UB Engineering Ltd.
|BSE: 509992||Sector: Engineering|
|NSE: UBENGG||ISIN Code: INE328C01013|
|BSE 00:00 | 02 Mar||UB Engineering Ltd|
|NSE 05:30 | 01 Jan||UB Engineering Ltd|
|BSE: 509992||Sector: Engineering|
|NSE: UBENGG||ISIN Code: INE328C01013|
|BSE 00:00 | 02 Mar||UB Engineering Ltd|
|NSE 05:30 | 01 Jan||UB Engineering Ltd|
The Members of
UB Engineering Limited
Report on the Financial Statements
We have audited the accompanying stand-alone financial statements of UB EngineeringLimited ( the Company ) which comprise the Balance Sheet as at March 31 2016 theStatement of Profit and Loss and the Cash Flow Statement and a summary of significantaccounting policies and other explanatory information for the year then ended.
Managementfs responsibility for the Financial Statements
The Company s Management is responsible for the matters stated in Section 134(5) of theCompanies Act 2013 ("the Act") with respect to the preparation of thesestand-alone financial statements that give a true and fair view of the financial positionfinancial performance and cash flows of the Company in accordance with the accountingprinciples generally accepted in India including the Accounting Standards specified underSection 133 of the Act read with Rule 7 of the Companies ( Accounts ) Rules 2014. 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 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 statements thatgive a true and fair view and are free from material misstatement whether due to fraud orerror.
Our responsibility is to express an opinion on these stand-alone financial statementsbased on our audit.
We have taken in to 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 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 the auditors 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 the financial statements that give a true and fair view inorder to 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 control system over financial reporting and the effectiveness of such controls.An audit also includes evaluating the appropriateness of accounting policies used and thereasonableness of the accounting estimates made by the Management as well as evaluatingthe overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our qualified audit opinion on the stand-alone financial statements.
Basis for Qualified Opinion
Reference is invited to Note No. 21 wherein Management has given reasons forpresenting Financial Statements on the principles applicable to going concern which arein our opinion is based upon happening of certain future events and on which we are unableto form such an opinion.
i) Notwithstanding erosion of net-worth and reference to BIFR the Audited FinancialStatements for the year ending March 2016 are prepared on going concern basis which inour opinion is based on happening of events futuristic in nature hence not verifiable andon which we are unable to form such an opinion. (Refer Note No. 21)
ii) During the F.Y. 2012-13 a Bank Guarantee invoked by a customer of Rs. 191.65Million in August 2012 which is being contested before High Court of Punjab and Haryanaat Chandigarh has been referred to arbitration and not fully provided for. (Refer NoteNo. 23)
iii) Consortium Banks had classified the account of the Company as Non-Performing Asset(NPA) with effect from April 1 2014. (Refer Note No. 24)
iv) Consortium Banks have enforced the security of assets at Fabrication Unit situatedat Durg (Chhattisgarh) Shirwal Pune and Chiplun. Consortium Banks have filedMiscellaneous Application with BIFR for abatement of reference under Section 15 of SICAand some member banks have individually filed applications with appropriate authoritiesfor recovery of their Dues. Company is contesting these applications by appropriate legalprocess.(Refer Note No. 24)
v) During the year various Bank Guarantees aggregating to Rs. 375.96 Million issued onbehalf of the Company towards performance / mobilization advance / security have beeninvoked by various Clients. The Company has assessed potential losses that may ultimatelyarise as a consequence and the actual financial loss would depend on outcome ofnegotiation with Clients. Liabilities are included in Dues to Banks and appropriateprovision has been considered in Accounts. (Refer Note No. 25)
vi) During the year Bad Debts Written off as well as Provision for Bad and DoubtfulDebts are considered in Contract Costs based on Management Declaration on which we haverelied upon. (Refer Note No. 26)
vii) Statutory Dues excluding interest aggregating to Rs. 154.73 Million (approx.) wereoutstanding as on March 31 2016 mainly towards Indirect Taxes (Including Service Tax)etc. (Refer Note No. 30)
viii) The entire expenditure incurred at or for contract sites are shown under head"Contract Costs" without classifying the same under nominal heads ofexpenditure. (Refer Note No. 35)
ix) Post March 31 2016 various Bank Guarantees aggregating to Rs. 139.00 Millionissued to clients on behalf of the Company towards performance / mobilisation advance /security were invoked by various clients. The Company has assessed potential losses thatmay arise as a consequence and appropriate provision has been considered in Accounts. Theactual financial loss would depend on outcome of negotiation with Client. (Refer Note No.37)
x) Winding up petitions were filed by two vendors for which Honorable High CourtMumbai has passed orders for adjournment sine die in view of BIFR Registration. (ReferNote No.38)
xi) Managerial Remuneration of Rs.10.50 Million Is subject to approval of the CentralGovernment. (Refer Note No.43) xii) The Company does not have minimum number of stipulatedDirectors as required as per Companies Act 2013.
