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Bajaj Electricals Ltd.

BSE: 500031 Sector: Consumer
NSE: BAJAJELEC ISIN Code: INE193E01025
BSE 00:00 | 08 Apr 288.10 10.25
(3.69%)
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279.60

HIGH

294.35

LOW

279.60

NSE 00:00 | 08 Apr 287.80 10.50
(3.79%)
OPEN

277.30

HIGH

294.50

LOW

277.30

OPEN 279.60
PREVIOUS CLOSE 277.85
VOLUME 5010
52-Week high 573.40
52-Week low 260.00
P/E 115.24
Mkt Cap.(Rs cr) 3,277
Buy Price 284.50
Buy Qty 90.00
Sell Price 288.10
Sell Qty 116.00
OPEN 279.60
CLOSE 277.85
VOLUME 5010
52-Week high 573.40
52-Week low 260.00
P/E 115.24
Mkt Cap.(Rs cr) 3,277
Buy Price 284.50
Buy Qty 90.00
Sell Price 288.10
Sell Qty 116.00

Bajaj Electricals Ltd. (BAJAJELEC) - Auditors Report

Company auditors report

To the Members of Bajaj Electricals Limited

Report on the Audit of the Standalone Ind AS Financial Statements

Opinion

1. We have audited the accompanying standalone Ind AS financial statements of Bajaj Electricals Limited (the Company) which comprise the Balance sheet as at March 31 2019 the Statement of Profit and Loss including the statement of Other Comprehensive Income the Cash Flow Statement and the Statement of Changes in Equity for the year then ended and notes to the financial statements including a summary of significant accounting policies and other explanatory information.

In our opinion and to the best of our information and according to the explanations given to us the aforesaid standalone Ind AS financial statements give the information required by the Companies Act 2013 as amended (`the Act) in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India of the state of affairs of the Company as at March 31 2019 its profit including other comprehensive income its cash flows and the changes in equity for the year ended on that date.

Basis for Opinion

2. We conducted our audit of the standalone Ind AS financial statements in accordance with the Standards on Auditing (SAs) as specified under section 143(10) of the Act. Our responsibilities under those Standards are further described in the `Auditor's Responsibilities for the Audit of the Standalone Ind AS Financial Statements' section of our report. We are independent of the Company in accordance with the `Code of Ethics' issued by the Institute of Chartered Accountants of India together with the ethical requirements that are relevant to our audit of the financial statements under the provisions of the Act and the Rules thereunder and we have fulfilled our other ethical responsibilities in accordance with these requirements and the Code of Ethics. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the standalone Ind AS financial statements.

Key Audit Matters

3. Key audit matters are those matters that in our professional judgment were of most significance in our audit of the standalone Ind AS financial statements for the financial year ended March 31 2019. These matters were addressed in the context of our audit of the standalone Ind AS financial statements as a whole and in forming our opinion thereon and we do not provide a separate opinion on these matters. For each matter below our description of how our audit addressed the matter is provided in that context.

4. We have determined the matters described below to be the key audit matters to be communicated in our report. We have fulfilled the responsibilities described in the Auditor's responsibilities for the audit of the standalone Ind AS financial statements section of our report including in relation to these matters. Accordingly our audit included the performance of procedures designed to respond to our assessment of the risks of material misstatement of the standalone Ind AS financial statements. The results of our audit procedures including the procedures performed to address the matters below provide the basis for our audit opinion on the accompanying standalone Ind AS financial statements.

