Mar 31, 2023
To the Members of Bharat Forge Limited
Report on the Audit of the Standalone Financial Statements
We have audited the standalone financial statements of Bharat Forge Limited (the "Company") which comprise the standalone balance sheet as at 31 March 2023, and the standalone statement of profit and loss (including other comprehensive income), standalone statement of changes in equity and standalone statement of cash flows for the year then ended, and notes to the standalone financial statements, including a summary of significant accounting policies and other explanatory information.
In our opinion and to the best of our information and according to the explanations given to us, the aforesaid standalone financial statements give the information required by the Companies Act, 2013 ("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 2023, and its profit and other comprehensive loss, changes in equity and its cash flows for the year ended on that date.
We conducted our audit in accordance with the Standards on Auditing (SAs) specified under Section 143(10) of the Act. Our responsibilities under those SAs are further described in the Auditor''s 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 together with the ethical requirements that are relevant to our audit of the standalone financial statements under the provisions of the Act and the Rules thereunder, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the Code of Ethics. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion on the standalone 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 standalone financial statements of the current period. These matters were addressed in the context of our audit of the standalone financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
Revenue from Sale of Products |
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See Note 2.2(e) and Note 24 to standalone financial statements |
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The key audit matter |
How the matter was addressed in our audit |
The Company''s revenue is derived primarily |
In view of the significance of the matter we applied |
from sale of goods. The Company manufactures |
the following audit procedures in this area, to obtain |
specialised forged and machined products as |
sufficient appropriate audit evidence: |
per specifications provided by its customers. Revenue from sale of goods is recognised at a point in time when performance obligation is satisfied and is based on the transfer of control to the customer as per terms of the contract with them |
We assessed the appropriateness of the Company''s accounting policies for revenue recognition by comparing with applicable accounting standards. |
which may vary for each customer. The Company |
We evaluated the design, implementation and |
and its external stakeholders focus on revenue as a |
operating effectiveness of key internal controls |
key performance metric. |
over recognition of revenue. |
Revenue recognition has been identified as a key audit matter as there could be incentives or external pressures to meet expectations resulting in revenue being overstated or recognised before the control has been transferred. |
On a sample basis, we tested the revenue transactions recorded during the year by |
verifying the underlying documents to assess whether revenue is recognised appropriately when control is transferred. |
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We tested, on a sample basis specific revenue |
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transactions recorded before and after the |
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financial year-end date to assess whether revenue is recognised in the correct financial period in which control if transferred. |
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We scrutinised journal entries related to revenue |
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recognised during the year based upon specified risk-based criteria, to identify unusual or irregular items. |
Assessment of impairment of investments in subsidiaries, associates and joint ventures See Note 2.2 (r) and Note 06 to standalone financial statements |
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The key audit matter |
How the matter was addressed in our audit |
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The Company has significant investments in |
In |
view of the significance of the matter we applied |
subsidiaries, associates and joint ventures as |
the following audit procedures in this area, to obtain |
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at 31 March 2023. |
sufficient and appropriate audit evidence: |
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The Company periodically assesses if there are any impairment indicators for recognising impairment loss in respect of these investments. |
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We obtained an understanding of the Company''s process for assessing the indicators of impairment of investments, and for the estimation of the recoverable value, wherever necessary |
The estimation of the recoverable amount of each |
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We evaluated the design, implementation and |
investment is based on complex assumptions. |
operating effectiveness of key internal controls |
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Considering that significant judgment is required |
over impairment assessment of investments in |
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and the underlying complexity of the assumptions |
subsidiaries, associates and joint ventures. |
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used, this is considered as a key audit matter |
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We assessed the models used by the Company to estimate the recoverable value of relevant investments, and consistency with the applicable Ind AS. |
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We evaluated the appropriateness of key inputs and assumptions used in the cash flow projections including discount rates, expected growth rates and terminal growth rates. |
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We involved specialists to assist us in evaluating the impairment models, assumptions and estimates. |
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We performed sensitivity analysis of key assumptions to ascertain the extent of change in those assumptions that either individually or collectively could change the outcome of the impairment assessments. |
Management''s and Board of Directors'' Responsibilities for the Standalone Financial Statements
The Company''s Management and Board of Directors are 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 state of affairs, profit/loss and other comprehensive income, changes in equity and cash flows of the Company in accordance with the accounting principles generally accepted in India, including the Indian Accounting Standards (Ind AS) specified under Section 133 of the Act. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding of the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the standalone 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, the Management and Board of Directors are 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 the Board of Directors 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 Company''s financial reporting process.
Auditor''s Responsibilities for the Audit of the Standalone 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 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 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 standalone financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances. Under Section 143(3)(i) of the Act, we are also responsible for expressing our opinion on whether the company has adequate internal financial controls with reference to financial statements in place and the operating effectiveness of such controls.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the Management and Board of Directors.
Conclude on the appropriateness of the Management and Board of Directors use of the going concern basis of accounting in preparation of standalone financial statements 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 standalone financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our 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 standalone financial statements, including the disclosures, and whether the standalone financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
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 standalone 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.
Other Matters
a. The standalone financial statements of the Company for the year ended 31 March 2022 were audited by the predecessor auditor who had expressed an unmodified opinion on 16 May 2022.
Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditor''s Report) Order, 2020 ("the Order") issued by the Central Government of India in terms of Section 143(11) of the Act, we give in the "Annexure A" a statement on the matters specified in paragraphs 3 and 4 of the Order, to the extent applicable.
2 A. 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 standalone balance sheet, the standalone statement of profit and loss (including other comprehensive income), the standalone statement of changes in equity and the standalone statement of cash flows 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 specified under Section 133 of the Act.
e. On the basis of the written representations received from the directors as on 31 March 2023 taken on record by the Board of Directors, none of the directors is disqualified as on 31 March 2023 from being appointed as a director in terms of Section 164(2) of the Act.
f. With respect to the adequacy of the internal financial controls with reference to financial statements of the Company and the operating effectiveness of such controls, refer to our separate Report in "Annexure B".
B. 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:
a. The Company has disclosed the impact of pending litigations as at 31 March 2023 on its financial position in its standalone financial statements - Refer Note 38 to the standalone financial statements.
b. The Company has made provision, as required under the applicable law or accounting standards, for material foreseeable losses, if any, on long-term contracts including derivative contracts - Refer Note 9 to the standalone financial statements.
c. There has been no delay in transferring amounts required to be transferred to the Investor Education and Protection Fund by the Company, except for delays in depositing '' 0.55 million ranging from 7 years to 18 years which is unpaid as at 31 March 2023.
d (i) The management has represented that, to the best of its knowledge and belief, other than as disclosed in the Note 47 to the standalone financial statements, 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 ("Intermediaries"), with the understanding, whether recorded in writing or otherwise, that the Intermediary shall directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Company ("Ultimate Beneficiaries") or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.
(ii) The management has represented that, to the best of its knowledge and belief, as disclosed in the Note 47 to the standalone financial statements, no funds have been received by the Company from any person(s) or entity(ies), including foreign entities ("Funding Parties"), with the understanding, whether recorded in writing or otherwise, that the Company shall directly or indirectly, lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Parties ("Ultimate Beneficiaries") or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.
(iii) Based on the audit procedures that have been considered reasonable and appropriate in the circumstances, nothing has come to our notice that has caused us to believe that the representations under sub-clause (i) and (ii) of Rule 11(e), as provided under (i) and (ii) above, contain any material misstatement.
e. The interim dividend declared and paid by the Company during the year and until the date of this audit report is in accordance with Section 123 of the Act.
The final dividend paid by the Company during the year, in respect of the same declared for the previous year, is in accordance with Section 123 of the Act to the extent it applies to payment of dividend.
As stated in Note 17 to the standalone financial statements, the Board of Directors of the Company have proposed final dividend for the year which is subject to the approval of the members at the ensuing Annual General Meeting. The dividend declared is in accordance with Section 123 of the Act to the extent it applies to declaration of dividend.
f. As proviso to rule 3(1) of the Companies (Accounts) Rules, 2014 is applicable for the Company only with effect from 1 April 2023, reporting under Rule 11(g) of the Companies (Audit and Auditors) Rules, 2014 is not applicable.
C. With respect to the matter to be included in the Auditor''s Report under Section 197(16) of the Act:
In our opinion and according to the information and explanations given to us, the remuneration paid by the Company to its directors during the current year is in accordance with the provisions of Section 197 of the Act. The remuneration paid to any director is not in excess of the limit laid down under Section 197 of the Act. However, the re-appointment of the Chairman and Managing Director for the period from 30 March 2023 to 28 March 2028 and the remuneration for this period are subject to approval of the shareholders, for which the Company has started the process of obtaining approval by postal ballot, in accordance with the provisions of the Companies Act, 2013 (Also refer note 39 (iv) to the standalone financial statements). The Ministry of Corporate Affairs has not prescribed other details under Section 197(16) of the Act which are required to be commented upon by us.
For B S R & Co. LLP
Chartered Accountants Firm''s Registration No.:101248W/W-100022
Shiraz Vastani
Partner
Place: Pune Membership No.: 103334
Date: 05 May 2023 ICAI UDIN:23103334BGYMRG2165
The Company''s Management and Board of Directors are responsible for the other information. The other information comprises the information included in the Company''s annual report, but does not include the financial statements and auditor''s report thereon.
Our opinion on the standalone financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.
In connection with our audit of the standalone financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the standalone financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.
Mar 31, 2022
Report on the audit of the standalone Ind AS financial statements Opinion
We have audited the accompanying standalone Ind AS financial statements of Bharat Forge Limited ("the Company"), which comprise the Balance sheet as at March 31 2022, the Statement of Profit and Loss, including the statement of Other Comprehensive Income, the Cash Flow Statement and the Statement of Changes in Equity for the year then ended, and notes to the standalone Ind AS financial statements, including a summary of significant accounting policies and other explanatory information.
In our opinion and to the best of our information and according to the explanations given to us, the aforesaid standalone Ind AS financial statements give the information required by the Companies Act, 2013, as amended ("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, 2022, its profit including other comprehensive income, its cash flows and the changes in equity for the year ended on that date.
Basis for opinion
We conducted our audit of the standalone Ind AS financial statements in accordance with the Standards on Auditing (SAs), as specified under section 143(10) of the Act. Our responsibilities under those Standards are further described in the ''Auditor''s responsibilities for the audit of the standalone Ind AS 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 together with the ethical requirements that are relevant to our audit of the financial statements under the provisions of the Act and the Rules thereunder, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the Code of Ethics. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the standalone Ind AS 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 standalone Ind AS financial statements for the financial year ended March 31, 2022. These matters were addressed in the context of our audit of the standalone Ind AS financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. For each matter below, our description of how our audit addressed the matter is provided in that context.
We have determined the matters described below to be the key audit matters to be communicated in our report. We have fulfilled the responsibilities described in the Auditor''s responsibilities for the audit of the standalone Ind AS financial statements section of our report, including in relation to these matters. Accordingly, our audit included the performance of procedures designed to respond to our assessment of the risks of material misstatement of the standalone Ind AS financial statements. The results of our audit procedures, including the procedures performed to address the matters below, provide the basis for our audit opinion on the accompanying standalone Ind AS financial statements.
Key audit matters |
How our audit addressed the key audit matter |
Completeness of revenue (as described in Note 2.2(e) (Summary of significant accounting policies) and note 24 of notes |
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forming part of the standalone I nd AS financial statements) |
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The Company has revenue from sale of products which |
Our audit procedures included the following: |
includes finished goods and tooling income and sale of services in the form of job work charges. The Company manufactures highly specialized forged and machined finished goods as per specification provided by the |
⢠We focused on our understanding of the Company''s sales process, including design and implementation of controls and tested the operating effectiveness of these controls. |
customers and based on the schedules from the customers. |
⢠We read the Company''s accounting policies pertaining to |
The Company recognizes revenue from sale of finished goods at a point in time based on the terms of the contract |
revenue recognition and assessed compliance with Ind AS 115 - Revenue from Contracts with Customers. |
with customers which varies for each customer. |
⢠We obtained and read the terms of customer contracts |
Determination of point in time includes assessment of timing of transfer of significant risk and rewards of ownership, establishing the present right to receive payment for the products, delivery specifications including inco terms, timing of transfer of legal title of the asset and determination of the point of acceptance of goods by customer. Further, the pricing of the products is dependent on metal indices and foreign exchange fluctuation making the price volatile including variable considerations. |
on sample basis to assess various performance obligations in the contract, the point in time of transfer of control and pricing terms. ⢠We tested on a sample basis sales invoices for identification of point in time for transfer of control and terms of contract with customers. Further, we performed procedures to test on a sample basis whether revenue was recognized in the appropriate period by testing shipping records, good inwards receipt of customer, sales |
Due to judgments relating to determination of point in time |
invoice, etc. and testing the management assessment |
in satisfaction of performance obligations with respect to |
involved in the process, wherever applicable. |
sale of products, this matter has been considered as key audit matter. |
⢠We assessed the disclosure is in accordance with |
applicable accounting standards. |
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⢠We also performed various analytical procedures to |
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identify any unusual sales trends for further testing. |
Key audit matters |
How our audit addressed the key audit matter |
Hedge accounting including valuations thereof (as described in Note 2.2(r) (Summary of significant accounting policies) and note 9 and 50 of notes forming part of the standalone Ind AS financial statements) |
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The Company enters into derivative financial instruments which are mainly plain vanilla forward contracts and range forward contracts to manage its exposure of foreign currency risk of highly probable forecasted transactions which arise during the normal course of its business. These contracts are measured at fair values leading to derivative financial assets of INR 3,850.53 million as at March 31, 2022 and the net movement of cashflow hedge reserve for the |
Our audit procedures included the following: ⢠We obtained understanding of the Company''s overall hedge accounting strategy, forward contract valuation and hedge accounting process from initiation to settlement of derivative financial instruments including assessment of the design and implementation of controls and tested the operating effectiveness of these controls. |
year is INR 762.24 million net of taxes which is recorded in |
⢠We read Company''s accounting policy for hedge |
other comprehensive income. The gain / loss on maturity of |
accounting in accordance with relevant accounting |
such derivative instruments is recorded in the statement of |
standards. |
profit and loss along with the relevant hedged item. |
⢠We tested the existence of hedging contracts by tracing |
Due to the changes in risks and estimates during the lifecycle |
to the independent balance confirmations obtained from |
of the customer contracts, in order to apply hedge |
respective banks. |
accounting, management is required to demonstrate that the underlying contract is considered to be a highly probable transaction, that the hedges are highly effective and |
⢠We tested management''s hedge documentation and contracts, on a sample basis. |
maintain hedge documentation. A degree of subjectivity is |
⢠We tested on a sample basis the fair values of derivative |
also required to determine when hedge accounting is to be |
financial instruments recorded by the Company with the |
considered as ineffective. Fair value movements of the |
independent balance confirmations obtained from |
forward contracts are driven by movements in financial |
banks. |
markets. |
⢠We involved our valuation specialists in re-performing |
Due to the outbreak of COVID 19, there are uncertainties |
the year-end fair valuations including evaluation of |
involved in estimating the highly probable forecasted sales, |
hedge effectiveness of derivative financial instruments |
estimating future foreign exchange rates and accordingly |
on a sample basis and compared these valuations with |
have an impact on hedge effectiveness and impact to |
those recorded by the Company including assessing the |
statement of profit and loss account. |
valuation methodology and key assumptions used |
These transactions may have a significant financial effect |
therein. |
and have extensive accounting and reporting obligations |
⢠We have evaluated the revised estimates obtained from |
and accordingly, this is considered as a key audit matter. |
management with respect to highly probable forecasted sales due to COVID 19. |
⢠We assessed the disclosure of hedge transactions in the |
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standalone Ind AS financial statements of the Company. |
Key audit matters |
How our audit addressed the key audit matter |
impairment assessment of investments in subsidiaries, associates and joint ventures (as described in Note 2.2(q) |
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(Summary of significant accounting policies) and note 6 of notes forming part of the standalone Ind AS financial statements) |
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The Company has major investments in subsidiaries, |
Our audit procedures included the following: |
associates and joint ventures as at March 31, 2022. The |
⢠We obtained understanding of the Company''s policy on |
management assesses at least annually the existence of |
assessment of impairment of investment in subsidiaries, |
impairment indicators of each shareholdings in such |
associates and joint ventures and assumptions used by |
subsidiaries, associates andjoint ventures. |
the management including design and implementation of |
The processes and methodologies for assessing and |
controls. We have tested the operating effectiveness of |
determining the recoverable amount of each investments |
these controls. |
are based on complex assumptions, that by their nature |
⢠We assessed the methodology used by management to |
imply the use of the management''s judgment, in particular |
estimate the recoverable value of each investment and |
with reference to identification of impairment indicators, |
consistency with accounting standards. |
forecast of future cash flows relating to the period covered |
⢠We compared the carrying values of the Company''s |
by the Company''s strategic business plan, normalized cash |
investment in these subsidiaries, associates and joint |
flows assumed as a basis for terminal value, as well as the |
ventures with their respective net worth as per audited |
long-term growth rates and discount rates applied to such forecasted cash flows |
financial statements. ⢠We have seen valuation models prepared by the |
Further considering the outbreak of COVID 19 and |
management on investments where investment amount |
uncertainties involved regarding forecast of future cash flows the management performed detailed analysis to |
is material and there are indicators of impairment. |
evaluate impairment for specific cases where there are |
⢠We involved our valuation specialists to evaluate |
impairment indicators and material investments. |
methodology, assumptions and estimates used in the calculations We discussed potential changes in key |
Considering the judgment required for estimating the cash |
drivers as compared to previous year / actual |
flows and the complexity of the assumptions used, this is |
performance with management to evaluate whether the |
considered as a key audit matter. |
inputs and assumptions used in the cash flow forecasts were suitable. We also evaluated the assumptions around the key drivers of the cash flow forecasts including discount rates, expected growth rates and terminal growth rates used. ⢠We also assessed the recoverable value by performing sensitivity testing of key assumptions used. ⢠Analysed and examined the business plans approved along with assumptions and estimates used by management. ⢠We evaluated the accounting and disclosure of impairment of investment in the standalone Ind AS financial statements of the Company. ⢠We tested the arithmetical accuracy of these models. |
We have determined that there are no other key audit matters to communicate in our report.