In view of the observations in the paragraph above "Basis for QualifiedOpinion" we are unable to express any opinion as a true and fair view.
(a) in the case of the Balance sheet of the state of affairs of the Company as atMarch 31 2016;
(b) in the case of the Statement of Profit and Loss of the loss for the year ended onthat date; and
(c) In the case of the Cash Flow Statement of the cash flows for the year ended onthat 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 of the Act we give inthe
"Annexure A" a statement on the matters specified in paragraphs 3 and 4 ofthe Order to the extent applicable.
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 purposes of our audit;b 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 Balance Sheet the Statement of Profit and Loss and theCash Flow Statement dealt with by this report are in agreement with the books of account;d. In our opinion the Balance Sheet the Statement of Profit and Loss comply with theAccounting Standards referred to in Section 133 of the Companies Act 2013 read with rule7 of the Companies (Accounts) Rules 2014. e. .On the basis of written representationsreceived from the Directors as on March 31 2016 and taken on record by the Board ofDirectors none of the Directors is disqualified as on March 31 2016 from beingappointed as a Director in terms of Section 164(2) of the Companies Act 2013. f. We haveissued a separate report on the adequacy of the internal financial controls over financialreporting of the Company and the operating effectiveness of such controls. The said reportcan be found in "Annexure B" to this report. g. With respect to the othermatters to be included in the Auditor's Report in accordance with Rule 11 of the Companies(Audit and Auditors) Rules 2014 in our opinion & to the best of our information andaccording to the explanations given to us i) The Company has not quantified the impact ofpending litigations on its financial position in its financial statements in accordancewith the generally accepted accounting practice. ii) The Company did not have any onlong-term contracts (including derivative contracts) for which a provision is required formaterial foreseeable losses under the applicable law or accounting standards. iii) Therewere no amounts which were required to be transferred to the "Investor Education andProtection Fund" by the Company.
Annexure A to the Auditor's Report
The Annexure referred to in paragraph 7(1) under "Report on Other Legal andRegulatory Requirements" of our report of even date
(i) In Respect of its Fixed Assets:
(a) The Company is maintaining proper records showing full particulars includingquantitative details and situation of fixed assets at respective sites.
(b) Most of these Fixed Assets have been physically verified by the Management atreasonable intervals in accordance with regular program of verification We have beeninformed that there is no material discrepancies between book records and physicalverification. However the records are not been fully verifiable for closed and terminatedsites. We have relied on the Management Decision on the same.
c) According to the information and explanation given to us the title deeds ofimmovable properties are held in the name of Company. (ii) (a) As explained to us theinventories were physically verified during the year by the Management at reasonableintervals at certain sites.
(b) In our opinion and according to the information and explanations given to us theprocedures of physical verification of inventory followed by the Management are reasonableand adequate in relation to the size of the Company and the nature of its business.
(iii) According to the information and explanations given to us during the year theCompany has not granted loans secured or unsecured to companies firms or other partiescovered in the register maintained under Section 189 of the Companies Act 2013. TheCompany had given advances to subsidiary and step-down subsidiaries of Rs. 114.49 Millionover the years which has been fully provided for in the books. (iv) According to theinformation and explanations given to us and based on our examination of the records ofthe Company the Company has not given any loans made any investments provided anyguarantee / security to any persons during the year. Therefore the provisions of clause3(iv) of the Companies (Auditor s Report) Order 2016 are not applicable to the Company.
(v) According to the information and explanations given to us the Company has notaccepted any deposit during the year. However Company has received Inter-corporateUnsecured Loan from the Subsidiary of the Promoter Company.
(vi) According to the information and explanations given to us the Central Governmenthas prescribed maintenance of cost records Section 148(1) of the Companies Act 2013.(vii) According to the information and explanations given to us
(a) The Company is not regular in depositing undisputed statutory dues includingprovident fund employees state insurance income-tax sales-tax wealth tax service taxduty of customs duty of excise value added tax cess and any other statutory dues withthe appropriate authorities.
(b) There were undisputed amounts payable in respect of provident fund employees stateinsurance income-tax sales-tax wealth tax service tax duty of customs duty ofexcise value added tax cess and any other statutory dues in arrears as at March 312016for period of more than six months from the date they became payable as under -
- Service Tax - Rs.33.36 Million ( excluding interest and Penalty )
- Provident Fund Rs. 0.15 Million ( excluding Penalty and Damages )
- T.D.S. - Nil ( excluding Interest )
- Profession Tax - Rs. 2.41 Million
- E.S.I. - Rs. 0.05 Million
- Employee s Deposit Linked Insurance - Rs. 5.69 Million relating to earlier years.
