To the Members of STAR PAPER MILLS LIMITED
Report on the Audit of the Ind AS Financial Statements
We have audited the accompanying Ind AS financial statements of Star Paper MillsLimited ("the Company") which comprise the Balance sheet as at March 31st 2020the Statement of Profit and Loss including the statement of Other Comprehensive Incomethe Cash Flow Statement and the statement of Changes in Equity for the year then endedand notes to the financial statements including a summary of significant accountingpolicies and other explanatory information.
In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid Ind AS financial statements give the information required bythe Companies Act 2013 as amended ("the Act") in the manner so required andgive a true and fair view in conformity with the accounting principles generally acceptedin India of the state of affairs of the Company as at March 31st 2020 its profitincluding other comprehensive income its cash flows and the changes in equity for theyear ended on that date.
Basis for Opinion
We conducted our audit of the Ind AS financial statements in accordance with theStandards on Auditing (SAs) as specified under section 143(10) of the Act. Ourresponsibilities under those Standards are further described in the 'Auditor'sResponsibilities for the Audit of the Ind AS Financial Statements' section of our report.We are independent of the Company in accordance with the 'Code of Ethics' issued by theInstitute of Chartered Accountants of India together with the ethical requirements thatare relevant to our audit of the financial statements under the provisions of the Act andthe Rules there under and we have fulfilled our other ethical responsibilities inaccordance with these requirements and the Code of Ethics. We believe that the auditevidence we have obtained is sufficient and appropriate to provide a basis for our auditopinion on the Ind AS financial statements.
Emphasis of Matters
We draw attention to the following matters in the notes of the financial statement.
a) Note 32.6 to the financial result describes the uncertainties and the impact of theCovid-19 pandemic on the company's operations and results as assessed by the management.The actual results may differ from such estimates depending on the future developments.
b) In view of disqualification u/s164(2) remuneration aggregating to Rs. 650.96 Lacspaid/provided to two directors is recoverable subject to removal of disqualificationgranted by competent authority ( Note No. 32.5)
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 the financial statements as a whole and informing our opinion thereon and we do not provide a separate opinion on these matters. Wehave determined the matter described below to the key audit matters to be communicated inour report.
We have determined the matters described below to be the key audit matters to becommunicated in our report. We have fulfilled the responsibilities described in theAuditor's responsibility for the audit of the Ind AS financial statements section of ourreport including in relation to these matters. Accordingly our audit included theperformance of procedures designed to respond to our assessment of the risks of materialmisstatement of the Ind AS financial statement. The results of our audit proceduresincluding the procedures performed to address the matters below provide the basis for ouraudit opinion on the accompanying Ind AS financial statements.
|Key Audit Matters ||Auditors' Response |
|IND AS 116 Leases ||Our audit procedures on adoption of Ind AS 116 include: |
| || Assessed and tested new processes and controls in respect of the lease accounting standard (Ind AS 116); |
|As described in Note 35 (3.4) to the financial statements the Company has adopted Ind AS 116 Leases in the current year. The application and transition to this accounting standard is complex and is an area of focus inouraudit. || Assessed the Company's evaluation on the identification of leases based on the contractual agreements and our knowledge of the business; |
|Ind AS 116 introduces a new lease accounting model wherein lessees are required to recognise a right-of-use (ROU) asset and a lease liability arising from a lease on the balance sheet. || On a statistical sample we performed the following procedures: |
|The lease liabilities are initially measured by discounting future lease payments during the lease term as per the contract/arrangement. ||- assessed the key terms and conditions of each lease with the underlying lease contracts; and |
|Adoption of the standard involves significant judgments and estimates including determination of the discount rates and the lease term. ||- Evaluated computation of lease liabilities and verified the key estimates such as discount rates and the lease term. |
|Additionally the standard mandates detailed disclosures in respect of transition. || Assessed and tested the presentation and disclosures relating to Ind AS 116 including disclosures relating to transition. |
|Refer Note 32.7 to the annual financial statements. || |
| || |
|Evaluation of contingent Liability of Income Tax ||Principal Audit Procedures |
|The Company has contingent Liability of Rs. 4023.00 Lacs (Note No. 40) || We involved our internal experts and they considered counsel opinion legal precedence and other ruling in evaluating management's position to consider the same as contingent liability. |
We have determined that there are no other key audit matter to communicate in eachreport Information Other than the Financial Statements and Auditor's Report Thereon
The Company's Board of Directors is responsible for the other information. The otherinformation comprises the information included in the Annual report 2019-20 but does notinclude the Ind AS financial statements and our auditor's report thereon.
