To the Members of El Forge Limited
Report on the Audit of the Standalone Financial Statements Opinion
We have audited the standalone financial statements of El Forge Limited ("theCompany") which comprise the balance sheet as at 31st March 2019 and the statementof Profit and Loss (including Other Comprehensive Income) the statement of cash flows andthe Statement of Changes in Equity for the year then ended and a summary of significantaccounting policies and other explanatory information.
In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid standalone financial statements give the information requiredby the Companies Act 2013 (the Act') in the manner so required and give a true andfair view in conformity with the accounting principles generally accepted in Indiaincluding Indian Accounting Standards (Ind AS') specified under Section 133 of theAct of the state of affairs (financial position) of the Company as at 31 March 2019 andits profit (financial performance including other comprehensive income) its cash flowsand 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 Act. Our responsibilities under those Standards are furtherdescribed in the Auditor's Responsibilities for the Audit of the Financial Statementssection of our report. We are independent of the Company in accordance with the Code ofEthics issued by the Institute of Chartered Accountants of India (ICAI') togetherwith the ethical requirements that are relevant to our audit of the financial statementsunder the provisions of the Act and the rules thereunder and we have fulfilled our otherethical responsibilities in accordance with these requirements and the Code of Ethics. Webelieve that the audit evidence we have obtained is sufficient and appropriate to providea basis for our opinion.
Key Audit Matters
Key audit matters are those matters that in our professional judgment were of mostsignificance in our audit of the standalone financial statements of the current period.These matters were addressed in the context of our audit of the financial statements as awhole and in forming our opinion thereon and we do not provide a separate opinion onthese matters. Based on the examination of books of account and explanations provided tous we are of the opinion that there are no materially significant key audit matters thatrequires disclosure in this report.
Emphasis of Matters
Without qualifying our opinion we draw the attention to the following
Sl.no.5 namely Miscellaneous Expenditure in Notes on Standalone Ind AS financialrelating to Other Information; Sl.no.6 namely Non Provision for diminution in the Valueof Investments in the Standalone Ind AS financial statements relating to OtherInformation;
Slno.9 namely Non Payment of Group Gratuity Fund in the Standalone Ind AS financialstatements relating to Other Information;
Slno.10 namely Non Disclosure of details under Employees benefit in the StandaloneInd AS financial statements relating to Other Information; Slno.11 namely Penalty andInterest in the Standalone Ind AS financial statements relating to Other Information;
Slno.12 namely Pending Litigation in the Standalone Ind AS financial statementsrelating to Other Information;
Slno.14 namely Assets Reconstruction Company in the Standalone Ind AS financialstatements relating to Other Information;
Our opinion is not qualified in respect of these matters.
Responsibility of Management for Standalone Financial Statements
The Company's Board of Directors is responsible for the matters stated in section134(5) of the Act with respect to the preparation of these standalone financial statementsthat the state of affairs (financial position) profit or loss (financial performance)cash flows and changes in equity of the Company in accordance with the accountingprinciples generally accepted in India including the Ind AS specified under section 133of the Act.
This responsibility also includes maintenance of adequate accounting records inaccordance 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 design implementation and maintenance of adequate internalfinancial controls that were operating effectively for ensuring the accuracy andcompleteness of the accounting records relevant to the preparation and presentation ofthe financial statement that give a true and fair view and are free from materialmisstatement whether due to fraud or error.
In preparing the financial statements management is responsible for assessing theCompany's ability to continue as a going concern disclosing as applicable mattersrelated to going concern and using the going concern basis of accounting unless managementeither intends to liquidate the Company or to cease operations or has no realisticalternative but to do so.
Those Board of Directors are also responsible for overseeing the company's financialreporting process.
Auditor's Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financialstatements as a whole are free from material misstatement whether due to fraud or errorand to issue an auditor's report that includes our opinion. Reasonable assurance is a highlevel of assurance but is not a guarantee that an audit conducted in accordance withStandards of Auditing will always detect a material misstatement when it exists.Misstatements can arise from fraud or error and are considered material if individuallyor in the aggregate they could reasonably be expected to influence the economic decisionsof users taken on the basis of these financial statements.
