Jun 30, 2023
To the Members of Kennametal India Limited
Report on the Audit of the Financial Statements
Opinion
1. We have audited the accompanying financial statements of Kennametal India Limited (âthe Companyâ), which comprise the Balance Sheet as at June 30, 2023, and the Statement of Profit and Loss (including Other Comprehensive Income), the Statement of Changes in Equity and the Statement of Cash Flows for the year then ended, and notes to the financial statements, including a summary of 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 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 June 30, 2023, and total comprehensive income (comprising of profit and other comprehensive loss), changes in equity and its cash flows for the year then ended.
Basis for Opinion
3. We conducted our audit in accordance with the Standards on Auditing (SAs) specified under Section 143(10) of the Act. Our responsibilities under those Standards are further described in the âAuditorâs Responsibilities for the Audit of the Financial Statementsâ 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 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.
Emphasis of Matter
4. We draw your attention to Note 40 to the financial statements in respect of Scheme of Arrangement (the âSchemeâ) between the Company and Widia India Tooling Private Limited, the erstwhile wholly owned subsidiary (the âtransferor companyâ), from the appointed date of April 1,2021, as approved by National Company Law Tribunal, Bengaluru bench, vide its order delivered dated October 17, 2022 (received on November 16, 2022). Though the transferor company did not carry on any business since January 1,2021, the Company has given effect to the accounting treatment set out in the Scheme from the date prescribed under âAppendix C, Business combinations of entities under common controlâ of Ind AS 103 âBusiness Combinationsâ as specified in clause 12.1 of the Scheme, which is the beginning of the preceding period presented, i.e., July 1,2021. Accordingly, the impact of the merger has been accounted for as at July 1,2021, and the comparative financial information in the financial statement have been restated. Our conclusion is not modified in respect of this matter.
Key audit matters
5. 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.
Key audit matter |
How our audit addressed the key audit matter |
Assessment of ongoing income tax litigations [Refer Note 8 âCurrent income tax assets (net)â and Note 28 âContingent liabilitiesâ to the financial statements] As at June 30, 2023, the Company has income tax demands aggregating to ''. 321 million, which have been disclosed under Contingent liabilities. The Company has certain disputed income tax matters with the Income tax authorities, which include demands in respect of transfer pricing adjustments on transactions with the ultimate holding company in connection with information technology services cross charge received by the Company and margin on the manufacturing segment of the Company. The Company has fled appeals against these demands with various appellate forums which are currently pending for adjudication. Management judgment is involved in evaluation of the likelihood of ultimate outcome of these disputes and the probable amount of the provision to be recognised or contingent liabilities to be disclosed, based on the application of significant judgement, favourable order received and related external advice including those relating to interpretation of laws and regulations, wherever applicable, unless the probability of outflow of resources is considered remote. Considering that the ultimate outcome of the matters is contingent and the positions adopted by the management are based on the application of significant judgement, the matter has been determined to be a key audit matter. |
Our procedures included the following: ⢠Understood, evaluated and tested the design and operating effectiveness of controls in respect of identifying income tax exposures, its accounting and disclosures thereof. ⢠Obtained a listing of the income tax disputed matters and read the correspondence with income tax authorities and where relevant, the advice received by management from its external tax consultants. ⢠Evaluated the independence, objectivity and competence of the management experts involved. ⢠Along with auditorâs tax expert, gained an understanding of the current status of income tax disputes through our inquiries with management and determined the impact, if any, based on recent judicial rulings and latest developments in respective laws. ⢠Along with auditorâs tax expert, evaluated managementâs assessment of the probability of outcome and the magnitude of potential outflow of economic resources in respect of provisions for uncertain tax exposures based on case history and other available evidence to challenge the valuation and completeness of the provisions recognised by the management. ⢠Evaluated the relevant accounting policies with respect to provisions |
and contingent liabilities and assessed whether they are in compliance with applicable accounting standards. |
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⢠Evaluated the adequacy of disclosures made in the financial |
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statements with respect to Contingent liabilities. |
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Based on the above procedures, we did not note any significant exceptions to the management assessment in recognising provisions and in determining and disclosing contingent liabilities in respect of the aforesaid income tax disputed matters. |
6. The Company''s Board of Directors is responsible for the other information. The other information comprises the information included in Board''s Report, Management Discussion and Analysis Report, Corporate Governance Report and Business Responsibility and Sustainability Report, but does not include the financial statements and our auditor''s 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 Companyâs Board of Directors is responsible for the matters stated in Section 134(5) of the Act with respect to the preparation of these financial statements that give a true and fair view of the financial position, financial performance, changes in equity 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. 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, management is 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 management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so. Those Board of Directors are also responsible for overseeing the Companyâs financial reporting process.
Auditor''s responsibilities for the audit of the financial statements
9. 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 SAs 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.
10. As part of an audit in accordance with SAs, we exercise professional judgment and maintain professional scepticism 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 managementâs 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.
11. 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.
12. 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.
13. 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.
14. The financial statements of the Company for the year ended June 30, 2022, were audited by another firm of chartered accountants under the Act who, vide their report dated August 12, 2022 expressed an unmodified opinion on those financial statements. Our opinion is not modified in respect of this matter.
Report on other legal and regulatory requirements
15. As required by the Companies (Auditorâs Report) Order, 2020 (âthe Orderâ), issued by the Central Government of India in terms of subsection (11) of Section 143 of the Act, we give in the Annexure B a statement on the matters specified in paragraphs 3 and 4 of the Order, to the extent applicable.
16. 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, except that the backup of books of account and other books and papers maintained in electronic mode has not been maintained on a daily basis on servers physically located in India during the year.
(c) The Balance Sheet, the Statement of Profit and Loss (including other comprehensive income), the Statement of Changes in Equity and the Statement of Cash Flows dealt with by this Report are in agreement with the books of account.
(d) In our opinion, the aforesaid financial statements comply with the Accounting Standards specified under Section 133 of the Act.
(e) On the basis of the written representations received from the directors as on June 30, 2023 taken on record by the Board of Directors, none of the directors is disqualified as on June 30, 2023 from being appointed as a director in terms of Section 164(2) of the Act.
(f) With respect to the maintenance of accounts and other matters connected therewith, reference is made to our comment in paragraph 16 (b) above.
(g) 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 âAnnexure Aâ.
(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 (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 in its financial statements - Refer Note 28 to the financial statements.
ii. The Company was not required to recognise a provision as at June 30, 2023 under the applicable law or accounting standards, as it does not have any material foreseeable losses on long-term contract. The Company did not have any derivative contracts as at June 30, 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.
iv. (a) The management has represented that, to the best of
its knowledge and belief, as disclosed in the notes to the accounts, no funds have been advanced or loaned or invested (either from borrowed funds or share premium or any other sources or kind of funds) by the Company to or in any other person(s) or entity(ies), including foreign entities (âIntermediariesâ), 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 (âUltimate Beneficiariesâ) or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries (Refer Note 39(b)(vii)(A) to the financial statements);
(b) The management has represented that, to the best of its knowledge and belief, as disclosed in the notes to the accounts, no funds have been received by the Company from any person(s) or entity(ies), including foreign entities (âFunding 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 (Refer Note 39(b)(vii)(B) to the financial statements); and
(c) Based on such audit procedures that we considered reasonable and appropriate in the circumstances, nothing has come to our notice that has caused us to believe that the representations under sub-clause (a) and (b) contain any material misstatement.
v. The dividend declared and paid during the year by the Company is in compliance with Section 123 of the Act.
vi. As proviso to Rule 3(1) of the Companies (Accounts) Rules, 2014 (as amended), which provides for maintaining books of account in accounting software having a feature of recording audit trail of each and every transaction, creating an edit log of each change made in books of account along with the date when such changes were made and ensuring that the audit trail cannot be disabled, is applicable to the Company only with effect from financial year beginning July 1, 2023, the reporting under clause (g) of Rule 11 of the Companies (Audit and Auditors) Rules, 2014 (as amended), is currently not applicable.
17. The Company has provided for managerial remuneration in accordance with the requisite approvals mandated by the provisions of Section 197 read with Schedule V to the Act.
For Price Waterhouse & Co Chartered Accountants LLP
Firm Registration Number: 304026E/E-300009
Shivakumar Hegde
Partner
Membership Number: 204627 UDIN: 23204627BGXXXB4048
Bengaluru 11 August 2023
Jun 30, 2022
Report on the Audit of the Standalone Financial Statements
Opinion
1. We have audited the accompanying standalone financial statements of Kennametal India Limited (''the Companyâ), which comprise the Balance Sheet as at 30 June 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 standalone financial statements give the information required by the Companies Act, 2013 (''the Actâ) in the manner so required and give a true and fair view in conformity with the Indian Accounting Standards (''Ind 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 30 June 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 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 (''ICAIâ) together with the ethical requirements that are relevant to our audit of the standalone 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.
Key Audit Matter
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 standalone 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 matter 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 |
Inventory: Refer note 2.9 for accounting policy and note 12 for financial disclosures in relation to inventory. At the Standalone Balance Sheet dated 30 June 2022, the Company held inventories comprising of raw materials and components, finished goods, work-in-progress and stores and spares worth '' 2,666 million as detailed in note 12 to the accompanying standalone financial statements. During the year ended 30 June 2022, the management has performed 100% physical verification for the inventory between 23 May 2022 to 20 June 2022 in multiple intervals with the assistance of management experts and has performed roll forward workings based on system generated reports. The raw material and other components of inventory are valued based on weighted average cost. The Company follows standard costing for Hard Metal Products segment and actual costing for Machining Solutions Group segment to arrive at the inventory value. At the end of each reporting period, price variance and various production related overheads are allocated on actual basis and manually adjusted, as necessary, to value the inventory. Owing to its nature, with respect to manufacture of engineering products specific to the needs of the customers, valuation of inventory involves preparation of specific bill of materials (BOM) for each product being manufactured. In addition to the above, the complexities involved in this assessment include: ⢠Identification of products where specific production overheads and other allocations such as labour cost, depreciation on machineries, etc. to be added to the cost of inventory. |
Our audit procedures around inventory to assess valuation and allowance for inventories included, but were not limited to the following: Existence, Completeness, Cut-off and Accuracy of Inventory: ⢠Obtained understanding of management process of inventory management and inventory physical verification performed at various intervals during the year and near to the reporting date; ⢠Evaluated the design effectiveness of controls over inventory management process/inventory physical verification and tested key controls for their operating effectiveness; ⢠Observed physical count carried out by the management. ⢠Obtained the report of the expert and verified the treatment of count difference in the books of accounts. ⢠Independently verified the physical quantities of inventory on test check basis to the physical count report provided by the management and performed roll back procedures from date our physical verification till the balance sheet date. ⢠On test check basis, tested the roll forward/back procedures from the date of management count to the balance sheet date. ⢠Performed cut-off procedures to ensure completeness of the inventory recorded in the books of accounts and completeness of goods-in-transit as at reporting date. Valuation of inventory: ⢠Obtained an understanding of the managementâs process of valuation of inventory. ⢠Evaluated the design and tested the operating effectiveness of key |
⢠Assessment of the completion percentage of products. ⢠Allocation of price variance on raw materials to inventories in work-in-progress and finished goods. The management of the Company reviews the list of aged stocks and |
controls around valuation including estimates such as stage of completion, overhead computations, and determination of net realizable value of inventory items. Discussed with management the rationale supporting assumptions |
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provides for aged inventory basis policy set forth by the management. Inventories of general use are reviewed further and any provision on these stocks are reversed. Further, at the end of each reporting period, the management of the Company also assesses whether there is any |
and estimates used in carrying out the inventory valuation and corroborated the same to our understanding of the business. On a sample basis, recomputed the cost of the inventory by |
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objective evidence that net realisable value of any item of inventory is below the carrying value. If so, such inventories are written down to their net realizable value in accordance with Ind AS 2, Inventories. Such specific identification performed by management to ascertain slow moving and obsolete inventories, and assessment of net realisable value of such slow moving and obsolete inventory items require significant |
applying managementâs valuation model, testing underlying cost of acquisition of raw materials consumed, and testing overheads and labour cost allocation to such inventory items. This also included testing of BOM on sample basis for specialised inventory to ensure the BOM is approved as the internal process of the Company. Evaluated the appropriateness of the Companyâs accounting policy |
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judgement and estimation. Considering the complexities and materiality of amounts involved, this matter is considered to be a key audit matter for current year audit. |
and valuation method of inventory in accordance with the accounting standards. Inventory allowance: |
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⢠Obtained and understood management process for identification of slow moving, non-moving or obsolete inventories and ensured that the same is consistently applied. ⢠Performed an independent analysis of the ageing of inventory line items leading to specific inquiries with the management to ensure the completeness of the inventory identified as slow moving, nonmoving and obsolete. ⢠On sample basis, tested the ageing of inventory items obtained through system reports, as applicable. ⢠For slow and non-moving inventories as at 30 June 2022 identified by the management, recomputed the allowance created by the management using managementâs model which has been consistently applied. Further, tested the net realisable value of finished goods inventory on a sample basis to average of 6 months historical selling prices less costs to sell, to identify allowance required, if any, for finished goods. Presentation and disclosure: ⢠Evaluated the disclosures made in the accompanying standalone financial statements in accordance with the applicable accounting standards. |
Information other than the Financial Statements and Auditor''s Report
thereon
6. The Companyâs Board of Directors is responsible for the other information. The other information comprises the information included in the Boardâs Report but does not include the standalone financial statements and our auditorâs report thereon. The Annual Report is expected to be made available to us after the date of this auditor''s report.
Our opinion on the standalone financial statements does not cover the other information and we will 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 identified above when it becomes available 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.
