Eaton Fluid Power Ltd


BSE: 505875 | NSE: VICKERSYS | ISIN: INE762B01015 
Market Cap: [Rs.Cr.] 124 | Face Value: [Rs.] 10
Industry: Engineering

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Auditor's Report

INDEPENDENT AUDITOR

To the Members of Eaton Fluid Power Limited

Report on the Financial Statements

We have audited the accompanying financial statements of Eaton Fluid Power Limited("the Company"), which comprise the Balance sheet as at March 31, 2013, and theStatement of profit and loss and Cash flow statement for the year then ended, and asummary 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 atrue and fair view of the financial position, financial performance and cash flows of theCompany in accordance with accounting principles generally accepted in India, includingthe Accounting Standards referred to in sub-section (3C) of section 211 of the CompaniesAct, 1956 ("the Act"). This responsibility includes the design, implementationand maintenance of internal control relevant to the preparation and presentation of thefinancial statements that give a true and fair view and are free from materialmisstatement, whether due to fraud or error.

Auditor's Responsibility

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

An audit involves performing procedures to obtain audit evidence about the amounts anddisclosures in the financial statements. The procedures selected depend on the auditor'sjudgment, including the assessment of the risks of material misstatement of the financialstatements, whether due to fraud or error. In making those risk assessments, the auditorconsiders internal control relevant to the Company's preparation and fair presentation ofthe financial statements in order to design audit procedures that are appropriate in thecircumstances. An audit also includes evaluating the appropriateness of accountingpolicies used and the reasonableness of the accounting estimates made by management, aswell as evaluating the overall presentation of the financial statements. We believe thatthe audit evidence we have obtained is sufficient and appropriate to provide a basis forour audit opinion.

Opinion

In our opinion and to the best of our information and according to the explanationsgiven to us, the financial statements give the information required by the Act in themanner so required and give a true and fair view in conformity with the accountingprinciples generally accepted in India:

(a) in the case of the Balance sheet, of the state of affairs of the Company as atMarch 31,2013;

(b) in the case of the Statement of profit and loss, of the loss for the year ended onthat date; and

(c) in the case of the Cash flow statement, of the cash flows for the year ended onthat date.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor's Report) Order, 2003 ("the Order")issued by the Central Government of India in terms of sub-section (4A) of section 227 ofthe Act, we give in the Annexure a statement on the matters specified in paragraphs 4 and5 of the Order.

2. As required by section 227(3) of the Act, we report that:

(a) We have obtained all the information and explanations which to the best of ourknowledge 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 theCompany so far as appears from our examination of those books;

(c) The Balance sheet, Statement of profit and loss, and Cash flow statement dealt withby this Report are in agreement with the books of account;

(d) In our opinion, the Balance sheet, Statement of profit and loss, and Cash flowStatement comply with the Accounting Standards referred to in subsection (3C) of Section211 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 disqualifiedas on March 31, 2013, from being appointed as a director in terms of clause (g) ofsub-section (1) of section 274 of the Act.

For S. R. Batliboi & Associates LLP
Chartered Accountants
ICAI Firm Registration Number: 101049W
per Shyamsundar Pachisia
Partner
Membership Number: 049237
Date: August 29. 2013
Place: Mumbai

Annexure referred to in paragraph 1 under the heading "Report on other legal andregulatory requirements" of our report of even date

Re: Eaton Fluid Power Limited ('the Company')

(i) (a) The Company has maintained proper records showing full particulars, includingquantitative details and situation of fixed assets, except for additions to fixed assetsmade in the previous three years, for which the details of quantity and location of suchassets is not updated.

(b) All fixed assets were physically verified by the management in the previous year,except tools/moulds lying with third party which is pending for reconciliation with fixedasset register, in accordance with a planned programme of verifying them once in threeyears which, in our opinion, is reasonable having regard to the size of the Company andthe nature of its assets. No material discrepancies were noticed on such verification.

(c) There was no disposal of a substantial part of fixed assets during the year.

(ii) (a) The inventory has been physically verified by the management during the year.In our opinion, the frequency of I verification is reasonable. Inventories lying withoutside parties have been confirmed by them as at year end.

(b) The procedures of physical verification of inventory followed by the management arereasonable and adequate in relation to the size of the Company and the nature of itsbusiness.

(c) The Company is maintaining proper records of inventory. Discrepancies noted onphysical verification of inventories were not material and have been properly dealt withinthe books of accounts.

