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Lakshmi Electrical Control Systems Ltd.

BSE: 504258 Sector: Engineering
NSE: LAKSELECON ISIN Code: INE284C01018
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NSE 05:30 | 01 Jan Lakshmi Electrical Control Systems Ltd
OPEN 310.00
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VOLUME 3115
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P/E
Mkt Cap.(Rs cr) 74
Buy Price 298.00
Buy Qty 2.00
Sell Price 299.95
Sell Qty 7.00
OPEN 310.00
CLOSE 305.05
VOLUME 3115
52-Week high 359.00
52-Week low 185.15
P/E
Mkt Cap.(Rs cr) 74
Buy Price 298.00
Buy Qty 2.00
Sell Price 299.95
Sell Qty 7.00

Lakshmi Electrical Control Systems Ltd. (LAKSELECON) - Auditors Report

Company auditors report

To the Members of LAKSHMI ELECTRICAL CONTROL SYSTEMS LIMITED

Report on the audit of Standalone Financial Statements

Opinion

We have audited the standalone financial statements of LAKSHMI ELECTRICAL CONTROLSYSTEMS LIMITED ("the Company") which comprise the Balance Sheet as at March31 2020 the Statement of Profit and Loss (including Other Comprehensive Income) theStatement of Changes in Equity and the Cash Flow Statement and for the year then endedand notes to the financial statements including a summary of the significant accountingpolicies and other explanatory information. (hereinafter referred to standalone financialstatements).

In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid standalone financial statements give the information requiredby the Companies Act 2013 ["the Act"] in the manner so required and give atrue and fair view in conformity with the Indian Accounting Standards prescribed underSection 133 of the Companies Act 2013 read with the Companies (Indian AccountingStandards) Rules 2015 as amended and other accounting principles generally accepted inIndia of the state of affairs of the Company as at March 31 2020 the profit and totalcomprehensive income changes in equity and its cash flows for the year ended on thatdate.

Basis for Opinion

We conducted our audit in accordance with the Standards on Auditing (SAs) specifiedunder section 143(10) of the Companies Act 2013. Our responsibilities under thoseStandards are further described in the Auditor's Responsibilities for the Audit of theFinancial Statements section of our report. We are independent of the Company inaccordance with the Code of Ethics issued by the Institute of Chartered Accountants ofIndia together with the ethical requirements that are relevant to our audit of thefinancial statements under the provisions of the Companies Act 2013 and the Rulesthereunder and we have fulfilled our other ethical responsibilities in accordance withthese requirements and the Code of Ethics. We believe that the audit evidence we haveobtained is sufficient and appropriate to provide a basis for our opinion on thestandalone financial statements.

Key Audit Matters

Key audit matters are those matters that in our professional judgment were of mostsignificance in our audit of the standalone financial statements of the current period.These matters were addressed in the context of our audit of the standalone financialstatements as a whole and in forming our opinion thereon and we do not provide aseparate opinion on these matters. We have determined the matters described below to bethe key audit matters to be communicated in our report. We have fulfilled theresponsibilities described in the Auditor's responsibilities for the audit of theStandalone financial statements section of our report including in relation to thesematters.

Key Audit Matter Auditor's Response
1. Evaluation of uncertain tax positions Principal Audit Procedures:
The Company did not have material uncertain tax positions other than uncertain position of statutory dues of indirect taxes and electricity generation tax under dispute which involves significant judgment to determine the possible outcome of these disputes. We obtained details of completed tax assessments demands received and latest rulings of appellate forums from the management. We analysed the management's underlying assumptions in estimating the tax provision and the possible outcome of the disputes. We considered legal precedence and other rulings in evaluating management's position on these uncertain tax positions and electricity generation tax. Additionally we considered the effect of new information in respect of material uncertain tax positions and other uncertain position of statutory dues of indirect taxes and electricity generation tax under dispute to evaluate whether any change was required to management's position on these uncertainties.
2. Assessment of carrying value of Investments Principal Audit Procedures
The Company has invested in listed equity instruments and mutual funds. The evaluation of their fair values is considered as a key audit matter given the relative significance of the value of investments and the fluctuations in their fair values. Our audit procedures in relation to assessing the carrying value of these investments include ascertaining from relevant external sources that the equity instruments and the mutual funds are carried at fair value as on 31st March 2020. Due to general market fluctuations there has been significant fair value reduction in these investments. We agree with the management's evaluation of the fair values as at the balance sheet date read with the disclosures by the management in note on Investments [Refer Note No.6].