When we read the Annual Report, if we conclude that there is a material misstatement therein, we are required to communicate the matter to those charged with governance.
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 standalone 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.
Auditor''s Responsibilities for the Audit of the Standalone FinancialStatements
10. Our objectives are to obtain reasonable assurance about whether the standalone 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 standalone 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 standalone 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 system with reference to standalone 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 standalone 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 standalone financial statements, including the disclosures, and whether the standalone 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 standalone 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 (''the Orderâ) issued by the Central Government of India in terms of Section 143(11) of the Act we give in the Annexure I 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 I, 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;
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 30 June 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 standalone financial statements of the Company as on 30 June 2022 and the operating effectiveness of such controls, refer to our separate Report in Annexure II 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 30 to the standalone financial statements, has disclosed the impact of pending litigation(s) on its financial position as at 30 June 2022.;
ii. the Company did not have any long-term contracts including derivative contracts for which there were any material foreseeable losses as at 30 June 2022.;
iii. There were no amounts which were required to be transferred to the Investor Education and Protection Fund by the Company during the year ended 30 June 2022;
iv. a. The management has represented that, to the best of its
knowledge and belief, as disclosed in note 44 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(s) or entity(ies), including foreign entities (''the 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 (''the 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 44 to the standalone financial statements, no funds have been received by the Company from any person(s) or entity(ies), including foreign entities (''the 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 (''Ultimate 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. The interim dividend declared and paid by the Company during
the year ended 30 June 2022 and until the date of this audit report is in compliance with section 123 of the Act.
Chartered Accountants
Firmâs Registration No.: 001076N/N500013
Partner
Membership No.: 059139
UDIN: 22059139AOXMQB8200
Bengaluru
12 August 2022
Jun 30, 2021
To the Members of Kennametal India Limited
Report on the Audit of the Standalone Financial Statements
Opinion
1. We have audited the accompanying standalone financial statements of Kennametal India Limited (âthe Companyâ), which comprise the Balance Sheet as at 30 June 2021, the Statement of Profit and Loss (including Other Comprehensive Income), the Cash Flow Statement 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 standalone financial statements give the information required by the Companies Act, 2013 (âActâ) in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India including Indian Accounting Standards find ASâ) specified under Section 133 of the Act, of the state of affairs of the Company as at 30 June 2021, 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.
Key Audit Matter
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 matter described below to be the key audit matters to be communicated in our report. |
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Key audit matter |
How our audit addressed the key audit matter |
Inventory: Refer note 2.9 for accounting policy and note 12 for financial disclosures in relation to inventory. At the Standalone Balance Sheet dated 30 June 2021, the Company held inventories comprising of raw materials and components, finished goods, work-in-progress and stores and spares worth X 2,051 millions detailed in note 12 to the accompanying standalone financial statements. During the year ended 30 June 2021, the management has performed 100% physical verification for the inventory between 28 June 2021 and 15 July 2021 in multiple intervals with the assistance of management experts and has performed roll forward/roll back workings based on system generated reports. The raw material and other components of inventory are valued based on weighted average cost. The Company follows standard costing for Hard Metal Products segment and actual costing for Machining Solutions Group segment to arrive at the inventory value. At the end of each reporting period, price variance and various production related overheads are allocated on actual basis and manually adjusted, as necessary, to value the inventory. Owing to its nature, with respect to manufacture of engineering products specific to the needs of the customers, valuation of inventory involves preparation of specific bill of materials (BOM) for each product being manufactured. In addition to the above, the complexities involved in this assessment include: ⢠Identification of products where specific production overheads and other allocations such as labour cost, depreciation on machineries, etc. to be added to the cost of inventory. |
Our audit procedures around inventory to assess valuation and allowance for inventories included, but were not limited to the following: Existence, Completeness, Cut-off and Accuracy of Inventory: ⢠Obtained understanding of management process of inventory management and inventory physical verification performed at various intervals during the year and near to the reporting date; ⢠Evaluated the design effectiveness of controls over inventory management process/inventory physical verification and tested key controls for their operating effectiveness; ⢠Observed physical count carried out by the management. ⢠Obtained the report of the expert and verified the treatment of count difference in the books of accounts. Independently verified the physical quantities of inventory on test check basis to the physical count report provided by the management and performed roll back procedures from date our physical verification till the balance sheet date. ⢠On test check basis, tested the roll forward/back procedures from the date of management count to the balance sheet date. ⢠Performed cut-off procedures to ensure completeness of the inventory recorded in the books of accounts and completeness of goods-in-transit as at reporting date. Valuation of inventory: ⢠Obtained an understanding of the managementâs process of valuation of inventory. ⢠Evaluated the design and tested the operating effectiveness of key |
⢠Assessment of the completion percentage of products. ⢠Allocation of price variance on raw materials to inventories in work-in-progress and finished goods. The management of the Company reviews the list of aged stocks and provides for aged inventory basis policy set forth by the management. Inventories of general use are reviewed further and any provision on these stocks are reversed. Further, at the end of each reporting period, the management of the Company also assesses whether there is any objective evidence that net realisable value of any item of inventory is below the carrying value. If so, such inventories are written down to their net realizable value in accordance with Ind AS 2, Inventories. Such specific identification performed by management to ascertain slow moving and obsolete inventories, and assessment of net realisable value of such slow moving and obsolete inventory items require significant judgement and estimation. Considering the complexities and materiality of amounts involved, this matter is considered to be a key audit matter for current year audit. |
controls around valuation including estimates such as stage of completion, overhead computations, and determination of net realizable value of inventory items. ⢠Discussed with management the rationale supporting assumptions and estimates used in carrying out the inventory valuation, and corroborated the same to our understanding of the business. ⢠On a sample basis, recomputed the cost of the inventory by applying managementâs valuation model, testing underlying cost of acquisition of raw materials consumed, and testing overheads and labour cost allocation to such inventory items. This also included testing of BOM on sample basis for specialised inventory to ensure the BOM is approved as the internal process of the Company. ⢠Evaluated the appropriateness of the Companyâs accounting policy and valuation method of inventory in accordance with the accounting standards. Inventory allowance: |
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Obtained and understood management process for identification of slow moving, non-moving or obsolete inventories and ensured that the same is consistently applied. |
||
Performed an independent analysis of the ageing of inventory line items leading to specific inquiries with the management to ensure the completeness of the inventory identified as slow moving, nonmoving and obsolete. |
||
⢠|
On sample basis, tested the ageing of inventory items obtained through system reports, as applicable. |
|
For slow and non-moving inventories as at 30 June 2021 identified by the management, recomputed the allowance created by the management using managementâs model which has been consistently applied. Further, tested the net realisable value of finished goods inventory on a sample basis to average of 6 months historical selling prices less costs to sell, to identify allowance required, if any, for finished goods. |
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Presentation and disclosure: |
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Evaluated the disclosures made in the accompanying financial statements in accordance with the applicable accounting standards. |
Information other than the Financial Statements and Auditorâs Report thereon
6. The Companyâs Board of Directors is 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. The Annual Report is expected to be made available to us after the date of this auditor''s report.
Our opinion on the standalone financial statements does not cover the other information and we will 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 identified above when it becomes available 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.
When we read the Annual Report, if we conclude that there is a material misstatement therein, we are required to communicate the matter to those charged with governance.
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 is responsible for the matters stated in Section 134(5) of the Act with respect to the preparation 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 accounting principles generally accepted in India, including the Ind AS specified 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 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, management is 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 management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.
9. Those Board of Directors is also responsible for overseeing the Companyâs financial reporting process.
Auditorâs Responsibilities for the Audit ofthe 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, 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, orthe 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 managementâs 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 standalone 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 ouraudit.
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 standalone 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, 2016 (âthe Orderâ) issued by the Central Government of India in terms of Section 143(11) of the Act, we give in the Annexure I a statement on the matters specified in paragraphs 3 and 4 of the Order.
17. Further to our comments in Annexure I, 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;
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 30 June 2021 from being appointed as adirector in terms of Section 164(2) of the Act;
f) we have also audited the internal financial controls with reference
to the financial statements of the Company as on 30 June 2021 in conjunction with our audit of the standalone financial statements of the Company for the year ended on that date and our report dated 18 August 2021 as per Annexure II 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 30 to the standalone financial statements, has disclosed the impact of pending litigations on its financial position as at 30 June 2021;
ii. the Company did not have any long-term contracts including derivative contracts for which there were any material foreseeable losses as at 30 June 2021;
iii. there were no amounts which were required to be transferred to the Investor Education and Protection Fund by the Company during the year ended 30 June 2021; and
iv. the disclosure requirements relating to holdings as well as dealings in specified bank notes were applicable for the period from 8 November 2016 to 30 December 2016, which are not relevant to these standalone financial statements. Hence, reporting under this clause is not applicable.
Chartered Accountants
Firmâs Registration No.: 001076N/N500013
Partner
Membership No.: 059139
UDIN:21059139AAAAEH3170
Bengaluru
18 August 2021
Jun 30, 2018
Report on the Financial Statements
1. We have audited the accompanying financial statements of Kennametal India Limited (âthe Companyâ), which comprise the Balance Sheet as at 30 June 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 the significant accounting policies and other explanatory information.
Managementâs Responsibility for the Financial Statements
2. 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 financial statements that give a true and fair view of the state of affairs (financial position), profit or loss (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 (âInd ASâ) specified 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; 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.
Auditorâs Responsibility
3. Our responsibility is to express an opinion on these financial statements based on our audit.
4. 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.
5. 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 these financial statements are free from material misstatement.
6. 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 auditorâs 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 controls relevant to the Companyâs preparation of the financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of the accounting estimates made by the Companyâs Directors, as well as evaluating the overall presentation of the financial statements.
7. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on these financial statements.
Opinion
8. 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 including Ind AS specified under Section 133 of the Act, of the state of affairs (financial position) of the Company as at 30 June 2018, and its profit (financial performance including other comprehensive income), its cash flows and the changes in equity for the year ended on that date.
Other Matter
9. The comparative financial information for the year ended 30 June, 2017 and the transition date opening balance sheet as at 1 July, 2016 prepared in accordance with Ind AS included in these financial statements, are based on the previously issued statutory financial statements for the year ended 30 June, 2017 and 30 June, 2016 respectively prepared in accordance with Accounting Standards prescribed under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014 (as amended) which were audited by the predecessor auditor whose reports dated 24 August, 2017 and 9 August, 2016 respectively expressed unmodified opinion on those financial statements, and have been adjusted for the differences in the accounting principles adopted by the Company on transition to Ind AS, which have been audited by us. Our opinion is not modified in respect of this matter.
Report on Other Legal and Regulatory Requirements
10. As required by the Companies (Auditorâs Report) Order, 2016 (âthe Orderâ) issued by the Central Government of India in terms of Section 143(11) of the Act, we give in the Annexure I a statement on the matters specified in paragraphs 3 and 4 of the Order.
11. Further to our comments in Annexure I, 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 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 30 June, 2018 from being appointed as a director in terms of Section 164(2) of the Act;
f) we have also audited the internal financial controls over financial reporting (IFCoFR) of the Company as on 30 June, 2018 in conjunction with our audit of the financial statements of the Company for the year ended on that date and our report dated 23 August, 2018 as per Annexure II expressed unmodified opinion;
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 29 to the financial statements, has disclosed the impact of pending litigations on its financial position;
ii. the Company did not have any long-term contracts including derivative contracts for which there were any material foreseeable losses;
iii. there were no amounts which were required to be transferred to the Investor Education and Protection Fund by the Company;
iv. the disclosure requirements relating to holdings as well as dealings in specified bank notes were applicable for the period from 8 November, 2016 to 30 December, 2016 which are not relevant to these financial statements. Hence, reporting under this clause is not applicable.
Annexure I
Based on the audit procedures performed for the purpose of reporting a true and fair view on the financial statements of the Company and taking into consideration the information and explanations given to us and the books of account and other records examined by us in the normal course of audit, and to the best of our knowledge and belief, 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 regular program of physical verification of its fixed assets under which fixed assets are verified in a phased manner over a period of three years, which, in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. In accordance with this program, certain fixed assets were verified during the year and no material discrepancies were noticed on such verification.
(c) The title deeds of all the immovable properties (which are included under the head âProperty, plant and equipment) are held in the name of the Company.
(ii) In our opinion, the management has conducted physical verification of inventory at reasonable intervals during the year, except for goods-in-transit and stocks lying with third parties. For stocks lying with third parties at the year-end, written confirmations have been obtained by the management. No material discrepancies were noticed on the aforesaid verification.
(iii) The Company has not granted any loan, secured or unsecured to companies, firms, Limited Liability Partnerships (LLPs) or other parties covered in the register maintained under Section 189 of the Act. Accordingly, the provisions of clauses 3(iii)(a), 3(iii)(b) and 3(iii)(c) of the Order are not applicable.
(iv) In our opinion, the Company has not entered into any transaction covered under Sections 185 and 186 of the Act. Accordingly, the provisions of clause 3(iv) of the Order are not applicable.
(v) In our opinion, the Company has not accepted any deposits within the meaning of Sections 73 to 76 of the Act and the Companies (Acceptance of Deposits) Rules, 2014 (as amended). Accordingly, the provisions of clause 3(v) of the Order are not applicable.
(vi) 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 subsection (1) of Section 148 of the Act in respect of Companyâs products/services and are of the opinion that, prima facie, the prescribed accounts and records have been made and maintained. However, we have not made a detailed examination of the cost records with a view to determine whether they are accurate or complete.
(vii) (a) The Company is regular in depositing undisputed statutory dues including provident fund, employeesâ state insurance, income-tax, sales-tax, service tax, goods and service tax, duty of customs, duty of excise, value added tax, cess and other material statutory dues, as applicable, to the appropriate authorities. Further, no undisputed amounts payable in respect thereof were outstanding at the year-end for a period of more than six months from the date they become payable.
