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India Nippon Electricals

BSE: 532240|NSE: INDNIPPON|ISIN: INE092B01017|SECTOR: Auto Ancillaries
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Mar 16
Auditor's Report (India Nippon Electricals) Year End : Mar '17

To the Members of India Nippon Electricals Limited

Report on the Standalone IndAS Financial Statements

We have audited the accompanying standalone IndAS financial statements of India Nippon Electricals Limited (the Company) which comprises the Balance Sheet as at March 31, 2017, the statement of Profit and Loss ( including Other Comprehensive Income), the Cash Flow Statement and the statement of changes in equity for the year then ended, and a summary of significant accounting policies and other explanatory information. ( Hereinafter referred to as the Standalone IndAS financial statements)..

Management’s Responsibility for the Standalone Ind AS Financial Statements

The Company''s 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 standalone IndAS financial statements that give a true and fair view of the financial position, profit (financial performance including other comprehensive income) cash flows and changes in equity of the Company in accordance with the accounting principles generally accepted in India ,including the Indian Accounting Standards prescribed under Section 1 33 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014.This responsibility also includes the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding 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 standalone IndAS financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditor’s Responsibility

Our responsibility is to express an opinion on these standalone IndAS 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 hereunder.

We conducted our audit of the standalone IndAS financial statements in accordance with the Standards on Auditing specified under section 1 43(1 0) 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 standalone IndAS financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the standalone IndAS financial statements. The procedures selected depend on the auditor''s judgment, including the assessment of the risks of material misstatements of the standalone IndAS 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 Standalone IndAS financial statements that give 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 accounting policies used and the reasonableness of the accounting estimates made by Company Directors, as well as evaluating the overall presentation of the standalone IndAS financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the standalone IndAS financial statements.

Opinion

In our opinion and to the best of our information and according to the explanations given to us, the aforesaid standalone IndAS 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 including the IndAS, of the financial position of the Company as at 31st March 2017 and its financial performance including other comprehensive income, its cash flows and the changes in the equity for the year ended on that date.

Report on other Legal and Regulatory Requirements:

As required by the Companies (Auditor''s Report) Order, 2016 (the Order) issued by the Central Government of India in terms of sub-section (11) of section 143 of the Companies Act 201 3, we give in the Annexure-A, a statement on the matters specified in paragraphs 3 and 4 of the Order, to the extent applicable.

As required by section 1 43(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 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, Statement of Profit and Loss, the Cash Flow Statement and Statement of Changes in Equity dealt with by this Report are in agreement with the books of account;

d. In our opinion, the aforesaid standalone financial statements comply with the Accounting Standards 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 31 st March 2017 taken on record by the board of directors, none of the directors is disqualified as on 31st March 2017 from being appointed as a director in terms of Sec 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 report in Annexure-B; and

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, in our opinion to the best of our information and according to the explanations given to us:

i. The Company has disclosed the impact of pending litigation on its financial position in its standalone IndAS financial statements - Refer Note : 39 to the Standalone IndAS financial statements disclosing Contingent Liabilities;

ii. The Company has made provisions, as required under the applicable law or accounting standards, for material foreseeable losses, if any, on long-term contracts including derivative contracts; and

iii. There has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Company.

iv. The company has provided requisite disclosures in its Standalone IndAS financial statements as to holdings as well as dealings in Specified Bank Notes during the period from 8th November, 2016 to 30th December 2016 and these are in accordance with the books of accounts maintained by the company. Refer Note: 44 to the Standalone IndAS financial statement

Annexure-A referred to in paragraph 1 of our report of even date.

The provisions of the following clauses of Companies (Auditor''s Report) Order, 2016 are not applicable to the Company for the year.

a) Clause 3(v) with regard to acceptance of deposits from the public since the Company has not accepted any deposits.

b) Clause 3(viii) with regard to default in repayment of dues to a financial institution or Bank or Debenture Holders since the Company has not borrowed any amount during the year.

c) Clause 3(ix) with regard to Money raised by way of initial public offer or further public offer (including debt instruments) and term loans during the year.

d) Clause 3(xii) with regard to Compliance by the Nidhi Company.

e) Clause 3(xiv) with regard to preferential allotment (or) private placement of shares since the Company has not made any preferential allotment (or) private placement of shares (or) fully (or) partly convertible debentures during the year.

f) Clause 3(xvi) since the Company is not required to be registered under Section 45-IA of the Reserve Bank of India Act, 1934.

(i) (a) The Company has maintained proper records showing full particulars including quantitative details and the situation of fixed assets.

