To the Members of Indo Tech Transformers Limited
Report on the Financial Statements
We have audited the accompanying financial statements of Indo Tech TransformersLimited (the Company') which comprise the balance sheet as at March 31 2017the statement of profit and loss and the cash flow statement for the year then ended anda 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 Section134(5) of the Companies Act 2013 ("the Act") with respect to the preparation ofthese financial statements that give a true and fair view of the financial positionfinancial performance and cash flows of the Company in accordance with the accountingprinciples generally accepted in India including the Accounting Standards specified underSection 133 of the Act read with Rule 7 of the Companies (Accounts) Rules 2014. Thisresponsibility also includes maintenance of adequate accounting records in accordance withthe provisions of the Act for safeguarding the assets of the Company and for preventingand detecting frauds and other irregularities; selection and application of appropriateaccounting policies; making judgments and estimates that are reasonable and prudent; anddesign implementation and maintenance of adequate internal financial controls that wereoperating effectively for ensuring the accuracy and completeness of the accountingrecords relevant to the preparation and presentation of the financial statements thatgive a true and fair view and are free from material misstatement whether due to fraud orerror.
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 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.
In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid 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 2017 and its loss and its cash flows for the year ended on that date.
Emphasis of matter
We draw attention to note 2(a) to the financial statements which more fully discussesthe going concern related matters. Based on the current business plans commitment by theholding company to provide financial and other assistance as is necessary to enable theCompany to continue in operational existence for the foreseeable future at least for aperiod of 12 months from the balance sheet date and availability of banking limits theCompany believes that it would be able to meet its financial requirements and noadjustments would be required in respect of the carrying value of assets/liabilities.Accordingly the financial statements have been prepared on a going concern basis. Ouropinion 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 sub-section (11) of section 143 ofthe Companies Act we enclose in Annexure A' a statement on the mattersspecified 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 thebest 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 bythe Company so far as it appears from our examination of those books.
(c) The balance sheet the statement of profit and loss and the statement ofcash flow dealt with by this report are in agreement with the books of account.
(d) In our opinion the aforesaid financial statements comply with the AccountingStandards specified under Section 133 of the Act read with Rule 7 of the Companies(Accounts) Rules 2014.
(e) The going concern matter described in the Emphasis of Matter paragraph abovein our opinion may have an adverse effect on the functioning of the Company. (f) Onthe basis of the written representations received from the directors as on March 31 2017taken on record by the Board of Directors none of the directors is disqualified as onMarch 31 2017 from being appointed as a director in terms of Section 164 (2) of the Act.
(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 B".
(h) 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. theCompany has disclosed the impact of pending litigations on its financial position in itsfinancial statements Refer Note 26 to the financial statements.
ii. the Company did not have any long-term contracts including derivative contractsfor which there were any material foreseeable losses. iii. there has been no delayin transferring amounts which were required to be transferred to the Investor Educationand Protection Fund by the Company. iv. the Company did not have any holdings ordealings in Specified Bank Notes during the period from November 08 2016 to December 302016 Refer Note 38 to the financial statements.
Annexure A to Independent Auditors' Report Referred to in our IndependentAuditors' Report of even date to the members of Indo Tech Transformers Limited on thefinancial statements as of and for the year ended March 31 2017 i. (a) The Companyhas maintained proper records showing full particulars including quantitative details andsituation of fixed assets.
(b) The Company has a regular program of physical verification of its fixed assets bywhich all fixed assets are verified in a phased manner over a period of two years. In ouropinion this periodicity of physical verification is reasonable having regard to the sizeof the company and the nature of its assets. No material discrepancies were noticed onsuch verification.
(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 except for one number of immovable property amounting Rs13.2 lakhs as at March 31 2017 for which the Company is in process of obtainingregistration.
ii. (a) The inventory except certain goods-in-transit and stocks lying with thirdparties has been physically verified by the management during the period. In our opinionthe frequency of such verification is reasonable. For major portion of stocks lying withthird parties at the year end written confirmations have been obtained by the Company.
(b) The inventory has been physically verified by the management during the year. Theprocedures of physical verification of inventory followed by the management are reasonableand adequate in relation to the size of the Company and the nature of its business. In ouropinion the frequency of verification is reasonable. The discrepancies noticed onverification between physical stock and book records were not material.
iii. In our opinion and according to the information and explanation given to us theCompany has not granted any loans secured or unsecured to companies firms limitedliability partnerships or other parties covered in the register maintained under Section189 of the Act. Accordingly paragraph 3 (iii) of the Order is not applicable to theCompany.
iv. The Company has not granted any loans or made any investments or provided anyguarantee or security to the parties covered under Section 185 and 186 of the Act.Accordingly paragraph 3(iv) of the Order is not applicable to the Company.
v. The Company has not accepted any deposits from the public within the meaning ofSections 73 to 76 or any other relevant provisions of the Act and the rules framedthereunder.
vi. W e have broadly reviewed the books of account maintained by the Company in respectof products where pursuant to the rules made by the Central Government of India themaintenance of cost records has been specified under sub-section (1) of Section 148 of theAct and are of the opinion that prima faciethe prescribed accounts and recordshave been made and maintained. However we have not made a detailed examination of therecords.
vii. (a) According to the information and explanations given to us and on the basis ofan examination of the records of the Company in our opinion amount deducted/accrued inthe books of account in respect of undisputed statutory dues including provident fundemployees' state insurance income tax sales tax service tax duty of customs duty ofexcise value added tax and other statutory dues have generally been regularly depositedduring the year by the Company with the appropriate authorities except in respect ofincome tax deductible at source estimated at Rs 42.8 lakhs which has not beendeducted/paid .
