Mar 31, 2018
Report on the Financial Statements
1. We have audited the accompanying financial statements of Nath Pulp and Paper Mills Limited (âthe Companyâ), which comprise the Balance Sheet as at 31st March 2018, the Statement of Profit and Loss (including other comprehensive income), Cash Flow Statement and Statement of Changes in Equity for the year then ended, and a summary of significant accounting policies and other explanatory information.
Management''s Responsibility for the Financial Statements
2. The Company''s Board of Directors is responsible for the matters stated in section 134(5) of the Companies Act, 2013 (''the Act'') with respect to the preparation and presentation of these Ind AS financial statements to give a true and fair view of the financial position, financial performance (including other comprehensive income), cash flows and changes in the equity of the Company in accordance with the accounting principles generally accepted in India, including the Indian Accounting Standards specified in the Companies (Indian Accounting Standards) Rules, 2015 (as amended) under section 133 of the Act. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the Ind AS financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.
Auditor''s Responsibility
3. Our responsibility is to express an opinion on these Ind AS financial statements based on our audit.
4. We have taken into account the provisions of the Act and the rules made thereunder including the accounting and auditing standards and matters which are required to be included in the audit report under the provisions of the Act and rules made there-under.
5. We conducted our audit of the Ind AS financial Statements in accordance with the Standards on Auditing specified under section 143(10) of the Act and other applicable authoritative pronouncements issued by the Institute of Chartered Accountants of India. Those Standards and pronouncements require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the Ind AS financial statements are free from material misstatement.
6. An audit involves performing procedures to obtain audit evidence about the amounts and the disclosures in the Ind AS financial statements. The procedures selected depend on the auditor''s judgment, including the assessment of the risks of material misstatement of the Ind AS financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal financial control relevant to the Company''s preparation of the Ind AS financial statements that give a true and fair view, in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by the Company''s directors, as well as evaluating the overall presentation of the Ind AS financial statements.
7. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our qualified audit opinion on the Ind AS financial statements.
Basis for qualified opinion
8. The Company has not revalued its future liability towards Sales tax deferral at its fair value in compliance with Ind AS -113. Refer note no 14.
Had this observation made by us been considered the Profit for the year would have been Rs 14,02,21,592 (as against reported Profit figure of Rs. 17,53,941), Non- Current Financial Liabilities - Borrowings would have been Rs. 13,18,73,222 (as against reported figure of Rs.27,03,40,873).
9. We are unable to express an opinion regarding reversal of Deferred Tax Assets recognized in the financial statements to the extent of Rs.18,88,25,520, as there is no virtual certainty anticipated in foreseeable future, as contemplated in Accounting Standard (AS) 22 of âAccount for Taxes on Incomeâ issued by Companies (Accounting Standard) Rules, 2006.
Qualified Opinion
10. In our opinion and to the best of our information and according to the explanations given to us, except for the effects of the matter described in the Basis for Qualified Opinion paragraph the aforesaid Ind AS financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India, of the state of affairs of the Company as at 31st March 2018 and its profit (including other comprehensive income), its cash flows and the changes in equity for the year ended on that date.
Emphasis of Matter
11. The financial information of the company for the year ended 31st March 2017, and the transition date opening balance sheet as at 1st April 2016 included in these Ind AS Financial Statements, are based on the previously issued statutory financial statements for the years ended 31st March 2017 and 31st March 2016 prepared in accordance with the Companies (Accounting Standards) Rules, 2006 (as amended), of which statutory financial statements for the year ended 31st March 2016 were audited by previous auditors, on which they expressed modified opinion dated 30th May 2016. We have also expressed our modified opinion on the Statutory financial statements for the financial year ended 31st March 2017, dated 30th May 2017. The adjustments to those financial statements for the differences in accounting principles adopted by the company on transition to the Ind AS have been audited by us.
12. We draw attention to Note No 33 to the financial statements which describes that Trade Payable, Trade Receivable, Unsecured Loans, Deposits, Loans and Advances (Including inter party transfer) are subject to confirmation and reconciliation.
Our opinion is not qualified in respect of these matters.
Report on Other Legal and Regulatory Requirements
13. As required by the Companies (Auditor''s Report) Order, 2016 (âthe Orderâ), issued by the Central Government of India in terms of sub-section (11) of section 143 of the Act, and on the basis of such checks of the books and records of the company as we considered appropriate and according to the information and explanations given to us, we give in the Annexure âAâ, a statement on the matters specified in paragraph 3 and 4 of the Order.
14. 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 best of our knowledge and belief were necessary for the purpose of our audit;
b) Except for the effects of the matter described in the Basis for Qualified Opinion paragraph above, in our opinion, proper books of account as required by law have been kept by the Company so far as it appears from our examination of those books;
c) The Balance Sheet, the Statement Profit and Loss (including other comprehensive income), the Cash Flow Statement and statement of change in equity dealt with by this report are in agreement with the books of account;
d) Except for the matter described in the Basis for Qualified Opinion paragraph in our opinion, the aforesaid Ind AS financial statements comply with the Indian Accounting Standards specified under Section 133 of the Act;
e) On the basis of written representations received from the directors as on 31st March, 2018, and taken on record by the Board of Directors, none of the directors is disqualified as on 31st March, 2018, 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 financial reporting of the company and operating effectiveness of such controls, refer to our separate report in Annexure âBâ; and
g) With respect to the other matters to be included in the Auditors Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules, 2014, in our opinion and to the best of our information and according to the explanation given to us:
i) The company has disclosed the impact of pending litigations as at 31st March 2018 on its financial position in its financial statements-Refer Note No. 31 to the financial statements.
ii) The Company does not have long term contracts or derivative contracts which require provision.
iii) There is no amount required to be transferred to investor education and protection fund.
ANNEXURE âAâ TO THE AUDITORS'' REPORT
The Annexure referred to in Independent Auditors'' Report to the members of the Company on the financial statements for the year ended 31st March 2018, we report that:
1. (a) The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets.
(b) The company has regular program of physical verification of its fixed assets by which fixed assets are verified in a phased manner over a period of three years. In accordance with this program, certain fixed assets were verified during the year and no material discrepancies were noticed on such verification. In our opinion, this periodicity of physical verification is reasonable having regard to the size of the company and nature of its business.
(c) According to the information and explanations given to us, and on the basis of our examination of the record of the company, the title deeds of the immovable properties are held in the name of the company.
2. The inventory has been physically verified during the year by the management. The discrepancies noticed on verification between the physical stocks and book records were not material, which have been properly dealt with in the books of account.
3. a) As per the information and explanations given to us, the Company has granted non-interest bearing unsecured loans to one company covered in the register maintained under section 189 of the Act. The terms and conditions of the grant of such loans are, prima facie, not prejudicial to the interest of the company looking to long term business exigencies/purposes except non-charging of interest.
b) No formal schedule of repayment has been made for repayment of the principal amount and as such in absence of such schedule, we are unable to comment if the same are being repaid timely.
c) There are no overdue amounts in respect of the loans granted to a body corporate listed in the register maintained under section 189 of the Act.
4. The company has not granted loan to any party covered under section 185 and 186 of the Act as such clause (iv) is not applicable to the company.
5. The Company has not accepted deposits within the meaning of sections 73 to 76 or any other relevant provisions of the Act and the rules framed there under.
6. We have broadly reviewed the cost records maintained by the company pursuant to the order of the Central Government under sub-section (1) of section 148 of the Act and are the opinion that, prima facie, the prescribed records have been made and maintained. We are, however, not required to make a detailed examination of the records with a view to determine whether they are accurate or complete.
