To the Members of Kalyani Forge Limited
Report on the Audit of Financial Statements
We have audited the accompanying financial statements of Kalyani Forge Limited(the Company') which comprise the Balance Sheet as at 31st March 2021 theStatement of Profit and Loss (Including Other Comprehensive Income) the Cash FlowStatement and the Statement of Changes in Equity for the year then ended and a summary ofthe significant accounting policies and other explanatory 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 (the 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 31st March 2021 and its loss (including othercomprehensive income) changes in equity and its cash flows for the year ended on thatdate.
Basis of 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 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 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.
Emphasis of Matter
Attention is drawn to Note No.32 which gives management assessment of Company's abilityto continue as going concern as at 31st March 2021 in view of the likely economic impacton the business of the Company arising out of Covid19 pandemic.
Our opinion is not modified in respect of this matter.
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. There are noKey Audit Matters to be reported.
Information Other than the Financial Statements and Auditor's Report Thereon
The Company's Board of Directors is responsible for the other information. ManagementDiscussion and Analysis Board's Report including Annexures to Board's Report BusinessResponsibility Report Corporate Governance and Shareholder's Information but does notinclude the financial statements and our auditor's 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 thefinancial statements our responsibility is to read the other information identified abovewhen it becomes available 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. When we read the other informationif we conclude that there is a material misstatement therein we are required tocommunicate the matter to those charged with governance.
Responsibilities of the Management for the Financial Statements
The Company's Board of Directors is responsible for the matters stated in Section 134(5) of the Companies Act 2013 (the Act') with respect to the preparation of thesefinancial statements that give a true and fair view of the financial position financialperformance including other comprehensive income changes in equity and cash flows of theCompany in accordance with the accounting principles generally accepted in Indiaincluding the Indian Accounting Standards (Ind AS) specified under Section 133 of the Actread with the rules made thereunder. 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 financial statements that give a true and fair viewand are free from material misstatement whether due to fraud or error.
In preparing the financial statements the Board of Directors 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 unlessthe Board of Directors either intends to liquidate the Company or to cease operations orhas no realistic alternative but to do so. The Board of Directors are responsible foroverseeing the Company's financial reporting process.
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 weexercise professional judgment and maintain 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 financial controls relevant to the auditin order to design audit procedures that are appropriate in the circumstances. Undersection 143(3)(i) of the Companies Act 2013 we are also responsible for expressing ouropinion on whether the company has internal financial controls with reference to financialstatements in place and the operating effectiveness of such controls.
Evaluate the appropriateness of accounting policies used and thereasonableness of accounting estimates and related disclosures made by management.
Conclude on the appropriateness of management's use of the going concernbasis of accounting and based on the audit evidence obtained whether a materialuncertainty exists related to events or conditions that may cast significant doubt on theCompany's ability to continue as a going concern. If we conclude that a materialuncertainty exists we are required to draw attention in our auditor's report to therelated disclosures in the financial statements or if such disclosures are inadequate tomodify our opinion. Our conclusions are based on the audit evidence obtained up to thedate of our auditor's report. However future events or conditions may cause the Companyto cease to continue as a 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 alsoprovide those charged with governance with a statement that we have complied with relevantethical requirements regarding independence and to communicate with them allrelationships and other matters that may reasonably be thought to bear on ourindependence and where applicable related safeguards.
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 Ministry of Corporate Affairs in terms of sub-section(11) of section 143 of the Act we enclose in the annexure A' a statement on thematters specified in paragraphs 3 and 4 of the said Order.
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 the Statement of Profit and Loss (including other comprehensiveincome) the Cash Flow Statement and the Statement of Changes in Equity dealt with by thisReport are in agreement with the books of account.
(d) In our opinion the aforesaid financial statements comply with Accounting Standardsspecified under Section 133 of the Act read with Companies(Indian AccountingStandards)Rules 2015 as amended.
(e) On the basis of the written representations received from the directors as on March31 2021 taken on record by the Board of Directors none of the directors is disqualifiedas on March 31 2021 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".
(g) With respect to the other matters to be included in the Auditor's Report inaccordance with the requirements of section 197(16) of the Act as amended:
In our opinion and to the best of our information and according to the explanationsgiven to us the remuneration paid by the Company to its directors during the year is inaccordance with the provisions of section 197 of the Act.
(h) 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 (as amended) inour opinion and to the best of our information and according to the explanations given tous:
i. the Company has disclosed the impact of pending litigations on its financialposition in its financial statements Refer note 28.1 to Financial Statements;
ii. The Company doesn't have any long-term contracts including derivative contractsrequiring provision for material foreseeable losses.
iii. There has been no delay in transferring amounts required to be transferred onaccount of unpaid dividend to the Investor Education and Protection Fund by the Company.
