To the Members of
SANGHVI FORGING & ENGINEERING LIMITED
Report on the Financial Statements
We have audited the accompanying financial statements of SANGHVI FORGING &ENGINEERING LIMITEDwhich comprise the Balance sheet as at 31 March 2016 and the Statementof Profit and Loss the Cash flow Statement for the year the ended and a summary ofsignificant policies and other explanatory information.
Managements Responsibility for the Financial Statements
The Companys Board of Directors is responsible for the matters stated in section134(5) of the companies Act 2013(the Act) with respect to the preparation andpresentation of these standalone financial statements of Companythat give a true and fairview of the financial position and financial performance and cash flows of the company inaccordance with the Accounting principles generally accepted in India includingaccounting Standards specifiedu/s 133 of the Act read with Rule 7 of the Companies(Accounts) Rules 2014. This responsibility includes maintenance of adequate accountingrecords in accordance with the provision of the Act for safeguarding the assets of thecompany and 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 internalsufficient and appropriate to provide a financial controls that were operatingeffectively for ensuring the accuracy and completeness of the accounting records relevantto the preparation and presentation of the financial statements that give a true and fairview and are free from material misstatement whether due to fraud or error.
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 accountingand auditing standards and matters which are required to be included in the audit reportunder the provisions of the act and the rules made there under.
We conducted our audit in accordance with the Standards on Auditing specified u/s143(10) of the Act. Those Standards require that we comply with ethical requirements andplan and perform the audit to obtain reasonable assurance about whether the financialstatements are free from material misstatement. An audit involves performing procedures toobtain audit evidence about the amounts and disclosures in the financial statements. Theprocedures selected depend on the auditors judgment including the assessment of therisks of material misstatement of the financial statements whether due to fraud or error.In making those risk assessments the auditor considers internal control relevant to thecompanys preparation of the financial statements that give true and fair view inorder to design audit procedures that are appropriate in the circumstances but not forthe purpose of expressing an opinion on whether the Companyhas in place an adequateinternal financial controls system over financial reporting and the operatingeffectiveness of such controls. An audit also includes evaluating the appropriateness ofaccounting policies used and the reasonableness of the accounting estimates made bymanagement as well as evaluating the overall presentation of the financial statements. Webelieve that the audit evidence we have obtained is for our audit opinion on thestandalone financial statements.
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 and give a true and fair view in conformity with the accountingprinciples generally accepted in India:
(i) in the case of the balance sheet of the state of affairs of the company as at 31March 2016; (ii) in the case of the statement of profit and loss of the Loss for the yearended on that date;
(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. As required by the Companies (Auditors 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 mattersspecified in paragraphs 3 and 4 of the Order.
2. As required by section 143(3) of the Act we report 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; and Loss
c. The Balance Sheet Statement of Profit and cash flow statement dealt with by thisReport are in agreement with the books of account;
d. In our opinion the Balance Sheet and Statement of Profit and Loss comply with theAccounting Standards referred to in section 133the Act read with rule 7 of the Companies(Accounts) Rules2014
e. On the basis of written representations received from the directors as on 31 March2016 and taken on record by the Board of Directors none of the directors is disqualifiedas on 31 March 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 matter to be included in the Auditors report in accordancewith Rule 11 of the Companies (Audit and Auditors) Rules2014 in our opinion and to thebest of our information and according to the explanations given to us:
i. The Company has disclosed the impact of pending litigations on its financialposition in Note 2.25(1A) of the standalone financial statements.
ii. The Company did not have any long term contracts including derivatives contractsfor which there were an material foreseeable losses;
iii. There is no such amount which is required to be transferto the Investor educationand protection fund in accordance with the relevant provisions of the Companies Act 1956and rules madethere under.
Annexure A to the Auditors Report
i. (a) The Company has maintained proper records showing full particulars includingquantitative details and situation of its fixed assets.
(b) As explained to us fixed assets are physically verified by the managementaccording to a phased programme designed to cover all items over a period of three yearwhich in our opinion is reasonable looking to the size of the company and its nature ofbusiness 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 properties areheld in the name of the company.
ii. (a) As explained to us Inventories has been physically verified during the yearand at the year-end.
(b) In our opinion the procedures of physical verification of inventory followed by themanagement are reasonable and adequate in relation to the size of the Company and thenature of its business.
(c ) The Company is maintaining proper records of inventory. In our opinion andaccording to information given to us no major discrepancies noticed on physicalverification of stocks as compared to book records .
iii. The Company has granted interest free unsecured loan to company covered in theregister maintained under section 189 of the Act.
(a) As information given to us the terms and conditions of grant of such loans is notprejudicial to the interest of the company.
(b) As information given to us there is no stipulation of repayment of loan.
(c) Since there is no stipulation of repayment of loan clause of the Order is notapplicable
iv. In our opinion and according to the information and explanations given to us theCompany has not given any Loans nor made any investments under the provisions of section185 and 186 of the Act.
v. The Company has not accepted any deposits during the year from the publicwithin the meaning of sections 73 & 74 of the Act and the rules framed there under tothe extent notified.
vi. We have broadly reviewed the cost records maintained by the Company pursuant toRules prescribed by the Central Government under Section 148(1) of the Act and are of theopinion that prima-facie the prescribed cost records have been maintained and are beingmade up. We have however not made a detailed examination of the cost records with a viewto determine whether they are accurate or complete.
vii. (a) According to the information and explanations given to us the company isgenerally regular in depositing undisputed statutory dues including provident fundemployees state insurance income-tax sales-tax service tax duty of customsduty of excise value added tax or cess dues with the appropriate authorities. There areno undisputed amounts payable as at 31.03.2016 for a period of more than six months fromthe date they became payable.
