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Frontier Springs Ltd.

BSE: 522195 Sector: Auto
NSE: N.A. ISIN Code: INE572D01014
BSE 00:00 | 23 Oct 309.25 1.80
(0.59%)
OPEN

303.00

HIGH

321.00

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303.00

NSE 05:30 | 01 Jan Frontier Springs Ltd
OPEN 303.00
PREVIOUS CLOSE 307.45
VOLUME 4249
52-Week high 380.00
52-Week low 165.10
P/E 9.47
Mkt Cap.(Rs cr) 122
Buy Price 307.55
Buy Qty 1.00
Sell Price 311.00
Sell Qty 150.00
OPEN 303.00
CLOSE 307.45
VOLUME 4249
52-Week high 380.00
52-Week low 165.10
P/E 9.47
Mkt Cap.(Rs cr) 122
Buy Price 307.55
Buy Qty 1.00
Sell Price 311.00
Sell Qty 150.00

Frontier Springs Ltd. (FRONTIERSPRINGS) - Auditors Report

Company auditors report

To the Members of

M/S FRONTIER SPRINGS LIMITED

Report on the Audit of the Standalone Financial Statements

Opinion

I have audited the accompanying standalone financial statements of Frontier SpringsLimited ("the Company") which comprise the Balance Sheet as at March 31 2019the Statement of Profit and Loss the Statement of Changes in Equity and the Statement ofCash Flows for the year ended on that date and a summary of the significant accountingpolicies and other explanatory information.

In my opinion and to the best of my information and according to the explanations givento us the aforesaid standalone financial statements give the information required by theCompanies Act 2013 ("the Act") in the manner so required and give a true andfair view in conformity with the Indian Accounting Standards prescribed under section 133of the Act read with the Companies (Indian Accounting Standards) Rules 2015 as amendedand other accounting principles generally accepted in India of the state of affairs ofthe Company as at March 31 2019 and its profit changes in equity and its cash flows forthe year ended on that date.

Basis for opinion

I conducted my audit of the standalone financial statements in accordance with theStandards on Auditing specified under section 143(10) of the Act (SAs). Myresponsibilities under those Standards are further described in the Auditor'sResponsibilities for the Audit of the Standalone Financial Statements section of myreport. I are independent of the Company in accordance with the Code of Ethics issued bythe Institute of Chartered Accountants of India (ICAI) together with the independencerequirements that are relevant to my audit of the standalone financial statements underthe provisions of the Act and the Rules made there under and I have fulfilled my otherethical responsibilities in accordance with these requirements and the ICAI's Code ofEthics. I believe that the audit evidence I have obtained is sufficient and appropriate toprovide a basis for my audit opinion on the standalone financial statements.

Key audit matters

Key audit matters are those matters that in my professional judgment were of mostsignificance in my audit of the standalone financial statements of the current period.These matters were addressed in the context of my audit of the standalone financialstatements as a whole and in forming my opinion thereon and I do not provide a separateopinion on these matters. I have determined the matters described below to be the keyaudit matters to be communicated in my report.

1. Revenue Recognition

Revenue from the sale of goods is recognized upon the transfer of control of the goodsto the customer (mainly being supply to railways) usually on delivery of goods. Thecompany uses a variety of shipment terms across its operating markets and this has animpact on the timing of revenue recognition. As well as the company recognizes its revenueas per the various tenders received from railways which has overall impact on the timingof revenue recognition? There is a risk due to retention norms of 2% or 5% in all purchaseorders by railways that revenue could be recognized in the incorrect period for salestransactions occurring on and around the year end therefore revenue recognition has beenidentified as a key audit matter.

Refer to Note 21 to the Standalone Financial Statements

Auditor's Response Principal Audit Procedures

My audit procedures included reading the Company's revenue recognition accountingpolicies to assess compliance with Ind AS 115 "Revenue from contracts withcustomers".

I performed test of controls of management's process of recognizing the revenue fromsales of goods and placed specific attention on the timing of the revenue recognition asper the sales terms with the customers.

