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Servotech Power Systems Ltd.

BSE: 535002 Sector: Engineering
NSE: SERVOTECH ISIN Code: INE782X01017
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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 Audit of Standalone Financial Statements

OPINION

We have audited the accompanying standalone Financial Statements of SERVOTECH POWERSYSTEMS LIMITED (the Company') which comprise the balance sheet as at 31st March 2020the statement of profit and loss and the Statement of Cash Flows for the year ended on31st March 2020 and a summary of significant accounting policies and other explanatoryinformation.

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 the conformity with the accounting principles generally accepted inIndia of the State of Affairs of the Company as at 31st March 2020 and profit and totalcomprehensive income Cash flows for the year ended on that date.

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'sResponsibilities for the Audit of the Standalone 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 independencerequirements that are relevant to our audit of the standalone Financial Statements underthe provisions of the Act and the Rules made thereunder and we have fulfilled our otherethical responsibilities in accordance with these requirements and the ICAI's Code ofEthics. We believe that the audit evidence we have obtained is sufficient and appropriateto provide a basis for our audit opinion on the Standalone Financial Statements.

OTHER INFORMATION

The Company's management and Board of Directors are responsible for the otherinformation. The other information comprises the information included in the Company'sannual report but does not include the Standalone Financial Statements and our Auditors'Report thereon.

Our opinion on the Standalone Financial Statements does not cover the other informationand we do not express any form of assurance conclusion thereon.

In connection with our audit of the standalone Financial Statements our responsibilityis to read the other information and in doing so consider whether the other informationis materially inconsistent with the standalone Financial Statements or our knowledgeobtained in the audit or otherwise appears to be materially misstated. If based on thework we have performed we conclude that there is a material misstatement of this otherinformation we are required to report that fact. We have nothing to report in thisregard.

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 position financial 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 ofadequate accounting records in accordance with the provisions of the Act for safeguardingthe assets of the Company and for preventing and detecting frauds and otherirregularities; selection and application of appropriate accounting policies; makingjudgments and estimates that are reasonable and prudent; and design implementation andmaintenance of adequate internal financial controls that were operating effectively forensuring the accuracy and completeness of the accounting records relevant to thepreparation and presentation of the Standalone Financial Statements that give a true andfair view and are free from material misstatement whether due 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.

The Board of Directors are responsible for overseeing the Company's financial reportingprocess.

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 Standalone Financial Statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts andthe disclosures in the Standalone Financial Statements. The procedures selected depend onthe auditor's judgment including the assessment of the risks of material misstatement ofthe Standalone Financial Statements whether due to fraud or error. In making those riskassessments the auditor considers internal financial control relevant to the Company'spreparation of the Standalone Financial Statements that give a true and fair view in orderto design audit procedures that are appropriate in the circumstances but not for thepurpose of expressing an opinion on whether the Company has in place an adequate internalfinancial controls system over financial reporting and the operating effectiveness of suchcontrols. An audit also includes evaluating the appropriateness of the accounting policiesused and the reasonableness of the accounting estimates made by the Company's Directorsas well as evaluating the overall presentation of the Standalone 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.

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 2020 taken on record by the Board of Directors none of the directors isdisqualified as on 31st March 2020 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. The Company does not have any pending litigations as at 31st March 2020 which wouldmaterially impact its financial position.

ii. The Company did not have any long-term contracts including derivative contracts asat 31st March 2020.

iii. There were no amounts which were required to be transferred to the InvestorEducation and Protection Fund by the Company during the period ended 31st March 2020.

UDIN: 20082389AAAACA943B

For and on behalf of

Gupta Jalan & Associates

Chartered Accountants

FIRM REG. No. 003721N

CA Ram Niwas Jalan (Partner)

Membership No.: 082389

Date: The 29th Day of July 2020

ANNEXURE "A "TO THE AUDITORS' REPORT

The Annexure referred to in our report to the members of SERVOTECH POWER SYSTEMSLIMITED (the Company') for the year ended on 31stMarch 2020 we report that:

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

2. b) All the fixed assets have been physically verified by the management atreasonable intervals having regard to the size of the company and the nature of itsassets. No serious 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.

3. 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. The company has duly maintained the cost records as per section 148 (1) of theCompanies Act 2013.

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 taxGoods and service tax any other statutory dues were in arrears as at 31st March 2020 for aperiod of more than six months from the date they became payable.

ii) According to the information and explanations given to us the income taxdepartment has created demand of Rs.29744736/- For the assessment year 2016-17. Thecompany had filed an appeal before commissioner of income tax New Delhi and deposited Rs.250000/-. The appeal is pending.

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 notraised money by way of initial public offer therefore no further comments required.

(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. According to the information and explanations given to us The Company haspaid/provided for managerial remuneration in accordance with the requisite approvalsmandated by the provisions of section 197 read with Schedule V to the Act.

12. The company is not a Nidhi Company; therefore the provisions of Nidhi companiesare not 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 provisions of section 177of the Companies Act 2013 are applicable to the Company the transactions with the relatedparties are in compliance with section 188 of the Companies Act 2013 where applicable andthe details have been disclosed in the Standalone Financial Statements as required by theaccounting standards.

14. According to the information and explanations give to us and based on ourexamination of the records of the Company the Company has not made any preferentialallotment or private placement of shares or fully or partly convertible debentures duringthe year.

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.

UDIN: 20082389AAAACA943B

For and on behalf of Gupta Jalan & Associates

Chartered Accountants

FIRM REG. No. 003721N

CA Ram Niwas Jalan (Partner)

Membership No.: 082389

Date: The 29th Day of July 2020

"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")

Opinion

We have audited the internal financial controls over financial reporting of SERVOTECHPOWER SYSTEMS LIMITED (‘the Company') as of 31st March 2020 in conjunction with ouraudit of the standalone Standalone Financial Statements of the Company for the year endedon that date.

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 2020 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.

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').Theseresponsibilities include the design implementation and maintenance of adequate internalfinancial controls that were operating effectively for ensuring the orderly and efficientconduct of its business including adherence to company's policies the safeguarding ofits assets the prevention and detection of frauds and errors the accuracy andcompleteness of the accounting records and the timely preparation of reliable financialinformation as required under the Companies Act 2013. The company is in process ofdesigning internal financial control system as per guidance note on audit of internalfinancial control over financial 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 Standalone Financial Statements whether due to fraud orerror.

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 Standalone 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 StandaloneFinancial Statements in accordance with generally accepted accounting principles and thatreceipts and expenditures of the company are being made only in accordance withauthorizations of management and directors of the company; and (3) provide reasonableassurance regarding prevention or timely detection of unauthorized acquisition use ordisposition of the company's assets that could have a material effect on the StandaloneFinancial 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.

For and on behalf of

Gupta Jalan & Associates

Chartered Accountants

FIRM REG. No. 003721N

CA Ram Niwas Jalan (Partner)

Membership No.: 082389

Date: The 29th Day of July 2020

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