SHARDA MOTOR Auditors Report

To the Members of M/s. SHARDA MOTOR INDUSTRIES LIMITED


Report on the Standalone Financial Statements


We have audited the accompanying standalone financial statements of Sharda Motor Industries Limited (“the Company”), which comprise the Balance Sheet as at March 31, 2017, 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 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 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 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.


Auditor’s Responsibility


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 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 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. 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 for our audit opinion on standalone financial statements.


Opinion


In our opinion and to the best of our information and according to the explanations given to us, 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, 2017, its profit and cash flows for the year ended on that date.


Report on Other Legal and Regulatory Requirements


1. As required by section 143(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) 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) 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 March 31, 2017 taken on record by the Board of Directors, none of the directors is 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 A”.


(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 and to the best of our information and according to the explanations given to us:


i. On the basis of written representations received from the management of the Company, the Company has disclosed the impact of pending litigations on its financial position in its financial statements- Refer Note No. 7 to the financial statements.


ii. The Company has made provisions, as required under the applicable law or accounting standards, for material foreseeable losses, if any on long-term contacts including derivative contracts. - Refer Note No 25 to the 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.


iv. The Company has provided requisite disclosures in the financial statements as to holdings as well as and dealings in Specified Bank Notes during the period from 8th November, 2016 to 30th December, 2016. Based on audit procedures and relying on the management representation we report that the disclosures are in accordance with the books of account maintained by the Company and as produced to us by the Management- Refer Note No. 31 to the financial statements.


2. As required by the Companies (Auditor''''s Report) Order, 2016 (“the Order”) issued by the Central Government of India in terms of Section 143 (11) of the Act, we give in “Annexure B” a statement on the matters specified in paragraphs 3 and 4 of the Order.


Annexure ‘A’ to the Independent Auditors’ Report of even date on the standalone financial statement of Sharda Motor Industries Limited


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 Sharda Motor Industries Limited (“the Company”) as of March 31, 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 the Institute of Chartered Accountants of India. 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 March 31, 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 the Institute of Chartered Accountants of India.


Annexure ‘B’ To the Independent Auditors’ Report


The Annexure referred to in independent Auditors'''' Report to the members of the Company on the standalone financial statements for the year ended March 31, 2017; we report that:


i) In respect of fixed assets:


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


b) The Company has a regular programme of physical verification of its fixed assets by which fixed assets are verified at periodic intervals. In accordance with this programme for the year, no material discrepancies were noticed on such verification. In our opinion, such periodicity of physical verification is reasonable having regard to the size of the Company and the nature of its assets.


c) On the basis of information and explanation provided by the management, title deeds of immovable properties are held in the name of the Company. Two title deeds are mortgaged with the Banks for securing the long term borrowings, detail of the same are disclosed in Note No 5 of the financial statement.


ii) In respect of its inventory:


a) On the basis of information and explanation provided by the management, inventories have been physically verified by the management during the year, except inventory in transit and lying with third parties. In our opinion, the frequency of physical verification followed by the management is reasonable.


b) We have been explained that discrepancies noticed on physical verification as compared to book records were not material and the same have been properly dealt with in the books of account.


iii) According to the information and explanation given to us, the Company had not granted any loans, secured or unsecured to Companies, Firms, Limited Liability Partnership or other parties covered in the register maintained under section 189 of the Companies Act, 2013. Accordingly, the provisions of paragraph 3(iii) (a) to (c) of the Order are not applicable to the Company.


iv) In our opinion and according to the information and explanation given to us, the Company has complied with the provisions of section 185 and 186 of the Act in respect of grant of loans, making investments and providing guarantees and securities, as applicable.


v) The Company has not accepted any deposits from the public. Accordingly, the provisions of paragraph 3(v) of the Companies (Auditor''''s Report) Order, 2016 are not applicable to the Company.


vi) We have broadly reviewed the books of account relating to materials, labour and other items maintained by the company as specified by the Central Government for the maintenance of cost records under sub-section (1) of section 148 of the Companies Act, 2013 and are of the opinion that prima facie, the prescribed accounts and records have been made and maintained. We have not, however, made a detailed examination of the records with a view to determine whether they are accurate and complete.


vii) In respect of statutory dues:


a) The Company is generally regular in depositing 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 any other statutory dues with appropriate authorities. Further there were no undisputed outstanding statutory dues as on the last day of the financial year concerned for a period of more than six months from the date they became payable except duty of Custom '''' 6.59 lacs.


b) According to the records of the Company examined by us and the information and explanations given to us, there were no dues of Income Tax or Sales Tax or Service Tax or duty of Customs or duty of Excise or Value Added Tax which have not been deposited on account of any dispute except the following, which have not been deposited on account of dispute:






























































S. No.



Name of the Statute



Nature of Dues



Amount (Rs.)