According to the information and explanations given to us no undisputed amountspayable in respect of provident fund employees' state insurance income tax sales taxservice tax duty of customs duty of excise value added tax and other statutory dueswere in arrears as at March 31 2017 for a period of more than six months from the datethey became payable.
(b) According to the information and explanations given to us the dues relating toincome tax sales tax duty of excise and duty of customs that have not been deposited bythe Company with the appropriate authorities on account of disputes are given below.
|Name of the statute ||Nature of the dues ||Amount (Rs) ||Period to which the amount relates ||Forum where the dispute is pending |
|The Customs Act 1962 ||Customs duty ||1417317* ||FY 2004-05 ||Custom Excise and Service Tax Appellate Tribunal Chennai |
|The Central Sales Tax Act 1956 ||Central sales tax ||441618 ||FY 1996-97 ||Madras High Court |
|The Central Sales Tax Act 1956 ||Central ||362608^ ||FY 2005-06 ||Assistant Commissioner of |
| ||sales tax || ||FY 2006-07 ||Commercial Taxes Chennai |
|Tamil Nadu General Sales Tax Act 1959 ||Penalty ||15607 ||FY 1996-97 ||Commissioner of |
| || || || ||Commercial Tax Appeals |
|Tamil Nadu Value Added Tax Act 2006 ||Sales tax ||1411682@ ||AY 2006-07 2007- 08 2008-09 and 2009-10 ||Appellant Deputy Commissioner of Commercial Taxes |
|Central Excise Act 1944 ||Excise duty ||14602445 ||FY 2008-09 to December 2012 ||Custom Excise and Service Tax Appellate Tribunal Chennai |
|Central Excise Act 1944 ||Excise duty ||6867642 ||January 2012 to December 2013 and March 2014 to March 2015 ||Joint Commissioner of Central Excise Chennai |
|Central Excise Act 1944 ||Excise duty ||6646290 ||December 2014 to December 2015 ||Additional Commissioner of Central Excise |
|Central Excise Act 1944 ||Excise duty ||1679536 ||March 2011 ||Additional Commissioner of Service Tax |
|Income-tax Act 1961 ||Income tax ||1879032 ||AY 2005-06 ||Income Tax Appellate Tribunal |
|Income-tax Act 1961 ||Income tax ||6351833 ||AY 2006-07 ||Commissioner of Income Tax (Appeals) |
* net of Rs 1272500 paid under protest ^ net of Rs 2500000 paid under protest @ netof Rs 554793 paid under protest
viii. In our opinion and according to the information and explanations given to us theCompany has not defaulted in repayment of dues to its bankers. The Company does not haveany outstanding loan or borrowings from any financial institutions government ordebenture holders during the year.
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 explanations given to us no material fraud by theCompany or on the Company by its officers or employees has been noticed or reported duringthe course of our audit.
xi. According to the information and explanations give to us and based on ourexamination of the records the Company has paid/ provided for managerial remuneration inaccordance with the requisite approvals mandated by the provisions of section 197 readwith Schedule V to the Act. xii. In our opinion and according to the information andexplanation given to us the Company is not a nidhi company. Accordingly paragraph 3(xii)of the order is not applicable.
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. The details of suchrelated party transactions have been disclosed in the financial statements as requiredunder Accounting Standards (AS) 18 Related Party disclosures specified under section 133of the Act read with Rule 7 of the Companies (Accounts) Rules 2014.
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 them. Accordingly paragraph 3(xv)of the Order is not applicable.
xvi. In our opinion and according to the information and explanation given to us theCompany is not required to be registered under section 45-IA of the Reserve Bank of India1934. Accordingly paragraph 3(xvi) of the order is not applicable.
Annexure - B to the Independent Auditors' Report Referred to in our IndependentAuditors' Report of even date to the members of Indo Tech Transformers Limited on thefinancial statements as of and for the year ended March 31 2017
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 Indo TechTransformers Limited ("the Company") as of 31 March 2017 in conjunction with ouraudit of the 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.
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 or our audit opinion on the Company's internal financial controls systemover financial reporting.
Meaning of Internal Financial Controls over Financial
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
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 31 March 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 B S R & Co. LLP
ICAI Firm Registration Number: 101248W/ W-100022
Membership No. 078305
Date : May 17 2017