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L G Balakrishnan & Bros Ltd.

BSE: 500250 Sector: Auto
NSE: LGBBROSLTD ISIN Code: INE337A01034
BSE 00:00 | 07 Jul 239.20 0.65
(0.27%)
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238.45

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239.45

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237.00

NSE 00:00 | 07 Jul 238.65 -0.20
(-0.08%)
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241.00

HIGH

241.00

LOW

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OPEN 238.45
PREVIOUS CLOSE 238.55
VOLUME 1618
52-Week high 369.90
52-Week low 146.00
P/E 9.06
Mkt Cap.(Rs cr) 751
Buy Price 239.20
Buy Qty 19.00
Sell Price 239.00
Sell Qty 26.00
OPEN 238.45
CLOSE 238.55
VOLUME 1618
52-Week high 369.90
52-Week low 146.00
P/E 9.06
Mkt Cap.(Rs cr) 751
Buy Price 239.20
Buy Qty 19.00
Sell Price 239.00
Sell Qty 26.00

L G Balakrishnan & Bros Ltd. (LGBBROSLTD) - Auditors Report

Company auditors report

TO

THE MEMBERS OF L.G.BALAKRISHNAN & BROS LIMITED

Report on the Standalone Ind AS Financial Statements:

Opinion:

We have audited the accompanying Standalone Ind AS Financial Statements of M/s.L.G.BALAKRISHNAN & BROS LIMITED ("the Company") which comprises the BalanceSheet as at 31st March 2019 the Statement of Profit and Loss (Including OtherComprehensive Income) the Statement of Cash Flows notes to the financial statements theStatement of Changes in Equity for the year ended and a summary of significant accountingpolicies and other explanatory information.

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

Key Audit Mattters Paragraph :

Ind AS of the state of affairs of the Company as at 31st March 2019 the profit andtotal comprehensive income its cash flows and the changes in equity for the year ended onthat date.

Basis for Opinion:

We conducted our audit of the standalone IND AS financial statements in accordance withthe Standards on Auditing specified u/s 143(10) of the Companies Act 2013. Ourresponsibilities under those standards are further described in the Auditor'sresponsibilities for the Audit of the Financial Statements section of our report. We areIndependent of the company in accordance with the Code of Ethics issued by the Instituteof Chartered Accountants of India together with the ethical requirements that are relevantto our audit of the standalone financial statements under the provisions of the CompaniesAct 2013 and the Rules thereunder and we have fulfilled our other ethicalresponsibilities in accordance with these requirements and ICAI's Code of Ethics.

We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on Standalone Ind AS Financial Statements.

Key Audit Matter Auditor's Response
1 Accuracy of recognition measurement presentation and disclosures of revenues and other related balances in view of adoption of Ind AS 115 "Revenue from contracts with customers" (new revenue accounting standard)(Refer Note No.42) Principal Audit Procedures
We assessed the Company's process to identify the impact of adoption of the new revenue accounting standard.
Our audit approach consisted testing of the design and operating effectiveness of the internal controls and substantive testing as follows:
• Selected a sample of continuing and new contracts and tested the operating effectiveness of the internal control relating to identification of the distinct performance obligations and determination of transaction price. We carried out a combination of procedures involving enquiry and observation reperformance and inspection of evidence in respect of operation of these controls.
• Selected a sample of continuing and new contracts and performed the following procedures:
• Read analysed and identified the distinct performance obligations in these contracts.
• Compared these performance obligations with that identified and recorded by the Company.
Key Audit Matter Auditor's Response
• Considered the terms of the contracts to determine the transaction price including any variable consideration to verify the transaction price used to compute revenue and to test the basis of estimation of the variable consideration.
• Samples in respect of revenue recorded for time and material contracts were tested using a combination of approved time sheets including customer acceptances subsequent invoicing and historical trend of collections and disputes.
• Performed analytical procedures for reasonableness of revenues disclosed by type and service offerings.
2. Evaluation of uncertain tax positions Principal Audit Procedures
Obtained details of completed tax assessments and demands for the year ended March 31 2019 from management. We reviewed the management's underlying assumptions in estimating the tax provision and the possible outcome of the disputes. We also considered legal precedence and other rulings in evaluating management's position on these uncertain tax positions. Additionally we considered the effect of new information in respect of uncertain tax positions as at April 1 2018 to evaluate whether any change was required to management's position on these uncertainties.

