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LGB Forge Ltd.

BSE: 533007 Sector: Engineering
NSE: LGBFORGE ISIN Code: INE201J01017
BSE 00:00 | 17 Jun 5.82 0.27
(4.86%)
OPEN

5.82

HIGH

5.82

LOW

5.75

NSE 00:00 | 17 Jun 5.75 0.25
(4.55%)
OPEN

5.75

HIGH

5.75

LOW

5.75

OPEN 5.82
PREVIOUS CLOSE 5.55
VOLUME 693504
52-Week high 5.82
52-Week low 2.17
P/E 145.50
Mkt Cap.(Rs cr) 139
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 5.82
CLOSE 5.55
VOLUME 693504
52-Week high 5.82
52-Week low 2.17
P/E 145.50
Mkt Cap.(Rs cr) 139
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

LGB Forge Ltd. (LGBFORGE) - Auditors Report

Company auditors report

To the Members of LGB Forge Limited

Report on the Audit of the Ind AS Financial Statements: Opinion:

We have audited the accompanying Ind AS financial statements of LGB FORGE LIMITED(“the Company”) which comprise the Balance Sheet as at March 31 2020 theStatement of Profit and Loss (including Other Comprehensive Income) the Statement ofChanges in Equity and the Statement of Cash Flows for the year then ended and notes tothe Ind AS financial statements including a summary of significant accounting policiesand other explanatory 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 Companies Act 2013 (the “Act”) in the manner so required and give a trueand fair view in conformity with the Indian Accounting Standards prescribed under section133 of the Act read with the Companies (Indian Accounting Standards) Rules 2015 asamended (“Ind AS”) and other accounting principles generally accepted in Indiaof the state of affairs of the company as at March 31 2020 the Loss and totalcomprehensive income changes in equity and its cash flows for the year ended on thatdate.

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 Act. Our responsibilities underthose standards are further described in the Auditor's Responsibilities for the Audit ofthe Ind AS Financial Statements section of our report. We are Independent of the companyin accordance with the Code of Ethics issued by the Institute of Chartered Accountants ofIndia (ICAI) together with the ethical requirements that are relevant to our audit of thefinancial statements under the provisions of the Act and the Rules thereunder and we havefulfilled our other ethical responsibilities in accordance with these requirements andICAI'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 Ind AS financial statements as a wholeand in forming our opinion thereon and we do not provide a separate opinion on thesematters. We have determined the matters described below to be the Key Audit Matters to becommunicated in our report.

Key Audit Matter Auditor's Response
1. Adoption of IND AS 116 - Leases Principal Audit Procedures:
The Company has adopted IND AS 116 from the current year. The Application and transition to this accounting standard is complex and is an area of focus in our audit. We have performed the following audit procedures: a)We have reviewed the method of transition adopted and related adjustments in the financial statements.
As per IND AS 116 a right of use asset and lease liability were recognized in the balance sheet. Lease liability is initially recognized at the present value of future lease payment during the lease term. This standard requires usage of significant judgements and estimation in recognizing the leases. b)Reviewed various judgements and controls applied by the management in classifying the leases based on contractual agreements.
During the first year of transition the standard mandates detailed note on impact of transfer. Refer note 38 to the financial statements. c) We have verified the reconciliation prepared between short term or low value leases and leases where IND AS 116 was applied. d) Verified the recognition of right of use assets and lease liability including the estimates such as discount rates and lease term.
e)Assessed and verified the presentation and disclosures of leases as per IND AS 116 including the disclosure requirements of transition period.

Emphasis of Matter:

Without qualifying our report we draw attention to note 46 to the financialstatements where the extent of COVID 19 pandemic's impact on company's financialperformance depends on future developments which are highly uncertain and as such we areunable to quantify the financial impact.

Our opinion is not modified in respect of the above matter

Information other than the Ind AS Financial Statements and the Auditor's report thereon

The Company's Board of directors is responsible for preparation of other information.The other information comprises the information included in the management discussion andanalysis Board's Report including annexures to Board's Report Business ResponsibilityReport Corporate Governance Report and Shareholder's information but does not includethe 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 are required to report the fact. We havenothing to report in this regard

Management's Responsibility for the Ind AS Financial Statements:

The Company's Board of Directors is responsible for the matters stated in Section134(5) of the Act with respect to the preparation of these Ind AS financial statementsthat give a true and fair view of the financial position financial performance includingother comprehensive income changes in equity and cash flows of the Company in accordancewith the Ind

AS and other accounting principles generally accepted in India. This responsibilityalso includes maintenance of adequate accounting records in accordance with the provisionsof the Act for safeguarding the assets of the Company and for preventing and detectingfrauds and other irregularities; selection and application of appropriate accountingpolicies; making judgments and estimates that are reasonable and prudent; and designimplementation and maintenance of adequate internal financial controls that wereoperating effectively for ensuring the accuracy and completeness of the accountingrecords relevant to the preparation and presentation of the Ind AS Financial Statementsthat give a true and fair view and are free from material misstatement whether due tofraud or error.

