Novopan Industries Ltd Auditor Reports

TO THE MEMBERS OF Novopan Industries Limited

Report on the Financial Statements

We have audited the accompanying financial statements of Novopan Industries Limited ("the Company"), which comprise the Balance Sheet as at 31st March, 2018, the Statement of Profit and Loss, the Cash Flow Statement for the year then ended, and a summary of the significant accounting policies and other explanatory information.

Managements Responsibility for the Financial Statements and for Internal Financial Controls Over Financial Reporting

The Companys 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 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, as amended vide the Companies (Accounting Standards) Amendment Rules, 2016. 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.

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". 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 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

Our responsibility is to express an opinion on these financial statements based on our audit and to express an opinion on the Companys internal financial controls over financial reporting 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 thereunder.

We conducted our audit in accordance with the Standards on Auditing specified under Section 143(10) of the Act and the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting. 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 the financial statements are free from material misstatement and whether adequate internal financial controls over financial reporting was established and maintained and if such controls operated effectively in all material respects.

An audit involves performing procedures to obtain audit evidence about the amounts, the disclosures in the financial statements and 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 financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal financial controls relevant to the Companys 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 evaluating the appropriateness of the accounting policies used and the reasonableness of the accounting estimates made by the Companys 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 Companys internal financial controls system over financial reporting and the financial statements.

Meaning of Internal Financial Controls Over Financial Reporting

A companys internal financial controls 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 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 companys 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 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

In our opinion and to the best of our information and according to the explanations given to us, 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, 2018, and its loss and its cash flows for the year ended on that date.

Emphasis of Matters

We draw attention to note 23 to the financial statements, regarding various pending disputed legal cases. Management is confident that these disputes will be decided in favour of the Company and no provision is required. Accordingly, no provision is made in the books of account for the probable liability that may arise on account of these disputes in the financial statements.

Our opinion is not modified in respect of these matters.

Report on Other Legal and Regulatory Requirements

1) As required by ‘the Companies (Auditors Report) Order, 2016, issued by the Central Government of India in terms of sub-section (11) of section 143 of the Act ("the Order"), 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 A" a statement on the matters specified in paragraphs 3 and 4 of the Order.

2) As required by Section 143 (3) of the Act, we report that:

a) We have sought and obtained all the information and explanations which to the 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 financial statements comply with the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014, as amended vide the Companies (Accounting Standards) Amendment Rules, 2016.

e) On the basis of the written representations received from the directors as on 31st March, 2018 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) In our opinion considering nature of business, size of operation and organisational structure of the entity, 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 Institute of Chartered Accountants of India.

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 explanations given to us:

i. The Company has disclosed the impact of pending litigations on its financial position in its financial statements – Refer Note 23 to the financial statements;

ii. The Company did not have any long-term contracts including derivative contracts as at 31st March, 2018.

Therefore, provision for any material foreseeable losses doesnt arise.

iii. There are no amounts which are required to be transferred, to the Investor Education and Protection Fund by the Company.

	for KS Rao& Co.,
	Chartered Accountants
	Firms Registration Number: 003109S
	(Pardhasaradhi Rao P)
Place : Hyderabad	Partner
Date : 25th July, 2018	Membership Number: 224777

ANNEXURE A TO INDEPENDENT AUDITORS REPORT

Referred to in paragraph 2 Report on Other Legal and Regulatory Requirementsof the Independent Auditors Report of even date to the members of Novopan Industries Limited on the financial statements for the year ended 31st March, 2018

(i) (a) The company is maintaining proper records showing full particulars, including quantitative details and situation of fixed assets;

(b) According to the information and explanation given to us, the management has physically verified the fixed assets during the year and there is a regular programme of verification which, in our opinion,is reasonable having regard to the size of the Company and the nature of its assets. No material discrepancies have been noticed on such verification.

(c) According to the information and explanations given to us and the records of the Company examined by us, the title deeds of immovable properties included in fixed assets register are held in the name of the company.

(ii) The inventory has been physically verified by the Management during the year. In our opinion, the frequency of verification is reasonable. No material discrepancies were noticed in respect of such verification.

(iii) According to the information and explanation given to us and the records of the Company examined by us, in our opinion, the Company has not granted any loans, secured or unsecured, to companies, firms, limited liability partnerships or other parties covered in the register maintained under Section 189 of the Act. Accordingly, the provisions of Clause 3(iii)(a), (b) and (c) of the said Order are not applicable to the Company.

(iv) According to the information and explanation given to us and the records of the Company examined by us, in our opinion, the Company has not granted any loans or made any investments, or provided any guarantees or securities to the parties covered under Section 185 and 186 of the Act. Therefore, the provisions of Clause 3(iv) of the said Order are not applicable to the Company.