7. (a) The company is regular in depositing undisputed statutory dues including employees'' state insurance, income-tax, sales-tax, wealth tax, service tax, duty of customs, duty of excise, value added tax, cess and any other statutory dues with the appropriate authorities except the following which have not been deposited and are outstanding for a period of more than six months from the date they became payable at the close of the year.
Sr |
Name of the Statute |
Nature of the dues |
Amount (Rs) |
Remarks |
1. |
Income Tax Act, 1961 |
Tax Deduction at Sources |
9567 |
Since Paid |
2. |
Income Tax Act, 1961 |
Tax Collection at Sources |
13271 |
Since Paid |
3 |
Finance Act, 1994 |
Service Tax |
236187 |
Since paid |
(b) According to the records of the company, there are no dues of income tax or sales tax or service tax or duty of customs or duty of excise or value added tax or cess which have not been deposited on account of any dispute except the followings:
Particulars |
Forum where the dispute is pending |
Amount Rs |
Period to which the Amount Relates |
Sales Tax |
Joint Commissioner of Sales Tax (Appeal) Aurangabad. |
7,66,900 14,69,710 21,97,260 |
2006-2007 2007-2008 2011-2012 |
Excise Duty |
Customs, Excise & Service Tax Appellate Tribunal Mumbai. |
32,44,508 |
2006-2007 |
Excise Duty |
Commissioner of Central Excise (Appeal) Nagpur |
8,836,659 |
2015-2016 |
Excise Duty |
Commissioner of Central Excise (Appeal) Nagpur |
1,598,430 |
July 2012- March 2015 |
Excise Duty |
Commissioner of Central Excise Aurangabad |
7,436,435 |
2010-2011 to 2014-2015 |
8. In our opinion and according to the information and explanations given to us, the Company has not defaulted in payment of dues to bank or debenture holders except Interest dues to the financial institutions for the period of February 2012 to June 2017. Refer Note no. 18.
9. The company has not raised any moneys by way of initial public offer or further public offer (including debt instruments) during the year. Further, the term loans were applied for the purpose for which those are raised.
10. No fraud on or by the company or any fraud on the company by its officers or employees has been noticed or reported during the year.
11. Managerial remuneration has been paid or provided in accordance with the requisite approvals mandated by the provisions of section 197 read with schedule V of the Companies Act.
12. The company is not a Nidhi Company as such provisions of the clause (xii) are not applicable to the company.
13. All transactions with the related parties are in compliance with section 177 and 188 of the Act, where applicable, and the details have been disclosed in the Ind AS financial statements etc., as required by the applicable accounting standards.
14. The company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures during the year under review.
15. The company has not entered into any non-cash transactions with directors or persons connected with him.
16. The company is not required to be registered under section 45-IA of the Reserve Bank of India Act, 1934.
ANNEXURE âBâ TO THE AUDITORS'' REPORT
Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section 143 of the Companies Act, 2013 (âthe Actâ)
1. We have audited the internal financial controls over financial reporting of Nath Pulp and Paper Mills Limited (âthe Companyâ) as of 31stMarch, 2018 in conjunction with our audit of the Ind AS 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 internal financial controls based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls over Financial Reporting issued by the Institute of Chartered Accountants of India (ICAI). These responsibilities include the design, implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the orderly and efficient conduct of its business, including adherence to the Company''s policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information, as required under the Act.
Auditors Responsibility
3. Our responsibility is to express an opinion on the Company''s internal financial controls over financial reporting based on our audit. We conducted our audit in accordance with the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting (the âGuidance Noteâ) issued by the ICAI and the Standards on Auditing deemed to be prescribed under Section 143(10) of the Act, to the extent applicable to an audit of internal financial controls. Those Standards and the Guidance Note require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether adequate internal financial controls over financial reporting was established and maintained and if such controls operated effectively in all material respects.
4. Our audit involves performing procedures to obtain audit evidence about the adequacy of the internal financial controls system over financial reporting and their operating effectiveness. Our audit of internal financial controls over financial reporting included obtaining an understanding of internal financial controls over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. The procedures selected depend on the auditor''s judgment, including the assessment of the risks of material misstatement of the Ind AS financial statements, whether due to fraud or error.
5. We believe that the audit evidence, we have obtained, is sufficient and appropriate to provide a basis for our audit opinion on the Company''s internal financial controls system over financial reporting.
Meaning of Internal Financial Controls over Financial Reporting
6. A company''s internal financial control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company''s internal financial control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of Ind AS financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorisations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorised acquisition, use, or disposition of the company''s assets that could have a material effect on the Ind AS financial statements.
Inherent Limitations of Internal Financial Controls over Financial Reporting
7. Because of the inherent limitations of internal financial controls over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may occur and not be detected. Also, projections of any evaluation of the internal financial controls over financial reporting to future periods are subject to the risk that the internal financial control over financial reporting may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Opinion
8. In our opinion, to the best of our information and according to the explanations given to us, the Company has, in all material respects, an adequate internal financial controls system over financial reporting and such internal financial controls over financial reporting were operating effectively as at 31st March, 2018, based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issued by the ICAI.
For Gautam N Associates
Chartered Accountants
FRN 103117W
Gautam Nandawat
Partner Membership No 032742
Place: Aurangabad
Date: 30.05.2018
Mar 31, 2016
TO, THE MEMBERS OF, NATH PULP AND PAPER MILLS LIMITED
Report on the Financial Statements
We have audited the accompanying financial statements of NATH PULP AND PAPER MILLS LIMITED (âthe Companyâ), which comprise the Balance Sheet as at 31st March, 2016, the Statement of Profit and Loss, the Cash Flow Statement for the year ended, and a summary of the significant accounting policies and other explanatory information.
Managementâs Responsibility for the Financial Statements
The Companyâs Board of Directors are responsible for the matters stated in Section 134(5) of the Companies Act, 2013 (âthe Actâ) with respect to the preparation of these financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the accounting principles generally accepted in India, including the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014.This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding of the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.
Auditorâs Responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. We have taken into account the provisions of the Act, the accounting and auditing standards and matters which are required to be included in the audit report under the provisions of the Act and the Rules made there under.
We conducted our audit in accordance with the Standards on Auditing specified under Section 143(10) of the Act. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and the disclosures in the financial statements. The procedures selected depend on the auditorâs judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal financial control relevant to the Companyâs preparation of the financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances. An audit also includes valuating the appropriateness of the accounting policies used and the reasonableness of the accounting estimates made by the Companyâs Directors, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the financial statements.
Basis for qualified opinion
(a) The accumulated losses of the Company exceed its net worth. The financial statements have, however, been prepared by the management on a going concern basis, as explained in Note No. 27.11 of notes on financial statements. Should, however, the Company be unable to continue as a going concern , the extent of effect of the resultant adjustments on the assets and liabilities as at the end of the year and profit after exceptional items, for the year has not been ascertained presently.
(b) In respect of inter-corporate Loans / Advances, prima-facie, the company has not complied with section 186 of the Act, in as much as these are interest free loans for which approval of the financial institutions has not been obtained (Refer Note No. 27.09 of notes on financial statements). Maximum amount outstanding during the year '' 27,184,055 (as at 31st March 2015 Rs. 19,977,545) and amount outstanding as at the close of the year Rs. 4,549,976 (as at 31st March 2015 Rs. 19,284,743)
(c) Default made by the Company in repayment of installments to Financial Institutions and the right to revoke the concessions granted under the BIFR scheme and non-provision of liability on account of interest/premium. Refer note no. 27.14.
