To the members of
WEST COAST PAPER MILLS LIMITED
Report on the Audit of the Standalone Financial Statements
We have audited the accompanying standalone financial statements of West Coast PaperMills Limited ("the Company") which comprise the Balance Sheet as at March312020 the Statement of Profit and Loss including the statement of Other ComprehensiveIncome the Cash Flow Statement and the Statement of Changes in Equity for the year thenended and notes to the financial statements including a summary of significantaccounting policies and other explanatory information.
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 ("the Act") in the manner so required and give a trueand fair view in conformity with the accounting principles generally accepted in India ofthe state of affairs of the Company as at March 31 2020 its profit including othercomprehensive income its cash flows and the changes in equity for the year ended on thatdate.
Basis for Opinion
We conducted our audit of the standalone 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 standalone Financial Statements' section of ourreport. We are independent of the Company in accordance with the 'Code of Ethics' issuedby the Institute of Chartered Accountants of India together with the ethical requirementsthat are relevant to our audit of the financial statements under the provisions of the Actand the Rules thereunder 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 standalone financial statements.
Emphasis of Matter
We draw attention to Note 59 the Standalone financial statements regarding uncertaintyaround the impact of COVID 19 on the operations of the Company which is presently notascertainable. Our opinion is not modified in respect of this matter.
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 March 31 2020. These matters were addressed in the context of our audit of thestandalone financial statements as a whole and in forming our opinion thereon and we donot provide a separate opinion on these matters. For each matter below our description ofhow our audit addressed the matter is provided in that context.
|Key audit matters ||How our audit addressed the key audit matter |
|1. Revenue Recognition (Refer Note 1 (III) (h) and 27 to the Standalone Financial Statements) || |
|Revenue is recognized at an amount that reflects the consideration to which the Company expects to be entitled in exchange for transferring goods to a customer. The revenue recognition occurs at a point in time when the control of the goods is transferred to the customer. We focussed on this area as a key audit matter as the value is significant and inherent risk exists of revenue being recognized before the control is transferred including risk of incorrect timing of estimation related to recording the discounts and rebates. ||As part of our audit procedures we: |
| ||> Read the Company's accounting policy for revenue recognition and assessed compliance with the requirements of Ind AS 115. |
| ||> Evaluated the design tested the implementation and operating effectiveness of the Company's internal controls including general IT controls and key IT application controls over recognition of revenue. |
| ||> On a sample basis tested supporting documentation for sales transactions which included sales invoices customer contracts and shipping documents. |
| ||> Tested revenue samples focused on sales recorded immediately before the year-end obtained evidence as regards timing of revenue recognition based on terms and conditions of sales contracts and delivery documents. |
| ||> Assessed disclosures in financial statements in respect of revenue as specified in Ind AS 115. |
|2. Provisions and contingent liabilities related to taxation litigation and claims (Refer Note 38 to the Standalone financial statements) ||As part of our audit procedures we: |
|The Company has ongoing litigations with various regulatory and tax authorities and third parties. Where an outflow of funds is believed to be probable and a reliable estimate of the outcome of the dispute can be made based on management's assessment of specific circumstances of each dispute and relevant external advice management provides for its reliable estimate of the liability. Such accruals are by nature complex and can take number of years to resolve and can involve estimation uncertainty. Due to the level of judgement relating to recognition valuation and presentation of provisions and contingent liabilities this is considered to be a key audit matter ||> Obtained an understanding of management's process to identify new obligations and changes in existing obligations for compliance with Ind AS 12 - Income taxes and Ind AS 37 - Provisions Contingent Liabilities and Contingent Assets. |
| ||> analysed significant changes in material provisions from prior periods and obtained a detailed understanding of these changes and assumptions applied. |
| ||> Our audit procedures related to material provisions recognised and contingent liabilities disclosed in the Consolidated financial statements included: |
| || Assessment of the recognition criteria for the liability; |
| || Evaluation of the methodology adopted by management for the measurement of the liability; |
| || Assessment of the other key measurement assumptions and inputs. |
| || We have obtained opinions and confirmations from internal /external experts and legal counsel where necessary which we have relied upon. |
| ||> We reviewed the minutes of the Board meetings including other committees to evaluate the process and controls over obligations operated by management. |
| ||> Testing of the mathematical accuracy of the measurement calculation; |
| ||> We assessed the appropriateness of the presentation of the most significant contingent liabilities in the financial statements. |
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 but does not includethe standalone financial statements and our auditor's report thereon. The Annual Report isexpected to be made available to us after the date of this auditor's report.
