Report on the Standalone Financial Statements
We have audited the accompanying standalone Ind AS financial statements of KirloskarBrothers Limited fthe Company")which comprise the Balance Sheet as at 31st March2017 the Statement of Profit and Loss (including OtherComprehensivelncome)theCashFIowStatementandtheStatementofChangesinEquityfortheyearthenendedand a summary of the significant accounting policies and other explanatory information.
Management's Responsibility for the Standalone Ind AS Financial Statements
The Companyi Board of Directors isresponsible forthe matters stated in Section 134(5)of the Companies Act 2013 ("the Act")with respect to the preparation of thesestandalone Ind AS financial statements that give a true and fair view of the financialposition financial performance cash flows and changes in equity of the Company inaccordance with the accounting principles generally accepted in India including theIndian Accounting Standards (Ind AS) specified under Section 133 of the Act read with theCompanies (Accounts) Rules 2014 and amendments thereof.
This responsibility also includes maintenance of adequate accounting records inaccordance with the provisions of the Act forsafeguarding of the assets of the Company andforpreventing and detecting frauds and other irregularities; selection and application ofappropriate accounting policies; making judgments and estimates that are reasonable andprudent; and design implementation and maintenance of adequate internal financialcontrols that were operating effectively forensuring the accuracy and completeness of theaccounting records relevant to the preparation and presentation of the standalone Ind ASfinancial statements that give a true and fair view and are free from materialmisstatement whether due to fraud orerror.
ourresponsibility is to express an opinion on these standalone Ind AS financialstatements based on ouraudit. We have taken into account the provisions of the Act theaccounting and auditing standards and matters which are required to be included in theaudit report under the provisions of the Act and the Rules made there under. We conductedouraudit of the standalone Ind AS financial statements in accordance with the Standards onAuditing specified under Section 143(10) of the Act. Those Standards require that wecomply with ethical requirements and plan and perform the audit to obtain reasonableassurance about whether the standalone Ind AS financial statements are free from materialmisstatement.
An audit involves performing procedures to obtain audit evidence about the amounts andthe disclosures in the standalone Ind AS financial statements. The procedures selecteddepend on the auditors1 judgment including the assessment of the risks of materialmisstatement of the standalone Ind AS financial statements whether due to fraud or error.In making those risk assessments the auditor considers internal financial controlrelevant to the Company's preparation of the standalone Ind AS financial statements thatgive a true and fair view in order to design audit procedures that are appropriate in thecircumstances. An audit also includes evaluating the appropriateness of the accountingpolicies used and the reasonableness of the accounting estimates made by the Company'sDirectors as well as evaluating the overall presentation of the standalone Ind ASfinancial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for ouraudit opinion on the standalone Ind AS financial statements.
In ouropinion and to the best of ourand according to the explanatiotis given to ustheaforesaid standalotie Ind AS 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 including the Ind AS of the state of affairs
(financial position) of the Company as at 31st March 2017and its profit (financialperformance including other comprehensive income) its cash flows and the changes inequity forthe year ended on that date.
Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditor's Report) order2016 ("theorder")issued by the Central Government of India in terms of sub-section (11)ofSection 143 of the Companies Act2013 we give in the "Annexure A'a statement on thematters specified in paragraphs 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 ourknowledge and belief were necessary for the purposes of ouraudit.
(b) In ouropinion proper books of account as required by law have been kept by theCompany so far as it appears from ourexamination of those books.
(c) The Balance Sheet the Statement of Profit and Loss Statement the Cash FlowStatement and Statement of Changes in Equity dealt with by this report are in agreementwith the books of account.
(d) In ouropinion the aforesaid standalone Ind AS financial statements comply with theIndian Accounting Standards specified under Section 133 of the Act read with theCompanies (Accounts) Rules 2014 and amendments thereof.
(e) On the basis of the written representations received from the directors as on 31stMarch 2017 taken on record by the Board of Directors none of the directors isdisqualified as on 31st March 2017 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 refertoourseparate Report in "Annexure B".
(g) With respect to the other matters to be included in the Auditor's Report inaccordance with Rule 11 of the Gompanies (Audit and Auditors) Rules 2014in ouropinionand to the best of ourand according to the explanations given to us:
i. The Company has disclosed pending litigations and the impact on its financialposition - refer note 24 to the standalone Ind AS financial statements.
ii. The Company has made provision as required under the applicable law orIndianaccounting standards formaterial foreseeable loses on long term contracts refernote 34 to the standalone Ind AS financial statements.
iii. There has been no delay in transferring amounts required to be transferred tothe Investor Education and Protection Fund by the Company.
iv TheCompany has provided the disclosure regarding Specified Bank Notes (SBN) in Note40 to the standalone Ind AS financial statements as per notification no. G.S.R.308(E)dated 30th March 2017 issued by the Ministry of Corporate Affairs and these are inaccordance with the books of account maintained by the Company.
|ForM/sP G Bhagwat |
|Chartered Accountants |
|Abhijeet Bhagwat |
Pune :17th May 2017
Annexure A to the Independent Auditors' Report
Referred to in paragraph 1 under the heading "Report on Other Legal andRegulatory Requirements" of ourreport on even date:
(i) (a) The Company is maintaining proper records showing full particulars includingquantitative details and
situation of fixed assets.
