Home  »  Company  »  Reliance Def.& Eng.  »  Quotes  »  Auditor Report
Enter the first few characters of Company and click 'Go'

Auditor Report of Reliance Defence and Engineering Ltd.

Mar 31, 2016

We have audited the accompanying standalone financial statements of RELIANCE DEFENCE AND ENGINEERING LIMITED (Formerly known as Pipavav Defence and Offshore Engineering Company Limited) ("the Company"), which comprise the Balance sheet as at 31st March, 2016, the Statement of Profit and Loss and the Cash Flow Statement for the year then ended and a summary of significant accounting policies and other explanatory information.

Management''s Responsibility for the Standalone Financial Statements

The Company''s Board of Directors is responsible for the matters stated in Section 1 34(5) of the Companies act, 201 3 ("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 and cash flows of the Company in accordance with the Accounting Principles Generally Accepted in India (Indian GAAPs), including Indian Accounting Standards (''Ind AS'') prescribed under Section 133 of the Companies Act, 2013, as applicable.

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 standalone financial statements based on our audit.

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

We conducted our audit 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 misstatements.

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 a true and fair view in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by the Company''s directors, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the standalone financial statements.

Opinion

In our opinion and to the best of our information and according to the explanations given to us, the aforesaid standalone financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India, of the state of affairs of the Company as at 31st March, 2016 and its loss and its cash flows for the year ended on that date.

Emphasis of Matters

We draw attention to the:

a. note no. 29.1 regarding managerial remuneration paid / payable to a Executive Director, which is subject to the approval of the Central Government.

b. note no. 48 regarding voluntary early adoption of ''Ind AS'' by the company and its consequential impacts on the Other Equity (Reserve & Surplus) as well as restatement/ rework of corresponding figures of the previous year and presentations of financial statements as per Schedule III of the Companies Act 2013 as notified vide notification No. G.S.R. 404 (E) dated 6th April, 2016 by the Ministry of Corporate Affairs.

Our opinion is not modified in respect of these matters. Report on Other Legal and Regulatory Requirements

1. 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 standalone financial statements comply with the Ind AS prescribed under Section 133 of the Act, as applicable.

e. On the basis of the written representations received from the directors as on 31st March, 2016 and 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 A".

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 as referred to in Note No. 33 to the standalone financial statements;

ii. The Company has made provisions, as required under the applicable law or Ind AS, for material foreseeable losses, if any, on long term contracts including derivative contracts; and

iii. There are no amounts which are 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 ("CARO 2016") 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 CARO 2016.

i. In respect of its fixed assets:

a. The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets on the basis of available information.

b. As explained to us, the Company has physically verified certain assets, in accordance with a phased program of verification, which in our opinion is reasonable, having regard to the size of the Company and the nature of its assets. No material discrepancies were noticed on such physical verification as compared with the available records.

c. According to the information and explanations given to us and on the basis of our examination of the records of the Company, the Company doesn''t have any freehold immovable properties. As informed to us, in respect of leasehold immovable properties the original title deeds have been deposited with the lenders, we have been produced the photocopy of the title deeds of these leasehold immovable properties and based on such documents, the title deeds are held in the name of the Company.

ii. As explained to us, inventories have been physically verified during the year by the management and in our opinion the frequency of verification is reasonable. Discrepancies noticed on physical verification of the inventories between the physical inventories and book records were not material, having regard to the size of the operations of the Company and the same have been properly dealt with.

iii. In respect of loans, secured or unsecured, granted by the company to companies, firms, Limited liability partnerships or other parties covered in the register maintained under section 189 of the Act:

a. The company has granted unsecured loans to wholly owned subsidiary companies, and in our opinion, the rate of interest and other terms and conditions on which the loans had been granted are not, prima facie, prejudicial to the interest of the Company.

b. As per the information and explanations given to us, the above loans are repayable on demand along with the interest accrued thereon. The repayment / receipts, if any, demanded have been received.

c. As the above loans are repayable on demand, the question of overdue amount does not arise.

iv. In our opinion and according to the information and explanations given to us, the Company has complied with the provisions of section 185 and 186 of the Act, in respect of grant of loans, making investments and providing guarantees and securities.

v. According to the information and explanations given to us, the Company has not accepted any deposits from the public. Therefore, the provisions of paragraph 3 (v) of the CARO 2016 are not applicable to the Company.

vi. According to the information and explanations given to us, the Central Government has not prescribed the cost records to be maintained under sub-Section (1) of Section 148 of the Act in respect of activities carried on by the Company. Therefore the provisions of paragraph 3(vi) of the CARO 2016 are not applicable to the Company.

vii. According to the information and explanations given to us in respect of statutory dues:

a. During the year delays have been noticed in depositing undisputed statutory dues, including provident fund, employees'' state insurance, income tax, sales-tax, service tax, duty of customs, duty of excise, value added tax, cess and any other statutory dues, as applicable, with the appropriate authorities. According to the information and explanations given to us, no undisputed amounts payable in respect of such statutory dues were outstanding as at 31st March, 2016 for a period of more than six months from the date they became payable except in respect of TDS and Works Contract Tax aggregating to Rs.1,696.35 Lacs as detailed below, which have since been paid.