(b) The dues outstanding in respect of income-tax, sales-tax, service-tax, goods and service tax, duty of customs, duty of excise and value added tax on account of any dispute, are as follows:
Statement of Disputed Dues (Rs. in lakhs)
Name of the statute |
Nature of dues |
Amount (Rs.) |
Amount paid under Protest (Rs.) |
Period to which the amount relates |
Forum where dispute is pending |
The Central Excise Act, 1944 |
Excise Duty/ Service tax |
1 |
January 1998 to September 2011 |
The Customs, Excise & Service Tax Appellate Tribunal (CESTAT), Bangalore |
|
Excise Duty |
97 |
51 |
April 2006 to June 2013 |
CESTAT, Bangalore |
|
Finance Act, 1994 |
Service Tax |
12 |
6 |
April 2007 to March 2008 |
CESTAT, Bangalore |
The Delhi Sales Tax Act, 1975 |
Sales Tax |
2 |
1 |
April 2004 to March 2005 |
Joint Commissioner Appeals - Delhi |
The Uttar Pradesh Value Added |
Value Added |
4 |
4 |
May 2011 |
Joint Commissioner Appeals - Sonabhadhra, Uttar |
Tax Act, 2008 |
Tax |
Pradesh |
|||
The Andhra Pradesh General |
Sales Tax |
117 |
59 |
April 2003 to March 2004 |
Sales Tax Appellate, Andhra Pradesh |
Sales Tax Act, 1957 |
|||||
The Karnataka Tax on Entry of |
Entry Tax |
122 |
122 |
April 2010 to June 2017 |
The Commissioner of Commercial Tax, Bangalore |
Goods Act, 1979 |
|||||
The Customs Act, 1962 |
Customs Duty |
159 |
159 |
August 2009 to October 2013 |
CESTAT, Bangalore |
The Central Sales Tax Act, 1956 |
Sales Tax |
64 |
62 |
April 2010 to March 2011 |
The Assistant Commissioner of Commercial Tax, Bangalore |
Sales Tax |
Nil |
33 |
April 2011 to March 2012 |
The Assistant Commissioner of Commercial Tax, Bangalore |
|
Sales Tax |
Nil |
60 |
April 2012 to March 2013 |
The Joint Commissioner of Commercial Tax (Appeals), Bangalore |
|
Sales Tax |
Nil |
69 |
April 2013 to March 2014 |
The Assistant Commissioner of Commercial Tax, Bangalore |
|
Sales Tax |
599 |
180 |
April 2014 to March 2015 |
The Joint Commissioner of Commercial Tax (Appeals), Bangalore |
|
Income Tax Act, 1961 |
Income Tax |
8 |
8 |
April 1993 to March 1994 |
The Income Tax Appellate Tribunal, Bangalore |
22 |
April 1999 to March 2001 |
Supreme Court of India |
|||
277 |
277 |
April 1999 to March 2001 |
The Commissioner of Income Tax, (Appeals), Bangalore |
||
702 |
702 |
April 2006 to March 2007 |
Transfer Pricing Office |
||
550 |
550 |
April 2007 to March 2008 |
The Commissioner of Income Tax, (Appeals), Bangalore |
||
505 |
505 |
April 2008 to March 2009 |
The Commissioner of Income Tax, (Appeals), Bangalore |
||
528 |
494 |
April 2009 to March 2010 |
The Commissioner of Income Tax, (Appeals), Bangalore |
||
473 |
473 |
April 2010 to March 2011 |
The Commissioner of Income Tax, (Appeals), Bangalore |
||
108 |
108 |
April 2011 to March 2012 |
The Commissioner of Income Tax (Appeals) , Bangalore |
||
164 |
164 |
April 2012 to March 2013 |
The Income Tax Appellate Tribunal, Bangalore |
||
209 |
209 |
April 2013 to March 2014 |
The Dispute Resolution Panel, Bangalore |
(viii) The Company has no loans or borrowings payable to a financial institution or a bank or government and no dues payable to debenture-holders during the year. Accordingly, the provisions of clause 3(viii) of the Order are not applicable.
(ix) The Company did not raise moneys by way of initial public offer or further public offer (including debt instruments) and did not have any term loans outstanding during the year. Accordingly, the provisions of clause 3(ix) of the Order are not applicable.
(x) No fraud by the Company or on the Company by its officers or employees has been noticed or reported during the period covered by our audit.
(xi) Managerial remuneration has been paid by the Company in accordance with the requisite approvals mandated by the provisions of Section 197 of the Act read with Schedule V to the Act.
(xii) In our opinion, the Company is not a Nidhi Company. Accordingly, provisions of clause 3(xii) of the Order are not applicable.
(xiii) In our opinion all transactions with the related parties are in compliance with Sections 177 and 188 of Act, where applicable, and the requisite details have been disclosed in the financial statements etc., as required by the applicable Ind AS.
(xiv) During the year, the Company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures.
(xv) In our opinion, the Company has not entered into any non-cash transactions with the directors or persons connected with them covered under Section 192 of the Act.
(xvi) The Company is not required to be registered under Section 45-IA of the Reserve Bank of India Act, 1934.
1. In conjunction with our audit of the financial statements of Kennametal India Limited (âthe Companyâ) as of and for the year ended 30 June 2018, we have audited the internal financial controls over financial reporting (IFCoFR) of the Company as of that date.
Managementâs Responsibility for Internal Financial Controls
2. The Companyâs Board of Directors is responsible for establishing and maintaining internal financial controls based on the internal control over the 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 (âthe ICAIâ). 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 the Companyâs business, including adherence to 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.
Auditorsâ Responsibility
3. Our responsibility is to express an opinion on the Companyâs IFCoFR based on our audit. We conducted our audit in accordance with the Standards on Auditing, issued by the Institute of Chartered Accountants of India (ICAI) and deemed to be prescribed under section 143(10) of the Act, to the extent applicable to an audit of IFCoFR, and the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting (the âGuidance Noteâ) issued by the ICAI. 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 IFCoFR were established and maintained and if such controls operated effectively in all material respects.
4. Our audit involves performing procedures to obtain audit evidence about the adequacy of the IFCoFR and their operating effectiveness. Our audit of IFCoFR included obtaining an understanding of IFCoFR, 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 financial statements, whether due to fraud or error.
5. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the Companyâs IFCoFR.
Meaning of Internal Financial Controls over Financial Reporting
6. A companyâs IFCoFR 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 IFCoFR 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 authorisations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorised 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 Reporting
7. Because of the inherent limitations of IFCoFR, 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 IFCoFR to future periods are subject to the risk that IFCoFR may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Opinion
8. In our opinion, the Company has, in all material respects, adequate internal financial controls over financial reporting and such internal financial controls over financial reporting were operating effectively as at 30 June 2018, based on the internal control over the financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note issued by the ICAI.
For Walker Chandiok & Co LLP
Chartered Accountants
Firmâs Registration No.: 001076N/N500013
Vijay Vikram Singh
Partner
Membership No.: 059139
Bengaluru
August 23, 2018
Jun 30, 2017
INDEPENDENT AUDITORSâ REPORT TOTHE MEMBERS OF KENNAMETAL INDIA LIMITED
Report on the Financial Statements
1. We have audited the accompanying financial statements of Kennametal India Limited (âthe Companyâ), which comprise the Balance Sheet as at June 30, 20I7, the Statement of Profit and Loss and the Cash Flow Statement for the year then ended, and a summary of the significant accounting policies and other explanatory information.
Managementâs Responsibility for the Financial Statements
2. The Company''s Board of Directors is responsible for the matters stated in Section I34(5) of the Companies Act, 20I3 (âthe Actâ) with respect to the preparation of these financial statements to 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 I33 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 20I4. 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.
Auditorsâ Responsibility
3. Our responsibility is to express an opinion on these financial statements based on our audit.
4. We have taken into account the provisions of the Act and the Rules made thereunder including the accounting standards and matters which are required to be included in the audit report.
5. We conducted our audit in accordance with the Standards on Auditing specified under Section I43(I0) of the Act and other applicable authoritative pronouncements issued by the Institute of Chartered Accountants of India (ICAI). Those Standards and pronouncements 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.
6. 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 auditors'' 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 the effectiveness of the Company''s internal control. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of the accounting estimates made by the Company''s Directors, as well as evaluating the overall presentation of the financial statements.
7. 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
8. In our opinion and to the best of our information and according to the explanations given to us, the afore said 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 June 30, 20I7, and its profit and its cash flows for the year ended on that date.
Report on Other Legal and Regulatory Requirements
9. As required by âthe Companies (Auditor''s Report) Order, 20I6'', issued by the Central Government of India in terms of sub-section (II) of Section I43 of the Act (hereinafter referred to as the âOrderâ), and on the basis of such checks of the books and records of the Company as we considered appropriate and according to the information and explanations given to us, we give in the Annexure B a statement on the matters specified in paragraphs 3 and 4 of the Order.
10. As required by Section I43(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, and the Cash Flow Statement dealt with by this Report are in agreement with the books of account.
(d) In our opinion, the aforesaid financial statements comply with the Accounting Standards specified under Section I33 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 20I4.
(e) On the basis of the written representations received from the directors as on June 30, 20I7 taken on record by the Board of Directors, none of the directors is disqualified as on June 30, 20I7 from being appointed as a director in terms of Section I64(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 A.
(g) With respect to the other matters to be included in the Auditors'' Report in accordance with Rule II of the Companies (Audit and Auditors) Rules, 20I4, in our opinion and to the best of our knowledge and belief and according to the information and explanations given to us:
i. The Company has disclosed the impact of pending litigations as at June 30, 20I7,on its financial position in its financial statements - Refer Notes 6 and 28;
ii. The Company has long-term contracts as at June 30, 20I7 for which there were no material foreseeable losses. The Company did not have any derivative contracts as at June 30, 20I7.
iii. There were no amounts which were required to be transferred to the Investor Education and Protection Fund by the Company during the year ended June 30, 20I7.
iv. The Company has provided requisite disclosures in the financial statements as to holdings as well as dealings in Specified Bank
Notes during the period from November 8, 20I6 to December 30, 20I6. Based on audit procedures and relying on Management representation, we report that the disclosures are in accordance with books of account maintained by the Company and as produced to us by Management - Refer Note 46.
Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section 143 of the Act
1. We have audited the internal financial controls over financial reporting of Kennametal India Limited (âthe Companyâ) as of June 30, 20I7 in conjunction with our audit of the financial statements of the Company for the year ended on that date.
Managementâs Responsibility for Internal Financial Controls
2. 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 (theâGuidance Noteâ)issued by the ICAI. 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 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 Act.
Auditorsâ Responsibility
3. 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 and the Standards on Auditing deemed to be prescribed under section I43(I0) of the Act to the extent applicable to an audit of internal financial controls, both applicable to an audit of internal financial controls and both issued by the ICAI. 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.
4. 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 judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error.
5. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the Company''s internal financial controls system over financial reporting.
Meaning of Internal Financial Controls Over Financial Reporting
6. 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 (I) 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
7. 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.
Referred to in paragraph 9 of the Independent Auditors'' Report of even date to the members of Kennametal India Limited on the financial statements as of and for the year ended June 30, 20I7
i. (a) The Company is maintaining proper records showing full particulars, including quantitative details and situation, of fixed assets.
(b) The fixed assets are physically verified by Management according to a phased programme designed to cover all the items over a period of three years which, in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. Pursuant to the programme, a portion of the fixed assets has been physically verified by the Management during the year and no material discrepancies have been noticed on such verification.
(c) The title deeds of immovable properties, as disclosed in Note I0 on fixed assets to the financial statements, are held in the name of the Company.
ii. Except for inventory lying with third parties, the other inventory has been physically verified by the Management during the year. The discrepancies noticed on physical verification of inventory as compared to book records were not material.
iii. The Company has not granted any loans, secured or unsecured, to companies, firms, Limited Liability Partnerships or other parties covered in the register maintained under Section I89 of the Act. Therefore, the provisions of Clause 3(iii)(a), (iii)(b) and (iii)(c) of the Order are not applicable to the Company.
iv. In our opinion, and according to the information and explanations given to us, the Company has complied with the provisions of Section I86 of the Act in respect of the loans given. The Company has not granted any loans or made any investments, or provided any guarantees or security to the parties covered under Section I85 of the Act.
v. The Company has not accepted any deposits from the public within the meaning of Sections 73, 74, 75 and 76 of the Act and the Rules framed there under to the extent notified.
vi. Pursuant to the rules made by the Central Government of India, the Company is required to maintain cost records as specified under Section I48(I) of the Act in respect of its products. We have broadly reviewed the same, 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 with a view to determine whether they are accurate or complete.
vii. (a) According to the information and explanations given to us and the records of the Company examined by us, in our opinion, the
Company is regular in depositing the undisputed statutory dues, including provident fund, employees'' state insurance, income tax, sales tax, service tax, duty of customs, duty of excise, value added tax, cess and other material statutory dues, as applicable, with the appropriate authorities.