Our opinion on the Ind AS financial statements does not cover the other information andwe do not express any form of assurance conclusion thereon.
In connection with our audit of the Ind AS financial statements our responsibility isto read the other information and in doing so consider whether such other information ismaterially inconsistent with the Ind AS financial statements or our knowledge obtained inthe audit or otherwise appears to be materially misstated. If based on the work we haveperformed we conclude that there is a material misstatement of this other information weare required to report that fact. We have nothing to report in this regard.
Responsibilities of Management for the Ind AS Financial Statements
The Company's Board of Directors is responsible for the matters stated in section134(5) of the Act with respect to the preparation of these Ind AS financial statementsthat give a true and fair view of the financial position financial performance includingother comprehensive income cash flows and changes in equity of the Company in accordancewith the accounting principles generally accepted in India including the IndianAccounting Standards (Ind AS) specified under section 133 of the Act read with [theCompanies (Indian Accounting Standards) Rules 2015 as amended. 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 the 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 Ind AS financial statementsthat give a true and fair view and are free from material misstatement whether due tofraud or error.
In preparing the Ind AS financial statements management is responsible for assessingthe Company'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.
Those Board of Directors are also responsible for overseeing the Company's financialreporting process.
Auditor's Responsibilities for the Audit of the Ind AS Financial Statements
Our objectives are to obtain reasonable assurance about whether the Ind AS 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 influence the economic decisions of users taken on thebasis of these Ind AS 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 Ind AS financialstatements whether due to fraud or error design and perform audit procedures responsiveto those risks and obtain audit evidence that is sufficient and appropriate to provide abasis for our opinion. The risk of not detecting a material misstatement resulting fromfraud is higher than for one resulting from error as fraud may involve collusionforgery intentional omissions misrepresentations or the override of internal control.
Obtain an understanding of internal control relevant to the audit in order todesign audit procedures that are appropriate in the circumstances. Under section 143(3)(i)of the Act we are also responsible for expressing our opinion on whether the Company hasadequate internal financial controls system in place and the operating effectiveness ofsuch 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 Company'sability 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 financial statements or if such disclosures are inadequate to modify our opinion.Our conclusions are based on the audit evidence obtained up to the date of our auditor'sreport. However future events or conditions may cause the Company to cease to continue asa going concern.
Evaluate the overall presentation structure and content of the Ind AS financialstatements including the disclosures and whether the Ind AS financial statementsrepresent the underlying transactions and events in a manner that achieves fairpresentation.
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 Ind AS financial statements forthe financial year ended March 31 2020 and are therefore the key audit matters. Wedescribe these matters in our auditor's report unless law or regulation precludes publicdisclosure about the matter or when in extremely rare circumstances we determine that amatter should not be communicated in our report because the adverse consequences of doingso would reasonably be expected to outweigh the public interest benefits of suchcommunication.
Report on Other Legal and Regulatory Requirements :
1. As required by the Companies (Auditor's Report) Order 2016 ("the Order")issued by the Central Government in terms of Section 143(11) of the Act we give in"Annexure A"
a statement on the matters specified in paragraphs 3 and 4 of the Order.
2. As required by Section 143(3) of the Act we report that:
a) We have sought and obtained all the information and explanations which to the bestof our knowledge and belief were necessary for the purposes of our audit.
b) In our opinion proper books of account as required by law have been kept by theCompany so far as it appears from our examination of those books.
c) The Balance Sheet the Statement of Profit and Loss the Cash Flow Statement andStatement of Changes in Equity dealt with by this Report are in agreement with the booksof account
d) In our opinion the aforesaid Ind AS financial statements comply with the IndianAccounting Standards prescribed under section 133 of the Act.