Name of Nature of the Period to which Amounts the Statutes Dues it relates (Rs. in Lacs)

Income Tax Tax Deducted April 2015 to 229.30 Act,1961 at source August 2015

MVAT Act Works December 1,467.05 Contract Tax 2014

Total 1,696.35

b. Details of dues of Income tax, Duty of Excise and Value added tax aggregating to Rs.2,1 73.26 Lacs that have not been deposited on account of disputed matters pending before appropriate authorities are as under:

Name of the Statutes Nature of the Dues Period to which it relates

Income Tax Act,1961 Income Tax 2007-08

2004-05

2007-08 to 2014-15

MVAT, 2002 VAT 2006-07 to 2011-12

CENVAT Credit Central Excise 2010-11 to 2014-15 Rules,2004 Penalty

Name of the Statutes Amounts Forum where the dispute is (Rs. in Lacs) (*) pending

Income Tax Act,1961 942.17 Income Tax Appellate Tribunal

30.16 High Court

18.57 ITO (TDS)

MVAT, 2002 146.36 Assistance Commissioner of Sales Tax

CENVAT Credit Rules,2004 1,036.00 Commissioner of Central Excise

Total 2,173.26

(*) Net of amount deposited under protest

viii. Based on our audit procedures and information and explanations given by the management, and considering the Corporate Debt Restructuring (CDR) scheme, we are of the opinion that as on 31st March, 2016 the Company has defaulted in repayment of loans to banks and financial institutions aggregating to Rs.7,869.07 Lacs. Lender wise details of such default is as under:

(Rs. in Lacs)

Sr. Bank / Financial Amount of Period of default No Institution default as at the balance sheet date

1 HUDCO Ltd 6,263.00 Above 100 days

2 India Infrastructure 902.13 Below 100 days Financial Ltd ECB

3 Bank of India 182.95 Below 100 days

4 United Bank of India 131.92 Below 100 days

5 Union Bank of India 92.07 Below 100 days

6 Oriental Bank of 90.26 Below 100 days Commerce

7 Dena Bank 70.49 Below 100 days

8 Vijaya Bank 56.28 Below 100 days

9 State Bank of Patiala 28.79 Below 100 days

10 Central Bank of India 24.99 Below 100 days

11 Punjab National Bank 21.22 Below 100 days

12 State Bank of Mysore 4.97 Below 100 days

Total 7,869.07 ix. According to the information and explanations given to us, the term loans raised during the year were, prima facie, been applied for the purpose for which those are raised. The Company has not raised any money by way of initial public offer or further public offer (including debt instruments).

x. Based on our audit procedures performed for the purpose of reporting the true and fair view of the financial statements and on the basis of information and explanations given by the management, 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 give to us and based on our examination of the records Company has paid or provided Rs.249.51 Lacs to one of the executive director of the Company which was in excess of remuneration as prescribed in the Schedule V to the Act by Rs.120.53 Lacs. The Company has applied the requisite approval from the Central Government mandated by the provisions of section 197 read with Schedule V which is awaited.

xii. In our opinion and according to the information and explanations given to us, the Company is not a nidhi company. Therefore, the provisions of paragraph 3 (xii) of the CARO 2016 are not applicable to the Company.

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

xiv. According to the information and explanations give 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. Therefore, the provisions of paragraph 3 (xiv) of the CARO 2016 are not applicable to the Company.

xv. According to the information and explanations given to us, the Company has not entered into non-cash transactions with directors or persons connected with him. Therefore, the provisions of paragraph 3 (xv) of the CARO 2016 are not applicable to the Company.

xvi. In our opinion and according to information and explanations provided to us, the Company is not required to be registered under section 45-IA of the Reserve Bank of India Act 1934.

For Pathak H. D. & Associates

Chartered Accountants

Firm Regn. No: 107783W

Rupesh Shah

Partner

Membership No. 117964

Place: Mumbai

Date: 14th May, 2016


Mar 31, 2015

We have audited the accompanying standalone financial statements of Pipavav Defence and Offshore Engineering Company Limited ('the Company'), which comprise the balance sheet as at 31 March 2015, the statement of profit and loss and the cash flow statement for the year then ended, and a summary of significant accounting policies and other explanatory information.

Management's Responsibility for the Standalone 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 standalone 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 adequateaccounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation : and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness * of the accounting records, relevant to the preparation and presentation of the financial statements that give a true and fair view and : are free from material misstatement, whether due to fraud or error.

Auditor's Responsibility

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

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

We conducted our audit in accordance with the Standards on Auditing specified under Section 143(10) of the Act. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and the disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal financial control relevant to the Company's preparation of the financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on whether the Company has in place an adequate internal financial controls system over financial reporting and the operating effectiveness of such controls. An audit also includes evaluating the appropriateness of 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 standalone financial statements.

Opinion

In our opinion and to the best of our information and according to the explanations given to us, the aforesaid standalone financial statements give the information required by the 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 March 2015 and its loss and its cash flows for the year.ended on that date:.

Emphasis of Matter

We draw attention to the following matter in the Notes to the financial statements:

(a) Note 25.1 to the financial statements relating to Managerial Remuneration, which is subject to requisite approvals and procedure. Our Opinion is not modified in respect of the aforementioned matter.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor's Report) Order, 2015 ("the Order") issued by the Central Government of India in terms of sub-section (11) of section 143 of the Act, we give in the Annexure a statement on the matters specified in the paragraph 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) On the basis of the written representations received from the directors as on 31 March 2015 taken on record by the Board of Directors, none of the directors is disqualified as on 31 March 2015 from being appointed as a director in terms of Section 164 (2) of the Act; and

(f) With respect to the other matters to be included in the Auditor's Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules, 2014, in our opinion and to the best of our information and according to the explanations given to us:

i. The Company has disclosed the impact of pending litigations on its financial position in its financial statements - Refer Note 31 to the financial statements;

ii. The Company has made provisions, as required under the applicable law or accounting standards, for material foreseeable losses, on long-term contracts (Refer Note 11 to the financial statements) including derivative contracts; and

iii. There were no amounts which were required to be transferred to the investor education and protection fund by the Company.

