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Bharat Forge Ltd.

BSE: 500493 Sector: Engineering
NSE: BHARATFORG ISIN Code: INE465A01025
BSE 12:54 | 20 Mar 509.45 -8.50
(-1.64%)
OPEN

515.00

HIGH

515.00

LOW

505.80

NSE 12:44 | 20 Mar 508.25 -8.45
(-1.64%)
OPEN

515.65

HIGH

516.95

LOW

505.15

OPEN 515.00
PREVIOUS CLOSE 517.95
VOLUME 55312
52-Week high 783.90
52-Week low 452.00
P/E 25.41
Mkt Cap.(Rs cr) 23,720
Buy Price 508.70
Buy Qty 100.00
Sell Price 509.25
Sell Qty 56.00
OPEN 515.00
CLOSE 517.95
VOLUME 55312
52-Week high 783.90
52-Week low 452.00
P/E 25.41
Mkt Cap.(Rs cr) 23,720
Buy Price 508.70
Buy Qty 100.00
Sell Price 509.25
Sell Qty 56.00

Bharat Forge Ltd. (BHARATFORG) - Auditors Report

Company auditors report

To the Members of Bharat Forge Limited

Report on the Standalone Ind AS Financial Statements

We have audited the accompanying standalone Ind AS financial statements of the BalanceSheet as at March 31 2018 the Statement of Profit and Loss including the statement ofOther Comprehensive Income the Cash Flow Statement and the Statement of Changes in Equityfor the year then ended and a summary of significant accounting policies and otherexplanatory information.

Management's Responsibility for the Standalone Ind AS 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 Ind AS financial statements that give a true and fair view of thefinancial position financial performance including other comprehensive income cash flowsand changes in equity of the Company in accordance with accounting principles generallyaccepted in India including the Indian Accounting Standards (Ind AS) specified undersection 133 of the Act read with the Companies (Indian Accounting Standards) Rules 2015as amended. 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 the design implementation and maintenance of adequateinternal financial control that were operating effectively for ensuring the accuracy andcompleteness of the accounting records relevant to the preparation and presentation ofthe Ind AS financial statements that give a true and fair view and are free from materialmisstatement whether due to fraud or error.

Auditor's Responsibility

Our responsibility is to express an opinion on these standalone Ind AS 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. We conductedour audit of the standalone Ind AS financial statements in accordance with the Standardson Auditing issued by the Institute of Chartered Accountants of India as 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 financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts anddisclosures in the financial statements. The procedures selected depend on the auditor'sjudgment including the assessment of the risks of material misstatement of the standaloneInd AS 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 Ind AS financial statements that give a true and fair viewin order to design audit procedures that are appropriate in the circumstances. An auditalso includes evaluating the appropriateness of accounting policies used and thereasonableness of the accounting estimates made by the Company's Directors as well asevaluating the overall presentation of the standalone Ind AS financial statements. Webelieve that the audit evidence we have obtained is sufficient and appropriate to providea basis for our audit opinion on the standalone Ind AS financial statements.

Opinion

In our opinion and to the best of our information and according to the explanationsgiven to us the standalone Ind AS financial statements give the information required bythe 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 2018 its profit including other comprehensive income its cash flows andthe changes in equity for the year ended on that date.

Report on Other Legal and Regulatory Requirements

1. 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 ofthe Act we give in the Annexure 1 a statement on the matters specified in paragraphs 3and 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 purpose 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 Statement of Profit and Loss including the Statement of OtherComprehensive Income the Cash Flow Statement and Statement of Changes in Equity dealtwith by this Report are in agreement with the books of account;

(d) In our opinion the aforesaidstandaloneIndASfinancial statements comply with theAccounting Standards specified under section 133 of the Act read with Companies (IndianAccounting Standards) Rules 2015 as amended;

(e) On the basis of written representations received from the directors as on March 312018 and taken on record by the Board of Directors none of the directors isdisqualifiedas on March 31 2018 from being appointed as a director in terms of section164 (2) of the Act;

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

(g) With respect to the other matters to be included in the Auditor's Report inaccordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014 in our opinionand 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 financialposition in its standalone Ind AS financial statements Refer Note 38 to the standalone IndAS financial statements;

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

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

iv. The disclosure with respect to holding of and dealings in Specified Bank Notes isnot applicable to the Company for the year ended March 31 2018 and accordingly has notbeen reported upon by us. Refer Note 13 of the standalone Ind AS

Financial Statements.

Annexure 1 referred to in paragraph 1 under the heading "Report on Other Legal andRegulatory Requirements" of our report of even date.

Re: Bharat Forge Limited (‘the Company')

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

(b) All fixed assets have not been physicallyverifiedby the management during the yearbut there is a regular programme of verification which in our opinion is reasonablehaving regard to the size of the Company and the nature of its assets. No materialdiscrepancies were noticed on such verification.