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 except Mr. G.P. Goenka and Ms. Savita Laxmipathy Acharya.
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" .
g) In our opinion the managerial remuneration for the year ended March 31 2020 hasbeen paid/provided by the company to its Directors in accordance with the provisions ofsection 197 read with schedule V to the Act except recoverability of Rs. 650.96 Lacs asper Note No. 32.5.
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 Ind AS financial statements;
ii) The Company did not have any long term contracts including derivative contracts forwhich there were any material foreseeable losses.
iii) There were no amounts which were required to be transferred to the InvestorEducation and Protection Fund by the Company.
| ||For Jain Pramod Jain & Co. |
| ||Chartered Accountants |
| ||(Firm Registration No. 016746 N) |
|Place: New Delhi ||(P.K. Jain) |
|Date: 31st July 2020 ||Partner |
| ||Membership No. 010479 |
| ||UDIN No. : 20010479AAAABQ3573 |
to Independent Auditors' Report of Star Paper Mills Limited
(Referred to in Paragraph 1 under the heading of "Report on Other Legal andRegulatory Requirements" of our report of even date)
I. (a) The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets;
(b) Fixed assets have been physically verified by the management according to theregular programme of periodical verification in phased manner which in our opinion isreasonable having regard to the size of the company and the nature of its fixed assets. Nomaterial discrepancies were noticed on such verification;
(c) The title deeds of immovable properties are held in the name of the company.
ii. The inventories of the Company at all its locations (except stock in transit) havebeen physically verified by the management at reasonable intervals and the discrepancieswhich were noticed on physical verification of inventory as compared to book records werenot material;
iii. The company has not granted any loans secured or unsecured to companies firmslimited liability partnerships or other parties covered in section 189 of the CompaniesAct 2013;
iv. In our opinion and according to the information and explanations given to us thecompany has complied with provisions of section 185 and 186 of the Companies Act 2013with respect of loans investments guarantees and securities;
v. The Company has not accepted any deposit from public;
vi. We have broadly reviewed the books of account maintained by the Company pursuant tothe rules made by the Central Government for the maintenance of cost records under Section148(1) of the Companies Act 2013 and are of the opinion that prima-facie prescribedaccounts and records have been made and maintained. We have however not made a detailedexamination of the said records with a view to determine whether they are accurate andcomplete;
vii. (a) According to the information and explanations and records of the Company thecompany is regular in depositing undisputed statutory dues including Provident FundEmployees' State Insurance Income tax Sales tax Service tax Goods and Service TaxCustom Duty Excise Duty Value Added Tax Cess and other statutory dues with theappropriate authorities. There are no arrears of outstanding statutory dues for a periodof more than six months from the date they became payable as on 31st March 2020;
(b) According to the records and information and explanations given to us there are nodues in respect of custom duty that have been deposited on account of any dispute. In ouropinion and according to the information and explanations given to us the dues in respectof income tax or sales tax or service tax or Goods and Service Tax or excise duty or valueadded tax that have not been deposited with the appropriate authority on account ofdispute and the forum where the dispute is pending are given below:
|Name of Statute ||Nature of dues ||Amount involved (Rs. in lacs) ||Period to which it relates ||Forum where matter is pending |
|The UP Act 2018 ||VAT ||20.28 ||F.Y. 2010-2011 ||Tribunal |
| || || ||2014-2015 || |
| ||VAT ||24.40 ||2009-2010 ||Tribunal |
|The Central Sales Tax Act 1956 ||Sales Tax ||406.00 ||1995-1996 ||Tribunal |
| ||Sales Tax ||118.29 ||2010-2011 ||Additional Commissioner |
| || || ||2011-2012 ||(A) Trade Tax |
| || || ||2015-2016 || |
|The Central Excise Act ||Excise Duty ||4.84 ||2009-10 to 2011-12 ||CESTAT Allahabad |
viii. The Company has not defaulted in repayment of loans or borrowings to banks;
ix. The Company did not raise any money by way of initial/further public offer(including debt instruments) and the company has not taken any term loans during the year.
