To
The Members of
ABC Bearings Limited
Report on the Financial Statements
We have audited the accompanying financial statements of ABC Bearings Limited (“the Company”), which comprise the Balance Sheet as at 31st March, 2016, the Statement of Profit and Loss, 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
The Company’s Board of Directors is responsible for the matters stated in Section 134(5) of the Companies Act, 2013 (“the Act”) with respect to 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 principles generally accepted in India, including the Accounting Standards specified under Section 133 of the Act, read with the Rule 7 of the Companies (Accounts) Rules, 2014. This responsibility also includes maintenance of adequate Accounting records in accordance with the provision of the Act for safeguarding of the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgment and estimates that are reasonable and prudent; and design; implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, 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 have taken into account the provision of the Act , the accounting and auditing standards and matters which are required to be included in the audit report under the provision of the Act and the Rules made there under.
We conducted our audit in accordance with the Standards on Auditing specified under Section 143(10) of the Act. 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 the disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal financial control relevant to the Company’s preparation of the financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of the accounting estimates made by the Company’s Directors, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide 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 explanations given to us, the aforesaid financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India, of the state of affairs of the Company as at 31st March, 2016, 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 of the Act, we give in the Annexure I a statement on the matters specified in the paragraph 3 and 4 of the Order.
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 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 it appears from our examination of those books .
c. The Balance Sheet, the Statement of Profit and Loss, and the Cash Flow Statement dealt with by this Report are in agreement with the books of account.
d. In our opinion, the aforesaid financial statements comply with the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014.
e. On the basis of the written representations received from the directors as on 31st March, 2016 taken on record by the Board of Directors, none of the directors is disqualified as on 31st March, 2016, from being appointed as a director in terms of Section 164 (2) of the Act.
f. With respect to the adequacy of the internal financial controls over financial reporting of the Company and the operating effectiveness of such controls, refer to our separate report in “Annexure II ”; and
g. With respect to the other matters to be included in the Auditor’s Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules, 2014, in our opinion and to the best of our information and according to the explanations given to us:
I. The Company has disclosed the impact of pending litigations on its financial position in the financial statements (refer note 26 (ii) & (iii) to the financial statements).
II. The Company did not have any long term contracts including derivative contracts for which there were any material foreseeable losses.
III. There has been no delay in transferring amounts required to be transferred to the Investor Education and Protection Fund by the Company.
ANNEXURE- I ABC Bearings Limited
ANNEXURE TO INDEPENDENT AUDITORS’ REPORT ON THE ACCOUNTS FOR THE YEAR ENDED 31ST MARCH, 2016
1. a) The Company has maintained proper records showing full particulars including quantitative details and situation of all its fixed assets.
b) We are informed that the Company has a regular programme of physical verification of its fixed assets in a phased manner over a period of three years. Accordingly, the physical verification of part of the fixed assets has been carried out by the Management during the year and no material discrepancies have been noticed on such verification.
c) According to the information and explanation given to us and on the basis of examination of the records, the title deeds of immovable properties are held in the name of the Company.
2. The inventory has been physically verified at reasonable intervals during the year by the Management except stocks with third parties for which confirmations are obtained. The discrepancies noticed on physical verification, between physical stocks and books records, were not material in relation to the operations of the Company and have been properly dealt with in the books of accounts.
3. The Company has not granted any loans, secured or unsecured to companies, firms or other parties covered in the register maintained under Section 189 of the Companies Act, 2013.
4. The Company has not advanced any loan or given guarantee and made any investment in terms of Section 185 and 186 respectively of the Companies Act, 2013, accordingly clause 3(iv) of the Order is not applicable to the Company.
5. In our opinion and according to the information and explanations given to us, the Company has not accepted any deposit during the year in terms of provision of Section 73 to 76 or any other relevant provision of the Companies Act, 2013 and the rules framed there under. According to the information and explanations given to us, no order has been passed by the Company Law Board or the National Company Law Tribunal or the Reserve Bank of India or any Court or any other Tribunal.
6. We have broadly reviewed the books of Accounts maintained by the Company pursuant to the Order made by the Central Government for the maintenance of cost records under Section 148(1) of the Companies Act, 2013 and are of the opinion that prima facie the prescribed accounts and records have been maintained. We have not, however, made a detailed examination of the records with a view to determining whether they are accurate or complete.
7. a) On the basis of our examination of the books of accounts and other relevant records, the Company has been generally
regular in depositing with appropriate authorities undisputed statutory dues including provident fund, income tax, sales tax, service tax, custom duty, value added tax, excise duty, cess and other material statutory dues applicable to it and no such dues were outstanding as at 31-03-2016 for a period of more than six months from the date they became payable.