I performed test of details of the sales transactions testing based on a representativesampling of the sales orders to test that the related revenues and trade receivables arerecorded appropriately taking into consideration the terms and conditions of the saleorders including the shipping terms.

I also performed sales cut off procedures by agreeing deliveries occurring around theyear end to supporting documentation to establish that sales and corresponding tradereceivables are properly recorded in the correct period.

2. Retention by railways out of revenue received.

As per railway norms terms and conditions there are demurrage charges which areretained in the form of 2% or 5% of invoice value which is recovered when the tenure asper terms and conditions of the purchase order is completed. The total retention amountfor the period ended 31/03/2019 amounts to Rs 6275091/- out of total trade receivablesand out of which Rs 678853/- has been recovered upto 20 /05/2019.

Auditor's Response Principal Audit Procedures

My audit procedures included reading the Company's revenue recognition accountingpolicies to assess compliance with Ind AS 115 "Revenue from contracts withcustomers".

I performed test of controls of management's process of recognizing the revenue fromsales of goods and placed specific attention on the timing of the revenue recognition asper the sales terms with the customers.

I performed test of details of the sales transactions testing based on a representativesampling of the sales orders to test that the related revenues and trade receivables arerecorded appropriately taking into consideration the terms and conditions of the saleorders including the shipping terms.

I also performed sales cut off procedures by agreeing deliveries occurring around theyear end to supporting documentation to establish that sales and corresponding tradereceivables are properly recorded in the correct period.

3. Taxes including provision for current tax valuation of uncertain tax positions andrecognition of deferred taxes.

The company has recorded Rs. 22707239/- of tax expense and deferred tax assetamounting to Rs 3716335/- for the year ended 31st March 2019.

The company is subject to periodic tax challenges by tax authorities which may lead toprotracted litigations as such accounting for taxes involves management judgement indeveloping estimates of tax exposures and contingencies in order to assess the adequacy oftax provision.

Auditor's Response Principal Audit Procedures

Assessed the design implementation and operating effectiveness of key controls inrespect of the company's process of recognition of tax expense including uncertain taxprovisions and deferred taxes.

Assessed the calculation for the current tax provisions and the procedures performed toanalyze movements including the rationale for any release increase or continuedprovision in the year.

Assessed management's judgements with respect to probability of outflow arising out oflitigation after considering the status of recent tax assessments audits and enquiriesrecent judicial pronouncements and judgements in similar matters developments in the taxenvironment and outcome of past litigations.

4. Gratuity Accounting.

Company has taken policy from Life Insurance Corporation regarding the gratuity for itsunit at Rania in regards to this there is a trust Titles as ‘Trustees FrontierSprings Ltd Employees Group' the pending payment on this account upto the date of signingof balance sheet is Rs 1900000/-.There is no policy taken by company for its unit atPaonta Sahib Himachal Pradesh and Forging division of Rania. The outstanding amount onthis account is Rs 1816046/- for Paonta and Rs 281904/- for Forging division at Rania. Against this no earmarked funds have been kept by the company.

Auditor's Response Principal Audit Procedures

My audit procedures included reading the Company's revenue recognition accountingpolicies to assess compliance with Ind AS 37 "Provisions Contingent Liabilities andContingent Assets".

I performed test of controls of management's process of recognizing the ProvisionsContingent Liabilities and Contingent Assets and placed specific attention on the timingof the provisions.

I performed test of details of the expense transactions testing based on arepresentative sampling of the Provisions to test that the Provisions ContingentLiabilities and Contingent Assets are recorded appropriately.

I also performed cut off procedures relating to Provisions Contingent Liabilities andContingent Assets occurring around the year end and the same are properly recorded in thecorrect period.

Information Other than the Standalone Financial Statements and Auditor's Report Thereon

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 financial statements and my auditor's report thereon.

My opinion on the standalone financial statements does not cover the other informationand I do not express any form of assurance conclusion thereon.

