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Auditor Report of Elecon Engineering Company Ltd.

Mar 31, 2017

Report on the Standalone Ind AS Financial Statements

We have audited the accompanying standalone Ind AS financial statements of Elecon Engineering Company Limited ("the Company”), which comprise the Standalone Balance Sheet as at March 31, 2017, the Standalone Statement of Profit and Loss (including other comprehensive income), the Standalone Statement of Cash Flows and the Standalone Statement of Changes in Equity for the year then ended and a summary of the significant accounting policies and other explanatory information (hereinafter referred to as ''Standalone Ind AS financial statements'')

Management''s Responsibility for the Standalone Ind AS 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 standalone Ind AS financial statements that give a true and fair view of the financial position, financial performance including other comprehensive income, cash flows and changes in equity of the Company in accordance with the accounting principles generally accepted in India, including the Indian Accounting Standards (Ind AS) prescribed under Section 133 of the Act, read with relevant rules issued there under.

This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments 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 standalone Ind AS financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditors'' Responsibility

Our responsibility is to express an opinion on these standalone Ind AS financial statements based on our audit.

We have taken into account the provisions of the Act, the accounting and auditing standards and matters which are required to be included in the audit report under the provisions of the Act and the Rules made there under.

We conducted our audit of the standalone Ind AS financial statements 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 standalone Ind AS financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and the disclosures in the standalone Ind AS financial statements. The procedures selected depend on the Auditors'' judgment, including the assessment of the risks of material misstatement of the standalone Ind AS 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 standalone Ind AS 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 standalone Ind AS 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 standalone Ind AS financial statements.

Opinion

In our opinion and to the best of our information and according to the explanations given to us, the aforesaid standalone Ind AS 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, including Ind AS, of the financial position of the Company as at March 31, 2017, and its financial performance including other comprehensive income, its cash flows and the changes in equity for the year ended on that date.

Emphasis of matter

We draw attention to note 41 of the Statement regarding the Scheme of Amalgamation (''the Scheme1) between Elecon EPC Projects Limited (subsidiary of the Company) and the Company sanctioned by the Honorable High Court of Judicature at Gujarat vide its order dated October 7, 2016, wherein the Company, has accounted for the amalgamation under purchase method in accordance with the erstwhile Accounting Standard 14 - Accounting for Amalgamation. The Company has given effect to the Scheme from the appointed date specified in the Scheme i.e. March 30, 2015. Pursuant to giving effect of the Scheme the Capital Reserve of INR 4,258.57 Lakhs has been generated. The accounting treatment is different from that prescribed under Ind AS 103 - Business Combinations.

Other matters

The comparative financial information of the Company for the year ended March 31, 2016 and the transition date opening balance sheet as at April 1, 2015 prepared in accordance with Ind AS included in these standalone Ind AS financial statements have been audited by the one of Joint auditor, Thacker Butala Desai who had audited the financial statements for the relevant periods. The report of the one of Joint auditor, Thacker Butala Desai on the comparative financial information and the opening Balance Sheet dated May 19, 2017 expressed an unmodified opinion.

Our opinion is not modified in respect of this matters.

Report on Other Legal and Regulatory Requirements

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 A, a statement on the matters specified in the paragraphs 3 and 4 of the Order.

As required by sub-section (3) of Section 143 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 purposes 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 Standalone Balance Sheet, the Standalone Statement of Profit and Loss (including other comprehensive income), the Standalone Statement of Cash Flows and the Statement of Changes in Equity dealt with by this report are in agreement with the books of account;

(d) in our opinion, the aforesaid standalone Ind AS financial statements comply with the Indian Accounting Standards (Ind AS) prescribed under Section 133 of the Act, read with relevant rules issued thereunder;

(e) on the basis of the written representations received from the Directors as on March 31, 2017 taken on record by the board of directors, none of the Directors are disqualified as on March 31, 2017 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 B; and

(g) with respect to the other matters to be included in the Auditors'' 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 its standalone Ind AS financial statements - Refer Note 42 to the standalone Ind AS financial statements;

ii. the Company has made provision, as required under the applicable law or accounting standards, for material foreseeable losses on long-term contracts including derivative contracts (if any) - Refer Note 23 to the standalone Ind AS financial statements;

iii. there has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Company during the year ended March 31, 2017; and

iv. the Company has provided requisite disclosures in its standalone Ind AS financial statements as to holdings as well as dealings in Specified Bank Notes during the period from November 8, 2016 to December 30, 2016. Based on audit procedures and relying on management representation, we report that the disclosures are in accordance with the books of accounts maintained by the Company and as produced to us by the Management - Refer Note 40 to the standalone Ind AS financial statements.

With reference to the Annexure A referred to in the Independent Auditors'' Report to the members of the Company on the standalone Ind AS financial statements for the year ended March 31, 2017, we report the following:

(i) (a) The Company has maintained proper records showing full particulars, including quantitative details and situation of property, plant and equipment and investment properties.

(b) The Company has a regular programme of physical verification of its property, plant and equipment and investment properties by which all the items are verified in a phased manner over a period of three years. In our opinion, this periodicity of physical verification is reasonable having regard to the size of the Company and the nature of its assets. No material discrepancies were noticed upon such verification during the year and these have been dealt with appropriately in the books of account.

(c) According to the information and explanations given to us and on the basis of our examination of the records of the Company, the title deeds of immovable properties as disclosed in Note 3 and Note 4 to the standalone Ind AS financial statements, are held in the name of the Company, except in respect for two land parcels, which the Company is in process of registering the title deeds in its name (carrying value: INR 2,440.92 Lakhs included in Land).

(ii) The inventory, except goods in transit, has been physically verified by the management during the year. In our opinion, the frequency of such verification is reasonable. The discrepancies noticed on verification between the physical stocks and the book records were not material and have been dealt with in books of account.

(iii) The Company has granted unsecured loans to wholly owned foreign subsidiary company covered in the register maintained under Section 189 of the Companies Act, 2013 (''the Act''). The Company has not granted any loans, secured or unsecured, to firms, Limited Liability Partnerships or other parties covered under Section 189 of the Act:

a) In our opinion, the rate of interest and other terms and conditions on which the loans had been granted to the wholly owned foreign subsidiary company listed in the register maintained under Section 189 of the Act were not prejudicial to the Company''s interest.

b) According to the information and explanations given to us, the loans granted to the wholly owned foreign subsidiary company listed in the register maintained under Section 189 of the Act are repayable on demand. The borrower have been regular in repaying the principal amounts as demanded and in the payment of interest.

c) There is no overdue amount in respect of loans granted to the wholly owned foreign subsidiary company listed in the register maintained under Section 189 of the Act.

(iv) In our opinion and according to the information and explanations given to us, the Company has not given any loans, or provided any guarantees or security to the parties covered under Section 185 of the Act. Accordingly, compliance under Section 185 of the Act is not applicable to the Company. According to the information and explanations given to us, the Company has complied with the provisions of Section 186 of the Act in respect of the loans given and investment made.