(iii) (a) According to the information and explanations given to us, the Company hasnot granted any loans, secured or unsecured to companies, firms or other parties coveredin the register maintained under section 301 of the Act. Accordingly, the provisions ofclause 4(iii) (a) to (d) of the Order are not applicable to the Company and hence notcommented upon.

(b) The Company had taken unsecured loans from one party covered in the registermaintained under section 301 of the Act. The maximum amount involved during the year wasRs. 500,000,000 and the year-end balance of loans taken from such party was Rs.500,000,000.

(c) In our opinion and according to the information and explanations given to us, therate of interest and other terms and conditions for such loans are not prima facieprejudicial to the interest of the Company.

(d) In respect of loans taken, repayment of the principal amount is as stipulated andpayment of interest has been regular.

(iv) The Company has significant purchases of inventory items from the ultimate holdingcompany and fellow subsidiaries. According to the information and explanation given to usthese items are of specialized nature, for which alternative sources are not available toobtain comparable quotations and hence, in such cases, comparison of prices with themarket rates are not made. However, the internal control system for purchases of inventory(including purchases from third party), fixed assets and sale of services should befurther strengthened for timely accounting and recording of transactions. In our opinion,this is a continuing failure to correct major weakness in the internal control system. Inour opinion and according to the information and explanations given to us, there isadequate internal control system commensurate with the size of the Company and the natureof its business for the sale of goods.

(v) (a) According to the information and explanations provided by the management, weare of the opinion that the particulars of contracts or arrangements referred to insection 301 of the Act, that need to be entered into the register maintained under section301 have been so entered.

(b) In respect of transactions made in pursuance of such contracts or arrangements andexceeding the value of Rupees five lakhs entered into during the financial year, becauseof the unique and specialized nature of the items involved and absence of any comparableprices, we are unable to comment whether the transactions were made at prevailing marketprices at the relevant time.

(vi) The Company has not accepted any deposits from the public.

(vii) The Company is covered as part of the internal audit function operated by itsultimate parent company, which is commensurate with the size and nature of its business.

(viii) We have broadly reviewed the books of account maintained by the Company pursuantto the rules made by the Central Government for the maintenance of cost records undersection 209(1) (d) of the Act, and are of the opinion that prima facie, the prescribedaccounts and records have been made and maintained. We have not, however, made a detailedexamination of the same.

(ix) (a) Undisputed statutory dues including provident fund, professional tax, investoreducation and protection fund, employees' state insurance, income-tax, sales-tax,wealth-tax, service tax, customs duty, excise duty, cess and other material statutory dueshave generally been regularly deposited with the appropriate authorities though there havebeen slight delay in few cases in deposit of withholding tax, professional tax, providentfund and employee state insurance, and serious delay in large number of cases in depositof sales tax and service tax. There are no statutory dues towards investor education andprotection fund.

(b) According to the information and explanations given to us, undisputed amountspayable in respect of service tax, sales-tax, excise duty, cess and other undisputedstatutory dues were outstanding, at the year end, for a period of more than six monthsfrom the date they became payable, are as follows:

Name of the Statute Nature of the Dues Amount (Rs.) Period to which the amount relates Due Date Date of Payment
MVAT Act, 2002 Value added tax 653,071 2010-11 Various dates Not paid
Finance Act, 1994 Service tax payable on royalty 507,064 2010-11 Various dates Not paid
The Income Tax Act, 1961 Withholding tax under various section 1,064,320 2011 -12 & 2012-13 Various dates Not paid
The Central Excise Act, 1944 Excise duty payable on inventory provision 4,510,372 2010-11, 2011-12 & 2012-13 Various dates Not paid

There are no undisputed amounts payable in respect of provident fund, wealth-tax,customs duty, cess and other material statutory dues were outstanding, at the year end,for a period of more than six months from the date they became payable. There are nostatutory dues towards investor education and protection fund.

