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Kirloskar Brothers Ltd.

BSE: 500241 Sector: Engineering
NSE: KIRLOSBROS ISIN Code: INE732A01036
BSE 00:00 | 20 Jul 258.20 -2.90
(-1.11%)
OPEN

260.65

HIGH

260.65

LOW

257.00

NSE 00:00 | 20 Jul 260.50 0.25
(0.10%)
OPEN

268.85

HIGH

268.85

LOW

258.00

OPEN 260.65
PREVIOUS CLOSE 261.10
VOLUME 119
52-Week high 432.00
52-Week low 229.45
P/E 31.37
Mkt Cap.(Rs cr) 2,050
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 260.65
CLOSE 261.10
VOLUME 119
52-Week high 432.00
52-Week low 229.45
P/E 31.37
Mkt Cap.(Rs cr) 2,050
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Kirloskar Brothers Ltd. (KIRLOSBROS) - Auditors Report

Company auditors report

To the members of KIRLOSKAR BROTHERS LIMITED

Report on the Standalone Indian Accounting Standards (Ind AS) Financial Statements

We have audited the accompanying standalone Ind AS financial statements of KirloskarBrothers Limited ("the Company") which comprise the Balance Sheet as at 31stMarch 2018 the Statement of Profit and Loss (including Other Comprehensive Income) theCash Flow Statement and the Statement of Changes in Equity for the year then ended and asummary of the significant accounting policies and other explanatory information.

Management's Responsibility for the Standalone Ind AS Financial Statements

The Company's Board of Directors is responsible for the matters stated in Section134(5) of the Companies Act 2013 ("the Act") with respect to the preparation ofthese standalone Ind AS financial statements that give a true and fair view of thefinancial position financial performance cashflows and changes in equity of the Companyin accordance with the accounting principles generally accepted in India including theIndian Accounting Standards (Ind AS) specified under Section 133 of the Act read with theCompanies (Indian Accounting Standards) Rules 2015 and amendments thereof.

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 judgments 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 standalone Ind AS financial statements that give a true and fair view and are freefrom material misstatement whether due to fraud or error.

Auditors' Responsibility

Our responsibility is to express an opinion on these standalone Ind AS financialstatements based on our 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 and the Orderissued under section 143(11) of the Act. We conducted our audit of the standalone Ind ASfinancial statements in accordance with the Standards on Auditing specified under Section143(10) of the Act. Those Standards require that we comply with ethical requirements andplan and perform the audit to obtain reasonable assurance about whether the standalone IndAS financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts andthe disclosures in the standalone Ind AS financial statements. The procedures selecteddepend on the auditors' judgment including the assessment of the risks of materialmisstatement of the standalone Ind AS financial statementswhether due to fraud or error.In making those risk assessments the auditor considers internal financial controlrelevant to the company's preparation of the standalone Ind AS financial statements thatgive a true and fair view in order to design audit procedures that are appropriate in thecircumstances. An audit also includes evaluating the appropriateness of the accountingpolicies used and the reasonableness of the accounting estimates made by the company'sDirectors as well as evaluating the overall presentation of the standalone Ind ASfinancial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the standalone Ind AS financial statements.

Opinion

In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid standalone Ind AS financial statements give the informationrequired by the Act in the manner so required and

give a true and fair view in conformity with the accounting principles generallyaccepted in India including the Ind AS of the state of affairs (financial position) ofthe Company as at 31st March 2018 and its profit (financial performanceincluding other comprehensive income) its cash flows and the changes in equity for theyear ended on that date.

Other matters

The financial statements of the company for the year ended 31st March 2017were audited by another auditor whose report dated 17th May 2017 expressed anunmodified opinion on those statements.

Our opinion is not modified in respect of this matter.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor's Report) Order 2016 ("the Order")issued by the Central Government of India in terms of sub-section (11) of Section 143 ofthe Companies Act 2013 we give in the "Annexure A'' a statement on the mattersspecified in paragraphs 3 and 4 of the 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 the Cash Flow Statement andStatement of Changes in Equity dealt with by this report are in agreement with the booksof account.

(d) In our opinion the aforesaid standalone Ind AS financial statements comply withthe Indian Accounting Standards specified under Section 133 of the Act read with theCompanies (Indian Accounting Standards) Rules 2015 and amendments thereof.

(e) On the basis of the written representations received from the directors as on 31stMarch 2018 taken on record by the Board of Directors none of the directors isdisqualified as on 31st March 2018 from being appointed as a director in termsof Section 164 (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 pending litigations and the impact on its financialposition. Refer note 28 to the standalone Ind AS financial statements.

ii. The Company has made provision as required under the applicable law or Indianaccounting standards for material foreseeable loses on long term contracts. Refer note 38to the standalone Ind AS financial statements.

iii. There has been no delay in transferring amounts required to be transferred tothe Investor Education and Protection Fund by the Company.