(v) In our opinion, and according to the information and explanations given to us, the Company has not accepted deposits as per the directives issued by the Reserve Bank of India and the provisions of Sections 73 to 76 or any other relevant provisions of the Act and the rules framed there under. Accordingly, paragraph 3 (v) of the Order is not applicable to the Company.

(vi) We have broadly reviewed the books of accounts maintained by the Company pursuant to the rules prescribed by the Central Government for the maintenance of cost records under Section 148(1) of the Act and are of the opinion that prima facie, the prescribed accounts and records have been made and maintained. However, we have not made a detailed examination of the cost records with a view to determine whether they are accurate or complete.

(vii) (a) According to the information and explanations given to us and on the basis of our examination of the records of the Company, amounts deducted/accrued in the books of account in respect of undisputed statutory dues including Provident fund, Employees'' State Insurance, Income-tax, Duty of customs, Duty of excise, Sales-tax, Value added tax, Service tax, Works contract tax, Entry tax, Local body tax and other material statutory dues have been regularly deposited during the year with the appropriate authorities, though there have been significant delays in case of Professional tax. The Company is not having any dues in respect of Cess.

According to the information and explanations given to us, no undisputed amounts payable in respect of Provident fund, Employees'' State Insurance, Professional tax, Income-tax, Duty of customs, Duty of excise, Sales-tax, Service tax, Value added tax, Works contract tax, Entry tax, Local body tax and other material statutory dues were in arrears as at March 31, 2017 for a period of more than six months from the date they became payable.

(b) According to the information and explanations given to us, there are no dues of Income-tax, Sales tax, Service tax, Duty of customs, Duty of excise and Value added tax as at March 31, 2017, which have not been deposited with the appropriate authorities on account of any dispute, other than those mentioned in the Appendix I to this report.

(viii) In our opinion and according to the information and explanations given to us, the Company has not defaulted in repayment of loans and borrowings to the banks and financial institutions. The Company did not have any outstanding loans and borrowings to Government and outstanding dues to debenture holders during the year.

(ix) According to the information and explanations given to us and based on our examination of the records of the Company, the Company has not raised any moneys by way of initial public offer or further public offer (including debt instruments) during the year. In our opinion and according to the information and explanations given to us, the term loans taken by the Company have been applied for the purpose for which they are raised.

(x) During the course of our examination of the books and records of the Company, carried out in accordance with the generally accepted auditing practices in India, and according to the information and explanations given to us, we have neither come across any instance of material fraud by the Company or on the Company by its officers or employees, noticed or reported during the year, nor have we been informed of any such case by the management.

(xi) According to the information and explanations given to us and based on our examination of the records of the Company, the Company has paid/provided for managerial remuneration in accordance with the requisite approvals mandated by the provisions of Section 197 read with Schedule V to the Act.

(xii) In our opinion and according to the information and explanations given to us, the Company is not a Nidhi company. Accordingly, paragraph 3 (xii) of the Order is not applicable to the Company.

(xiii) According to the information and explanations given to us and based on our examination of the records of the Company, transactions with the related parties are in compliance with Sections 177 and 188 of the Act where applicable and details of such transactions have been disclosed in the standalone Ind AS financial statements as required by applicable accounting standards.

(xiv) According to the information and explanations given to us and based on our examination of the records of the Company, the Company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures during the year. Accordingly, paragraph 3 (xiv) of the Order is not applicable to the Company.

(xv) According to the information and explanations given to us and based on our examination of the records of the Company, the Company has not entered into any non-cash transactions with directors or persons connected with them. Accordingly, paragraph 3 (xv) of the Order is not applicable to the Company.

(xvi) In our opinion and according to the information and explanations given to us, the Company is not required to be registered under Section 45-IA of the Reserve Bank of India Act, 1934. Accordingly, paragraph 3 (xvi) of the Order is not applicable to the Company.

Sr.

No

Name of Statute

Nature of Dues

Amount (Rs. in lakhs)*

Period to which amount related

Forum where the Dispute is pending

1

The Finance Act, 1944

Service tax including penalties

6,014.22

2006 to 2013

C.E.S.T.A.T

Ahmedabad

2

The Finance Act, 1944

Service tax including penalties

1,578.80

2013 to 2016

Central Excise Commissioner (Appeal) Vadodara

3

Central Excise Act, 1944

Excise duty including penalties

77.93

1989 to 1993, 2009 to 2013

C.E.S.T.A.T

Ahmedabad

4

Central Sales Tax Act, 1956 and Value added tax of various States.

Sales Tax / Work Contract Tax

847.50

2007-08 to 2011-12

Commissioner of Commercial tax (Appeal) Vadodara

5

Central Sales Tax Act, 1956 and Value added tax of various States.

Sales Tax / Work Contract Tax

233.39

1991-92 to 1995-96

Odisha High Court

6

Central Sales Tax Act, 1956 and Value added tax of various States.

Sales Tax / Work Contract Tax

453.27

2005-06 to 2009-10

Dy. Commissioner of Commercial Tax, Maharashtra

7

Central Sales Tax Act, 1956 and Value added tax of various States.

Sales Tax / Work Contract Tax

555.29

2009-12 and 2013-14

Commissioner, Of Commercial Tax, West Bengal

8

The Income Tax Act, 1961

Income tax including interest

367.31

AY 1988-89, 1990-91, 2006-07 to 2011-12

ITAT

9

The Income Tax Act, 1961

Tax and Interest

23.92

AY 2009-10

CIT (Appeals) Vadodara

* INR 1,771.75 Lakhs have been deposited under protest

For B S R & Co. LLP For Thacker Butala Desai

Chartered Accountants Chartered Accountants

Firm''s Registration No: 101248W/W-100022 Firm''s Registration No: 110864W

Nirav Patel M T Desai

Partner Partner

Membership No: 113327 Membership No: 030911

Vallabh Vidyanagar Vallabh Vidyanagar

Date: May 19, 2017 Date: May 19, 2017


Mar 31, 2014

Report on the Financial Statements

We have audited the accompanying financial statements of ELECON ENGINEERING COMPANY LIMITED (the "Company"), which comprise the Balance Sheet as at March 31, 2014, the Statement of Profit and Loss and 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 ("the Act") read with General Circular 15/2013 dated 13 September 2013 of the Ministry of Corporate Affairs in respect of Section 133 of the Companies Act, 2013 and in accordance with the accounting principles generally accepted in India. 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 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 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 the 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 in conformity with the accounting principles generally accepted in India:

(a) in the case of the Balance Sheet, of the state of affairs of the Company as at March 31, 2014;

(b) in the case of the Statement of Profit and Loss, of the profit 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"), as amended, 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 read with General Circular 15/2013 dated 13 September 2013 of the Ministry of Corporate Affairs in respect of Section 133 of the Companies Act, 2013;

e. on the basis of written representations received from the Directors as on March 31, 2014, and taken on record by the Board of Directors, none of the Directors is disqualified as on March 31, 2014, from being appointed as a Director in terms of clause (g) of Sub-Section (1) of Section 274 of the Companies Act, 1956.

