NAVCOM INDUSTRIES LIMITED. Report on the Financial Statements
We have audited the accompanying financial statements of NAVCOM INDUSTRIES LIMITED('the company') which comprise the balance sheet as at 317r March 2016 thestatement of profit & loss and the cash flow Statement for the year then ended and asummary of significant accounting policies and other explanatory information.
Management's Responsibility for the Financial Statements
The Management and Board of Directors of the Company are responsible for the matterstated in Section 134(5) of the Companies Act 2013 ('the act') with respect to thepreparation of these financial statements that give a true and fair view of the financialposition financial performance and cash flows of the company in accordance with theaccounting principles generally accepted in India including Accounting Standardsspecified under Section 133 of the Act read with rule 7 of Companies (Accounts) Rules2014. This responsibility 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 operatingeffectively for ensuring the accuracy and completeness of the accounting recordsrelevant to the preparation and presentation of the financial statements that give a trueand fair view and are free from material misstatement whether due to fraud or error.
Our responsibility is to express an opinion on these financial statements based on ouraudit. We have taken into account the provisions of the Act the accounting standards andmatters which are required to be included in the audit report under the provisions of theAct and the Rules made thereunder. We conducted our audit in accordance with the Standardson Auditing specified under Section 143(10) of the Act. 1 nose Standards require that wecomply with ethical requirements and plan and perform the audit to obtain reasonableassurance about whether the financial statements are free from material misstatement. 1
We believe that the audit evidence we have obtained is sufficient and appropriate forour audit opinion except in some cases confirmation cf balances ot Debtors Creditorsbanks ana other parties under Loans and Advances
In our opinion and to the best of our information and according to the explanationsgiven to us the financial statements give the information required by the Act m themanner so required and give a true and fair view in conformity with the accountingprinciples generally accepted in India:
(i) in the case of the balance sheet of the State of Affairs of the Company as at 31stMarch 2016;
(ii) in the case of statement of profit & loss of the LOSS for the year ended onthat date; and
(iii) in the case of cash flow statement of the cash flows for the year ended on that;date.
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 give in the 'Annexure A' statement on the matters specified in paragraphs 3and 4 of the said Order.
2 As required by section 143(3) of the Act we report that:
a) We have obtained a!! the information and explanations which to the best of ourknowledge and belief were necessary for the purpose of our audit; except in some casesconfirmation of balances of accounts and parties included in Current Assets loans andadvances and current liabilities have not been obtained.
b) Subject to our remarks in Para (a) above in our opinion proper books of account asrequired by law have been kept by the company so far as appears from our examination ofthose books;
c) Subject to our remarks in Para (a) above The Balance Sheet Statement of Profit andLoss and the Cash Flow Statement dealt with by this Report are in agreement with the booksof account;
f) with respect to the adequacy of the internal financial controls over financialreporting ot the Company and the operating effectiveness of such controls refer to ourseparate report m ''Annexure 3"; and
g) ln our opinion and to the best of our information and according to the explanationsgiven to us we report as under with respecc to other matters to be included in theAuditor's Report in accordance wstn Rule il of the Companies (Audit and Auditors) Rules2014:
i The Company does not have any pending litigations which impact its financialposition
ii. The Company did not have any long-term contracts including derivative contracts; assuch the question of commenting on any material foreseeable losses thereon does not arise
Iii. There has not been an occasion in case of the Company during the year under reportto transfer any sums to the investor Education and Protection Fund The question of delayin transferring such sums does not arise.
For Sanjay N Pawar & Associates Chartered Accountants
CA^Sanjay N Pawar
Firm Reg. No. 122769W
Date; May 30 2016
Annexure A to the Auditor's Report
The Annexure referred to in cur report to the members of NAVCOM INDUSTRIES LIMITED("the Company") for the year endeo 31st Marcn 2016.
On the basis of such checks as we considered appropriate to Che information andexplanation given to us during the course of our audit we report that:
(i; (a) The company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets.
(b) As explained to us the management has physically verified the fixed assets atreasonable intervals. No material discrepancies were noticed on such physicalverification.
(u) (a) According to information and explanations given to us the Management
has physically verified the inventories during the year. In our opinion having regardto the nature of business and location of stocks the frequency of verification isreasonable
(b) In our opinion and according to information and explanations given to us theprocedures of physical verification of inventory followed by the management are reasonableand adequate in relation to the size of the company and nature of its business.
(c) In our opinion and according to .information and explanations given to us thecompany is maintaining proper records of inventory. The discrepancies noticed onverification between the physical stocks and the book record were not material and havebeen properly dealt in the books of account.
