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Patel Engineering Ltd.

BSE: 531120 Sector: Infrastructure
NSE: PATELENG ISIN Code: INE244B01030
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OPEN 80.65
PREVIOUS CLOSE 79.45
VOLUME 46931
52-Week high 106.90
52-Week low 64.00
P/E 11.98
Mkt Cap.(Rs cr) 1,247
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 80.65
CLOSE 79.45
VOLUME 46931
52-Week high 106.90
52-Week low 64.00
P/E 11.98
Mkt Cap.(Rs cr) 1,247
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Patel Engineering Ltd. (PATELENG) - Auditors Report

Company auditors report

TO

THE MEMBERS OF

PATEL ENGINEERING LIMITED

REPORT ON THE STANDALONE FINANCIAL STATEMENTS

We have audited the accompanying standalone financial statements of Patel EngineeringLimited ("the Company") which comprise the Balance Sheet as at March 31 2016the Statement of Profit and Loss the Cash Flow Statement for the year then ended and asummary of the significant accounting policies 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 Act 2013 ("the Act") with respect to the preparation ofthese standalone financial statements to 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 Standardsspecified under Section 133 of the Act read with Rule 7 of the Companies (Accounts)Rules 2014. This responsibility also includes maintenance of adequate accounting recordsin accordance with the provisions of the Act for safeguarding of the assets of the Companyand for preventing and detecting frauds and other irregularities; selection andapplication of appropriate accounting policies; making judgments and estimates that arereasonable and prudent; and design implementation and maintenance of adequate internalfinancial controls that were operating effectively for ensuring the accuracy andcompleteness of the accounting records relevant to the preparation and presentation ofthe standalone financial statements that give a true and fair view and are free frommaterial misstatement whether due to fraud or error.

Auditors' Responsibility

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 Act. Those Standards require that we comply with ethicalrequirements and plan and perform the audit to obtain reasonable assurance about whetherthe standalone financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts andthe disclosures in the standalone financial statements. The procedures selected depend onthe Auditors' judgment including the assessment of the risks of material misstatement ofthe standalone financial statements whether due to fraud or error. In making those riskassessments the auditor considers internal financial control relevant to the Company'spreparation of the standalone financial statements that give a true and fair view inorder to design audit procedures that are appropriate in the circumstances. An audit alsoincludes evaluating the appropriateness of the accounting policies used and thereasonableness of the accounting estimates made by the Company's Directors as well asevaluating the overall presentation of the standalone financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the standalone financial statements.

Opinion

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 2016 and its loss and its cash flows for the year ended on that date.

Emphasis of Matter

We draw attention to:

(a) Note no 4.1 to the standalone financial statements As per Section 71 of CompaniesAct 2013 the Company has created adequate Debenture Redemption Reserve for the SecuredRedeemable Non-Convertible Debenture issued by the Company. However in terms of Section71 read with Rule 18(7)(Rs.C) of Companies Share Capital and Debentures Rules 2014 theCompany has not made the required deposit/ investment to secure the repayment ofdebentures maturing during 2015-16. Our opinion is not qualified in respect of thismatter.

Report on Other Legal and Regulatory Requirements

1. As required by 'the Companies (Auditor's Report) Order 2016' issued by the CentralGovernment of India in terms of subsection (11) of section 143 of the Act (hereinafterreferred to as the "Order") and on the basis of such checks of the books andrecords of the Company as we considered appropriate and according to the information andexplanations given to us we give in the Annexure A a statement on the matters specifiedin 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 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 by theCompany so far as it 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 Act read with Rule 7 of theCompanies (Accounts) Rules 2014;

e) on the basis of the written representations received from the directors as on March31 2016 taken on record by the Board of Directors none of the directors is disqualifiedas on March 31 2016 from being appointed as a director in terms of Section 164 (2) of theAct;

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"; and

g) with respect to the other matters to be included in the Auditors' Report inaccordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014 in our opinionand to the best of our knowledge and belief and according to the information andexplanations given to us: i.

i. the Company has disclosed the impact of pending litigations as at March 31 2016 onits financial position in its standalone financial statements to the extentdeterminable/ascertainable.-Refer

Note 41 to the standalone financial statements;

ii. the Company has made provision as at March312016 as required under the applicablelaw or accounting standard for material foreseeable losses if any on long termcontract.

iii. There has been no delay in transferring amounts required to be transferred tothe Investor Education and Protection Fund by the Company during the year ended March 312016.

