To
The Members of M/s. Servalakshmi Paper Limited,
Report on the Financial Statements
We have audited the accompanying financial statements of SERVALAKSHMI PAPER LIMITED
(‘the Company), which comprise the balance sheet as at 31 March 2016, the statement
of profit and loss and the cash flow statement for the year then ended, and a summary of
significant accounting policies and other explanatory information.
Management’s Responsibility for the Financial Statements
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
and presentation 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 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, and ensuring their operating effectiveness for 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.
Auditor’s 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 thereunder.
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
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 control 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 financial statements.
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:
a) in the case of the Balance Sheet, of the state of affairs of the Company as at March
31, 2016;
b) in the case of Statement of Profit and Loss , the Loss for the year ended on that
date; and
c) in the case of the Cash Flow Statement, of the cash flows for the year ended on that
date.
Emphasis of Matters
We draw attention to the following matter in the Notes 3 to the financial statements:
Note 3 in the financial statements which indicate that the Company has accumulated
losses and its net worth has been fully eroded, the Company has incurred a net cash loss
during the current and previous year(s) and, the Companys current liabilities exceeded
its current assets as at the balance sheet date.
Report on Other Legal and Regulatory Requirements
1. 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 Act, we give in
the Annexure A,
a statement on the matters specified in the paragraph 3 and 4 of the order, to the
extent applicable.
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;
(e) The Erosion of Net Worth as described under the Emphasis of Matters 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 31
March 2016 taken on record by the Board of Directors, none of the directors is
disqualified as on 31 March 2016 from being appointed as a director in terms of Section
164 (2) of the Act;
(g) 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”; and
(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 does not have any pending litigations which would impact its financial
position - Refer Note 25 to the financial statements.
ii. the Company did not have any long-term contracts including derivatives contracts
for which there were any material foreseeable losses.
iii. There has been no delay in transferring amounts, required to be transferred, to
the Investor Education and Protection Fund by the Company.
|
For S. Krishnamoorthy & Co., |
|
Chartered Accountants |
|
(Registration No. 001496S) |
|
Sd/- K. Raghu |
| Place : Coimbatore |
Partner, Auditor |
| Date : 30.05.2016 |
Membership No.11178 |
Annexure to the Auditors’ Report
The Annexure A referred to in paragraph 1 of Report on Other Legal and Regulatory
Requirements
In terms of the information and explanation sought by us and given by the Company and
the books and records examined by us in the normal course of audit and to the best of our
knowledge and belief, we report the following:
(i) (a) The Company has maintained proper records showing full particulars, including
quantitative details and situation of fixed assets.
(b) The fixed assets of the company have been physically verified by the management
during the year at reasonable intervals having regard to size of the company and nature of
its assets. No material discrepancies were noticed on such verification.
(c) The title deeds of immovable properties are held in the name of the company.
(ii) The stocks of finished goods, stores, spares and raw materials of the Company at
its different locations have been physically verified by the management during the year at
reasonable intervals. In our opinion the frequency of such verification is reasonable and
material discrepancies noticed on physical verification of inventory has resulted in
difference in book stock and physical stock (physical stock being lower than book stock)
aggregating to Rs.31.51 Crores. Such difference has been fully reckoned appropriately in
the statement of profit and loss ( as part of increase/decrease in work-in-progress and
/or consumption of raw materials/other materials as the case may be) and as such the
physically verified stocks have been considered in the financial statements for the period
ended 31st March,2016.
(iii) The company has not granted any secured / unsecured loan to companies, firms,
Limited Liability Partnerships or other parties covered in the register maintained under
section 189 of the Companies Act, 2013.
(iv) The company has not granted any loan to directors or to any other person in whom
the director is interested or given any guarantee or provided any security in connection
with any loan taken by the director or such other person as contemplated in section 185 of
the Act. The company has also not given any loan or made any investment as contemplated
under section 186 of the Act.
(v) The company has not accepted deposits during the year.
(vi) We have broadly reviewed the records maintained by the company pursuant to the
rules made by the Central Government for the maintenance of the cost records u/s. 148(1),
of the Act. We are of the opinion that prima facie the prescribed accounts and records
have been made and maintained. We have not, however, made a detailed examination of the
records with a view to determining whether they are accurate or complete.
