We have audited the standalone financial statements of ASTRON PAPER & BOARD MILL LIMITED (“the Company”), which comprise the Standalone Balance Sheet as at March 31, 2024, the Standalone Statement of Profit and Loss (Including Other Comprehensive Income), the Standalone Statement of Changes In Equity and the Standalone Statement of Cash Flows for the year then ended and notes to the standalone financial statements, including a summary of significant accounting policies and other explanatory information
(hereinafter referred to as “Standalone Financial Statements”).
In our opinion and to the best of our information and according to the explanations given to us except for the effect for the possible effects of matters described in the Basis for Qualified Opinion & Other Matter section of our report and effect of observations, disclaimers and qualifications if any which are nonquantifiable as reported in Annexure A to this report being report on matters specified in paragraph 3 and 4 of the Companies (Auditor's Report) Order, 2020 issued by The Central Government Of India in term of section 143 (11) of The Companies Act, 2013 ,
the aforesaid standalone financial i. statements give the information required by the Companies Act, 2013 (“Act”) in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India including Indian Accounting Standards ('Ind AS’) specified under Section 133 of the Act read with the Companies (Indian Accounting Standards) Rules, 2015 as amended, of the state of affairs of the Company as at March 31, 2024, and its loss and other comprehensive loss, changes in equity and its cash flows for the year ended on that date.
BASIS FOR QUALIFIED OPINION:
. We draw attention to Note No. 11 of the Standalone Financial Statement regarding “Current Financial Assets: Trade Receivables” which includes export trade receivable of Rs. 1,55,58,318/- outstanding for more than three years, which the company has considered as good for recovery. In our opinion, the same should have been considered as doubtful and necessary provision for doubtful debts should have been made by the company. Nonprovision of such doubtful debts of Rs. 1,55,58,318/- has resulted into understatement of loss and overstatement of outstanding balance of current trade receivables and shareholder’s fund by Rs. 1,55,58,318/-.
We draw attention to Note No. 7 of the Standalone Financial Statement regarding “Non-Current Financial Assets: Loans & Advances in respect of loans given to wholly owned subsidiary company. The company has given long term loans and advances of Rs. 20,85,21,063/- to its wholly owned subsidiary company Balaram Papers Private Limited classified as long term loans & advances which was outstanding for more than twelve months as at the current financial year end date. This amount includes long term loans and advances of Rs. 8,65,10,628/- given in the financial year 2022-23 and balance amount of Rs. 12,20,10,435/- given prior to financial year 2022-23. The company has charged interest on loans and advances of Rs. 12,20,10,435/-. However, no interest has been charged on loans and advances of Rs. 8,65,10,628/-. Non charging of interest on loans and advances of Rs. 8,65,10,628/- has resulted into over statement of loss of Rs. 77,85,957/- and understatement of outstanding balance of long-term loans & advances and shareholder’s fund by Rs. 77,85,957/-.
We conducted our audit in accordance with the Standards on Auditing (SAs) specified under Section 143(10) of the Act. Our responsibilities under those SAs are further described in the Auditor’s Responsibilities for the Audit
of the Standalone 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 standalone financial statements under the provisions of the Act and the Rules thereunder, and we have fulfilled our
other ethical responsibilities in accordance with these requirements and the Code of Ethics. We believe that the audit evidence we have obtained is sufficient and appropriate except for availability of quarterly and periodical stock statement and other returns submitted by the company for availing and utilizing working capital limits and other limits from various banks during the year to provide a basis for our opinion.
EMPHASIS OF MATTER:
We draw attention to the following matters in the Notes to the Financial Statements:
I. Note No. 36(d)(1) relating to the disputed Income Tax Liabilities amounting to Rs. 36,15,110/- for A.Y. 2021-22.
II. Note No. 36(d)(2) relating to the disputed Income Tax Liabilities amounting to Rs. 51,77,20,750/- for A.Y. 2022-23.
III. Note No. 36(d)(3) relating to RCM Liabilities on Ocean Freight Rs. 30,59,267/-.
IV. Note No. 36(o) relating to Revenue from Operations in the form of GST Subsidy Claim amounting to Rs. 8,25,00,000/- accounted in the financial year 2021-22 and non-realization of any amount during the current financial year. [Refer to Note No. 36(o)]
V. Note No. 36(m) relating to income tax search carried out at the registered office of the company and subsequent initiation of assessment proceedings for various assessment years. [Refer to Note No. 36(m)]
Our opinion is not modified in respect of the above referred matters.
KEY AUDIT MATTERS:
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 period. 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. In addition to the matters described in the Basis for Qualified Opinion Section and Emphasis of Matters section, we have determined the matters described below to be the key audit matters to be communicated in our report.
