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Genus Paper & Boards Ltd.

BSE: 538961 Sector: Industrials
NSE: GENUSPAPER ISIN Code: INE949P01018
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5.65

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OPEN 5.75
PREVIOUS CLOSE 5.58
VOLUME 130349
52-Week high 7.45
52-Week low 2.80
P/E 15.77
Mkt Cap.(Rs cr) 142
Buy Price 5.38
Buy Qty 300.00
Sell Price 5.54
Sell Qty 36.00
OPEN 5.75
CLOSE 5.58
VOLUME 130349
52-Week high 7.45
52-Week low 2.80
P/E 15.77
Mkt Cap.(Rs cr) 142
Buy Price 5.38
Buy Qty 300.00
Sell Price 5.54
Sell Qty 36.00

Genus Paper & Boards Ltd. (GENUSPAPER) - Auditors Report

Company auditors report

To the Members of Genus Paper & Boards Limited

Report on the Audit of the Financial Statements

Opinion

We have audited the financial statements of Genus Paper & Boards Limited (“theCompany”) which comprise the balance sheet as at 31st March 2019 and the statementof Profit and Loss and Cash Flow Statement for the year then ended and notes to thefinancial statements including a summary of significant accounting policies and otherexplanatory information.

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 andfair view in conformity with the accounting principles generally accepted in India of thestate of affairs of the Company as at March 31 2019 and its Profit and its cash flowsfor the year ended on that date.

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 together with the ethicalrequirements that are relevant to our audit of the financial statements under theprovisions of the Act and the Rules thereunder and we have fulfilled our other ethicalresponsibilities in accordance with these requirements and the Code of Ethics. We believethat the audit evidence we have obtained is sufficient and appropriate to provide a basisfor our opinion on the financial statement.

Key Audit Ma ers

Key audit matters are those matters that in our professional judgment were of mostsignificance in our audit of the financial statements for the financial year ended March31 2019. These matters were addressed in the context of our audit of the financialstatements as a whole and in forming our opinion thereon and we do not provide aseparate opinion on these matters. For each matter below our description of how our auditaddressed the matter is provided in that context.

We have determined the matters described below to be the key audit matters to becommunicated in our report. We have fulfilled the responsibilities described in theAuditor's responsibilities for the audit of the financial statements section of ourreport including in relation to these matters. Accordingly our audit included theperformance of procedures designed to respond to our assessment of the risks of materialmisstatement of the financial statements. The results of our audit procedures includingthe procedures performed to address the matters below provide the basis for our auditopinion on the accompanying financial statements

Key audit matters How our audit addressed the key audit matter
1. Revenue Recognition as per Ind As 115 “Revenue from Contracts with Customers” (New Accounting Standards)
The application of the new revenue accounting standard involves certain key-judgments relating to identification of distinct performance obligations determination of transaction price of the identified performance obligations the appropriateness of the basis used to measure revenue recognized over a period. In view of the significance of the matter we applied the following audit procedures in this area among others to obtain sufficient appropriate audit evidence:
We assessed the appropriateness of the revenue recognition accounting policies including those relating to rebates and discounts by comparing with applicable accounting standard.
Revenue from sale of goods is recognised when control of the products being sold is transferred to the customer and when there are no longer any unfulfilled obligations. The performance obligations in the contracts are fulfilled at the time of dispatch.
Evaluated the design of internal controls relating to implementation of the new revenue accounting standard calculation of discounts and rebates. In addition tested material contracts on samples basis in respect of revenue recorded and evaluated the operating effectiveness of the internal control relating to identification of the distinct performance obligations and determination of transaction price We carried out a combination of procedures involving inquiry and observation reperformance and inspection of evidence in respect of operation of these controls.
Selected a sample of continuing and new contracts and read the distinct performance obligations in these contracts assessing the Company's revenue recognition policies with reference to the requirements of the applicable accounting standard.
Revenue is measured at fair value of the consideration received or receivable after deduction of any trade discounts or and any taxes or duties collected on behalf of the government such as goods and services tax etc. Accumulated experience is used to estimate the provision for discounts and rebates. Revenue is only recognised to the extent that it is highly probable a significant reversal will not occur. We performed substantive testing by selecting samples of revenue transactions recorded during the year by verifying the underlying documents which included goods dispatch notes.
There is a risk of revenue being overstated due to fraud including through manipulation of rebates and discounts resulting from pressure the management may feel to achieve performance targets at the reporting period end. We performed cut-oft testing for samples of revenue transactions recorded before and after the financial year end date by comparing with relevant underlying documentation which included goods dispatch notes to assess whether the revenue was recognized in the correct period.
We assessed manual journals posted to revenue to identify unusual items.
2. Procurement of Raw Materials and Valuation of Inventories
We identified procurement of Raw material and valuation of inventories as a key audit matters because of significance of costs incurred during the year related inventories as at reporting date and significant degree of management judgment involved in verification and Evaluated the design and operating effectiveness of internal controls relating to procurement and inventory. We carried out a combination of procedures involving inquiry and observation re-performance and inspection of evidence in respect of operation of these controls.
We performed substantive testing by selecting samples of purchase transactions recorded during the year by verifying the underlying documents i.e. supplier invoices goods receipt notes etc.
Observed inventory verification on a sample basis.
Re-computed the closing rate of sample items of inventories to check whether the same are in line with the accounting policy of the Company.
Obtained an understanding of the underlying data and estimates used for calculation of the yield ratio and compared the same with the previous years.
We performed cut-oft testing for samples of purchase transactions recorded before and after the financial year end date by comparing with relevant underlying documentation which included supplier invoices goods receipt notes etc. to assess whether the purchases were recognized in the correct period.
We assessed manual journals posted to purchases to identify unusual items.