(Referred to in paragraph 1 under ''Report on Other Legal and Regulatory Requirements'' section of our report of even date) (i) (a) The Company has maintained proper records showing full particulars including quantitative details and situation of its fixed assets.

(b) We have been informed that, a portion of the Fixed Assets have been physically verified by the management during the year in accordance with a programme of verification in a phased manner and no material discrepancies were noticed on such verification. In our opinion, this periodicity of physical verification is reasonable having regard to the size of the Company and the nature of its assets.

(c) The Company has not disposed of a substantial part of the fixed assets during the year under review. Therefore, going concern status of the Company has not been affected.

(ii) (a) As explained to us, inventories were physically verified by the management during the year.

(b) In our opinion and according to the information and explanations given to us, the procedures of physical verification of inventories followed by the management were reasonable and adequate in relation to the size of the Company and the nature of its business.

(c) In our opinion and according to the information and explanations given to us, the Company has maintained proper records of its inventories and discrepancies noticed on physical verification have been properly dealt with in the books of account of the Company.

(iii) (a) According to the information & explanations given to us, the Company has not granted any secured or unsecured loan to any party listed in the register maintained under section 301 of the Companies Act, 1956.

(b) In view of clause (iii) (a) above, this clause regarding interest and other terms and conditions is not applicable.

(c) In view of clause (iii) (a) above, this clause regarding repayment of loan and interest thereon is not applicable.

(d) In view of (iii) (a) above, this clause regarding overdue amounts of such loans and interest thereon is not applicable.

(e) According to the information & explanations given to us, the Company had taken unsecured loans amounting to Rs. 275.50 Lacs from six parties listed in the register maintained under Section 301 of the Companies Act, 1956. The maximum amount involved during the year was Rs. 275.50 Lacs and the year end balance of one party was Rs. 17.00 Lacs and others five parties are Nil.

(f) The rate of interest and other terms and conditions of such loans are, in our opinion, prima facie not prejudicial to the interest of the Company.

(g) The Company has been regular in repayment of Principal amount and Interest thereon.

(iv) In our opinion and according to the information and explanations given to us, having regard to the explanations that some of the items purchased are of peculiar nature and/or suitable alternate sources are not available for obtaining comparable quotations, there is an adequate Internal Control system commensurate with the size of the Company and the nature of its business for the purchase of inventory and fixed assets and for the sale of goods and services. We have not observed any major weakness in the internal control system during the course of the audit.

(v) (a) According to the information and explanations given to us, contracts or arrangements with the parties listed in the register maintained under Section 301 of the Companies Act, 1956 have been entered in the register upon ratification of the same by the Board of Directors of the Company.

(b) We are informed that in case of the transaction in excess of Rs.5 Lacs with each of the parties listed in the register maintained under Section 301 of the Companies Act, 1956 no comparison of prices could be made as there was either no alternate source of supply or that the management preferred the suppliers'' products and services on quality grounds or peculiarity of the products sold or services rendered.

(vi) In our opinion and according to the information and explanations given to us, the Company has not invited deposits from the public during the year. Therefore, provisions of the clause 4

(vi) of the Order are not applicable to the Company.

(vii) The Company has appointed a firm of Chartered Accountants to carry out Internal Audit work. The said Internal Audit system operating in the Company commensurate with the size of the Company and nature of its business.

(viii) We have broadly reviewed the books of account and records maintained by the Company pursuant to the Companies (Cost Accounting Records) Rules, 2011 prescribed by the Central Government for the maintenance of cost records under Section 209(1) (d) of the Companies Act, 1956 and are of the opinion that prima facie the prescribed accounts and records have been made and maintained. We have, however, not made a detailed examination of the records with a view to determining whether they are accurate or complete.

(ix) (a) According to the information and explanations given to us, in respect of statutory dues, the Company has generally been regular in depositing undisputed statutory dues, including Provident Fund, Investor Education & Protection Fund, Employees'' State Insurance, Income Tax, Wealth Tax, Sales Tax, Custom Duty, Excise Duty, Service Tax, Cess and other material statutory dues applicable to it with appropriate authorities.

(b) According to the information and explanations given to us, in respect of statutory dues, there were no undisputed amount payable in respect of Provident Fund, Investor Education & Protection Fund, Employees'' State Insurance, Income Tax, Wealth Tax, Sales Tax, Custom Duty, Excise Duty, Service Tax, Cess and other material statutory dues in arrears as at March 31, 2014 for a period of more than six months from the date they became payable.

(c) According to information and explanations given to us, the Company has not paid the following statutory dues on account of the demand being disputed by the Company.

Sr. Name of Statute Nature Amount Rs. Period to Forum where the No. of dues which the Dispute is pending amount relates

1. Central Excise Act, 1944. Excise Duty & 209.43 2003-04 & C.E.S.T.A.T Penalties Lacs 2006-07 to 2012-13

2. Central Excise Act, 1944. Excise Duty & 120.40 2005-06, Central Excise Penalties Lacs 2006-07, -2007-08, Commissioner 2008-09 & 2012-13 (Appeal)

3. Income Tax Act, 1961. Income Tax 75.45 Commissioner of Lacs Income Tax (Appeal)

(x) According to the records of the Company, it has no accumulated losses. The Company has not incurred cash losses during the financial year under review or during the immediately preceding financial year.

(xi) According to our audit procedure and on the basis of information and explanations given by the management, the Company has not defaulted in repayment of dues to any Financial Institution, Bank and Debenture Holders.

(xii) According to our audit procedure and on the basis of information & explanations given to us, the Company has not granted any loan on the basis of security by way of pledge of shares, debentures and other securities. Therefore, the question of adequacy or otherwise of maintenance of documents and records in respect thereof does not arise.

(xiii) According to our audit procedure and on the basis of information & explanations given to us, the Company has not indulged in any chit fund activity during the year under review. Therefore, the question of compliance with provisions of any special statute applicable to chit fund does not arise.

(xiv) According to our audit procedure and on the basis of information & explanations given to us, the Company has not indulged in dealing or trading in shares, securities, debentures and other investments. In respect of long term investments made by the Company, according to the information and explanations given to us, all the investments have been held in the name of the Company only.

(xv) In our opinion and according to the information and explanations given to us, the terms and conditions of the guarantees given by the Company for loans taken by Subsidiary Company from Banks or Financial Institutions are not prima-facie prejudicial to the interest of the Company.

(xvi) In our opinion and according to the information & explanations given to us, the term loans obtained during the year under review have been applied for the purpose for which they were raised.

(xvii) In our opinion and according to the information & explanations given to us, and on an overall examination of the Balance Sheet of the Company, we report that no funds raised on short-term basis have been used for long-term investment.

(xviii) According to our audit procedure and on the basis of information & explanations given to us, during the year under review, the Company has not made any preferential allotment of shares to the parties or companies listed in the register maintained under Section 301 of the Companies Act,1956 except allotment of shares in accordance with a scheme of arrangement approved by the Gujarat High Court and Shareholders. Therefore, the question of impact of the prices recovered in respect of such shares on the interest of the Company does not arise.

