Dec 31, 2023
Opinion
1. We have audited the accompanying standalone financial statements of Schaeffler India Limited (âthe Companyâ), which comprise the Balance Sheet as
at December 31, 2023, the Statement of Profit and Loss (including Other Comprehensive Income), the Statement of Cash Flow and the Statement of Changes in Equity for the year then ended, and notes to the standalone financial statements, including a summary of the significant accounting policies and other explanatory information.
2. In our opinion and to the best of our information and according to the explanations given to us, the aforesaid standalone financial statements give the information required by the Companies Act, 2013 (âthe Actâ) in
the manner so required and give a true and fair view in conformity with the Indian Accounting Standards (âInd ASâ) specified under section 133 of the Act read with the Companies (Indian Accounting Standards) Rules, 2015 and other accounting principles generally accepted in India, of the state of affairs of the Company as at December 31, 2023, and its profit (including other comprehensive income), its cash flows and the changes in equity for the year ended on that date.
3. We conducted our audit in accordance with the Standards on Auditing specified under section 143(10) of the Act. Our responsibilities under those standards are further described in the Auditorâs Responsibilities for the Audit of the Standalone Financial Statements section of our report. We are independent of the Company in accordance with the Code of Ethics issued by the Institute of Chartered Accountants of India (âICAIâ) together with the ethical requirements that are relevant to our audit of the financial statements under the provisions of the Act and the rules thereunder, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the Code of Ethics. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
4. Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the standalone financial statements of the current period. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
5. We have determined the matters described below to be the key audit matters to be communicated in our report.
Key audit matter |
How our audit addressed the key audit matter |
Revenue Recognition (refer note 25 and 48 of the accompanying financial statements) The Companyâs revenue principally comprises sale of goods. Revenue from the sale of goods is recognised at point in time when the control of the goods is transferred to the customers, which is on dispatch/delivery in accordance with the terms of sales contracts. We have identified the recognition of revenue as a key audit matter since the Company has various customers with different terms of trade which increase the risk of error in the timing of revenue recognition. Revenue is determined to be an area involving significant risk in line with the requirements on Standards of Auditing and hence requiring significant auditor attention. The Company and its external stakeholders focus on revenue as a key performance indicator and therefore there could be a risk of material misstatement in so far as revenue recognition is concerned. Considering the aforesaid significance to our audit and the external stakeholders, revenue recognition has been considered as a key audit matter for the current yearâs audit. |
Our key audit procedures around revenue recognition included, and not limited to, the following: ⢠Obtained an understanding of and assessed the design, implementation and operating effectiveness of managementâs key internal financial controls in relation to revenue recognition; ⢠Assessed the appropriateness of the revenue recognition accounting policies of the Company including those relating to variable consideration, by evaluating compliance with the applicable accounting standards. ⢠Selected samples of revenue transactions during the year and inspected underlying customer contracts and shipping documents to identify the terms and conditions relating to the transfer of control of the products sold and assessed the Companyâs timing of revenue recognition; ⢠Performed analytical review procedures on revenue recognized during the year to identify any unusual and/or material variances. ⢠Tested selected samples of revenue transactions recorded before and after the financial year end date to determine whether the revenue has been recognised in the appropriate financial period. Evaluated the appropriateness and adequacy of disclosures in the standalone financial statements in respect of revenue recognition with the applicable standards |
Key audit matter |
How our audit addressed the key audit matter |
Related Party Transactions |
Our key audit procedures around Related party transactions included, and |
(refer note 38 of the accompanying financial statements) |
not limited to, the following: |
The Company has entered into several transactions with related |
⢠Obtained an understanding and assessed the design, implementation |
parties during the year ended 31 December 2023 and has |
and operating effectiveness of managementâs key internal financial |
outstanding balances as the year-end. |
controls in relation to identification and disclosure of related party |
The Companyâs related party transactions comprises purchase and |
transactions and armâs length assessment. |
sale of goods, purchase of tangible assets, payments for royalty, |
⢠Assessed the compliance with the SEBI listing regulations and the |
information technology services and other services, guarantee |
regulations under the Companies Act, 2013, including authorization |
commission and reimbursements. |
and approvals as specified in Sections 177 and 188 of the Companies |
Each related party operates under different jurisdiction and |
Act, 2013 with respect to the related party transactions, as applicable. |
applies its own pricing model to be compliant with the respective |
⢠Evaluated the compliance with Indian Transfer Pricing Regulations with |
legal and tax (transfer pricing) framework of the respective |
respect to armâs length based on the transfer pricing documentation |
jurisdiction. |
prepared by the Company. This also involved obtaining views from the |
We have identified transactions with related parties as a key |
auditorâs internal tax experts regarding the armâs length pricing. |
audit matter due to quantum of transactions, completeness of the |
⢠On a sample basis, inspected relevant ledgers, agreements and |
disclosures made in the financial statements, compliance with |
other information that may indicate the existence of related party |
various tax requirements and judgements involved to ensure armâs |
relationships or transactions. We also assessed the completeness of |
length pricing, compliance with statutory regulations governing |
related parties with reference to the various statutory registers and |
related party transactions such as Companies Act, 2013 and |
declarations maintained by the Companyâs management. |
Securities and Exchange Board of India (Listing Obligations and |
Evaluated the adequacy and appropriateness of the disclosures on related |
Disclosure Requirements) Regulations 2015 (âthe SEBI listing |
party transactions in the financial statements with the requirements of the |
regulationsâ). |
applicable accounting standard. |
Information other than the Standalone Financial Statements and Auditorâs Report thereon
6. The Companyâs Board of Directors are responsible for the other information. The other information comprises the information included in the annual report, but does not include the standalone financial statements and our auditorâs report thereon.
Our opinion on the standalone financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.
In connection with our audit of the standalone financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the standalone financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
Responsibilities of Management and Those Charged with Governance for the Standalone Financial Statements
7. The accompanying standalone financial statements have been approved by the Companyâs Board
of Directors. The Companyâs Board of Directors are responsible for the matters stated in section 134(5) of the Act with respect to the preparation and presentation of these standalone financial statements that give a true and fair view of the financial position, financial performance including other comprehensive income, changes in equity and cash flows of the Company in accordance with the Ind
AS specified under section 133 of the Act and other accounting principles generally accepted in India.
This responsibility also includes maintenance of adequate accounting records in accordance with the provisions 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 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 financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.
8. In preparing the standalone financial statements, the Board of Directors are responsible for assessing the Companyâs ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Board of Directors either intend to liquidate the Company or to cease operations, or has no realistic alternative but to do so.
9. Those Board of Directors are also responsible for overseeing the Companyâs financial reporting process.
Auditorâs Responsibilities for the Audit of the Standalone Financial Statements
10. Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditorâs report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Standards on Auditing will always detect a material misstatement
including any significant deficiencies in internal control that we identify during our audit.
13. We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.
14. From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the financial statements of the current period and are therefore the key audit matters. We describe these matters
in our auditorâs report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.
Report on Other Legal and Regulatory Requirements
15. As required by section 197(16) of the Act based on our audit, we report that the Company has paid remuneration to its directors during the year in accordance with the provisions of and limits laid down under section 197 read with Schedule V to the Act.
16. As required by the Companies (Auditorâs Report) Order, 2020 (âthe Orderâ) issued by the Central Government of India in terms of section 143(11) of the Act we
give in the Annexure A a statement on the matters specified in paragraphs 3 and 4 of the Order, to the extent applicable.
17. Further to our comments in Annexure A, as required by section 143(3) of the Act based on our audit, we report, to the extent applicable, 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 of the accompanying standalone financial statements;
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 financial statements dealt with by this report are in agreement with the books of account;
d) in our opinion, the aforesaid standalone financial statements comply with Ind AS specified under section 133 of the Act;
when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
11. As part of an audit in accordance with Standards on Auditing, specified under section 143(10) of the Act we exercise professional judgment and maintain professional skepticism throughout the audit. We also:
⢠Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate
to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control;
⢠Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances. Under section 143(3)(i) of the Act we are also responsible for expressing our opinion on whether the Company has adequate internal financial controls with reference to financial statements in place and the operating effectiveness of such controls;
⢠Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management;
⢠Conclude on the appropriateness of Board of Directorsâ use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Companyâs ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditorâs report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditorâs report. However, future events or conditions may cause the Company to cease to continue as a going concern;
⢠Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation;
12. We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings,
e) On the basis of the written representations received from the directors and taken on record by the Board of Directors, none of the directors is disqualified as on December 31, 2023 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 with reference to financial statements of the Company as on December 31, 2023 and the operating effectiveness of such controls, refer to our separate Report in Annexure B wherein we have expressed an unmodified opinion; and
g) With respect to the other matters to be included in the Auditorâs Report in accordance with rule 11 of the Companies (Audit and Auditors) Rules, 2014 (as amended), in our opinion and to the best of our information and according to the explanations given to us:
i. the Company, as detailed in note 36 to the standalone financial statements, has disclosed the impact of pending litigations on its financial position as at December 31, 2023;
ii. the Company did not have any long-term contracts including derivative contracts for which there were any material foreseeable losses as at December 31, 2023;
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 December 31, 2023;
iv. a. The management has represented
that, to the best of its knowledge and belief, as disclosed in note 54 (5) to the standalone financial statements, no funds have been advanced or loaned or invested (either from borrowed funds or securities premium or any other sources or kind of funds) by the Company to or in any person or entity, including foreign entities (âthe intermediariesâ), with the understanding, whether recorded in writing or otherwise, that the intermediary shall, whether, directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Company (âthe Ultimate Beneficiariesâ) or provide any guarantee, security or the like on behalf the Ultimate Beneficiaries;
b. The management has represented that, to the best of its knowledge and belief, as disclosed in note 54 (6) to the standalone financial statements, no funds have been received by the
Company from any person or entity, including foreign entities (âthe Funding Partiesâ), with the understanding, whether recorded in writing or otherwise, that the Company shall, whether directly or indirectly, lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party (âUltimate Beneficiariesâ) or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries; and
c. Based on such audit procedures performed as considered reasonable and appropriate in the circumstances, nothing has come to our notice that has caused us to believe that the management representations under subclauses (a) and (b) above contain any material misstatement.
v. a. The final dividend paid by the Company
during the year ended December 31,
2023 in respect of such dividend declared for the previous year is in accordance with section 123 of the Act to the extent it applies to payment of dividend and
b. As stated in note 17 to the
accompanying standalone financial statements, the Board of Directors of the Company have proposed final dividend for the year ended December 31, 2023 which is subject to the approval of the members at the ensuing Annual General Meeting. The dividend declared is in accordance with section 123 of the Act to the extent it applies to declaration of dividend.
vi. Proviso to Rule 3(1) of the Companies (Accounts) Rules, 2014 requires all companies which use accounting software for maintaining their books of account, to use such an accounting software which has a feature of audit trail, with effect from the financial year beginning on April 1, 2023 and accordingly, reporting under Rule 11(g) of Companies (Audit and Auditors) Rules, 2014 (as amended) is not applicable for the current financial year.
For Walker Chandiok & Co LLP
Chartered Accountants Firmâs Registration No.: 001076N/N500013
Khushroo B. Panthaky
Partner
Place: Mumbai Membership No.: 042423
Date: February 16, 2024 UDIN: 24042423BKCMLG7791
Dec 31, 2022
Basis for Opinion
Opinion
1. We have audited the accompanying financial statements of Schaeffler India Limited (âthe Companyâ), which comprise the Balance Sheet as at December 31, 2022, the Statement of Profit and Loss (including Other Comprehensive Income), the Statement of Cash Flow and the Statement of Changes in Equity for the year then ended, and a summary of the significant accounting policies and other explanatory information.
2. 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 Companies Act, 2013 (âthe Actâ) in the manner so required and give a true and fair view in conformity with the Indian Accounting Standards (âInd ASâ) specified under section 133 of the Act read with the Companies (Indian Accounting Standards) Rules, 2015 and other accounting principles generally accepted in India, of the state of affairs of the Company as at December 31, 2022, and its profit (including other comprehensive income), its cash flows and the changes in equity for the year ended on that date.