b) According to information and explanation given to us the disputed dues in respect of Sales Tax, Excise Duty, Service Tax and Income Tax that have not been deposited by the Company are as follows:
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Name of Statute
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Nature of Dues
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Amount (Rs. in lacs)
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Period to which it relates
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Forum where the dispute is pending
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Financial Year
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State and Central Sales Tax Acts
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Sales Tax
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1.98
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2000-01
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Jt. Commissioner of Sales Tax (Appeal) Worli Division, Mumbai
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The Central Excise Act, 1944
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Excise Duty
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3.08
6.56
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1998-99
2011-12
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CEGAT, Commissioner, Mumbai Commissioner (Appeal) Central Excise, Vadodara II
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The Finance Act, 1994
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Service Tax
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1.74
0.43
5.23
2.89
0.56
1.36
184.49
34.62
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2008-09
2010-11
2011-12
2012-13
2013-14 September, 2009
to May, 2014 June, 2014 to March, 2015
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CESTAT - Ahmedabad Commissioner (Appeal), Vadodara-II CESTAT - Ahmedabad
Commissioner (Appeal), Vadodara-II
CESTAT - Ahmedabad Commissioner (Appeal), Vadodara-II
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Income Tax Act, 1961
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Income Tax Income Tax Income Tax Income Tax Income Tax Income Tax Income Tax
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26.93 16.55 16.381 14.16 J 9.37 7.76 4.69
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Assessment Year 2006-07 2006-07
2009-10
2011-12
2012-13
2013-14
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High Court of Mumbai ITAT, Mumbai.
ITAT, Mumbai
CIT (Appeals), Mumbai. CIT (Appeals), Mumbai.
CIT (Appeals), Mumbai.
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8. According to the records of the Company examined by us and on the basis of information and explanations given to us, the Company has not defaulted in repayment of dues to banks during the year. The Company has not taken any loans or borrowings from financial institution and government or by issue of debentures.
9. The term loans have been applied for the purpose for which they were obtained. No moneys are raised by way of initial public offer or further public offer (including debt instruments).
10. On the basis of examination of books of accounts and other relevant records in the course of our audit and information and explanation given to us, no fraud by the Company or on the Company by its officers or employees has been noticed or reported during the year.
11. According to information and explanation given to us and based on our examination of the records of the Company, the managerial remuneration has been paid/provided in accordance with the requisite approval mandated by the provisions of Section 197 read with Schedule V of the Companies Act, 2013.
12. The Company is not a Nidhi Company, accordingly the requirement of Clause 3 (xii) of the Order is not applicable.
13. According to the records of the Company examined by us and on the basis of information and explanations given, the transaction with related parties during the year are in compliance with provision of Section 177 of the Companies Act, 2013 and requisite disclosure has been made in the Financial Statements as required by the applicable accounting standard. There are no transactions with related parties in terms of provisions of Section 188 of the Companies Act, 2013.
14. The Company has not raised any money by preferential allotment or private placement of Shares or by issue of fully or partly Convertible debentures during the year under review, accordingly Clause 3(xiv) of the Order is not applicable.
15. According to information and explanation given to us and based on our examination of the records of the company, the Company has not entered into non-cash transactions with directors or persons connected with them. Accordingly, Clause 3(xv) of the Order is not applicable.
16. The Company is not required to be registered under Section 45 - IA of the Reserve Bank of India Act, 1934.
ANNEXURE - II ABC Bearings Limited
Annexure to Independent Auditors’ Report on the accounts for the year ended 31st March, 2016
Report on the Internal Financial Controls under Clause (i) of Sub-Section 3 of Section 143 of the Companies Act, 2013 (“the Act”)
We have audited the internal financial controls over financial reporting of ABC Bearings Limited (“the Company”) as of 31st March, 2016 in conjunction with our audit of the standalone 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 ensuring that adequate internal financial controls systems is operational as stated in the Guidance Note on Audit of Internal Financial Controls over Financial Reporting issued by the Institute of Chartered Accountants of India (‘ICAI’). These responsibilities include implementation of policies and procedures adopted by the Company for ensuring the orderly and efficient conduct of its business, including adherence to company’s policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information, as required under the Companies Act, 2013.
Auditors’ Responsibility
Our responsibility is to express an opinion on the Company's internal financial controls over financial reporting based on our audit. We conducted our audit in accordance with the Guidance Note on Audit of Internal Financial Controls over Financial Reporting (the “Guidance Note”) and the Standards on Auditing, issued by ICAI, to the extent applicable to an audit of internal financial controls. Those Standards and the Guidance Note require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether adequate internal financial controls over financial reporting was established and maintained and if such controls operated effectively in all material respects.
Our audit involves performing procedures to obtain audit evidence about the adequacy of the internal financial controls system over financial reporting and their operating effectiveness. Our audit of internal financial controls over financial reporting included assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the Company’s internal financial controls system over financial reporting.
Meaning of Internal Financial Controls over Financial Reporting
A company's internal financial control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal financial control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company'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 financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may occur and not be detected. Also, projections of any evaluation of the internal financial controls over financial reporting to future periods are subject to the risk that the internal financial control over financial reporting may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Opinion
In our opinion, the Company has, in all material respects, an adequate internal financial controls system over financial reporting and such internal financial controls over financial reporting were operating effectively as at 31st March, 2016, based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issued by the Institute of Chartered Accountants of India.
For PARIKH & SHAH
Chartered Accountants
Firm’s Registration No. 107528W
Place : Mumbai
H.K. Desai
Date : 10th May, 2016. Partner
Membership No.13719
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