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NRB Industrial Bearings Ltd.

BSE: 535458 Sector: Engineering
NSE: NIBL ISIN Code: INE047O01014
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VOLUME 1106
52-Week high 27.00
52-Week low 4.35
P/E
Mkt Cap.(Rs cr) 48
Buy Price 19.80
Buy Qty 54.00
Sell Price 20.40
Sell Qty 154.00
OPEN 20.00
CLOSE 20.15
VOLUME 1106
52-Week high 27.00
52-Week low 4.35
P/E
Mkt Cap.(Rs cr) 48
Buy Price 19.80
Buy Qty 54.00
Sell Price 20.40
Sell Qty 154.00

NRB Industrial Bearings Ltd. (NIBL) - Auditors Report

Company auditors report

To The Members of NRB Industrial Bearings Limited

Report on the Audit of Standalone Financial Statements

Opinion

We have audited the accompanying standalone financial statements of NRB INDUSTRIALBEARINGS LIMITED ("the Company") which comprise the Balance Sheet as at 31March 2020 and the Statement of Profit and Loss (including Other Comprehensive Income)the Statement of Cash Flows and the Statement of Changes in Equity for the year thenended and a summary of significant accounting policies and other explanatory information.

In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid standalone financial statements give the information requiredby the Companies Act 2013 ("the Act") in the manner so required and give 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 31 March 2020 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 financial statements in accordance with theStandards 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 Financial Statements section of our report.We are independent of the Company in accordance with the Code of Ethics issued by theInstitute of Chartered Accountants of India (ICAI) together with the ethical requirementsthat are relevant to our audit of the standalone financial statements under the provisionsof the Act and the Rules made thereunder and we have fulfilled our other ethicalresponsibilities in accordance with these requirements and the ICAI's Code of Ethics. Webelieve that the audit evidence obtained by us is sufficient and appropriate to provide abasis for our audit opinion on the standalone financial statements.

Key Audit Matters

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

Sr. No. Key Audit Matter Auditor's Response
1 Inventory - Provision for slow and non-moving inventory of finished goods. 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 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. 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;
The Company has certain non-moving finished goods inventory as at 31 March 2020 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-moving items 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. 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 31 December 2019 and on a test check basis verified the samples of provisions made with basis assumptions approval and supporting documents used by the management.
Refer to Note 2(f) and 11 of the standalone financial statements for the above matter.
2 Inventories - Existence
The Company's management conducts physical verification of inventories during the year at reasonable intervals (quarterly intervals). However on account of the COVID-19 related lockdown restrictions management was unable to perform year end physical verification of inventories. Management has carried out other procedures to validate the existence of its inventory as at the year end such as carrying out consumption analysis and stock movement analysis performing roll-forward procedures from the interim physical verification date to determine the quantities of the inventory at the balance sheet date. We have performed the following alternate audit procedures to audit the existence of inventories as at the year-end since we were not able to observe the physical stock verification:
• Understood the process and tested the management's internal controls to establish the existence of inventory in relation to the process of periodic physical verification carried out by the management the scope and coverage of the periodic verification programme the results of such verification including analysis of discrepancies if any;
(Refer note 4(b) to the standalone financial statements) • We have attended the physical verification conducted for the quarter ended 31 December 2019. Obtained the roll forward procedures performed by the management from the interim physical verification date to arrive at the quantities as at the balance sheet date.
• Tested the analytical reviews performed by the Company such as consumption analysis and stock movement analysis for the year in respect of key items of raw material and finished goods at factory.

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

The Company's Board of Directors is responsible for the other information. The otherinformation comprises the information included in the Director's report includingannexures to the Director's Report Management's Discussion and Analysis Report andCorporate Governance Report but does not include the consolidated financial statementsstandalone financial statements and our auditor's report thereon.

• Our opinion on the standalone financial statements does not cover the otherinformation and we do not express any form of assurance conclusion thereon.

• In connection with our audit of the standalone financial statements ourresponsibility is to read the other information and 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 Standalone 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 standalone financial statementsthat give a true and fair view of the financial position financial performance includingother comprehensive income cash flows and changes in equity of the Company in accordancewith the Ind AS and 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 standalone financialstatement that give a true and fair view and are free from material misstatement whetherdue to fraud or error.