(b) According to the information and explanations given to us and the records of the Company examined by us, the particulars of dues of income tax, sales tax, service tax, duty of customs, duty of excise, value added tax and cess as at June 30, 20I7 which have not been deposited on account of a dispute, are as follows:
Name of the statute |
Nature of dues |
Amount (?) |
Period to which the amount relates |
Forum where the dispute is pending |
The Central Excise Act, I944 |
Excise duty/ Service tax |
52,450 |
January I998 to September 20II |
The Customs, Excise & service Tax Appellate Tribunal (CESTAT), Bangalore |
4,610,113 (*1) |
April 2006 to June 2013 |
CESTAT, Bangalore |
||
The Finance Act, I994 |
Service tax |
576,I57 (*2) |
April 2007 to March 2008 |
CESTAT, Bangalore |
The Andhra Pradesh General Sales Tax Act, I957 |
Sales tax |
5,827,II4 (*3) |
April 2003 to March 2004 |
The Sales Tax Appellate Tribunal, Hyderabad |
The Delhi Sales Tax Act, I975 |
Sales tax |
78,550 (*4) |
April 2004 to March 2005 |
The Joint Commissioner (Appeals) of Special Zone Department of Trade and Taxes Government, Delhi |
The Karnataka Tax on Entry of Goods Act, I979 |
Entry tax |
Nil (*5) |
April 20I0 to June 20I7 |
The Commissioner of Commercial Tax, Bangalore |
The Uttar Pradesh Value Added Tax Act, 2008 |
Sales tax |
Nil (*6) |
May 20II |
The Joint Commissioner (Appeals) of Sales Tax, Sonabhadhra, Uttar Pradesh |
The Central Sales Tax Act, I956 |
Sales tax |
3,689,3I4 (*7) |
April 20I0 to March 20II |
The Assistant Commissioner of Commercial Tax, Bangalore |
Nil (*8) |
April 20II to March 20I2 |
The Assistant Commissioner of Commercial Tax, Bangalore |
||
Nil (*9) |
April 20I2 to March 20I3 |
The Joint Commissioner of Commercial Tax (Appeals), Bangalore |
||
Nil(*I0) |
April 20I3 to March 20I4 |
The Assistant Commissioner of Commercial Tax, Bangalore |
||
4I,899,707 (*II) |
April 20I4 to March 20I5 |
The Joint Commissioner of Commercial Tax (Appeals), Bangalore |
||
The Income Tax Act, I96I |
Income tax |
2,I98,066 |
April I999 to March 200I |
The Supreme Court of India |
Nil (*I2) |
April I993 to March I994 |
The Income Tax Apellate Tribunal, Bangalore |
||
Nil (*I3) |
April I999 to March 200I |
The Commissioner of Income Tax (Appeals), Bangalore |
||
Nil (*I4) |
April 2007 to March 2008 |
|||
Nil (*I5) |
April 2008 to March 2009 |
|||
3,376,830 (*I6) |
April 2009 to March 20I0 |
The Commissioner of Income Tax (Appeals) LTU, Bangalore |
||
Nil (*I7) |
April 20I0 to March 20II |
|||
Nil (*I8) |
April 20II to March 20I2 |
|||
Nil (*I9) |
April 20I2 to March 20I3 |
The Dispute Resolution Panel, Bangalore |
||
The Customs Act, I962 |
Customs duty |
Nil (*20) |
April 2009 to October 20I3 |
CESTAT, Bangalore |
(*I) Net of Z 5,094,9I5 paid "under protest" by the Company.
(*2) Net of Z 576,227 paid "under protest" by the Company.
(*3) Net of Z 5,872,886 paid "under protest" by the Company.
(*4) Net of Z 78,550 paid "under protest" by the Company.
(*5) Net of Z I2,228,373 paid "under protest" by the Company.
(*6) Net of Z 404,400 paid "under protest" by the Company.
(*7) Net of Z 2,7I5,000 paid â âunder protest by the Company.
(*8) Net of Z 2,I4I,073 paid "under protest" by the Company.
(*9) Net of Z 5,345,294 paid "under protest" by the Company.
(*I0) Net of Z 3,963,243paid "under protest" by the Company.
(*II) Net of Z I8,000,000 paid "under protest" by the Company.
(*I2) Net of Z 750,375 paid "under protest" by the Company.
(*I3) Net of Z 27,667,829 paid "under protest" by the Company.
(*I4) Net of Z 54,009,650 paid "under protest" by the Company.
(*I5) Net of Z 50,365,440 paid "under protest" by the Company.
(*I6) Net of Z 53,038,036 paid "under protest" by the Company.
(*I7) Net of Z 50,842,950 paid "under protest" by the Company.
(*I8) Net of Z I9,639,356 paid "under protest" by the Company.
(*I9) Net of Z 57,400,000 paid â âunder protestâ by the Company.
(*20) Net of Z I5,908,0I5 paid "under protest" by the Company.
viii. As the Company does not have any loans or borrowings from any financial institution or bank or Government, nor has it issued any debentures as at the balance sheet date, the provisions of Clause 3(viii) of the Order are not applicable to the Company.
ix. The Company has not raised any moneys by way of initial public offer, further public offer (including debt instruments) and term loans. Accordingly, the provisions of Clause 3(ix) of the Order are not applicable to the Company.
x. During the course of our examination of the books and records of the Company, carried out in accordance with the generally accepted auditing practices in India, and according to the information and explanations given to us, we have neither come across any instance of material fraud by the Company or on the Company by its officers or employees, noticed or reported during the year, nor have we been informed of any such case by the Management.
xi. The Company has paid for managerial remuneration in accordance with the requisite approvals mandated by the provisions of Section I97 read with ScheduleV to the Act.
xii. As the Company is not a Nidhi Company and the Nidhi Rules, 20I4 are not applicable to it, the provisions of Clause 3(xii) of the Order are not applicable to the Company.
xiii. The Company has entered into transactions with related parties in compliance with the provisions of Sections I77 and I88 of the Act. The details of such related party transactions have been disclosed in the financial statements as required under Accounting Standard (AS) I8, Related Party Disclosures specified under Section I33 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 20I4.
xiv. The Company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures during the year under audit. Accordingly, the provisions of Clause 3(xiv) of the Order are not applicable to the Company.
xv. The Company has not entered into any non cash transactions with its directors or persons connected with him. Accordingly, the provisions of Clause 3(xv) of the Order are not applicable to the Company.
xvi. The Company is not required to be registered under Section 45-IA of the Reserve Bank of India Act, I934. Accordingly, the provisions of Clause 3(xvi) of the Order are not applicable to the Company.
For Price Waterhouse & Co Bangalore LLP
Firm Registration Number: 007567S/S-2000I2
Chartered Accountants
Shivakumar Hegde
Bengaluru Partner
August 24, 20I7 Membership Number: 204627
Jun 30, 2016
To the Members of Kennametal India Limited
Report on the Financial Statements
1. We have audited the accompanying financial statements of Kennametal India Limited(âthe Companyâ), which comprise the Balance Sheet as at June 30, 20I6, the Statement of Profit and Loss, the Cash Flow Statement for the year then ended, and a summary of the significant accounting policies and other explanatory information.
Management''s Responsibility for the Financial Statements
2. The Company''s Board of Directors is responsible for the matters stated in Section 134(5) of the Companies Act, 20I3 (âthe Actâ) with respect to the preparation of these financial statements to 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 I33 of the Act, read with Rule 7 of the Companies(Accounts) Rules, 20I4. 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.
Auditors'' Responsibility
3. Our responsibility is to express an opinion on these financial statements based on our audit.
4. We have taken into account the provisions of the Act and the Rules made thereunder including the Accounting Standards and matters which are required to be included in the audit report.
5. We conducted our audit in accordance with the Standards on Auditing specified under Section I43(I0) of the Act and other applicable authoritative pronouncements issued by the Institute of Chartered Accountants of India (ICAI). Those Standards and pronouncements 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.
6. 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 auditors'' judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal financial control relevant to the Company''s preparation of the financial statements that give a true and fair view, in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of the accounting estimates made by the Company''s Directors, as well as evaluating the overall presentation of the financial statements.
7. 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
8. 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 June 30, 20I6, and its profit and its cash flowsfor the year ended on that date.
Report on Other Legal and Regulatory Requirements
9. As required by ''the Companies (Auditor''s Report) Order, 20I6'', issued by the Central Government of India in terms of sub-section (II) of Section I43 of the Act (hereinafter referred to as the âOrderâ), and on the basis of such checks of the books and records of the Company as we considered appropriate and according to the information and explanations given to us, we give in the Annexure B a statement on the matters specified in paragraphs 3 and 4 of the Order.
10. As required by Section I43(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 accounts required by law have been kept by the Company so far as it appears from our examination of those books.
(c) The Balance Sheet, the Statement of Profit and Loss, and the Cash Flow Statement dealt with by this Report are in agreement with the books of account.
(d) In our opinion, the aforesaid financial statements comply with the Accounting Standards specified under Section I33 of the Act, read with Rule 7 of the Companies (Accounts)Rules, 20I4.
(e) On the basis of the written representations received from the directors as on June 30, 20I6 taken on record by the Board of Directors, none of the directors is disqualified as on June 30, 20I6 from being appointed as a director in terms of Section I64(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 A.
(g) With respect to the other matters to be included in the Auditors'' Report in accordance with Rule II of the Companies (Audit and Auditors) Rules, 20I4, in our opinion and to the best of our knowledge and belief and according to the information and explanations given to us:
i. The Company has disclosed the impact of pending litigations as at June 30, 2016, on its financial position in its financial statements - Refer Note 27.
ii. The Company has long-term contracts as at June 30, 2016 for which there were no material foreseeable losses. The Company did not have any long term derivative contracts as at June 30, 20I6.
iii. There were no amounts which were required to be transferred to the Investor Education and Protection Fund by the Company during the year ended June 30, 2016.
Referred to in paragraph 10(f) of the Independent Auditors'' Report of even date to the members of Kennametal India Limited on the financial statements for the year ended June 30, 2016
Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section 143 of the Act
1. We have audited the internal financial controls over financial reporting of Kennametal India Limited (âthe Companyâ) as of June 30, 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
2. 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 (the âGuidance Noteâ) issued by the ICAI. 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 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 Act.
Auditors'' Responsibility
3. 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 and the Standards on Auditing deemed to be prescribed under Section I43(I0) of the Act to the extent applicable to an audit of internal financial controls, both applicable to an audit of internal financial controls and both issued by the ICAI. 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.
4. 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.
5. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the Company''s internal financial controls system over financial reporting.
Meaning of Internal Financial Controls Over Financial Reporting
6. 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
7. 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
8. 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 June 30, 20I6, 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.
Referred in paragraph 9 of the Independent Auditorsâ Report of even date to the member of
Kennametal India Limited on the financial statements as of and for the year ended June 30, 20I6
i. (a) The Company is maintaining proper records showing full particulars, including quantitative details and situation, of fixed assets.
(b) The fixed assets are physically verified by the Management according to a phased programme designed to cover all the items over a period of three years which, in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. Pursuant to the programme, a portion of the fixed assets has been physically verified by the Management during the year and no material discrepancies have been noticed on such verification.
(c) The title deeds of immovable properties, as disclosed in Note 9 on fixed assets to the financial statements, are held in the name of the Company.
ii. Except for inventory lying with third parties, the other inventory has been physically verified by the Management during the year. The discrepancies noticed on physical verification of inventory as compared to book records were not material.
iii. The Company has not granted any loans, secured or unsecured, to companies, firms, Limited Liability Partnerships or other parties covered in the register maintained under Section I89 of the Act. Therefore, the provisions of Clause 3(iii)(a), (iii)(b) and (iii)(c) of the Order are not applicable to the Company.
iv. In our opinion, and according to the information and explanations given to us, the Company has complied with the provisions of Section I86 of the Act in respect of the loans given. The Company has not granted any loans or made any investments, or provided any guarantees or security to the parties covered under Section I85 of the Act.
v. The Company has not accepted any deposits from the public within the meaning of Sections 73, 74, 75 and 76 of the Act and the Rules framed there under to the extent notified.
vi. Pursuant to the rules made by the Central Government of India, the Company is required to maintain cost records as specified under Section I48(I) of the Act in respect of its products. We have broadly reviewed the same, 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 with a view to determine whether they are accurate or complete.
vii. (a) According to the information and explanations given to us and the records of the Company examined by us,
in our opinion, except for dues in respect of service tax, the Company is regular in depositing undisputed statutory dues, including provident fund, employees'' state insurance, profession tax, income tax, wealth tax, sales tax, duty of customs, duty of excise, value added tax, cess and other material statutory dues, as applicable, with the appropriate authorities. The extent of the arrears of service tax outstanding as at June 30, 20I6, for a period of more than six months from the date they became payable, are as follows:
Name of the statute |
Nature of dues |
Amount (Rs.) |
Period to which the amount relates |
Due date |
Date of Payment |
The Finance Act, 1994 |
Service tax |
567,772 |
November 2015 |
December 6, 2015 |
August 2, 2016 |
(b) According to the information and explanations given to us and the records of the Company examined by us, there are no dues of wealth tax, which have not been deposited on account of any dispute. The particulars of dues of income tax, sales tax, service tax, duty of excise, duty of customs and value added tax as at June 30, 20I6, which have not been deposited on account of a dispute, are as follows:
Name of the statute |
Nature of dues |
Amount (Rs.) |
Period to which the amount relates |
Forum where the dispute is pending |
The Central Excise Act, 1944 |
Excise duty/ Service tax |
52,450 |
January 1998 to September 201 1 |
The Customs, Excise & service Tax Appellate Tribunal (CESTAT), Bangalore |
4,610,113 (*l) |
April 2006 to June 2013 |
CESTAT, Bangalore |
||
The Finance Act, 1994 |
Service tax |
576,157 (*2) |
April 2007 to March 2008 |
CESTAT, Bangalore |
The Andhra Pradesh General Sales Tax Act, 1957 |
Sales tax |
5,827,114 (*3) |
April 2003 to March 2004 |
The Sales Tax Appellate Tribunal, Hyderabad |
The Delhi Sales Tax Act, 1975 |
Sales tax |
78,550 (*4) |
April 2004 to March 2005 |
The Joint Commissioner (Appeals), Delhi |
The Karnataka Tax on Entry of Goods Act, 1979 |
Entry tax |
Nil (*5) |
April 2010 to June 2016 |
The Commissioner of Commercial Tax, Bangalore |
The Uttar Pradesh Value Added Tax Act, 2008 |
Sales tax |
Nil (*6) |
May 201 1 |
The Joint Commissioner (Appeals), Sonabhadhra, Uttar Pradesh |
The Karnataka Value Added Tax Act, 2003 |
Sales tax |
Nil (*7) |
April 2011 to March 2012 |
The Joint Commissioner of Commercial Tax (Appeals), Bangalore |
Nil (*8) |
April 2012 to March 2013 |
|||
4,444,126 (*9) |
April 2013 to March 2014 |
|||
41,899,707 (*10) |
April 2014 to March 2015 |
|||
The Income Tax Act, 1961 |
Income tax |
2,198,066 |
April 1999 to March 2001 |
The Supreme Court of India |
Nil (*l 1) |
April 1993 to March 1994 |
The Supreme Court of India |
||
Nil (*12) |
April 1999 to March 2001 |
The Commissioner of Income Tax (Appeals), Bangalore |
||
Nil (*13) |
April 2006 to March 2007 |
The Income Tax Appellate Tribunal, Bangalore |
||
Nil (*14) |
April 2007 to March 2008 |
The Commissioner of Income Tax (Appeals) LTU, Bangalore |
||
Nil (*15) |
April 2008 to March 2009 |
|||
3,376,830 (*16) |
April 2009 to March 2010 |
|||
Nil (*17) |
April 2010 to March 201 1 |
|||
Nil (*18) |
April 2011 to March 2012 |
|||
Nil (*19) |
April 2012 to March 2013 |
|||
The Customs Act, I962 |
Customs duty |
Nil (*20) |
April 2009 to October 20I3 |
The Principal Commissioner-Customs, Bangalore |
(*I) Net of Rs. 5,094,9I5 paid "under protest" by the Company.
