To The Members of NRB Industrial Bearings Limited
Report on the Ind AS Financial Statements
We have audited the accompanying standalone Ind AS financial statements of NRBIndustrial Bearings Limited ("the Company") which comprise the BalanceSheet as at 31st March 2019 and the Statement of Profit and Loss (including OtherComprehensive Income) the Cash Flow Statement and the Statement of Changes in Equity forthe year then ended and 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 standalone Ind AS financial statements give the informationrequired by the Companies Act 2013 ("the Act") in the manner so required andgive a true and fair view in conformity with the Indian Accounting Standards prescribedunder section 133 of the Act read with the Companies (Indian Accounting Standards) Rules2015 as amended ("Ind AS") and other accounting principles generally acceptedin India of the state of affairs of the Company as at 31 March 2019 and its loss totalcomprehensive loss its cash flows and the changes in equity for the year ended on thatdate.
Basis for Opinion
We conducted our audit of the standalone Ind AS financial statements in accordance withthe Standards on Auditing specified under section 143(10) of the Act (SAs). Ourresponsibilities under those Standards are further described in the Auditor'sResponsibility for the Audit of the standalone Ind AS Financial Statements section of ourreport. We are independent of the Company in accordance with the Code of Ethics issued bythe Institute of Chartered Accountants of India (ICAI) together with the ethicalrequirements that are relevant to our audit of the standalone Ind AS financial statementsunder the provisions of the Act and the Rules made thereunder and we have fulfilled ourother ethical responsibilities in accordance with these requirements and the ICAI's Codeof Ethics. We believe that the audit evidence obtained by us is sufficient and appropriateto provide a basis for our audit opinion on the standalone 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 Ind AS financial statements of the current period. Thesematters were addressed in the context of our audit of the Ind AS financial statements as awhole and in forming our opinion thereon and we do not provide a separate opinion onthese matters. We have determined the matter described below to be the key audit matter tobe communicated in our report.
|Sr. No. ||Key Audit Matter ||Auditor's Response |
|1 ||Inventory - Provision for slow and non-moving inventory of finished goods. The Company is in the business of manufacturing of industrial bearings. The inventory of the company includes Raw Materials Work-in- Progress and Finished goods are stated at lower of cost and net realisable value. Determination of slow moving and non-moving inventory involves significant management judgment and estimate. ||1. Review of accounting policies established by the Company with reference to the requirements of Ind AS 2 the process followed by the management control environment and control procedures in place. We have ensured that the procedures were appropriately structured to obtain all necessary information for accounting and disclosures. |
| ||The Company has certain non-moving finished goods inventory as at March 31 2019 lying at factory. This inventory is physically verified quarterly by the Company. Management applies judgment in determining the appropriate provisions for such slow damaged & non-moving inventory based upon its detailed analysis of old inventory net realizable value quarterly movement of such inventory its physical condition and future use. Accordingly determining slow damaged and non-movingitems of such inventory including assessment of their physical condition and consequent amount of provision required for such inventory requires the Company to make significant judgment and estimates about their recoverable value and future use. ||2. We have evaluated the design and tested the implementation of internal controls on the judgements exercised for provisions made and underlying data assumption used and record maintained; |
| ||Refer to Note 2(f) and 11 of the standalone financial statements for the above matter. ||3. We have tested the operating effectiveness of internal controls relating to provisions made (i.e. underlying data and related information used in recording of the provision) in accordance with the Company's policies and requirement of Ind AS 2. |
| || ||4. We have observed physical verification of inventory conducted by the Company as at March 31 2019 and on a test check basisverified the samples of provisions made with basis assumptions approval and supporting documents used by the management. |
Information Other than the Financial Statements and Auditor's Report Thereon
The Company's Board of Directors is responsible for the other information. Theother information comprises the information included in the Director's report but doesnot include the financial statements and our auditor's report thereon.
Our opinion on the standalone Ind AS financial statements does not cover theother information and we do not express any form of assurance conclusion thereon.
In connection with our audit of the standalone Ind AS financial statements ourresponsibility is to read the other informationand in doing so consider whether theother information is materially inconsistent with the standalone financial statements orour knowledge obtained during the course of our audit or otherwise appears to bematerially 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.
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 cash flows and changes in equityof the Company in accordancewith the Ind ASand other accounting principles generally accepted in India. Thisresponsibility also includes maintenance of adequate accounting records in accordance withthe provisions of the Act for safeguarding the assets of the Company and for preventingand detecting frauds and other irregularities; selection and application of appropriateaccounting policies; making judgments and estimates that are reasonable and prudent; anddesign implementation 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 statementthat give a true and fair view and are free from material misstatement whether due tofraud or error.
In preparing the Ind AS financial statements management is responsible for assessingthe Company'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.
Those Board of Directors are also responsible for overseeing the Company's financialreporting process.