Other Information other than the Financial Statements and Auditor’s Report thereon

The Company’s Board of Directors is responsible for the preparation of the otherinformation. The other information comprises the information included in theDirector’s Report and other company related information but does not include thefinancial statements and our auditor’s report thereon.

Our opinion on the financial statements does not cover the other information and we donot express any form of assurance conclusion thereon. In connection with our audit of thefinancial statements our responsibility is to read the other information and in doingso consider whether the other information is materially inconsistent with the financialstatements or our knowledge obtained in the audit or otherwise appears to be materiallymisstated. If based on the work we have performed we conclude that there is a materialmisstatement of this other information; we are required to report that fact. We havenothing to report in this regard.

Responsibilities of Management and Those Charged with Governance for the FinancialStatements

The Company’s Board of Directors is responsible for the matters stated in section134(5) of the Act with respect to the preparation of these financial statements that givea true and fair view of the financial position financial performance and cash flows ofthe Company in accordance with the accounting principles generally accepted in Indiaincluding the accounting Standards 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 financial statements thatgive a true and fair view and are free from material misstatement whether due to fraud orerror.

In preparing the financial statements the Board of Directors is responsible forassessing the Company’s ability to continue as a going concern disclosing asapplicable matters related to going concern and using the going concern basis ofaccounting unless the Board of Directors either intends to liquidate the Company or tocease operations or has no realistic alternative but to do so. The Board of Directors isalso responsible for overseeing the company’s financial reporting process.

Auditor’s Responsibilities for the Audit of the 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 ahigh level of assurance but is not a guarantee that an audit conducted in accordance withSAs will always detect a material misstatement when it exists. Misstatements can arisefrom fraud or error and are considered material if individually or in the aggregate theycould reasonably be expected to influence the economic decisions of users taken on thebasis 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 financialstatements whether due to fraud or error design and perform audit procedures responsiveto those risks and obtain audit evidence that is sufficient and appropriate to provide abasis for our opinion. The risk of not detecting a material misstatement resulting fromfraud is higher than for one resulting from error as fraud may involve collusionforgery intentional omissions misrepresentations or the override of internal control.

• 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 reference to Financial Statements in place andthe 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 concernbasis of accounting and based on the audit evidence obtained whether a materialuncertainty exists related to events or conditions that may cast significant doubt on theCompany’s ability to continue as a going concern. If we conclude that a materialuncertainty exists we are required to draw a ention in our auditor’s report to therelated disclosures in the financial statements or if such disclosures are inadequate tomodify our opinion. Our conclusions are based on the audit evidence obtained up to thedate of our auditor’s report. However future events or conditions may cause theCompany to cease to continue as a going concern.

• Evaluatetheoverallpresentationstructureandcontentofthe statements includingthe disclosures and whether the financial financial statements represent the underlyingtransactions and events in a manner that achieves fair presentation.

Materiality is the magnitude of misstatements in the Financial Statements thatindividually or in aggregate makes it probable that the economic decisions of areasonably knowledgeable user of the Financial Statements may be influenced. We considerquantitative materiality and qualitative factors in (i) planning the scope of our auditwork and in evaluating the results of our work; and (ii) to evaluate the effect of anyidentified misstatements in the Financial Statements.

