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Engineers India Ltd.

BSE: 532178 Sector: Engineering
NSE: ENGINERSIN ISIN Code: INE510A01028
BSE LIVE 15:55 | 24 Nov 184.95 0.70
(0.38%)
OPEN

184.00

HIGH

186.80

LOW

182.75

NSE 15:54 | 24 Nov 184.50 0.90
(0.49%)
OPEN

183.95

HIGH

186.80

LOW

182.55

OPEN 184.00
PREVIOUS CLOSE 184.25
VOLUME 1321239
52-Week high 203.90
52-Week low 135.00
P/E 33.26
Mkt Cap.(Rs cr) 11,687
Buy Price 184.95
Buy Qty 199.00
Sell Price 0.00
Sell Qty 0.00
OPEN 184.00
CLOSE 184.25
VOLUME 1321239
52-Week high 203.90
52-Week low 135.00
P/E 33.26
Mkt Cap.(Rs cr) 11,687
Buy Price 184.95
Buy Qty 199.00
Sell Price 0.00
Sell Qty 0.00

Engineers India Ltd. (ENGINERSIN) - Auditors Report

Company auditors report

To

The Members of ENGINEERS INDIA LIMITED

Report on the Standalone Financial Statements

We have audited the accompanying standalone financial statements of ENGINEERS INDIALIMITED ("the Company") which comprise the Balance Sheet as at 31 March2016 the Statement of Profit and Loss and the Cash Flow Statement for the year thenended and a summary of the significant accounting policies and other explanatoryinformation.

Management's Responsibility for the Standalone 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 preparationand presentation of these standalone financial statements that give a true and fair viewof the financial position financial performance and cash flows of the Company inaccordance with the accounting principles generally accepted in India including theAccounting Standards specified under Section 133 of the Act read with Rule 7 of theCompanies (Accounts) Rules 2014. This responsibility also includes maintenance ofadequate accounting records in accordance with the provisions of the Act for safeguardingthe assets of the Company and for preventing and detecting frauds and otherirregularities; selection and application of appropriate accounting policies; makingjudgments and estimates that are reasonable and prudent; and design implementation andmaintenance of adequate internal financial controls that were operating effectively forensuring the accuracy and completeness of the accounting records relevant to thepreparation and presentation of the financial statements that give a true and fair viewand are free from material misstatement whether due to fraud or error.

Auditor's Responsibility

Our responsibility is to express an opinion on these standalone financial statementsbased on our audit. While conducting our audit we have taken into account the provisionsof the Act the accounting and auditing standards and matters which are required to beincluded 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 underSection 143(10) of the Act. Those Standards require that we comply with ethicalrequirements and plan and perform the audit to obtain reasonable assurance about whetherthe financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts andthe disclosures in the financial statements. The procedures selected depend on theauditor's judgment including the assessment of the risks of material misstatement of thefinancial statements whether due to fraud or error. In making those risk assessments theauditor considers internal financial control relevant to the Company's preparation of thefinancial statements that give a true and fair view in order to design audit proceduresthat are appropriate in the circumstances. An audit also includes evaluating theappropriateness of the accounting policies used and the reasonableness of the accountingestimates made by the Company's Directors as well as evaluating the overall presentationof the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate toprovide 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 explanationsgiven to us the aforesaid standalone financial statements give the information requiredby the Act in the manner so required and give a true and fair view in conformity with theaccounting principles generally accepted in India of the state of affairs of the Companyas at 31 March 2016 and its profit and its cash flows for the year ended on that date.

Emphasis of Matter

We draw attention to the note no. 2.47 to the standalone financial statements for theyear ended 31 March 2016 regarding:

(a) fraud committed by M/s Fernas Construction India Pvt. Ltd. ('the Contractor') bysubmitting bogus completion certificate. Further the employees and officers of theCompany in connivance with the contractor relaxed the bid qualification criteria to enablethe contractor to qualify and beg the tender/contract worth Rs 180000 lakhs from a clientfor whom the Company is a consultant. The management does not envisage any financialliability in this regard.

