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Elecon Engineering Company Ltd.

BSE: 505700 | NSE: ELECON |

Represents Equity.Intra - day transactions are permissible and normal trading is done in this category
Series: EQ | ISIN: INE205B01023 | SECTOR: Engineering - Heavy

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  • Offer Price (Qty.)

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Annual Report

For Year :
2018 2017 2016 2015 2014 2013 2012 2011 2010

Auditor's Report

Report on the Standalone Ind AS Financial Statements

We have audited the accompanying standalone Ind AS financial statements of Elecon Engineering Company Limited (the Company”), which comprise the Standalone Balance Sheet as at March 31, 2017, the Standalone Statement of Profit and Loss (including other comprehensive income), the Standalone Statement of Cash Flows and the Standalone Statement of Changes in Equity for the year then ended and a summary of the significant accounting policies and other explanatory information (hereinafter referred to as ''Standalone Ind AS 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 Ind AS financial statements that give a true and fair view of the financial position, 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 (Ind AS) prescribed under Section 133 of the Act, read with relevant rules issued there under.

This responsibility also includes 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 Ind AS financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditors'' Responsibility

Our responsibility is to express an opinion on these standalone Ind AS 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 of the standalone Ind AS financial statements 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 standalone Ind AS financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and the disclosures in the standalone Ind AS financial statements. The procedures selected depend on the Auditors'' judgment, including the assessment of the risks of material misstatement of the standalone Ind AS 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 Ind AS 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 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 standalone Ind AS 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 Ind AS financial statements.

Opinion

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

Emphasis of matter

We draw attention to note 41 of the Statement regarding the Scheme of Amalgamation (''the Scheme1) between Elecon EPC Projects Limited (subsidiary of the Company) and the Company sanctioned by the Honorable High Court of Judicature at Gujarat vide its order dated October 7, 2016, wherein the Company, has accounted for the amalgamation under purchase method in accordance with the erstwhile Accounting Standard 14 - Accounting for Amalgamation. The Company has given effect to the Scheme from the appointed date specified in the Scheme i.e. March 30, 2015. Pursuant to giving effect of the Scheme the Capital Reserve of INR 4,258.57 Lakhs has been generated. The accounting treatment is different from that prescribed under Ind AS 103 - Business Combinations.

Other matters

The comparative financial information of the Company for the year ended March 31, 2016 and the transition date opening balance sheet as at April 1, 2015 prepared in accordance with Ind AS included in these standalone Ind AS financial statements have been audited by the one of Joint auditor, Thacker Butala Desai who had audited the financial statements for the relevant periods. The report of the one of Joint auditor, Thacker Butala Desai on the comparative financial information and the opening Balance Sheet dated May 19, 2017 expressed an unmodified opinion.

Our opinion is not modified in respect of this matters.

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 Act, we give in the Annexure A, a statement on the matters specified in the paragraphs 3 and 4 of the Order.

As required by sub-section (3) of Section 143 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 Standalone Balance Sheet, the Standalone Statement of Profit and Loss (including other comprehensive income), the Standalone Statement of Cash Flows and the 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 Ind AS financial statements comply with the Indian Accounting Standards (Ind AS) prescribed under Section 133 of the Act, read with relevant rules issued thereunder;

(e) on the basis of the written representations received from the Directors as on March 31, 2017 taken on record by the board of directors, none of the Directors are disqualified as on March 31, 2017 from being appointed as a Director in terms of Section 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 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:

i. the Company has disclosed the impact of pending litigations on its financial position in its standalone Ind AS financial statements - Refer Note 42 to the standalone Ind AS financial statements;

ii. the Company has made provision, as required under the applicable law or accounting standards, for material foreseeable losses on long-term contracts including derivative contracts (if any) - Refer Note 23 to the standalone Ind AS financial statements;

iii. there has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Company during the year ended March 31, 2017; and

iv. the Company has provided requisite disclosures in its standalone Ind AS financial statements as to holdings as well as dealings in Specified Bank Notes during the period from November 8, 2016 to December 30, 2016. Based on audit procedures and relying on management representation, we report that the disclosures are in accordance with the books of accounts maintained by the Company and as produced to us by the Management - Refer Note 40 to the standalone Ind AS financial statements.

