Mar 31, 2023
Kirloskar Ferrous Industries Limited
We have audited the accompanying standalone financial statements of Kirloskar Ferrous Industries Limited (âthe Companyâ), which comprise the Balance Sheet as at March 31, 2023, 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 ended on that date, and a summary of the significant accounting policies and other explanatory information (hereinafter referred to as âthe financial statementsâ).
In our opinion and to the best of our information and according to the explanations given to us, the aforesaid financial statements give the information required by the Companies Act, 2013 (âthe Actâ) in the manner so required and give a true and fair view in conformity with the Indian Accounting Standards prescribed under section 133 of the Act read with the Companies (Indian Accounting Standards) Rules, 2015, as amended, (âInd ASâ) and other accounting principles generally accepted in India, of the state of affairs of the Company as at March 31, 2023, the profit and total comprehensive income, changes in equity and its cash flows for the year ended on that date.
We conducted our audit of the financial statements 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 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 (ICAI) together with the independence requirements that are relevant to our audit of the standalone financial statements under the provisions of the Act and the Rules made thereunder, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the ICAIâs Code of Ethics. 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.
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements for the financial year ended March 31,2023. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, we do not provide a separate opinion on these matters. We have determined the matters described below to be the key audit matters to be communicated in our report.
Sr. No. |
Key Audit Matter |
How our audit addressed the key audit matter |
1. |
Contingent Liability The Company is involved in direct and indirect tax litigations that are pending with various tax authorities. Whether a liability is recognized or disclosed as a contingent liability in the financial statements is inherently judgmental and dependent on assumptions and assessments. We placed specific focus on the judgements in respect to these demands against the Company. Determining the amount, if any, to be recognized or disclosed in the financial statements, is inherently subjective. Therefore, these litigations amount is considered to be a key audit matter. |
Our procedures included, but were not limited to, the following: ⢠Obtained an understanding from the management with respect to process and controls followed by the Company for identification and monitoring of significant developments in relation to the litigations, including completeness thereof. ⢠Obtained the list of litigations from the management and reviewed their assessment of the likelihood of outflow of economic resources being probable, possible or remote in respect of the litigations. ⢠Assessed managementâs discussions held with their legal consultants and understanding precedents in similar cases. ⢠Obtained and evaluated the confirmations from the consultants representing the Company before the various authorities and our own dedicated teams of direct tax and indirect tax. Assessed and validated the adequacy and appropriateness of the disclosures made by the management in the financial statements. |
Sr. No. |
Key Audit Matter |
How our audit addressed the key audit matter |
2. |
Property, Plant & Equipment Valuation and existence of property, plant and equipment including assessment of useful lives and residual values Property, plant and equipment represents a significant proportion of the Companyâs asset base. The estimates and assumptions made to determine the carrying amounts, including whether and when to capitalize or expense certain costs, and the determination of depreciation charges are material to the Companyâs financial position and performance. The charges in respect of periodic depreciation are derived after estimating an assetâs expected useful life and the expected residual value. Changes to assetâs carrying amounts, expected useful lives or residual value could result in a material impact on the financial statements and hence considered as key audit matter. |
Our audit approach consisted evaluation of design and implementation of controls, and testing the operating effectiveness of the internal controls over valuation of property, plant and equipment and review of useful lives; Periodic physical verification of property, plant and equipment for adequacy and appropriateness of the accounting and disclosure by the Management: ⢠Review of CAPEX business process, flow of documents/information and their controlâs effectiveness. ⢠Substantive Tests on random sampling for all the major additions, deletions to the assets by applying all the characteristics of capital expenditure, proper classification of the same, with reference to the companyâs policy and accounting standards. ⢠We performed substantive testing for the determination of assetsâ useful lives and residual values with reference to managementâs judgments, including the appropriateness of past / existing asset lives and residual values applied in the calculation of depreciation. We also obtain certificates relating to useful lives of assets wherever required. ⢠We have reviewed the policy and the procedure of physical verification of PPE. ⢠After carrying out above audit procedures, we did not identify any exceptions in relation to the valuation and the existence of property, plant and equipment including assessment of useful lives and residual values which, may affect our opinion. |
Information Other than the Financial Statements and Auditorâs Report Thereon
The Companyâs Board of Directors is responsible for the preparation of the other information. The other information comprises the information included in the Management Discussion and Analysis, Boardâs Report including Annexures to Boardâs Report, business Responsibility and Sustainability Report, Corporate Governance and Shareholderâs Information, but does not include the Standalone financial statements and our auditorâs report thereon.
Our opinion on the financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained during the course of our 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.
Managementâs Responsibility for the Standalone Financial Statements
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, total comprehensive income, changes in equity and cash flows of the Company in accordance with the Ind AS 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 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.
In preparing the standalone 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.
The Board of Directors is also responsible for overseeing the Companyâs financial reporting process.
Auditorâs Responsibilities for the Audit of the Financial Statements
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 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 standalone financial statements.
As part of an audit in accordance with SAs, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:
⢠Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
⢠Obtain an understanding of internal financial controls 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 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.
Materiality is the magnitude of misstatements in the financial statements that, individually or in aggregate, makes it probable that the economic decisions of a reasonably knowledgeable
user of the financial statements may be influenced. We consider quantitative materiality and qualitative factors in (i) planning the scope of our audit work and in evaluating the results of our work; and (ii) to evaluate the effect of any identified misstatements in the financial statements.
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.
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.
From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditorâs report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.
Report on Other Legal and Regulatory Requirements
1. As required by Section 143(3) of the Act, based on our audit
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 including Other Comprehensive Income, Statement of Changes in Equity and the Statement of Cash Flow dealt with by this Report are in agreement with the relevant books of account.
d) In our opinion, the aforesaid financial statements comply with the Ind AS specified under Section 133 of the Act.
e) On the basis of the written representations received from the directors for the year ended March 31, 2023 taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2023 from being appointed as a director in terms of Section 164 (2) of the Act.
f) With respect to the adequacy of the internal financial controls over financial reporting of the Company and the operating effectiveness of such controls, refer to our separate Report in âAnnexure Aâ. Our report expresses an unmodified opinion on the adequacy and operating effectiveness of the Companyâs internal financial controls over financial reporting.
g) With respect to the other matters to be included in the Auditorâs Report in accordance with the requirements of section 197(16) of the Act, as amended:
In our opinion and to the best of our information and according to the explanations given to us, the remuneration paid by the Company to its directors for the financial year ended as at March 31, 2023 is in accordance with the provisions of section 197 read with Schedule V to the Act.
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 No. 45 of Standalone Financial Statements.
ii. The Company did not have any long-term contracts including derivative contracts for which there were any material foreseeable losses.
iii. There has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Company.
iv. With respect to clause (e) of Rule 11 of the Companies (Audit and Auditors) Rules, 2014, as amended:
a. The management has represented that, to the best of its knowledge and belief, 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.
b. Management has represented, that, to the best of its knowledge and belief, 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.
c. Based on the audit procedures that have been considered reasonable and appropriate in the circumstances, nothing has come to our attention that has caused us to believe that the representations under sub-clause (i) and (ii) of Rule 11 (e) as provided under (a) and (b) above, contain any material misstatement.
v. Dividend declared and paid during the year by the company is in compliance with section 123 of the Companies Act, 2013.
vi. With respect to clause (g) of Rule 11 of the Companies (Audit and Auditors) Rules, 2014, as amended, the requirement under proviso to Rule 3(1) of Companies (Accounts) Rules, 2014 of mandatory audit trail in the Company accounting software is postponed to financial year commencing on or after 01 April 2023 as per notification G.S.R. 235(E) dated 31 March 2022 as issued by Ministry of Corporate Affairs. Accordingly, reporting for the same is not applicable.
2. As required by the Companies (Auditorâs Report) Order, 2020 (âthe Orderâ) issued by the Central Government in terms of Section 143(11) of the Act, we give in âAnnexure Bâ a statement on the matters specified in paragraphs 3 and 4 of the Order.
For Kirtane & Pandit LLP
Chartered Accountants
Firm Registration No.105215W/W100057
Suhas Deshpande
Partner
Membership No.: 031787
UDIN: 23031787BGYQFW5275
Pune, May 12, 2023
Mar 31, 2019
INDEPENDENT AUDITORS'' REPORT
To The Members of
Kirloskar Ferrous Industries Limited
Report on the Audit of the Financial Statements
Opinion
We have audited the accompanying financial statements of Kirloskar Ferrous Industries Limited ("the Company"), which comprise the Balance Sheet as at 31st March, 2019, 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 ended on that date, and a summary of the significant accounting policies and other explanatory information (hereinafter referred to as "the financial statements").
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 ("the Act") in the manner so required and give a true and fair view in conformity with the Indian Accounting Standards prescribed under Section 133 of the Act read with the Companies (Indian Accounting Standards) Rules, 2015, as amended, ("Ind AS") and other accounting principles generally accepted in India, of the state of affairs of the Company as at 31st March, 2019, the profit and total comprehensive income, changes in equity and its cash flows for the year ended on that date.
Basis for Opinion
We conducted our audit of the financial statements in accordance with the Standards on Auditing specified under Section 143(10) of the Act (SAs). Our responsibilities under those Standards are further described in the Auditor''s 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 (ICAI) together with the independence requirements that are relevant to our audit of the financial statements under the provisions of the Act and the Rules made thereunder, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the ICAI''s Code of Ethics. 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.
Key Audit Matters
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, we do not provide a separate opinion on these matters. We have determined the matters described below to be the key audit matters to be communicated in our report.
Sr. No. |
Key Audit Matter |
Auditor''s Response |
1. |
Accuracy of Cost of Goods Sold (COGS) We identified Cost of Goods Sold area as a key audit matter for the Company because it is the most significant cost of the Company, which comprise cost of materials and other direct costs of production and the same has significant impact on the profitability of the Company. |
We assessed the Company''s process to verify the Cost of Goods Sold incurred during the year. Our audit approach consisted of testing of the design and operating effectiveness of the internal controls and substantive testing as follows: - Overall evaluation and testing of controls related to corresponding business processes, viz. ''Procurement to Payment (P2P), Production Process, Material Requirement Planning (MRP), Inventory policy and stores procedures. |
Sr. No. |
Key Audit Matter |
Auditor''s Response |
- Review of overall operations and production / conversion process of materials into finished products. - Review of Internal Audit reports and internal management reports relating to COGS. - Physical verification of inventory items on random sampling basis with reference to book inventory for accuracy and controls including review of internal period-end inventory procedures and reconciliations. - Reviewing completeness and overall accuracy of system generated material consumption and reconciling with General Ledger, including manual accounting entries relating to material consumption. - Review of inventory valuation, material consumption in accordance with applicable Indian Accounting Standards. |
||
2. |
Accuracy and Completeness of Capital Expenditure Capital Expenditure (CAPEX) has been considered as a key audit matter in view of the complexity and peculiarity of nature of business and being one of the important elements of costs. |
We assessed the Company''s process to verify the Capital Expenditure incurred during the year. Our audit approach consisted of testing of the design and operating effectiveness of the internal controls and substantive testing as follows: - Review of CAPEX business process, flow of documents/ information and their controls effectiveness. - Substantive Tests on random sampling for all the major additions, deletions to the assets by applying all the characteristics of capital expenditure, proper classification of the same, with reference to the company''s policy and accounting standards. - Scrutiny of relevant general ledger accounts to assess if the expenditure has been correctly accounted for. - Physical verification of test basis, review of physical verification carried out by the Management with respect to book records, review of Internal Audit reports findings relating to CAPEX, if any and implementation of the suggestions of the same. - Review of compliance done with respect to Companies Act, Income Tax Act, Customs duty and GST Act, particularly for accounting of capex additions, deletions, depreciation and of carrying amounts thereof. |
Information Other than the Financial Statements and Auditor''s Report Thereon
The Company''s Board of Directors is responsible for the preparation of the other information. The other information comprises the information included in the Management Discussion and Analysis, Board''s Report including Annexures to Board''s Report, Corporate Governance and Shareholder''s Information, 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 during the course of our 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.
Management''s Responsibility for the Financial Statements
The Company''s Board of Directors is responsible for the matters stated in Section 134(5) of the Act with respect to the preparation of these financial statements that give a true and fair view of the financial position, financial performance, total comprehensive income, changes in equity and cash flows of the Company in accordance with the Ind AS 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 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.
In preparing the financial statements, management is responsible for assessing the Company''s 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.
The Board of Directors are responsible for overseeing the Company''s financial reporting process. Auditor''s Responsibilities for the Audit of the Financial Statements
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 auditor''s 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.
As part of an audit in accordance with SAs, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:
- Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
- Obtain an understanding of internal financial controls 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 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 management''s 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 Company''s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor''s 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 auditor''s 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.
Materiality is the magnitude of misstatements in the financial statements that, individually or in aggregate, makes it probable that the economic decisions of a reasonably knowledgeable user of the financial statements may be influenced. We consider quantitative materiality and qualitative factors in (i) planning the scope of our audit work and in evaluating the results of our work; and (ii) to evaluate the effect of any identified misstatements in the financial statements.
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.
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.
