TO THE MEMBERS OF
KIRLOSKAR PNEUMATIC COMPANY LIMITED
Report on the Standalone IND AS financial statements
We have audited the accompanying standalone IND AS financial statements of KirloskarPneumatic Company Limited ("the Company") which comprise the Balance Sheet asat 31st March 2018 and the Statement of Profit and Loss (including Other ComprehensiveIncome) the Cash Flow Statement and the Statement of Changes in Equity for the year thenended and a summary of the significant accounting policies and other explanatoryinformation.
Managements Responsibility for the Standalone IND AS financial statements
The Companys 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 the stateof affairs (financial position) profit or loss (financial performance including othercomprehensive income) cash flows and changes in equity of the Company in accordance withthe accounting principles generally accepted in India including the Indian AccountingStandards (Ind AS) prescribed under section 133 of the Act. This responsibility alsoincludes maintenance of adequate accounting records in accordance with the provisions ofthe Act for safeguarding of the assets of the Company and for preventing and detectingfrauds and other irregularities; selection and application of appropriate accountingpolicies; making judgments and estimates that are reasonable and prudent; and designimplementation and maintenance of adequate internal financial controls that wereoperating effectively for ensuring the accuracy and completeness of the accountingrecords relevant to the preparation and presentation of the IND AS financial statementsthat give a true and fair view and are free from material misstatement whether due tofraud or error.
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 thereunder.
We conducted our audit in accordance with the Standards on Auditing specified underSection 143(10) of the Act. Those Standards require that we comply with ethicalrequirements and plan and perform the audit to obtain reasonable assurance about whetherthe IND AS financial statements are free from material misstatement. An audit involvesperforming procedures to obtain audit evidence about the amounts and the disclosures inthe IND AS financial statements. The procedures selected depend on the auditorsjudgment including the assessment of the risks of material misstatement of the IND ASfinancial statements whether due to fraud or error. In making those risk assessments theauditor considers internal financial control relevant to the Companys preparation ofthe IND AS financial statements that give a true and fair view in order to design auditprocedures that are appropriate in the circumstances. An audit also includes evaluatingthe appropriateness of the accounting policies used and the reasonableness of theaccounting estimates made by the Companys Directors as well as evaluating theoverall presentation of the IND AS financial statements. We believe that the auditevidence we have obtained is sufficient and appropriate to provide a basis for our auditopinion on the standalone IND AS financial statements.
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 conformitywith the accounting principles generally accepted in India including the Ind AS of thestate of affairs (financial position) of the Company as at 31st March 2018 and itsprofit (financial performance including other comprehensive income) its cash flows andthe changes in equity for the year ended on that date.
Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditors Report) Order 2016 issued by theCentral Government of India in terms of sub-section (11) of section 143 of the Act wegive in the Annexure A a statement on the matters specified in paragraphs 3 and 4 of theOrder.
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 and the Cash Flow Statementdealt with by this Report are in agreement with the books of account.
(d) In ouropinion the aforesaid standalone IND AS financial statements comply with theIndian Accounting Standards (IND AS) specified under Companies (Indian AccountingStandards) Rules 2015 specified under Section 133 of the Act read with the Rules of theCompanies (Accounts) Rules 2014.
(e) In our opinion there are no financial transactions or matters which have anyadverse effect on the functioning of the company.
(f) 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 terms of Section164(2) of the Act;
(g) 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;
(h) 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 has disclosed the impact of pending litigations on its financialposition in its IND AS financial statements - Refer Note 39 to the IND AS financialstatements;
ii. The Company did not have any long-term contracts including derivative contracts forwhich there were any material foreseeable losses.
iii. There has been no delay in transferring amounts required to be transferred tothe Investor Education and Protection Fund by the Company.
For M/s P.G.Bhagwat [ FRN :101118W]
Chartered Accountants sd/-
Membership No. 83374
Place : Pune
Date : 26th April 2018
ANNEXURE A TO THE AUDITORS REPORT
(Referred to in our above report of even date)
(i) (a) The company is maintaining proper records showing full particulars includingquantitative details and situation of fixed assets;
(b) As explained to us concidering the nature of the Fixed Assets the same have beenphysically verified by the management at reasonable intervals during the year as per theverification plan adopted by the company which in our opinion is reasonable havingregard to the size of the company and the nature of its assets. According to theinformation and explanations given to us and the records produced to us for ourverification the discrepancies noticed during such physical verification were notmaterial and the same have been properly dealt with in the books of account;
(c) The title deeds of immovable properties are held in the name of the company;
(ii) The physical verification of inventory has been conducted at reasonable intervalsby the management and no material discrepancies were noticed during such verification;
(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.
(iv) In respect of loans investments guarantees and security the provisions ofsection 185 and 186 of the Companies Act 2013 have been complied with.
(v) In our opinion and according to the information & explanations given to us thecompany has not accepted any deposits.
(vi) The Company is maintaining cost records as prescribed under Section 148 (1) of theCompanies Act 2013. However we have not verified the same for completeness or accuracy.
