Eon Electric Ltd.
|BSE: 532658||Sector: Engineering|
|NSE: EON||ISIN Code: INE076H01025|
|BSE 00:00 | 26 Oct||Eon Electric Ltd|
|NSE 05:30 | 01 Jan||Eon Electric Ltd|
|BSE: 532658||Sector: Engineering|
|NSE: EON||ISIN Code: INE076H01025|
|BSE 00:00 | 26 Oct||Eon Electric Ltd|
|NSE 05:30 | 01 Jan||Eon Electric Ltd|
To The Members of Eon Electric Ltd.
Report on the Audit of Standalone Ind AS Financial Statements opinion
We have audited the accompanying standalone Ind AS financial statements of Eon ElectricLimited ("the Company") which comprise the Balance Sheet as at March 31 2019the Statement of Profit and Loss (including Other Comprehensive Income) the Statement ofChanges in Equity and the Statement of cash flows for the year ended on that date andnotes to the Ind AS financial statements including a summary of significant accountingpolicies and other explanatory information.
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 ("the Act") in the manner so required andgive a true and fair view in conformity with the Indian Accounting Standards prescribedunder section 133 of the Act read with the Companies (Indian Accounting Standards) Rules2015 as amended ("Ind AS") and other accounting principles generally acceptedin India of the state of affairs of the Company as at March 31 2019 the loss and totalcomprehensive income changes in equity and its cash flows for the year ended on thatdate.
Basis for opinion
We conducted our audit of the standalone Ind AS financial statements in accordance withthe Standards on Auditing specified under section 143(10) of the Act (sas). Ourresponsibilities under those Standards are further described in the Auditor'sResponsibilities for the Audit of the Standalone Ind AS financial statements section ofour report. We are independent of the Company in accordance with the Code of Ethics issuedby the Institute of Chartered Accountants of India (ICAI) together with the independencerequirements that are relevant to our audit of the standalone Ind AS financial statementsunder the provisions of the Act and the Rules made thereunder and we have fulfilled ourother ethical responsibilities in accordance with these requirements and the ICAI's Codeof Ethics. We believe that the audit evidence we have obtained is sufficient andappropriate to provide a basis for our audit opinion on the standalone Ind AS financialstatements.
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 for the year endedMarch 31 2019. These matters were addressed in the context of our audit of the standaloneInd AS financial statements as a whole and in forming our opinion thereon and we do notprovide a separate opinion on these matters. We have determined the matters describedbelow to be the key audit matters to be communicated in our report.
Key Audit Matter
1. Accuracy of recognition measurement presentation and disclosures of revenues andother related balances in view of adoption of Ind AS 115 "Revenue from Contracts withCustomers" (new revenue accounting standard)
The application of the new revenue accounting standard involves certain key judgementsrelating to identification of distinct performance obligations determination oftransaction price of the identified performance obligations the appropriateness of thebasis used to measure revenue recognized over a period. Additionally new revenueaccounting standard contains disclosures which involves collation of information inrespect of disaggregated revenue and periods over which the remaining performanceobligations will be satisfied subsequent to the balance sheet date.
Refer to Notes 2.11 29 & 30 to the Standalone Financial Statements
Principal Audit Procedures
We assessed the Company's process to identify the impact of adoption of the new revenueaccounting standard. Our audit approach consisted testing of the design and operatingeffectiveness of the internal controls and substantive testing as follows:
Evaluated the design of internal controls relating to implementation of the newrevenue accounting standard.
Selected a sample of continuing and new contracts and tested the operatingeffectiveness of the internal control relating to identification of the distinctperformance obligations and determination of transaction price. We carried out acombination of procedures involving enquiry and observation reperformance and inspectionof evidence in respect of operation of these controls.
Selected a sample of continuing and new contracts and performed the followingprocedures :
Read analysed and identified the distinct performance obligations in thesecontracts.
Compared these performance obligations with that identified and recorded by theCompany.
Considered the terms of the contracts to determine the transaction priceincluding any variable consideration to verify the transaction price used to computerevenue and to test the basis of estimation of the variable consideration.
Sample of revenues disaggregated by product and service offerings was testedwith the performance obligations specified in the underlying contracts.
Information Other than the Standalone Ind AS financial statements andauditor's ReportThereon
The Company's Board of Directors is responsible for the preparation of the otherinformation. The other information comprises the information included in the ManagementDiscussion and Analysis Board's Report including Annexures to Board's Report BusinessResponsibility Report Corporate Governance and Shareholder's Information but does notinclude the standalone Ind AS financial statements and our auditor's report thereon.Thesereports are expected to be made available to us after the date of this auditor's report.
Our opinion on the standalone Ind AS financial statements does not cover the otherinformation and we do not express any form of assurance conclusion thereon.
In connection with our audit of the Ind AS financial statements our responsibility isto read the other information identified above when it becomes available and in doing soconsider whether the other information is materially inconsistent with the standalone IndAS financial statements or our knowledge obtained during the course of our audit orotherwise appears to be materially misstated.