Information other than the standalone financial statements and the auditor's reportthereon :

The Company's Board of directors is responsible for the preparation of otherinformation. The other information comprises the information included in the managementdiscussion and analysis Board's Report including annexures to Board's Report Businessresponsibility report Corporate Governance and Shareholder's information but does notinclude the standalone Ind AS financial statements and our auditor's report thereon. Ouropinion on the standalone Ind AS financial statements does not cover the other informationand we do not express any form of assurance conclusion thereon.

In connection with our audit of the standalone Ind AS financial statements ourresponsibility is to read the other information and in doing so whether the otherinformation is materially inconsistent with the standalone Ind AS financial statements orour knowledge obtained during the course of our audit or otherwise appears to bematerially misstated.

If based on the work we have performed we conclude that there is a materialmisstatement of this other information we required to report the fact. We have nothing toreport in this regard.

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 including other comprehensive income cash flowsand changes in equity of the Company in accordance with the Accounting principlesgenerally accepted in India including the Indian Accounting Standards ("IndAS")prescribed under Section 133 of the Act 2013 read with relevant rules issuedthere under.

This responsibility also includes maintenance of adequate accounting records inaccordance with the provisions of the Act for safeguarding the assets of the Company andfor preventing and detecting frauds and other irregularities; selection and application ofappropriate accounting policies; making judgments and estimates that are reasonable andprudent; and design implementation and maintenance of adequate internal financialcontrols that were operating effectively for ensuring the accuracy and completeness ofthe accounting records relevant to the preparation and presentation of the Standalone IndAS 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 is responsible for assessing theCompany's ability to continue as a going concern disclosing as applicable mattersrelated to going concern and using the going concern basis of accounting unless managementeither intends to liquidate the Company or to cease operations or has no realisticalternative but to do so.

The Board of Directors are also responsible for overseeing the company's financialreporting process.

Auditor's Responsibility for the Audit of the Standalone Ind AS 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 standalone Ind AS 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 standalone Ind ASfinancial statements whether due to fraud or error design and perform audit proceduresresponsive to those risks and obtain audit evidence that is sufficient and appropriate toprovide a basis for our opinion. The risk of not detecting a material misstatementresulting from fraud is higher than for one resulting from error as fraud may involvecollusion forgery intentional omissions misrepresentations or the override of internalcontrol.

• Obtain an understanding of internal financial controls relevant to the audit inorder to design audit procedures that are appropriate in the circumstances. Under section143(3)(i) of the Act we are also responsible for expressing our opinion on whether theCompany 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 the 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 material uncertainty existswe are required to draw attention in our auditor's report to the related disclosures inthe standalone Ind AS 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 standalone IndAS financial statements including the disclosures and whether the standalone Ind ASfinancial statements represent the underlying transactions and event in a manner thatachieves 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.

Report on Other Legal and Regulatory Requirements:

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 Act we enclose in "Annexure A" a statement on the matters specified inParagraphs 3 and 4 of the Order. As required by Section 143 (3) of the Act we reportthat:

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 Cash Flows and the Statement of Changes in Equity dealt with bythis Report are in agreement with the relevant books of accounts. d) In our opinion theaforesaid Standalone Ind AS

Financial Statements comply with the Indian Accounting Standards specified underSection 133 of the Act read with Rule 7 of the Companies (Accounts) Rules 2014.

e) On the basis of the written representations received from the Directors as on 31stMarch 2019 taken on record by the Board of Directors none of the directors aredisqualified as on 31 March 2019 from being appointed as a director in terms of Section164(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 the requirements of Section 197(16) of the Act as amended: In our opinionand to the best of our information and according to the explanations given to us theremuneration paid by the company to its directors during the year is in accordance withthe 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 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 on its financial position on itsStandalone Ind AS Financial Statements.

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.

In terms of our report attached For SURI & CO

Chartered Accountants FRN: 004283S

R. KRISHNAMOORTHY

Partner Membership No. 020695

Place : Coimbatore

Date : 29.04.2019

‘Annexure –A' to the Independent Auditor's Report to the members of

L.G.BALAKRISHNAN & BROS LIMITED

In terms of the information and explanation sought by us and given by the Company andthe books and records examined by us in the normal course of audit and to the best of ourknowledge and belief we report the following:

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

(b) Some of the fixed assets were physically verified during the year by the managementat reasonable intervals as per regular programme of verification and no materialdiscrepancies were noticed on such verification.

