Report on the Standalone Financial Statements
We have audited the accompanying standalone financial statements of
Taneja Aerospace and Aviation Limited (the Company), which comprise
the Balance Sheet as at March 31, 2015, the Statement of Profit and
Loss, the Cash Flow Statement for the year then ended, and a summary of
significant accounting policies and other explanatory information.
Management''s Responsibility for the Standalone 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 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 safe guarding 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.
Our responsibility is to express an opinion on these standalone
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
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 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 an adequate internal financial
controls system over financial reporting and the operating
effectiveness of such controls. An audit also includes evaluating the
appropriateness of 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 for our qualified audit opinion on the
standalone financial statements.
Basis for Qualified Opinion
1) The Company has debited Rs. 34.74 Lakhs under advertisement and
travelling expenses being reimbursement to a group company for which no
evidence/supporting is provided. This has resulted in overstatement of
loss for the year and understatement of amount receivable from the
group company by Rs. 34.74 Lakhs.
2) The Company during the year commenced the business of trading in
electrical goods (Refer Note No. 38) where in sales are only to LightO
Technologies Private Limited (a related party). Further, the Company
also gave Inter Corporate Deposit to the said related party which was
in excess of the amount approved by the audit committee by Rs.185
Lakhs. As at March 31, 2015, the Company has to receive Rs. 256.31
Lakhs against sale of goods and Rs. 688.84 Lakhs (including interest)
against Inter Corporate Deposit. We were not provided with sufficient
and appropriate audit evidence about the recoverability of the above
amounts. Consequently, we are unable to determine whether any
adjustments to these amounts are necessary.
3) We draw attention to Note No. 36 forming part of the standalone
financial statements, which refers to the fact that the shareholders of
the Company at their meeting (convened on the directions of the Hon''ble
High Court of Madras) held on April 15, 2015 have approved the Scheme
of Arrangement between the Company and TAAL Enterprises Limited, a
wholly owned subsidiary of the Company w.e.f. October 1, 2014 subject
to receipt of regulatory approvals. Further, the above mentioned note
also refers to the proposed Reduction in Share Capital of the Company
as a consequence of the said Scheme, the terms of which were approved
by the shareholders of the Company by way of special resolution passed
at their Extraordinary General Meeting held on April 15, 2015. Though
the said Scheme was sanctioned by the Hon''ble High Court of Judicature
at Madras on June 22, 2015 (the copy of which was received on July 23,
2015) i.e. before the adoption of accounts by the Board of Director''s
on August 14, 2015, the effect of the said Scheme is not given in the
accounts. We are unable to determine its impact, if any, on the
standalone financial statements.
4) The Company needs to strengthen its policies, procedures and overall
controls in order to provide proper evidences regarding recoverability
of debtors, valuation of work in progress and accounting for direct and
indirect taxes including statutory compliances.We are unable to
determine its impact, if any, on the standalone financial statements.
In our opinion and to the best of our information and according to the
explanations given to us, except for the possible effects of the
matters 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 March 31, 2015, and
its loss and its cash flows for the year ended on that date.
Emphasis of Matter
The Company has outstanding MAT Credit Entitlement of Rs. 134.69 Lakhs
as on March 31, 2015, which in the opinion of the management, based on
the projected future taxable profits, will be utilized within the
stipulated time period prescribed as per the provisions of Income Tax
Act, 1961. Considering the uncertainties around the assumptions used
for projections of future taxable profits and its consequential effect
on utilization of MAT Credit Entitlement, we are unable to comment on
the recoverability of MAT Credit Entitlement outstanding as at March
31, 2015 and its consequential impact on the Statement of Profit and
Loss for the year ended March 31, 2015 and on the Reserves of the
Company as on that date (Refer Note No. 18). Our opinion is not
qualified in respect of this matter.
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 paragraphs 3 and 4 of the Order.
2. As required by Section 143 (3) of the Act, we report that:
(a) We have sought and obtained, except for the matters described in
the Basis for Qualified Opinion paragraph, 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 possible effects of the matters 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 possible effects of the matters described in the
Basis for Qualified Opinion paragraph above, in our opinion, the
aforesaid standalone financial statements comply with the Accounting
Standards, except AS-2 Valuation of Inventories, specified under
section 133 of the Act, read with Rule 7 of the Companies (Accounts)
(e) The matters described in the Basis for Qualified Opinion paragraph
above, in our opinion, may have an adverse effect on the functioning of
(f) On the basis of the written representations received from the
directors as on March 31, 2015, taken on record by the Board of
Directors, none of the directors is disqualified as on March 31, 2015,
from being appointed as a director in terms of section 164 (2) of the
(g) The qualification relating to the maintenance of accounts and other
matters connected therewith are as stated in the Basis for Qualified
Opinion paragraph above.
(h) 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 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 financial statements as referred to in Note
No. 27 to the financial statements.
ii. The Company did not have any long-term contracts including
derivative contracts for which there were any material foreseeable
iii. There were no amounts which were required to be transferred to the
Investor Education and Protection Fund by the Company.
(i) a. The Company has maintained proper records showing full
particulars, including quantitative details and situation of fixed
b. Part of the fixed assets have been physically verified by the
management during the year in line with regular programme of
verification which, in our opinion, is reasonable having regard to the
size of the Company and the nature of its assets. According to the
information and explanations given to us, no material discrepancies
were noticed on such verification as compared to the book records.
