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Servotech Power Systems Ltd.

BSE: 535002 Sector: Engineering
NSE: SERVOTECH ISIN Code: INE782X01017
BSE 05:30 | 01 Jan Servotech Power Systems Ltd
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Servotech Power Systems Ltd. (SERVOTECH) - Auditors Report

Company auditors report

To

The Members of

SERVOTECH POWER SYSTEMS LIMITED

Report on the Standalone Financial Statements

We have audited the accompanying standalone financial statements of SERVOTECH POWERSYSTEMS LIMITED) (company converted into public limited on 24/05/2017) which comprise thebalance sheet as at 31st March 2018 the statement of profit and loss and the cash flowstatement for the year then ended and a summary of significant accounting policies andother explanatory information.

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 Companies Act 2013 ("the Act") with respect to the preparationand presentation of these standalone financial statements that give a true and fair viewof the financial positionfinancial performance and cash flows of the Company inaccordance with the accounting principles generally accepted in India including theAccounting Standards specified under Section 133 of the Act read with Rule 7 of theCompanies (Accounts) Rules 2014.

This responsibility also 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 reasonable andprudent; and design implementation and maintenance of adequate internal financialcontrols that were operating effectively for ensuring the accuracy and completeness ofthe accounting records relevant to the preparation and presentation of the financialstatements that give a true and fair view and are free from material misstatement whetherdue to fraud or error.

Auditor's Responsibility

Our responsibility is to express an opinion on these standalone financial statementsbased on our audit. We have taken into account the provisions of the Act the accountingand auditing standards and matters which are required to be included in the audit reportunder the provisions of the Act and the Rules made there under.

We conducted our audit in accordance with the Standards on Auditing specified underSection 143(10) of the Act. Those Standards require that we comply with ethicalrequirements and plan and perform the audit to obtain reasonable assurance about whetherthe financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts andthe disclosures in the financial statements. The procedures selected depend on theauditor's judgment including the assessment of the risks of material misstatement of thefinancial statements whether due to fraud or error. In making those risk assessments theauditor considers internal financial control relevant to the Company's preparation of thefinancial statements that give a true and fair view in order to design audit proceduresthat are appropriate in the circumstances but not for the purpose of expressing anopinion on whether the Company has in place an adequate internal financial controls systemover financial reporting and the operating effectiveness of such controls. An audit alsoincludesevaluating the appropriateness of the accounting policies used and thereasonableness of the accounting estimates made by the Company's Directors as well asevaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the standalone financial statements.

Opinion

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 Act in the manner so required and give a true and fair view in conformity with theaccounting principles generally accepted in India of the state of affairs of the Companyas at 31st March 2018 and its profit and its 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"a statement on the matters specified in theparagraph 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 and the cash flow statementdealt with by this Report are in agreement with the books of account;

d) In our opinion the aforesaid standalone financial statements comply with theAccounting Standards specified under Section 133 of the Act read with Rule 7 of theCompanies (Accounts) Rules 2014 except non provision of retiring benefits of employeesrequired as per accounting standard 15;

e) On the basis of the written representations received from the directors as on 31stMarch 2018 taken on record by the Board of Directors none of the directors isdisqualified as on 31st March 2018 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 B"; and

g) 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.) That the litigations pending by the company or against the company as on 31/03/2018will not materially impact its financial position.

ii. the Company did not have any long-term contracts including derivative contracts asat 31st March 2018.

There were no amounts which were required to be transferred to the Investor Educationand Protection Fund by the Company during the period ended 31st March 2018.

For GUPTA JALAN & ASSOCIATES

Chartered Accountants

CA RAM NIWAS JALAN

Partner

M.NO.-082389

Place: New Delhi

Date: 29.05.2018

Annexure "A "to the Auditors' Report

The Annexure referred to in our report to the members of SERVOTECH POWER SYSTEMSLIMITED ('theCompany') for the year ended on 31st March 2018we report that:

1. a) The company is maintaining proper records showing full particulars includingquantitative details and situation of fixed assets.

b) All the fixed assets have been physically verified by the management at reasonableintervals having regard to the size of the company and the nature of its assets. Noserious discrepancies have been noticed on such physical verification.

c) According to the information and explanations given to us and on the basis of ourexamination of the records of the Company the title deeds of immovable properties areheld in the name of the Company.

2. a) The management has conducted the physical verification of inventory at reasonableintervals.

b) The discrepancies noticed on physical verification of the inventories as compared tobooks records which has been properly dealt with in the books of account were notmaterial.