Annexure A' to the Auditor's Report
(Referred to in paragraph 1 under the heading Report on Other Legal andRegulatory Requirements' of our Report of even date on the financial statements for theyear ended on March 31 2021 of Kalyani Forge Limited)
(i) (a) The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets
(b) The Company has a program for physical verification of Fixed assets which in ouropinion is reasonable having regard to the nature of the business. Accordingly the Fixedassets have been verified by the management and no material discrepancies were noticed. Inour view the frequency of verification needs improvement.
(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 inventories have been physically verified during the year by the management.We have been informed that the discrepancies noticed on verification between the physicalstocks and the book records were not material and have been properly dealt with in thebooks of account.
(iii) As informed the Company has not granted any loans secured or unsecured tocompanies firms Limited Liability Partnerships or other parties covered in the registermaintained under Section 189 of the Companies Act 2013. Accordingly provisions ofclauses 3 (iii) (a) 3 (iii) (b) and 3 (iii) (c) of the Order are not applicable.
(iv) In our opinion and according to the information and explanations given to us theprovisions of section 185 and 186 of the Companies Act 2013 with respect to the loansinvestments guarantees and security are not applicable.
(v) In our opinion and according to the information and explanations given to us theCompany has not accepted any deposit from the public and consequently the directivesissued by the Reserve Bank of India and the provisions of section 73 to 76 or any otherrelevant provisions of the Companies Act 2013 and the rules framed there under withregard to the deposits accepted from the public are not applicable to the Company.
(vi) We have broadly reviewed the books of account maintained by the Company pursuantto the rules made by the Central Government for the maintenance of cost records under 148(1) of the Act and are of the opinion that prima-facie the prescribed accounts andrecords have been made and maintained. We have not however made a detailed examinationof the records with a view to determine whether they are accurate or complete.
(vii) (a) According to the information and explanation given to us and the records ofthe company examined by us undisputed statutory dues including provident fund employeesstate insurance income-tax duty of customs Goods and Service tax cess and any othermaterial statutory dues applicable to it have generally been regularly deposited with theappropriate authorities though there has been slight delay in few cases.
According to the information and explanation given to us no undisputed materialamounts payable in respect of statutory dues were in arrears as at 31st March 2021 for aperiod more than six months from the date they became payable.
(b) According to the information and explanations given to us the particulars of duesof income tax and excise duty as at 31st March 2021 which has not been deposited onaccount of disputes are as follows:
|Name of the statute || |
Nature of dispute due
|Amount under dispute not deposited (Rs.) || |
Period to which the amount related
Forum where the dispute pending
|Central Excise Act 1944 ||Cenvat Credit on Rejection Received from customer ||567018 ||From 2000-01 to 2011-12 ||High Court Mumbai |
| ||Interest on supplementary Invoices ||425113 ||From 2001-02 to 2004-05 ||High Court Mumbai |
| ||Cenvat Credit on Rejection Received from customer ||244406 ||From 2008-09 to 2011-12 ||CESTAT Mumbai |
|Goods And Services Tax Act 2017 ||E way bill expired ||301400 ||Y2018-19 From 22-10- 2018 to 15-11-2018 ||Additional Commissioner of GST and Central Excise (Appeals) Coimbatore |
|Income Tax Act 1961 ||Disallowance of Expenditure on expansion / upgradation of projects ||695976 ||AY 1992-93 ||Commissioner of Income Tax (Appeals) Pune |
| ||Loss on options settled ||1764485 ||AY 2008-09 ||Commissioner of Income Tax (Appeals) Pune |
| ||Expenditure incurred Bad debts and other expenses ||8137980 ||AY 2011-12 ||Commissioner of Income Tax (Appeals) Pune |
| ||Assessment Order received with demand for disallowance of late payment of TDS Additional Depreciation Stock Value ||2506620 ||AY 2013-14 ||Commissioner of Income Tax (Appeals) Pune |
| ||Disallowance of Additional Depreciation on electrical installations ||699618 ||AY 2016-17 ||Commissioner of Income Tax (Appeals) Pune |
(viii) In our opinion and according to information and explanations given to us theCompany has not defaulted in repayment of dues to a financial institution bank orgovernment as at the balance sheet date.
(ix) The Company has not raised any moneys by way of initial public offer or furtherpublic offer (including debt instruments). The term loans have been applied for thepurpose for which they were obtained.
