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Blue Star Ltd.

BSE: 500067 Sector: Engineering
NSE: BLUESTARCO ISIN Code: INE472A01039
BSE LIVE 15:40 | 05 Dec 481.90 6.45
(1.36%)
OPEN

478.60

HIGH

489.00

LOW

467.20

NSE LIVE 15:31 | 05 Dec 478.85 3.10
(0.65%)
OPEN

475.00

HIGH

487.40

LOW

466.30

OPEN 478.60
PREVIOUS CLOSE 475.45
VOLUME 746
52-Week high 581.00
52-Week low 306.10
P/E 38.77
Mkt Cap.(Rs cr) 4599.74
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 478.60
CLOSE 475.45
VOLUME 746
52-Week high 581.00
52-Week low 306.10
P/E 38.77
Mkt Cap.(Rs cr) 4599.74
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Blue Star Ltd. (BLUESTARCO) - Auditors Report

Company auditors report

To the Members of Blue Star Limited

Report on the Financial Statements

We have audited the accompanying standalone financial statements of Blue Star Limited("the Company") which comprise the Balance Sheet as at March 31 2016 theStatement of Profit and Loss and Cash Flow Statement for the year then ended and asummary 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 Section134(5) of the Companies Act 2013 ("the Act")with respect to the preparation ofthese standalone financial statements that give a true and fair view of the financialposition financial performance and cash flows of the Company in accordance withaccounting principles generally accepted in India including the Accounting Standardsspecified under section 133 of the Act read with Rule 7 of the Companies (Accounts)Rules 2014. This responsibility also includes maintenance of adequate accounting recordsin accordance with the provisions of the Act for safeguarding of the assets of the Companyand for preventing and detecting frauds and other irregularities; selection andapplication of appropriate accounting policies; making judgments and estimates that arereasonable and prudent; and the design implementation and maintenance of adequateinternal financial control that were operating effectively for ensuring the accuracy andcompleteness of the accounting records relevant to the preparation and presentation ofthe financial statements that give a true and fair view and are free from materialmisstatement whether due to fraud or error.

Auditor’s Responsibility

Our responsibility is to express an opinion on these standalone financial statementsbased on our audit. We have taken into account the provisions of the Act the accountingand auditing standards and matters which are required to be included in the audit reportunder the provisions of the Act and the Rules made thereunder. We conducted our audit inaccordance with the Standards on Auditing issued by the Institute of CharteredAccountants of India as specified under Section 143(10) of the Act. Those Standardsrequire that we comply with ethical requirements and plan and perform the audit to obtainreasonable assurance about whether the financial statements are free from materialmisstatement.

An audit involves performing procedures to obtain audit evidence about the amounts anddisclosures in the financial statements. The procedures selected depend on theauditor’s judgment including the assessment of the risks of material misstatement ofthe financial statements whether due to fraud or error. In making those risk assessmentsthe auditor considers internal financial control relevant to the Company’spreparation of the financial statements that give a true and fair view in order to designaudit procedures that are appropriate in the circumstances. An audit also includesevaluating the appropriateness of accounting policies used and the reasonableness of theaccounting estimates made by the Company’s Directors as well as evaluating theoverall presentation of the financial statements. We believe that the audit evidence wehave obtained is sufficient and appropriate to provide a basis for our audit opinion onthe standalone financial statements.

Opinion

In our opinion and to the best of our information and according to the explanationsgiven to us the standalone financial statements give the information required by the Actin the manner so required and give a true and fair view in conformity with the accountingprinciples generally accepted in India of the state of affairs of the Company as at March31 2016 its profit and its cash flows for the year ended on that date.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor’s report) Order 2016 ("theOrder") issued by the Central Government of India in terms of sub-section (11) ofsection 143 of the Act we give in the Annexure 1 a statement on the matters specified inparagraphs 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 bestof our knowledge and belief were necessary for the purpose of our audit; (b) In ouropinion proper books of account as required by law have been kept by the Company so far asit appears from our examin ation of those books; (c) The Balance Sheet Statement ofProfit and Loss and Cash Flow Statement dealt with by this Report are in agreement withthe books of account; (d) In our opinion the aforesaid financial statements comply withthe Accounting Standards specified under section 133 of the Act read with Rule 7 of theCompanies (Accounts) Rules 2014; (e) On the basis of written representations receivedfrom the directors as on March 31 2016 and taken on record by the Board of Directorsnone of the directors is disqualified as on March 31 2016 from being appointed as adirector in terms of section 164 (2) of the Act; (f) With respect to the adequacy of theinternal financial controls over financial reporting of the Company and the operatingeffectiveness of such controls refer to our separate Report in "Annexure 2" tothis report; (g) With respect to the other matters to be included in the Auditor’sReport in accordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014 inour opinion and to the best of our information and according to the explanations given tous: i. The Company has disclosed the impact of pending litigations on its financialposition in its financial statements - Refer Note 26 to the financial statements; ii. TheCompany has made provision as required under the applicable law or accounting standardsfor material foreseeable losses if any on long-term contracts. Further the Company doesnot have any long term derivative contracts. Refer Note 6 to the financial statements;iii. There has been no delay in transferring amounts required to be transferred to theInvestor Education and Protection Fund by the Company. Other Matter The accompanyingfinancial statements include total assets of Rs. 19753 lacs as at March 31 2016 andtotal revenues and net cash outflow of