Description of Key Audit Matters:
The Key Audit Matter How the matter was addressed in
our audit
1. Impairment Evaluation of Investment in a Subsidiary (Refer to Note No. 6 & 36(p)
The carrying amount of the investments (held at cost less impairment, if any) made in a subsidiary as at 31st March, 2024 was Rs. 4.04 Crores. The initial cost of investment was also Rs. 4.04 Crores.
We consider the valuation of these investments to be at a high risk of significant misstatement, or to be subject to a significant level of judgment since the company is wholly owned subsidiary company and representation made us by the management of the company regarding recoverable of value of the individual item of assets or Group of Cash Generating assets on overall basis being higher that the value at which they have been carried in the financial statements. However, due to their materiality in the context of total assets of the Company and since the subsidiary company has been incurring losses over the period and has not carried out any business activities during the current financial year, this is considered to be significant to our
• Comparing the carrying amounts of investments with the balance sheet of the subsidiary to identify whether their net assets were in excess of their carrying amount and assessing whether that subsidiary has historically been profit-making.
• The management representation regarding recoverable values of asset or group of assets being designated as cash generating unit.
• Considering the adequacy of disclosures in respect of the investments in the subsidiary.
overall audit strategy and planning and future possibilities of impairment if the assumptions made by the management regarding recoverable value do not materialize as estimated. As stated above, the subsidiary company however has been making losses over the year and has not carried out any operational activities during the current financial year.
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2. Litigations and Claims (Refer to Note No. 32 & 36(d)
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The Company operates in various States
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• Gained an understanding of the
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within India as well as export of goods and
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process of identification
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of claims,
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import of raw materials which exposes the
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litigations and contingent liabilities
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company to a variety of different Laws and
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and identified key controls in the
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Regulations and implications and
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process. For selected controls we
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interpretations thereof. The company is
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have performed tests of controls.
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also exposed to provisions relating to the
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• Obtained the summary of Company’s
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taxes on Income on account of search
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legal and tax cases and critically
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operations carried out at the registered
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assessed management’s
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position
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office of the company. In such regulatory
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through discussions with
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the Legal
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environment, the Company is subject to
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Counsel, appropriate
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senior
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some legal and tax related claims which
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management and operational
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have been disclosed for in the financial
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management, on both the probability
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statements based on the facts and
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of success in significant cases, and the
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circumstances of each case.
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magnitude of any potential loss.
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Taxation and litigations have been
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• Assessed management’s estimate of
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identified as a key audit matter due to the
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the possible outcome
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of the
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status of legal proceedings, quantum of
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litigations, the relevant disclosures
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demands raised, timescales involved for
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made within the financial statements
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resolution and the potential financial
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to address whether they
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impact of these on the financial
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appropriately reflect the
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facts and
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statements. Further, such tax litigations
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circumstances of the respective tax
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involve significant management judgment
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and legal exposures
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and the
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in assessing the exposure of each case and thus a risk that such cases may not be adequately provided for or disclosed.
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requirements of relevant accounting standards.
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3. Claims Receivable on Imported Raw Materials:
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The Company imports raw materials i.e.
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• Gained an understanding of
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waste paper and some of the chemicals
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the process of identification
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which constituted 82.18% of the total cost
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of claims, identified key
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of raw materials consumed for the
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controls in the process and
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financial year 2023-24.
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past trend of amounts at
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In cases of quality differences, the company files quality claims with the respective suppliers. After due verification process, the quality claims are allowed and paid by the respective
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which claims were finally settled with the amount for which claims were filed. For selected controls we have performed tests of controls.
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supplier depending upon the quality
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• Assessed management’s
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differences. The amounts of claims filed
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estimate of the amount of
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and actual claims received varies
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overall claims receivable as at
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depending upon the final quality
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the end of the financial year,
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assessment and its acceptance by the
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the possibility of
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respective suppliers and the company.
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recoverability, assessed
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In respect of claims filed but not accepted/approved by the suppliers as at the end of the financial year, the company accounts for such claims at the estimated
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overall past trend of claims filed and amounts recovered and the requirements of relevant accounting
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amount of claim likely to be realized based on the past trend and management estimate of the likely recoverability of claims. Such treatment involves significant management judgment in assessing the recoverability in each case and thus a risk that such claims may not be adequately and properly accounted for.
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standards.
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INFORMATION OTHER THAN THE STANDALONE FINANCIAL STATEMENTS AND AUDITORS’ REPORT THEREON
The Company’s management and 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 auditor’s report thereon.
Our opinion on the standalone 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 standalone financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the standalone 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 a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.
