TO THE MEMBERS OF ENVAIR ELECTRODYNE LIMITED
Report on the Financial Statements
We have audited the accompanying financial statements of Envair Electrodyne Limited("the Company") which comprise the Balance Sheet as at March 31 2017 and 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 with theaccounting principles generally accepted in India including the Accounting Standardsreferred to in section 133 of the Companies Act 2013 read with Rule 7 of the Companies(Accounts) Rules 2014 and amendments there of. This responsibility also includesmaintenance of adequate accounting records in accordance with the provisions of the Actfor safeguarding of the assets of the Company and for preventing and detecting frauds andother irregularities; 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.
Our responsibility is to express an opinion on these financial statements based on ouraudit. We have taken into account the provisions of the Act the accounting and auditingstandards and matters which are required to be included in the audit report under theprovisions of the Act and the Rules made there under.
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 anddisclosures in the financial statements. The procedures selected depend on the auditor'sjudgment including the assessment of the risks of material misstatement of the financialstatements whether due to fraud or error. In making those risk assessments the auditorconsiders internal control relevant to the Company's preparation of the financialstatements in order to design audit procedures that are appropriate in the circumstances.An audit also includes evaluating the appropriateness of accounting policies used and thereasonableness of the accounting estimates made by the Company's Directors as well asevaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our qualified audit opinion on the standalone financial statements.
Basis for Qualified Opinion
(a) The Company has not been made adequate provision for non-recoverability forreceivables and advances remaining unrecovered and unconfirmed for a long period of time.Although the management has not ascertained this amount the same may extend to 77.30lakhs. Had this provision been made the loss for the year would have been higher by thisextent and consequently Shareholder Funds would have been lower by the same amount.
(b) Provision for gratuity and leave encashment has been made on accrual basis insteadof on actuary valuation basis as is required by Accounting Standards 15 "EmployeeBenefits" and the required disclosures have also not been made in the Notes toAccounts. The effect of the same has not been ascertained.
In our opinion and to the best of our information and according to the explanationsgiven to us except for the effects of the matter described in the Basis for QualifiedOpinion paragraph above the aforesaid 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:
(a) in the case of the Balance Sheet of the state of affairs of the Company as atMarch 31 2017;
(b) in the case of the Statement of Profit and Loss of the Loss for the year ended onthat date; and
(c) in the case of the Cash Flow Statement of the cash flows for the year ended onthat date.
Emphasis of Matter
We draw attention to Note No. 25.3 of the financial statements explaining the basis ofpreparation of financial statements on going concern assertions though the company ishaving accumulated losses.This report is not qualified in this matter.
Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditor's Report) Order 2016 ('the Order') issued bythe Central Government of India in terms of sub section (11) of section 143of theCompanies Act 2013 we give in the Annexure a statement on the matters specified in theOrder.
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. Except for the matters described in the basis for qualified opinion paragraph inour opinion proper books of account as required by law have been kept by the Company sofar as it appears from our examination of those books;
c. The Balance Sheet Statement of Profit and Loss and Cash Flow Statement dealt withby this Report are in agreement with the books of account;
d. Except for the matters described in the basis for qualified opinion paragraph inour opinion the aforesaid standalone financial statements comply with the AccountingStandards specified under section 133 of the Companies Act 2013 read with Rule 7 ofCompanies (Accounts) Rules 2014 and amendments thereof;
e. Except for the matters described in the basis for qualified opinion paragraph andpoints reported in Annexure A of this audit report as well as points mentioned inCompanies (Auditor's Report) Order 2016 issued by the Central Government of India thereare no observations and comments on financial transactions or other matters which have anadverse effect on the functioning of the Company.
f. On the basis of written representations received from the directors as on March 312017 and taken on record by the Board of Directors none of the directors is disqualifiedas on March 31 2017 from being appointed as a director in terms of section 164(2) of theCompanies Act 2013.
g. 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 A".
h. The qualification relating to maintenance of accounts and other matters connectedtherewith are as stated in the basis for Qualified Opinion paragraph above.
i. 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 does not have any pending litigations having any impact on thefinancial position in its financial statements except disclosed in Notes 25.2of financialstatements.
