The Members of HERCULES HOISTS LIMITED
Report on the Ind AS Financial Statements
We have audited the Financial Statements of HERCULES HOISTS LIMITED ("theCompany") which comprise the Balance Sheet as at March 31 2019 and the Statementof Profit and Loss (including Other Comprehensive Income) Statement of Changes in Equityand Statement of Cash Flows for the year then ended and notes to the FinancialStatements including a summary of the signifc antaccounting policies and otherexplanatory information (hereinafter referred to as 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 theCompanies Act 2013 ("the Act") in the manner so required and give a true andfair view in conformity with the accounting principles generally accepted in India ofthe state of affairs of the Company as at March 312019 and its profit including othercomprehensive income changes in equity and its cash flows for the year ended on thatdate.
Basis for Opinion
We conducted our audit in accordance with the Standards on Auditing (SAs) specifiedunder section 143(10) of the Act. Our responsibilities under those Standards are furtherdescribed in the Auditor's Responsibilities for the Audit of the Financial Statementssection of our report. We are independent of the Company in accordance with theCode ofEthics issued by the Institute of Chartered Accountants of India together with ethicalrequirements that are relevant to our audit of the Financial Statements under theprovisions of the Companies Act 2013 and the Rules thereunder and we have fulfilled ourother ethical responsibilities in accordance with these requirements and the Code ofEthics. We believe that the audit evidence we have obtained is sufficient and appropriateto provide a basis for our opinion.
Key Audit Matters
Key audit matters are those matters that in our professional judgment were of mostsignificance in our audit of the Financial Statements of the current period. These matterswere addressed in the context of our audit of the Financial Statements as a whole and informing our opinion thereon and we do not provide a separate opinion on these matters.
|Warranty Provisions ||Principal Audit Procedures |
|The Company's product warranties primarily cover expected costs to repair or replace components with defects or functional errors. Warranties are usually granted for one year to two year period. ||Our procedures included but were not limited to: |
|We focused on this area as the completeness and valuation of the expected outcome of warranty provisions requires a high degree of Management judgment and the use of estimates giving rise to inherent uncertainty in the amounts recorded in the financial statements. (For the year ended March 31 2019 the Company has provided free replacement of Rs. 23.44 Lakhs which is approximately 0.30% comparedto last year's total turnover.) || Testing of relevant internal controls regarding completeness of warranty provisions and how management assesses valuation of provisions |
| || We assessed the assumptions underlying the valuation of provisions by checking and corroborating the inputs used to calculate the provisions including inter viewing Management regarding individual cases. |
| || We assessed specific warranty provisions held for individual cases to evaluate whether the warranty provisions were sufficient to cover expected costs at year-end. |
| || Further we assessed the level of historical warranty claims to assess whether the total warranty provisions held at year-end were sufficient to cover expected costs in light of known and expected cases and standard warranty periods provided. |
|Inventory Valuation ||From the procedures performed and bases on historical data we have no matters to report. |
|As at March 31 2019 the Company held Rs. 3345.91 Lakhs of inventory. Given the size of the inventory balance relative to the total assets of the Company and the estimates and judgments described below the valuation of inventory required significant audit attention. ||We have performed the following procedures over the valuation of inventory:- |
|As disclosed in Note No. 2(F) inventories are held at the lower of cost or net realisable value determined using the weighted average cost method. At year end the valuation of inventory is reviewed by management and the cost of inventory is reduced where inventory forecasts to be sold below cost || For sample inventory items re-performed the weighted average cost calculation and compared the weighted average cost to the last purchase invoices; |
|Management undertake the following procedure for determining the level of write down required: || We tested that the ageing report used by management correctly aged inventory items by agreeing a sample of aged inventory items to the last recorded invoice; |
| Use Inventory ageing report to check slow moving & non moving inventory; || On a sample basis we tested the net realizable value of inventory lines with recent selling prices of finished goods wherein these raw materials are used; |
| For inventory aged greater than one year management apply a percentage based write down to inventory. The percentage are derived from historical level of write down; || We assessed the percentage write down applied to older inventory with reference to historic inventory write downs and recoveries on slow moving inventory; and |
| Perform a line-by-line analysis of remaining inventory to ensure it is stated at the lower of cost or net realizable value and a specific write down is recognized if required. (As at March 31 2019 the Company has provided Rs. 201.80 Lakhs for slow moving & nonmoving raw materials.) || We re-performed the calculation of the inventory write down. |
| ||We also made enquiries with the management and considered the results of our testing above to determine whether any specific write downs were further required. From the procedures performed we have no matters to report. |
The Company's management and Board of Directors are responsible for the otherinformation. The other information comprises the information included in the Company'sannual report but does not include the Ind AS Financial Statements and our auditors'report thereon.
Our opinion on the Financial Statements does not cover the other information and we donot express any form of assurance conclusion thereon.