For Vatsaraj & Co.
Chartered Accountants
Firm Registration No.: 111327W
CA B. K. Vatsaraj
Partner
Membership N0.: 39894
May 30 2016
Mumbai

Annexure A to Independent Auditors' Report

Referred to in paragraph 1 under "Report on Other Legal and Regulatoryrequirement" section of our report of even date to the members of Patel EngineeringLimited on the Standalone Financial Statements for the year ended March 31 2016.

i (a) The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets.

(b) During the year fixed assets have been physically verified by the management atregular intervals and no material discrepancies were noticed on such 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 propertiesrecorded as fixed assets in the books of accounts of the Company as on March 31 2016 areheld in the name of the Company except for the details given below:

In respect of Freehold lands with gross block and net block of Rs. 30.45 million andBuilding with gross block of Rs. 5.53 million and net block of Rs. 3.96 million.

ii The management has conducted physical verification of inventory at reasonableintervals during the year and no material discrepancies between physical inventory andbook records were noticed on physical verification.

iii According to information and explanation given to us the Company's has not grantedany loan secured or unsecured to companies firms Limited Liability Partnership firm orother parties covered in the register maintained under section 189 of the Companies Act2013 . Accordingly Paragraph 3 (iii)(a) 3 (iii)(b) and 3(iii)(c) of the Order are notapplicable to the Company.

iv In our opinion and according to the information and explanations given to us theCompany has complied with the provisions of Section 185 and 186 of the Companies

Act 2013 to the extent applicable in respect of the loans investments guaranteesand security.

v The Company has not accepted any deposits from the public within the meaning ofSections 73 to 76 of the Act and the Companies (Acceptance of Deposits) Rules 2014 (asamended). Accordingly Paragraph 3(v) of the Order is not applicable to the Company.

vi We have broadly reviewed the books of accounts maintained by the company pursuant tothe Rules made by the Central Government for the maintenance of cost record under subsection (1) of section 148 of the Companies Act in respect to company's products/servicesand are of the opinion that prima facie the prescribed accounts and records have beenmade and maintained. However we have not made a detailed examination of the cost recordswith a view to determine whether they are accurate or complete

vii (a) According to the information and explanations given to us and the records ofthe Company examine by us undisputed statutory dues including Provident FundEmployeesRs. State Insurance Income Tax Sales tax Service Tax Custom Duty ExciseDuty Value Added Tax Cess and other statutory dues as applicable have been generallyregularly deposited with the appropriate authorities except for the Sales Tax Entry TaxService Tax Municipality Tax Income Tax and Professional Tax amounting to Rs. 280.17million outstanding as on the last day of the financial year for a period of more than sixmonths from the date they become payable.

(b) According to the information and explanations given to us and the records of theCompany examine by us the disputed statutory dues aggregating Rs. 3514.50 Million thathave not been deposited on account of disputed matters pending before appropriateauthorities are as under:

Particulars Financial Year to which amount relates Amounts in Million ( Rs.) Forum where dispute is pending
The Sales Tax Act 2001-2002 to 2003-2004 14.99 Appellate Tribunal
2005-2006 0.50 Joint Commissioner of Sales tax (A)-II Mumbai
2005-2006 2006-2007 and 20092010 32.78 Appellate Tribunal Kolkata
2007-2008 10.74 Deputy Commissioner Appellate -III Mumbai
2007-2008 2008-2009 and 20102011 28.26 Senior Joint Commissioner Siliguri
Entry Tax 2010-2011 7.57 High Court
The Finance Act 1994 2007-2008 to 2012-2013 323.20 Custom Excise and Service Tax Appellate Tribunal
April 2003 to July 2006 2.54
October 2009 to September 2010 108.31
June 2007 to September 2009 631.88
The Income Tax Act1961 2007-2008 to 2009-2010 and 2011-2012 to 2012-2013 2353.73 Commissioner of Income Tax (Appeals)
3514.50

viii There are no Loans or borrowings payable to government. The Company has defaultedin repayment of following dues to the financial institution banks and debenture holdersduring the year which were paid on before the balance sheet date.

