| We have audited the accompanying financial statements of Hinduja
Foundries Limited ('the Company'), which comprise the balance sheet as
at March 31, 2016, the statement of profit and loss and the cash flow
statement for the eighteen months period 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 principles generally accepted in India, including 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 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 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.
Auditors' 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 statements
are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about
the amounts and the 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 a
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 an adequate internal
financial controls system over financial reporting and the operating
effectiveness of such controls. An audit also includes evaluating the
appropriateness of the 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 on the financial
statements.
Opinion
In our opinion and to the best of our information and according to the
explanations given to us, the aforesaid 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, of the state of affairs of the Company as
at March 31, 2016 and its loss and its cash flows for the eighteen
months 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 the paragraph 3 and 4 of the
Order.
2. As required by Section 143 (3) of the Act, we report that:
(a) 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 it appears from our examination of those
books;
(c) the balance sheet, the statement of profit and loss and the cash
flow statement dealt with by this Report are in agreement with the
books of account;
(d) in our opinion, the aforesaid financial statements comply with the
Accounting Standards specified under Section 133 of the Act, read with
Rule 7 of the Companies (Accounts) Rules, 2014;
(e) on the basis of the written representations received from the
directors as on March 31, 2016 taken on record by the Board of
Directors, none of the directors is disqualified as on March 31, 2016
from being appointed as a director in terms of Section 164 (2) of the
Act; and
(f) 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 statements
- Refer Note 32 to the financial statements;
ii. the Company has made provision, as required under the applicable
law or accounting standards, for material foreseeable losses, if any,
on long- term contracts including derivative contracts;
iii. there has been no delay in transferring amounts, required to be
transferred, to the Investor Education and Protection Fund by the
Company.
The Annexure referred to in our Independent Auditors' Report to the
members of Hinduja Foundries Limited ("the Company") for the eighteen
months period ended March 31, 2016, we report that:
(i) (a) The Company has maintained proper records showing full
particulars, including quantitative details and situation of fixed
assets. The Company is in the process of comprehensively
compiling/updating the fixed asset register after incorporating the
results of the physical verification.
(b) The Company has a regular programme of physical verification of its
fixed assets by which all fixed assets are verified in a phased manner
over a period of three years. In our opinion, this periodicity of
physical verification is reasonable having regard to the size of the
Company and the nature of its assets. In accordance with the programme,
certain fixed assets were verified during the period. The Company is in
the process of reconciling some of the fixed assets counted with the
fixed assets register. As explained to us the Company believes the
difference, if any, will not be material.
(ii) (a) The inventory, except certain goods-in- transit and stocks
lying with third parties, has been physically verified by the
management during the period. In our opinion, the frequency of such
verification is reasonable. For major portion of stocks lying with
third parties at the period-end, written confirmations have been
obtained by the Company.
(b) The procedures for the physical verification of inventories
followed by the management are reasonable and generally adequate in
relation to the size of the Company and the nature of its business.
(c) In relation to the maintenance of inventory records, the Company
had during the previous periods initiated certain corrective steps
including implementation of an ERP system, introduction of perpetual
inventory system, identification of non - moving inventory,
strengthening the documentation and controls regarding recording and
usage of rejections and consumption of materials etc. During the
current period the Company continued to further implement and
strengthen the above corrective steps initiated and monitor the
operating effectiveness of the measures taken. Discrepancies noted on
verification between the physical stocks and book records were not
material and have been accounted as consumption in the books.
(iii) The Company has not granted any loans, secured or unsecured, to
or from companies, firms or other parties covered in the register
maintained under section 189 of the Companies Act, 2013 ('the Act').
(iv) In our opinion and according to the information and explanations
given to us, and having regard to the explanation that purchases of
certain items of inventories are for the Company's specialised
requirements and similarly certain goods sold or services rendered are
for the specialised requirements of the buyers and suitable alternative
sources are not available to obtain comparable quotations, there is an
adequate internal control system commensurate with the size of the
Company and the nature of its business with regard to purchase of
inventories and fixed assets and with regard to the sale of goods and
services. In our opinion and according to the information and
explanations given to us, further to the corrective action initiated to
the matter referred to in clause ii (c) above, there is no continuing
failure to correct major weaknesses in internal control system.
(v) The Company has not accepted any deposits from the public.
(vi) We have broadly reviewed the books of account maintained by the
Company pursuant to the Rules made by the Central Government for the
maintenance of cost records under section 148(1) of the Companies Act,
2013 and having regard to the comments in paragraph ii (c) above, we
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 records.