With reference to the Annexure A referred to in the Independent Auditors'' Report to the members of the Company on the standalone Ind AS financial statements for the year ended March 31, 2017, we report the following:

(i) (a) The Company has maintained proper records showing full particulars, including quantitative details and situation of property, plant and equipment and investment properties.

(b) The Company has a regular programme of physical verification of its property, plant and equipment and investment properties by which all the items are verified in a phased manner over a period of three years. In our opinion, this periodicity of physical verification is reasonable having regard to the size of the Company and the nature of its assets. No material discrepancies were noticed upon such verification during the year and these have been dealt with appropriately in the books of account.

(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 as disclosed in Note 3 and Note 4 to the standalone Ind AS financial statements, are held in the name of the Company, except in respect for two land parcels, which the Company is in process of registering the title deeds in its name (carrying value: INR 2,440.92 Lakhs included in Land).

(ii) The inventory, except goods in transit, has been physically verified by the management during the year. In our opinion, the frequency of such verification is reasonable. The discrepancies noticed on verification between the physical stocks and the book records were not material and have been dealt with in books of account.

(iii) The Company has granted unsecured loans to wholly owned foreign subsidiary company covered in the register maintained under Section 189 of the Companies Act, 2013 (''the Act''). The Company has not granted any loans, secured or unsecured, to firms, Limited Liability Partnerships or other parties covered under Section 189 of the Act:

a) In our opinion, the rate of interest and other terms and conditions on which the loans had been granted to the wholly owned foreign subsidiary company listed in the register maintained under Section 189 of the Act were not prejudicial to the Company''s interest.

b) According to the information and explanations given to us, the loans granted to the wholly owned foreign subsidiary company listed in the register maintained under Section 189 of the Act are repayable on demand. The borrower have been regular in repaying the principal amounts as demanded and in the payment of interest.

c) There is no overdue amount in respect of loans granted to the wholly owned foreign subsidiary company listed in the register maintained under Section 189 of the Act.

(iv) In our opinion and according to the information and explanations given to us, the Company has not given any loans, or provided any guarantees or security to the parties covered under Section 185 of the Act. Accordingly, compliance under Section 185 of the Act is not applicable to the Company. According to the information and explanations given to us, the Company has complied with the provisions of Section 186 of the Act in respect of the loans given and investment made.

(v) In our opinion, and according to the information and explanations given to us, the Company has not accepted deposits as per the directives issued by the Reserve Bank of India and the provisions of Sections 73 to 76 or any other relevant provisions of the Act and the rules framed there under. Accordingly, paragraph 3 (v) of the Order is not applicable to the Company.

(vi) We have broadly reviewed the books of accounts maintained by the Company pursuant to the rules prescribed by the Central Government for the maintenance of cost records under Section 148(1) of the Act and are of the opinion that prima facie, the prescribed accounts and records have been made and maintained. However, we have not made a detailed examination of the cost records with a view to determine whether they are accurate or complete.

(vii) (a) According to the information and explanations given to us and on the basis of our examination of the records of the Company, amounts deducted/accrued in the books of account in respect of undisputed statutory dues including Provident fund, Employees'' State Insurance, Income-tax, Duty of customs, Duty of excise, Sales-tax, Value added tax, Service tax, Works contract tax, Entry tax, Local body tax and other material statutory dues have been regularly deposited during the year with the appropriate authorities, though there have been significant delays in case of Professional tax. The Company is not having any dues in respect of Cess.

According to the information and explanations given to us, no undisputed amounts payable in respect of Provident fund, Employees'' State Insurance, Professional tax, Income-tax, Duty of customs, Duty of excise, Sales-tax, Service tax, Value added tax, Works contract tax, Entry tax, Local body tax and other material statutory dues were in arrears as at March 31, 2017 for a period of more than six months from the date they became payable.