Annexure to the Independent Auditors' Report

(Referred to in paragraph 1 under the heading "Report on other Legal and Regulatory Requirements" of our report of even date issued to the members of Pipavav Defence and Offshore Engineering Company Limited for the year ended 31 March, 2015)

i. In respect of fixed assets:

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

(b) We have been informed that the physical verification of fixed assets was carried out by the management in a phased manner, which in our opinion is reasonable, and no material discrepancies were noticed on such verification.

ii. In respect of inventory:

(a) The inventories have been physically verified during the year by the management. In our opinion, the frequency of verification * is reasonable. We have relied on the certificates and other documents provided by the management;

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

(c) According to the information and explanations given to us and on the basis of our examination of inventory records, we : are of the opinion that the Company is maintaining proper records of inventory. As explained to us by the management, the discrepancies noticed on physical verification of the inventories between the physical inventories and the book records were not material, having regard to the size of the operations of the Company and the same have been properly dealt with.

iii. The Company has granted unsecured loan to wholly owned subsidiary covered in the register maintained under section 189 of the Act;

(a) As per the information and explanations given to us, the said loan and interest thereon was not due for repayment during the year; and

(b) Since the above loan and interest thereon were not due for repayment during the year, the question of overdue amounts does not arise.

iv. In our opinion and according to the information and explanations given to us, there is an internal control system for purchase of inventory and fixed assets and also sale of goods and services which needs to be further strengthened. During the course of our audit, we have not observed any major weakness in the internal control system.

v. According to the information and explanation provided to us by the management, in our opinion, the Company has not accepted any 'deposits' within the meaning of Rule 2(b) of the Companies (Acceptance of Deposits) Rule 2014. Therefore, the provisions of clause (v) of paragraph 3 of the order arenot applicable to the Company.

vi. According to the information and explanations provided by management, the Company is not engaged in production of any such goods or provision of any such service for which Central Government has specified maintenance of cost records under section 148(1) of the Act. Hence in our opinion no comment on maintenance of cost records under section 148(1) of the Act is required.

vii. In respect of statutory dues:

(a) According to the information and explanations given to us and on the basis of our examination of the records of the Company, the Company has generally been regular in depositing with appropriate authorities undisputed statutory dues, including provident fund, employees state insurance, income tax, sales tax, wealth tax, service tax, duty of customs, duty of excise, value added tax, cess and other material statutory dues during the year. However delays have been noticed in case of income tax (including tax deducted at source), service tax and works contract tax. Further, no undisputed amounts payable in respect of such statutory dues were in arrears as at 31 March 2015 for a period of more than six months from the date they became payable.

(b) According to the information and explanations given to us we report that the disputed statutory dues aggregate to Rs. 2500.41 lacs have not been deposited on account of matters pending before appropriate authorities. The breakup of the above dues is as under:

Name of the Statute Natures of Dues Period to which the default it relates

lncomeTaxAct,1961 Tax Deducted 2004-05 at Source

2007-08 t0 2014-15

MVAT, 2002 VAT 2006-07to

2011-12

CENVAT Credit Penalty 2009-10- to Rules, 2004 2012-13



Name of the Statute Amount Forum where (Rs lacs)* dispute is pending

lncomeTaxAct,1961 30.16 High Court

98.73 ITO(TDS)

MVAT, 2002 146.36 Assistant Commissioner of Sales Tax



CENVAT Credit 2,225.16 Commissioner Rules, 2004 of Central Excise

Total: 2500.41

*The disputed amounts are net of amounts deposited with the relevant authorities.

(c) According to the information and explanations given to us and in accordance with the relevant provisions of the Companies Act, 1956 (1 of 1956 and rules thereunder, no amounts were required to be transferred to the investor education and protection fund.

viii. The accumulated losses of the Company as at 31 March 2015 are not more than fifty percent of its net worth as on that date. The Company has incurred cash losses during the current financial year and had not incurred cash losses in the immediately preceding-financial year.

ix. Based on our audit procedures, information and explanation given to us by the management and considering the Corporate Debt Restructuring (CDR) scheme, as on 31 March 2015, the Company has not defaulted in repayment of dues to financial institution or banks except an overdue amount of Rs. 5,131.33 lacs towards principal which includes Rs. 868.33 Lacs overdue since FY 2013-14 and overdue amount of Rs. 1,565.87 lacs towards interest which includes Rs. 149.17 Lacs overdue since FY 2013-14. Against such overdue amount, the Company has since paid Rs. 1,097.07 lacs up to the date of signing of this audit report.

x. The Company has given corporate guarantee in relation to loan taken by a wholly owned subsidiary from financial institution aggregating to Rs. 20,222.00 lacs as at 31 March 2015. The management is of the opinion that the terms and conditions are not prejudicial to the interests of the Company. We are, however, unable to comment on the same.

xi. The Company has raised new term loans during the year. To the best of our knowledge and according to information and explanation given to us, the term loans outstanding at the beginning of the year and those obtained by the Company during the year were prima facie been either used for the purposes for which they were raised or if pending utilization have been temporarily kept with the banks.

xii. To the best of our knowledge and according to the information and explanations given to us, review of internal audit reports and reading of minutes of the meetings of Board of Directors and its committees, no material fraud on or by the Company has been noticed or reported during the course of our audit.

For GPS & Associates Chartered Accountants Firm's Reg. No: 121344W

H.Y. Gurjar Place: Mumbai Partner Date: 30th May 2015 Membership no: 32485




Mar 31, 2014

We have audited the accompanying financial statements of Pipavav Defence and Offshore Engineering Company Limited ("the Company"), which comprise the Balance Sheet as at 31st March, 2014 and the Statement of Profit & 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 principles generally accepted in India, including, Accounting standards referred to in sub-section (3C) of Section 211 of the Companies Act, 1956 ("the Act") read with general circular 15/2013 dated 13th September, 2013 of the Ministry of Corporate Affairs in respect of Section 133 of the Companies Act, 2013. This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditors'' Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with the Standards on Auditing issued by the Institute of Chartered Accountants of India. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor''s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Company''s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company''s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion and to the best of our information and according to the explanations given to us, the accounts read together with significant accounting policies and notes thereon, give the information required by the Act, in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:

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

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

(iii) in the case of the Cash Flow Statement, of the Cash Flows for the year ended on that date.

Emphasis of matter

We draw attention to the Note no. 26.1 regarding Managerial Remuneration, which is subject to the approval of Central Government. Our report is not qualified in this matter.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor''s Report) Order, 2003 ("the Order") issued by the Central Government of India in terms of sub-section (4A) of Section 227 of the Act, we give in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the Order.

2. As required under provisions of 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 Act read with general circular 15/2013 dated 13th September, 2013 of the Ministry of Corporate Affairs in respect of Section 133 of the Companies Act, 2013;

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

ANNEXURE TO INDEPENDENT AUDITORS'' REPORT

(Referred to in paragraph 1 under the heading "Report on Other Legal and Regulatory Requirements" of our report of even date issued to the

members of Pipavav Defence and Offshore Engineering Company Limited for the year ended March 31, 2014)

(i) In respect of its fixed assets:

(a) The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets on the basis of available information.