As part of an audit in accordance with Standards on Auditing we exercise professionaljudgment and maintain professional skepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of the financialstatements whether due to fraud or error design and perform audit procedures responsiveto those risks and obtain audit evidence that is sufficient and appropriate to provide abasis for our opinion. The risk of not detecting a material misstatement resulting fromfraud is higher than for one resulting from error as fraud may involve collusionforgery intentional omissions misrepresentations or the override of internal control.
Obtain an understanding of internal control relevant to the audit in order todesign audit procedures that are appropriate in the circumstances. Under Section143(3)(i) of the Act we are also responsible for explaining our opinion on whether theCompany has adequate internal financial controls system in place and the operatingeffectiveness of such controls.
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 Company'sability to continue as a going concern. If we conclude that a material uncertainty existswe are required to draw attention in our auditor's report to the related disclosures inthe 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'sreport. However future events or conditions may cause the Company to cease to continue asa going concern.
Evaluate the overall presentation structure and content of the financialstatements including the disclosures and whether the financial statements represent theunderlying transactions and events in a manner that achieves fair presentation. Wecommunicate with those charged with governance regarding among other matters the plannedscope and timing of the audit and significant audit findings including any significantdeficiencies 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 financial statements of thecurrent period and are therefore the key audit matters. We describe these matters if theyare materially significant in our auditor's report unless law or regulation precludespublic disclosure about the matter or when in extremely rare circumstances we determinethat a matter should not be communicated in our report because the adverse consequences ofdoing so would reasonably be expected to outweigh the publicinterestbenefitsof suchcommunication.
Report on Other Legal and Regulatory Requirements
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 Companies Act 2013 we give in the Annexure A a statement on the matters specifiedin paragraphs 3 and 4 of the Order to the extent applicable.
As required by Section 143(3) of the Act we report that:
We have sought and obtained all the information and explanations which to the best ofour knowledge and belief were necessary for the purposes of our audit.
(a) 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.
(b) The standalone financial statements dealt with by this report are in agreement withthe books of account;
(c) In our opinion the aforesaid standalone financial statements comply with the IndAS specified under Section 133 of the Act; (d) On the basis of the written representationsreceived from the directors as on 31st March 2019 taken on record by the Board ofDirectors none of the directors is disqualified as on 31st March 2019 from beingappointed as a director in terms of Section 164 (2) of the Act
(e) 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".
(f) With respect to other matters to be included in the Auditor's 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: a. The Company hasdisclosed the impact of Pending Litigations on its financial position in its StandaloneInd AS financial statements Refer item no.12 of Note No.3.02 to the Standalone Ind ASfinancial statements. b. The Company did not have any long-term contracts includingderivative contracts for which there were any material foreseeable losses. c. We draw yourattention to item no.13 of Note No.3.02 to the Financial statements relating to moneythat are required to be transferred to the Investor Education and Protection Fund by theCompany.
For L Mukundan and Associates
Firm Registration No: 010283S
Annexure A to the Independent Auditor's Report
Statement of matters specified in Para 3 & 4 of the order referred to insub-section (11) of 143.
The annexure referred to in Para under the heading of "Report on other Legal andRegulatory Requirements" of our report to the members of EL FORGE LIMITED of evendate:
1. In respect of company's fixed assets:
a) The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets.
b) As per the information and explanation given to us all the fixed assets have beenphysically verified by the Company at reasonable intervals and no material discrepancieswere noticed on such verification. In our opinion this periodicity of physicalverification is reasonable having regard to the size of the Company and the nature of itsassets.
c) According to the information and explanations given to us and the records examinedby us and based on the examination of the registered conveyance deed provided to us wereport that the title deeds comprising all the immovable properties of land are held inthe name of the Company as at the balance sheet date. Immovable properties of freeholdland disclosed as fixed assets in the financial statement whose title deeds have beenpledged as security for loans are held in the name of the Company. but it has beenexplained that the title deeds of the immovable property have been mortgaged with theBanks/Financial Institutions etc.(or other Agencies namely
Assets Reconstruction Company through assignment in terms of under Securitization andreconstruction of financial assets and enforcement of Security Interest Act 2002) forsecuring the borrowings and loan raised by the Company; accordingly the same was not inthe possession of the Company.