In connection with my audit of the standalone financial statements my responsibilityis to read the other information and in doing so consider whether the other informationis materially inconsistent with the standalone financial statements or my knowledgeobtained during the course of my audit or otherwise appears to be materially misstated.

If based on the work I have performed I conclude that there is a materialmisstatement of this other information I are required to report that fact. I have nothingto report in this regard.

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 Act with respect to the preparation of these standalone financial statementsthat give a true and fair view of the financial position financial performance changesin equity and cash flows of the Company in accordance with the AS and other accountingprinciples generally accepted in India. 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 standalone financial statements that give a true andfair view and are free from material misstatement whether due to fraud or error.

In preparing the standalone 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 also responsible for overseeing the Company's financialreporting process.

Auditor's Responsibilities for the Audit of the Standalone Financial Statements

My objectives are to obtain reasonable assurance about whether the standalone financialstatements as a whole are free from material misstatement whether due to fraud or errorand to issue an auditor's report that includes my opinion. Reasonable assurance is a highlevel of assurance but is not a guarantee that an audit conducted in accordance with SAswill always detect a material misstatement when it exists. Misstatements can arise fromfraud or error and are considered material if individually or in the aggregate theycould reasonably be expected to influence the economic decisions of users taken on thebasis of these standalone financial statements.

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

Identify and assess the risks of material misstatement of the standalone 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 my 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 financial controls relevant to the audit in orderto design audit procedures that are appropriate in the circumstances. Under section143(3)(i) of the Act I are also responsible for expressing my 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 reasonableness ofaccounting 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 Company'sability to continue as a going concern. If I conclude that a material uncertainty existsI am required to draw attention in my auditor's report to the related disclosures in thestandalone financial statements or if such disclosures are inadequate to modify myopinion. My conclusions are based on the audit evidence obtained up to the date of myauditor's report. However future events or conditions may cause the Company to cease tocontinue as a going concern.

Evaluate the overall presentation structure and content of the standalone financialstatements including the disclosures and whether the standalone financial statementsrepresent the underlying transactions and events in a manner that achieves fairpresentation.

Materiality is the magnitude of misstatements in the standalone financial statementsthat individually or in aggregate makes it probable that the economic decisions of areasonably knowledgeable user of the financial statements may be influenced. I considerquantitative materiality and qualitative factors in (i) planning the scope of my auditwork and in evaluating the results of my work; and (ii) to evaluate the effect of anyidentified misstatements in the financial statements.

I 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 I identify during my audit.

I also provide those charged with governance with a statement that I have complied withrelevant ethical requirements regarding independence and to communicate with them allrelationships and other matters that may reasonably be thought to bear on my independenceand where applicable related safeguards.

From the matters communicated with those charged with governance I determine thosematters that were of most significance in the audit of the standalone financial statementsof the current period and are therefore the key audit matters. I describe these matters inmy auditor's report unless law or regulation precludes public disclosure about the matteror when in extremely rare circumstances I determine that a matter should not becommunicated in my report because the adverse consequences of doing so would reasonably beexpected to outweigh the public interest benefits of such communication.

Report on Other Legal and Regulatory Requirements

1. As required by Section 143(3) of the Act based on my audit I report that:

I have sought and obtained all the information and explanations which to the best of myknowledge and belief were necessary for the purposes of my audit.

In my opinion proper books of account as required by law have been kept by the Companyso far as it appears from my examination of those books.

The Balance Sheet the Statement of Profit and Loss Statement of Changes in Equity andthe Statement of Cash Flow dealt with by this Report are in agreement with the relevantbooks of account.

In my opinion the aforesaid standalone financial statements comply with the ASspecified under Section 133 of the Act read with Rule 7 of the Companies (Accounts)Rules 2014.

On the basis of the written representations received from the directors as on March 312019 taken on record by the Board of Directors none of the directors is disqualified ason March 31 2019 from being appointed as a director in terms of Section 164 (2) of theAct.