Rs. 11711 lacs and Rs.1221 lacs for the year ended on that date in respect ofcompanies amalgamated during the year (refer note 4 of the financial statement) whichhave been audited by other auditors whose reports have been furnished to us by themanagement.

Our opinion on the financial statements in so far as it relates to the amounts anddisclosures included in respect of amalgamated companies and our report in terms ofsub-sections (3) and (11) of Section 143 of the Act in so far as it relates to theseamalgamated companies is based solely on the reports of such other auditors.

Our opinion on the financial statements and our report on Other Legal and RegulatoryRequirements above is not modified in respect of the above matters with respect to ourreliance on the work done and the reports of the other auditors and the financialstatements and other financial information certified by the Management.

For S R B C & CO LLP

Chartered Accountants

ICAI Firm Registration Number: 324982E/E300003

per Sudhir Soni

Partner

Membership Number: 41870

Place of Signature: Mumbai

Date: May 30 2016

Annexure 1 to the Auditors’ Report

Annexure referred to in paragraph 1 under the heading "Report on other legal andRegulatory Requirement" of our report of even date –Re: Blue Star Limited(‘the Company") i. (a) The Company has maintained proper records showing fullparticulars including quantitative details and situation of fixed assets.

(b) All fixed assets have not been physically verified by the management during theyear but there is a regular programme of verification which in our opinion is reasonablehaving regard to the size of the Company and the nature of its assets. No materialdiscrepancies were noticed on such verification.

(c) According to the information and explanations given by the management the titledeeds of immovable properties included in fixed assets are held in the name of thecompany.

ii. The management has conducted physical verification of inventory at reasonableintervals during the year and no material discrepancies were noticed on physicalverification.

iii. (a) According to the information and explanations given to us the Company has notgranted any loans secured or unsecured to companies firms Limited LiabilityPartnerships or other parties covered in the register maintained under section 189 of theCompanies Act 2013 during the current year.

(b) The Company had granted loans that were re-payable on demand to a company coveredin the register maintained under section 189 of the Companies Act 2013 which wereoutstanding at the beginning of the year. During the year the company has received theentire loan amount along with interest.

(c) There is no overdue amount of loans granted to companies firms or other partieslisted in the register maintained under section 189 of the Companies Act 2013 which areoutstanding for more than ninety days.

iv. In our opinion and according to the information and explanations given to usprovisions of section 185 and 186 of the Companies Act 2013 in respect of loans todirectors including entities in which they are interested and in respect of loans andadvances given investments made and guarantees and securities given have been compliedwith by the Company.

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 tothe rules made by the Central Government for the maintenance of cost records under section148(1) of the Companies Act 2013 related to the manufacture or service of airconditioning and refrigeration products and are of the opinion that prima facie thespecified accounts and records have been made and maintained. We have not however made adetailed examination of the same.

vii. (a) The Company is generally regular in depositing with appropriate authoritiesundisputed statutory dues including provident fund employees’ state insuranceincome-tax sales-tax service tax customs duty excise duty value added tax cess andother material statutory dues applicable to it.

According to the information and explanations given to us no undisputed amountspayable in respect of provident fund employees’ state insurance income-tax servicetax sales-tax duty of custom duty of excise value added tax cess and other materialstatutory dues were outstanding at the year end for a period of more than six monthsfrom the date they became payable.

(b) According to the records of the Company the dues outstanding of income-taxsales-tax service tax excise duty value added tax on account of any dispute are asfollows:

Name of Statute Nature of dues Amount Rs. Lacs * Period to which the amount relates Forum where dispute is pending
Disallowance of Section 80IA/80IB deduction for non-allocation of Expenses 935.08 AY 1998-99 2000-01 to 2005-06 2006-07 to 2007-08 High Court/ITAT
Advertisement on Brand Building considered as capital expenditure 127.15 AY 2006-07 ITAT/High Court
Short deduction of Tax at Source on payment to subcontractors 166.50 AY 2008-09 to 2009-10 CIT Appeals
Income Tax Act 1961 Adjustment in value of Corporate guarantee to match it with arm’s length price 11.24 AY 2013-14 Assessing Officer
Depreciation disallowance on intangible assets 92.51 AY 2013-14 Assessing Officer
Disallowance u/s 14A 18.18 AY 2013-14 Assessing Officer
Interest on excess refund 19.95 AY 2001-02 2002-03 High Court
Penalty u/s 271(1)(c) of erstwhile Blue Star Infotech Limited. 119.61 2005-06 2006-07 ITAT
Income tax demand on various matter of erstwhile Blue Star Infotech Limited. 412.06 2004-05 2005-06 ITAT
Service tax demand on Composite Contracts 64.17 2003-09 CESTAT
Disallowance of Cenvat Credit to the extent of 80% including penalty 586.37 2004-05 2010-11 CESTAT/Commissioner (Appeals)
Disallowance of claim of CRA under Export of Services 509.57 2003-10 CESTAT/Commissioner (Appeals)/ Supreme Court
Reversal of Cenvat credit on input services used for providing taxable service as well as exempted services including penalty 328.21 2009-10 2010-11 CESTAT/Commissioner (Appeals)
Service Tax under Finance Act1994 Wrong availment of Cenvat Credit/Service Tax paid 175.38 2003-04 2006-12 CESTAT
Disallowance of input tax credit on common service. 59.53 2005-10 CESTAT
Short payment of Service Tax – Undervaluation of Installation & Commissioning charges SITC Order 684.85 2004-05 High Court
Demand of service tax on differential value arrived at on the basis of trial/ ledger vis--vis ST-3 return commission received for acting as agent of foreign clients Irregular availment of cenvat credit. 13210.44 2007-08 to 2011-12 Commissioner of Service Tax
Rejection of credit notes 158.61 2009-11 Joint commissioner (Appeals)
Demand notice received from Assessing authority treating works contract sales as product sales 2221.36 2001-02 to 2011-12 Supreme Court
Local Sales Tax Act VAT Act and Central Sales Tax Act Sales tax on Factory Direct Sale treated as Local branch sales 107.82 2002-04 Commissioner (Appeals)
Disallowance of Set off u/s 41D & interest liability 90.43 2004-05 Commissioner (Appeals)
Input credit disallowed 2352.50 2005-06 2007-08 Commissioner (Appeals)
Non Submission of Forms 2858.46 1992-93 2000-01 2003-04 2005-06 2007-14 Commissioner (Appeals)/ Tribunal
sales tax demand on assessment 1231.21 1990-91 TO 1998-99 1994-2001 2003-05 2007-13 High Court/Tribunal/Commissioner (Appeals)
Entry Tax Demand on factory direct sales 831.34 2001-02 2004-05 2007-08 to 2011-12 2014-15 2015-16 High Court/Commissioner (Appeals)
10% Demand of Excise Duty on Finished Goods raised for not maintaining separate books of accounts for dispatches to SEZ Developers including penalty. 112.62 2008-09 CESTAT
CENVAT Credit Rejection on GTA/CHA/ Rent a Cab/Canteen services etc. 151.72 1994-96 2005-12 2014-15 CESTAT/Commissioner Appeal
Central Excise Act 1944 Denial of exemption granted under various notifications. Excise Duty on Insulated panels which is considered as walk in coolers and claimed as concessional duty. 68.60 13.80 1987-91 1999-01 2009-10 2015-16 1987-90 CESTAT/Supreme Court Central Excise Commissioner
Valuation matter on Packaged Airconditioner Centrapak condensors chillers etc. 29.62 1986-90 CESTAT/High Court

* net of advances

viii. In our opinion and according to the information and based on explanationsprovided to us the Company has not defaulted in repayment of dues to a financialinstitution bank or debenture holders. The Company has not taken any loan or borrowingfrom the government. ix. According to the information and explanations given by themanagement the Company has not raised any money by way of initial public offer/furtherpublic offer/debt instruments and term loans hence reporting under clause (ix) is notapplicable to the Company and hence not commented upon. x. Based upon the audit proceduresperformed for the purpose of reporting the true and fair view of the financial statementsand according to the information and explanations given by the management we report thatno fraud by the Company or material fraud on the Company by the officers and employees ofthe Company has been noticed or reported during the year. xi. According to the informationand explanations given by the management the managerial remuneration has been paid/provided in accordance with the requisite approvals mandated by the provisions of section197 read with Schedule V to the Companies Act 2013. xii. In our opinion the Company isnot a nidhi Company. Therefore the provisions of clause 3(xii) of the order are notapplicable to the Company and hence not commented upon. xiii. According to the informationand explanations given by the management transactions with the related parties are incompliance with section 177 and 188 of Companies Act 2013 where applicable and thedetails have been disclosed in the notes to the financial statements as required by theapplicable accounting standards. xiv. According to the information and explanations givento us and on an overall examination of the balance sheet the Company has not made anypreferential allotment or private placement of shares or fully or partly convertibledebentures during the year under review and hence reporting requirements under clause 3(xiv) are not applicable to the Company and not commented upon. xv. According to theinformation and explanations given by the management the Company has not entered into anynon-cash transactions with directors or persons connected with him. xvi. According to theinformation and explanations given to us the provisions of section 45-IA of the ReserveBank of India Act 1934 are not applicable to the Company.

