INDEPENDENT AUDITORS
To the members of M/s Elgi Rubber Company Limited
Report on the Financial Statements
We have audited the accompanying financial statements of M/s Elgi Rubber Company
Limited ("the Company"), which comprises the Balance Sheet as at 31st March
2014, the Statement of Profit and Loss and the Cash Flow Statement of the Company 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 (3C) of
section 211 of the Companies Act, 1956 ("the Act") read with the General
Circular 15/2013 dated 13th September 2013 of the Ministry of Company 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.
Auditor’s Responsibility
Our responsibility is to express an opinion on these financial statements based on our
audit. We conducted our audit in accordance with the Standards on Auditing issued by the
Institute of Chartered Accountants of India. Those Standards require that we comply with
ethical requirements and plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and
disclosures in the financial statements. The procedures selected depend on the
auditor’s judgment, including the assessment of the risks of material misstatement of
the financial statements, whether due to fraud or error. In making those risk assessments,
the auditor considers internal control relevant to the Company’s preparation and fair
presentation of the financial statements in order to design audit procedures that are
appropriate in the circumstances. An audit also includes evaluating the appropriateness of
accounting policies used and the reasonableness of the accounting estimates made by
management, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to
provide a basis for our audit opinion.
Opinion
In our opinion and to the best of our information and according to the explanations
given to us, the financial statements give the information required by the Act in the
manner so required and give a true and fair view in conformity with the accounting
principles generally accepted in India:
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 and Loss, of the profit for the year ended
on that date; and
iii. in the case of the Cash Flow Statement, of the cash flows for the year ended on
that date.
Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditor’s Report) Order, 2003 ("the
Order"), as amended, issued by the Central Government of India in terms of
sub-section (4A) of section 227 of the Act, we give in the Annexure a statement on the
matters specified in paragraphs 4 and 5 of the Order.
2. As required by section 227(3) of the Act, we report that:
a. we have obtained all the information and explanations which to the best of our
knowledge and belief were necessary for the purpose of our audit;
b. in our opinion proper books of account as required by law have been kept by the
Company so far as appears from our examination of those books;
c. the Balance Sheet, Statement of Profit and Loss and Cash Flow Statement dealt with
by this report are in agreement with the books of account;
d. in our opinion, the Balance Sheet, Statement of Profit and Loss and Cash Flow
Statement comply with the Accounting Standards referred to in subsection (3C) of section
211 of the Companies Act, 1956 read with the General Circular 15/2013 dated 13th September
2013 of the Ministry of Company Affairs in respect of Section 133 of the Companies Act,
2013 and
e. on the basis of written representations received from the directors as on 31 March
2014, and taken on record by the Board of Directors, we report that none of the directors
is disqualified as on 31st March 2014, from being appointed as a director in terms of
clause (g) of sub-section (1) of section 274 of the Companies Act, 1956.
|
For Reddy, Goud & Janardhan |
|
Chartered Accountants |
|
Firm Registration No. 003254S |
|
B Anand |
| Coimbatore |
Partner |
| 19.05.2014 |
Membership No. 29146 |
The Annexure referred to in our report of even date
1. a. The Company has maintained proper records showing full particulars including
quantitative details and situation of fixed assets.
b. The assets have been physically verified by the management in accordance with a
phased programme of verification, which in our opinion is reasonable, considering the size
of the company and the nature of its assets. No material discrepencies were noticed on
such verification.
c. The Company has not disposed off substantial part of fixed assets during the year
and in our opinion, it has not affected the status of going concern and assumption of the
company.
2. a. The inventories have been physically verified during the year by the management.
In our opinion the frequency of verification is reasonable.
b. In our opinion, the procedures of physical verification of inventories followed by
the management are reasonable and adequate in relation to the size of the company and
nature of its business.
c. The company is maintaining proper records of inventories. The discrepancies noticed
on verification between the physical stock and the book records were not material.
3. a. The Company had not granted any loan secured or unsecured to any companies, firms
or other parties as covered in the register maintained under section 301 of the Companies
Act, 1956 except in the case of one subsidiary company wherein the company has granted
trade advance in the nature of loan and hence the provisions of clause (iii) (a) to clause
(iii) (d) of the said Order (as amended) are not applicable.
In the case of the trade advance in the nature of loan granted to the subsidiary
company, the rate of interest and other terms and conditions on which such advance is
given, in our opinion, is not prima facie prejudicial to the interest of the company. The
receipt of the trade advance and interest are in accordance with the terms and conditions
as agreed to by the company.
b. The Company had not taken any loan secured or unsecured from the companies or
firms/parties as covered in the register maintained under section 301 of the Companies
Act, 1956 except from one party amounting to Rs.18.0 Million during the year and the
year-end balance is Nil in respect of such party. The maximum amount involved during the
year was Rs.18.0 Million.
c. In our opinion and according to the information and explanations given to us, the
rate of interest and other terms and conditions for such loan are prima-facie not
prejudicial to the interest of the Company.
4. In our opinion and according to the information and explanations given to us, there
are adequate internal control procedures commensurate with the size of the Company and the
nature of its business with regard to the purchases of inventory, fixed assets and with
regard to sale of goods and services. During the course of our audit, we have not observed
any continuing failure to correct major weaknesses in internal control.