The Company''s Board of Directors is responsible for the other information. The other information comprises the information included in the Annual report, but does not include the standalone Ind AS financial statements and our auditor''s report thereon.
Our opinion on the standalone Ind AS financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.
In connection with our audit of the standalone Ind AS financial statements, our responsibility is to read the other information and, in doing so, consider whether such other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of management and those charged with governance for the standalone Ind AS 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 standalone Ind AS financial statements that give a true and fair view of the financial position, financial performance including other comprehensive income, cash flows and changes in equity of the Company in accordance with the accounting principles generally accepted in India, including the Indian Accounting Standards (Ind AS) specified under section 133 of the Act read with the Companies (Indian Accounting Standards) Rules, 2015, as amended. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding of the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and the design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the standalone Ind AS 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 Ind AS 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.
Those charged with governance are also responsible for overseeing the Company''s financial reporting process.
Auditor''s responsibilities for the audit of the standalone Ind AS financial statements
Our objectives are to obtain reasonable assurance about whether the standalone Ind AS 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 standalone Ind AS 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 standalone Ind AS financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
⢠Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances. Under section 143(3)(i) of the Act, we are also responsible for expressing our opinion on whether the Company has adequate internal financial controls with reference to financial statements in place and the operating effectiveness of such controls.
⢠Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
⢠Conclude on the appropriateness of 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 standalone Ind AS financial statements, including the disclosures, and whether the standalone Ind AS financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
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 standalone Ind AS financial statements for the financial year ended March 31, 2022 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 the Companies (Auditor''s Report) Order, 2020 ("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 1" 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 including the Statement of Other Comprehensive Income, the Cash Flow Statement and Statement of Changes in Equity dealt with by this Report are in agreement with the books of account;
(d) In our opinion, the aforesaid standalone Ind AS financial statements comply with the Accounting Standards specified under Section 133 of the Act, read with Companies (Indian Accounting Standards) Rules, 2015, as amended;
(e) On the basis of the written representations received from the directors as on March 31, 2022 taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2022 from being appointed as a director in terms of Section 164 (2) of the Act;
(f) With respect to the adequacy of the internal financial controls of the Company with reference to these standalone Ind AS financial statements and the operating effectiveness of such controls, refer to our separate Report in "Annexure 2" to this report;
(g) In our opinion, the managerial remuneration for the year ended March 31, 2022 has been paid / provided by the
Company to its directors in accordance with the provisions of section 197 read with Schedule V to the Act;
(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 standalone Ind AS financial statements - Refer Note 38 to the standalone Ind AS financial statements;
ii. The Company has made provision, as required under the applicable law or accounting standards, for material foreseeable losses, if any, on long-term contracts including derivative contracts - Refer Note 9 and 19(a) to the standalone Ind AS financial statements;
iii. There has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Company
iv. a) The management has represented that, to the best of its knowledge and belief, other than as disclosed in the
Note 47 to the standalone Ind AS financial statements, 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 persons or entities, including foreign entities ("Intermediaries"), 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 ("Ultimate Beneficiaries") or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries;
b) The management has represented that, to the best of its knowledge and belief, other than as disclosed in the Note 47 to the standalone Ind AS financial statements, no funds have been received by the Company from any persons or entities, including foreign entities ("Funding Parties"), with the understanding, whether recorded in writing or otherwise, that the Company shall, whether, directly or indirectly, lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party ("Ultimate Beneficiaries") or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries; and
c) Based on such audit procedures performed that have been considered reasonable and appropriate in the circumstances, nothing has come to our notice that has caused us to believe that the representations under sub-clause (a) and (b) contain any material misstatement.
v. The final dividend paid by the Company during the year in respect of the same declared for the previous year is in accordance with section 123 of the Act to the extent it applies to payment of dividend.
The interim dividend declared and paid by the Company during the year and until the date of this audit report is in accordance with section 123 of the Act.
As stated in Note 17 to the standalone Ind AS financial statements, the Board of Directors of the Company have proposed final dividend for the year which is subject to the approval of the members at the ensuing Annual General Meeting. The dividend declared is in accordance with section 123 of the Act to the extent it applies to declaration of dividend.
For S R B C & CO LLP Chartered Accountants
ICAI Firm Registration Number: 324982E/E300003 per Huzefa Ginwala
Partner
Membership Number: 111757 UDIN: 22111757AJAULT3008
Place of Signature: Pune Date: May 16, 2022
Mar 31, 2021
OPINION
We have audited the accompanying standalone Ind AS financial statements of Bharat Forge Limited ("the Company"), which comprise the Balance sheet as at March 31 2021, the Statement of Profit and Loss, including Other Comprehensive Income, the Cash Flow Statement and the Statement of Changes in Equity for the year then ended, and notes to the standalone Ind AS financial statements, including a summary of significant accounting policies and other explanatory information.
In our opinion and to the best of our information and according to the explanations given to us, the aforesaid standalone Ind AS financial statements give the information required by the Companies Act, 2013, as amended ("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, 2021, its profit including other comprehensive income, its cash flows and the changes in equity for the year ended on that date.
We conducted our audit of the standalone Ind AS financial statements in accordance with the Standards on Auditing (SAs), as specified under section 143(10) of the Act. Our responsibilities under those Standards are further described in the ''Auditor''s Responsibilities for the Audit of the Standalone Ind AS 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 together with the ethical requirements that are relevant to our audit of the financial statements under the provisions of the Act and the Rules thereunder, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the Code of Ethics. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the standalone Ind AS financial statements.
We draw attention to note 44 of the Standalone Ind AS financial Statement which describes the management''s evaluation of impact of uncertainties related to COVID -19 and its consequential effects on the carrying value of its assets as at March 31, 2021 and the operations of the Company.
Our opinion is not modified in respect of this matter.
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the standalone Ind AS financial statements for the financial year ended March 31, 2021. These matters were addressed in the context of our audit of the standalone Ind AS financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. For each matter below, our description of how our audit addressed the matter is provided in that context.
We have determined the matters described below to be the key audit matters to be communicated in our report. We have fulfilled the responsibilities described in the Auditor''s responsibilities for the audit of the standalone Ind AS financial statements section of our report, including in relation to these matters. Accordingly, our audit included the performance of procedures designed to respond to our assessment of the risks of material misstatement of the standalone Ind AS financial statements. The results of our audit procedures, including the procedures performed to address the matters below, provide the basis for our audit opinion on the accompanying standalone Ind AS financial statements.
Key audit matters |
How our audit addressed the key audit matter |
Completeness of revenue (as described in Note 2.2(e) (Summary of significant accounting policies) and note 24 of notes |
|
forming part of the standalone Ind AS financial statements) |
|
The Company has revenue from sale of products which includes finished goods and tooling income and sale of services in the form of job work charges. The Company manufactures highly specialized forged and machined finished goods as per specification provided by the customers and based on the schedules from the customers. |
Our audit procedures included the following: ⢠We focused on our understanding of the Company''s sales process, including design and implementation of controls and tested the operating effectiveness of these controls. |
⢠We read the Company''s accounting policies pertaining |
|
The Company recognizes revenue from sale of finished goods |
to revenue recognition and assessed compliance with |
at a point in time based on the terms of the contract with customers which varies for each customer. Determination |
Ind AS 115 - Revenue from Contracts with Customers. |
of point in time includes assessment of timing of transfer of |
⢠We obtained and read the terms of customer contracts |
significant risk and rewards of ownership, establishing the |
on sample basis to assess various performance |
present right to receive payment for the products, delivery |
obligations in the contract, the point in time of transfer |
specifications including inco terms, timing of transfer of |
of control and pricing terms. |
legal title of the asset and determination of the point of |
⢠We tested on a sample basis sales invoices for |
acceptance of goods by customer. Further, the pricing of |
identification of point in time for transfer of |
the products is dependent on metal indices and foreign |
control and terms of contract with customers. |
exchange fluctuation making the price volatile including variable considerations. |
Further, we performed procedures to test on a sample basis whether revenue was recognized in |
Due to judgments relating to determination of point in time |
the appropriate period by testing shipping records, good inwards receipt of customer, sales invoice, etc. |
in satisfaction of performance obligations with respect to sale of products, this matter has been considered as |
and testing the management assessment involved in |
key audit matter. |
the process, wherever applicable. |
⢠We assessed the disclosure is in accordance with |
|
applicable accounting standards. |
|
⢠We also performed various analytical procedures to |
|
identify any unusual sales trends for further testing. |
Key audit matters |
How our audit addressed the key audit matter |
|
Hedge accounting including valuations thereof (as described in |
Note 2.2(r) (Summary of significant accounting policies) |
|
and note 9 and 50 of notes forming part of the standalone Ind AS financial statements) |
||
The Company enters into derivative financial instruments which are mainly plain vanilla forward contracts and range |
Our audit procedures included the following: |
|
forward contracts to manage its exposure of foreign |
⢠|
We obtained understanding of the Company''s overall |
currency risk of highly probable forecasted transactions |
hedge accounting strategy, forward contract valuation |
|
which arise during the normal course of its business. |
and hedge accounting process from initiation to |
|
These contracts are measured at fair values leading to |
settlement of derivative financial instruments including |
|
derivative financial assets of INR 2,790.04 million as |
assessment of the design and implementation of |
|
at March 31, 2021 and the net movement of cashflow |
controls and tested the operating effectiveness of |
|
hedge reserve for the year is INR 2,598.77 million net of |
these controls. |
|
taxes which is recorded in other comprehensive income. |
⢠|
We read Company''s accounting policy for |
The gain / loss on maturity of such derivative instruments |
hedge accounting in accordance with relevant |
|
is recorded in the statement of profit and loss along with the relevant hedged item. |
accounting standards. |
|
⢠|
We tested the existence of hedging contracts by |
|
Due to the changes in risks and estimates during the |
tracing to the independent balance confirmations |
|
lifecycle of the customer contracts, in order to apply hedge |
obtained from respective banks. |
|
accounting, management is required to demonstrate that |
⢠|
We tested management''s hedge documentation and |
the underlying contract is considered to be a highly probable |
contracts, on a sample basis. |
|
transaction, that the hedges are highly effective and |
||
maintain hedge documentation. A degree of subjectivity |
⢠|
We tested on a sample basis the fair values of |
is also required to determine when hedge accounting is |
derivative financial instruments recorded by the |
|
to be considered as ineffective. Fair value movements |
Company with the independent balance confirmations |
|
of the forward contracts are driven by movements in financial markets. |
obtained from banks. |
|
⢠|
We involved our valuation specialists in re-performing |
|
Due to the outbreak of COVID 19, there are uncertainties |
the year-end fair valuations including evaluation of |
|
involved in estimating the highly probable forecasted sales, |
hedge effectiveness of derivative financial instruments |
|
estimating future foreign exchange rates and accordingly |
on a sample basis and compared these valuations |
|
have an impact on hedge effectiveness and impact to |
with those recorded by the Company including |
|
statement of profit and loss account. |
assessing the valuation methodology and key assumptions used therein. |
|
These transactions may have a significant financial effect |
⢠|
We have evaluated the revised estimates obtained |
and have extensive accounting and reporting obligations |
from management with respect to highly probable |
|
and accordingly, this is considered as a key audit matter. |
forecasted sales due to COVID 19. |
|
⢠|
We assessed the disclosure of hedge transactions in the standalone Ind AS financial statements of the Company. |
Key audit matters |
How our audit addressed the key audit matter |
|
Impairment assessment of investments in subsidiaries, associates and joint ventures (as described in Note 2.2(q) (Summary of significant accounting policies) and note 6 of notes forming part of the standalone Ind AS financial statements) |
||
The Company has major investments in subsidiaries, |
Our audit procedures included the following: |
|
associates and joint ventures as at March 31, 2021. The management assesses at least annually the existence |
⢠|
We obtained understanding of the Company''s |
of impairment indicators of each shareholdings in such subsidiaries, associates and joint ventures. |
policy on assessment of impairment of investment in subsidiaries, associates and joint ventures and assumptions used by the management including |
|
The processes and methodologies for assessing and determining the recoverable amount of each investments are based on complex assumptions, that by their nature imply the use of the management''s judgment, in particular with reference to identification of impairment indicators, forecast of future cash flows relating to the period covered |
⢠|
design and implementation of controls. We have tested the operating effectiveness of these controls. We assessed the methodology used by management to estimate the recoverable value of each investment and consistency with accounting standards. |
by the Company''s strategic business plan, normalized cash |
⢠|
We compared the carrying values of the Company''s |
flows assumed as a basis for terminal value, as well as the |
investment in these subsidiaries, associates and joint |
|
long-term growth rates and discount rates applied to such |
ventures with their respective net worth as per audited |
|
forecasted cash flows |
financial statements. |
|
Further considering the outbreak of COVID 19 and uncertainties involved regarding forecast of future cash flows the management performed detailed analysis to evaluate impairment for specific cases where there are |
⢠|
We have seen valuation models prepared by the management on investments where investment amount is material and there are indicators of impairment. |
impairment indicators and material investments. |
⢠|
We involved our valuation specialists to evaluate methodology, assumptions and estimates used in |
Considering the judgment required for estimating the cash |
the calculations. We discussed potential changes |
|
flows and the complexity of the assumptions used, this is |
in key drivers as compared to previous year / actual |
|
considered as a key audit matter. |
performance with management to evaluate whether the inputs and assumptions used in the cash flow forecasts were suitable. We also evaluated the assumptions around the key drivers of the cash flow forecasts including discount rates, expected growth rates and terminal growth rates used. |
|
⢠|
We also assessed the recoverable value by performing sensitivity testing of key assumptions used. |
|
⢠|
Analysed and examined the business plans approved along with assumptions and estimates used by management. |
|
⢠|
We evaluated the accounting and disclosure of impairment of investment in the Standalone Ind AS financial statements of the Company. |
|
⢠|
We tested the arithmetical accuracy of these models. |
The Company''s Board of Directors is responsible for the other information. The other information comprises the information included in the Annual report but does not include the standalone Ind AS financial statements and our auditor''s report thereon.
Our opinion on the standalone Ind AS financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.
In connection with our audit of the standalone Ind AS financial statements, our responsibility is to read the other information and, in doing so, consider whether such other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.