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.

From the matters communicated with those charged with governance we determine thosematters that were of most significance in the audit of the financial statements for thefinancial year ended March 31 2019 and are therefore the key audit matters. We describethese matters in our auditor's report unless law or regulation precludes public disclosureabout the matter or when in extremely rare circumstances we determine that a mattershould not be communicated in our report because the adverse consequences of doing sowould reasonably be expected to outweigh the public interest benefits of suchcommunication.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor’s Report) Order 2016 (“theOrder”) issued by the Central Government in terms of Section 143(11) of the Act andon the basis of such checks of the books and records of the Company as we consideredappropriate and according to the information and explanations given to us we give in“Annexure 1” a statement on the matters specified in paragraphs 3 and 4 of thesaid 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 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 Statement andstatement of changes in equity dealt with by this Report are in agreement with the booksof account.

d) In our opinion the aforesaid financial statements comply with the AccountingStandards specified under Section 133 of the Act read with the Companies (IndianAccounting Standards) Rules 2015 as amended.

e) On the basis of the wri en representations received from the directors as on 31stMarch 2019 taken on record by the Board of Directors none of the directors isdisqualified as on 31st March 2019 from being appointed as a director in terms of Section164(2) of the Act.

f) With respect to the adequacy of the internal financial controls with reference toFinancial Statements of the Company and the operating effectiveness of such controlsrefer to our separate report in ‘Annexure 2’ to this report.

g) With respect to the other matter to be included in the Auditor’s Report inaccordance with the requirements of section 197(16) of the Act as amended:

In our opinion and to the best of our information and according to the explanationsgiven to us the remuneration paid by the Company to its directors during the year is inaccordance with the provisions of section 197 of the Act and

h) With respect to the other matters to be included in the Auditor’s Report inaccordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014 in our opinionand to the best of our information and according to the explanations given to us:

i. The Company has disclosed the impact of pending litigations on its financialposition in its Financial Statements. Refer Note No. 32(B) to the Financial Statements;

ii. The Company did not have any long-term contracts including derivative contracts forwhich there were any material foreseeable losses.

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

For D Khanna & Associates
Chartered Accountants
FRN: 012917N
[Deepak Khanna]
Date: 29th May 2019 Partner
Place: Jaipur M. No. 092140

ANNEXURE ‘1’ TO THE INDEPENDENT AUDITOR’S REPORT

(Referred to in paragraph 1 under ‘Report on Other Legal and RegulatoryRequirements’ section of our report to the Members of Genus Paper & BoardsLimited of even date)

(i) In respect of the Company’s fixed assets:

(a) The Company has generally maintained proper records showing full particularsincluding quantitative details and situation of fixed assets (Property Plant &Equipment).

(b) The Company has a regular programme of physical verification of its property plantand equipment by which all property plant and equipment are verified in a phased mannerover a period of 3 years. In our opinion this periodicity of physical verification isreasonable having regard to the size of the Company and the nature of its assets. Nomaterial discrepancies were noticed on such verification.

(c) Based on our audit procedures performed for the purpose of reporting the true andfair view of the financial statements and according to information and explanations givenby the management the title deeds of immovable properties are held in the name of theCompany.

(ii) The management has conducted physical verification of inventory at reasonableintervals during the year and no material discrepancies were noticed on such physicalverification.

(iii) (a) The Company has granted loans the principal and interest thereof arere-payable on demand to a company covered in the register maintained under section189 of the Companies Act 2013. In our opinion and according to the information andexplanations given to us the terms and conditions of the grants and loans are notprejudicial to the Company's interest.

(b) The Company has granted loans that are re-payable on demand to a company coveredin the register maintained under section 189 of the Companies Act 2013. We are informedthat the Company has not demanded repayment of any such loan and interest during the yearand thus there has been no default on the part of the parties to whom the money has beenlent.

(c) There are no overdue amounts in respect of the loan granted to a company covered inthe register maintained under Section 189 of the Companies Act 2013.

(iv) In our opinion and according to the information and explanations given to usprovisions of section 185 and 186 of the Companies Act 2013 in respect of loans todirectors including entities in which they are interested and in respect of loans andadvances given investments made and guarantees and securities given have been compliedwith by the Company.