(b) As explained to us, the Company has physically verified certain assets, in accordance with a phased program of verification, which in our opinion is reasonable, having regard to the size of the Company.

(c) In our opinion, the Company has not disposed off substantial part of fixed assets during the year and the going concern status of the Company is not affected.

(ii) In respect of its inventories:

(a) The inventories have been physically verified during the year by the management. In our opinion, the frequency of verification is reasonable. In respect of inventories in transit, we have relied on the certificates and other documents provided by the management.

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

(c) According to the information and explanations given to us and on the basis of our examination of inventory records, we are of the opinion that the Company is maintaining proper records of inventory. As explained to us, discrepancies noticed on physical verification of the inventories between the physical inventories and book records were not material, having regard to the size of the operations of the Company, and the same have been properly dealt with.

(iii) In respect of Loans, secured or unsecured, granted or taken by the company to/from Companies, firms or other parties covered in the register maintained under Section 301 of the Companies Act, 1956:

(a) The Company has granted unsecured loan to a wholly-owned subsidiary company. The maximum amount outstanding at any time during the year was Rs. 6,887.24 lacs and the year-end balance was Rs. 1,613.01 lacs.

(b) In our opinion and according to the information and explanations given to us the rate of interest and other terms and conditions are not prima facie prejudicial to the interest of the Company.

(c) The above loan is repayable on demand and there is no repayment schedule.

(d) There was no overdue amount in respect of the above loan.

(e) The Company has taken loan from a wholly-owned subsidiary company in respect of which maximum amount involved during the year was Rs. 15,915.10 lacs and the year-end balance was Rs. 15,499.08 lacs.

(f) In our opinion and according to the information and explanations given to us, rate of interest, and other terms and conditions, are not prejudicial to the interest of the Company.

(g) As per the information and explanations given to us, the above loan is not due for repayment and there is no overdue amount as regards to interest.

(iv) In our opinion and according to the information and explanations given to us, there is an internal control system for the purchase of goods, services and fixed assets and also for the sale of goods and services which needs to be further strengthened. During the course of our audit, we have not observed any continuing failure to correct major weaknesses in internal control system.

(v) In respect of the contracts or arrangements referred to in Section 301 of the Companies Act, 1956:

(a) In our opinion and according to the information and explanations given to us, the transactions made in pursuance of contracts or arrangements, that needed to be entered in the register maintained under Section 301 of the Companies Act, 1956 have been so entered.

(b) The transactions, made in pursuance of the contracts or arrangements, entered in the register maintained under Section 301 of the Companies Act, 1956, and aggregating during the year to Rs. 5 lacs or more in respect of each party, have been made at prices, which are reasonable having regard to the available information. The Company has not made any similar transactions with any other party.

(vi) According to the information and explanations given to us, the Company has not accepted any deposits from the public and hence directives issued by the Reserve Bank of India and the provisions of Sections 58A and 58AA of the Companies Act, 1956 and the rules framed thereunder are not applicable for the year under audit.

(vii) In our opinion, the Company has an adequate internal audit system commensurate with its size and nature of its business.

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

(ix) 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, Sales tax, Wealth tax, Customs Duty, Service Tax, Excise Duty, Cess and any other material statutory dues with the appropriate authorities during the year however delays have been noticed in case of income tax (including tax deducted at source), service tax and works contract tax. According to the information and explanations given to us, no undisputed amounts payable in respect of such statutory dues were outstanding as at 31st March, 2014 for a period of more than six months from the date they became payable.

(b) The disputed statutory dues aggregating to Rs. 2,633.45 lacs that have not been deposited on account of disputed matters pending before appropriate authorities are as under:

Name of the Nature of Period to which the Amount Statute the Dues amount relates (Rs. In Lacs) (*)

Income Tax Income Tax 2004-05 32.64 Act, 1961 2005-06, 2006-07, 2,316.69 2008-09 to 2011-12

2007-08 to 2013-14 284.12

TOTAL 2,633.45

Name of the Forum where dispute is pending Statute

Income Tax High Court Act, 1961 C.I.T. (A)

ITO (TDS)

TOTAL

* Net of amount deposited under protest as mentioned in Note no 32.1 to the financial statements.

(x) The Company does not have any accumulated losses as at 31st March, 2014 and has not incurred cash losses during the financial year covered by the audit and in the immediately preceding financial year.

(xi) During the year, the Company has defaulted in repayment of dues to banks and financial institutions. Based on our audit procedures and information and explanations given by the management, we have noticed that as on 31st March, 2014 the Company has defaulted in repayment of dues to banks and financial institutions (including overdrawal in Cash Credit facilities) aggregating to Rs. 37,280.79 lacs, out of which Rs. 34,645.17 lacs has since been repaid.

(xii) In our opinion and according to the explanations given to us and based on the information available, no loans and advances have been granted by the Company on the basis of security by way of pledge of shares, debentures and other securities.

(xiii) In our opinion, the Company is not a chit fund or a nidhi/mutual benefit fund/society. Therefore the provisions of clause 4 (xiii) of the Companies (Auditor''s Report) Order, 2003 are not applicable to the Company.

(xiv) In our opinion and according to the information and explanations given to us, the Company is not a dealer or trader in shares, securities, debentures and other investment. The company has maintained proper records of transactions and contracts in respect of shares, securities and other investments and timely entries have been made therein. All shares, securities and other investments have been held by the Company in its own name.

(xv) The Company has given corporate guarantees aggregating to Rs. 54,672 lacs for loans taken by two of its wholly owned subsidiaries from banks or financial institutions as at 31st March, 2014. The management is of the opinion that terms and conditions are not prejudicial to the interest of the company. We are, however, unable to comment on the same.

(xvi) The Company has raised new term loans during the year. To the best of our knowledge and according to the information and explanations given to us the term loans outstanding at the beginning of the year and those raised during the year were prima facie been either used for the purposes for which they were raised or pending utilization been temporarily kept with the banks. However, certain short term working capital loans taken during the year have been utilized for the purchase of fixed assets.