2. The inventories have been physically verified by the management during the year. Inour opinion the frequency of such verification is reasonable and adequate in relation tothe size of the company and nature of its business. No material discrepancies were noticedon physical verification of inventories as compared to the book records.
3. During the year the company has not granted any loans secured or unsecured tocompanies firms or other parties covered in the Register maintained under Section 189 ofthe Companies
Act 2013. Accordingly Clause 3 (iii) of the Order is not applicable to the Company.
4. Relating to loans investments guarantees and security a. Compliance of Section185 of the Act (Loan to directors etc.):
i. Based on verification as per the information and explanations given to us theCompany has not given any loan to any directors of the company.
ii. Accordingly we have not made any observation on the compliance of the aforesaidsection. b. Compliance of Section 186 of the Act 2013 (Loans investments guarantees andsecurity)
i. Relating to the Current Financial Year:
A. The Company has not
(i) given give any loan to any person or other body corporate
(ii) given any guarantee or provide security in connection with a loan to any otherbody-corporate or person and
(iii) acquired by way of subscription purchase or otherwise the securities of anyother body corporate during the year;
B. In view of the above the provisions of section 186 of the Act are not applicable tothe Company for the year under report; accordingly we have not made any observation onthe compliance of the aforesaid section.
5. Relating to Deposits
a. In our opinion and according to the information and explanations given to us. theCompany has accepted or renewed deposit from the public to which the directives issued bythe Reserve bank of India provisions of sections 58A and 58AA of the Companies Act 1956and the Companies Acceptance of Deposits Rules 1975 are applicable.
b. The company has paid all the fixed deposits which have been matured and claimed; butthe com -pany has not paid the Fixed Deposits matured but not claimed. The amount of suchunclaimed deposits works out to Rs 84.95 Lakhs as at 31-03-2019; since the amount is duefor payment the same has been included and or shown under the under the grouping CurrentLiabilities in the Balance Sheet.
c. The company has not made any amount as are required to be kept as liquid assets inrespect of public deposit. Since they are due now and not going to mature in the ensuingfinancial year.
d. It has been explained to us that no order (not the CARO-Order referred by us) hasbeen passed by Company Law Board or National Company Law Tribunal or Reserve Bank of Indiaor any court or any other tribunal; accordingly the remaining part of the sub-clause ofthe aforesaid Clause of the Order namely "Whether the same (order) has beencomplied with or not' is not applicable for the financial year under report.
e. As required by Paragraph 4 of the order we give reason for our unfavorable orqualified remarks (Answers) as follows: The company has not repaid the amount of depositsoutstanding and became due but remained unclaimed. Hence we have qualified the sametogether with the amount remaining unpaid.
6. We have broadly reviewed the books of accounts maintained by the Company pursuant tothe rules prescribed by the Central Government for the maintenance of cost records undersub Section (1) of section 148 of the Act and are of the opinion that prima facie theprescribed accounts and records have been made and maintained. We have however not made adetailed examination of the cost records with a view to determine whether they areaccurate or complete.