(vii) (a) According to the information and explanations given to us and
on the basis of our examination of the records of the Company, amounts
deducted/accrued in the books of account in respect of undisputed
statutory dues including Provident Fund, Employees' State Insurance,
Income-tax, Sales-tax, Wealth tax, Service tax, Customs duty, Excise
duty and other material statutory dues have been generally regularly
deposited during the period by the Company with the appropriate
authorities.
According to the information and explanations given to us, no
undisputed amounts payable in respect of Provident Fund, Employees'
State Insurance, Income tax, Sales tax, Wealth tax, Service tax,
Customs duty, Excise duty and other material statutory dues were in
arrears as at March 31, 2016 for a period of more than six months from
the date they became payable.
(b) According to the information and explanations given to us, the dues
set out in Appendix I in respect of Income tax, Excise duty, Service
tax, Customs duty and Sales tax have not been deposited by the Company
on account of disputes.
(c) 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 thereunder has been
transferred to such fund within time.
(viii) The Company's accumulated losses at the end of the financial
period have exceeded 50% of its net worth. The Company has incurred
cash losses in the current financial period and in the preceding
financial period.
(ix) In our opinion and according to the information and explanations
given to us, the Company has not defaulted in repayment of dues to its
bankers or to any financial institutions. The Company did not have any
outstanding debentures during the period.
(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) In our opinion and according to the information and explanations
given to us, the term loans taken by the Company have been applied for
the purpose for which they were raised.
(xii) According to the information and explanations/ confirmations
given to us, no material fraud on or by the Company has been noticed or
reported during the period.
Appendix I as regards to Paragraph vii (b) of Annexure to the Auditors'
Report
Nature of Period to
which the Amount in
Name of
statute Forum where dispute
is pending
dues amount
relates Lakhs
Central Excise
Act, 1944 Excise duty 2011-2012 3.11 CESTAT
Central Excise
Act, 1944 Excise duty 2010-2011 3.08 Commissioner
(Appeals)
Additional
Commissioner of
Central
CENVAT
Credit Rules,
2004 Service tax 2014-2015 29.61 Excise
CENVAT
Credit Rules,
2004 Excise duty 2014-2015 0.88 Assistant
Commissioner
Assistant
Commissioner of
Central Excise
CENVAT
Credit Rules,
2004 Service tax 2014-2015 8.82
Commissioner of
Central Excise
CENVAT
Credit Rules,
2004 Excise duty 2014-2015 1.11 (Appeals)
CENVAT
Credit Rules,
2004 Service tax 2010-2014 387.10 Commissioner
CENVAT
Credit Rules,
2004 Service tax 2013-2014 6.63 Joint Commissioner
of Central Excise
CENVAT
Credit Rules,
2004 Service tax 2014-2015 96.60 Commissioner of
Central Excise
2006-2007 and
CENVAT
Credit Rules,
2004 Service tax # 13.35 Commissioner
(Appeals)
2013-2016
CENVAT
Credit Rules,
2004 Service tax 2006-2015 # 786.80 CESTAT
CENVAT
Credit Rules,
2004 Excise duty 2009-2015 # 9.01 CESTAT
CENVAT
Credit Rules,
2004 Excise duty 1993-1998 # 22.63 Hon'ble High
Court of Madras
Customs
Customs
Act, 1962 2006-2007 1.78 CESTAT
duty
CST Act, 1956 Sales tax 2003-2005 71.09 Appellate Deputy
Commissioner
CST Act, 1956 Sales tax 2014-15 # 44.60 TNSTAT
Finance Act ,
1994 Service tax 2009-2011 # 335.31 CESTAT
Finance Act ,
1994 Service tax 2010-2011 # 23.96 Commissioner
(Appeals)
Commissioner of
Central Excise
Finance Act ,
1994 Service tax 2011 & 2013 # 1.34 (Appeals)
TNGST Act,
1959 Sales tax 1994-1998 # 43.47 Hon'ble High Court
of Madras
Income Tax
Act, 1961 Income 2008-2010 36.62 Assessing Officer
tax
Income Commissioner of
Income tax -
Income Tax
Act, 1961 2007-2013 1,742.66 tax Appeals
# net of amounts paid under protest
for B S R and Company
Chartered Accountants
ICAI Firm's Registration No.:128900W
S Sethuraman
Chennai Partner
May 11, 2016 Membership No: 203491 | 