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LGB Forge Ltd.

BSE: 533007 Sector: Engineering
NSE: LGBFORGE ISIN Code: INE201J01017
BSE 00:00 | 03 Apr 1.62 0.02
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NSE 00:00 | 03 Apr 1.70 -0.05
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OPEN 1.62
PREVIOUS CLOSE 1.60
VOLUME 1000
52-Week high 4.72
52-Week low 1.56
P/E 32.40
Mkt Cap.(Rs cr) 39
Buy Price 1.68
Buy Qty 1000.00
Sell Price 1.60
Sell Qty 8000.00
OPEN 1.62
CLOSE 1.60
VOLUME 1000
52-Week high 4.72
52-Week low 1.56
P/E 32.40
Mkt Cap.(Rs cr) 39
Buy Price 1.68
Buy Qty 1000.00
Sell Price 1.60
Sell Qty 8000.00

LGB Forge Ltd. (LGBFORGE) - Auditors Report

Company auditors report

To the Members of LGB Forge Limited

Report on the Ind AS Financial Statements

We have audited the accompanying Ind AS Financial Statements of LGB FORGE LIMITED("the Company")which comprises the Balance Sheet as at 31st March 2019 theStatement of Profit and Loss (including Other Comprehensive Income) the Statement ofChanges in Equity and Statement of Cash Flows for the year then ended and notes to thefinancial statements including a summary of significant accounting policies and otherexplanatory information.

In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid Ind AS Financial Statements give the information required bythe Act in the manner so required and give a true and fair view in conformity with theaccounting principles generally accepted in India including Ind AS of the state ofaffairs of the Company as at 31st March 2019 the profit and total comprehensive incomethe changes in equity and its cash flows for the year ended on that date.

Basis for Opinion

We conducted our audit of the Ind AS financial statements in accordance with theStandards on Auditing (SAs) 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 (ICAI) together with the ethical requirements that arerelevant to our audit of the 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 Ind AS Financial Statements.

Key Audit Matters :

Key Audit Matters are those matters that in our professional judgment were of mostsignificance in our audit of the financial statements of the current period. These matterswere addressed in the context of our audit of the financial statements as a whole and informing our opinion thereonand we do not provide a separate opinion on these matters. Wehave determined the matters described below to be the Key Audit Matters to be communicatedin our report.

S.No 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) 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:
As per Ind AS 115 Revenue should be recognised only when risk and reward incidental to the ownership of goods are transferred to respective customers. 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.
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.
Performed analytical procedures for reasonableness of revenues disclosed by type and service offerings.
2. Evaluation of uncertain tax positions Principal Audit Procedures
The Company has certain Income Tax matters under dispute which involves significant judgement to determine the possible outcome of these disputes.The matters are pending before CIT(Appeals) Chennai and the disputed tax demand for AY:2011-12 & 2012-13 amounts to Rs. 1664496. 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 Ind AS financial statements and the auditor's report thereon

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 Ind AS financial statements and our auditor's report thereon.

Our opinion on the Ind AS financial statements does not cover the other information andwe do not express any form of assurance conclusion thereon.

In connection with our audit of the Ind AS financial statements our responsibility isto read the other information and in doing so whether the other information ismaterially inconsistent with the Ind AS financial statements or our knowledge obtainedduring 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 required to report the fact. We have nothing toreport in this regard.

Management's Responsibility for the Ind AS Financial Statements

The Company's Board of Directors is responsible for the Management's Responsibility forthe Ind AS Financial Statements: The Company's Board of Directors is responsible for thematters stated in Section 134(5) of the Companies Act 2013 ("the Act") withrespect to the preparation of these Ind AS Financial Statements that give a true and fairview of the financial position financial performance including other comprehensiveincome changes in equity and cash flows of the Company in accordance with the Accountingprinciples generally accepted in India including the Indian Accounting Standards("Ind AS") prescribed under Section 133 of the Act 2013 read with relevantrules issued there 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 Ind ASFinancial 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 responsible for overseeing the company's financial reportingprocess.

Auditor's Responsibility for the Audit of the 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 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 Ind AS 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 financial controls relevant to the audit inorder to design audit procedures that are appropriate in the circumstances. Under section143(3)(i) of the Companies Act 2013 we are also responsible for expressing our opinionon whether the Company has adequate internal financial controls system in place and theoperating effectiveness of such controls.

•Evaluate the appropriateness of accounting policies used and the reasonableness ofaccounting estimates and related disclosures made by the management.

