TO THE MEMBERS OF
M/S GAJRA BEVEL GEARS LIMITED
Report on the Financial Statement
We have audited the accompanying financial statements of M/S Gajra Bevel GearsLimited (the company) which comprise the Balance Sheet as at 31st March2017 the statement of profit & loss cash Flow Statement for the year ended and asummary of significant accounting policies with other explanatory information.
Management's Responsibility for the Financial Statement
The Company s Board of Directors is responsible for the matters stated in Section134(5) of the Companies Act 2013(" the Act") with respect to the preparation ofthese financial statements that give a true and fair view of the financial positionfinancial performance and cash flows of the Company in accordance with the accountingprinciples generally accepted in India including the Accounting Standards specified undersection 133 of the Act read with Rule 7 of the Companies (Accounts) Rules 2014. Thisresponsibility also includes maintenance of adequate accounting records in accordance withthe provisions of the Act for safeguarding of 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 financial statements thatgive a true and fair view and are free from material misstatement whether due to fraud orerror.
Our responsibility is to express an opinion on these financial statements based on ouraudit. We have taken into account the provisions of the Act the accounting and auditingstandards and matters which are required to be included in the audit report under theprovisions of the Act and Rules made there under. We conducted our audit in accordancewith the Standards on Auditing specified under section 143(10) of the Act. Those Standardsrequire that we comply with ethical requirements and plan and perform the audit to obtainreasonable assurance about whether the financial statements are free from materialmisstatement. An audit involves performing procedures to obtain audit evidence about theamounts and disclosures in the financial statements. The procedures selected depend on theauditor s judgment including the assessment of the risks of material misstatement offinancial 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 accounting policies used and the reasonableness of the accountingestimates made by the
Company s Director as well as evaluating the overall presentation of the financialstatements. We believe that the audit evidence we have obtained is sufficient andappropriate to provide a basis for our audit opinion on the financial statements.
In our opinion and to the best of information and according to the explanation given tous the aforesaid financial statements give the information required by the Act in themanner so required and give true and fair views in conformity with the accountingprinciples generally accepted in India of the state of affairs of the Company as at 31stMarch 2017 its loss and its cash flows for the year ended on that date.
Emphasis of Matters
We draw attention to the following matters in the Notes to the financial statements:
? Note 3 in the financial statements which indicate the Company has accumulated lossesand the accumulated losses have eroded entire net worth of the Company and have made theCompany financially sick. Based on the Audited Balance Sheet as on 30.09.2008 the Companyhad filed a reference u/s15 (1) of SIC (SP) Act 1985 with the BIFR and the same wasregistered as case no. 27/2009 on 30.07.2009. The BIFR vide its order of hearing held on06.01.2010 declared the Company a SICK INDUSTRIAL COMPANY in terms of section 3(1)(o) ofSick Industrial Companies (Special Provisions) Act 1985. During the course of pendency ofthe reference with the BIFR the management of the Company had settled the loan accounts ofState Bank of India IFCI IDBI MPSIDC and MPAVN and have also made the Full & Finalpayments as per the terms of OTS. OTS of M.P. Financial Corporation Term Loan is underprocess. ? By notification No. 50 388(E) dated 25/11/2016 the SICA Repeal Act 2003 hasbeen notified w. e. f. 01/12/2016 and as per section 252 read with schedule VIII of theinsolvency & bankruptcy code 2016. The reference filed with the BIFR/ABIFR is abatedand the company may file a fresh reference before the NCLT within 180 days from that datei. e. on or before 31/05/2017.
Report on Other Legal and regulatory Requirement
As required by the Companies (Auditor s Report) Order2016 ("the Order")issued by Central
Government of India in terms of sub-section (11) of section 143 of the Act we give inthe Annexure a statement on the matters specified in paragraph 3 and 4 of the said Order.
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 purpose 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 Account and the Cash FlowStatement dealt with by this report are in agreement with the books of Accounts.
(d) In our opinion the aforesaid financial statements comply with the AccountingStandards specified under section 133 of Act read with Rule 7 of the Companies (Accounts)Rules 2014.
(e) On the basis of written representations received from the directors as on March 31st2017 taken on record by the Board of Directors none of the directors is disqualified ason March 31st 2017 from being appointed as the directors in terms of section164(2) of the Act.
(f) With respect to the adequacy of internal financial control over the financialreporting of the company and the operative effectiveness of such control refer to ourseparate report in Annexure B
(g) With respect to the other matter 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 explanation given to us:
(i) The Company has disclosed the impact of pending litigations on its financialposition in its financial statements Refer Note 14.
(ii) The Company did not have any long-term contracts including derivative contractsfor which there were material foreseeable losses; (iii)There was no such amount requiredto be transferred to the Investor Education and Protection Fund by the Company hence thematter of delay does not arise. (iv)The company has provided requisite disclosure in itsfinancial statements as to holding as well as dealing in specified Bank Notes during theperiod from 8th November 2016 to 30th December 2016 and these areaccordance with the books of accounts maintained by the company. Refer Note no. 24 to thefinancial statements.
O.T. Gandhi & Co. Chartered Accountants
Firm Registration Number: 001120C
Vibhor Gandhi (Partner) M.No.: 425478 Place: Indore Date: 30th May 2017
ANNEXURE "A" TO THE AUDITOR'S REPORT
The Annexure referred to in our Independent Auditors Report to the members of theCompany for the year ended 31 March 2017 we report that:-
1. (a) The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets.
