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Shree Bhawani Paper Mills Ltd.

BSE: 502563 Sector: Industrials
NSE: N.A. ISIN Code: INE688C01010
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OPEN 3.99
PREVIOUS CLOSE 3.80
VOLUME 100
52-Week high 4.70
52-Week low 2.47
P/E
Mkt Cap.(Rs cr) 14
Buy Price 0.00
Buy Qty 0.00
Sell Price 3.99
Sell Qty 400.00
OPEN 3.99
CLOSE 3.80
VOLUME 100
52-Week high 4.70
52-Week low 2.47
P/E
Mkt Cap.(Rs cr) 14
Buy Price 0.00
Buy Qty 0.00
Sell Price 3.99
Sell Qty 400.00

Shree Bhawani Paper Mills Ltd. (SHBHAWANIPAP) - Auditors Report

Company auditors report

TO THE MEMBERS OF

SHREE BHAWANI PAPER MILLS LIMITED

Report on the Financial Statements

We have audited the accompanying financial statements of Shree Bhawani Paper Mills Ltd.("The Company") which comprise the Balance sheet as at 31st March 2016 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 preparationof these 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 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.

Auditor’s Responsibility

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 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 anddisclosures in the financial statements. The procedures selected depend on theauditor’s judgment including the assessment of the risks of material misstatement ofthe financial statements were due to fraud or error. In making those risk assessmentsthe auditor considers internal financial control relevant to the Company’spreparation of the financial statements that give true and fair view in order to designaudit procedures that are appropriate in the circumstances. An audit also includesevaluating the appropriateness of accounting policies used and the reasonableness of theaccounting estimates made by the Company’s 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 of Qualified Opinion

(a) As mentioned in Note No 40 of financial statements the balances of some of thetrade receivables trade payables lenders and loans and advances are subject toconfirmation/reconciliation and subsequent adjustments if any. As such we are unable toexpress any opinion as to the effect thereof on the financial statements for the year.

(b) As mentioned in Note No.42 of financial statements the Company became a sickindustrial company within the meaning of Section 3 (1) (O) of the Sick IndustrialCompanies (Special Provisions) Act 1985 (SICA) due to erosion of its entire net worth andthe Company was declared a sick industrial company by BIFR on 26th September 2013. Thesefactors along with other matters as set forth in the said note raise doubt that theCompany will be able to continue as a going concern. The Company has provided interest onTerm Loan and other Bank Loans of Indian Bank and Bank of Baroda @10.50% with effect from1st January 2013. Had the liability of interest been considered at the rate as sanctionedby the Banks the Loss for the year would have been Rs. 653863348/- as against thereported loss of Rs.513795177/-

(c) As mentioned in Note No.29 of financial statements the Company has not recognizedadditional net Deferred Tax Asset during the year. Net Deferred Tax Assets of Rs. 14crores was recognized for the year ended 31.03.2012 based on the future profitabilityprojections by the management. In the context of uncertainty of generation of profits innear future Deferred Tax Assets has not been recognized.

(d) As mentioned in Note No.33 of financial statements the Company has providedgratuity liability on estimated basis amounting to Rs.1113962/- (Previous YearRs.1422439/-). which is not in compliance with "Accounting Standard 15 - EmployeeBenefits" issued by The Institute of Chartered Accountants of India.

Opinion

In our opinion and to the best of our information and according to the explanationsgiven to us the financial statements give the information required by the Act in themanner 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 March31 2016 and its Loss and its cash flows for the year ended on that date.

Report on Other Legal and Regulatory Requirements

1. 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 we give in the Annexure-A a statement on the matters specified inparagraphs 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 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 at 31st March2016 and taken on record by the Board of Directors none of the Directors is disqualifiedas at 31st March 2016 from being appointed as a Director in terms of Section 164 (2) ofthe Act;

f. With respect to the adequacy of internal financial controls over financial reportingof the Company and the operating effectiveness of such controls refer to our separatereport in "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) Tthe Company has disclosed the impact of pending litigations on its financialposition in its financial statements-Refer Note no.23 .to the financial statements;

(ii) The Company has no long-term contracts as at 31st March 2016.

(iii) There has been no delay in transferring amounts required to be transferred tothe Investor Education and Protection Fund by the Company.

FOR P.L. GUPTA & CO.
CHARTERED ACCOUNTANTS
FIRM REGISTRATION NO. -011575C
PLACE: ALLAHABAD (P.L GUPTA)
DATE: 24TH MAY 2016 PARTNER
MEMBERSHIP NO. 009444

ANNEXURE-A

TO THE INDEPENDENT AUDITORS’ REPORT OF EVEN DATE ON FINANCIAL STATEMENT OF SHREEBHAWANI PAPER MILLS LIMITED

Referred to in paragraph 1 under the heading "Report on other Legal and RegulatoryRequirements" of our report of even date .

(i) (a) The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets.