3. We conducted our audit in accordance with the Standards on Auditing specified under section 143(10) of the Act. Our responsibilities under those standards are further described in the Auditorâs Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Company in accordance with the Code of Ethics issued by the Institute of Chartered Accountants of India (âICAIâ) together with the ethical requirements that are relevant to our audit of the financial statements under the provisions of the Act
and the rules thereunder, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the Code of Ethics. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
4. Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the current period. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
5. We have determined the matters described below to be the key audit matters to be communicated in our report.
Key audit matter |
How our audit addressed the key audit matter |
Revenue Recognition |
Our key audit procedures around revenue recognition included, and not limited |
(refer note 23 and 46 of the accompanying financial statements) |
to, the following: |
The Companyâs revenue principally comprises |
⢠Obtained an understanding of and assessed the design, implementation and |
sale of goods. Revenue from the sale of goods is |
operating effectiveness of managementâs key internal financial controls in |
recognised at point in time when the control of the goods is transferred to the customers, which is on |
relation to revenue recognition; |
dispatch/delivery in accordance with the terms of |
⢠Assessed the appropriateness of the revenue recognition accounting policies |
sales contracts. We have identified the recognition of revenue |
of the Company including those relating to variable consideration, by evaluating compliance with the applicable accounting standards. |
as a key audit matter since the Company has |
⢠Selected samples of revenue transactions during the year and inspected |
various customers with different terms of trade |
underlying customer contracts and shipping documents to identify the terms |
which increase the risk of error in the timing of |
and conditions relating to the transfer of control of the products sold and |
revenue recognition. Revenue is determined to be an area involving significant risk in line with the |
assessed the Companyâs timing of revenue recognition; |
requirements on Standards of Auditing and hence |
⢠Performed analytical review procedures on revenue recognised during the |
requiring significant auditor attention. |
year to identify any unusual and/or material variances. |
The Company and its external stakeholders |
⢠Tested selected samples of revenue transactions recorded before and after |
focus on revenue as a key performance indicator |
the financial year end date to determine whether the revenue has been |
and therefore there could be a risk of material |
recognised in the appropriate financial period. |
misstatement in so far as revenue recognition is concerned. Considering the aforesaid significance to our audit and the external stakeholders, revenue recognition has been considered as a key audit matter for the current yearâs audit. |
Evaluated the appropriateness and adequacy of disclosures in the financial |
statements in respect of revenue recognition with the applicable standards. |
Key audit matter |
How our audit addressed the key audit matter |
Related Party Transactions |
Our key audit procedures around Related party transactions included, and not |
(refer note 36 of the accompanying financial |
limited to, the following: |
statements) The Company has entered into several transactions |
⢠Obtained an understanding and assessed the design, implementation and |
with related parties during the year ended December |
operating effectiveness of managementâs key internal financial controls in |
31, 2022 and has outstanding balances as the |
relation to identification and disclosure of related party transactions and |
year-end. |
armâs length assessment. |
The Companyâs related party transactions comprises |
⢠Assessed the compliance with the SEBI listing regulations and the regulations |
purchase and sale of goods, purchase of tangible |
under the Companies Act, 2013, including authorisation and approvals as |
assets, payments for royalty, information technology |
specified in Sections 177 and 188 of the Companies Act, 2013 with respect to |
services and other services, guarantee commission and reimbursements. |
the related party transactions, as applicable. |
⢠Evaluated the compliance with Indian Transfer Pricing Regulations with |
|
Each related party operates under different |
respect to armâs length based on the transfer pricing documentation prepared |
jurisdiction and applies its own pricing model to be |
by the Company. This also involved obtaining views from the auditorâs |
compliant with the respective legal and tax (transfer pricing) framework of the respective jurisdiction. |
internal tax experts regarding the armâs length pricing. |
We have identified transactions with related |
⢠On a sample basis, inspected relevant ledgers, agreements and other |
parties as a key audit matter due to quantum of |
information that may indicate the existence of related party relationships |
transactions, completeness of the disclosures made |
or transactions. We also assessed the completeness of related parties with |
in the financial statements, compliance with various |
reference to the various statutory registers and declarations maintained by |
tax requirements and judgements involved to ensure |
the Companyâs management. |
armâs length pricing, compliance with statutory regulations governing related party transactions |
Evaluated the adequacy and appropriateness of the disclosures on related party transactions in the financial statements with the requirements of the applicable |
such as Companies Act, 2013 and Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations 2015 (âthe SEBI listing regulationsâ). |
accounting standard. |
Information other than the Financial Statements and Auditorâs Report thereon
6. The Companyâs Board of Directors are responsible for the other information. The other information comprises the information included in the Annual Report, but does not include the financial statements and our auditorâs report thereon.
Our opinion on the financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of Management and Those Charged with Governance for the Financial Statements
7. The accompanying financial statements have been approved by the Companyâs Board of Directors. The Companyâs Board of Directors are responsible for the matters stated in section 134(5) of the Act with respect to the preparation and presentation of these
financial statements that give a true and fair view of the financial position, financial performance including other comprehensive income, changes in equity and cash flows of the Company in accordance with the Ind AS specified under section 133 of the Act and other accounting principles generally accepted in India.
This responsibility also includes maintenance of adequate accounting records in accordance with the provisions 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 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 financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.
8. In preparing the financial statements, the Board of Directors are responsible for assessing the Companyâs ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Board of Directors either intend to liquidate the Company or to cease operations, or has no realistic alternative but to do so.
9. Those Board of Directors are also responsible for overseeing the Companyâs financial reporting process.
Auditorâs Responsibilities for the Audit of the Financial Statements
10. Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditorâs report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Standards on Auditing will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
11. As part of an audit in accordance with Standards on Auditing, specified under section 143(10) of the Act we exercise professional judgment and maintain professional skepticism throughout the audit. We also:
⢠Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate
to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control;
⢠Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances. Under section 143(3)(i) of the Act we are also responsible for expressing our opinion on whether the Company has adequate internal financial controls with reference to financial statements in place and the operating effectiveness of such controls;
⢠Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management;
⢠Conclude on the appropriateness of Board of Directorsâ use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Companyâs ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditorâs report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditorâs report. However, future events or conditions may cause the Company to cease to continue as a going concern and
⢠Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
12. We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
13. We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.
14. From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditorâs report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably
be expected to outweigh the public interest benefits of such communication.
Report on Other Legal and Regulatory Requirements
15. As required by section 197(16) of the Act based on our audit, we report that the Company has paid remuneration to its directors during the year in accordance with the provisions of and limits laid down under section 197 read with Schedule V to the Act.
16. As required by the Companies (Auditorâs Report) Order, 2020 (âthe Orderâ) issued by the Central Government of India in terms of section 143(11) of the Act we
give in the Annexure A a statement on the matters specified in paragraphs 3 and 4 of the Order, to the extent applicable.
17. Further to our comments in Annexure A, as required by section 143(3) of the Act based on our audit, we report, to the extent applicable, 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 of the accompanying financial statements;
(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 financial statements dealt with by this report are in agreement with the books of account;
(d) in our opinion, the aforesaid financial statements comply with Ind AS specified under section 133 of the Act;
(e) On the basis of the written representations received from the directors and taken on record by the Board of Directors, none of the directors is disqualified as on December 31, 2022 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 with reference to financial statements of the Company as on December 31, 2022 and the operating effectiveness of such controls, refer to our separate Report in Annexure B wherein we have expressed an unmodified opinion; and
(g) With respect to the other matters to be included in the Auditorâs Report in accordance with rule 11 of the Companies (Audit and Auditors) Rules, 2014 (as amended), 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 as at December 31, 2022;
ii. the Company did not have any long-term contracts including derivative contracts for which there were any material foreseeable losses as at December 31, 2022;
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 December 31, 2022;
iv. a. The management has represented
that, to the best of its knowledge and belief, as disclosed in note 49 (5) to the financial statements, no funds have been advanced or loaned or invested (either from borrowed funds or securities premium or any other sources or kind of funds) by the Company to or in any person or entity, including foreign entities (âthe intermediariesâ), with the understanding, whether recorded in writing or otherwise, that the intermediary shall, whether, directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the
Company (âthe Ultimate Beneficiariesâ) or provide any guarantee, security or the like on behalf the Ultimate Beneficiaries;
b. The management has represented that, to the best of its knowledge and belief, as disclosed in note 49 (6) to the financial statements, no funds have been received by the Company from any person or entity, including foreign entities (âthe Funding Partiesâ), with the understanding, whether recorded in writing or otherwise, that the Company shall, whether directly or indirectly, lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party (âUltimate Beneficiariesâ) or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries; and
c. Based on such audit procedures performed as considered reasonable and appropriate in the circumstances, nothing has come to our notice that has caused us to believe that the management representations under sub-clauses (a) and (b) above contain any material misstatement.
v. a. The final dividend paid by the Company during the year ended December 31, 2022 in respect of such dividend declared for the previous year is in accordance with section 123 of the Act to the extent it applies to payment of dividend and
b. As stated in note 15 to the accompanying financial statements, the Board of Directors of the Company have proposed final dividend for the year ended December 31, 2022 which is subject to the approval of the members at the ensuing Annual General Meeting. The dividend declared is in accordance with section 123 of the Act to the extent it applies to declaration of dividend.
For Walker Chandiok & Co. LLP
Chartered Accountants Firmâs Registration No.: 001076N/N500013
Khushroo B. Panthaky
Partner
Place: Mumbai Membership No.: 042423
Date: February 16, 2023 UDIN: 23042423BGWILR7847
Dec 31, 2018
Independent Auditors'' Report
To the Members of Schaeffler India Limited (formerly known as FAG Bearings India Limited)
Report on the Indian Accounting Standards (Ind AS) Financial Statements
We have audited the accompanying Ind AS financial statements of Schaeffler India Limited (formerly known as FAG Bearings India Limited) (âthe Companyâ), which comprise the Balance Sheet as at 31 December 2018, the Statement of Profit and Loss (including Other Comprehensive Income), the Cash Flow Statement and the Statement of Changes in Equity for the year then ended, and a summary of significant accounting policies and other explanatory information.
Managementâs Responsibility for the Ind AS Financial Statements
The Companyâs Board of Directors is responsible for the matters stated in Section 134(5) of the Companies Act, 2013 (âthe Actâ) with respect to the preparation of these Ind AS financial statements that give a true and fair view of the state of affairs, profit 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.
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; the selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and the 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 Ind AS financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.
Auditorâs Responsibility
Our responsibility is to express an opinion on these 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 thereunder.
We conducted our audit of the 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 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 Ind AS financial statements. The procedures selected depend on the auditorâs judgment, including the assessment of the risks of material misstatement of the Ind AS financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal financial control relevant to the Companyâs preparation of the 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 Companyâs directors, as well as evaluating the overall presentation of the 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 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 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 of the state of affairs of the Company as at 31 December 2018, and its profit including other comprehensive income, its cash flows and the changes in equity for the year ended on that date.
Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditorâs Report) Order, 2016 (âthe Orderâ), issued by the Central Government in terms of sub-section (11) of Section 143 of the Act, we give in the Annexure âAâ, a statement on the matters specified in paragraphs 3 and 4 of the Order, to the extent applicable.
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 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 Balance Sheet, the Statement of Profit and Loss, the Cash Flow Statement 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 Ind AS financial statements comply with the Indian Accounting Standards prescribed under Section 133 of the Act.
(e) On the basis of the written representations received from the directors as on 31 December 2018 taken on record by the Board of Directors, none of the directors is disqualified as on 31 December 2018, 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 with reference to financial statements of the Company and the operating effectiveness of such controls, refer to our separate Report in Annexure âBâ to this report;
(g) In our opinion, the managerial remuneration for the year ended December 31, 2018 has been paid / provided by the Company to its directors in accordance with the provisions of section 197 read with Schedule V to the Act; and
(h) With respect to the other matters to be included in the Auditorâs 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 Ind AS financial statements - refer note 35 to the Ind AS financial statements.
ii. The Company has made provisions, as required under the applicable law or accounting standards, for material foreseeable losses, if any, on long-term contracts including derivative contracts - refer note 38 to the 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.
(iv) In our opinion and according to the information and explanations given to us, there are no loans, garantees or securities in respect of which provision of section 185 of the Companies act, 2013 are applicable. Further, in our opinion and according to the information and explanations given to us, provisions of section 186 of the Companies Act, 2013 in respect of loans and advances given , investments made and garantees, securities given, have been complied by the company.
(v) The Company has not accepted any deposits to which the directives issued by the Reserve Bank of India and the provisions of Sections 73 to 76 or any other relevant provisions of the Companies Act, 2013 apply. Accordingly, paragraph 3(v) of the Order is not applicable to the Company.
(vi) We have broadly reviewed the books of account maintained by the Company pursuant to the rules prescribed by the Central Government for maintenance of cost records under Section 148(1) of the Companies Act, 2013, in respect of applicable products for the year ended 31 December 2018 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 records.
(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, Employeesâ State Insurance, Income-tax, Customs duty, Goods and Services tax and other material statutory dues have been generally regularly deposited during the year by the Company with the appropriate authorities.
(b) According to the information and explanations given to us, no undisputed amounts payable in respect of Provident Fund, Employeesâ State Insurance, Income-tax, Sales-tax, Service tax, Wealth tax, Excise duty, Customs duty, Value added tax, Goods and Services tax and other material statutory dues were in arrears as at 31 December 2018 for a period of more than six months from the date they became payable.
With reference to the Annexure - âAâ referred to in our report of even date, we report that:
(i) (a) The Company has maintained proper records showing full particulars, including quantitative details and situation of property, plant and equipment.
