Report on the Financial Statements
We have audited the accompanying financial statements of Sundram
Fasteners Limited, Chennai (the Company), which comprise of Balance
Sheet as at 31st March 2013, and the Statement of Profit and Loss and
the Cash Flow Statement for the year ended on that date along with
Notes to financial statements.
Management''s Responsibility for the Financial Statements
Management is responsible for 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 Standards referred to in sub-section (3C) of section 211
of the Companies Act, 1956 (the Act). This responsibility includes
the design, implementation and maintenance of internal control 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 conducted our audit in accordance
with the Standards on Auditing issued by the Institute of Chartered
Accountants of India. 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 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 control relevant to the Company''s preparation and
fair presentation of the financial statements 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 management, as
well as evaluating the overall presentation of the financial
We believe that the audit evidence we have obtained is sufficient and
appropriate to provide a basis for our audit opinion.
In our opinion and to the best of our information and according to the
explanations given to us, the 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
a) in the case of the Balance Sheet, of the state of affairs of the
Company as at 31st March 2013;
b) in the case of the Statement of Profit and Loss, of the profit for
the year ended on that date; and
c) in the case of the Cash Flow Statement, of the 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, 2003 (the
Order) issued by the Central Government of India in terms of
sub-section (4A) of section 227 of the Act, we give in the Annexure a
statement on the matters specified in paragraphs 4 and 5 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 our knowledge and belief were necessary for the purpose of our
b) in our opinion proper books of account as required by law have been
kept by the Company so far as appears from our examination of those
c) the Balance Sheet, Statement of Profit and Loss, and Cash Flow
Statement dealt with by this Report are in agreement with the books of
d) in our opinion, the Balance Sheet, Statement of Profit and Loss, and
Cash Flow Statement comply with the Accounting Standards referred to in
subsection (3C) of section 211 of the Companies Act, 1956;
e) on the basis of written representations received from the directors
as on 31st March 2013, and taken on record by the Board of Directors,
none of the directors are disqualified as on 31st March 2013, from
being appointed as a director in terms of clause (g) of sub-section (1)
of section 274 of the Companies Act, 1956.
Levy and Collection of cess on turnover or gross receipts
f) Since the Central Government has not issued any notification as to
the rate at which the cess is to be paid under section 441A of the
Companies Act, 1956 nor has it issued any Rules under the said section,
prescribing the manner in which such cess is to be paid, no cess is due
and payable by the Company.
Annexure referred to in para 1 of our report on other legal
requirements of even date
(i) (a) The Company has maintained proper records showing full
particulars including quantitative details and situation of fixed
(b) All the assets have not been physically verified by the management
during the year but there is a regular programme of verification at
reasonable intervals, which, in our opinion, is reasonable having
regard to the size of the Company and the nature of its assets. No
material discrepancies were noticed on such verification.
(c) The Company has not disposed off substantial part of its fixed
assets, which will affect the going concern status of the company.
(ii) (a) The inventory other than in transit has been physically
verified at reasonable intervals during the year by the management. In
our opinion, the frequency of such verification is adequate. In respect
of inventory lying with third parties which have not been physically
verified, there is a process of obtaining confirmation from such
(b) In our opinion and according to the information and explanations
given to us, the procedures for physical verification of inventory
followed by the management are reasonable and adequate in relation to
the size of the Company and the nature of its business.
(c) In our opinion, the Company has maintained proper records of
inventory. The discrepancies between the physical stocks and book
stocks were not material and have been properly dealt with in the books
(iii) (a) During the year, the Company has granted unsecured loan to a
wholly-owned subsidiary company covered in the register maintained
under Section 301 of the Act amounting to Rs 250 Lakhs (Balance due as
at the year end is Rs 1,850 Lakhs from one company). The Company has
waived interest due from subsidiary companies viz., Peiner
Umformtechnik GmbH and TVS Peiner Services, GmbH amounting to Rs 212.04
lakhs and Rs 13.77 lakhs respectively.
(b) In our opinion, the rate of interest and other terms and conditions
on which such loan is made is not prima facie prejudicial to the
interest of the company.
(c) The recovery of principal amount and interest thereon are in
accordance with the terms of loan.
(d) As on the date of Balance Sheet there was no overdue amount
recoverable on the said loan.
(e) The Company has not taken any loan secured or unsecured from
Companies, firms or other parties covered in the Register maintained
under Section 301 of the Act and accordingly paragraphs 4 (iii) (e),
(f) and (g) are not applicable.
(iv) In our opinion and according to the information and explanations
given to us, there are adequate internal control systems commensurate
with the size of the company and the nature of its business with regard
to purchases of inventory, fixed assets and for the sale of goods.
