The Members of
JK Paper Limited
Report on the Audit of the Standalone Financial Statements
We have audited the accompanying standalone financial statements of JKPaper Limited ("the Company") which comprise the Balance Sheet as at 31st March2021 the Statement of Profit and Loss (including Other Comprehensive Income) Statementof Changes in Equity and the Statement of Cash Flows for the year then ended and notes tothe financial statements including a summary of the significant accounting policies andother explanatory information (herein after referred to as "financialstatements").
In our opinion and to the best of our information and according to theexplanations given to us the aforesaid financial statements give the information requiredby the Companies Act 2013 ("the Act") in the manner so required and give a trueand fair view in conformity with the accounting principles generally accepted in India ofthe state of affairs of the Company as at 31st March 2021 its Profit including OtherComprehensive income changes in equity and its cash flows for the year ended on thatdate.
Basis for Opinion
We conducted our audit in accordance with the Standards on Auditing(SAs) specified under Section 143(10) of the Companies
Act 2013. 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 Companies Act 2013and the Rules made 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 opinion.
Key Audit Matters
Key audit matters are those matters that in our professional judgmentwere of most significance in our audit of the standalone financial statements for thefinancial year ended March 31 2021. These matters were addressed in the context of ouraudit of the standalone financial statements as a whole and in forming our opinionthereon and we do not provide a separate opinion on these matters. We have determined thematters described below to be the key audit matters to be communicated in our report. Foreach matter below our description of how our audit addressed the matter is provided inthat context:
|Description of Key Audit Matter ||Audit procedures to addressed the key audit matter |
|1. Valuation of financial instruments (held at fair value including securities and financial Guarantees) ||Our audit procedures includes: |
|The company has given letter of comfort to banker against borrowing facilities extended to a step down subsidiary of RS. 431.50 crs (PY RS. 361.14 crs) .The Company has also invested RS. 121 crs up to year end in to the preference share capital of subsidiaries (including a step down subsidiary) where dividend rate is not at par with market instruments . ||Control testing: |
|We have considered the valuation of financial instruments as key audit matter considering complexities and financial impact involved over financial statements. || We tested the design and operating effectiveness of key Controls. |
| || Controls over the validation completeness implementation and usage of valuation models. Independent reperformance: |
| || Our own valuation specialists independently challenged management on the valuations where they were found outside our expected range. Methodology choice: |
| || In the context of observed industry practice our own valuation specialists assisted us in challenging the appropriateness of significant models and methodologies used by an independent valuer in calculating fair values risk exposures completeness of risk factors and in calculating Fair Value Assessments (FVAs). |
Information Other than the Financial Statements and Auditor'sReport Thereon
The Company's Board of Directors is responsible for thepreparation of the other information. The other information comprises the informationincluded in the Management Discussion and Analysis Board's Report includingAnnexures to Board's Report Business Responsibility Report Corporate Governance andShareholder's Information but does not include the Standalone Financial Statementsand our auditor's report thereon.
Our opinion on the financial statements does not cover the otherinformation and we do not express any form of assurance conclusion thereon. In connectionwith our audit of the financial statements our responsibility is to read the otherinformation and in doing so consider whether the other information is materiallyinconsistent with the financial statements or our knowledge obtained during the course ofour audit or otherwise appears to be materially misstated.
If based on the work we have performed we conclude that there is amaterial misstatement of this other information we are required to report that fact. Wehave nothing to report in this regard.
Responsibility of Management and Those Charged with Governance for theStandalone Financial Statements
The Company's Board of Directors is responsible for the mattersstated in Section 134(5) of the Companies Act 2013 with respect to the preparation ofthese Standalone Financial Statements that give a true and fair view of the financialposition financial performance including other comprehensive income changes in equityand cash flows of the Company in accordance with the accounting principles generallyaccepted in India including the Indian Accounting Standards (Ind AS) specified underSection 133 of the Act read with the Companies (Indian Accounting Standards) Rules 2015as amended . This responsibility also includes maintenance of adequate accounting recordsin accordance with the provisions of the Act for safeguarding of the assets of the Companyand for preventing and detecting frauds and other irregularities; selection andapplication of appropriate accounting policies; making judgments and estimates that arereasonable and prudent; and design implementation and maintenance of adequate internalfinancial controls that were operating effectively for ensuring the accuracy andcompleteness of the accounting records relevant to the preparation and presentation ofthe Standalone Financial Statements that give a true and fair view and are free frommaterial misstatement whether due to fraud or error.