(b) The Company has regular programme of physical verification of its assets accordingto the information given to us by management. In accordance with this programme certainfixed assets were physically verified during the year and no material discrepancies werenoticed on such verification.
(c) According to the information and explanations given to us by management the titledeeds of immovable property are held in the name of the Company.
2. The inventory has been physically verified by the management at reasonable intervalsduring the year. The discrepancies noticed on verification between the physical stocks andbook records were not material.
3. According to the information and explanations given to us the Company has notgranted any loan secured or unsecured to companies firms or parties covered in theregister maintained under section 189 of the Act.
4. According to the information and explanation given to us the Company has notprovided any loans investments guarantees security in accordance of the provisions ofsection 185 and 186 of the Companies Act 2013.
5. In our opinion and according to information and explanation given to us the Companyhas not accepted any deposit from the public in accordance of section 73 to 76 or anyother relevant provision of the Companies Act 2013 during the year.
6. We have broadly reviewed the books of account maintained by the Company pursuant tothe Rules made by the Central Govt. for the maintenance of cost records under subsection(1) of section 148 of the Act. Having no manufacturing activities in the Company themaintenance of cost records is not applicable.
7. (a) Owing to the financial sickness in the operative years the Company has beenirregular in depositing with the appropriate authorities even the undisputed statutorydues like EPF contribution ESIC contribution Commercial Tax Income Tax and Excise Duty.However after the grant of installment facility the Company has cleared the dues ofProvident Fund. The status of unpaid dues as on 31.03.2017 is as under:-
|Nature of Dues ||Amount |
| ||(Rs. In |
| ||Lakhs) |
|E.S.I.C Contribution ||62.50 |
|Commercial Tax ||165.63 |
|Income Tax Demand ||149.11 |
|Excise Duty ||48.51 |
(b) Assessed demands of commercial tax against which the Company has preferred forRevision before the Competent Authority have not been accounted for as liability are asunder:
|Assessment Year ||Assessed demand (Rs. In Lakhs) |
|1999-2000 ||16.64 |
|2001-2002 ||27.72 |
|2002-2003 ||48.09 |
|2005-2006 ||267.81 |
|2006-2007 ||205.35 |
|TOTAL ||565.61 |
8. As per the records of the Company and based on our audit procedures during theyear the Company has not made any payment towards the dues of Madhya Pradesh FinancialCorporation the outstanding of which as on 31 March 2017 is Rs. 890.88 Lakhs and duringthe year Company has made payment in full settlement of dues to Madhya Pradesh StateIndustrial Development Corporation.
9. According to the information and explanations given to us and based on ourexamination of the record of the Company the Company did not raise any money by way ofinitial public offer or further public offer (including debt instruments) and term loanduring the year.
10. Based on the audit procedure performed and the information and explanation given bythe management we report that no fraud on or by the Company has been noticed or reportedduring the course of our audit.
11. According to the information and explanations given to us and based on ourexamination of the record of the Company no managerial remuneration was paid for the saidfinancial year.
12. In our opinion and according to the information and explanations given to us the
Company is not a Nidhi Company.
13. According to the information and explanations given to us and based on ourexamination of the records of the Company the company was involved in related partytransaction as per section 188 of the Companies Act 2013.
14. As per the records of the Company and based on our audit procedures during theyear the Company has not made any preferential allotment or private placement of sharesor fully or partly convertible debentures during the year.
15. According to the information and explanations given to us and based on ourexamination of the record of the Company the Company has not entered into any non cashtransactions with directors or persons connected with them.
16. The Company is not required to be registered under section 45-IA of the ReserveBank of
India Act 1934.
For : O.T. Gandhi & Co.
Firm Registration Number: 001120C
Vibhor Gandhi (Partner) M.No.: 425478 Place: Indore Date: 30th May 2017
ANNEXURE-B TO THE AUDITOR'S 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 internalfinancial controls over financial reporting of M/S Gajra Bevel Gears Limited ("theCompany") as on 31st March 2017 in conjunction with our audit of the financialstatements of the Company for the year ended on that date.
MANAGEMENT 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 ( ICAI ). These responsibilitiesinclude the designs implementation and maintenance of adequate internal financialcontrols that were operating effectively for ensuring the orderly and efficient conduct ofits business including adherence to company s policies the safeguarding of its assetsthe prevention and detection of frauds and errors the accuracy and completeness of theaccounting records and the timely preparation of reliable financial information asrequired 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 Controlling(the
"Guidance Note") and the Standards on Auditing issued by ICAI and deemed tobe prescribed under section 143 (10) of the Companies Act 2013 to the extent applicableto an audit of internal financial controls-both applicable to an audit of InternalFinancial Controls and both issued by the Institute of Chartered Accountants of India.Those Standards and the Guidance Note require that we comply with ethical requirements andplan and perform the Audit to obtain responsible assurance about whether adequate internalfinancial controls over financial reporting was established and maintained and if suchcontrols operated effectively in all material respects. Our audit involves performingprocedures to obtain audit evidence about the adequacy of the internal financial controlssystem over financial reporting and their operating effectiveness. Our audit of internalfinancial controls over financial reporting included obtaining an understanding ofinternal financial controls over financial reporting assessing the risk that a materialweakness exists testing and evaluating and design and operating effectiveness of internalcontrol based on the assessed risk. The procedures selected depend on the auditor sjudgment including the assessment of the risks of material misstatement of the financialstatements whether due to fraud or error. We believe that the audit evidence we haveobtained is sufficient and appropriate to provide a basis for our audit opinion on theCompany s internal financial controls system over financial reporting.