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ENKEI WHEELS (INDIA) LIMITED
ANNUAL REPORT 2011-2012
AUDITORS' REPORT
To,
The Members,
Enkei Wheels (India) Limited.
1. We have audited the attached Balance Sheet of Enkei Wheels (India)
Limited (the Company) as at March 31, 2012, the Statement of Profit and
Loss and the Cash Flow Statement of the Company for the year ended on that
date annexed thereto. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on
these financial statements based on our audit.
2. We conducted our audit in accordance with auditing standards generally
accepted in India. Those standards require that we plan and perform audit
to obtain reasonable assurance about whether the financial statements are
free from material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosure in the financial
statements. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the
overall financial statements presentation. We believe that our audit
provides a reasonable basis for our opinion.
3. As required by the Companies (Auditor's Report) Order, 2003, (as amended
by DCA Notification G.S.R. 766(E), dated November 25, 2004) issued by the
Central Government of India in terms of sub-section (4A) of Section 227 of
the Companies Act, 1956, we enclose in the Annexure a statement on the
matters specified in paragraphs 4 and 5 of the said Order.
4. Further to our comments in the Annexure referred to in paragraph (3)
above, we report that:
a) We have obtained all the information and explanations, which to the best
of our knowledge and belief were necessary for the purposes of our audit;
b) In our opinion, proper books of account as required by law have been
kept by the Company so far as appears from our examination of those books.
c) The Balance Sheet, 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 Balance Sheet, the Statement of Profit and Loss and
the Cash Flow Statement dealt with by this report are in compliance with
the Accounting Standards (AS) referred to in sub-section (3C) of Section
211 of the Companies Act,1956, except AS-II-'The Effects of changes in
Foreign Exchange Rates'.
Foreign currency monetary liabilities including loans, payable to group
companies have not been restated by the Company at the year-end closing
rate. The accounting treatment is not in compliance of the provisions of
the Accounting Standard (AS-11)-'The Effects of changes in Foreign Exchange
Rates'. The effect of non-compliance of the provisions on the Statement of
Profit and Loss of the year has not been quantified by the Company as
explained in note no.2.9 of the accounts.
Further, group payables (including old balances) are stated to be in the
process of reconciliation by the Company.
e) On the basis of written representations received from the directors as
on March 31,2012 and taken on record 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
explanation given to us, the said accounts read together with significant
accounting policies and notes thereon and subject to para (d) above 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 the Statement of Profit and 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.
For Asit Mehta & Associates
Chartered Accountants
Firm Regn No. 100733W
Sanjay S. Rane
(Partner)
Membership No. 100374
Place: Pune
Date : 21st May 2012.
ANNEXURE TO THE AUDITOR'S REPORT:
(Referred to in paragraph 3 of our report of even date)
On the basis of such checks of the books and records of the Company, as we
considered appropriate and according to the information and explanations
given to us, we state that: (reference of the phrase 'during the year'
hereinafter should be read and understood as 'during the year ended 31st
March 2012')
(I) (a) The Company is maintaining records showing quantitative details and
situation of fixed assets. However, asset numbering exercise is stated to
be under compilation. Further, legal formalities including payment of stamp
duty, conveyances etc. in respect of immovable properties received on
demerger from Alicon Castalloy Ltd. (erstwhile Enkei Castalloy Ltd.) on 1st
April 2009 are yet to be completed by the Company.
(b) As informed to us, some part of the fixed assets has been physically
verified by the management during the year. However, in our opinion, the
Company needs to undertake a comprehensive programme of physical
verification thereby book values of all its fixed assets could be compared
and reconciled with the results of physical verification. We are informed
that the discrepancies noticed on physical verification of the fixed assets
have been properly dealt with in the books of account.
(c) The Company has not disposed off any substantial part of its fixed
assets so as to affect its going concern status.
(ii) (a) The inventories comprising semi-finished goods, raw materials,
stores and spares etc. have been physically verified by the 1management
during the year. In our opinion, the frequency of verification is
reasonable.
(b) 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. However, in our opinion, the
procedures need to be further strengthened so that slow and non-moving
inventories can be identified and adjusted for losses.
(c) The Company needs to improve its inventory records so as to cover all
details of each transaction and for each item of the stock. The closing
inventory is established only on the basis of year-end physical
verification.
(iii) (a) In our opinion and according to the information and explanations
given to us, during the year, the Company has not granted any loan, secured
or unsecured, to companies, firms or other parties covered in the register
maintained under section 301 of the Companies Act, 1956. Accordingly,
paragraph 4(iii)(b), (c) and (d) of the Order are not applicable.
(b) In our opinion and according to the information and explanations given
to us, during the year, the company has not taken any loan, secured or
unsecured, from companies, firms or other parties covered in the register
maintained under section 301 of the Companies Act, 1956. However, the
Company had taken unsecured loans from its overseas promoter company in
earlier years which have remained outstanding as at the end of the year
where the year-end balance is Rs.547,111,754/-.
(c) In our opinion and according to the information and explanations given
to us, the rate of interest and other terms and conditions of unsecured
loans taken by the Company from its overseas promoter company in earlier
years are prima facie not prejudicial to the interest of the Company.