3. The Company had not granted any loans secured or unsecured to companies firmsLimited Liability Partnership or other parties covered in the register maintained undersection 189 of the Companies Act 2013. Accordingly paragraph 3(iii) of the order is notapplicable to the company.

4. In our opinion and according to the information and explanations given to us theCompany has not made any loan or investment as required under the provision of section 185and 186 of Companies Act 2013 with respect to the loans investments guarantees andsecurity.

5. The Company had not accepted any deposits from the public.

6. Maintenance of cost records under section 148 (1) of the Companies Act 2013 isapplicable for the company.

7. In respect of Statutory dues:-

i) According to the information and explanations given to us the company has beenregular in depositing undisputed statutory dues including income tax service tax salestax any other statutory dues to the appropriate authorities however there have beendelays in certain cases. Also no undisputed amounts payable in respect of income taxservice tax sales tax any other statutory dues were in arrears as at 31st March 2018 fora period of more than six months from the date they became payable.

ii) According to the information and explanations given to us there is no disputedstatutory liability as on 31st March 2018.

8. In our opinion and according to the information and explanation to us the companyhad taken loan from financial Institution; the Company has not defaulted in the repaymentof dues to banks.

9. (i) According to the information and explanations given to us company had raisedmoney during the year by way of initial public offer and the money raised by way ofinitial public offer and the term loans were applied for the purpose for which those areraised.

(ii) According to the information and explanations given to us the company hadreceived term loan and had not defaulted in repayment of its installments during the year.

10. According to the information and explanations given to us no fraud by the Companyor on the Company has been noticed during the course of our audit.

11. The company is in the process of taking approval of prescribed authority/membersfor excess payment made for managerial remuneration due to fall in profits as required bythe provision of section 197 read with schedule 5 to the Companies act 2013.

12. The company is not a Nidhi Company; therefore the provisions of Nidhi companies arenot applicable on the company.

13. In our opinion and according to the information and explanations given to us and onthe basis of our examination of the records of the Company the transactions with therelated parties are in compliance with section 177 and 188 of the Companies Act 2013where applicable and the details have been disclosed in the financial statements asrequired by the accounting standards.

14. According to the information and explanations give to us and based on ourexamination of the records of the Company the Company has made preferential allotmentshares during the year Under review and the requirement of section 42 of companies act2013 have been complied with and the amount raised has been used for the purpose for whichthe funds were raised

15. According to the information and explanations given to us and based on ourexamination of the records of the Company the Company has not entered into non-cashtransactions with directors or persons connected with him. Accordingly paragraph 3(xv) ofthe Order is not applicable.

16. The registration with Reserve Bank of India under section 45-IA of the Reserve Bankof India Act 1934 is not applicable on the company.

For GUPTA JALAN & ASSOCIATES

Chartered Accountants

CA RAM NIWASJALAN

Partner

M.No.-082389

Place: New Delhi

Date:29.05.2018

"Annexure B" to the Independent Auditor's 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 SERVOTECHPOWER SYSTEMS UMITED('the Company') as of 31st March 2018 in conjunction with our audit ofthe 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 ('ICAI').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. The company is in process of designing internalfinancial control system as per guidance note on audit of internal financial control overfinancial reporting issued by ICAI.

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 of financialrecords and documents even though the company is in process of designing andimplementation of internal control financial system to the extent applicable to an auditof internal financial control as prescribed in guidance note on audit of internalfinancial control over financial reporting and accounting standards as issued by ICAI.Those Standards and the Guidance Note require that we comply with ethical requirements andplan and perform the audit to obtain reasonable assurance about whether adequate internalfinancial controls over financial reporting was established and maintained and if suchcontrols 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 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 authorizations ofmanagement and directors of the company; and (3) provide reasonable assurance regardingprevention or timely detection of unauthorized 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 31st March 2018 based on theinternal control over financial reporting criteria established by the Company consideringthe essential components of internal control. We are of the opinion that after designingand implementation of internal control system as per guidance note on audit of internalfinancial controls over financial reporting issued by ICAI will not substantially impacton our opinion on internal financial control system presently implemented in the company.The present system of internal financial control is effectively prevailing in the company.

For GUPTA JALAN & ASSOCIATES

Chartered Accountants

CA RAM NIWASJALAN

Partner

M.No.-082389

Place: New Delhi

Date:29.05.2018