For Sharp & Tannan Associates
Chartered Accountants
Firm's Registration No.: 109983W
Tirtharaj Khot
Partner
Membership No.: 037457
Pune : 11th May 2018

Annexure A to the Independent Auditors' Report

Referred to in paragraph 1 under the heading "Report on Other Legal andRegulatory Requirements" of our report on even date:

(i) (a) The Company is maintaining proper records showing full particulars includingquantitative details

and situation of fixed assets.

(b) The fixed assets have been physically verified by the management at regularintervals based on the phased programme of verification which in our opinion isreasonable. No material discrepancies were identified during such physical verificationconducted by the Company during the year.

(c) According to the information and explanation provided to us and records examined byus all title deeds of immovable properties are held in the name of the Company.

(ii) Physical verification of inventory has been conducted by the management atreasonable intervals. In our opinion the interval of such verification is reasonable.Discrepancies noticed on physical verification were not material and the same have beenproperly dealt with in the books of account.

(iii) The Company has not granted any loans secured or unsecured to companies firmslimited liability partnerships or other parties covered in the register maintained underSection 189 of the Companies Act 2013 except to a subsidiary company and an associate inearlier years as mentioned below.

Name of Party Opening Balance (Rs) Mln Year End Balance (Rs) Mln Maximum Balance (Rs) Mln
The Kolhapur Steel Limited (TKSL) - subsidiary company 13.210 12.214 13.210
KBL Synerge LLP - associate (including interest) 1.504 1.639 1.639

a) According to the information and explanations provided to us the unsecured loangiven to TKSL in earlier years was under an Order from Board for Industrial and FinancialReconstruction (BIFR) and advance given to KBL Synerge LLP both were without any specificterms for charge of interest and repayment. Considering the above-mentioned facts andmateriality of the amounts in our opinion the terms and conditions of loans / advancesare not prejudicial to the Company's interest.

b) According to the information and explanations provided to us there is no scheduleof repayment of principal and payment of interest stipulated for the above-mentioned loan/ advances. Accordingly reporting on para 3(iii) (b) and 3(iii) (c) are not applicable.

(iv) According to information and explanation provided to us for the transactioncovered under the section 185 and section 186 of the Companies Act 2013 the Company hascomplied with the provisions of the said sections.

(v) According to information and explanation provided to us the Company has notaccepted deposits hence the directives issued by the Reserve Bank of India and theprovisions of Sections 73 to 76 of the Companies Act and the rules framed there under arenot applicable to it. According to information and explanation provided to us. No orderhas been passed by Company Law Board or National Company Law Tribunal or Reserve Bank ofIndia or any court or any other tribunal in the current year. Accordingly reporting onpara 3(v) is not applicable.

(vi) We have broadly reviewed the books of account relating to materials labour andother items of cost maintained by the Company pursuant to the rules made by the CentralGovernment for the maintenance of cost records under sub-section (I) of Section 148 of theCompanies Act 2013 and we are of the opinion that prima facie; the prescribed accountsand records have been made and maintained. We have not however made a detailed examinationof records with a view to determine whether they are accurate and complete.

(vii) (a) The Company is generally regular in depositing undisputed statutory duesincluding provident fund employees' state insurance income-tax Goods and Service Taxsales-tax service tax duty of customs duty of excise value added tax cess and anyother statutory dues with the appropriate authorities. According to the information andexplanation provided to us no undisputed amounts payable in respect of statutory dueswere in arrears as at 31st March 2018 for a period of more than six monthsfrom the date they became payable.

(b) Details of dues of Income tax Sales tax including valve added tax Service taxduty of Customs duty of excise which have not been deposited as on 31st March2018 on account of dispute are as follow:

Name of Statute Nature of Dues Forum where Dispute is Pending Period to which Amount Relates Amount Involved (In Millions Rs.) Amount Unpaid (In Millions Rs.)
Central Sales CST High Court 1993-94 0.41 0.31
Tax Act 1956 (Including Commissioner 2007-08 2012-13 3.58 2.27
interest Penalty Commercial Tax Officer 2008-09 2009-10 2010-11 1.31 1.31
etc. if any) Deputy Commissioner 2010-112011-12 2012-13 2.15 0.34
MP Commercial Tax Appellate Board 2011-12 12.33 1.7
Appeal Authority 2012-13 0.59 0.59
Additional Commissioner of Commercial Tax (Appeals) 2012-13 2013-14 2014-15 2015-16 79.17 70.99
Local Sales Tax of Various States VAT (Including interest Penalty etc. if any) Appellate Dy. Commissioner- CT 2008-09 2009-10 7.25 7.25
Commissioner- CT/High Court of TS & AP 2008-09 2009-10 2011-12 115.96 115.96
Appeal Authority 2008-09 2011-12 2012-13 9.47 9.47
Local Sales Tax of Various Commissioner (Appeals) 2012-13 144.63 121.54
States VAT (Including interest Penalty etc. if any) MP Commercial Tax Appellate Board 2011-12 3.24 0.88
Additional Commissioner of Commercial Tax (Appeals) 2012-13 2013-14 2014-15 2015-16 14.66 12.4
Deputy Commissioner (Appeals) 1992-93 4.79 4.79
Commercial Tax Officer 2000-01 0.05 0.03
Sales Tax Appellate Tribunal 2003-042004 052005-06 22.21 11.1
High Court 1989-901991-92 1994-951995-96 5.28 3.03
Bihar Entry Tax Act Tax Including Commissioner 2012-13 0.03 0.03
Chapter V of Finance Act 1994 interest Penalty etc. if any Commissioner (Appeals) 2004-05 to 2007-08 95.73 95.73
Commissioner 2006-07 to 2011-12 898.66 898.66
CESTAT 2008-09 to 2012-13 7.52 7.52
Central Excise Act 1944 Deputy Commissioner 1990-91 0.14 0.14
CESTAT 2003-04 2005-06 to 2009-10 2.72 2.72
The Income Income High Court 2001-02 34.28 20.56
Tax Act 1961 Tax** (Including interest Penalty etc. if any) CIT (Appeals) 2008-09 2009-10 906.57 98.86