(b) Some of the Fixed Assets were physically verified during the year by the managementin accordance with a program of verification which in our opinion provides for physicalverification of all fixed assets at reasonable intervals. According to information andexplanations given to us no material discrepancies were noticed on such verification.

(c) The title deeds of immovable properties are held in the name of the Company.

(ii) The inventory has been physically verified during the year by the management. Inour opinion the frequency of verification is reasonable.We are informed that thediscrepancies indentified on physical verification of inventories as compared to bookrecords were not material and have been properly dealt with in the books of account.

(iii) As informed to us the Company has not granted any loans secured or unsecured tocompanies firms or other parties covered in the register maintained under section 189 ofthe Act. Consequently the requirements of clauses (iii) (a) and (b) of paragraph 3 of theOrder are not applicable for the current year.

(iv) As informed to us the Company has not given any loans made investments givenguarantees and security to any person or party covered under section 185 and 186 of theCompanies Act 2013.

(v) The Company has not accepted any deposits from the public during the year under theprovisions of Companies Act 2013. As informed no order has been passed by the Company lawboard or National Company Law Tribunal or Reserve Bank of India or any court or any otherTribunal.

(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 Companies Act2013 in respect of the products of the Company. We have broadly reviewed the books ofaccount and records maintained by the company in this connection and are of the opinionthat prima facie the prescribed accounts and records have been made and maintained.However we have not made a detailed examination of the records with a view to determinewhether they are accurate or complete.

(vii) (a) According to the information and explanations given to us and records of theCompany examined by us undisputed statutory dues including provident fundemployees’ state insurance Income tax Sales Tax Service Tax duty of custom dutyof excise value added tax Cess and any other statutory dues have not been regularlydeposited with the appropriate authorities. Further details of such dues which wereoutstanding for a period of more than six months from the date they became payable are asfollows.

Name. of Statute Period to which amount relates Due Date Amount (Rupees) Date of payment
Employees State Insurance June 2013 to Sept. 2015 July 2013 to Oct. 2015 4873573 Not yet deposited
Employees Provident Fund Aug. 2012 to Sept. 2015 Sept. 2012 to Oct. 2015 22579526 Not yet deposited
Finance Act 1994 Service Tax Oct. 2013 to Sept. 2015 Nov. 2013 to Oct. 2015 541052 Not yet deposited
Income Tax Act 1961 TDS March 2014 to Sept. 2015 April 2014 to Oct. 2015 669737 Not yet deposited
Total 28663888

(b) According to the information and explanations given to us and records of theCompany the dues outstanding in respect of income tax Sales Tax Service Tax duty ofcustom duty of excise and value added tax on account of any dispute are as follows:

Name of Status Nature of the dues Amount Rs. Period to which amount relates Forum where dispute is pending Remarks if any
Commercial Tax Uttar Pradesh Penalty 28000/- 2012-13 Addl.Comm. Tax Allahabad Deposit under Protest
Commercial Tax Uttar Pradesh Penalty 88000/- 2012-13 Addl.Comm. Tax Allahabad Deposit under Protest
Commercial Tax Uttar Pradesh Penalty 53400/- 2012-13 Tribunal Comm. Tax Allahabad Deposit under Protest
Commercial Tax Uttar Pradesh Penalty 50000/- 2011-12 Tribunal Comm. Tax Allahabad Deposit under Protest
Commercial Tax Uttar Pradesh Central Sales Tax 648582/- 2009-10 Tribunal Comm. Tax Allahabad 2nd Appeal
Commercial Tax Uttar Pradesh Central Sales Tax 498560/- 2010-11 Tribunal Comm. Tax Allahabad 2nd Appeal
Commercial Tax Uttar Pradesh Central Sales Tax 2199000/- 2011-12 Addl. Comm. Tax Allahabad 1st Appeal
Commercial Tax Uttar Pradesh Central Sales Tax 719213/- 2012-13 Addl. Comm. Tax Allahabad 1st Appeal
Commercial Tax Uttar Pradesh Central Sales Tax 219371/- 2013-14 Addl. Comm. Tax Allahabad 1st Appeal
Commercial Tax Uttar Pradesh Value Added Tax 595235/- 2013-14 Addl. Comm. Tax Allahabad 1st Appeal
UP Tax on Entry of Good into Local Area Act 2007 Entry Tax 126473/- 2013-14 Addl. Comm. Tax Allahabad 1st Appeal
Total 5225834/-

(viii) According to the information and explanations given to us the Company hasdefaulted in repayment of loans or borrowings to banks. Details of such defaults are asfollows:

Name of Bank Period Installment Amount Period Interest Amount Total overdues as on 31st March 2016
Bank of Baroda T/L-III- July 2012 to March 2016 112500000/- August 2012 to March 2016 85483992/- 197983992/-
Bank of Baroda T/L-IV July 2012 to March 2016 11718750/- August 2012 to March 2016 8949865/- 20668615/-
Bank of Baroda T/L-V April 2013 to March 2016 31875000/- August 2012 to March 2016 42225597/- 74100597/-
Bank of Baroda WCTL April 2015 to March 2016 27142856/- August 2012 to March 2016 93794127/- 120936983/-
Bank of Baroda Corporate Loan April 2013 to March 2015 100000000/- August 2012 to March 2016 49359707/- 149359707/-
Indian Bank /T/L-III July 2012 to March 2016 112500000/- August 2012 to March 2016 80953750/- 193453750/-
Indian Bank T/L-IV July 2012 to March 2016 11718750/- August 2012 to March 2016 8299351/- 20018101/-
Indian Bank T/L-V April 2013 to March 2016 31875000/- August 2012 to March 2016 43069086/- 74944086/-
Indian Bank T/L-VI April 2014 to March 2016 40000000/- August 2012 to March 2016 78117963/- 118117963/-
Bank of Baroda (CC A/c) 179098257/-
Bank of Baroda Devolved LC 44076843/-
Indian Bank (CC A/c) 568745387/-
Indian Bank Guarantee 5819311/-
TOTAL 479330356/- 490253438/- 1767323592/-

(ix) The Company has not raised moneys by way of initial public offer or further publicoffer (including debt instruments) or term loans during the year. Accordingly theprovisions of clause 3 (ix) of the Companies (Auditor’s Report) Order 2016 are notapplicable.

(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) According to the information and explanations given to us managerial remunerationhas not been paid or provided during the year since remuneration has been foregone byDirectors.

(xii) The Company is not the Nidhi Company. Accordingly the clause 3 (xii) of theCompanies (Auditor’s Report) Order 2016 is not applicable.

(xiii) According to the information and explanations given to us all transactions withrelated parties are in compliance with Section 177 and 188 of the Companies Act 2013 andthe details have been disclosed in the Financial Statements as required by the applicableaccounting standards.

(xiv) According to the information and explanations given to us the Company has notmade any preferential allotment or private placement of shares or fully or partlyconvertible debentures during the year.

(xv) According to the information and explanations given to us the Company has notentered into any non cash transactions with directors or persons connected with themduring the year.

(xvi) According to the information and explanations given to us the Company is notrequired to be registered under Section 45-IA of the Reserve Bank of India Act 1934.

FOR P.L. GUPTA & CO.
CHARTERED ACCOUNTANTS
FIRM REGISTRATION NO. 011575C
PLACE: ALLAHABAD (P.L. GUPTA)
DATE : 24TH MAY 2016 PARTNER
Membership No. 009444

ANNEXURE- B

TO THE INDEPENDENT AUDITORS’ REPORT OF EVEN DATE ON FINANCIAL STATEMENTS OF SHREEBHAWANI PAPER MILLS 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 SHREEBHAWANI PAPER MILLS LIMITED ("the Company") as at 31st March 2016 inconjunction with our audit of the financial statements of the Company for the year endedon 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 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.

Auditor’s Responsibility

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 Institute ofChartered Accountants of India (ICAI) and deemed to be prescribed under section 143 (10)of the Companies Act 2013 to the extent applicable to an audit of internal financialcontrols both applicable to an audit of Internal Financial Controls and both issued bythe Institute of Chartered Accountants of India. Those Standards and Guidance Note requirethat we comply with ethical requirements and plan and perform the audit to obtainreasonable assurance about whether adequate internal financial controls over financialreporting was established and maintained and if such controls operated effectively in allmaterial respects. Our audit involves performing procedures to obtain audit evidence aboutthe adequacy of the internal financial controls system over financial reporting and theiroperating effectiveness. Our audit of internal financial controls over financial reportingincluded obtaining an understanding of internal financial controls over financialreporting assessing the risk that a material weakness exists and testing and evaluatingthe design and operating effectiveness of internal control based on the assessed risk. Theprocedures selected depend on the auditor’s judgment including the assessment of therisks of material 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 Company’s internal financial controlssystem over financial reporting.

Meaning of Internal Financial Controls Over Financial Reporting

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:

(1) Pertains to the maintenance of records that in reasonable detail accurately andfairly reflect the transactions and dispositions of the assets of the Company;

(2) 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

(3) Provide reasonable assurance regarding prevention or timely detection ofunauthorized acquisitions use or disposition of the company’s assets that couldhave 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 the compliance with the policies or procedures may deteriorate.

Opinion

In our opinion the Company has in all material respects and adequate internalfinancial controls system over financial reporting and such internal financial controlsover financial reporting were operating effectively as at 31st March 2016 based oninternal 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 Institute of CharteredAccountants of India.

FOR P.L. GUPTA & CO.
CHARTERED ACCOUNTANTS
FIRM REGISTRATION NO. 011575C
PLACE: ALLAHABAD (P.L. GUPTA)
DATE : 24TH MAY 2016 PARTNER
MEMBERSHIP NO. 009444