(b) fraud committed by M/s Fernas Construction India Pvt. Ltd. ('the Contractor') bysubmitting bogus completion certificate for qualifying in the bid criteria and beg thetender/contract of approximate Rs 27200 lakhs. The Company has terminated the contract.The Company has estimated additional expenditure of Rs 3167 lakhs to complete the jobwhich has been accounted for as per accounting standard (AS—7 'Accounting forConstruction Contracts'). Subsequent to termination of contract the contractor raised theclaim against the Company. Management does not consider any possible obligation on thisaccount requiring future probable outflow of resources.

Our opinion is not modified in respect of this matter.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor's Report) Order 2016 ("the Order")issued by the Central Government of India in terms of Subsection (11) of section 143 ofthe Act we give in the "Annexure A" a statement on the mattersspecified in the paragraph 3 and 4 of the Order.

2. The C&AG of India has issued directions indicating the areas to be examined interms of sub section (5) of section 143 of the Companies Act 2013 compliance of which areset out in "Annexure B"

3. 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 purposes of our audit.

(b) In our opinion proper books of account as required by law have been kept by theCompany 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 statementdealt with by this Report are in agreement with the books of account.

(d) In our opinion the aforesaid standalone financial statements comply with theAccounting Standards specified under Section 133 of the Act read with Rule 7 of theCompanies (Accounts) Rules 2014.

(e) On the basis of the written representations received from the Directors as on 31March 2016 taken on record by the Board of Directors none of the Directors isdisqualified as on 31 March 2016 from being appointed as a Director in terms of Section164 (2) of the Act.

(f) With respect to the adequacy of the internal financial controls over financialreporting of the Company and the operating effectiveness of such controls refer to ourseparate report in "Annexure C"; and

(g) With respect to the other matters to be included in the Auditor's Report inaccordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014 in our opinionand 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 financialposition in its financial statements - Refer note no. 2.18 to the financial statements;

ii. The Company has made provision as required under the applicable law or accountingstandards for material foreseeable losses if any on long term contracts includingderivative contracts - Refer note no. 2.45 to the financial statements;

iii. There has been no delay in transferring amounts required to be transferred tothe Investor Education and Protection Fund by the Company.

For Arun K Agarwal & Associates
Chartered Accountants
(Firm's Registration No. 003917N)
Arun Agarwal
Place: Delhi (Partner)
Date: 25/05/2016 M. No. 082899

Annexure A to Independent Auditors' Report

Referred to Paragraph 1 under the heading of "Report on Other Legal and RegulatoryRequirements" of our report of even date

(i) (a) The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets.

(b) The Company has a regular programme of physical verification of its fixed assets bywhich fixed assets are verified in a phased manner over a period of three years. Inaccordance with this programme certain fixed assets were verified during the year and nomaterial discrepancies were noticed on such verification. In our opinion this periodicityof physical verification is reasonable having regard to the size of the Company and thenature of its assets.

(c) According to the information and explanations given to us and on the basis of ourexamination of the records of the Company the title deeds of immovable properties areheld in the name of the Company.

(ii) (a) The Company has carried out a physical verification of inventory at the yearend. In our opinion frequency of physical verification is reasonable.

(b) In our opinion and according to the information and explanations given to us theprocedures of physical verification of inventories followed by the management arereasonable and adequate in relation to the size of the Company and nature of its business.

(c) On the basis of our examination of the inventory records in our opinion theCompany is maintaining proper records of inventory. Further as per the information andexplanations given to us the discrepancies noticed on physical verification ofinventories as compared to book records were not material and the same have been dealtwith in the books of account.

(iii) In our opinion and according to the information and explanations given to us theCompany has not granted any loans secured or unsecured to companies firms or otherparties covered in the register maintained under section 189 of the Companies Act 2013.Accordingly paragraphs 3 (iii) (a) (b) and (c) of the order are not applicable.

