| We have audited the accompanying financial statements of Shree Bhawani
Paper Mills Limited, ("the Company"), which comprise the Balance Sheet
as at March 31,2015 the Statement of Profit and Loss and 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 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 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 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 others
irregularities; selection and application of appropriate accounting
policies; making judgements 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.
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 statement
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 financial control relevant to the Company's
preparation of the financial statements that give true and fair view in
order to design audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on
whether the Company has in place and adequate internal financial
controls system over financial reporting and the operating
effectiveness of such controls. 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 financial statements.
We believe that the audit evidence we have obtained is sufficient and
appropriate to provide a basis for our audit opinion.
Basis of Qualified Opinion
(a) As mentioned in Note No 41 of financial statements, the balances of
some of the trade receivables, trade payables, lenders, and loans and
advances are subject to confirmation / reconciliation and subsequent
adjust- ments, if any. As such, we are unable to express any opinion as
to the effect thereof on the financial statements for the year.
(b) As mentioned in Note No. 43 of financial statements, the Company
became a sick industrial company within the meaning of Section 3 (1)
(O) of the Sick Industrial Companies (Special Provisions) Act, 1985
(SICA) due to erosion of its entire net worth and the Company was
declared a sick Industrial company by BIFR on 26th September 2013. The
Company has provided interest on Term Loan and other Bank Loans of
Indian Bank and Bank of Baroda @ 10.50% with effect from 1st January
2013. Had the liability of interest been considered at the rate as
sanctioned by the Banks the Loss for the year would have been Rs.
66,85,89,531/- as against the reported loss of Rs. 55,51,30,637/-.
(c) As mentioned in Note No. 29 of financial statements, the Company
has not recognized additional net Deferred Tax Asset during the year.
Net Deferred Tax Assets of Rs.14 crores was recognized for the year
ended 31.03.2012 based on the future profitability projections by the
management. We are unable to express our opinion in this respect.
Opinion
In our opinion and to the best of our information and according to the
explanations given to us, 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.
(a) In the case of the Balance Sheet, of the state of affairs of the
Company as at March 31,2015.
(b) In case of the Profit & Loss A/c of the loss for the period ended
on that date, and
(c) In case of the Cash Flow Statement, of the cash flows for the
period ended on that date.
Report on other legal and regulatory requirements
1. As required by the Companies (Auditor's Report) Order, 2015 ("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
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 obtained all the information and explanations which to the
best of our knowledge and belief were necessary for the purpose 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, 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 comply with the Accounting Standards specified
under Section 133 of the Act read with Rule 7 of the Companies
(Accounts) Rules, 2014.
e. Note No. 33 the liability for Gratuity has been made on the basis
of liability determined by the management.
f. On the basis of written representations received from the Directors
as on March 31,2015, and taken on record by the Board of Directors,
none of the Directors is disqualified as on March 31,2015, from being
appointed as a Director in terms of Section 164 (2) of the Act and
g. With respect to the other matters to be included in the Auditor's
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 statement - Refer Note 23 and 44 to
the financial statements.
ii. The Company has no long-term contracts as at March 31,2015.
iii. There has been no delay in transferring amounts, required to be
transferred, to the Investor Education and Protection Fund by the
Company.
ANNEXURE TO THE INDEPENDENT AUDITOR'S REPORT
Referred to in paragraph 1 of our report of even date on accounts for
the year ended March 31,2015 of Shree Bhawani Paper Mills Limited
(i) (a). The Company has maintained proper records showing full
particulars including quantitative details and situation of fixed
assets.
(b). The Company has physically verified certain assets during the year
in accordance with a 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 were noticed on such
verification.
(ii) (a). The inventory has been physically verified during the year by
the management. In our opinion, the frequency of verification is
reasonable.
(b). The procedures of physical verification of 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. We are
informed that the discrepancies identified on physical verification of
inventories as compared to book records were not material and have been
properly dealt with in the books of account.
(iii) As informed to us, the Company has not granted any loans, secured
or unsecured to Companies, firms or other parties covered in the
register maintained under Section 189 of the Companies Act, 2013.
Consequently, the requirements of clauses (iii) (a) and (b) of
paragraph 3 of the Order are not applicable for the current year.
(iv) In our opinion and according to the information and explanations
given to us, there is an adequate internal control system commensurate
with the size of the Company and the nature of its business for the
purchase of inventory, fixed assets and for the sale of goods and
services. During the course of our audit, we have not observed any
continuing failure to correct major weakness in internal control
system.
(v) The Company has not accepted any deposits from the public during
the year. As informed no order has been passed by the Company Law Board
or National Company Law Tribunal or Reserve Bank of India or any Court
or any other Tribunal.
(vi) The Central Government has prescribed maintenance of cost records
under Section 148 (1) of the Act in repect of the products of the
Company. We have broadly reviewed the books of account and records
maintained by the company in this connection and are of the opinion
that prima facie the prescribed accounts and records have been made and
maintained. However, we have not made a detailed examination of the
same.
