EMCO Ltd

BSE: 504008 | NSE: EMCO | ISIN: INE078A01026 
Market Cap: [Rs.Cr.] 229.48 | Face Value: [Rs.] 2
Industry: Electric Equipment

Auditor's Report
Independent Auditor

To the Members of

EMCO Limited

Report on the Financial Statements

We have audited the accompanying financial statements of EMCO Limited ("theCompany"), which comprise the Balance Sheet as at March 31, 2014, and the Statementof Profit and Loss and the Cash Flow Statement for the year then ended, and a summary ofsignificant 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 atrue and fair view of the financial position, financial performance and cash flows of theCompany in accordance with the Accounting Standards notified under the Companies Act, 1956("the Act") read with the 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.

Auditor's Responsibility

Our responsibility is to express an opinion on these financial statements based on ouraudit. We conducted our audit in accordance with the Standards on Auditing issued by theInstitute of Chartered Accountants of India. Those Standards require that we comply withethical requirements and plan and perform the audit to obtain reasonable assurance aboutwhether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts anddisclosures in the financial statements. The procedures selected depend on the auditor'sjudgment, including the assessment of the risks of material misstatement of the financialstatements, whether due to fraud or error. In making those risk assessments, the auditorconsiders internal control relevant to the Company's preparation and fair presentation ofthe financial statements in order to design audit procedures that are appropriate in thecircumstances, but not for the purpose of expressing an opinion on the effectiveness ofthe entity's internal control. An audit also includes evaluating the appropriateness ofaccounting policies used and the reasonableness of the accounting estimates made bymanagement, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion.

Opinion

In our opinion and to the best of our information and according to the explanationsgiven to us, the financial statements give the information required by the Act in themanner so required and give a true and fair view in conformity with the accountingprinciples generally accepted in India:

(a) in the case of the Balance Sheet, of the state of affairs of the Company as atMarch 31, 2014;

(b) in the case of the Statement of Profit and Loss, of the profit for the year endedon that date; and

(c) 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 Note 28 to these financial statements regarding the Company'sinvestment and net loan aggregating to Rs. 8,123.20 Lakhs into its wholly owned subsidiaryEMCO Power Limited, which is setting up power projects in the state of Chhattisgarh andOrissa through joint venture companies. Said Investment has been utilised towards projectdevelopment expenditure like feasibility studies, acquisition of land, allocation ofwater, EIA studies and other pre-operative expenses. There are delays in these projectsmainly on account of economic scenario and uncertainty in coal allocation policy. In theevent, prolonged delay, carrying value of said Investment will require to be adjusted forimpairment.

Our opinion is not qualified in this matter

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 sub-section (4A) of section 227 ofthe Act, we give in the Annexure a statement on the matters specified in paragraphs 4 and5 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 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 Balance Sheet, Statement of Profit and Loss, and Cash Flow Statement dealt withby this Report are in agreement with the books of account;

d. in our opinion, the Balance Sheet, the Profit and Loss statement comply with theaccounting standards notified under the Companies Act, 1956 read with the General Circular15/2013 dated 13th September 2013 of the Ministry of Corporate Affairs inrespect of Section 133 of the Companies Act, 2013.

e. on the basis of written representations received from the directors as on March 31,2014, and taken on record by the Board of Directors, none of the directors aredisqualified as on March 31, 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 P. RAJ & CO. For Chaturvedi & Shah
Chartered Accountants Chartered Accountants
Firm Registration No. 108310W Firm Registration No. 101720W
sd/- sd/-
Sanjay Chheda Amit Chaturvedi
Partner Partner
Membership No. 103938 Membership No. 103141
Mumbai, Mumbai,
25th April, 2014 25th April, 2014

Annexure referred to the Auditors' Report

(Referred to in Paragraph 1 under the heading Report on other legal and regulatoryrequirements of our Report of even date)

1. The Company has maintained proper records showing full particulars, includingquantitative details and situation of fixed assets.

As explained to us, the fixed assets have been physically verified by the management asper a phased programme of verification. In our opinion, the frequency of verification isreasonable having regard to the size of the Company and the nature of its fixed assets.The discrepancies noticed on such verification were not material and have been properlydealt with in the books of account.

The Company has not disposed off a substantial part of fixed assets during the year.

2. The management has conducted physical verification of inventories at reasonableintervals. In respect of stocks lying with the third parties, confirmation for most of thestocks has been received.

