: INE028D01025
BSE LIVE 15:40 | 18 Aug 4.15 0.03
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NSE 15:43 | 18 Aug 4.30 0.10
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OPEN 4.24
PREVIOUS CLOSE 4.12
VOLUME 42148
52-Week high 6.20
52-Week low 1.94
P/E
Mkt Cap.(Rs cr) 44
Buy Price 4.16
Buy Qty 500.00
Sell Price 0.00
Sell Qty 0.00
OPEN 4.24
CLOSE 4.12
VOLUME 42148
52-Week high 6.20
52-Week low 1.94
P/E
Mkt Cap.(Rs cr) 44
Buy Price 4.16
Buy Qty 500.00
Sell Price 0.00
Sell Qty 0.00

Rainbow Papers Ltd. (RAINBOWPAP) - Auditors Report

Company auditors report

To the Members of Rainbow Papers Limited

Report on the Standalone Financial Statements

We have audited the accompanying standalone financial statements of RAINBOW PAPERSLIMITED ("the Company") which comprise the Balance Sheet as at March 312016 the Statement of Profit and Loss and Cash Flow Statement for the year then endedand a summary of significant accounting policies and other explanatory information.

Management’s Responsibility for the Standalone 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 standalone financial statements that give a true and fair viewof the financial position financial performance and cash flows of the Company inaccordance with the accounting principles generally accepted in India including theAccounting Standards specified under Section 133 of the Act read with Rule 7 of theCompanies (Accounts) Rules 2014. This responsibility also includes maintenance ofadequate accounting records in accordance with the provisions of the Act for safeguardingthe assets of the Company and for preventing and detecting frauds and otherirregularities; selection and application of appropriate accounting policies; makingjudgments and estimates that are reasonable and prudent; and design implementation andmaintenance of adequate internal financial controls that were operating effectively forensuring the accuracy and completeness of the accounting records relevant to thepreparation and presentation of the Standalone financial statements that give a true andfair view and are free from material misstatement whether due to fraud or error.

Auditor’s Responsibility

Our responsibility is to express an opinion on these standalone financial statementsbased on our audit. We have taken into account the provisions of the Act the accountingand auditing standards and matters which are required to be included in the audit reportunder the provisions 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 Standalone financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts andthe disclosures in the Standalone financial statements. The procedures selected depend onthe auditor’s judgment including the assessment of the risks of materialmisstatement of the Standalone financial statements whether due to fraud or error. Inmaking those risk assessments the auditor considers internal financial control relevantto the Company’s preparation of the Standalone financial statements that give a trueand fair view in order to design audit procedures that are appropriate in thecircumstances but not for the purpose of expressing an opinion on whether the Company hasin place an adequate internal financial controls system over financial reporting and theoperating 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 Directorsas well as evaluating the overall presentation of the Standalone financial statements.

We broadly believe that the audit evidence we have obtained is sufficient andappropriate to provide a basis for our audit opinion.

Matter of Emphasis:

1. We draw attention to Note No. 37 of the accompanying Standalone Financial statementsin respect of non-provision of interest on NPA accounts of banks of Rs 2858.69 Lakhs. Theexact amounts of the said non provisions are not determined and accounted by the company.

2. We draw attention to Note No. 36 of the accompanying Standalone 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).

3. We draw attention to Note No. 30(a) of the accompanying Standalone FinancialStatement relating to third party balance confirmation.

4. We draw attention to Note No. 30(e) of the accompanying Standalone FinancialStatement in respect of higher depreciation on account of revision of useful liferesulting into higher depreciation of Rs 5012.56 Lakhs for the year under consideration.

Opinion

In our opinion and to the best of our information and according to the explanationsgiven to us read with the notes to accounts the aforesaid standalone financial statementsgive the information required by the Act in the manner so required and give a true andfair view in conformity with the accounting principles generally accepted in India of thestate of affairs of the Company as at 31 March 2016.

Report on Other Legal and Regulatory Requirements

As required by the Companies (Auditor’s Report) Order 2016 ("theOrder") issued by the Central Government of India in terms of sub-section (11) ofsection 143 of the Act on the basis of information given to us by the company we give inthe Annexure A statement on the matters specified in the paragraph 3 and 4 of theOrder to the extent applicable for the year under consideration.

2. As required by Section 143 (3) of the Act except otherwise stated we broadlyreport 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 standalone financial statements comply with theAccounting Standards specified under Section 133 of the Act read with Rule 7 of theCompanies (Accounts) Rules 2014;

(e) On the basis of the written representations received from the directors as on 31March 2016 taken on record by the Board of Directors none of the directors isdisqualified as on 31 March 2016 from being appointed as a director in terms of Section164 (2) of the Act; and

(f) With respect to adequacy of the internal financial controls over the financialreporting of the company and the operating effectiveness of such controls refers to ourseparate report in a Annexure-B

(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 Standalone 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; and

iii. There is no fund which is pending to be transferred to the Investor Education andProtection Fund by the Company.

