ASTRON PAPER & BOARD MILL LIMITED
REPORT ON THE STANDALONE FINANCIALSTATEMENTS:
We were engaged to audit the accompanying standalone financial statements of ASTRON PAPER & BOARD MILL LIMITED (“the Company”), which comprise the standalone balance sheet as at March 31, 2025, the standalone statement of profit and loss including other comprehensive income, standalone statement of changes in equity and standalone statement of cash flows for the year then ended, and notes to the standalone financial statements, including a summary of the material accounting policies and other explanatory information (hereinafter referred to as “Standalone Financial Statements”).
We do not express an opinion on the accompanying standalone financial statements of the Company. Because of the significance and materiality of the matters described in the Basis for Disclaimer of Opinion section of our report, we have not been able to obtain sufficient appropriate audit evidence to provide a basis for an audit opinion on these standalone financial statements and accordingly we do not express an opinion on the accompanying standalone financial statements of the Company.
i. The company has availed working capital and other loans from various banks for an amount exceeding Rs. 5.00 crores against the security of its assets including current assets. 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.
In spite of our specific request to the management of the company, the company has not made available to us such periodical statements if any as submitted to the banks for our verification. In absence of availability of such statements, we have not been able to verify the details and reported amounts as submitted to the banks in quarterly and periodical statements and those accounted in the books of account and variance if any between quarterly and periodical statements and books of accounts, accuracy and truthfulness of reported particulars including that reported amounts as submitted to the bank and defaults with regard to the loans availed by the company with regard to submission of such returns and statements and availability of drawing power or limits against such loans.
As all of the bank loans accounts have been declared as NPA, there was no drawing power available against the outstanding bank loan accounts as at March 31, 2025.
We draw attention to Note No. 17, 19 & 20 to the Standalone Financial Statements regarding reported amounts of defaults by the company with regard to non-current and current borrowings and interest on such borrowings from various banks. The company has reported defaults of Rs. 7,879.73 Lakhs including interest as at March 31, 2025 towards bank loans. However, in absence sufficient appropriate audit evidence with regard to defaults committed by the company towards loans from various bank, we are unable to verify the details of defaults committed by the company towards such loans and their consequential impact on reported amounts in the standalone financial statements and appropriate disclosure of such defaults, security offered, repayment terms, availability of security, initiation of legal actions by banks against the company including that for fraud if any and other terms and conditions relating to loan accounts.
ii. The company has shut down its plant at Halved since 8th of September, 2024 and has not resumed the production since the closure upto the date of this report. The other plant of the company at Bhuj has also been non-operational. The shut-down of plants and non- resumption of production, substantial cash losses incurred in the last three financial years as well as during the current financial year, nonutilization of production capacity, substantial reduction in sales turnover over the period and other financial factors including availability of liquid sources of funds have affected net worth of company significantly and these factors along with substantial tax demands against which litigations are pending and all of the bank loan accounts becoming NPA and company being declared as defaulter by banks have affected the overall business operations of the company and its ability to resume business activities and to continue the business in the normal course of business as going concern. However, the management of the company has prepared and presented the standalone financial statements assuming its status as going concern. In our opinion, the going concern status of the company has been substantially and materially adversely affected and, in our opinion, the accompanying standalone financial statements for the year ended March 31, 2025 should have been prepared and presented considering the status of the company as not being going concern.
However, in absence sufficient appropriate audit evidence regarding grounds on the basis of which the management of the company has prepared and presented standalone financial statements as going concern, we disclaim our opinion as to the going concern status of the company as at March 31, 2025.
iii. No Provision has been made by the company for outstanding export trader receivables of Rs. 1.60 crores and domestic trade receivables of Rs. 1.09 crores which have been outstanding since long. The company continues to recognize and classify
these trade receivables as good for recovery. Had the company made provision for doubtful debts, the losses for the year would have been higher by Rs. 2.69 crores and consequent net-worth lower by Rs. 2.69 crores.
