To the Members of
LUMAX AUTOMOTIVE SYSTEMS LIMITED
Report on the Financial Statements
We have audited the accompanying financial statements of LUMAX AUTOMOTIVESYSTEMS LIMITED (the Company) which comprise the balance sheet as at31 March 2014 the statement of profit and loss and the cash flow statement for the yearthen ended and a summary of significant accounting policies and other explanatoryinformation.
Managements Responsibility for the Financial Statements
Management is responsible for the preparation of these financial statements that give atrue and fair view of the financial position financial performance and cash flows of theCompany in accordance with the Accounting Standards referred to in sub-section (3C) ofsection 211 of the Companies Act 1956 ("the Act") read with the GeneralCircular 15/2013 dates 13th September 2013 of the Ministry of Corporate Affairsin respect of section 133 of the Companies Act 2013. This responsibility includes thedesign implementation and maintenance of internal control relevant to the preparation andpresentation of the financial statements that give a true and fair view and are free frommaterial misstatement whether due to fraud or error.
Our responsibility is to express an opinion on these financial statements based on ouraudit. We conducted our audit in accordance with the Standards on Auditing issued by theInstitute of Chartered Accountants of India. Those Standards require that we comply withethical requirements and plan and perform the audit to obtain reasonable assurance aboutwhether the 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 theauditors judgment including the assessment of the risks of material misstatement ofthe financial statements whether due to fraud or error. In making those risk assessmentsthe auditor considers internal control relevant to the Companys preparation and fairpresentation of the financial statements in order to design audit procedures that areappropriate in the circumstances but not for the purpose of expressing an opinion on theeffectiveness of the companys internal control. An audit also includes evaluatingthe appropriateness 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 the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion.
In our opinion and to the best of our information and according to the explanationsgiven to us the financial statements give the information required by the Act in themanner so required subject to our observations in para. 2(d) below (Report on other legaland regulatory requirements) and give a true and fair view in conformity with theaccounting principles generally accepted in India:
I. in the case of the balance sheet of the state of affairs of the Company as at 31March 2014;
II. in the case of the statement of profit and loss of the loss for the year ended onthat date; and
III. In the case of the cash flow statement of the cash flows for the year ended onthat date.
Report on Other Legal and Regulatory Requirements
1. Subject to the audit observations as under and as required by the Companies(Auditors Report) Order 2003 ("the Order") as amended issued by theCentral Government of India in terms of sub-section (4A) of section 227 of the Act wegive in the Annexure a statement on the matters specified in paragraphs 4 and 5 of theOrder.
2. As required by section 227(3) of the Act and subject to observations as under wereport that:
a. we have obtained all the information and explanations which to the best of ourknowledge 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 Statement of Profit and Loss and Cash Flow Statement dealt withby this Report are in agreement with the books of account;
d. in our opinion the Balance Sheet Statement of Profit and Loss and Cash FlowStatement comply with the Accounting Standards referred to in subsection (3C) of section211 of the Companies Act 1956 read with General Circular 15/2013 dated 13thSeptember 2013 of the Ministry of Corporate Affairs in respect of section 133 of theCompanies Act 2013 subject to our following observations that
i. As mentioned / stated in Note No.-14(Balance sheet) and Para 16 (iii) (accountingpolicies) of Note No. 29 regarding notes to accounts the company has valued theinventories at cost/estimated cost inclusive of taxes and duties instead of at Cost orrealizable value whichever is lower and exclusive of taxes paid which are subsequentlyrecoverable from the taxing authorities which is not in compliance with AccountingStandard to valuation of inventories prescribe in the companies (Accounting Standards)Rules 2006. In our opinion the old inventories which are unusable for manufacturingpurposes and are in obsolete nature should have been valued at realizable value andprovision for loss in value should have been provided by the company. Further stock intransit in hand valuing 47343592/- is imported raw material and was lying withthe Central Warehousing Corporation. The company has not obtained confirmation ofthe material lying in the Warehouse from Central Warehousing Corporation.
ii. No Provisions have been made in the financial statements in respect of thefollowing items:-
(a) Provision for Interest in respect of delayed/ non- payment to suppliers/ serviceproviders which are registered under the provisions of The Micro Small or MediumEnterprises Development Act 2006 as well as in respect of delayed payments/outstandingpayments in respect various statutory dues such as provident fund employees stateinsurance income tax wealth tax sales tax excise duty cess and other statutory dues;
(b) Provision for doubtful debts and loans and advances amounting to 181927873/-and 5826525/- respectively which are considered doubtful of recovery. In our opinionmost of the doubtful debts and loan and advances are bad in nature and the company shouldhave made the provision for the same.