(iv) In our opinion and according to the information and explanations given to us theCompany has complied with the provisions of section 185 and 186 of the Act with respectto the loans and investments made.

(v) The Company has not accepted any deposits from the public.

(vi) As per the information and explanations given to us the maintenance of costrecords has not been prescribed by the Central Government under section 148(1) of theCompanies Act 2013 for services rendered by the Company.

(vii) (a) According to the information and explanations given to us and on the basis ofour examination of the books of account of the Company amount deducted/accrued in thebooks of account in respect of undisputed statutory dues including Provident Fund IncomeTax Sales tax Service Tax Custom Duty Value Added Tax Cess and any other statutorydues have been regularly deposited during the year by the Company with appropriateauthorities. As explained to us the Company did not have any dues on account ofemployees' state insurance and duty of excise.

According to the information and explanation given to us and on the basis of ourexamination of the books of accounts no undisputed amounts payable in respect ofProvident Fund Income Tax Sales tax Service Tax Custom Duty Value Added Tax Cess andany other statutory dues were in arrears as at 31 March 2016 for a period more than sixmonths from the date they became payable.

(b) According to the information and explanations given to us the following dues ofIncome tax sales tax service tax have not been deposited by the Company on account ofdisputes:

Sl. No. Name of Statue Nature of dues Forum where dispute is pending Period to which amount relates Amount (Rs In Lakhs)
1. Income Tax Act 1961 Income Tax CIT (Appeals) 2011-12 2012-13 133.04
2. Income Tax Act 1961 TDS Under section 201(1) CIT (Appeals) 2008-09 0.32
3. Income Tax Act 1961 Interest Supreme Court 2005-06 105.37
4. Income Tax Act 1961 Income Tax Appellate Tribunals 2001-02 2003-04 2009-10 2010-11 363.37
5. Finance Act 1994 and Service Tax Laws Service Tax CESTAT 01.04.2002 to 17.04.2006 62.87
6. Sales Tax Sales Tax Sales Tax Tribunal Agra 1999-00 2000-01 248.65
7. Sales Tax Entry Tax Sales Tax Tribunal Agra 1999-00 13.70

(viii) The Company does not have any loan or borrowings from any financial institutionbank government or debenture holders during the year. Accordingly paragraph 3(viii) ofthe order is not applicable.

(ix) The Company did not raise any money by way of initial public offer or furtherpublic offer (including debt instruments) and term loans during the year. Accordinglyparagraph 3 (ix) of the Order is not applicable.

(x) According to the information and explanation given to us by the management a fraudwas committed by employees and officers of the Company by relaxing the bid qualificationcriteria in connivance with the bidding contractor and helping him to qualify and beg thetenders/ contracts worth Rs 180000 lakhs from clients for whom company is a consultant.The management does not envisage any financial liabilities in this regard. (Refer note no.2.47 (a) to the standalone financial statements).

(xi) According to the information and explanations give to us and based on ourexamination of the records of the Company the Company has paid/provided for managerialremuneration in accordance with the requisite approvals mandated by the provisions ofsection 197 read with Schedule V to the Act.

(xii) In our opinion and according to the information and explanations given to us theCompany is not a nidhi company. Accordingly paragraph 3(xii) of the Order is notapplicable.

(xiii) According to the information and explanations given to us and based on ourexamination of the records of the Company transactions with the related parties are incompliance with sections 177 and 188 of the Act where applicable and details of suchtransactions have been disclosed in the financial statements as required by the applicableaccounting standards.

(xiv) According to the information and explanations give to us and based on ourexamination of the records of the Company the Company has not made any preferentialallotment or private placement of shares or fully or partly convertible debentures duringthe year.

(xv) According to the information and explanations given to us and based on ourexamination of the records of the Company the Company has not entered into non-cashtransactions with Directors or persons connected with him. Accordingly paragraph 3(xv) ofthe Order is not applicable.

(xvi) The Company is not required to be registered under section 45-IA of the ReserveBank of India Act 1934.