The management of the company has not provided to us for our verification the sufficient appropriate audit evidences on the basis of which it has been assumed that the above trade receivables have been good for recovery at the values at which they have been stated in the standalone financial statements.
iv. The company has not made any provision of for Expected Credit Losses on trade receivables and other financial instruments for the financial year ended 31st March, 2025 other than as reported in para (iv) above as required to be made as per Ind-AS-109 ‘Financial Instruments”.
v. We refer 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 loans to its wholly owned subsidiary company Balaram Papers Private Limited amounting to Rs. 28.66 Crores. The company has not charged any interest on loans and advances of Rs. 28.66 Crores for the financial year ended March 31, 2025. The subsidiary company has been incurring losses over the years and its net-worth is substantially negative. The subsidiary company has also outstanding liabilities to be discharged towards bank loans and also to trade payables and other liabilities. The plant of the subsidiary company is also non-operational and the subsidiary company has not carried out any substantial business activities for the year ended March 31, 2025. Further, the company vide extraordinary general meeting of its members held on 7th February, 2025 resolved to dispose of the whole of the undertaking of the wholly owned subsidiary company. These factors along with possibility of non-resumption of business activities by the subsidiary in near foreseeable future indicate that the company may not be able to recover the entire amounts of balances of loans as outstanding from the wholly owned subsidiary company and accordingly such loans should have been stated at fair value of amounts realizable if any. However, company has neither accounted any interest for the current financial year nor stated such loans at fair value of realization and continued to carry such investment without providing for any interest as receivable for the current financial year. Had the company recognized such loans as impaired as per Ind-AS 109 “Financial Instruments”, the fair value of such loans would have been much lower than at which they have been carried in the standalone financial statements and consequent net-worth of the company would have been lower.
vi. The company has made investments in 40,35,000 Equity Share of Rs. 10.00 each amounting to Rs. 4.04 Crores in the wholly owned subsidiary company Balaram Papers Private Limited. The company has at the Extra Ordinary General Meeting of its members held on 7th February, 2025 resolved to dispose of the undertaking of wholly owned subsidiary. Because of the factors stated in para (v) above, these investments should have been impaired. However, no provision has been made for Impairment
on such investments and the company has continued to carry such investment at the cost of its acquisition. Had the company made provision for impairment losses on such investment the realizable value of such investment would have been much lower than at which they have been carried in the standalone financial statements or would not have any realizable value at all and consequent net-worth of the company would have been lower to that extent.
vii. Inventories of Imported Raw Materials in respect of which Bill of Entries have been filed but have not been lifted from port have not been accounted in the books of account. As informed to us by the management of the company, the company had received notices for auction against such inventories. As informed to us by the management of the company, some of the goods lying at port have been disposed of through auction. However, no details of goods sold through auction have been made available to us for our verification. The goods sold through auction have not been recognized in the books of account either as sale or inventories. The custom duty paid in respect of goods lying at port or disposed of through the process of auction has been classified as recoverable amount from the custom authorities in the books of account. The payments made to import suppliers have been recognized as amounts recoverable from the respective party in the standalone financial statements. The company has further not accounted corresponding liabilities towards suppliers if any in the books of account. Had the company accounted for above transactions the reportable amounts of revenue, assets, liabilities and losses for the year would have been different from what has been stated in the standalone financial statements.
We refer to Note No. 34(IV) to the standalone financial statements wherein the company has reported amounts of Rs. 5.78 Crores as Advances Paid for Imported Raw Materials.
In absence of sufficient appropriate audit evidence with regard to position of goods lying at port and disposed of through auction if any, we disclaim our opinion as regard to inventories, revenues, assets and liabilities in this regard.
viii. The company has not made any provision towards gratuity liabilities as per Ind AS-19 “Employee Benefits” for the financial year ended 31st March, 2025.
ix. The outstanding balances of trade receivables and trade payables as at March 31, 2025 as reported in the standalone financial statements have not been contra confirmed by the respective parties and hence the same are subject to confirmations and subsequent reconciliations and subject to claim and legal proceedings for recovery, damages, charges if any of respective parties against the company.
x. As informed to us by the management of the company, due to shut down of the plants, the quality of waste papers, chemical items, packing materials, coal and finished goods has deteriorated and hence they have been written down below their cost as per the estimates made by the management of the company regarding recoverable value of such inventories. The company has written down inventories of Rs. 9.74 crores during financial year ended March 31, 2025. The reported
amounts of losses for the financial year ended 31st March, 2025 includes the effect of such write down under respective head of raw materials consumed, fuel consumed, packing materials consumed and variation in stock of Finished Goods. The inventories of stores and work-in-process have not been revalued. The inventories as at March 31, 2025 have been carried at such revalued amount or cost as the case may be. In our opinion, the quality of inventories may have further substantially deteriorated and hence consequent net realizable value of such inventories may also have been lower than the value at which they have been carried in the standalone financial statements as at March 31, 2025. Such treatment is contrary to the valuation principles laid down in Ind-AS 2 “Inventories”. Had the company applied recognition and measurement principles as laid down in the Ind-AS 2, the carrying amounts of inventories may have been different from at which they have been carried in the standalone financial statements. The management of the company has not provided to us physical verification report of inventories held by the company as at March 31, 2025 and hence the carrying amounts as reported in the standalone financial statements as at March 31, 2025 are subject to physical verification and subsequent reconciliations and application of valuation principles as laid out in Ind-AS 2.