(xvii) On the basis of review of utilization of funds, which is based on overall examination of the balance sheet of the Company as at 31st March, 2014, related information as made available to us and as represented by the management, we are of the opinion that fund raised on short term basis aggregating to Rs. 124,184.73 lacs have been used during the year for long term investments (Projects).

(xviii) During the year the Company has not made any preferential allotment to the parties covered in the register maintained u/s. 301 of the Companies Act, 1956 and hence the provisions of the clause 4 (xviii) of the Companies (Auditor''s Report) Order, 2003 are not applicable to the Company.

(xix) The Company has not issued any debentures, hence the provisions of clause 4 (xix) of the Companies (Auditor''s Report) Order, 2003 are not applicable to the Company.

(xx) During the year covered by our report the Company has not raised any money by public issue.

(xxi) To the best of our knowledge and belief and according to the information and explanations given to us, review of internal audit reports and reading of minutes of the meetings of Board of Directors and its committees no fraud on or by the company was noticed or reported during the course of our audit.

For Chaturvedi & Shah Chartered Accountants (Firm Reg. No. - 101720W)

R Koria Partner Membership No. - 35629

Place : Mumbai Date : 30th May, 2014


Mar 31, 2013

Report on the Financial Statements

We have audited the accompanying financial statements of Pipavav Defence and Offshore Engineering Company Limited ("the Company"), which comprise the Balance Sheet as at 31st March 2013 and the Statement of Profit & 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 principles generally accepted in India including, 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.

Auditors'' Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with the Standards on Auditing issued by the Institute of Chartered Accountants of India. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor''s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Company''s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company''s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion and to the best of our information and according to the explanations given to us, the accounts read together with significant accounting policies and notes thereon, give the information required by the Act, in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India: -

i. in the case of the Balance Sheet, of the state of affairs of the Company as at 31st March 2013;

ii. in the case of the Statement of Profit & Loss, of the profit of the Company for the year ended on that date; and

iii. in the case of the Cash Flow Statement, of the Cash Flows for the year ended on that date.

Emphasis of matter

Without qualifying our opinion attention is drawn to the:-

i. Note no. 22.2 regarding recognition of revenue in respect of certain Panamax vessels under construction, wherein the matter is under arbitration, for the reasons explained therein.

ii. Note no. 27.1 regarding Managerial Remuneration, which is subject to the approval of Central Government.

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 under provisions of 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 Act.

e. on the basis of written representations received from the directors as on March 31, 2013, and taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2013, from being appointed as a director in terms of clause (g) of sub-section (1) of section 274 of the Act.

ANNEXURE TO INDEPENDENT AUDITOR''S REPORT

(Referred to in paragraph 1 under the heading of "Report on Other Legal and Regulatory Requirements" of our report of even date issued to the members of Pipavav Defence and Offshore Engineering Company Limited for the year ended March 31, 2013):

i. In respect of its fixed assets:

a. The company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets on the basis of available information.

b. As explained to us, the Company has physically verified certain assets, in accordance with a phased program of verification, which in our opinion is reasonable, having regard to the size of the Company.

c. In our opinion, the Company has not disposed off substantial part of fixed assets during the year and the going concern status of the Company is not affected.

ii. In respect of its inventories:

a. The inventories have been physically verified during the year by the management. In our opinion, the frequency of verification is reasonable. In respect of inventories in transit and lying with the Job Workers, we have relied on the certificates and other documents provided by the management.

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

c. According to the information and explanations given to us and on the basis of our examination of inventory records, we are of the opinion that the Company is maintaining proper records of inventory. As explained to us, discrepancies noticed on physical verification of the inventories between the physical inventories and book records were not material, having regard to the size of the operations of the Company, and the same have been properly dealt with.

iii. In respect of Loans, secured or unsecured, granted or taken by the company to/ from Companies, firms or other parties covered in the register maintained under Section 301 of the Companies Act, 1956:

a. The Company has granted interest free unsecured loan to a wholly-owned subsidiary company. The maximum amount outstanding at any time during the year was Rs. 5300.56 Lacs and the year-end balance was Rs. Nil.

b. In our opinion and according to the information and explanations given to us other terms and conditions are not prima facie prejudicial to the interest of the company.

c. The above loan is repayable on demand and there is no repayment schedule.

d. As there is no balance outstanding against the above loan, the question of overdue amount does not arise.

e. The company has taken loan from two such parties in respect of which maximum amount involved during the year was Rs. 20,978.00 lacs and the year-end balance was Rs. 11,822.07 lacs.

f. In our opinion and according to the information and explanations given to us, rate of interest, wherever applicable, and other terms and conditions, are not prejudicial to the interest of the Company.

g. As per the information and explanations given to us, the above loan is not due for repayment and there is no overdue amount as regards to interest.

iv. In our opinion and according to the information and explanations given to us, there is an internal control system for the purchase of goods, services and fixed assets and also for the sale of goods and services which needs to be further strengthened. During the course of our audit, we have not observed any continuing failure to correct major weaknesses in internal control system.

v. In respect of the contracts or arrangements referred to in Section 301 of the Companies Act, 1956:

a. In our opinion and according to the information and explanations given to us, the transactions made in pursuance of contracts or arrangements, that needed to be entered in the register maintained under section 301 of the Companies Act, 1956 have been so entered.

b. The transactions, made in pursuance of the contracts or arrangements, entered in the register maintained under section 301 of the Companies Act, 1956, and aggregating during the year to Rs. 5 lacs or more in respect of each party, have been made at prices, which are reasonable. The Company has not made any similar transactions with any other party.

vi. According to the information and explanations given to us, the Company has not accepted any deposits from the public and hence directives issued by the Reserve Bank of India and the provisions of sections 58A and 58AA of the Companies Act, 1956 and the rules framed there under are not applicable for the year under audit.

vii. In our opinion, the Company has an adequate internal audit system commensurate with its size and nature of its business.

