Mar 31, 2018
Report on the Standalone Ind AS Financial Statements
We have audited the accompanying standalone Ind AS financial statements of RELIANCE NAVAL AND ENGINEERING LIMITED (FORMERLY KNOWN AS RELIANCE DEFENCE AND ENGINEERING LIMITED) (âthe Companyâ), which comprise the Balance sheet as at March 31, 2018, and the Statement of Profit and Loss (including Other Comprehensive Income), the Cash Flow Statement and the Statement of Changes in Equity for the year then ended and a summary of significant accounting policies and other explanatory information.
Managementâs Responsibility for the 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 the Accounting Principles Generally Accepted in India (Indian GAAPs), including Indian Accounting Standards (âInd ASâ) prescribed under Section 133 of the Act.
This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the standalone 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 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 standalone Ind AS financial statements are free from material misstatements.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the standalone Ind AS 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 aforesaid 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 (financial position) of the Company as at March 31, 2018 and its loss (financial performance including other comprehensive income), its cash flows and the changes in equity for the year ended on that date.
Emphasis of Matters
We draw attention to the:
(i) Material Uncertainty Related to Going Concern Note no. 36 to the standalone Ind AS financial statements regarding preparation of standalone financial statements of the Company on going concern basis and also recognition of Deferred Tax Assets (DTA) on tax losses notwithstanding the fact that the Company has been incurring cash losses, its net worth has been substantially eroded as on March 31, 2018, loans have been called back by secured lenders, current liabilities are substantially higher than current assets, applications have been made to National Company Law Tribunal (NCLT), Ahmedabad, under section 9 of the Insolvency Bankruptcy Code 2016 and winding up petitions been filed before Honâble Gujarat High Court for recovery of their dues by few operating creditors, for the reasons stated in the said note. The Company is also of the view that no impairment of its noncurrent assets is required. These conditions indicate the existence of a material uncertainty that may cast significant doubt on the Companyâs ability to continue as going concern. The appropriateness of assumption of going concern, recognition of DTA and evaluation of recoverable value of its noncurrent assets is critically dependent upon the approval of Companyâs resolution plan by the secured lenders, the Companyâs ability to raise requisite finance / generate cash flows in future to meet its obligations and to earn profits in future.
(ii) Note no. 33.3 to the standalone Ind AS financial statements regarding applications under section 7 of the Insolvency and Bankruptcy Code, 2016 against the Company as a corporate guarantor for the loans taken by Reliance Marine and Offshore Limited (RMOL), a wholly owned subsidiary. The Management is of the view that the value of securities available in RMOL is sufficient to recover the outstanding dues of IFCI Limited. Accordingly, no provision against the claim under the invoked corporate guarantee is considered necessary.
Our opinion is not modified in respect of these matters.
Report on Other Legal and Regulatory Requirements
1. As required by Section 143 (3) of the Act, we report that:
a. We have sought and obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit.
b. In our opinion, proper books of account as required by law have been kept by the Company so far as it appears from our examination of those books.
c. The Balance Sheet, the Statement of Profit and Loss (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 Ind AS prescribed under Section 133 of the Act.
e. The going concern and the other matter described under the Emphasis of Matters paragraph above, in our opinion, may 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, 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.
g. With respect to the adequacy of the internal financial controls over financial reporting of the Company and the operating effectiveness of such controls, refer to our separate Report in âAnnexure Aâ.
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 as referred to in Note No. 33.1 (c) to the standalone Ind AS financial statements;
ii. The Company has made provisions, as required under the applicable law or Ind AS, for material foreseeable losses, if any, on long term contracts including derivative contracts;
iii. There were no amounts which were required to be transferred, to the Investor Education and Protection Fund by the Company;
2. As required by the Companies (Auditorâs Report) Order, 2016 (âCARO 2016â) issued by the Central Government in terms of Section 143(11) of the Act, we give in âAnnexure Bâ a statement on the matters specified in paragraphs 3 and 4 of CARO 2016.
ANNEXURE âAâ TO THE INDEPENDENT AUDITORâS REPORT
(Referred to in paragraph 1 (g) under âReport on Other Legal and Regulatory Requirementsâ of our report of even date on standalone Ind AS financial statements of RELIANCE NAVAL AND ENGINEERING LIMITED for the year ended March 31, 2018)
Report on the Internal Financial Controls Over Financial Reporting under Clause (i) of Sub-section 3 of Section 143 of the Companies Act, 2013 (âthe Actâ)
We have audited the internal financial controls over financial reporting of RELIANCE NAVAL AND ENGINEERING LIMITED (FORMERLY KNOWN AS RELIANCE DEFENCE AND ENGINEERING LIMITED) (âthe Companyâ) as of March 31, 2018 in conjunction with our audit of the standalone Ind AS financial statements of the Company for the year ended on that date.
Managementâs Responsibility for Internal Financial Controls
The Companyâs management is responsible for establishing and maintaining internal financial controls based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting (âthe Guidance Noteâ) issued by the Institute of Chartered Accountants of India (ICAI). These responsibilities include the design, implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the orderly and efficient conduct of its business, including adherence to companyâs policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information, as required under the Companies Act, 2013.
Auditorâs Responsibility
Our responsibility is to express an opinion on the Companyâs internal financial controls over financial reporting based on our audit. We conducted our audit in accordance with the Guidance Note issued by the ICAI and the Standards of Auditing prescribed under Section 143(10) of the Companies Act, 2013, to the extent applicable to an audit of internal financial controls. Those Standards and the Guidance Note require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether adequate internal financial controls over financial reporting was established and maintained and if such controls operated effectively in all material respects.
Our audit involves performing procedures to obtain audit evidence about the adequacy of the internal financial controls system over financial reporting and their operating effectiveness. Our audit of internal financial controls over financial reporting included obtaining an understanding of internal financial controls over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. The procedures selected depend on the auditorâs judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the Companyâs internal financial controls system over financial reporting.
Meaning of Internal Financial Controls over Financial Reporting
A companyâs internal financial control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A companyâs internal financial control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorisations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorised acquisition, use, or disposition of the companyâs assets that could have a material effect on the financial statements.
Inherent Limitations of Internal Financial Controls over Financial Reporting
Because of the inherent limitations of internal financial controls over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may occur and not be detected. Also, projections of any evaluation of the internal financial controls over financial reporting to future periods are subject to the risk that the internal financial control over financial reporting may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Opinion
In our opinion, to the best of our information and according to the explanations given to us, the Company has, in all material respects, an adequate internal financial controls system over financial reporting and such internal financial controls over financial reporting were operating effectively as at March 31, 2018, based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note.
(Referred to in paragraph 2 under the heading âReport on Other Legal and Regulatory Requirementsâ of our report of even date to the members of RELIANCE NAVAL And ENGINEERING LIMITED on the standalone Ind AS financial statements for the year ended March 31, 2018)
i. In respect of its fixed assets:
a. The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets on the basis of available information.
b. As explained to us, the Company has physically verified certain assets, in accordance with a phased program of verification, which in our opinion is reasonable, having regard to the size of the Company and the nature of its assets. No material discrepancies were noticed on such physical verification as compared with the available records.
c. According to the information and explanations given to us and on the basis of our examination of the records of the Company, the Company doesnât have any freehold immovable properties. As informed to us, in respect of leasehold immovable properties the original title deeds have been deposited with the lenders, we have been produced the photocopy of the title deeds of these leasehold immovable properties and based on such documents, the title deeds are held in the name of the Company.
ii. As explained to us, inventories have been physically verified during the year by the management and in our opinion the frequency of verification is reasonable. Discrepancies noticed on physical verification of the inventories between the physical inventories and book records were not material, having regard to the size of the operations of the Company and the same have been properly dealt with.
iii. In respect of loans, secured or unsecured, granted by the company to companies, firms, Limited liability partnerships or other parties covered in the register maintained under section 189 of the Act:
a. The company has granted unsecured loans to wholly owned subsidiary companies, and in our opinion, the rate of interest and other terms and conditions on which the loans had been granted are not, prima facie, prejudicial to the interest of the Company
b. As per the information and explanations given to us, the above loans are repayable on demand along with the interest accrued thereon. The repayment / receipts, if any, demanded have been received.
c. As the above loans are repayable on demand, the question of overdue amount does not arise.
iv. In our opinion and according to the information and explanations given to us, the Company has complied with the provisions of section 185 and 186 of the Act, in respect of grant of loans, making investments and providing guarantees and securities.
v. According to the information and explanations given to us, the Company has not accepted any deposits from the public. Therefore, the provisions of paragraph 3 (v) of the CARO 2016 are not applicable to the Company.
vi. According to the information and explanations given to us, the Central Government has not prescribed the cost records to be maintained under sub-Section (1) of Section 148 of the Act in respect of activities carried on by the Company. Therefore the provisions of paragraph 3(vi) of the CaRO 2016 are not applicable to the Company.
vii. According to the information and explanations given to us in respect of statutory dues:
a. The company has been generally regular in depositing undisputed statutory dues, including provident fund, income tax, service tax, duty of customs, duty of excise, cess, sales tax, value added tax, Goods and Service Tax and any other statutory dues, as applicable, with the appropriate authorities during the year however delays have been noticed in respect of income tax. According to the information and explanations given to us, no undisputed amounts payable in respect of such statutory dues were outstanding as at March 31, 2018 for a period of more than six months from the date they became payable.
b. Details of dues of Income tax and dues to Excise Department aggregating to Rs. 2,110.28 Lacs that have not been deposited on account of disputed matters pending before appropriate authorities are as under.
Name of the Statutes |
Nature of the Dues |
Period to which it relates |
Amounts (Rs. in Lacs) (*) |
Forum where the dispute is pending |
Income Tax Act,1961 |
Income Tax |
2007-08 to 201718 |
104.27 |
Commissioner of Income Tax |
CENVAT Credit Rules,2004 |
Penalty under Central Excise Act,1944 |
2010-11 to 201718 |
2,006.01 |
Commissioner of Central Excise |
Total |
2,110.28 |
(*) Net of amount deposited under protest
viii. Based on our audit procedures and information and explanations given by the management, and considering the recall notices received by the company from lender banks, we are of the opinion that as on March 31, 2018 the Company has defaulted in repayment of loans (including payment of interest on loans and Non Convertible Debentures (NCD)) to banks and financial institutions aggregating to Rs. 699,465.44 Lacs. Lender wise details of such defaults are as under:
(Rs. in Lacs)
Bank / Financial Institution |
Amount of Default |
Period of Default |
HUDCO |
15,839.21 |
More than 90 Days |
IL & FS |
666.97 |
More than 90 Days |
Bank of India |
26,661.18 |
Less than 90 Days |
Bank of Maharashtra |
8,309.65 |
Less than 90 Days |
Central Bank |
53,528.20 |
Less than 90 Days |
Corporation Bank |
24,285.38 |
Less than 90 Days |
Dena Bank |
25,025.64 |
Less than 90 Days |
EXIM Bank |
45,689.48 |
Less than 90 Days |
IDBI Bank |
90,001.75 |
Less than 90 Days |
IFCI Ltd |
20,264.84 |
Less than 90 Days |
IIFC UK |
345.56 |
Less than 90 Days |
Jammu & Kashmir |
24,239.76 |
Less than 90 Days |
Karnataka Bank |
3,243.98 |
Less than 90 Days |
Karur Vyasa Bank |
3,364.85 |
Less than 90 Days |
Life Insurance Corporation |
8,535.1 7 |
Less than 90 Days |
Oriental Bank of Commerce |
24,079.1 5 |
Less than 90 Days |
Punjab & Sind Bank |
6,687.94 |
Less than 90 Days |
Punjab National Bank |
40,890.97 |
Less than 90 Days |
State Bank of India |
87,091.04 |
Less than 90 Days |
UCO Bank |
33,750.60 |
Less than 90 Days |
Union Bank Of India |
109,372.39 |
Less than 90 Days |
United Bank of India |
30,397.88 |
Less than 90 Days |
Vijaya Bank |
16,415.62 |
Less than 90 Days |
Yes Bank |
778.23 |
Less than 90 Days |
TOTAL |
699,465.44 |
ix. According to the information and explanations given to us, the term loans raised during the year were, prima facie, been applied for the purpose for which those are raised. The Company has not raised any money by way of initial public offer or further public offer (including debt instruments).
x. Based on our audit procedures performed for the purpose of reporting the true and fair view of the standalone Ind AS financial statements and on the basis of information and explanations given by the management, no fraud by the Company or on the Company by its officers or employees has been noticed or reported during the year.
xi. In our opinion and according to the information and explanations given to us the Company has paid / provided managerial remuneration in accordance with the requisite approvals mandated by the provisions of section 197 read with Schedule V to the Companies Act, 2013.
xii. In our opinion and according to the information and explanations given to us, the Company is not a nidhi company. Therefore, the provisions of paragraph 3 (xii) of the CaRO 2016 are not applicable to the Company.
xiii. According to the information and explanations given to us and based on our examination of the records of the Company, transactions with the related parties are in compliance with sections 177 and 188 of the Act where applicable and details of such transactions have been disclosed in the financial statements etc. as required by the applicable accounting standards.
xiv. During the year the Company has made preferential allotment of equity shares and preference shares to one of its lender against the partial conversion of its outstanding debts. The provisions of section 42 of the Act, to the extent applicable, have been complied with.
xv. According to the information and explanations given to us, the Company has not entered into non-cash transactions with directors or persons connected with him. Therefore, the provisions of paragraph 3 (xv) of the CARO 2016 are not applicable to the Company.
xvi. In our opinion and according to information and explanations provided to us, the Company is not required to be registered under section 45-IA of the Reserve Bank of India Act 1934.
