We have audited the attached Balance Sheet of SPECIALITY PAPERS LIMITED
as at 31st March, 2009 and also the Profit and Loss account for the year
ended on that date annexed thereto. These financial statements are the
responsibility of the companys management. Our responsibility is to
express an opinion on these financial statements based on our audit:
We conducted our audit in accordance with auditing standards generally
accepted in India. Those Standards require that we plan and perform the
audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made
by the management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable
basis for our opinion.
1. As required by the Companies (Auditors report) Order 2003 (as
amended) issued by the Central Government of India in terms of section
227(4A) of the Companies act ,1956, we enclose in the Annexure a
statement on the matters specified therein.
2. Further to our comments in the annexure referred to in paragraph 1
above, we state that:
a) The balances of Debtors, Creditors and Loans and Advances are
subject to confirmation and reconciliation.
b) We are informed that die records of inventory of stores and spares
is under compilation and that the closing stock of stores has been
taken and valued as per physical verification on the year end date.
Impact of variation, if any on the profit is not quantifiable.
c) The Company has not provided for Interest on all unpaid statutory
d) Cheques to the tune of Rs. 992554/- have been issued but they have
remained uncleared till the report date.
e) We have obtained all the information and explanations which to the
best of our knowledge and belief were necessary for the purposes of our
f) Subject to what is stated in paragraph (a) (b) (c) and (d) above, in
our opinion, proper books of accounts as required by law, have been
kept by the Company so far as it appears from our examination of the
g) Balance Sheet and Profit and Loss Account and Cash flow statement
dealt with by this report are in agreement with the books of accounts;
h) In our opinion , the Profit & Loss account, Balance Sheet and the
Cash flow statement dealt with by this report, comply with the
mandatory accounting standards referred in to Sub-section (3C) of
section 211 of the companies Act 1956.
i) On the basis of written representations received from the Directors,
as on 31s March, 2009 and taken on record by the Board of Di rectors,
we report that none of the Directors is disqualified as on 31stMarch,
2009 from being appointed as a Director in terms of clause (g) of
sub-section (1) of section 274 of the Act;
j) Subject to our comments in paragraph (a) and (b) above, in our
opinion and to the best of our information and according to the
explanations given to us, the said accounts read in conjunction with
Schedules A to O; 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 31st March 2009,
b) In the case of the Profit and Loss ace ount, of the Profit for the
year ended on that date; and
c) In the case of Cash flow statement, of the cash flows for the year
ended on that date.
ANNEXURE TO THE AUDITORS REPORT
ANNEXURE REFERRED TO IN PARAGRAPH 1. OF AUDITORS REPORT TO THE MEMBERS
OF SPECIALITY PAPERS LIMITED ON THE ACCOUNTS FOR THE YEAR ENDED 31st
1.(a) In our opinion, the records relating to fixed assets of the
company need to be updated and modified to display full particulars
including qua ntitative details and situation of fixed assets. We are
informed that the company is in the process of updating these records.
(b) As per the information and explanations given to us the company
will be able to physically verify the fixed assets only after the
records relating to fixed assets are updated.
(c) The Company has not disposed off a substantial part of fixed assets
during the year.
2.(a) The inventory of the Company except for waste paper and Stores
has been physically verified by the management during the year. In
respect of inventory lying with third parties, these have been
substantially confirmed by them. In our opinion, the frequency of
verification is reasonable however verification of inventory of stores
and waste paper needs to be streamlined.
(b) In our opinion and according to the information and explanations
given to us, the procedures of physical verification of inventory
followed by the management except for waste paper and stores, were
found reasonable and adequate in relation to the size of the Company
and the nature of its business.
(c) On the basis of our examination of records of inventory, in our
opinion, except for waste paper and stores, the Company has maintained
proper records of inventory and discrepancies noticed on physical
verification between the physical stocks and the book records were not
material in relation to the operations of the company.
