To
The Members
GAJRA BEVEL GEARS LIMITED
Report on the Audit of the Financial Statements
Opinion
We have audited the financial statements of Gajra Bevel Gears Limited ("the
Company"), which comprises the Balance Sheet as at March 31, 2019, the statement of
Profit & Loss (including Other Comprehensive Income), the statement of Changes in
Equity and the Statement of Cash Flows for the year then ended, and notes to the financial
statements, including a summary of significant accounting policies and other explanatory
information.
In our opinion, and to the best of our information and according to the explanations
given to us, the aforesaid financial statements give the information required by the
Companies Act, 2013 ("the Act") in the manner so required and give a true and
fair view in conformity with the Indian Accounting Standards prescribed under section 133
of the Act read with the Companies (Indian Accounting Standards) Rules, 2015, as amended,
("Ind AS") and other accounting principles generally accepted in India, of the
state of affairs of the Company as at March 31st, 2019, the loss and total
comprehensive income, changes in equity and its cash flows of the year ended on that date.
Basis for Opinion
We conducted our audit in accordance with Standards on Auditing (SAs). Our
responsibilities under those standards are further described in the Auditor s
Responsibilities for the Audit of the Financial Statements section of our report. We are
independent of the Company in accordance with the ethical requirements that are relevant
to our audit of the financial statements as per the ICAI s Code of Ethics and the
provisions of the Companies Act, 2013, and we have fulfilled our ethical responsibilities
in accordance with these requirements. We believe that the audit evidence we have obtained
is sufficient and appropriate to provide a basis for our opinion.
Emphasis on the Matter
Company has accumulated losses which has eroded the entire new worth of the Company and
made the Company financially sick. Based on the audited financial statements as on
30.09.2008, the Company had filed a reference under section 15(1) of the SIC (SP) Act,
1985 with the BIFR and same is registered as case no. 27/2009 on 30.07.2009. The BIFR wide
its order issued during the hearing held on 06.01.2010 declared the Company as SICK
INDUSTRIAL COMPANY in terms of section 3(1)(o) of Sick Industrial Companies (Special
Provisions) Act, 1985. During the course of pendency of reference with BIFR, the
management of Company has settled the loan accounts of State Bank of India, IFCI, IDBI,
MPSIDC and MPAVN as well as made full and final payments as per the terms of OTS. OTS with
Madhya Pradesh Financial Corporation s term loan is still in process.
By notification no. 50 388(E) dated 25.11.2016, the SICA Repeal Act, 2003 has been
notified w.e.f. 01.12.2016 and as per section 252 read with schedule VIII of the
Insolvency and Bankruptcy Code, 2016. The reference filed with the BIFR/ABIFR is abated
and the Company may file a fresh reference before NCLT within 180 days from the date i.e.,
31.05.2017, but the Company has still not filed any reference.
Material Uncertainty Related to Going Concern
We draw attention to Note No. 23 in the financial statements, which indicates that the
Company has ceased its commercial operation & production from financial year 2008-09.
In addition to this, it was declared as Sick Industrial Company in terms of section
3(1)(o) of Sick Industrial Companies (Special Provisions) Act, 1985 on 06.01.2010. This
indicates that material uncertainty exists that may cast significant doubt on the
companys ability to continue as a going concern. Our opinion is not modified in respect
of this matter.
Key Audit Matters
Key audit matters are those matters that, in our professional judgement, were of most
significance in our audit of the financial statements of the current period. We have
determined that in addition to the matter reported in Material Uncertainty Related to
Going Concern para, there are no key audit matters to communicate in our report.
Information other than the Financial Statements & Auditor s Report thereon
The Company s Board of Directors is responsible for the preparation of the other
information. The other information comprises the information included in the Management
Discussion and Analysis, Board s Report including Annexures to Board s Report, and other
information included in Annual Report, but does not include the financial statements and
our auditor s report thereon.
Our opinion on the financial statements does not cover the other information and we do
not express any form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read
the other information and, in doing so, consider whether the other information is
materially inconsistent with the financial statements or our knowledge obtained in the
audit or otherwise appears to be materially misstated. If, based on the work we have
performed, we conclude that there is a material misstatement of this other information, we
are required to report that fact. We have nothing to report in this regard.
Management s Responsibility for the Financial Statements
The Company s Board of Directors is responsible for the matters stated in Section
134(5) of the Act with respect to the preparation of these financial statements that give
a true and fair view of the state of affairs (financial position), profit or loss
(financial performance including other comprehensive income), changes in equity and cash
flows of the Company in accordance with the accounting principles generally accepted in
India, including the Ind AS specified 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 of 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.