Key audit mattersHow our audit addressed the key audit matter
A. Cost to complete estimates in the EPC business segment and receivable in respect of the Madhyanchal and Purvanchal projects [Refer Note 1D (3) of the standalone Ind AS financial statements]
Revenue from construction contracts is recognised based on the stage of completion determined with reference to the actual costs incurred up to reporting date on the construction contract and the estimated cost to complete the project. Cost estimates involves judgments including those relating to cost escalations; assessment of technical political regulatory and other related contract risks and their financial estimation; scope of deliveries and services required for fulfilling the contractually defined obligations and expected delays if any.Our audit procedures included the following:
 Evaluation of the design and operating effectiveness of controls relating to cost estimation;
Further for the year ended March 31 2019 H160893 lakh of the revenue from the EPC business segment pertains to the Madhyanchal and Purvanchal projects in Uttar Pradesh (`UP projects'). Also as at March 31 2019 H121852 lakh of `Trade receivables' and H657 lakh `Amounts due to customers for contract work' relates to the aforesaid projects. The revenue and receivables of the UP projects are material to the financial statements. Selected projects by applying audit sampling techniques and examining whether the cost estimates for these projects are in line with the supplier quotations obtained by the management and other internal estimates where latest supplier quotations are not available. Further examining the contingencies identified by the management in these projects and corroborating the same with internal / external evidence available with the management.
 Evaluation of delay analysis performed by the Company and testing with corroborative evidence like contractual terms and correspondences with the customers.
Accordingly cost to come estimates and receivables in respect of UP projects have been considered as a key audit matter. For the UP projects examined whether the recognition and measurement of the receivables are in line with terms and conditions of the contract entered into with the customer including management assessment of recoverability of the outstanding balance as at March 31 2019.
B. Impairment allowance on trade receivables pertaining to operationally closed projects in Power Distribution (PD) and Transmission Line Tower (TLT) business [Refer Note 1D (2) and Note 5 of the standalone Ind AS financial statements] As at March 31 2019 trade receivables of H23968 lakh (net of impairment allowance of H6694 lakh) related to amounts collectible in respect of operationally closed projects in the PD and TLT business. In determining whether an impairment allowance is required the management takes into consideration the aging status and likelihood of collection based on contractual terms past experience customer claims etc. Based on such assessment specific allowances are made for receivables that are unlikely to be collected.
Our audit procedures included the following
 Examined management basis for identification of amounts which are `overdue' and `not due' for operationally closed projects where the receivables were material. For these samples assessed whether the rationale behind the management's judgment in determining the impairment provisions are adequate.
 Examined the provisions made for these receivables by evaluating the overdue balances customer's historical payment patterns and post year-end payments.
Due to the involvement of high level of management judgement and materiality of the amounts involved we considered the same as a key audit matter.Additionally we also examined corroborative evidence including correspondence supporting any disputes between the parties involved attempts by management to recover the amounts outstanding and the credit status of significant counterparties where available.
C. Recoverability of advances investments in associates and recognition of liability for guarantee given for loans taken by associate [Refer Note 4.1 4.2 and Note 40(a)(ix) of the standalone Ind AS financial statements]
As at March 31 2019 the Company has the following in respect of Starlite Lighting Limited (`SLL'):-Our audit procedures included the following
 Equity investment of H1637 lakh fully impaired. Obtained management's future cash flow forecasts for SLL and testing the mathematical accuracy of the underlying value-in-use calculations and agreeing them to the approved one-year financial budget and future forecasts.
 Preference investment of H1358 lakh measured at fair value through profit and loss
 Preference investment of H4294 lakh measured at amortised cost fully impaired  Comparing historical actual results to those budgeted and understanding the reasons for significant deviations in assessing the quality of management's forecasts.
 Trade advances of H4646 lakh (net of impairment allowance of H2200 lakh)
 Loans of H280 lakh fully impaired
 Financial guarantee of H24200 lakh given by the Company for loans taken by SLL from the banks SLL has been making losses over the past several years. Management has performed a fair value assessment by forecasting and discounting future cash flows which involve significant estimates and judgment and determined that:- Assessing the key assumptions used in the fair value assessment comprising sales growth rates gross profit margin net profit margin perpetual growth rate and discount rates.
a) No further impairment is required to be recorded for the year ended March 31 2019. Obtained the valuation report prepared by external valuation specialists from the management and assessed the reasonableness of the above assumptions used by management.
b) No liability is probable on the financial guarantee given by the Company for loans taken by SLL. Accordingly it has been determined as a key audit matter. Assessing the headroom calculation performed by the management based on the recoverable value determined above and by performing sensitivity testing of key assumptions used.

Other Information

5. The Company's Board of Directors is responsible for the other information. The other information comprises business responsibility report corporate governance report and management discussion and analysis but does not include the standalone Ind AS financial statements and our auditor's report thereon which we obtained prior to the date of this auditor's report and the message from chairman financial snapshot and directors' report which is expected to be made available to us after that date.

Our opinion on the standalone Ind AS financial statements does not cover the other information and we do not and will not express any form of assurance conclusion thereon.

In connection with our audit of the standalone Ind AS financial statements our responsibility is to read the other information identified above and in doing so consider whether the other information is materially inconsistent with the standalone Ind AS financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated.

If based on the work we have performed on the other information that we obtained prior to the date of this auditor's report we conclude that there is a material misstatement of this other information we are required to report that fact. We have nothing to report in this regard.

