The Members of
Pipavav Defence and Offshore Engineering Company Limited
Report on the Financial Statements
We have audited the accompanying financial statements ofPipavav Defence and OffshoreEngineering Company Limited ("the Company"), which comprise the BalanceSheet as at 31st March, 2014 and the Statement of Profit & Loss and Cash FlowStatement for the year then ended, and a summary of significant accounting policies andother explanatory information.
Managements 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 the accounting principles generally accepted in India,including, Accounting standards referred to in sub-section (3C) of Section 211 of theCompanies Act, 1956 ("the Act") read with general circular 15/2013 dated 13thSeptember, 2013 of the Ministry of Corporate Affairs in respect of Section 133 of theCompanies Act, 2013. This responsibility includes the design, implementation andmaintenance 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.
Our responsibility is to express an opinion on these financial statements based on ouraudit. We on Auditing issued by the Institute of Chartered Accountants of India. ThoseStandards require that we comply with ethical requirements and plan and perform the auditto obtain reasonable assurance about whether the financial statements are free frommaterial misstatement
An audit involves performing procedures to obtain audit evidence about the amounts anddisclosures in the financial statements. The procedures selected depend on theauditors judgment, including the assessment of the risks of material misstatement ofthe financial statements, whether due to fraud or error. In making those risk assessments,the auditor considers internal control relevant to the Companys preparation and fairpresentation of the financial statements in order to design audit procedures thatare appropriate in the circumstances, but not for the purpose of expressing an opinion onthe effectiveness of the Companys internal control. An audit also includesevaluating the appropriateness of accounting policies used and the reasonablenessof the accounting estimates made by management, as well as evaluating the overallpresentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion
In our opinion and to the best of our information and according to the explanationsgiven to us, the accounts read togetherwithsignificantaccounting policies and notesthereon, give the information required by the Act, in the manner so required and give atrue and fair view in conformity with the accounting principles generally accepted inIndia:
(i) in the case of the Balance Sheet, of the state of affairs of the Company as at 31stMarch, 2014;
(ii) in the case of the Statement of Profit & Loss, of the profit of the Companyfor the year ended on that date;
(iii) in the case of the Cash Flow Statement, of the Cash Flows for the year ended onthat date.
Emphasis of matter
We draw attention to the Note no. 26.1 regarding Managerial Remuneration, which issubject to the approval of Central Government. Our report is not qualified in this matter.
Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditors Report) Order, 2003 ("theOrder") issued by the Central Government of India in terms of sub-section (4A) ofSection 227 of the Act, we give in the Annexure a statement on the matters specified inparagraphs 4 and 5 of the Order.
2. As required under provisions of 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 BalanceSheet, Statement of Profit and Loss and Cash Flow Statement dealt with by this Report arein agreement with the books of account; (d) in our opinion, the Balance Sheet, Statementof Profit and Loss, and Cash Flow Statement comply with the Accounting Standards referredto in sub section (3C) of Section 211 of the Act read with general circular 15/2013 dated13th September, 2013 of the Ministry of Corporate Affairs in respect of Section 133 of theCompanies Act, 2013; (e) on the basis of written representations received from thedirectors as on March 31, 2014, and taken on record by the Board of Directors, noneof the Directors is disqualified as on March 31, 2014, from being appointed as a directorin terms of clause (g) of sub-section (1)of Section 274 of the Act.
|For Chaturvedi & Shah|
|(Firm Reg. No. 101720W)|
|Place : Mumbai||Partner|
|Date : 30th May, 2014||Membership No. - 35629|
ANNEXURE TO INDEPENDENT AUDITORS REPORT
(Referred to in paragraph 1 under the heading "Report on Other Legal andRegulatory Requirements" of our report of even date issued to the members of PipavavDefence and Offshore Engineering Company Limited for the year ended March 31, 2014)
(i) In respect of its fixed assets:
(a) The Company has maintained proper records showing full particulars, includingquantitative details and situation of fixed assets on the basis of available information.