We have determined that there are no other key audit matters to communicate in ourreport.

Information Other than the standalone Financial Statements and Auditor's Report Thereon

The Company's Board of Directors is responsible for the preparation of the otherinformation. The other information comprises the information included in the ManagementDiscussion and Analysis Board's Report including Annexures to Board's Report CorporateGovernance and Shareholder's Information but does not include the standalone financialstatements and our auditor's report thereon.

Our opinion on the standalone 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 financial statements our responsibilityis to read the other information and in doing so consider whether the other informationis materially inconsistent with the standalone financial statements or our knowledgeobtained during the course of our audit or otherwise appears to be materially misstated.

If based on the work we have performed we conclude that there is a materialmisstatement of this other information we are required to report that fact. We havenothing to report in this regard.

Responsibilities of Management and those charged with governance for the standaloneFinancial 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 ofthese standalone financial statements that give a true and fair view of the financialposition financial performance (including other comprehensive income) cash flows andchanges in equity of the Company in accordance with the Indian Accounting Standards (INDAS) prescribed under section 133 of the Act read with the Companies (Indian AccountingStandards) Rules 2015 as amended and other accounting principles generally accepted inIndia.

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 standalonefinancial 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.

Auditors Rs Responsibility

Our objectives are to obtain reasonable assurance about whether the standalonefinancial statements as a whole are free from material misstatement whether due to fraudor error and to issue an auditor's report that includes our opinion. Reasonable assuranceis a high level of assurance but is not a guarantee that an audit conducted in accordancewith SAs will always detect a material misstatement when it exists. Misstatements canarise from fraud or error and are considered material if individually or in theaggregate they could reasonably be expected to influence the economic decisions of userstaken on the basis of these standalone 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 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 control relevant to the audit in order todesign audit procedures that are appropriate in the circumstances. Under section 143(3)(i)of the Companies Act 2013 we are also responsible for expressing our opinion on whetherthe company 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 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 a material uncertainty existswe are required to draw attention in our auditor's report to the related disclosures inthe financial statements or if such disclosures are inadequate to modify our opinion.Our conclusions are based on the audit evidence obtained up to the date of our auditor'sreport. However future events or conditions may cause the Company to cease to continue asa 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.

Materiality is the magnitude of misstatements in the standalone financial statementsthat individually or in aggregate makes it probable that the economic decisions of areasonably knowledgeable user of the standalone financial statements may be influenced. Weconsider quantitative materiality and qualitative factors in (i) planning the scope of ouraudit work and in evaluating the results of our work; and (ii) to evaluate the effect ofany identified misstatements in the standalone financial statements.

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.

From the matters communicated with those charged with governance we determine thosematters that were of most significance in the audit of the standalone financial statementsof the current period and are therefore the key audit matters. We describe these mattersin our auditor's report unless law or regulation precludes public disclosure about thematter or when in extremely rare circumstances we determine that a matter should not becommunicated in our report because the adverse consequences of doing so would reasonablybe expected to outweigh the public interest benefits of such communication.

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 in terms of Section 143 (11) of the Act we give inAnnexure "A" a statement on the matters specified in paragraphs 3 and 4 of theOrder to the extent applicable.