(v) The company has not accepted deposits from the public within the meaning ofSections 73 to 76 of the Companies Act 2013 and the rules made there under hence thisclause is not applicable.

(vi) We have broadly reviewed the accounts and records maintained by the Companypursuant to the Rules made by the Central Government for the maintenance of cost recordsunder sub-section (1) of Section 148 of the Act read with Companies (Cost Records &Audit) Rules 2014 and we are of the opinion that prima facie the prescribed accounts andrecords have been made and maintained. We have not however made detailed examination ofthe records with a view to determine whether they are accurate and complete.

(vii) (a) The Company is regular in depositing with appropriate authorities undisputedstatutory dues including provident fund employees’ state insuranceincome-tax sales-tax service tax duty of custom duty of excise value added tax goodsand service tax cess and other material statutory dues applicable to it. There areno undisputed statutory dues outstanding as on 31st March 2019 for a period of morethan six months from the date they became payable.

(b) According to the information and explanations given to us no undisputed amountspayable in respect of provident fund employees’ state insurance goods and servicetax income-tax sales-tax duty of custom duty of excise value added tax goods andservice tax cess and other material statutory dues were outstanding at the year end fora period of more than six months from the date they became payable.

(c) According to the records of the Company the dues outstanding of income-taxsales-tax service tax duty of custom duty of excise value added tax goods and servicetax and cess on account of any dispute are as follows: (Rs. in Lacs)

Name of the Statue Nature of the Dues (including interest and penalty where applicable) Forum Period to which amount relates (Financial Year) Gross Amount (Rs. In Lacs) Amount Deposited under Protest (Rs. In Lacs) Net Amount (Rs. In Lacs)
The Central Sales Tax / The State Sales Tax CST / VAT and Entry Tax Hon’ble High Court / Commissioner Appeals Various year (2013-2018) 148.56 34.78 113.78
The Central Excise Excise Duty / Service Tax Appellate Tribunal / Appeals Various year (2008-2017) 20.20 0.80 19.40
Income Tax Income Tax ITAT Various year (2011-2015) 659.05 131.79 527.26
Factory act Factory Act DLC 1.25 0.00 1.25
Total 829.06 167.37 661.69

(viii) Based on our audit procedures performed for the purpose of reporting the trueand fair view of the financial statements and according to information and explanationsgiven by the management we are of the opinion that the Company has not defaulted inrepayment of dues to a financial institution debenture holders bank or government.

(ix) Based on our audit procedures performed for the purpose of reporting the true andfair view of the financial statements and according to the information and explanationsgiven by the management the Company has utilized the monies raised by way of term loansfor the purposes for which they were raised. The Company has not raised any money way ofinitial public offer/further public offer/debt instruments and hence not commented upon.

(x) Based upon the audit procedures performed for the purpose of reporting the true andfair view of the financial statements and according to the information and explanationsgiven by the management we report that no fraud by the Company or no fraud on the Companyby the officers and employees of the Company has been noticed or reported during the year.

(xi) Based on our audit procedures performed for the purpose of reporting the true andfair view of the financial statements and according to the information and explanationsgiven by the management we report that the managerial remuneration has been paid /provided in accordance with the requisite approvals mandated by the provisions of section197 read with Schedule V to the Companies Act 2013.

(xii) In our opinion the Company is not a nidhi company. Therefore the provisions ofclause 3(xi) of the order are not applicable to the Company and hence not commented upon.

(xiii) Based on our audit procedures performed for the purpose of reporting the trueand fair view of the financial statements and according to the information andexplanations given by the management transactions with the related parties are incompliance with section 177 and 188 of Companies Act 2013 where applicable and thedetails have been disclosed in the notes to the financial statements as required by theapplicable accounting standards.

(xiv) According to the information and explanations given to us and on an overallexamination of the balance sheet the Company has not made any preferential allotment orprivate placement of shares or fully or partly convertible debentures during the yearunder review and hence not commented upon.

(xv) Based on our audit procedures performed for the purpose of reporting the true andfair view of the financial statements and according to the information and explanationsgiven by the management the Company has not entered into any non-cash transactions withdirectors or persons connected with him.

(xvi) According to the information and explanations given to us the provisions ofsection 45-IA of the Reserve Bank of India Act 1934 are not applicable to the Company.

