To the Members of M/s. Cella Space Limited Kochi (Formerly Sree Sakthi Paper MillsLimited).
Report on the Standalone Financial Statements
We have audited the accompanying financial statements of M/s.Cella Space Limited Kochi(Formerly Sree Sakthi Paper Mills Limited ) which comprises of the Balance Sheet as at31st March 2019the Statement of Profit and Loss (including other comprehensive income)for the year ended 31st March 2019the Statement of Changes in Equity for the year ended31st March 2019the Cash Flow Statement for the year ended 31st March 2019 and a Summaryof Significant Accounting Policies and other explanatory information (herein afterreferred to as "the Standalone Financial 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 theCompanies Act 2013 ( the Act ) in the manner so required and give a true and fair view inconformity with the Indian Accounting Standards prescribed under section 133 of the Actread with the Companies (Indian Accounting Standards) Rules 2015 as amended ( the IndAS ) and other accounting principles generally accepted in India of the state of affairsof the Company as at March 31 2019; and its profit total comprehensive income thechanges in equity and its cash flows for the year ended 31st March 2019.
Emphasis of Matter
We Invite the attention of users to
(a) Based on our review conducted as above we draw attention to Note No.28A of thefinancials regarding recognition of income by writing back of unsecured loan received fromM/s. Indospace Industrial Park Oragadam Walajabad Private Limited (Formerly Shri KailashLogistics Limited ) amounting to Rs.7.28 Crores.
(b) Our Report is not qualified on the above matter.
Basis for Opinion
We conducted our audit in accordance with the Standards on Auditing (SAs) specifiedunder section 143(10) of the Act. Our responsibilities under those Standards are furtherdescribed in the Auditor s Responsibilities for the Audit of the Financial Statementssection of our report. We are independent of the Company in accordance with the Code ofEthics issued by the Institute of Chartered Accountants of India (ICAI) together with theindependence requirements that are relevant to our audit of the standalone financialstatements under the provisions of the Act and the Rules thereunder and we have fulfilledour other ethical responsibilities in accordance with these requirements and the Code ofEthics. We believe that the audit evidence we have obtained is sufficient and appropriateto provide a basis for our audit opinion on the standalone financial statements.
Key Audit Matters
Key Audit Matters are those matters that in our professional judgement were of mostsignificance in our audit of the standalone financial statements of the current period.These matters were addressed in the context of our audit of the standalone financialstatements as a whole and in forming our opinion thereon and we do not provide aseparate opinion on these matters. We have determined the matters described below to bethe key audit matters to be communicated in the report.
|The Key Audit Matters ||How our audit addressed the key audit matter |
|Adoption of Ind AS 115 Revenue from Contracts with Customers || |
|The Company has adopted Ind AS 115Revenue from Contracts with Customers ( Ind AS 115 )which is the new revenue accounting standard. The application and transition to this accounting standard is complex and is an area of focus in the audit. The revenue standard establishes a comprehensive framework for determining whether how much and when revenue is recognized. This involves certain key judgments relating to identification of distinct performance obligations determination of transaction price of identified performance obligation the appropriateness of the basis used to measure revenue recognized over a period. ||Our audit procedures on adoption of Ind AS 115 Revenue from contracts with Customers ( Ind AS 115 ) which is the new revenue accounting standard included |
|Additionally the standard mandates robust disclosures in respect of revenue and periods over which the remaining performance obligations will be satisfied subsequent to the balance sheet date. ||Evaluation of the design and implementation of the processes and internal controls relating to implementation of the new revenue accounting standard; |
| ||Evaluation of the detailed analysis performed by management on revenue streams by selecting samples for the existing contracts with customers and considered revenue recognition policy in the current period in respect of those revenue streams; |
| ||Evaluation of the cumulative effect adjustments as at 1 April 2018 for compliance with the new revenue standard; and |
| ||Evaluation of the appropriateness of the disclosures provided under the new revenue standard and assessed the completeness and mathematical accuracy of the relevant disclosures. |
|The Company adopted Ind AS 115 and applied the available exemption provided therein to not restate the comparative periods. || |
|Evaluation of uncertain tax positions || |
|The company has material uncertain tax positions including matters under dispute which involves significant judgement to determine the possible outcome of these disputes. ||Our audit procedures included |
| || Detailed analysis of the pending disputes on account of taxes at various forums; |
| || Obtaining internal expert opinion on the merit and sustainability of the disputes and litigations; |
| || Evaluating the legal precedences in evaluating the management judgements on these uncertain tax positions. |
|Recoverability of receivables and advances || |
|As at March 31 2019 the position of assets included - ||Our audit procedures included |
| || Detailed analysis of the long outstanding receivables and advances; |
| Trade receivables (Note 8A ): Rs.834.33 lakhs || |
| || Obtaining management analysis on the realisability of such assets; |
| Security Deposits (Note 6B):Rs.23.99 lakhs || |
|Other Non-Current Assets (Note 7) Rs.98.49 lakhs || Obtaining confirmation of balances for major balances outstanding; |
| Security Deposits (EMD) (Note 8C) : Rs.27.6 lakhs || Evaluating the adequacy of provision made by the management for doubtful assets included therein. |
|Out of the above most of the balances were outstanding for long and hence it was necessary to ascertain the recoverability and realisability of such receivables and advances. || |
The Company s management and Board of Directors are responsible for the otherinformation. The other information comprises the information included in the Company sannual report but does not include the standalone financial statements and our auditorsreport thereon.
