Star Paper Mills Ltd Forensic Report - SOIC x StockScans Report

as of Sep 2026

Star Paper Mills' financial statements carry a clean audit opinion every year, and the statutory auditor rotated on schedule in FY2022-23. But the clean opinions sit alongside a persistent set of governance and related-party issues: a disqualified promoter-director's recoverable remuneration, a ₹15.36 crore investment in a promoter-group firm carried at unchanged fair value between FY2025 and FY2026, and a fully-provided ₹45 lakh loan that has never been recovered.

Key findings

  1. A ₹45 lakh related-party loan has sat fully provided for since FY2021-22, while a brand fee to the same promoter group runs at ₹3 crore-plus a year Major - The unsecured loan to Emperor Commercial And Tradco Pvt. Ltd. was fully provided for as doubtful in FY2021-22, with no repayment terms; it remained outstanding with overdue principal of more than 90 days and no recovery steps in FY2023-24. Meanwhile, brand usage fees paid to ISG Traders Limited for the 'Duncan Goenka' brand were ₹3.28 crore in FY2023-24, ₹3.24 crore in FY2024-25, and ₹3.04 crore in FY2025-26.
  2. ISG Traders investment carried at fair value of ₹15.36 crore in FY2026 and FY2025 Major - The investment in ISG Traders Limited was carried at fair value of ₹1,536.29 lakhs (₹15.36 crore) as at March 31, 2026, unchanged from March 31, 2025. The carrying fair value was ₹1,710.87 lakhs (₹17.11 crore) as at March 31, 2024 and ₹1,815.62 lakhs (₹18.16 crore) as at March 31, 2023. The FY2020-21 audit report flagged as an Emphasis of Matter that fair value had not been evaluated after 31.12.2019. The FY2025-26 notes state the shares are quoted but not traded since long, with fair value based on an independent valuation using audited FY2024-25 financials, unchanged from the prior year.
  3. Clean audit opinions every year, but the auditor has repeatedly flagged an audit-trail gap Major - Lodha & Co., LLP issued an unqualified opinion for FY2025-26, signed 25 May 2026, but with a Section 143(3)(b) exception on the audit-trail matter under Rule 11(g). The FY2025-26 exception states the audit trail saves User ID and date except time in all cases. The FY2024-25 exception is similar, but the FY2023-24 exception differs: audit trail at database level was not enabled and preservation reporting was not applicable. The FY2025-26 internal financial controls opinion is modified on adequacy and operating effectiveness.
  4. A recurring pattern of SEBI/stock-exchange fines for board-composition and filing delays, paid or waived each year from FY2020 to FY2025 Major - In FY2024-25, BSE and NSE imposed fines for belated committee-constitution compliances, waived on application. In FY2023-24, a fine of ₹5,66,400 including GST was deposited for non-compliance of Regulation 17(1)(c); in FY2022-23, NSE and BSE each fined ₹2,35,000 plus GST for the same regulation, deposited with both exchanges. A SEBI fine of ₹3 lakh on eight promoters including Star Paper Mills was set aside by SAT on 14.09.2022.
  5. A recurring director-remuneration dispute, multi-year GST/UPVAT demands, and unsettled insurance claims, with capital commitments jumping to ₹11.66 crore Minor - The erstwhile disqualified director's ₹1.69 crore provided-but-unpaid remuneration and ₹5.55 crore paid remuneration remain subject to the Calcutta High Court decision. GST demands include ₹72.92 lacs for FY 2018-19 confirmed on appeal on 09/10/2024, which the company will appeal before the Allahabad High Court, and two FY 2019-20 orders of ₹0.72 lac and ₹572.66 lacs dated 31.08.2024. Capital commitments stood at ₹11.66 crore as at March 31, 2026, up from ₹57.41 lakhs a year earlier.
  6. A ₹247 crore land-revaluation reserve dominates distributable reserves, while profit is repeatedly shaped by policy choices Minor - Retained earnings include ₹247.13 crore not available for distribution, from land measured at fair value on transition as deemed cost. The company changed its wood-costing method from FIFO to weighted average in FY2021-22, decreasing profit by ₹69.15 lakhs, and wrote back ₹4.9 crore of deferred tax liabilities in FY2025-26. Fire losses of ₹11.97 crore from November 2022 and March 2023 fires are recognised, with insurance claims recognised only on crystallisation.
  7. Revenue recognition is a recurring key audit matter, and sales are persistently concentrated in a handful of customers Minor - Revenue recognition under Ind AS 115 was a key audit matter in FY2020-21 and FY2019-20. Sales to a single customer reached ₹104.08 crore in FY2025-26, exceeding 10% of turnover; sales to three customers totalled ₹181.88 crore in FY2024-25. Trade receivables are settled on credit terms of 5 to 9 days.
  8. Statutory auditor rotated on schedule in FY2022-23, with no resignations or adverse actions across seven years Clean - M/s Jain Pramod Jain & Co. completed a five-year term at the 83rd AGM held 21 September 2022, and M/s Lodha & Co. was appointed for five years in its place. Total auditor fees were stable, from ₹11.70 lacs in FY2019-20 to ₹13.85 lacs in FY2025-26. CARO reports for FY2021-22 through FY2023-24 each state there was no resignation of statutory auditors during the year.

What to watch

Bottom line: This is a record with clean audit opinions, a compliant auditor rotation, and stable fees, but the clean opinions sit on top of a recurring set of related-party and governance issues that never fully resolve. The character of the risk is slow-burn: a disqualified director's remuneration that stays recoverable year after year, a promoter-group investment that has been revalued downward in each of the last two years, and a loan that never gets recovered. Watch the court outcomes and the fair-value note in the next annual report.