To the Members of Gandhi Special Tubes Limited
Report on the Financial Statements
We have audited the accompanying financial statements of Gandhi Special Tubes Limited("the Company") which comprise the Balance Sheet as at 31 March 2017 theStatement of Profit and Loss and the Cash Flow Statement for the year then ended and asummary of the significant accounting policies and other explanatory information.
Management's Responsibility for the Financial Statements
The Company's Board of Directors are responsible for the matters stated in Section 134(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 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 accounting recordsrelevant to the preparation and presentation of the financial statements that give a trueand fair view and are free from material misstatement whether due to fraud or error.
Our responsibility is to express an opinion on these financial statements based on ouraudit.
While conducting the audit we have taken into account the provisions of the Act theaccounting and auditing standards and matters which are required to be included in theaudit report under the provisions of the Act and the Rules made there under.
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 nancial statements. 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. In making those risk assessments the auditorconsiders 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 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 financial statements.
In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid financial statements give the information required by the Actin the manner so required and give a true and fair view in conformity with the accountingprinciples generally accepted in India of the state of affairs of the Company as at 31March 2017 and its profit and its cash flows for the year ended on that date.
Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditor's Report) Order 2016 ("the Order")issued by the Government of India in terms of Section 143(11) of the Act we give in theAnnexure "A" a statement on the matters specified in paragraphs 3 and 4 of theOrder to the extent applicable.
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 Statement of Profit and Loss and the Cash Flow Statement dealtwith by this Report are in agreement with the books of account.
(d) In our opinion the aforesaid financial statements comply with the AccountingStandards 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 31March 2017 and taken on record by the Board of Directors none of the directors isdisquali ed as on 31 March 2017 from being appointed as a director in terms of Section164(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".
(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 Company has disclosed the impact of pending litigations on its financialposition in its financial statements - Refer Note 24 to the financial statements.
ii. the Company has not entered into any long-term contracts including derivativecontracts for which there were any material foreseeable losses as required under theapplicable law or accounting standards;
iii. there has been no delay in transferring the amounts required to be transferredto the Investor Education and Protection Fund by the Company.
iv. The Company has provided requisite disclosures in the financial statements as toholdings as well as dealings in Speci ed Bank Notes during the period from 08-11-2016 to30-12-2016. Based on audit procedures and relying on the management representation wereport that the disclosures are in accordance with books of account maintained by theCompany and as produced to us by the Management Refer Note 25 to the financial statements.
Annexure "A" to The Independent Auditor's Report
(Referred to in Paragraph 1 under the heading of "Report on Other Legal andRegulatory Requirements" of our report of even date)
()i a) The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets;
b) As explained to us the fixed assets have been physically veri ed by the managementin accordance with the phased programme of veri cation which in our opinion isreasonable having regard to the size of the Company and the nature of its assets. Nomaterial discrepancies were noticed on such veri cation;
c) According to the information and explanation given to us and on the basis of ourexamination of therecords of the Company the title deeds of immovable properties are heldin the name of the Company.
(ii) As explained to us the physical veri cation of inventory has been conducted bythe management in accordance with the phased programme of veri cation which in ouropinion is reasonable and no material discrepancies were noticed on such veri cation.
(iii) According to the information and explanations given to us the Company hasduring the year not granted any loans secured or unsecured to companies rms LimitedLiability Partnership; or other parties covered in the register maintained under Section189 of the Act. Accordingly Clause 3 (iii) (a) (b) and (c) of the Order are notapplicable.
(iv) In our opinion and according to the information and explanation given to us theCompany has complied with the provisions of section 185 and 186 of the Companies Act 2013in respect of loans to Directors Loans and investments giving guarantees and providingsecurities etc as applicable.
(v) The Company has not accepted any deposits from the public within the meaning ofSection 73 74 75 and 76 of the Act and the rules framed there under to the extent notied. Accordingly Clause 3(v) of the Order is not applicable.
(vi) We have broadly reviewed the records maintained by the Company in respect ofproducts where pursuant to the Company's (Cost record and audit) Rules 2014 themaintenance of cost records have been prescribed under Section 148(1) of the Act and areof the opinion that prima facie the prescribed accounts and records have been made andmaintained. We have not however made a detailed examination of records with a view todetermine whether they are accurate or complete.