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

ix. 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, Sales tax, Wealth tax, Customs Duty, Service Tax, Excise Duty, Cess and any other material statutory dues with the appropriate authorities during the year however delays have been noticed in case of income tax (including tax deducted at source) and works contract tax.

b. According to the information and explanations given to us, no undisputed amounts payable in respect of such statutory dues were outstanding as at 31st March, 2013 for a period of more than six months from the date they became payable.

c. The disputed statutory dues aggregating to Rs. 843.70 Lacs that have not been deposited on account of disputed matters pending before appropriate authorities are as under:

* Net of amount deposited under protest as mentioned in Note no 33.1 to the financial statements.

x. The Company does not have any accumulated losses as at 31st March, 2013 and has not incurred cash losses during the financial year covered by the audit and in the immediately preceding financial year.

xi. Based on our audit procedures and information and explanations given by the management, we are of the opinion that as on 31st March, 2013 the Company has not defaulted in repayment of dues to banks and financial institutions.

xii. In our opinion and according to the explanations given to us and based on the information available, no loans and advances have been granted by the Company on the basis of security by way of pledge of shares, debentures and other securities.

xiii. In our opinion, the Company is not a chit fund or a nidhi /mutual benefit fund/society. Therefore the provisions of clause 4 (xiii) of the Companies (Auditor''s Report) Order, 2003 are not applicable to the Company.

xiv. In our opinion and according to the information and explanations given to us, the Company is not a dealer or trader in shares, securities, debentures and other investment. The company has maintained proper records of transactions and contracts in respect of shares, securities and other investments and timely entries have been made therein. All shares, securities and other investments have been held by the Company in its own name.

xv. According to the information and explanations given to us, the Company has not given any guarantee for loans taken by others from banks or financial institutions.

xvi. The Company has raised new term loans during the year. To the best of our knowledge and according to the information and explanations given to us the term loans outstanding at the beginning of the year and those raised during the year were prima facie been either used for the purposes for which they were raised or pending utilization been temporarily kept with the banks. Further certain short term working capital loans taken during the year have been utilized for the purchase of fixed assets.

xvii. On the basis of review of utilization of funds, which is based on overall examination of the balance sheet of the Company as at 31st March, 2013, related information as made available to us and as represented by the management, we are of the opinion that fund raised on short term basis aggregating to Rs. 43,892.30 lacs have been used during the year for long term investments.

xviii During the year the Company has made preferential allotment of 1,00,00,000 equity shares against the conversion of share warrants to a company covered in the register maintained under Section 301 of the Companies Act, 1956. The price at which these equity shares have been issued, has been determined as per Securities and Exchange Board of India (Issue of Capital & Disclosure Requirements) Regulations, 2009, which in our opinion, is not prejudicial to the interest of the Company.

xix. The Company has not issued any debentures, hence the provisions of clause 4 (xix) of the Companies (Auditor''s Report) Order, 2003 are not applicable to the Company.

xx. During the year covered by our report the Company has not raised any money by public issue.

xxi. To the best of our knowledge and belief and according to the information and explanations given to us and review of internal audit reports, no fraud on or by the company was noticed or reported during the course of our audit.

For Chaturvedi & Shah

Chartered Accountants

Firm Reg. No. - 101720W

R. Koria

Place: Mumbai Partner

Date : 30th May 2013 Membership No. - 35629


Mar 31, 2012

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

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

3. Without qualifying our opinion attention is drawn to the:

- Note no. 21.2 regarding recognition of revenue in respect of certain Panamax vessels under construction, wherein the matter is under arbitration, for the reasons explained therein.

- Note no. 26.1 regarding Managerial Remuneration, which is subject to the approval of Central Government.

4. As required by the Companies (Auditor's Report) Order, 2003 issued by the Central Government of India in terms of sub-section (4A) of Section 227 of the Companies Act, 1956, we give in the Annexure hereto, a statement on the matters specified in paragraphs 4 and 5 of the said Order, to the extent applicable to the Company.

5. Further to our Comments in paragraph 3 above and in the Annexure referred to in Paragraph 4 above, we report that:

a) We have obtained all the information and explanations, which to the best of our knowledge and belief were necessary for the purposes of our audit;

b) In our opinion, proper books of account, as required by law, have been kept by the Company, so far as appears from our examination of such books;

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

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

e) On the basis of the written representations received from the directors as on March 31, 2012, and taken on records by the Board of Directors, we report that none of the directors is disqualified as on March 31, 2012, from being appointed as a director in terms of clause (g) of sub-section (1) of Section 274 of the Companies Act, 1956.

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

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

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

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

ANNEXURE TO AUDITOR'S REPORT

(Referred to in paragraph 4 of our report of even date)

As required by the Companies (Auditor's Report) Order, 2003 issued by the Central Government of India in terms of Section 227 (4A) of the Companies Act, 1956, and on the basis of such checks as we considered appropriate, we further report that:

i. In respect of its fixed assets:

a. The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets on the basis of available information.

b. As explained to us, the Company has physically verified certain assets, in accordance with a phased program of verification, which in our opinion is reasonable, having regard to the size of the Company.

c. In our opinion, the Company has not disposed off substantial part of fixed assets during the year and the going concern status of the Company is not affected.

ii. In respect of its inventories:

a. As explained to us, all the inventories at EOU and SEZ unit except steel profiles/angles have been physically verified by the management during the year. In respect of inventories in transit and lying with the Job Workers, we have relied on the certificates and other documents provided by the management.

b. In our opinion and according to the information and explanations given to us, the procedures of physical verification of inventories needs to be further strengthened to make it commensurate with the size of the Company.

c. The Company has maintained records of inventories which needs to be strengthened. As explained to us, there were no material discrepancies noticed on physical verification of inventories as compared to the book records.

iii. In respect of Loans, secured or unsecured, granted or taken by the Company to/ from companies, firms or other parties covered in the register maintained under Section 301 of the Companies Act, 1956:

a. The Company has granted unsecured loan to a wholly-owned subsidiary Company. The maximum amount outstanding at any time during the year was Rs. 4363.08 Lacs and the year end balance wasRs. 4158.13 Lacs.