In preparing the standalone financial statements management is responsible forassessing the Company's ability to continue as a going concern disclosing as applicablematters related to going concern and using the going concern basis of accounting unlessmanagement either intends to liquidate the Company or to cease operations or has norealistic alternative 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 Standalone Financial Statements

Our objectives are to obtain reasonable assurance about whether the standalonefinancial statements as a whole are free from material misstatement whether due to fraudor error and to issue an auditor's report that includes our opinion. Reasonable assuranceis a high level of assurance but is not a guarantee that an audit conducted in accordancewith SAs will always detect a material misstatement when it exists. Misstatements canarise from fraud or error and are considered material if individually or in theaggregate they could reasonably be expected to influence the economic decisions of userstaken on the basis of these standalone financial statements.

As part of an audit in accordance with SAs we exercise professional judgment andmaintain professional skepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the standalonefinancial statements whether due to fraud or error design and perform audit proceduresresponsive to those risks and obtain audit evidence that is sufficient and appropriate toprovide a basis for our opinion. The risk of not detecting a material misstatementresulting from fraud is higher than for one resulting from error as fraud may involvecollusion forgery intentional omissions misrepresentations or the override of internalcontrol.

• 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 standalonefinancial statements including the disclosures and whether the standalone financialstatements represent the underlying transactions and events in a manner that achieves fairpresentation.

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

We communicate with those charged with governance regarding among other matters theplanned scope and timing of the audit and significant audit findings including anysignificant deficiencies in internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have compliedwith relevant ethical requirements regarding independence and to communicate with themall relationships and other matters that may reasonably be thought to bear on ourindependence and where applicable related safeguards.

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

Report on Other Legal and Regulatory Requirements

1. As required by Section 143(3) of the Act based on our audit we report to theextent applicable 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 theCompanyso far as it appears from our examination of those books.

c) The Balance Sheet the Statement of Profit and Loss including Other ComprehensiveIncome the Statement of Cash Flows 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 financial statements comply with the Ind ASspecified under Section 133 of the Act.

e) On the basis of the written representations received from the directors as on 31March 2020 taken on record by the Board of Directors none of the directorsis disqualifiedas on 31 March 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 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 standalone financial statements - Refer Note 33 to the standalonefinancial 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
(Partner)
(Membership No. 102637)
(UDIN: 20102637AAAABN5489)
Place: Mumbai
Date : 16 June 2020

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 31 March 2020)

Report on the Internal Financial Controls Over Financial Reporting under Clause (i) ofSub-section 3 ofSection 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 31March 2020 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.

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 "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 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 judgement including the assessment of the risks ofmaterial misstatement 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 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 to the best of our information and according to the explanations givento us referred to in the Other Matters paragraph below the Company has in all materialrespects an adequate internal financial controls system over financial reporting and suchinternal financial controls over financial reporting were operating effectively as at 31March 2020 based on the criteria for internal financial control over financial reportingestablished by the respective 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.

For Deloitte Haskins and Sells
Chartered Accountants
(Firm's Registration No. 117365W)
Kedar Raje
(Partner)
(Membership No. 102637)
(UDIN: 20102637AAAABN5489)
Place: Mumbai
Date : 16 June 2020

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 31 March 2020)

(i)(a) The Company has maintained proper records showing full particulars includingquantitative details and situationof 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 previous period.

(c) According to the information and explanations given to us and the records examinedby us and based on the examination of the registered title deed provided to us we reportthat the title deed of the flat is held in the name of the company as at the balance sheetdate.

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 made investments or provided guarantees and hencereporting under clause (iv) of the Order is not applicable.

(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 explantions given to us in respect of statutorydues:

(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 31 March 2020 for a period of more than six months fromthe date they became payable.

(c) Details of dues of Service Tax which have not been deposited as on 31 March 2020 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 Commissioner Appeals December 2015 to June 2017 9.38 9.38

There are no dues of Income-tax Goods and Service Tax Excise Duty and Customs Duty ason 31 March 2020 on account of disputes.

(viii) In our opinion and according to the information and explanations given to usthe 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 employeeshas 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
(Partner)
(Membership No. 102637)
(UDIN: 20102637AAAABN5489)
Place: Mumbai
Date : 16 June 2020