•Conclude on the appropriateness of management's use of the going concern basis ofaccounting 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 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 Ind AS financialstatements including the disclosures and whether the Ind AS financial statementsrepresent the underlying transactions and event in a manner that achieves fairpresentation.

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

(1) As required by the Companies (Auditor's Report) Order 2016 ("the Order")issued by the Central Government of India in terms of sub-section (11) of Section 143 ofthe Act we enclose in Annexure 1 a statement on the matters specified in Paragraphs 3and 4 of the Order to the extend applicable.

(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 Cash Flow Statement and theStatement of Changes in Equity dealt with by this Report are in agreement with the booksof account;

d. In our opinion the aforesaid Ind AS financial statements comply with the IndianAccounting Standards specified under Section 133 of the Act read with Rule 7 of theCompanies (Accounts) Rules 2014.

e. On the basis of written representations received from the directors as on March 312019 and taken on record by the Board of Directors none of the directors is disqualifiedas on March 312019 from being appointed as a director in terms of Section 164 (2) of theAct;

f. With respect to the adequacy of the internal financial controls over financialreporting of the Company and the operating effectiveness of such controls we give ourseparate Report in "Annexure 2".

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) The Company has disclosed the impact of pending litigations on its financialposition in its Ind AS financial statements – Refer Note 36 on Contingent Liabilitiesto the Ind AS financial statements;

(ii) The Company did not have any long-term contracts including derivative contracts.

Hence the question of any material foreseeable losses does not arise;

(iii) There were no amounts which were required to be transferred to the InvestorEducation and Protection Fund by the Company.

For N.R.DORAISWAMI & CO
Chartered Accountants
Firm Registration No. 000771S
SUGUNA RAVICHANDRAN
Coimbatore Partner
30.04.2019 Membership No. 207893

ANNEXURE 1 TO INDEPENDENT AUDITOR'S REPORT

[Referred to in paragraph 1 under ‘Report on Other Legal and RegulatoryRequirements' in the Independent Auditor's Report of even date to the members of LGBForge Limited on the financial statements for the year ended 31-03-2019]

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 properrecords showing full particulars including quantitative details and situation of fixedassets.

(b) During the year the fixed assets of the Company have been physically verified bythe management and as informed no material discrepancies were noticed on suchverification. In our opinion the frequency of verification is reasonable having regard tothe size of the Company and the nature of its assets.

(c) The title deeds of immovable properties recorded as fixed assets in the books ofaccount of the Company are held in the name of the Company except for the details givenbelow:

Particulars Total number of cases Lease hold/ Free hold Gross Block as on March 31 2019 Net Block as on March 31 2019 Remarks
Land & Building at Mysore 1 Freehold 80.25 79.06 The Land & Building is in the name of L.G. Balakrishnan & Bros Limited for which the ownership is established by way of demerger vide court order dated 21.04.2008 sanctioning the scheme of demerger.

(ii) The inventory has been physically verified by the management during the year. Inour opinion the frequency of verification is reasonable. As informed no materialdiscrepancies were noticed on physical verification carried out during the year.

(iii) As informed the Company has not granted any loans secured or unsecured tocompanies firms Limited Liability Partnerships or other parties covered in the registermaintained under Section 189 of the Act. Accordingly paragraph 3 (iii)(a) 3 (iii)(b) and3 (iii)(c) of the Order are not applicable to the Company.

(iv Based on information and explanation given to us in respect of loans investmentsguarantees and securities the Company has complied with the provisions of Section 185 and186 of the Act.

(v) In our opinion and according to the information and explanations given to us theCompany has not accepted any deposits from the public within the provisions of Sections 73to 76 of the Act and the rules framed there under.

(vi) We have broadly reviewed the books of account maintained by the Company in respectof products where the maintenance of cost records has been specified by the CentralGovernment under sub-section (1) of Section 148 of the Act and the rules framed thereunder and we are of the opinion that prima facie the prescribed accounts and records havebeen made and maintained.

(vii) (a) The Company is generally regular in depositing with appropriate authoritiesundisputed statutory dues including provident fund employees' state insurance incometax sales tax service tax value added tax goods and service tax customs duty exciseduty cess and any other material statutory dues applicable to it however there havebeen slight delay in few cases.

According to the information and explanations given to us no undisputed amountspayable in respect of provident fund employees' state insurance income tax sales taxservice tax value added tax goods and service tax customs duty excise duty cess andany other material statutory dues applicable to it were outstanding at the year end fora period of more than six months from the date they became payable.