(vii) (a) According to the records of the Company, undisputed statutory
dues including Provident Fund, Employees' State Insurance, Income Tax,
Sales Tax, Wealth Tax, Service Tax, Custom duty, Excise Duty, Value
Added Tax, Cess and other statutory dues have not generally been
regularly deposited with the appropriate authorities.Further details of
such dues which were outstanding for a period of more than six months
from the date they became payable are as follows.
Name. of Statute Period to which Due Date
amount relates
Employees State Insurance June 2013 to Sept. July 2013 to Oct.
2014 2014
Employees Provident Fund Aug. 2012 to Sept. Sept. 2012 to Oct
2014 2014
Finance Act, 1994 April 2013 to Sept. May 2013 to Oct.
Service Tax 2014 2014
Income Tax Act, 1961 TDS March 2014 to Sept. April 2014 to Oct
2014 2014
Name. of Statute Amount Date of payment
(Rupees)
Employees State Insurance 33,41,092 Not yet deposited
Employees Provident Fund 1,65,86,121 Rs. 4,00,00/- paid
on 28/4/2015
Finance Act, 1994 7,67,247 Rs. 2,40,392/- paid
Service Tax on 28/4/2015
Income Tax Act, 1961 TDS 26,33,255 Rs. 8,500/- paid on
28/4/2015
Total 2,33,27,715
(b) According to the information and explanations given to us, the
amounts which were required to be transferred to the investor education
and protection fund in accordance with the relevant provisions of the
Companies Act, 1956 (1 of 1956) and rules made there under has been
transferred to such fund within time.
(viii) The accumulated losses of the Company at the end of the year are
more than its net worth. It has incurred cash losses, both in the
financial year under report and the immediately preceeding financial
year.
(ix) On the basis of the records and as per the information and
explanations given by the management, the Company has delayed in
repayments of dues to the Banks during the year ended March 31,2015.
Details of such dues are as follows.
(Amount in Rupees)
Name of Banks Instalments due as Interest due as
on March 31,2015 on March 31,2015
Bank of Baroda T/L-III 8,25,00,000/- 5,98,08,330/-
Bank of Baroda T/L-IV 70,70,723/- 62,75,081/-
Indian Bank T/L-IV 54,68,750/- 58,07,763/-
Indian Bank T/L-III 8,25,00,000/- 5,98,18,755/-
Bank of Baroda T/L-V 2,12,50,000/- 2,95,64,207/-
Bank of Baroda WCTL (New) Installment will be 6,55,50,950/-
due from June 2015
Bank of Baroda Corporate 1,00,00,000/- 3,44,95,431/-
Loan (New)
Indian Bank T/L-V 2,12,50,000/- 2,94,43,328/-
Indian Bank T/L-VI 2,00,00,000/- 5,41,46,555/-
Bank of Baroda (CC A/c) - -
Indian Bank (CC A/c) - -
Name of Banks Total overdue as on
March 31, 2015
Bank of Baroda T/L-III 14,23,08,330/- Instalment paid
upto June 2012 interest paid
upto July 2012.
Bank of Baroda T/L-IV 1,33,45,804/- instalment paid
upto June 2012 interest paid
upto July 2012.
Indian Bank T/L-IV 1,12,76,513/- Instalment paid
upto June 2012 interest paid
upto July 2012.
Indian Bank T/L-III 14,23,18,755/- Instalment paid
upto June 2012 interest paid
upto July 2012.
Bank of Baroda T/L-V 5,08,14,207/- Instalment paid Nil,
commenced from 1st quarter of
2013-14 Interest paid upto July
2012.
Bank of Baroda WCTL (New) 6,55,50,950/- Interest paid upto
July 2012
Bank of Baroda Corporate 4,44,95,431/- Instalment paid Nil,
Loan (New) commenced from 1st quarter of
2013-14 Interest paid upto July
2012.
Indian Bank T/L-V 5,06,93,328/- Instalment paid Nil,
commenced from 1st quarter of
2013-14 Interest paid upto July
2012.
Indian Bank T/L-VI 7,41,46,555/- Interest paid upto
July 2012-
Bank of Baroda (CC A/c) 16,12,74,248/-
Indian Bank (CC A/c) 51,21,43,369/-
(x) According to the information and explanations given to us, the
Company has not given any guarantee for loans taken by others from
Banks or financial institutions.
(xi) Based on our examination of records and information and
explanations given to us, no fresh term loan has been obtained by the
Company during the year. According to the information and explanations
given to us and on an overall examination of the Balance Sheet of the
Company, we report that the Company has used short term funds during
the year for financing the operating losses of the Company.
(xii) According to the information and explanations given to us, no
fraud on or by the Company has been noticed or reported during the
course of our audit.
FOR P.L. GUPTA & CO.,
CHARTERED ACCOUNTANTS
FIRM REGISTRATION NO. 011575C
PLACE : ALLAHABAD (P.L. GUPTA)
DATE : 30th MAY, 2015 PARTNER
Membership No. 009444
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