RESPONSIBILITY OF MANAGEMENT AND THOSE CHARGED WITH GOVERNANCE FOR
THE STANDALONE FINANCIAL STATEMENTS:
The Company’s Management and Board of Directors are responsible for the matters stated in section 134(5) of the Companies Act, 2013 (“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, cash flows and changes in equity of the Company in accordance with the Indian Accounting Standards (Ind AS), accounting principles generally accepted in India, including the Indian Accounting Standards specified under Section 133 of the Act, read with the Companies (Indian Accounting Standard) Rules, 2015 as amended.
This responsibility also includes the maintenance of adequate accounting records in accordance with the provision of the Act for safeguarding of the assets of the Company and for preventing and detecting the 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 control, 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.
In preparing the standalone financial statements, management and Board of Directors are responsible for assessing the Company’s 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.
The Board of Directors is also responsible for overseeing the Company’s financial reporting process.
AUDITOR’S RESPONSIBILITIES FOR THE AUDIT OF THE STANDALONE FINANCIAL STATEMENTS:
Our objectives are to obtain reasonable assurance about whether the standalone financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s 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 SAs 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 standalone financial statements.
As part of an audit in accordance with SAs, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:
• 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.
• Obtain an understanding of internal control 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 has adequate internal financial controls with reference to financial statements in place and the operating effectiveness of such controls.
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
• Conclude on the appropriateness of management’s 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 Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s 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 auditor’s report. However, future events or conditions may cause the Company to cease to continue as a going concern.
• 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.
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.
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.
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.
OTHER MATTER:
i. The company has availed working capital and other loans from various banks for an amount exceeding Rs. 5.00 crores. As a part of terms of
sanction with various banks, the company is required to submit various 'monthly, quarterly and periodical statements including stock statements and statement of various assets charged for availing loans including working capital loans. The company has not made available to us such periodical statements as submitted to the bank and financial institutions for our verification. In absence of availability of such statements, we are unable to express our opinion as to whether the amounts reported in the statements submitted to the banks materially vary with those accounted in the books of account and its effect on the reported amounts in the financial statements, if any and defaults if any with regard to the loans availed by the company with regard to submission of such returns and statements.
ii. According to the information and explanations given to us, the determination of the transactions with MSME vendors and balances thereof, have been done based on the either certificate received from the respective parties or confirmation in that regard from the parties. In absence of complete reconciliation in this respect, completeness of the disclosures in respect of MSME vendors, liability for interest thereon as per MSME Act, if any and on Income Tax computations thereon on payments made beyond specified date to be ascertained.
iii. The company has incurred substantial losses in the previous financial year as well as during the current financial year having substantial negative effect on the net-worth of the company and other key financial indicators.
Our opinion is not modified in respect of matters stated in para (ii) and (iii) above.
REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS:
1. As required by The Companies (Auditor's Report) Order, 2020 issued by The Central Government Of India in term of section 143 (11) of The Companies Act, 2013, we enclose in the Annexure-A hereto a statement on the matters specified in paragraphs 3 and 4 of the said order, to the extent applicable to the company.
2. As required by section 143(3) of the Act, based on our audit we report that:
a) Except for matter stated in para (i) of “Other Matter” paragraph above, 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 appears from our examination of those books;
c) The Standalone Balance Sheet, Standalone the Statement of Profit and Loss including Other Comprehensive Income, the Standalone Statement of Changes in Equity & the Standalone Statement of Cash Flows dealt with by this Report are in agreement with the books of account;
d) In our opinion, aforesaid Standalone Balance Sheet, the Standalone Statement of Profit and Loss including Other Comprehensive Income, the Standalone Statement of Changes in Equity & the Standalone Statement of Cash Flows comply with the Indian Accounting Standards prescribed under section 133 of the Act;
e) On the basis of written representations received from the directors of the Company as on March 31, 2024, and taken on record by the Board of Directors, none of the directors are disqualified as on March 31, 2024, from being appointed as a director in terms of sub-section (2) of section 164 of Act;
f) With respect to the adequacy of internal financial control 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 included in the Auditor’s Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules, 2014, as amended, in our opinion and to the best of our information and according to the explanations given to us:
i. The Company had the following litigations pending as at the end of the financial year which may impact its financial position on final disposal of the respective matters.
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Sr.
No.
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Name of The Party/Department
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Brief Facts of the Case
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Financial Impact
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1.
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Star Papers
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Suit Filed under Section 138 of the Negotiable Instruments Act, 1881 For Recovery of Dues For Sales of Goods
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33,58,877/-
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2.
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Hi Tech Multi Forms
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Suit Filed under Section 138 of the Negotiable Instruments Act, 1881 For Recovery of Dues For Sales of Goods (Suit Continuing but amount written off in the books of account)
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14,65,029/-
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3.
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Shreeji Enterprise
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Suit Filed For Recovery Of Dues For Sales of Goods
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16,67,194/-
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4.