In our opinion and according to information and explanations given to us, theprocedures of physical verification of inventories followed by the management arereasonable and adequate in relation to the size of the Company and the nature of itsbusiness.

The Company is maintaining proper records of inventories. The discrepancies noticed onverification between physical inventories and the book records were not material inrelation to the operations of the Company and the same have been properly dealt with inthe books of account.

3. In respect of the loans, secured or unsecured, granted or taken by the Company to /from companies, firms or other parties covered in the register maintained under Section301 of the Companies Act, 1956:

a) According to the information and explanations provided to us and as per the recordsexamined by us, as at 31st March 2014, Company has granted unsecured loans to three of itswholly owned subsidiaries covered in the register maintained under section 301 of theCompanies Act, 1956. The maximum balance outstanding at any time during the year was Rs.15,111.24 lakhs and the year-end balance is Rs. 14,874.54 lakhs.

In our opinion and according to the information and explanations given to us, the rateof interest other terms and conditions of such loan are prima facie not prejudicial to theinterest of the Company.

The loan granted to one of wholly owned subsidiary is repayable on demand and to othertwo wholly owned subsidiary is not due during the year for repayment; hence question ofoverdue principal amount doesn't arise. In cases, where there is no stipulation as topayment of interest, same is converted into loan, therefore, question of receipt ofinterest does not arise in this case. In other cases, company is regular in receipt ofinterest.

b) As per information and explanations provided to us, the Company has not taken anyloans, secured or unsecured from companies, firms or other parties covered in the registermaintained under section 301 of the Companies Act, 1956. Consequently, the requirements ofClauses (iii) (f) and (iii) (g) of paragraph 4 of the Order are not applicable.

4. In our opinion and according to the information and explanations provided to us,there are adequate internal control procedures commensurate with the size of the Companyand the nature of its business, for the purchase of inventories, fixed assets and for thesale of goods and services. During the course of our audit, no major weakness has beennoticed in the internal controls in respect of these areas.

5. Based on the audit procedures applied by us and according to the information andexplanations provided by the management, we are of the opinion that all the particulars ofcontracts or arrangements that need to be entered into the register maintained undersection 301 of the Companies Act, 1956 have been so entered.

In our opinion and according to the information and explanations provided to us, thetransactions made in pursuance of such contracts or arrangements have been made atreasonable prices having regard to the prevailing market prices at the relevant time.

6. In our opinion and according to the information and explanations provided to us, theCompany has not accepted any deposits from the public. Therefore, the provisions of Clause(vi) of paragraph 4 of the Order are not applicable to the Company.

7. In our opinion the Company has an internal audit system commensurate with the sizeand nature of its business.

8. We have broadly reviewed the cost records maintained by the Company pursuant (CostAccounting Records) Rules, 2011 prescribed by the Central Government under Section 209(1)(d) and are of the opinion that prima facie the prescribed records have been made andmaintained. We have however not made a detailed examination of the records with a view todetermine whether they are accurate or complete.

9. According to the information and explanations provided to us and on the basis of ourexamination of the books of account, the Company has been, except for certain casesgenerally regular in depositing undisputed statutory dues including Provident Fund,Employees' State Insurance, Income Tax, Value Added Tax, Service Tax , Customs Duty,Wealth Tax, Excise Duty, Cess, Investor Education and Protection Fund, and other materialstatutory dues during the year with the appropriate authorities. As on 31stMarch 2014, there are no undisputed dues payable for a period of more than six months fromthe date they became payable.

As at 31st March 2014, according to the records of the Company and theinformation and explanations given to us, disputed dues on account of Income Tax, SalesTax, Service Tax, Excise Duty and other material statutory taxes that have not beendeposited before appropriate authorities are as under:-

Name of Statute Nature of Dues Amount (Rs. in lakhs) Period to which the amount relates Forum where the dispute is pending
Sales Tax Act West Bengal VAT 42.91 2007-08 West Bengal Commercial Taxes Appellate and Revision Board
Sales Tax Act West Bengal VAT 34.39 2009-10 Joint Commissioner of Sales Tax
Sales Tax Act Jharkhand VAT 3.38 2008-09 Deputy Commissioner of Commercial Tax
Sales Tax Act Gujarat VAT 5.54 2008-09 Assistant Commissioner of Sales Tax
Central Excise Act Penalty Proceeding 1.51 2002-05 CESTAT
Central Excise Act Short Payment of Duty 6.98 2007-08 CESTAT
Central Excise Act Interest 2.86 2009-10 CESTAT
Central Excise Act Excise Duty 37.00 2011-12 Commissioner (Appeals)
Central Excise Act Excise Duty 5.86 2007-08 Additional Commissioner Central Excise & Customs
Central Excise Act Excise Duty 48.22 2012-13 Additional Commissioner Central Excise & Customs
Service Tax Service Tax and Penalty 88.57 2004-07 Commissioner (Appeals), Central Excise & Customs
Service Tax Service Tax, Interest and Penalty 175.18 Jan 2007 To Oct 2010 Additional Commisioner of Service Tax
Service Tax Service Tax 5.89 March 2007 to June 2008 CESTAT

