To the Members of
Gabriel India Limited
Report on the Audit of the Ind AS Financial Statements Opinion
We have audited the accompanying financial statements of Gabriel India Limited("the Company") which comprise the Balance sheet as at 31st March 2019 and theStatement of Profit and Loss (including Other Comprehensive Income) Statement of changesin Equity and Statement of Cash flows for the year then ended and notes to the financialstatements including a summary of significant accounting policies and other explanatoryinformation.
In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid financial statements give the information required by the Actin the manner so required and give a true and fair view in conformity with the accountingprinciples generally accepted in India of the state of affairs of the Company as at March31 2019 and profit/loss changes in equity and its cash flows for the year ended on thatdate.
Basis for Opinion
We conducted our audit in accordance with the Standards on Auditing (SAs) specifiedunder section 143(10) of the Companies Act 2013 ("the Act"). Ourresponsibilities under those Standards are further described in the Auditor'sResponsibilities for the Audit of the Financial Statements section of our report. We areindependent of the Company in accordance with the Code of Ethics issued by the Instituteof Chartered Accountants of India together with the ethical requirements that are relevantto our audit of the financial statements under the provisions of the Act and the Rulesthereunder and we have fulfilled our other ethical responsibilities in accordance withthese requirements and the Code of Ethics. We believe that the audit evidence we haveobtained is sufficient and appropriate to provide a basis for our opinion.
Key Audit Matters
Key audit matters are those matters that in our professional judgment were of mostsignificance in our audit of the financial statements of the current period. These matterswere addressed in the context of our audit of the financial statements as a whole and informing our opinion thereon and we do not provide a separate opinion on these matters.
|Key Audit Matters ||Response to Key Audit Matter |
|Revenue recognition ||Our audit approach was a combination of test of internal controls and substantive procedures which included the following: |
|Revenue is measured at the fair value of the consideration received or receivable as reduced by estimated customer returns rebates discounts and other similar allowances. || Understanding the policies and procedures applied to revenue recognition as well as compliance therewith including an analysis of the effectiveness of controls related to revenue recognition processes. |
|Accumulated experience is used to estimate and provide for the discounts and returns. The volume discounts are assessed based on anticipated sales. Further timing of revenue recognition is dependent on the shipping terms agreed with customers in relation to passing of risk and rewards of ownership. || Analyzing and discussing with management significant contracts including contractual terms and conditions related to discounts incentives and rebates. |
|The application of the new revenue accounting standard (Ind AS 115) involves significant judgements/material estimates relating to identification of distinct performance obligations determination of transaction price of the identified performance obligations the appropriateness of the basis used to measure revenue recognized over a period. || Selected a sample of continuing and new contracts and performed the following procedures: |
| ||a. Read analysed and identified the distinct performance obligations in these contracts. |
| ||b. Compared such performance obligations with that identified and recorded by the Company. |
|Reference: ||c. Reviewed contracts terms to determine the transaction price including any variable consideration to determine the appropriate transaction price for computing revenue and to test the basis of estimation of the variable consideration. |
|Refer Notes 1.2.8 to the Financial Statements. || |
| || Performing operations cut-off procedures for a sample of revenue transactions at year end in order to conclude on whether they were recognized at the moment the related goods or services actually took place. |
| || Analyzing other adjustments and credit notes issued after the reporting date. |
| || Performing analytical procedures on entries in the ledger related to revenue. |
|Recording of price variation in respect of customer and vendor agreements requires evaluation of contractual terms and estimation of amounts to be recognised as revenue and cost of purchases ||Our audit approach was a combination of test of internal controls and substantive procedures which included the following: |
|Contracts with customers and vendors contain clauses that require variation in prices of materials to be passed on to the customer and vendors. Further price variations may be subject to negotiations with customers and vendors. || Understanding the policies and procedures applied to recognition of revenue and purchase costs due to price variations including an analysis of the effectiveness of controls related to revenue recognition processes. |
|Management is required to analyse terms of contracts and assess the quantum and likelihood of such price variations to be passed on to customers or claimed by vendors. || Read agreements with customers and vendors to evaluate terms relating to price variation. |