When we read the remaining report if we conclude that there is a material misstatement therein we are required to communicate the matter to those charged with governance and shall comply with the relevant applicable requirements of the Standard on Audit for The Auditor's Responsibility in relation to Other Information in Documents containing audited financial statements.

Responsibilities of Management for the Standalone Ind AS Financial Statements

6. The Company's Board of Directors is responsible for the matters stated in section 134(5) of the Act with respect to the preparation of these standalone Ind AS financial statements that give a true and fair view of the financial position financial performance including other comprehensive income cash flows and changes in equity of the Company in accordance with the accounting principles generally accepted in India including the Indian Accounting Standards (Ind AS) specified under section 133 of the Act read with the Companies (Indian Accounting Standards) Rules 2015 as amended. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding of the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and the design implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the accuracy and completeness of the accounting records relevant to the preparation and presentation of the standalone Ind AS financial statements that give a true and fair view and are free from material misstatement whether due to fraud or error.

7. In preparing the standalone Ind AS financial statements management is responsible for assessing the Company's ability to continue as a going concern disclosing as applicable matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations or has no realistic alternative but to do so. Those Board of Directors are also responsible for overseeing the Company's financial reporting process.

Auditor's Responsibilities for the Audit of the Standalone Ind AS Financial Statements

8. Our objectives are to obtain reasonable assurance about whether the standalone Ind AS financial statements as a whole are free from material misstatement whether due to fraud or error and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with SAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if individually or in the aggregate they could reasonably be expected to influence the economic decisions of users taken on the basis of these standalone Ind AS financial statements.

9. As part of an audit in accordance with SAs we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

 Identify and assess the risks of material misstatement of the standalone Ind AS financial statements whether due to fraud or error design and perform audit procedures responsive to those risks and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error as fraud may involve collusion forgery intentional omissions misrepresentations or the override of internal control.

 Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances. Under section 143(3)(i) of the Act we are also responsible for expressing our opinion on whether the Company has adequate internal financial controls system in place and the operating effectiveness of such controls.

 Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.

 Conclude on the appropriateness of management's use of the going concern basis of accounting and based on the audit evidence obtained whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company's ability to continue as a going concern. If we conclude that a material uncertainty exists we are required to draw attention in our auditor's report to the related disclosures in the financial statements or if such disclosures are inadequate to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. However future events or conditions may cause the Company to cease to continue as a going concern.

 Evaluate the overall presentation structure and content of the standalone Ind AS financial statements including the disclosures and whether the standalone Ind AS financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

10. We communicate with those charged with governance regarding among other matters the planned scope and timing of the audit and significant audit findings including any significant deficiencies in internal control that we identify during our audit.

11. We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence and where applicable related safeguards.

12. From the matters communicated with those charged with governance we determine those matters that were of most significance in the audit of the standalone Ind AS financial statements for the financial year ended March 31 2019 and are therefore the key audit matters. We describe these matters in our auditor's report unless law or regulation precludes public disclosure about the matter or when in extremely rare circumstances we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

Report on Other Legal and Regulatory Requirements

13. As required by the Companies (Auditor's Report) Order 2016 (the Order) issued by the Central Government of India in terms of sub-section (11) of section 143 of the Act we give in the Annexure 1 a statement on the matters specified in paragraphs 3 and 4 of the Order;

14. 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 best of our knowledge and belief were necessary for the purposes of our audit;

(b) In our opinion proper books of accounts required by law have been kept by the Company so far as it appears from our examination of those books;

(c) The Balance Sheet the Statement of Profit and Loss including the Statement of Other Comprehensive Income the Cash Flow Statement and Statement of Changes in Equity dealt with by this Report are in agreement with the books of account;

(d) In our opinion the aforesaid standalone Ind AS financial statements comply with the Accounting Standards specified under Section 133 of the Act read with Companies (Indian Accounting Standards) Rules 2015 as amended;

(e) On the basis of the written representations received from the directors as on March 31 2019 taken on record by the Board of Directors none of the directors is disqualified as on March 31 2019 from being appointed as a director in terms of Section 164 (2) of the Act;

(f) With respect to the adequacy of the internal financial controls over financial reporting of the Company with reference to these standalone Ind AS financial statements and the operating effectiveness of such controls refer to our separate Report in Annexure 2 to this report;

(g) In our opinion the managerial remuneration for the year ended March 31 2019 has been paid / provided by the Company to its directors in accordance with the provisions of section 197 read with Schedule V to the Act;

(h) With respect to the other matters to be included in the Auditor's Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014 as amended in our opinion and to the best of our information and according to the explanations given to us:

i. The Company has disclosed the impact of pending litigations on its financial position in its standalone Ind AS financial statements - Refer Note 40 to the standalone Ind AS financial statements;

ii. The Company has made provision as required under the applicable law or accounting standards for material foreseeable losses if any on long-term contracts including derivative contracts;

iii. There has been no delay in transferring amounts required to be transferred to the Investor Education and Protection Fund by the Company.