For Pathak H. D. & Associates
Chartered Accountants
Firm Reg. No. 107783W
Gyandeo Chaturvedi
Place: Mumbai Partner
Dated: April 23, 2018 Membership No.46806
Mar 31, 2017
Report on the Standalone Ind AS Financial Statements
We have audited the accompanying standalone Ind AS financial statements of RELIANCE DEFENCE AND ENGINEERING LIMITED (FORMERLY KNOWN AS PIPAVAV DEFENCE AND OFFSHORE ENGINEERING COMPANY LIMITED) (âthe Companyâ), which comprise the Balance sheet as at 31st March, 2017, and the Statement of Profit and Loss (including Other Comprehensive Income), the Cash Flow Statement and the Statement of Changes in Equity for the year then ended and a summary of significant accounting policies and other explanatory information.
Managementâs Responsibility for the 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 the Accounting Principles Generally Accepted in India (Indian GAAPs), including Indian Accounting Standards (âInd ASâ) prescribed under Section 133 of the Act.
This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the standalone Ind AS financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error,
Auditorsâ 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 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 standalone Ind AS financial statements are free from material misstatements.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the standalone Ind AS 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 aforesaid 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 (financial position) of the Company as at 31st March, 2017 and its loss (financial performance including other comprehensive income), its cash flows and the changes in equity for the year ended on that date.
Emphasis of Matter
We draw attention to the note no. 28.1 regarding managerial remuneration paid to the executive director which is in excess of the limits prescribed in the Act. The company has applied to the Central Government for necessary approval which is awaited.
Our opinion is not modified in respect of this matter.
Report on Other Legal and Regulatory Requirements
1. As required by Section 143 (3) of the Act, we report that:
a. We have sought and obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit.
b. In our opinion, proper books of account as required by law have been kept by the Company so far as it appears from our examination of those books.
c. The Balance Sheet, the Statement of Profit and Loss, 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 Ind AS prescribed under Section 133 of the Act.
e. On the basis of the written representations received from the directors as on 31st March, 2017 and taken on record by the Board of Directors, none of the directors is disqualified as on 31st March, 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 Aâ,
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 read with Notification no. G.S.R. 307 (E) dated 30th March 2017, 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 as referred to in Note No. 32(c) to the standalone Ind AS financial statements;
ii. The Company has made provisions, as required under the applicable law or Ind AS, for material foreseeable losses, if any, on long term contracts including derivative contracts;
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 the requisite disclosures regarding to holdings as well as dealings in Specified Bank Notes during the period from 8th November, 2016 to 30th December, 2016 and the same are in accordance with the books of accounts maintained by the company. Refer to Note No 9.1 of Standalone Financial Statements.
2. As required by the Companies (Auditorâs Report) Order, 2016 (âCARO 2016â) issued by the Central Government in terms of Section 143(11) of the Act, we give in âAnnexure Bâ a statement on the matters specified in paragraphs 3 and 4 of CARO 2016.
(Referred to in paragraph 2 under the heading âReport on Other Legal and Regulatory Requirementsâ of our report of even date to the members of RELIANCE DEFENCE AND ENGINEERING LIMITED on the standalone Ind AS financial statements for the year ended 31st March, 2017)
i. In respect of its fixed assets:
a. The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets on the basis of available information.
b. As explained to us, the Company has physically verified certain assets, in accordance with a phased program of verification, which in our opinion is reasonable, having regard to the size of the Company and the nature of its assets. No material discrepancies were noticed on such physical verification as compared with the available records.
c. According to the information and explanations given to us and on the basis of our examination of the records of the Company, the Company doesnât have any freehold immovable properties. As informed to us, in respect of leasehold immovable properties the original title deeds have been deposited with the lenders, we have been produced the photocopy of the title deeds of these leasehold immovable properties and based on such documents, the title deeds are held in the name of the Company
ii. As explained to us, inventories have been physically verified during the year by the management and in our opinion the frequency of verification is reasonable. Discrepancies noticed on physical verification of the inventories between the physical inventories and book records were not material, having regard to the size of the operations of the Company and the same have been properly dealt with.
iii. In respect of loans, secured or unsecured, granted by the company to companies, firms, Limited liability partnerships or other parties covered in the register maintained under section 189 of the Act:
a. The company has granted unsecured loans to wholly owned subsidiary companies, and in our opinion, the rate of interest and other terms and conditions on which the loans had been granted are not, prima facie, prejudicial to the interest of the Company
b. As per the information and explanations given to us, the above loans are repayable on demand along with the interest accrued thereon. The repayment / receipts, if any, demanded have been received.
c. As the above loans are repayable on demand, the question of overdue amount does not arise.
iv. In our opinion and according to the information and explanations given to us, the Company has complied with the provisions of section 185 and 186 of the Act, in respect of grant of loans, making investments and providing guarantees and securities.
v. According to the information and explanations given to us, the Company has not accepted any deposits from the public. Therefore, the provisions of paragraph 3 (v) of the CARO 2016 are not applicable to the Company.
vi. According to the information and explanations given to us, the Central Government has not prescribed the cost records to be maintained under sub-Section (1) of Section 148 of the Act in respect of activities carried on by the Company, Therefore the provisions of paragraph 3(vi) of the CARO 2016 are not applicable to the Company
vii. According to the information and explanations given to us in respect of statutory dues:
a. The company has been generally regular in depositing undisputed statutory dues, including provident fund, income tax, service tax, duty of customs, duty of excise, cess, sales - tax, value added tax and any other statutory dues, as applicable, with the appropriate authorities during the year however delays have been noticed in respect of income tax. According to the information and explanations given to us, no undisputed amounts payable in respect of such statutory dues were outstanding as at 31st March, 2017 for a period of more than six months from the date they became payable.
b. Details of dues of Income tax and Duty of Excise aggregating to Rs. 3,935.40 Lacs that have not been deposited on account of disputed matters pending before appropriate authorities are as under.
Name of the Statutes |
Nature of the Dues |
Period to which it relates |
Amounts (Rs. in Lacs) (*) |
Forum where the dispute is pending |
Income Tax Act,1961 |
Income Tax |
2007-08 to 2008-09 |
3,349.23 |
Income Tax Appellate Tribunal |
2012-13 |
37.60 |
CIT |
||
CENVAT Credit Rules,2004 |
Central Excise Penalty |
2010-11 to 2014-15 |
548.57 |
Commissioner of Central Excise |
Total |
3935.40 |
(*) Net of amount deposited under protest
viii. Based on our audit procedures and information and explanations given by the management, and considering the Corporate Debt Restructuring (CDR) scheme, we are of the opinion that as on 31st March, 2017 the Company has defaulted in repayment of loans tobanks and financial institutions aggregating to Rs. 19,463.24 Lacs. Lender wise details of such default are as under:
(Rs. in Lacs)
Sr. No. |
Bank / Financial Institution |
Amount of default as at the balance sheet date |
Period of default |
1 |
Bank of Maharashtra |
133.26 |
Less than 60 Days |
2 |
Central Bank of India |
807.14 |
Less than 60 Days |
3 |
Corporation Bank |
399.06 |
Less than 60 Days |
4 |
EXIM |
511.38 |
Less than 60 Days |
5 |
HUDCO |
13,471.53 |
More than 60 days |
6 |
IDBI Bank |
976.47 |
Less than 60 Days |
7 |
IIFCL UK |
127.56 |
Less than 60 Days |
8 |
Jammu and Kashmir Bank |
397.67 |
Less than 60 Days |
9 |
Karnataka Bank Limited |
54.78 |
Less than 60 Days |
10 |
Karur Vysya Bank |
54.48 |
Less than 60 Days |
11 |
LIC of India |
133.61 |
Less than 60 Days |
12 |
Oriental Bank of Commerce |
105.63 |
Less than 60 Days |
13 |
Punjab National Bank |
220.93 |
Less than 60 Days |
14 |
UCO Bank |
133.56 |
Less than 60 Days |
15 |
Union Bank of India |
1,021.75 |
Less than 60 Days |
16 |
United Bank of India |
144.34 |
Less than 60 Days |
17 |
Vijaya Bank |
36.62 |
Less than 60 Days |
18 |
Yes Bank |
733.47 |
Less than 60 Days |
Total |
19,463.24 |
ix. According to the information and explanations given to us, the term loans raised during the year were, prima facie, been applied for the purpose for which those are raised. The Company has not raised any money by way of initial public offer or further public offer (including debt instruments).
x. Based on our audit procedures performed for the purpose of reporting the true and fair view of the standalone Ind AS financial statements and on the basis of information and explanations given by the management, no fraud by the Company or on the Company by its officers or employees has been noticed or reported during the year,
xi. According to the information and explanations give to us and based on our examination of the records the Company has paid Rs. 107.03 Lacs to the executive director of the Company, which was in excess of remuneration as prescribed in the Schedule V to the Act. The Company has applied the requisite approval from the Central Government mandated by the provisions of section 197 read with Schedule V which is awaited.
xii. In our opinion and according to the information and explanations given to us, the Company is not a nidhi company. Therefore, the provisions of paragraph 3 (xii) of the CaRO 2016 are not applicable to the Company.
xiii. According to the information and explanations given to us and based on our examination of the records of the Company, transactions with the related parties are in compliance with sections 177 and 188 of the Act where applicable and details of such transactions have been disclosed in the financial statements etc. as required by the applicable accounting standards.
xiv. According to the information and explanations give to us and based on our examination of the records of the Company, the Company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures during the year. Therefore, the provisions of paragraph 3 (xiv) of the CARO 2016 are not applicable to the Company
xv. According to the information and explanations given to us, the Company has not entered into non-cash transactions with directors or persons connected with him. Therefore, the provisions of paragraph 3 (xv) of the CARO 2016 are not applicable to the Company
In our opinion and according to information and explanations provided to us, the Company is not required to be registered under section 45-IA of the Reserve Bank of India Act 1 934.
For Pathak H. D. & Associates
Chartered Accountants
Firm Regn. No: 107783W
Gyandeo Chaturvedi
Partner
Membership No. 46806
Place: Mumbai
Date: April 11, 2017
Mar 31, 2016
We have audited the accompanying standalone financial statements of RELIANCE DEFENCE AND ENGINEERING LIMITED (Formerly known as Pipavav Defence and Offshore Engineering Company Limited) ("the Company"), which comprise the Balance sheet as at 31st March, 2016, the Statement of
Profit and Loss and the Cash Flow Statement for the year then ended and a summary of significant accounting policies and
other explanatory information.
Management''s Responsibility for the Standalone Financial Statements
The Company''s Board of Directors is responsible for the matters
stated in Section 1 34(5) of the Companies act, 201 3 ("the
Act") with respect to the preparation of these standalone
financial statements that give a true and fair view of the financial
position, financial performance and cash flows of the Company
in accordance with the Accounting Principles Generally Accepted
in India (Indian GAAPs), including Indian Accounting Standards
(''Ind AS'') prescribed under Section 133 of the Companies Act,
2013, as applicable.