In preparing the financial statements, management is responsible for assessing the
Company s ability to continue as a going concern, disclosing, as applicable, matters
related to going concern and using the going concern basis of accounting unless management
either intends to liquidate the Company or to cease operations, or has no realistic
alternative but to do so.
The Board of Directors are also responsible for overseeing the Company s financial
reporting process.
Auditor s Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial
statements as a whole are free from material misstatement, whether due to fraud or error,
and to issue an auditor s report that includes our opinion. Reasonable assurance is a high
level of assurance, but is not a guarantee that an audit conducted in accordance with
Standards on Auditing will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are considered material if, individually
or in the aggregate, they could reasonably be expected to influence the economic decisions
of users taken on the basis of these financial statements.
As part of an audit in accordance with Standards on Auditing, we exercise professional
judgment and maintain professional skepticism throughout the audit. We also:
• Identify and assess the risks of material mis-statement of the financial
statements, whether due to fraud or error, design and perform audit procedures responsive
to those risks, and obtain audit evidence that is sufficient and appropriate to provide a
basis for our opinion. The risk of not detecting a material misstatement resulting from
fraud is higher than for one resulting from error, as fraud may involve collusion,
forgery, intentional omissions, misrepresentations, or the override of internal control.
• Obtain an understanding of internal control relevant to the audit in order to
design audit procedures that are appropriate in the circumstances. Under Section 143(3)
(i) of the Act, we are also responsible for explaining our opinion on whether the Company
has adequate internal financial controls system in place and the operating effectiveness
of such controls.
• Evaluate the appropriateness of accounting policies used and the reasonableness
of accounting estimates and related disclosures made by management.
• Conclude on the appropriateness of management s use of the going concern basis
of accounting and, based on the audit evidence obtained, whether a material uncertainty
exists related to events or conditions that may cast significant doubt on the Company s
ability to continue as a going concern. If we conclude that a material uncertainty exists,
we are required to draw attention in our auditor s report to the related disclosures in
the financial statements or, if such disclosures are inadequate, to modify our opinion.
Our conclusions are based on the audit evidence obtained up to the date of our auditor s
report. However, future events or conditions may cause the Company to cease to continue as
a going concern.
• Evaluate the overall presentation, structure and content of the financial
statements, including the disclosures, and whether the financial statements represent the
underlying transactions and events in a manner that achieves fair presentation.
Materiality is the magnitude of misstatements in the financial statements that,
individually or in aggregate, makes it probable that the economic decisions of a
reasonably knowledgeable user of the financial statements may be influenced. We consider
quantitative materiality and qualitative factors in (i) planning the scope of our audit
work and in evaluating the results of our work; and (ii) to evaluate the effect of any
identified misstatements in the financial statements.
We communicate with those charged with governance regarding, among other matters, the
planned scope and timing of the audit and significant audit findings, including any
significant deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied
with relevant ethical requirements regarding independence, and to communicate with them
all relationships and other matters that may reasonably be thought to bear on our
independence, and where applicable, related safeguards.
From the matters communicated with those charged with governance, we determine those
matters that were of most significance in the audit of the financial statements of the
current period and are therefore the key audit matters. We describe these matters in our
auditor s report unless law or regulation precludes public disclosure about the matter or
when, in extremely rare circumstances, we determine that a matter should not be
communicated in our report because the adverse consequences of doing so would reasonably
be expected to outweigh the public interest benefits of such communication.
Report on Other Legal & Regulatory Requirements
1. As required by Section 197(16) of the Act, we report that the company has paid
remuneration to its directors during the year in accordance with the provisions of and
limits laid down under Section 197 read with Schedule V to the Act.
2. As required by the Companies (Auditor s Report) Order, 2016 ("the Order")
issued by the Central Government of India in terms of Section 143(11) of the Act, we give
in the " Annexure A", a statement on the matters specified in paragraphs 3 and 4
of the Order.
3. As required by Section 143(3) of the Act, based on our audit 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 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 it appears from our examination of those books;
c) The Balance Sheet, the Statement of Profit and Loss including Other Comprehensive
Income, Statement of Changes in Equity and the Statement of Cash Flow dealt with by this
Report are in agreement with the relevant books of account;
d) In our opinion, the aforesaid financial statements comply with the Ind AS 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 March,
31st 2019 taken on record by the Board of Directors, none of the directors is
disqualified as on March 31st, 2019 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 in "Annexure B". Our report expresses an unmodified opinion on the
adequacy and operating effectiveness of the Company s internal financial controls over
financial reporting.