(v) According to the information and explanation given to us and the records of the Company examined by us, the Company has not accepted any deposits from the public within the meaning of Sections 73, 74, 75 and 76 of the Act and the Rules framed there under to the extent notified. Therefore, the provisions of Clause 3(v) of the said Order are not applicable to the Company.

(vi) Since the Company stopped manufacturing activity and is disposed off its undertaking(s), maintenance of cost records under section 148(1) of the Companies Act, 2013 are not applicable.

(vii) (a) According to the information and explanations given to us and the records of the Company examined by us, in our opinion, the Company is regular in depositing the undisputed statutory dues, including income tax, sales tax, service tax, value added tax, goods and services tax, cess and other material statutory dues, as applicable, with the appropriate authorities. As informed to us, the provisions relating to excise duty, provident fund, employees state insurance and customs duty are not applicable to the Company;

(b) According to the information and explanations given to us, no undisputed amounts payable in respect of provident fund, employees state insurance, income-tax, service tax, sales-tax, customs duty, value added tax, goods and services tax,cess and other material statutory dues were outstanding, at the yearend 31st March, 2018, for a period of more than six months from the date they became payable.

(c) According to the information and explanations given to us and the records of the Company examined by us, there are no dues of sales-tax and value added tax, service tax and cess which have not been deposited on account of any dispute. The particulars of dues of income tax, excise duty and customs duty as at 31st March, 2018, which have not been deposited on account of a dispute, are as follows:

Nature of the Dues	Amount Rs. (in Lakhs)	Period to which the amount relates	Forum in which the dispute is pending
The Central Excise Act, 1944	36.27	2006-2007	Honble High Court of Andhra Pradesh and Telengana
	6.40	2010 to 2011	Custom Excise & Service Tax Appellate Tribunal, Bangalore
Service Tax, Finance Act, 1994	18.07	2008-2011	Custom Excise & Service Tax Appellate Tribunal, Bangalore
	25.22	2006-2010	Commissioner Customs, Central Excise and Service Tax, Hyderabad - 1
	32.38	2005-2010	Commissioner Customs, Central Excise and Service Tax, Hyderabad - 1
The Employees Provident Funds and Miscellaneous Provisions (Amendment) Act, 1996	7.62	2006-2009	Employees Provident Fund Appellate Tribunal, New Delhi
Forest Department of Andhra Pradesh – Royalty	33.19	1980-1984	Forest Department of Andhra Pradesh

(viii) According to the information and explanations given to us and the records of the Company examined by us, in our opinion,the company has neither obtained / availed any loans or borrowingsfrom financial institutions, banks,Government norissued any debenture.Accordingly, the provisions of Clause 3(viii) of the Order are not applicable to the Company.

(ix) According to the information and explanations given to us and the records of the Company examined by us, in our opinion, the Company has not raised any moneys by way of initial public offer, further public offer (including debt instruments) and term loans. Accordingly, the provisions of Clause 3(ix) of the Order are not applicable to the Company.

(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/ material fraudby the Company or on the Company by its officers or employees, noticed or reported during the year, nor have we been informed of any such case by the Management.

(xi) According to the information and explanations given to us and the records of the Company examined by us, the managerial personnel of the Company are not paid any remuneration. Accordingly the provisions of section 197 read with Schedule V to the Companies Act is not applicable for the year.

(xii) In our opinion, the Company is not a Nidhi Company and the Nidhi Rules, 2014 are not applicable to it.Therefore, the provisions of Clause 3(xii) of the Order are not applicable to the Company.

(xiii) According to the information and explanations given to us and the records of the Company examined by us, there are no transactions by the Company with related partiesand hence, reporting requirements under clause 3(xiv) are not applicable to the company and, not commented upon.

(xiv) According to the information and explanations given to us and on an overall examination of the balance sheet, the company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures during the year and hence, reporting requirements under clause 3(xiv) are not applicable to the company and, not commented upon.

(xv) According to the information and explanations given to us and the records of the Company examined by us, in our opinion, the Company has not entered into any non-cash transactions with its directors or persons connected with him. Accordingly, the provisions of Clause 3(xv) of the Order are not applicable to the Company.

(xvi) According to the information and explanations given to us and the records of the Company examined by us, in our opinion, the Company is not required to be registered under Section 45-IA of the Reserve Bank of India Act, 1934. Accordingly, the provisions of Clause 3(xvi) of the Order are not applicable to the Company.

	for K S Rao & Co.,
	Chartered Accountants
	Firms Registration Number: 003109S
	(Pardhasaradhi Rao P)
Place : Hyderabad	Partner
Date : 25th July, 2018	Membership Number: 224777