(c) According to the information and explanation given to us and the books and recordsverified by us and based on the examination of the registered sale deeds provided to uswe report that the title deeds of immovable properties of Land and Buildings which arefreehold are held in the name of the Company as at Balance sheet date. In respect ofImmovable properties of Land that have been taken on lease and disclosed as fixed assetsin the financial statements and the buildings constructed on such leasehold land whoselease deeds have been pledged as security for credit facilities taken from the banks thelease agreements are in the name of the Company where the Company is the lessee in theagreement based on the confirmation directly received by us from banks.

ii. According to information and explanations furnished to us the inventories havebeen physically verified by the management at reasonable intervals and no materialdiscrepancies were noticed on such verification.

iii. The Company has not granted 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. The Company has not granted any loans hence provisions of Section 185 are notapplicable. The Company has made Investments and provided guarantee which are within thelimits of Section 186 of the Companies Act 2013.

v. According to the explanation and information provided to us the Company hascomplied with the provisions of Sections 73 to 76 and any other relevant provisions of theCompanies Act 2013 and the Companies (Acceptance of Deposits) Rules 2014. We have beeninformed that no order has been passed by the Company Law Board or the National CompanyLaw Tribunal or the Reserve Bank of India or any court or any other Tribunal.

vi. The maintenance of cost records has been specified by the Central Government underSection 148(1) of the Companies Act 2013 for automotive components. We have broadlyreviewed the cost records maintained by the Company pursuant to the Companies (CostRecords and Audit) Rules 2014 as amended and prescribed by the Central Government undersub-section (1) of Section 148 of the Companies Act 2013 and are of the opinion thatprima facie the prescribed cost records have been made and maintained. We have howevernot made a detailed examination of the cost records with a view to determine whether theyare accurate or complete.

vii. (a) The Company is regular in depositing undisputed statutory dues includingprovident fund employees' state insurance income-tax sales-tax wealth tax servicetax duty of customs duty of excise value added tax goods and service tax cess and anyother statutory dues with the appropriate authorities and there are no undisputedstatutory dues outstanding for a period of more than six months from the date they becamepayable as at the balance sheet date.

(b) The particulars of disputes statutory dues are as follows:

Name of Statute Nature of Dues Amount disputed (Rs.  in Lakhs) Amount Unpaid (Rs.  in Lakhs) Period to which the the amount relates Forum where dispute is pending
Finance Act Denial of Service Tax 2.95 2.95 Various Periods. CESTAT Chennai
Finance Act Common Credit Input 113.68 113.68 2010-11 2011-12 2012-13 CESTAT Chennai
Finance Act Customer Receivable Written Off 60.00 55.50 Various Periods. CESTAT Chennai
Central Excise Act Differential Duty 30.86 20.86 2006-07 CESTAT Chennai
Central Excise Act Rebate Claims 107.06 NIL 2011-12 CESTAT Chennai
Central Excise Act ED- Transfer of Division 100.00 92.50 2009-10 CESTAT Chennai
Central Excise Act Duty on R & D Testing 1.86 1.86 2009-10 CESTAT Chennai
Central Excise Act Duty on DTA Advance Sales concession 2.6 2.6 2008-09 CESTAT Chennai
Central Excise Act Trade Discount 0.54 0.54 2000-2001 CESTAT Chennai
Delhi Value Added
Tax Act Stock Transfer 0.62 0.62 2007-08 Sales Tax Appellate
Tribunal
Tamil Nadu Value Input Tax Credit/ 345.46 172.47 2007-082008-09 Joint Commissioner
Added Tax Act Sales return 2010-11 2011-12 (Appeals) Coimbatore
Tamil Nadu General Sales Tax Act Assessment matters 43.94 43.94 2002-03 Hon'ble High Court of Madras (stayed by the High Court)
Tamil Nadu General Differential rate and 5.91 5.91 2006-072010-11 Sales Tax Appellate
Sales Tax Act & Central Sales Inter State Sale. 2011-12 Tribunal Coimbatore
The Uttarakhand Value Added Tax Branch Transfer Sales 697.88 661.5 2007-08 Joint Commissioner
Entry Tax Entry Tax 408.36 408.36 2007-08 Hon'ble High Court of Madras (stayed by the High Court)
Karnataka Entry Entry Tax 19.93 19.93 2005-06 Karnataka Appellate Tribunal
Tax
Finance Act Disputed on tax charged for Canteen sales 12.97 12.97 2007-08 2008-09 2009-10 2010-11 2011-12 Joint Commissioner Appeals Coimbatore
Income Tax Act Various dues 10.21 10.21 1987-88 High Court of Madras.
Income Tax Act Excess Claim of Expenses 46.41 46.41 1990-91 High Court of Madras
Income Tax Act Capital Gain 63.09 63.09 2008-09 ITAT Chennai
Income Tax Act Excess claim u/s 80IC 213.02 213.02 2009-10 ITAT Chennai
Income Tax Act Excess claim u/s 80IC 214.23 214.23 2010-11 Commissioner (Appeals)
Income Tax Act Excess claim u/s 80IC 273.14 273.14 2012-13 ITAT Chennai
Income Tax Act Excess claim u/s 80IC & 428.39 428.39 2013-14 DCIT
14A