ii. The company did not have any long term contract including derivative contracthaving any material foreseeable losses for which provision was required to be made underthe applicable law or accounting standard.
iii. There are no amounts required to be transferred to the Investor Education andProtection Fund by the Company.
iv. The company has provided requisite disclosures in its financial statements as toholdings as well as dealings in Specified Bank Notes (SBN) during the period from 8thNovember 2016 to 30th December 2016 based on audit procedures and relying on managementrepresentation these are in accordance with the books of accounts maintained by thecompany refer disclosure in Note No.25.22 of Financial statements.
Referred to in paragraph 1 of our "Report on Other Legal and RegulatoryRequirements"on even date
(i) (a) The company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets.
(b) The fixed assets have been physically verified by the management at reasonableintervals with regard to size of the company and nature of its assets. According toinformation and explanation given to us no material discrepancies were noticed on suchverification.
(c) According to records of the company examined by us the title deeds of immovableproperties are held in the name of the company.
(ii) (a) The management has conducted physical verification of inventory at reasonableintervals. In our opinion the frequency of verification is reasonable.
(b) According to information and explanation given to us the procedures of physicalverification of inventory followed by management are reasonable and adequate in relationto the size of the company and the nature of its business.
(c) The company is maintaining reasonably proper records showing quantitative detailsof inventory. As informed to us the discrepancies noticed on verification betweenphysical stock and book records have been properly dealt with accounts.
(iii) As informed to us the company has not granted secured or unsecured loan to othercompanies firms or other parties covered in the register maintained under Section 189 ofthe Companies Act 2013.
(iv) As informed to us the Company has not entered into any transaction which attractsthe provisions of section 185 and 186 of the Companies Act 2013.
(v) In our opinion and according to information and explanation given to us theCompany has not accepted public deposits hence the directive issued by the Reserve Bankof India and the provisions of sections 73 to 76 or any other relevant provisions of theCompanies Act and the rules framed there under are not applicable to it. According toinformation and explanation given to us no order has been passed against the company byCompany Law Board or National Company Law Tribunal or Reserve Bank of India or any courtor any other tribunal.
(vi) To the best of our information and as per the explanation given to us the CentralGovernment has not prescribed the maintenance of cost audit records U/s 148(1) of theCompanies Act 2013.
(vii) (a) According to information and explanation given to us and the records of thecompany examined by us the company is generally regular in depositing with appropriateauthorities undisputed statutory dues including income tax service tax and other materialstatutory dues applicable to it except in some of the cases delay in payment has beenobserved.
According to information and explanation given to us no undisputed amounts payable inrespect of statutory dues were in arrears as at 31st March 2017 for a period of more thansix months from the date they became payable except amount payable with respect to LWF of1872/- WCT VAT 28906/- LBT of 87511/- and Property Tax of 131536/-.
(b) According to information and explanation given to us the particulars of dues ofincome tax sales tax service tax custom duty excise duty and cess as at 31st March2017 which has not been deposited on account of disputes are as follows:
|Name of the Statute ||Nature of Dues ||Period to which amount relates ||Amount (Rs) under dispute not paid ||Forum where dispute is pending |
|Maharashtra Value Added Tax Act 2002 & Central Sales Tax ||CST liability ||F.Y. 2010-11 ||5304454/- ||Asst. Commissioner of Sales Tax Pune. |
|Maharashtra Value Added Tax Act 2002 ||VAT liability ||F.Y. 2010-11 ||2351802/- ||Dy. Commissioner of Sales Tax Pune. |
|Maharashtra Value Added Tax Act 2002 & Central Sales Tax ||CST liability ||F.Y. 2011-12 ||453820/- ||Asst. Commissioner of Sales Tax Pune. |
|Income Tax Act 1961 ||Dispute relating to Income tax ||A.Y. 2013-14 ||8089830/- ||Dy. Commissioner of Sales Tax Pune. |
(viii) Based on our audit procedures and on the information and explanation given tous we are of the opinion that the company has not defaulted in repayment of loans orborrowings to financial institution bank Government.