(d) Recognition of overdue payment of the financial institutions as on 31st March, 2016 as Long term borrowings instead of current liabilities as required under Schedule III.
(e) We are unable to express an opinion as to when and to what extent the Deferred Tax Assets recognized of Rs. 138,539,331 would reverse, as there is no virtual certainty as contemplated in Accounting Standard (AS) 22 of âAccount for Taxes on Incomeâ issued by Companies (Accounting Standard) Rules, 2006.
Qualified Opinion
In our opinion and to the best of our information and according to the explanations given to us, except for the effects of the matter described in the Basis for Qualified Opinion paragraph above, the aforesaid financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India, of the state of affairs of the Company as at 31st March, 2016, and its loss and its cash flows for the year ended on that date.
Report on Other Legal and Regulatory Requirements
1) As required by the Companies (Auditorâs Report) Order, 2016 (âthe Orderâ) issued by the Central Government of India in Terms of sub section (11) of section 143 of the Act, we give in the Annexure A, a statement of the matters specified in the paragraph 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 best of our knowledge and belief were necessary for the purposes of our audit.
(b) Except for the effects of the matter described in the Basis for Qualified Opinion paragraph above, in our opinion, proper books of account as required by law have been kept by the Company so far as it appears from our examination of those books.
(c) The Balance Sheet, the Statement of Profit and Loss, and the Cash Flow Statement dealt with by this Report are in agreement with the books of account.
(d) Except for the effects of the matter described in the Basis for Qualified Opinion paragraph above, in our opinion, the aforesaid financial statements comply with the Accounting Standards specified under Section 133 of the Act, read with Rule 7of the Companies (Accounts) Rules, 2014.
(e) The matter described in the Basis for Qualified Opinion paragraph above, in our opinion, may have an adverse effect on the functioning of the Company.
(f) On the basis of the written representations received from the directors as on 31st March, 2016 taken on record by the Board of Directors, none of the directors is disqualified as on 31stMarch, 2016 from being appointed as a director in terms of Section 164 (2) of the Act.
(g) The qualification relating to the maintenance of accounts and other matters connected therewith are as stated in the Basis for Qualified Opinion paragraph above.
(h) With respect to the adequacy of the internal financial controls over financial reporting of the company and the operating effectiveness of such controls, refer to our separate report in âAnnexure Bâ, and
(i) With respect to the other matters to be included in the Auditorâs Report in accordance with Rule11 of the Companies (Audit and Auditors) Rules, 2014, in our opinion and 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 financial position in its financial statements -Refer Note 27.01 to the financial statements;
Annexure A to the Auditorsâ Report
The Annexure referred to in Independent Auditorsâ Report to the members of NATH PULP AND PAPER MILLS LIMITED (âthe Companyâ) for the year Ended on 31st March 2016. We report that:
(i) (a) The company is maintaining proper records showing full particulars, including quantitative details and situation of fixed assets;
(b) These fixed assets have been physically verified by the management at reasonable intervals; no material discrepancies were noticed on such verification;
(c) According to the information and explanations given to us and on the basis of our examination of the records of the company, the title deeds of immovable properties are held in the name of the company.
(ii) The inventory has been physically verified by the management at reasonable intervals during the year. No material discrepancies were noticed on such verification;
(iii) The company has granted interest free unsecured loans to 2 bodies corporate covered in the register maintained under section 189 of the Companies Act, 2013 (âthe Actâ).
a) In our opinion the terms and conditions on which the loans had been granted to the bodies corporate listed in the register maintained under section 189 of the Act were not, prima facie prejudicial to the interest of the Company.
b) In the case of the loans granted to the bodies corporate listed in the register maintained under section 189 of the Act, the borrowers have been regular in the payment of the principal and interest as stipulated.
c) There are no overdue amounts in respect of the loan granted to a body corporate listed in the register maintained under section 189 of the Act.
(iv) In our opinion and according to the information and explanation given to us, the company has complied with the provisions of section 185 and 186 of the Act, with respect to the loans and investment made.
(v) The company has not accepted any deposits from the public. Hence this clause is not applicable.
(vi) We have broadly reviewed the cost records maintained by the company pursuant to the order of the Central Government under sub-section (1) of section 148 of the Companies Act and are the opinion that, prima facie, the prescribed records have been made and maintained. We are, however, not required to make a detailed examination of the records with a view to determine whether they are accurate or complete.
(vii) (a) The company is regular in depositing Custom Duty, Excise Duty and other applicable Cesses. The company is not regular in depositing undisputed statutory dues including provident fund, income-tax, sales-tax, service tax, value added tax and any other statutory dues with the appropriate authorities. However, there are statutory dues outstanding as at the last day of the financial year concerned for a period of more than six months Rs. 65,096 for Employees Contribution to Provident Fund, Rs. 66,614 for Employerâs Contribution to Provident Fund and Profession Tax Rs. 39,752 from the date they became payable.
(b) According to the records of the company, there are no dues of income tax or sales tax or service tax or duty of customs or duty of excise or value added tax or cess which have not been deposited on account of any dispute except the followings:_
Particulars |
Forum where the dispute is pending |
Amount Rs. |
Period to which the Amount Relates |
Sales Tax |
Joint Commissioner of Sales Tax (Appeal) Aurangabad. |
7,353,940 2,568,662 7,444,447 |
1989-1990 1990-1991 1991-1992 |
Excise Duty |
Customs, Excise & Service Tax Appellate Tribunal Mumbai. |
3,244,508 |
2006-2007 |
(viii) The Company has received sanctioned Rehabilitation scheme by Honâble BIFR vide sanction order dt. 14/02/12. The Company has also received sanction of Modified Rehabilitation Scheme by Honâble BIFR on 01st July, 2013. Considering the same, the Company has defaulted as at the year-end in repayment of dues to financial institutions. Reference is invited to Note No. 3 and 27.14 of notes to financial statements.
(ix) The company did not raise any money by way of initial public offer or further public offer (including debt instrument) and term loans during the year. Accordingly, paragraph 3 (ix) of the order is not applicable.
(x) During the course of our examination of the books and records of the Company carried out in accordance with the generally accepted auditing practices in India and according to the information and explanations given to us, we have neither come across any instance of fraud on or by the Company noticed or reported during the year, nor have we been informed of such case by the management.
(xi) Managerial remuneration has been paid or provided in accordance with the requisite approvals mandated by the provisions of section 197 read with schedule V of the Companies Act.
(xii) As the Company is not a Nidhi company, the provisions of the Nidhi Rules is not applicable to the Company.
(xiii) All transaction with the related parties are in compliance with section 177 and 188 of the Companies Act, 2013. The details have been disclosed in the Financial Statements etc. as required by the Accounting Standard.
(xiv) The company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures during the year under review.
(xv) The company has not entered into non-cash transactions with directors or persons connected with him.
(xvi) The company is not required to be registered under section 45-IA of the Reserve Bank of India Act, 1934.
Annexure- B to the Auditorsâ Report
Report on the Internal Financial Control under clause (i) of Sub-section 3 of section 143 of the Companies Act, 2013 (âthe Actâ)
We have audited the internal financial control over financial reporting of NATH PULP AND PAPER MILLS LIMITED (âthe Companyâ) as of 31st March 2016 in conjunction with our audit of the financial statements of the Company for the year ended on that date.
Managementâs Responsibility for Internal Financial Controls
The Companyâs management is responsible for establishing and maintaining internal financial controls based on the internal control over financial reporting criteria established by the company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls over Financial Reporting issued by the Institute of Chartered Accountants of India (ICAT). These responsibilities include the design, implementation and maintenance of adequate internal financial control that were operating effectively for ensuring the orderly and efficient conduct of its business, including adherence of companyâs policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information, as required under the Companies Act, 2013.