(c) According to the information and explanations given by the management the titledeeds of immovable properties included in property plant and equipment are held in thename of the Company except six number of immovable properties aggregating gross block ofINR 18.43 millon and net block of INR17.15 million as at March 31 2018 for which titledeed were not available with the Company and hence we are unable to comment on the same.

(ii) The inventory hasbeenphysicallyverifiedby the management during the year. In ouropinion the frequency of verification is reasonable. No material discrepancies werenoticed on such physical verification. Inventories lying with third parties have been ythem as at March 31 2018 and no material discrepancies were noticed in respect of suchconfirmations. b confirmed

(iii) (a) The Company has granted loans to four companies covered in the registermaintained under section 189 of the Act. In our opinion and according to the informationand explanations given to us the terms and conditions of the loans are not prejudicial tothe Company's interest.

(b) In respect of loans granted to companies covered in the register maintained undersection 189 of the Act repayment of the principal amount is as stipulated and payment ofinterest has been regular except for loans granted by the Company to two of itssubsidiaries where payment of interest has not been regular.

(c) The Company has a sum of amounts (representing interest) aggregating to INR 24.04million which are overdue for more than ninety days from two Companies covered in theregister maintained under section 189 of the Act and in our opinion and according to theinformation and explanations given by the management the Company has taken reasonablesteps for recovery of these overdue interest.

Details of overdue cases mentioned below:

INR in Million
Name of Parties Interest Overdue
BF Elbit Advanced Systems Private Limited* 20.57
Bharat Forge Global Holding GmbH# 3.47

* Amount has been converted to loan as on March 31 2018 # Amount has been recoveredsubsequently

(iv) In our opinion and according to the information and explanations given to usprovisions of sections 185 and 186 of the Act in respect of loans to directors includingentities in which they are interested and in respect of loans and advances giveninvestments made and guarantees and securities given have been complied with by theCompany.

(v) The Company has not accepted any deposits within the meaning of sections 73 to 76of 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. Howeveraccording to the information and explanations given to us in respect of deposits acceptedearlier under relevant provisions of the erstwhile Companies Act 1956 and the rulesframed thereunder there are certain unclaimed deposit amounting to INR 0.04 millionincluding interest thereon which are subject to litigation.

(vi) We have broadly reviewed the books of account maintained by the Company pursuantto the rules made by the Central Government for the maintenance of cost records undersection 148(1) of the Act related to the manufacture of forged and other allies productsand are of the opinion that prima facie the specified accounts and records have been madeand maintained. We have not however made a detailed examination of the same.

(vii) (a) Undisputed statutory dues including provident fund employees' stateinsurance income-tax sales-tax service tax duty of custom duty of excise value addedtax local body tax goods and service tax cess and other material statutory dues havegenerally been regularly deposited with the appropriate authorities though there has beenslight delay in few cases.

(b) According to the information and explanations given to us no undisputed dues inrespect of provident fund employees' state insurance income-tax sales-tax service taxduty of custom duty of excise value added tax goods and service tax cess and otherstatutory dues which were outstanding at the year end for a period of more than sixmonths from the date they became payable. The dues outstanding of Local Body Taxes onaccount of undisputed amounts outstanding as at year end for a period of more than sixmonths from the date they become payable are as follows:

Name of the statute Nature of the dues Amount (INR in million) Period to which the amount relates Due date Date of payment Remarks if any
Maharashtra Municipal Corporation Act 1949 and Bombay Provincial Municipal Corporation (Local Body Tax) Rules 2010 (LBT rules) Local Body Tax (LBT) 119.83 PY 2015-16 2016-17 & 2017-18 Various dates Not paid -

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

Name of the statute Nature of the dues Amount (INR in million)# Period to which the amount relates Forum where the dispute is pending
Income Tax Act 1961 Non deduction of withholding taxes u/s 195 (INR 54.92 million paid under protest) - AY 2014-15 ITAT
Property tax# Demand received for various cases (INR 135.51 million paid under protest) 149.03 AY 2005-06 to 2016-2017 High Court of Bombay
Central Excise Act 1944 Demand received for various cases (INR 8.92 million paid under protest) 54.15 AY 2004-05 to 2016-2017 Commissioner Appeals/ CESTAT/ High Court
Customs Act 1962 Demand received for wrong availment of duty drawback (INR 157.40 million paid under protest) - AY 2012-13 to 2013-2014 Principal Commissioner (RA)andex- Additional secretary to the Government of India

# Excludes interest and penalty and net of amounts paid under protests.

(viii) In our opinion and according to the information and explanations given by themanagement the Company has not defaulted in repayment of loans or borrowing to a bank orgovernment. The Company did not have any outstanding dues in respect of financialinstitution and debenture holders.