(ix) According to the information and explanation given to us the company has notavailed any term loan during the year. Accordingly the Provisions of clause 3(ix) of theCompanies (Auditor's Report) Order 2016 are not applicable to the company.
(x) During the course of our examination of the books & records of the companycarried out in accordance with the generally accepted auditing Practices in India andaccording to the information and explanation given to us we have neither come across anyinstances of fraud on or by the company noticed or reported during the year nor have webeen informed of such case by Management.
(xi) According to the information and explanation given to us managerial remunerationfor the year has been paid or provided in accordance with the requisite approvals mandatedby the provisions of section 197 read with schedule V to the Companies Act 2013.
(xii) In our opinion the company is not a Nidhi company. Accordingly the provisionsspecified in Paragraph 3(xii) of Companies (Auditor's Report) order 2016 are notapplicable to the company.
(xiii) According to the information and explanation given to us and in our opiniontransactions with related parties are in compliance with Section 177 and 188 of theCompanies Act 2013 and requisite details have been disclosed in the Financial Statementsas required by the applicable accounting standards.
(xiv) According to the information and explanation given to us the company has notmade any preferential allotment or private placement of shares or fully or partlyconvertible debentures for raising funds during the year. Accordingly the provisionsspecified in Paragraph 3(xiv) of Companies (Auditor's Report) order 2016 are notapplicable to the company.
(xv) According to the information and explanation given to us the company has notentered into any non-cash transaction with directors or persons connected with him withinthe meaning of the provisions of Section 192 of Companies Act 2013. Accordingly theprovisions specified in Paragraph 3(xv) of Companies (Auditor's Report) order 2016 arenot applicable to the company.
(xvi) In our opinion the company is not required to be registered under section 45-IAof the Reserve Bank of India Act 1934 so the provisions in Paragraph 3(xvi) ofCompanies (Auditor's Report) order 2016 are not applicable.
Annexure A to the Independent Auditor's Report of even date on the Standalone FinancialStatements of Envair Electrodyne Limited.
Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section143 of the Act
We were engaged to audit the internal financial controls over financial reporting ofEnvair Electrodyne Limited ("the Company") as of March 31 2017 in conjunctionwith our audit of the standalone financial statements of the Company for the year ended onthat 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). These responsibilitiesinclude the design implementation and maintenance of adequate internal financial controlsthat were operating effectively for ensuring the orderly and efficient conduct of itsbusiness including adherence to 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.
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 deemed to be prescribedunder Section 143(10) of the Act to the extent applicable to an audit of internalfinancial controls both applicable to an audit of internal financial controls and bothissued by the ICAI. Those Standards and the Guidance Note require that we comply withethical requirements and plan and perform the audit to obtain reasonable assurance aboutwhether adequate 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 of materialmisstatement of the financial statements whether due to fraud or error.
Because of the matter described in Disclaimer of Opinion paragraph below we were notable to obtain sufficient appropriate audit evidence to provide a basis for an auditopinion on internal financial controls system over financial reporting of the Company.
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 authorizations ofmanagement and directors of the company; and (3) provide reasonable assurance regardingprevention or timely detection of unauthorized 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.
Disclaimer of Opinion
Framework for Internal Financial Control over Financial Reporting not established butdoes not impact the audit opinion on Financial Statements.
According to the information and explanation given to us the company has notestablished its Internal Financial Control over financial reporting on criteria based onor considering the essential components of internal controls stated in the Guidance Noteon Audit of Internal Financial Controls over Financial Reporting issued by the Instituteof Chartered Accountants of India.
Because of this reason we are unable to obtain sufficient appropriate audit evidenceto provide a basis for our opinion whether the company had adequate Internal FinancialControls over Financial Reporting and whether such Internal Financial Controls wereoperating effectively as at March 31 2017.
We have considered the disclaimer reported above in determining the nature timing andextent of audit tests applied in our audit of the Standalone Financial Statements of thecompany and the disclaimer does not affect our opinion on Standalone Financial Statementsof the company.
FOR M/S P. G. BHAGWAT
Firm Registration Number 101118W
Membership No.: 117695