(xix) According to our audit procedure and on the basis of information & explanations given to us, during the year under review, the Company has not issued any secured or unsecured debentures. Therefore, the question of creation of securities or charge in respect thereof does not arise.

(xx) According to our audit procedure and on the basis of information & explanations given to us, during the year under review, the Company has not raised any money by way of public issue of shares. Therefore, the question of disclosure and verification of end use of money so raised does not arise.

(xxi) Based upon the audit procedures performed for the purpose of reporting the true and fair view of the financial statement and as per information and explanations given by the management, no material frauds on or by the Company were noticed or reported during the year under review.

For THACkER BUTALA DESAI

Chartered Accountants

Firm Regn. No. 110864W

M. T. DESAI

Place : Navsari Partner

Date : 28-05-2014 Membership No. : 030911


Mar 31, 2013

Report on the Financial Statements

We have audited the accompanying financial statements of ELECON ENGINEERING COMPANY LIMITED (the "Company"), which comprise the Balance Sheet as at March 31, 2013, the Statement of Profit and Loss and 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 ("the Act"). 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 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 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. 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 the 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 in conformity with the accounting principles generally accepted in India:

(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 profit 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"), as amended, 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;

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.

ANNEXURE TO THE INDEPENDENT AUDITOR''S REPORT

(Referred to in paragraph 1 under ''Report on Other Legal and Regulatory Requirements'' section of our report of even date)

(i) (a) The Company has maintained proper records showing full particulars including quantitative details and situation of its fxed assets.

(b) We have been informed that, a portion of the Fixed Assets have been physically verifed by the management during the year in accordance with a programme of verifcation in a phased manner and no material discrepancies were noticed on such verifcation. In our opinion, this periodicity of physical verifcation is reasonable having regard to the size of the Company and the nature of its assets.

(c) The Company has disposed of substantial part of its fxed assets during the year under review by way of slump sale of assets pertaining to Material Handling operations of the Company based on a Scheme of Arrangement between the Company, Prayas Engineering Ltd., Emtici Engineering Ltd., Elecon EPC Projects Ltd. and their respective Shareholders & Creditors under section 391 to 394 of the Companies Act, 1956 as approved by the Honorable High Court of Gujarat. However, this has not afected the ability of the Company to be a going concern.

(ii) (a) As explained to us, inventories were physically verifed by the management during the year.

(b) In our opinion and according to the information and explanations given to us, the procedures of physical verifcation of inventories followed by the management were reasonable and adequate in relation to the size of the Company and the nature of its business.

(c) In our opinion and according to the information and explanations given to us, the Company has maintained proper records of its inventories and discrepancies noticed on physical verifcation have been properly dealt with in the books of account of the Company.

(iii) (a) According to the information & explanations given to us, the Company has not granted any secured or unsecured loan to any party listed in the register maintained under Section 301 of the Companies Act, 1956.

(b) In view of clause (iii) (a) above, this clause regarding interest and other terms and conditions is not applicable.

(c) In view of clause (iii) (a) above, this clause regarding repayment of loan and interest thereon is not applicable.

(d) In view of (iii) (a) above, this clause regarding overdue amounts of such loans and interest thereon is not applicable.

(e) According to the information & explanations given to us, the Company has taken unsecured loans amounting to Rs. 275.50 Lacs from 6 parties listed in the register maintained under Section 301 of the Companies Act, 1956. The maximum amount involved during the year was Rs.275.50 Lacs and the yearend balance was Rs.275.50 Lacs.

(f) According to the information & explanations given to us, rate of interest and other terms and conditions of such loan is not prima facie prejudicial to the interest of the Company.

(g) The Company has been regular in repayment of Principal amount and Interest thereon.

(iv) In our opinion and according to the information and explanations given to us, there is adequate Internal Control System commensurate with the size of the Company and the nature of its business for the purchase of inventory and fxed assets and for the sale of goods and services. We have not observed any major weakness in the Internal Control System during the course of the audit.

(v) (a) According to the information and explanations given to us, contracts or arrangements with the parties listed in the register maintained under Section 301 of the Companies Act, 1956 have been entered in the register upon ratifcation of the same by the Board of Directors of the Company.

(b) We are informed that in case of the transaction in excess of Rs. 5 Lacs with each of the parties listed in the register maintained under Section 301 of the Companies Act, 1956 no comparison of prices could be made as there was either no alternate source of supply or that the management preferred the suppliers'' products and services on quality grounds or peculiarity of the products sold or services rendered.

(vi) In our opinion and according to the information and explanations given to us, the Company has not invited deposits from the public during the year. Therefore, provisions of the Clause 4(vi) of the Order are not applicable to the Company.

(vii) The Company has appointed a frm of Chartered Accountants to carry out Internal Audit work. The said Internal Audit system operating in the Company commensurate with the size of the Company and nature of its business.

(viii) We have broadly reviewed the books of account and records maintained by the Company pursuant to the Companies (Cost Accounting Records) Rules, 2011 prescribed by the Central Government for the maintenance of cost records under Section 209(1)(d) of the Companies Act, 1956 and are of the opinion that prima facie the prescribed accounts and records have been made and maintained. We have, however, not made a detailed examination of the records with a view to determining whether they are accurate or complete.

(ix) (a) According to the information and explanations given to us, in respect of statutory dues, the Company has generally been regular in depositing undisputed statutory dues, including Provident Fund, Investor Education & Protection Fund, Employees'' State Insurance, Income Tax, Wealth Tax, Sales Tax, Custom Duty, Excise Duty, Service Tax, Cess and other material statutory dues applicable to it with appropriate authorities.

(b) According to the information and explanations given to us, in respect of statutory dues, there were no undisputed amount payable in respect of Provident Fund, Investor Education & Protection Fund, Employees'' State Insurance, Income Tax, Wealth Tax, Sales Tax, Custom Duty, Excise Duty, Service Tax, Cess and other material statutory dues in arrears as at March 31, 2013 for a period of more than six months from the date they became payable.

(c) According to information and explanations given to us, the Company has not paid the following statutory dues on account of the demand being disputed by the Company.

Sr. No. Nature of liability Amt. (Rs. in Lacs) Forum where the dispute is pending

1. Sales Tax / Work Contract Tax 15.93 Lacs Commissioner (Appeal)

2. Excise Duty & Penalties 95.38 Lacs C.E.S.T.A.T.

3. Excise Duty & Penalties 312.59 Lacs Central Excise Commissioner (Appeal)

4. Income Tax 33.35 Lacs Commissioner of Income Tax (Appeal)

(x) According to the records of the Company, it has no accumulated losses. The Company has not incurred cash losses during the fnancial year under review or during the immediately preceding fnancial year.

(xi) According to our audit procedure and on the basis of information and explanations given by the management, the Company has not defaulted in repayment of dues to any Financial Institution, Bank and Debenture Holde''

(xii) According to our audit procedure and on the basis of information & explanations given to us, the Company has not granted any loan on the basis of security by way of pledge of shares, debentures and other securities. Therefore, the question of adequacy or otherwise of maintenance of documents and records in respect thereof does not arise.

