THE MEMBERS OF
L.G.BALAKRISHNAN a BROS LIMITED
Report on the Standalone Ind AS Financial Statements:
We have audited the accompanying Standalone Ind AS Financial Statements ofL.G.BALAKRISHNAN a BROS LIMITED ("the Company") which comprise the BalanceSheet as at 31 March 2018 the Statement of Profit and Loss (Including Other ComprehensiveIncome) the Statement of Cash Flows and the Statement of Changes in Equity for the yearended and a summary of 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 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.
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 the accounting and auditingstandards and matters which are required to be included in the audit report under theprovisions of the Act and the Rules made thereunder.
We conducted our audit in accordance with the Standards on Auditing specified u/s143(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 anddisclosures in the Standalone Ind AS Financial Statements. The procedures selected dependon the auditor's judgment including the assessment of the risks of material misstatementof the Standalone Ind AS Financial Statements whether due to fraud or error. In makingthose risk assessments the auditor considers internal financial control relevant to theCompany's preparation of the Standalone Ind AS Financial Statements that give a true andfair view in order to design audit procedures that are appropriate in the circumstances.An audit also includes evaluating the appropriateness of the accounting policies used andthe reasonableness of the accounting estimates made by the Company's directors as well asevaluating the overall presentation of the Standalone Ind AS Financial Statements.
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.
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 Ind AS of the stateof affairs of the Company as at 31 March 2018 and its financial performance includingother comprehensive income its cash flows and the changes in equity for the year ended onthat date.
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 report that:
a) We have sought and obtained all the information and explanations which to the bestof our knowledge and belief were necessary for the purposes of our audit.
b) In our opinion proper books of account as required by law have been kept by theCompany so far as it appears from our examination of those books.
c) The Balance Sheet the Statement of Profit and Loss (including other comprehensiveincome) the Statement of Cash Flows and the Statement of Changes in Equity dealt with bythis Report are in agreement with the books of accounts.
d) In our opinion the aforesaid Standalone Ind AS Financial Statements comply with theIndian Accounting Standards specified under Section 133 of the Act read with Rulesthereunder.
e) On the basis of the written representations received from the directors as on 31March 2018 taken on record by the Board of Directors none of the directors aredisqualified as on 31 March 2018 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 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 on its Standalone Ind AS Financial Statements.
ii. The company did not have any material foreseeable losses on long term contractsincluding derivative contracts.
iii. There has been no delay in transferring amounts required to be transferred tothe Investor Education and Protection Fund by the Company.
Place : Coimbatore
In terms of our report attached For SURI & CO Chartered Accountants FRN: 004283S
Membership No. 020695
Annexure -A' to the Independent Auditor's Report to the members ofL.G.BALAKRISHNAN Et 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 Managementin accordance with a regular programme of verification which in our opinion provides forphysical verification of all the fixed assets at reasonable intervals. According to theinformation and explanation given to us no material discrepancies were noticed on suchverification.
(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 except for theimmovable properties acquired on merger which are held in the name of the erstwhiletransferee company. In respect of immovable properties of land that have been taken onlease and disclosed as fixed assets in the financial statements and the buildingsconstructed on such leasehold land whose lease deeds have been pledged as security forcredit facilities taken from the banks the lease agreements are in the name of theCompany where the Company is the lessee in the agreement based on the confirmationdirectly received 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 |
|Period to which the the amount relates ||Forum where dispute is pending |
|Finance Act ||Service Tax on Import of Services ||5.07 ||5.07 ||2005-062006-07 |
|Flon'ble Supreme Court |
|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 Coimbatore |
|Central Excise Act ||Differential Duty ||72.59 ||52.59 ||2006-07 2007-08 ||CESTAT Chennai |
|Central Excise Act ||Rebate Claims ||107.06 ||107.06 ||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 ||0.50 ||0.47 ||2009-14 ||CESTAT Chennai |
|Maharashtra Value ||Classification of Goods ||22.76 ||20.26 ||2005-06 2006-07 2007-08 ||Sales Tax Added Tax Act Appellate TribunalDelhi |
|Value Added Tax Act ||Stock Transfer ||0.62 ||0.62 ||2007-08 ||Sales Tax Appellate Tribunal |
|Tamil Nadu Value Added Tax Act ||Input Tax Credit/ Sales return ||345.46 ||172.47 ||2007-082008-09 2010-11 2011-12 ||Joint Commissioner (Appeals) Coimbatore |
|Tamil Nadu General Sales Tax Act ||Assessment matters ||43.94 ||43.94 ||2002-03 ||Flon'ble High Court of Madras (stayed by the High Court) |
|Tamil Nadu General Sales Tax Act & Central Sales ||Differential rate and Inter State Sale. ||5.91 ||5.91 ||2006- 072010-11 2011-12 ||Sales Tax Appellate Tribunal Coimbatore |
|The Uttarakhand Value Added Tax ||Branch Transfer Sales ||697.88 ||661.50 ||2007-08 ||Joint Commissioner |
|Entry Tax ||Entry Tax ||408.36 ||408.36 ||2007-08 ||Flon'ble High Court of Madras (stayed by the High Court) |
|Karnataka Entry Tax ||Entry Tax ||19.93 ||19.93 ||2005-06 ||Karnataka Appellate Tribunal |
|Flaryana State VAT ||Duty paid at the time of Audit - Manesar Plant ||22.70 ||22.70 ||2012-2013 a 2013-2014 UPTO OCT-2013 ||CESTAT |
|Finance Act ||Common Credit on wind mill services ||8.50 ||7.86 ||Jan-2012 to Sept-2014 ||CESTAT Chennai |
|Finance Act ||Disputed on tax chargee for Canteen sales ||12.97 ||12.97 ||2007-08 2008-09 2009-10 2010-11 2011-12 ||Joint Commissioner Appeals Coimbatore |
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. The company has not raised any money by way of initial public offer or furtherpublic offer during the year.
x. According to the information and explanation given to us no frauds by the companyand no material fraud on the company by its officers or employees has been noticed orreported during the year.
xi. The managerial remuneration has been paid and provided in accordance with therequisite approvals mandated by the provisions of section 197 read with Schedule V to theAct.
xii. The Company is not a Nidhi Company and hence reporting under clause (xii) ofParagraph 3 of the order is not applicable.
xiii. In our opinion based on the information and explanation given to us alltransactions with the related parties are in compliance with section 177 and 188 of Actand the details thereof have been disclosed in the Standalone Ind AS Financial Statementsas required by the applicable accounting standards and the Act.
xiv. The company has not made any preferential allotment or private placement of sharesor fully or partly convertible debentures during the year under review and hence reportingunder clause (xiv) of Paragraph 3 of the Order is not applicable.
xv. The company has not entered into any non-cash transactions with directors orpersons connected with him and hence reporting under clause (xv) of Paragraph 3 of theOrder is not applicable.
xvi. The company is not required to be registered under section 45-IA of the ReserveBank of India Act 1934.
In terms of our report attached For SURI & CO Chartered Accountants FRN: 004283S
Place : Coimbatore Date : 31.07.2018
Membership No. 020695
"Annexure - B" to the Independent Auditor's Report to the members ofL.G.BALAKRISHNAN Et 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 2018 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.
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 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 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 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 Ind AS Financial Statements for external purposes in accordancewith generally accepted accounting principles. ACompany'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.
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 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.
In terms of our report attached
For SURI & CO
Place : Coimbatore
Membership No. 020695