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Eimco Elecon (India) Ltd.

BSE: 523708 Sector: Engineering
NSE: EIMCOELECO ISIN Code: INE158B01016
BSE 00:00 | 26 Feb 307.95 0
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296.80

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307.95

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295.00

NSE 00:00 | 28 Feb 296.00 -9.80
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300.00

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302.00

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OPEN 296.80
PREVIOUS CLOSE 307.95
VOLUME 340
52-Week high 449.95
52-Week low 262.50
P/E 10.99
Mkt Cap.(Rs cr) 178
Buy Price 285.05
Buy Qty 100.00
Sell Price 307.95
Sell Qty 108.00
OPEN 296.80
CLOSE 307.95
VOLUME 340
52-Week high 449.95
52-Week low 262.50
P/E 10.99
Mkt Cap.(Rs cr) 178
Buy Price 285.05
Buy Qty 100.00
Sell Price 307.95
Sell Qty 108.00

Eimco Elecon (India) Ltd. (EIMCOELECO) - Auditors Report

Company auditors report

To

The Members of Eimco Elecon (India) Limited

Report on Audit of the Standalone Ind AS Financial Statements

Opinion

We have audited the accompanying Standalone Ind AS financial statements of Eimco Elecon(India) Limited (‘the Company') which comprise the Balance Sheet as at 31stMarch 2019; the Statement of Profit and Loss (including other comprehensive income) theCash Flows Statement and the Statement of Changes in Equity for the year then ended and asummary of the Significant Accounting Policies and other Explanatory Information (hereinafter referred to as “Standalone Ind AS financial statements”).

In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid Standalone Ind AS financial statements give the informationrequired by the Companies Act 2013 in the manner so required and give a true and fairview in conformity with the accounting principles generally accepted in India:

(i) in the case of the Balance Sheet of the state of affairs of the company as at 31stMarch 2019;

(ii) in the case of the Statement of Profit and Loss (comprising of Other ComprehensiveIncome) of the Profit for the year ended on that date; and

(iii) in the case of the Cash Flow Statement of the cash flows for the year ended onthat date and

(iv) the changes in equity for the year ended on that date.

Basis for Opinion

We conducted our audit in accordance with the Standards on Auditing (SAs) specifiedunder section 143(10) of the Companies Act 2013. Our responsibilities under thoseStandards are further described in the Auditor's Responsibilities for the Audit of theStandalone Ind AS financial statements section of our report. We are independent of theCompany in accordance with the Code of Ethics issued by the Institute of CharteredAccountants of India and we have fulfilled our other ethical responsibilities inaccordance with the provisions of the Companies Act 2013. We believe that the auditevidence we have obtained is sufficient and appropriate to provide a basis for ouropinion.

Key Audit Matters

Key audit matters are those matters that in our professional judgment were of mostsignificance in our audit of the Standalone Ind AS financial statements of the currentperiod. These matters were addressed in the context of our audit of the Standalone Ind ASfinancial statements as a whole and in forming our opinion thereon and we do not providea separate opinion on these matters.

KEY AUDIT MATTER HOW OUR AUDIT ADDRESSED THE MATTER
Existence and valuation of investments
Note 2.2 c. & Note 6(a) to the standalone balance sheet in the financial statements Our audit procedures to test the existence of the investments mainly consist of verifying quantity / unit balances and market values with demat statement / statements of respective assets management companies as well as verifying the relevant recording of gain or loss in value of respective investments at each balance sheet date.
Total investments of Rs 14927 Lakh represent 43% of total assets of the company. These investments mainly consist of current and non-current investments in mutual funds. Valuation of the investments is done at fair market value at each balance sheet date. Thus being very high proportion of total assets of the company as well as high amount of gain or loss credited / debited to statement of profit and loss account made us conclude that existence and valuation of investments are a key audit matter of our audit.
Based on the procedures described we consider the disclosure of investments value as current as well as non-current and recording of gain or loss on the same as acceptable.
Existence and valuation of inventories Our audit procedures to test the existence of the
Note 2.2 k. & Note 8 to the standalone balance sheet in the financial statements inventories mainly consist of testing the relevant internal control procedures specifically by testing the
Total inventories of Rs 4016 Lakh represent 11% of total assets of the company. These inventories mainly consist of inventories of raw material stores work in progress traded goods and finished goods. Valuation of the inventories is at lower of cost and net realizable value. Cost of raw material and traded goods comprises cost of purchases cost of work in progress and finished goods comprises direct materials appropriate share of labour and manufacturing overheads and valued at the lower of cost and net realizable value. Cost of inventories also includes all other cost incurred in bringing the inventories to their present location and condition. Cost of purchase inventory cycle counts that are periodically performed by management and internal auditors. We have also performed physical verification of inventories lying in stock as at the date of the balance sheet at stores to validate counts performed by the company. We compared our count results with the results of the counts by the company representatives.
To validate the valuation of inventories we performed test check of valuation done by the company including value of slow-moving and obsolete inventories. Furthermore we analyzed the inventory turnaround and compared that to management's estimates.
inventory is determined after deducting rebate and discounts. Net realizable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated cost necessary to make the sale. Based on the procedures described we consider management's estimates of the inventory valuation as well as its existence as acceptable.
These inventories being significant share of total assets made us conclude that existence and valuation of inventories are a key audit matter of our audit. Furthermore inventories are an important factor to consider in our procedures because of its impact on the revenues.