Auditorsâ Responsibility
Our responsibility is to express an opinion on the Companyâs internal financial controls over financial reporting based on our audit. We conducted our audit in accordance with the Guidance Note on Audit of Internal Financial Controls over Financial Reporting (the âGuidance Noteâ) and the Standards on Auditing, issued by ICAI and deemed to be prescribed under section 143(10) of the Companies Act, 2013, to the extent applicable to an audit of internal financial controls, both applicable to an audit of internal Financial Controls and, both issued by the Institute of Chartered Accountants of India. Those Standards and the Guidance Note require that we comply with ethical
requirements and plan and perform the audit to obtain reasonable assurance about whether adequate internal financial controls over financial reporting was established and maintained and if such controls operated effectively in all material respects. Our audit involves performing procedures to obtain audit evidence about the adequacy of the internal financial controls system over financial reporting and their operating effectiveness. Our audit of internal financial controls over financial reporting included obtaining an understanding of internal financial controls over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. The procedures selected depend on the auditor''s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the Company''s internal financial controls system over financial reporting.
Meaning of Internal Financial Controls over Financial Reporting
A company''s internal financial control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company''s internal financial control over financial, reporting includes those. policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted- accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company''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 limitations of internal financial controls over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may occur and not be detected'' Also, projections of future evaluation of the internal financial controls over financial reporting to future periods are subject to the risk that the internal financial control over financial reporting may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Qualified opinion
According to the information and explanations given to us and based on our audit, the following material weaknesses have been identified in the operating effectiveness of the Company''s internal financial controls over financial reporting as at March 31, 2016:
a) The Companyâs internal financial controls over the reconciliation of financial institutions liabilities, credit evaluation, provisioning of interest and expenses thereof, were not operating effectively which could potentially result in the Company recognizing revenue without establishing reasonable certainty of ultimate repayment of liabilities.
A âmaterial weakness'' is a deficiency, or a combination of deficiencies, in internal financial control over financial reporting, such that there is a reasonable possibility that a material misstatement of the company''s annual or interim financial statements will not be prevented or detected on a timely basis.
In our opinion, the Company has, in all material respects, maintained adequate internal financial controls over financial reporting as of March 31 ,2016, based on "the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial controls Over Financial Reporting issued by the Institute of Chartered Accountants of India", and except for the possible effects of the material weaknesses described above on the achievement of the objectives of the control criteria, of the Companyâs internal financial controls over financial reporting were operating effectively as of March 31, 2016. We have considered the material weaknesses indentified and reported above in determining the nature, timing, and extent of audit tests applied in our audit of the March 31, 2016 financial statements of the Company, and these material weaknesses does not affect our opinion on the financial statements of the Company.
R. B. Sharma & Co.
Chartered Accountants
F.R.N. 109971W
CA Umesh Sharma
M. No. 104605
Partner
Date: 30/05/2016
Place Aurangabad
Mar 31, 2014
We have audited the accompanying financial statements of NATH PULP AND
PAPER MILLS LIMITED (the Company), which comprise the Balance Sheet as
at March 31, 2014, the Statement of Profit and Loss and Cash Flow
Statement for the year ended on that date, and a summary of significant
accounting policies and other explanatory information.
Management''s Responsibility for the Financial Statements
The Company''s Management is responsible for the preparation of these
financial statements that give a true and fair view of the financial
position, financial performance and cash flows of the Company in
accordance with the Accounting Standards notified under the Companies
Act, 1956 (the Act) read with the General Circular 15/2013 dated 13th
September, 2013 of the Ministry of Corporate Affairs in respect of
section 133 of the Companies Act, 2013 and in accordance with the
accounting principles generally accepted in India. This responsibility
includes the design, implementation and maintenance of internal control
relevant to the preparation and presentation of the financial
statements that give a true and fair view and are free from material
misstatement, whether due to fraud or error.
Auditors Responsibility
Our responsibility is to express an opinion on these financial
statements based on our audit. We conducted our audit in accordance
with the Standards on Auditing issued by the Institute of Chartered
Accountants of India. Those Standards require that we comply with
ethical requirements and plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free
from material misstatement.
An audit involves performing procedures to obtain audit evidence about
the amounts and disclosures in the financial statements. The procedures
selected depend on the auditors'' judgment, including the assessment of
the risks of material misstatement of the financial statements, whether
due to fraud or error. In making those risk assessments, the auditor
considers internal control relevant to the Company''s preparation and
fair presentation of the financial statements in order to design audit
procedures that are appropriate in the circumstances, but not for the
purpose of expressing an opinion on the effectiveness of the Company''s
internal control. An audit also includes evaluating the appropriateness
of accounting policies used and the reasonableness of the accounting
estimates made by management, as well as evaluating the overall
presentation of the financial statements. We believe that, the audit
evidence we have obtained is sufficient and appropriate to provide a
basis for our audit opinion.
Qualified Opinion
In our opinion and to the best of our information and according to the
explanations given to us, the said financial statements subject to what
is stated in paragraph 2 (e) to (g) below having consequential impact,
(presently not ascertainable) on the profit for the year (after
exceptional items), accumulated losses and current assets and read
together with our comments in the annexure hereto, Note No. 27.06
regarding Company not appointing a Whole time Company Secretary as
provided in the Act, Note No. 27.14 regarding default made by the
Company in repayment of installments to Financial Institutions and the
right to revoke the concessions granted under the scheme and
non-provision of liability on account of interest/premium and Note No.
27.15 regarding recognition of overdue payment of the financial
institutions as on 31s1 March,2014 as Long term borrowings instead of
current liabilities as required under Revised schedule VI, other notes
appearing in the said Notes to financial statements and those appearing
elsewhere in the financial statements give the information required by
the Act in the manner so required and give a true and fair view in
conformity with the accounting principles generally accepted in India:
i) in the case of the Balance Sheet, of the state of affairs of the
Company as at March 31, 2014;
ii) in the case of the Statement of Profit & Loss, of the profit of the
Company for the year ended on that date; and
iii) in the case of the Cash Flow Statement, of the cash flows for the
year ended on that date.
Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditor''s Report) Order, 2003
("the Order") issued by the Central Government of India in terms of
sub-section (4A)of section 227 of the Act, we enclose in the annexure a
statement on the matters specified in paragraphs 4 and 5 of the said
Order, to the extent applicable.
2. As required by section 227(3) of the Act, further to our comments in
the Annexure referred to in paragraph 1 above, particularly what is
mentioned, we report that:-
(a) Subject to what is stated in at paragraph (g) below, we have
obtained all the information and explanations, which to the best of 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 the Company so far as appears from our examination of
those books.
(c) The Balance Sheet, Statement of Profit and Loss and Cash Flow
Statement dealt with by this report are in agreement with the books of
account.
(d) Except for the matter disclosed in the Note No. 27.06, 24.14, and
27.15, In our opinion, the Balance Sheet, Statement of Profit and Loss
and Cash Flow Statement dealt with by this report comply with the
accounting standards notified under the Companies Act, 1956 (the Act)
read with the General Circular 15/2013 dated 13ffi September, 2013 of
the Ministry of Corporate Affairs in respect of section 133 of the
Companies Act, 2013.
(e) The accumulated losses of the Company exceed its net worth. The
financial statements have, however, been prepared by the management on
a going concern basis, as explained in Note No. 27.11 of notes on
financial statements. Should, however, the Company be unable to
continue as a going concern , the extent of effect of the resultant
adjustments on the assets and liabilities as at the end of the year and
profit after exceptional items, for the year has not been ascertained
presently.