(ili) The company has not granted unsecured loans to companies firms or other partiescovered in the register maintained under section 1S9 of the Companies Act
(iv) In our opinion and according to the information and explanations given to usthere is an adequate internal control system commensurate with the size of company and thenature of its business with regard to purchases of inventory and fixed assets and the saleof goods and services. Further on the basis of our examination of the books and recordsof the Company and according to the information and explanation given to us no majorweakness has not been t noticed or reported. i
(v) The Company has not accepted any deposits from the public covered under Section 73to 76 of the Companies Act 2013
(Vi) As informed to us the Central Government has not prescribed maintenance of tostrecords unde' sub-section (1 ) of Section '48 of the Act.
(b) Acco'dmc to the info Tiat:on and explanation giver; a; us and based onthe mcords of the company examined oy us there are no dues of Income Tax Wealth TaxService lax Sales lax Customs Duty and Excise Duty which have hot been deposited onaccount of any disputes.
(c) There has not been an occasion m case of the Company during the year under reportto transfer any sums to the Investor Education and Protection Fund. The question ofreporting delay in transferring such sums does not arise.
(viii) Accumulated losses of the Company at the end of the financial year are more thanfifty per cent of its net worth. The company has incurred cash loss during the financialyear and .there was a cash loss in the financial year immediately preceding the financialyear.
(ix) In our opinion and according to the information and explanations given to us thecompany has not defaulted in repayment of dues to banks and financial institutions duringthe year The company has not issued any debentures during the year.
(x) In our opinion and according to information and explanations given to us the termsand conditions of guarantees given by the company for loans taken by others from banks orfinancial institutions are not prima facie prejudicial to the interests of the company.
(xi) In our opinion and according to information and explanations given to us the termloans taken by the company were applied for the purpose for which they were obtained.
(xii) According to the information and explanations given to us no fraud on or by thecompany has been noticed or reported during the course of our audit.
For Sanjay N Pawar & Associates Chartered Accountants
CA.'Sanay N Pawar Partner
Firm Reg. No 122769W
Datcv May 30 2016
Annexure - B to the Auditors' Report
Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section143 of the Companies Act 2013 ("the Act")
We have audited the internal financial controls over financial reporting of NAVCOMINDUSTRIES LIMITED ("the Company") as of 31 March 2016 in conjunction with ouraudit of the standalone financial statements of the Company for the yea- endec on thatdate.
Management's Responsibility for 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 ('ICAJ'). These responsibilitiesinclude the design implementation and maintenance of adequate internal financial controlsthat were operating effectively for ensuring the orderly and efficient conduct of itsbusiness including adherence to company's policies the safeguarding of its assets theprevention and detection of frauds and errors the accuracy and completeness of theaccounting records and the timely preparation of reliable financial information asrequired under the 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 materia! 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 financial statements whether due to fraud or error.
Meaning of Internal Financial Controls over Financial Reporting
A company's infernal financial control over finance. reporting is a process designed toprovide 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 arid procedures that (l) 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 Alsoprojections of any evaluation of the internal financial controls over financial reportingto future periods are subject to the risk that the interna! financial control overfinancial reporting may become inadequate because of changes in conditions or that thedegree of compliance with the policies or procedures may deteriorate.
According to the information and explanations given to us and based on our audit thefollowing material weaknesses has beer identified as at March 31 2016:
a) The Company did not have an appropriate internal control system for customeracceptance credit evaluation and establishing customer credit limits for sales whichcould potentially result in the Company recognising revenue without establishingreasonable certainty of ultimate collection
b) The Company's internal control system for inventory with regard to receipts issue for delivery and physical verification were not operating effectively Further theinternal control system for identification and allocation of overheads to inventory wasalso not operating effectively. These could potentially result in material misstatementsin the Company's trade payables consumption Inventory and expense account balances.
In our opinion except for the ejects/possible effects of the material weaknessesdescribed above on the achievement of the objective- of the control criteria the Companylias maintained i i all material respects adec.uate internal financial controls overfinancial reporting and such internal financial control over financial reporting woreoperating effectively as of March 3l 2016 based on the internal control over financialreporting criteria established by the Company considering the essential components ofinternal control stated in the Guidance Note on Audit of Internal Financial Controls OverFinancial Reporting issued by the Institute of Chartered Accountants of India.
We have considered the material weaknesses identified and reported above m determiningthe nature timing and extent of audit tests applied in our audit of the March 31 2016standalone financial statements of the Company and these material weaknesses does notaffect our opinion on the standalone financial statements of the Company.
For Sanjay N Pawar & Associates Chartered Accountants
LA. banjay n pawar
M. No. 112470
Firm Reg. No. 122769W
Date: May 30 2016