For S R B C & CO LLP

Chartered Accountants

ICAI Firm Registration Number: 324982E/E300003

per Sudhir Soni

Partner

Membership Number: 41870

Place of signature: Mumbai

Date: May 30 2016

Annexure 2 to the Auditors’ Report

Annexure referred to in paragraph 2(f) under the heading "Report on other legaland Regulatory Requirement" of our report of even date –

Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section143 of the Companies Act 2013 ("the Act")

To the Members of Blue Star Limited

We have audited the internal financial controls over financial reporting of Blue StarLimited ("the Company") as of March 31 2016 in conjunction with our audit ofthe standalone financial statements of the Company for the year ended on that date.

Management’s Responsibility for Internal Financial Controls

The Company’s Management is responsible for establishing and maintaining internalfinancial controls based on the internal control over financial reporting criteriaestablished by the Company considering the essential components of internal control statedin the Guidance Note on Audit of Internal Financial Controls Over Financial Reportingissued by the Institute of Chartered Accountants of India. These responsibilities includethe design implementation and maintenance of adequate internal financial controls thatwere operating effectively for ensuring the orderly and efficient conduct of its businessincluding adherence to the Company’s policies the safeguarding of its assets theprevention and detection of frauds and errors the accuracy and completeness of theaccounting records and the timely preparation of reliable financial information asrequired under the Companies Act 2013.

Auditor’s Responsibility

Our responsibility is to express an opinion on the Company’s internal financialcontrols over financial reporting based on our audit. We conducted our audit in accordancewith the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting(the "Guidance Note") and the Standards on Auditing as specified under section143(10) of the Companies Act 2013 to the extent applicable to an audit of internalfinancial controls both applicable to an audit of Internal Financial Controls and bothissued by the Institute of Chartered Accountants of India. Those Standards and theGuidance Note require that we comply with ethical requirements and plan and perform theaudit to obtain reasonable assurance about whether adequate internal financial controlsover financial reporting was established and maintained and if such controls operatedeffectively in all material respects.

Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal financial controls system over financial reporting and their operatingeffectiveness. Our audit of internal financial controls over financial reporting includedobtaining an understanding of internal financial controls over financial reportingassessing the risk that a material weakness exists and testing and evaluating the designand operating effectiveness of internal control based on the assessed risk. The proceduresselected depend on the auditor’s judgement including the assessment of the risks ofmaterial misstatement of the financial statements whether due to fraud or error.

We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the internal financial controls system overfinancial reporting.

Meaning of Internal Financial Controls Over Financial Reporting

A company’s internal financial control over financial reporting is a processdesigned to provide reasonable assurance regarding the reliability of financial reportingand the preparation of financial statements for external purposes in accordance withgenerally accepted accounting principles. A company’s internal financial control overfinancial reporting includes those policies and procedures that (1) pertain to themaintenance of records that in reasonable detail accurately and fairly reflect thetransactions and dispositions of the assets of the company; (2) provide reasonableassurance that transactions are recorded as necessary to permit preparation of financialstatements in accordance with generally accepted accounting principles and that receiptsand expenditures of the company are being made only in accordance with authorisations ofmanagement and directors of the company; and (3) provide reasonable assurance regardingprevention or timely detection of unauthorised acquisition use or disposition of thecompany’s assets that could have a material effect on the financial statements.

Inherent Limitations of Internal Financial Controls Over Financial Reporting

Because of the inherent limitations of internal financial controls over financialreporting including the possibility of collusion or improper management override ofcontrols material misstatements due to error or fraud may occur and not be detected.Also projections of any evaluation of the internal financial controls over financialreporting to future periods are subject to the risk that the internal financial controlover financial reporting may become inadequate because of changes in conditions or thatthe degree of compliance with the policies or procedures may deteriorate.

Opinion

In our opinion the Company has in all material respects an adequate internalfinancial controls system over financial reporting and such internal financial controlsover financial reporting were operating effectively as at March 31 2016 based on theinternal control over financial reporting criteria established by the Company consideringthe essential components of internal control stated in the Guidance Note on Audit ofInternal Financial Controls Over Financial Reporting issued by the Institute of CharteredAccountants of India.

For S R B C & CO LLP

Chartered Accountants

ICAI Firm Registration Number: 324982E/E300003

per Sudhir Soni

Partner

Membership Number: 41870

Place of Signature: Mumbai

Date: May 30 2016

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