TO THE MEMBERS OF
M/s SESHASAYEE PAPER AND BOARDS LIMITED
Report on the audit of Standalone Financial Statements
We have audited the accompanying Standalone Financial Statements of SESHASAYEE PAPERAND BOARDS LIMITED ("the Company") which comprise the Balance Sheet as at March31 2020 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 then ended andNotes to the Financial Statements including a summary of the Significant AccountingPolicies and other explanatory information hereinafter referred to as FinancialStatements.
In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid Standalone Financial Statements give the information requiredby the Companies Act 2013 ("Act") in the manner so required and give a true andfair view in conformity with the Indian Accounting Standards prescribed under Section133 of the Act read with the Companies (Indian Accounting Standards) Rules 2015 asamended ("Ind AS") and other accounting principles generally accepted in Indiaof the state of affairs of the Company as at March 31 2020 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 Auditors'Responsibilities 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.
Emphasis of Matter
a) Attention is invited to note no 1 B (1.2) (g) of the financial statements which isextracted below : "The Company has considered the possible effects that may resultfrom the COVID-19 pandemic on the carrying amounts of Property Plant and EquipmentInvestments Inventories receivables and other current assets. In developing theassumptions relating to the possible future uncertainties in the global economicconditions because of this pandemic the Company as at the date of approval of thesefinancial results has used internal and external sources on the expected futureperformance of the Company. The Company has performed sensitivity analysis on theassumptions used and based on current estimates expects the carrying amount of theseassets will be recovered".
b) Due to Covid-19 related lockdown we were not able to physically observe thephysical verification of inventory that was carried . out by the management at the yearend. Consequently we have performed alternate procedures to audit the existence andcondition of inventory as per the guidelines provided in SA 501 "Audit evidence-Specific consideration for stipulated items' which includes inspection of supportingdocumentation relating to purchases production sales physical verification performed bythe management and such other third party evidences where applicable and have obtainedsufficient appropriate audit evidence to issue our unmodified opinion on the standalonefinancial statements.
Our opinion on the Financial Statements is not modified in respect of the abovematters.
Key Audit Matters
Key audit matters are those matters that in our professional judgment 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 matters. 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 Rs. 13.73 crores pursuant to a long-term agreement with the related party. || 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. |
|We considered the purchase of Bagasse from a related party as a key audit matter as it constitutes a significant percentage of bagasse purchases a key raw material. || 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 by the related party and the calorific value of Bagasse determined by both the parties. |
|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. || |
|As on 31st March 2020 the Company carries cash and bank balances of Rs. 325.26 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. |
|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 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. |
| || We have verified the estimates and judgments 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 based on legal opinion. |
| || We have also verifiedthe MAT credit available with the income-tax returns filed for the financial year 2018-19. |
| || Based on these procedures the management's estimate of provision for tax is found reasonable. |
Information Other Than the Financial Statements and Auditor's Report Thereon
The Company's Board of Directors is responsible for the other information in the AnnualReport comprising of the Director's report and its annexures but does not include thestandalone financial statements and our auditor's report thereon.
Our opinion on the standalone financial statements does not cover the other informationand we do not express any form of assurance conclusion thereon.
In connection with our audit of the standalone financial statements our responsibilityis to read the other information and in doing so consider whether the other informationis materially inconsistent with the standalone financial statements or our knowledgeobtained during the course of our audit or otherwise appears to be materially misstated.If based on the work we have performed we conclude that if there is a materialmisstatement of this other information we are required to report that fact. We havenothing to report in this regard.
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 other accounting principles generally accepted in India including the AccountingStandards specified under Section 133 of the Act. This responsibility also includesmaintenance of adequate accounting records in accordance with the provisions of the Actfor safeguarding of the assets of the Company and for preventing and detecting frauds andother irregularities; selection and application of appropriate accounting policies; makingjudgments and estimates that are reasonable and prudent and design implementation andmaintenance of adequate internal financial controls that were operating effectively forensuring the accuracy and completeness of the accounting records relevant to thepreparation and presentation of the Financial Statements that give a true and fair viewand are free from material misstatement whether due to fraud or error.
