To the Members of M/s. Sree Sakthi Paper Mills Limited Kochi.
Report on the Financial Statements
We have audited the accompanying financial statements of M/s. Sree Sakthi Paper MillsLimited Kochi which comprises of:-
(a) The Balance Sheet as at 31st March 2017
(b) The Statement of Profit and Loss for the year ended 31st March 2017
(c) Cash Flow Statement for the year ended 31st March 2017 and
(d) A Summary of 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 specifiedunderSection 133 of the Act read with Rule 7 of 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.
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 accordancewith the Standards on Auditing specified under Section 143(10) of the Act. Those Standardsrequire that we comply with ethical requirements and plan and perform the audit to obtainreasonable assurance about whether the financial statements are free from materialmisstatement.
An audit involves performing procedures to obtain audit evidence about the amounts anddisclosures in the financial statements. The procedures selected depend on the auditor'sjudgment including the assessment of the risks of material misstatement of the financialstatements whether due to fraud or error. In making those risk assessments the auditorconsiders 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 alsoincludes evaluating the appropriateness of accounting policies used and the reasonablenessof the accounting estimates made by Company's Directors as well as evaluating the overallpresentation of the financial statements. We believe that the audit evidence we haveobtained is sufficient and appropriate to provide a basis for our audit opinion on thefinancial statements.
In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid financial statements give the information required by the Actin the manner 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 2017; and its LOSS and its cash flows for the year ended 31st March 2017.
Emphasis of Matter
We invite the attention of the users to-
(a) Note No. 2 of the Significant Accounting Policies regarding the validity of GoingConcern Assumption for the year covered by the financial statements;
(b) Note No. 9(b) of the Significant Accounting Policies regarding treatment/disclosureof interest expense on buyers credit in line with to Accounting Standard (AS) 11 TheEffects of Changes in Foreign Exchange Rates (Revised 2003)';
(c) Note No. 15(1) and (4) of the Significant Accounting Policies regarding lack ofexternal confirmation for the receivables and payables and non-provision of retrenchmentcompensation payable to employees if any respectively.
Our report is not qualified in respect of the above matters.
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 to the extent applicable.
2) As required by section 143(1) of the Act we report that:
During the year 130597 units of ICICI Prudential Fund costing Rs 30.01 lakhs125646 units of L & T Mutual Fund costing Rs 30 lakhs and 23286 units of UTI MasterGrowth Fund costing Rs 10 lakhs were sold at Rs 17.93 lakhs Rs 21.01 lakhs and Rs 7.40lakhs respectively. Accordingly all investments were sold at a price below the cost.
3) 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 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 Companies Act 2013 read with Rule 7 ofCompanies (Accounts) Rules 2014 except for the effect of accounting treatmentspecified in Note No. 9(b) of the Significant Accounting Policies of the FinancialStatements.
e) On the basis of written representations received from the directors as on March 312017 and taken on record by the Board of Directors none of the directors is disqualifiedas on March 31 2017 from being appointed as a director in terms of sub-section (2) ofsection 164 of the Companies Act 2013.
f) The report on internal financial control as required under clause(i) of sub section3 of section 143 of the Companies Act 2013 is attached as Annexure B.
g) With respect to other matters to be included in the Auditors Report in accordancewith Rule 11 of Companies (Audit and Auditors) Rules 2014 in our opinion and to the bestof 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. The company has made provisions as required under any law or accounting standardfor material foreseeable losses.
Hi. Unpaid dividend relating to financial year 2008-09 amounting to Rs. 1.50 lakhswerenot transferred to Investor Education And Protection Fund as on 31.03.2017. The amount wassubsequently transferred on 04.05.2017.
iv. The company has provided requisite disclosures in its financial statements as toholdings as well as dealings in Specified Bank Notes during the period from 8 November to30 December 2016 and these are in accordance with the books of accounts maintained by theCompany. Refer to Note 28 to the financial statements.
| ||For Balan& Co |
| ||Chartered Accountants |
| ||FRN:000340S |
| ||Sd /- |
|Kochi -11 ||A. Mohanan B.Sc.FCADISA |
|24.06.2017 ||Partner(M .No.20627) |
Ref: M/s.Sree Sakthi Paper Mills Limited Kochi -16 (2016-17)
Annexure A deferred to in paragraph 1 of report on other Legal and Regulatoryrequirements of our report of even date-
(i)(a) The Company is maintaining proper records showing full particulars includingquantitative details and situation of fixed assets.