RESPONSIBILITIES OF MANAGEMENT AND THOSE CHARGED WITH GOVERNANCE FOR THE STANDALONE IND AS 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 standalone Ind AS financial statements that give a true and fair view of the financial position, financial performance including other comprehensive income, cash flows and changes in equity of the Company in accordance with the accounting principles generally accepted in India, including the Indian Accounting Standards (Ind AS) specified under section 133 of the Act read with the Companies (Indian Accounting Standards) Rules, 2015, as amended. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding of the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and the design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the standalone Ind AS 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 Ind AS 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.
Those charged with governance are also responsible for overseeing the Company''s financial reporting process.
AUDITOR''S RESPONSIBILITIES FOR THE AUDIT OF THE STANDALONE IND AS FINANCIAL STATEMENTS
Our objectives are to obtain reasonable assurance about whether the standalone Ind AS 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 standalone Ind AS 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 standalone Ind AS financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
⢠Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances. Under section 143(3)(i) of the Act, we are also responsible for expressing our opinion on whether the Company has adequate internal financial controls with reference to financial statements in place and the operating effectiveness of such controls.
⢠Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
⢠Conclude on the appropriateness of 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 standalone Ind AS financial statements, including the disclosures, and whether the standalone Ind AS financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
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 standalone Ind AS financial statements for the financial year ended March 31, 2021 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 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 1" 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 including Other Comprehensive Income, the Cash Flow Statement and Statement of Changes in Equity dealt with by this Report are in agreement with the books of account;
(d) In our opinion, the aforesaid standalone Ind AS financial statements comply with the Accounting Standards specified under Section 133 of the Act, read with Companies (Indian Accounting Standards) Rules, 2015, as amended;
(e) The matter described in Emphasis of matter paragraph above, in our opinion, may not have an adverse effect on the functioning of the Company;
(f) On the basis of the written representations received from the directors as on March 31, 2021 taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2021 from being appointed as a director in terms of Section 164 (2) of the Act;
(g) With respect to the adequacy of the internal financial controls over financial reporting of the Company with reference to these standalone Ind AS financial statements and the operating effectiveness of such controls, refer to our separate Report in "Annexure 2" to this report;
(h) In our opinion, the managerial remuneration for the year ended March 31, 2021 has been paid / provided by the Company to its directors in accordance with the provisions of section 197 read with Schedule V to the Act;
(i) 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 standalone Ind AS financial statements - Refer Note 38 to the standalone Ind AS financial statements;
ii. The Company has made provision, as required under the applicable law or accounting standards, for material foreseeable losses, if any, on long-term contracts including derivative contracts - Refer Note 9 and 19(a) to the standalone Ind AS financial statements;
iii. There has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Company
For S R B C & CO LLP
Chartered Accountants
ICAI Firm Registration Number: 324982E/E300003
per Huzefa Ginwala
Partner
Membership Number: 111757 UDIN: 21111757AAAADA8573
Place: Pune Date: June 4, 2021
ANNEXURE 1 REFERRED TO IN PARAGRAPH 1 UNDER THE HEADING âREPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS" OF OUR REPORT OF EVEN DATE.
Re: Bharat Forge Limited (''the Company'')
(i) (a) The Company has maintained proper records showing full particulars, including quantitative details and situation
of fixed assets.
(b) All fixed assets have not been physically verified by the management during the year but there is a regular programme of verifying them once in three years 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 verification.
(c) According to the information and explanations given by the management the title deeds of immovable properties included in property, plant and equipment are held in the name of the Company except two immovable properties aggregating gross block of INR 0.01 million and net block of INR 0.01 million as at March 31, 2021 for which title deeds were not available with the Company and hence we are unable to comment on the same.
(ii) The inventory has been physically verified by the management during the year. In our opinion, the frequency of verification is reasonable. No material discrepancies were noticed on such physical verification. Inventories lying with third parties have been confirmed by them as at March 31, 2021 and no material discrepancies were noticed in respect of such confirmations.
(iii) (a) The Company has granted loans to five companies covered in the register maintained under section 189 of the Act.
In our opinion and according to the information and explanations given to us, the terms and conditions of the loans are not prejudicial to the Company''s interest.
(b) In respect of loans granted to companies covered in the register maintained under section 189 of the Act, repayment of the principal amount is as stipulated and payment of interest has been regular except for loans granted by the Company to two of its subsidiaries and one of its associates, wherein payment of interest has not been regular.
(c) The Company has a sum of INR 13.95 million which is overdue for more than ninety days from Companies covered in the register maintained under section 189 of the Act and in our opinion and according to the information and explanations given by the management, the Company has taken reasonable steps for recovery of this overdue interest.
Details of overdue cases mentioned below:
Name of Company |
Interest Overdue (INR in million) |
BF Elbit Advanced Systems Private Limited * |
12.25 |
Bharat Forge Global Holdings GmbH # |
1.01 |
Tork Motors Private Limited # |
0.69 |
* Amount has been converted to loan as on March 31, 2021.
# Amounts received subsequently.
(iv) In our opinion and according to the information and explanations given to us, provisions of section 185 and 186 of the Act in respect of loans to directors including entities in which they are interested and in respect of loans and advances given, investments made and, guarantees, and securities given have been complied with by the Company.
(v) The Company has not accepted any deposits within the meaning of Sections 73 to 76 of the Act and the Companies (Acceptance of Deposits) Rules, 2014 (as amended). Accordingly, the provisions of clause 3(v) of the Order are not applicable. However, according to the information and explanations given to us, in respect of deposits accepted earlier
under relevant provisions of the erstwhile Companies Act, 1956, and the rules framed thereunder, there are certain unclaimed deposits amounting to INR 0.04 million including interest thereon which are subject to litigation.
(vi) We have broadly reviewed the books of account maintained by the Company pursuant to the rules made by the Central Government for the maintenance of cost records under section 148(1) of the Act, related to the manufacture of forged products and other products, and are of the opinion that prima facie, the specified accounts and records have been made and maintained. We have not, however, made a detailed examination of the same.
(vii) (a) Undisputed statutory dues including provident fund, employees'' state insurance, income-tax, duty of custom,
goods and service tax, cess and other material statutory dues have generally been regularly deposited with the appropriate authorities though there has been slight delay in few cases.
(b) According to the information and explanations given to us and audit procedures performed by us, undisputed dues in respect of provident fund, employees'' state insurance, income tax, duty of custom, goods and service tax, cess and other statutory dues which were outstanding, at the year end, for a period of more than six months from the date they became payable, are as follows:
Statement of arrears of statutory dues outstanding for more than six months |
|||||
Name of the statute |
Nature of the dues |
Amount (INR in million) |
Period to which the amount relate |
Due date |
Date of Remarks, if any payment |
Maharashtra Municipal Corporation Act, 1949 and Bombay Provincial Municipal Corporation (Local Body Tax) Rules, 2010 (LBT rules) |
Local Body Tax (LBT) |
39.80 |
FY 2015- 16, 2016- 17 & 2017- 18 |
Various dates |
Not paid - |
(c) According to the records of the Company, the dues outstanding of income-tax, duty of custom, duty of excise, goods and service tax and cess on account of any dispute, are as follows:
Name of the statute |
Nature of the dues |
Amount (INR in million)# |
Period to which the amount relates |
Forum where the dispute is pending |
Property tax# |
Demand received for various cases (net of INR 206.42 million paid under protest) |
165.73 |
AY 2005-06 to 2019-2020 |
High Court |
Central Excise Act, 1944 |
Demand received for various cases (net of INR 5.50 million paid under protest) |
38.31 |
AY 2003-04 to 2013-14 |
CESTAT |
Customs Act, 1962 |
Demand received for wrong availment of duty drawback (net of INR 157.40 million paid under protest) |
AY 2012-13 and 2013-14 |
Principal Commissioner (RA) and Ex-Officio Additional Secretary to the Government of India |
|
# Excludes interest and penalty. |
(viii) In our opinion and according to the information and explanations given by the management, the Company has not defaulted in repayment of loans or borrowing to a financial institution, bank or government or dues to debenture holders. The Company did not have any outstanding dues in respect of a financial institution.
(ix) In our opinion and according to the information and explanations given by the management and audit procedures performed by is, the Company has utilized the monies raised by way of debt instruments in the nature of non-convertible debenture and term loans for the purposes for which they were raised. The Company does not have any unutilised money out of initial public offer / further public offer.
(x) Based upon the audit procedures performed for the purpose of reporting the true and fair view of the financial statements and according to the information and explanations given by the management, we report that no material fraud by the Company or no material fraud on the Company by the officers and employees of the Company has been noticed or reported during the year.
(xi) According to the information and explanations given by the management and audit procedures performed by us, the managerial remuneration has been paid / provided in accordance with the requisite approvals mandated by the provisions of section 197 read with Schedule V to the Act.
(xii) In our opinion, the Company is not a nidhi company. Therefore, the provisions of clause 3(xii) of the Order are not applicable to the Company and hence not commented upon.
(xiii) According to the information and explanations given by the management and audit procedures performed by us, transactions with the related parties are in compliance with section 177 and 188 of the Act where applicable and the details have been disclosed in the notes to the financial statements, as required by the applicable accounting standards.
(xiv) According to the information and explanations given to us and on an overall examination of the balance sheet, the Company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures during the year and hence, reporting requirements under clause 3(xiv) are not applicable to the Company and not commented upon.
(xv) According to the information and explanations given by the management and audit procedures performed by us, the Company has not entered into any non-cash transactions with directors or persons connected with him as referred to in section 192 of the Act.
(xvi) According to the information and explanations given to us, the provisions of section 45-IA of the Reserve Bank of India Act, 1934 are not applicable to the Company and hence not commented upon.
For S R B C & CO LLP
Chartered Accountants
ICAI Firm Registration Number: 324982E/E300003
per Huzefa Ginwala
Partner
Membership Number: 111757
UDIN: 21111757AAAADA8573
Place: Pune
Date: June 4, 2021
ANNEXURE 2 REFERRED TO IN PARAGRAPH 2[G) UNDER THE HEADING âREPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS" OF OUR REPORT OF EVEN DATE.
Report on the Internal Financial Controls 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 Bharat Forge Limited ("the Company") as of March 31, 2021 in conjunction with our audit of the standalone Ind AS financial statements of the Company for the year ended on that date.
MANAGEMENT''S RESPONSIBILITY FOR INTERNAL FINANCIAL CONTROLS OVER FINANCIAL REPORTING WITH REFERENCE TO THESE STANDALONE IND AS FINANCIAL STATEMENTS
The Company''s Management is responsible for establishing and maintaining internal financial controls based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls over Financial Reporting issued by the Institute of Chartered Accountants of India. These responsibilities include the design, implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the orderly and efficient conduct of its business, including adherence to the Company''s policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information, as required under the Companies Act, 2013.
AUDITOR''S RESPONSIBILITY FOR INTERNAL FINANCIAL CONTROLS OVER FINANCIAL REPORTING WITH REFERENCE TO THESE STANDALONE IND AS FINANCIAL STATEMENTS
Our responsibility is to express an opinion on the Company''s internal financial controls over financial reporting with reference to these standalone Ind AS financial statements based on our audit. We conducted our audit in accordance with the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting (the "Guidance Note") and the Standards on Auditing as specified under section 143(10) of the Companies Act, 2013, to the extent applicable to an audit of internal financial controls and, both issued by the Institute of Chartered Accountants of India. Those Standards and the Guidance Note require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether adequate internal financial controls over financial reporting with reference to these standalone Ind AS financial statements was established and maintained and if such controls operated effectively in all material respects.
Our audit involves performing procedures to obtain audit evidence about the adequacy of the internal financial controls over financial reporting with reference to these standalone Ind AS financial statements and their operating effectiveness. Our audit of internal financial controls over financial reporting included obtaining an understanding of internal financial controls over financial reporting with reference to these standalone Ind AS financial statements, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. The procedures selected depend on the auditor''s judgement, including the assessment of the risks of material misstatement of the standalone Ind AS financial statements, whether due to fraud or error.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the internal financial controls over financial reporting with reference to these standalone Ind AS financial statements.
MEANING OF INTERNAL FINANCIAL CONTROLS OVER FINANCIAL REPORTING WITH REFERENCE TO THESE STANDALONE IND AS FINANCIAL STATEMENTS
A company''s internal financial control over financial reporting with reference to these standalone Ind AS financial statements is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of standalone Ind AS financial statements for external purposes in accordance with generally accepted accounting principles. A company''s internal financial control over financial reporting with reference to these standalone Ind AS financial statements includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that
transactions are recorded as necessary to permit preparation of standalone Ind AS 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 company''s assets that could have a material effect on the standalone Ind AS financial statements.
INHERENT LIMITATIONS OF INTERNAL FINANCIAL CONTROLS OVER FINANCIAL REPORTING WITH REFERENCE TO THESE STANDALONE IND AS FINANCIAL STATEMENTS
Because of the inherent limitations of internal financial controls over financial reporting with reference to these standalone Ind AS financial statements, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may occur and not be detected. Also, projections of any evaluation of the internal financial controls over financial reporting with reference to these standalone Ind AS financial statements to future periods are subject to the risk that the internal financial control over financial reporting with reference to these standalone Ind AS financial statements may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
In our opinion, the Company has, in all material respects, adequate internal financial controls over financial reporting with reference to these standalone Ind AS financial statements and such internal financial controls over financial reporting with reference to these standalone Ind AS financial statements were operating effectively as at March 31, 2021, based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issued by the Institute of Chartered Accountants of India.
For S R B C & CO LLP
Chartered Accountants
ICAI Firm Registration Number: 324982E/E300003
per Huzefa Ginwala
Partner
Membership Number: 111757 UDIN: 21111757AAAADA8573
Place: Pune Date: June 4, 2021
Mar 31, 2019
Independent Auditor''s Report
To the Members of Bharat Forge Limited
Report on the Audit of the Standalone Ind AS Financial Statements Opinion
We have audited the accompanying standalone Ind AS financial statements of Bharat Forge Limited ("the Company"], which comprise the Balance sheet as at March 31 2019, the Statement of Profit and Loss, including the statement of Other Comprehensive Income, the Cash Flow Statement and the Statement of Changes in Equity for the year then ended, and notes to the financial statements, including a summary of significant accounting policies and other explanatory information.
In our opinion and to the best of our information and according to the explanations given to us, the aforesaid standalone Ind AS financial statements give the information required by the Companies Act, 2013, as amended ("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, 2019, its profit including other comprehensive income its cash flows and the changes in equity for the year ended on that date.
Basis for Opinion
We conducted our audit of the standalone Ind AS financial statements in accordance with the Standards on Auditing (SAs], as 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 Ind AS Financial Statementsâ section of our report. We are independent of the Company in accordance with the ''Code of Ethicsâ issued by the Institute of Chartered Accountants of India together with the ethical requirements that are relevant to our audit of the accompanying financial statements under the provisions of the Act and the Rules there under, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the Code of Ethics. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the standalone Ind AS 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 standalone Ind AS financial statements for the financial year ended March 31, 2019. These matters were addressed in the context of our audit of the standalone Ind AS financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. For each matter below, our description of how our audit addressed the matter is provided in that context.
We have determined the matters described below to be the key audit matters to be communicated in our report. We have fulfilled the responsibilities described in the Auditorâs responsibilities for the audit of the standalone Ind AS financial statements section of our report, including in relation to these matters. Accordingly, our audit included the performance of procedures designed to respond to our assessment of the risks of material misstatement of the standalone Ind AS financial statements. The results of our audit procedures, including the procedures performed to address the matters below, provide the basis for our audit opinion on the accompanying standalone Ind AS financial statements.