This responsibility also includes maintenance of adequate
accounting records in accordance with the provisions of the Act
for safeguarding the assets of the Company and for preventing
and detecting frauds and other irregularities; selection and
application of appropriate accounting policies; making judgments
and estimates that are reasonable and prudent; and design,
implementation and maintenance of adequate internal financial
controls, that were operating effectively for ensuring the
accuracy and completeness of the accounting records, relevant
to the preparation and presentation of the financial statements
that give a true and fair view and are free from material
misstatement, whether due to fraud or error.
Auditors'' Responsibility
Our responsibility is to express an opinion on these standalone
financial statements based on our audit.
We have taken into account the provisions of the Act, the
accounting and auditing standards and matters which are
required to be included in the audit report under the provisions
of the Act and the Rules made thereunder.
We conducted our audit in accordance with the Standards on
Auditing specified under Section 143(10) of the Act. Those
Standards require that we comply with ethical requirements
and plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free from material
misstatements.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements.
The procedures selected depend on the auditor''s judgment,
including the assessment of the risks of material misstatement of
the financial statements, whether due to fraud or error. In making
those risk assessments, the auditor considers internal financial
control relevant to the Company''s preparation of the financial
statements that give a true and fair view in order to design
audit procedures that are appropriate in the circumstances. An
audit also includes evaluating the appropriateness of accounting
policies used and the reasonableness of the accounting estimates
made by the Company''s directors, as well as evaluating the
overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient
and appropriate to provide a basis for our audit opinion on the
standalone financial statements.
Opinion
In our opinion and to the best of our information and according
to the explanations given to us, the aforesaid standalone financial
statements give the information required by the Act in the
manner so required and give a true and fair view in conformity
with the accounting principles generally accepted in India, of the
state of affairs of the Company as at 31st March, 2016 and its
loss and its cash flows for the year ended on that date.
Emphasis of Matters
We draw attention to the:
a. note no. 29.1 regarding managerial remuneration paid /
payable to a Executive Director, which is subject to the
approval of the Central Government.
b. note no. 48 regarding voluntary early adoption of ''Ind
AS'' by the company and its consequential impacts on the
Other Equity (Reserve & Surplus) as well as restatement/
rework of corresponding figures of the previous year and
presentations of financial statements as per Schedule III of
the Companies Act 2013 as notified vide notification No.
G.S.R. 404 (E) dated 6th April, 2016 by the Ministry of
Corporate Affairs.
Our opinion is not modified in respect of these matters.
Report on Other Legal and Regulatory Requirements
1. As required by Section 143 (3) of the Act, we report that:
a. We have sought and obtained all the information and
explanations which to the best of our knowledge and
belief were necessary for the purposes of our audit.
b. In our opinion, proper books of account as required
by law have been kept by the Company so far as it
appears from our examination of those books.
c. The Balance Sheet, the Statement of Profit and Loss,
and the Cash Flow Statement dealt with by this report
are in agreement with the books of account.
d. In our opinion, the aforesaid standalone financial
statements comply with the Ind AS prescribed under
Section 133 of the Act, as applicable.
e. On the basis of the written representations received
from the directors as on 31st March, 2016 and taken
on record by the Board of Directors, none of the
directors is disqualified as on 31st March, 2016 from
being appointed as a director in terms of Section 164
(2) of the Act.
f. With respect to the adequacy of the internal financial
controls over financial reporting of the Company and
the operating effectiveness of such controls, refer to
our separate Report in "Annexure A".
g. With respect to the other matters to be included in
the Auditor''s Report in accordance with Rule 11 of
the Companies (Audit and Auditors) Rules, 2014, in our opinion and to the best of our information and according to the explanations given to us:
i. The Company has disclosed the impact of pending litigations on its financial position in its financial statements as referred to in Note No.
33 to the standalone financial statements;
ii. The Company has made provisions, as required under the applicable law or Ind AS, for material foreseeable losses, if any, on long term contracts including derivative contracts; and
iii. There are no amounts which are required to be transferred to the Investor Education and Protection Fund by the Company.
2. As required by the Companies (Auditor''s Report) Order, 2016 ("CARO 2016") issued by the Central Government in terms of Section 143(11) of the Act, we give in "Annexure B" a statement on the matters specified in paragraphs 3 and 4 of CARO 2016.
i. In respect of its fixed assets:
a. The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets on the basis of available information.
b. As explained to us, the Company has physically verified certain assets, in accordance with a phased program of verification, which in our opinion is reasonable, having regard to the size of the Company and the nature of its assets. No material discrepancies were noticed on such physical verification as compared with the available records.
c. According to the information and explanations given to us and on the basis of our examination of the records of the Company, the Company doesn''t have any freehold immovable properties. As informed to us, in
respect of leasehold immovable properties the original title deeds have been deposited with the lenders, we have been produced the photocopy of the title deeds of these leasehold immovable properties and based on
such documents, the title deeds are held in the name of the Company.
ii. As explained to us, inventories have been physically verified
during the year by the management and in our opinion the frequency of verification is reasonable. Discrepancies noticed on physical verification of the inventories between the physical inventories and book records were not material, having regard to the size of the operations of the Company and the same have been properly dealt with.
iii. In respect of loans, secured or unsecured, granted by the company to companies, firms, Limited liability partnerships or other parties covered in the register maintained under section 189 of the Act:
a. The company has granted unsecured loans to wholly owned subsidiary companies, and in our opinion, the rate of interest and other terms and conditions on which the loans had been granted are not, prima facie,
prejudicial to the interest of the Company.
b. As per the information and explanations given to us, the above loans are repayable on demand along with the interest accrued thereon. The repayment / receipts, if any, demanded have been received.
c. As the above loans are repayable on demand, the question of overdue amount does not arise.
iv. In our opinion and according to the information and explanations given to us, the Company has complied with the provisions of section 185 and 186 of the Act, in respect of grant of loans, making investments and providing guarantees and securities.
v. According to the information and explanations given to us, the Company has not accepted any deposits from the public. Therefore, the provisions of paragraph 3 (v) of the CARO 2016 are not applicable to the Company.
vi. According to the information and explanations given to us, the Central Government has not prescribed the cost records to be maintained under sub-Section (1) of Section 148 of the Act in respect of activities carried on by the Company. Therefore the provisions of paragraph 3(vi) of the CARO 2016 are not applicable to the Company.
vii. According to the information and explanations given to us in respect of statutory dues:
a. During the year delays have been noticed in depositing undisputed statutory dues, including provident fund, employees'' state insurance, income tax, sales-tax, service tax, duty of customs, duty of excise, value added tax, cess and any other statutory dues, as applicable, with the appropriate authorities. According to the information and explanations given to us, no undisputed amounts payable in respect of such statutory dues were outstanding as at 31st March, 2016 for a period of more than six months from the date they became payable except in respect of TDS and Works Contract Tax aggregating to Rs.1,696.35
Lacs as detailed below, which have since been paid.
Name of Nature of the Period to which Amounts
the Statutes Dues it relates (Rs. in Lacs)
Income Tax Tax Deducted April 2015 to 229.30
Act,1961 at source August 2015
MVAT Act Works December 1,467.05
Contract Tax 2014
Total 1,696.35
b. Details of dues of Income tax, Duty of Excise and Value added tax aggregating to Rs.2,1 73.26 Lacs
that have not been deposited on account of disputed matters pending before appropriate authorities are as under:
Name of the Statutes Nature of the Dues Period to which it relates
Income Tax Act,1961 Income Tax 2007-08
2004-05
2007-08 to 2014-15
MVAT, 2002 VAT 2006-07 to 2011-12
CENVAT Credit Central Excise 2010-11 to 2014-15
Rules,2004 Penalty
Name of the Statutes Amounts Forum where the dispute is
(Rs. in Lacs) (*) pending
Income Tax Act,1961 942.17 Income Tax Appellate Tribunal
30.16 High Court
18.57 ITO (TDS)
MVAT, 2002 146.36 Assistance Commissioner of
Sales Tax
CENVAT Credit
Rules,2004 1,036.00 Commissioner of Central Excise
Total 2,173.26
(*) Net of amount deposited under protest
viii. Based on our audit procedures and information and explanations given by the management, and considering the Corporate Debt Restructuring (CDR) scheme, we are of the opinion that as on 31st March, 2016 the Company has defaulted in repayment of loans to banks and financial institutions aggregating to Rs.7,869.07 Lacs. Lender wise details of such default is as under:
(Rs. in Lacs)
Sr. Bank / Financial Amount of Period of default
No Institution default
as at the
balance
sheet date
1 HUDCO Ltd 6,263.00 Above 100 days
2 India Infrastructure 902.13 Below 100 days
Financial Ltd ECB
3 Bank of India 182.95 Below 100 days
4 United Bank of India 131.92 Below 100 days
5 Union Bank of India 92.07 Below 100 days
6 Oriental Bank of 90.26 Below 100 days
Commerce
7 Dena Bank 70.49 Below 100 days
8 Vijaya Bank 56.28 Below 100 days
9 State Bank of Patiala 28.79 Below 100 days
10 Central Bank of India 24.99 Below 100 days
11 Punjab National Bank 21.22 Below 100 days
12 State Bank of Mysore 4.97 Below 100 days
Total 7,869.07
ix. According to the information and explanations given to us, the term loans raised during the year were, prima facie, been applied for the
purpose for which those are raised. The Company has not raised any money by way of initial public offer or further public offer (including
debt instruments).
x. Based on our audit procedures performed for the purpose of reporting the true and fair view of the financial statements
and on the basis of information and explanations given by the management, no fraud by the Company or on the
Company by its officers or employees has been noticed or reported during the year.
xi. According to the information and explanations give to us and
based on our examination of the records Company has paid or provided Rs.249.51 Lacs to one of the executive director of the Company which was in excess of remuneration as prescribed in the Schedule V to the Act by Rs.120.53 Lacs. The Company has applied the requisite approval from the
Central Government mandated by the provisions of section 197 read with Schedule V which is awaited.
xii. In our opinion and according to the information and explanations given to us, the Company is not a nidhi company. Therefore, the provisions of paragraph 3 (xii) of the CARO 2016 are not applicable to the Company.
xiii. According to the information and explanations given to us and based on our examination of the records of the Company, transactions with the related parties are in compliance with sections 177 and 188 of the Act where applicable and details of such transactions have been disclosed in the financial statements etc. as required by the applicable accounting standards.
xiv. According to the information and explanations give to us and
based on our examination of the records of the Company, the Company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures during the year. Therefore, the provisions of paragraph 3 (xiv) of the CARO 2016 are not applicable to
the Company.
xv. According to the information and explanations given to us, the Company has not entered into non-cash transactions with directors or persons connected with him. Therefore, the provisions of paragraph 3 (xv) of the CARO 2016 are not applicable to the Company.
xvi. In our opinion and according to information and explanations
provided to us, the Company is not required to be registered under section 45-IA of the Reserve Bank of India Act 1934.
For Pathak H. D. & Associates
Chartered Accountants
Firm Regn. No: 107783W
Rupesh Shah
Partner
Membership No. 117964
Place: Mumbai
Date: 14th May, 2016
Mar 31, 2015
We have audited the accompanying standalone financial statements of
Pipavav Defence and Offshore Engineering Company Limited ('the
Company'), which comprise the balance sheet as at 31 March 2015, the
statement of profit and loss and the cash flow statement for the year
then ended, and a summary of significant accounting policies and other
explanatory information.
Management's Responsibility for the Standalone Financial Statements
The Company's Board of Directors is responsible for the matters stated
in Section 134(5) of the Companies Act, 2013 ("the Act") with respect
to the preparation and presentation of these standalone financial
statements that give a true and fair view of the financial position,
financial performance and cash flows of the Company in accordance with
the accounting principles generally accepted in India, including
the Accounting Standards specified under Section 133 of the Act, read
with Rule 7 of the Companies (Accounts) Rules,
2014. This responsibility also includes maintenance of
adequateaccounting records in accordance with the provisions of the Act
for safeguarding the assets of the Company and for preventing and
detecting frauds and other irregularities; selection and application
of appropriate accounting policies; making judgments and estimates
that are reasonable and prudent; and design, implementation : and
maintenance of adequate internal financial controls, that were
operating effectively for ensuring the accuracy and completeness * of
the accounting records, relevant to the preparation and presentation of
the financial statements that give a true and fair view and : are free
from material misstatement, whether due to fraud or error.