(f) In respect of inter-corporate Loans / Advances, prima-facie, the
company has not complied with section 372A of the Act, in as much as
these are interest free loans for which approval of the financial
institutions has not been obtained (Refer Note No. 27.09 of notes on
financial statements). Maximum amount outstanding during the year Rs
17,496,186 and amount outstanding as at the close of the year Rs
14,107,654.
(g) The accounts of certain parties in respect of creditors, debtors
and financial Institutions are subject to confirmation, reconciliation
and consequent adjustments, if any. (Refer Note No. 27.07and 27.15 of
notes on financial statements)
(h) We are unable to express an opinion as to when and to what extent
the Deferred Tax Assets recognized of Rs. 235,959,531 would reverse, as
there is no virtual certainty as contemplated in Accounting Standard
(AS) 22 of "Account for Taxes an Income" issued by Companies
(Accounting Standard) Rules, 2006. (Refer Note No. 28.04 of notes on
financial statements).
(i) On the basis of written representations received from directors as
on March 31, 2014, and taken on record by the Board of Directors,
wherever applicable, we report that none of the directors is
disqualified as on March 31, 2014 from being appointed as a director of
the Company in terms of clause (g) of sub-section (1) of Section 274 of
the Act.
(j) Since the Central Government has not issued any notification as to
the rate at which the cess is to be paid under section 441A of the
Companies Act, 1956 nor it issued any Rules under the said section,
prescribing the manner in which such cess is to be paid, no cess is due
and payable by the Company.
ANNEXURE REFERRED TO IN AUDITORS'' REPORT OF EVEN DATE ON THE
FINANCIAL STATEMENTS FOR THE YEAR ENDED MARCH 31, 2014 OF NATH PULP &
PAPER MILLS LIMITED.
1. On the basis of such checks as we considered appropriate and
according to the information and explanations given to us during the
course of audit, we state that:
a) The Company is in process of updating records in respect of its
fixed assets showing full particulars including quantitative details
and situation of fixed assets.
b) The assets have been physically verified by the management in
accordance with the phased programme of verification adopted by the
Company. In our opinion, the frequency of verification is reasonable
having regard to the size of the Company and nature of fixed assets. No
material discrepancies have been noticed on such verification.
2. a) The inventory has been physically verified by the Management at
reasonable intervals during the year.
b) The procedures of physical verification of the inventories followed
by the management are reasonable and adequate in relation to the size
of the Company and the nature of its business.
c) The Company is maintaining proper records of inventory. The
discrepancies noticed on such physical verification of inventory as
compared to books records were not material.
3. a) The Company has granted interest free unsecured loan to four
parties covered in the register maintained under
Section 301 of the Act. The maximum amount involved during the year was
Rs 16,946,210 and the year end balance of loans granted to such parties
was Rs 13,557,678. Reference is invited to Note No. 27.09 of notes to
financial statements.
b) The Company has taken interest free unsecured loans from three
parties covered in the register maintained under Section 301 of the
Act. The amount received during the year was Rs 5,722,442 and the year
end balance of loan taken from such party was 15,344,087.
c) Other terms and conditions of the aforesaid loans given / taken are
prima facie, not prejudicial to the interest of the Company.
4. In our opinion and according to the information and explanations
given to us, there is adequate internal control system commensurate
with the size of the Company and nature of its business for the
purchase of inventory and fixed assets and for sale of goods. During
the course of our audit, we have not observed any continuing failure to
correct major weaknesses in the internal control system.
5. a) According to the information and explanations given to us, we are
of the opinion that particulars of contracts/arrangements referred to
in Section 301 of the Act have been entered in the register required to
be maintained under that section.
b) According to the information and explanations given to us, no
transaction made in pursuance of contract or arrangements referred to
in Section 301 of the Act exceeded the value of rupees five lacs during
the year.
6. In our opinion, the Company has not accepted deposits from the
public during the year, with the provisions of Sections 58A and 58AA of
the Act and rules framed thereunder.
7. In our opinion, Company has an internal audit system commensurate
with the size of the Company and nature of its business.
8. We have broadly reviewed the cost records maintained by the Company
pursuant to the order of the Central Government under Section 209(1)
(d) of the Act and are of the opinion that, prima facie, the prescribed
records have been made and maintained. We are, however, not required to
make a detailed examination of the records with a view to determine
whether they are accurate or complete. Refer note no. 27.10
9. a) The Company is not regular in depositing undisputed statutory
dues of Provident Fund, Income Tax, Service Tax, and other applicable
statutory dues with appropriate authorities. However, there are no
statutory dues outstanding as at the last day of the financial year
for a period of more than six months from the date they became payable.
The Company is regular in depositing Customs Duty, Excise Duty and
other applicable Cesses.
b) According to the records of the Company, there are no dues of Income
Tax, Sales Tax, Service tax, Customs Duty, Wealth Tax, Excise Duty,
Cess which have not been deposited on account of any dispute except the
following:
Particulars Forum where the dispute Amount Period to which the
is pending Amount Relates
Sales Tax Joint Commissioner 7,353,940 1989-1990
of Sales Tax
(Appeal) Sales Tax, 2,568,662 1990-1991
Aurangabad. 7,444,447 1991-1992
Excise Duty Customs, Excise & 3,244,508 2006-2007
Service Tax
Appellate Tribunal
Mumbai.
10. The accumulated losses of the Company as at March 31, 2014 are more
than fifty percent of its net worth. Subject to our comments in
paragraph 2(e) of our main report of even date, the Company has not
incurred cash losses during the financial year ended on that date or in
the immediately preceding year.
11. The Company has received sanctioned Rehabilitation scheme by
Hon''ble BIFR vide sanction order dt. 14/02/12. Considering the same,
the Company has defaulted as at the year-end in repayment of dues to
financial institutions. Reference is invited to Note No. 3 and 27.14 of
notes to financial statements. The Company has filed Modified Draft
Rehabilitation Scheme to Hon''ble BIFR on 17th September, 2013, which
is under consideration.
12. During the year, the Company has not granted loans and advances on
the basis of security by way of pledge of shares, debentures and other
securities.
13. As the Company is not a nidhi / mutual benefit fund / society, the
provisions of clause 4(xiii) of the Order is not applicable to the
Company.
14. As the Company is not dealing or trading in shares, securities,
debentures and other investments, the provision of clause 4(xiv) of the
Order is not applicable to the Company.
15. During the year, company has not given any guarantee for loans
taken by others from banks and financial institutions.
16. According to the information and explanations given to us, and in
our opinion, the term loans were applied for the purpose for which they
were obtained.
17. According to the information and explanations given to us and on an
overall examination of the cash flow statement and Balance Sheet of the
Company, in our opinion, the funds raised on short-term basis have,
prima facie, not been used for long-term investment.
18. The Company has not made any preferential allotment of shares to
parties and companies covered in the register maintained under Section
301 of the Act.
19. The company has not issued any debentures/bonds during the year.
20. The Company has not raised any money by way of public issue during
the year.
21. During the course of our examination of the books and records of
the Company, carried out in accordance with the generally accepted
auditing practices in India and according to the information and
explanations given to us, we have neither come across any instance of
fraud on or by the Company, noticed or reported during the year, nor
have we been informed of such case by the management.
For R. B. Sharma & Co.