(c) Short provision of labour compensation payable to workers with whom the settlementswere made during the year by 8 lakhs. Consequent to the above observations the lossis under stated.
(d) Provision of 27972000/- and interest thereon on non-payment on account ofenhanced cost raised by HSIIDC in respect of factory plot No.46 Sector-3 IMT ManesarGurgaon Haryana.
iii. As mentioned in note 15 of the notes to accounts no 29 regarding the balances ofsome of the sundry creditors and debtors loans and advances price variance and rebateclaims are subject to confirmation / reconciliation and subsequent adjustments if any. Assuch we are unable to express any opinion as to the effect their of on the financialstatements for the year.
e. On the basis of written representations received from the directors as on 31 March2014 and taken on record by the Board of Directors none of the directors is disqualifiedas on 31 March 2014 from being appointed as a director in terms of clause (g) ofsub-section (1) of section 274 of the Companies Act 1956.
| ||For R. Jain & Sanjay Associates |
| ||Chartered Accountants |
| ||ICAI Firm Registration No. 012377N |
| ||(CA. R.K.JAIN) |
|Place : New Delhi ||Partner |
|Date : 30th May 2014 ||M. No. 9981 |
ANNEXURE TO THE AUDITORS REPORT
(The Annexure referred to in our report to the members of LUMAX
AUTOMOTIVE SYSTEMS LIMITED (the company) for the year ended 31stMarch 2014.
i. (a) The company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets. However fixed assets have not beenphysically verified by the management during the year hence we are unable to comment onthe discrepancies if any.
(b) In our opinion the disposal of fixed assets during the year does not affect thegoing concern assumption.
ii. (a) The Management has conducted physical verification of inventory in respectof its working units at Manesar Gurgaon and 12/2 Mathura Road Faridabad at reasonableintervals. However no physical verification has been carried out in respect of the closedunits at Plot No.78 Sector-6 Faridabad Aurangabad unit and two Pune Units. The stockvalues in respect of the closed units have been taken as per values declared in theearlier financial statements.
(b) In our opinion and according to the information and explanation given to us theprocedures of physical verification of inventory followed by the management at workingunits referred to above are reasonable and adequate in relation to the size of the Companyand the nature of its business.
(c) On the basis of our examination of the records of inventory and subject toobservation made in paras ii(a) and (b) we are of the opinion that the Company ismaintaining proper records. The discrepancies noticed on verification between physicalinventories and book records were not material in relation to the operation of the Companyand the same have been properly dealt with in the books of account.
iii. (a) The Company has not granted any loans secured or unsecured to companiesfirms or other parties covered in the register maintained u/s 301 of the Act.
(b) The company has taken interest bearing unsecured loans from Directors and companiescovered in the register maintained u/s 301 of the Act. The number of the parties andmaximum amounts involved during the year were eight and Rs.42702465/- and the year endbalance of loans taken from such parties was Rs.37648433/-. The rate of interest andother terms and conditions of the loans taken are not prima facie prejudicial to theinterest of the Company. There is no stipulation in respect of repayment of principalamounts and interest thereon. v. In our opinion and according to the information andexplanations given to us there are adequate internal control systems commensurate withthe size of the Company and the nature of its business for the purchase of inventory andfixed assets and for the sale of goods and services. Further on the basis of examinationof the books and records of the Company and according to the information and explanationgiven to us as per the checking carried out in accordance with the auditing standardsgenerally accepted in India neither we have observed nor we have been reported for anycontinuing failure to correct major weaknesses in internal control systems.
v. (a) Based on the audit procedures applied by us and according to the information andexplanations provided by the management we are of the opinion that the particulars ofcontracts or arrangements referred to in section 301 of the Act have been entered in theregister required to be maintained u/s 301 of the Act.