With respect to the adequacy of the internal financial controls over financialreporting of the Company and the operating effectiveness of such controls refer to myseparate Report in "Annexure A". My report expresses an unmodified opinion onthe adequacy and operating effectiveness of the Company's internal financial controls overfinancial reporting.

With respect to the other matters to be included in the Auditor's Report in accordancewith the requirements of section 197(16) of the Act as amended :

In my opinion and to the best of my information and according to the explanations givento us the remuneration paid by the Company to its directors during the year is inaccordance with the provisions of section 197 of the Act.

With respect to the other matters to be included in the Auditor's Report in accordancewith Rule 11 of the Companies (Audit and Auditors) Rules 2014 as amended in my opinionand to the best of my information and according to the explanations given to us :

• The Company has disclosed the impact of pending litigations on its financialposition in its standalone financial statements.

• The Company has made provision as required under the applicable law oraccounting standards for material foreseeable losses if any on long-term contractsincluding derivative contracts.

• There were no amounts which were required to be transferred to the InvestorEducation and Protection Fund by the company.

2. 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 I give in"Annexure B" a statement on the matters specified in paragraphs 3 and 4 of theOrder.

For SANJEEVANI RAIZADA & CO.
Chartered Accountants
Firm's Regn. No. : 021960C
SANJEEVANI RAIZADA
Place : Kanpur Proprietor
Date : 27.05.2019 Membership No. 414542

ANNEXURE - ‘A' TO THE INDEPENDENT AUDITORS' REPORT

(Referred to in paragraph 1(f) under ‘Report on Other Legal and RegulatoryRequirements' section of my report to the Members of Frontier Springs Limited of evendate)

Report on the Internal Financial Controls Over Financial Reporting under Clause (i) ofSub-section 3 of Section 143 of the Companies Act 2013 ("the Act")

I have audited the internal financial controls over financial reporting of FRONTIERSPRINGS LIMITED ("the Company") as of March 312019 in conjunction with my auditof the standalone financial statements of the Company for the year ended on that date.

Management's Responsibility for Internal Financial Controls

The Board of Directors of the Company is responsible for establishing and maintaininginternal financial controls based on the internal control over financial reportingcriteria established by the Company considering the essential components of internalcontrol stated in the Guidance Note on Audit of Internal Financial Controls over FinancialReporting issued by the Institute of Chartered Accountants of India. Theseresponsibilities include the design implementation and maintenance of adequate internalfinancial controls that were operating effectively for ensuring the orderly and efficientconduct of its business including adherence to respective 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.

Auditor's Responsibility

My responsibility is to express an opinion on the internal financial controls overfinancial reporting of the Company based on my audit. I conducted my 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 I comply with ethical requirements and plan and perform theaudit to obtain reasonable assurance about whether adequate internal financial controlsover financial reporting was established and maintained and if such controls operatedeffectively in all material respects.

My audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal financial controls system over financial reporting and their operatingeffectiveness. My 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 judgement including the assessment of the risks ofmaterial misstatement of the financial statements whether due to fraud or error.

I believe that the audit evidence I have obtained are sufficient and appropriate toprovide a basis for my audit opinion on the internal financial controls system overfinancial reporting of the Company.

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.

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 my opinion to the best of my information and according to the explanations given tous 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 312019 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.

For SANJEEVANI RAIZADA & CO.
Chartered Accountants
Firm's Regn. No. : 021960C
SANJEEVANI RAIZADA
Place : Kanpur Proprietor
Date : 27.05.2019 Membership No. 414542

Annexure ‘B' to the Independent Auditor's Report

(Referred to in paragraph 2 under ‘Report on Other Legal and RegulatoryRequirements' section of my report to the Members of Frontier Springs Limited of evendate)

1. In respect of the Company's fixed assets :

a) The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets;

b) The Fixed Assets have been physically verified by the management in a phased mannerdesigned to cover all the items over a period of three years which in our opinion isreasonable having regard to the size of the company and nature of its business. Pursuantto the program a portion of the fixed asset has been physically verified by themanagement during the year and no material discrepancies between the books records and thephysical fixed assets have been noticed.

c) The title deeds of the immovable properties are held in the name of the company.