Auditor's Responsibility
Our responsibility is to express an opinion on these standalone
financial statements based on our audit.
We have taken into account the provisions of the Act, the accounting
and auditing standards and matters which are required to be included in
the audit report under the provisions of the Act and the Rules made
thereunder.
We conducted our audit in accordance with the Standards on Auditing
specified under Section 143(10) of the Act. Those Standards require that
we comply with ethical requirements and plan and perform the audit to
obtain reasonable assurance about whether the financial statements are
free from material misstatement.
An audit involves performing procedures to obtain audit evidence about
the amounts and the disclosures in the financial statements. The
procedures selected depend on the auditor's judgment, including the
assessment of the risks of material misstatement of the financial
statements, whether due to fraud or error. In making those risk
assessments, the auditor considers internal financial control relevant
to the Company's preparation of the financial statements that give a
true and fair view in order to design audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing
an opinion on whether the Company has in place an adequate internal
financial controls system over financial reporting and the operating
effectiveness of such controls. An audit also includes evaluating the
appropriateness of the accounting policies used and the reasonableness
of the accounting estimates made by the Company's Directors, as well as
evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and
appropriate to provide a basis for our audit opinion on the standalone
financial statements.
Opinion
In our opinion and to the best of our information and according to the
explanations given to us, the aforesaid standalone financial statements
give the information required by the Act in the manner so required and
give a true and fair view in conformity with the accounting principles
generally accepted in India, of the state of affairs of the Company as
at 31 March 2015 and its loss and its cash flows for the year.ended on
that date:.
Emphasis of Matter
We draw attention to the following matter in the Notes to the financial
statements:
(a) Note 25.1 to the financial statements relating to Managerial
Remuneration, which is subject to requisite approvals and procedure.
Our Opinion is not modified in respect of the aforementioned matter.
Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditor's Report) Order, 2015 ("the
Order") issued by the Central Government of India in terms of
sub-section (11) of section 143 of the Act, we give in the Annexure a
statement on the matters specified in the paragraph 3 and 4 of the
Order, to the extent applicable.
2. As required by Section 143 (3) of the Act, we report that:
(a) We have sought and obtained all the information and explanations
which to the best of our knowledge and belief were necessary for the
purposes of our audit;
(b) In our opinion proper books of account as required by law have been
kept by the Company so far as it appears from our examination of those
books;
(c) The Balance Sheet, the Statement of Profit and Loss and the Cash
Flow statement dealt with by this Report are in agreement with the
books of account;
(d) In our opinion, the aforesaid financial statements comply with the
Accounting Standards specified under Section 133 of the Act, read with
Rule 7 of the Companies (Accounts) Rules, 2014;
(e) On the basis of the written representations received from the
directors as on 31 March 2015 taken on record by the Board of
Directors, none of the directors is disqualified as on 31 March 2015
from being appointed as a director in terms of Section 164 (2) of the
Act; and
(f) With respect to the other matters to be included in the Auditor's
Report in accordance with Rule 11 of the Companies (Audit and Auditors)
Rules, 2014, in our opinion and to the best of our information and
according to the explanations given to us:
i. The Company has disclosed the impact of pending litigations on its
financial position in its financial statements - Refer Note 31 to the
financial statements;
ii. The Company has made provisions, as required under the applicable
law or accounting standards, for material foreseeable losses, on
long-term contracts (Refer Note 11 to the financial statements)
including derivative contracts; and
iii. There were no amounts which were required to be transferred to the
investor education and protection fund by the Company.
Annexure to the Independent Auditors' Report
(Referred to in paragraph 1 under the heading "Report on other Legal and
Regulatory Requirements" of our report of even date issued to the
members of Pipavav Defence and Offshore Engineering Company Limited for
the year ended 31 March, 2015)
i. In respect of fixed assets:
(a) The Company has maintained proper records showing full particulars,
including quantitative details and situation of fixed assets; and
(b) We have been informed that the physical verification of fixed
assets was carried out by the management in a phased manner, which in
our opinion is reasonable, and no material discrepancies were noticed
on such verification.
ii. In respect of inventory:
(a) The inventories have been physically verified during the year by
the management. In our opinion, the frequency of verification *
is reasonable. We have relied on the certificates and other documents
provided by the management;
(b) In our opinion and according to information and explanations given
to us, the procedures of physical verification of : inventories
followed by management are reasonable and adequate in relation to the
size of the Company and the nature of business; and
(c) According to the information and explanations given to us and on
the basis of our examination of inventory records, we : are of the
opinion that the Company is maintaining proper records of inventory. As
explained to us by the management, the discrepancies noticed on
physical verification of the inventories between the physical
inventories and the book records were not material, having regard to
the size of the operations of the Company and the same have been
properly dealt with.
iii. The Company has granted unsecured loan to wholly owned subsidiary
covered in the register maintained under section 189 of the Act;
(a) As per the information and explanations given to us, the said loan
and interest thereon was not due for repayment during the year; and
(b) Since the above loan and interest thereon were not due for
repayment during the year, the question of overdue amounts does not
arise.
iv. In our opinion and according to the information and explanations
given to us, there is an internal control system for purchase of
inventory and fixed assets and also sale of goods and services which
needs to be further strengthened. During the course of our audit, we
have not observed any major weakness in the internal control system.
v. According to the information and explanation provided to us by the
management, in our opinion, the Company has not accepted any 'deposits'
within the meaning of Rule 2(b) of the Companies (Acceptance of
Deposits) Rule 2014. Therefore, the provisions of clause (v) of
paragraph 3 of the order arenot applicable to the Company.
vi. According to the information and explanations provided by
management, the Company is not engaged in production of any such goods
or provision of any such service for which Central Government has
specified maintenance of cost records under section 148(1) of the Act.
Hence in our opinion no comment on maintenance of cost records under
section 148(1) of the Act is required.
vii. In respect of statutory dues:
(a) According to the information and explanations given to us and on the
basis of our examination of the records of the Company, the Company has
generally been regular in depositing with appropriate authorities
undisputed statutory dues, including provident fund, employees state
insurance, income tax, sales tax, wealth tax, service tax, duty of
customs, duty of excise, value added tax, cess and other material
statutory dues during the year. However delays have been noticed in case
of income tax (including tax deducted at source), service tax and works
contract tax. Further, no undisputed amounts payable in respect of such
statutory dues were in arrears as at 31 March 2015 for a period of more
than six months from the date they became payable.
(b) According to the information and explanations given to us we report
that the disputed statutory dues aggregate to Rs. 2500.41 lacs have not
been deposited on account of matters pending before appropriate
authorities. The breakup of the above dues is as under:
Name of the Statute Natures of Dues Period to which the
default it relates
lncomeTaxAct,1961 Tax Deducted 2004-05
at Source
2007-08 t0
2014-15
MVAT, 2002 VAT 2006-07to
2011-12
CENVAT Credit Penalty 2009-10- to
Rules, 2004
2012-13
Name of the Statute Amount Forum where
(Rs lacs)* dispute is pending
lncomeTaxAct,1961 30.16 High Court
98.73 ITO(TDS)
MVAT, 2002 146.36 Assistant
Commissioner
of Sales Tax
CENVAT Credit 2,225.16 Commissioner
Rules, 2004 of Central
Excise
Total: 2500.41
*The disputed amounts are net of amounts deposited with the relevant
authorities.
(c) According to the information and explanations given to us and in
accordance with the relevant provisions of the Companies Act, 1956 (1
of 1956 and rules thereunder, no amounts were required to be
transferred to the investor education and protection fund.
viii. The accumulated losses of the Company as at 31 March 2015 are not
more than fifty percent of its net worth as on that date. The Company
has incurred cash losses during the current financial year and had not
incurred cash losses in the immediately preceding-financial year.
ix. Based on our audit procedures, information and explanation given
to us by the management and considering the Corporate Debt
Restructuring (CDR) scheme, as on 31 March 2015, the Company has not
defaulted in repayment of dues to financial institution or banks except
an overdue amount of Rs. 5,131.33 lacs towards principal which includes
Rs. 868.33 Lacs overdue since FY 2013-14 and overdue amount of Rs.
1,565.87 lacs towards interest which includes Rs. 149.17 Lacs overdue
since FY 2013-14. Against such overdue amount, the Company has since
paid Rs. 1,097.07 lacs up to the date of signing of this audit report.
x. The Company has given corporate guarantee in relation to loan taken
by a wholly owned subsidiary from financial institution aggregating to
Rs. 20,222.00 lacs as at 31 March 2015. The management is of the
opinion that the terms and conditions are not prejudicial to the
interests of the Company. We are, however, unable to comment on the
same.
xi. The Company has raised new term loans during the year. To the best
of our knowledge and according to information and explanation given to
us, the term loans outstanding at the beginning of the year and those
obtained by the Company during the year were prima facie been either
used for the purposes for which they were raised or if pending
utilization have been temporarily kept with the banks.
xii. To the best of our knowledge and according to the information and
explanations given to us, review of internal audit reports and reading
of minutes of the meetings of Board of Directors and its committees, no
material fraud on or by the Company has been noticed or reported during
the course of our audit.
For GPS & Associates
Chartered Accountants
Firm's Reg. No: 121344W
H.Y. Gurjar
Place: Mumbai Partner
Date: 30th May 2015 Membership no: 32485
Mar 31, 2014
We have audited the accompanying financial statements of Pipavav
Defence and Offshore Engineering Company Limited ("the Company"), which
comprise the Balance Sheet as at 31st March, 2014 and the Statement of
Profit & Loss and Cash Flow Statement for the year then ended, and a
summary of significant accounting policies and other explanatory
information.
Management''s Responsibility for the Financial Statements
Management is responsible for the preparation of these financial
statements that give a true and fair view of the financial position,
financial performance and cash flows of the Company in accordance with
the accounting principles generally accepted in India, including,
Accounting standards referred to in sub-section (3C) of Section 211 of
the Companies Act, 1956 ("the Act") read with general circular 15/2013
dated 13th September, 2013 of the Ministry of Corporate Affairs in
respect of Section 133 of the Companies Act, 2013. This responsibility
includes the design, implementation and maintenance of internal control
relevant to the preparation and presentation of the financial
statements that give a true and fair view and are free from material
misstatement, whether due to fraud or error.
Auditors'' Responsibility
Our responsibility is to express an opinion on these financial
statements based on our audit. We conducted our audit in accordance
with the Standards on Auditing issued by the Institute of Chartered
Accountants of India. Those Standards require that we comply with
ethical requirements and plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free
from material misstatement.
An audit involves performing procedures to obtain audit evidence about
the amounts and disclosures in the financial statements. The procedures
selected depend on the auditor''s judgment, including the assessment of
the risks of material misstatement of the financial statements, whether
due to fraud or error. In making those risk assessments, the auditor
considers internal control relevant to the Company''s preparation and
fair presentation of the financial statements in order to design audit
procedures that are appropriate in the circumstances, but not for the
purpose of expressing an opinion on the effectiveness of the Company''s
internal control. An audit also includes evaluating the appropriateness
of accounting policies used and the reasonableness of the accounting
estimates made by management, as well as evaluating the overall
presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and
appropriate to provide a basis for our audit opinion.
Opinion
In our opinion and to the best of our information and according to the
explanations given to us, the accounts read together with significant
accounting policies and notes thereon, give the information required by
the Act, in the manner so required and give a true and fair view in
conformity with the accounting principles generally accepted in India:
(i) in the case of the Balance Sheet, of the state of affairs of the
Company as at 31st March, 2014;
(ii) in the case of the Statement of Profit & Loss, of the profit of
the Company for the year ended on that date; and
(iii) in the case of the Cash Flow Statement, of the Cash Flows for the
year ended on that date.
Emphasis of matter
We draw attention to the Note no. 26.1 regarding Managerial
Remuneration, which is subject to the approval of Central Government.
Our report is not qualified in this matter.
Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditor''s Report) Order, 2003 ("the
Order") issued by the Central Government of India in terms of
sub-section (4A) of Section 227 of the Act, we give in the Annexure a
statement on the matters specified in paragraphs 4 and 5 of the Order.