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 financial statements or our knowledge obtained in theaudit 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 standalone 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 standalone 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 standalone financialstatements that give a true and fair view and are free from material misstatement whetherdue to fraud or error.
In preparing the standalone financial statements management 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 unlessmanagement either intends to liquidate the Company or to cease operations or has norealistic alternative but to do so.
Those charged with governance are also responsible for overseeing the Company'sfinancial reporting process.
Auditor's Responsibilities for the Audit of the standalone Financial Statements
Our objectives are to obtain reasonable assurance about whether the standalonefinancial statements as a whole are free from material misstatement whether due to fraudor error and to issue an auditor's report that includes our opinion. Reasonable assuranceis a high level of assurance but is not a guarantee that an audit conducted in accordancewith SAs will always detect a material misstatement when it exists. Misstatements canarise from fraud or 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 standalone 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 standalonefinancial statements whether due to fraud or error design and perform audit proceduresresponsive to those risks and obtain audit evidence that is sufficient and appropriate toprovide a basis for our opinion. The risk of not detecting a material misstatementresulting from fraud is higher than for one resulting from error as fraud may involvecollusion forgery intentional omissions misrepresentations or the override of internalcontrol.
Obtain an understanding of internal control relevant to 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 standalonefinancial statements including the disclosures and whether the standalone financialstatements represent 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 standalone financial statementsfor the 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.
The Company had carried out physical verification of inventory post balance sheet dateand due to countrywide lockdown imposed by Government we could participate in the physicalverification of inventory at year end. Consequently we have performed alternate procedureto audit the existence of inventory as per the guidance provided in SA 501 "AuditEvidence - Specific Consideration for Selected Items" and have obtained sufficientappropriate audit evidence to issue our unmodified opinion on these Standalone FinancialStatement.
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 Act we give in the "Annexure A" statement on the matters specified inparagraphs 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 including the Statement ofOther Comprehensive Income the Cash Flow Statement and Statement of Changes in Equitydealt with by this Report are in agreement with the books of account;
(d) In our opinion the aforesaid standalone financial statements comply with theAccounting Standards specified under Section 133 of the Act read with Companies (IndianAccounting Standards) Rules 2015 as amended;
(e) On the basis of the written representations received from the directors and takenon record by the Board of Directors none of the directors is disqualified as on March 312020 from being appointed as a director in terms of Section 164 (2) of the Act;
(f) With respect to the adequacy of the internal financial controls over financialreporting of the Company with reference to these standalone financial statements and theoperating effectiveness of such controls refer to our separate Report in "AnnexureB" to this report;
(g) With respect to the matter to be included in the Auditors' Report under Section197(16) of the Act in our opinion and according to the information and explanations givento us the remuneration paid by the Company to its directors during the current year is inaccordance with the provisions of Section 197 of 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 as amended inour opinion and to the best of our information and according to the explanations given tous:
i. The Company has disclosed the impact of pending litigations on its financialposition in its standalone financial statements - Refer Note 38 to the standalonefinancial statements;
ii. The Company has accounted for material foreseeable losses if any for long-termcontracts including derivative contracts.
iii. There has been no delay in transferring amounts required to be transferred tothe Investor Education and Protection Fund by the Company.
