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Rane Engine Valve Ltd.

BSE: 532988 Sector: Auto
NSE: RANEENGINE ISIN Code: INE222J01013
BSE 00:00 | 24 Feb 203.10 -5.90
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NSE 00:00 | 24 Feb 208.40 -0.15
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OPEN 211.90
PREVIOUS CLOSE 209.00
VOLUME 22
52-Week high 642.80
52-Week low 194.55
P/E
Mkt Cap.(Rs cr) 136
Buy Price 203.00
Buy Qty 38.00
Sell Price 211.90
Sell Qty 98.00
OPEN 211.90
CLOSE 209.00
VOLUME 22
52-Week high 642.80
52-Week low 194.55
P/E
Mkt Cap.(Rs cr) 136
Buy Price 203.00
Buy Qty 38.00
Sell Price 211.90
Sell Qty 98.00

Rane Engine Valve Ltd. (RANEENGINE) - Auditors Report

Company auditors report

To

The Members

Rane Engine Valve Limited

Report on the Audit of the Standalone Financial Statements Opinion

We have audited the accompanying standalone financial statements of Rane Engine ValveLimited (‘the Company’) which comprise the Balance Sheet as at March 31 2019the Statement of Profit and Loss (including Other Comprehensive Income) the Cash FlowStatement and the Statement of Changes in Equity for the year then ended and a summary ofthe 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 the accounting principles generally accepted inIndia of the state of affairs of the Company as at March 31 2019 its losses and totalcomprehensive income changes in equity and its cash flows for the year ended on thatdate.

Basis for Opinion

We conducted our audit in accordance with the Standards on Auditing (SAs) specifiedunder section 143(10) of the Companies Act 2013. Our responsibilities under thoseStandards are further described in the Auditor’s Responsibilities for the Audit ofthe Financial Statements section of our report. We are independent of the Company inaccordance with the Code of Ethics issued by the Institute of Chartered Accountants ofIndia 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 and theCode of Ethics. We believe that the audit evidence we have obtained is sufficient andappropriate to provide a basis for our opinion.

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 matter described below to be thekey audit matter to be communicated in our report.

Information Other than the Standalone Financials Statements and Auditor’s Reportthereon (Other Information)

The Company’s Board of Directors is responsible for the other information. Theother information comprises the information included in the Management Discussion andAnalysis Board’s Report including Annexures to Board’s Report CorporateGovernance and Corporate Information but does not include the standalone financialstatements and our auditor’s report thereon.

Our opinion on the financial statements does not cover the other information and we donot express any form of assurance conclusion thereon.

In connection with our audit of the financial statements our responsibility is to readthe other Information and in doing so consider whether the other information ismaterially inconsistent with the financial statements or our knowledge obtained in theaudit 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 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 and cashflows of the Company in accordance with the accounting principles generally accepted inIndia including the accounting Standards specified under section 133 of the Act. Thisresponsibility also includes maintenance of adequate accounting records in accordance withthe provisions of the Act for safeguarding of 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 financial statement that givea true and fair view and are free from material misstatement whether due to fraud orerror.

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 financialreporting process.

Auditor’s Responsibilities for the Audit of the 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 ahigh level of assurance but is not a guarantee that an audit conducted in accordance withSAs will always detect a material misstatement when it exists. Misstatements can arisefrom fraud 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 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 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 control relevant to the audit in order todesign audit procedures that are appropriate in the circumstances. Under section 143(3)(i) of the Act we are also responsible for expressing our opinion on whether the Companyhas adequate internal financial controls system in place and the operating effectivenessof such controls.

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

• Conclude on the appropriateness of management’s use of the going concernbasis of accounting and based on the audit evidence obtained whether a materialuncertainty exists related to events or conditions that may cast significant doubt on theCompany’s ability to continue as a going concern. If we conclude that a materialuncertainty exists we are required to draw attention in our auditor’s report to therelated disclosures in the financial statements or if such disclosures are inadequate tomodify our opinion. Our conclusions are based on the audit evidence obtained up to thedate of our auditor’s report. However future events or conditions may cause theCompany to cease to continue as a going concern.

• Evaluate the overall presentation structure and content of the financialstatements including the disclosures and whether the financial statements represent theunderlying transactions and events in a manner that achieves fair presentation.

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 financial statements may be influenced. We considerquantitative materiality and qualitative factors in (i) planning the scope of our auditwork and in evaluating the results of our work; and (ii) to evaluate the effect of anyidentified misstatements in the 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 financial statements of thecurrent period and are therefore the key audit matters. We describe these matters in ourauditor’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 the Companies (Auditor’s Report) Order 2016 ("theOrder") issued by the Central Government of India in terms of sub-section (11) ofsection 143 of the Companies Act 2013 we give in "Annexure A" a statement onthe matters specified in paragraphs 3 and 4 of the Order to the extent applicable.

2. As required by Section 143(3) of the Act we report that:

(a) We have sought and obtained all the information and explanations which to the bestof our knowledge and belief were necessary for the purposes of our audit.