2. As required under provisions of Section 227(3) of the Act, we
report that:
(a) we have obtained all the information and explanations, which to the
best of our knowledge and belief were necessary for the purpose of our
audit;
(b) in our opinion, proper books of account, as required by law, have
been kept by the Company, so far as appears from our examination of
those books;
(c) the Balance Sheet, Statement of Profit and Loss and Cash Flow
Statement dealt with by this Report are in agreement with the books of
account;
(d) in our opinion, the Balance Sheet, Statement of Profit and Loss,
and Cash Flow Statement comply with the Accounting Standards referred
to in sub section (3C) of Section 211 of the Act read with general
circular 15/2013 dated 13th September, 2013 of the Ministry of
Corporate Affairs in respect of Section 133 of the Companies Act, 2013;
(e) on the basis of written representations received from the directors
as on March 31, 2014, and taken on record by the Board of Directors,
none of the Directors is disqualified as on March 31, 2014, from being
appointed as a director in terms of clause (g) of sub-section (1) of
Section 274 of the Act.
ANNEXURE TO INDEPENDENT AUDITORS'' REPORT
(Referred to in paragraph 1 under the heading "Report on Other Legal
and Regulatory Requirements" of our report of even date issued to the
members of Pipavav Defence and Offshore Engineering Company Limited for
the year ended March 31, 2014)
(i) In respect of its fixed assets:
(a) The Company has maintained proper records showing full particulars,
including quantitative details and situation of fixed assets on the
basis of available information.
(b) As explained to us, the Company has physically verified certain
assets, in accordance with a phased program of verification, which in
our opinion is reasonable, having regard to the size of the Company.
(c) In our opinion, the Company has not disposed off substantial part
of fixed assets during the year and the going concern status of the
Company is not affected.
(ii) In respect of its inventories:
(a) The inventories have been physically verified during the year by
the management. In our opinion, the frequency of verification is
reasonable. In respect of inventories in transit, we have relied on
the certificates and other documents provided by the management.
(b) In our opinion and according to the information and explanations
given to us, the procedures of physical verification of inventories
followed by the management are reasonable and adequate in relation to
the size of the Company and the nature of its business.
(c) According to the information and explanations given to us and on
the basis of our examination of inventory records, we are of the
opinion that the Company is maintaining proper records of inventory. As
explained to us, discrepancies noticed on physical verification of the
inventories between the physical inventories and book records were not
material, having regard to the size of the operations of the Company,
and the same have been properly dealt with.
(iii) In respect of Loans, secured or unsecured, granted or taken by
the company to/from Companies, firms or other parties covered in the
register maintained under Section 301 of the Companies Act, 1956:
(a) The Company has granted unsecured loan to a wholly-owned subsidiary
company. The maximum amount outstanding at any time during the year was
Rs. 6,887.24 lacs and the year-end balance was Rs. 1,613.01 lacs.
(b) In our opinion and according to the information and explanations
given to us the rate of interest and other terms and conditions are not
prima facie prejudicial to the interest of the Company.
(c) The above loan is repayable on demand and there is no repayment
schedule.
(d) There was no overdue amount in respect of the above loan.
(e) The Company has taken loan from a wholly-owned subsidiary company
in respect of which maximum amount involved during the year was Rs.
15,915.10 lacs and the year-end balance was Rs. 15,499.08 lacs.
(f) In our opinion and according to the information and explanations
given to us, rate of interest, and other terms and conditions, are not
prejudicial to the interest of the Company.
(g) As per the information and explanations given to us, the above loan
is not due for repayment and there is no overdue amount as regards to
interest.
(iv) In our opinion and according to the information and explanations
given to us, there is an internal control system for the purchase of
goods, services and fixed assets and also for the sale of goods and
services which needs to be further strengthened. During the course of
our audit, we have not observed any continuing failure to correct major
weaknesses in internal control system.
(v) In respect of the contracts or arrangements referred to in Section
301 of the Companies Act, 1956:
(a) In our opinion and according to the information and explanations
given to us, the transactions made in pursuance of contracts or
arrangements, that needed to be entered in the register maintained
under Section 301 of the Companies Act, 1956 have been so entered.
(b) The transactions, made in pursuance of the contracts or
arrangements, entered in the register maintained under Section 301 of
the Companies Act, 1956, and aggregating during the year to Rs. 5 lacs
or more in respect of each party, have been made at prices, which are
reasonable having regard to the available information. The Company has
not made any similar transactions with any other party.
(vi) According to the information and explanations given to us, the
Company has not accepted any deposits from the public and hence
directives issued by the Reserve Bank of India and the provisions of
Sections 58A and 58AA of the Companies Act, 1956 and the rules framed
thereunder are not applicable for the year under audit.
(vii) In our opinion, the Company has an adequate internal audit system
commensurate with its size and nature of its business.
(viii) We have broadly reviewed the cost records maintained by the
Company pursuant to the Companies (Cost Accounting Records) Rules, 2011
prescribed by the Central Government under Section 209(1)(d) of the
Companies Act, 1956 and are of the opinion that prima facie the
prescribed cost records have been maintained. We have, however, not
made a detailed examination of the cost records with a view to
determine whether they are accurate or complete.
(ix) According to the information and explanations given to us in
respect of statutory dues:
(a) The Company has generally been regular in depositing undisputed
statutory dues, including Provident Fund, Employees'' State Insurance,
Sales tax, Wealth tax, Customs Duty, Service Tax, Excise Duty, Cess and
any other material statutory dues with the appropriate authorities
during the year however delays have been noticed in case of income tax
(including tax deducted at source), service tax and works contract tax.
According to the information and explanations given to us, no
undisputed amounts payable in respect of such statutory dues were
outstanding as at 31st March, 2014 for a period of more than six months
from the date they became payable.
(b) The disputed statutory dues aggregating to Rs. 2,633.45 lacs that
have not been deposited on account of disputed matters pending before
appropriate authorities are as under:
Name of the Nature of Period to which the Amount
Statute the Dues amount relates (Rs. In Lacs) (*)
Income Tax Income Tax 2004-05 32.64
Act, 1961
2005-06, 2006-07, 2,316.69
2008-09 to 2011-12
2007-08 to 2013-14 284.12
TOTAL 2,633.45
Name of the Forum where dispute is pending
Statute
Income Tax High Court
Act, 1961
C.I.T. (A)
ITO (TDS)
TOTAL
* Net of amount deposited under protest as mentioned in Note no 32.1 to
the financial statements.
(x) The Company does not have any accumulated losses as at 31st March,
2014 and has not incurred cash losses during the financial year covered
by the audit and in the immediately preceding financial year.
(xi) During the year, the Company has defaulted in repayment of dues to
banks and financial institutions. Based on our audit procedures and
information and explanations given by the management, we have noticed
that as on 31st March, 2014 the Company has defaulted in repayment of
dues to banks and financial institutions (including overdrawal in Cash
Credit facilities) aggregating to Rs. 37,280.79 lacs, out of which Rs.
34,645.17 lacs has since been repaid.
(xii) In our opinion and according to the explanations given to us and
based on the information available, no loans and advances have been
granted by the Company on the basis of security by way of pledge of
shares, debentures and other securities.
(xiii) In our opinion, the Company is not a chit fund or a nidhi/mutual
benefit fund/society. Therefore the provisions of clause 4 (xiii) of
the Companies (Auditor''s Report) Order, 2003 are not applicable to the
Company.
(xiv) In our opinion and according to the information and explanations
given to us, the Company is not a dealer or trader in shares,
securities, debentures and other investment. The company has maintained
proper records of transactions and contracts in respect of shares,
securities and other investments and timely entries have been made
therein. All shares, securities and other investments have been held by
the Company in its own name.
(xv) The Company has given corporate guarantees aggregating to Rs.
54,672 lacs for loans taken by two of its wholly owned subsidiaries
from banks or financial institutions as at 31st March, 2014. The
management is of the opinion that terms and conditions are not
prejudicial to the interest of the company. We are, however, unable to
comment on the same.
(xvi) The Company has raised new term loans during the year. To the
best of our knowledge and according to the information and explanations
given to us the term loans outstanding at the beginning of the year and
those raised during the year were prima facie been either used for the
purposes for which they were raised or pending utilization been
temporarily kept with the banks. However, certain short term working
capital loans taken during the year have been utilized for the purchase
of fixed assets.
(xvii) On the basis of review of utilization of funds, which is based
on overall examination of the balance sheet of the Company as at 31st
March, 2014, related information as made available to us and as
represented by the management, we are of the opinion that fund raised
on short term basis aggregating to Rs. 124,184.73 lacs have been used
during the year for long term investments (Projects).
(xviii) During the year the Company has not made any preferential
allotment to the parties covered in the register maintained u/s. 301 of
the Companies Act, 1956 and hence the provisions of the clause 4
(xviii) of the Companies (Auditor''s Report) Order, 2003 are not
applicable to the Company.
(xix) The Company has not issued any debentures, hence the provisions
of clause 4 (xix) of the Companies (Auditor''s Report) Order, 2003 are
not applicable to the Company.
(xx) During the year covered by our report the Company has not raised
any money by public issue.
(xxi) To the best of our knowledge and belief and according to the
information and explanations given to us, review of internal audit
reports and reading of minutes of the meetings of Board of Directors
and its committees no fraud on or by the company was noticed or
reported during the course of our audit.
For Chaturvedi & Shah
Chartered Accountants
(Firm Reg. No. - 101720W)
R Koria
Partner
Membership No. - 35629
Place : Mumbai
Date : 30th May, 2014
Mar 31, 2013
Report on the Financial Statements
We have audited the accompanying financial statements of Pipavav
Defence and Offshore Engineering Company Limited ("the Company"), which
comprise the Balance Sheet as at 31st March 2013 and the Statement of
Profit & Loss and Cash Flow Statement for the year then ended, and a
summary of significant accounting policies and other explanatory
information.
Management''s Responsibility for the Financial Statements
Management is responsible for the preparation of these financial
statements that give a true and fair view of the financial position,
financial performance and cash flows of the Company in accordance with
the accounting principles generally accepted in India including,
accounting standards referred to in sub-section (3C) of section 211 of
the Companies Act, 1956 ("the Act"). This responsibility includes the
design, implementation and maintenance of internal control relevant to
the preparation and presentation of the financial statements that give
a true and fair view and are free from material misstatement, whether
due to fraud or error.
Auditors'' Responsibility
Our responsibility is to express an opinion on these financial
statements based on our audit. We conducted our audit in accordance
with the Standards on Auditing issued by the Institute of Chartered
Accountants of India. Those Standards require that we comply with
ethical requirements and plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free
from material misstatement.
An audit involves performing procedures to obtain audit evidence about
the amounts and disclosures in the financial statements. The procedures
selected depend on the auditor''s judgment, including the assessment of
the risks of material misstatement of the financial statements, whether
due to fraud or error. In making those risk assessments, the auditor
considers internal control relevant to the Company''s preparation and
fair presentation of the financial statements in order to design audit
procedures that are appropriate in the circumstances, but not for the
purpose of expressing an opinion on the effectiveness of the Company''s
internal control. An audit also includes evaluating the appropriateness
of accounting policies used and the reasonableness of the accounting
estimates made by management, as well as evaluating the overall
presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and
appropriate to provide a basis for our audit opinion.
Opinion
In our opinion and to the best of our information and according to the
explanations given to us, the accounts read together with significant
accounting policies and notes thereon, give the information required by
the Act, in the manner so required and give a true and fair view in
conformity with the accounting principles generally accepted in India:
-
i. in the case of the Balance Sheet, of the state of affairs of the
Company as at 31st March 2013;
ii. in the case of the Statement of Profit & Loss, of the profit of
the Company for the year ended on that date; and
iii. in the case of the Cash Flow Statement, of the Cash Flows for the
year ended on that date.
Emphasis of matter
Without qualifying our opinion attention is drawn to the:-
i. Note no. 22.2 regarding recognition of revenue in respect of certain
Panamax vessels under construction, wherein the matter is under
arbitration, for the reasons explained therein.
ii. Note no. 27.1 regarding Managerial Remuneration, which is subject
to the approval of Central Government.
Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditor''s Report) Order, 2003 ("the
Order") issued by the Central Government of India in terms of
sub-section (4A) of section 227 of the Act, we give in the Annexure a
statement on the matters specified in paragraphs 4 and 5 of the Order.