In preparing the Standalone Financial Statements the Board ofDirectors is responsible for assessing the Company's ability to continue as a goingconcern disclosing as applicable matters related to going concern and using the goingconcern basis of accounting unless the Board of Directors either intends to liquidate theCompany or to cease operations or has no realistic alternative but to do so.
Those Board of Directors are also responsible for overseeing theCompany's financial reporting process.
Auditor's Responsibilities for the Audit of the StandaloneFinancial Statements
Our objectives are to obtain reasonable assurance about whether thefinancial statements as a whole are free from material misstatement whether due to fraudor error and to issue an auditor's report that includes our opinion. Reasonableassurance is a high level of assurance but is not a guarantee that an audit conducted inaccordance with SAs will always detect a material misstatement when it exists.Misstatements can arise from fraud or error and are considered material if individuallyor in the aggregate they could reasonably be expected to influence the economic decisionsof users taken on the basis of these standalone financial statements.
As part of an audit in accordance with SAs we exercise professionaljudgment and maintain professional skepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of thefinancial 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 theaudit in order to design audit procedures that are appropriate in the circumstances. UnderSection 143(3)(i) of the Companies Act 2013 we are also responsible for expressing ouropinion on whether the Company has adequate internal financial controls system in placeand the operating effectiveness of such controls.
Evaluate the appropriateness of accounting policies used and thereasonableness of accounting estimates and related disclosures made by management.
Conclude on the appropriateness of management's use of thegoing concern basis of accounting and based on the audit evidence obtained whether amaterial uncertainty exists related to events or conditions that may cast significantdoubt on the ability of the Company to continue as a going concern. If we conclude that amaterial uncertainty exists we are required to draw attention in our auditor'sreport to the related disclosures in the financial statements or if such disclosures areinadequate to modify our opinion. Our conclusions are based on the audit evidenceobtained up to the date of our auditor's report. However future events or conditionsmay cause the Company to cease to continue as a going concern.
Evaluate the overall presentation structure and content of thefinancial statements including the disclosures and whether the financial statementsrepresent the underlying transactions and events in a manner that achieves fairpresentation.
Materiality is the magnitude of misstatements in the financialstatements that individually or in aggregate makes it probable that the economicdecisions of a reasonably knowledgeable user of the financial statements may beinfluenced. We consider quantitative materiality and qualitative factors in
(i) planning the scope of our audit work and in evaluating the resultsof our work; and
(ii) to evaluate the effect of any identified misstatements in thefinancial statements.
We communicate with those charged with governance regarding amongother matters the planned scope and timing of the audit and significant audit findingsincluding any significant deficiencies in internal control that we identify during ouraudit. We also provide those charged with governance with a statement that we havecomplied with relevant ethical requirements regarding independence and to communicatewith them all relationships and other matters that may reasonably be thought to bear onour independence and where applicable related safeguards.
From the matters communicated with those charged with governance wedetermine those matters that were of most significance in the audit of the standalonefinancial statements for the financial year ended March 31 2021 and are therefore the keyaudit matters. We describe these matters in our auditor's report unless law orregulation precludes public disclosure about the matter or when in extremely rarecircumstances we determine that a matter should not be communicated in our report becausethe adverse consequences of doing so would reasonably be expected to outweigh the publicinterest benefits of such communication.
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 the Companies Act2013 we give in the "Annexure A" astatement on the matters specified in paragraphs 3 and 4 of the Order to the extentapplicable.