To The Independent Auditor's Report
(Referred to in paragraph 1 of the Independent Auditors' Report of even date to themembers of WEST COAST PAPER MILLS LIMITED on the Standalone financial Statements as of andfor the year ended March 31 2020)
We report that:
i. In respect of its fixed assets:
a) The Company has maintained proper records showing full particulars includingquantitative details and situation of its fixed assets (property plant and equipment).
b) As explained to us the fixed assets (property plant and equipment) have beenphysically verified by management and no material discrepancies have been noticed on suchverification. In our opinion this periodicity of physical verification is reasonablehaving regard to the size of company and nature of its assets.
c) According to the information and explanations given to us and on the basis of ourexamination title deeds of the immovable property other than self - constructed immovableproperty (buildings) as disclosed in schedule of Property Plant and Equipments to thefinancial statements are held in the name of the Company except for
|Asset Category ||Gross Block (Rs Lakh) ||Net Block (Rs Lakh) ||Remarks |
|Leasehold Land ||162 ||162 ||289.68 acres of leasehold land for which Government approval for renewal for next 30 years received but lease agreement is yet to be executed; and 109.10 acres of other leasehold land of which lease agreement is expired and pending to be renewed and registered with the government. |
|Leasehold Land (Under Capital Work in progress) ||941 ||941 ||20 acres of leasehold land for which allotment letter is issued by the authority but agreement is yet to be executed. |
ii. As explained to us the physical verification of inventories except goods intransit has been conducted by the management at reasonable intervals during the year. Thediscrepancies noticed on physical verification of inventories were suitably adjusted inthe books of accounts.
iii. According to the information and explanations given to us the Company has notgranted any loan to Companies covered in the register maintained under Section 189 of theCompanies Act thus the clause is not applicable to the Company.
iv. In our opinion and according to the information and explanations given to us andrecords examined by us Company has not given any loan made investments or givenGuarantee and Securities to parties covered under Section 185 / 186 of the Companies Act2013. Hence paragraph 3 (iv) of the Order is not applicable to the Company.
v. According to the information and explanations given to us the Company has notaccepted any deposits from the public within the meaning of sections 73 to 76 of the Actand the Companies (Acceptance of Deposits) rules 2014 (as amended).
vi. We have broadly reviewed the books of account maintained by the Company in respectof products for which maintenance of prescribed cost records is mandated by Government ofIndia U/S 148 (1) of the Act and are of the opinion that prima facie the prescribedrecords have been made and maintained. We have however not made a detailed examinationof these records with a view to determine whether they are accurate or complete.
vii. According to the information and explanations given to us and the records of theCompany examined by us:
a) The Company has been generally regular in depositing amounts deducted/accrued in thebooks of accounts in respect of undisputed statutory dues including Provident FundEmployees' State Insurance Investor Education and Protection Fund Income Tax Sales TaxService Tax Custom Duty Excise Duty Cess Goods & Service Tax and other statutorydues as applicable except for some minor delays in case of TDS. There was no undisputedoutstanding statutory dues as at the year end for a period of more than six months fromthe date they became payable.
b) There are no dues of Income Tax Sales Tax Wealth Tax Service Tax Customs DutyExcise Duty and Cess Goods & Service Tax which have not been deposited with theappropriate authorities on account of any dispute except as mentioned below :
|Name of the Statute ||Period to which the amount relates ||Forum where dispute is pending ||Amount in dispute (Rs Lakhs) |
|Income Tax Act 1961 ||Assessment year 1999-00 to 2015-16 ||Commissioner Appeals ITAT Honourable High Court ||3117.08 (net of refunds adjusted and payments of Rs 662 lakhs) |
|Central Excise Act 1944 ||2008-09 to 2012-13 ||Commissioner- CESTAT ||60.15 |
|The Custom Act 1962 ||2013-14 & 2016-17 ||Honourable Supreme Court Commissioner of Customs (Appeals) ||540.27 (Net of recoveries done by department Rs 21.48 lakhs) |
|Service tax under Finance Act 1994 ||2015-16 ||Commissioner Appeals CESTAT ||0.10 |
viii. According to the information and explanations give to us and based on ourexamination of the records of the Company the Company has not defaulted in repayment ofloans or borrowings to any financial institution bank or Government. Further the Companyhas issued Non convertible debentures during the year and has not defaulted in repaymentof the same.