(*2) Net of Rs. 576,227 paid "under protest" by the Company.
(*3) Net of Rs. 5,872,886 paid "under protest" by the Company.
(*4) Net of Rs. 78,550 paid "under protest" by the Company.
(*5) Net of Rs. 9,54I,900 paid "under protest" by the Company.
(*6) Net of Rs. 404,400 paid "under protest" by the Company.
(*7) Net of Rs. 2,I4I,073 paid "under protest" by the Company.
(*8) Net of Rs. 5,345,294 paid "under protest" by the Company.
(*9) Net of Rs. 6,905,000 paid "under protest" by the Company.
(*I0) Net of Rs. I8,000,000 paid "under protest" by the Company.
(*II) Net of Rs. 750,375 paid "under protest" by the Company.
(*I2) Net of Rs. 27,667,829 paid "under protest" by the Company.
(*I3) Net of Rs. 69,776,57I paid "under protest" by the Company.
(*I4) Net of Rs. 54,009,650 paid "under protest" by the Company.
(*I5) Net of Rs. 50,365,440 paid "under protest" by the Company.
(*I6) Net of Rs. 53,038,036 paid "under protest" by the Company.
(*I7) Net of Rs. 50,842,950 paid "under protest" by the Company.
(*I8) Net of Rs. I9,639,356 paid "under protest" by the Company.
(*I9) Net of Rs. 30I,466 paid "under protest" by the Company.
(*20) Net of Rs. I5,908,0I5 paid "under protest" by the Company.
viii. As the Company does not have any loans or borrowings from any financial institution or bank or Government, nor has it issued any debentures as at the balance sheet date, the provisions of Clause 3(viii) of the Order are not applicable to the Company.
ix. The Company has not raised any moneys by way of initial public offer, further public offer (including debt instruments) and term loans. Accordingly, the provisions of Clause 3(ix) of the Order are not applicable to the Company.
x. During the course of our examination of the books and records of the Company, carried out in accordance with the generally accepted auditing practices in India, and according to the information and explanations given to us, we have neither come across any instance of material fraud by the Company or on the Company by its officers or employees, noticed or reported during the year, nor have we been informed of any such case by the Management.
xi. The Company has paid/ provided for managerial remuneration in accordance with the requisite approvals mandated by the provisions of Section I97 read with Schedule V to the Act.
xii. As the Company is not a Nidhi Company and the Nidhi Rules, 20I4 are not applicable to it, the provisions of Clause 3(xii) of the Order are not applicable to the Company.
xiii. The Company has entered into transactions with related parties in compliance with the provisions of Sections I77 and I88 of the Act. The details of such related party transactions have been disclosed in the financial statements as required under Accounting Standard (AS) I8, Related Party Disclosures specified under Section I33 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 20I4.
xiv. The Company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures during the year under audit. Accordingly, the provisions of Clause 3(xiv) of the Order are not applicable to the Company.
xv. The Company has not entered into any non cash transactions with its directors or persons connected with them. Accordingly, the provisions of Clause 3(xv) of the Order are not applicable to the Company.
xvi. The Company is not required to be registered under Section 45-IA of the Reserve Bank of India Act, I934. Accordingly, the provisions of Clause 3(xvi) of the Order are not applicable to the Company.
For Price Waterhouse & Co Bangalore LLP
Firm Registration Number: 007567S / S-2000I2
Chartered Accountants
ShivakumarHegde
Place : Bangalore Partner
Date : August 09, 20I6 Membership Number: 204627
Jun 30, 2015
1. We have audited the accompanying financial statements of Kennametal
India Limited ("the Company"), which comprise the Balance Sheet as at
June 30,2015, the Statement of Profit and Loss and the Cash Flow
Statement for the year then ended, and a summary of the significant
accounting policies and other explanatory information
Management's Responsibility for the Financial Statements
2. 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 to 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 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.
Auditors' Responsibility
3. Our responsibility is to express an opinion on these financial
statements based on our audit.
4. We have taken into account the provisions of the Act and the Rules
made thereunder including the Accounting Standards and matters,which
are required to be included in the audit report.
5. We conducted our audit in accordance with the Standards on Auditing
specified under Section 143(10) of the Act and other applicable
authoritative pronouncements issued by the Institute of Chartered
Accountants of India. Those Standards and pronouncements 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.
6. 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 auditors' 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 the accounting policies used and the reasonableness
of the accounting estimates made by the Company's Directors, as well as
evaluating the overall presentation of the financial statements.
7. 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
8. 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 June 30,2015,and its profit and its cash flows for the year ended on
that date.
Report on Other Legal and Regulatory Requirements
9. As required by 'the Companies (Auditor's Report) Order, 2015',
issued by the Central Government of India in terms of sub- section (II)
of Section 143 of the Act (hereinafter referred to as the "Order"), and
on the basis of such checks of the books and records of the Company as
we considered appropriate and according to the information and
explanations given to us, we give in the Annexure a statement on the
matters specified in paragraphs 3 and 4 of the Order.
10. As required by Section 143(3) of theAct,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, and the Cash
Flow Statement dealt with by this Report are in agreement with the
books of account.
(d) In our opinion, the aforesaid financial statements comply with the
Accounting Standards specified under Section 133 of theAct, read with
Rule 7 of the Companies (Accounts) Rules,20l4.
(e) On the basis of the written representations received from the
directors as on June 30,2015, taken on record by the Board of
Directors, none of the directors is disqualified as on June 30, 2015
from being appointed as a director in terms of Section 164 (2) of
theAct.
(f) With respect to the other matters to be included in the Auditors'
Report in accordance with Rule I I of the Companies (Audit and
Auditors) Rules, 2014, in our opinion and to the best of our knowledge
and belief and according to the information and explanations given to
us:
i. The Company has disclosed the impact of pending litigations as at
June 30,2015 on its financial position in its financial statements -
Refer Note 26.
ii. The Company has long-term contracts as at June 30,2015 for which
there were no material foreseeable losses.There are no long-term
derivative contracts.
iii. There were no amounts which were required to be transferred to the
Investor Education and Protection Fund by the Company during the year
ended June 30,2015.
Annexure to Independent Auditors' Report
Referred to in paragraph 9 of the Independent Auditors' Report of even
date to the members of Kennametal India Limited on the financial
statements as of and for the year ended June 30,2015
i. (a) The Company is maintaining proper records showing full
particulars, including quantitative details and situation, of fixed
assets.
(b) The fixed assets are physically verified by the Management
according to a phased programme designed to cover all the items over a
period of three years which, in our opinion, is reasonable having
regard to the size of the Company and the nature of its assets.
Pursuant to the programme, a portion of the fixed assets has been
physically verified by the Management during the year and no material
discrepancies have been noticed on such verification.
ii. (a) The inventory has been physically verified by the Management
during the year. In our opinion, the frequency of verification is
reasonable.
(b) In our opinion, the procedures of physical verification of
inventory 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 inventory records, in our
opinion, the Company is maintaining proper records of inventory. The
discrepancies noticed on physical verification of inventory as compared
to book records were not material.
iii. 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 Act.Therefore, the provisions of Clause
3(iii), (iii)(a) and (iii)(b) of the Order are not applicable to the
Company.
iv. In our opinion, and according to the information and explanations
given to us, 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. Further, on the basis of our examination of the books and
records of the Company, and according to the information and
explanations given to us, we have neither come across, nor have been
informed of, any continuing failure to correct major weaknesses in the
aforesaid internal control system.
v. The Company has not accepted any deposits from the public within
the meaning of Sections 73,74,75 and 76 of the Act and the rules framed
there under to the extent notified.
vi. We have broadly reviewed the books of account maintained by the
Company in respect of products where, pursuant to the rules made by the
Central Government of India, the maintenance of cost records has been
specified under sub-section (1) of Section 148 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 with a view to determine whether they are
accurate or complete.
vii (a) According to the information and explanations given to us and
the records of the Company examined by us, in our opinion, the Company
is regular in depositing the undisputed statutory dues, including
provident fund, employees' state insurance, income tax, sales tax,
wealth tax, service tax, duty of customs, duty of excise, value added
tax, cess and other material statutory dues,as applicable, with the
appropriate authorities.
(b) According to the information and explanations given to us and the
records of the Company examined by us, there are no dues of duty of
customs and wealth tax, which have not been deposited on account of any
dispute.The particulars of dues of income tax, sales tax, service tax
and duty of excise, as at June 30,2015, which have not been deposited
on account of a dispute,are as follows:
Name of the Nature of Amount Period to which
statute dues ( Rs ) the amount relates
The Central Excise Excise duty/ 52,450 January 1998 to
Act, 1944 Service tax September 2011
851,264 February 1992 to
August 1993
4,610.113 (* 1) April 2006 to June
2013
The Finance Act, Service tax 576,157 (*2) April 2007 to March
1994 2008
237,458 September 2005 to
November 2009
The Andhra Pradesh Sales tax 5,872,886 (*3) April 2003 to March
General Sales Tax 2004
Act, 1957
The Delhi Sales Tax Sales tax 78.550 (*4) April 2004 to March
Act, 1975 2005
The Central Sales Sales tax 5,711,151 April 2006 to March
Tax Act, 1956 2010
The Karnataka Value Sales tax 820,124 April 2005 to March
Added Tax Act, 2010
2003
The Karnataka Tax Entry tax Nil (*5) April 2010 to June
on Entry of Goods 2014
Act, 1979
The Uttar Pradesh Sales tax Nil (*6) May 2011
Value Added Tax
Act, 2008
The Karnataka Value Sales Tax Nil (*7) April 2005 to March
Added Tax Act, 2006
2003
Sales Tax Nil (*8) April 2011 to March
2012
Sales Tax Nil (*9) April 2012 to March
2013
Sales Tax 50,535,366 (* 10) April 2013 to March
2014
Name of the Forum where
statute the dispute is pending
The Central Excise The Customs, Excise &
Act, 1944 Service Tax Appellate
Tribunal (CESTAT),
Bangalor
The Supreme Court of India
CESTAT, Bangalore
The Finance Act, CESTAT, Bangalore
1994
CESTAT, Bangalore
The Andhra Pradesh The Sales Tax Appellate
General Sales Tax Tribunal, Hyderabad
Act, 1957
The Delhi Sales Tax The Joint Commissioner
Act, 1975 (Appeals), Delhi
The Central Sales The High Court of
Tax Act, 1956 Karnataka
The Karnataka Value The High Court of
Added Tax Act, Karnataka
2003
The Karnataka Tax The Commissioner of
on Entry of Goods Commercial Taxes,
Act, 1979 Bangalore
The Uttar Pradesh The Joint Commissioner of
Value Added Tax Appeals, Sonabhadhra, Uttar
Act, 2008 Pradesh
The Karnataka Value The Joint Commissioner of
Added Tax Act, Commercial taxes
2003 (Appeals), Bangalore
The Joint Commissioner of
Commercial taxes (Appeals),
Bangalore
The Joint Commissioner of
Commercial taxes (Appeals),
Bangalore
The Joint Commissioner of
Commercial taxes (Appeals), Bangalore
Name of the Nature of Amount Period to which
statute dues ( Rs ) the amount relates
The Income Tax Income tax 2,198,066 (*1 1) Aprill 1993 to March
Act, 1961 1994; and April 1999
to March 2001
Nil (*12) April 1999 to March
2001
Nil (*I3) April 2006 to March
2007 Tribunal.
Nil (*14) April 2007 to March
2008
Nil(*l5) April 2008 to March
2009
Nil *16) April 2009 to March
2010
50,842,950 April 2010 to March
2011
Nil (* 17) April 2012 to March
2013
Name of the Forum where the
statute dispute is pending
The Income Tax The Supreme Court
Act, 1961 of India
The Commissioner of
Income Tax (Appeals),
Bangalore
The Income Tax Appellate
Bangalore
The Commissioner of
Income Tax (Appeals) LTU,
Bangalore
The Commissioner of
Income Tax (Appeals) LTU,
Bangalore
The Commissioner of
Income Tax (Appeals) LTU,
Bangalore
The Commissioner of
Income Tax (Appeals) LTU,
Bangalore
The Commissioner of
Income Tax (Appeals) LTU,
Bangalore
(*l) Net of Rs.5,094,915 paid "under protest".