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 auditor''s 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
1. As required by Section 143(3) of the Act, based on our audit 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 including Other Comprehensive Income, Statement of Changes in Equity and the Statement of Cash Flow dealt with by this Report are in agreement with the relevant books of account.
d) In our opinion, the aforesaid financial statements comply with the Ind AS specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014.
e) On the basis of the written representations received from the directors as on 31st March,2019 taken on record by the Board of Directors, none of the Directors is disqualified as on 31st March, 2019 from being appointed as a Director in terms of Section 164 (2) of the Act.
f) With respect to the adequacy of the internal financial controls over financial reporting of the Company and the operating effectiveness of such controls, refer to our separate report in "Annexure A". Our report expresses an unmodified opinion on the adequacy and operating effectiveness of the Company''s internal financial controls over financial reporting.
g) With respect to the other matters to be included in the Auditor''s Report in accordance with the requirements of Section 197(16) of the Act, as amended:
In our opinion and to the best of our information and according to the explanations given to us, the remuneration paid by the Company to its Directors during the year is in accordance with the provisions of Section 197 of the Act.
h) With respect to the other matters to be included in the Auditor''s Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules, 2014, 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.
ii. The Company has made provision, as required under the applicable law or accounting standards, for material foreseeable losses, if any, on long-term contracts including derivative contracts.
iii. There has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Company.
2. As required by the Companies (Auditor''s Report) Order, 2016 ("the Order") issued by the Central Government in terms of Section 143(11) of the Act, we give in "Annexure B" a statement on the matters specified in paragraphs 3 and 4 of the Order.
(Referred to in paragraph 1(f) under ''Report on Other Legal and Regulatory Requirements'' section of our report to the Members of KIRLOSKAR FERROUS INDUSTRIES LIMITED of even date)
Report on the Internal Financial Controls Over Financial Reporting under Clause (i) of Sub-section 3 of Section 143 of the Companies Act, 2013 ("the Act").
We have audited the Internal Financial Controls over financial reporting of KIRLOSKAR FERROUS INDUSTRIES LIMITED ("the Company") as of 31st March, 2019 in conjunction with our audit of the financial statements of the Company for the year ended on that date.
Management''s Responsibility for Internal Financial Controls
The Board of Directors of the Company is responsible for establishing and maintaining internal financial controls based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issued by the Institute of Chartered Accountants of India. These responsibilities include the design, implementation and maintenance of adequate Internal Financial Controls that were operating effectively for ensuring the orderly and efficient conduct of its business, including adherence to respective Company''s policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information, as required under the Companies Act, 2013.
Auditor''s Responsibility
Our responsibility is to express an opinion on the internal financial controls over financial reporting of the Company based on our audit. We conducted our audit in accordance with the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting (the "Guidance Note") issued by the Institute of Chartered Accountants of India and the Standards on Auditing prescribed under Section 143(10) of the Companies Act, 2013, to the extent applicable to an audit of Internal Financial Controls. Those Standards and the Guidance Note require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether adequate Internal Financial Controls over financial reporting was established and maintained and if such controls operated effectively in all material respects.
Our audit involves performing procedures to obtain audit evidence about the adequacy of the Internal Financial Controls system over financial reporting and their operating effectiveness. Our audit of Internal Financial Controls over financial reporting included obtaining an understanding of Internal Financial Controls over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. The procedures selected depend on the auditor''s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error.
We believe that the audit evidence we have obtained, is sufficient and appropriate to provide a basis for our audit opinion on the Internal Financial Controls system over financial reporting of the Company.
Meaning of Internal Financial Controls Over Financial Reporting
A Company''s Internal Financial Control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company''s Internal Financial Control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of Management and Directors of the Company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorised acquisition, use, or disposition of the Company''s assets that could have a material effect on the financial statements.
Limitations of Internal Financial Controls Over Financial Reporting
Because of the inherent limitations of Internal Financial Controls over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may occur and not be detected. Also, projections of any evaluation of the Internal Financial Controls over financial reporting to future periods are subject to the risk that the Internal Financial Control over financial reporting may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Opinion
In our opinion, to the best of our information and according to the explanations given to us, the Company has, in all material respects, an adequate Internal Financial Controls system over financial reporting and such Internal Financial Controls over financial reporting were operating effectively as at 31st March, 2019, based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issued by the Institute of Chartered Accountants of India.
(Referred to in paragraph 2 under ''Report on Other Legal and Regulatory Requirements'' section of our report to the Members of KIRLOSKAR FERROUS INDUSTRIES LIMITED of even date)
i. In respect of the Company''s fixed assets:
(a) The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets.
(b) The Company has a program of verification to cover all the items of fixed assets in a phased manner which, in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. Pursuant to the program, certain fixed assets were physically verified by the Management during the year. According to the information and explanations given to us, no material discrepancies were noticed on such verification.
(c) According to the information and explanations given to us and on the basis of our examination of the records of the Company, the title deeds of immovable properties are held in the name of the Company.
ii. As informed to us, the physical verification of inventory has been conducted by the Management at reasonable intervals and the discrepancies noticed during such physical verification were not material. Stocks lying with third parties at the year-end have been confirmed.
The discrepancies noticed on physical verification of Inventory as compared to the book records have been properly dealt with the Books of Account.
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 189 of the Companies Act. Accordingly, paragraph 3(iii) of the Order is not applicable.
iv. In our opinion and according to the information and explanations given to us, the Company has not given loans, made investments or given guarantees which are covered by the provisions of Section 185 and 186 of the Act.
v. The Company has not accepted deposits during the year and does not have any unclaimed deposits as at 31st March, 2019 and therefore, the provisions of the Clause 3 (v) of the Order are not applicable to the Company.
vi. The Central Government has specified maintenance of cost records under Sub-Section (1) of Section 148 of the Act and we are of the opinion that prima facie such accounts and records are 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. According to the information and explanations given to us, in respect of statutory dues:
(a) The Company has generally been regular in depositing undisputed statutory dues, including Provident Fund, Employees'' State Insurance, Income Tax, Goods and Service Tax, Customs Duty, Cess and other material statutory dues applicable to it with the appropriate authorities.
(b) There were no undisputed amounts payable in respect of Provident Fund, Employees'' State Insurance, Income Tax, Goods and Service Tax, Customs Duty, Cess and other material statutory dues in arrears as at 31st March, 2019 for a period of more than six months from the date they became payable.
(c) Details of dues of Income Tax, Sales Tax, Service Tax, Excise Duty and Value Added Tax which have not been deposited as at 31st March, 2019 on account of dispute are given below:
Name of the statute |
Nature of the dues |
Amount under dispute (Rs.) |
Period(s) to which the amount relate |
Forum where such dispute is pending |
Central Excise Act, 1944 |
Interest on refund |
341,496 |
FY 2003-04 |
Assistant Commissioner of Central Excise, Bellary |
Central Excise Act, 1944 |
Cenvat Credit issues |
1,428,937 |
FY 2006-07 to FY 2015-16 |
Assistant Commissioner of Central Excise, Bellary |
Central Excise Act, 1944 |
Cenvat Credit availed on Steel |
94,084 |
FY 2010-11 |
Assistant Commissioner of Central Excise, Bellary |
Central Excise Act, 1944 |
Iron Ore supplied by Export Oriented Unit Supplier |
7,116,956 |
FY 2013-14 and FY 2014-15 |
Additional Commissioner of Central Excise, Belgaum, |
Finance Act, 1994 |
Cenvat Credit utilised for Service Tax payment |
7,585,734 |
FY 2006-07 |
Commissioner of Central Excise, Belgaum |
Finance Act, 1994 |
Cenvat Credit issues |
772,188 |
FY 2009-10 to FY 2011-12 |
Assistant Commissioner of Central Excise, Bellary |
Finance Act, 1994 |
Cenvat Credit issues |
2,716,155 |
FY 2011-12 and FY 2015-16 |
Assistant Commissioner of Central Excise, Bellary |
Name of the statute |
Nature of the dues |
Amount under dispute (Rs.) |
Period(s) to which the amount relate |
Forum where such dispute is pending |
Finance Act, 1994 |
Service Tax demand on Interest on Letter of Credit |
11,496,454 |
FY 2008-09 to FY 2011-12 |
CESTAT, Bangalore |
Finance Act, 1994 |
Service Tax demand on Interest on Letter of Credit |
1,722,088 |
FY 2016-17 to FY 2017-18 |
CESTAT, Bangalore |
Finance Act, 1994 |
Refund Claim filed in respect of Service Tax and KKC Cenvat Credit pertaining to Railway Siding Project |
4,115,498 |
FY 2016-17 and FY 2017-18 |
Commissioner of Central Tax (Appeals), Belgaum |
Finance Act, 1994 |
Service Tax Cenvat Credit availed on Input Services |
5,340,086 |
FY 2011-12 to FY 2014-15 |
CESTAT, Bangalore |
Income Tax Act, 1961 |
Minimum Alternate Tax (1) |
115,460,131 |
FY 2004-05 to FY 2006-07 |
Hon''ble High Court Mumbai |
Income Tax Act, 1961 |
Depreciation allowance - TG-3 Assessment Demand (2) |
93,713,150 |
FY 2010-11 and FY 2011-12 |
Income Tax Appellate Tribunal, Pune |
Income Tax Act, 1961 |
Income Tax Demand raised |
76,318 |
FY 2013-14 |
Deputy Commissioner, Circle 14, Pune |
Karnataka VAT Act, 2003 |
Disallowed Input Tax Credit |
8,276,255 |
FY 2007-08 |
Hon''ble High Court of Karnataka, Dharwad Bench, |
Karnataka VAT Act, 2003 |
Rejected Input Tax Credit (3) |
3,779,903 |
FY 2008-09 |
Assistant Commissioner of Commercial Tax, Davanagere |
Provident Fund and Miscellaneous Provisions Act, 1952 |
Interest and damages for belated remittance |
6,719,589 |
FY 2001-02 to FY 2004-05 |
EPF Appellate Tribunal, New Delhi |
Provident Fund and Miscellaneous Provisions Act, 1952 |
Demand for differential PF dues |
11,813,110 |
FY 2011-12 to FY 2015-16 |
EPFO, Bellary |
(1) Out of the total amount under dispute Rs. 15,618,182 is paid under protest.
(2) Total amount under dispute is paid under protest.
(3) Total amount under dispute is paid under protest.
viii. In our opinion and according to the information and explanations given to us, the Company has not defaulted in the repayment of loans or borrowings to financial institutions, banks and government and dues to debenture holders.
ix. In our opinion and according to the information and explanations given to us, the term loans taken by the Company have been applied for the purpose for which they were raised. The Company had not raised money by way of further public offer during the year.
x. According to the information and explanations given to us, no fraud by the Company or on the Company by its officers or employees has been noticed or reported during the year.
xi. In our opinion and according to the information and explanations given to us, the Company has paid/provided managerial remuneration in accordance with the requisite approvals mandated by the provisions of Section 197 read with Schedule V to the Act.
xii. The Company is not a Nidhi Company and hence reporting under Clause 3 (xii) of the Order is not applicable to the Company.
xiii. In our opinion and according to the information and explanations given to us, the Company is in compliance with Section 177 and 188 of the Companies Act, 2013 where applicable, for all transactions with the related parties and the details of related party transactions have been disclosed in the financial statements as required by the applicable accounting standards.
xiv. During the year, the Company has not made any preferential allotment or private placement of shares or fully or partly paid convertible debentures and hence reporting under Clause 3 (xiv) of the Order is not applicable to the Company.
xv. In our opinion and according to the information and explanations given to us, during the year the Company has not entered into any non-cash transactions with its Directors or persons connected to its Directors and hence provisions of Section 192 of the Companies Act, 2013 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, 1934.
For Kirtane & Pandit LLP
Chartered Accountants
Firm Registration No. 105215W/W100057
Suhas Deshpande
Partner
Pune, 3rd May, 2019 Membership No. 031787
Mar 31, 2018
INDEPENDENT AUDITORSâ REPORT
To The Members of
Kirloskar Ferrous Industries Limited
Report on the Financial Statements
We have audited the accompanying Ind AS financial statements of Kirloskar Ferrous Industries Limited (âthe Companyâ), which comprise the Balance Sheet as at 31st March, 2018, and 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 (hereinafter referred to as âthe Ind AS financial statementsâ).
Managementâs Responsibility for the Ind AS Financial Statement
The Companyâs Board of Directors is responsible for the matters stated in Section 134(5) of the Companies Act, 2013 (âthe Actâ) with respect to the preparation of these Ind AS financial statements that give a true and fair view of the financial position, financial performance including other comprehensive income, cash flows and changes in equity of the Company in accordance with the accounting principles generally accepted in India, including the Indian Accounting Standards (Ind AS) prescribed under Section 133 of the Act.
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 Ind AS financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.
Auditorâs Responsibility
Our responsibility is to express an opinion on these Ind AS financial statements based on our audit.
In conducting our audit, we have taken into account the provisions of the Act, the accounting and auditing standards and matters which are required to be included in the audit report under the provisions of the Act and the Rules made thereunder.