2. As required by Section 143(3) of the Companies Act 2013 we reportthat:
a) We have sought and obtained all the information and explanationswhich to the best of our knowledge and belief were necessary for the purposes of ouraudit.
b) In our opinion proper books of account as required by law have beenkept by the Company so far as it appears from our examination of those books.
c) The Balance Sheet the Statement of Profit and Loss including othercomprehensive income the Statement of Changes in Equity and the Statement of Cash Flowsdealt with by this Report are in agreement with the books of account.
d) In our opinion the aforesaid financial statements comply with theIndian Accounting Standards specified under Section 133 of the Act read with Rule 7 ofthe Companies (Accounts) Rules 2015 as amended.
e) On the basis of the written representations received from thedirectors as on 31stMarch 2021 and taken on record by the Board of Directors none of thedirectors is disqualified as on 31stMarch 2021 from being appointed as a director interms of Section 164 (2) of the Act.
f ) With respect to the adequacy of the internal financial controlsover financial reporting of the Company and the operating effectiveness of such controlsrefer to our separate Report in "Annexure B". Our report expresses an unmodifiedopinion on the adequacy and operating effectiveness of the Company's internalfinancial controls over financial reporting.
g) The managerial remuneration for the year ended 31st March 2021 hasbeen paid/ provided for by the Company to its directors is in accordance with theprovisions of Section 197 read with Schedule V to the Act.
h) With respect to the other matters to be included in theAuditor's Report in accordance with Rule 11 of the Companies (Audit and Auditors)Rules 2014 in our opinion and to the best of our information and according to theexplanations given to us:
i. The Company has disclosed the impact of pending litigations on itsfinancial position in its standalone financial statements.- Refer Note 35 to theStandalone Financial Statements;
ii. The Company has made provision as required under the applicablelaw or Indian Accounting Standards for material foreseeable losses if any on long-termcontracts including derivative contracts.;
iii. There has been no delay in transferring amounts required to betransferred to the Investor Education and Protection Fund by the Company.
Annexure A to the Auditors' Report
The Annexure referred to in Independent Auditors' Report to themembers of the JK Paper Limited on the standalone financial statements for the year ended31st March 2021 we report that:
(i) (a) The Company has maintained proper records showing fullparticulars including quantitative details and situation of fixed assets.
(b) The fixed assets have been physically verified by the managementaccording to the program of periodical verification in a phased manner which in ouropinion is reasonable having regard to the size of the company and the nature of its fixedassets. The discrepancies noticed on such physical verification were not material.
(c) According to the information and explanations given to us and onthe basis of our examination of the records of the Company the title deeds of immovableproperties are held in the name of the Company as at Balance Sheet date except as statedin note no. 2(a) of the standalone financial statements.
(ii) The inventories of the Company (except stock in transit which hasbeen verified from receipt of material) have been physically verified by the management atreasonable intervals and the procedures of physical verification of inventory followed bythe Management are reasonable in relation to the size of the Company and nature of itsbusiness. The discrepancies noticed on such physical verification of inventory as comparedto book records were not material and have been properly dealt with in the books ofaccounts.
(iii) The Company has not granted any loans to bodies corporate coveredin the register maintained under section 189 of the Companies Act 2013 (theAct') hence other parts of this clause are not applicable.
(iv) In our opinion and according to the information and explanationsprovided to us the Company has not granted any loans or provided any guarantees orsecurity to the parties covered under Section 185 of the Act. The Company has compliedwith the provisions of Section 186 of the Act in respect of investments made or loans orguarantee or security provided to the parties covered under Section 186 of the Act.
(v) In our opinion and according to the information and explanationsgiven to us the Company has complied with the directives issued by the Reserve Bank ofIndia and the provisions of Section 73 to76 of the Act or any other relevant provisions ofthe Act and the rules framed there under with regard to deposits accepted from the public.We have been informed that no order has been passed by the Company Law Board or NationalCompany Law Tribunal or Reserve Bank of India or any Court or other Tribunal in thisregard.