(*2) Net of Rs.576,227 paid "under protest".
(*3) Net of Rs.5,872,886 paid "under protest".
(*4) Net of Rs.78,550 paid "under protest".
(*5) Net of Rs.7,529,692 paid "under protest".
(*6) Net of Rs.404,400 paid "under protest".
(*7) Net of Rs.370,607 paid "under protest".
(*8) Net of Rs.2,141,073 paid "under protest".
(*9) Net of Rs.5,345,294 paid "under protest".
(*I0) Net of Rs.5,000,000 paid "under protest".
(*11) Net of Rs.750,375 paid "under protest".
(*12) Net of Rs.27,667,829 paid "under protest".
(*I3) Net of Rs.69,776,571 paid "under protest".
(*I4) Net of Rs.54,009,650 paid "under protest".
(*I5) Net of Rs.50,365,440 paid "under protest".
(*16) Net of Rs.53,038,036 paid "under protest".
(*I7) Net of Rs.215,466 paid "under protest".
c) There are no amounts required to be transferred by the Company to
the Investor Education and Protection Fund i accordance with the
provisions of the Companies Act, 1956 and the rules made thereunder.
viii. The Company has no accumulated losses as at the end of the
financial year and it has not incurred any cash losses in the financial
year ended on that date or in the immediately preceding financial year.
ix. As the Company does not have any borrowings from any financial
institution or bank nor has it issued any debentures as at the balance
sheet date, the provisions of Clause 3(ix) of the Order are not
applicable to the Company.
x. In our opinion, and 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 during the year.
Accordingly, the provisions of Clause 3(x) of the Order are not
applicable to the Company.
xi. The Company has not raised any term loans. Accordingly, the
provisions of Clause 3(xi) of the Order are not applicable to the
Company.
xii. During the course of our examination of the books and records of
the Company, carried out in accordance with the generally accepted
auditing practices in India, and according to the information and
explanations given to us, we have neither com across any instance of
material fraud on or by the Company, noticed or reported during the
year, nor have we been informed of any such case by the Management.
For Price Waterhouse & Co Bangalore LLP
Firm Registration Number (FRN): 007567S/S-200012
Chartered Accountants
(Formerly, Price Waterhouse & Co., Bangalore,
FRN: 007567S)
Shivakumar Hegde
Place: Bangalore Partner
Date: August 21,2015 Membership Number: 204627
Jun 30, 2014
1. We have audited the accompanying financial statements of Kennametal
India Limited (the "Company"), which comprise the Balance Sheet as at
June 30, 2014, and the Statement of Profit and Loss and Cash Flow
Statement for the year then ended, and a summary of signifcant
accounting policies and other explanatory information, which we have
signed under reference to this report.
Management''s Responsibility for the Financial Statements
2. The Company''s 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 notifed 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.
Auditors'' Responsibility
3. 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.
4. An audit involves performing procedures to obtain audit evidence,
about the amounts and disclosures in the financial statements. The
procedures selected depend on the auditors'' 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 auditors consider 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.
5. We believe that the audit evidence we have obtained is suffcient
and appropriate to provide a basis for our audit opinion.
Opinion
6. In our opinion, and to the best of our information and according to
the explanations given to us, the accompanying 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 June 30, 2014;
(b) in the case of the Statement of Profit and Loss, of the Profit for
the year ended on that date; and
(c) in the case of the Cash Flow Statement, of the cash flows for the
year ended on that date.
Report on Other Legal and Regulatory Requirements
7. As required by ''the Companies (Auditor''s Report) Order, 2003'', as
amended by ''the Companies (Auditor''s Report) (Amendment) Order, 2004'',
issued by the Central Government of India in terms of sub-section (4A)
of Section 227 of the Act (hereinafter referred to as the "Order"), and
on the basis of such checks of the books and records of the Company as
we considered appropriate and according to the information and
explanations given to us, we give in the Annexure a statement on the
matters specifed in paragraphs 4 and 5 of the Order.
8. As required by Section 227(3) of the Act, we report that:
(a) We have obtained all the information and explanations which, to the
best of our knowledge and belief, were necessary for the purpose of our
audit;
(b) In our opinion, proper books of account as required by law have
been kept by the Company so far as appears from our examination of
those books;
(c) The Balance Sheet, Statement of Profit and Loss, and Cash Flow
Statement dealt with by this Report are in agreement with the books of
account;
(d) In our opinion, the Balance Sheet, Statement of Profit and Loss, and
Cash Flow Statement dealt with by this report comply with the
Accounting Standards notifed 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 June 30, 2014, and taken on record by the Board of Directors,
none of the directors is disqualified as on June 30,2014, from being
appointed as a director in terms of clause (g) of sub-section (1) of
Section 274 of the Act.
ANNEXURE TO INDEPENDENT AUDITORS'' REPORT
Referred to in paragraph 7 of the Independent Auditors'' Report of even
date to the members of Kennametal India Limited on the financial
statements for the period ended June 30, 2014.
i. (a) The Company is maintaining proper records showing full
particulars, including quantitative details and situation, of fixed
assets.
(b) The fixed assets are physically verifed by the Management according
to a phased programme designed to cover all the items over a period of
three years which, in our opinion, is reasonable having regard to the
size of the Company and the nature of its assets. Pursuant to the
programme, a portion of the fixed assets has been physically verifed by
the Management during the year and no material discrepancies have been
noticed on such verifcation.
(c) In our opinion, and according to the information and explanations
given to us, a substantial part of fixed assets has not been disposed of
by the Company during the year.
ii. (a) The inventory excluding stocks with third parties has been
physically verifed by the Management during the year. In respect of
inventory lying with third parties, these have substantially been
confrmed by them. In our opinion, the frequency of verifcation is
reasonable.
(b) In our opinion, the procedures of physical verifcation of inventory
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 inventory records, in our
opinion, the Company is maintaining proper records of inventory. The
discrepancies noticed on physical verifcation of inventory as compared
to book records were not material.
iii. (a) The Company has not granted any loans, secured or unsecured,
to companies, frms or other parties covered in the register maintained
under Section 301 of the Act. Therefore, the provisions of Clause
4(iii)[(b),(c) and (d)] of the Order are not applicable to the Company.
(e) The Company has not taken any loans, secured or unsecured, from
companies, frms or other parties covered in the register maintained
under Section 301 of the Act. Therefore, the provisions of Clause
4(iii) [(f) and (g)] of the Order are not applicable to the Company.
iv. In our opinion, and according to the information and explanations
given to us, 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. Further, on the basis of our examination of the books and
records of the Company, and according to the information and
explanations given to us, we have neither come across, nor have been
informed of, any continuing failure to correct major weaknesses in the
aforesaid internal control system.
v. According to the information and explanations given to us, there
have been no contracts or arrangements that need to be entered in the
register maintained under Section 301 of the Act Accordingly commenting
on transactions made in pursuance of such contracts or arrangements
does not arise.
vi. The Company has not accepted any deposits from the public within
the meaning of Sections 58A and 58AA of the Act and the rules framed
there under.
vii. In our opinion, the Company has an internal audit system
commensurate with its size and the nature of its business.
viii. We have broadly reviewed the books of account maintained by the
Company in respect of products where, pursuant to the rules made by the
Central Government of India, the maintenance of cost records has been
prescribed under clause (d) of sub- section (1) of Section 209 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 with a view to determine whether
they are accurate or complete.
ix. (a) According to the information and explanations given to us and
the records of the Company examined by us, in our opinion, the Company
is regular in depositing undisputed statutory dues including provident
fund, investor education and protection fund, employees'' state
insurance, income tax, sales tax, wealth tax, service tax, customs
duty, excise duty and other material statutory dues, as applicable,
with the appropriate authorities.
ix. (b) According to the information and explanations given to us and
the records of the Company examined by us, the particulars of dues of
income tax, sales tax, service tax and excise duty as at June 30,
2014, which have not been deposited on account of a dispute, are as
follows:
Name of the statute Nature of dues Amount (RsRs.)
The Central Excise Act,1944 Excise duty/ 52,450
Service tax
851,264
4,610,113(1)
The Finance Act,1994 Service tax 576,157(2)
237,458
The Andhra Pradesh General Sales tax 5,827,114(3)
Sales Tax Act, 1957
The Delhi Sales Tax Act,1975 Sales tax 78,550(4)
The Central Sales Tax
Act,1956 Sales tax 5,711,151
The Karnataka Value
Added Tax Act, 2003 Sales tax 820,124
The Karnataka Tax on
Entry of Goods Act,1979 Entry tax Nil(5)
The Uttar Pradesh Value
Added Tax Act,2008 Sales tax Nil(6)
The Karnataka Value
Added Tax Act, 2003 Sales Tax Nil(7)
The Income Tax Act, 1961 Income tax 2,198,066(8)
Nil (9)
Nil (10)
Nil (11)
25,165,440(12)
53,038,036
Name of the statute Period to which the Forum where the
amount relates dispute is pending
The Central Excise January 1998 to The Customs, Excise
Act,1944 September 2011 & Service
Tax AppellateTribunal,
Bangalore
February 1992 to The Supreme Court of
August 1993 India
April 2006 to June The Customs,Excise &
2013 Service Tax Appellate
Tribunal, Bangalore
The Finance Act, 1994 April 2007 to March The Customs, Excise &
2008 Service Tax Appellate
Tribunal, Bangalore
September 2005 to The Customs, Excise
November 2009 & Service Tax Appellate
Tribunal, Bangalore
The Andhra Pradesh April 2003 to March The Sales Tax Appellate
General Sales Tax Act1957 2004 Tribunal, Hyderabad
The Delhi Sales Tax April 2004 to The Joint Commissioner
Act,1975 March 2005 Appeals, Delhi
The Central Sales Tax April 2006 to March The High Court of
Act, 1956 Karnataka 2010
The Karnataka Value Added April 2005 to March The High Court of
Tax Act, 2003 Karnataka 2010
The Karnataka Tax on April 2010 to June The Commissioner of
Entry of Goods Act, 1979 2014 Commercial Taxes,
Bangalore
The Uttar Pradesh Value May 2011 The Joint Commissioner
Added Tax Act, 2008 of Appeals, Sonabhadhra,
Uttar Pradesh
The Karnataka Value Added April 2005 to March The Joint Commissioner of
Tax Act, 2003 2006 Appeals, Bangalore
The Income Tax Act, 1961 April 1993 to March The Supreme Courtof India
1994 and April 1999
to March 2001
April 1999 to March The Commissioner Income
2001 Tax (Appeals), Bangalore
April 2006 to March The Income Tax Appellate
2007 Tribunal, Bangalore
April 2007 to March The Commissioner Income
2008 Tax (Appeals) LTU,
Bangalore
April 2008 to March The Commissioner Income
2009 Tax (Appeals) LTU,
Bangalore
April 2009 to March The Commissioner Income
2010 Tax(Appeals) LTU, Bangalore
(*1) Net of Rs. 5,094,915 paid "under protest". (*2) Net of Rs. 576,227
paid "under protest". (*3) Net of Rs. 5,872,886 paid "under protest".
(*4) Net of Rs. 78,550 paid "under protest". (*5) Net of Rs. 5,632,692
paid "under protest".
(*6) Net of Rs 404,400 paid "under protest".
(*7) Net of Rs 370,000 paid "under protest".
(*8) Net of Rs 750,375 paid "under protest".
(*9) Net of Rs 27,667,829 paid "under protest".
(*10) Net of Rs 69,776,571 paid "under protest".
(*11) Net of Rs 54,009,650 paid "under protest".
(*12) Net of Rs 25,200,000 paid "under protest".
x. The Company has no accumulated losses as at the end of the financial
year and it has not incurred any cash losses in the financial year ended
on that date or in the immediately preceding financial year.
xi. As the Company does not have any borrowings from any financial
institution or bank nor has it issued any debentures as at the balance
sheet date, the provisions of Clause 4(xi) of the Order are not
applicable to the Company.
xii. The Company has not granted any loans and advances on the basis of
security by way of pledge of shares, debentures and other securities.
Therefore, the provisions of Clause 4(xii) of the Order are not
applicable to the Company.
xiii. As the provisions of any special statute applicable to chit fund/
nidhi/ mutual benefit fund/ societies are not applicable to the Company,
the provisions of Clause 4(xiii) of the Order are not applicable to the
Company.
xiv. In our opinion, the Company is not dealing in or trading in
shares, securities, debentures and other investments. Accordingly, the
provisions of Clause 4(xiv) of the Order are not applicable to the
Company.
xv. In our opinion, and 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 during the year.
Accordingly, the provisions of Clause 4(xv) of the Order are not
applicable to the Company.
xvi. The Company has not raised any term loans. Accordingly, the
provisions of Clause 4(xvi) of the Order are not applicable to the
Company.
xvii. The Company has not raised any loans on short term basis.