We conducted our audit of the Ind AS financial statements in accordance with the Standards on Auditing specified under Section 143(10) of the Act. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the Ind AS financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and the disclosures in the Ind AS financial statements. The procedures selected depend on the auditorâs judgment, including the assessment of the risks of material misstatement of the Ind AS financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal financial control relevant to the Companyâs preparation of the Ind AS financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of the accounting estimates made by the Companyâs Directors, as well as evaluating the overall presentation of the Ind AS financial statements.
We believe that the audit evidence obtained by us is sufficient and appropriate to provide a basis for our audit opinion on the Ind AS financial statements.
Opinion
In our opinion and to the best of our information and according to the explanations given to us, the aforesaid Ind AS financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India, of the state of affairs of the Company as at 31st March, 2018, and its profit, total comprehensive income, its cash flows and the changes in equity for the year ended on that date.
Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditorâs Report) Order, 2016 (âthe Orderâ) issued by the Central Government of India in terms of sub-section (11) of section 143 of the Act, we give in the âAnnexure Aâ, a statement on the matters specified in paragraphs 3 and 4 of the Order.
2. 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 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 including Other Comprehensive Income, the Statement of Cash Flow and Statement of Changes in Equity dealt with by this Report are in agreement with the relevant books of account.
d. In our opinion, the aforesaid Ind AS financial statements comply with the Indian Accounting Standards prescribed under section 133 of the Act.
e. On the basis of the written representations received from the directors as on 31st March, 2018 taken on record by the Board of Directors, none of the directors is disqualified as on 31st March, 2018 from being appointed as a director in terms of Section 164(2) of the Act.
f. With respect to the adequacy of the internal financial controls over financial reporting of the Company, and the operating effectiveness of such controls, refer to our separate Report in âAnnexure Bâ. Our report expresses an unmodified opinion on the adequacy and operating effectiveness of the Companyâs internal financial controls over financial reporting.
g. With respect to the other matters to be included in the Auditorâs Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules, 2014, as amended, in our opinion and to the best of our information and according to the explanations given to us:
I. The Company has disclosed the impact of pending litigations on its financial position in its Ind AS financial statements - Refer Note 44 to Ind AS financial statements;
II. The Company did not have any long-term contracts including derivative contracts for which there were any material foreseeable losses;
III. There has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Company.
(Referred to in paragraph 1 under âReport on Other Legal and Regulatory Requirementsâ section of our report of even date)
(i) (a) The Company has maintained proper records showing full particulars, including quantitative details and situation of property, plant and equipment.
(b) The Company has a program of verification of property, plant and equipment to cover all the items in a phased manner over a period of two years which, in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. Pursuant to the program, certain property, plant and equipment were physically verified by the management during the year. According to the information and explanations given to us, no material discrepancies were noticed on such verification.
(c) According to the information and explanations given to us and on the basis of our examination of the records of the Company, the title deeds of immovable properties are held in the name of the Company.
(ii) (a) As informed to us, the physical verification of inventory has been conducted by the management at reasonable intervals and the discrepancies noticed during such physical verification were not material. Stocks lying with third parties at the year-end have been confirmed.
The discrepancies noticed on physical verification of Inventory as compared to the book records have been properly dealt with the Books of Account.
(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 189 of the Companies Act. Accordingly, paragraph 3(iii) of the Order is not applicable.
(iv) In our opinion and according to the information and explanations given to us, the Company has not given loans, made investments or given guarantees which are covered by the provisions of Section 185 and 186 of the Act.
(v) In our opinion and according to the information and explanations given to us, the Company has not accepted any deposits from the public under Section 73 to 76 or any other relevant provisions of the Companies Act and the rules framed there under.
(vi) The Central Government has specified maintenance of cost records under Sub-Section (1) of Section 148 of the Act and we are of the opinion that prima facie such accounts and records are 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 on the basis of our examination of the records of the Company, amounts deducted/ accrued in the books of account in respect of undisputed statutory dues including Provident Fund, Income Tax, Sales Tax, Value Added Tax, Duty of Customs, Duty of Excise, Service Tax, Goods & Service Tax, Employeesâ State Insurance, Cess and any other material statutory dues have been regularly deposited during the year by the Company with appropriate authorities.
According to the information and explanations given to us, no undisputed amounts payable in respect of statutory dues were in arrears as at 31st March, 2018 for a period of more than six months from the date they became payable.
(b) Details of dues of Income-tax, Service Tax, Customs Duty, Excise Duty, and Value Added Tax which have not been deposited as on 31st March, 2018 on account of disputes are given below:
Sl. No. |
Name of the statute |
Nature of the dues |
Amount unpaid (?) |
Period(s) to which the amount relate |
Forum where such dispute is pending |
1 |
Central Excise Act, 1944 |
Interest on refund |
341,496 |
2004-05 |
Assistant Commissioner of Central Excise, Bellary |
2 |
Central Excise Act, 1944 |
Cenvat Credit issues |
1,428,937 |
2007-08 to 2016-17 |
Assistant Commissioner of Central Excise, Bellary |
3 |
Central Excise Act, 1944 |
Cenvat Credit availed on Steel |
94,084 |
2010-11 |
Assistant Commissioner of Central Excise, Bellary |
4 |
Central Excise Act, 1944 |
Cenvat Credit on capital goods write offs |
1,023,603 |
2009-10 |
Additional Commissioner of Central Excise, Belgaum, |
5 |
Finance Act, 1994 |
Cenvat Credit utilised for Service Tax payment |
7,585,734 |
2006-07 |
Commissioner of Central Excise, Belgaum |
6 |
Finance Act, 1994 |
Cenvat Credit issues |
772,188 |
2009-10 to 2011-12 |
Assistant Commissioner of Central Excise, Bellary |
7 |
Finance Act, 1994 |
Cenvat Credit issues |
2,716,155 |
2011-12 & 2016-17 |
Assistant Commissioner of Central Excise, Bellary |
8 |
Finance Act, 1994 |
Service Tax demand on Interest on Letter of Credit |
11,496,454 |
2012-13 |
CESTAT, Bangalore |
9 |
Finance Act, 1994 |
Service Tax demand on usance charges |
562,844 |
2016-17 |
Assistant Commissioner of Central Excise, Bellary |
10 |
Finance Act, 1994 |
Service Tax demand on usance charges |
926,030 |
2014-15 and 2015-16 |
Commissioner of Central Excise (Appeals), Mysore |
11 |
Finance Act, 1994 |
Service Tax Cenvat Credit availed on Input Services |
5,373,798 |
2015-16 & 2016-17 |
Commissioner of Central Excise, Belgaum |
12 |
Customs Act, 1962 |
Refund of customs duty |
337,883 |
2010-11 |
CESTAT, Bangalore |
13 |
Income Tax Act, 1961 |
Minimum Alternate Tax |
115,460,131 |
2005-06 to 2007-08 |
Hon''ble High Court Mumbai |
14 |
Income Tax Act, 1961 |
Disallowance of Expenses |
93,615,326 |
2011-12 & 2012-13 |
Commissioner of Income Tax (Appeals), Pune |
15 |
Karnataka VAT Act, 2003 |
Disallowed Input Tax Credit |
8,276,255 |
2007-08 |
Hon''ble High Court of Karnataka, Dharwad Bench, |
16 |
Karnataka VAT Act, 2003 |
Rejected Input Tax Credit |
3,779,903 |
2008-09 |
Assistant Commissioner of Commercial Tax, Davanagere |
17 |
Karnataka VAT Act, 2003 |
Input Tax Credit on purchases |
53,207,879 |
2013-14 & 2014-15 |
Local Vat Officer, Koppal |
Sl. No. |
Name of the statute |
Nature of the dues |
Amount unpaid (?) |
Period(s) to which the amount relate |
Forum where such dispute is pending |
18 |
Provident Fund and Miscellaneous Provisions Act, 1952 |
Interest and damages for belated remittance |
6,719,589 |
2001 to 2005 |
EPF Appellate Tribunal, New Delhi |
19 |
Provident Fund and Miscellaneous Provisions Act, 1952 |
Demand for differential PF dues |
11,813,110 |
2012-13 to 2015-16 |
EPFO, Bellary |
(viii) In our opinion and according to the information and explanations given to us, the Company has not defaulted in the repayment of loans or borrowings to financial institutions, banks and government and dues to debenture holders.
(ix) In our opinion and according to the information and explanations given to us, the term loans taken by the Company have been applied for the purpose for which they were raised. The Company had not raised money by way of further public offer (including debt instruments) during the year.
(x) According to the information and explanations given to us, no fraud by the Company or on the Company by its officers or employees has been noticed or reported during the year.
(xi) In our opinion and according to the information and explanations given to us, the Company has paid/ provided managerial remuneration in accordance with the requisite approvals mandated by the provisions of section 197 read with Schedule V to the Companies Act, 2013.
(xii) In our opinion and according to the information and explanations given to us, the Company is not a Nidhi Company. Accordingly, paragraph 3(xii) of the Order is not applicable.
(xiii) In our opinion and according to the information and explanations given to us, the Company is in compliance with Section 177 and 188 of the Companies Act, 2013 where applicable, for all transactions with the related parties and the details of related party transactions have been disclosed in the Ind AS financial statements as required by the applicable accounting standards.
(xiv) During the year the Company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures and hence reporting under paragraph 3(xiv) of the Order is not applicable to the Company.
(xv) In our opinion and according to the information and explanations given to us, during the year the Company has not entered into any non-cash transactions with its directors or persons connected with him. Accordingly, paragraph 3(xv) of the Order is not applicable.
(xvi) The Company is not required to be registered under Section 45-I of the Reserve Bank of India Act, 1934.
(Referred to in paragraph 2(f) under âReport on Other Legal and Regulatory Requirementsâ section of our report of even date)
Report on the Internal Financial Controls Over Financial Reporting under Clause (i) of Sub-section 3 of Section 143 of the Companies Act, 2013 (âthe Actâ)
We have audited the internal financial controls over financial reporting of Kirloskar Ferrous Industries Limited (âthe Companyâ) as of 31st March, 2018 in conjunction with our audit of the Ind AS financial statements of the Company for the year ended on that date.
Managementâs Responsibility for Internal Financial Controls
The Companyâs management is responsible for establishing and maintaining internal financial controls based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting (the âGuidance Noteâ) issued by the Institute of Chartered Accountants of India. These responsibilities include the design, implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the orderly and efficient conduct of its business, including adherence to Companyâs policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information, as required under the Companies Act, 2013.
Auditorâs Responsibility
Our responsibility is to express an opinion on the Companyâs internal financial controls over financial reporting based on our audit. We conducted our audit in accordance with the Guidance Note issued by the Institute of Chartered Accountants of India and the Standards on Auditing prescribed under Section 143(10) of the Companies Act, 2013, to the extent applicable to an audit of internal financial controls. Those Standards and the Guidance Note require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether adequate internal financial controls over financial reporting was established and maintained and if such controls operated effectively in all material respects.
Our audit involves performing procedures to obtain audit evidence about the adequacy of the internal financial controls system over financial reporting and their operating effectiveness. Our audit of internal financial controls over financial reporting included obtaining an understanding of internal financial controls over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. The procedures selected depend on the auditorâs judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the Companyâs internal financial controls system over financial reporting.
Meaning of Internal Financial Controls Over Financial Reporting
A Companyâs internal financial control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A Companyâs internal financial control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with 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
Because of the inherent limitations of internal financial controls over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may occur and not be detected. Also, projections of any evaluation of the internal financial controls over financial reporting to future periods are subject to the risk that the internal financial control over financial reporting may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Opinion
In our opinion, to the best of our information and according to the explanations given to us, the Company has, in all material respects, an adequate internal financial controls system over financial reporting and such internal financial controls over financial reporting were operating effectively as at 31st March, 2018, 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 issued by the Institute of Chartered Accountants of India
For Kirtane & Pandit LLP
Chartered Accountants
Firm Registration No. 105215W/W100057
Suhas Deshpande Partner
Pune, May 03, 2018 Membership No. 31787
Mar 31, 2017
Report on the Financial Statements
We have audited the accompanying financial statements of Kirloskar Ferrous Industries Limited (âthe Companyâ), which comprise the Balance Sheet as at March 31, 2017, and the Statement of Profit and Loss and Cash Flow Statement for the year then ended, and a summary of significant accounting policies and other explanatory information.
Management''s Responsibility for the Financial Statements
The Company''s Board of Directors is responsible for the matters in Section 134(5) of the Companies Act, 2013 (âthe Actâ) with respect to the preparation and presentation of these financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the accounting principles generally accepted in India, including the Accounting Standards specified under Section 133 of the Act, read with relevant rules issued there under from time to time. This responsibility also includes the 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 control, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.
Auditor''s Responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. We have taken into account the provisions of the Act, the accounting and auditing standards and matters which are required to be included in the audit report under the provisions of the Act and the Rules made there under.
We conducted our audit in accordance with the Standards on Auditing specified under Section 143(10) of the Act. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor''s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal financial control relevant to the Company''s preparation of the financial statements that give true and fair view in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by the Company''s Board of Directors, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the financial statements.
Opinion
In our opinion and to the best of our information and according to the explanations given to us, the aforesaid financial statements, give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India, of the state of affairs of the Company as at March 31, 2017, and its profit and its cash flows for the year ended on that date.