(b) The Company has a regular programme of physical verification of its fixed assets at reasonable intervals. The fixed assets are physically verified by the external agency, which in our opinion, is reasonable having regard to the size of the group and nature of its assets . No material discrepancies were noticed on such verification.

(c) According to the information and explanations given to us and on the basis of our examination of the records of the Company, the title deeds of immovable properties are held in the name of the Company.

(ii) (a) The management has conducted physical verification of inventory at reasonable intervals.

(b) The procedure of physical verification of inventories followed by the management is reasonable and adequate in relation to the size of the Company and the nature of its business.

(c) On the basis of the examination of the records of the inventory, we are of the opinion that the Company is maintaining proper records of inventory. The discrepancies noticed on verification between the physical stock and the book records were not material and have been properly dealt with in the books of accounts.

(iii) The Company has not granted any loans secured or unsecured to companies, firms or other parties covered in the register maintained under section 189 of The Companies Act, 2013.

(iv) In our opinion and according to the information and explanations given to us, the Company has complied with the provisions of section 185 and 186 of Companies Act, 2013, with respect to the loans and investments made

(v) On the basis of the records, we are of the opinion that prima facie cost records and accounts specified by the Central Government of India under sub-section (1) of section 148 of the Companies Act, 2013 have been maintained. However, we are not required to and have not carried out any detailed examination of such accounts and records.

(vi) (a) According to the records of the Company, the Company is regular in depositing with appropriate authorities undisputed statutory dues including Provident Fund, Employees State Insurance, Income Tax, Sales Tax, Service Tax, Duty of Customs, Duty of Excise, Value Added Tax, cess and other statutory dues.

(b) Based on the audit procedures and on the information and explanations given by the management, we furnish below the details of dues of Service Tax / Duty of Excise / Local area Development Tax / Income Tax , which have not been deposited on account of disputes.

Statute

Nature of dues

Period to which relates (Financial Year)

Amount due In Rs. Lakhs

Forum where dispute is pending

Service tax under Finance Act,1994

Non- payment of service tax on commercial training

2012-2015 and 2015-2016

10.08

Customs, Excise and Service Tax Appellate Tribunal (CESTAT)

Service tax under Finance Act ,1994

Disallowance of Service Tax credit availed.

2005-06 and 2006-07

11.49

Customs, Excise and Service Tax Appellate Tribunal (CESTAT)

Service tax under Finance Act ,1994

Disallowance of Service Tax Credit availed.

2006-07

0.27

Commissioner of Central Excise (Appeals).

Service tax under Finance Act ,1994

Disallowance of Service Tax Credit availed.

2007-08

2012-13

1.50

Office of the Superintendent Central Excise

Local Area Development Tax of Haryana state.

Local Area Development Tax Assessment demand

2003-04 and 2004-05

0.41

Joint Excise Taxation Commissioner

Tamil Nadu VAT Act 2006

VAT ineligible credits

2007-08 to 2015-16

193.41

Assistant Commissioner of Commercial Taxes

Central Sales Act 1956

Penalty for issuing C-Forms without inclusion of B-Certificate

2010-11 to 2015-16

1.63

Assistant Commissioner of Commercial Taxes

Income Tax Act 1961

Deduction under Sec 80IB-with respect to Disallowance of Royalty payment, Apportionment of R&D Expenditure.

2012-13

64.77

Commissioner of Income Tax (Appeals)

(vii) Based upon the audit procedures performed and information and explanations given by the management, we report that no fraud by the Company or on the Company by its officers or employees has been noticed or reported during the year.

(viii) Based on our examination of the records of the Company, the Company has paid/provided for managerial remuneration in accordance with the requisite approvals mandated by the provisions of section 197 read with Schedule V to the Companies Act, 2013.

(ix) Based on our examination of the records of the Company, transactions with the related parties are in compliance with sections 177 and 188 of Companies Act, 2013 where applicable and details of such transactions have been disclosed in the financial statements as required by the applicable accounting standards.

(x) Based on our examination of the records of the Company, the Company has not entered into non-cash transactions with directors or persons connected with them.

Annexure-B to the Independent Auditors’ Report

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 controls over financial reporting of India Nippon Electricals Limited (the Company) as of 31 March 2017 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 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 (''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 Controls 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 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 auditor''s judgment, 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 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 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

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 31 March 2017, 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 ICAI.

For BRAHMAYYA & CO.,

Chartered Accountants,

Firm Registration No.: 000511S

Place of signature : Chennai (P S Kumar)

Date of signature : 18th May 2017 Partner

Membership Number:15590

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