(xiii) According to our audit procedure and on the basis of information & explanations given to us, the Company has not indulged in any chit fund activity during the year under review. Therefore, the question of compliance with provisions of any special statute applicable to chit fund does not arise.

(xiv) According to our audit procedure and on the basis of information & explanations given to us, the Company has not indulged in dealing or trading in shares, securities, debentures and other investments. In respect of long term investments made by the Company, according to the information and explanations given to us, all the investments have been held in the name of the Company only.

(xv) In our opinion and according to the information and explanations given to us, the terms and conditions of the guarantees given by the Company for loans taken by Subsidiary Company from Banks or Financial Institutions are not prima-facie prejudicial to the interest of the Company.

(xvi) In our opinion and according to the information & explanations given to us, the term loans obtained during the year under review have been applied for the purpose for which they were raised.

(xvii) In our opinion and according to the information & explanations given to us, and on an overall examination of the Balance Sheet of the Company, we report that no funds raised on short-term basis have been used for long-term investment.

(xviii) According to our audit procedure and on the basis of information & explanations given to us, during the under review, the Company has not made any preferential allotment of shares to the parties or companies listed in the register maintained under Section 301 of the Companies Act,1956. Therefore, the question of impact of the prices recovered in respect of such shares on the interest of the Company does not arise.

(xix) The Company has issued debentures having subservient charge on the Fixed Assets of the Company. However, the charge is yet to be created.

(xx) According to our audit procedure and on the basis of information & explanations given to us, during the year under review, the Company has not raised any money by way of public issue of shares. Therefore, the question of disclosure and verifcation of end use of money so raised does not arise.

(xxi) Based upon the audit procedures performed for the purpose of reporting the true and fair view of the fnancial statement and as per information and explanations given by the management, no material frauds on or by the Company were noticed or reported during the year under review.

For THACkER BUTALA DESAI

Chartered Accountants

Firm Regn. No. 110864W

M. T. DESAI

Place : Navsari Partner

Date : 27-05-2013 Membership No. : 030911


Mar 31, 2012

1. We have audited the attached Balance Sheet of ELECON ENGINEERING COMPANY LIMITED as at March 31, 2012 and also the Statement of Profit and Loss and Cash Flow Statement of the Company for the year ended on that date annexed thereto. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit.

2. We conducted our audit in accordance with auditing standards generally accepted in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by the management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

3. As required by the amended Companies (Auditors' Report) Order, 2003 issued by the Central Government of India in terms of Sub-Section (4A) of Section 227 of the Companies Act, 1956, we annex hereto a statement on the matters specified in paragraphs 4 and 5 of the said Order.

4. Further to our comments in the Annexure referred to in paragraph (3) above, 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 the law have been kept by the Company so far as it 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 dealt with by this report comply with the applicable Accounting Standards referred to in Sub- Section (3C) of Section 211 of the Companies Act, 1956 ;

(e) Based on representations made by all the Directors of the Company as on 31st March, 2012 and taken on record by the Board of Directors of the Company and according to the information and explanations made available to us by the Company, none of the Directors of the Company has any disqualification as referred to in Clause (g) of Sub-Section (1) to Section 274 of the Companies Act, 1956; and

(f) In our opinion and to the best of our information and according to the explanations given to us, the said accounts read together with the notes thereon, give the information required by the Companies Act, 1956, in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India;

(i) In the case of the Balance Sheet, of the state of affairs of the Company as at March 31, 2012;

(ii) In the case of the Statement of Profit and Loss, of the Profit of the Company for the year ended on that date; and

(iii) In the case of the Cash Flow Statement, of the cash flows for the year ended on that date.

ANNEXURE TO THE AUDITORS' REPORT

(Referred to in paragraph 3 of our report of even date)

(i) (a) The Company has maintained proper records showing full particulars including quantitative details and situation of its fixed assets.

(b) Certain items of Plant and Machineries were physically verified by the management during the year in accordance with a programme of verification, which in our opinion provides for physical verification of all the fixed assets at reasonable intervals. According to the information and explanations given to us no material discrepancies were noticed on such verification.

(c) The Company has not disposed off a substantial part of the fixed assets during the year under review. Therefore, going concern status of the Company has not been affected.

(ii) (a) As explained to us, inventories were physically verified by the management during the year.

(b) In our opinion and according to the information and explanations given to us, the procedures of physical verification of inventories followed by the management were reasonable and adequate in relation to the size of the Company and the nature of its business.

(c) In our opinion and according to the information and explanations given to us, the Company has maintained proper records of its inventories and discrepancies noticed on physical verification have been properly dealt with in the books of account of the Company.

(iii) (a) According to the information & explanations given to us, the Company has not granted any secured or unsecured

loan to any party listed in the register maintained under Section 301 of the Companies Act, 1956.

(b) In view of clause (iii) (a) above, this clause regarding interest and other terms and conditions is not applicable.

(c) In view of clause (iii) (a) above, this clause regarding repayment of loan and interest thereon is not applicable.

(d) In view of (iii) (a) above, this clause regarding overdue amounts of such loans and interest thereon is not applicable.

(e) According to the information & explanations given to us, the Company has not taken any loan from any party listed in the register maintained under Section 301 of the Companies Act, 1956.

(f) In view of clause (iii) (e) above, this clause regarding interest and other terms and conditions is not applicable.

(g) In view of clause (iii) (e) above, this clause regarding repayment of loan and interest thereon is not applicable.

(iv) In our opinion and according to the information and explanations given to us, there is adequate Internal Control System commensurate with the size of the Company and the nature of its business for the purchase of inventory and fixed assets and for the sale of goods and services.

(v) (a) According to the information and explanations given to us, contracts or arrangements with the parties listed in the register maintained under Section 301 of the Companies Act, 1956 have been entered in the register upon ratification of the same by the Board of Directors of the Company.

(b) We are informed that in case of the transactions with the parties listed in the register maintained under Section 301 of the Companies Act, 1956 no comparison of prices could be made as there was either no alternate source of supply or that the management preferred the suppliers products and services on quality grounds or peculiarity of the products sold or services rendered.

(vi) According to the information and explanations given to us, applicable provisions of the directives issued by the Reserve Bank of India and the provisions of Section 58A, 58AA or other relevant provisions of the Companies Act, 1956 and the rules framed thereunder have been complied with in respect of the deposits accepted by the Company during the year under review.

(vii) The Company has appointed a firm of Chartered Accountants to carry out Internal Audit work. The said Internal Audit system operating in the Company commensurate with the size of the Company and nature of its business.

(viii) We have broadly reviewed the cost records maintained by the Company pursuant to the Companies (Cost Accounting Records) Rules, 2011 prescribed by the Central Government under Section 209(1)(d) of the Companies Act, 1956 and are of the opinion that prima facie the prescribed cost records have been maintained. We have, however, not made a detailed examination of the cost records with a view to determine whether they are accurate or complete.