Auditor's Responsibility for the Audit of the Ind AS Financial Statements
Our objectives are to obtain reasonable assurance about whether the standalone Ind ASfinancial 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 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 control 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 standalone 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 standalone IndAS financial statements including the disclosures and whether the standalone Ind ASfinancial statements represent the underlying transactions and events in a manner thatachieves fair presentation.
Materiality is the magnitude of misstatements in the standalone Ind AS financialstatements that individually or in aggregate makes it probable that the economicdecisions of a reasonably knowledgeable user of the standalone Ind AS financial statementsmay be influenced. We consider quantitative materiality and qualitative factors in (i)planning the scope of our audit work and in evaluating the results of our work; and (ii)to evaluate the effect of any identified misstatements in the standalone Ind AS financialstatements.
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 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 the Cash Flow Statement and Statement of Changes in Equity dealt with by thisReport are in agreement with the relevant books of account.
d) In our opinion the aforesaid standalone Ind AS financial statements comply with theInd AS specified under Section 133 of the Act.
e) On the basis of the written representations received from the directors as on 31stMarch 2019 taken on record by the Board of Directors none of the directors isdisqualified as on 31st March 2019 from being appointed as a director in terms of Section164(2) of the Act.
f) With respect to the adequacy of the internal financial controls over financialreporting of the Company and the operating effectiveness of such controls refer to ourseparate Report in "Annexure A". Our report expresses an unmodified opinion onthe adequacy and operating effectiveness of the Company's internal financial controls overfinancial reporting.
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 financial statements- Refer Note 33 to the financial statements.
ii. The Company did not have any long-term contracts including derivative contracts forwhich there were any material foreseeable losses.
iii. There were no amounts which were required to be transferred to the InvestorEducation and Protection Fund by the Company.
2. 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 in"Annexure B" a statement on the matters specified in paragraphs 3 and 4 of theOrder.
| ||For Deloitte Haskins and Sells |
| ||Chartered Accountants |
| ||(Firm's Registration No. 117365W) |
| ||Kedar Raje |
|Place: Mumbai ||(Partner) |
|Date : 30 May 2018 ||(Membership No. 102637) |
ANNEXURE A TO THE INDEPENDENT AUDITOR'S REPORT
(Referred to in paragraph 1 (f) under 'Report on Other Legal and RegulatoryRequirements' of our report of even date to the members of NRB Industrial Bearings Limitedon the standalone financial statements for the year ended 31st March 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 NRBIndustrial Bearings Limited ("the Company") as of 31st March 2019 in conjunctionwith our audit of the standalone financial statements of the Company for the year ended onthat date.
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. These responsibilities includethe design implementation and maintenance of adequate internal financial controls thatwere operating effectively for ensuring the orderly and efficient conduct of its businessincluding adherence to Company's policies the safeguarding of its assets the preventionand detection of frauds and errors the accuracy and completeness of the accountingrecords and the timely preparation of reliable financial information as required underthe Companies Act 2013.
Our responsibility is to express an opinion on the Company's internal financialcontrols over financial reporting based on our audit. We conducted our audit in accordancewith the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting(the "GuidanceNote") issued by the Institute of Chartered Accountants of Indiaand the Standards on Auditing prescribed under Section 143(10) of the Companies Act 2013to the extent applicable to an audit of internal financial controls. Those Standards andthe Guidance Note require that we comply with ethical requirements and plan and performthe audit to obtain reasonable assurance about whether adequate internal financialcontrols over financial reporting was established and maintained and if such controlsoperated effectively in all material respects.
Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal financial controls system over financial reporting and their operatingeffectiveness. Our audit of internal financial controls over
financial reporting included obtaining an understanding of internal financial controlsover financial reporting assessing the risk that a material weakness exists and testingand evaluating the design and operating effectiveness of internal control based on theassessed risk. The procedures selected depend on the auditor's judgement including theassessment of the risks of material misstatement of the financial statements whether dueto 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 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.
In our opinion to the best of our information and according to the explanations givento us the Company has maintained in all material respects adequate internal financialcontrols over financial reporting and such internal financial controls over financialreporting were operating effectively as at 31st
March 2019 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.
| ||For Deloitte Haskins and Sells |
| ||Chartered Accountants |
| ||(Firm's Registration No. 117365W) |
| || |
| ||Kedar Raje |
| ||(Partner) |
| ||(Membership No. 102637) |
|Place: Mumbai || |
|Date: 30 May 2019 || |
ANNEXURE B TO THE INDEPENDENT AUDITOR'S REPORT
(Referred to in paragraph 2 under 'Report on Other Legal and Regulatory Requirements'section of our report of even date to the members of NRB Industrial Bearings Limited onthe standalone financial statements for the year ended March 31 2019)
(i) (a) The Company has maintained proper records showing full particulars includingquantitative details and situation of property plant and equipment.