During the course of our audit, no minor or major continuing failure
has been noticed in the internal control procedures.
(v) (a) Based on the audit procedures applied by us and according to
the information and explanations provided by the management, we are of
the opinion that the transactions that need to be entered in the
register maintained in pursuance of Section 301 of the Act have been
properly entered in the said register;
(b) In our opinion and according to the information and explanations
given to us, the transactions entered in the Register maintained under
Section 301 of the Act and exceeding Rupees five Lakhs during the year
in respect of each party have been made at prices which are reasonable
having regard to prevailing market prices at the relevant time;
(vi) The Company has not accepted any deposits from the public.
(vii) The Company has an internal audit system which, in our opinion,
is commensurate with the size and nature of its business;
(viii) We have broadly reviewed the books of accounts maintained by the
Company pursuant to the rules made by the Central Government under
Section 209 (1) (d) of the Act for maintenance of cost records and are
of the opinion that, prima facie, the prescribed accounts and records
have been made and maintained.
(ix) (a) According to the records provided to us, the Company is
regular in depositing undisputed statutory dues including Provident
Fund, Employees'' State Insurance, Investor Education and Protection
Fund, Income Tax, Sales Tax, Wealth Tax, Service Tax, Customs Duty,
Excise Duty, Cess and other statutory dues with the appropriate
authorities. However, certain marginal delays were noticed in respect
of remittance of Employees'' State Insurance, Income Tax Deducted at
Source on sub contract payments and professional services, Works
Contract Tax and Service Tax into Government and contribution to
Tamilnadu Labour Welfare Fund.
(b) According to the information and explanations given to us, no
undisputed amounts payable in respect of Income Tax, Wealth Tax, Sales
Tax, Service Tax, Customs Duty, Excise Duty and Cess were in arrears,
as at 31st March 2013 for a period of more than six months from the
date they became payable.
(c) According to the information and explanations given to us, the
following are the details of the disputed Income Tax, Customs Duty,
Service Tax, Excise Duty and Property Tax that was not paid to the
Nature of demand Amount (Rs
lakhs) Forum where the dispute is pending
Income Tax 19.64 High Court of Judicature at Madras
Income Tax 346.12 Commissioner of Income Tax (Appeals)
Excise Duty 48.22 Central Excise & Service Tax Appellate
Excise Duty 51.48 Commissioner (Appeals)
Excise Duty 2.23 High Court of Judicature at Madras
Property Tax 50.67 Commissioner & Secretary to Govt
Sales Tax/VAT 812.17 Joint Commissioner (Appeals) -
Central Sales Tax 33.33 Commercial Tax Officer
Service Tax 42.36 Central Excise & Service Tax
Service Tax 45.85 Commissioner (Appeals)
(x) The Company neither has accumulated losses as at the end of the
financial year nor has incurred cash losses during the financial year
and in the immediately preceding year.
(xi) According to the records of the Company examined by us and the
information and explanations given to us by the management, the Company
has not defaulted in repayment of dues to any financial institution or
bank as at the balance sheet date.
(xii) Based on our examination and according to the information and
explanations given to us, the Company has not granted any loans and
advances on the basis of security by way of pledge of shares,
debentures and other securities.
(xiii) The Company is not a chit fund / nidhi / mutual benefit fund /
society and clause (xiii) of the Order is not applicable.
(xiv) The Company is not dealing or trading in shares, securities,
debentures and other investments other than in the units of mutual
funds. Proper records have been maintained in respect of these
transactions and contracts and timely entries have been made therein.
The investments have been held by the Company in its own name except to
the extent of exemption granted under Section 49 of the Act, in respect
of shares held in subsidiary companies through the nominees.
(xv) The Company has given guarantee to banks and financial institution
for loans taken by Subsidiary Companies and also housing loans availed
by its employees. The terms and conditions of such guarantees are not
prejudicial to the interests of the Company.
(xvi) In our opinion and according to the information and explanations
given to us, the term loans have been applied for the purposes for
which they have been obtained.
(xvii) On the basis of our examination of the Balance sheet of the
Company and according to the explanations given to us, in our opinion,
funds raised on short term basis have not been used for long term
(xviii) The Company has not allotted any shares on preferential basis
to parties and companies covered in the Register maintained under
section 301 of the Act.
(xix) The Company has not issued any secured debentures;
(xx) The Company has not raised any money by issue of shares to the
(xxi) During the course of 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 by the management, no fraud on or by the Company has been
noticed or reported during the course of audit.
For SUNDARAM & SRINIVASAN
Regn. No. 004207S
Chennai M BALASUBRAMANIYAM
May 30, 2013 Partner
Membership No. F7945