(b) In our opinion and according to the information and explanations given to us thetransactions made in pursuance of such contracts or arrangements have been made at priceswhich are reasonable having regard to the prevailing market prices at the relevant time.
vi. In our opinion and according to the information and explanations given to us theCompany has not accepted any deposits from the public within the meaning of Section 58A58AA or any other relevant provisions of the Act.
vii. The Company has an internal audit system which in our opinion is not adequateand needs to be enlarge to be commensurate with the size of company and the nature of itsbusiness.
viii. We have broadly reviewed the books of account maintained by the Company pursuantto the Rules made by the Central Government for the maintenance of cost records u/s209(1)(d) of the Companies Act 1956 and are of the opinion that prima facie theprescribed accounts and records have been made and maintained. However we have not madedetailed examination of the records with a view to determine whether they are accurate orcomplete.
ix. (a) According to the records examined by us undisputed statutory dues includingprovident fund investor education and protection fund employees state insuranceincome tax sales tax wealth tax service tax custom duty excise duty and cess havenot been regularly deposited with the appropriate authorities and there have been seriousdelays in large number of cases.
(b) According to the information and explanations given to us undisputed dues inrespect of provident fund employees state insurance income tax sales tax exciseduty cess and other statutory dues which were outstanding at the year end for aperiod of more than six months from the date they became payable are Rs. 133455488/-
(c) According to the information and explanations given to us and the records of thecompany examined by us the particulars of dues of Income Tax Sales Tax Wealth TaxServices Tax Customs duty and Excise Duty as at 31-03-2013 which have not been depositedon account of the dispute are as follows :
|S.No ||Name of the Statute ||Nature of Dues ||Amount(Rs.) ||Period to which relate ||Forum where the dispute is pending |
|1. ||Income Tax Act 1961 ||Income Tax ||548585 ||F.Y 2006-07 ||Review petition pending with A.O. |
|2. ||Haryana Value added tax (Local) ||VAT including interest ||25.78 Lakhs ||F.Y. 2009-10 ||On account of non submission of statutory forms |
|3. ||Central Sales Tax Act 1956 ||CST including interest ||67.09 Lakhs ||F.Y. 2008-09 ||On account of non submission of statutory forms |
| || || ||73.65 Lakhs ||F.Y. 2009-10 || |
x. The company has no accumulated losses. However the company has incurred cash lossesin the current financial year and no cash losses were incurred in the immediatelypreceding financial year.
xi. Based on our audit procedures and as per the information and explanations given bythe management we are of the opinion that the Company has not defaulted in repayment ofdues to banks or financial institution except the following:- (a) installments of theterm loan and interest with HSIIDC amounting to 55329060/- as at the date ofbalance sheet (b) default during the year with IDBI Bank of two installments of 20lakh each for a period of 6 and 3 months which were re-paid in the accounting year.There were no dues to debenture holders during the year.
xii. According to the information and explanation given to us and based on thedocuments and records produced to us the company has not granted loans and advances onthe basis of security by way of pledge of shares debentures and other securities.
xiii. The Company is not a chit-fund or a nidhi/ mutual benefit fund/society.Therefore the provisions of clause 4(xiii) of the Companies (Auditors Report)Order 2003(As Amended) are not applicable to the Company.
xiv. The Company is not dealing or trading in shares securities debentures and otherinvestments. The other provisions of clause 4(xiv) of the Companies (AuditorsReport) Order 2003 (As amended) are not applicable to the company.
xv. According to the information and explanations given to us the Company has not givenguarantee for loans taken by others from bank or financial institutions.
xvi. According to the information and explanations given to us by the management theterm loans were applied for the purpose for which the loans were obtained.
xvii. Based on examination of documents records and fund flow statement made availableto us and on the basis of information and explanations given to us the Company has notused funds raised on short term basis for long term investment.