Chartered Accountants
FR No. 109971W
CA Umesh Sharma M. No. 104605
[Partner]
Place: Aurangabad
Date: 30/05/2014
Mar 31, 2013
Report on the Financial Statements
We have audited the accompanying financial statements of NATH PULP AND
PAPER MILLS LIMITED, which comprise the Balance Sheet as at March 31,
2013, the Statement of Profit and Loss and Cash Flow Statement for the
year ended, and a summary of significant accounting policies and other
explanatory information.
Management''s Responsibility for the Financial Statements
Management is responsible for the preparation of these financial
statements that give a true and fair view of the financial position,
financial performance and cash flows of the Company in accordance with
the Accounting Standards referred to in sub-section (3C) of section 211
of the Companies Act, 1956 ("the Act"). This responsibility includes
the design, implementation and maintenance of internal control relevant
to the preparation and presentation of the financial statements that
give a true and fair view and are free from material misstatement,
whether due to fraud or error.
Auditor''s Responsibility
Our responsibility is to express an opinion on these financial
statements based on our audit. We conducted our audit in accordance
with the Standards on Auditing issued by the Institute of Chartered
Accountants of India. Those Standards require that we comply with
ethical requirements and plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free
from material misstatement.
An audit involves performing procedures to obtain audit evidence about
the amounts and disclosures in the financial statements. The procedures
selected depend on the auditor''s judgment, including the assessment of
the risks of material misstatement of the financial statements, whether
due to fraud or error. In making those risk assessments, the auditor
considers internal control relevant to the Company''s preparation and
fair presentation of the financial statements in order to design audit
procedures that are appropriate in the circumstances. An audit also
includes evaluating the appropriateness of accounting policies used and
the reasonableness of the accounting estimates made by management, as
well as evaluating the overall presentation of the financial
statements. We believe that the audit evidence we have obtained is
sufficient and appropriate to provide a basis for our audit opinion.
Opinion
In our opinion and to the best of our information and according to the
explanations given to us, the said financial statements subject to what
is stated in paragraph 2 (e) to (g) below having consequential impact,
(presently not ascertainable) on the profit for the year (after
exceptional items), accumulated losses and current assets and read
together with our comments in the annexure hereto, Note No. 27.06
regarding Company not having a Company Secretary as provided in the
Act, Note No. 27.14 regarding default made by the Company in repayment
of installments to Financial Institutions and the right to revoke the
concessions granted under the scheme and non-provision of liability on
account of interest/premium and Note No. 27.15 regarding recognition of
overdue payment of the financial institutions as on 31st March,2013 as
Long term borrowings instead of current liabilities as required under
Revised schedule VI, other notes appearing in the said Notes to
financial statements and those appearing elsewhere in the financial
statements give the information required by the Act in the manner so
required and give a true and fare view in conformity with the
accounting principles generally accepted in India:
i) in the case of the Balance Sheet, of the state of affairs of the
Company as at March 31,2013;
ii) in the case of the Statement of Profit & Loss, of the profit of the
Company for the year ended on that date; and
iii) in the case of the Cash Flow Statement, of the cash flows for the
year ended on that date.
Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditor''s Report) Order, 2003 ("the
Order") issued by the Central Government of India in terms of
sub-section (4A)of section 227 of the Act, we enclose in the annexure a
statement on the matters specified in paragraphs 4 and 5 of the said
Order, to the extent applicable.
2. As required by section 227(3) of the Act, further to our comments
in the Annexure referred to in paragraph 1 above, particularly what is
mentioned, we report that:-
(a) Subject to what is stated in at paragraph (g) below, we have
obtained all the information and explanations, which to the best of 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 the Company so far as appears from our examination of
those books.
(c) The Balance Sheet, Statement of Profit and Loss and Cash Flow
Statement dealt with by this report are in agreement with the books of
account.
(d) In our opinion, the Balance Sheet, Statement of Profit and Loss and
Cash Flow Statement dealt with by this report comply with the
accounting standards referred to in sub section (3C) of Section 211 of
the Act,
(e) The accumulated losses of the Company exceed its net worth. The
financial statements have, however, been prepared by the management on
a going concern basis, as explained in Note No. 27.11 of notes on
financial statements. Should, however, the Company be unable to
continue as a going concern, the extent of effect of the resultant
adjustments on the assets and liabilities as at the end of the year and
profit after exceptional items, for the year has not been ascertained
presently.
(f) In respect of inter-corporate Loans / Advances, prima-facie, the
company has not complied with section 372A of the Act, in as much as
these are interest free loans for which approval of the financial
institutions has not been obtained (Refer Note No. 27.09 of notes on
financial statements). Maximum amount outstanding during the year
28,193,937 and amount outstanding as at the close of the year ?
16,972,884.
(g) The accounts of certain parties in respect of creditors and debtors
are subject to confirmation, reconciliation and consequent adjustments,
if any. (Refer Note No. 27.07 of notes on financial statements)
(h) We are unable to express an opinion as to when and to what extent
the Deferred Tax Assets recognized of? 235,436,931 would reverse, as
there is no virtual certainty as contemplated in Accounting Standard
(AS) 22 of "Account for Taxes an Income" issued by Companies
(Accounting Standard) Rules, 2006. (Refer Note No. 28.04 of notes on
financial statements).
(I on the basis of written representations received from directors as
on March 31, 2013, and taken on record by the Board of Directors,
wherever applicable, we report that none of the directors is
disqualified as on March 31, 2013 from being appointed as a director of
the Company in terms of clause (g) of sub-section (1) of Section 274 of
the Act.
ANNEXURE REFERRED TO IN PARAGRAPH 1 OF AUDITORS'' REPORT OF EVEN DATE ON
THE FINANCIAL STATEMENTS FOR THE YEAR ENDED MARCH 31, 2013 OF NATH PULP
& PAPER MILLS LIMITED.
1. On the basis of such checks as we considered appropriate and
according to the information and explanations given to us during the
course of audit, we state that:
a) The Company is in process of updating records in respect of its
fixed assets showing full particulars including quantitative details
and situation of fixed assets,
b) The assets have been physically verified by the management in
accordance with the phased programme of verification adopted by the
Company. In our opinion, the frequency of verification is reasonable
having regards to the size of the Company and nature of fixed assets.
No material discrepancies have been noticed on such verification.
2. a) The inventory has been physically verified by the management at
reasonable intervals during the
year.
b) The procedures of physical verification of the inventories followed
by the management are reasonable and adequate in relation to the size
of the Company and the nature of its business.
c) The Company is maintaining proper records of inventory. The
discrepancies noticed on such physical verification of inventory as
compared to books records were not material.
3. a) The Company has granted interest free unsecured loan to five
parties covered in the register maintained under Section 301 of the
Act. The maximum amount involved during the year was ? 27,463,100 and
the year end balance of loans granted to such party was ?16,422,908.
Reference is invited to Note No. 27.09 of notes to financial
statements.
b) The Company has taken interest free unsecured loans from three
parties covered in the register maintained under Section 301 of the
Act. The maximum amount involved during the year was 15,879,789 and the
year end balance of loan taken from such party was ?5,623,610.
c) Other terms and conditions of the aforesaid loans given / taken are,
prima facie, not prejudicial to the interest of the Company.
4. In our opinion and according to the information and explanations
given to us, there is adequate internal control system commensurate
with the size of the Company and nature of its business for the
purchase of inventory and fixed assets and for sale of goods. During
the course of our audit, we have not observed any continuing failure to
correct major weaknesses in the internal control system.
5. a) According to the information and explanations given to us, we
are of the opinion that particulars of contracts/arrangements referred
to in Section 301 of the Act have been entered in the register required
to be maintained under that section.
b) According to the information and explanations given to us, no
transaction made in pursuance of contract or arrangements referred to
in Section 301 of the Act exceeded the value of rupees five lacs during
the year.
