We have audited the accompanying financial statements of Best &
Crompton Engg. Limited ("the Company"), which comprise the Balance
sheet as at 31st March 2013, the Statement of Profit and Loss and the
Cash Flow Statement for the year then ended, and a summary of
significant accounting policies and other explanatory information.
Management's Responsibility for the Financial Statements
Management is responsible for the preparation of these financial
statements that give a true and fair view of the financial position,
financial performance and cash flows of the company in accordance with
the Accounting Standards referred to in sub-section (3C) of section 211
of the Companies Act, 1956 read with the General Circular 15/2013 dated
13 September 2013 of the Ministry of Corporate Affairs in respect of
Section 133 of the Companies Act, 2013. This responsibility includes
the design, implementation and maintenance of internal control relevant
to the preparation and presentation of the financial statements that
give a true and fair view and are free from material misstatement,
whether due to fraud or error.
Auditor's Responsibility
Our responsibility is to express an opinion on these financial
statements based on our audit. We conducted our audit in accordance
with the Standards on Auditing issued by the Institute of Chartered
Accountants of India. Those standards require that we comply with
ethical requirements and plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free
from material misstatement.
An audit involves performing procedures to obtain audit evidence about
the amounts and disclosures in the financial statements. The procedures
selected depend on the auditor's judgement, including the assessment of
the risks of material misstatements of the financial statements,
whether due to fraud or error. In making those risk assessments, the
auditor considers internal control relevant to the Company's
preparation and fair presentation of the financial statements in order
to design audit procedures that are appropriate in the circumstances
but not for the purpose of expressing an opinion on the effectiveness
of the entity's internal control. An audit also includes evaluating the
appropriateness of accounting policies used and the reasonableness of
the accounting estimates made by management, as well as evaluating the
overall presentation of financial statements.
We believe that the audit evidence we have obtained is sufficient and
appropriate to provide a basis for our audit opinion.
Opinion
In our opinion and to the best of our information and according to the
explanations given to us, the financial statements give the information
required by the Act in the manner so required and give a true and fair
view subject to 2 below and in conformity with the accounting
principles generally accepted in India:
1. Attention is called to the following, without qualifying
The Company has received inward remittances in respect of export of
goods which are yet to be made through authorized dealers which is more
clearly reflected in Note 43.
2. a) The company's ability to continue as a going concern under SA
570 has been assessed. In our opinion unless the company comes up with
concrete plans to tie up Shareholders' equity/ Long term debt, it will
have difficulty to continue to operate as a going concern.
b) The company has not complied with the following Accounting Standards
-
- AS - 13 (Accounting for Investments). The majority of the Company's
assets are its investment in Subsidiaries whose financial results have
been adversely commented upon by their respective auditors. We are
unable to state that the diminutions in these investments are long term
in nature. Any long term diminution in the value of these investments
will significantly erode the net worth of Best & Crompton Engg.
Limited.
- With regard to AS - 28 (Impairment of Assets) the recoverability of
most of the debts exceeding 6 months should have been classified as
doubtful.
c) The company has obtained secured loan from Institutions amounting to
Rs. 57.45 crores and the repayment of principal and interest is
outstanding as on date.
d) There has been a very significant delay in remitting P F, ESI, TDS
and Employee related dues and other statutory obligations as at the
balance sheet date. Tax deducted at source obligation of Rs. 40.52
lakhs is pending. Since remitted.
e) The effect of items (a) and (b) above are not quantifiable owing to
uncertainty in estimation of recoverable value of investments and
current assets. Hence this cumulative effect on the Statement of Profit
& Loss, reserves and net worth is not ascertainable.
(a) in the case of the Balance Sheet, of the state of affairs of the
Company as at March 31, 2013;
(b) in the case of the Statement of Profit and Loss, of the LOSS for
the year ended on that date; and
(c) in the case of the Cash Flow Statement, of the 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, 2003 ("the
Order") issued by the Central Government of India in terms of sub-
section (4A) of section 227 of the Act, we give in the Annexure a
statement on the matters specified in paragraphs 4 and 5 of the Order.
2. As required by section 227(3) of the Act, we report that:
a. we have obtained all the information and explanations which to the
best of our knowledge and belief were necessary for the purpose of our
audit;
b. in our opinion proper books of account as required by law have been
kept by the Company so far as appears from our examination of those
books;
c. the Balance Sheet, Statement of Profit and Loss and Cash Flow
Statement dealt with by this Report are in agreement with the books of
account;
d. in our opinion, the Balance Sheet, Statement of Profit and Loss and
Cash Flow Statement comply with the Accounting Standards referred to in
sub section (3C) of section 211 of the Companies Act 1956, subject to
note 2 above and
e. on the basis of written representations received from the directors
as on March 31, 2013, and taken on record by the Board of Directors,
none of the directors is disqualified as on March 31, 2013, from being
appointed as a director in terms of clause (g) of sub-section (1) of
section 274 of the Companies Act, 1956 read with the General Circular
15/2013 dated 13 September 2013 of the Ministry of Corporate Affairs in
respect of Section 133 of the Companies Act, 2013.
f. Since the Central Government has not issued any notification as to
the rate at which the cess is to be paid under section 441A of the
Companies Act, 1956 nor has it issued any Rules under the said section,
prescribing the manner in which such cess is to be paid, no cess is due
and payable by the Company.