(b) The Company has a programme of physical verification of its property, plant and equipment by which all property, plant and equipment are verified in a phased manner over a period of two 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. Accordingly, a part of the property, plant and equipment were physically verified by the management in the current year and no material discrepancies were noticed on such verification.
(c) In our opinion and 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 included in property, plant and equipment are held in the name of the Company, except in case of immovable properties of two transferor entities, which have been merged with the Company during the year pursuant to the Scheme of Amalgamation and their title transfer proceedings are under progress.
(ii) The inventory, except goods-in-transit and stocks lying with certain third parties, has been physically verified by the management during the year. For stocks lying with third parties at the year-end, written confirmations have been obtained. In our opinion, the frequency of such verification is reasonable. No material discrepancies were noticed on such physical verification.
(iii) According to the information and explanations given to us, 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. Accordingly, Paragraph 3(iii) of the Order is not applicable to the company.
(c) According to the information and explanations given to us, there are no dues of Provident Fund, Employeesâ State Insurance, Income-tax, Sales-tax, Service tax, Wealth tax, Excise duty, Customs duty, Value added tax and Goods and Services tax which have not been deposited with the appropriate authorities on account of any dispute other than those mentioned below:
Name of statute |
Nature of dues |
Amount (INR in million) |
Period |
Forum where dispute is pending |
State and Central Sales Tax Act |
Duty, Interest and Penalty |
0.1 |
2006-07 |
Dy. Commissioner Sales Tax |
0.3 |
2008-09 |
Joint Commissioner (Appeals), Maharashtra VAT, Pune |
||
0.6 |
2009-10 |
|||
9.9 |
2009-10 |
Commissioner (Appeals) |
||
6.4 |
2010-11 |
Joint Commissioner (Appeals), Maharashtra VAT, Pune |
||
1.2 |
2011-12 |
|||
1.0 |
2012-13 |
|||
0.4 |
2012-13 |
Dy. Commissioner of Sales Tax |
||
1.2 |
2013-14 |
|||
0.3 |
2013-14 2014-15 |
|||
12.0 |
2015-16 |
Assistant Commissioner (Commercial Taxes) |
||
Maharashtra Value Added Tax Act, 2002 |
Duty, Interest and Penalty |
0.5 |
2006-07 |
Joint Commissioner (Appeals), Maharashtra VAT, Pune |
1.6 |
2008-09 |
|||
0.3 |
2009-10 |
|||
0.8 |
2010-11 |
|||
0.2 |
2013-14 |
|||
The Finance Act, 1994 |
Duty and Interest |
11.8 |
Oct 2011 to March 2015 |
Commissioner of Central Excise |
The Central Excise Act, 1944 |
Duty, Interest and Penalty |
11.6 |
2009-10 2010-11 |
Commissioner Excise and Service Tax Appellate Tribunal, Mumbai (CESTAT) |
249.1 |
September 2010 to March 2012 |
|||
0.7 |
April 2011 and March 2015 |
Commissioner of Central Excise |
||
94.12 |
Oct 2011 to September 2016 |
Commissioner Excise and Service Tax Appellate Tribunal, Mumbai (CESTAT) |
Name of statute |
Nature of dues |
Amount (INR in million) |
Period |
Forum where dispute is pending |
6.7 |
April 2012 and May 2012 |
Commissioner of Central Excise |
||
5.2 |
2013-14 2014-15 |
Commissioner (A), Customs, Excise and Service Tax |
||
Income Tax Act, 1961 |
Tax and interest |
0.37 |
2002-03 |
Commissioner of Income Tax (Appeals) |
11.62 |
2004-05, 2005 - 06 and 2007-08 |
Income Tax - Appellate Tribunal |
||
1.24 |
2007-08 |
|||
14.40 |
2012-13 |
Commissioner of Income Tax (Appeals) |
||
17.64 |
2013-14 |
|||
42.12 |
2013-14 |
|||
2.32 |
2014-15 |
|||
5.05 |
2015-16 |
Above amounts are net of amounts paid under protest for sales-tax aggregating to INR 27.6 million, Excise Duty aggregating to INR 29.9 million and for Income-tax aggregating to INR 580.5 million.
(viii) In our opinion and according to the information and explanations given to us, the Company does not have any loans or borrowing from financial institutions or banks or Government or dues to debenture holders during the year. Accordingly, paragraph 3(viii) of the Order is not applicable to the Company.
(ix) 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 were raised. The Company did not raise any money by way of initial public offer or further public offer (including debt instruments).
(x) In our opinion and according to the information and explanations given to us, we report that no fraud by the Company or on the Company by its officers and employees has been noticed or reported during the year.
(xi) According to the information and explanations 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 approvals mandated by the provisions of Section 197 read with Schedule V to the Companies Act, 2013.
(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 related parties are in compliance with Section 177 and Section 188 of the Companies Act, 2013 where applicable and details of such transactions have been disclosed in the notes to the Ind AS financial statements, as required by the 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 under review. Accordingly, paragraph 3(xiv) of the Order is not applicable to the Company.
(xv) According to the information and explanations given to us, the Company has not entered into any non-cash transactions with directors or persons connected with them, as referred to in Section 192 of the Companies Act, 2013. Accordingly, paragraph 3(xv) of the Order is not applicable to the Company.
(xvi) 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.
We have audited the internal financial controls with reference to financial statements of Schaeffler India Limited (formerly known as FAG Bearings India Limited) (âthe Companyâ) as at 31 December 2018 in conjunction with our audit of the Ind AS financial statements of the Company for the year ended on that date.
Managementâs Responsibility for Internal Financial Controls
The Companyâs management is responsible for establishing and maintaining internal financial controls 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. These responsibilities include the design, implementation and maintenance of internal financial controls with reference to financial statements that were operating effectively for ensuring the orderly and efficient conduct of its business, including adherence to the Companyâs 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 Act.
Auditorâs Responsibility
Our responsibility is to express an opinion on the Companyâs internal financial controls with reference to financial statements based on our audit. We conducted our audit in accordance with the Guidance Note and the Standards on Auditing as specified under section 143(10) of the Act, to the extent applicable to an audit of internal financial controls, both issued by the Institute of Chartered Accountants of India. 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 with reference to financial statements 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 with reference to financial statements and their operating effectiveness. Our audit of internal financial controls with reference to financial statements included obtaining an understanding of internal financial controls with reference to financial statements, 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 auditorâs judgment, including the assessment of the risks of material misstatement of the Ind AS 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 internal financial controls system with reference to financial statements.
Meaning of Internal Financial Controls Over Financial statements
A Companyâs internal financial control with reference to financial statements 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 companyâs internal financial control with reference to financial statements 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 companyâs assets that could have a material effect on the financial statements.
Inherent Limitations of Internal Financial Controls Over Financial Statements
Because of the inherent limitations of internal financial controls with reference to financial statements, 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 with reference to financial statements to future periods are subject to the risk that the internal financial control with reference to financial statements 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 with reference to financial statements and such internal financial controls with reference to financial statements were operating effectively as at 31 December 2018 based on the internal control with reference to financial statements 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 B S R & Co. LLP
Chartered Accountants
Firm Registration Number: 101248W/W-100022
Nirav Patel
Partner
Mumbai: February 13, 2019 Membership No.: 113327
Dec 31, 2017
Independent Auditorsâ Report
To the Members of Schaeffler India Limited (formerly known as FAG Bearings India Limited)
Report on the Indian Accounting Standards (Ind AS) Financial Statements
We have audited the accompanying Ind AS financial statements of Schaeffler India Limited (formerly known as FAG Bearings India Limited) (âthe Companyâ), which comprise the Balance Sheet as at 31 December 2017, and the Statement of Profit and Loss (including Other Comprehensive Income), the Cash Flow Statement and the Statement of Changes in Equity for the year then ended, and a summary of significant accounting policies and other explanatory information.
Managementâs Responsibility for the Ind AS Financial Statements
The Companyâs Board of Directors is responsible for the matters stated in Section 134(5) of the Companies Act, 2013 (âthe Actâ) with respect to the preparation of these 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 Rule 7 of the Companies (Accounts) Rules, 2014.
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; the selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and the 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 Ind AS financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.
Auditorâs Responsibility
Our responsibility is to express an opinion on these 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 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 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 Ind AS financial statements. The procedures selected depend on the auditorâs judgment, including the assessment of the risks of material misstatement of the Ind AS financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal financial control relevant to the Companyâs preparation of the 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 Companyâs directors, as well as evaluating the overall presentation of the 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 Ind AS financial statements.
In our opinion and to the best of our information and according to the explanations given to us, the aforesaid 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 the Ind AS, of the financial position of the Company as at 31 December 2017, and its financial performance including other comprehensive income, its cash flows and the changes in equity for the year ended on that date.
Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditorâs Report) Order, 2016 (âthe Orderâ), issued by the Central Government of India in terms of sub-section (11) of Section 143 of the Act, we give in the Annexure âAâ, a statement on the matters specified in paragraphs 3 and 4 of the Order, to the extent applicable.
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, the Cash Flow Statement 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 Ind AS financial statements comply with the Indian Accounting Standards notified 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 31 December 2017 taken on record by the Board of Directors, none of the directors is disqualified as on 31 December 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 âBâ to this report; and
(g) With respect to the other matters to be included in the Auditorâs 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 Ind AS financial statements
- refer note 34 to the Ind AS financial statements.
ii. The Company has made provisions, as required under the applicable law or accounting standards, for material foreseeable losses, if any, on long-term contracts including derivative contracts
- refer note 37 to the 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.
(i) (a) The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets.
(b) The Company has a programme of physical verification of its fixed assets by which all fixed assets are verified in a phased manner over a period of two 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. Accordingly, a part of the fixed assets were physically verified by the management in the current year and no material discrepancies were noticed on such verification.
(c) In our opinion and 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 included in fixed assets are held in the name of the Company.
(ii) The inventory, except goods-in-transit and stocks lying with certain third parties, has been physically verified by the management during the year. For stocks lying with third parties at the year-end, written confirmations have been obtained. In our opinion, the frequency of such verification is reasonable. No material discrepancies were noticed on such physical verification.
(iii) According to the information and explanations given to us, 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. Accordingly, paragraph 3(iii) of the Order is not applicable to the Company.
(iv) In our opinion and according to the information and explanations given to us, there are no loans, guarantees or securities in respect of which provisions of Section 185 of the Companies Act, 2013 are applicable. Further, in our opinion and according to the information and explanations given to us, provisions of Section 186 of the Companies Act, 2013 in respect of loans given have been complied with by the Company.
(v) The Company has not accepted any deposits to which the directives issued by the Reserve Bank of India and the provisions of Sections 73 to 76 or any other relevant provisions of the Companies Act, 2013 apply. Accordingly, paragraph 3(v) of the Order is not applicable to the Company.
(vi) We have broadly reviewed the books of account maintained by the Company pursuant to the rules prescribed by the Central Government for maintenance of cost records under Section 148(1) of the Companies Act, 2013, in respect of bearings for the year ended 31 December 2017 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 records.
(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, Employeesâ State Insurance, Income-tax, Sales-tax, Wealth tax, Service tax, Customs duty, Excise duty, Value added tax, Goods and services tax and other material statutory dues have been regularly deposited during the year by the Company with the appropriate authorities.
(b) According to the information and explanations given to us, no undisputed amounts payable in respect of Provident Fund, Employeesâ State Insurance, Income-tax, Sales-tax, Wealth tax, Service tax, Customs duty, Excise duty, Value added tax, Goods and services tax and other material statutory dues were in arrears as at 31 December 2017 for a period of more than six months from the date they became payable.
Above amounts are net of amounts paid under protest for
(c) According to the information and explanations given to us, there are no dues of Income-tax, Sales-tax, Service tax, Wealth tax, Excise duty, Customs duty and Value added tax which have not been deposited with the appropriate authorities on account of any dispute other than those mentioned below:
Name of statute |
Nature of dues |
Amount (INR in million) |
Period |
Forum where dispute is pending |
State and Central Sales Tax Act |
Duty and interest |
9.9 |
2009-10 |
Commissioner (Appeals) |
0.1 |
2006-07 |
Dy. Commissioner Sales Tax |
||
1.2 |
2012-13 |
Dy. Commissioner Sales Tax |
||
2.0 |
2013-14, 2014-15 |
Dy. Commissioner Sales Tax |
||
Income Tax Act, 1961 |
Tax and interest |
11.6 |
2004-05, 2005-06, 2007-08 |
Income Tax Appellate Tribunal |
sales-tax aggregating to INR 20.5 million and for Income-tax aggregating to INR 292.3 million.
(viii) In our opinion and according to the information and explanations given to us, the Company does not have any loans or borrowing from financial institutions or banks or Government or dues to debenture holders during the year. Accordingly, paragraph 3(viii) of the Order is not applicable to the Company.