2. As required by Section 143 (3) of the Act based on our audit 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 appears from our examination of those books;

c) The balance sheet the statement of profit and loss (including other comprehensiveincome) statement of changes in equity and the cash flow statement dealt with by thisreport are in agreement with the books of account;

d) In our opinion the aforesaid standalone financial statements comply with the IndianAccounting Standards prescribed under section 133 of the Act read with Rule 7 of theCompanies (Accounts) Rules 2014;

e) On the basis of the written representations received from the directors of theCompany as on March 31 2020 taken on record by the board of directors none of thedirectors are disqualified as on March 312020 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" and

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 Companies Act 2013.

h) With respect to the other matters to be included in the auditors Rs 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 standalone standalone financial statements - Refer Note No 39 to thestandalone financial statements.

ii The Company does 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 to theinvestor Education and Protection Fund by the Company.

For M/s Subbachar & Srinivasan
Chartered Accountants
Firm Registration No.004083S
(T.S.V.RAJAGOPAL)
Place : Coimbatore Partner
Date : June 03 2020 Membership No. 200380
UDIN : 20200380AAAAFH1527

Annexure - "A" to the Independent Auditors Rs Report

(Referred to in Paragraph 1 under "Report on Other legal and regulatoryrequirements" section of our report to the members of LAKSHMI ELECTRICAL CONTROLSYSTEMS LIMITED of even date).

We report that

1. In respect of its Fixed Assets [Property Plant and Equipment] :

a. The company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets [Property Plant and Equipment].

b. As explained to us fixed assets [Property plant and Equipment] have beenphysically verified by the management at regular intervals in accordance with a programmeof verification which in our opinion provides for physical verification of all the fixedassets at reasonable intervals having regard to the size of the company and nature of itsassets. According to the information and explanations given to us no materialdiscrepancies were noticed on such verification.

c. According to the information and explanations given to us and the records examinedby us the title deeds of immovable properties are held in the name of the Company.

2. In respect of its inventories:

As explained to us physical verification of inventories has been conducted atreasonable intervals by the management during the year and no material discrepancies werenoticed.

3. The company has not granted any loan secured or unsecured to companies firmsLimited Liability Partnerships or other parties covered in the register maintained undersection 189 of the Companies Act 2013 during the financial year and hence sub-clauses(a) to (c) of clause (iii) of the Order are not applicable to the company.

4. The Company has not granted loans or given any guarantee or provided any security ormade any investments in any body corporate during the year and hence compliance withSection 185 and 186 are not applicable.

5. The company has not accepted any deposits from the public during the year to whichthe provisions of sections 73 to 76 of the Act are applicable and as such clause 3(v) ofthe Order is not applicable.

6. We have broadly reviewed the cost records maintained by the company specified by theCentral Government under subsection (1) of Section 148 of the Companies Act 2013 asapplicable to the company and are of the opinion that prima facie the specified costrecords have been maintained. We have however not made a detailed examination of thecost records with a view to determine whether they are accurate or complete.

7. According to the information and explanations given to us and on the basis of ourexamination of the records of the company in respect of the statutory dues:

a. The company is regular in depositing undisputed statutory dues including ProvidentFund Employees Rs State insurance Income tax Duty of customs Goods and Service Tax andany other statutory dues with the appropriate authorities during the year. According tothe information and explanations given to us no undisputed amounts payable in respect ofthe aforesaid dues were outstanding as at 31st March 2020 for a period of more than sixmonths from the date they became payable.

b. According to the information and explanations given to us the details of disputedstatutory dues that have not been deposited on account of dispute is as under:

Nature of the dues Amount (Rs in Lakhs) Amount paid/ adjusted (Rs in Lakhs) Period to which the amount relates Forum where dispute is pending
Central Excise Act / Service Tax Act Service Tax 9.18 0.92 2011-12 to 2014-15 CESTAT
The Tamilnadu Tax on Consumption or sale of Electricity Act 2003 Electricity Tax 33.27 NIL 2007-08 and 2009-10 to 2012-13 High Court
Income Tax Act 1961 Income Tax & Interest 21.89 1.08 Assessment Year 2017-18 Commissioner (Appeals)

8. In our opinion and according to the information and explanations given to us thecompany has not defaulted in repayment of loans or borrowings to any financialinstitution bank government or dues to debenture holders.