Other Matter
The financial statements of the Company for the year ended 31st March, 2016 were audited by other auditor, who expressed an unmodified opinion on these statements on 29th April, 2016.
Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditor''s Report) Order, 2016 (âthe Orderâ) issued by the Central Government of India in terms of sub-section (11) of section 143 of the Act, we give in the âAnnexure Aâ, a statement on the matters specified in paragraphs 3 and 4 of the Order.
2. As required by section 143(3) of the Act, we report that:
a. we have sought and obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purpose of our audit;
b. in our opinion proper books of account as required by law have been kept by the Company so far as 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 referred to in Section 133 of the Act, read with relevant rules issued thereunder from time to time;
e. on the basis of written representations received from the directors as on March 31, 2017 taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2017 from being appointed as a director in terms of Section 164(2) of the Act.
f. with respect to the adequacy of the internal financial controls over the financial reporting of the Company and the operating effectiveness of such controls, refer to our separate report in âAnnexure Bâ;
g. with respect to the other matters to be included in the Auditor''s Report in accordance with rule 11 of the Companies (Audit and Auditors) Rules, 2014, in our opinion and to the best of our information and according to the explanations given to us:
i) The Company has disclosed the impact of pending litigations on its financial statements -Refer Note 37 to the financial statements;
ii) The Company did not have any long term contracts including derivative contracts for which there were any material foreseeable losses;
iii) There has been no delay in transferring amounts, required to be transferred to the Investor Education and Protection Fund by the Company;
iv) The Company has provided requisite disclosures in the financial statements as to holding as well as dealings in Specified Bank Notes during the period from 8th November, 2016 to 30th December, 2016. Based on audit procedures and relying on the management representation we report that the disclosures are in accordance with books of account maintained by the Company and as produced to us by the Management - Refer Note 41 to the financial statements.
The annexure referred to in paragraph 1 in Report on Other Legal and Regulatory Requirements of the Independent Auditors'' Report to the members of the Company on the financial statements for the year ended March 31, 2017, we report that:
(i) (a) The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets.
(b) As informed to us, the fixed assets have been physically verified by the Management at reasonable intervals in accordance with the phased programme of verification adopted by the Company and the discrepancies noticed during such physical verification were not material.
(c) According to the information and explanations given to us and on the basis of our examination of the records of the Company, the title deeds of immovable properties are held in the name of the Company.
(ii) As informed to us, the physical verification of inventory has been conducted by the management at reasonable intervals and the discrepancies noticed during such physical verification were not material. Stocks lying with third parties at the year-end have been confirmed.
The discrepancies noticed on physical verification of Inventory as compared to the book records have been properly dealt with the Books of Account.
(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 189 of the Companies Act. Accordingly, paragraph 3(iii) of the Order is not applicable.
(iv) In our opinion and according to the information and explanations given to us, the Company has not given loans, made investments or given guarantees which are covered by the provisions of Section 185 and 186 of the Act.
(v) In our opinion and according to the information and explanations given to us, the Company has not accepted any deposits from the public under Section 73 to 76 or any other relevant provisions of the Companies Act and the rules framed there under.
(vi) The Central Government has specified maintenance of cost records under Sub-Section (1) of Section 148 of the Act and we are of the opinion that prima facie such accounts and records are 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 on the basis of our examination of the records of the Company, amounts deducted/ accrued in the books of account in respect of undisputed statutory dues including Provident Fund, Income Tax, Sales Tax, Value Added Tax, Duty of Customs, Duty of Excise, Service Tax, Employees'' State Insurance, Cess and any other material statutory dues have been regularly deposited during the year by the Company with appropriate authorities.
According to the information and explanations given to us, no undisputed amounts payable in respect of statutory dues were in arrears as at March 31, 2017 for a period of more than six months from the date they became payable.
(b) According to the information and explanations given to us, there are amounts of Excise Duty, Customs Duty, Value Added Tax, Service Tax, Income Tax and Provident Fund which have not been deposited on account of dispute as listed below:
Sl. No |
Name of the statute |
Nature of the dues |
Amount in Rs. |
Financial year to which the amount relates |
Forum where dispute is pending |
Remarks, if any |
1 |
Central Excise Act, 1944 |
Interest on refund |
341,496 |
2004-05 |
Assistant Commissioner of Central Excise, Bellary |
|
2 |
Central Excise Act, 1944 |
Cenvat Credit issues |
1,797,114 |
2007-08 to 2016-17 |
Assistant Commissioner of Central Excise, Bellary |
|
3 |
Central Excise Act, 1944 |
Cenvat Credit availed on Steel |
8,860,610 |
2004-05 to 2009-10 |
CESTAT, Bangalore |
|
4 |
Central Excise Act, 1944 |
Cenvat Credit availed on Steel |
268,737 |
2009-10 |
Commissioner of Central Excise (Appeals), Mysore |
|
5 |
Central Excise Act, 1944 |
Cenvat Credit availed on Steel |
94,084 |
2010-11 |
Assistant Commissioner of Central Excise, Bellary |
|
6 |
Central Excise Act, 1944 |
Cenvat Credit on capital goods write offs |
1,023,603 |
2009-10 |
Additional Commissioner of Central Excise, Belgaum |
|
7 |
Central Excise Act, 1944 |
Valuation of excisable goods |
1,876,214 |
2000-01 |
CESTAT, Mumbai |
|
8 |
Finance Act, 1994 |
Cenvat Credit utilised for Service Tax payment |
7,585,734 |
2006-07 |
Commissioner of Central Excise, Belgaum |
|
9 |
Finance Act, 1994 |
Cenvat Credit issues |
772,188 |
2009-10 to 2011-12 |
Assistant Commissioner of Central Excise, Bellary |
|
10 |
Finance Act, 1994 |
Penalty on Freight Outward |
2,992,835 |
2013-14 |
CESTAT, Bangalore |
|
11 |
Finance Act, 1994 |
Cenvat Credit issues |
2,716,155 |
2011-12 and 2016-17 |
Assistant Commissioner of Central Excise, Bellary |
|
12 |
Finance Act, 1994 |
Service Tax demand on Interest on Letter of Credit |
11,496,454 |
2012-13 |
CESTAT, Bangalore |
|
13 |
Finance Act, 1994 |
Service Tax demand on Interest on Letter of Credit |
1,887,734 |
2014-15 |
Commissioner of Central Excise (Appeals), Mysore |
|
Sl. No |
Name of the statute |
Nature of the dues |
Amount in Rs. |
Financial year to which the amount relates |
Forum where dispute is pending |
Remarks, if any |
14 |
Finance Act, 1994 |
Service Tax demand on usance charges |
983,215 |
2015-16 and 2016-17 |
Assistant Commissioner of Central Excise, Bellary |
|
15 |
Finance Act, 1994 |
Service Tax demand on usance charges |
505,569 |
2015-16 |
Commissioner of Central Excise (Appeals), Mysore |
|
16 |
Finance Act, 1994 |
Service Tax Cenvat Credit availed on Input Services |
5,373,798 |
2015-16 and 2016-17 |
Commissioner of Central Excise, Belgaum |
|
17 |
Customs Act, 1962 |
Refund of customs duty |
337,883 |
2010-11 |
CESTAT, Bangalore |
|
18 |
Income Tax Act, 1961 |
Minimum Alternate Tax |
99,831,949 |
2004-05 to 2006-07 |
Hon''ble High Court Mumbai |
|
19 |
Income Tax Act, 1961 |
Disallowance of Expenses |
58,317,163 |
2010-11 and 2011-12 |
Commissioner of Income Tax (Appeals), Pune |
Unfavourable outcome will be adjusted against the refund amount. |
20 |
Income Tax Act, 1961 |
Disallowance of Expenses |
76,318 |
2014-15 |
Deputy Commissioner of Income Tax, Pune |
Unfavourable outcome will be adjusted against the refund amount. |
21 |
Karnataka VAT Act, 2003 |
Disallowed Input Tax Credit |
8,276,255 |
2007-08 |
Hon''ble High Court of Karnataka, Dharwad Bench, |
|
22 |
Karnataka VAT Act, 2003 |
Input Tax Credit on purchases |
52,730,556 |
2013-14 |
Local Vat Officer, Koppal |
|
23 |
Maharashtra VAT Act, 2002 |
Disallowed Input Tax Credit |
100,828 |
2012-13 |
Deputy Commissioner of Sales Tax, Solapur |
|
24 |
Provident Fund and Miscellaneous Provisions Act, 1952 |
Interest and damages for belated remittance |
6,719,589 |
2001 to 2005 |
EPF Appellate Tribunal, New Delhi |
|
25 |
Provident Fund and Miscellaneous Provisions Act, 1952 |
Demand for differential PF dues |
11,813,110 |
2012-13 to 2015-16 |
EPFO, Bellary |
|
(viii) In our opinion and according to the information and explanations given to us, the Company has not defaulted in repayment of dues to its banks and financial institutions. The Company did not have any loan or borrowings from Government or any debentures outstanding during the year.
(ix) In our opinion and according to the information and explanations given to us, the term loans taken by the Company have been applied for the purpose for which they were raised. The Company had not raised money by way of further public offer (including debt instruments) during the year.
(x) According to the information and explanations given to us, no fraud by the Company or on the Company by its officers or employees has been noticed or reported during the year.
(xi) According to the information and explanations given to us, the managerial remuneration is paid or provided in accordance with the requisite approvals mandated by the provisions of section 197 read with schedule V to the Act.
(xii) In our opinion and according to the information and explanations given to us, the Company is not a nidhi company. Accordingly, paragraph 3(xii) of the Order is not applicable.
(xiii) In our opinion and according to the information and explanations given to us, all transactions with related parties are in compliance with Sections 177 and 188 of the Act and the details, as required by the applicable accounting standards have been disclosed in the financial statements.
(xiv) According to the information and explanations given to us, the Company has not made any preferential allotment or private placement of shares or fully or partially convertible debentures during the year.
(xv) According to the information and explanations given to us, the Company has not entered into any non-cash transactions with directors or persons connected with him during the year.
(xvi) In our opinion and according to the information and explanations given to us, the Company is not required to be registered under Section 45-IA of the Reserve Bank of India Act, 1934.
For Kirtane & Pandit LLP
Chartered Accountants
Firm Registration No. 105215W/W100057
Suhas Deshpande
Partner
Pune : 28th April, 2017 Membership No. 31787
Mar 31, 2016
We have audited the accompanying financial statements of KIRLOSKAR
FERROUS INDUSTRIES LIMITED ("the Company"), which comprise the Balance
Sheet as at 31 st March, 2016, 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:
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 and presentation of these financial statements that
give a true and fair view of the financial position, financial
performance and cash flows of the Company in accordance with the
accounting principles generally accepted in India, including the
Accounting Standards specified under Section 133 of the Act, read with
Rule 7 of the Companies(Accounts) Rules, 2014. This responsibility also
includes maintenance of adequate accounting records in accordance with
the provisions of the Act for safeguarding the assets of the Company
and for preventing and detecting frauds and other irregularities;
selection and application of appropriate accounting policies; making
judgments and estimates that are reasonable and prudent; and design,
implementation and maintenance of adequate internal financial controls,
that were operating effectively for ensuring the accuracy and
completeness of the accounting records, relevant to the preparation and
presentation of the financial statements that give a true and fair view
and are free from material misstatement, whether due to fraud or error.
Auditors'' Responsibility:
Our responsibility is to express an opinion on these financial
statements based on our audit.
We have taken into account the provisions of the Act, the accounting
and auditing standards and matters which are required to be included in
the audit report under the provisions of the Act and the Rules made
there under.
We conducted our audit in accordance with the Standards on Auditing
specified under Section 143(10) of the Act. Those Standards require
that we comply with ethical requirements and plan and perform the audit
to obtain reasonable assurance about whether the financial statements
are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about
the amounts and the disclosures in the financial statements. The
procedures selected depend on the auditor''s judgment, including the
assessment of the risks of material misstatement of the financial
statements, whether due to fraud or error. In making those risk
assessments, the auditor considers internal financial controls relevant
to the Company''s preparation of the financial statements that give a
true and fair view in order to design audit procedures that are
appropriate in the circumstances. An audit also includes evaluating the
appropriateness of the accounting policies used and the reasonableness
of the accounting estimates made by the Company''s Directors, as well as
evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and
appropriate to provide a basis for our audit opinion on the financial
statements.
Opinion:
In our opinion and to the best of our information and according to the
explanations given to us, the aforesaid financial statements give the
information required by the Act in the manner so required and give a
true and fair view in conformity with the accounting principles
generally accepted in India, of the state of affairs of the Company as
at 31 st March, 2016, and its profits and its cash flows for the year
ended on that date.
Report on other Legal and Regulatory Requirements:
1 As required by the Companies (Auditor''s Report) Order, 2016 ("the
Order"), issued by the Central Government of India in terms of
Sub-Section (11) of Section 143 of the Act, we give in the Annexure-A,
a statement on the matters specified in paragraphs 3 and 4 of the
Order.
2. As required by Section 143 (3) of the Act, we report that:
(a) We have sought and obtained all the information and explanations
which to the best of our knowledge and belief were necessary for the
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 the Act, read with
Rule 7 of the Companies (Accounts) Rules, 2014.