(vi) We have broadly reviewed the books of account maintained by thecompany pursuant to the rules made by the Central Government for the maintenance of thecost records under section 148(1) of the act in respect of the company's products towhich the said rules are made applicable and are of the opinion that prima facie theprescribed cost records have been made and maintained. We have however not made adetailed examination of the said records with a view to determine whether they areaccurate or complete.
(vii) (a) According to the records of the company the company isregular in depositing undisputed statutory dues including provident fund employees'state insurance income tax custom duty goods and service tax cess and other materialstatutory dues with the appropriate authorities to the extent applicable and there are noundisputed statutory dues payable for a period of more than six months from the date theybecome payable as at 31st March 2021.
(b) According to the records and information & explanations givento us there are no dues in respect of income tax sales tax service tax goods andservice tax duty of excise and value added tax that have not been deposited with theappropriate authorities on account of any dispute except as given below.
|Name of the statute ||Nature of dues ||Period to which amount relates ||Amount involved (Rs. in crores) ||Forum where dispute is pending |
|Central Excise Act 1944 ||Central Excise ||1981-1983 ||0.70 ||Deputy Commissioner Central Excise Rayagada |
| || ||1982-1983 ||0.41 ||Supreme Court |
| || ||1986-1995 ||1.31 ||High Court Cuttack |
| || ||2004-2017 ||7.27 ||CESTAT Ahmedabad |
| || ||2011-2012 ||0.36 ||Addl. Commissioner Excise Bhubaneshwar |
| || ||2014-2017 ||0.10 ||Asst. Commissioner Rayagada |
| || ||2015-2016 ||7.42 ||CESTAT Mumbai |
|Custom Act 1962 ||Custom Duty ||2011-2012 & 2012-2013 ||0.69 ||CESTAT Ahmedabad |
|Finance Act 1944 ||Service Tax ||2009-2010 ||0.24 ||CESTAT Ahmedabad |
| || ||2014-16 ||0.16 ||CESTAT Ahmedabad |
|Sales Tax ||Sales Tax ||1983-84/ 1987- 88 ||0.05 ||Sales Tax Department Delhi |
| || ||1997-1998 ||0.10 ||Sales Tax Tribunal Cuttack |
| || ||2002-2003 ||0.01 ||Dy. Commissioner Delhi |
| || ||2005-2009 ||0.15 ||Sales Tax Tribunal Cuttack |
| || ||2006-2007 ||0.33 ||Gujarat Vat (Tribunal) Ahmedabad |
| || ||2012-2013 ||5.85 ||Additional Commissioner Cuttack |
| || ||2013-14 & 2014-15 ||0.59 ||Addl. Commissioner of Sales Tax Cuttack |
| || ||2013-2015 ||0.07 ||JCCT Rayagada |
| || ||2015-2016 ||0.22 ||Addl. Commissioner of Sales Tax Berhampur |
| || ||2015-2016 ||0.16 ||Sales Tax Tribunal Cuttack Orissa |
(viii) In our opinion on the basis of audit procedures and accordingto the information and explanation given to us the company has not defaulted in repaymentof loans and borrowings to financial institutions banks or dues to Debenture holders. Thecompany has not taken any loan from the government. (ix) On the basis of information andexplanation provided by the management the Company has utilised the term loans for thepurposes for which they were obtained. The Company did not raise any money by way ofinitial public offer or further public offer (including debt instruments).
(x) Based on the audit procedures performed and on the basis ofinformation and explanations provided by the management we report that no fraud by theCompany or no fraud on the Company by the officers and employees of the Company has beennoticed or reported during the year.
(xi) On the basis of records and information and explanations madeavailable and based on our examinations of the records of the company the company haspaid / provided managerial remuneration for current year in accordance with the requisiteapprovals mandated under Section 197 read with Schedule V of the Act.
(xii) On the basis of information and explanation given to us theCompany is not a Nidhi Company. Accordingly reporting under clause 3 (xii) of the saidorder is not applicable.
(xiii) As per the information and explanations and records madeavailable by the management of the company and audit procedures performed for the relatedparties transactions entered during the year the company has complied with the provisionsof section 177 and 188 of the Act where applicable. As explained and as per the records /details the related party transactions have been disclosed in the standalone financialstatements as required by the applicable accounting standards (Refer Note no.50).