|Reference: || Tested the computation of provision for price variation recorded by the Company as at the end of the financial year for completeness. |
|Refer Notes 1.2.8 (1) and 1.2.16 (1) to the Financial Statements. || |
|Foreign exchange transaction & derivatives contracts ||Our audit approach was a combination of test of internal controls and substantive procedures which included the following: |
|The Company uses derivative financial instruments such as foreign exchange forward contracts to manage its exposure to foreign exchange risks relating to import of components and exports. || We tested the relevant internal controls regarding initiation processing and recording of foreign exchange contracts documentation of contracts identified as hedges of foreign currency risk and how Management assesses effectiveness of hedges. |
|These contracts are designated as hedges under Ind AS 109 which require management estimates of timing of cash flows from the underlying and hedging instrument and estimating hedge effectiveness. || These procedures also included testing of internal approvals and compliance with hedging policy approved by the Board. |
|Under Ind AS 109 designation of hedges and assessment of effectiveness requires significant management judgements. || Test of details included checking fair value of forward exchange contracts as on reporting date with confirmations from counter-party banks and checking accuracy of the accounting for amounts recorded in Statement of Profit and Loss and |
|Reference: || |
|Refer Notes 1.2.9 (8) to the Financial Statements. ||Other Comprehensive income in relation to effective portion of hedges. |
Information Other than Ind AS Financial Statement and Auditor's Report thereon
The company's Board of Directors is responsible for the other information. The otherinformation comprises the information included in Company's Board report but does notinclude the financial statements and our auditor's report thereon.
Our opinion on Ind AS financial statements does not cover the other information and wedo not express any form of assurance conclusion thereon.
In connection with our audit of the Ind AS financial statements our responsibility isto read the other information and in doing so consider whether the other information ismaterially inconsistent with the financial statements or our knowledge obtained in theaudit or otherwise appears to be materially misstated.
If based on the work we have performed we conclude that there is a materialmisstatement of this other information we are required to report that fact. We havenothing to report in this regard.
Responsibilities of Management and Those Charged with Governance for the FinancialStatements
The Company's Board of Directors is responsible for the matters stated in section134(5) of the Act with respect to the preparation of these financial statements that givea true and fair view of the financial position financial performance (changes in equity)and cash flows of the Company in accordance with the accounting principles generallyaccepted in India including the accounting Standards specified under section 133 of theAct. This responsibility also includes maintenance of adequate accounting records inaccordance with the provisions of the Act for safeguarding of the assets of the Companyand for preventing and detecting frauds and other irregularities; selection andapplication of appropriate accounting policies; making judgments and estimates that arereasonable and prudent; and design implementation and maintenance of adequate internalfinancial controls that were operating effectively for ensuring the accuracy andcompleteness of the accounting records relevant to the preparation and presentation ofthe financial statements that give a true and fair view and are free from materialmisstatement whether due to fraud or error.
In preparing the financial statements management is responsible for assessing theCompany's ability to continue as a going concern disclosing as applicable mattersrelated to going concern and using the going concern basis of accounting unless managementeither intends to liquidate the Company or to cease operations or has no realisticalternative but to do so.
Those Board of Directors are also responsible for overseeing the Company's financialreporting process.
Auditor's Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financialstatements as a whole are free from material misstatement whether due to fraud or errorand to issue an auditor's report that includes our opinion. Reasonable assurance is a highlevel of assurance but is not a guarantee that an audit conducted in accordance withStandard on Auditing will always detect a material misstatement when it exists.Misstatements can arise from fraud or error and are considered material if individuallyor in the aggregate they could reasonably be expected to influence the economic decisionsof users taken on the basis of these financial statements.
As part of an audit in accordance with Standard on Auditing we exercise professionaljudgment and maintain professional skepticism throughout the audit.
Identify and assess the risks of material misstatement of the financial statementswhether due to fraud or error design and perform audit procedures responsive to thoserisks and obtain audit evidence that is sufficient and appropriate to provide a basis forour opinion. The risk of not detecting a material misstatement resulting from fraud ishigher than for one resulting from error as fraud may involve collusion forgeryintentional omissions misrepresentations or the override of internal control.