(b) As explained to us, the Company has physically verified certain assets, inaccordance with a phased program of verification, which in our opinion is reasonable,having regard to the size of the Company.
(c) In our opinion, the Company has not disposed off substantial part of fixed assetsduring the year and the going concern status of the Company is not affected.
(ii) In respect of its inventories:
(a) The inventories have been physically verified during the year by the management. Inour opinion, the frequency of verificationis reasonable. In respect of inventories intransit, we have relied on the certificates and other documents provided by themanagement.
(b) In our opinion and according to the information and explanationsgiven verificationofinventories us,theprocedures followed by physical the management are reasonable andadequate in relation to the size of the Company and the nature of its business.
(c) According to the information and explanations given to us and on the basis of ourexamination of inventory records, we are of the opinion that the Company is maintainingproper records of inventory. As explained to us, discrepancies noticed on physicalverification of the inventories between the physical inventories and book records were notmaterial, having regard to the size of the operations of the Company, and the same havebeen properly dealt with.
(iii) In respect of Loans, secured or unsecured, granted or taken by the companyto/from Companies, firms or other parties covered in the register maintained under Section301 of the Companies Act, 1956:
(a) The Company has granted unsecured loan to a wholly-owned subsidiary company. Themaximum amount outstanding at any time during the year was Rs 6,887.24 lacs and theyear-end balance was Rs 1,613.01 lacs.
(b) In our opinion and according to the information and explanations given to us therate of interest and other terms and conditions are not prima facie prejudicial tothe interest of the Company.
(c) The above loan is repayable on demand and there is no repayment schedule.
(d) There was no overdue amount in respect of the above loan.
(e) The Company has taken loan from a wholly-owned subsidiary company in respect ofwhich maximum amount involved during the year was Rs 15,915.10 lacs and the year-endbalance was Rs 15,499.08 lacs.
(f) In our opinion and according to the information and explanations given to us, rateof interest, and other terms and conditions, are not prejudicial to the interest of theCompany.
(g) As per the information and explanations given to us, the above loan is not due forrepayment and there is no overdue amount as regards to interest.
(iv) In our opinion and according to the information and explanations given to us,there is an internal control system for the purchase of goods, services and fixed assetsand also for the sale of goods and services which needs to be further strengthened. Duringthe course of our audit, we have not observed any continuing failure to correct majorweaknesses in internal control system.
(v) In respect of the contracts or arrangements referred to in Section 301 of theCompanies Act, 1956:
(a) In our opinion and according to the information and explanations given to us, thetransactions made in pursuance of contracts or arrangements, that needed to be entered inthe register maintained under Section 301 of the Companies Act, 1956 have been so entered.(b) The transactions, made in pursuance of the contracts or arrangements, entered in theregister maintained under Section 301 of the Companies Act, 1956, and aggregating duringthe year to Rs 5 lacs or more in respect of each party, have been made at prices, whichare reasonable having regard to the available information. The Company has not made anysimilar transactions with any other party.
(vi) According to the information and explanations given to us, the Company has notaccepted any deposits from the public and hence directives issued by the Reserve Bank ofIndia and the provisions of Sections 58A and 58AA of the Companies Act, 1956 and the rulesframed thereunder are not applicable for the year under audit.
(vii) In our opinion, the Company has an adequate internal audit system commensuratewith its size and nature of its business.
(viii) We have broadly reviewed the cost records maintained by the Company pursuant tothe Companies (Cost Accounting Records) Rules, 2011 prescribed by the Central Governmentunder Section 209(1)(d) of the Companies Act, 1956 and are of the opinion that primafacie the prescribed cost records have been maintained. We have, however, not made adetailed examination of the cost records with a view to determine whether they areaccurate or complete.
(ix) According to the information and explanations given to us in respect of statutorydues:
(a) The Company has generally been regular in depositing undisputed statutory dues,including Provident Fund, Employees State Insurance, Sales tax, Wealth tax, CustomsDuty, Service Tax, Excise Duty, Cess and any other material statutory dues with theappropriate authorities during the year however delays have been noticed in case of incometax (including tax deducted at source), service tax and works contract tax.