(ix) According to the information and explanations given to us, the Company has not raised any money by way of initial public offer / further public offer / debt instruments and term loans. Accordingly, paragraph 3(ix) of the Order is not applicable to the Company.
(x) In our opinion and according to the information and explanations given to us, we report that no fraud by the Company or on the Company by its officers and employees has been noticed or reported during the year.
(xi) According to the information and explanations 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 approvals mandated by the provisions of Section 197 read with Schedule V to the Companies Act, 2013.
(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 related parties are in compliance with Section 177 and Section 188 of the Companies Act, 2013 where applicable and details of such transactions have been disclosed in the notes to the Ind AS financial statements, as required by the 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 under review. Accordingly, paragraph 3(xiv) of the Order is not applicable to the Company.
(xv) According to the information and explanations given to us, the Company has not entered into any non-cash transactions with directors or persons connected with them, as referred to in Section 192 of the Companies Act, 2013. Accordingly, paragraph 3(xv) of the Order is not applicable to the Company.
(xvi) 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.
We have audited the internal financial controls over financial reporting of Schaeffler India Limited (formerly known as FAG Bearings India Limited) (âthe Companyâ) as at 31 December 2017 in conjunction with our audit of the Ind AS financial statements of the Company for the year ended on that date.
Managementâs Responsibility for Internal Financial Controls
The Companyâs management is responsible for establishing and maintaining internal financial controls 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. These responsibilities include the design, implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the orderly and efficient conduct of its business, including adherence to the Companyâs 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.
Auditorâs Responsibility
Our responsibility is to express an opinion on the Companyâs 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 âGuidance Noteâ) and the Standards on Auditing as specified under section 143(10) of the Companies Act, 2013, to the extent applicable to an audit of internal financial controls, both issued by the Institute of Chartered Accountants of India. 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 obtaining an understanding of internal financial controls over financial reporting, 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 auditorâs judgement, including the assessment of the risks of material misstatement of the Ind AS 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 internal financial controls system over financial reporting.
Meaning of Internal Financial Controls Over Financial Reporting
A Companyâs 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 companyâs 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 companyâs assets that could have a material effect on the financial statements.
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.
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 31 December 2017 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 B S R & Co. LLP
Chartered Accountants
Firm Registration Number: 101248W/W-100022
Vijay Mathur
Partner
New Delhi: February 7, 2018 Membership No.: 046476
Dec 31, 2016
to the Members of FAG Bearings India Limited
Report on the Financial Statements
We have audited the accompanying financial statements of FAG Bearings India Limited (''the Company''), which comprise the Balance Sheet as at December 31, 2016, the Statement of Profit and Loss and the Cash Flow Statement for the year then ended, and a summary of significant accounting policies and other explanatory information.
Management''s Responsibility for the Financial Statements
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 Rule 7 of the Companies (Accounts) Rules, 2014.
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 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 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 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 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 December 31, 2016, and its profit and its cash flows for the year ended on that date.
Emphasis of Matter
We draw attention to Note 41 to the financial statements in respect of accounting for forward contracts. The Company has adopted and applied the principles of hedge accounting as set out in Accounting Standard (AS)30, ''Financial Instruments: Recognition and measurement'' issued by the Institute of Chartered Accountants of India to forward contracts in respect of highly probable transactions or firm commitments. Consequently, the Company has recorded M 62.5 million representing marked to market loss in the hedging reserve as at December 31, 2016 (M 8.6 million marked to market gain as at December 31, 2015). Our opinion is not qualified in respect of this matter.
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 ''A'' a statement on the matters specified in paragraphs 3 and 4 of the Order, to the extent applicable.
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 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 notified 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 December 31, 2016 taken on record by the Board of Directors, none of the directors is disqualified as on December 31, 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 ''B'' to this report; 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 its financial statements - refer note 6 and note 29 to the financial statements.
ii. The Company has made provisions, as required under the applicable law or accounting standards, for material foreseeable losses, if any, on long-term contracts including derivative contracts - refer note 41 to the 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.
(i) (a) The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets.
(b) The Company has a programme of physical verification of its fixed assets by which all fixed assets are verified in a phased manner over a period of two 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. Accordingly, a part of the fixed assets were physically verified by the management in the current year and no material discrepancies were noticed on such verification.
(c) According to the information and explanations given by the management, the title deeds of immovable properties included in fixed assets are held in the name of the Company.
(ii) The inventory, except goods-in-transit and stocks lying with certain third parties, has been physically verified by the management during the year. For stocks lying with third parties at the year-end, written confirmations have been obtained. In our opinion, the frequency of such verification is reasonable. No material discrepancies were noticed on such physical verification.
(iii) According to the information and explanations given to us, 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. Accordingly, paragraph 3(iii) of the Order is not applicable to the Company.
(iv) In our opinion and according to the information and explanations given to us, there are no loans, guarantees or securities in respect of which provisions of Section 185 of the Companies Act, 2013 are applicable. Further, in our opinion and according to the information and explanations given to us, provisions of Section 186 of the Companies Act, 2013 in respect of loans and advances given, investments made and guarantees, securities given, have been complied with by the Company.
(v) The Company has not accepted any deposits to which the directives issued by the Reserve Bank of India and the provisions of Sections 73 to 76 or any other relevant provisions of the Companies Act, 2013 apply. Accordingly, paragraph 3(v) of the Order is not applicable to the Company.
(vi) We have broadly reviewed the books of account maintained by the Company pursuant to the rules prescribed by the Central Government for maintenance of cost records under Section 148(1) of the Companies Act, 2013, in respect of bearings for the year ended December 31, 2016 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 records.
(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, Sales-tax, Wealth tax, Service tax, Customs duty, Excise duty, Value added tax and other material statutory dues have been regularly deposited during the year by the Company with the appropriate authorities.
(b) According to the information and explanations given to us, no undisputed amounts payable in respect of Provident Fund, Employees'' State Insurance, Income-tax, Sales-tax, Wealth tax, Service tax, Customs duty, Excise duty, Value added tax and other material statutory dues were in arrears as at December 31, 2016 for a period of more than six months from the date they became payable.
(c) According to the information and explanations given to us, there are no dues of Income-tax, Sales-tax, Service tax, Wealth tax, Excise duty, Customs duty and Value added tax which have not been deposited with the appropriate authorities on account of any dispute other than those mentioned below:
Name of the statute |
Nature of the dues |
Amount (M in millions) |
Period |
Forum where the dispute is pending |
State and Central Sales Tax Act |
Duty and interest |
9.9 0.1 |
2009-10 2006-07 |
Commissioner (Appeals) Dy. Commissioner Sales Tax |
Central Excise Act, 1944 |
Duty, interest and penalty |
12.4 |
2003-04, 2004-05, 2006-07, 2007-08 |
High Court |
14.1 |
2003-04, 2004-05, 2006-07, 2007-08, 2009-10 |
Commissioner (Appeals) |
Annexure A to the Independent Auditorsâ Report
Finance Act, 1994 (Service tax) |
Tax and interest |
0.9 |
2004-05 |
Appellate Tribunal |
Income Tax Act, 1961 |
Tax and interest |
96.8 |
2002-03 to 2012-13 |
Income Tax - Appellate Tribunal and Commissioner of Income Tax (Appeals) |
Above amounts are net of amounts paid under protest for Sales tax aggregating to M 13.4 million, Excise duty aggregating to M 8.1 million and for Income Tax aggregating to M 246.4 million.
(viii) In our opinion and according to the information and explanations given to us, the Company does not have any loans or borrowing from financial institutions or banks or Government or dues to debenture holders during the year. Accordingly, paragraph 3(viii) of the Order is not applicable to the Company.
(ix) According to the information and explanations given to us, the Company has not raised any money by way of initial public offer / further public offer / debt instruments and term loans. Accordingly, paragraph 3(ix) of the Order is not applicable to the Company.
(x) In our opinion and according to the information and explanations given to us, we report that no fraud by the Company or on the Company by its officers and employees has been noticed or reported during the year.
(xi) According to the information and explanations 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 approvals mandated by the provisions of Section 197 read with Schedule V to the Companies Act, 2013.
(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 related parties are in compliance with Section 177 and Section 188 of the Companies Act, 2013 where applicable and details of such transactions have been disclosed in the notes to the financial statements, as required by the 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 under review. Accordingly, paragraph 3(xiv) of the Order is not applicable to the Company.
(xv) According to the information and explanations given to us, the Company has not entered into any non-cash transactions with Directors or persons connected with them, as referred to in Section 192 of the Companies Act, 2013. Accordingly, paragraph 3(xv) of the Order is not applicable to the Company.
(xvi) 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.
Annexure B to the Independent Auditorsâ Report
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 FAG Bearings India Limited (''the Company'') as at December 31, 2016 in conjunction with our audit of the financial statements of the Company for the year ended on that date.
Management''s Responsibility for Internal Financial Controls
The Company''s Management is responsible for establishing and maintaining internal financial controls 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. These responsibilities include the design, implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the orderly and efficient conduct of its business, including adherence to the 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.
Auditor''s 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 as specified under Section 143(10) of the Companies Act, 2013, to the extent applicable to an audit of internal financial controls and, both issued by the Institute of Chartered Accountants of India. 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 obtaining an understanding of internal financial controls over financial reporting, 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 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 December 31, 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 B S R & Co. LLP
Chartered Accountants
Firm''s Reg. No. 101248W / W-100022
Vijay Mathur
Partner
Membership No. 046476
Dec 31, 2015
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 Rule 7 of the Companies (Accounts) Rules, 2014.
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 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 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 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, but not for the purpose of expressing an opinion on whether the Company has in place an adequate internal financial controls system over financial reporting and the operating effectiveness of such controls. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by 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 December 31, 2015, and its profit and its cash flows for the year ended on that date.
Emphasis of Matter
We draw attention to Note 42 to the financial statements in respect of accounting for forward contracts. The Company has adopted and applied the principles of hedge accounting as set out in Accounting Standard (AS)-30, ''Financial Instruments: Recognition and Measurement'' issued by Institute of Chartered Accountants of India to forward contracts in respect of highly probable transactions or firm commitments. Consequently, the Company has recorded M 8.6 million representing marked to market gain in the hedging reserve as at December 31, 2015 (M 203 million marked to market loss as at December 31, 2014). Our opinion is not qualified in respect of this matter.
Report on other Legal and Regulatory Requirements
1. As required by the Companies (Auditor''s Report) Order, 2015 (''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 statement on the matters specified in paragraphs 3 and 4 of the Order, to the extent applicable.
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 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 notified 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 December 31, 2015 taken on record by the Board of Directors, none of the Directors is disqualified as on December 31, 2015, from being appointed as a Director in terms of Section 164(2) of the Act; and
(f) 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 its financial statements - refer note 30 to the financial statements.
ii. The Company has made provision, as required under the applicable law or accounting standards, for material foreseeable losses, if any, on long-term contracts including derivative contracts - refer note 42 to the 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.
With reference to the Annexure referred to in our report of even date, we report that:
(i) (a) The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets.
(b) The Company has a programme of physical verification of its fixed assets by which all fixed assets are verified in a phased manner over a period of two 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. Accordingly, a part of the fixed assets were physically verified by the management in the current year and no material discrepancies were noticed on such verification.
(ii) (a) The inventory, except goods-in-transit and stocks lying with certain third parties, has been physically verified by the management during the year. In our opinion, the frequency of such verification is reasonable. For stocks lying with third parties at the year-end, written confirmations have been obtained.
(b) The procedures for the physical verification of inventories followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its business.
(c) The Company is maintaining proper records of inventory. The discrepancies noticed on verification between the physical stocks and the book records were not material.
(iii) According to the information and explanations given to us, we are of the opinion that there are no companies, firms or other parties covered in the register required under Section 189 of the Companies Act, 2013. Accordingly, paragraph (iii) of the Order is not applicable.
(iv) In our opinion and according to the information and explanations given to us, and having regard to the explanation that purchases of certain items of inventories and fixed assets are for the Company''s specialized requirements and similarly certain goods sold and services rendered are for the specialized requirements of the buyers and suitable alternative sources are not available to obtain comparable quotations, there is an adequate internal control system commensurate with the size of the Company and the nature of its business with regard to purchase of inventories and fixed assets and with regard to 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) 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 under the provisions of Sections 73 to 76 or any other relevant provisions of the Act and the rules framed there under. Accordingly, paragraph (v) of the Order is not applicable to the Company.
(vi) We have broadly reviewed the books of account maintained by the Company pursuant to the rules prescribed by the Central Government for maintenance of cost records under Section 148(1) of the Companies Act, 2013, in respect of bearings 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 records.
(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, Sales-tax, Wealth tax, Service tax, Customs duty, Excise duty, Value added tax and other material statutory dues have been regularly deposited during the year by the Company with the appropriate authorities.