(ix) (a) According to the records of the Company, undisputed statutory dues including Provident Fund, Investor Education & Protection Fund, Employees' State Insurance, Income Tax, Wealth Tax, Sales Tax, Custom Duty, Excise Duty, Service Tax, Cess and other statutory dues have been regularly deposited during the period with appropriate authorities. There was no outstanding statutory dues as at the end of the year outstanding for a period of more than six months from the date they became payable.

(b) According to information and explanations given to us, the Company has not paid the following statutory dues on account of the demand being disputed by the Company.

Sr. No. Nature of liability Amt. (Rs.in Lacs) Pending Before

1. Excise Duty, Penalties & Interest thereon 102.01 C.E.S.T.A.T.

2. Excise Duty, Penalties & Interest thereon 131.19 Central Excise

Commissioner (Appeal)

3. Sales Tax, Purchase Tax, Works Contract Tax and 347.55 Orissa State Sales Interest & Penalty thereon Tax Appellate Tribunal

4. Income Tax 13.02 Commissioner of

Income Tax (Appeal)

(x) According to the records of the Company, it has no accumulated losses. The Company has not incurred cash losses during the financial year under review or during the immediately preceding financial year.

(xi) According to our audit procedure and on the basis of information and explanations given by the management, the Company has not defaulted in repayment of dues to any Financial Institution or Bank. The Company has not issued any Debentures.

(xii) According to our audit procedure and on the basis of information & explanations given to us, the Company has not granted any loan on the basis of security by way of pledge of shares, debentures and other securities. Therefore, the question of adequacy or otherwise of maintenance of documents and records in respect thereof does not arise.

(xiii) According to our audit procedure and on the basis of information & explanations given to us, the Company has not indulged in any chit fund activity during the year under review. Therefore, the question of compliance with provisions of any special statute applicable to chit fund does not arise.

(xiv) According to our audit procedure and on the basis of information & explanations given to us, the Company has not indulged in dealing or trading in shares, securities, debentures and other investments. In respect of long term investments made by the Company, according to the information and explanations given to us, all the investments have been held in the name of the Company only.

(xv) In our opinion and according to the information and explanations given to us, the terms and conditions on which the Company has given guarantee for loans taken by others from Banks or Financial Institutions are prima-facie not prejudicial to the interest of the Company.

(xvi) In our opinion and according to the information & explanations given to us, the term loans obtained during the year under review have been applied for the purpose for which they were raised.

(xvii) In our opinion and according to the information & explanations given to us, and on an overall examination of the Balance Sheet of the Company, we report that no funds raised on short-term basis have been used for long-term investment.

(xviii) According to our audit procedure and on the basis of information & explanations given to us, during the year under review, the Company has not made any preferential allotment of shares to the parties or companies listed in the register maintained under Section 301 of the Companies Act,1956. Therefore, the question of impact of the prices recovered in respect of such shares on the interest of the Company does not arise.

(xix) According to our audit procedure and on the basis of information & explanations given to us, during the year under review, the Company has not issued any secured or unsecured debentures. Therefore, the question of creation of securities or charge in respect thereof does not arise.

(xx) According to our audit procedure and on the basis of information & explanations given to us, during the year under review, the Company has not raised any money by way of public issue of shares. Therefore, the question of disclosure and verification of end use of money so raised does not arise.

(xxi) Based upon the audit procedures performed for the purpose of reporting the true and fair view of the financial statement and as per information and explanations given by the management, no material frauds on or by the Company were noticed or reported during the year under review.

For THACKER BUTALA DESAI

Chartered Accountants

M. T. DESAI

Partner

Place : Navsari Membership No. : 030911

Date : 30-05-2012 Firm Regn. No. 110864W


Mar 31, 2011

1. We have audited the attached Balance Sheet of ELECON ENGINEERING COMPANY LIMITED as at March 31st, 2011 and also the Profit and Loss Account and Cash Flow Statement of the Company for the year ended on that date annexed thereto. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit.

2. We conducted our audit in accordance with auditing standards generally accepted in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by the management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

3. As required by the amended Companies (Auditors' Report) Order, 2003 issued by the Central Government of India in terms of Sub-Section (4A) of Section 227 of the Companies Act, 1956, we annex hereto a statement on the matters specified in paragraphs 4 and 5 of the said Order.

4. Further to our comments in the Annexure referred to in paragraph (3) above, 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 the law have been kept by the Company so far as it appears from our examination of those books;

(c) The Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this report are in agreement with the books of account;

(d) In our opinion, the Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this report comply with the applicable Accounting Standards referred to in Sub-Section (3C) of Section 211 of the Companies Act, 1956;

(e) Based on representations made by all the Directors of the Company as on 31st March, 2011 and taken on record by the Board of Directors of the Company and according to the information and explanations made available to us by the Company, none of the Directors of the Company has any disqualification as referred to in Clause (g) of Sub-Section (1) to Section 274 of the Companies Act, 1956; and

(f) In our opinion and to the best of our information and according to the explanations given to us, the said accounts read together with the notes thereon, give the information required by the Companies Act, 1956, in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India;

(i) In the case of the Balance Sheet, of the state of affairs of the Company as at March 31, 2011;

(ii) In the case of the Profit and Loss Account, of the Profit of the Company for the year ended on that date; and

(iii) In the case of the Cash Flow Statement, of the cash flows for the year ended on that date.

ANNEXURE TO THE AUDITORS' REPORT

(Referred to in paragraph 3 of our report of even date)

(i) (a) The Company has maintained proper records showing full particulars including quantitative details and situation of its fixed assets.

(b) Certain items of Plant and Machineries were physically verified by the management during the year in accordance with a programme of verification, which in our opinion provides for physical verification of all the fixed assets at reasonable intervals. According to the information and explanations given to us no material discrepancies were noticed on such verification.

(c) The Company has not disposed off a substantial part of the fixed assets during the year under review. Therefore, going concern status of the Company has not been affected.

(ii) (a) As explained to us, inventories were physically verified by the management during the year.

(b) In our opinion and according to the information and explanations given to us, the procedures of physical verification of inventories followed by the management were reasonable and adequate in relation to the size of the Company and the nature of its business.

(c) In our opinion and according to the information and explanations given to us, the Company has maintained proper records of its inventories and discrepancies noticed on physical verification have been properly dealt with in the books of account of the Company.

(iii) (a) According to the information & explanations given to us, the Company has not granted any secured or unsecured loan to any party listed in the register maintained under Section 301 of the Companies Act, 1956.

(b) In view of clause (iii) (a) above, this clause regarding interest and other terms and conditions is not applicable.

(c) In view of clause (iii) (a) above, this clause regarding repayment of loan and interest thereon is not applicable.

(d) In view of (iii) (a) above, this clause regarding overdue amounts of such loans and interest thereon is not applicable.

(e) According to the information & explanations given to us, the Company has not taken any loan from any party listed in the register maintained under Section 301 of the Companies Act, 1956.

(f) In view of clause (iii) (e) above, this clause regarding interest and other terms and conditions is not applicable.