In absence of availability of sufficient appropriate audit evidence, physical verification report, details of valuation of inventories and the verification and valuation of such inventory being technical matter, we disclaim our opinion as to the amounts of inventory as reported in the standalone financial statements.
xi. The company has carried items of PPE at cost less accumulated depreciation upto March 31, 2025. However, due to the plants being non-operational for a substantial period of time during the financial year and other factors affecting the recoverable amounts of items of PPE, the recoverable value of some of the items or class of items within PPE may have suffered impairment. The company has not applied impairment test in respect of tangible PPE for the financial year ended March 31, 2025 as required to be made as per Ind-AS 36 “Impairment of Assets”. The management of the company has not provided to us physical verification report of PPE held by the company as at March 31, 2025 and hence the carrying amounts as reported in financial statements as at March 31, 2025 are subject to physical verification and subsequent reconciliations and application of accounting principles of impairment as laid out in Ind-AS 36.
In absence of availability of sufficient appropriate audit evidence, physical verification report and the verification and valuation of each item of PPE being technical matter, we disclaim our opinion as to the carrying value of PPE as reported in the standalone financial statements.
xii. We draw attention to “Statement of Changes in Equity” to the standalone financial statements relating to Equity. The net-worth of the company eroded substantially due to continuous losses in the last few years. As at March 31, 2025 the current liabilities of the company are far in excess of its current assets. The company has been declared as defaulters by banks in
respect of loans granted by them to the company as the company has failed to discharge its liabilities towards bank loans. These factors along with other factors referred to in basis of disclaimer of opinion para herein above, cast significant doubt on the company’s ability to continue as going concern and discharge its liabilities towards bank creditors, other creditors and statutory liabilities.
However, the standalone financial statements have been prepared and presented by the management of the company assuming company being a going concern.
xiii. In spite of our specific request to the management of the company, the company has not made available to us details and status of pending litigations against the company and its possible impact on the financial statements including litigations relating to commitment of fraud by the company if any.
As a result of the matters stated in para (i) to (xiii) above and other factors affecting procedures to be applied by us to verify the reported amounts and disclosures in the standalone financial statements, we have not been able to obtain sufficient appropriate audit evidence to provide the basis of our opinion on the standalone financial statements and reported amounts and disclosures in the standalone financial statements including that reported in notes to the financial statements.
MATERIAL UNCERTAINTY RELATED TO GOING CONCERN:
We draw attention to Basis of Disclaimer of Opinion section of our audit report as reported herein above. Due to the materiality of the factors stated Basis of Disclaimer of Opinion, financial position of the company, defaults with regard to bank and other creditors, substantial erosion of the net-worth of the company, continuous substantial losses in the business, the liabilities being far in excess of the available assets, possible effect of impairment of assets and realizable value of financial instruments and assets, closure of business operations, substantial tax demands being in excess of net-worth of the company and pending substantial legal matters, all financial parameters being negative and adverse and other factors affecting the possibility of discharge of liabilities from available sources of funds, the going concern status of the company has been substantially and materially adversely affected which indicates that a material uncertainty exists that may cast significant doubt on the company’s ability to continue as going concern and in our opinion, the accompanying standalone financial statements for the year ended March 31, 2025 should have been prepared and presented considering the status of the company as not being going concern.
However, for the reasons more as described in Note No. 35(s) to the standalone financial statements, the management of the company has prepared and presented the accompanying standalone financial statements assuming the status of the company as a Going Concern.
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.
Our responsibility is to conduct an audit of the standalone financial statements in accordance with the Standard on Auditing and issue an auditor’s report thereon.
However, because of the matters described in the Basis for Disclaimer of Opinion section of our report, we have not been able to obtain sufficient appropriate audit evidence to provide a basis for an audit opinion on the accompanying standalone financial statements.
We are independent of the Company in accordance with the Code of Ethics and provisions of the Act that are relevant to our audit of the standalone financial statements in India under the Act, and we have fulfilled our other ethical responsibilities in accordance with the Code of Ethics and the requirements under the Act.
i. 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 and legal action for claim of recovery by the respective MSME Parties in this regard for outstanding dues, if any and on Income Tax computations thereon on payments made beyond specified date to be ascertained.