According to the information and explanations given to us, no undisputed amounts payable in respect of Provident Fund, Employees'' State Insurance, Income-tax, Sales-tax, Wealth tax, Service tax, Customs duty, Excise duty, Value added tax and other material statutory dues were in arrears as at December 31, 2015 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, Wealth tax, Excise duty, Customs duty and Value Added Tax, which have not been deposited with the appropriate authorities on account of any dispute other than those mentioned below:
Name of the statute |
Nature of the dues |
Amount (Rs, in millions) |
Period |
Forum where the dispute is pending |
State and Central |
Duty and interest |
9.9 |
2009-10 |
Commissioner Appeals |
Sales Tax Act |
1.4 |
2009-10 |
Dy. Commissioner Sales Tax |
|
0.3 |
2006-07 |
Dy. Commissioner Sales Tax |
||
Central Excise Act, |
Duty, interest and |
12.4 |
2003-04, |
High Court |
1944 |
penalty |
2004-05, |
||
2006-07, |
||||
2007-08 |
Name of the statute |
Nature of the dues |
Amount (RS, in |
million) Period |
Forum where the dispute is pending |
Central Excise Act, 1944 |
Duty, interest and penalty |
13.1 |
2003-04, 2004-05, 2006-07, 2007-08, 2009-10 |
Commissioner Appeals |
0.9 |
2004-05 |
Appellate Tribunal |
||
The Income Tax Act, 1961 |
Tax and interest |
94.2 |
2000-01 to 2010-11 |
Income Tax - Appellate Tribunal and Commissioner of Income Tax (Appeals) |
The above are net of amounts paid under protest for Sales tax M 19.0 and for Income tax M 3,485.4
(c) According to the information and explanations given to us, there has been no delay in transferring amounts which were required to be transferred to the Investor Education and Protection Fund in accordance with the relevant provisions of the Companies Act, 1956 (1 of 1956) and rules there under.
(viii) The Company does not have any accumulated losses at the end of the financial year and has not incurred cash losses in the financial year or in the immediately preceding financial year.
(ix) In our opinion and according to the information and explanations given to us, the Company did not have any outstanding dues to any financial institution, banks or debenture holders during the year.
(x) According to the information and explanations given to us, the Company has not given any guarantee for loans taken by others from banks or financial institutions.
(xi) The Company did not have any term loans outstanding during the year.
(xii) According to the information and explanations given to us, no fraud on or by the Company has been noticed or reported during the course of our audit.
For B S R & Co. LLP
Chartered Accountants
Firm''s Reg. No. 101248W / W-100022
Vijay Mathur
Partner
Mumbai: February 12, 2016 Membership No. 046476
Dec 31, 2014
We have audited the accompanying financial statements of FAG Bearings
India Limited (''the Company''), which comprise the Balance Sheet as at
December 31, 2014, the Statement of Profit and Loss, and the Cash Flow
Statement for the year then ended, and a summary of significant
accounting policies and other explanatory information.
Management''s Responsibility for the Financial Statements
Management is responsible for the preparation of these financial
statements that give a true and fair view of the financial position,
financial performance and cash flows of the Company in accordance with
the Accounting Standards notified under the Companies Act, 1956 (''the
Act'') read with the General Circular 15/2013 dated September 13, 2013
of the Ministry of Corporate Affairs in respect of Section 133 of the
Companies Act, 2013. This responsibility includes the design,
implementation and maintenance of internal control relevant to the
preparation and presentation of the financial statements that give a
true and fair view and are free from material misstatement, whether due
to fraud or error.
Auditor''s Responsibility
Our responsibility is to express an opinion on these financial
statements based on our audit. We conducted our audit in accordance
with the Standards on Auditing issued by the Institute of Chartered
Accountants of India. Those Standards require that we comply with
ethical requirements and plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free
from material misstatement.
An audit involves performing procedures to obtain audit evidence about
the amounts and disclosures in the financial statements. The procedures
selected depend on the auditor''s 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 December 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.
Emphasis of Matter
We draw attention to Note 43 to the financial statements in respect of
change in accounting policy in respect of accounting for forward
contracts. During the year, the Company has adopted and applied the
principles of hedge accounting as set out in Accounting Standard
(AS)-30, ''Financial Instruments: Recognition and Measurement'' issued by
Institute of Chartered Accountants of India to forward contracts in
respect of highly probable transactions or firm commitments which were
previously accounted following the principles of prudence as per AS-1
''Disclosure of Accounting Policies''. Consequently, the Company has
recorded M 203 million representing mark to mark loss in the hedging
reserve as at December 31, 2014 resulting in net profit for the year
being higher to that extent. Our opinion is not qualified in respect of
this matter.
Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditor''s Report) Order, 2003 (''the
Order'') issued by the Central Government of India in terms of
sub-section (4A) of Section 227 of the Act, we give in the Annexure, a
statement on the matters specified in paragraphs 4 and 5 of the Order.
2. As required by Section 227(3) of the Act, we report that:
(a) we have obtained all the information and explanations which to the
best of our knowledge and belief were necessary for the purpose of our
audit;
(b) in our opinion, proper books of account as required by law have
been kept by the Company so far as appears from our examination of
those books;
(c) the Balance Sheet, Statement of Profit and Loss, and Cash Flow
Statement dealt with by this Report are in agreement with the books of
account;
(d) in our opinion, the Balance Sheet, the Statement of Profit and
Loss, and the Cash Flow Statement comply with the Accounting Standards
notified under the Companies Act, 1956 read with the General Circular
15/2013 dated September 13, 2013 of the Ministry of Corporate Affairs
in respect of Section 133 of the Companies Act, 2013; and
(e) on the basis of written representations received from the Directors
as on December 31, 2014, and taken on record by the Board of Directors,
none of the Directors is disqualified as on December 31, 2014, from
being appointed as a Director in terms of Section 164(2) of the
Companies Act, 2013.
ANNEXURE TO THE INDEPENDENT AUDITORS'' REPORT December 31, 2014
With reference to the Annexure referred to in our report of even date,
we report that:
(i) (a) The Company has maintained proper records showing full
particulars, including quantitative details and situation of fixed
assets.
(b) The Company has a programme of physical verification of its fixed
assets by which all fixed assets are verified in a phased manner over a
period of two 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. Accordingly, a part of the fixed assets were
physically verified by the management in the current year and no
material discrepancies were noticed on such verification.
(c) Fixed assets disposed off during the year were not substantial, and
therefore, do not affect the ongoing concern assumption.
(ii) (a) The inventory, except goods-in-transit and stocks lying with
certain third parties, has been physically verified by the management
during the year. In our opinion, the frequency of such verification is
reasonable. For stocks lying with third parties at the year-end, written
confirmations have been obtained.
(b) The procedures for the physical verification of inventories
followed by the management are reasonable and adequate in relation to
the size of the Company and the nature of its business.
(c) The Company is maintaining proper records of inventory. The
discrepancies noticed on verification between the physical stocks and
the book records were not material.
(iii) According to the information and explanations given to us, we are
of the opinion that there are no Companies, firms or other parties
covered in the register required under Section 301 of the Act / Section
189 of the Companies Act, 2013 (as applicable). Accordingly, paragraph
(iii) of the Order is not applicable.
(iv) In our opinion and according to the information and explanations
given to us, and having regard to the explanation that purchases of
certain items of inventories and fixed assets are for the Company''s
specialised requirements and similarly certain goods sold and services
rendered are for the specialised requirements of the buyers and
suitable alternative sources are not available to obtain comparable
quotations, there is an adequate internal control system commensurate
with the size of the Company and the nature of its business with regard
to purchase of inventories and fixed assets and with regard to 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) In our opinion, and according to the information and explanations
given to us, there are no contracts and arrangements, the particulars
of which need to be entered into the register maintained under Section
301 of the Act / Section 189 of the Companies Act, 2013 (as
applicable).
(vi) The Company has not accepted any deposits from public.
(vii) In our opinion, the Company has an internal audit system
commensurate with the size and the nature of its business.
(viii) We have broadly reviewed the books of account maintained by the
Company pursuant to the rules prescribed by the Central Government for
maintenance of cost records under Section 209(1)(d) of the Act /
Section 128 of the Companies Act, 2013 (as applicable), in respect of
bearings 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 records.
(ix) (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, Sales-tax, Wealth tax, Service tax, Customs
duty, Excise duty, Value added tax, Investor Education and Protection
Fund and other material statutory dues have been regularly deposited
during the year by the Company with the appropriate authorities.
According to the information and explanations given to us, no
undisputed amounts payable in respect of Provident Fund, Employees''
State Insurance, Income-tax, Sales-tax, Wealth tax, Service tax,
Customs duty, Excise duty, Value added tax, Investor Education and
Protection Fund and other material statutory dues were in arrears as at
December 31, 2014 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, Wealth tax, Excise
duty, Customs duty, and Value added tax, which have not been deposited
with the appropriate authorities on account of any dispute other than
those mentioned below:
Name of Nature of Amount Period Forum where the
the statute the dues (in million) dispute is pending
State and Central Duty and 2.8 2004-05 Joint Commissioner
interest Appeals
Sales Tax Act 3.7 2008-09 Joint Commissioner
Appeals
9.9 2009-10 Commissioner
Appeals
1.4 2009-10 Dy. Commissioner
Sales Tax
0.3 2006-07 Dy. Commissioner
Sales Tax
Central Excise Duty, int 12.4 2003-04, High Court
Act, erest and 2004-05,
1944 penalty
2006- 07,
2007- 08
13.1 2003-04, Commissioner
Appeals
2004-05,
2006- 07,
2007- 08,
2009-10
2.2 2004-05 Appellate Tribunal
The Income Tax Tax and 174.4 2000-01 to Income Tax
Act, interest - Appellate
1961 2010-11 Tribunal and
Assessing Officer
The above are net of amounts paid under protest for Sales tax M 78.3
million and for Income tax M 2,691.4 million. The Income tax dues of M
174.4 million mentioned above represent cases where the Company has
received favorable orders and the department has gone for further
appeals with higher authorities for various assessment years.
(x) The Company does not have any accumulated losses at the end of the
financial year and has not incurred cash losses in the financial year
or in the immediately preceding financial year.
(xi) In our opinion and according to the information and explanations
given to us, the Company did not have any outstanding dues to any
financial institution, banks or debenture holders during the year.
(xii) The Company has not granted loans and advances on the basis of
security by way of pledge of shares, debentures and other securities.
(xiii) In our opinion, and according to the information and
explanations given to us, the Company is not a chit fund or a nidhi /
mutual benefit fund / society.
(xiv) According to the information and explanations given to us, the
Company is not dealing or trading in shares, securities, debentures and
other investments.
(xv) According to the information and explanations given to us, the
Company has not given any guarantee for loans taken by others from
banks or financial institutions.
(xvi) The Company did not have any term loans outstanding during the
year.
(xvii) According to the information and explanations given to us and on
an overall examination of the Balance Sheet of the Company, we are of
the opinion that the funds raised on short-term basis have not been
used for long-term investment.
(xviii) As stated in paragraph (iii) above, there are no Companies /
firms / parties covered in the register required to be maintained under
Section 301 of the Act / Section 189 of the Companies Act, 2013 (as
applicable). Accordingly, paragraph (xviii) of the Order is not
applicable.
(xix) The Company did not have any outstanding debentures during the
year.
(xx) The Company has not raised any money by public issues during the
year.
(xxi) According to the information and explanations given to us, no
fraud on or by the Company has been noticed or reported during the
course of our audit.
For B S R & Co. LLP
Chartered Accountants
Firm''s Reg. No. 101248W / W-100022
Vijay Mathur
Partner
Mumbai: February 11, 2015 Membership No. 046476
Dec 31, 2013
We have audited the accompanying financial statements of FAG Bearings
India Limited (''the Company''), which comprise the Balance Sheet as at
December 31, 2013, the Statement of Profit and Loss, and the Cash Flow
Statement for the year then ended, and a summary of significant
accounting policies, and other explanatory information.
Management''s Responsibility for the Financial Statements
Management is responsible for the preparation of these financial
statements that give a true and fair view of the financial position,
financial performance and cash flows of the Company in accordance with
the Accounting Standards notified under the Companies Act, 1956 (''the
Act'') read with the General Circular 15 / 2013 dated September 13, 2013
of the Ministry of Corporate Affairs in respect of Section 133 of the
Companies Act, 2013. This responsibility includes the design,
implementation and maintenance of internal control relevant to the
preparation and presentation of the financial statements that give a
true and fair view and are free from material misstatement, whether due
to fraud or error.
Auditor''s Responsibility
Our responsibility is to express an opinion on these financial
statements based on our audit. We conducted our audit in accordance
with the Standards on Auditing issued by the Institute of Chartered
Accountants of India. Those Standards require that we comply with
ethical requirements and plan, and perform the audit to obtain
reasonable assurance about whether the financial statements are free
from material misstatement.