(g) In view of clause (iii) (e) above, this clause regarding repayment of loan and interest thereon is not applicable.

(iv) In our opinion and according to the information and explanations given to us, there is adequate Internal Control system commensurate with the size of the Company and the nature of its business for the purchase of inventory and fixed assets and for the sale of goods and services.

(v) (a) According to the information and explanations given to us, contracts or arrangements with the parties listed in the register maintained under Section 301 of the Companies Act, 1956 have been entered in the register upon ratification of the same by the Board of Directors of the Company.

(b) We are informed that in case of the transactions with the parties listed in the register maintained under Section 301 of the Companies Act, 1956 no comparison of prices could be made as there was either no alternate source of supply or that the management preferred the suppliers' products and services on quality grounds or peculiarity of the products sold or services rendered.

(vi) According to the information and explanations given to us, applicable provisions of the directives issued by the Reserve Bank of India and the provisions of Section 58A, 58AA or other relevant provisions of the Companies Act, 1956 and the rules framed thereunder have been complied with in respect of the deposits accepted by the Company during the year under review.

(vii) The Company has appointed a firm of Chartered Accountants to carry out Internal Audit work. The said Internal Audit system operating in the Company commensurate with the size of the Company and nature of its business.

(viii) According to the information and explanations given to us, the Central Government has not prescribed maintenance of cost records under Section 209(1 )(d) of the Companies Act, 1956 in respect of any of the products of the Company.

(ix) (a) According to the records of the Company, undisputed statutory dues including Provident Fund, Investor Education & Protection Fund, Employees' State Insurance, Income Tax, Wealth Tax, Sales Tax, Custom Duty, Excise Duty, Service Tax, Cess and other statutory dues have been regularly deposited during the period with appropriate authorities. There was no outstanding statutory dues as at the end of the year outstanding for a period of more than six months from the date they became payable.

(b) According to information and explanations given to us, the Company has not paid the following statutory dues on account of the demand being disputed by the Company.

Sr. No. Nature of liability Amt. (Rs. in Lacs) Pending Before

1. Excise Duty, Penalties & Interest thereon 146.49 C.E.S.T.A.T.

2. Excise Duty, Penalties & Interest thereon 122.89 Central Excise

Commissioner (Appeal)

3. Sales Tax, Purchase Tax, Works Contract Tax and 347.55 Orissa State Sales Interest & Penalty thereon Tax Appellate Tribunal

(x) According to the records of the Company, it has no accumulated losses. The Company has not incurred cash losses during the financial year under review or during the immediately preceding financial year.

(xi) According to our audit procedure and on the basis of information and explanations given by the management, the Company has not defaulted in repayment of dues to any Financial Institution or Bank. The Company has not issued any Debentures.

(xii) According to our audit procedure and on the basis of information & explanations given to us, the Company has not granted any loan on the basis of security by way of pledge of shares, debentures and other securities. Therefore, the question of adequacy or otherwise of maintenance of documents and records in respect thereof does not arise.

(xiii) According to our audit procedure and on the basis of information & explanations given to us, the Company has not indulged in any chit fund activity during the year under review. Therefore, the question of compliance with provisions of any special statute applicable to chit fund does not arise.

(xiv) According to our audit procedure and on the basis of information & explanations given to us, the Company has not indulged in dealing or trading in shares, securities, debentures and other investments. In respect of long term investments made by the Company, according to the information and explanations given to us, all the investments have been held in the name of the Company only.

(xv) In our opinion and according to the information and explanations given to us, the terms and conditions on which the Company has given guarantee for loans taken by others from Banks or Financial Institutions are prima-facie not prejudicial to the interest of the Company.

(xvi) In our opinion and according to the information & explanations given to us, the term loans obtained during the year under review have been applied for the purpose for which they were raised.

(xvii) In our opinion and according to the information & explanations given to us, and on an overall examination of the Balance Sheet of the Company, we report that no funds raised on short-term basis have been used for long-term investment.

(xviii) According to our audit procedure and on the basis of information & explanations given to us, during the year under review, the Company has not made any preferential allotment of shares to the parties or Companies listed in the register maintained under Section 301 of the Companies Act, 1956. Therefore, the question of impact of the prices recovered in respect of such shares on the interest of the Company does not arise.

(xix) According to our audit procedure and on the basis of information & explanations given to us, during the year under review, the Company has not issued any secured or unsecured debentures. Therefore, the question of creation of securities or charge in respect thereof does not arise.

(xx) According to our audit procedure and on the basis of information & explanations given to us, during the year under review, the Company has not raised any money byway of public issue of shares. Therefore, the question of disclosure and verification of end use of money so raised does not arise.

(xxi) Based upon the audit procedures performed for the purpose of reporting the true and fair view of the financial statement and as per information and explanations given by the management, no material frauds on or by the Company were noticed or reported during the year under review.

For THACKER BUTALA DESAI Chartered Accountants

M. T. DESAI Partner Place : Navsari Membership No. : 030911

Date : 28-05-2011 Firm Regn. No. 110864W


Mar 31, 2010

1. We have audited the attached Balance Sheet of ELECON ENGINEERING COMPANY LIMITED as at March 31, 2010 and also the Profit and Loss Account and Cash Flow Statement of the Company for the year ended on that date annexed thereto. These financial statements are the responsibility of the Companys management. Our responsibility is to express an opinion on these financial statements based on our audit.

2. We conducted our audit in accordance with Auditing Standards generally accepted in India.Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by the management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

3. As required by the amended Companies (Auditors Report) Order, 2003 issued by the Central Government of India in terms of Sub-Section (4A) of Section 227 of the Companies Act, 1956, we annex hereto a statement on the matters specified in paragraphs 4 and 5 of the said Order.

4. Further to our comments in the Annexure referred to in paragraph (3) above, 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- lb) In our opinion, proper books of account, as required by the law have been kept by the Company so far as it appears from our examination of those books;

(c) The Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this report are in agreement with the books of account;

(d) In our opinion, the Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this report comply with the applicable Accounting Standards referred to in Sub- Section (3C) of Section 211 of the Companies Act, 1956;

(e) Based on representations made by all the Directors of the Company as on 31st March, 2010 and taken on record by the Board of Directors of the Company and according to the information and explanations made available to us by the Company, none of the Directors of the Company has any disqualification as referred to in Clause (g) of Sub-Section (1) to Section 274 of the Companies Act, 1956; and

(f) In our opinion and to the best of our information and according to the explanations given to us, the said accounts read together with the notes thereon, give the information required by the Companies Act, 1956, in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India;

(i) In the case of the Balance Sheet, of the state of affairs of the Company as at March 31, 2010;

(ii) In the case of the Profit and Loss Account, of the Profit of the Company for the year ended on that date; and

(iii) In the case of the Cash Flow Statement, of the cash flows for the year ended on that date.

ANNEXURE TO THE AUDITORS REPORT

(Referred to in paragraph 3 of our report of even date)

(i) (a) The Company has maintained proper records showing full particulars including quantitative details and situation of its fixed assets.