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 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 a material uncertainty existswe are required to draw attention in our auditor's report to the related disclosures inthe Ind AS financial statements or if such disclosures are inadequate to modify ouropinion. Our conclusions are based on the audit evidence obtained up to the date of ourauditor's report. However future events or conditions may cause the company to cease tocontinue as a 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.

From the matters communicated with those charged with governance we determine thosematters that were of most significance in the audit of the standalone Ind AS financialstatements of the current period and are therefore the key audit matters. We describethese matters in our auditor's report unless law or regulation precludes public disclosureabout the matter or when in extremely rare circumstances we determine that a mattershould not be communicated in our report because the adverse consequences of doing sowould reasonably be expected to outweigh the public interest benefits of suchcommunication.

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 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 it 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 Statement of Cash Flows dealt with by thisReport are in agreement with the books of 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 the written representations received from the directors as on March31 2020 taken on record by the Board of Directors none of the directors is disqualifiedas on March 31 2020 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 refer to 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 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 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 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 Ind AS Financial Statements - Refer Note No.36 on Contingent Liability tothe 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
Place: Coimbatore Firm Registration No. : 000771S
Date :20.06.2020 (SUGUNA RAVICHANDRAN)
UDIN: 20207893AAAAJI1535 Partner
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 LGB ForgeLimited on the financial statements for the year ended 31-03-2020]

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) 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 2020 Net Block as on March 31 2020 Remarks
Land & Building Mysore 1 Freehold 80.26 78.29 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) (b) and (c) ofthe Order are not applicable to the Company.

iv. In our opinion and according to the information and explanation given to us theCompany has complied with the provisions of Section 185 and 186 of the Act in respect ofgrant of loans making investments and providing guarantees and securities as applicable.

v. In our opinion and according to the information and explanation given to ustheCompany has not accepted any deposits during the year within the provisions of section 73to 76 of the Act and the rules framed thereunder.

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 Goods and Service Tax Customs duty Cess and any other material statutory duesapplicable to it however there have been 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 Goods andService tax Customs duty Cess and any other material statutory dues applicable to itwere outstanding at the year end for a period of more than six months from the date theybecame payable.

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

Name of the Statute Nature of Due Amount Disputed (Rs.) Amount Unpaid (Rs.) Period to which the amount relates Forum where dispute is pending
Income Tax Act 1961 Demand raised u/s. 201(1) 1186252 276675 A.Y.2011-12 Commissioner of Income tax (Appeals) Chennai.
Income Tax Act 1961 Demand raised u/s. 201(1) 478244 478244 A.Y.2012-13 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. To the best of our knowledge and according to the information and explanations givento us we report that no material fraud by the Company or on the Company by its officersor employees has been noticed or reported during the year.

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. Accordingly paragraph 3(xii) of the Order is notapplicable.

xiii. According to the information and explanation given to us and based on ourexamination of the records of the Company the transactions with the related parties arein compliance with section 177 and 188 of the Act wherever applicable.

The details of transactions with the related parties have been disclosed in the Ind ASFinancial Statements as required by the applicable accounting standards.

xiv. The Company has not made any preferential allotment or private placement of sharesor fully or partly convertible debentures during the year under review. Thereforeparagraph 3(xiv) of the Order is not applicable to the company.

xv. In our opinion and according to the information and explanations given to usduring the year the Company has not entered into any non-cash transactions with itsDirectors or persons connected to its directors and hence paragraph 3(xv) of the Order isnot applicable to the Company.

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
Place: Coimbatore Firm Registration No. : 000771S
Date :20.06.2020

(SUGUNA RAVICHANDRAN)

UDIN: 20207893AAAAJI1535
Partner
Membership No. : 207893

ANNEXURE 2 TO THE INDEPENDEDNT 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 LGB ForgeLimited on the Financial Statements for the year ended 31-03-2020]

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 2020 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 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”).These responsibilities include the design implementation and maintenance of adequateinternal financial controls that were operating effectively for ensuring the orderly andefficient conduct of its business including adherence to the respective company'spolicies the safeguarding of its assets the prevention and detection of frauds anderrors the accuracy and completeness of the accounting records and the timelypreparation of reliable financial information as required under the Companies Act 2013.

Auditor's 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”) issued by the ICAI and the Standards on Auditingprescribed under section 143(10) of the Companies Act 2013 to the extent applicable toan audit of internal financial controls. Those Standards and the Guidance Note requirethat we comply with ethical requirements and plan and perform the audit to obtainreasonable assurance about whether adequate internal financial controls over financialreporting was established and maintained and if such controls operated effectively in allmaterial 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 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 judgment including the assessment of the risks of materialmisstatement of the financial statements whether due to fraud or error.

We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the 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 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 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 financial statements in accordance with generally accepted accountingprinciples and that receipts and expenditures of the company are being made only inaccordance with authorisations of management and directors of the company; and

3) provide reasonable assurance regarding prevention or timely detection ofunauthorised acquisition use or disposition of the company's assets that could have amaterial 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 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 March 31 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 ICAI.

For N.R.DORAISWAMI & CO.
Chartered Accountants
Place: Coimbatore Firm Registration No. : 000771S
Date :20.06.2020

(SUGUNA RAVICHANDRAN)

UDIN: 20207893AAAAJI1535
Partner
Membership No. : 207893