(vii) a) According to the information and explanations given to us and the records ofthe Company examined by us in our opinion the Company is generally regular in depositingundisputed statutory dues including Provident Fund Investor Education & ProtectionFund Employees' State Insurance Income Tax Sales Tax Service tax Custom duty Exciseduty value added tax cess and other material statutory dues as applicable with theappropriate authorities.
(b) The disputed statutory dues aggregating Rs 178.51 Lakhs that have not beendeposited on account of disputed matters pending before appropriate authorities are asunder:
| || || || ||(Rs in lakhs) |
|Name of the Statute ||Nature of Dues ||Amount under dispute not yet deposited ||Period to which the amount relates ||Forum where the dispute is pending |
|Service Tax Laws ||Service Tax ||152.03 ||01-09-2004 To 30-09- 2013 ||Before Customs Excise & Service Tax Appellate Tribunal |
|Service Tax Laws ||Service Tax ||1.25 ||01-03-2012 To 31-12- 2012 ||Before Commissioner (Appeals) Customs Excise & Service Tax |
|Sales Tax Laws ||Service Tax ||25.23 ||01-04-2002 To 31-03- 2003 ||Before Joint Commissioner of Commercial Tax (Appeals) |
| ||Total ||178.51 || || |
(viii) The Company does not have any loans or borrowing from financial institutionbank Government or to debenture holders during the year. Accordingly paragraph 3(viii)of the order is not applicable.
(ix) The Company has not raised any money by way of initial public offer or furtherpublic offer (including debt instruments) and term loans during the year. Accordinglyparagraph 3(ix) of the order is not applicable.
(x) According to the information and explanations given to us we have neither comeacross any instance of material fraud by the Company or on the Company by its of cers oremployees noticed or reported during the year in course of our audit nor have we beeninformed of any such case by the Management.
(xi) 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.
(xii) 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;
(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 the details of suchtransactions have been disclosed in the Financial Statements as required by the applicableaccounting standards;
(xiv) According to the information and explanations given to us and based on ourexamination of the records of the Company the Company has not made any preferentialallotment or private placement of shares or fully or partly convertible debentures duringthe year under review. Accordingly paragraph 3(xiv) of the order is not applicable.
(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 any non-cashtransactions with directors or persons connected with him. Accordingly paragraph 3(xv) ofthe order is not applicable.
(xvi) The Company is not required to be registered under section 45-IA of the ReserveBank of India Act 1934. Accordingly paragraph 3(xiv) of the order is not applicable.
Annexure "B" to The Independent Auditor's Report
(Referred to in Paragraph 2(f) under the heading of "Report on Other Legal andRegulatory Requirements" of our report of even date)
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 GandhiSpecial Tubes Limited ("the Company") as of March 31 2017 in conjunction withour audit of the 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 Reportingissued by the Institute of Chartered Accountants of India ("ICAI"). 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 Company's policies the safeguarding ofits assets the prevention and detection of frauds and errors the accuracy andcompleteness of the accounting records and the timely preparation of reliable financialinformation 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 on Audit of Internal Financial Controls Over Financial Reporting(the "Guidance Note") and the Standards on Auditing issued by ICAI and deemedto be prescribed 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 ICAI. Those Standards and the Guidance Note require that we comply withethical requirements and plan and perform the audit to obtain reasonable assurance aboutwhether adequate internal financial controls over financial reporting was established andmaintained and if such controls operated 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 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 authorizations ofmanagement and directors of the Company; and (3) provide reasonable assurance regardingprevention or timely detection of unauthorized 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 March 31 2017 based on theinternal control over financial reporting criteria established by the Company consideringthe essential components of internal control stated in the Guidance Note on Audit ofInternal Financial Controls Over Financial Reporting issued by the Institute of CharteredAccountants of India.
| ||For S. V. DOSHI & CO. |
| ||Chartered Accountants |
| ||Firm Reg. No.: 102752W |
| ||SUNIL DOSHI |
| ||Partner |
|Mumbai 16 May 2017 ||Membership No.: 35037 |