Responsibilities of the Management and Those Charged with Governance for the StandaloneInd 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 the accounting principlesgenerally accepted in India including the Indian Accounting Standards (Ind AS) prescribedunder Section 133 of the Act read with relevant rules issued thereunder.

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 Standalone IndAS financial statements that give a true and fair view and are free from materialmisstatement whether due to fraud or error.

In preparing the Standalone Ind AS financial statements the Board of Directors of thecompany are responsible for assessing the ability of the company to continue as a goingconcern disclosing as applicable matters related to going concern and using the goingconcern basis of accounting unless management either intends to liquidate the Company orto cease operations or has no realistic alternative but to do so.

The Board of Directors of the company are also responsible for overseeing the financialreporting process of the company.

AuditorsRs Responsibility

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

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

• Identify and assess the risks of material misstatement of the Standalone Ind ASfinancial statements whether due to fraud or error design and perform audit proceduresresponsive to those risks and obtain audit evidence that is sufficient and appropriate toprovide a basis for our opinion. The risk of not detecting a material misstatementresulting from fraud is higher than for one resulting from error as fraud may involvecollusion forgery intentional omissions misrepresentations or the override of internalcontrol.

• Obtain an understanding of internal controls relevant to the audit in order todesign audit procedures that are appropriate in the circumstances but not for the purposeof expressing an opinion on whether the Company has in place an adequate internalfinancial controls system over financial reporting and the operating effectiveness of suchcontrols.

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

• Conclude on the appropriateness of management's use of the going concern basisof accounting and based on the audit evidence obtained whether a material uncertaintyexists related to events or conditions that may cast significant doubt on the ability ofthe Company to continue as a going concern. If we conclude that a material uncertaintyexists we are required to draw attention in our auditor's report to the relateddisclosures in the Standalone Ind AS financial statements or if such disclosures areinadequate to modify our opinion. Our conclusions are based on the audit evidenceobtained up to the date of our auditor's report. However future events or conditions maycause the company to cease to continue as a going concern.

• Evaluate the overall presentation structure and content of the Standalone IndAS financial statements including the disclosures and whether the Standalone Ind ASfinancial statements represent the underlying transactions and events in a manner thatachieves fair presentation.

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

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

From the matters communicated with those charged with governance we determine thosematters that were of most significance in the audit of the Standalone Ind AS financialstatements of the current period and are therefore the key audit matters. We describethese matters in our auditor's report unless law or regulation precludes public disclosureabout the matter or when in extremely rare circumstances we determine that a mattershould not be communicated in our report because the adverse consequences of doing sowould reasonably be expected to outweigh the public interest benefits of suchcommunication.

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 A” a statement on the matters specified inparagraphs 3 and 4 of the Order to the extent applicable.

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 the Statement of Profit and Loss the Cash Flow Statement and theStatement of Changes in Equity dealt with by this Report are in agreement with the booksof account;

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

e. On the basis of written representations received from the directors as on 31stMarch 2019 taken on record by the Board of Directors none of the directors isdisqualified as on 31st March 2019 from being appointed as a director in termsof Section164(2) of the Act.

