To the Members of Orbit Corporation Limited
Report on the Financial Statements
We have audited the financial statements of Orbit Corporation Limited (the
‘Company), which comprise the Balance Sheet as at 31st March, 2016, the Statement of
Profit and Loss and the Statement of Cash Flows for the year then ended, and a summary of
the significant accounting policies and other explanatory information.
Responsibilities of Management for the Financial Statements
The Companys Board of Directors is responsible for the matters stated in Section
134(5) of the Companies Act, 2013 (the Act) with respect to 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 principles
generally accepted in India, including the Accounting Standards specified under Section
133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014. 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.
Auditors Responsibilities
Our responsibility is to express an opinion on these financial statements based on our
audit. We have taken into account the provisions of the Act, the accounting and auditing
standards and matters which are required to be included in the audit report under the
provisions of the Act and Rules made there under.
We conducted our audit in accordance with the Standards on Auditing specified under
Section 143(10) of the Act. 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
the disclosures in the financial statements. The procedures selected depend on the
auditors 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 financial control relevant to the Companys preparation of the
financial statements that gives a true and fair view in order to design audit procedures
that are appropriate in the circumstances. An audit also includes evaluating the
appropriateness of the accounting policies used and reasonableness of the accounting
estimates made by the Companys Directors as well as evaluating the over presentation of
the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to
provide a basis for our opinion on the financial statements.
Emphasis of matter
We draw attention to Note 26(2(a)) to the financial statements as regards the income
tax demands received by the Company for the assessment years 2004-05 to 2012-13 amounting
to Rs. 1884.31millions. The Company has filed appeals against these demands and the matter
is sub-judice.
Our opinion is not qualified in respect of this matter.
Opinion
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 Act,
in the manner so required and give a true and fair view in conformity with the accounting
principles generally accepted in India, of the state of affairs of the Company as at 31st
March, 2016, and its loss and its cash flows for the year ended on that date.
Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditors 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, to the extent applicable.
2. As required by Section 143(3) of the Act, 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 purposes 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 and the Cash Flow Statement
dealt with by this report are in agreement with the books of account;
(d) in our opinion, the aforesaid financial statements comply with the Accounting
Standards specified under Section 133 of the Act, read with Rule 8 of the Companies
(Accounts) Rules, 2014;
(e) on the basis of the written representations received from the directors as on 31st
March, 2016 taken on record by the Board of Directors, none of the directors is
disqualified as on 31st March, 2016 from being appointed as a director in terms of Section
164 (2) of the Act; and
(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 Report in Annexure ‘B;
(g) with respect to the other matters to be included in the Auditors Report in
accordance with Rule 11 of the Companies (Audit and Auditors) Rules, 2014, in our opinion
and to the best of our information and according to the explanations given to us:
(1) the Company has disclosed the impact of pending litigations on its financial
position in its financial statements - Refer Note 26 to the Financial Statements;
(2) the Company did not have any long-term contracts including derivative contracts for
which there were any material foreseeable losses; and
(3) there are no amounts that are required to be transferred to the Investor Education
and Protection Fund by the Company.
|
SHARP & TANNAN |
|
Chartered Accountants |
|
Firms Registration No.109982W |
|
by the hand of |
|
MILIND P. PHADKE |
|
Partner |
|
Membership No. 033013 |
| Mumbai, 18th May, 2016 |
|
ANNEXURE ‘B TO THE INDEPENDENT AUDITORS REPORT
(Referred to in paragraph 2(f) of our report of even date)
We have audited the internal financial controls over financial reporting of Orbit
Corporation Limited (the ‘Company) as of 31st March, 2016 in conjunction with
our audit of the financial statements of the Company for the year ended on that date.
Managements Responsibility for Internal Financial Controls
The Companys management is responsible for establishing and maintaining internal
financial controls 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 (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 companys 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 (the
‘Act).
Auditors Responsibility
Our responsibility is to express an opinion on the Companys internal financial
controls over financial reporting based on our audit. We conducted our audit in accordance
with the Guidance Note and the Standards on Auditing, issued by ICAI and deemed to be
prescribed under Section 143(10) of the Act, 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 ICAI. Those Standards and the Guidance Note require that we comply
with ethical requirements 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 auditors judgement, including the assessment of the risks of
material misstatement of the financial statements, whether due to fraud or error.
We believe that the audit evidence we have obtained is sufficient and appropriate to
provide a basis for our audit opinion on the Companys internal financial controls system
over financial reporting.
Meaning of Internal Financial Controls Over Financial Reporting
A companys 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 companys 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 authorisation of
management and directors of the company; and (3) provide reasonable assurance regarding
prevention or timely detection of unauthorised acquisition, use, or disposition of the
companys assets that could have a 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
According to the information and explanations given to us and based on our audit, the
following material weaknesses have been identified in the operating effectiveness of the
companys internal financial controls over financial reporting as at 31st March, 2016 : a)
The segregation of duties in Finance & accounts department as envisaged in the
internal control system of the company was not effectively implemented due to high rate of
attrition of the staff. This area needs to be strengthened to ensure effective operation
of the internal control system
A ‘material weakness is a deficiency, or a combination of deficiencies, in
internal financial control over financial reporting, such that there is a reasonable
possibility that a material misstatement of the companys annual or interim financial
statements will not be prevented or detected on a timely basis.
In our opinion, because of the possible effects of the material weaknesses described
above on the achievement of the objectives of the control criteria, the Company has not
maintained adequate internal financial controls over financial reporting and such internal
financial controls over financial reporting were not operating effectively as of March 31,
2016, based on "the internal control over financial reporting criteria established by
the Company considering the essential components of internal control stated in Guidance
Note on Audit of Internal Financial Controls Over Financial Reporting issued by the
Institute of Chartered Accountants of India".
We have considered the material weaknesses identified and reported above in determining
the nature, timing, and extent of audit tests applied in our audit of the March 31, 2016
standalone financial statements of the Company, and these material weaknesses do not
affect our opinion on the financial statements of the Company.
|
SHARP & TANNAN |
|
Chartered Accountants |
|
Firms Registration No. 109982W |
|
by the hand of |
|
MILIND P. PHADKE |
|
Partner |
| Mumbai, 18th May, 2016 |
Membership No. 033013 |
+91-9892691696