(b) The fixed assets are being physically verified by the management at regularintervals based on the programme of verification which in ouropinion isreasonable. Duringthe current yearno physical verification of assets was undertaken.
(c) According to the information and explanation provided to usthe title deeds ofimmovable properties are held in the name of the Company.
(ii) Physical verification of inventory has been conducted by the management during thecurrent year. In ouropinion the interval of such verification is reasonable.Discrepancies noticed on physical verification were not material and the same have beenproperly dealt with in the books of account.
(iii) The Company has not granted any loans secured orunsecured to companies firmslimited liability partnerships orother parties covered in the register maintained underSection 189 of the Companies Act 2013 except to a subsidiary company is earlier yearsand an associate in the current year as mentioned below.
|Name of Party ||Opening balance (^) Min ||Year End balance (^) Min ||Maximum balance (^) Min |
|The Kolhapur Steel Limited (TKSL)- subsidiary company ||13.210 ||13.210 ||13.210 |
|KBL Synerge LLP - associate ||Nil ||1.500 ||1.500 |
a) According to the information and explanations provided to usthe unsecured loangiven to TKSL in earlier years was under an orderfrom Board forIndustrial and FinancialReconstruction (BIFR)without any specific terms including charge of interest orrepayment.Therefore in ouropinion the loan cannot be treated as prejudicial to the Company'sinterest. Furtherin ouropinion the terms of the loan given to the associate are notprejudicial to the Company's interest;
b) According to the information and explanations provided to usthere is no scheduleforrepayment of principal and payment of interest that had been stipulated for theunsecured loan given to TKSL andthereforewearenotabletocommentontheregularityoftherepaymentsorreceipts.Thescheduleforrepayment of principal and payment of interest has been stipulated forthe loan to theassociate and the repayments is as per said schedule;
c) According to the information and explanations provided to usno amount is overdue.
(iv) According to information and explanation provided to usforthe transaction coveredunder the sections 185 and section 186 of the Companies Act 2013 the Company hascomplied with the provisions of the said sections.
(v) According to information and explanation provided to usthe Company has notaccepted deposits hence the directives issued by the Reserve Bank of India and theprovisions of Sections 73 to 76 orany other relevant provisions of the Companies Act andthe rules framed there underare not applicable to it. According to
information and explanation provided to usno orderhas been passed by Company Law BoardorNational Company LawTribunal orReserve Bank of India orany court orany other tribunal inthe current year.
(vi) We have broadly reviewed the books of accountrelating to materialslabour andother items of cost maintained by the Company pursuant to therules made by the CentralGovernment forthe maintenance of costrecords under sub-section (I)of Section 148 of theCompanies Act 2013 and we are of the opinion that prima facie; the prescribed accountsand records have been made and maintained. We have not however made a detailed examinationof records with a view to determine whether they are accurate and complete.
(vii) (a) The Company is generally regular in depositing undisputed statutory duesincluding provident fund
employees1 state insurance income-tax sales-taxservice tax duty of customs duty ofexcise value added tax cess and any other statutory dues with the appropriateauthorities. According to the information and explanation provided to usno undisputedamounts payable in respect of statutory dues were in arrears as at 31st March 2017 foraperiod of more than six months from the date they became payable.
(b) According to the itiformatioti and explanation provided to usthere are no dues ofincome tax sales tax service tax duty of customs duty of excise value added taxorcess which have not been deposited because of any dispute except the following:
|Name of Statute ||Nature of Dues ||Amount in Mil. ^ ||Period to which amount relates ||Forum where dispute is pending |
|Sales TaxAct of ||Sales tax ||30.986 ||2002-03 2013-14 ||Appellate Tribunal |
|various States || ||14.155 ||1989-2006 ||High Court |
| || ||90.879 ||1993-94 2000-012008-09 2011-12 2012-13 2013-14 2014-15 2015-16 ||Commissioner |
| || ||11.000 ||2000-012010-112011-12 2012-13 2014-15 ||Deputy Commissioner (Appeals) |
|Central Sales Tax ||Central ||0.310 ||1993-94 ||High Court |
|Act 1956 ||Sales Tax ||2.586 ||2011-12 ||Assistant Commissioner (Appeals) |
| || ||3.634 ||2012-13 ||Assistant Commissioner |
|Finance Act1994 ||Service Tax ||7.521 ||2011-12 ||Appellate Tribunal |
| || ||898.656 ||2012-13 ||Commissioner |
|Central Excise ||Excise ||23.951 ||2003-04 and 2006-10 ||CESTAT |
|Act 1944 ||duty ||0.808 ||2008-09 2014-15 ||Assistant Commissioner |
| || ||0.144 ||1990-91 ||Deputy Commissioner |
|Income Tax ||Income Tax ||10.316 ||2003-04 ||High Court |
|Act1961 || ||20.565 ||2001-2002 ||Appellate Tribunal |
| || ||98.865 ||08-09 09-10 10-11 ||Commissioner |
(viii) Based on ouraudit procedures and according to the information and explanationprovided to usthe Companyhasnotdefaultedinrepaymentofduestoafinancialinstitutionbankorgovernment.TheCompanydoesnothave any debenture holders.