Key audit matters |
How our audit addressed the key audit matter |
Completeness of revenue in relation to determination of point of time when revenue should be recognized [refer note 2.2[e] [accounting policy] and note 24 [financial disclosures] to the standalone Ind AS financial statements] |
|
The Company has revenue from sale of products which includes finished goods and tooling income and sale of services in the form ofjob work charges. The Company manufactures highly specialized forged and machined finished goods per specification provided by the customers and based on the schedules from the customers. The Company recognizes revenue from sale of finished goods at a point of time based on the terms of the contract with customers which varies for each customer. Determination of point in time includes assessment of timing of transfer of significant risk and rewards of ownership, establishing the present right to receive payment for the products, delivery specifications including inco terms, timing of transfer of legal title of the asset and determination of the point of acceptance of goods by customer. Further, the pricing of the products is dependent on metal indices and foreign exchange movements making the price volatile including variable considerations. Due tojudgments relating to determination of point of time in satisfaction of performance obligations with respect to sale of products, this matter has been considered as key audit matter. |
Our audit procedures included: - We focused on our understanding of the Companyâs sales process, including design and implementation of controls and tested the operating effectiveness of these controls. - We read and understood the Companyâs accounting policy for revenue recognition. - We obtained and read the terms of customer contracts on sample basis to assess various performance obligations in the contract, the point of time of transfer of control and pricing terms. - We tested on a sample basis sales invoices for identification of point of time for transfer of control and terms of contract with customers. Further, we have performed procedures on sales by testing on a sample basis to assess whether the control was passed for the sales made at or around the year end based on various supporting documents. - We also performed various analytical procedures to identify any unusual sales trends for further testing. |
Significant estimate and judgment in Hedge accounting including valuations thereof [refer note 2.2[r] [accounting policy] and note 9 and 49 [financial disclosures] to the IndAS standalone financial statements] |
|
The Company enters into derivative financial instruments which are mainly plain vanilla forward contracts to manage its exposure of foreign currency risk of highly probable forecasted transactions which arise during the normal course of its business. These contracts are measured at fair values leading to derivative financial assets of INR 1,982.94 million as at March 31, 2019. The net movement of cashflow hedge reserve for the year is INR 33.29 million net of taxes which is recorded in other comprehensive income. The gain / loss on maturity of such derivative instruments is recorded in the statement of profit and loss along with the relevant hedged item. Due to the changes in risks and estimates during the lifecycle of the customer contracts, in order to apply hedge accounting, management is required to demonstrate that the underlying contract is considered to be a highly probable transaction, that the hedges are highly effective and maintain appropriate hedge documentation. A degree of subjectivity is also required to determine when hedge accounting is to be considered as ineffective. Fair value movements of the forward contracts are driven by movements in financial markets. These transactions may have a significant financial effect and have extensive accounting and reporting obligations and accordingly, this is considered as a key audit matter. |
Our audit procedures included: - We obtained understanding of the Companyâs overall hedge accounting strategy, forward contract valuation and hedge accounting process from initiation to settlement of derivative financial instruments including assessment of the design and implementation of controls, and tested the operating effectiveness of these controls. - We assessed Companyâs accounting policy for hedge accounting in accordance with Ind AS. - We tested the existence of hedging contracts by tracing to the confirmations obtained from respective banks. - We tested managementâs hedge documentation and contracts, on a sample basis. - We tested on a sample basis the fair values of derivative financial instruments recorded by the Company with the independent balance confirmations obtained from banks. - We involved our valuation specialists to assist in reper forming the year-end fair valuations of derivative financial instruments on a sample basis and compared these valuations with those recorded by the Company including assessing the valuation methodology and key assumptions used therein. - We assessed the disclosure of hedge transactions in the financial statements. |
Key audit matters How our audit addressed the key audit matter Significant judgment relating to impairment of investments in subsidiaries, associates and joint ventures (refer note 2.2 [n] [accounting policy] and note 6 [financial disclosures] to the standalone IndAS financial statements] |
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The Company has major investments in subsidiaries, associates and joint ventures as at March 31, 2019. The management assesses at least annually the existence of impairment indicators of each shareholdings in such subsidiaries, associates andjoint ventures. The processes and methodologies for assessing and determining the recoverable amount of each investments are based on complex assumptions, that by their nature imply the use of the managementâsjudgment, in particular with reference to identification of impairment indicators, forecast of future cash flows relating to the period covered by the Companyâs strategic business plan, normalized cash flows assumed as a basis for terminal value, as well as the long-term growth rates and discount rates applied to such forecasted cash flows. Considering the judgment required for estimating the cash flows and the complexity of the assumptions used, this is considered as a key audit matter. |
Our audit procedures included - We obtained understanding of the Companyâs policy on assessment of impairment of investment in subsidiaries, associates and joint ventures and assumptions used by the management including design and implementation of controls. We have tested the operating effectiveness of these controls. - We assessed the methodology used by management to estimate the recoverable value of each investment and consistency with accounting standards. - We compared the carrying values of the Companyâs investment in these subsidiaries, associates and joint ventures with their respective net asset values as per audited financial statements. - With respect to cases where indicators of impairment were identified by management, we obtained and read the projections / future cash flows along with sensitivity analysis thereof with respect to the relevant investments. - We evaluated managementâs methodology, assumptions and estimates used in the calculations. - We evaluated the accounting and disclosure of investment impairments in the financial statements of the Company. |
Other Information
The Companyâs Board of Directors is responsible for the other information. The other information comprises the information included in the Annual report, but does not include the standalone Ind AS financial statements and our auditorâs report thereon.
Our opinion on the standalone Ind AS financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.
In connection with our audit of the standalone Ind AS financial statements, our responsibility is to read the other information and, in doing so, consider whether such other information is materially inconsistent with the standalone Ind AS financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of Management and Those charged with Governance for the Standalone Ind AS 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 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] specified under section 133 of the Act read with the Companies (Indian Accounting Standards] Rules, 2015, as amended. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding of the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and the design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the standalone Ind AS 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 Ind AS financial statements, management is responsible for assessing the Companyâs ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.
Those charged with governance are also responsible for overseeing the Companyâs financial reporting process.
Auditor''s Responsibilities for the Audit of the Standalone Ind AS Financial Statements
Our objectives are to obtain reasonable assurance about whether the standalone Ind AS 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 Ind AS 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 standalone Ind AS financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
- Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances. Under section 143(3X0 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 standalone Ind AS financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditorâs report. However, future events or conditions may cause the Company to cease to continue as a going concern.
- Evaluate the overall presentation, structure and content of the standalone Ind AS financial statements, including the disclosures, and whether the standalone Ind AS financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
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 standalone Ind AS financial statements for the financial year ended March 31, 2019 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 the Companies (Auditorâs 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 1" 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 including the Statement of Other Comprehensive Income, the Cash Flow Statement and Statement of Changes in Equity dealt with by this Report are in agreement with the books of account;
(d] In our opinion, the aforesaid standalone Ind AS financial statements comply with the Accounting Standards specified under Section 133 of the Act, read with Companies (Indian Accounting Standards] Rules, 2015, as amended;
(e] On the basis of the written representations received from the directors as on March 31, 2019 taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 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 with reference to these standalone Ind AS financial statements and the operating effectiveness of such controls, refer to our separate Report in "Annexure 2" to this report;
(g] In our opinion, the managerial remuneration for the year ended March 31, 2019 has been paid / provided by the Company to its directors in accordance with the provisions of section 197 read with Schedule V to the Act;
(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 standalone Ind AS financial statements - Refer Note 38 to the standalone Ind AS financial statements;
ii. The Company has made provision, as required under the applicable law or accounting standards, for material foreseeable losses, if any, on long-term contracts including derivative contracts - Refer Note 20 to the standalone Ind AS financial statements;
iii. There has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Company.
Annexure 1 referred to in paragraph 1 under the heading âReport on Other Legal and Regulatory Requirementsâ of our report of even date.
Re: Bharat Forge Limited (âthe Company'')
(i] [a] The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets.
(b] All fixed assets have not been physically verified by the management during the year but there is a regular programme of verifying them once in three years 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 verification.
(c] According to the information and explanations given by the management the title deeds of immovable properties included in property, plant and equipment are held in the name of the Company except six immovable properties aggregating gross block of INR 0.01 million and net block of INR 0.01 million as at March 31, 2019 for which title deeds were not available with the Company and hence we are unable to comment on the same.
(ii] The inventory has been physically verified by the management during the year. In our opinion, the frequency of verification is reasonable. No material discrepancies were noticed on such physical verification. Inventories lying with third parties have been confirmed by them as at March 31, 2019 and no material discrepancies were noticed in respect of such confirmations.
(iii] [a] The Company has granted loans to two companies covered in the register maintained under section 189 of the Act. In our opinion and according to the information and explanations given to us, the terms and conditions of the loans are not prejudicial to the Companyâs interest.
(b] In respect of loans granted to companies covered in the register maintained under section 189 of the Act, repayment of the principal amount is as stipulated and payment of interest has been regular except for loans granted by the Company to one of its subsidiaries, wherein loans are repayable on demand. The Company has not demanded the repayment of such loans and payment of interest has not been regular.
(c]
The Company has a sum of INR 6.73 million which is overdue for more than ninety days from a Company covered in the register maintained under section 189 of the Act and in our opinion and according to the information and explanations given by the management, the Company has taken reasonable steps for recovery of this overdue interest.
Details of overdue cases mentioned below:
INR in million
Name of Company |
Interest Overdue |
BF Elbit Advanced Systems Private Limited* |
6.73 |
* Amount has been converted to loan as on March 31, 2019
[iv] In our opinion and according to the information and explanations given to us, provisions of section 185 and 186 of the Act in respect of loans to directors including entities in which they are interested and in respect of loans and advances given, investments made and, guarantees, and securities given have been complied with by the Company.
(v] The Company has not accepted any deposits within the meaning of Sections 73 to 76 of the Act and the Companies (Acceptance of Deposits] Rules, 2014 (as amended]. Accordingly, the provisions of clause 3(v] of the Order are not applicable. However, according to the information and explanations given to us, in respect of deposits accepted earlier under relevant provisions of the erstwhile Companies Act, 1956, and the rules framed there under, there are certain unclaimed deposit amounting to INR 0.04 million including interest thereon which are subject to litigation.
[vi] We have broadly reviewed the books of account maintained by the Company pursuant to the rules made by the Central Government for the maintenance of cost records under section 148(1] of the Act, related to the manufacture of forged products, and are of the opinion that prima facie, the specified accounts and records have been made and maintained. We have not, however, made a detailed examination of the same.
(vii] (a] Undisputed statutory dues including provident fund, employeesâ state insurance, income-tax, duty of custom, duty
of excise, goods and service tax, cess and other material statutory dues have generally been regularly deposited with the appropriate authorities though there has been slight delay in few cases.
(b] According to the information and explanations given to us, undisputed dues in respect of provident fund, employeesâ state insurance, income-tax, duty of custom, duty of excise, goods and service tax, cess and other statutory dues which were outstanding, at the year end, for a period of more than six months from the date they became payable, are as follows:
Statement of arrears of statutory dues outstanding for more than six months
Name of the statute |
Nature of the dues |
Amount (INR in millions) |
Period to which the amount relates |
Due date |
Date of payment |
Remarks, if any |
Maharashtra municipal Corporation Act, 1949 and Bombay Provincial Municipal Corporation (Local Body Tax] Rules, 2010(LBT rules] |
Local Body Tax (LBT] |
39.80 |
PY 2015-16, 2016-17 & 2017-18 |
Various dates |
Not paid |
(c] According to the records of the Company, the dues outstanding of income-tax, sales-tax, service tax, duty of custom, duty of excise, value added tax, goods and service tax and cess on account of any dispute, are as follows:
Name of the statute |
Nature of the dues |
Amount (INR in million)# |
Period to which the amount relates |
Forum where the dispute is pending |
Income Tax Act, 1961 |
Non deduction of withholding taxes u/s 195 (INR 54.92 million] |
AY 2014-15 |
ITAT |
|
Property tax# |
Demand received for various cases (INR149.09 million paid under protest] |
164.66 |
AY 2005-06 to 2016-2017 |
High Court |
Central Excise Act, 1944 |
Demand received for various cases (INR8.96 million paid under protest] |
49.36 |
AY 2004-05 to 2016-2017 |
Commissioner Appeals / CESTAT/ High Court |
Customs Act, 1962 |
Demand received for wrong a ailment of duty drawback (INR 157.40 million paid under protest] |
AY 2012-13 and 2013-14 |
Principal Commissioner (RA] and Ex-0fficio Additional Secretary to the Government of India |
# Excludes interest and penalty
(viii] In our opinion and according to the information and explanations given by the management, the Company has not defaulted in repayment of loans or borrowing to a financial institution, bank or government or dues to debenture holders. The Company did not have any outstanding dues in respect of a financial institution and debenture holders.
[ix] In our opinion and according to the information and explanations given by the management, the Company has utilized the monies raised by way of term loans for the purposes for which they were raised. The Company does not have any unutilized money out of initial public offer / further public offer.
[x] Based upon the audit procedures performed for the purpose of reporting the true and fair view of the financial statements and according to the information and explanations given by the management, we report that no fraud by the Company or no material fraud on the Company by the officers and employees of the Company has been noticed or reported during the year.
[xi] According to the information and explanations given by the management, the managerial remuneration has been paid / provided in accordance with the requisite approvals mandated by the provisions of section 197 read with Schedule V to the Act.
[xii] In our opinion, the Company is not a nidhi company. Therefore, the provisions of clause 3(xii] of the Order are not applicable to the Company and hence not commented upon.
[xiii] According to the information and explanations given by the management, transactions with the related parties are in compliance with section 177 and 188 of the Act where applicable and the details have been disclosed in the notes to the financial statements, as required by the applicable accounting standards.
[xiv] According to the information and explanations given to us and on an overall examination of the balance sheet, the Company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures during the year and hence, reporting requirements under clause 3(xiv] are not applicable to the company and, not commented upon.
[xv] According to the information and explanations given by the management, the Company has not entered into any non-cash transactions with directors or persons connected with him as referred to in section 192 of the Act.
[xvi] According to the information and explanations given to us, the provisions of section 45-IA of the Reserve Bank of India Act, 1934 are not applicable to the Company.
Annexure 2 referred to in paragraph 2(f) under the heading âReport on Other Legal and Regulatory Requirementsâ of our report of even date. Report on the Internal Financial Controls 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 Bharat Forge Limited ("the Company"] as of March 31, 2019 in conjunction with our audit of the standalone Ind AS financial statements of the Company for the year ended on that date.
Management''s Responsibility for Internal Financial Controls
The Companyâs Management is responsible for establishing and maintaining internal financial controls based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls over Financial Reporting issued by the Institute of Chartered Accountants of India. These responsibilities include the design, implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the orderly and efficient conduct of its business, including adherence to the Companyâs policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information, as required under the Companies Act, 2013.
Auditor''s Responsibility
Our responsibility is to express an opinion on the Companyâs internal financial controls over financial reporting with reference to these standalone Ind AS financial statements based on our audit. We conducted our audit in accordance with the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting (the "Guidance Note"] and the Standards on Auditing as specified under section 143(10] of the Companies Act, 2013, to the extent applicable to an audit of internal financial controls and, both issued by the Institute of Chartered Accountants of India. Those Standards and the Guidance Note require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether adequate internal financial controls over financial reporting with reference to these standalone Ind AS financial statements was established and maintained and ifsuch controls operated effectively in all material respects.
Our audit involves performing procedures to obtain audit evidence about the adequacy of the internal financial controls over financial reporting with reference to these standalone Ind AS financial statements and their operating effectiveness. Our audit of internal financial controls over financial reporting included obtaining an understanding of internal financial controls over financial reporting with reference to these standalone Ind AS financial statements, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. The procedures selected depend on the auditorâ judgment, including the assessment of the risks of material misstatement of the standalone Ind AS financial statements, whether due to fraud or error.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the internal financial controls over financial reporting with reference to these standalone Ind AS financial statements.
Meaning of Internal Financial Controls over Financial Reporting with reference to these Financial Statements
A companyâs internal financial control over financial reporting with reference to these standalone Ind AS financial statements is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of standalone Ind AS financial statements for external purposes in accordance with generally accepted accounting principles. A companyâs internal financial control over financial reporting with reference to these standalone Ind AS financial statements includes those policies and procedures that (1] pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; [2] provide reasonable assurance that transactions are recorded as necessary to permit preparation of standalone Ind AS financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and [3] provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the companyâs assets that could have a material effect on the standalone Ind AS financial statements.
Inherent Limitations of Internal Financial Controls over Financial Reporting with reference to these Standalone Ind AS Financial Statements
Because of the inherent limitations of internal financial controls over financial reporting with reference to these standalone Ind AS financial statements, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may occur and not be detected. Also, projections of any evaluation of the internal financial controls over financial reporting with reference to these standalone Ind AS financial statements to future periods are subject to the risk that the internal financial control over financial reporting with reference to these standalone Ind AS financial statements may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Opinion
In our opinion, the Company has, in all material respects, adequate internal financial controls over financial reporting with reference to these standalone Ind AS financial statements and such internal financial controls over financial reporting with reference to these standalone Ind AS financial statements were operating effectively as at March 31, 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.