(xiv) During the year the Company has not made any preferentialallotment or private placement of shares or fully or partly paid convertible debenturesand hence reporting under clause 3 (xiv) of the Order is not applicable to the Company.
(xv) According to the information and explanations given to us andbased on our examination of the records the Company has not entered into non-cashtransactions with directors or persons connected with him. Accordingly clause 3(xv) ofthe Order is not applicable.
(xvi) According to the information and explanation given to us theCompany is not required to be registered under section 45-IA of the Reserve Bank of IndiaAct 1934.
Annexure B to the Auditors' Report
Report on the Internal Financial Controls under Clause (i) ofSub-section 3 of Section 143 of the Companies Act 2013 ("the Act")
We have audited the internal financial controls over financialreporting of JK Paper Limited ("the Company") as of 31st March 2021 inconjunction with our audit of the standalone financial statements of the Company for theyear ended on that date.
Management's Responsibility for Internal Financial Controls
The Board of Director of the Company is responsible for establishingand maintaining internal financial controls based on the internal control over financialreporting criteria established by the Company considering the essential components ofinternal control stated in the Guidance Note on Audit of Internal Financial Controls OverFinancial Reporting issued by the Institute of Chartered Accountants of India(ICAI'). These responsibilities include the design implementation andmaintenance of adequate internal financial controls that were operating effectively forensuring the orderly and efficient conduct of its business including adherence tocompany's policies the safeguarding of its assets the prevention and detection offrauds and errors the accuracy and completeness of the accounting records and the timelypreparation of reliable financial information as required under the Companies Act 2013.
Our responsibility is to express an opinion on the Company'sinternal financial controls over financial reporting based on our audit. We conducted ouraudit in 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 Companies Act 2013 tothe extent applicable to an audit of internal financial controls both applicable to anaudit of Internal Financial Controls and both issued by the Institute of CharteredAccountants of India. Those Standards and the Guidance Note require that we comply withethical requirements and plan and perform the audit to obtain reasonable assurance aboutwhether adequate internal financial controls over financial reporting was established andmaintained and if such controls operated effectively in all material 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 andappropriate to provide a basis for our audit opinion on the Company's internalfinancial controls system over financial reporting.
Meaning of Internal Financial Controls over Financial Reporting
A company's internal financial control over financial reporting isa process 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 controlover financial reporting includes those policies and procedures that
(1) pertain to the maintenance of records that in reasonable detailaccurately and fairly reflect the transactions and dispositions of the assets of thecompany;
(2) provide reasonable assurance that transactions are recorded asnecessary to permit preparation of financial statements in accordance with generallyaccepted accounting principles and that receipts and expenditures of the company arebeing made only in accordance with authorisations of management and directors of thecompany; and
(3) provide reasonable assurance regarding prevention or timelydetection of unauthorised acquisition use or disposition of the company's assetsthat could have a material effect on the financial statements.
Inherent Limitations of Internal Financial Controls Over FinancialReporting
Because of the inherent limitations of internal financial controls overfinancial reporting 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 overfinancial reporting to future periods are subject to the risk that the internal financialcontrol over financial reporting may become inadequate because of changes in conditionsor that the degree of compliance with the policies or procedures may deteriorate.
In our opinion the Company has in all material respects an adequateinternal financial controls system over financial reporting and such internal financialcontrols over financial reporting were operating effectively as at 31st March 2021 basedon the internal control over financial reporting criteria established by the Companyconsidering the essential components of internal control stated in the Guidance Note onAudit of Internal Financial Controls Over Financial Reporting issued by the Institute ofChartered Accountants of India.
|For LODHA & CO. |
|Chartered Accountants |
|Firms Registration No. 301051E |
|(N.K. Lodha) |
|Membership No.085155 |
|UDIN: 21085155AAAACM3095 |
|Place: New Delhi |
|Dated: 24th May 2021 |