INDEPENDENT AUDITOR
To the Members of Best & Crompton Engg. Limited
Report on the Financial Statements
We have audited the accompanying financial statements of Best & Crompton
Engg. Limited ("the Company"), which comprise the Balance sheet as at
31st March 2013, 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 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 Standards referred to in sub-section (30 of
section 211 of the Companies Act, 1956 read with the General Circular 15/2013 dated 13
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 judgement, including the assessment of the risks of material misstatements
of the financial statements, whether due to fraud or error. In making those risk
assessments, the auditor considers internal control relevant to the Companys 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 entitys 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 financial
statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to
provide a basis for our audit opinion.
Opinion
In our opinion and to the best of our information and according to the explanations
given to us, the financial statements give the information required by the Act in the
manner so required and give a true and fair view subject to 2 below and in
conformity with the accounting principles generally accepted in India:
1. Attention is called to the following, without qualifying
The Company has received inward remittances in respect of export of goods which are yet
to be made through authorized dealers which is more clearly reflected in Note 43.
2. a) The company’s ability to continue as a going concern under SA 570 has been
assessed. In our opinion unless the company comes up with concrete plans to tie up
Shareholders equity/ Long term debt, it will have difficulty to continue to operate as a
going concern.
b) The company has not complied with the following Accounting Standards -
• AS - 13 (Accounting for Investments). The majority of the Companys assets are
its investment in Subsidiaries whose financial results have been adversely commented upon
by their respective auditors. We are unable to state that the diminutions in these
investments are long term in nature. Any long term diminution in the value of these
investments will significantly erode the net worth of Best & Crompton Engg. Limited.
• With regard to AS - 28 (Impairment of Assets) the recoverability of most of the
debts exceeding 6 months should have been classified as doubtful.
c) The company has obtained secured loan from Institutions amounting to Rs. 57.45
crores and the repayment of principal and interest is outstanding as on date.
d) There has been a very significant delay in remitting PF, ESI, TDS and Employee
related dues and other statutory obligations as at the balance sheet date. Tax deducted at
source obligation of Rs. 40.52 lakhs is pending. Since remitted.
e) The effect of items (a) and (b) above are not quantifiable owing to uncertainty in
estimation of recoverable value of investments and current assets. Hence this cumulative
effect on the Statement of Profit & Loss, reserves and net worth is not ascertainable.
(a) in the case of the Balance Sheet, of the state of affairs of the Company as at
March 31, 2013;
(b) in the case of the Statement of Profit and Loss, of the LOSS for the year ended on
that date; and
(c) in the case of the Cash Flow Statement, of the cash flows for the year ended on
that date.
Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditor’s Report) Order, 2003 ("the
Order") issued by the Central Government of India in terms of subsection (4A) of
section 227 of the Act, we give in the Annexure a statement on the matters specified in
paragraphs 4 and 5 of the Order.
2. As required by section 227(3) of the Act, we report that:
a. we have obtained all the information and explanations which to the best of our
knowledge and belief were necessary for the purpose of our audit;
b. in our opinion proper books of account as required by law have been kept by the
Company so far as appears from our examination of those books;
c. the Balance Sheet, Statement of Profit and Loss and Cash Flow Statement dealt with
by this Report are in agreement with the books of account;
d. in our opinion, the Balance Sheet, Statement of Profit and Loss and Cash Flow
Statement comply with the Accounting Standards referred to in sub section (30 of section
211 of the Companies Act 1956, subject to note 2 above and
e. on the basis of written representations received from the directors as on March 31,
2013, and taken on record by the Board of Directors, none of the directors is disqualified
as on March 31, 2013, from being appointed as a director in terms of clause (g) of
sub-section (1) of section 274 of the Companies Act, 1956 read with the General Circular
15/2013 dated 13 September 2013 of the Ministry of Corporate Affairs in respect of Section
133 of the Companies Act, 2013.
f. Since the Central Government has not issued any notification as to the rate at which
the cess is to be paid under section 441A of the Companies Act, 1956 nor has it issued any
Rules under the said section, prescribing the manner in which such cess is to be paid, no
cess is due and payable by the Company.
|
For CNGSN & ASSOCIATES |
|
Chartered Accountants |
|
F.R.No.004915S |
|
C N GANGADARAN |
| Place : Chennai |
Partner |
| Dated: October 9, 2014 |
Memb. No. 11205 |
Annexure to the Auditors’ Report
1. (a) The Company has maintained proper records showingfull particulars including
quantitative details and situation of fixed assets. The fixed assets have been physically
verified during the year by the management.