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, 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 the financial statements;
ii. the Company did not have any long-term contract including derivatives for which
there was material foreseeable losses;
iii. there is / has been no such amounts which is / was required to be transferred to
Investor Education and Protection Fund by the Company during the year ended on March,
31st 2019;
|
For D. N. JHAMB AND COMPANY |
|
Chartered Accountants |
|
Firm Registration No. 019675C |
|
DEVKI NANDAN JHAMB |
| Place: Indore |
Partner |
| Date: May, 30th 2019 |
Membership No. 079696 |
"ANNEXURE-A TO THE INDEPENDENT AUDITOR S REPORT OF EVEN DATE TO THE MEMBERS OF
GAJRA BEVEL GEARS LIMITED, ON THE FINANCIAL STATEMENTS FOR THE YEAR ENDED MARCH, 31ST
2019"
Based on the audit procedures performed for the purpose of reporting a true and fair
view on the standalone financial statements of the Company and taking into consideration
the information and explanations given to us and the books of account and other records
examined by us in the normal course of audit, and to the best of our knowledge and belief,
we report that:
1) In respect of the Company s fixed assets:
a) The Company has maintained proper records showing full particulars, including
quantitative details and situation of fixed assets.
b) The Company has a regular program for physical verification of its fixed assets in a
phased manner which, in our opinion, is reasonable having regard to the size of the
Company and the nature of its assets. Pursuant to the program, certain fixed assets were
physically verified by the management during the year. According to the information and
explanations given to us, no material discrepancies were noticed on such verification.
Although records of fixed assets have been maintained properly, the Company is not into
operation since long, hence production facilities are standing ideal. Working conditions
of the fixed assets cannot be commented upon.
c) The title deeds of all the immovable properties are held in the name of the Company.
2) In our opinion, the management has conducted physical verification of inventory at
reasonable intervals during the year. In our opinion and according to the information and
explanation given to us, the physical verification of inventories followed by the
management were reasonable and adequate in relation to the size of the Company and the
nature of its business. The discrepancies noticed on physical verification of inventories
as compared to book records were not material and have been properly dealt with in the
books of accounts. All the inventories of the Company are non-moving since long, but
management is of the opinion that they have values to the tune as stated in the financial
statements and accordingly, there exists no need to write off or provide for the reduction
in value.
3) The Company has not granted any loans, secured or unsecured to companies, firms,
limited liability partnerships or other parties covered in the register maintained under
section 189 of the Companies Act, 2013. Accordingly, provisions under clause 3(iii)(a) to
(c) of the Order are not applicable.
4) In our opinion and according to the information and explanation given to us, the
Company has complied with the provisions of Sections 185 and 186 of the Act in respect of
loans, investments, guarantees and security.
5) In our opinion and according to the information and explanation given to us, the
Company has not accepted any deposits within the meaning of Sections 73 to 76 of the Act
and the Companies (Acceptance of Deposits) Rules, 2014 (as amended). Accordingly, the
provisions of clause 3(v) of the Order are not applicable.
6) The Company is not required to maintain cost records as specified by the Central
Government under sub section (1) of section 148 of the Companies Act, 2013. Accordingly,
the provisions of clause 3(vi) of the Order are not applicable.
7) In respect to statutory dues:
a) According to the records of the Company and information and explanations given to
us, the Company is irregular in depositing undisputed statutory dues such as provident
fund, employees state insurance, income-tax, duty of excise and value added tax, as
applicable, with the appropriate authorities. However, after the grant of installment
facility, the company has cleared the dues of provident fund.
The extent of the arrears of outstanding statutory dues as on the last day of the
financial year concerned for a period of more than six months from the date they became
payable are as under:
| S. No. |
Nature of Dues |
Amount |
|
|
(Rs. In Lakhs) |
| 1. |
Commercial Tax (Value Added Tax) |
169.27 |
| 2. |
Income Tax Demand |
149.11 |
b) Assessed demands of Commercial Tax, against which the Company has preferred for
revision before the Competent Authority have not been accounted for as liability are as
under:
| S. No. |
Assessment Year |
Assessed Demand |
|
|
(Rs. In Lakhs) |
| 1. |
1999-2000 |
16.64 |
| 2. |
2001-2002 |
27.72 |
| 3. |
2002-2003 |
48.09 |
| 4. |
2005-2006 |
267.81 |
| 5. |
2006-2007 |
205.35 |
|
Total |
565.61 |
8) In our opinion and according to the information and explanations given to us, during
the year, the Company has not made any payment towards the dues of Madhya Pradesh
Financial Corporation, the outstanding amount in respect of which as on 31st
March, 2019 is Rs. 890.88 Lakhs. The Company did not have any outstanding loans or
borrowings from banks, government or any dues to debenture holders during the year.