b. In our opinion and according to the information and explanations given to us, the aforesaid loan is interest free and other terms and conditions are not prima facie prejudicial to the interest of the Company.

c. The said loan is repayable on demand and there is no repayment schedule.

d. As the said loan is repayable on demand, the question of overdue amount does not arise.

e. The Company has not taken any loan during the year from companies, firms or other parties covered in the Register maintained under Section 301 of the Companies Act, 1956. Consequently, the provisions of sub-clauses (f) and (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 is an internal control system for the purchases of inventory and fixed assets and for the sale of goods and services which needs to be strengthened. During the course of our audit, we have not observed any continuing failure to correct major weakness in internal control system.

v. In respect of the contracts or arrangements referred to in Section 301 of the Companies Act, 1956:

a. In our opinion and according to the information and explanations given to us, the transactions made in pursuance of contracts or arrangements, that needed to be entered in the register maintained under Section 301 of the Companies Act, 1956 have been so entered.

b. The transactions, made in pursuance of the contracts or arrangements, entered in the register maintained under Section 301 of the Companies Act, 1956, and aggregating during the year toRs. 5 lacs or more in respect of each party, have been made at prices, which are reasonable. The Company has not made any similar transactions with any other party.

vi. According to the information and explanations given to us, the Company has not accepted any deposits from the public and hence directives issued by the Reserve Bank of India and the provisions of Sections 58A and 58AA of the Companies Act, 1956 and the rules framed there under are not applicable for the year under audit.

vii. In our opinion, the Company has an adequate internal audit system commensurate with the size and nature of the business of the Company.

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

ix. According to the information and explanations given to us in respect of statutory dues:

a. The Company has been regular in depositing undisputed statutory dues, including Provident Fund, Employees' State Insurance, Income tax, Sales tax, Wealth tax, Service tax, Customs Duty, Excise Duty, Cess and any other material statutory dues with the appropriate authorities during the year except in some cases.

b. According to the information and explanations given to us, no undisputed amounts payable in respect of such statutory dues were outstanding as at March 31, 2012 for a period of more than six months from the date they became payable.

c. The disputed statutory dues aggregating to Rs. 795.30 Lacs that have not been deposited on account of disputed matters pending before appropriate authorities are as under:

Name of the Nature of Period to which the Amount* Forum where dispute is Statute the Dues amount relates (Rs.in lacs) pending

Income Tax Income Tax 2007-08 5.46 C.I.T. (A) Act, 1961 2004-05 32.64 ITAT

2007-08 to 2010-11 757.20 ITO (TDS)

Total 795.30

* Net of amount deposited under protest as mentioned in Note no. 32 to the financial statements.

x. The Company does not have any accumulated losses as at March 31, 2012 and has not incurred cash losses during the financial year covered by the audit and in the immediately preceding financial year.

xi. Based on our audit procedures and according to the information and explanations given to us, we are of the opinion that the Company as on March 31, 2012 has not defaulted in the repayment of dues to banks, financial institutions and debenture holders except for overdue amount of loans and interest aggregating to Rs. 7365.31 lacs to banks and financial institutions.

xii. In our opinion and according to the explanations given to us and based on the information available, no loans and advances have been granted by the Company on the basis of security by way of pledge of shares, debentures and other securities.

xiii. In our opinion, the Company is not a chit fund or a nidhi/ mutual benefit fund/ society. Therefore, the provisions of clause 4 (xiii) of the Companies (Auditor's Report) Order, 2003 are not applicable to the Company.

xiv. In our opinion and according to the information and explanations given to us, the Company is not a dealer or trader in shares, securities, debentures and other investment. The Company has maintained proper records of transactions and contracts in respect of shares, securities, debentures, and other investments and timely entries have been made therein. All shares, securities, debentures, and other investments have been held by the Company in its own name.

xv. According to the information and explanations given to us, the Company has not given any guarantee for loans taken by others from banks or financial institutions.

xvi. The Company has raised new term loans during the year. To the best of our knowledge and according to the information and explanations given to us, the term loans outstanding at the beginning of the year and those raised during the year were prima facie been either used for the purposes for which they were raised or pending utilization been temporarily kept with the banks.

xvii. On the basis of review of utilization of fund, which is based on overall examination of the Balance Sheet of the Company as at March 31, 2012, related information as made available to us and as represented by the management, we are of the opinion that fund raised on short term basis have not prima facie been used during the year for long term investments.

xviii The Company has not made any preferential allotment of shares to parties and companies covered in the Register maintained under Section 301 of the Companies Act, 1956.

xix. The Company has not issued any secured debentures, hence the provisions of clause 4 (xix) of the Companies (Auditor's Report) Order, 2003 are not applicable to the Company.

xx. During the year covered by our report, the Company has not raised any money by public issue.

xxi. To the best of our knowledge and belief and according to the information and explanations given to us, no fraud on or by the Company was noticed or reported during the course of our audit.

For Chaturvedi & Shah

Chartered Accountants

Firm Reg. No. - 101720W

R. Koria

Place : Mumbai Partner

Date : May 30, 2012 Membership No. - 35629


Mar 31, 2010

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

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

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

4. Further to our Comments in the Annexure referred to in Para 3 above, we report that:

a) We have obtained all the information and explanations, which to the best of our knowledge and belief were necessary for the purposes of our audit;

b) In our opinion, proper books of account, as required by law, have been kept by the Company, so far as appears from our examination of such books;

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

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

e) On the basis of the written representations received from the directors as on 31st March, 2010, and taken on records 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.

f) In our opinion and to the best of our information and according to the explanations given to us, the said accounts, read together with the significant Accounting Policies & notes there on, in particular Note No. 10 of Schedule 23 regarding payment of managerial remuneration which is subject to the approval of Central Government, give the information required by the Companies Act, 1956, in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:

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

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

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

ANNEXURE TO AUDITORS REPORT (Referred to in paragraph 3 of our report of even date)

As required by the Companies (Auditors Report) Order, 2003 issued by the Central Government of India in terms of Section 227 (4A) of the Companies Act 1956, and on the basis of such checks as we considered appropriate, we further report that:- i. In respect of its fixed assets:

a. The company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets on the basis of available information.

b. As explained to us, all the fixed assets have been physically verified by the management in a phased periodical manner, which in our opinion is reasonable, having regard to the size of the Company. No material discrepancies were noticed on such physical verification.

c. In our opinion, the Company has not disposed off substantial part of fixed assets during the year and the going concern status of the Company is not affected.

ii. In respect of its inventories:

a. As explained to us, inventories have been physically verified during the year by the management. In our opinion the frequency of verification is reasonable.

