The Members of JK Paper Limited
Report on the Audit of the Standalone Financial Statements
We have audited the accompanying standalone financial statements of JK Paper Limited("the Company") which comprise the Balance Sheet as at 31st March 2020 theStatement of Profit and Loss (including Other Comprehensive Income) Statement of Changesin Equity and the Statement of Cash Flows for the year then ended and notes to thefinancial statements including a summary of the significant accounting policies and otherexplanatory information (herein after referred to as "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 andfair view in conformity with the accounting principles generally accepted in India of thestate of Affairs of the Company as at 31st March 2020 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) specifiedunder Section 143(10) of the Companies Act 2013. Our responsibilities under thoseStandards are further described in the Auditor's Responsibilities for the Audit of theFinancial Statements section of our report. We are independent of the Company inaccordance with the Code of Ethics issued by the Institute of Chartered Accountants ofIndia together with the ethical requirements that are relevant to our audit of thefinancial statements under the provisions of the Companies Act 2013 and the Rules madethereunder and we have fulfilled our other ethical responsibilities in accordance withthese requirements and the Code of Ethics. We believe that the audit evidence we haveobtained is sufficient and appropriate to provide a basis for our opinion.
Key Audit Matters
Key audit matters are those matters that in our professional judgment were of mostsignificance in our audit of the standalone financial statements for the financial yearended 31st March 2020. 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: |
| ||Control testing: |
|The company has given letter of comfort to banker against borrowing facilities extended to a step down subsidiary of H361.14 crs (PY H166.14 crs) . The Company has also invested H121 crs up to year end in the preference share capital of subsidiaries (including a step down subsidiary) where dividend rate is not at par with market instruments. || 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: |
|We have considered the valuation of financial instruments as key audit matter considering complexities and financial impact involved over financial statements. || 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 FVAs. |
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 the ManagementDiscussion and Analysis Board's Report including Annexures to Board's Report BusinessResponsibility Report Corporate Governance and Shareholder's Information but does notinclude the standalone financial 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 during the course of our audit or otherwise appearsto be materially misstated. If based on the work we have performed we conclude that thereis a material misstatement of this other information we are required to report that fact.We have nothing to report in this regard.
Responsibility of Management and Those Charged with Governance for the StandaloneFinancial Statements
The Company's Board of Directors is responsible for the matters stated in Section134(5) of the Companies Act 2013 with respect to the preparation of these financialstatements that give a true and fair view of the financial position financialperformance changes in equity and cash flows of the Company in accordance with theaccounting principles generally accepted in India including the Indian AccountingStandards (Ind AS) specified under Section 133 of the Act. This responsibility alsoincludes maintenance of adequate accounting records in accordance with the provisions ofthe Act for safeguarding of the assets of the Company and for preventing and detectingfrauds and other irregularities; selection and application of appropriate accountingpolicies; making judgments and estimates that are reasonable and prudent; and designimplementation 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 as applicablematters related to going concern and using the going concern basis of accounting unlessthe Board of Directors either intends to liquidate the Company or to cease operations orhas no realistic alternative but to do so.
Those Board of Directors are also responsible for overseeing the Company's financialreporting 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 highlevel of assurance but is not a guarantee that an audit conducted in accordance with SAswill always detect a material misstatement when it exists. Misstatements can arise fromfraud or error and are considered material if individually or in the aggregate theycould reasonably be expected to infiuence 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 Companies Act 2013 we are also responsible for expressing our opinion on whetherthe Company has adequate internal financial controls system in place and the operatingeffectiveness 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 ability ofthe Company to continue as a going concern. If we conclude that a material uncertaintyexists we are required to draw attention in our auditor's report to the relateddisclosures in the financial statements or if such disclosures are inadequate to modifyour opinion. Our conclusions are based on the audit evidence obtained up to the date ofour auditor's report. However future events or conditions may cause the Company to ceaseto continue as a going concern.
