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Indo Tech Transformers Ltd.

BSE: 532717 Sector: Engineering
NSE: INDOTECH ISIN Code: INE332H01014
BSE 00:00 | 08 Aug 204.00 -3.15
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NSE 00:00 | 08 Aug 205.55
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OPEN 207.65
PREVIOUS CLOSE 207.15
VOLUME 663
52-Week high 294.95
52-Week low 147.00
P/E 17.77
Mkt Cap.(Rs cr) 217
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 207.65
CLOSE 207.15
VOLUME 663
52-Week high 294.95
52-Week low 147.00
P/E 17.77
Mkt Cap.(Rs cr) 217
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Indo Tech Transformers Ltd. (INDOTECH) - Auditors Report

Company auditors report

To the Members of Indo Tech Transformers Limited

Report on the Audit of the Financial Statements

Opinion

We have audited the financial statements of Indo Tech Transformers 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 significant accounting policies and otherexplanatory information.

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 ("Act") in the manner so required and give a true and fairview in conformity with the accounting principles generally accepted in India of thestate of affairs of the Company as at March 31 2019 and loss and other comprehensiveincome changes in equity and its cash flows for the year ended on that date.

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 SAs are furtherdescribed in the Auditors' Responsibilities for the Audit of the Financial Statementssection of our report. We are independent of the Company in accordance with the Code ofEthics issued by the Institute of Chartered Accountants of India together with the ethicalrequirements that are relevant to our audit of the financial statements under theprovisions of the Act and the Rules thereunder and we have fulfilled our other ethicalresponsibilities in accordance with these requirements and the Code of Ethics. We believethat the audit evidence we have obtained is sufficient and appropriate to provide a basisfor our opinion.

Key Audit Matters

Key audit matters are those matters that in our professional judgement 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.

1. Going concern – Effect of continuous losses

The key audit matter How the matter was addressed in our audit
The Company has incurred losses over the past few years and has significant accumulated losses as at balance sheet date. Our audit procedures to assess the going concern assumption in the preparation of the financial statements included the following:
As more fully explained in Note 2 to the financial statements the Company's financial statements have been prepared using the going concern basis of accounting. The use of this basis of accounting is appropriate unless management either intends to liquidate the Company or to cease operations or has no realistic alternative but to do so. • evaluating the business plan and various underlying facts and assumptions with respect to such plan;
• obtaining the support letter received by the Company from its holding company;
Management has not identified a material uncertainty that may cast significant doubt on the Company's ability to continue as a going concern and accordingly this financial statements have been prepared on a going concern basis. • verifying the available banking limits with underlying documentation.
In view of continued and accumulated losses we identified the assessment of going concern as a key audit matter.

2. Revenue recognition

The key audit matter How the matter was addressed in our audit
The Company has adopted Ind AS 115 - Revenue from Contracts with In view of the significance of the matter our audit procedures included the following:
Customers (Ind AS 115) which is the new revenue accounting standard.
Ind AS 115 is effective for the year beginning April 1 2018 and establishes a comprehensive framework for determining whether how much and when revenue is recognised. This involves certain key judgements relating to identification of distinct performance obligations determination of transaction price appropriateness of the basis used to measure revenue recognised over a period or at a point in time. Revenue is recognised when (or as) a performance obligation is satisfied i.e. when ‘control' of the goods or services underlying the particular performance obligation is transferred to the customer. • evaluation of the design and operating effectiveness of controls relating to implementation of the new revenue accounting standard;
• evaluation of management's assessment of different types of customer contracts by selecting samples of contracts and testing such assessment made by the management;
• evaluation of the adequacy of disclosures made in the financial statements.

In view of the above the application and transition to this accounting standard is anarea of focus in the audit.

See note 3(k) to the financial statements

3. Recoverability of trade receivables

The key audit matter How the matter was addressed in our audit
Considering the industry in which the company operates and the customer profile and mix the Company has significant dues outstanding from customers which are already past due. We have performed the following procedures in relation to the recoverability of trade receivables:
The recoverability assessment and the provisioning requirement carried on by the management is based on the ageing profile historical payment pattern and the past record of default by the customer expected date of collection and time value of money. • evaluating the design implementation and operating effectiveness of key internal controls relating to debt collection and the calculation of the allowance for doubtful debts;
We identified the recoverability of trade receivables as a key audit matter because of the inherent uncertainty in assessing if trade receivables will be recovered in full and because the assessment of the allowance for doubtful debts requires the exercise of judgement by management. • assessing the accuracy of individual balances in the trade receivables ageing report by comparing the details in the trade receivables ageing report with underlying sales invoices on a sample basis;
• obtaining an understanding of the basis of management's judgement about the recoverability of individual overdue balances and evaluating the allowance for doubtful debts made by management for these balances with reference to the industry in which the Company is operating the ageing of overdue balances correspondences with the customers and historical payment records;
See note 11 and 29B(ii) to the financial statements • obtaining direct confirmations and comparing receipts from customers subsequent to the financial year end relating to balances at March 31 2019 with bank statements and relevant underlying documentation on a sample basis.

