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S & S Power Switchgear Ltd.

BSE: 517273 Sector: Engineering
NSE: S&SPOWER ISIN Code: INE902B01017
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S & S Power Switchgear Ltd. (S&SPOWER) - Auditors Report

Company auditors report

TO THE MEMBERS OF

S&S POWER SWITCHGEAR LIMITED

Report on the Standalone Financial Statements

1 We have audited the accompanying standalone financial statements of S&S PowerSwitchgear Ltd (‘the Company’) which comprise the balance sheet as at 31 March2016 the statement of profit and loss and the cash flow statement for account the yearthen ended and a summary of significant -ing policies and other explanatory information.

Management’s Responsibility for the Standalone Financial Statements

2 The Company’s Board of Directors is responsible for the matters stated inSection 134(5) of the Companies Act 2013 ("the Act") with respect to thepreparation and presentation of these standalone financial statements that give a true andfair view of the financial position financial performance and cash flows of the Companyin accordance with the accounting principles generally accepted in India including theAccounting Standards specified under Section 133 of the Act read with Rule 7 of theCompanies (Accounts) Rules 2014.

3 This responsibility also includes maintenance of adequate accounting records inaccordance with the provisions of the Act for safeguarding the assets of the Company andfor preventing 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 for ensuring the accuracy and completeness ofthe accounting records relevant to the preparation and presentation of the financialstatements that give a true and fair view and are free from material misstatement whetherdue to fraud or error.

Auditor’s Responsibility

4 Our responsibility is to express an opinion on these stand-alone financialstatements based on our audit. 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 thereunder.

5 We conducted our audit in accordance with the Standards on Auditing specifiedunder Section 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 performingprocedures to obtain audit evidence about the amounts and the disclosures in the financialstatements. The procedures selected depend on the auditor’s judgment including theassessment of the risks of material misstatement of the financial statements whether dueto fraud or error. In making those risk assessments the auditor considers internalfinancial control relevant to the Company’s preparation of the financial statementsthat give a true and fair view in order to design audit procedures that are appropriate inthe circumstances.

6 An audit also includes evaluating the appropriateness of the accounting policiesused and the reasonableness of the accounting estimates made by the Company’sDirectors as well as evaluating the overall presentation of the financial statements.

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

Basis of Disclaimer of Opinion

8. We are unable to form any opinion on the following items in the financial statements

8 1 The company has not fulfilled its export obligation as disclosed in sub-note 5.1of financial statements in respect of advance license availed during 1997-98.. We wereinformed that there has been no progress in the writ petition filed in Madras High Courtagainst the order of Director General of Foreign Trade in this regard. We are unable toexpress any opinion on the possible additional levy against the company

8 2 Included in Investments Loans and Advances and Other current assets are sumsaggregating to Rs 23 73 34 423 invested and advanced to its subsidiary M/s AcrastylePower India Ltd against which there exists aggregate provision of Rs 72176837. In ouropinion the quantum of provisioning could be understated considering the net worth of itswholly owned subsidiary and the qualified opinion of its auditors with respect to quantumof provisioning of its investment in its subsidiary. We are not able to comment on theadequacy of provisioning with respect to the same.

Opinion

9 In our opinion subject to our disclaimer of opinion expressed above onwhich we could not form any opin-ion to the best of our information and accordingto the explanations given to us the aforesaid standalone financial statements give theinformation required by the Act in the manner so required and give a true and fair view inconformity with the accounting principles generally accepted in India of the state ofaffairs of the Company as at 31 March 2016 and its profit and its cash flows for the yearended that date.

Report on Other Legal and Regulatory Requirements

10 As required by the Companies (Auditor’s Report) Order 2016 ("theOrder") issued by the Central Government of India in terms of sub-section (11) ofsection 143 of the Act we give in the Annexure A a statement on the matters specified inthe paragraph 3 and 4 of the order

11 As required by Section 143 (3) of the Act we report that

11 1 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.

11 2 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;

11 3 The balance sheet the statement of profit the cash flow statement dealtwithby this Report are in agreement with the books of account;

11 4 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

11 5 On the basis of the written representations received from the directors as on31 March 2016 taken on record by the Board of Directors none of the directors isdisqualified as on 31 March 2016 from being appointed as a director in terms of Section164 (2) of the Act;

11 6 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

11 7 With respect to the other matters to be included in the Auditor’s Reportin accordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014 in ouropinion and to the best of our information and according to the explanations given to us:

11 7 1 The Company has disclosed the impact of pending litigations on its financialposition in its financial statements refer Note 26

11 7 2 The Company has made provision as required under the applicable law oraccounting standards for material foreseeable losses on long term contracts. There wereno long term derivative contracts.

11 7 3 There has been no delay in transferring amounts required to be transferredto the Investor Education and Protection Fund by the Company.

For GSV Associates

Chartered Accountants

FRN: 006179S

MR Venkatesh

Partner

M.No: 201407

Date: 26th May 2016

ANNEXURE - A TO THE AUDITORS’ REPORT

The Annexure referred to in Independent Auditors’ Report to the members of theCompany on the standalone financial statements for the year ended 31 March 2016 we reportthe following based on the audit conducted by us and explanation and information providedto us:

(i) (a) The company is maintaining proper records showing full particulars includingquantitative details and situation of fixed assets;

(b) The fixed assets have been physically verified by the management at reasonableintervals. No material discrepancies were noticed on such verification

(c) The title deeds of the immovable properties are held in the name of the company.