9. In our opinion and according to the information and explanations given to us thecompany has not raised any money by way of term loans or by way of initial public offer orfurther public offer (including debt instruments) during the year and hence clause 3(ix)of the Order is not applicable to the company.

10. To the best of our knowledge and belief and according to the information andexplanations given to us during the course of our examination of the books and records ofthe company carried out in accordance with the auditing standards generally accepted inIndia no fraud on or by the company was noticed or reported during the year that causesthe standalone financial statements to be materially misstated.

11. According to the information and explanations given to us and based on ourexamination of the records of the company the company has not paid / not provided formanagerial remuneration during the year read with the requisite terms of approvals asmandated by the provisions of section 197 and read with Schedule V to the Companies Act2013.

12. In our opinion and according to the information and explanations given to us theCompany is not a Nidhi company. Accordingly clause 3(xii) of the Order is not applicable.

13. According to the information and explanations given to us and based on ourexamination of the records of the Company transactions with the related parties are incompliance with sections 177 and 188 of the Act where applicable and details of suchtransactions have been disclosed in the standalone financial statements as required by theapplicable accounting standards.

14. According to the information and explanations given to us and based on ourexamination of the records of the Company the Company has not made any preferentialallotment or private placement of shares or fully or partly convertible debentures duringthe year.

15. According to the information and explanations given to us and based on ourexamination of the records of the Company the Company has not entered into non-cashtransactions with directors or persons connected with him. Accordingly clause 3(xv) ofthe Order is not applicable.

16. The Company is not required to be registered under section 45-IA of the ReserveBank of India Act 1934.

For M/s Subbachar & Srinivasan
Chartered Accountants
Firm Registration No.004083S
(T.S.V.RAJAGOPAL)
Place : Coimbatore Partner
Date : June 03 2020 Membership No. 200380
UDIN : 20200380AAAAFH1527

Annexure - "B" to the Independent Auditors Rs Report

(Referred to in Paragraph 2(f) under "Report on Other legal and regulatoryrequirements" section of our report to the members of LAKSHMI ELECTRICAL CONTROLSYSTEMS LIMITED of even date).

Report on the Internal Financial Controls over Financial reporting under Clause (i) ofSub-section 3 of Section 143 of the Companies Act 2013 ("the Act")

We have audited the internal financial controls over financial reporting of LAKSHMIELECTRICAL CONTROL SYSTEMS LIMITED as of 31st March 2020 in conjunction with our audit ofthe standalone financial statements of the Company for the year ended on that date.

Management's Responsibility for Internal Financial Controls

The Board of Directors of the company is responsible for establishing and maintaininginternal financial controls based on the internal control over financial reportingcriteria established by the Company considering the essential components of internalcontrol stated in the Guidance Note on Audit of Internal Financial Controls over FinancialReporting issued 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 company's policies the safeguarding ofits 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.

Auditors Rs 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. Those Standards and the GuidanceNote require that we comply with ethical requirements and plan and perform the audit toobtain reasonable assurance about whether adequate internal financial controls overfinancial reporting was established and maintained and if such controls operatedeffectively 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 standalonefinancial 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 financialstatements.

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 to the best of our information and according to the explanations givento us the Company has in all material respects an adequate internal financial controlssystem over financial reporting and such internal financial controls over financialreporting were operating effectively as at 31st March 2020 based on the internal controlover financial reporting criteria established by the Company considering the essentialcomponents of internal control stated in the Guidance Note on Audit of Internal FinancialControls Over Financial Reporting issued by the Institute of Chartered Accountants ofIndia.

For M/s Subbachar & Srinivasan
Chartered Accountants
Firm Registration No.004083S
(T.S.V.RAJAGOPAL)
Place : Coimbatore Partner
Date : June 03 2020 Membership No. 200380
UDIN : 20200380AAAAFH1527

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