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Supreme Engineering Ltd.

BSE: 535105 Sector: Metals & Mining
NSE: SUPREMEENG ISIN Code: INE319Z01013
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Supreme Engineering Ltd. (SUPREMEENG) - Auditors Report

Company auditors report

To the Members of SUPREME ENGINEERING LIMITED

Report on the Financial Statements

We have audited the accompanying financial statements of Supreme Engineering Limited (Formerly Known as Supreme Heatreaters Pvt. Ltd) (“the Company”) which comprisethe Balance Sheet as at 31 March 2018 the Statement of Profit and Loss the Cash FlowStatement for the year then ended and a summary of the significant accounting policies andother explanatory information.

Management's Responsibility for the 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 financial statements that give a true and fair view of thefinancial position financial performance and cash flows of the Company in accordance withthe accounting principles generally accepted in India including the Accounting Standardsspecified under Section 133 of the Act read with Rule 7 of the Companies (Accounts)Rules 2014 (as amended). This responsibility also includes maintenance of adequateaccounting records in accordance with the provisions of the Act; safeguarding the assetsof the Company; preventing and detecting frauds and other irregularities; selection andapplication of appropriate accounting policies; making judgments and estimates that arereasonable and prudent; and design implementation and maintenance of adequate internalfinancial controls that were operating effectively for ensuring the accuracy andcompleteness of the accounting records relevant to the preparation and presentation ofthe financial statements that give a true and fair view and are free from materialmisstatement whether due to fraud or error.

Auditor's Responsibility

Our responsibility is to express an opinion on these financial statements based on ouraudit.

We have taken into account the provisions of the Act the accounting and auditingstandards and matters which are required to be included in the audit report under theprovisions of the Act and the Rules made thereunder.

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 controls 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. An audit also includes evaluating theappropriateness of the accounting policies used and the reasonableness of the accountingestimates made by the Company's Directors as well as evaluating the overall presentationof 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 financial statements.

Opinion

In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid financial statements give the information required by the Actin the manner so required and give a true and fair view in conformity with the accountingprinciples generally accepted in India of the state of affairs of the Company as at 31March 2018 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 Section 143(11) of the Act we givein the “Annexure 1” a statement on the matters specified in paragraphs 3 and 4of the Order.

2. As required by Section 143(3) of the Act we report that: a. We have sought andobtained all the information and explanations which to the best of our knowledge andbelief were necessary for the purpose of our audit; b. In our opinion proper books ofaccount as required by law have been kept by the Company so far as it appears from ourexamination of those books; c. the financial statements dealt with by this report are inagreement with the books of account; d. In our opinion the aforesaid financial statementscomply with the Accounting Standards specified under Section 133 of the Act read withRule 7 of the Companies (Accounts) Rules 2014 except as under :

Accounting Standard 15 “Accounting for retirement benefits in the financialstatement of employees” with respect to non provision for liability for gratuity.

e. On the basis of the written representations received from the directors as at 31March 2018 and taken on record by the Board of Directors none of the directors isdisqualified as at 31 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 overfinancial reporting of the Company and the operating effectiveness of such controls referto our separate Report in “Annexure 2” to this report; g. With respect to theother matters to be included in the Auditor's Report in accordance with Rule 11 of theCompanies (Audit and Auditors) Rules 2014 in our opinion and to the best of ourinformation and according to the explanations given to us:

i. the Company does not have any pending litigations which would impact its financialposition;

ii. The Company did not have any long-term contracts including derivative contracts forwhich there were any material foreseeable losses; and iii. There were no amounts whichwere required to be transferred to the Investor Education and Protection Fund by theCompany.

For H L Saini & Co.

Chartered Accountants

H L Saini

Partner

Membership No. - 128301

Mumbai

Date: 26.04.2018

Annexure 1 to the Auditors Report

The annexure referred to in independent auditors report to the members of the Companyon the financial statements for the year ended 31 March 2018. We report that:

(i) (a) The Company in process to maintaining fixed Assets records in full particularsincluding quantitative details and situation of fixed assets but said register notavailable for our verification.

(b) As explained to us the Company has a program for physical verification of fixedassets at periodic intervals. In our opinion the period of verification is reasonablehaving regard to the size of the Company and the nature of its assets. The discrepanciesreported on such verification were not material and have been properly dealt with in thebooks of account.

(c) Based on our audit procedures performed for the purpose of reporting the true andfair view of the financial statements and according to information and explanations givenby the management the title deeds of immovable properties are held in the name of thecompany.

(ii) The Company has maintained stock register but due to highly complexity in stockitems. We have verified stock only test check basis. However the management has conductedphysical verification of inventory at reasonable intervals during the year and no materialdiscrepancies were noticed on such physical verification.

(iii) The Company has not granted any loan secured or unsecured to companies firmsLimited Liability Partnerships (LLPs) or other parties covered in the register maintainedunder Section 189 of the Act. Accordingly the provisions of clauses 3(iii)(a) 3(iii)(b)and 3(iii)(c) of the Order are not applicable to the Company. (iv) In our opinion andaccording to the information and explanations given to us provisions of section 185 and186 of the Companies Act 2013 in respect of loans to directors including entities in whichthey are interested and in respect of loans and advances given investments made andguarantees and securities given have been complied with by the company.

(v) In our opinion the Company has not accepted any deposits within the meaning ofSections 73 to 76 of the Act and the Companies (Acceptance of Deposits) Rules 2014 (asamended). Accordingly the provisions of clause 3(v) of the Order are not applicable tothe Company.