(ix) In our opinion and according to the information and explanations given by themanagement the Company has utilized the monies raised by way of term loans for thepurposes for which they were raised. The Company does not have any unutilised money out ofinitial public offer / further public offer.

(x) Based upon the audit procedures performed for the purpose of reporting the true andfair view of the financial statements and according to the information and explanationsgiven by the management we report that no fraud by the Company or no material fraud onthe Company by the officers and employees of the Company has been noticed or reportedduring the year.

(xi) According to the information and explanations given by the management themanagerial remuneration has been paid / provided in accordance with the requisiteapprovals 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 ofclause 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 managementtransactions with the related parties are in compliance with sections 177 and 188 of theAct where applicable and the details have been disclosed in the notes to the financialstatements as required by the applicable accounting standards.

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

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

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

Annexure 2 referred to in paragraph 2(f) under the heading "Report on Other Legaland Regulatory Requirements" of our report of even date.

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 BharatForge Limited ("the Company") as of March 31 2018 in conjunction with our auditof the standalone Ind AS 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. These responsibilities includethe design implementation and maintenance of adequate internal financial controls thatwere operating effectively for ensuring the orderly and efficient conduct of its businessincluding adherence to the 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 Act.

Auditor's Responsibility

Our responsibility is to express an opinion on the Company's internal financialcontrols over financial reporting with reference to these standalone Ind AS financialstatements based on our audit. We conducted our audit in accordance with the Guidance Noteon Audit of Internal Financial Controls Over Financial Reporting (the "GuidanceNote") and the Standards on Auditing as specified under section 143(10) of the Actto the extent applicable to an audit of internal financial controls and both issued bythe Institute of Chartered Accountants of India. Those Standards and the Guidance Noterequire that we comply with ethical requirements and plan and perform the audit to obtainreasonable assurance about whether adequate internal financial controls over financialreporting with reference to these standalone Ind AS financial statements was establishedand maintained 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 over financial reporting with reference to thesestandalone Ind AS financial statements and their operating effectiveness. Our audit ofinternal financial controls over financial reporting included obtaining an understandingof internal financial controls over financial reporting with reference to these standaloneInd AS financial statements assessing the risk that a material weakness exists andtesting and evaluating the design and operating effectiveness of internal control based onthe assessed risk. The procedures selected depend on the auditor's judgement includingthe assessment of the risks of material misstatement of the financial statements whetherdue to fraud or error.

We believe that the audit evidence we have obtained is sufficient and appropriate toover financial reporting with reference to these standalone Ind AS financial statements.internal

Meaning of Internal Financial Controls over Financial Reporting with reference to theseFinancial Statements

A company's internal financial control over financial reporting with reference to thesestandalone Ind AS financial statements is a process designed to provide reasonableassurance regarding the reliability of financial reporting and the preparation offinancial statements for external purposes in accordance with generally acceptedaccounting principles. A Company's internal financial control over financial reportingwith reference to these standalone Ind AS financial statements includes those policies andprocedures that (1) pertain to the maintenance of records that in reasonable detailaccurately and fairly reflect the transactions and dispositions of the assets of thecompany; (2) provide reasonable assurance that transactions are recorded as necessary topermit preparation of financial statements in accordance with generally acceptedaccounting principles and that receipts and expenditures of the Company are being madeonly in accordance with authorisations of management and directors of the Company; and (3)provide reasonable assurance regarding prevention or timely detection of unauthorisedacquisition use or disposition of the Company's assets that could have a material effecton the financial statements.

Inherent Limitations of Internal Financial Controls over Financial Reporting withreference to these Standalone Ind AS Financial Statements

Because of the inherent limitations of internal financial controls over financialreporting with reference to these standalone Ind AS financial statements including thepossibility of collusion or improper management override of controls materialmisstatements due to error or fraud may occur and not be detected. Also projections ofany evaluation of the internal financial controls over financial reporting with referenceto these standalone financial statements to future periods are subject to the risk thatthe internal financial control over financial reporting with reference to these standaloneInd AS financial statements may become inadequate because of changes in conditions orthat the degree of compliance with the policies or procedures may deteriorate.

Opinion

In our opinion the Company has in all material respects adequate internal financialcontrols over financial reporting with reference to these standalone Ind AS financialstatements and such internal financial controls over financial reporting with reference tothese standalone Ind AS financial statements were operating effectively as at March 312018 based on the internal control over financial reporting criteria established by theCompany considering the essential components of internal control stated in the GuidanceNote on Audit of Internal Financial Controls Over Financial Reporting issued by theInstitute of Chartered Accountants of India.

For S R B C & CO LLP

Chartered Accountants

ICAI Firm Registration Number: 324982E/E300003

per Tridevlal Khandelwal

Partner

Membership Number: 501160

Place of Signature: Pune

Date: May 22 2018