- Gratuity Rs. 17.94 Million
(c) Details of the amounts due on account of dispute in respect of Sales Tax and IncomeTax dues as of March 31 2016 have not been deposited with the authorities and the forumwhere the disputes are pending as given below
(viii) The Company has defaulted in repayment of Loans and Borrowings to the ConsortiumBanks. The Company s account is declared as Non-Performing Asset ( NPA ) by the ConsortiumBanks with effect from April 1 2014.
Various Bank Guarantees invoked during the year have been shown as Dues to the Banks.
(ix) The Company has not raised any money by way of initial public offer or furtherpublic offer (including debt instruments) and term loans during the year. Therefore theprovision of Clause
3(ix) of the Companies (Auditor s Report ) Order. 2016 are not applicable to theCompany.
(x) According to the information and explanations given to us no significant fraud bythe Company or on the Company by its officers or employees that causes a materialmisstatement to the financial statements has been noticed or reported during the year.
(xi) According to the information and explanations given to us the Company has paidManagerial Remuneration during the year. However the same is subject to approval of theCentral Government.
(xii) As the Company is not the Nidhi Company the provision of Clause 3
(xii) of the Companies
(Auditor s Report ) Order 2016 are not applicable to the Company.
(xiii) According to the information and explanations given to us the Company has madeall the transactions with the related parties in compliance with Sections 177 & 188 ofCompanies Act and the details have been disclosed in the Financial Statements as requiredby the applicable Accounting Standards.
(xiv) According to the information and explanations given to us the Company has notmade any preferential allotment or private placement of shares or fully or partlyconvertible debentures during the year as per Section 42 of the Companies Act.2013.Accordingly the provision of Clause 3
(xiv) of the Companies (Auditor s Report ) Order 2016 is not applicable to the Company.
(xv) According to the information and explanations given to us the Company has notentered into any non-cash transactions with the directors or persons connected with him asper Section 192 of Companies Act 2013.
(xvi) The Company is not required to be registered under Section 45-IA of the ReserveBank of India Act 1934. Accordingly the clause 3(xvi) is not applicable.
ANNEXURE B TO THE INDEPENDENT AUDITOR'S REPORT
Of even date on the stand-alone Financials Statements of UB ENGINEERING LIMITED.
Report on the Internal Financial Controls under Clause (i) of Section 143(3) of theCompanies Act
2013 ("the Act").
We have audited the internal financial controls over financial reporting of ('theCompany') as of March 31 2016 in conjunction with our audit of the stand-alone financialstatements 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. These responsibilities include the design implementation andmaintenance of adequate internal financial controls that were operating effectively forensuring the orderly and efficient conduct of its business including adherence to companys policies the safeguarding of its assets the prevention and detection of frauds anderrors the accuracy and completeness of the accounting records and the timelypreparation of reliable financial information as required under the Companies Act 2013.
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 deemed to be prescribed under Section 143(10) of theCompanies Act 2013 to the extent applicable to an audit of internal financial controlsboth applicable to an audit of Internal Financial Controls and both issued by theInstitute of Chartered Accountants of India. Those Standards and the Guidance Note requirethat we comply with ethical requirements and plan and perform the audit to obtainreasonable assurance about whether adequate internal financial controls over financialreporting was established and maintained and if such controls operated effectively in allmaterial respects. Our audit involves performing procedures to obtain audit evidence aboutthe adequacy of the internal financial controls system over financial reporting and theiroperating effectiveness. Our audit of internal financial controls over financial reportingincluded obtaining an understanding of internal financial controls over financialreporting assessing the risk that a material weakness exists and testing and evaluatingthe design and operating effectiveness of internal control based on the assessed risk. Theprocedures selected depend on the auditor s judgment including the assessment of therisks of material misstatement of the financial statements whether due to fraud or error.We believe that the audit evidence I/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 of records that in reasonable detail accurately andfairly reflect the transactions and dispositions of the assets of the company;
(2) provide reasonable assurance that transactions are recorded as necessary to permitpreparation of financial statements in accordance with generally accepted accountingprinciples and that receipts and expenditures of the company are being made only inaccordance with authorizations of Management and directors of the company; and
(3) Provide reasonable assurance regarding prevention or timely detection ofunauthorized acquisition use or disposition of the Company's assets that could have amaterial 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.
In our opinion the Company does not have an adequate internal financial controlssystem over financial reporting and such internal financial controls over financialreporting were not operating effectively as at March 31 2016.