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 Act with respect to the preparation of these standalone Ind AS financialstatements that give a true and fair view of the financial position financialperformance total comprehensive income changes in equity and cash flows of the Companyin accordance with the Ind AS and other accounting principles generally accepted in Indiaincluding the accounting Standards specified under section 133 of the Act. Thisresponsibility also includes maintenance of adequate accounting records in accordance withthe provisions of the Act for safeguarding the assets of the Company and for preventingand detecting frauds and other irregularities; selection and application of appropriateaccounting policies; making judgments and estimates that are reasonable and prudent; anddesign implementation and maintenance of adequate internal financial controls that wereoperating effectively for ensuring the accuracy and completeness of the accountingrecords relevant to the preparation and presentation of the standalone Ind AS financialstatements that give a true and fair view and are free from material misstatement whetherdue to fraud or error.
In preparing the standalone Ind AS financial statements management is responsible forassessing the Company's ability to continue as a going concern disclosing as applicablematters related to going concern and using the going concern basis of accounting unlessmanagement either intends to liquidate the Company or to cease operations or has norealistic alternative but to do so.
The Board of Directors are responsible for overseeing the Company's financial reportingprocess.
Auditor's Responsibilities for the Audit of the Financial Statements
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 inaccordance with sas we exercise professional judgment and maintain professionalskepticism 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 financial controls relevant to the audit inorder to design audit procedures that are appropriate in the circumstances. Under section143(3)(i) of the Act we are also responsible for expressing 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 standalone Ind AS financial statements or if such disclosures are inadequate tomodify our opinion. Our conclusions are based on the audit evidence obtained up to thedate of our auditor's report. However future events or conditions may cause the Companyto 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.
Materiality is the magnitude of misstatements in the standalone Ind AS financialstatements that individually or in aggregate makes it probable that the economicdecisions of a reasonably knowledgeable user of the Ind AS financial statements may beinfluenced. We consider quantitative materiality and qualitative factors in (i) planningthe scope of our audit work and in evaluating the results of our work; and (ii) toevaluate the effect of any identified misstatements in the Ind AS financial statements.
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 alsoprovide those charged with governance with a statement that we have complied with relevantethical 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 in terms of Section 143(11) of the Act we give in"Annexure I" a statement on the matters specified in paragraphs 3 and 4 of theOrder.
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 purposes 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 Sheetthe Statement of Profit and Loss including Other Comprehensive Income Statement ofChanges in Equity and the Statement of Cash Flow dealt with by this Report are inagreement with the relevant books of account.
D) In our opinion the aforesaid standalone Ind AS financial statements comply with theInd AS specified under Section 133 of the Act read with Rule 7 of the Companies(Accounts) Rules 2014.
E) On the basis of the written representations received from the directors as on March31 2019 taken on record by the Board of Directors none of the Directors is disqualifiedas on March 31 2019 from being appointed as a Director in terms of Section 164 (2) of theAct.
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 II". Our report expresses an unmodified opinion onthe adequacy and operating effectiveness of the Company's internal financial controls overfinancial reporting.
G) With respect to the other matters to be included in the Auditor's Report inaccordance with the requirements of section 197(16) of the Act as amended:
In our opinion and to the best of our information and according to the explanationsgiven to us the remuneration paid by the Company to its directors during the year is inaccordance with the provisions of section 197 of the Act. H) With respect to the othermatters to be included in the Auditor's Report in accordance with Rule 11 of the Companies(Audit and Auditors) Rules 2014 as amended in our opinion and to the best of ourinformation 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 No. 40).
Ii. The Company did not have any long term contracts including derivative contracts forwhich there were any material foreseeable losses.
Iii. There has been no delay in transferring amounts required to be transferred tothe Investor Education and Protection Fund by the Company.
Annexure I to Independent Auditor's Report
Referred to in Paragraph 1 under "Report on Other Legal and RegulatoryRequirements" section of our report of even date on the Ind AS financial statementsfor the year ended on March 31 2019 ofe on electric Ltd.
(i) In respect of the Company's fixed assets:
(a) The Company is maintaining proper records showing full particulars includingquantitative details and situation of all fixed assets.
(b) The fixed assets have been physically verified by the management at the year-end.We are informed that no material discrepancies have been noticed by the management on suchverification as compared with the record of fixed assets maintained by the Company.
(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 immovable properties areheld in the name of the Company.
(ii) The inventory (excluding stocks lying with third parties) has been physicallyverified by the management during the year. In respect of inventories lying with the thirdparties these have been substantially confirmed by them. In our opinion frequency ofverification is reasonable. The discrepancies noticed on verification between the physicalstock and the book records were not material and have been properly dealt with in thebooks of account.
(iii) According to the information and explanations given to us and in our opinion theCompany has not granted any loans secured or unsecured to companies firms limitedLiability partnerships or other parties covered in register maintained under section 189of the Companies Act. Accordingly clauses (iii) (a) (iii) (b) and (iii) (c) of paragraph3 of the Companies (Auditor's Report) Order 2016 are not applicable to the Company.