For S R B C & CO LLP
Chartered Accountants ICAI
Firm Registration Number: 324982E/E300003
per Tridevlal Khandelwal
Pa rtner
Membership Number: 501160
Place of Signature: Pune
Date: May 20, 2019
Mar 31, 2018
Report on the Standalone Ind AS Financial Statements
We have audited the accompanying standalone Ind AS financial statements of Bharat Forge Limited (âthe Companyâ), which comprise the Balance Sheet as at March 31, 2018, the Statement of Profit and Loss, including the statement of Other Comprehensive Income, the Cash Flow Statement and the Statement of Changes in Equity for the year then ended, and a summary of significant accounting policies and other explanatory information.
Managementâs Responsibility for the Standalone Ind AS Financial Statements
The Companyâs Board of Directors is responsible for the matters stated in Section 134(5) of the Companies Act, 2013 (âthe Actâ) with respect to the preparation of these standalone Ind AS financial statements that give a true and fair view of the financial position, financial performance including other comprehensive income, cash flows and changes in equity of the Company in accordance with accounting principles generally accepted in India, including the Indian Accounting Standards (Ind AS) specified under section 133 of the Act, read with the Companies (Indian Accounting Standards) Rules, 2015, as amended. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding of the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and the 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 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 standalone Ind AS financial statements based on our audit. We have taken into account the provisions of the Act, the accounting and auditing standards and matters which are required to be included in the audit report under the provisions of the Act and the Rules made thereunder. We conducted our audit of the standalone Ind AS financial statements in accordance with the Standards on Auditing, issued by the Institute of Chartered Accountants of India, as 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 auditorâs judgment, including the assessment of the risks of material misstatement of the standalone Ind AS financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal financial control relevant to the Companyâs preparation of the standalone Ind AS financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by the Companyâs Directors, as well as evaluating the overall presentation of the standalone Ind AS financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the standalone Ind AS financial statements.
Opinion
In our opinion and to the best of our information and according to the explanations given to us, the standalone Ind AS financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India, of the state of affairs of the Company as at March 31, 2018, its profit including other comprehensive income, its cash flows and the changes in equity for the year ended on that date.
Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditorâs Report) Order, 2016 (âthe Orderâ) issued by the Central Government of India in terms of sub-section (11) of section 143 of the Act, we give in the Annexure 1 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 it appears from our examination of those books;
(c) The Balance Sheet, Statement of Profit and Loss including the Statement of Other Comprehensive Income, the Cash Flow Statement and Statement of Changes in Equity dealt with by this Report are in agreement with the books of account;
(d) In our opinion, the aforesaid standalone Ind AS financial statements comply with the Accounting Standards specified under section 133 of the Act, read with Companies (Indian Accounting Standards) Rules, 2015, as amended;
(e) On the basis of written representations received from the directors as on March 31, 2018, and taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 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 with reference to these standalone Ind AS financial statements and the operating effectiveness of such controls, refer to our separate Report in âAnnexure 2â to this report;
(g) With respect to the other matters to be included in the Auditorâs Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules, 2014, in our opinion and to the best of our information and according to the explanations given to us:
i. The Company has disclosed the impact of pending litigations on its financial position in its standalone Ind AS financial statements - Refer Note 38 to the standalone Ind AS financial statements;
ii. The Company has made provision, as required under the applicable law or accounting standards, for material foreseeable losses, 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.
iv. The disclosure with respect to holding of and dealings in Specified Bank Notes is not applicable to the Company for the year ended March 31, 2018 and accordingly has not been reported upon by us. Refer Note 13 of the standalone Ind AS Financial Statements.
Annexure 1 referred to in paragraph 1 under the heading âReport on Other Legal and Regulatory Requirementsâ of our report of even date.
Re: Bharat Forge Limited (âthe Companyâ)
(i) (a) The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets.
(b) All fixed assets have not been physically verified by the management during the year but there is a regular programme 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 verification.
(c) According to the information and explanations given by the management the title deeds of immovable properties included in property, plant and equipment are held in the name of the Company except six number of immovable properties aggregating gross block of INR 18.43 millon and net block of INR17.15 million as at March 31, 2018 for which title deed were not available with the Company and hence we are unable to comment on the same.
(ii) The inventory has been physically verified by the management during the year. In our opinion, the frequency of verification is reasonable. No material discrepancies were noticed on such physical verification. Inventories lying with third parties have been confirmed by them as at March 31, 2018 and no material discrepancies were noticed in respect of such confirmations.
(iii) (a) The Company has granted loans to four companies covered in the register maintained under section 189 of the Act. In our opinion and according to the information and explanations given to us, the terms and conditions of the loans are not prejudicial to the Companyâs interest.
(b) In respect of loans granted to companies covered in the register maintained under section 189 of the Act, repayment of the principal amount is as stipulated and payment of interest has been regular except for loans granted by the Company to two of its subsidiaries, where payment of interest has not been regular.
(c) The Company has a sum of amounts (representing interest) aggregating to INR 24.04 million which are overdue for more than ninety days from two Companies covered in the register maintained under section 189 of the Act and in our opinion and according to the information and explanations given by the management, the Company has taken reasonable steps for recovery of these overdue interest.
Details of overdue cases mentioned below:
INR in Million
Name of Parties |
Interest Overdue |
BF Elbit Advanced Systems Private Limited* |
20.57 |
Bharat Forge Global Holding GmbH# |
3.47 |
* Amount has been converted to loan as on March 31, 2018
# Amount has been recovered subsequently
(iv) In our opinion and according to the information and explanations given to us, provisions of sections 185 and 186 of the Act in respect of loans to directors including entities in which they are interested and in respect of loans and advances given, investments made and, guarantees, and securities given have been complied with by the Company.
(v) The Company has not accepted any deposits within the meaning of sections 73 to 76 of the Act and the Companies (Acceptance of Deposits) Rules, 2014 (as amended). Accordingly, the provisions of clause 3(v) of the Order are not applicable. However, according to the information and explanations given to us, in respect of deposits accepted earlier under relevant provisions of the erstwhile Companies Act, 1956, and the rules framed thereunder, there are certain unclaimed deposit amounting to INR 0.04 million including interest thereon which are subject to litigation.
(vi) We have broadly reviewed the books of account maintained by the Company pursuant to the rules made by the Central Government for the maintenance of cost records under section 148(1) of the Act, related to the manufacture of forged and other allies products, and are of the opinion that prima facie, the specified accounts and records have been made and maintained. We have not, however, made a detailed examination of the same.
(vii) (a) Undisputed statutory dues including provident fund, employeesâ state insurance, income-tax, sales-tax, service tax, duty of custom, duty of excise, value added tax, local body tax, goods and service tax, cess and other material statutory dues have generally been regularly deposited with the appropriate authorities though there has been slight delay in few cases.
(b) According to the information and explanations given to us, no undisputed dues in respect of provident fund, employeesâ state insurance, income-tax, sales-tax, service tax, duty of custom, duty of excise, value added tax, goods and service tax, cess and other statutory dues which were outstanding, at the year end, for a period of more than six months from the date they became payable. The dues outstanding of Local Body Taxes on account of undisputed amounts outstanding as at year end, for a period of more than six months from the date they become payable are as follows:
Name of the statute |
Nature of the dues |
Amount (INR in million) |
Period to which the amount relates |
Due date |
Date of payment |
Remarks, if any |
Maharashtra Municipal Corporation Act, 1949 and Bombay Provincial Municipal Corporation (Local Body Tax) Rules, 2010 (LBT rules) |
Local Body Tax (LBT) |
119.83 |
PY 2015-16, 2016-17 & 2017-18 |
Various dates |
Not paid |
(c) According to the records of the Company, the dues outstanding of income-tax, sales-tax, service tax, duty of custom, duty of excise, value added tax, goods and service tax and cess on account of any dispute, are as follows:
Name of the statute |
Nature of the dues |
Amount (INR in million)# |
Period to which the amount relates |
Forum where the dispute is pending |
Income Tax Act, 1961 |
Non deduction of withholding taxes u/s 195 (INR 54.92 million paid under protest) |
- |
AY 2014-15 |
ITAT |
Property tax# |
Demand received for various cases (INR 135.51 million paid under protest) |
149.03 |
AY 2005-06 to 2016-2017 |
High Court of Bombay |
Central Excise Act, 1944 |
Demand received for various cases (INR 8.92 million paid under protest) |
54.15 |
AY 2004-05 to 2016-2017 |
Commissioner Appeals/ CESTAT/ High Court |
Customs Act, 1962 |
Demand received for wrong availment of duty drawback (INR 157.40 million paid under protest) |
AY 2012-13 to 2013-2014 |
Principal Commissioner (RA) and ex-officio Additional secretary to the Government of India |
# Excludes interest and penalty and net of amounts paid under protests.
(viii) In our opinion and according to the information and explanations given by the management, the Company has not defaulted in repayment of loans or borrowing to a bank or government. The Company did not have any outstanding dues in respect of financial institution and debenture holders.
(ix) In our opinion and according to the information and explanations given by the management, the Company has utilized the monies raised by way of term loans for the purposes for which they were raised. The Company does not have any unutilised money out of initial public offer / further public offer.
(x) Based upon the audit procedures performed for the purpose of reporting the true and fair view of the financial statements and according to the information and explanations given by the management, we report that no fraud by the Company or no material fraud on the Company by the officers and employees of the Company has been noticed or reported during the year.
(xi) According to the information and explanations given by the management, the managerial remuneration has been paid / provided in accordance with the requisite approvals mandated by the provisions of section 197 read with Schedule V to the Act.
(xii) In our opinion, the Company is not a nidhi Company. Therefore, the provisions of clause 3(xii) of the Order are not applicable to the Company and hence not commented upon.
(xiii) According to the information and explanations given by the management, transactions with the related parties are in compliance with sections 177 and 188 of the Act where applicable and the details have been disclosed in the notes to the financial statements, as required by the applicable accounting standards.
(xiv) According to the information and explanations given to us and on an overall examination of the balance sheet, the Company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures during the year and hence, reporting requirements under clause 3(xiv) are not applicable to the company and, not commented upon.
(xv) According to the information and explanations given by the management, the Company has not entered into any non-cash transactions with directors or persons connected with him as referred to in section 192 of the Act.
(xvi) According to the information and explanations given to us, the provisions of section 45-IA of the Reserve Bank of India Act, 1934 are not applicable to the Company.
For S R B C & CO LLP
Chartered Accountants
ICAI Firm Registration Number: 324982E/E300003
per Tridevlal Khandelwal
Partner
Membership Number: 501160
Place of Signature: Pune
Date: May 22, 2018
Mar 31, 2017
Report on the Standalone Ind AS Financial Statements
We have audited the accompanying standalone Ind AS financial statements of Bharat Forge Limited (âthe Companyâ), which comprise the Balance Sheet as at March 31, 2017, the Statement of Profit and Loss, including the statement of Other Comprehensive Income, the Cash Flow Statement and the Statement of Changes in Equity for the year then ended, and a summary of significant accounting policies and other explanatory information.
Managementâs Responsibility for the Financial Statements
The Companyâs Board of Directors is responsible for the matters stated in Section 134(5) of the Companies Act, 2013 (âthe Actâ) with respect to the preparation of these standalone Ind AS financial statements that give a true and fair view of the financial position, financial performance including other comprehensive income, cash flows and changes in equity of the Company in accordance with accounting principles generally accepted in India, including the Indian Accounting Standards (Ind AS) specified under section 133 of the Act, read with the Companies (Indian Accounting Standards) Rules, 2015, as amended. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding of the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and the 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 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 standalone Ind AS financial statements based on our audit. We have taken into account the provisions of the Act, the accounting and auditing standards and matters which are required to be included in the audit report under the provisions of the Act and the Rules made thereunder. We conducted our audit of the standalone Ind AS financial statements in accordance with the Standards on Auditing, issued by the Institute of Chartered Accountants of India, as 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 auditorâs judgment, including the assessment of the risks of material misstatement of the standalone Ind AS financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal financial control relevant to the Companyâs preparation of the standalone Ind AS financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by the Companyâs Directors, as well as evaluating the overall presentation of the standalone Ind AS financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the standalone Ind AS financial statements.
Opinion
In our opinion and to the best of our information and according to the explanations given to us, the standalone Ind AS financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India, of the state of affairs of the Company as at March 31, 2017, its profit including other comprehensive income, its cash flows and the changes in equity for the year ended on that date.
Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditorâs report) Order, 2016 (âthe Orderâ) issued by the Central Government of India in terms of sub-section (11) of section 143 of the Act, we give in the Annexure 1 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 it appears from our examination of those books;
(c) The Balance Sheet, Statement of Profit and Loss including the Statement of Other Comprehensive Income, the Cash Flow Statement and Statement of Changes in Equity dealt with by this Report are in agreement with the books of account;
(d) In our opinion, the aforesaid standalone Ind AS financial statements comply with the Accounting Standards specified under section 133 of the Act, read with Companies (Indian Accounting Standards) Rules, 2015, as amended;
(e) On the basis of written representations received from the directors as on March 31, 2017, and 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 financial reporting of the Company and the operating effectiveness of such controls, refer to our separate Report in âAnnexure 2â to this report;
(g) With respect to the other matters to be included in the Auditorâs Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules, 2014, in our opinion and to the best of our information and according to the explanations given to us:
i. The Company has disclosed the impact of pending litigations on its financial position in its standalone Ind AS financial statements - Refer Note 38 to the standalone Ind AS financial statements;
ii. The Company has made provision, as required under the applicable law or accounting standards, for material foreseeable losses, if any, on long-term contracts including derivative contracts - Refer Note 20 to the standalone Ind AS financial statements;
iii. There has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Company;
iv. The Company has provided requisite disclosures in Note 13 to these standalone Ind AS financial statements as to the holding of Specified Bank Notes on November 8, 2016 and December 30, 2016 as well as dealings in Specified Bank Notes during the period from November 8, 2016 to December 30, 2016. Based on our audit procedures and relying on the management representation regarding the holding and nature of cash transactions, including Specified Bank Notes, we report that these disclosures are in accordance with the books of accounts maintained by the Company and as produced to us by the Management.
Annexure 1 referred to in paragraph 1 under the heading âReporting on Other Legal and Regulatory Requirementsâ of our report of even date.
Re: Bharat Forge Limited (âthe Companyâ)
(i) (a) The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets.
(b) All fixed assets have not been physically verified by the management during the year but there is a regular programme 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 verification.
(c) According to the information and explanations given by the management the title deeds of immovable properties included in fixed assets are held in the name of the Company except six number of immovable properties aggregating INR 26.80 million as at March 31, 2017 for which title deed were not available with the Company and hence we are unable to comment on the same.
(ii) The inventory has been physically verified by the management during the year. In our opinion, the frequency of verification is reasonable. No material discrepancies were noticed on such physical verification. Inventories lying with third parties have been confirmed by them as at March 31, 2017 and no material discrepancies were noticed in respect of such confirmations.
(iii) (a) The Company has granted loans to five parties covered in the register maintained under section 189 of the Act. In our opinion and according to the information and explanations given to us, the terms and conditions of the loans are not prejudicial to the Companyâs interest.
(b) In respect of loans granted to Companies covered in the register maintained under section 189 of the Companies Act, 2013, repayment of the principal amount is as stipulated and payment of interest has been regular except for loans granted by the Company to two of its subsidiaries, where repayment of principal amount in case of one subsidiary was not as stipulated and payment of interest has not been regular in case of both the subsidiaries.
(c) The company has a sum of amounts aggregating to INR 15.59 million which are overdue for more than ninety days from two Companies covered in the register maintained under section 189 of the Companies Act, 2013 and in our opinion and according to the information and explanations given by the management, the Company has taken reasonable steps for recovery of these overdue principal and interest as the case may be.â
Details of overdue cases mentioned below:
INR in million
Number of Cases |
Principal Amount |
Interest Overdue |
Total Overdue |
Overdue |
|||
BF Elbit Advanced Systems Private Limited |
- |
14.29 |
14.29 |
Analogic Controls India Limited* |
1.30 |
- |
1.30 |
* Amount has been recovered before March 31, 2017
(iv) In our opinion and according to the information and explanations given to us, provisions of section 185 and 186 of the Act in respect of loans to directors including entities in which they are interested and in respect of loans and advances given, investments made and, guarantees, and securities given have been complied with by the Company.