(vii) (a) According to the records of the company the company is regular in depositingundisputed statutory dues including provident fund employees' state insuranceincome-tax sales-tax service tax duty of customs duty of excise value added tax cessand any other statutory dues to the appropriate authorities and there were no arrears ofoutstanding statutory dues as on the last day of the financial year concerned for a periodof more than six months from the date they became payable;
(b) According to the records of the company there are no dues of income tax or salestax or service tax or duty of customs or excise duty or value added tax which have notbeen deposited on account of any dispute except :
|Name of the Statute ||Nature of dues ||Amount (Rs) ||Period to which amount relates ||Forum |
|Excise Duty ||Demand of penalty on reversal of Cenvat Credit not made ||200000 ||FY 1997-98 to 2001-02 upto Feb-2002 ||CESTAT Delhi |
|Service Tax ||Wrong availment of CENVAT ||1279793 ||FY 2013-14 ||Commissioner Appeals Excise & Customs Nashik |
|Customs Duty ||Non compliance of conditions for availing concessional rate of customs duty ||1454000 ||FY 1997-98 ||Asst. Commissioner (Customs) Mumbai |
| ||Non compliance of conditions for availing concessional rate of customs duty ||14588379 ||FY 2011-12 ||Supreme Court |
|Sales Tax ||Non- production of C ||102000 ||FY 1992-93 ||Asst.Commissioner |
| ||Forms ||12206864 ||FY 2010-11 ||Appeals |
| || ||21544210 ||FY 2011-12 ||Appeals |
| || ||123547951 ||FY 2012-13 || |
|Sales Tax ||Demand underwork Contract Tax ||475000 ||FY 1985-86 to1987-88 ||Asst.Commissioner Appeals |
|Income Tax ||Provision for Pension Scheme ||6966000 ||FY 1996-97 ||High Court |
(viii) Based on our audit procedures and on the information and explanations given bythe management we are of the opinion that the company has not defaulted in repayment ofloans or borrowing to any financial institutions banks Government or dues to debentureholders.
(ix) The company has not raised any moneys by way of initial public offer or furtherpublic offer (including debt instruments) and the term loan raised during the year wasapplied for the purpose for which it was taken.
(x) Based upon the audit procedures performed and information and explanations given bythe management we report that no fraud by the company or any fraud on the Company by itsofficers or employees has been noticed or reported during the year;
(xi) Managerial remuneration for the year has been paid or provided in accordance withthe requisite approvals mandated by the provisions of section 197 read with Schedule V tothe Companies Act;
(xii) The company is not a Nidhi Company;
(xiii) Based upon the audit procedures performed and information and explanations givenby the management all transactions with the related parties are in compliance withsections 177 and 188 of Companies Act 2013 where applicable and the details have beendisclosed in the IND AS financial Statements etc. as required by the applicableaccounting standards;
(xiv) The company has not made any preferential allotment or private placement ofshares or fully or partly convertible debentures during the year under review;
(xv) Based upon the audit procedures performed and information and explanations givenby the management the company has not entered into any non-cash transactions withdirectors or persons connected with him within the meaning of the provisions of section192 of Companies Act 2013;
(xvi) The company is not required to be registered under section 45-IA of the ReserveBank of India Act 1934.
For M/s P.G.Bhagwat [ FRN :101118W]
Chartered Accountants sd/-
Membership No. 83374
Place : Pune
Date : 26th April 2018
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 KirloskarPneumatic Company 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.
Managements Responsibility for Internal Financial Controls
The Companys management is responsible for establishing and maintaining internalfinancial controls based on the internal control over financial reporting criteriaestablished by the Company considering the essential components of internal control statedin the Guidance Note on Audit of Internal Financial Controls over Financial Reportingissued by the Institute of Chartered Accountants of India (ICAI). Theseresponsibilities include the design implementation and maintenance of adequate internalfinancial controls that were operating effectively for ensuring the orderly and efficientconduct of its business including adherence to companys policies the safeguardingof its 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 applicable to an audit ofInternal Financial Controls and both issued by the Institute of Chartered Accountants ofIndia. Those Standards and the Guidance Note require that we comply with ethicalrequirements and plan and perform the audit to obtain reasonable assurance about whetheradequate internal financial controls over financial reporting was established andmaintained and ifsuch 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 auditors 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 Companys internal financial controlssystem over 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 IND AS 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 IND ASfinancial statements in accordance with generally accepted accounting principles and thatreceipts 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 Over Financial Reporting
Because of the inherent limitations of internal financial controls over financialreporting including the possibility of collusion or improper management override ofcontrols material misstatements due to error or fraud may occur and not be detected.Also projections of any evaluation of the internal financial controls over financialreporting to future periods are subject to the risk that the internal financial controlover financial reporting may become inadequate because of changes in conditions or thatthe degree of compliance with the policies or procedures may deteriorate.
In our opinion the Company has in all material respects an adequate internalfinancial controls system over financial reporting and such internal financial controlsover financial reporting were operating effectively as at 31st March 2018 based on theinternal control over financial reporting criteria established by the Company consideringthe essential components of internal control stated in the Guidance Note on Audit ofInternal Financial Controls Over Financial Reporting issued by the Institute of CharteredAccountants of India.
For M/s P.G.Bhagwat
[ FRN :101118W]
Membership No. 83374
Place : Pune
Date : 26th April 2018