6. In our opinion, the Company has not accepted deposits from the
public during the year, with the provision of Sections 58A and 58AA of
the Act and rules framed there under.
7. In our opinion, Company has an internal audit system commensurate
with the size of the Company and nature of its business.
8. We have broadly reviewed the cost records maintained by the Company
pursuant to the order of the Central Government under Section 209(1)
(d) of the Act and are of the opinion that, prima facie, the prescribed
records have been made and maintained. We are, however, not required to
make a detailed examination of the records with a view to determine
whether they are accurate or complete. Refer note no. 27.10
9. a) The Company is not regular in depositing undisputed statutory
dues of Provident Fund, Income Tax, Service Tax, and other applicable
statutory dues with appropriate authorities. However, there are no
statutory dues outstanding as at the last day of the financial year for
a period of more than six months from the date they became payable. The
Company is regular in depositing Customs Duty, Excise Duty and other
applicable Cesses.
b) According to the records of the Company, there are no dues of Income
Tax, Sales Tax, Service tax, Customs Duty, Wealth Tax, Excise Duty,
Cess which have not been deposited on account of any dispute except the
following:
Particulars Forum where the dispute is pending Amount? Period to which
the Amount Relates
Sales Tax Joint Commissioner of Sales Tax 7,353,940 1989-1990
(Appeal) Sales Tax, Aurangabad. 2,568,662 1990-1991
7,444,447 1991-1992
Excise Duty Customs, Excise & Service Tax 3,244,508 2006-2007
Appellate Tribunal Mumbai.
10. The accumulated losses of the Company as at March 31, 2013 are
more than fifty percent of its net worth. Subject to our comments in
paragraph 2(e) of our main report of even date, the Company has not
incurred cash losses during the financial year ended on that date or in
the immediately preceding year.
11. The Company has received sanctioned Rehabilitation scheme by
Hon''ble BIFR vide sanction order dt.
14/02/12. Considering the same, the Company has defaulted as at the
year-end in repayment of dues to financial institutions. Reference is
invited to Note No. 3 and 27.14 of notes to financial statements.
12. During the year, the Company has not granted loans and advances on
the basis of security by way of pledge of shares, debentures and other
securities.
13. As the Company is not a nidhi / mutual benefit fund / society, the
provisions of clause 4(xiii) of the Order is not applicable to the
Company.
14. As the Company is not dealing or trading in shares, securities,
debentures and other investments, the Provision of clause 4(xiv) of the
Order is not applicable to the Company.
15. During the year, company has not given any guarantee for loans
taken by others from banks and financial institutions.
16. According to the information and explanations given to us, and in
our opinion, the term loans were applied for the purpose for which they
were obtained.
17. According to the information and explanations given to us and on
an overall examination of the cash flow statement and Balance Sheet of
the Company, in our opinion, the funds raised on short-term basis have,
prima facie, not been used for long-term investment.
18. The Company has not made any preferential allotment of shares to
parties and companies covered in the register maintained under Section
301 of the Act.
19. The company has not issued any debentures /bonds during the year.
20. The Company has not raised any money by way of public issue during
the year.
21. During the course of our examination of the books and records of
the Company, carried out in accordance with the generally accepted
auditing practice in India and according to the information and
explanations given to us, we have neither come across any instance of
fraud on or by the Company, noticed or reported during the year, nor
have we been informed of such case by the management.
For R. B. Sharma & Co.
Chartered Accountants
FRN 109971W
CA Umesh Sharma M. No. 104605
[Partner]
Place: Aurangabad
Date: 30th May, 2013
Mar 31, 2009
1. We have audited the attached Balance Sheet of NATH PULP & PAPER
MILLS LIMITED as at March 31, 2009, the Profit and Loss Account and
also the Cash Flow Statement for the year ended on that date annexed
thereto.
These financial statements are the responsibility of the Companys
management. Our responsibility is to express an opinion on these
financial statements based on our audit.
2. We conducted our audit in accordance with the auditing standards
generally accepted in India. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for
our opinion.
3. As required by the Companies (Auditors Report) Order, 2003, as
amended by the Companies (Auditors Report) (Amendment) Order 2004
issued by the Central Government in terms of sub-section (4A) of
Section 227 of the Companies Act. 1956 (hereinafter referred to as the
"Act"), we annex hereto a statement on the matters specified in
paragraphs 4 and 5 of the said Order, to the extent applicable.
4. Further to our comments in the Annexure referred to in paragraph 3
above, we report that:-
(a) Subject to what is stated in at paragraph (g) below, we have
obtained all the information and explanations, which to the best of 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 the Company so far as appears from our examination of
those books.
(c) The Balance Sheet, Profit and Loss Account and Cash Flow Statement
dealt with by this report are in agreement with the books of account.
(d) In our opinion, the Balance Sheet, Profit and Loss Account and Cash
Flow Statement dealt with by this report comply with the accounting
standards prescribed by companies (Accounting Standards) Rules 2006.
to the extent applicable, except to the extent of non disclosure of
gratuity liability in the manner as mentioned in Accounting Standard 15
(Revised) on Employees Benefit (Refer Note no 23 in Schedule 20
attached to
the Financial Statements.)
(e) The accumulated losses of the Company far exceed its net worth. The
accounts have, however, been prepared by the management on a going
concern basis, as explained in Note No. 3 in Schedule 20. Should,
however, the Company be unable to continue as a going concern , the
extent of effect of the resultant adjustments on the assets and
liabilities as at the end of the year and profit (after exceptional
items and provision for frienge benefit tax) for the year has not been
ascertained presently.
(f) In respect of intercorporate Loans / Advances, prima-facie, the
company has not compiled with section 372 of the Act, inasmuch as these
are interest free loans and approval of the financial institutions has
not been obtained. However, as explained by the management, in view of
the scheme of arrangement under section 391 of the Act being pending
before the Hon ble Bombay High Court, the compliance with regard to
approval of institutions may not be required, as mentioned in Note No
18 of Schedule 20. Maximum amount outstanding during the year Rs
8,973,675 and amount outstanding as at the close of the year Rs.
1,395,200.
(g) The accounts of certain parties in respect of secured and unsecured
loans taken, creditors, debtors, loans and advances given and certain
bank balances are subject to confirmation, reconciliation and
consequent adjustments, if any. (Refer Note No. 7 of Schedule 20)
(h) On the basis of written representations received from directors as
on 31 st March, 2009, and taken on record by the Board of Directors,
wherever applicable, we report that none of the directors is
disqualified as on 31st March, 2009 from being appointed as a director
of the Company in terms of clause (g) of sub-section (1) of section 274
of the Act. Reference is, however, invited in this respect to Note No.
4 of Schedule 20 dealing with the managements view in this matter.
(i) In our opinion and to the best of our information and according to
the explanations given to us, the said accounts subject to what is
stated in paragraph 4 (e) to (g) above having consequential impact,
(presently not determinable) on the profit for the year,( after
exceptional items and provision for frienge benefit tax) accumulated
losses and current assets and read together with our comments in the
annexure hereto, Note no 5 in Schedule 20 regarding appointment of
Company Secretary, Note No 8 regarding dividend account pertaining to
earlier years, which is under reconciliation with the bankers, Note no
9 regarding assignment of secured loans to a third party and default in
repayment thereof, Note No.16 regarding accounting as other income of
Rs. 7,674,962, being the gain on settlement of deferred sales tax
liability, Note No. 19 regarding capitalisation of certain expenses
aggregating to Rs. 2,499,810 for the revamping of machinery and other
notes appearing in the said Schedule and those appearing elsewhere in
the accounts give the information required by the Act in the manner so
required and give a true and fair view in conformity with the
accounting principles generally accepted in India:
i) in the case of the Balance Sheet, of the state of affairs of the
Company as at 31st March, 2009;
ii) in the case of the Profit & Loss Account, of the profit of the
Company for the year ended on that date; and
iii) in the case of the Cash Flow Statement, of the cash flows for the
year ended on that date.