Other Information

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 financial statements and our auditors' reportthereon.

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.

Management's Responsibility for the Financial Statements

The Company's management and Board of Directors are responsible for the matters statedin section 134(5) of the Act with respect to the preparation of these financial statementsthat give a true and fair view of the state of affairs profit/loss and othercomprehensive income changes in equity and cash flows of the Company in accordance withthe accounting principles generally accepted in India including the Indian AccountingStandards (Ind AS) specified under section 133 of the Act.

This responsibility also includes maintenance of adequate accounting records inaccordance with the provisions of the Act for safeguarding of the assets of the Companyand for preventing and detecting frauds and other irregularities; selection andapplication of appropriate accounting policies; making judgements and estimates that arereasonable and prudent; and design implementation and maintenance of adequate internalfinancial controls that were operating effectively for ensuring the accuracy andcompleteness of the accounting records relevant to the preparation and presentation ofthe financial statements that give a true and fair view and are free from materialmisstatement 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.

Auditors' 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 auditors' 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 judgement 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 Act we are also responsible for expressing our opinion on whether the companyhas adequate internal financial controls with reference to financial statements in placeand the operating effectiveness 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 auditors' 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 auditors'report. 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 financial statementsincluding the disclosures and whether the financial statements represent the underlyingtransactions 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 ourauditors' 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 in terms of section 143 (11) of the Act we give in the"Annexure A" a statement on the matters specified in paragraphs 3 and 4 of theOrder to the extent applicable.

(A) 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 (including other comprehensiveincome) the statement of changes in equity and the statement of cash flows dealt with bythis Report are in agreement with the books of account.

d) In our opinion the aforesaid financial statements comply with the Ind AS specifiedunder section 133 of the Act.

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 31 2019 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 with reference tofinancial statements of the Company and the operating effectiveness of such controlsrefer to our separate Report in "Annexure B".

(B) 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. TheCompany has disclosed the impact of pending litigations as at March 31 2019 on itsfinancial position in its financial statements - Refer Note 30 to the financialstatements; ii. The Company did not have any long-term contracts including derivativecontracts for which there were any material foreseeable losses; iii. There were no amountswhich were required to be transferred to the Investor Education and Protection Fund by theCompany;

iv. The disclosures in the financial statements regarding holdings as well as dealingsin specified bank notes during the period from November 8 2016 to December 30 2016 havenot been made in these financial statements since they do not pertain to the financialyear ended March 31 2019.

(C) With respect to the matter to be included in the Auditors' Report under section197(16):

In our opinion and according to the information and explanations given to us theremuneration paid by the Company to its directors during the current year is not inaccordance with the provisions of Section 197 read with Schedule V to the Act. Theremuneration paid to a director is in excess of the limit laid down under Section 197 readwith Schedule V to the Act by Rs. 0.95 lakhs. The same is subject to shareholders'approval in the ensuing general meeting. The Ministry of Corporate Affairs has notprescribed other details under Section 197(16) which are required to be commented upon byus.

for B S R & Co. LLP

Chartered Accountants

Firm's Registration No.: 101248W/W-100022

Amar Sunder

Partner

Membership No. 078305

Place: Chennai

Date: May 22 2019

Annexure - A to the Independent Auditors' Report on the financial statements of IndoTech Transformers Limited for the year ended March 31 2019

(Referred to in our report of even date)

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

(b) The Company has a regular program of physical verification of its fixed assets bywhich all fixed assets are verified in a phased manner over a period of two years. In ouropinion this periodicity of physical verification is reasonable having regard to the sizeof the Company and the nature of its assets. No material discrepancies were noticed onsuch verification.

(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.

ii. The inventory except certain stocks lying with third parties has been physicallyverified by the management during the year. In our opinion the frequency of suchverification is reasonable in relation to the size of the Company. The discrepanciesnoticed on verification between physical stock and book records were not material and havebeen properly dealt with in the books of account. For major portion of stocks lying withthird parties at the year end written confirmations have been obtained by the Company.

iii. In our opinion and according to the information and explanation given to us theCompany has not granted any loans secured or unsecured to companies firms limitedliability partnerships or other parties covered in the register maintained under Section189 of the Act. Accordingly paragraph 3 (iii) of the Order is not applicable to theCompany.