(ii) a. As explained to us, inventories have been physically verified
during the year by the management. In our opinion, the frequency of
such verification is reasonable.
b. The procedures of physical verification of inventories followed by
the management are generally 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 inventory except in
the case of Work in Progress. No material discrepancies were noticed on
verification between the physical stocks and the book records. In our
opinion, the present operative modules of ERP are insufficient to
ascertain the cost and arrive at proper valuation of Work in Progress
as per the Accounting Policies and Accounting Standards specified under
Section 133 of the Act, read with Rule 7 of the Companies (Accounts)
(iii) During the year under audit, the Company has granted fresh
unsecured loans by way of Inter Corporate Deposit to five companies
covered in the register maintained under section 189 of the Companies
Act, 2013. The aggregate maximum amount outstanding during the year was
Rs. 2022.25 Lakhs and the aggregate year-end balance of such loans
amounted to Rs. 1978.64 Lakhs.
a. There are no stipulations for the repayment of principal and the
interest thereon. Therefore, we are unable to comment on the regularity
of receipt of the principal amount and interest thereon.
b. No principal or interest can be termed as overdue in the absence of
time of repayment and thus we are unable to comment on the steps taken
for recovery of principal and interest thereon.
(iv) In our opinion and according to the information and explanations
given to us, internal control system is inadequate considering the size
of the Company and the nature of its business with regard to purchase
of inventories and for the sale of goods and services. Further, there
is a continuing failure to correct major weakness in internal control
systems in the areas of debtors, valuation of work in progress and
accounting for direct and indirect taxes including statutory
compliances (Refer paragraph 4 of Basis for Qualified Opinion above).
(v) As per the explanations given to us, the Company has not accepted
any deposits from the public in accordance with the provisions of
Sections 73 to 76 of the Act and the rules framed thereunder.
Accordingly, the provisions stated in paragraph 3 (v) of the Order is
not applicable to the Company.
(vi) The cost accounts and records were not made available to us.
Hence, we are unable to comment on the maintenance of cost records as
specified by the Central Government under Section 148(1) of the
Companies Act, 2013.
(vii) a) According to the information and explanations given to us and
on the basis of our examination of the records of the Company, the
Company is irregular in depositing undisputed statutory dues applicable
to it with the appropriate authorities during the year. Tax Deducted
at Source (TDS) amounting to Rs.21.94 Lakhs and Service Tax amounting
to Rs.42.31 Lakhs are in arrears as at March 31, 2015 for a period of
more than six months from the date they became payable.
b) According to the information and explanations given to us, dues that
have not been deposited by the Company on account of disputes are :
Name of Nature of Period to
the Statute Dues which it relates
Customs Act, Customs F.Y. 2007-08
Finance Act, Service F.Y. 2005-06
1994 Tax to F.Y. 2009-10
Central Excise Excise F.Y. 2012-2013
Act, 1944 Duty
Central Excise Excise F.Y. 2013-14
Act, 1944 Duty to F.Y. 2014-15
Central Excise Excise F.Y. 2008-09
Act, 1944 Duty to F.Y. 2011-12
Finance Act, Service F.Y. 2008-09
1994 Tax to F.Y. 2012-13
Sales Tax Sales Tax F.Y. 2007-08 to F.Y. 2009-10
Name of the Statute Amount Amount Forum where
under paid the dispute is
dispute under pending
(Rs. in protest
Lakhs) (Rs. in
Customs Act, 1962 622.67 - CESTAT
Finance Act, 1994 317 10 CESTAT
Central Excise Act, 1944 23.73 - CESTAT
Central Excise Act, 1944 57.50 - Adjudicating Authority
Central Excise Act, 1944 80.24 - CESTAT
Finance Act, 1994 124.37 - CESTAT
Sales Tax 55.00 - Adjudicating Authority
c) There are no amounts required to be transferred to the Investor
Education and Protection Fund in accordance with the relevant
provisions of the Companies Act, 1956 (1 of 1956) and rules made
(viii) The Company does not have any accumulated losses at the end of
the financial year. The Company has incurred cash losses during the
financial year. However it had not incurred any cash losses in the
immediately preceding financial year.
(ix) In our opinion and according to the information and explanations
given to us, the Company has not defaulted during the year in repayment
of dues to financial institutions or banks. The Company did not have
any outstanding debentures during the year.
(x) In our opinion and according to the information and explanations
given to us, the terms and conditions of the guarantee given by the
Company for loan taken by its subsidiary from bank is not, prima facie
prejudicial to the interest of the Company. (Refer Note No. 27B on
guarantee given to bank on behalf of subsidiary).
(xi) In our opinion and according to the information and explanations
given to us, the Company has raised Term Loan of Rs. 800 Lakhs during
the period under audit. Also, the Term Loan availed during the year
has, on an overall basis, been applied for the purposes for which the
said loans were obtained.
(xii) According to the information and explanations given to us, no
material fraud on or by the Company has been noticed or reported during
the course of our audit.
For Haresh Upendra & Co.
Firm Reg. No.: 103513W
Haresh B. Shah
Pune, August 14, 2015 Membership No.: 32208