(iv) According to the information and explanations given to us and in our opinion theCompany has not advanced any loan investment guarantee or security to any person asspecified under sections 185 and 186 of the Companies Act 2013. Accordingly clause (iv)of paragraph 3 of the Companies (Auditor's Report) Order 2016 is not applicable to theCompany.
(v) In our opinion and according to the information and explanation given to us theCompany has not accepted deposits from the public during the year within the meaning ofSection 73 to 76 or any other relevant provisions of the Companies Act 2013 and the rulesframed there under.
(vi) On the basis of the records produced we are of the opinion that prima facie thecost accounting records prescribed by the Central Government under section 148(1) of theCompanies Act 2013 have been maintained by the Company. However we are not required toand have not carried out any detailed examination of such records.
(vii) (a) Undisputed statutory dues including provident fund employees' stateinsurance income-tax(TDS) have not been regularly deposited with the appropriateauthorities and there have been serious delays in a large number of cases includingprovident fund of Rs. 3246406 income-tax (TDS) of Rs. 12113744 Goods and ServicesTax of Rs. 14844657 which are yet to be deposited. However there are no undisputedamounts payable in respect of the aforesaid dues outstanding as at March 31 2019 for aperiod of more than six months from the date they became payable.
(b) According to the information and explanations given to us the particulars ofdisputed dues of duty of excise and sales tax aggregating to Rs.3633371/- andRs.11297131/-as at March 31 2019 which have not been deposited on account of disputedmatters are as follows
Appeals filed by Central Excise 2019 Department as at March 31
(viii) Based on our audit procedures and according to the information and explanationsgiven to us we are of the opinion that the Company has not defaulted in repayment ofloans or borrowing to a financial institution bank and government. The Company has nooutstanding dues to debenture holders.
(ix) According to the information and explanations given to us the Company did notraise any money by way of initial public offer or further public offer (including debtinstruments). The Company has raised term loans during the year and were applied for thepurposes for which they were raised.
(x) According to the information and explanations given to us no material fraud by theCompany or on the Company by its officers or employees has been noticed or reported duringthe course of our audit.
(xi) According to the information and explanations give to us and based on ourexamination of the records of the Company the Company has paid/provided for managerialremuneration in accordance with the requisite approvals mandated by the provisions ofsection 197 read with Schedule V to the Act.
(xii) In our opinion and according to the information and explanations given to us theCompany is not a nidhi company. Accordingly clause (xii) of paragraph 3 of the Companies(Auditor's Report) Order 2016 is not applicable.
(xiii) According to the information and explanations given to us and based on ourexamination of the records of the Company transactions with the related parties are incompliance with sections 177 and 188 of the Act where applicable and details of suchtransactions have been disclosed in the standalone Ind AS financial statements as requiredby the applicable accounting standards.
(xiv) 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 of shares during the year.
(xv) 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 Directors or persons connected with them.
Accordingly clause (xv) of paragraph 3 of the Companies (Auditor's Report) Order 2016is not applicable.
(xvi) The company is not required to be registered under section 45-IA of the ReserveBank of India Act 1934.
Annexure II to the Independent Auditors' Report of even date on the Standalone Ind ASfinancial statements of Eon Electric 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 EonElectric Ltd. ("the Company") as of March 31 2019 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 include the design implementation and maintenance of adequateinternal financial controls that were operating effectively for ensuring the orderly andefficient conduct of its business including adherence to company's policies thesafeguarding of its assets the prevention and detection of frauds and errors theaccuracy and completeness of the accounting records and the timely preparation ofreliable financial information as required under the Companies Act 2013.
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") issued by The Institute of Chartered Accountants of Indiaand the Standards on Auditing prescribed under section 143(10) of the Companies Act 2013to the extent applicable to an audit of internal financial controls. Those Standards andthe Guidance Note require that we comply with ethical requirements and plan and performthe audit to obtain reasonable assurance about whether adequate internal financialcontrols over financial reporting was established and maintained and if such controlsoperated 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 included obtaining anunderstanding of internal financial controls over financial reporting assessing the riskthat a material weakness exists and testing and evaluating the design and operatingeffectiveness of internal control based on the assessed risk. The procedures selecteddepend on the auditor's judgment including the assessment of the risks of materialmisstatement of the Ind AS 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 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 Ind AS financial statements for external purposes in accordance withgenerally 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 Ind AS financial statements in accordance with generally acceptedaccounting principles and those receipts and expenditures of the company are being madeonly in accordance with authorizations of management and directors of the company; and
(3) provide reasonable assurance regarding prevention or timely detection ofunauthorized acquisition use or disposition of the company's assets that could have amaterial effect on the 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.
In our opinion to the best of our information and according to the explanations givento us the Company has in all material respects an adequate internal financial controlssystem over financial reporting and such internal financial controls over financialreporting were operating effectively as at March 31 2019 based on the internal controlover financial reporting criteria established by the Company considering the essentialcomponents of internal control stated in the Guidance Note on Audit of Internal FinancialControls over Financial Reporting issued by the Institute of Chartered Accountants ofIndia.