An audit involves performing procedures to obtain audit evidence about
the amounts and disclosures in the financial statements. The procedures
selected depend on the auditor''s 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 December 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'') 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, the Statement of Profit and
Loss, and the Cash Flow Statement comply with the Accounting Standards
notified under the Companies Act, 1956 read with the General Circular
15 / 2013 dated September 13, 2013 of the Ministry of Corporate Affairs
in respect of Section 133 of the Companies Act, 2013; and
(e) on the basis of written representations received from the directors
as on December 31, 2013, and taken on record by the Board of Directors,
none of the directors is disqualified as on December 31, 2013, from
being appointed as a director in terms of clause (g) of sub- section
(1) of Section 274 of the Act.
ANNEXURE TO THE INDEPENDENT AUDITORS'' REPORT
With reference to the Annexure referred to in our report of even date,
we report that:
(i) (a) The Company has maintained proper records showing full
particulars, including quantitative details and situation of fixed
assets.
(b) The Company has a programme of physical verification of its fixed
assets by which all fixed assets are verified in a phased manner over a
period of two 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. Accordingly, a part of the fixed assets were
physically verified by the management in the current year and no
material discrepancies were noticed on such verification.
(c) Fixed assets disposed off during the year were not substantial, and
therefore, do not affect the going concern assumption.
(ii) (a) The inventory, except goods-in-transit and stocks lying with
certain third parties, has been physically verified by the management
during the year. In our opinion, the frequency of such verification is
reasonable. For stocks lying with third parties at the year-end,
written confirmations have been obtained.
(b) The procedures for the physical verification of inventories
followed by the management are reasonable and adequate in relation to
the size of the Company and the nature of its business.
(c) The Company is maintaining proper records of inventory. The
discrepancies noticed on verification between the physical stocks and
the book records were not material.
(iii) According to the information and explanations given to us, we are
of the opinion that there are no companies, firms or other parties
covered in the register required under Section 301 of the Act.
Accordingly, paragraph (iii) of the Order is not applicable.
(iv) In our opinion and according to the information and explanations
given to us, and having regard to the explanation that purchases of
certain items of inventories and fixed assets are for the Company''s
specialised requirements and similarly certain goods sold and services
rendered are for the specialised requirements of the buyers and
suitable alternative sources are not available to obtain comparable
quotations, there is an adequate internal control system commensurate
with the size of the Company and the nature of its business with regard
to purchase of inventories and fixed assets and with regard to 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) In our opinion, and according to the information and explanations
given to us, there are no contracts and arrangements, the particulars
of which need to be entered into the register maintained under Section
301 of the Act.
(vi) In our opinion and according to the information and explanations
given to us, the Company has complied with the provisions of Section
58A, Section 58AA or other relevant provisions of the Act, and the
rules framed thereunder with regard to deposits accepted from the
public. Accordingly, there have been no proceedings before the Company
Law Board or National Company Law Tribunal (as applicable) or Reserve
Bank of India or any Court or any other Tribunal in this matter and no
order has been passed by any of the aforesaid authorities.
(vii) In our opinion, the Company has an internal audit system
commensurate with the size and the nature of its business.
(viii) We have broadly reviewed the books of account maintained by the
Company pursuant to the rules prescribed by the Central Government for
maintenance of cost records under Section 209(1)(d) of the Act in
respect of bearings 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 records.
(ix) (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, Sales-tax, Wealth tax, Service tax, Customs duty, Excise
duty, Value added tax, Investor Education and Protection Fund and other
material statutory dues have been regularly deposited during the year
by the Company with the appropriate authorities.
According to the information and explanations given to us, no
undisputed amounts payable in respect of Provident Fund, Employees''
State Insurance, Income-tax, Sales-tax, Wealth tax, Service tax,
Customs duty, Excise duty, Value added tax, Investor Education and
Protection Fund and other material statutory dues were in arrears as at
December 31, 2013 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, Wealth tax, Excise
duty, Customs duty, and Value added tax, which have not been deposited
with the appropriate authorities on account of any dispute other than
those mentioned below:
Name of the
statute Nature of
the dues Amount
(Rs. in
million) Period Forum where the dispute
is pending
State and
Central Duty and
interest 2.8 2004-05 Dy. Commissioner Sales
Tax
Sales Tax
Act 0.1 2003-04 Joint Commissioner
Appeals
3.7 2008-09 Joint Commissioner
Appeals
Central
Excise Act, Duty,
interest
and penalty 12.4 2003-04, High Court
1944 2004-05,
2006-07,
2007-08
12.4 2003-04, Commissioner Appeals
2004-05,
2006-07,
2007-08,
2009-10
2.1 2004-05 Assistant
Commissioner Appeals
The Income
Tax Act, Tax and
interest 136.6 2000-01
to Income Tax - Appellate
1961 2008-09 Tribunal and
Assessing Officer
The above are net of amounts paid under protest for Sales Tax Rs. 68.3
million and for Income Tax Rs. 2,285.2 million.
The Income Tax dues of Rs. 136.6 million mentioned above represents cases
where the Company has received favorable orders and the department has
gone for further appeals with higher authorities for various assessment
years.
(x) The Company does not have any accumulated losses at the end of the
financial year and has not incurred cash losses in the financial year
or in the immediately preceding financial year.
(xi) In our opinion and according to the information and explanations
given to us, the Company did not have any outstanding dues to any
financial institution, banks or debenture holders during the year.
(xii) The Company has not granted loans and advances on the basis of
security by way of pledge of shares, debentures and other securities.
(xiii) In our opinion, and according to the information and
explanations given to us, the Company is not a chit fund or a nidhi /
mutual benefit fund / society.
(xiv) According to the information and explanations given to us, the
Company is not dealing or trading in shares, securities, debentures and
other investments.
(xv) According to the information and explanations given to us, the
Company has not given any guarantee for loans taken by others from
banks or financial institutions.
(xvi) The Company did not have any term loans outstanding during the
year.
(xvii) According to the information and explanations given to us and on
an overall examination of the Balance Sheet of the Company, we are of
the opinion that the funds raised on short-term basis have not been
used for long-term investment.
(xviii) As stated in paragraph (iii) above, there are no companies /
firms / parties covered in the register required to be maintained under
Section 301 of the Act. Accordingly, paragraph (xviii) of the Order is
not applicable.
(xix) The Company did not have any outstanding debentures during the
year.
(xx) The Company has not raised any money by public issues during the
year.
(xxi) According to the information and explanations given to us, no
fraud on or by the Company has been noticed or reported during the
course of our audit.
For B S R & Co. LLP
Chartered Accountants
Firm''s Reg. No. 101248W
Vijay Mathur
Partner
Mumbai: February 11, 2014 Membership No. 046476
Dec 31, 2012
We have audited the attached Balance Sheet of FAG Bearings India
Limited (''the Company'') as at December 31, 2012 and the related
Statement of Profit and Loss and the Cash Flow Statement 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.
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.
As required by the Companies (Auditor''s Report) Order, 2003 (Âthe
Order'') issued by the Central Government of India in terms of
sub-section (4A) of Section 227 of the Companies Act, 1956 (Âthe
Act''), we enclose in the Annexure a statement on the matters
specified in paragraphs 4 and 5 of the said Order.
Further to our comments in the Annexure referred to 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 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 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 Balance Sheet, the Statement of Profit and Loss
and the Cash Flow Statement dealt with by this report comply with the
Accounting Standards referred to in sub-section (3C) of Section 211 of
the Act;
(e) on the basis of written representations received from the directors
of the Company as at December 31, 2012 and taken on record by the Board
of Directors, we report that none of the directors is disqualified as
on December 31, 2012 from being appointed as a director in terms of
clause (g) of sub-section (1) of Section 274 of the Act; and
(f) in our opinion, and to the best of our information and according to
the explanations given to us, they said accounts 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:
(i) in the case of the Balance Sheet, of the state of affairs of the
Company as at December 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 of the
Company for the year ended on that date.
With reference to the Annexure referred to in our report of even date,
we report that:
(i) (a) The Company has maintained proper records showing full
particulars, including quantitative details and situation of fixed
assets.
(b) The Company has a programme of physical verification of its fixed
assets by which all fixed assets are verified in a phased manner over a
period of two 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. Accordingly, a significant part of fixed
assets were physically verified by the management in the current year
and no material discrepancies were noticed on such verification.
(c) Fixed assets disposed off during the year were not substantial, and
therefore, do not affect the ongoing concern assumption.
(ii) (a) The inventory, except goods-in-transit and stocks lying with
third parties, has been physically verified by the management during
the year. In our opinion, the frequency of such verification is
reasonable. For stocks lying with third parties at the year end,
written confirmations have been obtained.
(b) The procedures for the physical verification of inventories
followed by the management are reasonable and adequate in relation to
the size of the Company and the nature of its business.
(c) The Company is maintaining proper records of inventory. The
discrepancies noticed on verification between the physical stocks and
the book records were not material.
(iii) According to the information and explanations given to us, we are
of the opinion that there are no companies, firms or other parties
covered in the register required under Section 301 of the Act.
Accordingly, paragraph 4(iii) of the Order is not applicable.
(iv) In our opinion and according to the information and explanations
given to us and having regard to the explanation that purchases of
certain items of inventories and fixed assets are for the Company''s
specialized requirements and similarly certain goods sold and services
rendered are for the specialized requirements of the buyers and
suitable alternative sources are not available to obtain comparable
quotations, there is an adequate internal control system commensurate
with the size of the Company and the nature of its business with regard
to purchase of inventories and fixed assets and with regard to 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) In our opinion, and according to the information and explanations
given to us, there are no contracts and arrangements, the particulars
of which need to be entered into the register maintained under Section
301 of the Act.
(vi) In our opinion and according to the information and explanations
given to us, the Company has complied with the provisions of Section
58A, Section 58AA or other relevant provisions of the Act and the rules
framed there under with regard to deposits accepted from the public.
Accordingly, there have been no proceedings before the Company Law
Board or National Company Law Tribunal (as applicable) or Reserve Bank
of India or any Court or any other Tribunal in this matter and no order
has been passed by any of the aforesaid authorities.
(vii) In our opinion, the Company has an internal audit system
commensurate with the size and the nature of its business.
(viii) We have broadly reviewed the books of account maintained by the
Company pursuant to the rules prescribed by the Central Government for
maintenance of cost records under Section 209(1)(d) of the Act in
respect of bearings 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 records.
(ix) (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, Sales tax, Wealth tax, Service tax, Customs
duty, Excise duty, Value added tax, Investor Education and Protection
Fund and other material statutory dues have been regularly deposited
during the year by the Company with the appropriate authorities.
According to the information and explanations given to us, no
undisputed amounts payable in respect of Provident Fund, Employees''
State Insurance, Income tax, Sales tax, Wealth tax, Service tax,
Customs duty, Excise duty, Value added tax, Investor Education and
Protection Fund and other material statutory dues were in arrears as at
December 31, 2012 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, Wealth tax, Excise
duty and Customs duty, which have not been deposited with the
appropriate authorities on account of any dispute other than those
mentioned below:
(Rs. in million)
Name of
the statute Nature of
the dues Amount Period Forum where the
dispute is pending
State and
Central
Sales Tax
Act Duty and
interest 2.8 2004-05 Joint Commissioner
Appeals
8.3 2006-07
0.1 2003-04
3.7 2008-09 Commissioner Appeals
Central
Excise
Act, 1944 Duty,
interest
and penalty 12.4 2003-04, High court
2004-05,
2006-07,
2007-08
11.7 2003-04, Commissioner
Appeals
2004-05,
2006-07,
2007-08,
2009-10
1.9 2004-05 Assistant
Commissioner
Appeals
The Income
Tax Act,
1961 Tax and
interest 106.3 2000-01 Income Tax -
Appellate
to 2008-09 Tribunal and
Assessing Officer
The above are net of amounts paid under protest for Sales tax (Rs.67.3
million; 2011: Rs.57.3 million), and for Income tax (Rs.1,814.4 million;
2011: Rs.1,799.4 million).
(x) The Company does not have any accumulated losses at the end of the
financial year and has not incurred cash losses in the financial year
and in the immediately preceding financial year.
(xi) In our opinion and according to the information and explanations
given to us, the Company did not have any outstanding dues to any
financial institution, banks or debenture holders during the year.
(xii) The Company has not granted loans and advances on the basis of
security by way of pledge of shares, debentures and other securities.
(xiii) In our opinion and according to the information and explanations
given to us, the Company is not a chit fund or a nidhi / mutual benefit
fund / society.
(xiv) According to the information and explanations given to us, the
Company is not dealing or trading in shares, securities, debentures and
other investments.
(xv) According to the information and explanations given to us, the
Company has not given any guarantee for loans taken by others from
banks or financial institutions.
(xvi) The Company did not have any term loans outstanding during the
year.