Period to which the amount relates



Forum where the dispute is pending



1



U. P. Entry Tax Act



Entry Tax



0.90 lacs



F.Y. 2001-02



Appellate Authority UP Trade Tax



2.



Maharashtra Sales Tax Act



VAT



35.29 lacs



F.Y. 2010-11 & 2011-12



Deputy Commissioner, Sales Tax, Maharashtra



3.



Tamil Nadu Sales Tax Act



VAT



29.72 lacs



F.Y. 2005-06 & 2006-07



Asst. Commissioner (CT), Sriperumbudur



4.



Service Tax under Finance Act,1994



Service Tax



08.09 lacs



F.Y. 2008-09 & 2015-16



CESTAT,Custom, Central Excise & Service Tax, Appellate Tribunal, Delhi



5.



Central Excise Act



CENVAT Credit



2.24 lacs



F.Y. 2007-08



Adjudicating Authority, Large Taxpayer Unit Delhi



6.



Central Excise Act



CENVAT Credit



3.20 lacs



F.Y 2008-09 to 2012-13



Deputy Commissioner, Central Excise & Service Tax, LTU, New Delhi
































































































7.



Central Excise Act



CENVAT Credit



440 lacs



F.Y. 2008-09 & 2009-10



Hon''''ble Supreme Court of India



8.



Central Excise Act



CENVAT Credit



4.93 lacs



F.Y. 2014-15



Deputy Commissioner, Central Excise & Service Tax, LTU, New Delhi



9.



Central Excise Act



CENVAT Credit



1.56 lacs



F.Y. 2014-15



Deputy Commissioner, Central Excise & Service Tax, LTU, New Delhi



10.



Central Excise Act



CENVAT Credit



0.78 lacs



F.Y. 2015-16 & 2016-17



Deputy Commissioner, Central Excise & Service Tax, LTU, New Delhi



11.



Income Tax Act



Income Tax



38.14 lacs



A.Y. 2011-12



ITAT, New Delhi



12.



Income Tax Act



Income Tax



41.55 lacs



A.Y. 2012-13



ITAT, New Delhi



13.



Income Tax Act



Income Tax



41.29 lacs



A.Y. 2013-14



CIT (A), New Delhi



14.



Indian Contract Act



Security Services/ Damages



4.43 lacs



F.Y.2014-15



District Court, Saket



15.



Labour Act



Employees Dispute



0.40 lacs



F.Y. 2013-14



Presiding Officer, Industrial Tribunal cum Labour Court-II, Gurgaon



16.



Indian Contract Act



Vendor Dispute



6.12 lacs



F.Y. 2010-11



High Court, Bombay



17.



EPFO Act



Provident Fund



18.31 lacs



F.Y 1995-96 to 2014-15



Asst. Provident Fund Commissioner



viii) On the basis of information and explanation provided to us, the Company has not defaulted in repayment of loans and borrowings to financial institution and bank. The Company has not taken any loan from Government or has not issued any debentures.


ix) The Company did not raise any money by the way of initial public or further public offer (including debt instruments) during the year. Accordingly, paragraph 3(ix) of the Order is not applicable.


x) According to the information and explanations given to us, no fraud by the Company or on the Company by its officers or employees has been noticed or reported during the year.


xi) The Company has paid/provided managerial remuneration in accordance with provisions of section 197 read with Schedule V to the Companies Act, 2013 as applicable to the Company.


xii) The Company is not a nidhi company and hence, the provisions of paragraph 3(xii) of the Order are not applicable to the Company.


xiii) During the course of our examination of the books and records of the Company, all transactions entered with the related parties are in compliance with sections 177 and 188 of Companies Act, 2013 and the details have been disclosed in the financial statements etc, as required by the applicable accounting standards.


xiv) The Company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures during the year under review. Accordingly, the provisions of paragraph 3(xiv) of the Order are not applicable to the Company.


xv) The Company has not entered into any non-cash transactions with directors or persons connected with him and hence provisions of section 192 of the Companies Act, 2013 are not applicable.


xvi) The Company is not required to be registered under section 45-IA of the Reserve Bank of India Act, 1934. Accordingly, the provisions of paragraph 3(xvi) of the Order are not applicable to the Company.


For S. R. Dinodia & Co., LLP.


Chartered Accountants,


Firm Registration Number 001478N/N500005


(Sandeep Dinodia)


Partner


Membership No. 083689


Place of Signature: New Delhi


Date : 30th May, 2017





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