According to the information and explanations given to us, no undisputed amountspayable in respect of such statutory dues were outstanding as at 31st March, 2014 for aperiod of more than six months from the date they became payable.
(b) The disputed statutory dues aggregating to Rs 2,633.45 lacs that have not beendeposited on account of disputed matters pending before appropriate authorities are asunder:
|Name of the Statute||Nature of the Dues||Period to which the amount relates||Amount||Forum where dispute is pending|
|(Rs In Lacs) (*)|
|Income Tax Act, 1961||Income Tax||2004-05||32.64||High Court|
|2005-06, 2006-07,||2,316.69||C.I.T. (A)|
|2008-09 to 2011-12|
|2007-08 to 2013-14||284.12||ITO (TDS)|
* Net of amount deposited under protest as mentioned in Note no 32.1 to the financialstatements.
(x) The Company does not have any accumulated losses as at 31st March, 2014 and has notincurred cash losses during the financial year covered by the audit and in the immediatelypreceding financial year.
(xi) During the year, the Company has defaulted in repayment of dues to banks andfinancial institutions. Based on our audit procedures and information and explanationsgiven by the management, we have noticed that as on 31st March, 2014 the Company hasdefaulted in repayment of dues to banks and financial institutions (including overdrawalin Cash Credit facilities) aggregating to Rs 37,280.79 lacs, out of which Rs 34,645.17lacs has since been repaid.
(xii) In our opinion and according to the explanations given to us and based on theinformation available, no loans and advances have been granted by the Company on the basisof 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 benefitfund/society. Therefore the provisions of clause 4 (xiii) of the (Auditors Report)Order, 2003 are not applicable to the Company.
(xiv) In our opinion and according to the information and explanations given to us, theCompany is not a dealer or trader in shares, securities, debentures and other investment.The company has maintained proper records of transactions and contracts in respect ofshares, securities and other investments and timely entries have been made therein. Allshares, securities and other investments have been held by the Company in its own name.
(xv) The Company has given corporate guarantees aggregating to Rs 54,672 lacs for loanstaken by two of its wholly owned subsidiaries from banks or financial institutions as at31st March, 2014. The management is of the opinion that terms and conditions are notprejudicial to the interest of the company. We are, however, unable to comment on thesame.
(xvi) The Company has raised new term loans during the year. To the best of ourknowledge and according to the information and explanations given to us the term loansoutstanding at the beginning of the year and those raised during the year were primafacie been either used for the purposes for which they were raised or pendingutilization been temporarily kept with the banks. However, certain short term workingcapital loans taken during the year have been utilized for the purchase of fixed assets.
(xvii) On the basis of review of utilization of funds, which is based on overallexamination of the balance sheet of the Companyasat31 st March, 2014, related informationas made available to us and as represented by the management, we are of the opinion thatfund raised on short term basis aggregating to Rs 124,184.73 lacs have been used duringthe year for long term investments (Projects).
(xviii) During the year the Company has not made any preferential allotment to theparties covered in the register maintained u/s. 301 of the Companies Act, 1956 and hencethe provisions of the clause 4 (xviii) of the Companies (Auditors Report) Order,2003 are not applicable to the Company.
(xix) The Company has not issued any debentures, hence the provisions of clause 4 (xix)of the Companies (Auditors Report) Order, 2003 are not applicable to the Company.
(xx) During the year covered by our report the Company has not raised any money bypublic issue.
(xxi) To the best of our knowledge and belief and according to the information andexplanations given to us, review of internal audit reports and reading of minutes of themeetings of Board of Directors and its committees no fraud on or by the company wasnoticed or reported during the course of our audit.
|For Chaturvedi & Shah|
|(Firm Reg. No. 101720W)|
|Place : Mumbai||Partner|
|Date : 30th May, 2014||Membership No. - 35629|