2. a) The management has conducted the physical verification of inventory at reasonableintervals.

b) The discrepancies noticed on physical verification of the inventory as compared tobooks records which has been properly dealt with in the books of account were notmaterial.

3. The Company has not granted any loans secured or unsecured to companies firmsLimited Liability partnerships or other parties covered in the Register maintained undersection 189 of the Act. Accordingly the provisions of clause 3 (iii) (a) to (C) of theOrder are not applicable to the Company and hence not commented upon.

4. In our opinion and according to the information and explanations given to us thecompany has complied with the provisions of section 185 and I86 of the Companies Act 2013In respect of loans investments guarantees and security.

5. The Company has not accepted any deposits from the public and hence the directivesissued by the Reserve Bank of India and the provisions of Sections 73 to 76 or any otherrelevant provisions of the Act and the Companies (Acceptance of Deposit) Rules 2015 withregard to the deposits accepted from the public are not applicable.

6. As informed to us the maintenance of Cost Records has not been specified by theCentral Government under sub-section (1) of Section 148 of the Act in respect of theactivities carried on by the company.

7. a) According to information and explanations given to us and on the basis of ourexamination of the books of account and records the Company has been generally regularin depositing undisputed statutory dues including Provident Fund Employees StateInsurance Income-Tax Sales tax Service Tax Duty of Customs Duty of Excise Valueadded Tax Cess GST and any other statutory dues with the appropriate authorities.According to the information and explanations given to us no undisputed amounts payablein respect of the above were in arrears as at March 31 2019 for a period of more than sixmonths from the date on when they become payable.

b) According to the information and explanation given to us there are no dues ofincome tax sales tax service tax duty of customs duty of excise value added taxoutstanding on account of any dispute.

8. In our opinion and according to the information and explanations given to us theCompany has not defaulted in the repayment of dues to banks. The Company has not taken anyloan either from financial institutions or from the government and has not issued anydebentures.

9. Based upon the audit procedures performed and the information and explanations givenby the management the company has not raised money by way of initial public offer orfurther public offer including debt instruments and term Loans. Accordingly theprovisions of clause 3 (ix) of the Order are not applicable to the Company and hence notcommented upon.

10. Based upon the audit procedures performed and the information and explanationsgiven by the management we report that no fraud by the Company or on the company by itsofficers or employees has been noticed or reported during the year.

11. Based upon the audit procedures performed and the information and explanationsgiven by the management managerial remuneration has been paid by the Company inaccordance with the requisite approvals mandated by the provisions of section 197 readwith Schedule V to the Companies Act;

12. In our opinion the Company is not a Nidhi Company. Therefore the provisions ofclause 4 (xii) of the Order are not applicable to the Company.

13. In our opinion all transactions with the related parties are in compliance withsection 177 and 188 of Companies Act 2013 and the details have been disclosed in theFinancial Statements as required by the applicable accounting standards.

14. Based upon the audit procedures performed and the information and explanationsgiven by the management the company has not made any preferential allotment or privateplacement of shares or fully or partly convertible debentures during the year underreview. Accordingly the provisions of clause 3 (xiv) of the Order are not applicable tothe Company and hence not commented upon.

15. Based upon the audit procedures performed and the information and explanationsgiven by the management the company has not entered into any non-cash transactions withdirectors or persons connected with him. Accordingly the provisions of clause 3 (xv) ofthe Order are not applicable to the Company and hence not commented upon.

16. In our opinion the company is not required to be registered under section 45 IA ofthe Reserve Bank of India Act 1934 and accordingly the provisions of clause 3 (xvi) ofthe Order are not applicable to the Company and hence not commented upon.

For SANJEEVANI RAIZADA & CO.
Chartered Accountants
Firm's Regn. No. : 021960C
SANJEEVANI RAIZADA
Place : Kanpur Proprietor
Date : 27.05.2019 Membership No. 414542

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