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Eimco Elecon (India) Ltd.

BSE: 523708 Sector: Engineering
NSE: EIMCOELECO ISIN Code: INE158B01016
BSE 00:00 | 20 Apr 337.00 8.30
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NSE 00:00 | 20 Apr 336.00 5.00
(1.51%)
OPEN

332.00

HIGH

343.00

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OPEN 330.45
PREVIOUS CLOSE 328.70
VOLUME 573
52-Week high 423.00
52-Week low 210.00
P/E 15.97
Mkt Cap.(Rs cr) 194
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 330.45
CLOSE 328.70
VOLUME 573
52-Week high 423.00
52-Week low 210.00
P/E 15.97
Mkt Cap.(Rs cr) 194
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

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 2020; 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 2020;

(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 accordance with the Code of Ethics issued by theInstitute of Chartered Accountants of India and we have fulfilled our other ethicalresponsibilities in accordance with the provisions of the Companies Act 2013. We believethat the audit evidence we have obtained is sufficient and appropriate to provide a basisfor our opinion.

Emphasis of Matter

We draw attention to Note 35 to the Standalone Ind AS Financial Statements whichdescribes the impact of COVID 19 carrying amounts of inventories intangible assets tradereceivables ontheCompany'sbusinessand investments and other financial assets as assessedby the management. The actual results may differ from such estimates depending on futuredevelopments. Our opinion is not modified in respect of this matter.

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 theStandaloneIndASfinancialstatements as a whole and in forming our opinion thereon and wedo not provide a separate opinion on these matters.

KEY AUDIT MATTER HOW OUR AUDIT ADDRESSED THE MATTER
Existence and valuation of investments 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. 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.
Note 2.2 c. & Note 6(a) to the standalone balance sheet in the financial statements Total investments of `15259 Lakhs represent 44% 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.

 

Existence and valuation of inventories Our audit procedures to test the existence of the inventories mainly consist of testing the relevant internal control procedures specifically by testing the inventory cycle counts that are periodically performed by management and internal auditors. On account of the COVID-19 related lock-down restrictions management was able to perform year end physical verification of inventories subsequent to the year end. We were also not able to physically observe the verification of inventory that was carried out by the Management. Consequently we have performed alternate procedures to audit the existence of Inventory as per the guidance provided by in SA 501 "Audit Evidence Specific Considerations for Selected Items" and have obtained evidence.
Note 2.2 k. & Note 8 to the standalone balance sheet in the financial statements Total inventories of Rs.5270 Lakhs represent 15% 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 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. 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.
These inventoriesbeingsignificantshare 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. Based on the procedures described we consider management's estimates of the inventory valuation as well as its existence as acceptable.

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 cashflowsand 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 thatwereoperatingeffectivelyfor ensuring the accuracy and completeness of theaccounting records relevant to the preparation and presentation of the Standalone Ind ASfinancial 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.

Auditors' 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. resulting from fraud is higher than for one resultingfrom error as fraud may involve collusion forgery intentional omissionsmisrepresentations or the override of internal control.

? 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 basis ofaccounting 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 Ind ASfinancial statements the disclosures and whether theStandaloneIndASfinancial statementsrepresent the underlying transactions and events in a manner that achieves fairpresentation.

We communicate with those charged with governance regarding among other matters theplanned scope and timing of the audit and significant audit findingsincludinganysignificantdeficiencies in internal control that we identify during our audit.We also provide those charged with governance with a statement that we have complied withrelevant ethical requirements regarding independence and to communicate with them allrelationships and other matters that may reasonably be thought to bear on ourindependence and where applicable related safeguards. From the matters communicated withthose charged with governance we determine those matters that were of most significancein the audit of the Standalone Ind AS financial statements of the current period and aretherefore the key audit matters. We describe these matters in our auditor's report unlesslaw or regulation precludes public disclosure about the matter or when in extremely rarecircumstances we determine that a matter should not be communicated in our report becausethe adverse consequences of doing so would reasonably be expected to outweigh the publicinterest benefits of such communication.

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 mattersspecified in paragraphs 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 andobtained all the information and explanations which to the best of our knowledge andbelief were necessary for the purpose of our audit; b. In our opinion proper books ofaccount as required by law have been kept by the Company so far as it appears from ourexamination of those books; c. The Balance Sheet the Statement of Profit and Loss theCash Flow Statement and the Statement of Changes in Equity dealt with by this Report arein agreement with the books of account; d. In our opinion the aforesaid Standalone Ind ASfinancial statements comply with the Accounting Standards (Ind AS) specified under Section133 of the Act read with Companies (Indian Accounting Standards) Rules

2015 as amended; e. On the basis of written representations received from the directorsas on 31st March 2020 taken on record by the Board of Directors none of thedirectors is disqualified as on 31st March 2020 from being appointed as a directorin terms of Section164(2) of the Act. f. With respect to the adequacy of the internalfinancial controls over financial reporting of the Company and the operating effectivenessof such controls refer to our separate Report in"Annexure B". g. In ouropinion the managerial remuneration for the year ended March 31 2020 has beenpaid/provided by the Company to its directors in accordance with the provisions of section197 read with Schedule V to the Act; h. With respect to other matters to be included inthe Auditors' Report in accordance with Rule 11 of the Companies (Audit and Auditors)Rules 2014 in our opinion and to the best of our information and according to theexplanations 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 intransferring amounts required to be transferred to the Investors Education andProtection Fund by the Company.