(b) During the year the Company has not disposed off substantial part of the fixed
assets.
2. (a) Inventories have been physically verified during the year by the Management.
(b) In our opinion, the procedure of physical verification of inventory followed by the
management is 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. The discrepancies noticed
on verification between physical stocks and book records were not material.
3. The Company has certified that no transaction need to be entered in the Register
maintained under Section 301 of the Companies Act 1956. Hence the question of loans given
or received from such parties does not arise.
4. In our opinion and according to the information and explanations given to us, there
are adequate internal control systems commensurate with the size of the Company and the
nature of its business with regard to the purchase of stores, raw materials including
components, plant and machinery, equipment and other assets and with regard to the sale of
goods and services.
5. (a) In our opinion and according to the information and explanations and based on
certifications given to us, we are of the opinion that there are no transactions that need
to be entered into the register maintained under Section 301 of the Companies Act, 1956.
(b) No transactions have been entered at a price exceeding the value of Rs. 5,00,000/-
in respect of any one party.
6. The company has not accepted any fixed deposits from the public during the year and
there are no outstanding fixed deposits.
7. In our opinion, the internal audit functions carried out during the year by an
external agency appointed by the Management have been commensurate with the size of the
Company and the nature of its business.
8. We have been informed that Cost Audit is applicable to 2 units in the Pumps Division
of the Company. The Cost audit is in progress.
9. (a) According to the records of the Company Provident fund, Employees State
Insurance, Tax deducted at source and Service tax dues have been deposited with the
appropriate authorities with severe delays in certain months except for TDS amounting to
Rs. 40.52 lakhs. Since remitted.
(b) The Undisputed income tax liability amounting to Rs 19.80 crores were in arrears as
on 31st March 2013 for a period of more than six months from the date they became payable.
The amount relates to the period A.Y.2009-10
(c) The disputed statutory dues amounting to Rs. 1843.94-lakhs that have not been
deposited on account of matters pending before appropriate authorities are as under.
| S. No |
Particulars |
Forum |
Year |
Amount (lakhs) |
| 1 |
Excise Duty |
Commissioner of Excise |
1998-99 |
0.86 |
| 2 |
Sales Tax |
High Court, Tribunal, Additional Deputy Commissioner, Assistant Commissioner, Joint
Commissioner, Additional Commissioner. |
1983-84 to 2003-04 |
352.92 |
| 3 |
Central Sales Tax |
Tribunal, Additional Deputy Commissioner, Assistant Commissioner, Joint Commissioner,
Additional Commissioner. |
1987-88 to 2001-02 |
80.88 |
| 4 |
Income Tax |
|
|
1409.28 |
|
|
TOTAL |
|
1843.94 |
10. The Company has accumulated losses as at 31st March 2013. The Company has incurred
cash losses in the current financial year and also in the immediately preceding financial
year.
11. The Company has defaulted in repayments to Financial Institutions as follow:
| Particulars |
Principle (Rs.) |
Interest (Rs.) |
| ILFS |
5070 lakhs |
674.56 lakhs |
12. According to the information and explanations given to us, the company has not
granted any loans and advances on the basis of security by way of pledge of shares,
debentures and other securities.
13. The provisions of any special statute as specified under clause (xiii) of paragraph
4 of the Order are not applicable to the Company.
14. According to the information and explanations given to us, the Company is not
dealing or trading in shares, securities, debentures and other investments. Accordingly,
clause 4(xiv) of Companies (Auditors Report) Order 2003, is not applicable.
15. The company has given guarantees for Rs.3,26,80,50/- thousands on behalf of its
subsidiaries and another company.
16. According to the information and explanations given to us, on an overall basis, the
term loans have been applied for the purposes for which they were obtained.
17. According to the information and explanation given to us and on overall examination
of the Balance Sheet of the Company, we report that funds raised on short-term basis have
not been used for longterm investment.
18. During the year the Company has not made any preferential allotment of shares to
the parties and the companies covered in the register maintained under Section 301 of the
Companies Act, 1956. Accordingly, clause 4 (xviii) of Companies (Auditors Report) Order
2003 is not applicable.
19. On the basis of records and documents examined by us, there is no shortfall in the
creation of security.
20. The Company has not raised any money through public issue during the year.
21. According to the information and explanations given to us, no fraud on or by the
Company has been noticed or reported during the year.
|
For CNGSN & ASSOCIATES |
|
Chartered Accountants |
|
F.R.NO.004915S |
|
C N GANGADARAN |
| Place : Chennai |
Partner |
| Dated: October 9, 2014 |
Memb. No. 11205 |
+91-9892691696
