To,
The Members of
Nath Pulp and Paper Mills Limited Aurangabad
Report on the Audit of the Standalone Financial Statements
Opinion
1. We have audited the accompanying standalone financial statements of Nath Pulp and
Paper Limited having CIN: L21100MH1975PLC018289 ("the Company"), which
comprise the Balance Sheet as at 31st March 2019, the Statement of Profit and
Loss (including other comprehensive income), Statement of Cash Flows and Statement of
Changes in Equity for the year then ended, and notes to financial statements, including a
summary of significant accounting policies and other explanatory information.
2. 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 standalone financial statements give the information
required by the Companies Act, 2013 (the Act) in the manner so required and give a true
and fair view in conformity with Indian Accounting Standards prescribed under section 133
of the Act read with the Companies (Indian Accounting Standards) Rules, 2015, as amended
("Ind AS") and the other accounting principles generally accepted in India, of
the state of affairs of the Company as at 31st March 2019 and its profit (financial
performance including other comprehensive income), the changes in equity and its cash
flows for the year ended on that date.
Basis for Qualified Opinion
3. We conducted our audit in accordance with Standards on Auditing (SAs) specified
under section 143(10) of the Act. Our responsibilities under those Standards are further
described in the Auditors Responsibilities for the Audit of the Financial Statements
section of our report. We are independent of the Company in accordance with the Code of
Ethics issued by the Institute of Chartered Accountants of India (ICAI) together with the
ethical requirements that are relevant to our audit of the financial statements under the
provisions of the Act and the rules there under, and we have fulfilled our other ethical
responsibilities in accordance with these requirements and the ICAIs Code of Ethics.
We believe that the audit evidence we have obtained is sufficient and appropriate to
provide a basis for our qualified opinion.
Qualification
4. 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 13.
Had this observation made by us been considered the Profit for the year would have been
Rs 21,51,98,853 (as against reported profit figure of Rs. 5,62,59,060), Non- Current
Financial Liabilities - Borrowings would have been Rs. 46,81,53,200 (as against reported
figure of Rs.30,93,09,099).
5. We are unable to express an opinion regarding reversal of Deferred Tax Assets
recognized in the financial statements to the extent of Rs.18,70,26,862, as there is no
virtual certainty anticipated in foreseeable future, as contemplated in Accounting
Standard (AS) 22 of "Account for Taxes on Income" issued by Companies
(Accounting Standard) Rules, 2006.
Key Audit Matters
6. Key audit matters are those matters that, in our professional judgment, were of most
significance in our audit of the standalone financial statements of the current year.
These matters were addressed in the context of our audit of the standalone financial
statements as a whole, and in forming our opinion thereon, and we do not provide a
separate opinion on these matters. We have determined the matters described below to be
the key audit matters to be communicated in our report.
We have determined that there are no key audit matters to be communicated in our
report.
Information other than the Standalone Financial Statements and Auditors Report thereon
7. The Companys Board of Directors is responsible for the other information. The other
information comprises the information included in the annual report but does not include
the financial statements and our auditors report thereon.
Our opinion on the financial statements does not cover the other information and we do
not express any form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read
the other information and, in doing so, consider whether the other information is
materially inconsistent with the financial statements or our knowledge obtained in the
audit or otherwise appears to be materially misstated. If, based on the work we have
performed, we conclude that there is material misstatement of this other information; we
are required to report that fact. We have nothing to report in this regard.
Managements Responsibility for the Standalone Financial Statements
8. The Companys Board of Directors is responsible for the matters stated in section
134(5) of the Act with respect to the preparation of these standalone financial statements
that give a true and fair view of the financial position, financial performance (including
other comprehensive income), changes in equity and cash flows of the Company in accordance
with the accounting principles generally accepted in India, including the Ind AS specified
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 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 statement that give a true and fair view and are free from
material misstatement, whether due to fraud or error.
9. In preparing the financial statements, management is responsible for assessing the
Companys ability to continue as a going concern, disclosing, as applicable, matters
related to going concern and using the going concern basis of accounting unless management
either intends to liquidate the Company or to cease operations, or has no realistic
alternative but to do so.
10. The Board of Directors are also responsible for overseeing the Companys financial
reporting process.
Auditors Responsibilities for the Audit of the Financial Statements
11. Our objectives are to obtain reasonable assurance about whether the financial
statements as a whole are free from material misstatement, whether due to fraud or error,
and to issue an auditors report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit
conducted in accordance with Standards on Auditing will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are
considered material if, individually or in the aggregate, they could reasonably be
expected to influence the economic decisions of users taken on the basis of these
financial statements.