(e) On the basis of the written representations received from the
directors as on 31st March, 2016 taken on record by the Board of
Directors, none of the directors is disqualified as on 31st March, 2016
from being appointed as a director in terms of Section 164 (2) of the
Act.
(f) With respect to the adequacy of the internal financial controls
over financial reporting of the Company and the operating effectiveness
of such controls, refer to our separate report in "Annexure B"; and
(g) With respect to the other matters to be included in the Auditor''s
Report in accordance with Rule 11 of the Companies (Audit and Auditors)
Rules, 2014, in our opinion and to the best of our information and
according to the explanations given to us:
i. The Company has disclosed the impact of pending litigations on its
financial position in its financial statements - Refer Note 37 to the
financial statements;
ii. The Company did not have any long-term contracts including
derivative contracts for which there were any material foreseeable
losses;
iii. There has been no delay in transferring amounts, required to be
transferred, to the Investor Education and Protection Fund by the
Company.
The Annexure referred to in Independent Auditors'' Report to the members
of the Company on the financial statements for the year ended 31st
March, 2016, we report that:
(i) (a) The Company has maintained proper records showing full
particulars, including quantitative details and situation of fixed
assets.
(b) As informed to us, the fixed assets have been physically verified
by the Management at reasonable intervals in a phased manner and the
discrepancies noticed during such physical verification were not
material.
(c) According to the information and explanations given to us and on
the basis of our examination of the records of the Company, the title
deeds of immovable properties are held in the name of the Company.
(ii) As informed to us, the physical verification of inventory has been
conducted by the management at reasonable intervals and the
discrepancies noticed during such physical verification were not
material. Stocks lying with third parties at the year-end have been
confirmed.
(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 189 of the Act.
(iv) In our opinion and according to the information and explanations
given to us, the Company has not given loans, made investments or given
guarantees which are covered by the provisions of Section 185 and 186
of the Act.
(v) In our opinion and according to the information and explanations
given to us, the Company has not accepted any deposits and hence the
directives issued by the Reserve Bank of India and the provisions of
sections 73 to 76 or any other relevant provisions of the Act and the
rules framed there under are not applicable to the Company.
(vi) The Central Government has specified maintenance of cost records
under Sub-Section (1) of Section 148 of the Act and we are of the
opinion that prima facie such accounts and records are 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
on the basis of our examination of the records of the Company, amounts
deducted/ accrued in the books of account in respect of undisputed
statutory dues including provident fund, Income Tax, Sales Tax, Value
Added Tax, Duty of Customs, Service Tax, Cess and other material
statutory dues have been regularly deposited during the year by the
Company with the appropriate authorities. According to information and
explanation given to us, no undisputed amounts payable in respect of
statutory dues were in arrears, as at 31 st March, 2016 for a period of
more than six months from the date they became payable.
b) According to information and explanation given to us, there are
amounts of Excise Duty, Customs Duty, Value Added Tax, Service Tax and
Income Tax which have not been deposited on account of dispute as
listed below:
SI. Name of the statute Nature of
the dues Amount
No inRs,
1 The Central Excise Duty on pattern 342,068
Act, 1944 development
charges
2 The Central Excise Interest on
refund 341,496
Act, 1944
3 The Central Excise Cenvat Credit
issues 1,420,241
Act, 1944
4 The Central Excise Cenvat Credit
availed 9,570,486
Act, 1944 on Steel
5 The Central Excise Cenvat Credit
availed 268,737
Act, 1944 on Steel
6 The Central Excise Cenvat Credit
availed 94,084
Act, 1944 on Steel
7 The Central Excise Cenvat Credit
issues 467,910
Act, 1944
8 The Central Excise Cenvat Credit
issues 39,304
Act, 1944
9 The Central Excise Cenvat Credit on 1,023,603
Act, 1944 write-offs
10 The Central Excise Valuation of
excisable 1,876,214
Act, 1944 goods
11 The Central Excise Refund of
Interest 714,462
Act, 1944
12 The Finance Cenvat Credit utilized 7,585,734
Act, 1994 for Service
Tax
payment
13 The Finance Cenvat Credit
issues 772,188
Act, 1994
14 The Finance Penalty on Freight 2,992,835
Act, 1994 Outward
15 The Finance Cenvat Credit i
ssues 161,633
Act, 1994
16 The Finance Service Tax
demand 11,496,454
Act, 1994 on Interest
17 The Finance Service Tax
demand 1,887,734
Act, 1994 on Interest
18 The Finance Service Tax
demand 420,371
Act, 1994
on since charges
Name of the Financial Forum where dispute is
stutus year to pending
which the
amount
relates
The Central Excise 1997-98 CESTAT, Bangalore
Act 1944
the Central excise 2004-05 Assistant
Act 1944 Commission of
Central Excise duty
Bellary
The Central Excise 2007-08 to Assistant
Act 1944 2015-16 Commissioner,
Central Excise,
Bellary
The Central Excise 2004-05 to CESTAT, Bangalore
2009-10
Act 1944
The Centrol Excise 2009 -10 Commissioner of Central
Act 1944 Excise (Appeals), Mysore
The Centrol Excise 2010-11 Assistant
Act 1944
Commissioner, Central
Excise, Bellary
The Central Excise
Act 1944 2012-13 Commissioner of Central
Excise, Belgaum
The Central Excise 2013-14 Commissioner of Central
Act 1944 Excise (Appeals), Mysore
The central Excise 2009-10 Additional
Act 1944
Commissioner, Central
Excise, Belgaum,
The Central Excise 2000-01 CESTAT, Mumbai
Act 1944
The Central Excise 2010-11 Hon''ble High Court,
Mumbai
Act 1944
The Finance 2006-07 Commissioner of Central
Excise, Belgaum
Act 1994
The Finance 2009-10 to Assistant
Act 1994 2010-11 Commissioner, Central
Excise, Bellary
The Finance 2013-14 CESTAT, Bangalore
act 1994
2011-12 Assistant
Commissioner of Central
Excise, Bellary
The FInance 2012-13 CESTAT, Bangalore
Act 1994
The Finance 2014-15 Commissioner, Central
Excise, Belgaum
Act 1994
The Finance 2015-16 Assistant
Act 1994
Commissioner of Central
Excise, Bellary
SI. Name of the
statute Nature of the dues Amount
No inRs,
19 The Finance Service Tax demand 505,659
Act, 1994 on usance charges
20 The Finance Cenvat Credit availed 30,120,653
Act,1994 on Input
Services
21 The Customs Refund of customs 337,883
Act, 1962 duty
22 The Income Tax Minimum Alternate 112,215
Act, 1961 Tax
23 The Income Tax Minimum Alternate 5,181,762
Act, 1961 TAx
24 The Income Tax Disallowance of 72,579,929
Act, 1961 expenses
25 The Income Tax Disallowance of 5,258,434
Act, 1961 expenses
26 The Karnataka Input tax credit on 52,730,556
VAT Act, 2003 purchases
27 The Maharashtra VAT set off 183,941
VAT Act,2002 disallowed
Name of the Financial Forum where dispute
statute is year to pending
which the
amount
relates
The finance 2015-16 Joint Commissioner,
Act 1994 Central Excise,
Belgaum
The finance 2015-16 Commissioner, Central
Act 1994 Excise, Belgaum
The Customs 2010-11 Commissioner of Custom
act 1962 (Appeals), Bangalore
The Income Tax 2004- 05 Hon''ble High Court
Act 1961
Mumbai
The Income Tax 2005- 06 Hon''ble High Court
Act 1961
Mumbai
The Income Tax 2009-10 Commissioner of
Act 1961
Income Tax (Appeals) Pune
The Income Tax 2010-11 Commissioner of
Act 1961
Income Tax (Appeals), Pune
The karnataka 2013-14 Local Vat Officer, Koppal
Vat Act 2003
The maharastra 2008-09 Joint Commissioner of
Sales Tax, Kolhapur
VAT Act 2002
(viii) The Company has not defaulted in repayment of loans or
borrowings to banks / financial institutions. The Company has not
borrowed funds from Government and has not issued any debentures.
(ix) The Company did not raise any money by way of initial public offer
or further public offer (including debt instruments). As informed to
us, the term loans were applied for the purposes for which those are
raised.
(x) According to the information and explanations given to us, no fraud
by the Company or any fraud on the Company by its officers or employees
has been noticed or reported during the year.
(xi) According to the information and explanations given to us and
based on our examination of the records of the Company, the Company has
paid/provided for managerial remuneration in accordance with the
requisite approvals mandated by the provisions of section 197 read with
Schedule V to the Act.
(xii) In our opinion and according to the information and explanations
given to us, the Company is not a nidhi company. Accordingly, paragraph
3(xii) of the Order is not applicable.
(xiii) According to the information and explanations given to us and
based on our examination of the records of the Company, transactions
with the related parties are in compliance with Sections 177 and 188 of
the Act where applicable and details of such transactions have been
disclosed in the financial statements as required by the applicable
accounting standards.
(xiv) According to the information and explanations given to us and
based on our examination of the records of the Company, the Company has
not made any preferential allotment or private placement of shares or
fully or partly convertible debentures during the year.
(xv) According to the information and explanations given to us and
based on our examination of the records of the Company, the Company has
not entered into non-cash transactions with Directors or persons
connected with him. Accordingly, paragraph 3(xv)of the Order is not
applicable.
(xvi) As informed to us, the Company is not required to be registered
under Section 45 -IA of the Reserve Bank of India Act, 1934.
ForM/sP.G.Bhagwat
Chartered Accountants
Firm Registration No. 101118W
S.B.Pagad
Partner
Pune: 29th April, 2016 Membership No.206124
Mar 31, 2015
We have audited the accompanying financial statements of KIRLOSKAR
FERROUS INDUSTRIES LIMITED ("the Company"), which comprise the
Balance Sheet as at 31st March, 2015, 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:
The Company''s Board of Directors is responsible for the matters stated
in Section 134(5) of the Companies Act, 2013 ("the Act") with
respect to the preparation of these financial statements that give a
true and fair view of the financial position, financial performance and
cash flows of the Company in accordance with the accounting principles
generally accepted in India, including the Accounting Standards
specified under Section 133 of the Act, read with Rule 7 of the
Companies(Accounts) Rules, 2014. This responsibility also includes
maintenance of adequate accounting records in accordance with the
provisions of the Act for safeguarding the assets of the Company and
for preventing and detecting frauds and other irregularities; selection
and application of appropriate accounting policies; making judgments
and estimates that are reasonable and prudent; and design,
implementation and maintenance of adequate internal financial controls,
that were operating effectively for ensuring the accuracy and
completeness of the accounting records, relevant to the preparation and
presentation of the financial statements that give a true and fair view
and are free from material misstatement, whether due to fraud or error.
Auditors'' Responsibility:
Our responsibility is to express an opinion on these financial
statements based on our audit. We have taken into account the
provisions of the Act, the accounting and auditing standards and
matters which are required to be included in the audit report under the
provisions of the Act and the Rules made there under.
We conducted our audit in accordance with the Standards on Auditing
specified under Section 143(10) of the Act. Those Standards require
that we comply with ethical requirements and plan and perform the audit
to obtain reasonable assurance about whether the financial statements
are free from material misstatement. An audit involves performing
procedures to obtain audit evidence about the amounts and the
disclosures in the financial statements. The procedures selected depend
on the auditor''s judgment, including the assessment of the risks of
material misstatement of the financial statements, whether due to fraud
or error. In making those risk assessments, the auditor considers
internal financial controls 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. We believe that the audit evidence we have
obtained is sufficient and appropriate to provide a basis for our audit
opinion on the financial statements.
Opinion:
In our opinion and to the best of our information and according to the
explanations given to us, the aforesaid financial statements give the
information required by the Act in the manner so required and give a
true and fair view in conformity with the accounting principles
generally accepted in India, of the state of affairs of the Company as
at 31st March, 2015, and its profits and its cash flows for the year
ended on that date.
Report on other Legal and Regulatory Requirements
1 As required by the Companies (Auditor''s Report) Order, 2015 ("the
Order"), issued by the Central Government of India in terms of
sub-section (11) of Section 143 of the Companies Act, 2015, we give in
the Annexure a statement on the matters specified in paragraphs 3 and 4
of the Order, to the extent applicable.
2. As required by Section 143 (3) of the Act, we report that:
(a) We have sought and obtained all the information and explanations
which to the best of our knowledge and belief were necessary for the
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 the Act, read with
Rule 7 of the Companies (Accounts) Rules, 2014.
(e) In our opinion, there are no financial transactions or other
matters which have an adverse effect on the functioning of the Company.
(f) On the basis of the written representations received from the
Directors as on 31st March, 2015 taken on record by the Board of
Directors, none of the Directors is disqualified as on 31st March, 2015
from being appointed as a Director in terms of Section 164 (2) of the
Act.
(g) With respect to the other matters to be included in the Auditor''s
Report in accordance with Rule 11 of the Companies (Audit and Auditors)
Rules, 2014, in our opinion and to the best of our information and
according to the explanations given to us:
i. The Company has disclosed the impact of pending litigations on its
financial position in its financial statements - Refer Note 37 to the
financial statements;
ii. The Company did not have any long-term contracts including
derivative contracts for which there were any material foreseeable
losses;
iii. There has been no delay in transferring amounts, required to be
transferred, to the Investor Education and Protection Fund by the
Company.