Accordingly, the provisions of Clause 4(xvii) of the Order are not
applicable to the Company.
xviii. The Company has not made any preferential allotment of shares to
parties and companies covered in the register maintained under Section
301 of the Act during the year. Accordingly, the provisions of Clause
4(xviii) of the Order are not applicable to the Company.
xix. The Company has not issued any debentures during the year and does
not have any debentures outstanding as at the beginning of the year and
at the year end. Accordingly, the provisions of Clause 4(xix) of the
Order are not applicable to the Company.
xx. The Company has not raised any money by public issues during the
year. Accordingly, the provisions of Clause 4(xx) of the Order are not
applicable to the Company.
xxi. During the course of our examination of the books and records of
the Company, carried out in accordance with the generally accepted
auditing practices in India, and according to the information and
explanations given to us, we have neither come across any instance of
material fraud on or by the Company, noticed or reported during the
year, nor have we been informed of any such case by the Management.
For Price Waterhouse & Co., Bangalore
Firm Registration Number:007567S
Chartered Accountants
Shivakumar Hegde
Bangalore Partner
August 12, 2014 Membership Number: 204627
Jun 30, 2013
Report on the Financial Statements
1. We have audited the accompanying fnancial statements of Kennametal
India Limited (the "Company"), which comprise the Balance Sheet as at
June 30, 2013, and the Statement of Proft and Loss and Cash Flow
Statement for the year then ended, and a summary of signifcant
accounting policies and other explanatory information, which we have
signed under reference to this report.
Management''s Responsibility forthe Financial Statements
2. The Company''s Management is responsible for the preparation of
these fnancial statements that give a true and fair view of the
fnancial position, fnancial performance and cash fows of the Company in
accordance with the Accounting Standards referred to in sub-section
(3C) of section 211 of ''the Companies Act, 1956'' of India (the "Act").
This responsibility includes the design, implementation and maintenance
of internal control relevant to the preparation and presentation of the
fnancial statements that give a true and fair view and are free from
material misstatement, whether due to fraud or error.
Auditors'' Responsibility
3. Our responsibility is to express an opinion on these fnancial
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 fnancial statements are free
from material misstatement.
4. An audit involves performing procedures to obtain audit evidence,
about the amounts and disclosures in the fnancial statements. The
procedures selected depend on the auditors'' judgment, including the
assessment of the risks of material misstatement of the fnancial
statements, whether due to fraud or error. In making those risk
assessments, the auditors consider internal control relevant to the
Company''s preparation and fair presentation of the fnancial statements
in order to design audit procedures that are appropriate in the
circumstances. An audit also includes evaluating the appropriateness of
accounting policies used and the reasonableness of the accounting
estimates made by Management, as well as evaluating the overall
presentation of the fnancial statements.
5. We believe that the audit evidence we have obtained is suffcient
and appropriate to provide a basis for our audit opinion.
Opinion
6. In our opinion, and to the best of our information and according to
the explanations given to us, the accompanying fnancial 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 June 30, 2013;
(b) in the case of the Statement of Proft and Loss, of the proft for
the year ended on that date; and
(c) in the case of the Cash Flow Statement, of the cash fows for the
year ended on that date.
Report on Other Legal and Regulatory Requirements
7. As required by ''the Companies (Auditor''s Report) Order, 2003'', as
amended by ''the Companies (Auditor''s Report) (Amendment) Order, 2004'',
issued by the Central Government of India in terms of sub-section (4A)
of section 227 of the Act (hereinafter referred to as the "Order"), and
on the basis of such checks of the books and records of the Company as
we considered appropriate and according to the information and
explanations given to us, we give in the Annexure a statement on the
matters specifed in paragraphs 4 and 5 of the Order.
8. 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 Proft and Loss, and Cash Flow
Statement dealt with by this Report are in agreement with the books of
account;
(d) In our opinion, the Balance Sheet, Statement of Proft and Loss, and
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
as on June 30, 2013, and taken on record by the Board of Directors,
none of the directors is disqualifed as on June 30, 2013, from being
appointed as a director in terms of clause (g) of sub-section (1) of
section 274 of the Act.
ANNEXURE TO INDEPENDENT AUDITORS'' REPORT
Referred to in paragraph 7 of the Independent Auditors'' Report of even
date to the members of Kennametal India Limited on the fnancial
statements for the period ended June 30, 2013
i. (a) The Company is maintaining proper records showing full
particulars, including quantitative details and situation, of fxed
assets.
(b) The fxed assets are physically verifed by the Management according
to a phased programme designed to cover all the items over a period of
three years which, in our opinion, is reasonable having regard to the
size of the Company and the nature of its assets. Pursuant to the
programme, a portion of the fxed assets has been physically verifed by
the Management during the year and no material discrepancies have been
noticed on such verifcation.
(c) In our opinion, and according to the information and explanations
given to us, a substantial part of fxed assets has not been disposed of
by the Company during the year.
ii. (a) The inventory excluding stocks with third parties has been
physically verifed by the Management during the year. In respect of
inventory lying with third parties, these have substantially been
confrmed by them. In our opinion, the frequency of verifcation is
reasonable.
(b) In our opinion, the procedures of physical verifcation of inventory
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 inventory records, in our
opinion, the Company is maintaining proper records of inventory. The
discrepancies noticed on physical verifcation of inventory as compared
to book records were not material.
iii. (a) The Company has not granted any loans, secured or unsecured,
to companies, frms or other parties covered in the register maintained
under Section 301 of the Act. Therefore, the provisions of Clause
4(iii)[(b),(c) and (d)] of the Order are not applicable to the Company.
(e) The Company has not taken any loans, secured or unsecured, from
companies, frms or other parties covered in the register maintained
under Section 301 of the Act. Therefore, the provisions of Clause
4(iii) [(f) and (g)] of the Order are not applicable to the Company.
iv. In our opinion, and according to the information and explanations
given to us, 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 fxed
assets and for the sale of goods and services. Further, on the basis of
our examination of the books and records of the Company, and according
to the information and explanations given to us, we have neither come
across, nor have been informed of, any continuing failure to correct
major weaknesses in the aforesaid internal control system.
v. According to the information and explanations given to us, there
have been no contracts or arrangements that need to be entered in 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 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. According to the information and
explanations given to us, 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 on the Company in respect of the aforesaid
deposits.
vii. In our opinion, the Company has an internal audit system
commensurate with its size and the nature of its business.
viii. We have broadly reviewed the books of account maintained by the
Company in respect of products where, pursuant to the rules made by the
Central Government of India, the maintenance of cost records has been
prescribed under clause (d) of sub-section (1) of Section 209 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 with a view to determine whether
they are accurate or complete.
ix.According to the information and explanations given to us and
the records of the Company examined by us, in our opinion, the Company
is regular in depositing undisputed statutory dues including provident
fund, investor education and protection fund, employees'' state
insurance, income tax, sales tax, wealth tax, service tax, customs
duty, excise duty and other material statutory dues, as applicable,
with the appropriate authorities.
(*1) Net of Rs.4,135,113 paid "under protest". (*2) Net of Rs.5,872,886
paid "under protest". (*3) Net of Rs.78,550 paid "under protest". (*4)
Net of Rs.5,716,692 paid "under protest".
(*5) Net of Rs. 404,400 paid "under protest".
(*6) Net of Rs. 370,000 paid "under protest". (*7) Net of Rs. 750,375 paid
"under protest". (*8) Net of Rs. 27,667,829 paid "under protest". (*9)
Net of Rs. 69,776,571 paid "under protest". (*10) Net of Rs. 54,009,650
paid "under protest". (*11) Net of Rs. 25,200,000 paid "under protest".
x. The Company has no accumulated losses as at the end of the fnancial
year and it has not incurred any cash losses in the fnancial year ended
on that date or in the immediately preceding fnancial year.
xi. As the Company does not have any borrowings from any fnancial
institution or bank nor has it issued any debentures as at the balance
sheet date, the provisions of Clause 4(xi) of the Order are not
applicable to the Company.
xii. The Company has not granted any loans and advances on the basis of
security by way of pledge of shares, debentures and other securities.
Therefore, the provisions of Clause 4(xii) of the Order are not
applicable to the Company.
xiii. As the provisions of any special statute applicable to chit fund/
nidhi/ mutual beneft fund/ societies are not applicable to the Company,
the provisions of Clause 4(xiii) of the Order are not applicable to the
Company.
xiv. In our opinion, the Company is not dealing in or trading in
shares, securities, debentures and other investments. Accordingly, the
provisions of Clause 4(xiv) of the Order are not applicable to the
Company.
xv. In our opinion, and according to the information and explanations
given to us, the Company has not given any guarantee for loans taken by
others from banks or fnancial institutions during the year.
Accordingly, the provisions of Clause 4(xv) of the Order are not
applicable to the Company.
xvi. The Company has not raised any term loans. Accordingly, the
provisions of Clause 4(xvi) of the Order are not applicable to the
Company.
xvii. The Company has not raised any loans on short term basis.
Accordingly, the provisions of Clause 4(xvii) of the Order are not
applicable to the Company.
xviii.The Company has not made any preferential allotment of shares to
parties and companies covered in the register maintained under Section
301 of the Act during the year. Accordingly, the provisions of Clause
4(xviii) of the Order are not applicable to the Company.
xix. The Company has not issued any debentures during the year and does
not have any debentures outstanding as at the beginning of the year and
at the year end. Accordingly, the provisions of Clause 4(xix) of the
Order are not applicable to the Company.
xx. The Company has not raised any money by public issues during the
year. Accordingly, the provisions of Clause 4(xx) of the Order are not
applicable to the Company.
xxi. During the course of our examination of the books and records of
the Company, carried out in accordance with the generally accepted
auditing practices in India, and according to the information and
explanations given to us, we have neither come across any instance of
material fraud on or by the Company, noticed or reported during the
year, nor have we been informed of any such case by the Management.
For Price Waterhouse & Co.,
Bangalore Firm Registration Number: 007567S
Chartered Accountants
Shivakumar Hegde
Bangalore Partner
August 16, 2013 Membership Number: 204627
Jun 30, 2012
1. We have audited the attached Balance Sheet of Kennametal India
Limited (the "Company") as at June 30, 2012, and the related
Statement of Profit and Loss and Cash Flow Statement for the year ended
on that date annexed thereto, which we have signed under reference to
this report. These financial statements are the responsibility of the
Company's Management. Our responsibility is to express an opinion on
these financial statements based on our audit.
2. We conducted our audit in accordance with 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.
3. As required by the Companies (Auditor's Report) Order, 2003, as
amended by the Companies (Auditor's Report) (Amendment) Order, 2004
(together the "Order"), issued by the Central Government of India
in terms of sub-section (4A) of Section 227 of The Companies Act, 1
956' of India (the 'Act') and on the basis of such checks of the
books and records of the Company as we considered appropriate and
according to the information and explanations given to us, we give in
the Annexure a statement on the matters specified in paragraphs 4 and 5
of the Order.
4. Further to our comments in the Annexure referred to in paragraph 3
above, we report that:
(a) We have obtained ail the information and explanations which, to the
best of our knowledge and belief, were n ecessary fo r the pu rposes of
ou r a udit;
(b) In our opinion, proper books of account as required by taw have
been kept by the Company so far as appears from our examination of
those books;
(c) The Balance Sheet, Statement of Profit and Loss and Cash Flow
Statement dealt with by this report are in agreement with the books of
account;
(d) In our opinion, the Balance Sheet, Statement of Profit and Loss and
Cash Flow Statement dealt with by this report comply with the
accounting standards referred to in sub-section (3C) of Section 211
oftheAct;
(e) On the basis of written representations received from the
directors, as on June 30, 2012, and taken on record by the Board of
Directors, none of the directors is disqualified as on June 30, 2012
from being appointed as a director in terms of clause (g) of
sub-section (1) of Section 274 oftheAct;
(f) In our opinion and to the best of our information and according to
the explanations given to us, the said financial statements together
with the notes thereon and attached thereto give, in the prescribed
manner, the information required by the Act, and give a true and fair
view in conformity with the accounting principles generally accepted in
India:
(i) in the case ofthe Balance Sheet, of the state of affairs of the
Company as at June 30,2012;
(ii) in the case of the Statement of Profit and Loss, of the profit for
the year ended on that date; and
(iii) in the case of the Cash Flow Statement, of the cash flows for the
yearended on that date.
Annexure to Auditors' Report
Referred to in paragraph 3 of the Auditors' Report of even date to the
members of Kennametal India Limited on the financial statements as of
and for the year ended June 30, 2012
i. (a) The Company is maintaining proper records showing full
particulars, including quantitative details and situation, of fixed
assets,
(b) The fixed assets are physically verified by the Management
according to a phased programme designed to cover all the items over a
period of three years which, in our opinion, is reasonable having
regard to the size of the Company and the nature of its assets.
Pursuant to the programme, a portion of the fixed assets has been
physically verified by the Management during the year and no material
discrepancies have been noticed on such verification.
(c) In our opinion, and according to the Information and explanations
given to us, a substantial part of fixed assets has not been disposed
of by the Company during the year.
ii. (a) The inventory excluding stocks with third parties has been
physically verified by the Management during the year. In respect of
inventory lying with third parties, these have substantially been
confirmed by them. In our opinion, the frequency of verification is
reasonable.
(b) In our opinion, the procedures of physical verification of
inventory 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 inventory records, in our
opinion, the Company is maintaining proper records of inventory. The
discrepancies noticed on physical verification of inventory as compared
to book records were not material.
iii. (a) The Company has not granted any loans, secured or unsecured,
to companies, firms or other parties covered in the register maintained
under Section 301 of the Act. Therefore,the provisions of Clause
4(iii)(b), (c) and (d) of the Order are not applicable to the Company.