(b) Certain items of Plant and Machineries were physically verified by the management during the year in accordance with a programme of verification, which in our opinion provides for physical verification of all the fixed assets at reasonable intervals. According to the information and explanations given to us no material discrepancies were noticed on such verification.

(c) The Company has not disposed off a substantial part of the fixed assets during the year under review. Therefore, going concern status of the Company has not been affected.

(ii) (a) As explained to us, inventories were physically verified by the management at the end of the year.

(b) In our opinion and according to the information and explanations given to us, the procedures of physical verification of inventories followed by the management were reasonable and adequate in relation to the size of the Company and the nature of its business.

(c) In our opinion and according to the information and explanations given to us, the Company has maintained proper records of its inventories and discrepancies noticed on physical verification have been properly dealt with in the books of account of the Company.

(iii) (a) According to the information & explanations given to us, the Company has not granted any secured or unsecured loan to any party listed in the register maintained under Section 301 of the Companies Act, 1956.

(b) In view of clause (iii) (a) above, this clause regarding interest and other terms and conditions is not applicable.

(c) In view of clause (iii) (a) above, this clause regarding repayment of loan and interest thereon is not applicable.

(d) In view of clause (iii) (a) above, this clause regarding overdue amounts of such loan and interest thereon is not applicable.

(e) According to the information & explanations given to us, the Company has not taken any loan from any party listed in the register maintained under Section 301 of the Companies Act, 1956.

(f) In view of clause (iii) (e) above, this clause regarding interest and other terms and conditions is not applicable.

(g) In view of clause (iii) (e) above, this clause regarding repayment of loan and interest thereon is not applicable.

(iv) In our opinion and according to the information and explanations given to us, there is adequate internal control system commensurate with the size of the Company and the nature of its business for the purchase of inventory and fixed assets and for the sale of goods and services.

(v) (a) According to the information and explanations given to us, contracts or arrangements with the parties listed in the register maintained under Section 301 of the Companies Act, 1956 have been entered in the register upon ratification of the same by the Board of Directors of the Company.

(b) We are informed that in case of the transactions with the parties listed in the register maintained under Section 301 of the Companies Act, 1956 no comparison of prices could be made as there was either no alternate source of supply or that the management preferred the suppliers products and services on quality grounds or peculiarity of the products sold or services rendered.

(vi) According to the information and explanations given to us, applicable provisions of the directives issued by the Reserve Bank of India and the provisions of Section 58A, 58AA or other relevant provisions of the Companies Act, 1956 and the rules framed thereunder have been complied with in respect of deposit accepted by the Company during the year under review.

(vii) The Company has appointed a firm of Chartered Accountants to carry out Internal Audit work. The said Internal Audit system operating in the Company commensurate with the size of the Company and nature of its business.

(viii) According to the information and explanations given to us, the Central Government has not prescribed maintenance of cost records under Section 209(1 )(d) of the Companies Act, 1956 in respect of any of the products of the Company.

(ix) (a) According to the records of the Company undisputed statutory dues including Provident Fund, Investor Education & Protection Fund, EmployeesState Insurance, Income Tax, Wealth Tax, Sales Tax, Custom Duty, Excise Duty, Service Tax, Cess and other statutory dues have been regularly deposited during the period with appropriate authorities. There was no outstanding statutory dues as at the end of the year outstanding for a period of more than six months from the date they became payable.

(b) According to information and explanations given to us, the Company has not paid the following statutory dues on account of the demand being disputed by the Company.

Sr. No. Nature of liability Amt. (Rs. in Lacs) Pending Before 1. Excise Duty, Penalties & Interest thereon 109.38 C.E.S.T.A.T. 2. Excise Duty, Penalties & Interest thereon 49.98 Central Excise Commissioner (Appeal) 3. Income Tax, Wealth Tax and Interest & Penalty thereon 35.71 I.T.A.T. 4. Income Tax, Wealth Tax and Interest & Penalty thereon 390.59 C.I.T (Appeal) 5. Sales Tax, Purchase Tax, Works Contract 347.55 Orissa State Sales Tax Tax and Interest & Penalty thereon Appellate Tribunal

(x) According to the records of the Company, it has no accumulated losses. The Company has not incurred cash losses during the financial year under review or during the immediately preceding financial year.

(xi) According to our audit procedure and on the basis of information and explanations given by the management, the Company has not defaulted in repayment of dues to any Financial Institution or Bank. The Company has not issued any Debenture.

(xii) According to our audit procedure and on the basis of information & explanations given to us, the Company has not granted any loan on the basis of security by way of pledge of shares, debentures and other securities. Therefore, the question of adequacy or otherwise of maintenance of documents and records in respect thereof does not arise.

(xiii) According to our audit procedure and on the basis of information & explanations given to us, the Company has not indulged in any chit fund activity during the year under review. Therefore, the question of compliance with provisions of any special statute applicable to chit fund does not arise.

(xiv) According to our audit procedure and on the basis of information & explanations given to us, the Company has not indulged in dealing or trading in shares, securities, debentures and other investments. In respect of long term investment made by the Company, according to the information and explanations given to us, all the investments have been held in the name of the Company only.

(xv) In our opinion and according to the information & explanations given to us, the terms and conditions on which the Company has given guarantee for loans taken by others from Banks or Financial Institutions are prima-facie not prejudicial to the interest of the Company.

(xvi) In our opinion and according to the information & explanations given to us, the term loans obtained during the year under review have been applied for the purpose for which they were raised.

(xvii) In our opinion and according to the information & explanations given to us, and on an overall examination of the Balance Sheet of the company, we report that no funds raised on short-term basis have been used for long-term investment.

(xviii) According to our audit procedure and on the basis of information & explanations given to us, during the year under review, the Company has not make any preferential allotment of shares to the parties or companies listed in the register maintained under Section 301 of the Companies Act,1956. Therefore, the question of impact of the prices recovered in respect of such shares on the interest of the Company does not arise.

(xix) According to our audit procedure and on the basis of information & explanations given to us, during the year under review, the Company has not issued any secured or unsecured debentures.

Therefore, the question of creation of securities or charge in respect thereof does notarise.

(xx) According to our audit procedure and on the basis of information & explanations given to us, during the year under review, the Company has not raise money byway of public issue of shares.

Therefore, the question of disclosure and verification of end use of money so raised does not arise.

(xxi) Based upon the audit procedures performed for the purpose of reporting the true and fair view of the financial statement and as per information and explanations given by the management, no material frauds on or by the Company were noticed or reported during the year under review except an instance of fraud on the Company by its one of the employees as given below:

One case of misappropriation by the said employee of the Company aggregating to Rs.33,40,431/- was reported during the year. The service of said employee involved has been terminated and the Company is in the process of taking legal actions.

However, the said amount has been recovered from the said employee with interest and hence there is no impact on the financial results of the Company for the year under review.

For THACKER BUTALA DESAI Chartered Accountants M.T. DESAI Partner Place : Navsari Membership No.: 30911 Date : 14-05-2010 Firm Regn. No. 110864W

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