Fedders Electric & Engineering Ltd.
|BSE: 500139||Sector: Engineering|
|NSE: FEDDERELEC||ISIN Code: INE249C01011|
|BSE 00:00 | 17 Jun||Fedders Electric & Engineering Ltd|
|NSE 05:30 | 01 Jan||Fedders Electric & Engineering Ltd|
|BSE: 500139||Sector: Engineering|
|NSE: FEDDERELEC||ISIN Code: INE249C01011|
|BSE 00:00 | 17 Jun||Fedders Electric & Engineering Ltd|
|NSE 05:30 | 01 Jan||Fedders Electric & Engineering Ltd|
To the Members of Fedders Electric and Engineering Limited (Formerly known as FeddersLloyd Corporation Limited)
Report on the Standalone Financial Statements
We have audited the accompanying Standalone Financial Statements of Fedders Electricand Engineering Limited (Formerly known as Fedders Lloyd Corporation Limited)("the Company") which comprise the Balance Sheet as at 31st March2017 the Statement of Profit and Loss and the Statement of Cash Flows for the year endedand a summary of significant accounting policies and other explanatory information.
Management's Responsibility for the Standalone 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 preparationand presentation of these Standalone Financial Statements that give a true and fair viewof the financial position financial performance and cash flows of the Company inaccordance with the accounting principles generally accepted in India including theAccounting Standards specified under Section 133 of the Act read with Rule 7 of theCompanies (Accounts) Rules 2014. This responsibility also includes maintenance ofadequate accounting records in accordance with the provisions of the Act for safeguardingthe assets of the Company and for preventing and detecting frauds and otherirregularities; selection and application of appropriate accounting policies; makingjudgments and estimates that are reasonable and prudent; and design implementation andmaintenance of adequate internal financial controls that were operating effectively forensuring the accuracy and completeness of the accounting records relevant to thepreparation and presentation of the financial statements that give a true and fair viewand are free from material misstatement whether due to fraud or error.
Our responsibility is to express an opinion on these Standalone Financial Statementsbased on our audit. We have taken into account the provisions of the Act the accountingand auditing standards and matters which are required to be included in the audit reportunder the provisions of the Act and the Rules made thereunder.
We conducted our audit in accordance with the Standards on Auditing specified underSection 143(10) of the Act. Those Standards require that we comply with ethicalrequirements and plan and perform the audit to obtain reasonable assurance about whetherthe financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts andthe disclosures in the financial statements. The procedures selected depend on theauditor's judgment including the assessment of the risks of material misstatement of thefinancial statements whether due to fraud or error. In making those risk assessments theauditor considers internal financial control relevant to the Company's preparation of thefinancial statements that give a true and fair view in order to design audit proceduresthat are appropriate in the circumstances. An audit also includes evaluating theappropriateness of the accounting policies used and the reasonableness of the accountingestimates made by the Company's Directors as well as evaluating the overall presentationof the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the Standalone Financial Statements.
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 Act in the manner so required and give a true and fair view in conformity with theaccounting principles generally accepted in India of the state of affairs of the Companyas at 31st March 2017 and its profit and its cash flows for the year ended onthat date.
Emphasis of Matter
The Company has concluded the transaction with respect to the sale of the brand namelogo trademark or any other intellectual property rights associated with"LLOYD" and/or "Lloyd" to Havells India Limited for a consideration ofRs. 50.00 Crores on 8th May 2017. Subsequent upon conclusion of the aforesaidtransaction and upon receipt of approval from the Registrar of Companies Uttar Pradeshfor change in name of the Company on 23rd May 2017 the name of the Companyhas been changed from "Fedders Lloyd Corporation Limited" to "FeddersElectric and Engineering Limited" w.e.f. 23rd May 2017.
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 in the paragraphs3 and 4 of the Order.