x. Based upon the audit procedure performed and information and explanation given tous we report that no fraud by the company or any fraud on the company by its officers oremployees has been noticed or reported during the course of our audit;
xi. Managerial Remuneration has been paid or provided in accordance with the requisiteapprovals mandated by the provision of Section 197 read with schedule V of the CompaniesAct 2013 except recoverability of Rs. 651.96 Lacs as per Note No. 32.5
xii. Provision of Nidhi Company is not applicable to the Company;
xiii. According to the information and explanation give to us and based on ourexamination of the records of the company all transactions with the related parties arein compliance with Section 177 and 188 of the Companies Act 2013 and the details havebeen disclosed in the financial statements etc as required by the applicable accountingstandard;
xiv. The company has not made any preferential allotment or private placements ofshares or fully or partly convertible debentures during the year under review;
xv. The company has not entered into any non-cash transaction with Directors or personsconnected with him;
xvi. The company is not required to be registered under section 45-1A of the ReserveBank of India Act 1934.
| ||For JAIN PRAMOD JAIN & CO. |
| ||Chartered Accountants |
| ||(Firm Registration No. 016746 N) |
|Place : New Delhi ||(P. K. JAIN) |
|Date : 31st July 2020 ||Partner |
| ||M. No. 010479 |
to the Independent Auditors' Report of Even Date on the Standalone Financial Statementof Star Paper Mills Limited.
Report on the Internal Financial Controls under Clause (i) of sub -section 3 of section143 of the Companies Act 2013.
We have audited the internal financial controls over financial reporting of Star PaperMills Limited as at March 31 2020 in conjunction with our audit of the standalonefinancial statements of the Company for the year ended 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 control statedin the Guidance Note on Audit of "The Internal Financial Controls Over FinancialReporting issued by the Institute of Chartered Accountants of India" 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 Guidance note on Audit of Internal Financial Controls over Financial Reporting(the" Guidance Note" ) and the Standard on Auditing issued by ICAI prescribedunder section 143 (10) of the Companies Act2013 to the extent applicable to an audit ofinternal financial controls both applicable to an audit of Internal Financial Controlsand both issued by the Institute of Chartered Accountants of India. Those standards andthe Guidance Note require that we comply with ethical requirements and plan and performthe audit to obtain reasonable assurance about whether adequate Internal financialcontrols over financial reporting was established and maintained and if such controlsoperated effectively in all material respects.
Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe Internal financial controls system over financial reporting and their operatingeffectiveness our audit of internal financial controls over financial reporting includedobtaining and 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 judgement including the assessment of the risks ofmaterial misstatement of the financial statement 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 ofrecords that in reasonable details accurately and fairly reflect the transactions anddisposition of the assets of the company;(2) provide reasonable assurance thattransactions are recorded as necessary to permit preparation of financial statement inaccordance with generally accepted accounting principles and that receipts andexpenditures of the company are being made only in accordance with authorizations ofmanagement and directors of the company; and (3) provide reasonable assurance regardingprevention or timely detection of unauthorized acquisition use or disposition of thecompany's assets that could have a material effect on the financial statements.
Inherent Limitations of Internal Financial Controls over Financial Reporting
Because of the inherent limitation 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 respect an adequate internal financialcontrols systems over financial reporting and such internal financial controls overfinancial reporting were operating effectively as at March 31 2020 based on the internalcontrol over financial reporting criteria established by the company considering theessential components of internal control stated in the Guidance Note on Audit of InternalFinancial Controls over Financial Reporting issued by the Institute of CharteredAccountants of India.
| ||For JAIN PRAMOD JAIN & CO. |
| ||Chartered Accountants |
| ||(Firm Registration No. : 016746 N) |
|Place : New Delhi ||(P. K. JAIN) |
|Date : 31stJuly 2020 ||Partner |
| ||M. No. 010479 |