ANNEXURE REFERRED TO IN PARAGRAPH 3 OF AUDITORS REPORT OF EVEN DATE ON
THE FINANCIAL STATEMENTS FOR THE YEAR ENDED MARCH 31, 2009 OF NATH PULP
& PAPER MILLS LIMITED.
On the basis of such checks as we considered appropriate and according
to the information and explanations given to us during the course of
audit, we state that:
1. a) The Company has maintained proper records showing full
particulars including quantitative details and
situation of fixed assets.
b) The assets have been physically verified by the management in
accordance with the phased programme of verification adopted by the
Company. In our opinion, the frequency of verification is reasonable
having regard to the size of the Company and nature of fixed assets. No
material discrepancies have been noticed in respect of the assets
physically verified during the year.
c) No substantial part of the fixed assets has been disposed off during
the year.
2. a) The inventory has been physically verified by the management at
reasonable intervals during the year.
b) The procedures of physical verification of the inventories followed
by the management are reasonable and adequate in relation to the size
of the Company and the nature of its business.
c) The Company is maintaining proper records of inventory. The
discrepancies noticed on such physical verification of inventory as
compared to book records were not material. Attention is, however,
invited to note no. 10 regarding write off Stocks of Unusable /
Unserviceable Raw Materials amounting to Rs. 75,266,813 because of
deterioration in the quality of the material as evaluated by the
management appearing, in Schedule 20 attached to the Financial
Statements.
3. a) The Company has granted interest free unsecured loan to two
companies covered in the register
maintained under Section 301 of the Act. The maximum amount involved
during the year was Rs. 7, 578,475 and the year-end balance of loans
granted to such parties was Rs.Nil. ( Refer Note no 18 in Schedule 20
attached to the Financial Statement).
b) The Company has taken interest free unsecured loans from five
companies covered in the register maintained under Section 301 of the
Act. The maximum amount involved during the year was Rs.52,054,604 and
the year end balance of loan taken from such parties was Rs. 46,396,753
.
c) Other terms and conditions of the aforesaid loans given / taken are,
prima facie, not prejudicial to the interest of the Company.
4. In our opinion and according to the information and explanations
given to us, having regard to the explanation that the items of
purchases and sales are of special nature and suitable alternative
sources do not exist for obtaining comparable quotations, there is
adequate internal control system commensurate with the size of the
Company and nature of its business for the purchase of inventory and
fixed assets and for sale of goods. During the course of our audit, we
have not observed any continuing failure to correct major weaknesses in
the internal control system. Reference is, however, invited to para 7
below.
5. a) According to the information and explanations given to us, we
are of the opinion that particulars of
contracts/arrangements referred to in Section 301 of the Act have been
entered in the register required to be maintained under that section.
b) According to the information and explanations given to us, no
transaction made in pursuance of contract or arrangements referred to
in Section 301 of the Act exceeded the value of rupees five lacs during
the year.
6. In our opinion, the Company has complied with the provision of
Sections 58A and 58AA of the Act and rules framed thereunder with
regard to the deposits accepted from the public except that it did not
repay
- the over due principal amount & interest thereon as also did not
create security in respect of redeemable bonds-balance outstanding as
at the close of the year Rs. 295,220.
7. In our opinion, Company has an internal audit system commensurate
with the size of the Company and nature of its business.
8. We have broadly reviewed the cost records maintained by the Company
pursuant to the order of the Central Government under Section 209(1)
(d) of the Act and are of the opinion that, prima facie, the prescribed
records have been made and maintained. We are, however, not required to
make a detailed examination of the records with a view to determine
whether they are accurate or complete.
9. (a) The Company is generally regular in depositing undisputed
statutory dues as Provident Fund, Income Tax, Sales Tax, Value Added Tax,
Service Tax, Custom Duty, Excise Duty, Cess and other applicable statutory
dues with appropriate authorities, except that, the Company is irregular
in depositing Income Tax deducted at source (TDS) and fringe benefit tax,
with the authorities. There have been delays upto 352 days. Income Tax
TDS Rs. 1,768,142 and Fringe Benefit Tax Rs 396,146 were outstanding as
at the last day of the financial year for a period of more than six months
from the date they became payable. With regard to the arrears of the
Investor Education and Protection Fund, reference is invited to Note No.
8 in Schedule 20 attached to the Financial Statements.
(b) According to the records of the Company, there are no dues of
Income Tax, Sales Tax, Service tax, Customs Duty, Wealth Tax, Excise
Duty, Cess which have not been deposited on account of any dispute
except the following:
Particulars Forum where the dispute
is pending Amt. in Rs. Period to
which the
Amount
Relates
Sales Tax Joint Commisioner of Sales
Tax (Appeals) 7,353,940 1989-1990
Aurangabad 2,568,662 1990-1991
7,444,447 1991-1992
Excise Duty Customs, Excise and Service
Tax Appellate Tribunal, 3,297,335 2006-2007
Mumbai
10. The accumulated losses of the Company as at March 31 2009 are more
than fifty percent of its net worth. Subject to our comments in
paragraph 4(e) of our main report of even date, the Company has not
incurred cash losses during the financial year ended on that date or in
the immediately preceding year.
11. Considering that the Scheme of Arrangement/Compromise between the
Company and its Secured
Creditors has been approved by the 3/4 of Secured Creditors in value
and number and subject to the fact that the petition has been filed
before the Honble Bombay High Court (pending approval), the Company
has no default existing as at the year end in repayment of dues to
financial institutions, banks or debenture holders, as stated in Note
No. 9 of Schedule 20 of Significant Accounting Policies and Notes to
Accounts.
12. During the year, the Company has not granted loans and advances on
the basis of security by way of pledge of shares, debentures and other
securities.
13. As the Company is not a nidhi / mutual benefit fund / society, the
provisions of clause 4(xiii) of the Order is not applicable to the
Company.
14. As the Company is not dealing or trading in shares, securities,
debentures and other investments, the provision of clause 4(xiv) of the
Order is not applicable to the Company.
15. During the year, company has not given any guarantee for loans
taken by others from banks and financial institutions.
16. According to the information and explanations given to us, and in
our opinion, the term loans were applied for the purpose for which they
were obtained.
17. According to the information and explanations given to us and on
an overall examination of the cash flow statement and Balance Sheet of
the Company, in our opinion, the funds raised on short-term basis have,
prima facie, not been used for long-term investment.
18. The Company has not made any preferential allotment of shares to
parties and companies covered in the register maintained under section
301 of the Act.
19. In the case of Privately Placed Secured Redeemable Bonds for
Rs.904,020 (now balance Rs.295,220) issued in an earlier year, the
security is still to be created as referred to in Schedule 4(c)
attached to the Financial Statements.
20. The Company has not raised any money by way of public issue during
the year.
21. During, the course of our examination of the books and records of
the Company, carried out in accordance with the generally accepted
auditing practices in India and according to the information and
explanations given to us, we have neither come across any instance of
fraud on or by the Company, noticed or reported during the year, nor
have we been informed of such case by the management
For LODHA & CO.
Chartered Accountants
A.M.HARIHARAN
Place: Mumbai Partner
Dated: 29.09.2009 Membership No.38323