Obtain an understanding of internal control relevant to the audit in order to designaudit procedures that are appropriate in the circumstances. Under section 143(3)(i) of theAct we are also responsible for expressing our opinion on whether the company hasadequate internal financial controls system in place and the operating effectiveness ofsuch controls.
Evaluate the appropriateness of accounting policies used and the reasonableness ofaccounting estimates and related disclosures made by management.
Conclude on the appropriateness of management's use of the going concern basis ofaccounting and based on the audit evidence obtained whether a material uncertaintyexists related to events or conditions that may cast significant doubt on the Company'sability to continue as a going concern. If we conclude that a material uncertainty existswe are required to draw attention in our auditor's report to the related disclosures inthe financial statements or if such disclosures are inadequate to modify our opinion.Our conclusions are based on the audit evidence obtained up to the date of our auditor'sreport. However future events or conditions may cause the Company to cease to continue asa going concern.
Evaluate the overall presentation structure and content of the financial statementsincluding the disclosures and whether the financial statements represent the underlyingtransactions and events in a manner that achieves fair presentation.
We communicate with those charged with governance regarding among other matters theplanned scope and timing of the audit and significant audit findings including anysignificant deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have compliedwith relevant ethical requirements regarding independence and to communicate with themall relationships and other matters that may reasonably be thought to bear on ourindependence and where applicable related safeguards.
Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditor's Report) Order 2016 ("the Order")issued by the Central Government of I ndia in terms of sub-section (11) of section 143 ofthe Act 2013 we give in the "Annexure-B" a statement on the matters specifiedin paragraphs 3 and 4 of the Order to the extent applicable.
2. As required by Section 143(3) of the Act we report that: (a) We have sought andobtained all the information and explanations which to the best of our knowledge andbelief were necessary for the purposes of our audit. (b) In our opinion proper books ofaccount as required by law have been kept by the Company so far as it appears from ourexamination of those books.
(c) The Balance Sheet the Statement of Profit and Loss and the Cash Flow Statementdealt with by this Report are in agreement with the books of account.
(d) In our opinion the aforesaid financial statements comply with the AccountingStandards 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 31stMarch 2019 taken on record by the Board of Directors none of the directors aredisqualified as on 31st March 2019 from being appointed as a director in terms of Section164 (2) of the Act.
(f ) With respect to the adequacy of the internal financial controls over financialreporting of the Company and the operating effectiveness of such controls refer to ourseparate Report in "Annexure A".
(g) With respect to the other matters to be included in the Auditor's Report inaccordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014 in our opinionand 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 financialposition in its Indian Accounting Standards financial statements.
ii. The Company has made provision as required under the applicable law or IndiaAccounting Standard for material foreseeable losses if any on long term contractsincluding derivative contracts;
iii. There has been no delay in transferring amounts required to be transferred tothe Investor Education and Protection Fund by the Company.
For B.K. Khare & Co.
Firm's Registration No. 105102W
Membership No. 040404
New Delhi May 16 2019
Annexure "A" to the Independent Auditor's Report
(Referred to in paragraph under Report on Other Legal and RegulatoryRequirements' section of our report of even date)
Report on the Internal Financial Controls Over Financial Reporting under Clause (i) ofSub-section 3 of Section 143 of the Companies Act 2013 ("the Act")
We have audited the internal financial controls over financial reporting of GabrielIndia Limited ("the Company") as of March 31 2019 in conjunction with our auditof the IndAS 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 internalfinancial controls based on the internal control over financial reporting criteriaestablished by the Company considering the essential components of internal control statedin the Guidance Note on Audit of Internal Financial Controls over Financial Reportingissued by theInstitute of Chartered Accountants of India. These responsibilities includethe design implementation and maintenance of adequate internal financial controls thatwere operating effectively for ensuring the orderly and efficient conduct of its businessthe safeguarding of its assets the prevention and detection of frauds and errors theaccuracy and completeness of the accounting records and the timely preparation ofreliable financial information as required under the Act.