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”.

g. With respect to other matters to be included in the AuditorsRs Report in accordancewith Rule 11 of the Companies (Audit and Auditors) Rules 2014 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 its Ind AS financial statements- Refer Note 29 to the Standalone Ind ASfinancial statements;

(ii) The Company did not have any long-term contracts including derivative contractsfor which there were any material foreseeable losses;

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

For THACKER BUTALA DESAI
Chartered Accountants
ICAI Firm's Registration No.110864W
Yatin N. Patel
Place : Vallabh Vidyanagar Partner
Date : 7th May 2019 Membership No. 122676

‘ANNEXURE - A TO THE INDEPENDENT AUDITORS REPORT

Referred to in paragraph 1 under the heading ‘Report on Other Legal &Regulatory RequirementRs of our report of even date to the Standalone Ind AS financialstatements of the Eimco Elecon (India) Limited for the year ended 31stMarch 2019:

(i) (a) The Company has maintained proper records showing full particulars includingquantitative details and situation of property plant and equipment and investmentproperties.

(b) Majority of the assets have been physically verified by the management in a phasedmanner at reasonable intervals. According to the information and explanation given to usno material discrepancies were noticed on such verification. In our opinion thisperiodicity of physical verification is reasonable having regard to the size of theCompany and its assets.

(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 the immovable propertiesheld are in the name of the Company except in respect of one immovable property whichthe Company is in process of registering the title deeds in its name (carrying value: Rs755.29 Lakh included in Land and Rs 225.35 Lakh included in Buildings).

(ii) According to the information and explanations given to us physical verificationof inventories has been conducted at reasonable intervals by the management. Thediscrepancies noticed on physical verification of inventories as compared to the bookrecords which in our opinion were not material have been properly dealt with.

(iii) According to information and explanations given to us the company has notgranted loans secured or unsecured to companies firms Limited Liability Partnerships orother parties covered in the register maintained under section 189 of the Companies Act2013. Hence clauses (iii) (a) (b) & (c) of paragraph 3 of the Order are notapplicable to the Company.

(iv) In our opinion and according to the information and explanations given to us theCompany has complied with the provisions of Sections 185 and 186 of the Companies Act2013 in respect of grant of loans making investments and providing guarantees andsecurities as applicable.

(v) In our opinion and according to the information and explanations given to us theCompany has not accepted any deposit and hence the provisions of Section 73 to 76 or anyother relevant provisions of the Companies Act and the Companies (Acceptance of Deposits)Rules 2014 with regard to the deposits accepted are not applicable to the Company.Therefore the provisions of Clause (v) of paragraph 3 of the Order are not applicable tothe Company. According to the information and explanations given to us no order has beenpassed by the Company Law Board or the National Company Law Tribunal or the Reserve Bankof India or any Court or any other Tribunal.

(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 Companies Act 2013 and are of the opinion that prima facie theprescribed accounts and records have been made and maintained. We have however not madea detailed examination of the cost records with a view to determine whether they areaccurate or complete.

(vii) In respect of Statutory dues:

(a) According to the records of the Company the Company is regular in depositing withappropriate authorities undisputed statutory dues including Provident Fund EmployeesRsState Insurance Income Tax Goods & Service Tax Sales Tax Service Tax Duty ofCustoms Duty of Excise Value Added Tax Cess and any other statutory dues applicable toit. According to the information and explanations given to us no undisputed amountspayable in respect of the aforesaid statutory dues were outstanding as at 31stMarch 2019 for a period of more than six months from the date they became payable.

(b) The disputed statutory dues aggregating to Rs 1400.33 Lakh that have not beendeposited on account of disputed statutory matters pending before appropriate authoritiesare as under:

Sr. No. Name of the Statute Nature of the Dues Amount* (? In Lakh) Period to which the amount Relates Forum where dispute is pending
1. Central Excise Act 1944 Excise Duty & Service Tax 1315.00 Various years from 2006-07 to 2013-14 CESTAT Ahmedabad
2. Gujarat VAT Act 2003 VAT 85.33 Various years from 2008-09 to 2013-14 JCCT (Appeal) Vadodara

*Net of amounts paid under protest & excluding unquantified Interest payablewherever applicable.

(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.The Company does not have any dues outstanding to debenture holder or financialinstitution or government in the nature of loan or borrowing.

(ix) In our opinion and to the best of our information and according to theexplanations provided by the management the Company has not raised any monies by way ofInitial Public Offer or Further Public Offer during the year. In our opinion and to thebest of our information and according to the explanations provided by the management theterm loans taken by the Company have been applied for the purpose for which they wereobtained.

