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Seshasayee Paper & Boards Ltd.

BSE: 502450 Sector: Industrials
NSE: SESHAPAPER ISIN Code: INE630A01024
BSE 00:00 | 26 May 119.40 -1.25
(-1.04%)
OPEN

120.40

HIGH

121.30

LOW

118.00

NSE 00:00 | 26 May 120.25 -0.25
(-0.21%)
OPEN

116.70

HIGH

124.40

LOW

116.70

OPEN 120.40
PREVIOUS CLOSE 120.65
VOLUME 872
52-Week high 225.70
52-Week low 82.05
P/E 3.94
Mkt Cap.(Rs cr) 753
Buy Price 116.00
Buy Qty 11.00
Sell Price 119.40
Sell Qty 10.00
OPEN 120.40
CLOSE 120.65
VOLUME 872
52-Week high 225.70
52-Week low 82.05
P/E 3.94
Mkt Cap.(Rs cr) 753
Buy Price 116.00
Buy Qty 11.00
Sell Price 119.40
Sell Qty 10.00

Seshasayee Paper & Boards Ltd. (SESHAPAPER) - Auditors Report

Company auditors report

TO THE MEMBERS OF

M/s SESHASAYEE PAPER AND BOARDS LIMITED

Report on the audit of Standalone Financial Statements Opinion

We have audited the accompanying Standalone Financial Statements of SESHASAYEE PAPERAND BOARDS LIMITED ("the Company") which comprise the Balance Sheet as at March31 2019 and the Statement of Profit and Loss (including Other Comprehensive Income)Statement of Changes in Equity and the Statement of Cash Flows for the year ended on thatdate and Notes to the Financial Statements including a summary oftheSignificant Policiesand other explanatory information hereinafter referred to as Financial Statements In ouropinion and to the best of our information and according to the explanations given to usthe aforesaid Standalone Financial Statements give the information required by theCompanies Act 2013 ("Act") in the manner so required and give a true and fairview in conformity with the Indian Accounting Standards prescribed under section 133 ofthe Act read with the Companies (Indian Accounting Standards) Rules 2015 as amended("Ind AS") and other accounting principles generally accepted in India of thestate of affairs of the Company as at March 31 2019 the Profit (Including OtherComprehensive Income) the changes in Equity and its cash flows for the year ended onthat date.

Basis for Opinion

We conducted our audit of the financial statements in accordance with the Standards onAuditing (SAs) specified under Section 143 (10) of the Act.

Our responsibilities under those Standards are further described in the Auditor'sResponsibilities for the Audit of the Financial Statements section of our report. We areindependent of the Company in accordance with the Code of Ethics issued by the Instituteof Chartered Accountants of India together with the ethical requirements that are relevantto our audit of the financial statements under the provisions of the Act and the Rulesthereunder 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 on the financialstatements.

Key Audit Matters

Key audit matters are those matters that in our professional judgement were of mostsignificance in our audit of the Financial Statements of the current period. These matterswere addressed in the context of our audit of Financial Statements as a whole and informing our opinion thereon and we do not provide a separate opinion on these matte र Wehave determined the matters described below to be the key audit matters to be communicatedin our report.

Key Audit Matters Response to Key Audit Matters & Conclusion
• Purchase of Bagasse – Raw material from related party. • We understood and tested the design and operating effectiveness of controls as established by the management in determining the various parameters and the ultimate price determination.
During the year the company has purchased Bagasse from a related party (Associate) for an aggregate purchase value of र 19.16 crores pursuant to a long-term agreement with the related party.
We considered the purchase of Bagaasse from a related party as a key audit matter as it constitutes significant percentage of bagasse purchases a key raw material. • We have also tested the relevant records and found the price determination to be in accordance with the agreement. Based on the above procedures in or opinion the management's determination of the price of Bagasse for the year is considered to be reasonable.
The price of Bagasse is fixed for the year pursuant to the terms of the agreement taking into account the quantities of Bagasse supplied the calorific value of fuel supplied by the company and the calorific value of Bagasse determined by the both the parties. • The price of Bagasse is fixed for the year pursuant to the terms of the agreement taking into account the calorific value of fuel supplied to the related party and the calorific value of Bagasse determined by both the parties.
• As on 31st March 2019 the company carries cash and bank balances of र 310.57 crores. We considered the amount of cash and bank balance as a key audit matter given the relative size of the balance in the financial statements • We have verified and tested the design and operating effectiveness of controls with regard to maintenance of cash balances and preparation of bank reconciliation statements.
• We have verified the cash balance at the end of the year as well as the bank reconciliation statements.
• We have also received confirmation of balances from banks directly which corroborates with the results of our audit procedures.
• Provision for Income-tax has been made considering the deduction under Section 80-IA in respect of the captive power plant as well as MAT credit [Refer Note No. 35 (B)]. We consider this as a key audit matter given the relative significance of the tax provision in the Statement of Profit and Loss. • We have verified the estimates and judgements made by the management in computing the income for the year as well as the deduction under Section 80-IA and found them to be consistent with the basis adopted in the earlier years and accepted by the Income-tax Department.
• We have also verified the MAT credit available with the income-tax returns filed for the financial year 2017-18.
• Based on these procedures the management's estimate of provision for tax is found reasonable.

