The Members of
GARG FURNACE LIMITED
Report on the Financial Statements
We have audited the accompanying standalone Financial Statements of Garg FurnaceLimited ("the Company") Kanganwal Road V.P.O. Jugiana G. T. Road Ludhianawhich comprise the Balance Sheet as at March 31 2017 the Profit and Loss Statement andCash Flow Statement for the year then ended and a summary of significant accountingpolicies and other explanatory information.
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 Act2013 ("the Act") with respect to the preparation andpresentation of these Standalone financial statements that give a true and fair view ofthe financial position financial performance and Cash flows of the Company in accordancewith the Accounting principles generally accepted in India including the AccountingStandards specified under Section 133 of the Companies Act 2013 read with rule 7 of theCompanies (Accounts) Rules2014. This responsibility also includes maintenance of adequateaccounting records in accordance with the provisions of the Act for safeguarding theassets of the company and for preventing and detecting frauds and other irregularities;selection and application of appropriate accounting policies; making judgments andestimates that are reasonable and prudent; and the design implementation and maintenanceof adequate internal financial controls that were operating effectively for ensuring theaccuracy and completeness of the accounting records relevant to the preparation andpresentation of the consolidated financial statements that give a true and fair view andare free from material misstatement whether due to fraud or error.
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 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 Companies Act 2013("the Act"). Those Standards requirethat we comply with ethical requirements and plan and perform the audit to obtainreasonable assurance about whether the financial statements are free from materialmisstatements.
An audit involves performing procedures to obtain audit evidence about the amounts anddisclosures in the financial statements. The procedures selected depend on auditor'sjudgment including 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 and fair presentation ofthe financial statements in order to design audit procedures that are appropriate in thecircumstances but not for the purpose of expressing an opinion on whether the Company hasin place an adequate internal financial controls system over financial reporting and theoperating effectiveness of such controls. An auditor also includes evaluating theappropriateness of accounting policies used and the reasonableness of the accountingestimates made by management as well as evaluating the overall presentation of thefinancial statements.
We believe that audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the Standalone financial statements.
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 March 31 2017 and profit/loss and its cash flows for the year ended on that date.
Emphasis of Matter
We draw attention to the following: a) The company has not provided for the interest onborrowings amounting to Rs. 1671.62 lacs pertaining to year ended 31st March 2017.
b) The earning (loss) per share for the year ended 31st March 2017 would have been Rs.(75.51) against reported earning (loss) per share of Rs. (33.81).
c) Note 30 to the financial statements which describes the uncertainty related tooutcome of appeal filled by the Company against demand of Punjab Power Corporation Ltd& appeal filled against demand by Income Tax Authority.
d) The company has not arranged to make available the confirmations and/orreconciliations to verify the balances stated in the financial statements in respect ofTrade Receivables Loans & Advances & Trade payables.
Basis for Qualified Opinion
Further we report that
(I) Note No. 34 to the financial statements which says that as required by sec 138of the Companies Act 2013 read with rule 13 to appoint internal auditor and as requiredby sec 203 of the Companies Act 2013 read with Companies (Appointment and Remuneration ofManagerial Personnel) Rules 2014 to appoint the company secretary company has not complywith these requirements.
(ii) The management of the company has represented to us that the recoverable amount ofassets within the meaning of Accounting Standard 28 Impairment of Assets ismore than their carrying value and as such no amount needs to be recognized in thefinancial statements for impairment loss. In the absence of the workings of impairmenthaving been prepared and made available to us for our review we are unable to comment onwhether the company needs to make a provision in respect of impairment loss on such assetsand the amount of such provision.
In our opinion and to the best of our information and according to the explanationsgiven to us subject to our comments in above paragraph the aforesaidstandalone financial statements give the information required by the Act in the manner sorequired and give a true and fair view in conformity with the accounting principlesgenerally accepted in India of the state of affairs of the Company as at March 31 2017and its loss 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 ("the Order")issued by the Central Government of India in terms of sub-section (11) of section 143 ofthe Act we give in the 'Annexure A' a statement on the matters specified in paragraph 3and 4 of the Order.