(xvii) According to the information and explanations given to us and on
an overall examination of the balance sheet of the Company, we are of
the opinion that the funds raised on short-term basis have not been
used for long-term investment.
(xviii) As stated in paragraph (iii) above, there are no companies /
firms / parties covered in the register required to be maintained under
Section 301 of the Act.
(xix) The Company did not have any outstanding debentures during the
year.
(xx) The Company has not raised any money by public issues during the
year.
(xxi) According to the information and explanations given to us, no
fraud on or by the Company has been noticed or reported during the
course of our audit.
For B S R & Co.
Chartered Accountants
Firm''s Reg. No. 101248W
Vijay Mathur
Partner
Mumbai: February 14, 2013 Membership No. 046476
Dec 31, 2011
We have audited the attached Balance Sheet of FAG Bearings India
Limited ('the Company') as at December 31,2011 and the related Profit
and Loss Account and the Cash Flow Statement 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.
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 management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for
our opinion.
As required by the Companies (Auditors' Report) Order, 2003 ('the
Order') issued by the Central Government of India in terms of
sub-section (4A) of Section 227 of the Companies Act, 1956 ('the Act'),
we enclose in the Annexure a statement on the matters specified in
paragraphs 4 and 5 of the said Order.
Further to our comments in the Annexure referred to above, we report
that:
-we have obtained all the information and explanations, which to the
best of our knowledge and belief, were necessary for the purposes of
our audit;
-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;
-the Balance Sheet, the Profit and Loss Account and the Cash Flow
Statement dealt with by this report are in agreement with the books of
account;
-in our opinion, the Balance Sheet, the Profit and Loss Account and the
Cash Flow Statement dealt with by this report comply with the
Accounting Standards referred to in sub-section (3 C) of Section 211
Of the Act;
- on the basis of written representations received from the directors
of the Company as at December 31, 2011 and taken on record by the Board
of Directors, we report that none of the directors is disqualified as on
December 31, 2011 from being appointed as a director in terms of Clause
(g) of sub-section (1) of Section 274 of the Act; and
- in our opinion, and to the best of our information and according to
the explanations given to us, the said accounts 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:
i) in the case of the Balance Sheet, of the state of affairs of the
Company as at December 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 of the
Company for the year ended on that date.
With reference to the Annexure referred to in our report ofthe even
date, we report that: ,
[I] (a) The Company has maintained proper records showing full
particulars, including quantitative details and situation of fixed
assets.
(b) The Company has a programme of physical verification of its fixed
assets by which all fixed assets are verified - once in every two
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. Accordingly, all assets were physically verified by the
management in the previous year and no material discrepancies were
noticed on such verification.
(c) Fixed assets disposed off during the year were not substantial, and
therefore, do not affect the going concern assumption.
[II] (a) The inventory, except goods-in-transit and stocks lying with
third parties, has been physically verified by the management during
the year. In our opinion, the frequency of such verification is
reasonable. For stocks lying with third parties at the year 'end,
written confirmations have been obtained.
(b) The procedures for the physical verification of inventories
followed by the management are reasonable and adequate in relation to
the size of the Company and the nature of its business.
(c) The Company is maintaining proper records of inventory. The
discrepancies noticed on verification between the physical stocks and
the book records were not material.
[III] According to the information and explanations given to us, we are
Of the opinion that there are no Companies, firms or other parties
covered in the register required under Section 301 of the Act.
Accordingly, paragraph 4(iii) of the Order is not applicable.
[IV] In our opinion and according to the information and explanations
given to us, and having regard to the explanation that purchases of
certain items of inventories and fixed assets are for the Company's
specialised requirements and similarly certain goods sold and services
rendered are for the specialised requirements of the buyers and suitable
alternative sources are not available to obtain comparable quotations,
there is an adequate internal control system commensurate with the size
of the Company and the nature of its business with regard to purchase of
inventories and fixed assets and with regard to 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] In our opinion, and according to the information and explanations
given to us, there are no contracts and arrangements the particulars of
which need to be entered into the register maintained under Section 301
of the Companies Act, 1956.
[VI] In our opinion and according to the information and explanations
given to us, the Company has complied with the provisions of Section
58A, Section 58AA or other relevant provisions of the Act, and the rules
framed there under with regard to deposits accepted from the public.
Accordingly, there have been no proceedings before the Company Law
Board or National Company Law Tribunal (as applicable) or Reserve Bank
of India or any Court or any other Tribunal in this matter and no order
has been passed by any of the aforesaid authorities.
[VII] In our opinion, the Company has an internal audit system
commensurate with the size and the nature of its business.
[VIII] We have broadly reviewed the books of account maintained by the
Company pursuant to the rules prescribed by the Central Government for
maintenance of cost records under Section 209(l)(d) of the Act in
respect of bearings 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 records.
[IX](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, Sales tax, Wealth tax, Service tax, Customs duty, Excise
duty, Value added tax, Investor Education and Protection Fund and other
material statutory dues have been regularly deposited during the year by
the Company with the appropriate authorities.
According to the information and explanations given to us, no
undisputed amounts payable in respect of Provident Fund, Employees'
State Insurance, income tax, sales tax, wealth tax, service tax,
customs duty, excise duty, value added tax, investor education and
protection fund and other material statutory dues were in arrears as at
December 31,2011 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, wealth tax, excise duty
and customs duty, which have not been deposited with the appropriate
authorities on account of any dispute other than those mentioned below:
Name of Nature of Amount Period Forum where the dispute
the
statute the Dues (Rs. in
million) is pending
State
and
Central Duty
interest 2.4 2002 Sales tax appellate
tribunal
Sales
Tax
Act and
penalty 20.3 2004-05 Joint commissioner
0.1 2005-06 Appeals
8.3 2006-07
0.1 2003-04 Dy. Commissioner
Appeals
Central
Excise
Act, Duty
interest 0.7 2007-08 Central Excise &
Service
1944 and
penalty Tax Appellate Tribunal
11.3 2003-04, Commissioner Appeals
2004-05,
2006-07,
2007-08,
2008-09,
2009-10
1.8 2004-05 Assistant Commissioner
Appeals
The
Income
Tax Act, Tax,
interest 27.7 2006-07 Income Tax Appellate
1961 and penalty Tribunal
39.3 2007-08 Commissioner Appeals
[X] The Company does not have any accumulated losses at the end ofthe
financial year and has not incurred cash losses in the financial year
and in the immediately preceding financial year.
[XI] In our opinion and according to the information and explanations
given to us, the Company did not have any outstanding dues to any
financial institution, banks or debenture holders during the year.
[XII] The Company has not granted loans and advances on the basis
Of security by way of pledge of shares, debentures and other securities.
[XIII] In our opinion, and according to the information and
explanations given to us, the Company is not a chit fund ora nidhi /
mutual benefit fund / society.
[XIV] According to the information and explanations given to us, the
Company is not dealing or trading in shares, securities,
debentures and other investments.
[XV] According to the information and explanations given to us, the
Company has not given any guarantee for loans taken by others from banks
Or financial institutions.
[XVI] The Company did not have any term loans out standing during the year.
[XVII] According to the information and explanations given to us and on
an overall examination of the Balance Sheet of the Company, we are of the
opinion that the funds raised on short-term basis have not been used
for long-term investment.
[XVIII] As stated in paragraph (iii) above, there are no companies /
firms / parties covered in the register required to be maintained
under Section 301 of the Act.
[XIX] The Company did not have any outstanding debentures during the
year.
[XX] The Company has not raised any money by public issues during the
year.
[XXI] According to the information and explanations given to us, no
fraud on or by the Company has been noticed or reported during the
course of our audit.
For B S R & Co.
Chartered Accountants
Firm's Reg. No. 101248W
Vijay Mathur
Partner
Mumbai: February 9, 2012
Membership No. 046476
Dec 31, 2010
We have audited the attached Balance Sheet of FAG Bearings India
Limited, as at December 31,2010 and also the Profit and Loss Account
for the year ended on that date annexed thereto and the Cash Flow
Statement for the year ended on that date. 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.
We conducted our audit in accordance with the 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 management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis
forouropinion.
1) As required by the Companies (Auditors Report) Order, 2003 as
amended by the Companies (Auditors Report) (Amendment) Order, 2004
issued by the Central Government of India in terms of sub-section (4A)
of Section 227 of the Companies Act, 1956, (referred to as the "Act")
we enclose in the Annexure a statement on the matters specified in
paragraphs 4 and 5 of the said Order.
2) Further to our comments in the Annexure referred to above, we report
that:
a) we have obtained all the information and explanations which to the
best of our knowledge and belief were necessary forthe purposes of our
audit;
b) in our opinion, proper books of account as required bylaw, have been
kept by the Company so far as appears from ourexamination of such
books;
c) the Balance Sheet, the Profit and Loss Account and the Cash Flow
Statement dealt with by this report are in agreement with the books of
account;
d) in our opinion, the Balance Sheet, the Profit and Loss Account and
the Cash Flow Statement dealt with by this report 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 December 31, 2010 and taken on record by the Board of Directors,
we report that none of the directors is disqualified as on December 31,
2010 from being appointed as a director in terms of Clause (g) of
sub-section (1) of Section 274 of the Companies Act, 1956;
0 in our opinion and to the best of our information and according to
the explanations given to us, the said accounts 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 December 31,2010,
(ii) in the case of the Profit and Loss Account, of the profit
fortheyear ended on that date; and
(iii) in the case of Cash Flow Statement, of the cash flows fortheyear
ended on that date.
ANNEXURE REFERRED TO IN PARAGRAPH 1OFTHE AUDITORS REPORTTO THE MEMBERS
OF FAG BEARINGS INDIA LIMITED ON THE ACCOUNTS FORTHEYEAR ENDED DECEMBER
31,2010
Q (a) The Company has maintained proper records showing full
particulars including quantitative details and situation of fixed
assets.
(b) The Company has a regular programme of physical verification of
fixed assets which, in our opinion is reasonable. The assets which were
to be covered as per the said programme, have been physically verified
by the management during the year. According to the information and
explanations given to us, no material discrepancies were noticed on
such verification.
(c) There was no disposal of substantial part of fixed assets duringthe
year.
Q (a) The inventories have been physically verified by the management
duringtheyearat reasonable intervals.
(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 are reasonable and adequate in relation to
the size of the Company and the nature of its business.
(c) On the basis of our examination of the records of the inventory, we
are of the opinion that the Company is maintaining proper records of
inventory. According to the information and explanations given to us,
no material discrepancies were noticed on physical verification between
the physical stock and the book records.
- The Company has not taken / granted any loans, secured or unsecured
from / to Companies, firms or other parties covered in the register
maintained under Section 301 of the Act. Hence, the provisions of
Clause 4(iii) of the Companies (AuditorsReport) Order, 2003 are not
applicable to the Company.
- In our opinion and according to the information and explanations
given to us, having regard to the explanation that some of the items
are of a special nature and comparable alternative quotations are not
available, 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. Duringthe course of our audit, we have not observed any
continuing failure to correct major weaknesses in internal control
system in respect of these areas.
Q The Company has not entered into any transactions with any Companies,
firms or other parties which are required to be entered into the
register maintained under Section 301 of the Companies Act, 1956.
- In our opinion and according to the information and explanations
given to us, the Company has complied with the provisions of Sections
58A and 58AA or any other relevant provisions of the Act and the
Companies (Acceptance of Deposits) Rules, 1975, with regard to the
deposits accepted from the public in earlieryear/s which have remained
unclaimed. We have been informed that during the year, no order has
been passed by the Company Law Board or National Company Law Tribunal
or Reserve Bank of India or any Court or any other Tribunal in respect
of such deposits.
-} The Company has a dedicated internal audit department carrying out
Internal Audits. In our opinion, the Company has an internal audit
system commensurate with the size and the nature of its business.
-| We have broadly reviewed the books of account maintained by the
Company pursuant to the Rules made by the Central Government forthe
maintenance of cost records under Section 209(l)(d)ofthe Act and are of
the opinion that prima facie the prescribed accounts and records have
been made and maintained. We have not, however, made a detailed
examination of the records.
- (a) According to the information and explanations given to us and
according to the records of the Company, the Company has been generally
regular in depositing with appropriate authorities undisputed statutory
dues including provident fund, investor education and protection fund,
employees state insurance, income tax, sales tax, value added tax,
wealth tax, service tax, octroi, custom duty, excise duty, cess and
other material statutory dues applicabletoit.
(b) According to the information and explanations given to us, no
undisputed amounts payable in respect of provident fund, investor
education and protection fund, employees state insurance, income tax,
sales tax, value added tax, wealth tax, service tax, octroi, custom
duty, excise duty, cess and other material statutory dues applicable to
it were in arrears as atthe Balance Sheet date fora period of more than
sixmonths from the date they became payable.