Our opinion on the standalone financial statements does not cover the other informationand we do not express any form of assurance conclusion thereon.
In connection with our audit of the standalone financial statements our responsibilityis to read the other information and in doing so consider whether the other informationis materially inconsistent with the standalone financial statements or our knowledgeobtained in the audit or otherwise appears to be materially misstated. If based on thework we have performed we conclude that there is a material misstatement of this otherinformation we are required to report that fact. We have nothing to report in thisregard.
Management's Responsibility for the Financial Statements
The Company's management and Board of Directors are responsible for the matters statedin Section 134(5) of the Act with respect to the preparation of these standalone financialstatements that give a true and fair view of the state of affairs profit / loss(including other comprehensive income) changes in equity and cash flows of the Company inaccordance with the accounting principles generally accepted in India including theIndian Accounting Standards (Ind AS) specified under Section 133 of the Act. 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 standalone financialstatements that give a true and fair view and are free from material misstatement whetherdue to fraud or error.
In preparing the standalone financial statements management and Board of Directors areresponsible for assessing the Company s ability to continue as a going concerndisclosing as applicable matters related to going concern and using the going concernbasis of accounting unless management either intends to liquidate the Company or to ceaseoperations or has no realistic alternative but to do so. Board of Directors is alsoresponsible for overseeing the Company s financial reporting process.
Auditor s Responsibilities for the Audit of the Standalone Financial Statements
Our objectives are to obtain reasonable assurance about whether the financialstatements as a whole are free from material misstatement whether due to fraud or errorand to issue an auditor s report that includes our opinion.
Reasonable assurance is a high level of assurance but is not a guarantee that an auditconducted in accordance with SAs will always detect a material misstatement when itexists. Misstatements can arise from fraud or error and are considered material ifindividually or in the aggregate they could reasonably be expected to influence theeconomic decisions of users taken on the basis of these financial statements.
As part of an audit in accordance with SAs we exercise professional judgment andmaintain professional skepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of the standalonefinancial statements whether due to fraud or error design and perform audit proceduresresponsive to those risks and obtain audit evidence that is sufficient and appropriate toprovide a basis for our opinion. The risk of not detecting a material misstatementresulting from fraud is higher than for one resulting from error as fraud may involvecollusion forgery intentional omissions misrepresentations or the override of internalcontrol.
Obtain an understanding of internal control relevant to the audit in order todesign audit procedures that are appropriate in the circumstances. Under section 143(3)(i)of the Act we are also responsible for expressing our opinion on whether the company hasadequate internal financial controls with respect to the standalone financial statementsin place and the operating effectiveness of such controls.
Evaluate the appropriateness of accounting policies used and the reasonablenessof accounting estimates and related disclosures made by management.
Conclude on the appropriateness of management s use of the going concern basisof accounting and based on the audit evidence obtained whether a material uncertaintyexists related to events or conditions that may cast significant doubt on the Company sability to continue as a going concern. If we conclude that a material uncertainty existswe are required to draw attention in our auditor s report to the related disclosures inthe standalone financial statements or if such disclosures are inadequate to modify ouropinion. Our conclusions are based on the audit evidence obtained up to the date of ourauditor s report. However future events or conditions may cause the Company to cease tocontinue as a going concern.
Evaluate the overall presentation structure and content of the financialstatements including the disclosures and whether the standalone financial statementsrepresent the underlying transactions and events in a manner that achieves fairpresentation.
We communicate with those charged with governance regarding among other matters theplanned scope and timing of the audit and significant audit findings including anysignificant deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have compliedwith relevant ethical requirements regarding independence and to communicate with themall relationships and other matters that may reasonably be thought to bear on ourindependence and where applicable related safeguards.
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 of theAct we give a statement on the matters specified in paragraphs 3 and 4 of the Order tothe extent applicable attached as Annexure 1.