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

c. The Company has maintained proper records of inventories. As explained to us, there were no material discrepancies noticed on the physical verification of inventory as compared to the book records.

iii. In respect of Loans, secured or unsecured, granted or taken by the company to/ from Companies, firms or other parties covered in the register maintained under Section 301 of the Companies Act, 1956:

a. The Company has granted unsecured loan to a wholly-owned subsidiary company of it. The maximum amount outstanding at any time during the year was Rs. 10,669.93 Lacs and the year end balance was Rs. 3,869.40 Lacs.

b. In our opinion and according to the information and explanations given to us, the aforesaid loan is interest free and other terms and conditions, are not prima facie prejudicial to the interest of the company.

c. The said loan is repayable on demand and there is no repayment schedule.

d. As the said loan is repayable on demand, the question of overdue amount does not arise.

e. The company has not taken any loans during the year from companies, firms or other parties covered in the Register maintained under section 301 of the Companies Act, 1956. Consequently, the provisions of sub clauses (f) and (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 is an adequate internal control system commensurate with the size

of the Company and the nature of its business for the purchase of inventory, fixed assets and also for the sale of goods. During the course of our audit, we have not observed any continuing failure to correct major weaknesses in internal controls.

v. In respect of the contracts or arrangements referred to in Section 301 of the Companies Act, 1956:

a. In our opinion and according to the information and explanations given to us, the transactions made in pursuance of contracts or arrangements, that needed to be entered in the register maintained under section 301 of the Companies Act, 1956 have been so entered.

b. The transactions, made in pursuance of the contracts or arrangements, entered in the register maintained under section 301 of the Companies Act, 1956, and aggregating during the year to Rs. Five lacs or more in respect of each party, have been made at prices, which are reasonable. The Company has not made any similar transactions with any other party.

vi. According to information and explanations given to us, the Company has not accepted any deposits from the public and hence directives issued by the Reserve Bank of India and the provisions of sections 58A and 58AA of the Companies Act, 1956 and the rules framed there under are not applicable for the year under audit.

vii. In our opinion, the Company has an adequate internal audit system commensurate with the size and nature of its business.

viii. The Central Government has not prescribed the maintenance of cost records under section 209 (1) (d) of the Companies Act, 1956 in respect of Ship Building activities carried out by the company.

ix. According to the information and explanations given to us in respect of statutory dues:

a. The company has been regular in depositing undisputed statutory dues, including Provident Fund, Employees State Insurance, Income tax, Sales tax, Wealth tax, Service tax, Customs Duty, Excise Duty, Cess and any other material statutory dues with the appropriate authorities during the year except in few cases.

b. According to the information and explanations given to us, no undisputed amounts payable in respect of such statutory dues were outstanding as at 31st March, 2010 for a period of more than six months from the date they became payable.

c. The disputed statutory dues aggregating to Rs. 19.33 Lacs that have not been deposited on account of disputed matters pending before appropriate authorities are as under:

Period to Forum Amount Name of Nature of which the where

(Rs. In the Statute the Dues amount ispute is

Lacs) relates pending

Income Tax Income 2004 - 05 19.33 C.I.T. (A)

Act, 1961 Tax

Total 19.33



x. The Company has accumulated loss as on 31st March 2010, which is not more than fifty percent of its net worth as on that date. The Company has incurred cash loss during the current financial year but had not incurred cash loss in the immediately preceding year.

xi. Based on our audit procedures and according to the information and explanations given to us, we are of the opinion that the Company has not defaulted in the repayment of dues to banks and financial Institutions except incase of a financial institution where Rs. 815.65 Lacs were outstanding as on 31st March, 2010 which has since been paid.

xii. In our opinion and according to the explanations given to us and based on the information available, no loans and advances have been granted by the Company on the basis of security by way of pledge of shares, debentures and other securities.

xiii. In our opinion, the Company is not a chit fund or a nidhi /mutual beneft fund/society. Therefore the provisions of clause 4 (xiii) of the Companies (Auditors Report) Order, 2003 is not applicable to the Company.

xiv. The company has maintained proper records of transactions and contracts in respect of shares and other securities and timely entries have been made therein. The investments are held by the Company in its own name.

xv. According to the information and explanations given to us, the Company has not given any guarantee for loans taken by others from banks or financial institutions.

xvi. The Company has raised new term loans during the year. To the best of our knowledge and according to information and explanation given to us the term loans outstanding at the beginning of the year and those raised during the year were prima facie been either used for the purposes for which they were raised or pending utilization been temporarily kept with the bank.

xvii. On the basis of review of utilization of funds, which is based on overall examination of the Balance Sheet of the Company as at 31st March, 2010, related informations as made available to us and as represented to us, by the management, we are of the opinion, that funds raised on short term basis have not been utilized for long term purposes.

xviii The Company has not made any preferential allotment of shares to parties and companies covered in the Register maintained under Section 301 of the Companies Act, 1956.

xix. The Company has not issued any debentures, hence the provisions of clause 4 (xix) of the Companies (Auditors Report) Order, 2003 is not applicable to the Company.

xx. We have verified the end use of money raised by Initial Public Offer and the same is disclosed by the management in the Note No. 4 of Schedule 23 to the accounts.

xxi. To the best of our knowledge and belief and according to the information and explanations given to us, no fraud on or by the company was noticed or reported during the course of our audit.



For Chaturvedi & Shah

Firm Reg. No. - 101720W

Chartered Accountants

R Koria

Partner

Membership No. - 35629



Place : Mumbai

Date : 28th May, 2010



 
Subscribe now to get personal finance updates in your inbox!