For D Khanna & Associates
Chartered Accountants
FRN: 012917N
[Deepak Khanna]
Date: 29th May 2019 Partner
Place: Jaipur M. No. 092140

annexure -2

Annexure 2 to the Independent Auditor’s Report

Referred to in Paragraph 2 under “Report on Other Legal and RegulatoryRequirements” section of our report on even date to the members of Genus Paper &Boards Limited on the Financial Statements for the year ended 31st March 2019.

Report on the Internal Financial Controls with reference to Financial Statements underClause (i) of Sub-section 3 of Section 143 of the Act.

We have audited the internal financial controls with reference to Financial Statementsof Genus Paper & Boards Limited (“the Company”) as of 31st March 2019 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 with reference to Financial Statements based on the internal controlsover financial reporting criteria established by the Company considering the essentialcomponents of internal control stated in the Guidance Note on Audit of Internal FinancialControls over Financial Reporting issued by The Institute of Chartered Accountants ofIndia (ICAI). These responsibilities include the design implementation and maintenance ofadequate internal financial controls that were operating effectively for ensuring theorderly and efficient conduct of its business including adherence to Company’spolicies the safeguarding of its assets the prevention and detection of frauds anderrors the accuracy and completeness of the accounting records and the timelypreparation of reliable financial information as required under the Companies Act 2013.

Auditors’ Responsibility

Our responsibility is to express an opinion on the Company's internal financialcontrols with reference to Financial Statements based on our audit. We conducted our auditin accordance with the Guidance Note on Audit of Internal Financial Controls overFinancial Reporting (the “Guidance Note”) and the Standards on Auditing issuedby ICAI and deemed to be prescribed under section 143(10) of the Act to the extentapplicable to an audit of internal financial controls both applicable to an audit ofInternal Financial Controls and both issued by ICAI. Those Standards and the GuidanceNote require that we comply with ethical requirements and plan and perform the audit toobtain reasonable assurance about whether adequate internal financial controls withreference to Financial Statements was established and maintained and if such controlsoperated effectively in all material respects.

Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal financial control system with reference to Financial Statements and theiroperating effectiveness. Our audit of internal financial control with reference toFinancial Statements included obtaining an understanding of internal financial controlwith reference to Financial Statements assessing the risk that a material weaknessexists and testing and evaluating the design and operating effectiveness of internalcontrol based on the assessed risk. The procedures selected depend on the auditor’sjudgement including the assessment of the risks of material misstatement of the FinancialStatements 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 with reference to Financial Statements.

Meaning of Internal Financial Controls over Financial Reporting with reference toFinancial Statements

A Company's internal financial control with reference to Financial Statements is aprocess designed to provide reasonable assurance regarding the reliability of financialreporting and the preparation of Financial Statements for external purposes in accordancewith generally accepted accounting principles. A Company's internal financial control withreference to Financial Statements includes those policies and procedures that (1) pertainto the maintenance of records that in reasonable detail accurately and fairly reflectthe transactions and dispositions of the assets of the Company; (2) provide reasonableassurance that transactions are recorded as necessary to permit preparation of FinancialStatements in accordance with generally accepted accounting principles and that receiptsand expenditures of the Company are being made only in accordance with authorizations ofmanagement and directors of the Company; and (3) provide reasonable assurance regardingprevention or timely detection of unauthorized acquisition use or disposition of theCompany's assets that could have a material effect on the Financial Statements.

Inherent Limitations of Internal Financial Controls over Financial Reporting withreference to Financial Statements

Because of the inherent limitations of internal financial controls with reference toFinancial Statements including the possibility of collusion or improper managementoverride of controls material misstatements due to error or fraud may occur and not bedetected. Also projections of any evaluation of the internal financial controls withreference to Financial Statements to future periods are subject to the risk that theinternal

financial controls with reference to Financial Statements may become inadequate becauseof changes in conditions or that the degree of compliance with the policies or proceduresmay deteriorate.

Opinion

In our opinion to the best of our information and according to the explanations givento us the Company has in all material respects an adequate internal financial controlssystem with reference to Financial Statements in place and such internal financialcontrols with respect to Financial Statements were operating effectively as at 31 March2019 based on the internal controls over financial reporting criteria established by theCompany considering the components of internal controls stated in the Guidance Note onAudit of Internal Financial Controls over Financial Reporting issued by the ICAI.

For D Khanna & Associates
Chartered Accountants
FRN: 012917N
[Deepak Khanna]
Date: 29th May 2019 Partner
Place: Jaipur M. No. 092140