(x) According to the information and explanations furnished by the management whichhave been relied upon by us there were no frauds by or on the Company by its officers oremployees noticed or reported during the year.
(xi) In our opinion and according to information and explanations given to usManagerial Remuneration has been paid or provided during the year in accordance with therequisite approvals mandated by provisions of section 197 read with Schedule V to theCompanies Act 2013.
(xii) In our opinion the Company is not a Nidhi Company. Accordingly clause 3 (xii)of the Order is not applicable to the Company.
(xiii) In our opinion all transactions with the related parties are in compliance withsections 177 and 188 of Companies Act 2013 where applicable and the requisite detailshave been disclosed in the financial statements etc. as required by the applicableaccounting standards.
(xiv) The Company has not made preferential allotment or private placement of sharefully or partly convertible debentures during the year under review. The requirements ofsection 42 of the Companies Act 2013 therefore are not applicable.
(xv) The Company has not entered into any non-cash transactions with directors orpersons connected with them covered under Section 192 of the Companies Act 2013.
(xvi) According to the information and explanations given to us the Company is notrequired to be registered under section 45-I(A) of the Reserve Bank of India Act 1934.
Annexure - B to the Independent Auditor's Report of even date on the FinancialStatements of Kalyani Forge Limited.
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 with reference to financial statementsof Kalyani Forge Limited ("the Company") as of March 31 2021 inconjunction with our audit of the financial statements of the Company for the year endedon 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
Reporting issued by the Institute of Chartered Accountants of India (ICAI').These responsibilities include the design implementation and maintenance of adequateinternal financial controls that were operating effectively for ensuring the orderly andefficient conduct of its business including adherence to 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.
Our responsibility is to express an opinion on the Company's internal financialcontrols with reference to financial statements based on our audit. We conducted our auditin accordance with the Guidance Note on Audit of Internal Financial Controls overFinancial Reporting (the "Guidance Note") and the Standards on Auditing issuedby ICAI and deemed to be prescribed under section 143(10) of the Companies Act 2013 tothe extent applicable to an audit of internal financial controls both applicable to anaudit of Internal Financial Controls and both issued by the Institute of CharteredAccountants of India. Those Standards and the Guidance Note require that we comply withethical requirements and plan and perform the audit to obtain reasonable assurance aboutwhether internal financial controls with reference to financial statements was establishedand maintained 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 with reference to financial statements and theiroperating effectiveness. Our audit of internal financial controls with reference tofinancial statements included obtaining an understanding of internal financial controlswith reference to financial statements assessing the risk that a material weaknessexists and testing and evaluating the 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 Ind ASfinancial 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 systemwith reference to financial statements.
Meaning of Internal Financial Controls with refence to financial statements
A company's internal financial control with reference to financial statements is aprocess designed to provide reasonable assurance regarding the reliability of financialreporting and the preparation of Ind AS financial statements for external purposes inaccordance with generally accepted accounting principles. A company's internal financialcontrol with reference to financial statements includes those policies and procedures that(1) pertain to the maintenance of records that in reasonable detail accurately andfairly reflect the transactions and dispositions of the assets of the company; (2) providereasonable assurance that transactions are recorded as necessary to permit preparation ofInd AS financial statements in accordance with generally accepted accounting principlesand that receipts and expenditures of the company are being made only in accordance withauthorisations of management and directors of the company; and (3) provide reasonableassurance regarding prevention or timely detection of unauthorised acquisition use ordisposition of the company's assets that could have a material effect on the Ind ASfinancial statements.
Inherent Limitations of Internal Financial Controls with reference to FinancialStatements
Because of the inherent limitations of internal financial controls with reference tofinancial statements including the possibility of collusion or improper managementoverride of controls material misstatements due to error or fraud may occur and not bedetected. Also projections of any evaluation of the internal financial controls withreference to financial statements to future periods are subject to the risk that theinternal financial control with reference to financial statements may become inadequatebecause of changes in conditions or that the degree of compliance with the policies orprocedures may deteriorate.
In our opinion the Company has in all material respects an adequate internalfinancial controls system with reference to financial statements and such internalfinancial controls with reference to financial statements were operating effectively as at31st March 2021 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.
| ||For K. S. Aiyar & Co. |
| ||Chartered Accountants |
| ||ICAI Firm Registration No. 100186W |
| ||Satish Kelkar |
| ||Partner |
|Place : Mumbai ||Membership No.: 38934 |
|Date : June 10 2021 ||UDIN: 21038934AAAACN5739 |