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INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF VETO SWITCHGEARS AND CABLES LIMITED
Report on the Financial Statements
We have audited the accompanying standalone financial statements of Veto Switchgears and Cables Limited("the Company"),which comprise the Balance Sheet as at 31st March,2015,the Statement of Profit and Loss, the Cash Flow Statement for the year then ended ,and a summary of the significant accounting policies and other explanatory information.
Management's Responsibility for the Financial Statements
The Company's Board of Directors are responsible for the matters stated in Section 134(5) of the Companies Act, 2013 ("the Act") with respect to the preparation of these standalone 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 Rule7 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 are 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.
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 the 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 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 financial control relevant to the Company's preparation of the financial statements, that give a true and fair view, in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on whether the Company has in place as adequate internal financial control system over financial reporting and the operating effectiveness of such controls. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of the accounting estimates made by the Company's Directors, 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 or our audit opinion on the financial statements.
Basis for Qualified Opinion
1. During the year the Company has recognized insurance claim on account of fire amounting to Rs. 1, 669.03 lacs which is still not approved by the Insurance Company. Since at present there is no certainty of collection, in our view recognition of the same is not in compliance with Accounting Standard (AS–9) relating to "Revenue Recognition". Had the same not been recognized the loss for the year would have been Rs. 693.47 lacs as against the reported "Profit for the year" of Rs. 975.56 lacs and "Other Current Assets" would have been lower by Rs. 1669.03 lacs and having a consequential impact on the Reserves and surplus. (Refer Note AO)
In our opinion and to the best of our information and according to the explanations given to us, except for the effects of the matter described in the Basis for Qualified Opinion paragraph above, the aforesaid standalone 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, 2015,its profit and its 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, 2015 ("the Order") issued by the Central Government of India in terms of sub–section (11) of section 143 of the Act, we give in the annexure a statement on the matters specified in the paragraphs 3 and 4 of the Order.
2. As required by Section143 (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) Except for the effects of the matter described in the Basis for Qualified Opinion Paragraph above, 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) Except for the effects of the matter described in the Basis for Qualified Opinion paragraph above, in our opinion, the afore said standalone financial statements comply with the applicable Accounting Standards specified under Section 133 of the Act ,read with Rule7of the Companies(Accounts)Rules,2014.
(e) The matter described in the Basis for Qualified Opinion paragraph above, in our opinion, may have an adverse effect on the functioning of the Company.
(f) On the basis of the written representations received from the directors as on 31s,March, 2015 and taken on record by the Board of Directors, none of the directors are disqualified as on31st March, 2015frombeing appointed as a director in terms of Section 164(2) of the Act.
(g) The qualification relating to the maintenance of accounts and other matters connected therewith are as stated in the Basis for Qualified Opinion paragraph.
(h) With respect to the other matters to be included in the Auditor's Report in accordance with Rulel 1 of the Companies (Audit and Auditors)Rules, 2014,inour opinion and to the best of our information and according to the explanations given to us:
(/) The Company has Disclosed the impact of pending litigation on its financial position in its Financial Statements (Refer note no. 32(b)of the Financial Statements)
(ii) The Company did not have any long–term contracts including derivative contracts for which there were any material foreseeable losses.
(iii) There were no amounts which were required to be transferred to the Investor Education and Protection Fund by the Company.
Annexure to the Independent Auditors Report
The Annexure referred to in Paragraph 1 under the heading "Report on Other Legal and Regulatory Requirements "in our Independent Auditor's Report to the members of Veto Switchgears and Cables Limited for the year ended 31st March, 2015.
As required by the Companies (Auditors Report) Order, 2015and according to the information and explanations given to us during the course of the audit and on the basis of such checks of the books and records as were considered appropriate we report that:
(i) a) The company has maintained proper records showing full particulars including quantitative details and situation of its fixed assets.
b) All the fixed 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 and the nature of its assets. In pursuant to the programme certain fixed assets have been physically verified by the Company during the year. The frequency of verification is reasonable and no discrepancies have been noticed on such physical verification.
(ii) a) The inventories have been physically verified by the management during the year at reasonable intervals.
b) The procedures of physical verification of the inventories followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its business.
c) The Company has maintained proper records of its inventories. No material discrepancies were noticed on physical verification as compared to book records.
(iii) The Company has granted unsecured loans to one party covered in the register maintained under Section 189 of the Act. The said loans are interest free and the principal amount is refundable on call basis. Hence paragraph 3 (iii) a & b of the said Order are not applicable to the Company.
(iv) There is an adequate internal control system commensurate with the size of the Company and the nature of its business with regard to purchase of inventories, fixed assets and for the sale of goods and services. During the course of our audit, we have not observed any continuing failure to correct major weakness in internal control system.
(v) The Company has not accepted any deposits from the public.
(vi) The Company is not required to maintain cost records as per Section 148 (1) of the Companies Act, 2013 and Companies (Cost Records and Audit) Rules, 2014.
(vii) a) According to the records of the Company, the undisputed statutory dues including Provident Fund, Employees'
State Insurance, Income Tax, Sales Tax, Wealth Tax, Service Tax, Duty of Customs, Duty of Excise, Value Added Tax and Cess, to the extent applicable to the Company, have been regularly deposited with the appropriate authorities except there is slight delay in few cases of depositing TDS, Service Tax and Provident Fund. According to the information and explanation given to us, there are no undisputed amount payable in respect of such statutory dues which have remained outstanding as at 31st March, 2015 for a period more than six months from the date they became payable.
c) There is no amount which is required to be transferred to Investor Education and Protection Fund by the Company in accordance with the relevant provisions of the Companies Act, 1956 (1 of 1956) and rules made there under.
(viii) The Company does not have any accumulated losses as at 31st March, 2015. However, if the impact of our basis of qualified opinion is considered, the Company has incurred cash losses during the year under review. During the year the Company has incurred cash loss of Rs. 492.12lacs after adjusting the amount mentioned in our Qualified Opinion. Further during the immediate preceding year the Company has not incurred any cash losses.
(ix) In our opinion and according to the information and explanations given to us the Company has not defaulted in repayment of its dues to banks and financial institutions.
(x) The Company has not given any guarantee for loans taken by others from banks and financial institutions.
(xi) The Company has applied the term loans during the year for the purpose they were obtained.
(xii) During the course of our examination of the books and records of the Company, carried out 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 any fraud on or by the Company, noticed or reported during the year, nor have we been informed of such case by the management.
For S G C O&Co.
Date: 29* May, 2015