For Arun K Agarwal & Associates
Chartered Accountants
(Firm's Registration No. 003917N)
Arun Agarwal
Place: Delhi (Partner)
Date: 25/05/2016 M. No. 082899

Annexure B to Independent Auditors' Report

Referred to Paragraph 2 under the heading of "Report on Other Legal and RegulatoryRequirements" of our report of even date According to the information andexplanations given to us we report as under:

S.No. Areas Examined Observations/Findings
1. Whether the Company has clear title/lease deeds for freehold and leasehold properties respectively Rs If not please state the area of freehold and leasehold land for which title/lease deeds are not available. During the year the Internal Audit Department of the Company was given the task to verify the title/lease deed of all freehold and leasehold properties. No material discrepancies were observed in their report. Further we have also verified the title/lease deeds of the properties on test check basis and no material discrepancies were observed.
2. Whether there are any cases of waiver/write off of debts/ loans/ interest etc. if yes the reasons there of and amount involved. As per the records and information provided to us there is waiver/write off of Rs 168.57 lakhs during the year out of which Rs 166.54 Lakhs is on account of bad debts written off and Rs 2.03 Lakhs on account of deposits written off. The management is of the view that despite consistent follow up no recovery of these debts have been made.
3. Whether proper records are maintained for inventories a. There are no inventories lying with third parties.
lying with third parties & assets received as gifts/grants from the Govt. or other authorities. b. The Company has not received any assets as gifts from Govt. or other authorities.
4. Independent verification may be made of information/ inputs furnished to Actuary viz number of employees average salary retirement age and assumptions made by actuary regarding discount rate future cost increase mortality rate etc for arriving at the provision for liability of retirement benefits viz gratuity leave encashment post retirement medical benefits etc. We have independently verified the information furnished to actuary.

 

For Arun K Agarwal & Associates
Chartered Accountants
(Firm's Registration No. 003917N)
Arun Agarwal
Place: Delhi (Partner)
Date: 25/05/2016 M. No. 082899

Annexure C to Independent Auditors' Report

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

We have audited the internal financial controls over financial reporting of EngineersIndia Limited ("the Company") as of 31 March 2016 in conjunction with our auditof the 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 ("ICAI"). Theseresponsibilities include the design implementation and maintenance of adequate internalfinancial controls that were operating effectively for ensuring the orderly and efficientconduct of its business including adherence to company's policies the safeguarding ofits assets the prevention and detection of frauds and errors the accuracy andcompleteness of the accounting records and the timely preparation of reliable financialinformation as required under the Companies Act 2013.

Auditors' 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 issued by ICAI and deemedto be prescribed under section 143(10) of the Companies Act 2013 to the extentapplicable to an audit of internal financial controls both applicable to an audit ofInternal Financial Controls and both issued by the Institute of Chartered Accountants ofIndia. Those Standards and the Guidance Note require that we comply with ethicalrequirements and plan and perform the audit to obtain reasonable assurance about whetheradequate internal financial controls over financial reporting was established andmaintained and if such controls operated effectively 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 judgment 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 Company's internal financial controls systemover financial reporting.

Meaning of Internal Financial Controls over Financial Reporting

A company's internal financial control over financial reporting is a process designedto provide reasonable assurance regarding the reliability of financial reporting and thepreparation of financial statements for external purposes in accordance with generallyaccepted accounting principles. A company's internal financial control over financialreporting includes those policies and procedures that (1) pertain to the maintenance ofrecords that in reasonable detail accurately and fairly reflect the transactions anddispositions of the assets of the Company; (2) provide reasonable assurance thattransactions are recorded as necessary to permit preparation of financial statements inaccordance with generally accepted accounting principles and that receipts andexpenditures 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 31 March 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 Arun K Agarwal & Associates
Chartered Accountants
(Firm's Registration No. 003917N)
Arun Agarwal
Date: 25/05/2016 (Partner)
Place: Delhi M.No:082899