(x) Based on the audit procedures performed and representation obtained from themanagement we report that no case of fraud by the Company or on the Company by itsofficers and employee has been noticed or reported for the year under audit.

(xi) In our opinion and according to the information and explanations given to us theCompany has provided managerial remuneration in accordance with the requisite approvalsmandated by the provisions of section 197 read with Schedule V to the Companies Act 2013.

(xii) In our opinion and to the best of our information and according to theexplanations provided by the management the company is not a nidhi company. Hence in ouropinion the requirements of clause (xii) of Paragraph 3 of the Order do not apply to theCompany.

(xiii) The Company has complied with Sections 177 and 188 of Companies Act 2013 inrespect of transactions with the related parties and relevant details have been disclosedin the Ind AS financial statements as required by the applicable accounting standards (IndAS).

(xiv) The Company has not made any preferential allotment or private placement ofshares or fully or partly convertible debentures during the year under review. Hence theprovisions of Clause (xiv) of paragraph 3 of the Order are not applicable to the Company.

(xv) The Company has not entered into any non-cash transactions with directors orpersons connected with them. Therefore the provisions of Clause (xv) of paragraph 3 ofthe Order are not applicable to the Company.

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

For THACKER BUTALA DESAI
Chartered Accountants
ICAI Firm's Registration No.110864W
Yatin N. Patel
Place : Vallabh Vidyanagar Partner
Date : 7th May 2019 Membership No. 122676

‘ANNEXURE - B TO THE INDEPENDENT AUDITORSRs REPORT OF EVEN DATE ON THE STANDALONEIND AS FINANCIAL STATEMENTS OF EIMCO ELECON (INDIA) LIMITED

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 EimcoElecon (India) Limited (“the Company”) as of 31st March 2019 inconjunction with our audit of the Standalone Ind AS financial statements of the Companyfor the year ended on that date.

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 company's policies the safeguarding of its assets the preventionand detection of frauds and errors the accuracy and completeness of the accountingrecords and the timely preparation of reliable financial information as required underthe Companies Act 2013.

AuditorsRs Responsibility

Our responsibility is to express an opinion on the Company's internal financialcontrols over financial reporting based on our audit. We conducted our audit in accordancewith the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting(the “Guidance Note”) and the Standards on Auditing issued by ICAI and deemedto be prescribed under section 143(10) of the Companies Act 2013 to the extentapplicable to an audit of internal financial controls both applicable to an audit ofInternal Financial Controls and both issued by the Institute of Chartered Accountants ofIndia. Those Standards and the Guidance Note require that we comply with ethicalrequirements and plan and perform the audit to obtain reasonable assurance about whetheradequate internal financial controls over financial reporting was established 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 includedin obtaining an understanding of internal financial controls over financial reportingassessing the risk that a material weakness exists and testing and evaluating the designand operating effectiveness of internal control based on the assessed risk. The proceduresselected depend on the auditor's judgement including the assessment of the risks ofmaterial misstatement of the Standalone Ind AS financial statements whether due to fraudor 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 controls systemover financial reporting.

Meaning of Internal Financial Controls Over Financial Reporting

A company's internal financial control over financial reporting is a process designedto provide reasonable assurance regarding the reliability of financial reporting and thepreparation of Standalone Ind AS financial statements for external purposes in accordancewith generally accepted accounting principles. A company's internal financial control overfinancial reporting includes those policies and procedures that (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 StandaloneInd AS financial statements in accordance with generally accepted accounting principlesand that receipts and expenditures of the company are being made only in accordance withauthorisations of management and directors of the company; and (3) provide reasonableassurance regarding prevention or timely detection of unauthorised acquisition use ordisposition of the company's assets that could have a material effect on the StandaloneInd AS 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 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 control over financial reporting may becomeinadequate because of changes in conditions or that the degree of compliance with thepolicies or procedures may deteriorate.

Opinion

In our opinion the Company has in all material respects an adequate internalfinancial controls system over financial reporting and such internal financial controlsover financial reporting were operating effectively as at 31st March 2019based on the internal control over financial reporting criteria established by the Companyconsidering the essential components of internal control stated in the Guidance Note onAudit of Internal Financial Controls over Financial Reporting issued by the Institute ofChartered Accountants of India.

For THACKER BUTALA DESAI
Chartered Accountants
ICAI Firm's Registration No.110864W
Yatin N. Patel
Place : Vallabh Vidyanagar Partner
Date : 7th May 2019 Membership No. 122676