2. As required by Section 143 (3) of the Act we report that:
(a) We have sought and obtained all the information and explanations which to the bestof our knowledge and belief were necessary for the 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 Sheet the Statement of Profit and Loss and the Cash Flow Statementdealt with by this Report are in agreement with the books of account;
(d) In our opinion the aforesaid Standalone Financial Statements comply with theAccounting Standards specified under Section 133 of the Act read with Rule 7 of theCompanies (Accounts) Rules 2014;
(e) On the basis of the written representations received from the Directors as on 31stMarch 2017 taken on record by the Board of Directors none of the Directors aredisqualified as on 31st March 2017 from being appointed as a Director in termsof Section 164 (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"; and
(g) With respect to the other matters to be included in the Auditor's Report inaccordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014 in our opinionand to the best of our information and according to the explanations given to us:
i. The financial statements have disclosed the impact of pending litigations on thefinancial position of the Company as referred to in Note No. 40.
ii. The Company did not have long-term contracts including derivative contracts forwhich there were no material foreseeable losses;
iii. There has been no delay in transferring amounts required to be transferred tothe Investor Education and Protection Fund ("IEPF") by the Company.
iv. The Company has provided requisite disclosures in its Standalone FinancialStatements as to holdings as well as dealings in Specified Bank Notes during the periodfrom 8th November 2016 to 30th December 2016 and those are inaccordance with the books of accounts maintained by the Company. Refer Note No. 41 of theStandalone Financial Statements.
Annexure - A to the Auditors' Report
The Annexure referred to in Independent Auditors' Report to the Members of the Companyon the Standalone Financial Statements for the year ended 31st March 2017 wereport that:
1. a) The Company has maintained proper records showing full particulars includingquantitative details and situation of the Fixed Assets.
b) The Fixed Assets were physically verified during the year by the Management inaccordance with a regular programme of verification which in our opinion provides forphysical verification of the Fixed Assets at reasonable intervals. According to theinformation and explanations given to us no material discrepancies were noticed on suchverification.
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.
2. a) The Inventory has been physically verified during the year by the management atreasonable intervals.
b) The procedures of the physical verification of the Inventories followed by themanagement are reasonable and adequate in relation to the size of the Company and thenature of the Business.
c) The Company is maintaining proper records of the Inventory. The discrepanciesnoticed on physical stocks and the book records were not material.
3. a) The Company has given Loans to its wholly owned subsidiary Fedders Lloyd TradingFZE of AED 19925 (Equivalent to INR 0.03 Cr). Total Due as on 31st March 2017in AED 1214154 (Equivalent to INR 1.66 Cr)
b) The Loans granted to the Bodies Corporate listed in the register maintained underSection 189 of the Act the borrowers have been regular in the payment of the interest asstipulated. The terms of arrangements do not stipulate any repayment schedule as the loansare repayable on demand.
c) There are no overdue amounts in respect of the Loans granted to the Bodies Corporatelisted in the register maintained under Section 189 of the Act.
4. 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 Act with respectto the loans and investments made.
5. According to the information and explanations given to us the Company has notaccepted any Deposit in terms of the directive issued by the Reserve Bank of India andthe provisions of the sections 73 to 76 or any other relevant provisions of the Act andthe rules framed there under.
6. We have broadly reviewed the cost records maintained by the Company prescribed bythe Central Government under Section 148(1) of the Companies Act 2013 and are of theopinion that prima facie the prescribed cost records have been maintained. We havehowever not made a detailed examination of the cost records with a view to determinewhether they are accurate or complete.
7. a) According to the records of the Company the Company is regular in depositingundisputed Statutory dues including Provident Fund Employees State Insurance Income TaxSales Tax Service Tax Duty of Excise Valued Added Tax Cess and any other statutorydues with the appropriate authorities however there is some delay in depositing Govt.dues. According to the information and explanations given to us no undisputed amountspayable in respect of Income Tax Sales Tax Customs Duty Service Tax Excise Duty andCess were outstanding at the financial reporting period ending on 31st March2017 for a period of more than 6 (six) months from the date they became payable. b)According to information and explanations given to us following demands of Income Tax andSales Tax are under disputes:
In addition to the above the Company has received total demand of Rs. 0.61 Crore undershow cause notices from Excise Department Noida. The Company has made suitable reply ofthe same. The adjudication order is awaited.