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Videocon Industries Limited
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Operational Creditor in NCLT Proceedings For Recovery Of Dues For Sales of Goods
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8,00,221/-
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5.
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Royal Sundaram General Insurance Company-Vehicle Claim
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Claim for Loss of Vehicle
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5,88,750/-
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6.
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Commissioner of Income Tax-Appeals, Ahmedabad-11
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Disputed Income Tax Liabilities On Account Of Income Tax Assessment Order Passed Under Section 143(3) by the Office of Central Circle 1(1), Ahmedabad for A.Y. 2021-22
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36,15,110/-
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7.
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Commissioner of Income Tax-Appeals-Ahmedabad-11
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Disputed Income Tax Liabilities On Account Of Income Tax Assessment Order Passed Under Section 143(3) by the Office of Central Circle 1(1), Ahmedabad for A.Y. 2022-23 [Addition of Rs. 38,81,09,281/- made on protective basis]
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51,77,20,750/-
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8.
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Office of the Commissioner of Central Goods and Service Tax, Audit Commissionerate, Rajkot
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RCM Liability on Ocean Freight (Company has paid Rs. 30,59,267/-under protest)
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30,59,267/-
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9.
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District Consumer Dispute Redressal Commissioner, Mehsana
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Fire Insurance Claim filed with The New India Assurance Company Limited for materials destroyed due to fire held at the premises of Balaram Papers Private Limited (wholly owned subsidiary company), located at 112/1-1, Dhanali Road, Near Deem-Roll Tech Limited, At & Post Ganeshpura, Taluka Kadi, District Mahesana. The claim and case filed by Balaram Papers Private Limited. However, the amount is recoverable by the company from the subsidiary company.
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3,35,38,210/-
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ii. The Company did not have any long-term contracts including derivatives contracts for which there were any material foreseeable losses.
iii. As at 31st March, 2024 there were no amounts which were required to be transferred to the Investor Education and Protection Fund by the Company.
iv. Management Representation:
a. The Management of the Company has represented to us that to the best of it’s knowledge and belief, no funds (which are material either individually or in the aggregate) have been advanced or loaned or invested (either from borrowed funds or share premium or any other sources or kind of funds) by the Company to or in any other person(s) or entity(ies), including foreign entities (“Intermediaries”), with the understanding, whether recorded in writing or otherwise, that the Intermediary shall, directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Company (“Ultimate Beneficiaries”) or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.
b. The management of the Company has represented, that, to the best of it’s knowledge and belief no funds (which are material either individually or in the aggregate) have been received by the company from any person(s) or entity(ies), including foreign entities (“Funding Parties”), with the understanding, whether recorded in writing or otherwise, that the company shall, whether, directly or indirectly, lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party (“Ultimate Beneficiaries”) or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.
c. Based on audit procedures which we considered reasonable and appropriate in the circumstances, nothing has come to our notice that has caused us to believe that the representations under subclause (i) and (ii) of Rule 11(e) Companies (Audit and Auditors) Rules, 2014 (as amended) and provided in clauses (a) and (b) above contain any material mis-statement.
v. The company has not declared or paid any dividend during the year.
vi. Based on our examination, which included test checks, the Company has used accounting software for maintaining its books of account for the financial year ended March 31, 2024 which has a feature of recording audit trail (edit log) facility and the same has been in operation throughout the year for all relevant transactions recorded in the software. Further, during the course of our audit we did not come across any instance of the audit trail feature being tampered with. However, we have carried out test checks only and our opinion is based on test check only.
As proviso to Rule 3(1) of the Companies (Accounts) Rules, 2014 is applicable from April 1, 2023, reporting under Rule 11(g) of the Companies (Audit and Auditors) Rules, 2014 on preservation of audit trail as per the statutory requirements for retention of the record is not applicable for the financial year ended March 31, 2024.
3. With respect to the matter to be included in the Auditors’ Report under Section 197(16) of the Act:
In our opinion and according to the information and explanations given to us, the remuneration paid by the Company to its directors during the current year is in accordance with the provisions of Section 197 of the Act read with Schedule V to the Companies Act, 2013. The remuneration paid to any director is not in excess of the limit laid down under Section 197 of the Act read with Schedule V to the Companies Act, 2013. The Ministry of Corporate Affairs has not prescribed other details under Section 197(16) of the Act which are required to be commented upon by us.
FOR AND ON BEHALF OF
SNDK & ASSOCIATES, CHARTERED ACCOUNTANTS, FIRM REG. NO. W100060
KISHAN R. KANANI
PLACE: AHMEDABAD PARTNER
DATED: 29th MAY, 2024 M. No. 192347
UDIN: 24192347BKAO O O3319
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