Debenture Holders (Rs. in Million)
Days Principal Interest
Axis Bank-Non-Convertible 1-30 - 22.90
31-60 - 13.10
61-90 500.00 54.91
GIC- Non-Convertible >90 - 0.03
LIC- Non-Convertible 1-30 - 6.74
61-90 - 44.22
>90 - 37.19

Banks

(Rs. in Million)

Days Principal Letter of Credit Interest
DBS Bank 1-30 - - 48.96
31-60 1545.67 - 61.26
61-90 122.00 - 118.81
HDFC Bank 1-30 - - 1.50
31-60 4.05 - 2.86
61-90 33.35 - 10.19
Canara Bank 1-30 8.99 - 75.67
31-60 0.25 - 12.92
Bank Of Baroda 1-30 - 882.39 98.46
31-60 - 131.20 26.07
Bank of India 1-30 48.95 398.52 124.92
31-60 7.82 1095.17 110.06
61-90 2.30 - 64.84
IDBI Bank 1-30 75.00 - 92.68
31-60 - 57.67
61-90 - - 42.93
Bank of Maharashtra 1-30 1.20 278.28 344.35
31-60 - 51.55 176.52
Ratnakar Bank 1-30 - - 2.74
31-60 - - 5.51
Axis Bank 1-30 - 211.36 25.18
31-60 - 80.00 44.62
61-90 - 127.60 43.83
Dena Bank 1-30 250.00 149.91 154.44
31-60 - - 146.52
61-90 569.21 - 190.01
Indusind bank 1-30 - - 22.02
31-60 - - 21.79
61-90 - - 13.70
State Bank of Patiala 1-30 - - 36.26
ICICI Bank 1-30 - 1402.57 70.18
31-60 - 648.94 24.42
61-90 - 181.54 -
Society General Bank 1-30 - - 54.83
31-60 - - 5.03
61-90 - - 41.60
Standard Chartered Bank 1-30 47.00 - 80.52
31-60 - - 102.18
61-90 - - 71.35
Exim Bank 1-30 - - 83.75
Corporation Bank 1-30 - - 51.53
31-60 - - 16.13

Financial Institutions

(Rs. in Million)

Days Principal Interest
Sicom India Ltd 1-30 - 18.57

The Company has defaulted in repayment of following dues to the financial institutionbanks and debenture holders during the year which were not paid as at the balance sheetdate:

Debenture Holders

(Rs. in Million)

Days Principal Interest Total
GIC- Non-Convertible 1-30 100.00 43.66 143.66
Axis Bank 1-30 100.00 39.10 139.10

Banks

(Rs. in Million)

Days Principal Letter of Credit Interest Total
DBS Bank 1-30 - - 9.59 9.59
31-60 - - 0.11 0.11
61-90 - - 0.11 0.11
HDFC Bank 1-30 4.42 - 1.03 5.45
31-60 4.38 - 1.07 5.45
61-90 4.34 - 1.10 5.44
Canara Bank 1-30 - - 7.72 7.72
Bank of Baroda 1-30 - 257.52 7.59 265.11
31-60 - 6.21 - 6.21
Bank of India 31-60 - 22.04 30.38 52.42
IDBI Bank 31-60 400.00 - 4.15 404.15
Bank of Maharashtra 1-30 - - 0.46 0.46
31-60 - - 11.16 11.16
Ratnakar Bank 31-60 - - 2.43 2.43
Axis Bank 1-30 - 25.00 2.39 27.39
31-60 - - 28.32 28.32
Dena Bank 1-30 - - 0.02 0.02
Society General Bank 31-60 - - 22.73 22.73
Standard Chartered Bank 31-60 - - 34.10 34.10
61-90 12.39 - 0.30 12.69
>90 82.62 - 2.82 85.44
ICICI Bank 1-30 22.50 73.39 - 95.89
Corporation Bank 1-30 - - 0.26 0.26

ix The Company did not raise any money by way of initial public offer or further publicoffer (including debt instruments). According to the information and explanations given tous the term loans have been applied for the purposes for which they were obtained.