(ii) In our opinion physical verification of inventory has been conducted atreasonable intervals by the management and that no material discrepancies were noticed.

(iii) The company has granted advances to parties covered in the register maintainedunder section 189 of the Companies Act 2013 the outstanding balances on 31st March 2016of which are provided below:

In our opinion

1 In our opinion the terms and conditions are prejudicial to the interest of thecompany with respect to interest-free loan given to S&S Power Switchgear Equipment Ltdto the extent of Rs 37500000.

2 No interest / principal repayment schedule has been stipulated with respect tothese loans and the repayments of the same are not regular

3 In absence of any specified repayment schedule we are not able to comment to theextent of loan which is overdue. In our opinion the company is in process ofrecovering loans by way of greater scrutiny of the company’s operation.

(iv) During the year the company had not advanced any loans in contravention ofsection 185 of Companies Act 2013.

(v) The company has not accepted any deposits and consequently the directives issuedby Reserve Bank of India and provisions of section 73 to 76 of the Companies Act 2013 doesnot apply to the company.

(vi) In our opinion the company is not required to maintain cost records undersub-section 1 of section 148 of the Companies Act 2013

(vii) (a) The company is generally regular in depositing undisputed statutory duesincluding provident fundemployees’ state insurance income-tax sales-tax servicetax duty of customs duty of excise value added tax cess andany other statutory dues tothe appropriate authorities. There are no arrears of statutory dues as on date whichremain arrear for more than 6 months.

(b) The Company has disputed the claim on account of statutory enactments at thevarious forums as set out below:

Nature of Statute Nature of Dues Amount as at 31st March 2016 (Rs) Period to which the amount relates Forum where the dispute is pending Remarks
1 Central Excise Act 1944 Excise Duty 39189657 1993 to 1997 CESTAT – Chennai Company preferring an appeal before Madras High Court. The Company has Pre- Deposit of Rs. 50.00 Lacs.
2 Foreign Trade Policy Differential Custom Duty 17247439 1998 to 1999 DGFT – Delhi Matter pending before DGFT – Delhi.
3 Income Tax Act1961 Tax on waiver of principal portion of loans by Bankers 9298960 A.Y 2007-08 ITAT – Chennai Department filed an appeal against order of CIT (A).

(viii) The company has not defaulted in repayment of loans or borrowing to a financialinstitution bank or Government. The company has not made any borrowings throughdebentures.

(ix) The company has not raised any money by way of initial public offer or furtherpublic offer during the financial year

(x) No fraud has been noticed by the company or by the officers or employees againstthe company during the financial year.

(xi) The company has paid managerial remuneration in compliance with the necessaryapprovals as provided by section 197 of the Companies Act 2013.

(xii) The company is not a Nidhi Company

(xiii) In as much as the transactions with the related parties of the company are atarms’ length we are of the opinion that the company has complied with provisions ofsection 177 and 188 of the Companies Act 2013. The company has made adequate disclosureswith respect to the transactions with related parties as required under the applicableAccounting standards.

(xiv) The company has not made any preferential allotment or private placement of anyshares during the financial year.

(xv) The company has not entered into any non-cash transactions with directors orpersons connected with them.

(xvi) In our opinon the company is not required to be registered under section 45-IAof the Reserve Bank of India Act

For GSV Associates

Chartered Accountants

FRN: 006179S

MR Venkatesh

Partner

M.No: 201407

Date: 26th May 2016

ANNEXURE - B TO THE AUDITORS’ REPORT

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 S&SPower Switchgear Ltd ("the Company") as of 31 March 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

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 safeguardingof its 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

Auditors’ Responsibility

Our responsibility is to express financial reporting based on our audit.opinion on theCompany’s internal financial controls over We conducted our audit in accordance withthe Guidance Note on Audit of Internal Financial Controls over Financial Reporting (the"Guidance Note") and the Standards on Auditing issued by ICAI and deemed to beprescribed under section 143(10) of the Companies Act 2013 to the extent applicable toan audit of internal financial controls both applicable to an audit of Internal Controlsand both issued by the Institute of Chartered Accountants of India. Those Standards andthe Guidance Note require that we comply with ethical requirements and plan and performthe audit to obtain reasonable assurance about whether adequate internal financial 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 test -ing and evaluating thedesign and operating effectiveness of internal control based on the assessed risk. Theprocedures selected depend on the auditor’s judgment including the assessment of therisks of material misstatement of the financial 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 controlssystem over financial reporting.

Meaning of Internal Financial Controls over Financial Reporting

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 financial statements for external 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 acceptedaccounting principles and that receipts and expenditures of the company financial arebeing made only in accordance with authorisations of management and directors of thecompany; and (3) provide reasonable assurance regarding prevention or timely detection ofunauthorised acquisition use or disposition of the company’s assets that could havea material 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 improp -er 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 financialreporting may become inadequate because of changes in conditions or thatthe degree of compliance with the policies or procedures may deteriorate.

Opinion

In our opinion the Company has in all material respects an adequate internalfinancial controls system over financial reporting effectively as at 31 March 2016 basedon the inter overfinancial andsuchinternalfinancial -nal control over financial reportingcriteria established by the Company considering the essential components of stated in theGuidance Note on Audit of Internal Financial Controls Over Financial Reporting issued bythe Institute of Chartered Accountants of India.

For GSV Associates

Chartered Accountants

FRN: 006179S

MR Venkatesh

Partner

M.No: 201407

Date: 26th May 2016