7. Relating to Statutory Dues a. As per the records examined by us the company is notregular in depositing undisputed statutory dues including Provident Fund Employees' StateInsurance Income-tax etc. with the appropriate authorities. As per the records examinedby us an amount of Rs. 378.55 Lakhs has been outstanding towards statutory dues as atthe last day of the financial year under report for a period of more than six months fromthe date they became payable.
b. As required by Paragraph 4 of the order we give reason for our unfavorable orqualified remarks
c. Since the company has not paid the undisputed statutory dues even though they aredue we have qualified the same together with the amount as per the aforesaid clause ofthe Order. d. As at the end of the financial period under report no undisputed amount ofincome tax / sales tax / Wealth tax / Service Tax / Custom duty / Excise duty /Cess hasbeen outstanding except those given below:
|Nature of the Statue ||Nature of the dues ||Amount ||Year to which the amounts relates ||Forum where dispute is pending |
| || ||(Rs. In Lacs) || || |
|1 ESI ||ESI contribution ||0.77 ||Year 2001 ||Employee Insurance court Chennai |
|2 Income Tax ||Income Tax Demand ||132.74 ||Assessment Year 2007-08 ||CIT Appeals Chennai |
|3 Service Tax ||Service Tax Demand ||4.89 ||2006-08 to 2008-09 ||Commissioner Appeals of Central Excise & Service Tax Chennai |
|4 The Central Excise ||Excise Demand ||1.47 ||2003-04 to 2006-07 ||Commissioner of Central Excise Chennai IV Commissionerate |
|5 The Central Excise ||Excise Demand ||1.72 ||2002 to 2005 ||Customs Excise and Service Tax Appellate Tribunal |
|6 The Central Excise ||Excise Demand ||4.86 ||2008-09 to 2012-13 ||Additional Commissioner of Central Excise Div. appeal Chennai III |
|7 The Central Excise ||Excise Demand ||8.49 ||2007-08 ||Assistance commissioner of Central Excise Chennai III |
8. Relating to Repayment of Loans
a. The Company has not borrowed amount from bank (No loan has been obtained fromfinancial institution government or debenture holders) during the year under report.
b. During the earlier years the company has borrowed money both Long Term and ShortTerm from a few banks under consortium. The company has repaid the amount to the bankand amount outstanding with the banks as at 31-03-2019 is Rs. Nil. Further we draw yourattention to Item no.14 of Note no. 3.02 to Financial Statements.
c. Accordingly the remaining part of the Clause relating to reporting of the periodand the amount of default (lender wise) is not applicable to the company for the yearreport.
9. The company has not raised any money by way of initial public offer or furtherpublic offer (including debt instruments) or term loans and hence reporting under Clause3 (ix) of the Order is not applicable to the Company.
10. To the best of our knowledge and according to the information and explanationsgiven to us no material fraud by the Company or on the Company by its officers oremployees has been noticed or reported during the course of our audit and accordingly wehave not made any observation relating to the above
11. According to the information and explanations give to us and based on ourexamination of the records of the Company the Company has paid or provided managerialremuneration in accordance with the requisite approvals mandated by the provisions ofsection 197 read with Schedule V to the Act.
12. Nidhi Company a. In our opinion the Company is not carrying out any activitiesresulting in Nidhi accordingly reporting of certain matters under the clause namely"(01) the net-owned funds to deposit liability ratio is more than 1:20 as on the dateof balance sheet (02) compliance with the maintaining ten per cent unencumbered termdeposits as specified in the Nidhi Rules 2014 to meet out the liability" are notapplicable to company for the financial year under report. b. In view of the above wehave not reported the details of default reason delay and subsequent rectifica -tion ifany.
13. According to the information and explanations given to us and based on ourexamination of the records of the Company all transactions with the related parties arein compliance with sections 177 and 188 of the Act where applicable and the details ofsuch transactions have been disclosed in the standalone financial statements as requiredby the applicable accounting standards and are on arm's length basis.
14. According to the information and explanations give to us and based on ourexamination of the records of the Company the Company has not made any preferentialallotment or private placement of shares or fully or partly convertible debentures duringthe year and hence reporting under Clause 3 (xiv) of the Order is not applicable to theCompany.
15. According to the information and explanations given to us and based on ourexamination of the records of the Company the Company has not entered into non-cashtransactions with its directors or persons connected to its directors. Accordinglyparagraph 3(xv) of the Order is not applicable.