(b) The fixed assets have been physically verified by the management at reasonableintervals and the discrepancies noticed have been properly dealt with in the books ofaccounts.
(c) According to the information and explanation given to us the title deeds ofimmovable properties of the Company are held in the name of the Company except for 1.75acres of industrial land in the possession of the Company at Edayar purchased infinancial year 2012-13. The company has paid the entire purchase consideration and iswaiting for final clearance for effecting legal transfer of ownership.
(ii) The inventory has been physically verified during the year by the management. Inour opinion the frequency of verification is reasonable.The discrepancies noticed onverification between the physical stocks and the book records were not material and havebeen properly dealt with in the books of account.
(iii)(a) The Company has not granted any loans secured or unsecured to Companies firms LLPs or other parties covered in the register maintained under Section 189 of theCompanies Act 2013 except for unsecured loans Rs. 5.36 lakhs Rs.5.36 lakhs and Rs.7.11lakhs advanced to the subsidiary companies M/s Sree Adisakthi Mukkuttathode HydropowerLimited M/s Jalashaayi Alamparathodu Hydro power Limited and M/sSree Kailas PalchuramHydro power Limited respectively prior to 2013.
(b) The terms and conditions of the above loans granted are not prejudicial to theinterest of the company.
(c) The company has not stipulated any schedule of repayment of principal.
(iv) The company had received an amount of Rs.712 lakhs from M/s Indospaceindustrial Park oragadam Walajabad limited(Formerly as Shri Kailash logistics Limited) asadvance towards purchase of land which later on became refundable and classified by thecompany under Inter-Corporate loan'. In our opinion the said amount asclassification as inter-corporate loan is in violation of section 185 of the CompaniesAct2013.
Further to the above the company has granted loans/advances to the subsidiarycompanies as given in(iii)(a) above which we are informed by the company that theprovisions of section 185 and 186 are not applicable as they were made before 12?hSeptember2013 being the effective date of section 185 of companies Act 2013.
Except as above in our opinion the company has complied with the provisions of section185 and 186 of the Companies Act2013 in respect of Loans Investments Guarantees andsecurities made by it.
(v) In our opinion and according to the information and explanations given to us theCompany has not accepted any deposits during the year. Therefore the provisions of clause3 (v) of the Companies (Auditor's Report) Order 2016 are not applicable to the Company.
(vi) We have broadly reviewed the books and records maintained by the company pursuantto the order of the Central Government 148 (1) of the Companies Act 2013 and are of theopinion that prima facie the prescribed accounts and records have been made andmaintained. We have however not made a detailed examination of the records with a view todetermining whether these records are accurate or complete.
(vii) (a) According to the information given to us and on the basis of the checksconducted by us we report that the company has not been regular in depositing undisputedstatutory dues including Provident fund Employees state insurance Income Tax SalesTaxService Tax Duty of Customs
Duty of Excise Value added tax Cess and other statutory dues with appropriateauthorities . The extend of arrears of Statutory dues as at the last day of the financialyear concerned outstanding for a period of more than six months as at 31.3.2017 from thedate they became payable are income tax of Rs. 48.80 lakhs and TDS of Rs.3.84 lakhs Service Tax Rs 2.22 lakhs and Excise duty of Rs 46.03 lakhs.
(b) According to the information and explanations given to us and based on the recordsof the company examined by usthe particulars of dues towards income tax sales taxwealth taxservice tax duty of customs duty of excise value added tax and cess as at 31stMarch 2017which have not been deposited on account of any dispute are furnished as :
|SI. No. ||Name of the statute ||Nature of Dues ||Amount of tax disputed (Rs. In lakhs) ||Period to which the dispute relates. ||Forum where the Dispute is pending. |
|1 ||Income tax Act ||Income Tax ||20.53 ||A.Y 2007-08 ||CIT (Appeals) Kochi |
|2 ||Income Tax Act ||Income Tax ||11.68 ||A.Y 2011-12 ||CIT(Appeals) Kochi |
|3 ||Central Sales Tax Act ||Central Sales tax ||15.48 ||A.Y 2007-'08 ||Deputy Commissioner (Appeals) Kochi |
(viii) In our opinion and according to the information and explanation given to us theCompany has not defaulted in repayment of loans or borrowings to financial institutionsbanks and Government except for temporary delays occurred in the repayment details ofwhich are given in Annexure C .There were no debenture holders at any time during theyear.