For S R B C & CO LLP
Chartered Accountants
ICAI Registration number: 324982E/E300003
per Vikram Mehta
Place: Mumbai Partner
Date: May 22 2019 Membership No.: 105938

Annexure 1 To The Independent Auditors Report Referred To In Paragraph 13 Under The Heading `Report On Other Legal And Regulatory Requirements' Of Our Report Of Even Date

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

(b) All fixed assets have not been physically verified by the management during the year but there is a regular programme of verification which in our opinion is reasonable having regard to the size of the Company and the nature of its assets. No material discrepancies were noticed on such verification.

(c) According to the information and explanations given by the management the title deeds of immovable properties included in property plant and equipment/ fixed assets are held in the name of the Company.

(ii) The management has conducted physical verification of inventory at reasonable intervals during the year and no material discrepancies were noticed on such physical verification. There was no inventory lying with third parties.

(iii) According to the information and explanations given to us the Company has not granted any loans secured or unsecured to companies firms Limited Liability Partnerships or other parties covered in the register maintained under section 189 of the Act. Accordingly the provisions of clause 3(iii)(a) (b) and (c) of the Order are not applicable to the Company and hence not commented upon.

(iv) In our opinion and according to the information and explanations given to us provisions of section 185 and 186 of the Act in respect of loans to directors including entities in which they are interested and in respect of loans and advances given investments made and guarantees and securities given have been complied with by the Company.

(v) The Company has not accepted any deposits within the meaning of Sections 73 to 76 of the Act and the Companies (Acceptance of Deposits) Rules 2014 (as amended). Accordingly the provisions of clause 3(v) of the Order are not applicable.

(vi) We have broadly reviewed the books of account maintained by the Company pursuant to the rules made by the Central Government for the maintenance of cost records under section 148(1) of the Companies Act 2013 related to the manufacture its products and are of the opinion that prima facie the specified accounts and records have been made and maintained. We have not however made a detailed examination of the same.

(vii) (a) The Company is regular in depositing with appropriate authorities undisputed statutory dues including provident fund employees' state insurance income-tax sales-tax service tax duty of custom duty of excise value added tax goods and service tax cess and other statutory dues applicable to it.

(b) According to the information and explanations given to us no undisputed amounts payable in respect of provident fund employees' state insurance income-tax service tax sales-tax duty of custom duty of excise value added tax goods and service tax cess and other statutory dues were outstanding at the year end for a period of more than six months from the date they became payable.

(c) According to the records of the Company the dues of income-tax sales-tax service tax duty of custom duty of excise value added tax and cess on account of any dispute are as follows:

( H lakh)

Forum where dispute is pending

YearDy. Commissioner / Commissioner / Jt. Commissioner AppealsAppellate/ RevisionTribunalHigh courtTotal
Matter
Entry Tax2010-131.15-9.41-10.56
2013-1586.16---86.16
2015-1625.86---25.86
-
Sales tax2005-0737.80-9.38-47.18
2007-1027.08-1.82-28.89
2010-1219.60--6.4026.00
2012-14667.68211.48881.51309.802070.47
2014-151041.38-19.38-1060.76
2015-17240.15-5.75-245.90
Service Tax2005-10149.40---149.40
Customs2016-1715.49---15.49
Grand total2311.75211.48927.25316.203766.68

(viii) In our opinion and according to the information and explanations given by the management the Company has not defaulted in repayment of loans or borrowing to a financial institution bank or dues to debenture holders. The Company did not have any outstanding loans or borrowing dues to government during the year.

(ix) According to the information and explanations given by the management the Company has not raised any money way of initial public offer / further public offer / debt instruments) and term loans hence reporting under clause (ix) is not applicable to the Company and hence not commented upon.

(x) Based upon the audit procedures performed for the purpose of reporting the true and fair view of the financial statements and according to the information and explanations given by the management we report that no fraud by the company or no fraud / material fraud on the company by the officers and employees of the Company has been noticed or reported during the year.