(v) The Company has not accepted any deposits from the public. Therefore, in our opinion, the provisions of clause (v) of the Order are not applicable to the Company. However, according to the information and explanations given to us, in respect of deposits accepted earlier under relevant provisions of the erstwhile Companies Act, 1956, and the rules framed thereunder, there are certain unclaimed deposit amounting to INR 0.04 million including interest thereon subject to litigation.
(vi) We have broadly reviewed the books of account maintained by the Company pursuant to the rules made by the Central Government for the maintenance of cost records under section 148(1) of the Act, related to the manufacture of forged products, and are of the opinion that prima facie, the specified accounts and records have been made and maintained. We have not, however, made a detailed examination of the same.
(vii) (a) Undisputed statutory dues including provident fund, employeesâ state insurance, income-tax, sales-tax, service tax, duty of custom, duty of excise, value added tax, local body tax, cess and other material statutory dues have generally been regularly deposited with the appropriate authorities though there has been slight delay in few cases.
(b) According to the information and explanations given to us, undisputed dues in respect of provident fund, employeesâ state insurance, income-tax, sales-tax, service tax, duty of custom, duty of excise, value added tax, local body tax, cess and other material statutory dues which were outstanding, at the year end, for a period of more than six months from the date they became payable, are as follows:
Statement of arrears of statutory dues outstanding for more than six months
Name of the statute |
Nature of the dues |
Amount (INR in million) |
Period to which the amount relates |
Due date |
Date of payment |
Remarks, if any |
Maharashtra municipal Corporation Act, 1949 and Bombay Provincial Municipal Corporation (Local Body Tax) Rules, 2010(LBT rules) |
Local Body Tax (LBT) |
115.66 |
P.Y. 2015-16 & 2016-17 |
Various dates |
Not paid |
- |
(c) According to the records of the Company, the dues outstanding of income-tax, sales-tax, service tax, duty of custom, duty of excise, value added tax and cess on account of any dispute, are as follows:
Name of the statute |
Nature of the dues |
Amount (INR in million)# |
Period to which the amount relates |
Forum where the dispute is pending |
Income Tax Act, 1961 |
Non deduction of withholding taxes u/s 195 (INR 54.92 million) |
AY 2014-15 |
CIT Appeals |
|
Property tax# |
Demand received for various cases (INR 121.94 million paid under protest) |
134.77 |
AY 2005-06 to 2016-2017 |
High Court |
Central Excise Act, 1944 |
Demand received for various cases (INR 9.70 million paid under protest) |
31.03 |
AY 2004-05 to 2016-2017 |
Commissioner Appeals/ CESTAT |
# Excludes interest and penalty
(viii) In our opinion and according to the information and explanations given by the management, the Company has not defaulted in repayment of dues to bank or debenture holders or government. The Company did not have any outstanding dues in respect of financial institution.
(ix) In our opinion and according to the information and explanations given by the management, the Company has utilized the monies raised by way of term loans for the purposes for which they were raised. The Company does not have any unutilised money out of initial public offer / further public offer.
(x) Based upon the audit procedures performed for the purpose of reporting the true and fair view of the financial statements and according to the information and explanations given by the management, we report that no fraud by the Company or no material fraud on the Company by the officers and employees of the Company has been noticed or reported during the year.
(xi) According to the information and explanations given by the management, the managerial remuneration has been paid / provided in accordance with the requisite approvals mandated by the provisions of section 197 read with Schedule V to the Act.
(xii) In our opinion, the Company is not a nidhi Company. Therefore, the provisions of clause 3(xii) of the Order are not applicable to the Company and hence not commented upon.
(xiii) According to the information and explanations given by the management, transactions with the related parties are in compliance with section 177 and 188 of the Act where applicable and the details have been disclosed in the notes to the financial statements, as required by the applicable accounting standards.
(xiv) According to the information and explanations given to us and on an overall examination of the balance sheet, the Company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures during the year under review and hence, reporting requirements under clause 3(xiv) are not applicable to the Company and, not commented upon.
(xv) According to the information and explanations given by the management, the Company has not entered into any non-cash transactions with directors or persons connected with him as referred to in section 192 of the Act.
(xvi) According to the information and explanations given to us, the provisions of section 45-IA of the Reserve Bank of India Act, 1934 are not applicable to the Company.
For S R B C & CO LLP
Chartered Accountants
ICAI Firm Registration Number: 324982E/E300003
per ARVIND SETHI
Partner
Membership Number: 89802
Place of Signature: Pune
Date: May 24, 2017
Mar 31, 2014
We have audited the accompanying financial statements of Bharat Forge
Limited ("the Company"), which comprise the Balance Sheet as at March
31, 2014, 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
accounting principles generally accepted in India, including the
Accounting Standards notifed under Companies Act, 1956 ("the Act"),
read with General Circular 8/2014 dated April 4, 2014. 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 sufcient 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 afairs of the
Company as at March 31, 2014;
(b) in the case of the Statement of profit and Loss, of the profit for
the year ended on that date; and
(c) in the case of the Cash Flow Statement, of the cash flows for the
year ended on that date.
Report on other Legal and regulatory requirements
1. As required by the Companies (Auditor''s Report) Order, 2003 ("the
Order") 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 notifed under
Companies Act, 1956, read with General Circular 8/2014 dated April 4,
2014;
(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 disqualifed as on March 31, 2014, from being
appointed as a director in terms of clause (g) of sub-section (1) of
section 274 of the Companies Act, 1956.
annexure referred To in ParagraPh 1 under The heading "rePorT on oTher
LegaL and reguLaTory requireMenTs" of our rePorT of even daTe re:
bharaT forge LiMiTed ("The CoMPany")
i. (a) The Company has maintained proper records showing full
particulars, including quantitative details and situation of fixed
assets.
(b) All fixed assets have not been physically verifed by the management
during the year but there is a regular programme of verifcation 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 verifcation.
(c) There was no disposal of a substantial part of fixed assets during
the year. ii. (a) The inventory has been physically verifed by the
management during the year. In our opinion, the frequency of
verifcation
is reasonable. Inventories lying with outside parties have been
confirmed by them as at year end.
(b) The procedures of physical verifcation of inventory followed by the
management are reasonable and adequate in relation to the size of the
Company and the nature of its business.
(c) The Company is maintaining proper records of inventory.
Discrepancies noted on physical verifcation of inventories were not
material, and have been properly dealt with in the books of account.
(a) The Company has granted unsecured loan to one company covered in
the register maintained under section 301 of the Companies Act, 1956.
The maximum amount involved during the year was Rs 1,851 million and
the year-end balance of loans granted to such party was Rs 82.34
million.
(b) In our opinion and according to the information and explanations
given to us, the rate of interest and other terms and conditions for
such loan are not prima facie prejudicial to the interest of the
Company.
(c) In respect of loan granted, repayment of the principal amount is as
stipulated and payment of interest has been regular.
(d) There is no overdue amount of loan granted to companies, firms or
other parties listed in the register maintained under section 301 of
the Companies Act, 1956.
(e) According to information and explanations given to us, the Company
has not taken any loans, secured or unsecured, from companies, firms or
other parties covered in the register maintained under section 301 of
the Companies Act, 1956. Accordingly, the provisions of clause 4(iii)
(e) 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 is an adequate internal control system commensurate
with the size of the Company and the nature of its business, for the
purchase of inventory and fixed assets and for the sale of goods and
services. During the course of our audit, we have not observed any
major weakness or continuing failure to correct any major weakness in
the internal control system of the Company in respect of these areas.
v. (a) According to the information and explanations provided by the
management, we are of the opinion that the particulars of contracts or
arrangements referred to in section 301 of the Companies Act, 1956 that
need to be entered into the register maintained under section 301 have
been so entered. (b) In our opinion and according to the information
and explanations given to us, the transactions made in pursuance of
such contracts or arrangements and exceeding the value of Rupees five
lakhs have been entered into during the financial year at prices which
are reasonable having regard to the prevailing market prices at the
relevant time. vi. In respect of deposits accepted, in our opinion
and according to the information and explanations given to us,
directives issued by the Reserve Bank of India and the provisions of
sections 58A, 58AA or any other relevant provisions of the Companies
Act, 1956, and the rules framed there under, to the extent applicable,
have been complied with. We are informed by the management that no
order has been passed by the Company Law Board, National Company Law
Tribunal or Reserve Bank of India or any Court or any other Tribunal.
vii. In our opinion, the Company has an internal audit system
commensurate with the size of the Company and nature of its business.
viii. We have broadly reviewed the books of account maintained by the
Company pursuant to the rules made by the Central Government for the
maintenance of cost records under section 209(1)(d) of the Companies
Act, 1956, related to the manufacture of forged products, 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 same ix. (a) The Company is generally regular in
depositing with appropriate authorities undisputed statutory dues other
than LBT payable more fully explained in note 10 of the financial
statements including provident fund, investor education and protection
fund, employees'' state insurance, income-tax, sales-tax, wealth-tax,
service tax, customs duty, excise duty, cess and other material
statutory dues applicable to it. (b) According to the information and
explanations given to us, no undisputed amounts payable in respect of
provident fund, investor education and protection fund, employees''
state insurance, income-tax, wealth-tax, service tax, sales-tax,
customs duty, excise duty cess and other material statutory dues were
outstanding, at the year end, for a period of more than six months from
the date they became payable.
According to the records of the Company, the dues outstanding of
income-tax, sales-tax, wealth-tax, service tax, customs duty, excise
duty and cess on account of any dispute, are as follows:
Name of the Nature of Dues Amount Period to which the
Statue (Rs.in Million) amount relates
Service tax Demand received
from various
cases 46.38 2006 to 2013
(Rs 29.55 mn
paid)
VAT/Sales Tax Demand received
from various
cases 3.57 2004 to 2006
Excise Demand received
from various
cases 122.67 2004 to 2013
(Rs 4.85 mn paid)
Property tax Demand received
from various
cases 105.37 2005 to 2014
(Rs 51.50 mn paid)
Income tax Disallowance u/s
40A(9)
(Amount paid) 0.3 A.Y 2006 to 2009
Income tax Disallowance u/s
14A (Amount paid) 7.9 A.Y 2006 to 2009
Income tax Disallowance u/s
40a(ia) (Amount
paid) 3.34 A.Y 2006 to 2009
Income tax Other disallowances
(Amount paid) 2.66 A.Y 2006 to 2009
Name of the statue Forum where the dispute
is pending
Service tax Commissioner appeals/
CESTAT
VAT/Sales Tax Commissioner of Sales Tax
Excise Commissioner appeals/
CESTAT
Property tax High Court
Income tax Appellate Tribunal and
Commissioner
Income tax Appellate Tribunal and
Commissioner
Income tax Appellate Tribunal and
Commissioner
Income tax Appellate Tribunal
x. The Company has no accumulated losses at the end of the financial
year and it has not incurred cash losses in the current and immediately
preceding financial year.
xi. Based on our audit procedures and as per the information and
explanations given by the management, we are of the opinion that the
Company has not defaulted in repayment of dues to a financial
institution, bank or debenture holders.
xii. Based on our examination of documents and records, we are of the
opinion that the Company has maintained adequate records where the
Company has granted loans and advances 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 Order are not applicable to the Company.
xiv. In our opinion, the Company is not dealing in or trading in
shares, securities, debentures and other investments. Accordingly, the
provisions of clause 4(xiv) of Order are not applicable to the Company.
xv. According to the information and explanations given to us, the
Company has given guarantee for loans taken by others from banks and
financial institutions, the terms and conditions whereof, in our
opinion, are not prima-facie prejudicial to the interest of the
Company.
xvi. Based on the information and explanations given to us by the
management, term loans were applied for the purpose for which the loans
were obtained.
xvii. According to the information and explanations given to us and on
an overall examination of the Balance Sheet of the Company, we report
that no funds raised on short-term basis have been used for long-term
investment.
xviii. The Company has not made any preferential allotment of shares to
parties or companies covered in the register maintained under section
301 of the Companies Act, 1956.
xix. The Company has secured debentures outstanding during the year,
on which the security or charge as required is created.
xx. The Company has not raised any money by public issues during the
year.
xxi. Based upon the audit procedures performed for the purpose of
reporting the true and fair view of the financial statements and as per
the information and explanations given by the management, we report
that no fraud on or by the Company has been noticed or reported during
the year.
For S.R. BATLIBOI & CO. LLP
ICAI Firm Registration Number: 301003e
Chartered Accountants
per arvind sethi
Partner
Membership No.: 89802
Place: Pune
Date : May 27, 2014
Mar 31, 2013
Report on the financial statements
We have audited the accompanying financial statements of Bharat Forge
Limited ("the Company"), which comprise the Balance Sheet as at March
31, 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
accounting principles generally accepted in India, including the
Accounting Standards referred to in sub-section (3C) of section 211 of
the Companies Act, 1956 ("the Act"). This responsibility includes the
design, implementation and maintenance of internal control relevant to
the preparation and presentation of the financial statements that give
a true and fair view and are free from material misstatement, whether
due to fraud or error.
Auditor''s responsibility
Our responsibility is to express an opinion on these financial
statements based on our audit. We conducted our audit in accordance
with the Standards on Auditing issued by the Institute of Chartered
Accountants of India. Those Standards require that we comply with
ethical requirements and plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free
from material misstatement.
An audit involves performing procedures to obtain audit evidence about
the amounts and disclosures in the financial statements. The
procedures selected depend on the auditor''s judgment, including the
assessment of the risks of material misstatement of the financial
statements, whether due to fraud or error. In making those risk
assessments, the auditor considers internal control relevant to the
Company''s preparation and fair presentation of the financial statements
in order to design audit procedures that are appropriate in the
circumstances. An audit also includes evaluating the appropriateness of
accounting policies used and the reasonableness of the accounting
estimates made by management, as well as evaluating the overall
presentation of the financial statements. We believe that the audit
evidence we have obtained is sufficient and appropriate to provide a
basis for our audit opinion.
Opinion
In our opinion and to the best of our information and according to the
explanations given to us, the financial statements give the information
required by the Act in the manner so required and give a true and fair
view in conformity with the accounting principles generally accepted in
India:
(a) in the case of the Balance Sheet, of the state of affairs of the
Company as at March 31, 2013;
(b) in the case of the Statement of Profit and Loss, of the profit for
the year ended on that date; and
(c) in the case of the Cash Flow Statement, of the cash flows for the
year ended on that date.
Report on other legal and regulatory requirements
1. As required by the Companies (Auditor''s Report) Order, 2003 ("the
Order") 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 subsection (3C) of section 211 of the Companies Act, 1956; and
(e) On the basis of written representations received from the directors
as on March 31, 2013, and taken on record by the Board of Directors,
none of the directors is disqualified as on March 31, 2013, from being
appointed as a director in terms of clause (g) of sub-section (1) of
section 274 of the Companies Act, 1956.
Annexure referred to in paragraph 1 under the heading "Report on
other legal and regulatory requirements" of our report of even date
Re: Bharat Forge Limited ("the Company")
i. (a) The Company has maintained proper records showing full
particulars, including quantitative details and situation of fixed
assets.
(b) All fixed assets have not been physically verified by the
management during the year but there is a regular programme 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 verification.
(c) There was no disposal of a substantial part of fixed assets during
the year.
ii. (a) The inventory has been physically verified by the management
during the year. In our opinion, the frequency of verification is
reasonable. Inventories lying with outside parties have been confirmed
by them as at year end.
(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.
Discrepancies noted on physical verification of inventories were not
material, and have been properly dealt with in the books of account.
iii. (a) The Company has granted loan to one company covered in the
register maintained under section 301 of the Companies Act, 1956. The
maximum amount involved during the year was Rs. 1,597 Million and the
year-end balance of loans granted to such parties was Rs. 1,504
Million.
(b) In our opinion and according to the information and explanations
given to us, the rate of interest and other terms and conditions for
such loans are not prima facie prejudicial to the interest of the
Company.
(c) In respect of loans granted, repayment of the principal amount is
as stipulated and payment of interest has been regular.
(d) There is no overdue amount of loans granted to companies, firms or
other parties listed in the register maintained under section 301 of
the Companies Act, 1956.