(b) According to the information and explanations given to us, there are no dues of Income-tax, Sales tax, Service tax, Duty of customs, Duty of excise and Value added tax as at March 31, 2017, which have not been deposited with the appropriate authorities on account of any dispute, other than those mentioned in the Appendix I to this report.

(viii) In our opinion and according to the information and explanations given to us, the Company has not defaulted in repayment of loans and borrowings to the banks and financial institutions. The Company did not have any outstanding loans and borrowings to Government and outstanding dues to debenture holders during the year.

(ix) According to the information and explanations given to us and based on our examination of the records of the Company, the Company has not raised any moneys by way of initial public offer or further public offer (including debt instruments) during the year. In our opinion and according to the information and explanations given to us, the term loans taken by the Company have been applied for the purpose for which they are raised.

(x) 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 material fraud by the Company or on the Company by its officers or employees, noticed or reported during the year, nor have we been informed of any such case by the management.

(xi) According to the information and explanations given to us and 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 Act.

(xii) In our opinion and according to the information and explanations given to us, the Company is not a Nidhi company. Accordingly, paragraph 3 (xii) of the Order is not applicable to the Company.

(xiii) According to the information and explanations given to us and based on our examination of the records of the Company, transactions with the related parties are in compliance with Sections 177 and 188 of the Act where applicable and details of such transactions have been disclosed in the standalone Ind AS financial statements as required by applicable accounting standards.

(xiv) According to the information and explanations given to us and based on our examination of the records of the Company, the Company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures during the year. Accordingly, paragraph 3 (xiv) of the Order is not applicable to the Company.

(xv) According to the information and explanations given to us and based on our examination of the records of the Company, the Company has not entered into any non-cash transactions with directors or persons connected with them. Accordingly, paragraph 3 (xv) of the Order is not applicable to the Company.

(xvi) In our opinion and according to the information and explanations given to us, the Company is not required to be registered under Section 45-IA of the Reserve Bank of India Act, 1934. Accordingly, paragraph 3 (xvi) of the Order is not applicable to the Company.

Sr.

No

Name of Statute

Nature of Dues

Amount (Rs. in lakhs)*

Period to which amount related

Forum where the Dispute is pending

1

The Finance Act, 1944

Service tax including penalties

6,014.22

2006 to 2013

C.E.S.T.A.T

Ahmedabad

2

The Finance Act, 1944

Service tax including penalties

1,578.80

2013 to 2016

Central Excise Commissioner (Appeal) Vadodara

3

Central Excise Act, 1944

Excise duty including penalties

77.93

1989 to 1993, 2009 to 2013

C.E.S.T.A.T

Ahmedabad

4

Central Sales Tax Act, 1956 and Value added tax of various States.

Sales Tax / Work Contract Tax

847.50

2007-08 to 2011-12

Commissioner of Commercial tax (Appeal) Vadodara

5

Central Sales Tax Act, 1956 and Value added tax of various States.

Sales Tax / Work Contract Tax

233.39

1991-92 to 1995-96

Odisha High Court

6

Central Sales Tax Act, 1956 and Value added tax of various States.

Sales Tax / Work Contract Tax

453.27

2005-06 to 2009-10

Dy. Commissioner of Commercial Tax, Maharashtra

7

Central Sales Tax Act, 1956 and Value added tax of various States.

Sales Tax / Work Contract Tax

555.29

2009-12 and 2013-14

Commissioner, Of Commercial Tax, West Bengal

8

The Income Tax Act, 1961

Income tax including interest

367.31

AY 1988-89, 1990-91, 2006-07 to 2011-12

ITAT

9

The Income Tax Act, 1961

Tax and Interest

23.92

AY 2009-10

CIT (Appeals) Vadodara

* INR 1,771.75 Lakhs have been deposited under protest

For B S R & Co. LLP For Thacker Butala Desai

Chartered Accountants Chartered Accountants

Firm''s Registration No: 101248W/W-100022 Firm''s Registration No: 110864W

Nirav Patel M T Desai

Partner Partner

Membership No: 113327 Membership No: 030911

Vallabh Vidyanagar Vallabh Vidyanagar

Date: May 19, 2017 Date: May 19, 2017