Evaluate the overall presentation structure and content of the financialstatements including the disclosures and whether the financial statements represent theunderlying transactions 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 infiuenced. We considerquantitative materiality and qualitative factors in
(i) planning the scope of our audit work and in evaluating the results of our work; and
(ii) to evaluate the effect of any identified misstatements in the financialstatements.
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 standalone financial statementsof the current period and are therefore the key audit matters. We describe these mattersin our auditor's report unless law or regulation precludes public disclosure about thematter or when in extremely rare circumstances we determine that a matter should not becommunicated in our report because the adverse consequences of doing so would reasonablybe expected to outweigh the public interest 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 ofthe Companies Act 2013 we give in the "Annexure A" a statement on thematters specified in paragraphs 3 and 4 of the Order to the extent applicable.
2. As required by Section 143(3) of the Companies Act 2013 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 including other comprehensiveincome the Statement of Changes in Equity and the Statement of Cash Flows dealt with bythis Report are in agreement with the books of account.
d) In our opinion the aforesaid financial statements comply with the Indian AccountingStandards specified under Section 133 of the Act read with Rule 7 of the Companies(Accounts) Rules 2014.
e) On the basis of the written representations received from the directors as on 31stMarch 2020 taken on record by the Board of Directors none of the directors isdisqualified as on 31st March 2020 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 over financialreporting of the Company and the operating effectiveness of such controls refer to ourseparate Report in "Annexure B". Our report expresses an unmodified opinion onthe adequacy and operating effectiveness of the Company's internal financial controls overfinancial reporting.
g) The managerial remuneration for the year ended 31st March 2020 has been paid/provided for by the Company to its directors in accordance with the provisions of Section197 read with Schedule V to the Act.
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 standalone financial statements.;
ii. The Company has made provision as required under the applicable law or IndianAccounting Standards for material foreseeable losses if any on long-term contractsincluding derivative contracts.;
iii. There were no amounts which were required to be transferred to the InvestorEducation and Protection Fund by the Company.
Annexure A to the Auditors' Report
The Annexure referred to in Independent Auditors' Report to the members of the JK PaperLimited on the standalone financial statements for the year ended 31st March 2020 wereport that:
(i) (a) The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets.
(b) The fixed assets have been physically verified by the management according to theprogram of periodical verification in phased manner which in our opinion is reasonablehaving regard to the size of the company and the nature of its fixed assets. Thediscrepancies noticed on such physical verification were not material.
(c) According to the information and explanations given to us and on the basis of ourexamination of the records of the Company the title deeds of immovable properties areheld in the name of the Company as at Balance Sheet date except as stated in note no. 2(a)of the standalone financial statements.
(ii) The inventories of the Company (except stock in transit which has been verifiedon receipt of material and to be read with note no. 37 w.r.t. year end verification ofinventory) have been physically verified by the management at reasonable intervals and theprocedures of physical verification of inventory followed by the Management are reasonablein relation to the size of the Company and nature of its business. The discrepanciesnoticed on such physical verification of inventory as compared to book records were notmaterial and have been properly dealt with in the books of accounts.
(iii) The Company has not granted any loans to bodies corporate covered in the registermaintained under section 189 of the Companies Act 2013 (the Act') hence otherparts of this clause are not applicable.
(iv) In our opinion and according to the information and explanations given to us theCompany has complied with the provisions of section 185 and 186 of the Act with respectto the loans granted providing guarantees and investments made.
(v) In our opinion and according to the information and explanations given to us theCompany has complied with the directives issued by the Reserve Bank of India and theprovisions of Section 73 to 76 of the Act or any other relevant provisions of the Act andthe rules framed there under with regard to deposits accepted from the public. We havebeen informed that no order has been passed by the Company Law Board or National CompanyLaw Tribunal or Reserve Bank of India or any Court or other Tribunal in this regard.
(vi) We have broadly reviewed the books of account maintained by the company pursuantto the rules made by the Central Government for the maintenance of the cost records undersection 148(1) of the act in respect of the company's products to which the said rules aremade applicable and are on the opinion that prima facie the prescribed cost records havebeen made and maintained. We have however not made a detailed examination of the saidrecords with a view to determine whether they are accurate or complete.