ix. According to the information and explanations given to us and based on ourexamination of the records of the Company the Company did not raise any money by way ofinitial public offer or further public offer (including debt instruments) during the year.The term loans were applied for purpose for which they were raised.
x. To the best of our knowledge and according to the information and explanations givento us no material fraud by the Company or on the Company by its officers or employees hasbeen noticed or reported during the course of our audit.
xi. According to the information and explanations give to us and based on ourexamination of the records of the Company the Company has paid/provided for managerialremuneration in accordance with the requisite approvals mandated by the provisions ofsection 197 read with Schedule V to the Act.
xii. In our opinion and according to the information and explanations given to us theCompany is not a Nidhi Company. Accordingly paragraph 3(xii) of the Order is notapplicable to the Company.
xiii. According to the information and explanations given to us and based on ourexamination of the records of the Company transactions with the related parties are incompliance with sections 177 and 188 of the Act where applicable and details of suchtransactions have been disclosed in the Financial Statements as required by the applicableIndian accounting standards.
xiv. According to the information and explanations give to us and based on ourexamination of the records of the Company the Company has not made any preferentialallotment / private placement of shares.
xv. According to the information and explanations given to us and based on ourexamination of the records of the Company the Company has not entered into non-cashtransactions with directors or persons connected with him. Accordingly paragraph 3(xv) ofthe Order is not applicable.
xvi. The Company is not required to be registered under section 45-IA of the ReserveBank of India Act 1934.Accordingly paragraph 3 (xvi) of the Order is not applicable tothe Company.
(Referred to in paragraph 2 (f) of the Independent Auditors' Report of even date to themembers of WEST COAST PAPER MILLS LIMITED on the Standalone financial Statements as of andfor the year ended March 31 2020)
Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section143 of the Companies Act 2013 ('the Act')
1. We have audited the internal financial controls over financial reporting of WestCoast Paper Mills Limited ('the Company') as of March 312020 in conjunction with ouraudit of the Financial Statements of the Company for the year ended on that date.
Management's Responsibility for Internal Financial Controls
2. 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 Internal Financial Controls over Financial Reportingissued by the Institute of Chartered Accountants of India ('ICAI'). These responsibilitiesinclude the design implementation and maintenance of adequate internal financial controlsthat were operating effectively for ensuring the orderly and efficient conduct of itsbusiness including adherence to Company's policies the safeguarding of its assets theprevention and detection of frauds and errors the accuracy and completeness of theaccounting records and the timely preparation of reliable financial information asrequired under the Act.
3. 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 deemed to beprescribed under section 143(10) of the Companies Act 2013 to the extent applicable toan audit of internal financial controls both applicable to an audit of Internal FinancialControls and both issued by the Institute of Chartered Accountants of India. ThoseStandards and the Guidance Note require that we comply with ethical requirements and planand perform the audit to obtain reasonable assurance about whether adequate internalfinancial controls over financial reporting was established and maintained and if suchcontrols operated effectively in all material respects.
4. Our audit involves performing procedures to obtain audit evidence about the adequacyof the 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.
5. 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
6. 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 detail accurately and fairly reflect the transactions anddispositions of the assets of the Company; (2) provide reasonable assurance thattransactions are recorded as necessary to permit preparation of financial statements 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
7. 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.
8. 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 the Institute of CharteredAccountants of India.
| ||For Singhi & Co. |
| ||Chartered Accountants |
| ||Firm Registration Number: 302049E |
| ||Sudesh Choraria |
|Date : June 26 2020 ||Partner |
|Place : Mumbai ||Membership No: 204936 |
| ||UDIN: 20204936AAAACR2868 |