(d) The principal amount/s of unsecured loan/s taken by the Company from
its overseas promoter Company is not yet due for repayment by the end of
the financial year. The payment of interest is regular.
(iv) In our opinion and according to the information and explanations given
to us, there exists internal control system commensurate with the size of
Company and the nature of its business for the purchase of inventory, fixed
assets and for the sale of goods. However, in our opinion, the existing
internal control system needs to be further strengthened particularly in
respect of fixed assets. During the course of our audit, we have not
observed any continuing failure to correct major weaknesses in internal
control system of the Company.
(v) (a) In our opinion and according to the information and explanations
given to us, the particulars of contracts or arrangements that need to be
entered in the register maintained under section 301 of the Companies Act,
1956 have been entered.
(b) According to the information and explanations given to us, the
transactions made in pursuance of such contracts or arrangements entered in
the register maintained under section 301 of the Companies Act, 1956 and
exceeding the value of rupees five lakhs in respect of any party during the
year have been made at prices which are prima facie reasonable having
regard to the prevailing market prices at the relevant time, to the extent
that such comparative prices are available and where items purchased/sold
are of special nature for which suitable alternative sources do not exist.
(vi) In our opinion and according to the information and explanations given
to us, the Company has not accepted any deposit from the public during the
year. We are informed that no order has been passed by Company Law Board or
National Company Law Tribunal or Reserve Bank of India or any Court or any
other Tribunal in this regard.
(vii) The Company has internal audit system commensurate with its size and
nature of its business which needs to be further strengthened as a part of
its overall internal control system.
(viii) In our opinion and according to the information and explanations
given to us, the cost records required to be maintained under section
209(1)(d) of the Companies Act, 1956 have been made and maintained. We,
however, have not made detailed examination of the records.
(ix) (a) Based on verification of records and information and explanations
given to us, the Company is generally regular in depositing with the
appropriate authorities undisputed statutory dues including Provident Fund,
Workmen Compensation, Income-tax, Sales-tax, Value Added Tax, Service Tax,
Custom Duty, Excise Duty, cess and other material statutory dues as
applicable.
According to the information and explanation given to us, there are no dues
payable by the Company under Employees' State Insurance Scheme and Investor
Education and Protection Fund.
According to the information and explanation given to us, no undisputed
amounts payable in respect of the aforesaid statutory dues were in arrears
and outstanding as at March 31, 2012 for a period of more than six months
from the date those became payable.
(b) According to the information and explanations given to us, there are no
dues, to the extent applicable, of Income-tax, Sales-tax, Value Added Tax,
Wealth Tax, Service Tax, Custom Duty, Excise Duty and cess which have not
been deposited on account of any dispute.
(x) Post-demerger, the year ended March 31, 2012 is third year of
operations of the Company. The Company has accumulated losses as at the end
of the financial year. The Company 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 as per the information and
explanations given by the management, the Company has not defaulted in
repayment of dues to the banks and financial institutions. The Company has
not borrowed money in the form of debentures.
(xii) Based on our examination of records and according to the information
and explanations given to us, the Company has not granted loans and
advances on the basis of security by way of pledge of shares, debentures
and other securities.
(xiii) The Company is not a Chit Fund or Nidhi Mutual benefit Fund/Society
and therefore provisions of clause 4 (xiii) of the Companies (Auditor's
Report) Order, 2003, as amended are not applicable to the Company.
(xiv) The Company is not dealing or trading in shares, securities,
debentures and other investments.
(xv) In our opinion and 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) In our opinion and according to the information and explanations
given to us and on overall examination of the Balance Sheet read with notes
thereon of the Company, the term loans have prima-facie been applied for
the purposes for which they were obtained.
(xvii) In our opinion and according to the information and explanation
given to us and on overall examination of the Balance Sheet read with notes
thereon of the Company with notes annexed to, no funds raised on short-term
basis have prima facie been used for long-term investment.
(xviii) During the year, the Company has not made any preferential
allotment of shares to parties and companies covered in the register
maintained under Section 301 of the Act other than conversion of 9,251,250
compulsorily convertible preference shares into equity shares, earlier
issued on preferential basis to its overseas promoter company. Accordingly
1,233,500 equity shares of Face value of Rs. 5/- each at a premium of
Rs.70/- each have been allotted to the overseas promoter company, viz.
Enkei Corporation, Japan. The said allotment is in compliance with clause
40A of the Listing Agreement. In our opinion and according to the
information and explanation given to us, the price at which shares have
been issued is not prejudicial to the interest of the Company.
(xix) The Company has not issued debentures during the year. The Company
also did not have any debentures outstanding as at the end the year.
(xx) The Company has not raised any money by way of public issue during the
year.
(xxi) During the course of our examination of the books and records of the
Company carried out in accordance with the generally accepted auditing
practices in India, and according to the information and explanations given
to us, we have neither come across any instance of fraud of material amount
on or by the Company, noticed or reported during the year, nor have we been
informed of such case by the management.
For Asit Mehta & Associates
Chartered Accountants
Firm Regn No. 100733W
Sanjay S. Rane
(Partner)
Membership No. 100374
Place: Pune
Date : 21st May 2012.
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