iv. The Company has not granted any loans or made any investments or provided anyguarantee or security to the parties covered under Section 185 and 186 of the Act.Accordingly paragraph 3(iv) of the Order is not applicable to the Company.

v. The Company has not accepted any deposits from the public within the meaning ofSections 73 to 76 or any other relevant provisions of the Act and the rules framedthereunder. vi. We have broadly reviewed the books of account maintained by the Company inrespect of products where pursuant to the rules made by the Central Government of Indiathe maintenance of cost records has been specified under sub-section (1) of Section 148 ofthe Act and are of the opinion that prima facie the prescribed accounts andrecords have been made and maintained. However we have not made a detailed examination ofthe records. vii. (a) According to the information and explanations given to us and on thebasis of an examination of the records of the Company in our opinion amountdeducted/accrued in the books of account in respect of undisputed statutory duesincluding provident fund employees' state insurance income tax duty of customs goodsand services tax and other material statutory dues have generally been regularly depositedduring the year by the Company with the appropriate authorities. As explained tous the Company did not have any dues on account of sales-tax service tax duty ofcustoms value added tax and cess.

According to the information and explanations given to us no undisputed amountspayable in respect of provident fund employees' state insurance income tax duty ofcustoms goods and services tax and other material statutory dues were in arrears as atMarch 31 2019 for a period of more than six months from the date they became payableexcept in respect of income tax deductible at source estimated at Rs. 43.27 lakhspertaining to FY 2017-18 and 2018-19 which has not been deducted/ paid.

(b) According to the information and explanations given to us the dues relating toincome tax sales tax duty of excise and duty of customs that have not been deposited bythe Company with the appropriate authorities on account of disputes are given below:

Name of the statute Nature of the dues Amount (Rs. lakhs) Period to which the amount relates Forum where the dispute is pending
The Central Sales Tax Act 1956 Central sales tax 4.42 FY 1996-97 Madras High Court
The Central Sales Tax Act 1956 Central sales tax 3.63^ FY 2005-06 Assistant Commissioner of Commercial Taxes
FY 2006-07
Tamil Nadu General Sales Tax Act 1959 Penalty 0.16 FY 1996-97 Commissioner of Commercial Tax Appeals

 

Name of the statute Nature of the dues Amount (Rs. lakhs) Period to which the amount relates Forum where the dispute is pending
Tamil Nadu Value Added Tax Act 2006 Sales tax 14.12@ FY 2006-07 2007-08 Appellant Deputy
2008-09 and 2009-10 Commissioner of Commercial Taxes
Central Excise Act 1944 Excise duty 146.02 FY 2008-09 to Custom Excise and Service
December 2012 Tax Appellate Tribunal Chennai
Central Excise Act 1944 Excise duty 41.16 January 2012 to December 2013 and March 2014 to March 2015 Joint Commissioner of Central Excise
Finance Act 1994 Service Tax 79.22# FY 2014-15 Custom Excise and Service Tax Appellate Tribunal Chennai
Income-tax Act 1961 Income Tax 36.70 AY 2005-06 Madras High Court
Income-tax Act 1961 Income Tax 63.52 AY 2006-07 Income Tax Appellate Tribunal
Income-tax Act 1961 Income Tax 13.08 AY 2016-17 Deputy Commissioner of Income Tax

^ net of Rs. 25.00 lakhs paid under protest

@ net of Rs. 5.55 lakhs paid under protest

# net of Rs. 4.17 lakhs paid under protest

viii. In our opinion and according to the information and explanations given to us theCompany has not defaulted in repayment of dues to its bankers. The Company does not haveany outstanding loan or borrowings from any financial institutions government ordebenture holders during the year.

ix. The Company did not raise 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 no material fraud by theCompany or on the Company by its officers or employees has been noticed or reported duringthe course of our audit.

xi. According to the information and explanations give to us and based on ourexamination of the records the Company has paid/provided for managerial remuneration inexcess of the limits mandated by the provisions of section 197 read with Schedule V to theAct by Rs. 0.95 lakhs. The same is subject to shareholders' approval in the ensuinggeneral meeting.

xii. In our opinion and according to the information and explanation 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. The details of suchrelated party transactions have been disclosed in the financial statements as required bythe applicable accounting standard.

xiv. According to the information and explanations give 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.

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 non-cashtransactions with directors or persons connected with them. Accordingly paragraph 3(xv)of the Order is not applicable.

xvi. In our opinion and according to the information and explanation given to us theCompany is not required to be registered under section 45-IA of the Reserve Bank of India1934. Accordingly paragraph 3(xvi) of the order is not applicable.

for B S R & Co. LLP

Chartered Accountants

Firm's Registration No.: 101248W/W-100022

Amar Sunder

Partner

Membership No. 078305

Place: Chennai

Date: May 22 2019

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