2. As required under provisions of section 227(3) of the Act, we
report that:
a. we have obtained all the information and explanations which to the
best of our knowledge and belief were necessary for the purpose of our
audit;
b. in our opinion proper books of account as required by law have been
kept by the Company so far as appears from our examination of those
books;
c. the Balance Sheet, Statement of Profit and Loss and Cash Flow
Statement dealt with by this Report are in agreement with the books of
account
d. in our opinion, the Balance Sheet, Statement of Profit and Loss,
and Cash Flow Statement comply with the Accounting Standards referred
to in sub section (3C) of section 211 of the Act.
e. on the basis of written representations received from the directors
as on March 31, 2013, and taken on record by the Board of Directors,
none of the directors is disqualified as on March 31, 2013, from being
appointed as a director in terms of clause (g) of sub-section (1) of
section 274 of the Act.
ANNEXURE TO INDEPENDENT AUDITOR''S REPORT
(Referred to in paragraph 1 under the heading of "Report on Other Legal
and Regulatory Requirements" of our report of even date issued to the
members of Pipavav Defence and Offshore Engineering Company Limited for
the year ended March 31, 2013):
i. In respect of its fixed assets:
a. The company has maintained proper records showing full particulars,
including quantitative details and situation of fixed assets on the
basis of available information.
b. As explained to us, the Company has physically verified certain
assets, in accordance with a phased program of verification, which in
our opinion is reasonable, having regard to the size of the Company.
c. In our opinion, the Company has not disposed off substantial part
of fixed assets during the year and the going concern status of the
Company is not affected.
ii. In respect of its inventories:
a. The inventories have been physically verified during the year by
the management. In our opinion, the frequency of verification is
reasonable. In respect of inventories in transit and lying with the Job
Workers, we have relied on the certificates and other documents
provided by the management.
b. In our opinion and according to the information and explanations
given to us, the procedures of physical verification of inventories
followed by the management are reasonable and adequate in relation to
the size of the Company and the nature of its business.
c. According to the information and explanations given to us and on
the basis of our examination of inventory records, we are of the
opinion that the Company is maintaining proper records of inventory. As
explained to us, discrepancies noticed on physical verification of the
inventories between the physical inventories and book records were not
material, having regard to the size of the operations of the Company,
and the same have been properly dealt with.
iii. In respect of Loans, secured or unsecured, granted or taken by the
company to/ from Companies, firms or other parties covered in the
register maintained under Section 301 of the Companies Act, 1956:
a. The Company has granted interest free unsecured loan to a
wholly-owned subsidiary company. The maximum amount outstanding at any
time during the year was Rs. 5300.56 Lacs and the year-end balance was Rs.
Nil.
b. In our opinion and according to the information and explanations
given to us other terms and conditions are not prima facie prejudicial
to the interest of the company.
c. The above loan is repayable on demand and there is no repayment
schedule.
d. As there is no balance outstanding against the above loan, the
question of overdue amount does not arise.
e. The company has taken loan from two such parties in respect of
which maximum amount involved during the year was Rs. 20,978.00 lacs and
the year-end balance was Rs. 11,822.07 lacs.
f. In our opinion and according to the information and explanations
given to us, rate of interest, wherever applicable, and other terms and
conditions, are not prejudicial to the interest of the Company.
g. As per the information and explanations given to us, the above loan
is not due for repayment and there is no overdue amount as regards to
interest.
iv. In our opinion and according to the information and explanations
given to us, there is an internal control system for the purchase of
goods, services and fixed assets and also for the sale of goods and
services which needs to be further strengthened. During the course of
our audit, we have not observed any continuing failure to correct major
weaknesses in internal control system.
v. In respect of the contracts or arrangements referred to in Section
301 of the Companies Act, 1956:
a. In our opinion and according to the information and explanations
given to us, the transactions made in pursuance of contracts or
arrangements, that needed to be entered in the register maintained
under section 301 of the Companies Act, 1956 have been so entered.
b. The transactions, made in pursuance of the contracts or
arrangements, entered in the register maintained under section 301 of
the Companies Act, 1956, and aggregating during the year to Rs. 5 lacs or
more in respect of each party, have been made at prices, which are
reasonable. The Company has not made any similar transactions with any
other party.
vi. According to the information and explanations given to us, the
Company has not accepted any deposits from the public and hence
directives issued by the Reserve Bank of India and the provisions of
sections 58A and 58AA of the Companies Act, 1956 and the rules framed
there under are not applicable for the year under audit.
vii. In our opinion, the Company has an adequate internal audit system
commensurate with its size and nature of its business.
viii. We have broadly reviewed the cost records maintained by the
Company pursuant to the Companies (Cost Accounting Records) Rules, 2011
prescribed by the Central Government under Section 209(1 )(d) of the
Companies Act, 1956 and are of the opinion that prima facie the
prescribed cost records have been maintained. We have, however, not
made a detailed examination of the cost records with a view to
determine whether they are accurate or complete.
ix. According to the information and explanations given to us in
respect of statutory dues:
a. The company has generally been regular in depositing undisputed
statutory dues, including Provident Fund, Employees'' State Insurance,
Sales tax, Wealth tax, Customs Duty, Service Tax, Excise Duty, Cess and
any other material statutory dues with the appropriate authorities
during the year however delays have been noticed in case of income tax
(including tax deducted at source) and works contract tax.
b. According to the information and explanations given to us, no
undisputed amounts payable in respect of such statutory dues were
outstanding as at 31st March, 2013 for a period of more than six months
from the date they became payable.
c. The disputed statutory dues aggregating to Rs. 843.70 Lacs that have
not been deposited on account of disputed matters pending before
appropriate authorities are as under:
* Net of amount deposited under protest as mentioned in Note no 33.1 to
the financial statements.
x. The Company does not have any accumulated losses as at 31st March,
2013 and has not incurred cash losses during the financial year covered
by the audit and in the immediately preceding financial year.
xi. Based on our audit procedures and information and explanations
given by the management, we are of the opinion that as on 31st March,
2013 the Company has not defaulted in repayment of dues to banks and
financial institutions.
xii. In our opinion and according to the explanations given to us and
based on the information available, no loans and advances have been
granted by the Company on the basis of security by way of pledge of
shares, debentures and other securities.
xiii. In our opinion, the Company is not a chit fund or a nidhi /mutual
benefit fund/society. Therefore the provisions of clause 4 (xiii) of
the Companies (Auditor''s Report) Order, 2003 are not applicable to the
Company.
xiv. In our opinion and according to the information and explanations
given to us, the Company is not a dealer or trader in shares,
securities, debentures and other investment. The company has maintained
proper records of transactions and contracts in respect of shares,
securities and other investments and timely entries have been made
therein. All shares, securities and other investments have been held by
the Company in its own name.
xv. According to the information and explanations given to us, the
Company has not given any guarantee for loans taken by others from
banks or financial institutions.
xvi. The Company has raised new term loans during the year. To the best
of our knowledge and according to the information and explanations
given to us the term loans outstanding at the beginning of the year and
those raised during the year were prima facie been either used for the
purposes for which they were raised or pending utilization been
temporarily kept with the banks. Further certain short term working
capital loans taken during the year have been utilized for the purchase
of fixed assets.
xvii. On the basis of review of utilization of funds, which is based on
overall examination of the balance sheet of the Company as at 31st
March, 2013, related information as made available to us and as
represented by the management, we are of the opinion that fund raised
on short term basis aggregating to Rs. 43,892.30 lacs have been used
during the year for long term investments.
xviii During the year the Company has made preferential allotment of
1,00,00,000 equity shares against the conversion of share warrants to a
company covered in the register maintained under Section 301 of the
Companies Act, 1956. The price at which these equity shares have been
issued, has been determined as per Securities and Exchange Board of
India (Issue of Capital & Disclosure Requirements) Regulations, 2009,
which in our opinion, is not prejudicial to the interest of the
Company.
xix. The Company has not issued any debentures, hence the provisions of
clause 4 (xix) of the Companies (Auditor''s Report) Order, 2003 are not
applicable to the Company.
xx. During the year covered by our report the Company has not raised
any money by public issue.
xxi. To the best of our knowledge and belief and according to the
information and explanations given to us and review of internal audit
reports, no fraud on or by the company was noticed or reported during
the course of our audit.
For Chaturvedi & Shah
Chartered Accountants
Firm Reg. No. - 101720W
R. Koria
Place: Mumbai Partner
Date : 30th May 2013 Membership No. - 35629
Mar 31, 2012
1. We have audited the attached Balance Sheet of Pipavav Defence and
Offshore Engineering Company Limited as at March 31, 2012, and also the
Statement of Profit and Loss and Cash Flow Statement of the Company for
the year ended on that date annexed thereto. These financial statements
are the responsibility of the Company's management. Our responsibility
is to express an opinion on these financial statements based on our
audit.
2. We conducted our audit in accordance with Auditing Standards
generally accepted in India. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatements. An audit
includes examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made
by the management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
3. Without qualifying our opinion attention is drawn to the:
- Note no. 21.2 regarding recognition of revenue in respect of certain
Panamax vessels under construction, wherein the matter is under
arbitration, for the reasons explained therein.
- Note no. 26.1 regarding Managerial Remuneration, which is subject to
the approval of Central Government.
4. As required by the Companies (Auditor's Report) Order, 2003 issued
by the Central Government of India in terms of sub-section (4A) of
Section 227 of the Companies Act, 1956, we give in the Annexure hereto,
a statement on the matters specified in paragraphs 4 and 5 of the said
Order, to the extent applicable to the Company.
5. Further to our Comments in paragraph 3 above and in the Annexure
referred to in Paragraph 4 above, we report that:
a) We have obtained all the information and explanations, which to the
best of our knowledge and belief were necessary for the purposes of our
audit;
b) In our opinion, proper books of account, as required by law, have
been kept by the Company, so far as appears from our examination of
such books;
c) The Balance Sheet, Statement of Profit and Loss and Cash Flow
Statement dealt with by this report are in agreement with the books of
account;
d) In our opinion the Balance Sheet, Statement of Profit and Loss and
Cash Flow Statement dealt with by this report comply with the mandatory
Accounting Standards referred to in sub-section (3C) of Section 211 of
the Companies Act, 1956;
e) On the basis of the written representations received from the
directors as on March 31, 2012, and taken on records by the Board of
Directors, we report that none of the directors is disqualified as on
March 31, 2012, from being appointed as a director in terms of clause
(g) of sub-section (1) of Section 274 of the Companies Act, 1956.
f) In our opinion and to the best of our information and according to
the explanations given to us, the said accounts, read together with the
significant accounting policies and notes there on, give the
information required by the Companies Act, 1956, in the manner so
required and give a true and fair view in conformity with the
accounting principles generally accepted in India:
(i) in the case of the Balance Sheet, of the state of affairs of the
Company as at March 31, 2012;
(ii) in the case of Statement of Profit and Loss, of the profit of the
Company for the year ended on that date; and
(iii) in the case of Cash Flow Statement, of the cash flows for the
year ended on that date.