In connection with our audit of the Financial Statements our responsibility is to readthe other information and in doing so consider whether the other information ismaterially inconsistent with the Financial Statements or our knowledge obtained in theaudit or otherwise appears to be materially misstated. If based on the work we haveperformed we conclude that there is a material misstatement of this other information; weare required to report that fact. We have nothing to report in this regard.
Responsibilities of Management and Those charged with Governance for the FinancialStatements
The Company's management and Board of Directors is responsible for the matters statedin section 134(5) of the Act with respect to the preparation of these Ind AS FinancialStatements that give a true and fair view of financial position financial performancechanges in equity and cash flows of the Company in accordance with the accountingprinciples generally accepted in India including the Indian Accounting Standards (Ind AS)specified under section 133 of the Act. This responsibility also includes maintenance ofadequate accounting records in accordance with the provisions of the Act for safeguardingof the 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 theInd ASFinancial Statements that give a true and fairview and are free from material misstatement whether due to fraud or error.
In preparing the Financial Statements management and Board of Directors areresponsible for assessing the Company's ability to continue as a going concerndisclosing as applicable matters related to going concern and using the going concernbasis of accounting unless management either intends to liquidate the Company or to ceaseoperations or has no realistic alternative but to do so.
Board of Directors is also 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 FinancialStatements as a whole are free from material misstatement whether due to fraud or errorand to issue an auditor's report that includes our 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 Financial Statements.
As part of an audit in accordance with SAs we exercise professional judgment andmaintain professional skepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of the 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 our 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 control relevant to the audit in order todesign audit procedures that are appropriate in the circumstances. Under Section 143(3)(i)of the Companies Act 2013 we are also responsible for expressing our opinion on whetherthe company 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 financial statements or if such disclosures are inadequate to modify our opinion.Our conclusions are based on the audit evidence obtained up to the date of our auditor'sreport. However future events or conditions may cause the Company to cease to continue asa going concern.
Evaluate the overall presentation structure and content of the FinancialStatements including the disclosures and whether the financial statements represent theunderlying transactions and events in a manner that achieves fair presentation.
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 also provide those charged with governance with a statement that we have compliedwith relevant ethical requirements regarding independence and to communicate with themall relationships and other matters that may reasonably be thought to bear on ourindependence and where applicable related safeguards.
From the matters communicated with those charged with governance we determine thosematters that were of most significance in the audit of the Financial Statements of thecurrent period and are therefore the key audit matters. We describe these matters in ourauditor's report unless law or regulation precludes public disclosure about the matter orwhen in extremely rare circumstances we determine that a matter should not becommunicated in our report because the adverse consequences of doing so would reasonablybe expected to outweigh the public interest benefits of such communication.
Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditors' Report) Order 2016 ("the Order")issued by the Central Government of India in terms of section 143 (11) of the CompaniesAct 2013 we give in the "Annexure A" a statement on the matters specified inparagraphs 3 and 4 of the Order 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 of the aforesaidFinancial Statements.
b) In our opinion proper books of account as required by law relating to preparationof the aforesaid Ind ASFinancial Statements have been kept by the Company so far as itappears from our examination of those books.
c) The Balance Sheet the Statement of Profit and Loss (including other comprehensiveincome) the Statement of Changes in Equity and the Cash Flow Statement dealt with by thisReport are in agreement with the books of account maintained for the purpose ofpreparation of the Financial Statements.
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(Account) 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 312019 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 B".
g) With respect to the other matters to be included in the Auditors' 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 does not have any pending litigations which would impact its financialposition.
ii. The Company did not have any material foreseeable losses on long-term contractsincluding derivatives contracts.
iii. There has been no delay in transferring amounts required to be transferred tothe Investor Education and Protection
Fund by the company.
For Kanu Doshi Associates LLP
FRN. No. 104746W/W100096
Kunal Vakharia Partner
Membership no. 148916
Place: Mumbai Date: May 24 2019
ANNEXURE A TO THE AUDITOR'S REPORT
Referred to in paragraph 2 of Report on other Legal and RegulatoryRequirements' in our Report of even date on the accounts of Hercules Hoists Limitedfor the year ended March 31 2019
i (a) The Company is maintaining proper records showing full particulars includingquantitative details and situation of fixed assets.
(b) The fixed assets of the company are physically verified by the Management accordingto a phased programme designed to cover all the items over a period of three years whichin our opinion is reasonable having regard to the size of the company and the nature ofits assets. Pursuant to the programme a portion of the fixed assets has been physicallyverified by the management during the year and discrepancies noticed between the bookrecords and the physical inventories were not material and have been properly dealt within the accounts.