Place : Navsari For THACKER BUTALA DESAI
Date : 25th June 2020 Chartered Accountants
(Firm's Registration No.110864W)
Yatin N. Patel
Partner
Membership No. 122676
ICAI'S UDIN:- 20122676AAAABS8194

‘ANNEXURE A' TO THE INDEPENDENT AUDITORS' REPORT

Referred to in paragraph 1 under the heading ‘Report on Other Legal &Regulatory Requirement' of our report of even date to the Standalone Ind AS financialstatements of theEimco Elecon (India) Limited for the year ended 31st March2020:

(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: INR755.29 Lakhs included in Land and INR 214.31 Lakhs 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 firmsLimited 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 Employees'State 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 31st March2020 for a period of more than six months from the date they became payable.

(b) The disputed statutory dues aggregating to Rs.850.77 Lakh that have not beendeposited on account of disputed statutory matters pending before appropriate authoritiesare as under:

Name of the Statute Sr. No. Nature of the Dues Amount* (Rs.In Lakh) Period to which the amount Relates Forum where dispute is pending
1. Central Excise Act 1944 Excise Duty & Service Tax 765.44 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 anymoniesbywayofInitialPublic Offerduring the year. In our opinion orFurtherPublicand to the best of our information and according to the explanations provided by themanagement the term loans taken by the Company have been applied for the purpose forwhich they were obtained.

(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 beendisclosed financialstatementsas required by the applicable theIndAS accounting standards (Ind AS).

(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.

Place : Navsari For THACKER BUTALA DESAI
Date : 25th June 2020 Chartered Accountants
(Firm's Registration No.110864W)
Yatin N. Patel
Partner
Membership No. 122676
ICAI'S UDIN:- 20122676AAAABS8194

‘ANNEXURE - B' TO THE INDEPENDENT AUDITORS' REPORT OF EVEN DATE ON THE STANDALONE

IND 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 financialEimco Elecon (India)Limited reportingof ("the Company") as of 31st March 2020 inconjunction with our audit of the Standalone Ind AS financialstatements of the Company forthe 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.

Auditors' Responsibility

Our responsibility is to express an opinion on theCompany'sinternalfinancialcontrolsoverfinancialreporting based on our audit. We conductedour audit in accordance with the Guidance Note on Audit of Internal Financial ControlsOver Financial Reporting (the "Guidance Note") and the Standards on Auditingissued by ICAI and deemed to be prescribed under section 143(10) of the Companies Act2013 to the extent applicable to an audit of internal financial controls both applicableto an audit of Internal Financial Controls and both issued by the Institute of CharteredAccountants of India. Those Standards and the Guidance Note require that we comply withethical requirements and plan and perform the audit to obtain reasonable assurance aboutwhether adequate internal financialcontrols 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 financialreporting and their operatingeffectiveness. Our audit of internal financial controls over financial reporting includedin obtaining an understanding of internal financial controls over financialreportingassessing 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 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 the maintenance of records that in reasonable detail accurately andfairly reflect the transactions and dispositions of the assets of the company;

(2) provide reasonable assurance that transactions are recorded as necessary to permitpreparation of Standalone Ind AS financial statements in accordance with generallyaccepted accounting principles and that receipts and expenditures of the company arebeing made only in accordance with authorisations of management and directors of thecompany; and

(3) provide reasonable assurance regarding prevention or timely detection ofunauthorised acquisition use or disposition of the company's assets that could have amaterial effect on the Standalone Ind 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 controlover financial reporting may become inadequate because of changes in conditions or thatthe degree of compliance with the policies or procedures may deteriorate.

Opinion

In our opinion the Company has in all material respects an adequate internalfinancial controls system over financial effectivelyas atwereoperating reportingand suchinternal financial 31st March 2020 based on the internal control over financialreporting criteria established by the Company considering the essential components ofinternal control stated in the Guidance Note on Audit of Internal Financial Controls overFinancial Reporting issued by the Institute of Chartered Accountants of India.

Place : Navsari For THACKER BUTALA DESAI
Date : 25th June 2020 Chartered Accountants
(Firm's Registration No.110864W)
Yatin N. Patel
Partner
Membership No. 122676
ICAI'S UDIN:- 20122676AAAABS8194

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