(b) In our opinion proper books of account as required by law have been kept by theCompany so far as it appears from our examination of those books

(c) The Balance Sheet the Statement of Profit and Loss including Other ComprehensiveIncome Statement of Changes in Equity and the Statement of Cash Flow 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 IndAS specified under Section 133 of the Act read with Rule 7 of the Companies (Accounts)Rules 2014.

(e) On the basis of the written representations received from the directors as on March31 2019 taken on record by the Board of Directors none of the directors is disqualifiedas on March 31 2019 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 B". Our report expresses an unmodified opinion onthe adequacy and operating effectiveness of the Company’s internal financial controlsover financial 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 we report thatin our opinion and to the best of our information and according to the explanations givento us no managerial remuneration has been paid or provided during the year. Sitting feespaid to the directors is within the limits prescribed under the Act.

(h) With respect to the other matters to be included in the Auditor’s Report inaccordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014 in our opinionand to the best of our information and according to the explanations given to us:

i. The Company has disclosed the impact of pending litigations on its financialposition in its financial statements – Refer Note 18 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 has been no delay in transferring amounts required to be transferred tothe Investor Education and Protection Fund by the Company.

For Varma & Varma
Chartered Accountants
FRN. 004532S
P R Prasanna Varma
Chennai Partner
May 21 2019 M.No. 025854

Annexure ‘A’

Referred to in Paragraph 1 under the heading report on "Other Legal and RegulatoryRequirements" of our Independent Audit Report of even date on the StandaloneFinancial Statements of Rane Engine Valve Limited for the Year Ended March 31 2019

(i) a. The Company is maintaining proper records showing full particularsincluding quantitative details and situation of fixed assets.

b. The Company has a program of verification to cover all the items of fixed assets ina phased manner which in our opinion is reasonable having regard to the size of theCompany and the nature of its assets. According to the information and explanations givento us no material discrepancies have been noticed on such verification.

c. According to the information and explanations given to us and based on theexamination of the records of the Company including confirmations received from banks inrespect of title deeds deposited with them wherever applicable and having regard to theScheme of Amalgamation approved by the Honourable High Court we report that the titledeeds of immovable properties are held in the name of the Company except in one casewherein the local authority has claimed the title of a property held by the Company and inrespect of which the Company has obtained a stay order from the Honourable High Court ofAndhra Pradesh.

(ii) We are informed that the physical verification of inventory has been conductedby the management at reasonable intervals and discrepancies noticed on such verificationhave been properly dealt with in the books of account.

(iii) The Company has not granted any loans secured or unsecured tocompanies/firms or other parties covered in the register maintained under section 189 ofthe Companies Act 2013 Accordingly reporting under clause 3 (iii) of the Order is notapplicable to the Company.

(iv) According to the information and explanations given to us and based on therecords of the Company examined by us the Company has not made any investments grantedany loans or given any security or guarantee for which the provisions of section 185 and186 of the Act are applicable.

(v) The Company has not accepted deposits during the year. Accordingly reportingunder clause 3 (v) of the Order is not applicable to the Company.

(vi) The Central Government has prescribed the maintenance of cost records underSection 148 (1) of the Act in respect of certain products manufactured by the Company. Wehave broadly reviewed the cost records maintained by the Company pursuant to the Companies(Cost Records and Audit) Rules 2014 as amended and are of the opinion that primafacie the prescribed cost records have been made and maintained. We have however notmade a detailed examination of the cost records with a view to determine whether they areaccurate or complete.

(vii) a. As per the information and explanations furnished to us and according toour examination of the records of the Company the Company has been regular in depositingthe undisputed statutory dues including provident fund employees state insurance incometax goods and service tax duty of customs cess and other material statutory dues asapplicable to the Company with the appropriate authorities during the year and noundisputed amounts in respect of material statutory dues were in arrears as at March 312019 for a period of more than six months from the date they became payable.

b. According to the information and explanations given to us and based on the recordsof the Company examined by us the particulars of dues of income tax sales tax servicetax duty of customs duty of excise and value added tax that have not been deposited onaccount of any dispute as at March 31 2019 are as follows:

Statute Nature of dues Amount (? in Cr) Period to which the amount pertains Forum where dispute is pending
Income Tax Act 1961 Income Tax 0.23 April 1994 to March 1995 Honourable Supreme Court of India
Income Tax Act 1961 Income Tax 0.35 April 2003 to March 2004 Honourable High Court of Madras
Income Tax Act 1961 Income Tax 1.06 April 2007 to March 2008 & April 2010 to March 2011 Income Tax Appellate Tribunal Chennai
Income Tax Act 1961 Income Tax 0.18 April 2002 to March 2003 Commissioner of Income Tax Chennai
Finance Act 1994 Service Tax 0.07 April 2005 to March 2008 Customs Excise & Service Tax Appellate Tribunal Bengaluru.
Finance Act 1994 Service Tax 0.00 April 2011 to August 2011 Commissioner of Central Excise (Appeals) Bengaluru.
Finance Act 1994 Service Tax 0.23 April 2006 to March 2014 Commissioner of Service Tax Chennai
Finance Act 1994 Service Tax 0.07 April 2016 to March 2017 Honourable High Court of Madras
Maharashtra Value Added Tax Act 2002 Maharashtra VAT 0.49 April 2011 to March 2012 & April 2013 to March 2014 Jt. Commissioner of Sales Tax Maharashtra

(viii) In our opinion and according to the information and explanations given to usand based on the records of the Company examined by us the Company has not defaulted inrepayment of loans to banks or government. The Company has neither taken any loans orborrowings from any financial institution during the year nor has it issued anydebentures.