(c) According to the information and explanation given to us, there are no dues tocustom duty, service tax, wealth tax and cess which have not been deposited on account ofany dispute. The dues outstanding of income-tax, sales-tax, excise duty and property taxon account of any dispute, are as follows:

Name of the Statute Nature of Dues Amount (Rs.) Period to which the amount relates Forum where dispute is pending
The Central Excise Act, 1944 Cenvat credit not reversed on write off value of spares & tools, material transfer from Mumbai to Pune Office on discount, rejection of cenvat credit for reprocessed items etc including interest and penalty. 9,034,390 2001- 02, 2002- 03 and 2003-04 Appellate Tribunal
The Central Excise Act, 1944 Penalty on Cenvat credit availed on input used for manufacture of gear pumps and test stand which have been consumed captively. 623,717 2003-04 Joint Commissioner Pune, Maharashtra
The Central Excise Act, 1944 Non - availability of Excise exemption on clearance of goods to Vallur Power Project on account of defect in documentation 836,910 2012-13 Commissioner (Appeals)
Central Sales Tax Act, 1956/Bombay Sales Tax Act, 1959 Liability for non submission of various forms and various other matters including interest and penalty. 71,219,900* 2003-04 to 2005-06 Joint Commissioner
Central Sales Tax Act, 1956/Bombay Sales Tax Act, 1959 Liability for non submission of various forms and various other matters including interest and penalty. 1,715,704** 2002-03 The Maharashtra Sales Tax Tribunal
Income Tax Act, 1961 Disallowance of Bonus / Ex-gratia and contribution to Superannuation Fund. 393,612 1979-80 1983- 84 and 1984- 85 Bombay High Court
Income Tax Act, 1961 Disallowance of certain expenditure charged to Statement of profit and loss and non payment of tax deducted at source 1,167,745 2004-05 and 2010-11 Commissioner of Income Tax (CIT) Appeals
Income Tax Act, 1961 Disallowance under section 92 CA of the Income Tax Act, 1961, for certain transactions with Associate enterprise and other disallowance of certain expenses 25,639,286*** 2007- 08 and 2008- 09 Income Tax Appellate Tribunal
Pimpri-Chinchwad Municipal Corporation Dues of property tax in dispute with the Pimpri-Chinchwad Municipal Corporation (PCMC) 4,201,091 Various Years Bombay High Court

* Net of amount paid under protest Rs 5,960,000.

** Net of amount paid under protest Rs 3,030,000.

*** Net of amount paid under protest Rs 46,404,780.

(x) The Company has no accumulated losses at the end of the financial year but it hasincurred cash losses in the current financial year. In the immediately preceding financialyear, the Company had not incurred cash losses.

(xi) The Company did not have any borrowings from financial institutions, banks and hasnot issued any debentures. Accordingly, the provision of clause (xi) of the Order is notapplicable to the Company.

(xii) According to the information and explanations given to us and based on thedocuments and records produced to us, the Company has not granted loans and advances onthe basis of security by way of pledge of shares, debentures and other securities.

(xiii) In our opinion, the Company is not a chit fund or a nidhi / mutual benefit fund/ society. Therefore, the provisions of clause 4(xiii) of the Order are not applicable tothe Company.

(xiv) In our opinion, the Company is not dealing in or trading in shares, securities,debentures and other investments. Accordingly, the provisions of clause 4(xiv) of theOrder are not applicable to the Company.

(xv) According to the information and explanations given to us, the Company has notgiven any guarantee for loans taken by others from bank or financial institutions.

(xvi) The Company did not have any term loans outstanding during the year.

(xvii) According to the information and explanations given to us and on an overallexamination the balance sheet of the Company, we report that funds amounting to Rs.26,720,997 raised on short term basis in the form of loan from related parties ha ve beenused for long-term investment representing acquisition of fixed assets and funding oflosses.

(xviii) The Company has not made any preferential allotment of shares to parties orcompanies covered in the register maintained under section 301 of the Act.

(xix) The Company did not have any outstanding debentures during the year.

(xx) The Company has not raised any money through a public issue during the year.

(xxi) Based upon the audit procedures performed for the purpose of reporting the trueand fair view of the financial statements and as per the information and explanationsgiven by the management, we report that no fraud on or by the Company has been noticed orreported during the year.

For S. R. Batliboi & Associates LLP
Chartered Accountants
ICAI Firm Registration Number: 101049W
per Shyamsundar Pachisia
Partner
Membership Number: 049237
Date: August 29, 2013
Place: Mumbai
   

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Key Information

Key Executives:

Nitin Chalke , Director  

Sachit Nayak , Director  

Yan Jin , Director  

Charles Sims , Director  


Company Head Office / Quarters:
145 Off Mumbai-Pune Road,
Pimpri,
Pune,
Maharashtra-411018
Phone : 91-020-27474407/8/9
Fax : 91-020-27431395
E-mail :
Web : http://
Registrars:
Link Intime India Pvt Ltd
BNo 202 Akshay Compl
Off Dhole Patil Road
Near Ganesh Mandir
Pune-411001

Fund Holding

 
Scheme Name No. of Shares
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