In preparing the Financial Statements management is responsible for assessing theCompany's ability to continue as a going concern disclosing as applicable mattersrelated to going concern and using the going concern basis of accounting unless managementeither intends to liquidate the Company or to cease operations or has no realisticalternative but to do so. The Board of Directors is also responsible for overseeing theCompany's financial reporting process.
Auditors' 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 auditors' 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 doubt on theor error and are considered material if individually or in theaggregate they could reasonably be expected to influence the economic decisions of userstaken on the basis of these Financial Statements.
As part of an audit in accordance with SAs we exercise professional judgment andmaintain professional skepticism throughout the audit.
We also :
Identify and assess the risks of material misstatement of the 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 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 Companyhas adequate Internal Financial Controls system in place and the operating effectivenessof 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 Company's ability to significantcontinue as a going concern. If we conclude that a material uncertainty exists we arerequired to draw attention in our auditors' report to the related disclosures in theStandalone 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 ourauditors' report. However future events or conditions may cause the Company to cease tocontinue as a going concern.
Evaluate the overall presentation structure and content of the FinancialStatements including the disclosures and whether the Financial Statements represent theunderlying transactions 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
We communicate with those charged with governance regarding among other matters theplanned scope and timing of the audit and significant audit findings including anysignificant deficiencies in Internal Control that we identify during our audit.
We also provide those charged with governance with a statement that we have compliedwith relevant ethical requirements regarding independence and to communicate with themall relationships and other matters that may reasonably be thought to bear on ourindependence and where applicable related safeguards.
Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditors' Report) Order 2016 ("the Order")issued by the Central Government in terms of Section 143 (11) of the Act we givein "Annexure B" a statement on the matters specifiedin paragraphs 3 and 4 of theOrder.
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 (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 2020 taken on record by the Board of Directors none of the Directors isdisqualified as on 31 st March 2020 from being appointed as a Director in termsof Section 164(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 Auditors' 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.
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.
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 2020 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.
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' 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:
(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 effectonthefinancial . 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 March 31 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 ICAI.
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 includingfixed quantitative details and situation of assets;
(b) These fixed assets have been physically verified by the Management at the year endand 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 reasonableintervals and no material discrepancies were noticed.
(iii) The Company has not granted any loans secured or unsecured to Companies FirmsLimited Liability Partnerships or other parties covered in the Register maintained undersection 189 of the Companies Act 2013.
(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 Duty of Customs Cess Goods and Service Taxand any other Statutory Dues to the appropriate authorities and there were no undisputedamounts payable which were in arrears as at 31st March 2020 for a period ofmore than six months from the date they became 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 2020 on account of disputes are given below :
|Name of the Statute ||Nature of dues ||Amount Rs. in crores ||Forum where the dispute is pending ||Period to which the dues belong |
|Central Excise Act 1944 ||Excise Duty ||0.08 ||CESTAT ||December 2005 - June 2007 |
|-do - ||-do - ||0.02 ||Hon'ble High Court of Madras ||07 12 2008 |
|Service Tax (Finance) Act 1994 ||Service Tax ||0.10 ||CESTAT ||April 2016 - June 2017 |
|Customs Act 1962 ||Customs Duty ||6.24 ||CESTAT ||March 2012 - January 2013 |
|-do - ||-do - ||0.19 ||-do - ||13 12 2002 |
|-do - ||-do - ||0.09 ||-do - ||18 01 2018 |
|-do - ||Cenvat ||3.71 ||-do - ||April 2012 to January 2016 |
(viii) The Company has not defaulted in repayment of loans or borrowing to a financialinstitution bank Government. The Company has not issued any Debentures.
(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 or reported during the year any fraud by the Company orany fraud on the Company by its Officers or employees.
(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. However the provision of commission to Non-Whole time Directors forRs. 0.34 crores is subject to the approval of the shareholders.
(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 Directorsor persons 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. 004137S /S200041 |
|N R Suresh ||N Krishnamurthy |
|Membership No. 021661 ||Membership No. 019339 |
|Partner ||Partner |
|Chartered Accountants ||Chartered Accountants |
|Place : Chennai || |
|Date : May 30 2020 || |