For Mehta Lodha & Co.
Chartered Accountants
Firm Regn No: 106250W
Place : Ahmedabad (Prakash D. Shah)
Date : 30th May 2016 (Partner)
Membership No:34363

ANNEXURE A TO THE INDEPENDENT AUDITOR’S REPORT

[ANNEXURE A REFERRED IN OUR REPORT OF EVEN DATE TO THE MEMBERS OF RAINBOW PAPERSLIMITED FOR THE YEAR ENDED ON 31ST MARCH 2016]

i. (a) The Company maintain records showing full particulars including quantitativedetails and situation of fixed assets however the company is in the process of updatingthe fixed assets register in respect of addition made during the year and deprecation forthe year.

(b) As informed to us the fixed assets are physically verified by the Management atregular intervals however during the year no physical verification is undertaken by thecompany and therefore we are unable to comment on any discrepancies between the recordsand physical verification.

(c) As informed to us and on the basis of the records of the company the title deedsof immovable properties as disclosed in Note 12 on fixed assets to the Standalonefinancial statements are held in the name of the Company.

ii. The physical verification of inventory has been conducted at reasonable intervalsby the Management during the year. The various discrepancies noticed on physicalverification of inventory as compared to book records were material and have beenappropriately dealt with in the books of accounts.

iii. The Company has not granted any loans secured or unsecured to companies firms orother parties covered in the register maintained under section 189 of the Companies Act2013 (‘the Act’) and accordingly the para iii (a) (b) and (c) of the Order arenot applicable.

iv. In our opinion and according to the information and explanations given to us theCompany has complied with the provisions of Section 185 and 186 of the Companies Act 2013in respect of the loans and investments made and guarantees and security provided by itduring the year.

v. The Company has not accepted any deposits from the public (Other than exempteddeposit) within the meaning of Sections 73 74 75 and 76 of the Act and the Rules framedthere under to the extent notified.

vi. Pursuant to the rules made by the Central Government of India the Company isrequired to maintain cost records as specified under Section 148(1) of the Act in respectof its products and we have been informed that the same are maintained and the company isin process of updating the same.

vii. (a) According to the information and explanations given to us and the records ofthe Company examined by us in our opinion the Company is not regular in depositingundisputed statutory dues including provident fund employees’ state insurancePension Fund income tax service tax duty of customs duty of excise cess and othermaterial statutory dues as applicable with the appropriate authorities.There areundisputed amounts payable in respect of above dues which were in arrears as at 31st March2016 for a period of more than six months from the date they became payable.

Name of the statute Nature of dues Rs. In Lacs* Periods to which amount relates
Employee Provident Fund Provident Fund 187.56 From October -14 to August 2015
Professional Tax Professional Tax 8.42 From March-2015 to August 2015
Finance Act 1994 Service Tax 63.63 May 2015 to August 2015
Central Sales Tax Act1956 Central Sales Tax / 27.63 2014-15
Value Added Tax 1.48 April 2015 to August 2015
Commission of Electricity Board Electricity Duty Payable 1000.87 From April 2012 to August 2015
Income Tax Act 1961 Tax Deducted as Source 73.91 March 2015 to August 2015
Dividend Distribution Tax 72.21 Asstt. Year 2014-15 and Asstt. Year 2015-16

*In absence of evidence if any payments made during the year are apportioned on FIFObasis to determine the above outstanding liabilities. Further the amount of interest onthe above outstanding amount and the penalty thereon are not included in the aboveamounts.

(b) According to the information and explanations given to us and the records of theCompany produced for our verification following are the details of outstanding dues inrespect of followings which have not been deposited on account of any dispute:-

Name of the statute Nature of dues Rs. In Lacs dispute not yet deposited As on 31st March 2015 Periods to which the amount relates (F.Y) Forum where the dispute is pending
Income Tax Act 1961 Income Tax 1.92 Asstt. Year 2009-10 2011-12 Hon’ble Income Tax Appellate Tribunal
Income Tax Act 1961 Income Tax 191.35 Asstt.Year 2012-13 Hon’ble Income Tax Appellate Tribunal
Custom Act 1975 Custom Duty 238.96 F.Y. 2007-08 F.Y. 2008-09 & F.Y. 2012-2013 Office of the Commissioner of Customs

viii. According to the records of the Company examined by us and the information andexplanation given to us the Company has defaulted in repayment of loans or borrowings tofinancial institution and bank as at the balance sheet date. Details of which are asbelow:

Particulars Name of Lender Amount of Default as on 31/03/2016*(Rs in Lacs) Period of Default
Principal Interest Total
Financial IFCI Limited 600.00 1090.06 1690.06 Oct 2015
Institutions Tourism Finance Corporation of India Limited 2000.00 120.55 2120.55 Interest Default from Nov 2015 and Principal from March 2016
Banks Union Bank of India 600.00 0.00 600.00 Nov 2015
Indian Overseas Bank 1600.00 225.09 1825.09 Interest from December 2015 and Principal from March 2016
Axis Bank 1536.00 344.87 1880.87 January 2016
Allahabad Bank 0.00 205.65 205.65 October 2015
Total 6336.00 1986.22 8322.22

*The above table does not include the interest which bank has not provided after theaccount has been classified Non Performing Assets.

ix. In our opinion and according to the information and explanations given to usduring the year company has not raised money by way of term loan. Accordingly theprovisions of Clause 3(ix) of the Order are not applicable to the Company.

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 material fraud by the Company or on the Company by its officers or employeesnoticed or reported during the year nor have we been informed of any such case by theManagement.

xi. The Company has paid / provided for managerial remuneration in accordance withprovisions of section 197 of the Companies Act 2013.

xii. As the Company is not a Nidhi Company and the Nidhi Rules 2014 are not applicableto it the provisions of Clause 3(xii) of the Order are not applicable to the Company.

xiii. The Company has entered into transactions with related parties in compliance withthe provisions of Sections 177 and 188 of the Act. The details of such related partytransactions have been disclosed in the Standalone financial statements as required underAccounting Standard (AS) 18 Related Party Disclosures specified under Section 133 of theAct read with Rule 7 of the Companies (Accounts) Rules 2014.

xiv. The Company has not made any preferential allotment or private placement of sharesor fully or partly convertible debentures during the year under review. Accordingly theprovisions of Clause 3(xiv) of the Order are not applicable to the Company.

xv. The Company has not entered into any non cash transactions with its directors orpersons connected with him. Accordingly the provisions of Clause 3(xv) of the Order arenot applicable to the Company.

xvi. The Company is not required to be registered under Section 45-IA of the ReserveBank of India Act 1934. Accordingly the provisions of Clause 3(xvi) of the Order are notapplicable to the Company.

For Mehta Lodha & Co.
Chartered Accountants
Firm Regn No: 106250W
Place : Ahmedabad Prakash D. Shah
Date : 30th May 2016 (Partner)
Membership No:34363

Annexure B of the Independent Auditors’ Report of even date to the members ofRainbow Papers Limited on the standalone financial statements for the year ended March 312016.

Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section143 of the Act

1. We have audited the internal financial controls over financial reporting of RainbowPapers Limited ("the Company") as of March 31 2016 in conjunction with ouraudit of the standalone financial statements of the Company for the year ended on thatdate.

Management’s Responsibility for Internal Financial Controls

2. The Company’s management is responsible for establishing and maintaininginternal financial controls 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 (ICAI). Theseresponsibilities include the design implementation and maintenance of adequate internalfinancial controls that were operating effectively for ensuring the orderly and efficientconduct of its business including adherence to company’s policies the safeguardingof its 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 Act.

Auditors’ Responsibility

3. 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 deemed to be prescribed undersection 143(10) of the Act to the extent applicable to an audit of internal financialcontrols both applicable to an audit of internal financial controls and both issued bythe ICAI. 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.

4. Our audit involves performing procedures to obtain audit evidence about the adequacyof the 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.

5. 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 controlssystem over financial reporting.

Meaning of Internal Financial Controls Over Financial Reporting

6. A company’s internal financial control over financial reporting is a processdesigned to provide reasonable assurance regarding the reliability of financial reportingand the preparation of financial statements for external purposes in accordance withgenerally accepted accounting principles. A company’s internal financial control overfinancial reporting includes those policies and procedures that

(a) pertain to the maintenance of records that in reasonable detail accurately andfairly reflect the transactions and dispositions of the assets of the company;

(b) provide reasonable assurance that transactions are recorded as necessary to permitpreparation of financial statements in accordance with generally accepted accountingprinciples and that receipts and expenditures of the company are being made only inaccordance with authorisations of management and directors of the company; and

(c) provide reasonable assurance regarding prevention or timely detection ofunauthorized acquisition use or disposition of the company’s assets that could havea material effect on the financial statements.

Inherent Limitations of Internal Financial Controls Over Financial Reporting

7. 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.

Opinion

8. In our opinion the Company has in all material respects except otherwise statedin the financial statement an adequate internal financial controls system over financialreporting and such internal financial controls over financial reporting were operatingeffectively as at March 31 2016 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 2016 (Partner)
Membership No:34363