(c) As explained to us and according to the records of the Company, the
following dues as at the year end of income tax/ sales tax / value
added tax / wealth tax / service tax / custom duty / excise duty / cess
have not been deposited on accountofdispute:
Name of Nature of Due as at
the Statute the Dues the year end
(Rs. in million)
The Income Tax Income Tax 47.2
Act, 1961
The Central
SalesTax SalesTax 2.4
Act, 1956
The Central SalesTax 9.0
Sales Tax Act, 1956
The Central SalesTax 1.8
SalesTaxAct, 1956
The Bombay BST 0.5
Sales Tax Act (excludinginterest)
The Central SalesTax 19.6
Sales Tax Act,
1956 (includinginterest)
The Central SalesTax 0.7
Sales Tax Act,
1956 (includinginterest)
The Bombay BST 0.2
Sales Tax Act (includinginterest)
The Central SalesTax 12.3
Sales Tax Act,
1956
The Central Excise Duty 35.0*
Excise Act, 1944 (including penalty
and interest)
Name of the Period to which Forum where
Statue the amount relates dispute is pending
The Income Tax
Act, 1961 AY 2006-07 IncomeTax
Appellate Tribunal
The Central SalesTax
Act, 1956 2002 Gujarat VAT Tribunal
The Central
SalesTaxAct, 1956 January2003 JointCommissioner
to December 2003 of Sales Tax (Appeals)
The Central
SalesTaxAct, 1956 2003-04 Deputy Commissioner
of Sales Tax (Appeals)
Mumbai
The Bombay
Sales Tax Act 2003-04 Deputy Commissioner
(Appeals), Mumbai
The Central
SalesTaxAct, 1956 2004 Joint Commissioner
of Sales Tax (Appeals)
The Central
SalesTaxAct, 1956 2004-05 Sales Tax Authority,
Pune
The Bombay
SalesTaxAct 2004-05 Sales Tax Authority,
Pune
The Central
SalesTaxAct, 1956 2006-07 Joint Commissioner
(Appeals)
The Central
SalesTaxAct, 1944 April 2003 to Commissioner
June 2010 (Appeals)
*Rs. 23.7 million since deleted on account of favourable order dated
January 13,2011.
Q The Company does not have accumulated losses. The Company has not
incurred any cash losses during the financial year covered by our audit
and in the immediately preceding financialyear.
$ As the Company has no amount due to any financial institution, bank
or debenture holderthe provisions of Clause 4(xi) of the Order, are not
applicable to the Company.
- As the Company has not granted any loans or advances on the basis of
security by way of pledge of shares, debentures and other securities,
the provisions of Clause 4(xii) of the Order are not applicable.
-p As the Company is not a chit fund / nidhi / mutual benefit fund /
society, the provisions of Clause 4(xiii) of the Order are not
applicable.
- Based on our examination of the records and evaluation of the related
internal controls, we are of the opinion that proper records have been
maintained of the transactions and contracts of dealings or trading in
shares, securities, debentures and other investments with timely
entries in those records. We also report that the Company has held the
shares, securities, debentures and other investments in its own name.
- According to the information and explanations given to us, the
Company has not given any guarantee for loans taken by others from
banks orfinancial institutions.
é As the Company has not obtained any term loans, the provisions of
Clause 4(xvi) of the Order are not applicable.
-> According to the information and 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
investments.
- According to the information and explanations given to us, the
Company has not made any preferential allotment of shares
duringtheyearto parties orCompanies covered in the register maintained
underSection 301 of the Act.
- As the Company has not issued any debentures, the provisions of
Clause 4(xix) of the Order are not applicable.
- As the Company has not raised any money during the year byway of
public issue, the provisions of Clause 4(xx) of the Orderare not
applicable.
Based upon the audit procedures performed for the purpose of
reporting the true and fair view of the financial statements and
according to the information and explanations given by the management,
we report that no fraud on or by the Company has been noticed or
reported during the course of ouraudit.
For Mohinder Puri & Co.
Chartered Accountants
Firm No. 000204N
Vikas Vig
Partner
Membership No. 16920
Mumbai: February 17, 2011
Dec 31, 2009
We have audited the attached Balance Sheet of FAG Bearings India
Limited, as at December 31, 2009 and also the Profit and Loss Account
for the year ended on that date annexed thereto and the Cash Flow
Statement for the year ended on that date. 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.
We conducted our audit in accordance with the 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 management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis
forouropinion.
1) As required by the Companies (Auditors Report) order, 2003 as
amended by the Companies (Auditors Report) (Amendment) Order, 2004
issued by the Central Government of India in terms of sub-section (4A)
of Section 227 of the Companies Act, 1956, (referred to as the "Act")
we enclose in the Annexure a statement on the matters specified in
paragraphs 4 and 5 of the said order.
2) Further to our comments in the Annexure referred to 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 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 appears from our examination of such
books;
c) the Balance Sheet, the Profit and Loss Account and the Cash Flow
Statement dealt with by this report are in agreement with the books of
account;
d) in our opinion, the Balance Sheet, the Profit and Loss Account and
the Cash Flow Statement dealt with by this report 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 December 31, 2009 and taken on record by the Board of Directors,
we report that none of the directors is disqualified as on December31,
2009 from being appointed as a director in terms of Clause (g) of
sub-section (1) of Section 274 of the Companies Act, 1956;
f) in our opinion and to the best of our information and according to
the explanations given to us, the said accounts 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 December 31,2009,
(ii) in the case of the Profit and Loss Account,of the profit for the
year ended on that date;and
(iii) in the case of Cash Flow Statement, of the cash flows for the
year ended on that date.
ANNEXURE REFERRED TO IN PARAGRAPH 1 OF THE AUDITORS REPORT TO THE
MEMBERS OF FAG BEARINGS INDIA LIMITED ON THE ACCOUNTS FOR THE YEAR
ENDED DECEMBER 31, 2009
i(a) The Company has maintained proper records showing full particulars
including quantitative details and situation of fixed assets. (b) The
Company has a regular programme of physical verification of fixed
assets which, in our opinion is reasonable. The assets which were to be
covered as per the said programme, have been physically verified by the
management during the year. According to the information and
explanations given to us, no material discrepancies were noticed on
such verification. (c) There was no disposal of substantial part of
fixed assets during the year.
ii(a) The inventories have been physically verified by the management
during the year at reasonable intervals. (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 are reasonable and adequate in relation to the size of the
Company and the nature of its business. (c) On the basis of our
examination of the records of the inventory, we are of the opinion that
the Company is maintaining proper records of inventory. According to
the information and explanations given to us, no material discrepancies
were noticed on physical verification between the physical stock and
the book records.
iii The Company has not taken / granted any loans, secured or unsecured
from / to companies, firms or other parties HI covered in the register
maintained under Section 301 of the Act. Hence, the provisions of
Clause 4(iii) of the I Companies (Auditors Report) order, 2003 are not
applicable to the Company.
iv In our opinion and according to the information and explanations
given to us, having regard to the explanation that some of the items
are of a special nature and comparable alternative quotations are not
available, 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. During the course of our audit, we have not observed any
continuing failure to correct major weaknesses in internal control
system in respect of these areas.
v(a) Based on the audit procedures applied by us and according to the
information and explanations provided by the management, we are of the
opinion, the transactions that need to be entered into the register in
pursuance of Section 301 of the Act have been so entered. (b) In our
opinion and according to the information and explanations given to us,
the transactions made in pursuance of contracts or arrangements entered
in the registers maintained under Section 301 of the Act and exceeding
the value of rupees five lakh in respect of any party during the year
have been made at prices which are reasonable having regard to
prevailing market prices at the relevant time.
vi In our opinion and according to the information and explanations
given to us, the Company has complied with the provisions of Sections
58A and 58AA or any other relevant provisions of the Act and the
Companies (Acceptance of Deposits) Rules, 1975, with regard to the
deposits accepted from the public in earlier years which have remained
unclaimed. We have been informed that during the year, no order has
been passed by the Company Law Board or National Company Law Tribunal
or Reserve Bank of India or any Court or any other Tribunal in respect
of such deposits.
vii The Company has a dedicated internal audit department carrying out
Internal Audits. In our opinion, the Company has an internal audit
system commensurate with the size and the nature of its business.
viii We have broadly reviewed the books of account maintained by the
Company pursuant to the Rules made by the Central Government for the
maintenance of cost records under Section 209(l)(d) of the Act and are
of the opinion that prima facie the prescribed accounts and records
have been made and maintained. We have not, however, made a detailed
examination of the records.
(a) According to the information and explanations given to us and
according to the records of the Company, except for a short deposit of
Central Sales Tax, which was later paid, the Company has been generally
regular in depositing with appropriate authorities undisputed statutory
dues including provident fund, investor education and protection fund,
employees state insurance, income tax, sales tax, value added tax,
wealth tax, service tax, octroi, custom duty, excise duty, cess and
other material statutory dues applicable to it.
(b) According to the information and explanations given to us, no
undisputed amounts payable in respect of provident fund, investor
education and protection fund, employees state insurance, income tax,
sales tax, value added tax, wealth tax, service tax, octroi, custom
duty, excise duty, cess and other material statutory dues applicable to
it were in arrears as at the Balance Sheet date for a period of more
than six months from the date they became payable.
(c) As explained to us and according to the records of the Company, the
following dues as at the year end of income tax / sales tax / value
added tax / wealth tax / service tax / custom duty / excise duty / cess
have not been deposited on account of dispute:
Name of Nature of Due as at the
the Statute the Dues year end (Rs.)
The Central Sales Tax 3,819,805
Sales Tax Act,
1956
The Central Sales Tax 13,572,126
Sales Tax Act,
1956 (including interest)
The Gujarat Sales Tax 1,085,868
Sales Tax Act,
1969 (including interest)
The Central Sales Tax 44,154,235
Sales Tax Act,
1956 (including interest)
The Central Sales Tax 23,873,348
Sales Tax Act,
1956 (including interest)
The Finance Act,
1994 Service Tax 60,605,967
(including penalty
and interest)
The Finance Act,
1994 Service Tax 859,592
The Central Excise Duty 22,695,391
Excise Act, 1944 (including penalty
and interest)
Name of the Statue Period to which Forum where
the amount relates dispute is pending
The Central
Sales Tax Act, 1956 2002 Gujarat VAT Tribunal
The Central
Sales Tax Act, 1956 January 2003 to Joint Commissioner of
December 2003 Sales Tax (Appeals)
The Gujarat
Sales Tax Act, 1969 2004 Joint Commissioner of
Sales Tax (Appeals)
The Central
Sales Tax Act, 1956 2004 Joint Commissioner of
Sales Tax (Appeals)
The Central
Sales TaxAct, 1956 January 2005 to Joint Commissioner of
March 2006 Sales Tax (Appeals)
The Finance Act, 1994 July 2003 to Central Excise and
December 2005 Service Tax Appellate
Tribunal
The Finance Act, 1994 2005 Central Excise and
Service Tax Appellate
Tribunal
The Central
Excise Act, 1944 November 2003 to The Company is in the
December 2007 process of Filing an
Appeal
x The Company does not have accumulated losses. The Company has not
incurred any cash losses during the financial year covered by our audit
and in the immediately preceding financial year.
xi As the Company has no amount due to any financial institution, bank
or debenture holder the provisions of Clause 4(xi)ofthe order, are not
applicable to the Company.
xii As the Company has not granted any loans or advances on the basis
of security by way of pledge of shares, debentures and other
securities, the provisions of Clause 4(xii) of the order are not
applicable.
xiii As the Company is not a chit fund / nidhi / mutual benefit fund /
society, the provisions of Clause 4(xiii) of the order are not
applicable.
xiv Based on our examination of the records and evaluation of the
related internal controls, we are of the opinion that proper records
have been maintained of the transactions and contracts of dealings or
trading in shares, securities, debentures and other investments with
timely entries in those records. We also report that the Company has
held the shares, securities, debentures and other investments in its
own name.
xv According to the information and explanations given to us, the
Company has not given any guarantee for loans taken by others from
banks or financial institutions.
xvi As the Company has not obtained any term loans, the provisions of
Clause 4(xvi) of the order are not applicable.
æ According to the information and 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
investments.
xviii According to the information and explanations given to us, the
Company has not made any preferential allotment of shares during the
year to parties or companies covered in the register maintained under
Section 301 of the Act.
xix As the Company has not issued any debentures, the provisions of
Clause 4(xix) of the order are not applicable.
xx the Company has not raised any money during the year by way of
public issue, the provisions of Clause 4(xx) of the order are not
applicable.
xxi Based upon the audit procedures performed for the purpose of
reporting the true and fair view of the financial statements and
according to the information and explanations given by the management,
we report that no fraud on or by the Company has been noticed or
reported during the course of our audit.
For Mohinder Puri & Co.
Chartered Accountants
VikasVig
Partner
Membership No. 16920
Mumbai: February 11, 2010
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