(vi) We have broadly reviewed the books of account maintained by the Company pursuantto the rules made by the Central Government for the maintenance of cost records undersection 148(1) of the Companies Act 2013and are of the opinion that prima facie thespecified accounts and records have been made and maintained. However Company need tomaintained systematic record in respect of consumption production and procurement ofmaterials wastages material reconciliation.

(vii) (a) Undisputed statutory dues including provident fund employees' stateinsurance income-tax sales-tax wealth-tax service tax duty of custom duty of excisevalue added tax cess and other material statutory dues have generally been regularlydeposited with the appropriate authorities though there has been a slight delay in a fewcases.

According to the information and explanations given to us no undisputed amountspayable in respect of provident fund employees' state insurance income-tax wealth-taxservice tax sales-tax duty of custom duty of excise value added tax cess and othermaterial statutory dues were outstanding at the year end for a period of more than sixmonths from the date they became payable.

(b) According to the information and explanations given to us there are no dues ofduty of customs which have not been deposited with the appropriate authorities on accountof any dispute. However according to information and explanations given to us thefollowing dues of income tax sales tax duty of excise service tax and value added taxhave not been deposited by the Company on account of disputes.

Name of the Statute Nature of Dues Period to which amount relates Forum where dispute is pending Amount**
Maharashtra Value Added Tax Act CST FY 08-09 Commissioner of Sales(Appeal) 1643510
Maharashtra Value Added Tax Act VAT and CST FY 09-10 Commissioner of Sales (Appeal) 10406560
Maharashtra Value Added Tax Act VAT and CST FY 10-11 Commissioner of Sales (Appeal) 10930611
Maharashtra Value Added Tax Act VAT and CST FY 11-12 Commissioner of Sales (Appeal) 59285224

*As represented by the management ** Include deposit against appeals Rs. 4653776

(viii) In our opinion and according to the information and explanations given to usthe Company has not defaulted in the repayment of dues to banks. The Company has takenloan from financial institutions or from the government and has not issued any debentures.

(ix) Based on our audit procedures performed for the purpose of reporting the true andfair view of the financial statements and according to the information and explanationsgiven by the management and on an overall examination of the balance sheet we report thatmonies raised by way term loans were applied for the purposes for which those were raised.

(x) Based upon the audit procedures performed for the purpose of reporting the true andfair view of the financial statements and according to the information and explanationsgiven by the management we report that no fraud on or by the officers and employees ofthe Company has been noticed or reported during the year.

(xi) Based on our audit procedures performed for the purpose of reporting the true andfair view of the financial statements and according to the information and explanationsgiven by the management we report that the managerial remuneration has been paid /provided in accordance with the requisite approvals mandated by the provisions of section197 read with Schedule V to the Companies Act 2013.

(xii) In our opinion the Company is not a Nidhi company. Therefore the provisions ofclause 3(xi) of the order are not applicable to the Company and hence not commented upon.

(xiii) Based on our audit procedures performed for the purpose of reporting the trueand fair view of the financial statements and according to the information andexplanations given by the management transactions with the related parties are incompliance with section 177 and 188 of Companies Act 2013 where applicable and thedetails have been disclosed in the notes to the financial statements as required by theapplicable accounting standards.

(xiv) Based on our audit procedures performed for the purpose of reporting the true andfair view of the financial statements and according to the information and explanationsgiven by the management the Company has complied with provisions of section 42 of theCompanies Act 2013 in respect of the preferential allotment of shares during the year.Based on our audit procedures performed for the purpose of reporting the true and fairview of the financial statements and according to the information and explanations givenby the management we report that the amounts raised have been used for the purposes forwhich the funds were raised.

(xv) Based on our audit procedures performed for the purpose of reporting the true andfair view of the financial statements and according to the information and explanationsgiven by the management the Company has not entered into any non-cash transactions withdirectors or persons connected with him except disclose in note no.1 of financialstatements

(xvi) According to the information and explanations given to us the provisions ofsection 45-IA of the Reserve Bank of India Act 1934 are not applicable to the Company.

For H L Saini & Co.

Chartered Accountants

H L Saini

Partner

Membership No. - 128301

Mumbai

Date: 26.04.2018

Annexure 2 to the Auditors Report

ANNEXURE TO THE INDEPENDENT AUDITOR'S REPORT OF EVEN DATE ON THE FINANCIAL STATEMENTSOF SUPREME ENGINEERING LIMITED

Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section143 of the Companies Act 2013 (“the Act”)

To the Members of SUPREME ENGINEERING LIMITED

We were engaged to audit the internal financial controls over financial reporting ofSUPREME ENGINEERING LIMITED (“the Company”) as of March 31 2018 in conjunctionwith our audit of the 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 the Company's policies the safeguarding of its assetsthe prevention 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.

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 “Guidance Note”) and the Standards on Auditing as specified under section143(10) of the Companies Act 2013 to the extent applicable to an audit of internalfinancial controls both applicable to an audit of Internal Financial Controls and bothissued by the Institute of Chartered Accountants of India. Those Standards and theGuidance Note require that we comply with ethical requirements and plan and perform theaudit to obtain reasonable assurance about whether adequate internal financial controlsover financial reporting was established and maintained and if such controls operatedeffectively 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 internal financial controls system overfinancial 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 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 2018 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. However the internal controls over accounting of consumptionproduction and procurement of materials wastages material reconciliation need furtherstrengthening.

For H L Saini & Co.

Chartered Accountants

H L Saini

Partner

Membership No. - 128301

Mumbai

Date: 26.04.2018