(viii) Based on our audit procedures and according to the information and explanationprovided to us the Company has not defaulted in repayment of dues to a financialinstitution bank or government. The Company does not have any debenture holders.

(ix) According to information and explanation provided to us the Company has notraised moneys by way of initial public offer or further public offer (including debtinstruments). According to the information and explanations provided to us term loansavailed by the Company were prima facie; applied for the purpose for which the loans wereobtained.

(x) Based upon the audit procedures performed by us and according to the informationand explanations provided to us no fraud by the Company or any fraud on the Company byits officers or employees has been noticed or reported during the year.

(xi) According to the information and explanation provided to us the managerialremuneration has been paid and provided in accordance with the requisite approvalsmandated by the provisions of Section 197 read with Schedule V to the Companies Act.

(xii) The Company is not a Nidhi Company. Accordingly reporting on para 3(xii) is notapplicable.

(xiii) According to the information and explanation provided to us all transactionswith the related parties are in compliance with Sections 177 and 188 of Companies Act2013 wherever applicable and the details have been disclosed in the standalone Ind ASfinancial statements as required by the applicable Indian Accounting Standards.

(xiv) According to the information and explanation provided to us the Company has notmade any preferential allotment or private placement of shares or fully or partlyconvertible debentures during the year under review.

(xv) According to the information and explanation provided to us the Company has notentered into any non-cash transactions with directors or persons connected with him.

(xvi) According to the information and explanation provided to us the Company is notrequired to be registered under Section 45-IA of the Reserve Bank of India Act 1934.

For Sharp & Tannan Associates
Chartered Accountants
Firm's Registration No.: 109983W
Tirtharaj Khot
Partner
Membership No.: 037457
Pune : 11th May 2018

Annexure B to the Independent Auditors' Report

Referred to in paragraph 2 (f) under the heading "Report on Other legal andRegulatory Requirements of our report on even date:

Report on the Internal Financial Controls

under Clause (i) of Sub-section 3 of Section 143 of the Companies Act 2013 ("theAct")

We have audited the internal financial controls over financial reporting of KirloskarBrothers Limited ("the Company") as of 31st March 2018 in conjunctionwith our audit of the standalone Ind AS financial statements of the Company for the yearended 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. These responsibilities includethe design implementation and maintenance of adequate internal financial controls thatwere operating effectively for ensuring the orderly and efficient conduct of its businessincluding adherence to company's policies the safeguarding of its assets the preventionand detection of frauds and errors the accuracy and completeness of the accountingrecords and the timely preparation of reliable financial information as required underthe Companies Act 2013.

Auditors' Responsibility

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 to the extent applicable toan audit of internal financial controls 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 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 standalone financial statements whether due to fraud orerror.

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 standalone financial statements for external purposes in accordance withgenerally accepted accounting principles. A Company's internal financial control overfinancial reporting includes those policies and procedures that (1) pertain to themaintenance of records that in reasonable detail accurately and fairly reflect thetransactions and dispositions of the assets of the Company; (2) provide reasonableassurance that transactions are recorded as necessary to permit

preparation of standalone financial statements in accordance with generally acceptedaccounting principles and that receipts and expenditures of the Company are being madeonly in accordance with authorizations of management and directors of the Company; and (3)provide reasonable assurance regarding prevention or timely detection of unauthorizedacquisition use or disposition of the Company's assets that could have a material effecton the standalone 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.

Opinion

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 31st March 2018based on the internal control over financial reporting criteria established by the Companyconsidering the essential components of internal control stated in the Guidance Note onAudit of Internal Financial Controls Over Financial Reporting issued by the Institute ofChartered Accountants of India.

For Sharp & Tannan Associates
Chartered Accountants
Firm's Registration No.: 109983W
Tirtharaj Khot
Partner
Membership No.: 037457
Pune : 11th May 2018