(ix) According to information and explanation provided to usthe Company has not raisedmoneys by way of initialpublicofferorfurtherpublicoffer(includingdebtinstruments).Accordingtotheinformationandexplanationsprovided to usterm loans availed by the Company were prima facie; applied for thepurpose for which the loans were obtained.
(x) Based upon the audit procedures performed by us and according to the informationand explanations provided to usno fraud by the Company orany fraud on the Company by itsofficers oremployees has been noticed or reported to us during the year.
(xi) According to the information and explanation provided to usthe managerialremuneration has been paid and provided in accordance with the requisite approvalsmandated by the provisions of Section 197 read with Schedule V to the Companies Act.
(xii) he Company is not a Nidhi Company and accordinglyClause (xii)of the orderis notapplicable to the Company.
(xiii) According to the information and explanation provided to usall transactionswith therelated parties are in compliance with Sections 177 and 188 of Companies Act 2013wherever applicable and the details have been disclosed in the standalone Ind AS financialstatements as required by the applicable Indian Accounting Standards.
(xiv) According to the information and explanation provided to usthe Company has notmade any preferential allotment orprivate placement of shares orfully orpartly convertibledebentures during the year under review.
(xv) According to the itiformatioti and explanation provided to usthe Company has notentered into any non-cash transactions with directors orpersons connected with him.
(xvi) According to the information and explanation provided to usthe Company is notrequired to be registered under Section 45-IA of the Reserve Bank of India Act 1934.
|ForM/sP G Bhagwat |
|FinrTsRegistrationNo.:101118W Abhijeet Bhagwat |
Pune: 17th May 2017
Annexure B to the Independent Auditors' Report
Referred to in paragraph 2 (f) under the heading "Report on Other legal andRegulatory Requirements" ofourreport on even date:
Report on the Internal Financial Controls
under Clause (i) of Sub-section 3 of Section 143 of the Companies Act 2013 ("theAct")
We have audited the internal financial controls over financial reporting of KirloskarBrothers Limited ("the Company") as of 31st March 2017 in conjunction withouraudit of the standalone Ind AS financial statements of the Company forthe year ended onthat date.
Management's Responsibilityfor Internal Financial Controls
The Company's management is responsible forestablishing 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.
ourresponsibility is to express an opinion on the Company's internal financial controlsover financial reporting based on ouraudit. We conducted ouraudit in accordance with theGuidance Note on Audit of Internal Financial Controls Over Financial Reporting (the"Guidance Note") and the Standards on Auditing to the extent applicable to anaudit of internal financial controls both issued by the Institute of CharteredAccountants of India. 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.
ouraudit involves performing procedures to obtain audit evidence about the adequacy ofthe internal financial controls system over financial reporting and their operatingeffectiveness.ouraudit 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 standalone financial statements whether due to fraudorerror.
We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for ouraudit 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 overfinancial reporting is a process designed toprovide reasonable assurance regarding the reliability of financial reporting and thepreparation of standalone financial statements forexternal 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 standalone
financial statements in accordance with generally accepted accounting principles andthat receipts and expenditures of the Company are being made only in accordance withauthorisations of management and directors of the Company; and (3) provide reasonableassurance regarding prevention ortimely detection of unauthorised acquisition useordisposition of the Company's assets that could have a material effect on the standalonefinancial 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 orimproper management override ofcontrols material misstatements due to errororfraud may occur andnotbedetected.Alsoprojectionsofanyevaluationoftheinternalfinancialcontrolsoverfinancialreportingtofutureperiods are subject to the risk that the internal financial control overfinancialreporting may become inadequate because of changes in conditionsorthat the degree ofcompliance with the policies orprocedures may deteriorate.
In ouropinion 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 31st 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..
|Chartered Accountants |
|Abhijeet Bhagwat |
Pune: 17th May 2017