12. As part of an audit in accordance with Standard on Auditing, we exercise
professional judgment and maintain professional skepticism throughout the audit. We also:
a. Identify and assess the risks of material misstatement of the standalone financial
statements, whether due to fraud or error, design and perform audit procedures responsive
to those risks, and obtain audit evidence that is sufficient and appropriate to provide a
basis for our opinion. The risk of not detecting a material misstatement resulting from
fraud is higher than for one resulting from error, as fraud may involve collusion,
forgery, intentional omissions, misrepresentations, or the override of internal control.
b. Obtain an understanding of internal financial controls relevant to the audit in
order to design 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 and its subsidiary companies which are companies incorporated in India, has
adequate internal financial controls system in place and the operating effectiveness of
such controls.
c. Evaluate the appropriateness of accounting policies used and the reasonableness of
accounting estimates and related disclosures made by management.
d. Conclude on the appropriateness of managements use of the going concern basis of
accounting and, based on the audit evidence obtained, whether a material uncertainty
exists related to events or conditions that may cast significant doubt on the ability of
the Company to continue as a going concern. If we conclude that a material uncertainty
exists, we are required to draw attention in our auditors report to the related
disclosures in the standalone 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 auditors report. However, future events or conditions may cause the Company
to cease to continue as a going concern.
e. Evaluate the overall presentation, structure and content of the standalone financial
statements, including the disclosures, and whether the standalone financial statements
represent the underlying transactions and events in a manner that achieves fair
presentation.
13. We communicate with those charged with governance regarding, among other matters,
the planned scope and timing of the audit and significant audit findings, including any
significant deficiencies in internal control that we identify during our audit.
14. We also provide those charged with governance with a statement that we have
complied with relevant ethical requirements regarding independence, and to communicate
with them all relationships and other matters that may reasonably be thought to bear on
our independence, and where applicable, related safeguards.
15. From the matters communicated with those charged with governance, we determine
those matters that were of most significance in the audit of the standalone financial
statements of the current period and are therefore the key audit matters. We describe
these matters in our auditors report unless law or regulation precludes public disclosure
about the matter or when, in extremely rare circumstances, we determine that a matter
should not be communicated in our report because the adverse consequences of doing so
would reasonably be expected to outweigh the public interest benefits of such
communication
Report on Other Legal and Regulatory Requirements
16. As required by the Companies (Auditors Report) Order, 2016 ("the
Order"), issued by the Central Government of India in terms of sub-section (11) of
section 143 of the Companies Act, 2013, we give in the "Annexure A" a statement
on the matters specified in paragraphs 3 and 4 of the Order, to the extent applicable. 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. 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. In our opinion, the aforesaid standalone financial statements comply with the Ind AS
specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts)
Rules, 2014.
e. On the basis of the written representations received from the directors as on 31st
March, 2019 taken on record by the Board of Directors, none of the directors is
disqualified as on 31st March, 2019 from being appointed as a director in terms of Section
164 (2) of the
f. 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 "Annexure B". g. With respect to the other matters to be
included in the Auditors Report in accordance with the requirements of section 197(16) of
the Act, as amended :
In our opinion and to the best of our information and according to the explanations
given to us, the remuneration paid by the Company to its directors during the year is in
accordance with the provisions of section 197 of the Act.
h. 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 explanations given to us:
i. The Company has disclosed the impact of pending litigations on its financial
position in its standalone financial statements Refer Note 31 to the financial statements;
ii. The Company did not have any long-term contracts including derivative contracts for
which there were any material foreseeable losses.
iii. There were no amounts which were required to be transferred to the Investor
Education and Protection Fund by the Company.
For Gautam N Associates
Chartered Accountants
FRN: 103117W
Gautam Nandawat
Partner
M No: 32742
Place: Aurangabad
Dated: 30.05.2019
ANNEXURE A 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 2019, 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. As per the information and explanations given to us, the Company has not granted
unsecured loans to any party covered 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.
(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) |
5,17,535 |
2007-2008 |
|
Aurangabad. |
21,97,260 |
2011-2012 |
| Excise Duty |
Customs, Excise & Service Tax Appellate Tribunal Mumbai. |
30,74,508 |
2006-2007 |
| Excise Duty |
Commissioner of Central Excise (Appeal) Nagpur |
14,78,546 |
July 2012- March 2015 |
| Excise Duty |
Commissioner of Central Excise Aurangabad |
74,36,435 |
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. 17 & Note No.44.
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.
For Gautam N Associates
Chartered Accountants
FRN 103117W
Gautam Nandawat
Partner
Membership No 032742
Place: Aurangabad
Date: 30.05.2019
ANNEXURE B TO THE INDEPENDENT AUDITORS REPORT
Report on the Internal Financial Controls over financial reporting under Clause (i) of
Sub-section 3 of Section 143 of the Companies Act, 2013 (the Act)
1. We have audited the internal financial controls over financial reporting of Nath
Pulp and Paper Mills Limited ("the Company") as of 31st March, 2019
in conjunction with our audit of the Ind AS financial statements of the Company for the
year ended on that date.
Managements Responsibility for Internal Financial Controls
2. The Companys 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 Companys 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 Companys 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 "Guidance Note") issued by the ICAI and the Standards on Auditing
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 auditors 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 Companys internal financial controls
system over financial reporting of the company.
Meaning of Internal Financial Controls over Financial Reporting
6. A companys 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 companys 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
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 companys 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, 2019, 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: 30.05.2019
+91-9892691696