(vii) (a) According to the records of the company the company is regular in depositingundisputed statutory dues including provident fund employees' state insurance incometax custom duty goods and service tax cess and other material statutory dues with theappropriate authorities to the extent applicable and there are no undisputed statutorydues payable for a period of more than six months from the date they become payable as at31st March 2020.
(b) According to the records and information & explanations given to us there areno dues in respect of income tax sales tax service tax goods and service tax duty ofexcise and value added tax that have not been deposited with the appropriate authoritieson 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 Raygada |
| || ||1982-1983 ||0.41 ||Supreme Court |
| || ||1986-1995 ||1.31 ||High Court Cuttack |
| || ||2004-2010 ||0.20 ||CESTAT Ahmedabad |
| || ||2007-2010 ||2.88 ||CESTAT Ahmedabad |
| || ||2008-2012 ||0.69 ||CESTAT Ahmedabad |
| || ||2009-2010 ||0.05 ||CESTAT Ahmedabad |
| || ||2010-2011 ||0.09 ||CESTAT Ahmedabad |
| || ||2011-2012 ||0.09 ||CESTAT Ahmedabad |
| || ||2011-2012 ||0.36 ||Addl. Commissioner Excise Bhubaneshwar |
| || ||2011-2015 ||2.56 ||CESTAT Ahmedabad |
| || ||2012-2013 ||0.09 ||CESTAT Ahmedabad |
| || ||2012-2014 ||0.16 ||CESTAT Ahmedabad |
| || ||2013-2014 ||0.05 ||CESTAT Ahmedabad |
| || ||2014-2015 ||0.04 ||CESTAT Ahmedabad |
| || ||2014-2015 ||0.03 ||CESTAT Ahmedabad |
| || ||2014-2017 ||0.10 ||Asst. Commissioner Rayagada |
| || ||2015-2016 ||7.42 ||CESTAT Mumbai |
| || ||2015-2016 ||0.04 ||CESTAT Ahmedabad |
| || ||2015-2017 ||0.08 ||CESTAT Ahmedabad |
| || ||2015-2017 ||0.23 ||Commissioner (Appeals) Surat |
| || ||2011-2012 & || || |
|Custom Act 1962 ||Custom Duty ||2012-2013 ||0.69 ||CESTAT Ahmedabad |
|Finance Act 1944 ||Service Tax ||FY 2009-2010 ||0.25 ||Commissioner (Appeals) Surat |
| || ||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 ||0.55 ||Gujarat VAT (Tribunal) Ahmedabad |
| || ||2012-2013 ||5.85 ||Sales Tax Tribunal - Cuttack |
| || ||2013-14 & 2014-15 ||0.59 ||Addl. Commissioner of Sales Tax Cuttack |
| || ||2013-2015 ||0.07 ||JCCT Rayagada |
| || ||2015-2016 ||0.08 ||Addl. Commissioner of Sales Tax Berhampur |
| || ||2015-2016 ||0.14 ||Addl. Commissioner of Sales Tax Berhampur |
| || ||2015-2016 ||0.01 ||Sales Tax Tribunal Cuttack Orissa |
| || ||2016-2018 ||0.15 ||Sales Tax Tribunal Cuttack Orissa |
|Income Tax Act 1961 ||Income Tax ||FY 2010-11 ||0.01 ||CIT(Appeals) |
| || ||FY 2015-16 ||0.03 ||CIT(Appeals) |
(viii) In our opinion on the basis of audit procedures and according to theinformation and explanation given to us the company has not defaulted in repayment ofloans 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 and explanation given to us term loans have beenapplied for the purposes for which they were obtained. The Company did not raise any moneyby way of initial public offer or further public offer (including debt instruments).
(x) Based on the audit procedures performed and on the basis of information andexplanations given to us no fraud by the Company or on the Company by its officers oremployees has been noticed or reported during the course of our audit.