(ix) In our opinion and according to the information and explanations given to usthe term loan availed by the Company during the year have been applied for the purpose forwhich it was obtained. The Company has not raised monies by way of initial public offer orfurther public offer (including debt instruments) during the year.

(x) During the course of our examination of the books and records of the companycarried out in accordance with generally accepted auditing practices in India andaccording to the information and explanations given to us we have neither come across anyinstances of material fraud by the company or on the company by its officers or employeeswhich has been noticed or reported during the year nor have we been informed of any suchcase by the management.

(xi) According to the information and explanations given to us and based on therecords of the Company examined by us no managerial remuneration has been paid orprovided during the year as per the provisions of Section 197(1) of Companies Act 2013.Accordingly reporting under clause 3 (xi) of the Order is not applicable to the Company.

(xii) The Company is not a Nidhi Company. Accordingly reporting under clause 3(xii) of the Order is not applicable to the Company.

(xiii) According to the information and explanations given to us and based on therecords of the Company examined by us transactions with the related parties are incompliance with sections 177 and 188 of the Act where applicable and the details thereofhave been duly disclosed in Note 28 to the standalone financial statements as required bythe applicable accounting standard.

(xiv) According to the information and explanations given to us and based therecords of the Company examined by us the company has not made any preferentialallotment/private placement of shares or fully or partially convertible debentures duringthe year. Accordingly reporting under clause 3 (xiv) of the Order is not applicable tothe Company.

(xv) According to the information and explanations given to us and based therecords of the Company examined by us the company has not entered into any non-cashtransactions with directors or persons connected with the directors. Accordingly thereporting requirements under clause 3(xv) of the Order is not applicable.

(xvi) According to the information and explanations given to us and the records ofthe Company examined by us the company is not required to be registered under section45-IA of the Reserve Bank of India Act 1934. Accordingly reporting under clause 3 (xvi)of the Order is not applicable to the Company.

For Varma & Varma
Chartered Accountants
FRN. 004532S
P R Prasanna Varma
Chennai Partner
May 21 2019 M.No. 025854

Annexure ‘B’

Referred to in Paragraph 1 under the heading report on "Other Legal and RegulatoryRequirements" of our Independent Audit Report of even date on the StandaloneFinancial Statements of Rane Engine Valve Limited for the Year Ended March 31 2019

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 Rane EngineValve Limited ("the Company") as of March 31 2019 in conjunction with our auditof the standalone financial statements of the Company for the year ended on that 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 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.

Auditors’ Responsibility

Our responsibility is to express an opinion on the Company’s internal financialcontrols over financial reporting based on our audit. We conducted our audit in accordancewith the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting(the "Guidance Note") and the Standards on Auditing 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 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 controlssystem over financial reporting.

Meaning of Internal Financial Controls Over Financial Reporting

A company’s internal financial control over financial reporting is a processdesigned to provide reasonable assurance regarding the reliability of financial reportingand the preparation of financial statements for external purposes in accordance withgenerally accepted accounting principles. A company’s internal financial control overfinancial reporting includes those policies and procedures that (1) pertain to themaintenance of records that in reasonable detail accurately and fairly reflect thetransactions and dispositions of the assets of the company; (2) provide reasonableassurance that transactions are recorded as necessary to permit preparation of financialstatements in accordance with generally accepted accounting principles and that receiptsand expenditures of the company are being made only in accordance with authorisations ofmanagement and directors of the company; and (3) provide reasonable assurance regardingprevention or timely detection of unauthorised acquisition use or disposition of thecompany’s assets that could have a material effect on the financial statements.

Inherent Limitations of Internal Financial Controls Over Financial Reporting

Because of the inherent limitations of internal financial controls over financialreporting including the possibility of collusion or improper management override ofcontrols material misstatements due to error or fraud may occur and not be detected.Also projections of any evaluation of the internal financial controls over financialreporting to future periods are subject to the risk that the internal financial controlover financial reporting may become inadequate because of changes in conditions or thatthe degree of compliance with the policies or procedures may deteriorate.

Opinion

In our opinion the Company has in all material respects an adequate internalfinancial controls system over financial reporting and such internal financial controlsover financial reporting were operating effectively as at March 31 2019 based on theinternal control over financial reporting criteria established by the Company consideringthe essential components of internal control stated in the Guidance Note on Audit ofInternal Financial Controls Over Financial Reporting issued by the Institute of CharteredAccountants of India.

For Varma & Varma
Chartered Accountants
FRN. 004532S
P R Prasanna Varma
Chennai Partner
May 21 2019 M.No. 025854