16. According to the information and explanation given to us the Company is notrequired to be registered under section 45-IA of the Reserve Bank of India Act 1934.Accordingly paragraph 3(xvi) of the Order is not applicable.
For L Mukundan and Associates Chartered Accountants Firm Registration No: 010283S
L Mukundan Partner
Annexure - B to the Independent Auditors' Report
(Referred to in paragraph 1(e) under Report on Other Legal and RegulatoryRequirements' section of our report to the members of EL FORGE LIMITED of even date)Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section 143of the
Companies Act 2013 ("the Act")
We have audited the Internal Financial Controls over financial reporting of EL FORGELIMITED ("the Company") as of March 31 2019 in conjunction with our audit ofthe 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 internalfinancial based on the internal control over financial reporting considering the essentialcomponents of internal control stated in the Guidance Note on Audit of Internal FinancialControls Over Financial Reporting (the "Guidance Note") issued by the Instituteof Chartered Accountants of India (ICAI). These responsibilities include the designimplementation and maintenance of adequate internal financial controls that were operatingeffectively for ensuring the orderly and efficient conduct of its business includingadherence to company's policies the safeguarding of its assets the prevention anddetection of frauds and errors the accuracy and completeness of the accounting recordsand the timely preparation of reliable financial information as required under the Act.
Our responsibility is to express an opinion on the Company's IFCoFR based on our audit.We conducted our audit in accordance with the Standards on Auditing issued by the ICAIand deemed to be prescribed under Section 143(10) of the Act to the extent applicable toan audit of IFCoFR and the Guidance Note issued by the ICAI. Those Standards and theGuidance Note require that we comply with ethical requirements and plan and perform theaudit to obtain reasonable assurance about whether adequate IF-CoFR were established andmaintained and if such controls operated effectively in all material respects. Our auditinvolves performing procedures to obtain audit evidence about the adequacy of the IFCoFRand their operating effectiveness. Our audit of IFCoFR included obtaining an understandingof IFCoFR assessing the risk that a material weakness exists and testing and evaluatingthe design and operating effectiveness of internal control based on the assessed risk. Theprocedures selected depend on the auditor's judgement including the assessment of therisks 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 toprovide a basis for our audit opinion on the Company's IFCoFR.
Meaning of Internal Financial Controls over Financial Reporting
A Company's IFCoFR is a process designed to provide reasonable assurance regarding thereliability for external purposes in accordance offinancialreportingandthe preparation offinancial with generally accepted accounting principles. A Company's IFCoFR includes thosepolicies and procedures that (1) pertain to the maintenance of records that in reasonabledetail accurately and fairly assets of the Company; (2) provide reasonable assurancereflect that transactions are recorded as necessary to permit preparation of financialstatements in accordance with generally accepted accounting principles and that receiptsand expenditures of the Company are being made only in accordance with authorisations ofmanagement and directors of the Company; and (3) provide reasonable assurance regardingprevention or timely detection of unauthorised acquisition use or disposition of theCompany's assets that could have a material effect on the financial statements
Inherent Limitations of Internal Financial Controls over Financial Reporting
Because of the inherent limitations of IFCoFR including the possibility of collusionor improper management override of controls material misstatements due to error or fraudmay occur and not be detected. Also projections of any evaluation of the IFCoFR to futureperiods are subject to the risk that IFCoFR may become inadequate because of changes inconditions or that the degree of compliance with the policies or procedures maydeteriorate.
In our opinion the Company has in all material respects adequate internal financialcontrols over financial reporting and such internalfinancialcontrols overfinancialreporting were operating effectively as at 31 March 2019 based on the internalcontrol over financialreporting criteria established by the Company considering theessential components of internal control stated in the Guidance Note issued by theICAI.
For L Mukundan and Associates Chartered Accountants Firm Registration No:010283S
L Mukundan Partner
Membership No. 204372