ANNEXURE TO AUDITOR'S REPORT
(Referred to in paragraph 4 of our report of even date)
As required by the Companies (Auditor's Report) Order, 2003 issued by
the Central Government of India in terms of Section 227 (4A) of the
Companies Act, 1956, and on the basis of such checks as we considered
appropriate, we further report that:
i. In respect of its fixed assets:
a. The Company has maintained proper records showing full particulars,
including quantitative details and situation of fixed assets on the
basis of available information.
b. As explained to us, the Company has physically verified certain
assets, in accordance with a phased program of verification, which in
our opinion is reasonable, having regard to the size of the Company.
c. In our opinion, the Company has not disposed off substantial part
of fixed assets during the year and the going concern status of the
Company is not affected.
ii. In respect of its inventories:
a. As explained to us, all the inventories at EOU and SEZ unit except
steel profiles/angles have been physically verified by the management
during the year. In respect of inventories in transit and lying with
the Job Workers, we have relied on the certificates and other documents
provided by the management.
b. In our opinion and according to the information and explanations
given to us, the procedures of physical verification of inventories
needs to be further strengthened to make it commensurate with the size
of the Company.
c. The Company has maintained records of inventories which needs to be
strengthened. As explained to us, there were no material discrepancies
noticed on physical verification of inventories as compared to the book
records.
iii. In respect of Loans, secured or unsecured, granted or taken by the
Company to/ from companies, firms or other parties covered in the
register maintained under Section 301 of the Companies Act, 1956:
a. The Company has granted unsecured loan to a wholly-owned subsidiary
Company. The maximum amount outstanding at any time during the year was
Rs. 4363.08 Lacs and the year end balance wasRs. 4158.13 Lacs.
b. In our opinion and according to the information and explanations
given to us, the aforesaid loan is interest free and other terms and
conditions are not prima facie prejudicial to the interest of the
Company.
c. The said loan is repayable on demand and there is no repayment
schedule.
d. As the said loan is repayable on demand, the question of overdue
amount does not arise.
e. The Company has not taken any loan during the year from companies,
firms or other parties covered in the Register maintained under Section
301 of the Companies Act, 1956. Consequently, the provisions of
sub-clauses (f) and (g) of paragraph 4 of the order are not applicable.
iv. In our opinion and according to the information and explanations
given to us, there is an internal control system for the purchases of
inventory and fixed assets and for the sale of goods and services which
needs to be strengthened. During the course of our audit, we have not
observed any continuing failure to correct major weakness in internal
control system.
v. In respect of the contracts or arrangements referred to in Section
301 of the Companies Act, 1956:
a. In our opinion and according to the information and explanations
given to us, the transactions made in pursuance of contracts or
arrangements, that needed to be entered in the register maintained
under Section 301 of the Companies Act, 1956 have been so entered.
b. The transactions, made in pursuance of the contracts or
arrangements, entered in the register maintained under Section 301 of
the Companies Act, 1956, and aggregating during the year toRs. 5 lacs or
more in respect of each party, have been made at prices, which are
reasonable. The Company has not made any similar transactions with any
other party.
vi. According to the information and explanations given to us, the
Company has not accepted any deposits from the public and hence
directives issued by the Reserve Bank of India and the provisions of
Sections 58A and 58AA of the Companies Act, 1956 and the rules framed
there under are not applicable for the year under audit.
vii. In our opinion, the Company has an adequate internal audit system
commensurate with the size and nature of the business of the Company.
viii. We have broadly reviewed the cost records maintained by the
Company pursuant to the Companies (Cost Accounting Records) Rules, 2011
prescribed by the Central Government under Section 209 (1) (d) of the
Companies Act, 1956 and are of the opinion that prima facie the
prescribed cost records have been maintained. We have, however, not
made a detailed examination of the cost records with a view to
determine whether they are accurate or complete.
ix. According to the information and explanations given to us in
respect of statutory dues:
a. The Company has been regular in depositing undisputed statutory
dues, including Provident Fund, Employees' State Insurance, Income tax,
Sales tax, Wealth tax, Service tax, Customs Duty, Excise Duty, Cess and
any other material statutory dues with the appropriate authorities
during the year except in some cases.
b. According to the information and explanations given to us, no
undisputed amounts payable in respect of such statutory dues were
outstanding as at March 31, 2012 for a period of more than six months
from the date they became payable.
c. The disputed statutory dues aggregating to Rs. 795.30 Lacs that have
not been deposited on account of disputed matters pending before
appropriate authorities are as under:
Name of the Nature of Period to
which the Amount* Forum where
dispute is
Statute the Dues amount
relates (Rs.in
lacs) pending
Income Tax Income Tax 2007-08 5.46 C.I.T. (A)
Act, 1961 2004-05 32.64 ITAT
2007-08 to
2010-11 757.20 ITO (TDS)
Total 795.30
* Net of amount deposited under protest as mentioned in Note no. 32 to
the financial statements.
x. The Company does not have any accumulated losses as at March 31,
2012 and has not incurred cash losses during the financial year covered
by the audit and in the immediately preceding financial year.
xi. Based on our audit procedures and according to the information and
explanations given to us, we are of the opinion that the Company as on
March 31, 2012 has not defaulted in the repayment of dues to banks,
financial institutions and debenture holders except for overdue amount
of loans and interest aggregating to Rs. 7365.31 lacs to banks and
financial institutions.
xii. In our opinion and according to the explanations given to us and
based on the information available, no loans and advances have been
granted by the Company on the basis of security by way of pledge of
shares, debentures and other securities.
xiii. In our opinion, the Company is not a chit fund or a nidhi/ mutual
benefit fund/ society. Therefore, the provisions of clause 4 (xiii) of
the Companies (Auditor's Report) Order, 2003 are not applicable to the
Company.
xiv. In our opinion and according to the information and explanations
given to us, the Company is not a dealer or trader in shares,
securities, debentures and other investment. The Company has maintained
proper records of transactions and contracts in respect of shares,
securities, debentures, and other investments and timely entries have
been made therein. All shares, securities, debentures, and other
investments have been held by the Company in its own name.
xv. According to the information and explanations given to us, the
Company has not given any guarantee for loans taken by others from
banks or financial institutions.
xvi. The Company has raised new term loans during the year. To the best
of our knowledge and according to the information and explanations
given to us, the term loans outstanding at the beginning of the year
and those raised during the year were prima facie been either used for
the purposes for which they were raised or pending utilization been
temporarily kept with the banks.
xvii. On the basis of review of utilization of fund, which is based on
overall examination of the Balance Sheet of the Company as at March 31,
2012, related information as made available to us and as represented by
the management, we are of the opinion that fund raised on short term
basis have not prima facie been used during the year for long term
investments.
xviii The Company has not made any preferential allotment of shares to
parties and companies covered in the Register maintained under Section
301 of the Companies Act, 1956.
xix. The Company has not issued any secured debentures, hence the
provisions of clause 4 (xix) of the Companies (Auditor's Report) Order,
2003 are not applicable to the Company.
xx. During the year covered by our report, the Company has not raised
any money by public issue.
xxi. To the best of our knowledge and belief and according to the
information and explanations given to us, no fraud on or by the Company
was noticed or reported during the course of our audit.
For Chaturvedi & Shah
Chartered Accountants
Firm Reg. No. - 101720W
R. Koria
Place : Mumbai Partner
Date : May 30, 2012 Membership No. - 35629
Mar 31, 2011
1. We have audited the attached Balance Sheet of PIPAVAV SHIPYARD
LIMITED, as at March 31, 2011, and also the Profit and Loss Account and
Cash Flow Statement of the Company for the year ended on that date
annexed thereto. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion
on these financial statements based on our audit.
2. We conducted our audit in accordance with Auditing Standards
generally accepted in India. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatements. An audit
includes examining, on a test basis, evidence supporting the amounts
and disclosures in financial statements. An audit also includes
assessing the accounting principles used and significant estimates made
by the management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable
basis for our opinion.
3. As required by the Companies (Auditor's Report) Order, 2003 issued
by the Central Government of India in terms of Sub-section (4A) of
Section 227 of the Companies Act, 1956, we give in the Annexure hereto,
a statement on the matters specified in paragraphs 4 and 5 of the said
Order, to the extent applicable to the Company.
4. Further to our Comments in the Annexure referred to in Para 3
above, we report that:
a) We have obtained all the information and explanations, which to the
best of our knowledge and belief, were necessary for the purposes of
our audit;
b) In our opinion, proper books of account, as required by law, have
been kept by the Company, so far as appears from our examination of
such books;
c) The Balance Sheet, 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 mandatory
Accounting Standards referred to in Sub-section (3C) of Section 211 of
the Companies Act, 1956;
e) On the basis of the written representations received from the
directors as on March 31, 2011, and taken on records by the Board of
Directors, we report that none of the directors is disqualified as on
March 31, 2011, from being appointed as a director in terms of clause
(g) of sub-section (1) of Section 274 of the Companies Act, 1956.
f) In our opinion and to the best of our information and according to
the explanations given to us, the said accounts, read together with the
significant accounting policies & notes there on, in particular Note
no. 11 of Schedule 22 regarding payment of managerial remuneration
which is subject to the approval of Central Government, give the
information required by the Companies Act, 1956, in the manner so
required and give a true and fair view in conformity with the
accounting principles generally accepted in India:
(i) in the case of the Balance Sheet, of the state of affairs of the
Company as at March 31, 2011;
(ii) in the case of Profit and Loss Account, of the Profit of the
Company for the year ended on that date; and
(iii) in the case of Cash Flow Statement, of the cash flows for the
year ended on that date.
ANNEXURE TO AUDITOR'S REPORT
(Referred to in paragraph 3 of our report of even date)
As required by the Companies (Auditor's Report) Order, 2003 issued by
the Central Government of India in terms of Section 227 (4A) of the
Companies Act, 1956, and on the basis of such checks as we considered
appropriate, we further report that:- i. In respect of its fixed
assets:
a. The Company has maintained proper records showing full particulars,
including quantitative details and situation of fixed assets on the
basis of available information.
b. As explained to us, the Company has physically verified certain
assets, in accordance with a phased program of verification, which in
our opinion is reasonable, having regard to the size of the Company.
c. In our opinion, the Company has not disposed off substantial part
of fixed assets during the year and the going concern status of the
Company is not affected.
ii. In respect of its inventories:
a. As explained to us, inventories have been physically verified
during the year by the management. In our opinion, the frequency of
verification is reasonable.
b. In our opinion and according to the information and explanations
given to us, the procedures of physical verification of inventories
followed by the management are reasonable and adequate in relation to
the size of the Company and the nature of its business.
c. The Company has maintained proper records of inventories. As
explained to us, there were no material discrepancies noticed on the
physical verification of inventory as compared to the book records.
iii. In respect of Loans, secured or unsecured, granted or taken by the
Company to/ from Companies, firms or other parties covered in the
register maintained under Section 301 of the Companies Act, 1956:
a. The Company has granted unsecured loan to a wholly-owned subsidiary
company. The maximum amount outstanding at any time during the year was
Rs. 4011.24 Lacs and the year end balance was Rs. 3790.23 Lacs.
b. In our opinion and according to the information and explanations
given to us, the aforesaid loan is interest free and other terms and
conditions, are not prima facie prejudicial to the interest of the
Company.
c. The said loan is repayable on demand and there is no repayment
schedule.
d. As the said loan is repayable on demand, the question of overdue
amount does not arise.
e. The Company has not taken any loans during the year from companies,
firms or other parties covered in the Register maintained under section
301 of the Companies Act, 1956. Consequently, the provisions of sub
clauses (f) and (g) of paragraph 4 of the order are not applicable.
iv. In our opinion and according to the information and explanations
given to us, there is an adequate internal control system commensurate
with the size of the Company and the nature of its business for the
purchase of inventory, fixed assets and also for the sale of goods and
services. During the course of our audit, we have not observed any
continuing failure to correct major weaknesses in internal controls.
v. In respect of the contracts or arrangements referred to in Section
301 of the Companies Act, 1956:
a. In our opinion and according to the information and explanations
given to us, the transactions made in pursuance of contracts or
arrangements, that needed to be entered in the register maintained
under section 301 of the Companies Act, 1956 have been so entered.
b. The transactions, made in pursuance of the contracts or
arrangements, entered in the register maintained under section 301 of
the Companies Act, 1956, and aggregating during the year to Rs. Five
lacs or more in respect of each party, have been made at prices, which
are reasonable. The Company has not made any similar transactions with
any other party.
vi. According to information and explanations given to us, the Company
has not accepted any deposits from the public and hence directives
issued by the Reserve Bank of India and the provisions of sections 58A
and 58AA of the Companies Act, 1956 and the rules framed there under
are not applicable for the year under audit.
vii. In our opinion, the Company has an adequate internal audit system
commensurate with the size and nature of its business.
viii. The Central Government has not prescribed the maintenance of cost
records under section 209 (1) (d) of the Companies Act, 1956 in respect
of Ship Building activities carried out by the Company.
ix. According to the information and explanations given to us in
respect of statutory dues:
a. The Company has been regular in depositing undisputed statutory
dues, including Provident Fund, Employees' State Insurance, Income tax,
Sales tax, Wealth tax, Service tax, Customs Duty, Excise Duty, Cess and
any other material statutory dues with the appropriate authorities
during the year except in few cases.