2. As required by section 143(3) of the Act we report that:
a) We have sought & obtained all the information and explanations which to the bestof our knowledge and belief were necessary for the purpose of our audit.
b) In our opinion proper books of account as required by law have been kept by theCompany so far as 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 Companies Act2013 read with rule7 of the Companies (Accounts) Rules 2014.
e) On the basis of the written representations received from the directors as on March31 2017 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.
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 B.
g) With respect to other matters to be included in the Auditor's Report in accordancewith Rule 11 of the Companies (Audit and Auditors) Rules 2014 in our opinion and to thebest of our information and according to explanations given to us:
i) The Company has disclosed the impact of pending litigations on its financialpositions in its financial statements as referred to in note 30 to its financialstatements.
ii) The Company does not have any long-term contracts including derivative contractsfor which there were any material foreseeable losses.
iii) There were no amount which were required to be transferred to Investor Educationand Protection Fund by the company.
iv) The Company has provided requisite disclosures in the standalone financialstatements as to holding as well as dealings in Specified Bank Notes during the periodfrom 8th November 2016 to 30th December 2016on the basis of information available with theCompany. Based on audit procedures and relying on management's representation we reportthat disclosures are in accordance with the books of accounts maintained by the Companyand as produced to us by the Management. - Refer Note 41.
| ||For Pawan Puri & Associates |
|Place: LUDHIANA. ||Chartered Accountants |
|Date : 30-05-2017 ||FRN. 005950N |
| ||Alok Kalia |
| ||Partner |
| ||M. No.528412 |
ANNEXURE A TO THE INDEPENDENT AUDITORS' REPORT
(Referred to in Paragraph 1 under the Heading of "Report on Other Legal andRegulatory Requirements' of our Audit Report of Even Date)
(I) a). The company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets.
b). All the assets have not been physically verified by the management during the yearbut 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). The title deeds of immovable properties are held in the name of the company.
(ii) a) The management has conducted the physical verification of inventory atreasonable intervals.
b) The discrepancies noticed on physical verification of the inventory as compared tobooks records which has been properly dealt with in the books of account were notmaterial.
(iii) According to the information and explanations given to us and on the basis of ourexamination of the books of accounts the company has not granted any loans secured orunsecured to companies firms or other parties listed in the register maintained undersection 189 of the companies Act 2013. Consequently the provisions of clauses iii (a) to(C) of the order are not applicable to the company.
(iv) In our opinion and according to the information and explanations given to us thecompany has not given any loans investments guarantees and security under theprovisions of section 185 and 186 of the Companies Act 2013. Accordingly the provisionsof clause 3 (iv) of the Order are not applicable to the Company.
(v) According to the information and explanations given to us the Company has notaccepted any deposits from the public and hence the directives issued by the Reserve Bankof India and the provisions of Sections 73 to 76 or any other relevant provisions of theAct and the Companies (Acceptance of Deposit) Rules 2015 with regard to the depositsaccepted from the public are not applicable.
(vi) We have broadly reviewed the books of account relating to materials labour andother items of cost maintained by the company pursuant to the Rules made by the CentralGovernment for the maintenance of cost records under section 148(1) of the Companies Act2013 and we are of the opinion that prima facie the prescribed accounts and records havebeen made and maintained. We have however not made a detailed examination of the recordwith a view to determine whether they are accurate or complete.
(vii) a). The Company is regular in depositing with appropriate authorities undisputedstatutory dues including provident fund employees' state insurance income tax salestax custom duty excise duty cess service tax and other material statutory duesapplicable to it.