xviii. The Company has not made any preferential allotment of shares to parties orcompanies covered in the register maintained u/s 301 of the Companies Act 1956.
xix. The Company has neither issued nor had any outstanding debenture during the year.
xx. The Company has not raised any money through a public issue during the year.
xxi. Based upon the audit procedures performed for the purpose of reporting a true andfair view of the financial statements and as per the information and explanations given bythe management we report that no fraud on or by the Company has been noticed or reportedduring the course of our audit nor we have been informed of such cases by the management.
| ||FOR R.JAIN & SANJAY ASSOCIATES |
| ||ICAI FIRM REGISTRATION NO.012377N |
| ||CHARTERED ACCOUNTANTS |
|PLACE: NEW DELHI ||CA-R.K. JAIN |
|DATE: 30TH MAY 2014 ||(PARTNER) |
| ||MEMBERSHIP NO: - 9981 |
CFO & Managing Director certification under clause 41 & 49(V) of the listingagreement to be placed before the board along with audited annual accounts for the yearended March 31 2014.
(a) We certify to the board that we have reviewed financial statements and the cashflow statement for the year and that to the best of their knowledge and belief:
(i) these statements do not contain any materially untrue statement or omit anymaterial fact or contain statements that might be misleading;
(ii) these statements together present a true and fair view of the companysaffairs and are in compliance with existing accounting standards applicable laws andregulations.
(b) There are to the best of their knowledge and belief no transactions entered intoby the company during the year which are fraudulent illegal or violative of thecompanys code of conduct.
(c) We accept responsibility for establishing and maintaining internal controls forfinancial reporting and that they have evaluated the effectiveness of internal controlsystems of the company pertaining to financial reporting and they have disclosed to theauditors and the Audit Committee deficiencies in the design or operation of such internalcontrols if any of which they are aware and the steps they have taken or propose to taketo rectify these deficiencies.
(d) We have indicated to the auditors and the Audit committee
(i) significant changes in internal control over financial reporting during the year;
(ii) significant changes in accounting policies during the year and that the same havebeen disclosed in the notes to the financial statements; and
(iii) instances of significant fraud of which they have become aware and theinvolvement therein if any of the management or an employee having a significant role inthe companys internal control system over financial reporting.
|Place: Delhi ||A.K. Goel ||Nitin Jain |
|Date : 26/08/2014 ||Chief Financial Officer ||Managing Director |
DECLARATION BY MANAGING DIRECTOR PURSUANT TO CLAUSE 49(1)(D)(ii) OF LISTING AGREEMENT
As the Managing Director of Lumax Automotive Systems Ltd and as required by Clause 49(1)(D) (ii) of the Listing Agreement I hereby declare that the all the Board Members andSenior Management Personnel of the Company have affirmed compliance with CompanysCode of Business Conduct and Ethics for the financial year 2013-14.
For Lumax Automotive Systems Limited
Place: New Delhi
CERTIFICATE REGARDING COMPLIANCE OF CONDITIONS OF CORPORATE GOVERNANCE
To the Members of Lumax Automotive Systems Limited.
We have examined the compliance of conditions of Corporate Governance by LumaxAutomotive Systems Limited for the year ended March 31 2014 as stipulated in Clause 49 ofthe Listing Agreement of the said Company with the stock exchanges.
The Compliance of conditions of Corporate Governance is the responsibility of themanagement. Our examination has been limited to a review of the procedures andimplementation thereof adopted by the Company for ensuring compliance with the conditionsof Corporate Governance as stipulated in the said clause. It is neither an audit nor anexpression of opinion on the financial statements of the Company.
In our opinion and to the best of our information and according to the explanationsgiven to us and based on the representations made by the directors and the management wecertify that the Company has complied with the conditions of Corporate Governance asstipulated in clause 49 of the above-mentioned Listing Agreement.
We state that such compliance is neither an assurance as to the future viability of theCompany nor the efficiency or effectiveness with which the management has conducted theaffairs of the Company.
For R. Jain & Sanjay Associates
Firm Registration No.- 012377N
R. K. Jain
Membership no. 9981
Place: New Delhi