viii. In our opinion and according to the information and explanation given to us thecompany has not defaulted in repayment of dues to financial institutions and banks. Thecompany has not taken any loan from Government and has not issued any debentures. ix. Thecompany has not raised any money by way of initial public offer or further public offerduring the year.The term loan obtained have been used for the purpose for which availed.x. In our Opinion and according to the information and explanation provided to us Nofrauds by the Company and no material fraud on the Company by its officers or employeeshas been noticed or reported during the year. xi. The managerial remuneration has beenpaid and provided in accordance with the requisite approvals mandated by the provisions ofsection 197 read with Schedule V to the Act. xii. The Company is not a Nidhi Company andhence reporting under clause (xii) of Paragraph 3 of the order is not applicable. xiii. Inour opinion based on the information and explanation given to us all transactions withthe related parties are in compliance with section 177 and 188 of Act and the detailsthereof have been disclosed in the Standalone Ind AS Financial Statements as required bythe applicable accounting standards and the Act. xiv. The company has not made anypreferential allotment or private placement of shares or fully or partly convertibledebentures during the year under review and hence reporting under clause (xiv) ofParagraph 3 of the Order is not applicable. xv. The company has not entered into anynon-cash transactions with directors or persons connected with him and hence reportingunder clause (xv) of Paragraph 3 of the Order is not applicable. xvi. The company is notrequired to be registered under section 45-IA of the Reserve Bank of India Act 1934.

In terms of our report attached For SURI & CO

Chartered Accountants FRN: 004283S

R. KRISHNAMOORTHY

Partner Membership No. 020695

Place : Coimbatore

Date : 29.04.2019

"Annexure – B" to the Independent Auditor's Report to the members ofL.G.BALAKRISHNAN & BROS

LIMITED

Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section143 of the Companies Act 2013:

We have audited the internal financial controls over financial reporting ofL.G.BALAKRISHNAN & BROS LIMITED ("the Company") as of 31 March 2019 inconjunction with our audit of the Standalone Ind AS Financial Statements of the Companyfor the year ended on that date.

Management's Responsibility for the Internal Financial Controls:

The Company's management is responsible for establishing and maintaining internalfinancial controls based on the internal controls 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 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 ethical requirements andplan and 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 judgement including the assessment of the risks ofmaterial misstatement of the Standalone Ind AS Financial Statements whether due to fraudor error. We believe that the audit evidence we have obtained is sufficient andappropriate to provide a basis for our audit opinion on the Company's internal financialcontrols system 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 Standalone Ind AS Financial Statements for external purposes in accordancewith generally accepted accounting principles. A Company's internal financial control overfinancial reporting 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. Provide reasonable assurance that transactions are recorded as necessary to permitpreparation of Standalone Ind AS Financial Statements in accordance with generallyaccepted accounting principles and that receipts and expenditures of the Company arebeing made only in accordance with authorizations of management and directors of theCompany; and

3. Provide reasonable assurance regarding prevention or timely detection ofunauthorized acquisition use or disposition of the Company's assets that could have amaterial effect on the Standalone Ind AS 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 31 March 2019 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.

In terms of our report attached For SURI & CO

Chartered Accountants FRN: 004283S

R. KRISHNAMOORTHY

Partner Membership No. 020695

Place : Coimbatore

Date : 29.04.2019