(vii) (a) The company is not regular in depositing undisputed statutory dues including
provident fund, employees state insurance, income-tax, sales-tax, service tax, duty of
customs, duty of excise, value added tax, cess and any other statutory dues to the
appropriate authorities .No undisputed arrears of outstanding statutory dues as on
31.03.2016, for a period of more than 6 months from the date they become payable except
the following;
| Name of the Statute |
Nature of the dues |
Amount (Rs in Lakhs) |
Period to which the amount relates |
Due Date |
Date of Payment |
Remarks, if any |
| Service Tax Act, 1994 |
Service Tax |
0.22 |
Apr-15 |
05/05/2015 |
|
Not Paid |
|
|
1.92 |
May-15 |
05/06/2015 |
|
Not Paid |
|
|
2.77 |
Jun-15 |
05/07/2015 |
|
Not Paid |
|
|
3.39 |
Jul-15 |
05/08/2015 |
|
Not Paid |
|
|
2.07 |
Aug-15 |
05/09/2015 |
|
Not Paid |
| Income Tax Act, 1961 |
TDS |
0.92 |
May-15 |
07/06/2015 |
04/05/2016 |
|
|
|
2.83 |
Jun-15 |
07/07/2015 |
04/05/2016 |
|
|
|
3.84 |
Jul-15 |
07/08/2015 |
|
Not Paid |
|
|
1.75 |
Aug-15 |
07/09/2015 |
|
Not Paid |
| Total |
|
19.71 |
|
|
|
|
(b) 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 which have not been deposited on account of any dispute
except the following;
| Name of Statute |
Nature of Dues |
Amount (Rs in Lakhs) |
Period to which the amount relates |
Forum where dispute is pending |
| Customs Act,1962 |
Customs Duty |
125.09 |
April 2012 to October 2012 |
CESTAT, Chennai |
| Tamil Nadu Tax on Consumption or Sale of Electricity Act, 2003 |
Electricity Tax |
231.43 |
April 2012 March 2016 |
Supreme Court of India |
| Tamil Nadu Value |
Non Reversal of ITC |
28.98 |
April 2013 |
Madurai Bench of High Court of Madras |
| Added Tax Act, 2006 |
Penalty |
28.93 |
March 2014 |
| Tamil Nadu Value Added Tax Act, 2006 |
Value Added Tax |
3.00 |
November 12 to March13 |
Joint Commissioner(CT), Tirunelveli Division |
| Total |
|
417.43 |
|
|
(viii) The company has not availed any loan from financial institutions and has not
issued any debentures till date. The Company has defaulted in repayment of dues to banks
as under.
| Name of the Bank |
Period of Default |
Principal |
Interest |
| Indian overseas Bank-Term Loans |
41 Months |
4668.53 |
4889.25 |
| Bank of India-Term Loans |
41 Months |
2541.85 |
3612.14 |
| State Bank of India-Term Loan (Now assigned to M/s. Pridhvi Asset Recons &
Securtisation co. Ltd) |
41 Months |
2123.85 |
2731.24 |
| Indian overseas Bank - CC |
13 Months |
|
448.11 |
| Bank of India - CC |
33 Months |
|
247.64 |
| State Bank of India - CC (Now assigned to M/s. Pridhvi Asset Recons &
Securtisation co. Ltd) |
36 Months |
|
235.94 |
| Total |
|
9334.23 |
12164.32 |
(ix) The company has not raised any money by initial public offer or further public
offer (including debt instruments) and has not availed any term loan during the year.
(x) Based upon the audit procedures performed and information and explanation given by
the management, no frauds by the company or on the company by its officers or employees
has been noticed or reported during the course of our audit.
(xi) The Company has not paid managerial remuneration during the year.
(xii) In our opinion the company is not a nidhi company.
(xiii) In our opinion transactions with related parties are in compliance with section
177 and 188 of the Act. Details of such transactions have been disclosed in the financial
statements as required by the applicable accounting standards.
(xiv) The company has not made any preferential allotment or private placement of
shares or fully or partly convertible debentures during the year.
(xv) The company has not entered into non cash transactions with directors or persons
connected with them.
(xvi) The company is not required to be registered under section 45-IA of the Reserve
Bank of India Act 1934.
|
For S. Krishnamoorthy & Co., |
|
Chartered Accountants |
|
(Registration No. 001496S) |
|
Sd/- K. Raghu |
| Place : Coimbatore |
Partner, Auditor |
| Date : 30.05.2016 |
Membership No.11178 |
Annexure - B 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 (“the Act”)
We have audited the internal financial controls over financial reporting of
SERVALAKSHMI PAPER LIMITED (“the Company”) as of 31 March 2016 in conjunction
with our audit of the financial statements of the Company for the year ended on that date.
Management’s Responsibility for Internal Financial Controls
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 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 Companies Act, 2013.
Auditors’ Responsibility
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”) 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 auditors 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 Companys internal financial controls system
over financial reporting.
Meaning of Internal Financial Controls over Financial Reporting
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 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, 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 31 March 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.
|
For S. Krishnamoorthy & Co., |
|
Chartered Accountants |
|
(Registration No. 001496S) |
|
Sd/- K. Raghu |
| Place : Coimbatore |
Partner, Auditor |
| Date : 30.05.2016 |
Membership No.11178 |
+91-9892691696