2. As required by section 143(3) of the Act we report that: a) We have sought andobtained all the information and explanations which to the best of our knowledge andbelief 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 including other comprehensiveincome Statement of changes in Equity and Cash Flow Statement dealt with by this Reportare in agreement with the books of account.
d) In our opinion the aforesaid financial statements comply with the Ind AS specifiedunder section 133 of the Act;
e) On the basis of written representations received from the directors and taken onrecord by the Board of Directors none of the directors is disqualified as on March 312019 from being appointed as a director in terms of sub-section (2) of section 164 of theCompanies Act 2013 except for Mr. Subramoniam Sivathanu Pillai. We are informed that theorder of disqualification of Mr. Rajkumar Sivathanu Pillai has been stayed by HonorableHigh Court of Madras vide writ petition no. 29141/2017 dated 30-11-2017.
f) 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 no long term contracts including derivative contracts and hence noprovision on account of material foreseeable losses is required.
(iii) The company has not transferred the equity shares corresponding to unpaiddividend where the specified period under Section 124(5) has been completed to theInvestor Education and Protection Fund within the due date. Further based on theinformation given to us we report that there has been a delay of 33 days in transferringunpaid dividend of Rs.112650.20/- to the above fund.
For KPR & Co
Deepa Praveen FCA
Memb No: 232410
Ref: M/s.Cella Space Limited Kochi (Formerly Sree Sakthi Paper Mills Limited) (2018-19)
Annexure A: Referred to in paragraph 5 (1) of report on other Legal and Regulatoryrequirements of our report of even date-
(i) In respect of the fixed assets
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. We are informed that the company has paid the entire purchaseconsideration and is waiting for final clearance for effecting legal transfer ofownership.
(ii)The Company does not have any inventory during the year .Hence the clause 3(ii) ofthe order is not applicable to the company.
(iii) The Company has not granted any loans secured or unsecured to Companies firmsLLPs or other parties covered in the register maintained under Section 189 of theCompanies Act 2013.
(iv) In our opinion and according to the explanations given to us the Company hascomplied with the provisions of the Sections 185 and 186 of the Act in respect of thegrant of loans making investments and providing guarantees and securities made by it. Thecompany had granted loans/advances to subsidiary companies as given in iii (a) abovewhich we were informed by the company that the provisions of section 185 and 186 are notapplicable as they were made before 12th September 2013 being the effective date of Sec185 of Companies Act 2013.
(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) Order2016 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 Sales TaxService Tax Duty of Customs Duty of Excise Value added tax Cess and other statutorydues with appropriate authorities. The extend of arrears of Statutory dues as at the lastday of the financial year concerned outstanding for a period of more than six months as at31.3.2019 from the date they became payable are as under
Income tax payable: Rs. 71.71 lakhs
TDS deducted but not remitted to Government Rs.4.17 lakhs
Service Tax payable: Rs 3.18 lakhs
Excise duty payable: Rs 46.39 lakhs
VAT payable Rs 4.79 lakhs
CST payable Rs.0.57 lakhs
GST payable Rs.4.84 lakhs
TCS payable Rs.8.27 lakhs
(b) According to the information and explanations given to us and based on the recordsof the company examined by us the particulars of dues towards income tax sales taxwealth tax service tax duty of customs duty of excise value added tax and cess as at31st March 2019 which have not been deposited on account of any dispute are furnished asunder -
|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 ||22.18 ||AY 2014-15 ||CIT(Appeals) Kochi |
|2 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 the year.
(ix) The company has not made any initial public offer or further public offer in theyear under audit. The proceeds of the term loans availed by the company have been appliedfor the purpose for which they are raised.
(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 19 read withSchedule 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 the Company.
(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 madepreferential allotment of shares during the year under review in accordance with therequirements of Section 42 of the Companies Act 2013 and the amount raised has been usedfor the purposes for which the funds were raised.
(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 KPR & Co |
| ||Chartered Accountants |
| ||FRN: 05326S |
| ||Sd/- |
| ||Deepa Praveen FCA |
|Kochi -11 ||Memb No: 232410 |
|28/05/2019 ||Partner |
ANNEXURE B TO THE INDEPENDENT AUDITOR S REPORT OF EVEN DATE ON the FINANCIAL STATEMENTSOF M/S. CELLA SPACE LIMITED KOCHI (FORMERLY 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 M/s. CellaSpace Limited Kochi (Formerly Sree Sakthi Paper Mills Limited).(the company) as of 31stMarch 2019 in conjunction with our audit of the financial statements of the company forthe 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. 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.
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 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.
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 detected.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 31 2019:
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 in internalfinancial control over financial reporting such that there is a reasonable possibilitythat a material misstatement of the company's annual or interim financial statements willnot 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 2019 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 2019financial statements of the Company and these material weaknesses does not affect ouropinion on the financial statements of the Company.
For KPR & Co
Deepa Praveen FCA
Memb No: 232410