Referred to in paragraph 1 under the heading, "Report on Other legal
and Regulatory Requirements" of our report on even date:
(i) (a) The Company is maintaining proper records showing full
particulars, including quantitative details and situation of fixed
assets;
(b) As informed to us, the fixed assets have been physically verified
by the Management at reasonable intervals and the discrepancies noticed
during such physical verification were not material and the same have
been properly dealt with in the books of account.
(ii) (a) Physical verification of inventory has been conducted at
reasonable intervals by the Management. In our opinion, the frequency
of verification is reasonable. Stocks lying with third parties at the
year-end have been confirmed;
(b) 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) The Company is maintaining proper records of inventory and as
informed to us no material discrepancies were noticed on physical
verification.
(iii) The Company has not granted any loans, secured or unsecured to
companies, firms or other parties covered in the register maintained
under Section189 of the Act.
(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. During the course of audit, we have not observed any
continuing failure to correct major weaknesses in internal control
system.
(v) In our opinion and according to the information and explanations
given to us, the Company has not accepted any deposits and hence the
provisions of Sections 73 to 76 of the Act are not applicable to the
Company.
(vi) The Central Government has specified maintenance of cost records
under sub-section (1) of Section 148 of the Act, and we are of the
opinion that prima facie such accounts and records are 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) The Company is regular in depositing 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 or cess and any other statutory dues with the
appropriate authorities. According to information and explanation
given to us, no undisputed amounts payable in respect of statutory dues
were in arrears, as at 31st March, 2015 for a period of more than six
months from the date they became payable.
b) According to information and explanation given to us, there are
amounts of Excise Duty, Value Added Tax, Service Tax and Income Tax
which have not been deposited on account of dispute as listed below:
Sl. Name of the statute Nature of the dues Amount (Rs.)
No
1 The Central Excise Duty on pattern 342,068
Act,1944 development charges
2 The Central Excise Interest on refund 341,496
Act,1944
3 The Central Excise Cenvat Credit issues 1,117,174
Act,1944
4 The Central Excise Cenvat credit availed on 9,933,307
Act,1944 Steel
5 The Central Excise Cenvat Credit issues 467,910
Act,1944
6 The Central Excise Cenvat Credit issues 87,726
Act,1944
7 The Central Excise Cenvat Credit on 1,023,603
Act,1944 writeoffs
8 The Finance Act,1994 Cenvat Credit utilised for 14,856,255
Service Tax payment
9 The Finance Act,1994 Cenvat Credit issues 772,188
10 The Finance Act,1994 Penalty on Freight 2,992,835
Outward
11 The Finance Act,1994 Service Tax Credit on 20,734
Expenses
12 The Finance Act,1994 Cenvat Credit issues 161,633
13 The Finance Act,1994 Service Tax demand on 11,496,454
Interest
14 The Finance Act,1994 Service Tax demand on 1,887,734
Interest
15 The Customs Refund of customs duty 337,883
Act,1962
16 The Income Tax Act, Prior period Expenses 4,250,990
1961 disallowed
17 The Income Tax Act, Levy of Penalty 4,228,469
1961
18 The Income Tax Act, Royalty and Depreciation 94,873,362
1961 allowance
19 The Karnataka VAT Interest on Input tax 1,479,449
Act, 2003 credit on purchases
20 The Karnataka VAT Input tax credit on 52,730,656
Act, 2003 purchases
21 The Central Excise Valuation of excisable 1,876,214
Act,1944 goods
22 The Central Excise Refund of Interest 714,462
Act,1944
23 The Maharashtra VAT set off disallowed 183,941
VAT Act, 2002
Name of the Statute Forum where dispute is pending
The Central Excise Act,1944 CESTAT, Bangalore
The Central Excise Act,1944 Assistant Commissioner of Central
Excise, Bellary
The Central Excise Act,1944 Assistant Commissioner, Central
Excise, Bellary
The Central Excise Act,1944 CESTAT, Bangalore
The Central Excise Act,1944 Commissioner of Central Excise,
Belgaum
The Central Excise Act,1944 Commissioner of Central Excise
(Appeals), Mysore
The Central Excise Act,1944 Additional Commissioner, Central
Excise, Belgaum,
The Finance Act,1994 Commissioner of Central Excise,
Belgaum
The Finance Act,1994 Assistant Commissioner of Central
Excise, Bellary
The Finance Act,1994 CESTAT, Bangalore
The Finance Act,1994 Commissioner of Central Excise
(Appeals), Mysore
The Finance Act,1994 Assistant Commissioner of Central
Excise, Bellary
The Finance Act,1994 CESTAT, Bangalore
The Finance Act,1994 Commissioner of Central Excise,
Belgaum
The Customs Act 1962 Commissioner of Custom (Appeals),
Bangalore
The Income Tax Act, 1961 Hon''ble High Court Mumbai
The Income Tax Act, 1961 Commissioner of Income Tax
(Appeals), Pune
The Income Tax Act, 1961 Commissioner of Income Tax
(Appeals), Pune
The Karnataka VAT Act, 2003 The Karnataka Appellate Tribunal,
Bangalore
The Karnataka VAT Act, 2003 Local Vat Officer, Koppal
The Central Excise Act,1944 CESTAT, Mumbai
The Central Excise Act,1944 CESTAT, Mumbai
The Maharashtra VAT Act, 2002 Joint Commissioner of Sales Tax,
Kolhapur
(c) The amounts required to be transferred to investor education and
protection fund in accordance with the relevant provisions of the
Companies Act,1956 and rules made there under have been transferred to
such fund within time.
(viii) The Company does not have any accumulated losses at the end of
the financial year and has not incurred cash losses in the current
financial year and in the immediately preceding financial year;
(ix) In our opinion and according to the information and explanations
given to us, the Company has not defaulted in repayment of dues to its
bankers. The Company did not have any outstanding debentures or any
outstanding loans from financial institution during the year;
(x) As informed to us, the Company has not given any guarantee for
loans taken by others from bank or financial institutions;
(xi) In our opinion, the term loans were applied for the purpose for
which the loans were obtained;
(xii) According to information and explanation given to us, no fraud on
or by the Company has been noticed or reported during the course of our
audit.
For M/s P. G. Bhagwat
Chartered Accountants
Firm Registration No. 101118W
S.B. Pagad
Partner
Pune : 28th April, 2015 Membership No.206124
Mar 31, 2013
We have audited the accompanying financial statements of KIRLOSKAR
FERROUS INDUSTRIES LIMITED ("the Company"), which comprise the
Balance Sheet as at 31st March, 2013, and the Statement of Profit and
Loss and Cash Flow Statement for the year then ended, and a summary of
significant accounting policies and other explanatory information.
Management''s Responsibility for the Financial Statements
Management is responsible for the preparation of these financial
statements that give a true and fair view of the financial position,
financial performance and cash flows of the Company in accordance with
the Accounting Standards referred to in sub-section (3C) of Section 211
of the Companies Act, 1956 ("the Act"). This responsibility
includes the design, implementation and maintenance of internal control
relevant to the preparation and presentation of the financial
statements that give a true and fair view and are free from material
misstatement, whether due to fraud or error.
Auditor''s Responsibility
Our responsibility is to express an opinion on these financial
statements based on our audit. We conducted our audit in accordance
with the Standards on Auditing issued by the Institute of Chartered
Accountants of India. Those Standards require that we comply with
ethical requirements and plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free
from material misstatement. An audit involves performing procedures to
obtain audit evidence about the amounts and disclosures in the
financial statements. The procedures selected depend on the auditor''s
judgment, including the assessment of the risks of material
misstatement of the financial statements, whether due to fraud or
error. In making those risk assessments, the auditor considers internal
control relevant to the Company''s preparation and fair presentation of
the financial statements in order to design audit procedures that are
appropriate in the circumstances. An audit also includes evaluating the
appropriateness of accounting policies used and the reasonableness of
the accounting estimates made by management, as well as evaluating the
overall presentation of the financial statements. We believe that the
audit evidence we have obtained is sufficient and appropriate to
provide a basis for our audit opinion.
Opinion
In our opinion and to the best of our information and according to the
explanations given to us, the financial statements give the information
required by the Act in the manner so required and give a true and fair
view in conformity with the accounting principles generally accepted in
India:
(a) In the case of the Balance Sheet, of the state of affairs of the
Company as at 31st March, 2013;
(b) In the case of the Statement of Profit and Loss, of the profit for
the year ended on that date; and
(c) In the case of the Cash Flow Statement, of the cash flows for the
year ended on that date.
Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditor''s Report) Order, 2003 ("the
Order") issued by the Central Government of India in terms of
sub-section (4a) of Section 227 of the Act, we give in the Annexure a
statement on the matters specified in paragraphs 4 and 5 of the Order.
2. As required by Section 227(3) of the Act, we report that:
a. We have obtained all the information and explanations which to the
best of our knowledge and belief were necessary for the purpose of our
audit;
b. In our opinion proper books of account as required by law have been
kept by the Company so far as appears from our examination of those
books;
c. The Balance Sheet, Statement of Profit and Loss, and Cash Flow
Statement dealt with by this Report are in agreement with the books of
account;
d. In our opinion, the Balance Sheet, Statement of Profit and Loss,
and Cash Flow Statement comply with the Accounting Standards referred
to in sub-section (3C) of Section 211 of the Companies Act, 1956;
e. On the basis of written representations received from the Directors
as on 31st March, 2013, and taken on record by the Board of Directors,
none of the Directors is disqualified as on 31st March, 2013, from
being appointed as a Director in terms of clause (g) of sub-section (1)
of Section 274 of the Companies Act, 1956;
f. Since the Central Government has not issued any notification as to
the rate at which the cess is to be paid under Section 441A of the
Companies Act, 1956 nor has it issued any Rules under the said Section,
prescribing the manner in which such cess is to be paid, no cess is due
and payable by the Company.
ANNEXURE TO THE AUDITORS'' REPORT
Referred to in paragraph 1 of Report on Other Legal and Regulatory
Requirements of our report of even date
(i) (a) The Company has maintained proper records showing full
particulars including quantitative details and situation of fixed
assets.
(b) As informed to us, the fixed assets have been physically verified
by the Management at reasonable intervals. In our opinion, this
periodicity of physical verification is reasonable having regard to the
size of the Company and the nature of its assets. The discrepancies
noticed on such verification were not material and have been properly
dealt with in the Books of Account.
(c) Fixed assets disposed off during the year were not substantial and
therefore do not affect the going concern assumption.
(ii) (a) The inventory was physically verified during the year by the
Management. In our opinion, the frequency of verification is
reasonable. Stocks lying with third parties at the year-end have been
confirmed.
(b) 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) The Company is maintaining proper records of inventory. The
discrepancies noticed on verification between the physical stocks and
the book records were not material.
(iii) The Company has neither granted nor taken any loans, secured or
unsecured, to/ from companies, firms or other parties covered in the
register maintained under Section 301 of the Act. Accordingly, clauses
4(iii) (a) to (g) of the Order are not applicable to the Company and
hence not commented upon.
(iv) In our opinion and according to the information and explanations
given to us, there were adequate internal control system commensurate
with the size of the Company and the nature of its business with regard
to purchase of inventory and fixed assets and for the sale of goods and
services. During the course of audit, we have not observed any
continuing failure to correct major weaknesses in internal control
system.
(v) (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 Rs. five lakhs in respect of any party
during the period have been made at prices, which are reasonable having
regard to the prevailing market prices at the relevant time.
(vi) The Company has not accepted deposits from public and hence the
provisions of Clause (vi) are not applicable.
(vii) In our opinion, the Company has an internal audit system
commensurate with the size and 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) The Company has generally been regular in depositing
undisputed dues, including Provident Fund, Investor Education and
Protection Fund, Employees'' State Insurance, Income Tax, Value Added
Tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty, Cess and other
material statutory dues, applicable to it with the appropriate
authorities.
According to information and explanation given to us, no undisputed
amounts payable in respect of statutory dues were in arrears, as at
31st March, 2013 for a period of more than six months from the date
they became payable.
(b) According to information and explanations given to us, there are
amounts of Excise Duty, Value Added Tax, Service Tax , Electricity Tax
and Income Tax which have not been deposited on account of dispute as
listed below:
Name of the
statute Nature of
the dues Amount Rs. Forum where dispute
is pending
The Central
Excise Interest on
refund 341,496 Assistant Commissioner of
Act,1944 Central Excise, Belgaum
The Central
Excise Duty on pattern 342,068 CESTAT, Bangalore
Act,1944 development
charges
The Central
Excise Cenvat Credit
utilised for 7,585,734 Commissioner of
Central Excise,
Act,1944 payment of
Service Tax Belgaum
The Central
Excise Interest /
Penalty on 2,827,237 CESTAT, Mumbai
Act,1944 undervaluation
The Central
Excise Refund of
Cenvat Credit 714,462 The Honourable High
Court,
Act,1944 Mumbai
The Central
Excise Cenvat Credit
availed on 668,440 Assistant Commissioner,
Act,1944 Electrodes Central Excise, Bellary
The Central
Excise Cenvat Credit
availed on 362,821 Assistant Commissioner,
Act,1944 Structural Steel Central Excise, Bellary
The Finance
Act, Cenvat Credit
on input 772,188 Deputy Commissioner,
1994 Services Central Excise, Bellary
The Finance
Act, Cenvat Credit
on outward 29,92,835 Commissioner of Central
Excise,
1994 freight Belgaum
The Karnataka Electricity
Tax on captive 604,782 The Honourable High
Court of
Electricity
Act generation and Karnataka
Consumption
Karnataka VAT VAT disallowance 53,50,856 Assistant Commissioner of
Act, 2003 Commercial Taxes,Audit-1,
Davangere.