x During the course of our examination of the books and records of the Company carriedout in accordance with the generally accepted auditing practice in India and according toinformation and explanation given to us we have neither come across any instance of fraudon or by the Company its officers or employees noticed or reported during the periodnor have we been informed of such case by the management.

xi According to the information and explanations given to us the Company has paid orprovided for managerial remuneration in accordance with the reguisite approvals mandatedby the provisions of Section 197 read with Schedule V to the Act.

xii In our opinion and according the information and explanation given to us theCompany is not a Nidhi Company.

Accordingly paragraph 3(xii) of the Order is not applicable to the Company.

xiii According to the information and explanation given to us and based on ourverification of the records of the Company and on the basis of review and approval by theBoard and Audit Committee the transactions with related parties are in compliance withSection 177 and 188 of the Act where applicable and the details of such transactions havebeen disclosed in the standalone financial statements as reguired by the applicableaccounting standards.

xiv According to the information and explanation given 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 period under review. Accordingly paragraph 3(xiv) of the Order is not applicable tothe Company.

xv According to the information and explanation given to us and based on ourexamination of the records of the Company the Company has not entered into any non-cashtransactions with its directors or persons connected with them during the year.Accordingly paragraph 3(xv) of the Order is not applicable to the Company.

xvi The Company is not reguired to be registered under Section 45-IA of the ReserveBank of India Act 1934.

For Vatsaraj & Co.
Chartered Accountants
Firm Registration Number: 111327W
CA B. K. Vatsaraj
Partner
Membership Number: 39894
May 30 2016
Mumbai

Annexure B to Independent Auditors' Report

Referred to in paragraph 2(f) under "Report on Other Legal and Regulatoryrequirement" section of our report of even date to the members of Patel EngineeringLimited on the Standalone Financial Statements for the year ended March 31 2016. Reporton the Internal Financial Controls under Clause (i) of Sub-section 3 of Section 143 of theCompanies Act 2013

1. We have audited the internal financial controls over financial reporting of PatelEngineering Limited ("the Company"} as of March 31 2016 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

2. 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.

Auditors' Responsibility

3. 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.

4. Our audit involves performing procedures to obtain audit evidence about the adequacyof the 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 standalone financial statements whether due to fraud orerror. 5

5. 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

6. A company's internal financial control over financial reporting is a processdesigned to provide reasonable assurance regarding the reliability of financial reportingand the preparation of standalone financial statements for external purposes in accordancewith generally accepted accounting principles. A company's internal financial control overfinancial reporting includes those policies and procedures that

i. Pertain to the maintenance of records that in reasonable detail accurately andfairly reflect the transactions and dispositions of the assets of the company;

ii. Provide reasonable assurance that transactions are recorded as necessary to permitpreparation of standalone financial statements in accordance with generally acceptedaccounting principles and that receipts and expenditures of the company are being madeonly in accordance with authorizations of management and directors of the company; and

iii. Provide reasonable assurance regarding prevention or timely detection ofunauthorized acquisition use or disposition of the company's assets that could have amaterial effect on the standalone financial statements.

Inherent Limitations of Internal Financial Controls over Financial

Reporting

7. 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.

Opinion

8. 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 2016 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 of Internal Financial Controls Over Financial Reporting issued by theInstitute of Chartered Accountants of India.

For Vatsaraj & Co.
Chartered Accountants
Firm Registration Number: 111327W
CA B. K. Vatsaraj
Partner
Membership Number: 39894
May 30 2016
Mumbai