5. In our opinion and according to the information and explanations given to us and to
the best of our knowledge and belief,
a. The particulars of contract or arrangements referred to in Section 301 of the
Companies Act,1956 that needed to be entered into the register maintained under the said
section have been so entered.
b. Where such transactions are in excess of Rs. 0.5 million in respect of any party
during the year, the transactions have been made at prices, which are prima-facie
reasonable having regard to the prevailing market prices at the relevant time, except that
reasonableness could not be ascertained where comparable quotations are not available
having regard to the specialized nature of some of the transactions of the Company.
6. The company has not accepted any deposits from public and hence provisions of Para
(vi) of the said order (as amended) are not applicable.
7. In our opinion, the Company has an internal audit system commensurate with the size
of the company and nature of its business.
8. We have broadly reviewed the books of account relating to material, labour and other
items of cost maintained by the company, pursuant to the Rules made by the Central
Government for the maintenance of cost records under Section 209 (1) (d) of the Companies
Act, 1956 and we are of the opinion that prima-facie the prescribed accounts and records
have been made and maintained. We have, however, not made a detailed examination of the
records with a view to determine whether they are accurate or complete.
9. a. According to the information and explanations given to us and books and the
records as produced and examined by us, in our opinion, undisputed statutory dues
including provident fund, investors education and protection fund, employees state
insurance, income tax, sales tax, wealth tax, service tax, customs duty, excise duty, cess
and other material statutory dues applicable have been regularly deposited by the company
during the year with the appropriate authorities.
b. According to the information and explanations given to us, no undisputed amounts
payable in respect of income tax, wealth tax, service tax, sales tax, customs duty, excise
duty and cess were in arrears, as at 31st March 2014 for a period of more than six months
from the date they became payable.
c. According to the information and explanations given to us, the details of disputed
statutory dues remaining unpaid and the forum where the dispute is pending are listed as
under:
| Name of the statute |
Nature of dues |
Amount (Rs. in million) |
Period to which amount relates |
Forum where dispute is pending |
| Service Tax |
Service Tax on Wind Mill |
0.09 |
01.04.2005-31.03.2008 |
CESTAT, Chennai |
|
Service Tax on Wind Mill |
0.05 |
01.04.2008-31.03.2009 |
CESTAT, Chennai |
| Service Tax |
Service Tax on Wind Mill |
0.09 |
01.04.2005-31.03.2008 |
CESTAT,Chennai |
|
Service Tax on knowhow |
1.48 |
01.04.2008-31.03.2009 |
Additional Commissioner Coimbatore. |
| Excise Duty |
Excise duty on Capital Goods |
0.14 |
01.04.1997-31.03.1999 |
CESTAT, Chennai |
| VAT |
VAT on movement of hired Goods |
0.26 |
01.04.2013-31.03.2014 |
Enquiry Officer, Walayar |
| Income Tax |
Disallowance of Depreciation expense related to exempted income |
0.67 |
01.04.2008-31.03.2009 |
ITAT Chennai |
| Stamp duty |
Stamp Duty demand |
4.37 |
01.04.2009-31.03.2010 |
DR(Stamps), Coimbatore |
10. There are no accumulated losses and the company has not incurred cash losses during
the financial year covered by our audit and in the immediately preceding financial year.
11. In our opinion and according to the information and explanations given to us, the
company has not defaulted in repayment of dues to a financial institution or to a bank.
There are no debenture holders during the year.
12. We are of the opinion that the Company has not granted loans and advances on the
basis of security by way of pledge of shares, debentures and other securities.
13. In our opinion, the Company is not a chit fund or a Nidhi / Mutual Benefit Fund /
Society. Therefore the provisions of clause (xiii) of Para 4 of the Order (as amended) are
not applicable.
14. In our opinion, in respect of dealing or trading in shares and securities, the
company has maintained proper records and timely entries have been made therein. Further,
the company has held the shares and securities in its own name.
15. In our opinion, the Company has given guarantees for banking facilities availed by
a few subsidiary companies from banks and according to the information and explanations
given to us, the terms and conditions on which such guarantees have been given are not
prima facie prejudicial to the interest of the company.
16. The Company has not borrowed any term loan during the year and hence the provisions
of clause (xvi) of Para 4 of this Order (as amended) are not applicable.
17. According to the information and explanations given to us and on an overall
examination of the balance sheet of the Company, we report that funds raised on short term
basis have prima-facie, not been used during the year for long term investments.
18. The Company has not made any preferential allotment of shares during the year and
hence the provisions of clause (xviii) of Para 4 of this Order (as amended) are not
applicable.
19. The Company has not issued any debentures during the year and hence the provisions
of clause (xix) of Para 4 of this Order (as amended) are not applicable.
20. The company has not raised any monies by way of public issues during the year and
hence the provisions of clause (xx) of Para 4 of this Order (as amended) are not
applicable.
21. During the course of our examination of the books of accounts carried on in
accordance with the generally accepted auditing practices in India and according to the
information and explanations given to us, we have neither come across any instance of
fraud on or by the Company, noticed or reported during the year nor have been informed of
such case by the management.
|
For Reddy, Goud & Janardhan |
|
Chartered Accountants |
|
Firm Registration No. 003254S |
|
B Anand |
| Coimbatore |
Partner |
| 19.05.2014 |
Membership No. 29146 |
+91-9892691696