3.(a) The company has granted unsecured loan to two companies/ firm /
persons covered in the register maintain under section 301 of the
companies act 1956, The maximum amount involved during the year was
Rs.5.43 Lacs (PY Rs.307.22) and the maximum amount outstanding at any
time during the year for the loan granted to such companies/ firm was
Rs. 5.43 Lacs (P.Y. Rs. 307.22).
(b) The company has granted interest free loan. There is no fixed
schedule for repayment of these loans.
(c) There is no stipulated repayment schedule for these loans. Thus
this clause does not apply.
(d) There is no overdue amount exceeding Rs. One Lac in case of loans
given by the company.
(e) The company has taken unsecured loan from 8 companies/ Firm/
Persons covered in the register maintained under section 301 of the
Companys Act 1956. The maximum amount involved during the year was
Rs.3377.78 Lacs (P.Y. Rs. 3069.16) and the maximum balance outstanding
of loan taken from such companies at any time during the year was Rs.
3101.66 Lacs (P.Y. Rs. 1845.85)
(f) In our opinion and according to the information and explanation
given to us, the rate of interest and other terms and conditions in
respect of loans taken from these parties are prima facie not
prejudiced to the interest of the company.
(g) Since the company has taken interest free loan s, and there is no
stipulated repayment schedule for these loans, this clause does not
4. In our opinion and according to the information a nd explanations
given to us , there are adequate internal control procedures
commensurate with the size of the Company and nature of its business
with regards to the purchase of inventory & fixed assets and with
regards to the sale of goods. During the course of our audit, we have
not observed any continuing failure to correct the major weaknesses in
5.(a) In our opinion and according to the information and explanation
given to us, the transactions that need to be entered into the Register
maintain ed under Section 301 of the Companies Act, 1956 have been so
(b) In our opinion and according to the information and explanations
given to us, the transactions that need to be entered in the register
in pursuance of Section 301 of the act, where the amount of such
transaction with each party exceeds Rs. Five Lacs, during the financial
year, have been made at prices which are reasonable having regard to
the prevailing market prices at the relevant time.
6. The Company has not accepted any deposit from the public.
7. The Company presently does not have a formal internal audit system.
8. As per the information and explanations given to us the Company is
in the process of compiling cost records required to be maintained as
pres cribed by the Central Government under Clause (d) of sub-section
(1) of Secti on 209 of the Companies Act 1956.
9(a) The Company has generally been irregular in depositing undisputed
dues including Provident
Funds, Employees State Insurance dues, Labour welfare fund, Sales Tax
and Income Tax with appropriate authorities. According to the
information and explanations given to us and as examined from the books
of accounts of the Compan y, there are statutory dues outstanding for
more than six months at the year end date.
(b) According to the records of the Company, there are no dues
outstanding of Sales Tax, Income Tax, Wealth Tax, Custom Duty or Excise
Duty or Cess on account of any dispute except for TDS amounting to Rs.
2276161/- for which the appeals are pending.
10. The Company has no accumulated losses as on the balance sheet
11. Based on our audit procedures and the information and explanations
given by management, we are of the opinion that the Company has not
repayment of its dues to any financial institution or bank during the
12. The Company has not granted any loans and advances on the basis of
security by way of pledge of shares, debentures and other security.
13. The provisions of any special statute as specified under clause
(xiii) of paragraph 4 of the Order are not applicable to the Company.
14. In our opinion and according to the information and explanations
given to us, the Company is not a dealer or trader in securities.
15. 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.
16. According to the information and explanations given to us, term
loans have been applied for the purpose for which they were raised.
17. According to the information and explanations given to us and on
an overall examination of the balance sheet of the company we report
that no funds raised on short term basis have been used for long term
18. The Company has not made preferential allotment of shares to the
parties and companies covered in the Register maintained under section
301 of the Companies Act, 1956 during the year.
19. The Company has not issued any debentures.
20. The Company has not raised any money by public issue during the
21. To the best of our knowledge and belief and according to the
information and explanations given to us, no fraud on or by the company
was noticed or reported during the year.
FOR KAPADIA SHAH & CO.
Shreyas S. Kapadia