(e) According to information and explanations given to us, the Company
has not taken any loans, secured or unsecured, from companies, firms or
other parties covered in the register maintained under section 301 of
the Companies Act, 1956. Accordingly, the provisions of clause 4(iii)
(e) 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 is an adequate internal control system commensurate
with the size of the Company and the nature of its business, for the
purchase of inventory and fixed assets and for the sale of goods and
services. During the course of our audit, we have not observed any
major weakness or continuing failure to correct any major weakness in
the internal control system of the Company in respect of these areas.
v. (a) According to the information and explanations provided by the
management, we are of the opinion that the particulars of contracts or
arrangements referred to in section 301 of the Companies Act, 1956 that
need to be entered into the register maintained under section 301 have
been so entered.
(b) In our opinion and according to the information and explanations
given to us, the transactions made in pursuance of such contracts or
arrangements and exceeding the value of Rupees five lakhs have been
entered into during the financial year at prices which are reasonable
having regard to the prevailing market prices at the relevant time.
vi. In respect of deposits accepted, in our opinion and according to
the information and explanations given to us, directives issued by the
Reserve Bank of India and the provisions of sections 58A, 58AA or any
other relevant provisions of the Companies Act, 1956, and the rules
framed there under, to the extent applicable, have been complied with.
We are informed by the management that no order has been passed by the
Company Law Board, National Company Law Tribunal or Reserve Bank of
India or any Court or any other Tribunal.
vii. In our opinion, the Company has an internal audit system
commensurate with the size of the Company and nature of its business.
viii. We have broadly reviewed the books of account maintained by the
Company pursuant to the rules made by the Central Government for the
maintenance of cost records under section 209( 1)(d) of the Companies
Act, 1956, related to the manufacture of forged products, 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 same
ix. (a) The Company is generally regular in depositing with
appropriate authorities undisputed statutory dues including provident
fund, investor education and protection fund, employees'' state
insurance, income-tax, sales-tax, wealth-tax, service tax, customs
duty, excise duty cess and other material statutory dues applicable to
it.
(b) According to the information and explanations given to us, no
undisputed amounts payable in respect of provident fund, investor
education and protection fund, employees'' state insurance, income-tax,
wealth-tax, service tax, sales-tax, customs duty, excise duty cess and
other material statutory dues were outstanding, at the year end, for a
period of more than six months from the date they became payable.
(c) According to the records of the Company, the dues outstanding of
income-tax, sales-tax, wealth-tax, service tax, customs duty, excise
duty and cess on account of any dispute, are as follows:
Name of the Nature of dues Amount
statute (Rs. in
Millions)
Service tax Demand received from various cases 37.38
Custom duty Demand received from various cases 48.97
Excise Demand received from various cases 139.01
Property tax Demand received from various cases 39.82
Income tax Disallowance u/s 40A(9) (Amount 0.30
paid)
Income tax Disallowance u/s 14A 7.90
(Amount paid)
Income tax Disallowance u/s 40a(ia) (Amount 3.34
paid)
Income tax Other disallowances (Amount paid) 2.66
Name of the
Statute Period to which the Forum where the
amount relates dispute is pending
Service tax 2006 to 2011 Commissioner appeals
Custom duty 2004 to 2005 Commissioner appeals
Excise 2006 to 2011 Commissioner appeals
Property tax 2005 to 2011 High Court
Income tax 2006 to 2009 Appellate Tribunal and
Commissioner
Income tax 2006 to 2009 Appellate Tribunal and
Commissioner
Income tax 2006 to 2009 Appellate Tribunal and
Commissioner
Income tax 2006 to 2009 Appellate Tribunal
x. The Company has no accumulated losses at the end of the financial
year and it has not incurred cash losses in the current and immediately
preceding financial year.
xi. Based on our audit procedures and as per the information and
explanations given by the management, we are of the opinion that the
Company has not defaulted in repayment of dues to a financial
institution, bank or debenture holders.
xii. Based on our examination of documents and records, we are of the
opinion that the Company has maintained adequate records where the
Company has granted loans and advances 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 Order are not applicable to the Company.
xiv. In our opinion, the Company is not dealing in or trading in
shares, securities, debentures and other investments. Accordingly, the
provisions of clause 4(xiv) of Order are not applicable to the Company.
xv. According to the information and explanations given to us, the
Company has given guarantee for loans taken by others from banks and
financial institutions, the terms and conditions whereof, in our
opinion, are not prima-facie prejudicial to the interest of the
Company.
xvi. Based on the information and explanations given to us by the
management, term loans were applied for the purpose for which the loans
were obtained.
xvii. According to the information and explanations given to us and on
an overall examination of the balance sheet of the Company, we report
that no funds raised on short-term basis have been used for long-term
investment.
xviii.The Company has not made any preferential allotment of shares to
parties or companies covered in the register maintained under section
301 of the Companies Act, 1956.
xix. The Company has secured debentures outstanding during the year, on
which the security or charge as required is created.
xx. The Company has not raised any money by public issues during the
year.
xxi. Based upon the audit procedures performed for the purpose of
reporting the true and fair view of the financial statements and as per
the information and explanations given by the management, we report
that no fraud on or by the Company has been noticed or reported during
the year.
For S.R.BATLIBOI & Co. LLP
Firm registration number: 301003E
Chartered Accountants
per ARVIND SETHI
Partner
Membership No. 89802
Place: Pune
Date: May 25, 2013
Mar 31, 2012
1. We have audited the attached Balance Sheet of Bharat Forge Limited
(''the Company'') as at 31st March, 2012, and the related Statement of
Profit and Loss and Cash Flow Statement for the year ended on that date
annexed thereto, which we have signed under reference to this report.
These financial statements are the responsibility of the Company's
Management. Our responsibility is to express an opinion on these
financial statements based on our audit.
2. We conducted our audit in accordance with the auditing standards
generally accepted in India. Those Standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made
by Management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for
our opinion.
3. As required by the Companies (Auditor's Report) Order, 2003, as
amended by the Companies (Auditor's Report) (Amendment) Order, 2004
(together the ''Order''), issued by the Central Government of India in
terms of sub-section (4A) of Section 227 of 'The Companies Act, 1956 of
India (the 'Act') and on the basis of such checks of the books and
records of the Company as we considered appropriate and according to
the information and explanations given to us, we give in the Annexure a
statement on the matters specified in paragraphs 4 and 5 of the Order.
4. Further to our comments in the Annexure referred to in paragraph 3
above, we report that:
(a) We have obtained all the information and explanations which, to the
best of our knowledge and belief, were necessary for the purposes of
our audit;
(b) In our opinion, proper books of account as required by law have
been kept by the Company so far as appears from our examination of
those books;
(c) The Balance Sheet, Statement of Profit and Loss and Cash Flow
Statement dealt with by this report are in agreement with the books of
account;
(d) In our opinion, the Balance Sheet, Statement of Profit and Loss and
Cash Flow Statement dealt with by this report comply with the
accounting standards referred to in sub-section (3C), of Section 211 of
the Act;
(e) On the basis of written representations received from the
directors, as on 31st March, 2012 and taken on record by the Board of
Directors, 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 Act;
(f) In our opinion and to the best of our information and according to
the explanations given to us, the said financial statements together
with the notes thereon and attached thereto give, in the prescribed
manner, the information required by the Act, and give a true and fair
view in conformity with the accounting principles generally accepted in
India:
(i) in the case of the Balance Sheet, of the state of affairs of the
Company as at 31st March, 2012;
(ii) in the case of the Statement of Profit and Loss, of the profit for
the year ended on that date; and
(iii) in the case of the Cash Flow Statement, of the cash flows for the
year ended on that date.
Referred to in paragraph 3 of the Auditors' Report of even date to the
members of Bharat Forge Limited on the financial statements for the
year ended 31st March, 2012:
1. (a) The Company is maintaining proper records showing full
particulars, including quantitative details and situation, of fixed
assets.
(b) The fixed assets are physically verified by the Management
according to a phased programme designed to cover all the items over a
period of three years which, in our opinion, is reasonable having
regard to the size of the Company and the nature of its assets.
Pursuant to the programme, a portion of the fixed assets has been
physically verified by the Management during the year and no material
discrepancies between the book records and such physical verification
have been noticed.
(c) In our opinion and according to the information and explanations
given to us, a substantial part of fixed assets has not been disposed
of by the Company during the year.
2. (a) The inventory (excluding stocks with third parties) has been
physically verified by the Management during the year. In respect of
inventory lying with third parties, these have substantially been
confirmed by them. In our opinion, the frequency of verification is
reasonable.
(b) In our opinion, the procedures of physical verification of
inventory followed by the Management are reasonable and adequate in
relation to the size of the Company and the nature of its business.
(c) On the basis of our examination of the inventory records, in our
opinion, the Company is maintaining proper records of inventory. The
discrepancies noticed on physical verification of inventory as compared
to book records were not material.
3. (a) The Company has not granted any loans, secured or unsecured, to
companies, firms or other parties covered in the register maintained
under Section 301 of the Act.
(b) The Company has not taken any loans, secured or unsecured, from
companies, firms or other parties covered in the register maintained
under Section 301 of the Act.
4. In our opinion and according to the information and explanations
given to us, there is an adequate internal control system commensurate
with the size of the Company and the nature of its business for the
purchase of inventory, fixed assets and for the sale of goods and
services. Further, on the basis of our examination of the books and
records of the Company, and according to the information and
explanations given to us, no major weakness have been noticed or
reported.
5. (a) In our opinion and according to the information and
explanations given to us, the particulars of contracts or arrangements
referred to in Section 301 of the Act have been entered in the register
required to be maintained under that section.
(b) In our opinion and according to the information and explanations
given to us, the transactions made in pursuance of such contracts or
arrangements and exceeding the value of Rupees Five Lakhs in respect of
any party during the year have been made at prices which are reasonable
having regard to the prevailing market prices at the relevant time.
6. In our opinion and according to the information and explanations
given to us, the Company has complied with the directives issued by
Reserve Bank of India and the provisions of Sections 58A and 58AA or
any other relevant provisions of the Act and the Companies (Acceptance
of Deposits) Rules, 1975 with regard to the deposits accepted from the
public. According to the information and explanations given to us, no
Order has been passed by the Company Law Board or National Company Law
Tribunal or Reserve Bank of India or any Court or any other Tribunal on
the Company in respect of the aforesaid deposits.
7. In our opinion, the Company has an internal audit system
commensurate with its size and nature of its business.
8. We have broadly reviewed the books of account maintained by the
Company in respect of products where, pursuant to the Rules made by the
Central Government of India, the maintenance of cost records has been
prescribed under clause (d) of sub-section (1) of Section 209 of the
Act, and are of the opinion that prima facie, the prescribed accounts
and records have been made and maintained. We have not, however, made a
detailed examination of the records with a view to determine whether
they are accurate or complete.
9. (a) According to the information and explanations given to us and
the records of the Company examined by us, in our opinion, the Company
is regular in depositing the undisputed statutory dues including
provident fund, investor education and protection fund, employees'
state insurance, income-tax, sales-tax, wealth tax, service tax,
customs duty, excise duty, cess and other material statutory dues as
applicable with the appropriate authorities.
(b) According to the information and explanations given to us and the
records of the Company examined by us, the particulars of dues of
income-tax, sales-tax, wealth-tax, service-tax, customs duty, excise
duty and cess as at 31st March, 2012 which have not been deposited on
account of a dispute, are as follows:
Referred to in paragraph 3 of the Auditors' Report of even date to the
members of Bharat Forge Limited on the financial statements for the
year ended 31st March, 2012 (contd.):
Name of the Nature of
dues Amount Period to
which the Forum where the
statute (Rs in
millions) amount
relates dispute is pending
Sales Tax - - - -
Income Tax - - - -
Wealth Tax - - - -
Service Tax Demand
received
from
various 37.38 2006 to 2011 Commissioner
Appeals cases
Custom Duty Demand
received
from
various 49.97 2004-2005 Commissioner
Appeals cases
Excise Demand
received
from
various 142.99 2006 to 2011 Commissioner
Appeals cases
Property Tax Demand
received
from
various 82.55 2005-2011 High Court
cases
10. The Company has no accumulated losses as at 31st March, 2012 and
it has not incurred any cash losses in the financial year ended on that
date or in the immediately preceding financial year.
11. According to the records of the Company examined by us and the
information and explanation given to us, the Company has not defaulted
in repayment of dues to any financial institution or bank or debenture
holders as at the balance sheet date.
12. The Company has not granted any loans and advances on the basis of
security by way of pledge of shares, debentures and other securities.
13. The provisions of any special statute applicable to chit fund /
nidhi / mutual benefit fund/ societies are not applicable to the
Company.
14. In our opinion, the Company has maintained proper records of
transactions and contracts relating to dealing or trading in shares,
securities, debentures and other investments during the year and timely
entries have been made therein. Further, such securities have been held
by the Company in its own name or are in the process of transfer in its
name, except to the extent of the exemption granted under Section 49 of
the Act.
15. In our opinion and according to the information and explanations
given to us, the terms and conditions of the guarantees given by the
Company, for loans taken by others from banks or financial institutions
during the year, are not prejudicial to the interest of the Company.
16. In our opinion, and according to the information and explanations
given to us, on an overall basis, the term loans have been applied for
the purposes for which they were obtained.
17. On the basis of an overall examination of the balance sheet of the
Company, in our opinion and according to the information and
explanations given to us, there are no funds raised on a short-term
basis which have been used for long-term investment.
18. The Company has not made any preferential allotment of shares to
parties and companies covered in the register maintained under Section
301 of the Act during the year.
19. The Company has created securities and registered charges in
respect of debentures issued and outstanding at the year-end. The
details of security are disclosed in Note No. 4(a) to the Financial
Statements.
20. The Company has not raised any money by public issues during the
year.
21. During the course of our examination of the books and records of
the Company, carried out in accordance with the generally accepted
auditing practices in India, and according to the information and
explanations given to us, we have neither come across any instance of
fraud on or by the Company, noticed or reported during the year, nor
have we been informed of such case by the Management.
For DALAL & SHAH
Firm Registration Number: 102021W
Chartered Accountants
ANISH AMIN
Partner
Mumbai : 28th May, 2012 Membership Number : 40451
Mar 31, 2011
1. We have audited the attached Balance Sheet of BHARAT FORGE LIMITED
(the "Company") as at 31st March, 2011, and the related Profit and Loss
Account and Cash Flow Statement for the year ended on that date annexed
thereto, which we have signed under reference to this report. These
financial statements are the responsibility of the Companys
anagement. Our responsibility is to express an opinion on these
financial statements based on our audit.
2. We conducted our audit in accordance with the auditing standards
generally accepted in India. Those Standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made
by Management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for
our opinion.
3. As required by the Companies (Auditors Report) Order, 2003, as
amended by the Companies (Auditors Report) (Amendment) Order, 2004
(together the "Order"), issued by the Central Government of India in
terms of sub-section (4A) of Section 227 of The Companies Act, 1956
of India (the Act) and on the basis of such checks of the books and
records of the Company as we considered appropriate and according to
the information and explanations given to us, we give in the Annexure a
statement on the matters specified in paragraphs 4 and 5 of the Order.
4. Further to our comments in the Annexure referred to in paragraph 3
above, we report that:
(a) We have obtained all the information and explanations which, to the
best of our knowledge and belief, were necessary for the purposes of
our audit;
(b) In our opinion, proper books of account as required by law have
been kept by the Company so far as appears from our examination of
those books;
(c) The Balance Sheet, Profit and Loss Account and Cash Flow Statement
dealt with by this report are in agreement with the books of account;
(d) In our opinion, the Balance Sheet, Profit and Loss Account and Cash
Flow Statement dealt with by this report comply with the accounting
standards referred to in sub-section (3C) of Section 211 of the Act;
(e) On the basis of written representations received from the
directors, as on 31st March, 2011 and taken on record by the Board of
Directors, 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 Act;
(f) In our opinion and to the best of our information and according to
the explanations given to us, the said financial statements together
with the notes thereon and attached thereto give, in the prescribed
manner, the information required by the Act, and give a true and fair
view in conformity with the accounting principles generally accepted in
India:
(i) in the case of the Balance Sheet, of the state of affairs of the
company as at 31st March, 2011;
(ii) in the case of the Profit and Loss Account, of the profit for the
year ended on that date; and
(iii) in the case of the Cash Flow Statement, of the cash flows for the
year ended on that date.
ANNEXURE TO AUDITORSÃ REPORT:
Referred to in paragraph 3 of the Auditorsà Report of even date to the
members of BHARAT FORGE LIMITED on the financial statements for the
year ended 31st March, 2011:
1. (a) The Company is maintaining proper records showing full
particulars, including quantitative details and situation of fixed
assets.