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

Name of the Statute Nature of Due Amount Disputed Amount Unpaid

Period to which the amount relates

Forum where dispute is pending
Income Tax Act Demand raised u/s 201(1) Rs. 1186252 Rs. 276675 A.Y.2011-2012 Commissioner of Income tax (Appeals) Chennai.
Income Tax Act Demand raised u/s 201(1) Rs. 478244 Rs. 478244 A.Y.2012-2013 Commissioner of Income tax (Appeals) Chennai.

(viii) According to the information and explanations given to us the Company has notdefaulted in repayment of loans or borrowings to financial institution(s) bank(s)government(s) or dues to debenture holder(s).

(ix) In our opinion and according to the information and explanations given to us theCompany has utilized the money raised by way of term loans during the year for thepurposes for which they were raised. The company did not raise any money by way of InitialPublic Offer or further public offer including debt instruments during the year.

(x) During the course of our examination of the books and records of the Companycarried out in accordance with the generally accepted auditing practices in India andaccording to the information and explanations given to us we have neither come across anyinstance of fraud by the Company or any fraud on the Company by its officers or employeesnoticed or reported during the year nor have we been informed of any such instance by themanagement.

(xi) According to the information and explanations given to us managerial remunerationhas been paid / provided in accordance with the requisite approvals mandated by theprovisions of Section 197 read with Schedule V to the Act.

(xii) In our opinion and according to the information and explanations given to us theCompany is not a Nidhi Company. Therefore paragraph 3(xii) of the Order is not applicableto the Company.

(xiii) According to the information and explanation given to us all transactionsentered into by the Company with the related parties are in compliance with Sections 177and 188 of Act where applicable and the details have been disclosed in the FinancialStatements etc. as required by the applicable accounting 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. Thereforeparagraph 3(xiv) of the Order is not applicable to the Company.

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

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

For N.R.DORAISWAMI & CO
Chartered Accountants
Firm Registration No. 000771S
SUGUNA RAVICHANDRAN
Coimbatore Partner
30.04.2019 Membership No. 207893

ANNEXURE 2 TO THE INDEPENDENT AUDITOR'S REPORT

[Referred to in paragraph 2 under ‘Report on Other Legal and RegulatoryRequirements' in the Independent Auditor's Report of even date to the members of LGBForge Limited on the Financial Statements for the year ended 31-03-2019]

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 LGB ForgeLimited ("the Company") as of March 31 2019 in conjunction with our audit ofthe Financial Statements of the Company for 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 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 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' 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 specified under section143(10) of the Act to the extent applicable to an audit of internal financial controlsboth issued by the ICAI. Those Standards and the Guidance Note require that we comply withethical requirements and plan and perform the audit to obtain reasonable assurance aboutwhether adequate internal financial controls over financial reporting was established andmaintained and if such controls operated effectively in all material respects. Our auditinvolves performing procedures to obtain audit evidence about the adequacy of the internalfinancial controls system over financial reporting and their operating effectiveness.

Our audit of internal financial controls over financial reporting included obtaining anunderstanding of internal financial controls over financial reporting assessing the riskthat a material weakness exists and testing and evaluating the design and operatingeffectiveness of internal control based on the assessed risk. The procedures selecteddepend on the auditor's judgement including the assessment of the risks of materialmisstatement of the financial statements whether due to fraud or error. We believe thatthe audit evidence we have obtained is sufficient and appropriate to provide a basis forour audit opinion on the Company's internal financial controls system over financialreporting.

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 financial statements for external purposes in accordance with generallyaccepted accounting principles. A company's internal financial control over financialreporting includes those policies and procedures that (1) pertain to the maintenance ofrecords that in reasonable detail accurately and fairly reflect the transactions anddispositions of the assets of the company;(2) provide reasonable assurance thattransactions are recorded as necessary to permit preparation of financial statements inaccordance with generally accepted accounting principles and that receipts andexpenditures of the company are being made only in accordance with authorisations ofmanagement and directors of the company; and (3) provide reasonable assurance regardingprevention or timely detection of unauthorised acquisition use or disposition of thecompany's assets that could have a material effect on the 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 March 31 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 (ICAI).

For N.R.DORAISWAMI & CO
Chartered Accountants
Firm Registration No. 000771S
SUGUNA RAVICHANDRAN
Coimbatore Partner
30.04.2019 Membership No. 207893