(b) According to the information and explanation given to us there are no dues ofincome-tax sales-tax service tax duty of customs duty of excise value added tax orcess dues under dispute as on 31st March 2016 except Income Tax Service Tax and ExciseDuty dues:
|Name of Statue ||Nature of Dues ||Amount ( Rs 000) ||Period to which it relates (F.Y.) ||Forum where the dispute is pending |
|Income Tax Act 1961 ||Income Tax ||282.61 ||2012-13 to 2013-14 ||ITAT Ahmedabad |
| || ||5000.00 || || |
|Central Excise Act 1944 ||Service Tax ||1955.60 ||2007-08 to 2011-12 ||CESTAT Ahmedabad |
|Central Excise Act 1944 ||Service Tax ||7653.06 ||2007-08 to 2013-14 ||Asst. Commissioner of Central Excise Custom & Service Tax Vadodara |
|Central Excise Act 1944 ||Excise ||2979.31 ||2011-12 to 2014-15 ||Additional Commissioner of Central Excise Custom & Service Tax Vadodara |
|Central Sales Tax Act 1956 ||Sales Tax ||7104.84 ||2010-11 to 2011-12 ||Asst. CCT (Appeal) |
viii. Based on our audit procedures and on the information and explanation given to usby management the company has defaulted in repayment of its loan and interest to thebanks. Estimated unpaid overdue instalments and interest to banks as at March 31 2016aggregated to C28296000/- & interest there on C25100000/- since January 2016(P.Y. C11118000 & Interest thereon of C1767000/- since February 2015).
ix. According to the information and explanations given to us the term loan wasapplied for the purpose for which they were obtained.
x. During the course of our examination of the books and records of the Companycarried out in accordance with the generally accepted auditing practices in India andaccording to the information and explanations given to us we have neither come across anyinstance of material fraud by the Company or on the Company by its officers or employeesnoticed or reported during the year nor have we been informed of any such case by theManagement.
xi. In our opinion and according to the information and explanations given to us themanagerial remuneration has been paid or provided in accordance with the requisiteapprovals mandated by the provisions of Section 197 read with Schedule V to the Act. xii.In our opinion and according to the information and explanations given to us the Companyis not of a nidhi company. Accordingly paragraph 3(xii) of the Order is not applicable.
xiii. In our opinion and according to the information and explanations given to us thecompany has entered into transactions with related parties in compliance with Section 188and 177 of Companies Act 2013 where applicable and the details of such related partytransactions have been disclosed in the financial statement as required by relevantAccounting Standards (AS) 18 Related Party Disclosures specified under Section 133 of theAct read with Rule 7 of the Companies (Accounts) Rules2014.
xiv. According to the information and explanations given to us The Company does nothave made any preferential allotment or private placement of shares or fully or partlyconvertible debentures during the year. Accordingly paragraph 3(xiv) of the Order is notapplicable.
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 him. Accordingly paragraph 3(xv) ofthe Order is not applicable.
xvi. The Company is not required to be registered under section 45-IA of the ReserveBank of India Act 1934. Accordingly the provisions of Clause 3(xvi) of the Order are notapplicable to the Company.
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 SANGHVIFORGING & ENGINEERING LIMITED as of 31 March 2016 in conjunction with our audit of thestandalone financial statements of the Company for the year ended on that date.
Managements Responsibility for Internal Financial Controls
The Companys 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 includethedesignimplementation sufficient and appropriate to provide aand maintenance of adequate internal financial controls that were operating effectivelyfor ensuring the orderly and efficient conduct of its business including adherence tocompanys policies the safeguarding of its assets the prevention and detection offrauds and errors the accuracy and completeness of the accounting records and the timelypreparation of reliable financial information as required under the Companies Act 2013.
Our responsibility is to express an opinion on the internal financial controls overfinancial reporting based on our audit. We conducted our audit in accordance with theGuidance Note on Audit of Internal Financial Controls over Financial Reporting (theGuidance 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 FinancialControls and both issued by the Institute of Chartered Accountants of India. ThoseStandards and the Guidance Note require that we comply with ethical requirements and planand perform the audit to obtain reasonable assurance about whether adequate internalfinancial controls over financial reporting was established in and maintained and if suchcontrols operated effectively 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 auditors 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 for our audit opinion on theinternal financial controls system over financial reporting.
Meaning of Internal Financial Controls over Financial Reporting
A companys 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 companys 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 financialstatements in accordance with generally accepted accounting principles and that receiptsand expenditures of the company are being made only in accordance with authorisations ofmanagement and directors of the company; and (3) provide reasonable assurance regardingprevention or timely detection of unauthorised acquisition use or disposition of thecompanys assets that could have a material effect on the financialstatements.
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 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 controls asat 31over financial reporting were operating effectively
March 2016 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.
| ||For Shah & Bhandari |
| ||Chartered Accountants |
| ||Firm No.: 118852W |
| ||Yogesh Bhandari |
|Place: Vadodara ||Partner |
|Date: 25th May 2016 ||M.No.046255 |