1. (a) The Company has maintained proper records showing full
particulars including quantitative details and situation of fixed
assets. The fixed assets have been physically verified during the year
by the management.
(b) During the year the Company has not disposed off substantial part
of the fixed assets.
2. (a) Inventories have been physically verified during the year by
the Management.
(b) In our opinion, the procedure of physical verification of inventory
followed by the management is reasonable and adequate in relation to
the size of the Company and the nature of its business.
(c) The Company has maintained proper records of inventories. The
discrepancies noticed on verification between physical stocks and book
records were not material.
3. The Company has certified that no transaction need to be entered in
the Register maintained under Section 301 of the Companies Act 1956.
Hence the question of loans given or received from such parties does
not arise.
4. In our opinion and according to the information and explanations
given to us, there are adequate internal control systems commensurate
with the size of the Company and the nature of its business with regard
to the purchase of stores, raw materials including components, plant
and machinery, equipment and other assets and with regard to the sale
of goods and services.
5. (a) In our opinion and according to the information and
explanations and based on certifications given to us, we are of the
opinion that there are no transactions that need to be entered into the
register maintained under Section 301 of the Companies Act, 1956.
(b) No transactions have been entered at a price exceeding the value of
Rs. 5,00,000/- in respect of any one party.
6. The company has not accepted any fixed deposits from the public
during the year and there are no outstanding fixed deposits.
7. In our opinion, the internal audit functions carried out during the
year by an external agency appointed by the Management have been
commensurate with the size of the Company and the nature of its
business.
8. We have been informed that Cost Audit is applicable to 2 units in
the Pumps Division of the Company. The Cost audit is in progress.
9. (a) According to the records of the Company Provident fund,
Employees State Insurance, Tax deducted at source and Service tax dues
have been deposited with the appropriate authorities with severe delays
in certain months except for TDS amounting to Rs. 40.52 lakhs. Since
remitted.
(b) The Undisputed income tax liability amounting to Rs 19.80 crores
were in arrears as on 31st March 2013 for a period of more than six
months from the date they became payable. The amount relates to the
period A.Y.2009-10
(c) The disputed statutory dues amounting to Rs. 1843.94- lakhs that
have not been deposited on account of matters pending before
appropriate authorities are as under.
S. Particulars Forum Year
No
1 Excise Duty Commissioner of Excise 1998-99
2 Sales Tax High Court, Tribunal, 1983-84 to
Additional Deputy Commissioner, 2003-04
Assistant Commissioner, Joint
Commissioner, Additional
Commissioner.
3 Central Tribunal, 1987-88 to
Sales Tax Additional Deputy Commissioner, 2001-02
Assistant Commissioner, Joint
Commissioner, Additional
Commissioner.
4 Income Tax
Particulars Amount (lakhs)
Excise Duty 0.86
Sales Tax 352.92
Central Sales Tax 80.88
Income Tax 1409.28
Total 1843.94
10. The Company has accumulated losses as at 31st March 2013. The
Company has incurred cash losses in the current financial year and also
in the immediately preceding financial year.
11. The Company has defaulted in repayments to Financial Institutions
as follow:
Particulars Principle (Rs.) Interest (Rs.)
ILFS 5070 lakhs 674.56 lakhs
12. According to the information and explanations given to us, the
company has not granted any loans and advances on the basis of security
by way of pledge of shares, debentures and other securities.
13. The provisions of any special statute as specified under clause
(xiii) of paragraph 4 of the Order are not applicable to the Company.
14. According to the information and explanations given to us, the
Company is not dealing or trading in shares, securities, debentures and
other investments. Accordingly, clause 4(xiv) of Companies (Auditors'
Report) Order 2003, is not applicable.
15. The company has given guarantees for Rs.3,26,80,50/- thousands on
behalf of its subsidiaries and another company.
16. According to the information and explanations given to us, on an
overall basis, the term loans have been applied for the purposes for
which they were obtained.
17. According to the information and explanation given to us and on
overall examination of the Balance Sheet of the Company, we report that
funds raised on short-term basis have not been used for long term
investment.
18. During the year the Company has not made any preferential
allotment of shares to the parties and the companies covered in the
register maintained under Section 301 of the Companies Act, 1956.
Accordingly, clause 4 (xviii) of Companies (Auditors Report) Order 2003
is not applicable.
19. On the basis of records and documents examined by us, there is no
shortfall in the creation of security.
20. The Company has not raised any money through public issue during
the year.
21. According to the information and explanations given to us, no
fraud on or by the Company has been noticed or reported during the
year.
For CNGSN & ASSOCIATES
Chartered Accountants
F.R.No.004915S
Place : Chennai C N GANGADARAN
Dated: October 9, 2014 Partner
Memb. No. 11205
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