(b) The Company has a program of verification of property plant and equipment to coverall the items once over a period of three years which in our opinion is reasonablehaving regards to the size of the Company and the nature of its assets. In accordance withthe programme all the items of property plant and equipment were physically verifiedduring the year. 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 and based on the examination of the registered tittle deed provided to us we reportthat the tittle deed of the fiat is held in the name of the company as at the balancesheet date.
In respect of immovable property of building constructed on leasehold land disclosedas Property Plant and Equipment in the financial statements the lease agreement has beenpledged as security for loans based on the confirmation directly received by us fromLenders the lease agreement is in the name of the Company where the company is lessee inthe agreement.
(ii) As explained to us the inventories were physically verified during the year bythe Management at reasonable intervals and no material discrepancies were noticed onphysical verification.
(iii) The Company has not granted any loans secured or unsecured to companies orother parties covered in the register maintained under section 189 of the Companies Act2013.
(iv) In our opinion and according to the information and explanations given to us theCompany has not granted any loans or provided guarantees. In respect of investments madethe Company has complied with the provisions of section 186 of the Companies Act 2013.
(v) According to the information and explanations given to us the Company has notaccepted any deposit during the year.
(vi) The maintenance of cost records has been specified by the Central Government undersection 148(1) of the Companies Act 2013. We have broadly reviewed the cost recordsmaintained by the Company pursuant to the Companies (Cost Records and Audit) Rules 2014as amended prescribed by the Central Government under sub-section (1) of Section 148 ofthe Companies Act 2013 and are of the opinion that prima facie the prescribed costrecords have been made and maintained. We have however not made a detailed examinationof the cost records with a view to determine whether they are accurate or complete.
(vii) According to the information and explanations given to us in respect ofstatutory dues:
(a) The Company has generally been regular in depositing other undisputed statutorydues including Provident Fund Employee's State Insurance Income Tax Goods and ServicesTax Custom duty cess and other material statutory dues applicable to it to theappropriate authorities.
(b) There were no undisputed amounts payable in respect of Provident Fund Income TaxSales Tax Service tax Goods and Services Tax Value Added Tax cess and other materialstatutory dues in arrears as at March 31 2019 for a period of more than six months fromthe date they became payable.
(c) Details of dues of Service Taxwhich have not been deposited as on March 31 2019 onaccount of disputes:
|Statute ||Nature of Dues ||Forum where Dispute is pending ||Period to which the amount relates ||Amount involved (Rs. in lakhs) ||Amount unpaid (Rs. in lakhs) |
|The Finance Act 1994 ||Service Tax ||Customs Excise and Service Tax Appellate Tribunal ||October 2012 to March 2015 ||9.42 ||7.92* |
|April 2012 to November 2015. ||20.76 ||18.69** |
|Commissioner Appeals ||December 2015 to June 2017 ||9.38 ||9.38 |
* Net of Rs. 1.5 lakhs paid under protest
** Net of Rs. 2.07 lakhs paid under protest
There are no dues of Income-tax Goods and Service Tax Excise Duty and Customs Duty ason 31 March 2019 on account of disputes.
(viii) (viii) In our opinion and according to the information and explanations given tous the Company has not defaulted in the repayment of loans or borrowings to financialinstitution and banks. The Company has not issued any debentures.
(ix) The Company has not raised moneys by way of initial public offer or further publicoffer (including debt instruments).Further the term loans have been applied by theCompany during the year for the purposes for which they were raised.
(x) To the best of our knowledge and according to the information and explanationsgiven to us no fraud by the Company and no material fraud on the Company by its officersor employees has been noticed or reported during the year.
(xi) In our opinion and according to the information and explanations given to us theCompany has paid managerial remuneration for the year in accordance with the requisiteapprovals mandated by the provisions of section 197 read with Schedule V to the CompaniesAct 2013.
(xii) The Company is not a Nidhi Company and hence reporting under clause (xii) of theOrder is not applicable.
(xiii) In our opinion and according to the information and explanations given to us theCompany is in compliance with Section 188 and 177 of the Companies Act 2013 whereapplicable for all transactions with the related parties and the details of related partytransactions have been disclosed in the financial statements etc. as required by theapplicable accounting standards.
(xiv) According to the information and explanations given to us the Company has madeprivate placement of shares during the year under review.
In respect of the above issue we further report that:
a) the requirement of Section 42 of the Companies Act 2013 as applicable have beencomplied with; and
b) the amounts raised have been applied by the Company during the year for the purposesfor which the funds were raised.
(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 with him and hence provisions of section 192 of theCompanies Act 2013 are not applicable.
(xvi) The Company is not required to be registered under section 45-IA of the ReserveBank of India Act 1934.
| ||For Deloitte Haskins and Sells |
| ||Chartered Accountants |
| ||(Firm's Registration No. 117365W) |
| ||Kedar Raje |
|Place: Mumbai ||(Partner) |
|Date: 30 May 2019 ||(Membership No. 102637) |