Income tax Income tax and
interest 41,726,230 Deputy Commissioner of
Income
Act,1961 demand Tax, Pune
(x) The Company does not have any accumulated losses at the end of the
financial year and has not incurred cash losses in the current
financial year and in the immediately preceding financial year.
(xi) In our opinion and according to the information and explanations
given to us, the Company has not defaulted in repayment of dues to its
bankers. The Company did not have any outstanding debentures or any
outstanding loans from financial institution during the year.
(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.
(xiii) In our opinion and according to the information and explanations
given to us, the Company is not a chit fund or a nidhi/ mutual benefit
fund/ society.
(xiv) According to information and explanations given to us, the
Company is not dealing in or trading in shares, securities, debentures.
However, the Company had made investments in mutual funds for which
proper records have been maintained of the transactions and contracts
and timely entries have been made therein.
(xv) As informed to us, the Company has not given guarantees for loans
taken by others from banks or financial institutions.
(xvi) In our opinion, the term loans have been applied for the purpose
for which they were raised.
(xvii) According to the information and explanations given to us and on
an overall examination of the balance sheet and cash flow statement of
the Company, we report that no funds raised on short-term basis have
been used for long-term investment.
(xviii) According to information and explanation given to us, the
Company has not made any preferential allotment of any shares to
parties and companies covered under Section 301 of the Companies Act,
1956.
(xix) Since the Company has not issued any debentures during the year,
para 4(xix) of the order regarding creation of security is not
applicable.
(xx) The Company has not made any public issue to raise money.
(xxi) According to information and explanation given to us, no fraud on
or by the Company has been noticed or reported during the course of our
audit.
For M/s P. G. Bhagwat
Chartered Accountants
Firm Registration No. 101118W
S.B. Pagad
Partner
Pune : 29th April, 2013 Membership No.206124
Mar 31, 2012
1. We have audited the attached Balance Sheet of KIRLOSKAR FERROUS
INDUSTRIES LIMITED ('the Company') as at 31st March, 2012 and the
related Statement of Profit and Loss and also the Cash Flow Statement
of the Company for the year ended on that date, annexed thereto. These
financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these
financial statements based on our audit.
2. We conducted our audit in accordance with auditing standards
generally accepted in India. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made
by 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 (Auditor's Report) Order, 2003 [as
amended by 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 Companies Act, 1956 ('the Act'), we enclose in
the Annexure a statement on the matters specified in paragraph 4 and 5
of the said Order.
4. Further to our comments in the Annexure referred to in paragraph 3
above, we report that:
(i) 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;
(ii) 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;
(iii) 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;
(iv) 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 of
the Companies Act, 1956;
(v) On the basis of the written representations received from the
Directors as on 31st March, 2012, and taken on record by the Board of
Directors, we report that none of the Directors is disqualified as on
31st March, 2012 from being appointed as a Director in terms of clause
(g) of sub-section (1) of Section 274 of the Companies Act, 1956;and
(vi) In our opinion and to the best of our information and according to
the explanations given to us, the said accounts, read together with the
notes thereon, give the information required by the Companies Act, 1956
in the manner so required and give a true and fair view in conformity
with the accounting principles generally accepted in India:
(a) In the case of the Balance Sheet, of the state of affairs of the
Company as at 31st March, 2012;
(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.
ANNEXURE TO THE AUDITORS' REPORT
STATEMENT REFERRED TO IN PARAGRAPH 3 OF OUR REPORT OF EVEN DATE TO THE
MEMBERS OF KIRLOSKAR FERROUS INDUSTRIES LIMITED ON THE FINANCIAL
STATEMENTS FOR THE YEAR ENDED 31st MARCH, 2012.
(i) (a) The Company has maintained proper records showing full
particulars including quantitative details and situation of fixed assets.
(b) As informed to us, the fixed assets have been physically verified
by the management at reasonable intervals. In our opinion, this
periodicity of physical verification is reasonable having regard to the
size of the Company and the nature of its assets. The discrepancies
noticed on such verification were not material and have been properly
dealt with in the Books of Account.
(c) Fixed assets disposed off during the year were not substantial and
therefore do not affect the going concern assumption.
(ii) (a) The inventory was physically verified during the year by the
management. In our opinion, the
frequency of verification is reasonable. Stocks lying with third
parties at the year-end have been confirmed.
(b) 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) The Company is maintaining proper records of inventory. The
discrepancies noticed on verification between the physical stocks and
the book records were not material.
(iii) The Company has neither granted nor taken any loans, secured or
unsecured, to/ from companies, firms or other parties covered in the
register maintained under Section 301 of the Act. Consequently, clauses
(iii)(b), (iii)(c), (iii)(d), (iii)(f) and (iii)(g) of paragraph 4 of
the Order are not applicable.
(iv) In our opinion and according to the information and explanations
given to us, there were adequate internal control system commensurate
with the size of the Company and the nature of its business with regard
to purchase of inventory and fixed assets and for the sale of goods and
services. During the course of audit, we have not observed any
continuing failure to correct major weaknesses in internal control
system.
(v) (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 Rs. five lakhs in respect of any party during
the period have been made at prices which are reasonable having regard
to the prevailing market prices at the relevant time.
(vi) The Company has not accepted deposits from public and hence the
provisions of Clause (vi) are not applicable.
(vii) In our opinion, the Company has an internal audit system
commensurate with the size and 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) The Company has generally been regular in depositing
undisputed dues, including Provident Fund, Investor Education and
Protection Fund, Employees' State Insurance, Income Tax, Value Added
Tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty, Cess and other
material statutory dues, applicable to it with the appropriate
authorities.
According to information and explanation given to us, no undisputed
amounts payable in respect of statutory dues were in arrears, as at
31st March, 2012 for a period of more than six months from the date
they became payable.
(b) According to information and explanation given to us, there are
amounts of Excise Duty, Value Added Tax, Service Tax , Electricity Tax
and Income Tax which have not been deposited on account of dispute as
listed below:
Name of the
statute Nature of
the dues Amount Forum where dispute is
pending
(Rs)
The Central
Excise Interest on refund 341,496 Assistant Commissioner
of
Act, 1944 Central Excise, Belgaum
The Central
Excise Duty on pattern 342,068 CESTAT, Bangalore
Act, 1944 development charges
The Central
Excise Cenvat credit
utilized for 7,585,734 Commissioner of
Central Excise,
Act, 1944 payment of
Service Tax Belgaum
The Central
Excise Interest/
Penalty on 3,127,237 CESTAT, Mumbai
Act, 1944 valuation
The Central
Excise Refund of Cenvat 714,462 The Honorable High
Court of
Act, 1944 Mumbai
The Central
Excise Cenvat Credit
availed on 598,069 Assistant Commissioner,
Act, 1944 Electrodes Central Excise, Belgaum
The Central
Excise Cenvat Credit
availed on 9,933,307 Commissioner (Appeals),
Act, 1944 Structural
Steels Central Excise,
Mangalore
The Finance Cenvat Credit
on input 772,188 Deputy Commissioner,
Act, 1994 Services Central Excise, Bellary
The Finance Cenvat Credit on 32,990,
072 Commissioner of
Central Excise,
Act, 1994 outward freight Belgaum
The Karnataka Electricity Tax
on captive 604,782 Honorable High Court
Electricity Act, generation and of Karnataka
Consumption
Income tax Minimum
Alternate Tax 1,27,859 Income Tax Appellate
Tribunal,
Act, 1961 Pune
Income tax Minimum
Alternate Tax 5,181,762 Commissioner of
Income Tax/
Act, 1961 Income Tax Appellate
Tribunal,
Pune
Income tax Minimum
Alternate Tax 3,266,806 Commissioner of
Income Tax/
Act, 1961 Income Tax Appellate
Tribunal,
Pune
Income tax Minimum
Alternate Tax 892,820 Assistant Commissioner of
Act, 1961 Income Tax, Pune
(x) The Company does not have any accumulated losses at the end of the
financial year and has not incurred cash losses in the current
financial year and in the immediately preceding financial year.
(xi) In our opinion and according to the information and explanations
given to us, the Company has not defaulted in repayment of dues to its
bankers. The Company did not have any outstanding debentures or any
outstanding loans from financial institution during the year.
(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.
(xiii) In our opinion and according to the information and explanations
given to us, the Company is not a chit fund ora nidhi/ mutual benefit
fund/ society.
(xiv) According to information and explanation given to us, the Company
is not dealing in or trading in shares, securities, debentures.
However, the Company had made investments in mutual funds for which
proper records have been maintained of the transactions and contracts
and timely entries have been made therein.
(xv) As informed to us, the Company has not given guarantees for loans
taken by others from banks or financial institutions.
(xvi) In our opinion, the term loans have been applied for the purpose
for which they were raised.
(xvii) According to information and explanation given to us, we report
that no funds raised on short-term basis have been used for long-term
investment.
(xviii) According to information and explanation given to us, the
Company has not made any preferential allotment of any shares to
parties and companies covered under Section 301 of the Companies Act,
1956.
(xix) Since the Company has not issued any debentures during the year,
para 4(xix) of the order regarding creation of security is not
applicable.
(xx) The Company has not made any public issue to raise money.
(xxi) According to information and explanation given to us, no fraud on
or by the Company has been noticed or reported during the course of our
audit.
For M/s P. G. Bhagwat
Chartered Accountants
Firm Registration No.101118W
S.B.Pagad
Partner
Pune: 27th April, 2012 Membership No.206124
Mar 31, 2011
1. We have audited the attached Balance Sheet of KIRLOSKAR FERROUS
INDUSTRIES LIMITED (the Company) as at 31st March, 2011 and the
related Profit and Loss Account and also the Cash Flow Statement of the
Company for the year ended on that date, annexed thereto. These
financial statements are the responsibility of the Companys
management. Our responsibility is to express an opinion on these
financial statements based on our audit.
2. We conducted our audit in accordance with auditing standards
generally accepted in India. Those Standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made
by 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 Companies (Auditors Report) (Amendment) Order, 2004] issued
by the Central Government of India in terms of sub-section (4A) of
Section 227 of the Companies Act, 1956 (Ãthe ActÃ), we enclose in the
Annexure a statement on the matters specified in paragraph 4 and 5 of
the said Order.
4. Further to our comments in the Annexure referred to in paragraph 3
above, we report that:
(i) 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;
(ii) 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;
(iii) The Balance Sheet, Profit and Loss Account and Cash Flow
Statement dealt with by this report are in agreement with the Books of
Account;
(iv) 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 Companies Act, 1956;
(v) On the basis of the written representations received from the
Directors as on 31st March, 2011, and taken on record by the Board of
Directors, we report that none of the Directors is disqualified as on
31st March, 2011 from being appointed as a Director in terms of clause
(g) of sub-section (1) of Section 274 of the Companies Act, 1956; and
(vi) In our opinion and to the best of our information and according to
the explanations given to us, the said accounts, read together with the
notes thereon, give the information required by the Companies Act, 1956
in the manner so required and give a true and fair view in conformity
with the accounting principles generally accepted in India:
(a) In the case of the Balance Sheet, of the state of affairs of the
Company as at 31st March, 2011:
(b) In the case of the Profit and Loss Account 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.
ANNEXURE TO THE AUDITORS REPORT
STATEMENT REFERRED TO IN PARAGRAPH 3 OF OUR REPORT OF EVEN DATE TO THE
MEMBERS OF KIRLOSKAR FERROUS INDUSTRIES LIMITED ON THE FINANCIAL
STATEMENTS FOR THE YEAR ENDED 31st MARCH, 2011.
(i) (a) The Company has maintained proper records showing full
particulars including quantitative details and situation of fixed
assets.
(b) As informed to us, the fixed assets have been physically verified
by the Management at reasonable intervals. In our opinion, this
periodicity of physical verification is reasonable having regard to the
size of the Company and the nature of its assets. The discrepancies
noticed on such verification were not material and have been properly
dealt with in the Books of Account.
(c) Fixed assets disposed off during the year were not substantial and
therefore do not affect the going concern assumption.
(ii) (a) The inventory was physically verified during the year by the
Management. In our opinion, the frequency of verification is
reasonable. Stocks lying with third parties at the year-end have been
confirmed.
(b) 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) The Company is maintaining proper records of inventory. The
discrepancies noticed on verification between the physical stocks and
the book records were not material.
(iii) The Company has neither granted nor taken any loans, secured or
unsecured, to/ from companies, firms or other parties covered in the
register maintained under Section 301 of the Act. Consequently clauses
(iii)(b), (iii)(c), (iii)(d), (iii)(f) and (iii)(g) of paragraph 4 of
the Order are not applicable.