Recovery suits filed by the parties for Rs. 6.49 Crores not acknowledged asdebt/liability.
8. 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 of duesof banks. The Company did not have any outstanding debentures during the year.
9. In our opinion and according to the information and explanations given to us theTerm Loans have been applied for the purposes for which they were obtained. The Companydid not raise any money by way of Initial Public Offer or Further Public Offer (includingdebt instruments) during the year.
10. 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.
11. According to the information and explanations given 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.
12. In our opinion and according to the information and explanations given to us theCompany is not a Nidhi company. Accordingly paragraph 3(xii) of the Order is notapplicable.
13. 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 financial statements as required by the applicableaccounting standards.
14. According to the information and explanation given to us and based on ourexamination of the records the Company subsequent upon receipt of 25% of the issue pricefrom the Promoters and Promoters' Group had issued and allotted 5000000 warrantsconvertible into equivalent number of equity shares on preferential basis to its Promotersand Promoters' Group at the issue price of Rs. 75 per warrant.
The aforesaid warrant holders had applied for exercising their right for conversion of3200000 warrants into equity shares and had paid balance 75% aggregating toRs.180000000/-. Consequently the Company had allotted equity shares to the aforesaidholders in 2 (two) Tranches. The details of allotment are as mentioned below:
1. Allotment on 30th December 2016 in Tranche-I
2. Allotment on 13th January 2017 in Tranche-II
Upon the exercise of right of conversion of warrants by the allottee(s) the Paid-upshare capital of the Company stands increased to Rs. 339697000/- divided into33969700 equity shares of face value Rs. 10/- each.
The remaining 1800000 warrants allotted to the warrant holders stand forfeited inaccordance with the SEBI (ICDR) Regulations 2009. Consequent upon the above allotmentsand forfeiture of warrants there are no pending warrants due for conversion.
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 Directors or persons connected with them. Accordingly paragraph 3(xv)of the Order is not applicable.
16. The Company is not required to be registered under section 45-IA of the ReserveBank of India Act 1934.
Annexure - B to the Auditors' Report
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 FeddersElectric and Engineering Limited (Formerly known as Fedders Lloyd Corporation Limited)("the Company") as on 31st March 2017 in conjunction with our auditof the 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 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 Reporting("Guidance Note") issued by the Institute of Chartered Accountants of India("ICAI"). These responsibilities include the design implementation andmaintenance of adequate internal financial controls that were operating effectively forensuring the orderly and efficient conduct of its business including adherence toCompany's policies the safeguarding of its assets the prevention and detection of fraudsand errors the accuracy and completeness of the accounting records and the timelypreparation of reliable financial information as required under the Act.
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 and the Standards on Auditing issued by ICAI and deemed to beprescribed under section 143 (10) of the Act to the extent applicable to an audit ofinternal financial controls both applicable to an audit of Internal Financial Controlsand both issued by the ICAI. Those Standards and the Guidance Note require that we complywith ethical requirements and plan and perform the audit to obtain reasonable assuranceabout whether adequate internal financial controls over financial reporting wasestablished and maintained and if such controls operated effectively in all materialrespects.
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 includedobtaining 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 judgment including the assessment of the risks ofmaterial 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 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 financial statements for external purposes in accordance with generallyaccepted accounting principles. A company's internal financial control over financialreporting includes those policies and procedures that (1) pertain to the maintenance ofrecords that in reasonable detail accurately and fairly reflect the transactions anddispositions of the assets of the company; (2) provide reasonable assurance thattransactions are recorded as necessary to permit preparation of financial statements inaccordance with generally accepted accounting principles and that receipts andexpenditures 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 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 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 2017based 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.