b). According to the information and explanations given to us there are no dues ofsales tax income tax custom duty excise duty cess and service tax which have not beendeposited on account of any dispute except mentioned below:
|Name of Statute ||Nature of Dues ||Forum where appeal is pending ||Period to which amount relates ||Amount involved in Rs |
|Income Tax Act1961 ||Income Tax ||ITAT ||A.Y 2008-09 ||29.00 Lacs |
|Income Tax Act1961 ||Income Tax ||ITAT ||A.Y 2010-11 ||10.00 Lacs |
|Income Tax Act1961 ||Income Tax ||ITAT ||A.Y 2011-12 ||12.11 Lacs |
(viii) According to the information and explanation given to us the company hasdefault in repayment of dues to banks and financial institutions. The detail of defaultare as under:
|Sr. No. ||Particulars ||Amount (in lacs) ||Nature of dues ||Date since overdue |
|1. ||Indian Bank - MTL1 ||17.64 ||Principal ||01.09.2015 |
| || ||11.98 ||Interest (Term Loan) || |
|2. ||Indian Bank - MTL2 ||43.75 ||Principal ||01.09.2015 |
| || ||27.24 ||Interest (Term Loan) || |
|3. ||Indian Bank - MTL3 ||62.88 ||Principal ||01.10.2015 |
| || ||6.91 ||Interest (Term Loan) || |
|4. ||Indian Bank - OCC ||143.30 ||Interest (Working Capital) ||01.12.2015 |
|5. ||Indian Bank - OCC Adhoc ||33.58 ||Interest (Working Capital) ||01.09.2015 |
|6. ||Indian Bank - LC/BC ||94.32 ||Interest (Working Capital) ||01.01.2016 |
(ix) In our opinion and according to the information & explanation given to us theterm loans have been applied for the purpose for which they were obtained.
(x) Based upon the audit procedures performed and the information and explanationsgiven by the management we report that no fraud by the Company or on the company by itsofficers or employees has been noticed or reported during the year.
(xi) Based upon the audit procedures performed and the information and explanationsgiven by the management the managerial remuneration has been paid or provided inaccordance with the requisite approvals mandated by the provisions of section 197 readwith Schedule V to the Companies Act;
(xii) In our opinion the Company is not a Nidhi Company. Therefore the provisions ofclause 4 (xii) of the Order are not applicable to the Company.
(xiii) In our opinion all transactions with the related parties are in compliance withsection 177 and 188 of Companies Act 2013 and the details have been disclosed in theFinancial Statements as required by the applicable accounting standards.
(xiv) Based upon the audit procedures performed and the information and explanationsgiven by the management the company has not made any preferential allotment or privateplacement of shares or fully or partly convertible debentures during the year underreview. Accordingly the provisions of clause 3 (xiv) of the Order are not applicable tothe Company. (xv)Based upon the audit procedures performed and the information andexplanations given by the management the company has not entered into any non-cashtransactions with directors or persons connected with him. Accordingly the provisions ofclause 3 (xv) of the Order are not applicable to the Company.
(xv) In our opinion the company is not required to be registered under section 45 IAof the Reserve Bank of India Act 1934 and accordingly the provisions of clause 3 (xvi)of the Order are not applicable to the Company.
| ||For Pawan Puri & Associates ||Alok Kalia |
|Place: LUDHIANA. ||Chartered Accountants ||Partner |
|Date : 30-05-2017 ||FRN. 005950N ||M. No.528412 |
"Annexure B" to the Independent Auditor's Report of even date on theStandalone Financial Statements of Garg Furnace Limited
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 GargFurnace Limited ("the Company") as of March 31 2017 in conjunction with ouraudit of the standalone financial statements of the Company for the year ended on thatdate.
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 company's policies the safeguarding of its assets the preventionand detection of frauds and errors the accuracy and completeness of the accountingrecords and the timely preparation of reliable financial information as required underthe 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 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 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 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 of records that in reasonable detail accurately andfairly reflect the transactions and dispositions of the assets of the company;
(2) provide reasonable assurance that transactions are recorded as necessary to permitpreparation of financial statements in accordance with generally accepted accountingprinciples and that receipts and expenditures of the company are being made only inaccordance with authorisations of management and directors of the company; and
(3) provide reasonable assurance regarding prevention or timely detection ofunauthorised acquisition use or disposition of the company's assets that could have amaterial 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.
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 2017 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 Pawan Puri & Associates ||Alok Kalia |
|Place: LUDHIANA ||Chartered Accountants ||Partner |
|Date : 30-05-2017 ||FRN. 005950N ||M. No.528412 |