9) In our opinion and according to the information and explanations given to us, the
Company did not raise any money by way of initial public offer or further public offer
(including debt instruments) or term loan. Accordingly, the provisions of clause 3(ix) of
the Order are not applicable.
10) To the best of our knowledge and according to the information and explanation given
to us, no fraud by the Company or on the Company by its officers or employees has been
noticed or reported during the period covered by our audit.
11) In our opinion and according to the information and explanations given to us,
managerial remuneration has not been paid to any director. Accordingly, provisions of
clause 3(xi) of the Order are not applicable.
12) In our opinion and according to the information and explanations given to us, the
Company is not a Nidhi Company. Accordingly, provisions of clause 3(xii) of the Order are
not applicable.
13) In our opinion, according to the information and explanations given to usand on the
basis of our examination of records of the Company, the transactionswith the related
parties are in compliance with Sections 177 and 188 of Act, whereapplicable, and the
requisite details have been disclosed in the financial statements etc., as required by the
applicable Ind AS.
14) In our opinion, according to the information and explanations given to usand on the
basis of our examination of 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 under review. Accordingly, provisions of clause 3(xiv) of the
Order are not applicable.
15) In our opinionand according to the information and explanations given to us, the
Company has not made / entered into any non-cash transactions with the directors or
persons connected with them covered under Section 192 of the Act.Accordingly, provisions
of clause 3(xv) of the Order are not applicable.
16) The Company is not required to be registered under Section 45-IA of the Reserve
Bank of India Act, 1934.
|
For D. N. JHAMB AND COMPANY |
|
Chartered Accountants |
|
Firm Registration No. 019675C |
|
DEVKI NANDAN JHAMB |
| Place: Indore |
Partner |
| Date: May, 30th 2019 |
Membership No. 079696 |
"ANNEXURE-B TO THE INDEPENDENT AUDITOR S REPORT OF EVEN DATE TO THE MEMBERS OF
GAJRA BEVEL GEARS LIMITED, ON THE FINANCIAL STATEMENTS FOR THE YEAR ENDED MARCH, 31ST
2019"
Report on the Internal Financial Controls under clause (i) of Sub-section 3 of Section
143 of the Companies Act, 2013 ("the Act")
We have audited the Internal Financial Control Over Financial Reporting of GAJRA
BEVEL GEARS LIMITED ("the company") as of 31 March 2019 in conjunction with
our audit of the standalone financial statements of the company for the year ended on that
date.
Management s Responsibility for Internal Financial controls
The Company s management is responsible for establishing and maintaining internal
financial controls based on the internal controls 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
("the Guidance Note") 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 company s 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.
Auditors Responsibility
Our responsibility is to express an opinion on the Company s internal financial
controls over financial reporting based on our audit. We conducted our audit in accordance
with the Guidance Note on Audit of Internal Financial control over financial Reporting
(the "Guidance Note") and the Standards on Auditing, issued by ICAI and deemed
to be prescribed under section 143(10) of the Companies Act, 2013, to the extent
applicable to an audit of internal financial controls, both applicable to an audit of
Internal Financial Controls and, both issued by the Institute of Chartered Accountants of
India. Those Standards and the Guidance Note require that we comply with ethical
requirement 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 auditor s judgment, including the assessment of the risks of
material misstatement of the financial statement, whether due to fraud error.
We believe that the audit evidence we have obtained is sufficient and appropriate to
provide a basis for our audit opinion on the Company s internal financial controls system
over financial reporting.
Meaning of Internal Financial Controls over Financial Reporting
A company s 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 company s 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 authorizations of
management and directors of the company; and (3) provide reasonable assurance regarding
prevention or timely detection of unauthorized acquisition, use, or disposition of the
company s assets that could have 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, 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 31stMarch, 2019,
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 issued by the Institute of
Chartered Accountants of India.
|
For D. N. JHAMB AND COMPANY |
|
Chartered Accountants |
|
Firm Registration No. 019675C |
|
DEVKI NANDAN JHAMB |
| Place: Indore |
Partner |
| Date: May, 30th 2019 |
Membership No. 079696 |
+91-9892691696