Our opinion is not modified in respect of matters stated in para (i) 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 and except for the possible effects of the matters described in the Basis for Disclaimer of Opinion section, 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) As described in the Basis for Disclaimer of Opinion section, we have sought but have not been able to obtain all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit.
b) Due to the effects/possible effects of the matter described in the Basis for Disclaimer of Opinion section and for the matters stated in the paragraph below on reporting under Rule 11(g), we are unable to state whether 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 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) Due to the effects/possible effects of the matter described in the Basis for Disclaimer of Opinion section, we are unable to state whether the financial statements comply with the Indian Accounting Standards specified under section 133 of the Act.
e) The matter described in the Basis for Disclaimer of Opinion section particularly going concern matter, in our opinion, may have an adverse effect on the functioning of the Company.
f) On the basis of written representations received from the directors of the Company as on March 31, 2025, and taken on record by the Board of Directors, none of the directors are disqualified as on March 31, 2025, from being appointed as a director in terms of sub-section (2) of section 164 of Act;
g) The reservation relating to maintenance of accounts and other matters connected therewith are as stated in the Basis for Disclaimer Opinion section, in the paragraph (b) above on reporting under Section 143(3)(b) and in paragraph below on reporting under Rule 11(g);
h) With respect to the adequacy of internal financial control over financial reporting of the Company with reference to standalone financial statements and the operating effectiveness of such controls, refer to our separate report in Annexure-B.
i) 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.
Sr.
No.
Name of The Party/Department
Brief Facts of the Case
Financial Impact
1.
Star Papers
Suit Filed under Section 138 of the Negotiable Instruments Act, 1881 For Recovery of Dues For Sales of Goods
33,58,877/-
2.
Hi Tech Multi Forms
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)
14,65,029/-
3.
Shreeji Enterprise
Suit Filed For Recovery Of Dues For Sales of Goods
16,67,194/-
4.
Videocon Industries Limited
Operational Creditor in NCLT Proceedings For Recovery Of Dues For Sales of Goods
8,00,221/-
5.
Royal Sundaram General Insurance Company-Vehicle Claim
Claim for Loss of Vehicle
5,88,750/-
6.
Commissioner of Income Tax-Appeals
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. 202122
NIL
[Demand Amount Included in Order Passed Under Section 147 dated 24/03/20245]
7.
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]
51,77,20,750/-
8.
Disputed Income Tax Liabilities On Account Of Income Tax Assessment Order Passed Under Section 147 by the Office of Central Circle 1(1), Ahmedabad for A.Y. 2020-21
7,72,85,920/-
9.
Disputed Income Tax Liabilities On Account Of Income Tax Assessment Order Passed Under Section 147 by the Office of Central Circle 1(1), Ahmedabad for A.Y. 2021-22
65,28,77,060/-
10.
Office of the Commissioner of Central Goods and Service Tax, Audit Commissionerate, Rajkot
RCM Liability on Ocean Freight
(Company has paid Rs. 30,59,267/- under protest)
30,59,267/-
11.
District Consumer Dispute Redressal Commissioner, Mehsana
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.
3,35,38,210/-
However, due to the effects/possible effects of the matter described in the Basis for Disclaimer of Opinion paragraph and nonavailability of sufficient appropriate audit evidence regarding pending litigations, we are unable to state whether the Company has disclosed the impact of pending litigations on its financial position in its standalone financial statements and whether such disclosures are complete, true and fair.
[Refer Note No. 31 to the standalone financial statements]
ii. Except for the effects/possible effects of the matter described in the Basis for Disclaimer of Opinion section, the Company did not have any long-term contracts including derivative contracts for which there were any material foreseeable losses.
iii. As at 31st March, 2025 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 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 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 sub-clause (i) and
PLACE: AHMEDABAD DATED: 29TH MAY, 2025
(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, 2025 which has a feature of recording audit trail (edit log) facility. However, the company has not provided to us the details of audit trail records for the entire financial year ended on March 31, 2025. In absence of audit trial records, we are unable to express our opinion whether the audit trial feature of the said software was enabled and operated throughout the year for all relevant transactions in the software or whether there were any instances of the audit trial feature being tempered with.
In absence of availability of complete audit trial records, we are unable to express our opinion as to whether the required audit trial has been preserved by the company as per the statutory requirement of record retention or not.
vii. 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.
CHARTERED ACCOUNTANTS, FIRM REG. NO. W100060
PARTNER M. No. 192347 UDIN: 25192347BMNTLI8061