(b) The Company has not taken any loans, secured or unsecured, from
companies, firms or other parties covered in the register maintained
under Section 301 of the Act. Therefore, the provisions of Clause
4(iii)(f) and (g) of the Order are not applicable to the Company.
iv. In our opinion, and according to the information and explanations
given to us, 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. Further, on the basis of our examination of the books and
records of the Company, and according to the information and
explanations given to us, we have neither come across, nor have been
informed of, any continuing failure to correct major weaknesses in the
aforesaid internal control system.
v According to the information and explanations given to us, there have
been no contracts or arrangements that need to be entered in the
register maintained under Section 301 of the Act. Accordingly, the
question of commenting on transactions made in pursuance of such
contracts or arrangements does not arise.
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. According to the information and
explanations given to us, 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 on the Company in respect of the aforesaid
deposits.
vii. In our opinion, the Company has an internal audit system
commensurate with its size and the nature of its business.
viii. We have broadly reviewed the books of account maintained by the
Company in respect of products where, pursuant to the rules made by the
Central Government of India, the maintenance of cost records has been
prescribed under clause (d) of sub-section {1) of Section 209 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 with a view to determine whether
they are accurate or complete.
ix. (a) According to the information and explanations given to us and
the records of the Company examined by us, in our opinion, the Company
is regular in depositing the undisputed statutory dues, including
provident fund, investor education and protection fund, employees'
state insurance, income tax, sales tax, wealth tax, service tax,
customs duty, excise duty and other material statutory dues, as
applicable, with th e appropriate a uthorities.
ix. (b)According to the information and explanations given to us and
the records of the Company examined by us, the particulars of dues of
income tax, sales tax, and excise duty as at June 30, 2012, which have
not been deposited on account of a dispute, are as follows:
Name of the Nature of Amount Period to which Forum where the
statute dues Rs. the amount dispute is
pending
relates
The Central Excise 52450 January 1998 to The Customs,
Excise &
Excise and
Salt duty/ September 2011 Service Tax
Appellate
Act, 1944 Service Tribunal.
Bangalore
tax 851264 February 1992 to The Supreme
Court of
August 1993 India
4738908 April 2006 to The High Court
of
September 2010 Karnataka
1496814 September 2006 The Commissioner
to June 2007 (Appeals) LTU,
Bangalore
The Finance
Act, Service 1901458 June 2007 to The Additional
1994 tax March 2011 Commissioner
(Excise) LTU.
Bangalore
237458 September 2005 The Customs,
Excise &
to November 2009 Service Tax
Appellate
Tribunal,
Bangalore
The Andhra Sales tax 5827114
(*1) April 2003 to The Sales Tax
Pradesh
General March 2004 Appellate
Tribunal,
Sales Tax
Act, Hyderabad
1957
The Delhi
Sales Sales tax 78550
(*2) April 2004 to The Joint
Tax Act, 1975 March 2005 Commissioner
Appeals, Delhi
The Central Sales tax 2427840
(*3) April 2006 to The Joint
Sales Tax Act, March 2010 Commissioner
Appeals,
1956 Bangalore
The Karnataka Sales tax Nil
(*4) April 2005 to The Joint
Value Added
Tax March 2010 Commissioner
Appeals,
Act, 2003 Bangalore
The Karnataka Entry tax Nil
(*5) April 2005 to
June The High Court of
Tax on
Entry of 2012 Karnataka
Goods Act.
1979
The Uttar Sales tax Nil
(*6) May 2011 The Joint
Pradesh Value Commissioner of
Added Tax
Act, Appeals,
Sonabhadhra,
2008 U.P.
The Income
Tax Income 2198066
(*7) April 1993 to The Supreme
Court of
Act, 1961 tax March 1994; and India
April 1999 to
March 2001
Nil
(*8) April 1999 to The Commissioner
March 2001 Income Tax
(Appeals),
Bangalore
Nil
(*9) April 2006 to The Income Tax
March 2007 Appellate
Tribunal,
Bangalore
Nil
(*10) April 2007 to The Commissioner
March 2008 Income Tax
(Appeals) LTU,
Bangalore
(*1) Net of Rs.5872886 paid "under protest".
(*2) Net of Rs.78550 paid "under protest".
(*3} Net of Rs.4810532 paid "under protest".
(*4) Net of Rs.6901382 paid "under protest".
(*5) Net of Rs.4153486 paid "under protest".
(*6) Net of Rs.404400 paid "under protest".
(*7) Net of Rs.750375 paid "under protest".
(*8) Net of Rs.27667829 paid "under protest".
(*9) Net of Rs.69776571 paid "under protest".
(*10) Net ofRs.54009650 paid "under protest".
x. The Company has no accumulated losses as at the end of the
financial year and it has not incurred any cash losses in the financial
year ended on that date or in the immediately preceding financial year.
xi. As the Company does not have any borrowings from any financial
institution or bank nor has it issued any debentures as at the balance
sheet date, the provisions of Clause 4(xi) of the Order are not appl
icable to the Com pany.
xii. The Company has not granted any loans and advances on the basis of
security by way of pledge of shares, debentures and other securities.
Therefore, the provisions of Clause 4(xii) of the Order are not
applicable to the Company.
xiii. As the provisions of any special statute applicable to chit fund
/ nidhi / mutual benefit fund / societies are not applicable to the
Company, the provisions of Clause 4(xiii) of the Order are not
applicable to the Company.
xiv. In our opinion, the Company is not dealing in or trading in
shares, securities, debentures and other investments. Accordingly, the
provisions of Clause 4{xiv) of the Order are not applicable to the
Company.
xv. In our opinion, and 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 during the year.
Accordingly, the provisions of Clause 4(xv) of the Order are not
applicable to the Company.
xvi. The Company has not raised any term loans. Accordingly, the
provisions of Clause 4(xvi) of the Orderare notapplicable to the
Company.
xvii. The Company has not raised any loans on short term basis.
Accordingly, the provisions of Clause 4{xvii) of the Order are not
applicable to the Company.
xviii.The Company has not made any preferential allotment of shares to
parties and companies covered in the register maintained under Section
301 of the Act during the year. Accordingly, the provisions of Clause
4{xviii) of the Order are not applicable to the Company.
xix. The Company has not issued any debentures during the year and does
not have any debentures outstanding as at the beginning of the year and
at the year end. Accordingly, the provisions of Clause 4(xix) of the
Order are not ' applicable to the Company.
xx. The Company has not raised any money by public issues during the
year. Accordingly, the provisions of Clause 4(xx) of the Order are not
applicable to the Company.
xxi. During the course of our examination of the books and records of
the Company, carried out in accordance with the generally accepted
auditing practices in India, and according to the information and
explanations given to us, we have neither come across any instance of
fraud on or by the Company, noticed or reported during the year, nor
have we been informed of any such case by the Management.
For Price Waterhouse & Co.
Firm Registration Number: 007567S
Chartered Accountants
Shivakumar Hegde
Partner
Membership Number 204627
Bangalore
August 13, 2012
Jun 30, 2010
1. We have audited the attached Balance Sheet of Kennametal India
Limited (the "Company") as at June 30, 2010, and the related Profit and
Loss Account and Cash Flow Statement for the year ended on that date
annexed thereto, which we have signed under reference to this report.
These financial statements are the responsibility of the Companys
Management. Our responsibility is to express an opinion on these
financial statements based on our audit.
2. We conducted our audit in accordance with 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
for our opinion.
3. As required by the Companies (Auditors Report) Order, 2003, as
amended by the Companies (AuditorÃs Report) (Amendment) Order, 2004
(together the ÃOrderÃ), issued by the Central Government of India in
terms of sub-section (4A) of Section 227 of "The Companies Act, 1956 of
India (the "Act") and on the basis of such checks of the books and
records of the Company as we considered appropriate and according to
the information and explanations given to us, we give in the Annexure a
statement on the matters specified in paragraphs 4 and 5 of the Order.
4. Further to our comments in the Annexure referred to in paragraph 3
above, we report that:
(a) We have obtained all the information and explanations which, to the
best of our knowledge and belief, were necessary for the 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, Profit and Loss Account and Cash Flow Statement
dealt with by this report are in agreement with the books of account;
(d) In our opinion, the Balance Sheet, Profit and Loss Account and Cash
Flow Statement dealt with by this report comply with the 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, as on June 30, 2010 and taken on record by the Board of
Directors, none of the directors is disqualified as on June 30, 2010
from being appointed as a director in terms of clause (g) of sub-
section (1) of Section 274 of the Act;
(f) In our opinion and to the best of our information and according to
the explanations given to us, the said financial statements together
with the notes thereon and attached thereto give, in the prescribed
manner, the information required by the Act, 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 June 30, 2010;
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 the Cash Flow Statement, of the cash flows for the
year ended on that date.
Annexure to auditors report
[Referred to in paragraph 3 of the Auditors Report of even date to the
members of Kennametal India Limited on the financial statements for the
year ended June 30, 2010]
1.(a) The Company is maintaining proper records showing full particulars,
including quantitative details and situation, of fixed assets.
(b) The fixed assets are physically verified by the Management
according to a phased programme designed to cover all the items over a
period of three years which, in our opinion, is reasonable having
regard to the size of the Company and the nature of its assets.
Pursuant to the programme, a portion of the fixed assets has been
physically verified by the Management during the year and no material
discrepancies between the book records and the physical inventory have
been noticed.
(c) In our opinion and according to the information and explanations
given to us, a substantial part of fixed assets has not been disposed
of by the Company during the year.
2. (a) The inventory (excluding stocks with
third parties) has been physically verified by the Management during
the year. In respect of inventory lying with third parties, these have
substantially been confirmed by them. In our opinion, the frequency of
verification is reasonable.
(b) In our opinion, the procedures of physical verification of
inventory 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 inventory records, in our
opinion, the Company is maintaining proper records of inventory. The
discrepancies noticed on physical verification of inventory as compared
to book records were not material.
3. (a) The Company has not granted any loans,
secured or unsecured, to companies, firms or other parties covered in
the register maintained under Section 301 of the Act.
(b) The Company has not taken any loans, secured or unsecured, from
companies, firms or other parties covered in the register maintained
under Section 301 of the Act.
4. In our opinion and according to the information and explanations
given to us, 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, fixed assets and for the sale of goods and
services. Further, on the basis of our examination of the books and
records of the Company, and according to the information and
explanations given to us, we have neither come across nor have been
informed of any continuing failure to correct major weaknesses in the
aforesaid internal control system.
5. (a) In our opinion and according to the
information and explanations given to us, the particulars of contracts
or arrangements referred to in Section 301 of the Act have been entered
in the register required to be maintained under that section.
(b) In our opinion and according to the information and explanations
given to us, the transactions made in pursuance of such contracts or
arrangements and exceeding the value of Rupees Five Lakhs in respect of
any party during the year have been made at prices which are reasonable
having regard to the prevailing market prices at the relevant time.
6. In our opinion and according to the information and explanations
given to us, the Company has complied with the directives issued by
Reserve Bank of India and 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. According to the information and explanations given to us, 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 on
the Company in respect of the aforesaid deposits.
7. In our opinion, the Company has an internal audit system
commensurate with its size and nature of its business.
8. We have broadly reviewed the books of account maintained by the
Company in respect of products where, pursuant to the Rules made by the
Central Government of India, the maintenance of cost records has been
prescribed under clause (d) of sub-section (1) of Section 209 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 with a view to determine whether
they are accurate or complete.
9. (a) According to the information and
explanations given to us and the records of the Company examined
by us, in our opinion, the Company is regular in depositing the
undisputed statutory dues including provident fund, investor education
and protection fund, employeesà state insurance, income-tax, sales-tax,
wealth tax, service tax, customs duty, excise duty, cess and other
material statutory dues as applicable with the appropriate authorities.
(b) According to the information and explanations given to us and the
records of the Company examined by us, the particulars of dues of
income- tax, sales-tax, wealth-tax, service-tax, customs duty, excise
duty and cess as at June 30, 2010 which have not been deposited on
account of a dispute, are as follows:
Name of the Nature of Amount Period to Forum where
which the dispute is
statute dues Rs.000s the amount pending
relates
The Central Excise Duty 851 1994-95 Supreme Court
Excises and of India
Salt Matters
Act, 1944
28 2008-09 Large Tax Payer
Unit, Bangalore
426 2009-10 Appellate Tribunal
The Andhra Sales Tax 5,727 2003-04 Appellate Tribunal
Pradesh Matters
General
Sales Tax Act
10. The Company has no accumulated losses as at June 30, 2010 and it
has not incurred any cash losses in the financial year ended on that
date or in the immediately preceding financial year
11. According to the records of the Company examined by us and the
information and explanation given to us, the Company has not defaulted
in repayment of dues to any financial institution or bank or debenture
holders as at the balance sheet date.
12. The Company has not granted any loans and advances on the basis of
security by way of pledge of shares, debentures and other securities.
13. The provisions of any special statute applicable to chit fund /
nidhi / mutual benefit fund/ societies are not applicable to the
Company.
14. In our opinion, the Company is not a dealer or trader in shares,
securities, debentures and other investments.
15. In our opinion and 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 during the year.
16. The Company has not obtained any term loans.
17. On the basis of an overall examination of the balance sheet of the
Company, in our opinion and according to the information and
explanations given to us, there are no funds raised on a short-term
basis which have been used for long-term investment.
18. The Company has not made any preferential allotment of shares to
parties
and companies covered in the register maintained under Section 301 of
the Act during the year.
19. The Company has not issued any debentures during the year.
20. The Company has not raised any money by public issues during the
year.
21. During the course of our examination of the books and records of
the Company, carried out in accordance with the generally accepted
auditing practices in India, and according to the information
and explanations given to us, we have neither come across any instance
of fraud on or by the Company, noticed or reported during the year, nor
have we been informed of such case by the Management.
For price Waterhouse
Firm Registration No.007568S
Chartered Accountants
Usha A Narayanan
Bangalore Partner
August 13, 2010 Membership Number: 23997
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