(b) The fixed assets are physically verified by the Management
according to a phased programme designed to cover all the items over a
period of three years which, in our opinion, is reasonable having
regard to the size of the Company and the nature of its assets.
Pursuant to the programme, a portion of the fixed assets has been
physically verified by the Management during the year and no material
discrepancies between the book records and such physical verification
have been noticed.
(c) In our opinion and according to the information and explanations
given to us, a substantial part of fixed assets has not been disposed
of by the Company during the year.
2. (a) The inventory (excluding stocks with third parties) has been
physically verified by the Management during the year. In respect of
inventory lying with third parties, these have substantially been
confirmed by them. In our opinion, the frequency of verification is
reasonable.
(b) In our opinion, the procedures of physical verification of
inventory followed by the Management are reasonable and adequate in
relation to the size of the Company and the nature of its business.
(c) On the basis of our examination of the inventory records, in our
opinion, the Company is maintaining proper records of inventory. The
discrepancies noticed on physical verification of inventory as compared
to book records were not material.
3. (a) The Company has not granted any loans, secured or unsecured, to
companies, firms or other parties covered in the register maintained
under Section 301 of the Act.
(b) The Company has not taken any loans, secured or unsecured, from
companies, firms or other parties covered in the register maintained
under Section 301 of the Act.
4. In our opinion and according to the information and explanations
given to us, there is an adequate internal control system commensurate
with the size of the Company and the nature of its business for the
purchase of inventory, fixed assets and for the sale of goods and
services. Further, on the basis of our examination of the books and
records of the Company and according to the information and
explanations given to us, no major weakness have been noticed or
reported.
5. (a) In our opinion and according to the information and
explanations given to us, the particulars of contracts or arrangements
referred to in Section 301 of the Act have been entered in the register
required to be maintained under that section.
(b) In our opinion and according to the information and explanations
given to us, the transactions made in pursuance of such contracts or
arrangements and exceeding the value of Rupees Five Lakhs in respect of
any party during the year have been made at prices which are reasonable
having regard to the prevailing market prices at the relevant time.
6. In our opinion and according to the information and explanations
given to us, the Company has complied with the directives issued by
Reserve Bank of India and the provisions of Sections 58A and 58AA or
any other relevant provisions of the Act and the Companies (Acceptance
of Deposits) Rules, 1975 with regard to the deposits accepted from the
public. According to the information and explanations given to us, no
Order has been passed by the Company Law Board or National Company Law
Tribunal or Reserve Bank of India or any Court or any other Tribunal on
the Company in respect of the aforesaid deposits.
7. In our opinion, the Company has an internal audit system
commensurate with its size and nature of its business.
8. We have broadly reviewed the books of account maintained by the
Company in respect of products where, pursuant to the Rules made by the
Central Government of India, the maintenance of cost records has been
prescribed under clause (d) of sub-section (1) of Section 209 of the
Act and are of the opinion that prima facie, the prescribed accounts
and records have been made and maintained. We have not, however, made
a detailed examination of the records with a view to determine whether
they are accurate or complete.
9. (a) According to the information and explanations given to us and
the records of the Company examined by us, in our opinion, the Company
is regular in depositing the undisputed statutory dues including
provident fund, investor education and protection fund, employeesÃ
state insurance, income-tax, sales-tax, wealth-tax, service-tax,
customs duty, excise duty, cess and other material statutory dues as
applicable with the appropriate authorities.
(b) According to the information and explanations given to us and the
records of the Company examined by us, the particulars of dues of
income-tax, sales-tax, wealth-tax, service-tax, customs duty, excise
duty and cess as at 31st March, 2011 which have not been deposited on
account of a dispute, are as follows:
Name of the
statute Nature of dues Amount Period to which the Forum
where the
(Rs in Millions) amount relates dispute is
pending
Sales Tax - - - -
Income Tax - - - -
Wealth Tax - - - -
Service Tax Demand received
from various cases 41.66 2006 to 2011 Commissioner
Appeals
Custom Duty Demand received
from various cases 49.97 2004-2005 Commissioner
Appeals
Excise Demand received from
various cases 142.99 2006 to 2011 Commissioner
Appeals
Property Tax Demand received from
various cases 3.69 2005-2011 High Court
10. The Company has no accumulated losses as at 31st March, 2011 and
it has not incurred any cash losses in the financial year ended on that
date or in the immediately preceding financial year.
11. According to the records of the Company examined by us and the
information and explanation given to us, the Company has not defaulted
in repayment of dues to any financial institution or bank or debenture
holders during the year.
12. The Company has not granted any loans and advances on the basis of
security by way of pledge of shares, debentures and other securities.
13. The provisions of any special statute applicable to chit fund /
nidhi / mutual benefit fund/societies are not applicable to the
Company.
14. As per the records produced to us for our verification and the
information and explanations given to us, in our opinion, the Company
has maintained proper records of transactions and contracts entered
into for investing temporarily idle funds in investments in units of
Mutual Funds, into which timely entries have been made. The said
investments have been held by the Company in its own name.
15. In our opinion and according to the information and explanations
given to us, the terms and conditions of the guarantees given by the
Company, for loans taken by others from banks or financial institutions
during the year, are not prejudicial to the interest of the Company.
16. In our opinion and according to the information and explanations
given to us, on an overall basis, the term loans have been applied for
the purposes for which they were obtained.
17. On the basis of an overall examination of the balance sheet of the
Company, in our opinion and according to the information and
explanations given to us, there are no funds raised on a short-term
basis which have been used for long-term investment.
18. The Company has not made any preferential allotment of shares to
parties and companies covered in the register maintained under Section
301 of the Act during the year.
19. The Company has created securities and registered charges in
respect of debentures issued and outstanding at the year-end. The
details of security are disclosed in Note No. 12 (a) (i), (ii) and
(iii) in Schedule "K" to the Financial Statements.
20. The Management has disclosed the end use of money raised by way of
Foreign Currency Convertible Bonds and Equity Shares evidencing Global
Depository Receipts detailed in Note No. 18 in Schedule "K" and Foot
Note A (iv) to Schedule "A" to the Financial Statements respectively,
during the year, which have been verified by us.
21. During the course of our examination of the books and records of
the Company, carried out in accordance with the generally accepted
auditing practices in India, and according to the information and
explanations given to us, we have neither come across any instance of
fraud on or by the Company, noticed or reported during the year, nor
have we been informed of such case by the Management.
For DALAL & SHAH
Firm Registration Number 102021W
Chartered Accountants
ANISH AMIN
Partner
Membership Number 40451
Mumbai: May 24, 2011
Mar 31, 2010
1) We have audited the attached Balance Sheet of BHARAT FORGE LIMITED,
as at 31st March, 2010, and the related Profi t and Loss Account and
Cash Flow Statement for the year ended on that date annexed thereto,
which we have signed under reference to this report. These fi nancial
statements are the responsibility of the CompanyÃs management. Our
responsibility is to express an opinion on these fi nancial statements
based on our audit.
2) We conducted our audit in accordance with the auditing standards
generally accepted in India. Those Standards require that we plan and
perform the audit to obtain reasonable assurance about whether the fi
nancial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and
disclosures in the fi nancial statements. An audit also includes
assessing the accounting principles used and signifi cant estimates
made by management, as well as evaluating the overall fi nancial
statement presentation. We believe that our audit provides a reasonable
basis for our opinion.
3) As required by the Companies (AuditorÃs Report) Order, 2003, as
amended by the Companies (AuditorÃs Report) (Amendment) Order, 2004
(together the ÃOrderÃ), issued by the Central Government of India in
terms of sub-section (4A) of Section 227 of ÃThe Companies Act, 1956Ã
(the ÃActÃ) and on the basis of such checks of the books and records of
the Company as we considered appropriate and according to the
information and explanations given to us, we give in the Annexure a
statement on the matters specifi ed in paragraphs 4 and 5 of the Order.
4) Further to our comments in the Annexure referred to in paragraph 3
above, we report that:
(a) We have obtained all the information and explanations, which to the
best of our knowledge and belief were necessary for the purposes of our
audit;
(b) In our opinion, proper books of account as required by law have
been kept by the Company so far as appears from our examination of
those books;
(c) The Balance Sheet, Profi t 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, Profi t and Loss Account and
Cash Flow Statement dealt with by this report comply with the
accounting standards referred to in sub- section (3C) of Section 211 of
the Act;
(e) On the basis of written representations received from the
directors, as on 31st March, 2010 and taken on record by the Board of
Directors, none of the directors is disqualifi ed 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 Act;
(f) In our opinion and to the best of our information and according to
the explanations given to us, the said fi nancial statements together
with the notes thereon and attached thereto give, in the prescribed
manner, the information required by the Act and give a true and fair
view in conformity with the accounting principles generally accepted in
India:
(i) in the case of the Balance Sheet, of the state of affairs of the
Company as at 31st March, 2010;
(ii) in the case of the Profi t and Loss Account, of the profi t for
the year ended on that date; and
(iii) in the case of the Cash Flow Statement, of the cash fl ows for
the year ended on that date.
ANNEXURE TO THE AUDITORSÃ REPORT: Referred to in paragraph 3 of the
Auditorsà Report of even date to the members of BHARAT FORGE LIMITED on
the fi nancial statements for the year ended 31st March, 2010:
1. (a) The Company is maintaining proper records showing full
particulars including quantitative details and situation of fi xed
assets.
(b) The fi xed assets are physically verifi ed by the management
according to a phased programme designed to cover all the items over a
period of three years, which in our opinion, is reasonable having
regard to the size of the Company and the nature of its assets.
Pursuant to the programme, a portion of the fi xed assets has been
physically verifi ed by the management during the year and no material
discrepancies between the book records and such physical verifi cation
have been noticed.
(c) In our opinion and according to the information and explanations
given to us, a substantial part of fi xed assets has not been disposed
of by the Company during the year.
2. (a) The inventory (excluding stock with the third parties) has been
physically verifi ed by the management during the year. In our opinion,
the frequency of verifi cation is reasonable. Inventories lying with
outside parties have substantially been confi rmed by them at the close
of the year.
(b) In our opinion, the procedures of physical verifi cation of
inventory followed by the management are reasonable and adequate in
relation to the size of the Company and the nature of its business.
(c) On the basis of our examination of the inventory records, in our
opinion, the Company is maintaining proper records of inventory. The
discrepancies noticed on physical verifi cation of inventory as
compared to book records were not material.
3. (a) The Company has not granted any loans, secured or unsecured, to
companies, fi rms or other parties covered in the register maintained
under Section 301 of the Act. (b) The Company has not taken any loans,
secured or unsecured, from companies, fi rms or other parties covered
in the register maintained under Section 301 of the Act.
4. In our opinion and according to the information and explanations
given to us, there is an adequate internal control system commensurate
with the size of the Company and the nature of its business for the
purchase of inventory, fi xed assets and for the sale of goods and
services. Further, on the basis of our examination of the books and
records of the Company, and according to the information and
explanations given to us, no major weekaness have been noticed or
reported.
5. (a) In our opinion and according to the information and
explanations given to us, the particulars of contracts or arrangements
referred to in Section 301 of the Act have been entered in the register
required to be maintained under that section.
(b) In our opinion and according to the information and explanations
given to us, the transactions made in pursuance of such contracts or
arrangements and exceeding the value of Rupees Five Lakhs in respect of
any party during the year have been made at prices which are reasonable
having regard to the prevailing market prices at the relevant time.
6. In our opinion and according to the information and explanations
given to us, the Company has complied with the directives issued by
Reserve Bank of India and the provisions of Sections 58A and 58AA or
any other relevant provisions of the Act and the Companies (Acceptance
of Deposits) Rules, 1975 with regard to the deposits accepted from the
public. According to the information and explanations given to us, no
Order has been passed by the Company Law Board or National Company Law
Tribunal or Reserve Bank of India or any Court or any other Tribunal on
the Company in respect of the aforesaid deposits.
7. In our opinion, the Company has an internal audit system
commensurate with its size and nature of its business.
8. We have broadly reviewed the books of account maintained by the
Company in respect of products where, pursuant to the Rules made by the
Central Government of India, the maintenance of cost records has been
prescribed under clause (d) of sub-section (1) of Section 209 of the
Act and are of the opinion that prima facie, the prescribed accounts
and records have been made and maintained. We have not, however, made a
detailed examination of the records with a view to determine whether
they are accurate or complete.
9. (a) According to the information and explanations given to us and
the records of the Company examined by us, in our opinion, the Company
is regular in depositing the undisputed statutory dues including
provident fund, investor education and protection fund, employeesÃ
state insurance, income tax, sales tax, wealth tax, service tax,
customs duty, excise duty, cess and other material statutory dues as
applicable with the appropriate authorities.
(b) According to the information and explanations given to us and the
records of the Company examined by us, the particulars of dues of
income-tax, sales-tax, wealth tax, Property tax, service tax, customs
duty, excise duty and cess as at 31st March, 2010 which have not been
deposited on account of a dispute, are as follows -
Name of the statute Nature of dues Amount
(Rs. in Millions)
Sales Tax - -
Income Tax Tax Liability on Matter in
Dispute against 16.27
Company by Income Tax Department
Wealth Tax - -
Service Tax Demand received for various cases 32.31
Custom Duty Demand received for various cases 302.67
Excise Demand received for various cases 213.24
Property Tax Demand received for various cases 28.28
Name of the Staute Period to which the Forum where the
amount relates dispute is pending
Sales Tax - -
Income Tax 2003-04, 2004-05 Tribunal
Wealth Tax - -
Service Tax 2006-07, 2007-08, 2009-10 Commissioner Appeals
Custom Duty 2004-05, 2008-09 Commissioner Appeals
Excise 2004 to 2010 Tribunal
Property Tax 2005-2010 High Court
10. The Company has no accumulated losses as at 31st March, 2010 and
it has not incurred any cash losses in the fi nancial year ended on
that date or in the immediately preceding fi nancial year.
11. According to the records of the Company examined by us and the
information and explanation given to us, the Company has not defaulted
in repayment of dues to any fi nancial institution or bank or debenture
holders during the year.
12. The Company has not granted any loans and advances on the basis of
security by way of pledge of shares, debentures and other securities.
13. As per the records produced for our verifi cation and the
information and explanations given to us, in our opinion, the Company
has maintained proper records of transactions and contracts entered
into for investing temporarily idle funds in investments in units of
Mutual Funds, into which timely entries have been made. The said
investments were held in the name of the Company.
14. In our opinion and according to the information and explanations
given to us, the terms and conditions of the guarantees given by the
Company, for loans taken by others from banks or fi nancial
institutions during the year, are not prejudicial to the interest of
the Company.
15. In our opinion, and according to the information and explanations
given to us, on an overall basis, the term loans have been applied for
the purposes for which they were obtained.
16. On the basis of an overall examination of the balance sheet of the
Company, in our opinion and according to the information and
explanations given to us, there are no funds raised on a short-term
basis which have been used for long-term investment.
17. The Company has not made any preferential allotment of shares to
parties and companies covered in the register maintained under Section
301 of the Act during the year.
18. The Company has created securities and registered charges in
respect of debentures issued, in the current year. The details of
security are disclosed in Note No.12(a)(i) in Schedule à Là to the
Financial Statements.
19. The Management of the Company has disclosed the end use of money
raised by way of Foreign Currency Convertible Bonds and Equity Shares
evidencing Global Depository Receipts detailed in Note No. 18 in
Schedule ÃLà and Foot Note A (iv) to Schedule à Aà to the Financial
Statements respectively, during the year, which have been verifi ed by
us;
20. During the course of our examination of the books and records of
the Company, carried out in accordance with the generally accepted
auditing practices in India, and according to the information and
explanations given to us, we have neither come across any instance of
fraud on or by the Company, noticed or reported during the year, nor
have we been informed of such case by the management.
21. Considering the nature of the business, clause (xiii) of paragraph
4 of the Companies (AuditorÃs Report) Order, 2003, as amended by the
Companies (AuditorÃs Report) (Amendment) Order, 2004, is not applicable
in the case of the Company for the current year. Hence in our opinion
there is no matter which arises to be reported in the afforsaid clause
of the order.
For DALAL & SHAH
Firm Registration No.: 102021W
Chartered Accountants
ANISH AMIN
Partner
Membership No.: 40451
Mumbai: May, 22, 2010