(ix) The company has not made any initial public offer or further public offer or hasavailed any new term loans during the year.
(x) To the best of our knowledge and belief and according to the information andexplanations given to us no material fraud by the Company or any fraud on the company byits officers or employees during the year was noticed or reported nor we were informed ofsuch case by the management.
(xi) In our opinion the managerial remuneration has been paid or provided inaccordance with the requisite approvals mandated by the provisions of Section 197 readwith Schedule V to the Companies Act 2013.
(xii) In our opinion the Company is not a Nidhi Company. Therefore the provisions ofclause 3 (xii) of the Companies (Auditor's Report) Order 2016 are not applicable to theCompany.
(xiii) In our opinion all transactions with the related parties are in compliance withSection 177 and 188 of Companies Act 2013 where applicable and the details have beendisclosed in the financial statements etc. as required by the applicable accountingstandards.
(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 under review.
(xv) In our opinion and according to the information and explanations given to us theCompany has not entered into any non cash transactions with directors or persons connectedwith him for which provisions of section 192 are applicable.
(xvi) In our opinion and according to the information and explanations given to us theCompany is not required to be registered under Section 45- IA of the Reserve Bank of IndiaAct 1934.
| ||For Balan& Co |
| ||Chartered Accountants |
| ||FRN:000340S |
| ||Sd/- |
|Kochi-11 ||A. Mohanan B.Sc.FCADISA |
|24.06.2017 ||Partner (M. No.20627) |
ANNEXURE B TO THE INDEPENDENT AUDITOR'S REPORT OF EVEN DATE ON THE STANDALONE FINANCIALSTATEMENTS OF SREE SAKTHI 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 Sree SakthiPaper Mills Ltd (the company) as of 31st March 2017 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
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 the preventionand detection of frauds and errors the accuracy and completeness of accounting recordsand the timely preparation of reliable financial Information as required under theCompanies 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 deemed to beprescribed under Section 143(10) of the Companies Act 2013 to the extent applicable to anaudit of internal financial controls both applicable to an audit of internal financialcontrols and both issued by the Institute of Chartered Accountants of India. Thosestandards and the Guidance Notes require that we comply with ethical requirements and planand perform the audit to obtain reasonable assurance about whether adequate internalfinancial controls over financial reporting was established and maintained and if suchcontrols 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 controls based on the assessed risk. Theprocedures selected depend on the auditor's judgment including the assessment of risks ofmaterial 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 control systemsover financial reporting.
Meaning of internal financial controls over financial reporting
A company's internal financial controls over financial reporting is a process designedto provide reasonable assurance regarding the reliability of financial reporting and thepreparation of the financial statements for external purposes in accordance with generallyaccepted accounting principles. A company's internal financial controls over financialreporting includes those policies and procedures that (1) [pertain to the maintenance ofthe records that in reasonable detail accurately and fairy reflect the transactions anddispositions of the assets of the company; (2) provide reasonable assurance that thetransactions are recorded as necessary to permit preparation of financial statements inaccordance with generally accepted accounting principles and that the receipts andexpenditures of the company are being made only in accordance with authorizations ofmanagement and directors of the company; and (3) provide reasonable assurance regardingthe prevention or timely deduction 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 of improper management override ofcontrols material misstatements due to error or fraud may occur and not be deducted.Also projections of any evaluation of the internal financial controls over the 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 revealed as at March 312017:
The internal control system established by the company for recording of financialtransactions in time was not operating effectively due to which there was considerabledelay in recording reconciling and reporting the financial information on a timely basis.Further no internal audit was conducted during the year.
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 except for the effects/possible effects of the material weaknessesdescribed above on the achievement of the objectives of the control criteria the Companyhas maintained in all material respects adequate internal financial controls overfinancial reporting and such internal financial controls over financial reporting wereoperating effectively as of March 31 2017 based on the internal control over thefinancial reporting criteria established by the Company considering the essentialcomponents of internal control stated in the Guidance Note on Audit of internal FinancialReporting issued by the Institute of Chartered Accountants of India.
We have considered the material weaknesses identified and reported above in determiningthe nature timing and extent of audit tests applied in our audit of the March 31 2017financial statements of the Company and these material weaknesses does not affect ouropinion on the financial statements of the Company.
| ||For Balan & Co |
| ||Chartered Accountants |
| ||FRN:000340S |
| ||Sd /- |
|Cochin -11 ||A. Mohanan B.Sc.FCADISA |
|24.06.2017 ||Partner (M. No.20627) |