Our responsibility is to express an opinion on theCompany's internal financial controlsover financial reporting based on our audit. We conducted our audit in accordance with theGuidance Note on Audit of Internal Financial Controls Over Financial Reporting (the"Guidance Note") issued by the I nstitute of Chartered Accountants of India andthe Standards on Auditing prescribed under Section 143(10) of the Act to the extentapplicable to an audit of internal financial controls. Those Standards and the GuidanceNote require that we comply with ethical requirements and plan and perform the audit toobtain reasonable assurance about whether adequate internal financial controls overfinancial reporting was established and maintained and if such controls operatedeffectively in all material respects.
Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal financial controls system over financial reporting and their operatingeffectiveness. Our audit of internal financial controls over financial reporting includedobtaining an understanding of internal financial controls over financial reportingassessing whether the risk of a material weakness exists and testing and evaluating thedesign and operating effectiveness of internal control based on the assessed risk. Theprocedures selected depend on the auditor's judgement including the assessment of therisks 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 toprovide a basis for our audit opinion on the Company's Internal financial controls systemover financial reporting.
Meaning of Internal Financial Controls over Financial Reporting
A company's internal financial control over financial reporting is a process designedto provide reasonable assurance regarding the reliability of financial reporting and thepreparation of financial statements for external purposes in accordance with generallyaccepted accounting principles. A company's internal financial control over financialreporting includes those policies and procedures that: (1) pertain to the maintenance ofrecords that in reasonable detail accurately and fairly reflect the transactions anddispositions of the assets of the company; (2) provide reasonable assurance thattransactions are recorded as necessary to permit preparation of financial statements inaccordance with generally accepted accounting principles and that receipts andexpenditures of the company are being made only in accordance with authorizations ofmanagement and directors of the company; and (3) provide reasonable assurance regardingprevention or timely detection of unauthorized acquisition use or disposition of thecompany'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 financialreporting including the possibility of collusion or improper management override ofcontrols material misstatements due to error or fraud may occur and not be detectedAlso projections of any evaluation of the internal financial controls over financialreporting to future periods are subject to the risk that the internal financial controlover financial reporting may become inadequate because of changes in conditions or thatthe degree of compliance with the policies or procedures may deteriorate.
In our opinion to the best of our information and according to the explanations givento us the Company has in all material respects an adequate internal financial controlssystem over financial reporting and such internal financial controls over financialreporting were operating effectively as at March 31 2019 based on "the internalcontrol over financial reporting criteria established by the Company considering theessential components of internal control stated in the Guidance Note on Audit of InternalFinancial Controls Over Financial Reporting issued by theInstitute of CharteredAccountants of India".
For B.K. Khare & Co.
Firm's Registration No. 105102W
Membership No. 040404
New Delhi May 16 2019
Annexure "B" to the Independent Auditor's Report
( Referred to in paragraph 1 under Report on Other Legal and RegulatoryRequirements' section of our report of even date)
(i) In respect of its Fixed Assets: a) The Company has maintained proper recordsshowing full particulars including quantitative details and situation of fixed assets. b)The fixed assets were physically verified during the year by the Management in accordancewith a regular programme of verification which in our opinion provides for physicalverification of all the fixed assets at reasonable intervals according to the informationand explanation given to us no material discrepancies were noticed on such verification.c) According to the information and explanations given by the management and the recordsexamined by us the title deeds of immovable properties included in property plant andequipment are held in the name of the company except for land purchased by the Companyduring the year located in Parwanoo for which registration is pending.
(ii) The inventory has been physically verified by the management during the year. Inour opinion the frequency of verification is reasonable. No material discrepancies werenoted on such physical verification. Inventories lying with third parties have beenconfirmed by them as at 31st March 2019 and no material discrepancies were noticed inrespect on such confirmations. (iii) The Company has not granted any loans secured orunsecured to companies firms Limited Liability Partnerships or other parties covered inthe register maintained under section 189 of the Act.
(iv) According to information and explanations given to us the Company has not grantedany loans made investments or provide guarantees and hence reporting under clause (iv) ofthe CAR O 2016 is not applicable.
(v) In our opinion and according to the information and explanations given to us theCompany has complied with the provisions of sections 737475 and 76 or any other relevantprovisions of the Act and the rules framed there under to the extent notified with regardto deposits accepted from the public. According to information given to us no order hasbeen passed NCLT or Reserve Bank of India or any court or tribunal on the Company inrespect of aforesaid deposits.