Management Responsibility for the Standalone Financial Statements

The Company's Board of Directors is responsible for the matters stated in Section 134(5) of the Act with respect to the preparation of these Standalone Financial Statementsthat give a true and fair view of the Financial Position Financial Performance (includingOther Comprehensive Income) Changes in Equity and Cash Flows of the Company in accordancewith Ind AS and other accounting principles generally accepted in India. 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 appropriateimplementation and maintenance of accounting policies; making judgments and estimates thatare reasonable and prudent; and design implementation and maintenance of adequateinternal financial controls that were operating effectively for ensuring the accuracy andcompleteness of the accounting records relevant to the preparation and presentation ofthe Financial Statements that give a true and fair view and are free from materialmisstatement whether due to fraud or error. In preparing the Financial Statementsmanagement 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 management either intends to liquidate the Company orto cease operations or has no realistic alternative but to do so.

The Board of Directors is also responsible for overseeing the Company's financialreporting 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 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 influencethe economic decisions of users taken on thebasis of these Financial Statements. As part of an audit in accordance with SAs weexercise professional judgment and maintain professional skepticism throughout the audit.We also :

Identify and assess the risks of material misstatement of the Financial Statementswhether due to fraud or error design and perform audit procedures responsive to thoserisks and obtain audit evidence that is sufficient and appropriate to provide a basis forour opinion. The risk of not detecting a material misstatement resulting from fraud ishigher than for one resulting from error as fraud may involve collusion forgeryintentional omissions misrepresentations or the override of internal control.

Obtain an understanding of internal controls relevant to the audit in order to designaudit procedures that are appropriate in the circumstances. Under Section 143 (3) (i) ofthe Act we are also responsible for expressing our opinion on whether the Company hasadequate Internal Financial Controls system in place and the operating effectiveness ofsuch controls.

Evaluate the appropriateness of accounting policies used and the reasonableness ofaccounting estimates and related disclosures made by management.

Conclude on the appropriateness of management's use of the going concern basis ofaccounting and based on the audit evidence obtained whether a material uncertaintyexists related to events or conditions that may cast doubt on the Company's significantability 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 Financial Statementsincluding the disclosures and whether the Financial Statements represent the underlyingtransactions and events in a manner that achieves fair presentation.

Materiality is the magnitude of misstatements in the standalone financial statementsthat individually 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.

Report on Other Legal and Regulatory Requirements

1. 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 (including Other ComprehensiveIncome) the Statement of Changes in Equity and the Cash Flow Statement dealt with by thisReport are in agreement with the books of account.

d) In our opinion the aforesaid standalone financial statements comply with the IndianAccounting Standards prescribed under Section 133 of the Act read with Rule 7 of theCompanies (Accounts) Rules 2014.

e) On the basis of the written 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 over financialreporting of the Company and the operating effectiveness of such controls refer to ourseparate Report in "Annexure A".

g) With respect to the other matters to be included in the Auditor's Report inaccordance with the requirements of Section 197 (16) of the Act as amended: In ouropinion and to the best of our information and according to the explanations given to usthe remuneration paid by the Company to its directors during the year is in accordancewith the provisions of Section 197 of the Act.

h) With respect to the other matters to be included in the Auditors' 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.

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 to theInvestor Education and Protection Fund by the company.

2. As required by the Companies (Auditors' Report) Order 2016 ("the Order")issued by the Central Government in terms of Section 143 (11) of the Act we give in"Annexure B" a statement on the matters specified in paragraphs 3 and 4 of theOrder.

MAHARAJ N R SURESH AND CO. R SUBRAMANIAN AND COMPANY LLP
Firm Regn. No. 001931S Firm Regn. No. S200041
N R Suresh N Krishnamurthy
Membership No. 021661 Membership No. 019339
Partner Partner
Chartered Accountants Chartered Accountants
Place : Chennai
Date : May 25 2019

ANNEXURE ‘A' TO THE INDEPENDENT AUDITOR'S REPORT OF EVEN DATE ON THE STANDALONEIND AS FINANCIAL STATEMENTS OF SESHASAYEE PAPER AND BOARDS 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 SESHASAYEEPAPER AND BOARDS LIMITED ("the Company") as of March 31 2019 in conjunctionwith our audit of the Standalone Ind AS Financial Statements of the Company for the yearended 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 Controlstated 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 efficientconduct 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.

Auditors' 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 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 ICAI. Those Standards and the Guidance Noterequire that we comply with ethical requirements and plan and perform the audit to obtainreasonable assurance about whether adequate Internal Financial Controls over FinancialReporting was established and maintained and if such controls operated effectively in allmaterial 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 Auditors' judgement 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:

(i) pertain to the maintenance of records that in reasonable detail accurately andfairly reflect the transactions and dispositions of the assets of the company;

(ii) 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

(iii) 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.