(xi) On the basis of records and information and explanations made available and basedon our examinations of the records of the company the company has paid / providedmanagerial remuneration for current year in accordance with the requisite approvalsmandated under Section 197 read with Schedule V of the Act. (Refer Note no.50(b).
(xii) On the basis of information and explanation given to us the Company is not aNidhi Company. Accordingly reporting under clause 3 (xii) of the said order is notapplicable.
(xiii) As per the information and explanations and records made available by themanagement of the company and audit procedures performed for the related partiestransactions entered during the year the company has complied with the provisions ofsection 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 preferential allotment or privateplacement of shares or fully or partly paid convertible debentures and hence reportingunder clause 3 (xiv) of the Order is not applicable to the Company.
(xv) According to the information and explanations given to us and based on ourexamination of the records the Company has not entered into non-cash transactions withdirectors or persons connected with him. Accordingly clause 3(xv) of the Order is notapplicable.
(xvi) According to the information and explanation given to us the Company is notrequired to be registered under section 45-IA of the Reserve Bank of India Act 1934.
Annexure B to the Auditors' Report
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 JK PaperLimited ("the Company") as of 31st March 2020 in conjunction with our audit ofthe standalone financial statements of the Company for the year ended on that date.
Management's Responsibility for Internal Financial Controls
The Board of Director of the Company is responsible for establishing and maintaininginternal financial controls based on the internal control over financial reportingcriteria established by the Company considering the essential components of internalcontrol stated in the Guidance Note on Audit of Internal Financial Controls Over FinancialReporting issued by the Institute of Chartered Accountants of India (ICAI'). Theseresponsibilities include the design implementation and maintenance of adequate internalfinancial controls that were operating effectively for ensuring the orderly and eficientconduct of its business including adherence to company's policies the safeguarding ofits assets the prevention and detection of frauds and errors the accuracy andcompleteness of the accounting records and the timely preparation of reliable financialinformation as required under the Companies 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 deemedto be prescribed under section 143(10) of the Companies Act 2013 to the extentapplicable to an audit of internal financial controls both applicable to an audit ofInternal Financial Controls and both issued by the Institute of Chartered Accountants ofIndia. Those Standards and the Guidance Note require that we comply with ethicalrequirements and plan and perform the audit to obtain reasonable assurance about whetheradequate 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 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 control based on the assessed risk. The proceduresselected depend on the auditor's judgment including the assessment of the 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 controls systemover financial reporting.
Meaning of Internal Financial Controls over Financial Reporting
A company's internal financial control over financial reporting is a process designedto provide reasonable assurance regarding the reliability of financial reporting and thepreparation of financial statements for external purposes in accordance with generallyaccepted accounting principles. A company's internal financial control over financialreporting includes those policies and procedures that
(1) pertain to the maintenance of records that in reasonable detail accurately andfairly reffect the transactions and dispositions of the assets of the company;
(2) provide reasonable assurance that transactions are recorded as necessary to permitpreparation of financial statements in accordance with generally accepted accountingprinciples and that receipts and expenditures of the company are being made only inaccordance with authorisations of management and directors of the company; and
(3) provide reasonable assurance regarding prevention or timely detection ofunauthorised acquisition use or disposition of the company's assets that could have amaterial effect on the financial statements.
Inherent Limitations of Internal Financial Controls Over Financial Reporting
Because of the inherent limitations of internal financial controls over financialreporting including the possibility of collusion or improper management override ofcontrols material misstatements due to error or fraud may occur and not be detected.Also projections of any evaluation of the internal financial controls over financialreporting to future periods are subject to the risk that the internal financial controlover financial reporting may become inadequate because of changes in conditions or thatthe degree of compliance with the policies or procedures may deteriorate.
In our opinion the Company has in all material respects an adequate internalfinancial controls system over financial reporting and such internal financial controlsover financial reporting were operating effectively as at 31st March 2020 based on theinternal control over financial reporting criteria established by the Company consideringthe essential components of internal control stated in the Guidance Note on Audit ofInternal Financial Controls Over Financial Reporting issued by the Institute of CharteredAccountants of India.