(xi) According to the information and explanations given by the management the managerial remuneration has been paid / provided in accordance with the requisite approvals mandated by the provisions of section 197 read with Schedule V to the Act.

(xii) In our opinion the Company is not a nidhi company. Therefore the provisions of clause 3(xii) of the order are not applicable to the Company and hence not commented upon.

(xiii) According to the information and explanations given by the management transactions with the related parties are in compliance with section 177 and 188 of the Act where applicable and the details have been disclosed in the notes to the financial statements as required by the applicable accounting standards.

(xiv) According to the information and explanations given to us and on an overall examination of the balance sheet the company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures during the year under review and hence reporting requirements under clause 3(xiv) are not applicable to the company and not commented upon.

(xv) According to the information and explanations given by the management the Company has not entered into any non-cash transactions with directors or persons connected with him as referred to in section 192 of the Act.

(xvi) According to the information and explanations given to us the provisions of section 45-IA of the Reserve Bank of India Act 1934 are not applicable to the Company.

For S R B C & CO LLP
Chartered Accountants
ICAI Registration number: 324982E/E300003
per Vikram Mehta
Place: Mumbai Partner
Date: May 22 2019 Membership No.: 105938

Annexure 2 To The Independent Auditors Report Of Even Date On The Standalone Financial Statements of Bajaj Electricals Limited

Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section 143 of the Companies Act 2013 (the Act)

We have audited the internal financial controls over financial reporting of Bajaj Electricals Limited (the Company) as of March 31 2019 in conjunction with our audit of the standalone financial statements of the Company for the year ended on that date.

Management's Responsibility for Internal Financial Controls

The Company's Management is responsible for establishing and maintaining internal financial controls based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issued by the Institute of Chartered Accountants of India. These responsibilities include the design implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the orderly and efficient conduct of its business including adherence to the Company's policies the safeguarding of its assets the prevention and detection of frauds and errors the accuracy and completeness of the accounting records and the timely preparation of reliable financial information as required under the Act.

Auditor's Responsibility

Our responsibility is to express an opinion on the Company's internal financial controls over financial reporting with reference to these standalone financial statements based on our audit. We conducted our audit in accordance with the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting (the Guidance Note) and the Standards on Auditing as specified under section 143(10) of the Act to the extent applicable to an audit of internal financial controls and both issued by the Institute of Chartered Accountants of India. Those Standards and the Guidance Note require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether adequate internal financial controls over financial reporting with reference to these standalone financial statements was established and maintained and if such controls operated effectively in all material respects.

Our audit involves performing procedures to obtain audit evidence about the adequacy of the internal financial controls over financial reporting with reference to these standalone financial statements and their operating effectiveness. Our audit of internal financial controls over financial reporting included obtaining an understanding of internal financial controls over financial reporting with reference to these standalone financial statements assessing the risk that a material weakness exists and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. The procedures selected depend on the auditor's judgement including the assessment of the risks of material misstatement of the financial statements whether due to fraud or error.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the internal financial controls over financial reporting with reference to these standalone financial statements.

Meaning of Internal Financial Controls Over Financial Reporting With Reference to these Financial Statements

A company's internal financial control over financial reporting with reference to these standalone financial statements is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal financial control over financial reporting with reference to these standalone financial statements includes those policies and procedures that (1) pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles and that receipts and expenditures of the company are being made only in accordance with authorisations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorised acquisition use or disposition of the company's assets that could have a material effect on the financial statements.

Inherent Limitations of Internal Financial Controls Over Financial Reporting With Reference to these Standalone Financial Statements

Because of the inherent limitations of internal financial controls over financial reporting with reference to these standalone financial statements including the possibility of collusion or improper management override of controls material misstatements due to error or fraud may occur and not be detected. Also projections of any evaluation of the internal financial controls over financial reporting with reference to these standalone financial statements to future periods are subject to the risk that the internal financial control over financial reporting with reference to these standalone financial statements may become inadequate because of changes in conditions or that the degree of compliance with the policies or procedures may deteriorate.

Opinion

In our opinion the Company has in all material respects adequate internal financial controls over financial reporting with reference to these standalone financial statements and such internal financial controls over financial reporting with reference to these standalone financial statements were operating effectively as at March 31 2019 based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issued by the Institute of Chartered Accountants of India.

For S R B C & CO LLP
Chartered Accountants
ICAI Registration number: 324982E/E300003
per Vikram Mehta
Place: MumbaiPartner
Date: May 22 2019 Membership No.: 105938