Opinion

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 March 31 2019 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 ICAI.

MAHARAJ N R SURESH AND CO. R SUBRAMANIAN AND COMPANY LLP
Firm Regn. No. 001931S Firm Regn. No. S200041
N R Suresh N Krishnamurthy
Membership No. 021661 Membership No. 019339
Partner Partner
Chartered Accountants Chartered Accountants
Place : Chennai
Date : May 25 2019

ANNEXURE ‘B' TO THE INDEPENDENT AUDITORS' REPORT OF EVEN DATE ON THE STANDALONEIND AS FINANCIAL STATEMENTS OF SESHASAYEE PAPER AND BOARDS LIMITED.

The Annexure referred to in Paragraph 2 under the heading ‘Report on Other Legaland Regulatory Requirements' of our Report of even date :

(i) (a) The Company is maintaining proper records showing full particulars includingquantitative details and situation of fixed assets;

(b) These fixed assets have been physically verified by the Management at reasonableintervals and no material discrepancies were noticed on such verification.

(c) The title deeds of immovable properties are held in the name of the Company. (ii)The Management has conducted physical verification of inventory at reasonable intervalsand no material discrepancies were noticed.

(iii) The Company has granted a loan of र 60 lakhs to a party covered in the registermaintained under Section 189 of the Companies Act 2013. The terms and conditions of theloan are not prejudicial to the interests of the Company. Schedule of repayment ofprincipal and payment of interest has been stipulated. However repayment of principal andpayment of interest have not fallen due during the year. There are no amounts which areoverdue.

(iv) The Company has complied with the provisions of Sections 185 and 186 of theCompanies Act 2013 in respect of loans investments provided by the Company. TheCompany has not provided any guarantee or security to any company covered under Section185.

(v) The Company has not accepted any deposits from the public.

(vi) The Central Government has prescribed maintenance of Cost Records under Sub-section(1) of Section 148 of the Companies Act 2013 and such accounts and records have been madeand maintained.

(vii) According to the information and explanations given to us in respect of Statutorydues :

(a) The Company is regular in depositing undisputed statutory dues including ProvidentFund Employees' State Insurance Income Tax Sales Tax Service Tax Duty of CustomsDuty of Excise Value Added Tax Cess Goods and Service Tax and any other Statutory Duesto the appropriate authorities and there were no undisputed amounts payable which were inarrears as at 31st March 2019 for a period of more than six months from the date theybecame payable.

(b) Details of dues of Income Tax or Sales Tax or Service Tax or Duty of Customs orDuty of Excise or Value Added Tax Cess and Goods and Service Tax have not been depositedas on 31st March 2019 on account of disputes are given below :

Name of the Statute Nature of dues Amount र crores Forum where the dispute is pending Period to which the dues belong
Central Excise Act 1944 Excise Duty 0.21 CESTAT February 2008 - December 2012
- do - - do - 0.08 - do - December 2005 - June 2007
- do - - do - 0.41 - do - April 2007 - March 2011
- do - - do - 0.02 Hon'ble High Court of Madras 07 12 2008
- do - - do - 0.05 - do - October - November 1996
Cenvat Credit Rules 2004 Service Tax 1.17 Commissioner (Appeals) September 2004 - February 2015 June 2015 October 2015
Income Tax Act 1961 TDS 0.03 Commissioner of Income Tax (Appeals) 2013-14
Customs Act 1962 Customs Duty 6.24 CESTAT March 2012 - January 2013
- do - - do - 0.19 - do - 13 12 2002
- do - Cenvat 3.71 - do - April 2012 - January 2016

(viii) The Company has not defaulted in repayment of loans or borrowing to a financialinstitution bank Government.

(ix) The Company has not raised any moneys by way of initial public offer or furtherpublic offer (including debt instruments) during the year.

(x) The Company has not noticed any fraud by the Company or any fraud on the Company byits Officers or employees or reported during the year.

(xi) The managerial remuneration has been paid or provided in accordance with therequisite approvals mandated by the provisions of Section 197 read with Schedule V to theCompanies Act 2013.

(xii) The Company is not a Nidhi Company and hence complying with the provisions of theNidhi Rules 2014 does not arise.

(xiii) All transactions with the related parties are in compliance with Sections 177and 188 of the Companies Act 2013 where applicable and the details have been disclosedin the Financial Statements etc. as required by the applicable Accounting Standards.

(xiv) The Company has not made any preferential allotment or private placement ofshares or fully or partly convertible debentures during the year under review.

(xv) The Company has not entered into any non-cash transactions with Directors orpersons connected with him.

(xvi) The Company is not required to be registered under Section 45-IA of the ReserveBank of India Act 1934.

MAHARAJ N R SURESH AND CO. R SUBRAMANIAN AND COMPANY LLP
Firm Regn. No. 001931S Firm Regn. No. S200041
N R Suresh N Krishnamurthy
Membership No. 021661 Membership No. 019339
Partner Partner
Chartered Accountants Chartered Accountants
Place : Chennai
Date : May 25 2019