In the following matters, the department has preferred appeals at higher levels:

Name of the Statute Nature of Dues Amount (Rs. in lakhs) Financial Year to which the amount relates Forum where dispute is pending
Sales Tax Act Rajasthan VAT 6.38 2008-10 Commercial Tax Officer
Central Excise Act Excise Duty 141.32 1996-01 Supreme Court
Central Excise Act Excise Duty 4.10 1993-98 High Court
Central Excise Act Excise Duty 3.14 2008-09 CESTAT

10. The Company does not have accumulated losses at the end of the financial year. TheCompany has not incurred cash losses in current financial year and in the immediatelypreceding financial year.

11. Based on our audit procedures and as per the information and explanations providedby the management, we are of the opinion that Company has not defaulted in repayment ofdues to banks and debenture holders except default during the year relating to repaymentof overdrawn working capital facilities from banks. The balances due towards suchoverdrawn working capital facilities as at year end are as under:

Nature of Dues Principal Amount due as at 31.3.2014 (Rs. in Lakhs)
Working Capital / Cash Credit / Packing Credit / Other Fund based Facilities - Overdrawn 3,356

The Company has not borrowed any funds from financial institutions under audit.

12. Based on our audit procedures and according to the information and explanationsprovided to us, the Company has not granted loans and advances on the basis of security byway of pledge of shares, debentures and other securities.

13. In our opinion, the Company is not a chit fund / nidhi / mutual benefit fund /society. Therefore, the provisions of clause 4(xiii) of the Order are not applicable tothe Company.

14. In our opinion, the Company is not dealing in or trading in shares, debentures andother investments. Accordingly, the provisions of clause 4(xiv) of the Order are notapplicable to the Company.

15. According to the information and explanations provided to us and the recordsexamined by us, the Company has given guarantee for loan taken by its wholly ownedsubsidiary from bank. According to information and explanation given to us, we are of theopinion that terms and conditions of guarantee given is not prejudicial to the interest ofthe Company.

16. In our opinion and according to the information and explanations given to us, theterm loans have been applied for the purposes for which they were obtained.

17. According to the information and explanations provided to us and on an overallexamination of the balance sheet of the Company, we are of the opinion that the fundsraised on short-term basis have not been used for long-term investment.

18. According to the information and explanations provided to us and on the basis ofrecords examined by us, during the year Company has not made a preferential allotment ofshares to parties and companies covered in the Register maintained under Section 301 ofthe Companies Act, 1956.

19. According to the information and explanations provided to us and the recordsexamined by us, the Company had created security and charge in respect of debentures.

20. The Company has not raised any money through a public issue during the year.

21. Based upon the audit procedures performed for the purpose of reporting the true andfair view of the financial statements and as per the information and explanations providedby the management, we report that no fraud on or by the Company has been noticed orreported during the course of our audit.

For P. RAJ & CO. For Chaturvedi & Shah
Chartered Accountants Chartered Accountants
Firm Registration No. 108310W Firm Registration No. 101720W
sd/- sd/-
Sanjay Chheda Amit Chaturvedi
Partner Partner
Membership No. 103938 Membership No. 103141
Mumbai, Mumbai,
25th April, 2014 25th April, 2014
   
Futures & Options Quote
Future Data Not present
Key Information

Key Executives:

Rajesh S Jain , Chairman

Shailesh S Jain , Vice Chairman

S V Deo , Director

Bheru Choudhary , Director


Company Head Office / Quarters:

N-104 MIDC Area,
,
Jalgaon,
Maharashtra-425003
Phone : Maharashtra-91-257-2272462/2272572 / Maharashtra-
Fax : Maharashtra-91-257-2272598 / Maharashtra-
E-mail : emco.jelgaon1@emcoindia.com
Web : http://www.emcoindia.com

Registrars:


 
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