Further, since the Central Government has till date not prescribed the
amount of cess payable under Section 441A of the Companies Act, 1956,
we are not in a position to comment upon the regularity or otherwise of
the Company in depositing the same.
b. According to the information and explanations given to us, no
undisputed amounts payable in respect of such statutory dues were
outstanding as at March 31, 2011 for a period of more than six months
from the date they became payable.
c. The disputed statutory dues aggregating to Rs. 108.65 Lacs that
have not been deposited on account of disputed matters pending before
appropriate authorities are as under:
Name of the
Statute Nature of the Period to
which the Amount* Forum where dispute
Dues amount
relates (Rs. In
Lacs) is pending
Income Tax
Act, 1961 Income Tax 2007-08 15.82 C.I.T. (A)
Income Tax
Act, 1961 Income Tax 2008-09 92.83 ITO-TDS
Total 108.65
* Net of amount deposited under protest as mentioned in Note no. 1 of
Schedule 22 to the financial statement.
x. The Company has accumulated loss as on March 31, 2011, which is not
more than fifty percent of its net worth as on that date. The Company
has not incurred cash losses during the financial year covered by the
audit but incurred cash losses in the immediately preceding financial
year.
xi. Based on our audit procedures and according to the information and
explanations given to us, we are of the opinion that the Company has
not defaulted in the repayment of dues to banks, financial Institutions
and debenture holders.
xii. In our opinion and according to the explanations given to us and
based on the information available, no loans and advances have been
granted by the Company on the basis of security by way of pledge of
shares, debentures and other securities.
xiii. In our opinion, the Company is not a chit fund or a nidhi /mutual
benefit fund/society. Therefore the provisions of clause 4 (xiii) of
the Companies (Auditor's Report) Order, 2003 is not applicable to the
Company.
xiv. The Company has maintained proper records of transactions and
contracts in respect of shares and other securities and timely entries
have been made therein. The investments are held by the Company in its
own name.
xv. According to the information and explanations given to us, the
Company has not given any guarantee for loans taken by others from
banks or financial institutions.
xvi. The Company has raised new term loans during the year. To the best
of our knowledge and according to information and explanation given to
us, the term loans outstanding at the beginning of the year and those
raised during the year were prima facie been either used for the
purposes for which they were raised or pending utilization been
temporarily kept with the banks.
xvii. On the basis of review of utilization of funds, which is based on
overall examination of the Balance Sheet of the Company as at March 31,
2011, related information as made available to us and as represented to
us, by the management, we are of the opinion, that funds raised on
short term basis have not been utilized for long term purposes.
xviii. The Company has not made any preferential allotment of shares to
parties and companies covered in the Register maintained under Section
301 of the Companies Act, 1956.
xix. The Company has issued unsecured debentures and hence the question
of creation of security against the same does not arise.
xx. During the year covered by our report, the Company has not raised
any money by public issue.
xxi. To the best of our knowledge and belief and according to the
information and explanations given to us, no fraud on or by the Company
was noticed or reported during the course of our audit.
For Chaturvedi & Shah
Chartered Accountants
Firm Reg. No. Ã 101720W
R. Koria
Place: Mumbai Partner
Date: May 28, 2011 Membership No. Ã 35629
Mar 31, 2010
1. We have audited the attached Balance Sheet of PIPAVAV SHIPYARD
LIMITED, as at 31st March, 2010, and also the Profit and Loss Account
and Cash Flow Statement of the Company for the year ended on that date
annexed thereto. These financial statements are the responsibility of
the Companys management. Our responsibility is to express an opinion
on these financial statements based on our audit.
2. We conducted our audit in accordance with Auditing Standards
generally accepted in India. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatements. An audit
includes examining, on a test basis, evidence supporting the amounts
and disclosures in financial statements. An audit also includes
assessing the accounting principles used and significant estimates made
by the management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable
basis for our opinion.
3. As required by the Companies (Auditors Report) Order, 2003 issued
by the Central Government of India in terms of Sub-section (4A) of
Section 227 of the Companies Act, 1956, we give in the Annexure hereto,
a statement on the matters specified in paragraphs 4 and 5 of the said
Order, to the extent applicable to the company.
4. Further to our Comments in the Annexure referred to in Para 3
above, we report that:
a) We have obtained all the information and explanations, which to the
best of our knowledge and belief were necessary for the purposes of our
audit;
b) In our opinion, proper books of account, as required by law, have
been kept by the Company, so far as appears from our examination of
such books;
c) The Balance Sheet, Proft and Loss Account and Cash Flow Statement
dealt with by this report are in agreement with the books of account;
d) In our opinion the Balance Sheet, Profit and Loss Account and Cash
Flow Statement dealt with by this report comply with the mandatory
Accounting Standards referred to in Sub- section (3C) of Section 211 of
the Companies Act, 1956;
e) On the basis of the written representations received from the
directors as on 31st March, 2010, and taken on records by the Board of
Directors, we report that none of the directors is disqualified as on
31st March, 2010, from being appointed as a director in terms of clause
(g) of sub-section (1) of Section 274 of the Companies Act 1956.
f) In our opinion and to the best of our information and according to
the explanations given to us, the said accounts, read together with the
significant Accounting Policies & notes there on, in particular Note
No. 10 of Schedule 23 regarding payment of managerial remuneration
which is subject to the approval of Central Government, give the
information required by the Companies Act, 1956, in the manner so
required and give a true and fair view in conformity with the
accounting principles generally accepted in India:
(i) in the case of the Balance Sheet, of the state of affairs of the
Company as at 31st March, 2010;
(ii) in the case of Profit and Loss Account, of the loss of the Company
for the year ended on that date; and
(iii) in the case of Cash Flow Statement, of the cash fows for the year
ended on that date.
ANNEXURE TO AUDITORS REPORT (Referred to in paragraph 3 of our report
of even date)
As required by the Companies (Auditors Report) Order, 2003 issued by
the Central Government of India in terms of Section 227 (4A) of the
Companies Act 1956, and on the basis of such checks as we considered
appropriate, we further report that:- i. In respect of its fixed
assets:
a. The company has maintained proper records showing full particulars,
including quantitative details and situation of fixed assets on the
basis of available information.
b. As explained to us, all the fixed assets have been physically
verified by the management in a phased periodical manner, which in our
opinion is reasonable, having regard to the size of the Company. No
material discrepancies were noticed on such physical verification.
c. In our opinion, the Company has not disposed off substantial part
of fixed assets during the year and the going concern status of the
Company is not affected.
ii. In respect of its inventories:
a. As explained to us, inventories have been physically verified
during the year by the management. In our opinion the frequency of
verification is reasonable.
b. In our opinion and according to the information and explanations
given to us, the procedures of physical verification of inventories
followed by the management are reasonable and adequate in relation to
the size of the Company and the nature of its business.
c. The Company has maintained proper records of inventories. As
explained to us, there were no material discrepancies noticed on the
physical verification of inventory as compared to the book records.
iii. In respect of Loans, secured or unsecured, granted or taken by the
company to/ from Companies, firms or other parties covered in the
register maintained under Section 301 of the Companies Act, 1956:
a. The Company has granted unsecured loan to a wholly-owned subsidiary
company of it. The maximum amount outstanding at any time during the
year was Rs. 10,669.93 Lacs and the year end balance was Rs. 3,869.40
Lacs.
b. In our opinion and according to the information and explanations
given to us, the aforesaid loan is interest free and other terms and
conditions, are not prima facie prejudicial to the interest of the
company.
c. The said loan is repayable on demand and there is no repayment
schedule.
d. As the said loan is repayable on demand, the question of overdue
amount does not arise.
e. The company has not taken any loans during the year from companies,
firms or other parties covered in the Register maintained under section
301 of the Companies Act, 1956. Consequently, the provisions of sub
clauses (f) and (g) of paragraph 4 of the order are not applicable.
iv. In our opinion and according to the information and explanations
given to us, there is an adequate internal control system commensurate
with the size
of the Company and the nature of its business for the purchase of
inventory, fixed assets and also for the sale of goods. During the
course of our audit, we have not observed any continuing failure to
correct major weaknesses in internal controls.
v. In respect of the contracts or arrangements referred to in Section
301 of the Companies Act, 1956:
a. In our opinion and according to the information and explanations
given to us, the transactions made in pursuance of contracts or
arrangements, that needed to be entered in the register maintained
under section 301 of the Companies Act, 1956 have been so entered.
b. The transactions, made in pursuance of the contracts or
arrangements, entered in the register maintained under section 301 of
the Companies Act, 1956, and aggregating during the year to Rs. Five
lacs or more in respect of each party, have been made at prices, which
are reasonable. The Company has not made any similar transactions with
any other party.
vi. According to information and explanations given to us, the Company
has not accepted any deposits from the public and hence directives
issued by the Reserve Bank of India and the provisions of sections 58A
and 58AA of the Companies Act, 1956 and the rules framed there under
are not applicable for the year under audit.
vii. In our opinion, the Company has an adequate internal audit system
commensurate with the size and nature of its business.
viii. The Central Government has not prescribed the maintenance of cost
records under section 209 (1) (d) of the Companies Act, 1956 in respect
of Ship Building activities carried out by the company.
ix. According to the information and explanations given to us in
respect of statutory dues:
a. The company has been regular in depositing undisputed statutory
dues, including Provident Fund, Employees State Insurance, Income tax,
Sales tax, Wealth tax, Service tax, Customs Duty, Excise Duty, Cess and
any other material statutory dues with the appropriate authorities
during the year except in few cases.
b. According to the information and explanations given to us, no
undisputed amounts payable in respect of such statutory dues were
outstanding as at 31st March, 2010 for a period of more than six months
from the date they became payable.
c. The disputed statutory dues aggregating to Rs. 19.33 Lacs that have
not been deposited on account of disputed matters pending before
appropriate authorities are as under:
Period to Forum
Amount
Name of Nature of which the where
(Rs. In
the Statute the Dues amount ispute is
Lacs)
relates pending
Income Tax Income 2004 - 05 19.33 C.I.T. (A)
Act, 1961 Tax
Total 19.33
x. The Company has accumulated loss as on 31st March 2010, which is not
more than fifty percent of its net worth as on that date. The Company
has incurred cash loss during the current financial year but had not
incurred cash loss in the immediately preceding year.
xi. Based on our audit procedures and according to the information and
explanations given to us, we are of the opinion that the Company has
not defaulted in the repayment of dues to banks and financial
Institutions except incase of a financial institution where Rs. 815.65
Lacs were outstanding as on 31st March, 2010 which has since been paid.
xii. In our opinion and according to the explanations given to us and
based on the information available, no loans and advances have been
granted by the Company on the basis of security by way of pledge of
shares, debentures and other securities.
xiii. In our opinion, the Company is not a chit fund or a nidhi /mutual
beneft fund/society. Therefore the provisions of clause 4 (xiii) of the
Companies (Auditors Report) Order, 2003 is not applicable to the
Company.
xiv. The company has maintained proper records of transactions and
contracts in respect of shares and other securities and timely entries
have been made therein. The investments are held by the Company in its
own name.
xv. According to the information and explanations given to us, the
Company has not given any guarantee for loans taken by others from
banks or financial institutions.
xvi. The Company has raised new term loans during the year. To the best
of our knowledge and according to information and explanation given to
us the term loans outstanding at the beginning of the year and those
raised during the year were prima facie been either used for the
purposes for which they were raised or pending utilization been
temporarily kept with the bank.
xvii. On the basis of review of utilization of funds, which is based on
overall examination of the Balance Sheet of the Company as at 31st March,
2010, related informations as made available to us and as represented
to us, by the management, we are of the opinion, that funds raised on
short term basis have not been utilized for long term purposes.
xviii The Company has not made any preferential allotment of shares to
parties and companies covered in the Register maintained under Section
301 of the Companies Act, 1956.
xix. The Company has not issued any debentures, hence the provisions of
clause 4 (xix) of the Companies (Auditors Report) Order, 2003 is not
applicable to the Company.
xx. We have verified the end use of money raised by Initial Public
Offer and the same is disclosed by the management in the Note No. 4 of
Schedule 23 to the accounts.
xxi. To the best of our knowledge and belief and according to the
information and explanations given to us, no fraud on or by the company
was noticed or reported during the course of our audit.
For Chaturvedi & Shah
Firm Reg. No. - 101720W
Chartered Accountants
R Koria
Partner
Membership No. - 35629
Place : Mumbai
Date : 28th May, 2010
Disclaimer: This is 3rd Party content/feed, viewers are requested to use their discretion and conduct proper diligence before investing, GoodReturns does not take any liability on the genuineness and correctness of the information in this article