(iv) In our opinion and according to the information and explanations
given to us, there were adequate internal control system commensurate
with the size of the Company and the nature of its business with regard
to purchase of inventory and fixed assets and for the sale of goods and
services. During the course of audit, we have not observed any
continuing failure to correct major weaknesses in internal control
system.
(v) (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 Rs. five lakhs in respect of any party
during the period have been made at prices which are reasonable having
regard to the prevailing market prices at the relevant time.
(vi) The Company has not accepted deposits from public and hence the
provisions of Clause (vi) are not applicable.
(vii) In our opinion, the Company has an internal audit system
commensurate with the size and 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) The Company has generally been regular in depositing
undisputed dues, including Provident Fund, Investor Education and
Protection Fund, Employees State Insurance, Income Tax, Value Added
Tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty, Cess and other
material statutory dues, applicable to it with the appropriate
authorities.
According to information and explanation given to us, no undisputed
amounts payable in respect of statutory dues were in arrears, as at
31st March, 2011 for a period of more than six months from the date
they became payable.
(b) According to information and explanation given to us, there are
amounts of Excise Duty, Value Added Tax, Service Tax , Electricity Tax
and Income Tax which have not been deposited on account of dispute as
listed below:
Name of the statute Nature of the dues Amount
(Rs.)
The Central Excise Interest on refund 341,496
Act,1944
The Central Excise Duty on pattern development 342,06
Act,1944
The Central Excise Cenvat credit utilised for 7,585,734
Act,1944 payment of Service Tax
The Central Excise Penalty on excise duty 100,000
Act,1944
The Central Excise Interest /Penalty on 3,127,237
Act,1944 undervaluation
The Central Excise Refund of Cenvat 714,462
Act,1944
The Central Excise Cenvat Credit availed on 598,069
Act,1944 Electrodes
The Central Excise Cenvat Credit availed on 9,933,307
Act,1944 Structural Steels
The Central Excise Cenvat Credit on input 438,687
Act,1944 services
The Karnataka Interest on refund 211,311
VAT Act,2003
The Karnataka Electricity Tax on captive 604,782
Electricity Act, generation & Consumption
Income tax Act, Minimum Alternate Tax 5,181,762
1961
Income tax Act, Income Tax 8,057,910
1961
Name of the statute Forum where dispute is pending
The Central Excise Assistant Commissioner of Central Excise
Act, 1944
The Central Excise CESTAT, Bangalore
Act, 1944
The Central Excise Commissioner of Central Excise
Act, 1944
The Central Excise CESTAT,Bangalore
Act, 1944
The Central Excise CESTAT,Mumbai
Act, 1944
The Central Excise The Honourable High Court of Mumbai
Act, 1944
The Central Excise Assistant Commissioner, Central Excise
Act, 1944
The Central Excise Joint /Asst. Commissioner,
Act, 1944 Central Excise, Belgaum
The Central Excise Deputy Commissioner, Central Excise, Bellary
Act, 1944
The Karnataka VAT Joint Commissioner of Commercial Taxes,
Act, 2003 Davangere
The Karnataka Honble High Court of Karnataka
Electricity Act,
Income tax Act, Income Tax Appellate Tribunal, Pune
1961
Income tax Act, Income Tax Appellate Tribunal, Pune
1961
(x) The Company does not have any accumulated losses at the end of the
financial year and has not incurred cash losses in the current
financial year and in the immediately preceding financial year.
(xi) In our opinion and according to the information and explanations
given to us, the Company has not defaulted in repayment of dues to its
bankers. The Company did not have any outstanding debentures or any
outstanding loans from financial institution during the year.
(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.
(xiii) In our opinion and according to the information and explanations
given to us, the Company is not a chit fund or a nidhi/ mutual benefit
fund/ society.
(xiv) According to information and explanation given to us, the Company
is not dealing in or trading in shares, securities, debentures.
However, the Company had made investments in mutual funds for which
proper records have been maintained of the transactions and contracts
and timely entries have been made therein.
(xv) As informed to us, the Company has not given guarantees for loans
taken by others from banks or financial institutions.
(xvi) In our opinion, the term loans have been applied for the purpose
for which they were raised.
(xvii) According to information and explanation given to us, we report
that no funds raised on short-term basis have been used for long-term
investment.
(xviii) According to information and explanation given to us, the
Company has not made any preferential allotment of any shares to
parties and companies covered under Section 301 of the Companies Act,
1956.
(xix) Since the Company has not issued any debentures during the year,
para 4(xix) of the order regarding creation of security is not
applicable.
(xx) The Company has not made any public issue to raise money.
(xxi) According to information and explanation given to us, no fraud on
or by the Company has been noticed or reported during the course of our
audit.
For M/s P. G. BHAGWAT
Chartered Accountants
Firm Registration No. 101118W
S.B.Pagad
Partner
Membership No. 206124
Pune : 26th April, 2011
Mar 31, 2010
1. We have audited the attached Balance Sheet of KIRLOSKAR FERROUS
INDUSTRIES LIMITED (the Company) as at 31st March, 2010 and the
related Profit and Loss Account and also the Cash Flow Statement of the
Company for the year ended on that date, annexed thereto. These
financial statements are the responsibility of the Companys
management. Our responsibility is to express an opinion on these
financial statements based on our audit.
2. We conducted our audit in accordance with auditing standards
generally accepted in India. Those Standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made
by 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 (Auditors Report) Order, 2003 [as
amended by Companies (Auditors Report) (Amendment) Order, 2004] issued
by the Central Government of India in terms of sub-section (4A) of
Section 227 of the Companies Act, 1956, we enclose in the Annexure a
statement on the matters specified in paragraph 4 and 5 of the said
Order.
4. Further to our comments in the Annexure referred to in paragraph 3
above, we report that:
(i) We have obtained all the information and explanations which to the
best of our knowledge and beliefwerenecessaryforthepurposeofouraudit;
(ii) 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;
(iii) The Balance Sheet, Profit and Loss Account and Cash Flow
Statement dealt with by this report are in agreement with the Books of
Account;
(iv) 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 Companies Act, 1956;
(v) On the basis of the written representations received from the
Directors as on 31st March, 2010, and taken on record by the Board of
Directors, we report that none of the Directors is disqualified as on
31st March, 2010 from being appointed as a Director in terms of clause
(g) of sub-section (1) of Section 274 of the Companies Act, 1956;and
(vi) In our opinion and to the best of our information and according to
the explanations given to us, the said accounts, read together with the
notes thereon, give the information required by the Companies Act, 1956
in the manner so required and give a true and fair view in conformity
with the accounting principles generally accepted in India:
(a) In the case of the Balance Sheet, of the state of affairs of the
Company as at 31 st March, 2010;
(b) In the case of the Profit and Loss Account 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.
ANNEXURE TO THE AUDITORSREPORT STATEMENT REFERRED TO IN PARAGRAPH 3 OF
OUR REPORT OF EVEN DATE TO THE MEMBERS OF KIRLOSKAR FERROUS INDUSTRIES
LIMITED ON THE FINANCIAL STATEMENTS FOR THE YEAR ENDED31st MARCH,2010.
(i) (a) The Company has maintained proper records showing full
particulars including quantitative details and situation of fixed
assets.
(b) As informed to us, the fixed assets have been physically verified
by the Management at reasonable intervals. In our opinion, this
periodicity of physical verification is reasonable having regard to the
size of the Company and the nature of its assets. The discrepancies
noticed on such verification were not material and have been properly
dealt with in the Books of Account.
(c) Fixed assets disposed off during the year were not substantial and
therefore do not affect the going concern assumption.
(ii) (a) The inventory was physically verified during the year by the
Management. In our opinion, the frequency of verification is
reasonable. Stocks lying with third parties at the year-end have been
confirmed.
(b) 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) The Company is maintaining proper records of inventory. The
discrepancies noticed on verification between the physical stocks and
the book records were not material.
(iii) The Company has neither granted nor taken any loans, secured or
unsecured, to/ from companies, firms or other parties covered in the
register maintained under Section 301 of the Companies Act, 1956.
Consequently, clauses (iii)(b), (iii)(c), (iii)(d), (iii)(f) and
(iii)(g) of paragraph 4 of the Order are not applicable.
(iv) In our opinion and according to the information and explanations
given to us, there were adequate internal control system commensurate
with the size of the Company and the nature of its business with regard
to purchase of inventory and fixed assets and for the sale of goods and
services. During the course of audit, we have not observed any
continuing failure to correct major weaknesses in internal control
system.
(v) (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 Companies Act, 1956 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 Rs. five lakhs in respect of any party
during the period have been made at prices which are reasonable having
regard to the prevailing market prices at the relevant time.
(vi) The Company has not accepted deposits from public and hence the
provisions of Clause vi are not applicable.
(vii) In our opinion, the Company has an internal audit system
commensurate with the size and 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
Companies Act, 1956 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) The Company is regular in depositing with appropriate
authorities undisputed statutory dues including provident fund,
investor education and protection fund, income tax, sales tax, wealth
tax, service tax, custom duty, excise duty, cess and other material
statutory dues applicable to it. As informed to us, Employees State
Insurance Act is not applicable to the Company.
According to information and explanation given to us, no undisputed
amounts payable in respect of statutory dues were in arrears, as at
31st March, 2010 for a period of more than six months from the date
they became payable.
(b) According to information and explanation given to us, there are
amounts of excise duty and sales tax, which have not been deposited on
account of dispute as listed below:
Name of the statute Nature of the dues Amount
(Rs.)
The Central Excise Interest on refund 341,496
Act, 1944
The Central Excise Duty on pattern development 342,068
Act, 1944 charges
The Central Excise Cenvat Credit utilised for 7,585,734
Act, 1944 payment of Service Tax
The Central Excise Penalty on excise duty 100,000
Act, 1944
The Central Excise Interest /Penalty on 3,127,237
Act, 1944 undervaluation
The Central Excise Cenvat Credit availed on 494,497
Act, 1944 Electrodes
The Central Excise Cenvat Credit availed on 9,839,223
Act, 1944 Structural Steels
The Karnataka VAT Interest on refund 211,311
Act,2003
The Karnataka VAT VAT - Difference in Tax 1,415,672
Act,2003
The Karnataka Electricity Tax on captive 604,782
Electricity Act, generation & consumption
Income Tax Act,1961 Minimum Alternate Tax 3,456,134
Income Tax Act,1961 Minimum Alternate Tax 7,332,841
Income Tax Act, 1961 Minimum Alternate Tax 6,205,167
Name of the Statue Forum where dispute is pending
The Central Excise
Act, 1944 Assistant Commissioner of
Central Excise
The Central Excise
Act, 1944 CESTAT, Bangalore
The Central Excise
Act, 1944 Commissioner of Central Excise
The Central Excise
Act, 1944 CESTAT, Bangalore
The Central Excise
Act, 1944 CESTAT, Mumbai
The Central Excise
Act, 1944 Assistant Commissioner, Central
Excise
The Central Excise
Act, 1944 Joint /Asst. Commissioner, Central
Excise, Belgaum
The Karnataka VAT
Act,2003 Joint Commissioner of Commerical
Taxes, Davangere
The Karnataka VAT
Act,2003 Deputy Commissioner of
Commercial Taxes, Davangere
The Karnataka
Electricity Act, Honble High Court of Karnataka
Income Tax Act,1961 Income Tax Appl. Tribunal, Pune.
Income Tax Act,1961 Commissioner, IT , Appeals, Pune
Income Tax Act, 1961 Commissioner, IT , Appeals, Pune
(x) The Company does not have any accumulated losses at the end of the
financial year and has not incurred cash losses in the current
financial year and in the immediately preceding financial year.
(xi) In our opinion and according to the information and explanations
given to us, the Company has not defaulted in repayment of dues to its
bankers. The Company did not have any outstanding debentures or any
outstanding loans from financial institution during the year.
(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.
(xiii) In our opinion and according to the information and explanations
given to us, the Company is not a chit fund or a nidhi/mutual benefit
fund/society.
(xiv) According to information and explanation given to us, the Company
is not dealing in or trading in shares, securities, debentures.
However, the Company had made investments in mutual funds for which
proper records have been maintained of the transactions and contracts
and timely entries have been made therein.
(xv) As informed to us, the Company has not given guarantees for loans
taken by others from banks or financial institutions.
(xvi) In our opinion, the term loans have been applied for the purpose
for which they were raised.
(xvii) According to information and explanation given to us, we report
that no funds raised on short-term basis have been used for long-term
investment.
(xviii) According to information and explanation given to us, the
Company has not made any preferential allotment of any shares to
parties and companies covered under Section 301 of the Companies Act,
1956.
(xix) Since the Company has not issued any debentures during the year,
para 4(xix) of the order regarding creation of security is not
applicable.
(xx) The Company has not made any public issue to raise money.
(xxi) According to information and explanation given to us, no fraud on
or by the Company has been noticed or reported during the course of our
audit.
For M/s P. G. B HAG WAT
Chartered Accountants
Firm Registration No. 101118W
S.B.Pagad
Partner
Pune : 29th April, 2010 Membership No. 206124