(c) According to 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 During the year the inventories have been physically verified by the management. Inour opinion the frequency of verification is reasonable. The discrepancies noticed onphysical verification of inventories as compared to the book records have been properlydealt with in the books of accounts.
iii. As informed to us the Company has not granted loans secured or unsecured tocompanies firms limited liability partnerships or other parties covered in the registermaintained under Section 189 of the Act. Hence sub clauses (a) to (c) of clause 3(iii) arenot applicable to the Company.
iv. The company has complied with provisions of section 186 of the Companies Act 2013in respect of investments made and section 185 of the Companies Act 2013 is notapplicable as there were no such loans securities or guarantees provided during the year.
v. The Company has not accepted any deposits from the public within the meaning ofSections 73 74 75 and 76 of the Act and the rules framed there under to the extentnotified and therefore clause 3(v) is not applicable.
vi. The Central Government has prescribed maintenance of cost records for the companyunder sub section (1) of section 148 of the Companies Act 2013 and such accounts andrecords have been made and maintained by the Company. However no detailed examinations ofsuch records have been carried out by us.
vii (a) The Company is regular in depositing with appropriate authorities undisputedstatutory dues including Provident Fund Employees' State Insurance Income Tax ExciseDuty Customs Duty Cess Goods & Service Tax and any other material statutory duesapplicable to it.
(b) According to the records of the Company there are no dues of Excise Duty IncomeTax and Customs Duty which have not been deposited on account of any dispute exceptdisclosed below.
The disputed amounts that have not been deposited in respect of Income Tax Service Taxand Excise Duty are as under:
|Sr. No. ||Name of the Statue ||Nature of the Dues ||Forum where the dues is pending ||Rs. in Lakhs |
|1 ||Central Excise Act1944 And ||Demand of Service Tax on Royalty ||Deputy Commissioner of Central Excise & Service Tax ||1.89 |
| ||Service Tax Rules 1994 ||Demand of Excise Duty on Sales under notification ||Central Excise Appellate Tribunal ||58.47 |
| || ||Duty on Sale of Power units & disallowance of Common Input Service Tax Credit ||Commissioner of Central Excise ||214.43 |
| || ||Disallowance of Input Credit ||Additional Commissioner of Central Excise ||20.01 |
|2 ||Income tax Act 1961 ||Income tax ||Commissioner of Income tax (Appeals). ||4.42 |
viii. According to the records of the Company examined by us and information andexplanation given to us the Company has not defaulted in repayment of dues to banksduring the year. The company has not taken any loan or borrowing from governmentfinancial institution and has not issued debentures during the year.
ix. The Company has not raised any money by way of public issue/ further offer(including debt instruments) and through term loans during the year. Accordingly clause3(ix) of the order is not applicable to the Company.
x. Based upon the audit procedures performed and information and explanation given bythe management we report that no fraud by the Company and no fraud on the Company by itsofficers or employees has been noticed or reported during the year.
xi. In our opinion and according to the information and explanations given to us themanagerial remuneration has been paid or provided in accordance with the requisiteapprovals mandated by the provisions of Section 197 read with schedule V to the CompaniesAct 2013.
xii. In our opinion and according to the information and explanations given to usthenature of the activities of the company does not attract any special statue applicable toNidhi Company. Accordingly clause 3(xii) of the order is not applicable to the company.
xiii. According to the information and explanation given to us and based on ourexamination of the records of the Company transactions with the related parties are incompliance with Sec 177 and 188 of Companies Act 2013 where applicable and details ofsuch transactions have been disclosed in the financial statements as required by theapplicable accounting standards.
xiv. In our opinion and according to the information and explanations given to us andbased on our examination of the records of the Company the company has not made anypreferential allotment or private placement of shares or fully or partly convertibledebentures during the year. Accordingly clause 3 (xiv) of the Order is not applicable tothe Company.
xv. In our opinion and according to the information and explanations given to us andbased on our examination of the records of the Company the company has not entered intoany non-cash transactions with directors or persons connected with him. Accordinglyclause 3 (xv) of the Order is not applicable to the Company.
xvi. The company is not required to be registered under Sec 45-IA of the Reserve Bankof India Act 1934. Accordingly clause 3 (xvi) of the Order is not applicable to theCompany.
For Kanu Doshi Associates LLP
FRN. No. 104746W/W100096
Membership no. 148916
Date: May 24 2019
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 HerculesHoists Limited ("the Company") as of March 31 2019 in conjunction with ouraudit of the Ind AS Financial Statements of the Company for the year ended on that date.
Management's Responsibility for Internal Financial Controls
The Company's Board of Directors are 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 (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 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") and the Standards on Auditing issued by ICAI and deemedto be prescribed under Section 143(10) of the Companies Act 2013 to the extentapplicable to an audit of internal financial controls both issued by the ICAI. ThoseStandards and the Guidance Note require that we comply with ethical requirements and planand perform the audit to obtain reasonable 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 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 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 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 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 31st March 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 ICAI.
For Kanu Doshi Associates LLP
Chartered Accountants FRN. No. 104746W/W100096
Kunal Vakharia Partner
Membership no. 148916
Date: May 24 2019