(vi) The Central Government has not prescribed the maintenance of cost records undersection 148(1) of the Act for any of the products/services rendered by the Company.
(vii) According to the information and explanations given to us in respect ofstatutory dues: (a) The Company has been generally regular in depositing undisputedstatutory dues including Provident Fund Employees' State I nsurance I ncome-tax Goodsand
Services Tax Customs Duty and other material statutory dues applicable to it to theappropriate authorities. Also refer Note No. 42 in the notes to the financial statements.
(b) There were no undisputed amounts payable in respect of Provident Fund Employees'State Insurance Income-tax Goods and Services Tax Custom Duty and other materialstatutory dues in arrears as at March 31 2019 for a period of more than six months fromthe date they became payable.
(c) The dues of Income tax Service tax Custom Duty Excise Duty Value added taxcess and Goods and Service tax on account of any dispute are as follows:
|Name of the statute ||Nature of the dues ||H in million ||Period to which the amount relates ||Forum where the dispute is pending |
|Central Excise Act 1944 ||Excise Duty ||43.72 ||FY 2003-07 ||Appellate Authority- Tribunal |
| ||Excise Duty ||1.35 ||FY 2011-14 ||Appellate Authority-Upto Commissioner's / Revisionary Authorities level |
| ||Excise Duty ||4.43 ||FY 2016-17 ||Appellate Authority- Upto Commissioner's / Revisionary Authorities level |
|Central Sales Tax Act and Local Sales tax ||Sales Tax & VAT ||117.33 ||FY 2008-17 ||Appellate Authority- Upto Commissioner's / Revisionary Authorities level |
| || ||2.43 ||FY 2004-07 ||Appellate Authority Tribunal |
| ||BST ||8.60 ||FY 2004-05 ||Appellate Authority- upto commissioner/ revisionary authorities level. |
| ||Entry Tax ||14.53 ||FY 2012-18 ||High Court |
Name of the statute Nature of the H in million Period to which the Forum where thedispute is pending dues amount relates Service Tax (Finance Act 1994) Service Tax 18.88FY 2004-08 Appellate Authority Tribunal Income Tax Act 1961 Income Tax 2.82 FY2012-14 CIT (appeal) 7.23 FY 2011-12 ITAT 12.26 FY 2008-12 High Court Income Tax - TDS0.01 FY 2008-17 Income Tax Officer
(viii) On the basis of examination of relevant records and according to the informationand explanations given to us the Company has not defaulted in repayment of dues to abank. The company does not have any loan/dues towards any financial institution ordebenture holders.
(ix) The Company has not raised moneys by way of initial public offer or further publicoffer (including debt instruments) or term loans and hence reporting under clause (ix) ofthe CARO 2016 is not applicable.
(x) To the best of our knowledge and according to the information and explanationsgiven to us no fraud by the Company and no material fraud on the Company by its officersor employees has been noticed or reported during the year.
(xi) On the basis of examination of relevant records and according to the informationand explanations given to us the managerial remuneration has been paid/provided inaccordance with the requisite approval mandated by the provisions of Section 197 read withSchedule V to the Act.
(xii) In our opinion the Company is not a Nidhi Company and hence reporting underclause (xii) of the CARO 2016 Order is not applicable.
(xiii) In our opinion and according to the information and explanations given to us theCompany is in compliance with Section 177 and 188 of the Act where applicable for alltransactions with the related parties and the details of related party transactions havebeen disclosed in the notes to the Ind AS financial statements as required by theapplicable Indian accounting standards.
(xiv) During the year the Company has not made any preferential allotment or privateplacement of shares or fully or partly convertible debentures and hence reporting underclause (xiv) of CARO 2016 is not applicable to the Company.
(xv) Based on the information and explanations given to us during the year the Companyhas not entered into any non-cash transactions with its directors or persons connectedwith him and hence provisions of section 192 of the Act are not applicable.
(xvi) According to the information and explanation given to us the provisions ofsection 45-1 of the Reserve Bank of India Act 1934 are not applicable to the Company.
For B.K. Khare & Co.
Firm's Registration No. 105102W
Membership No. 040404
New Delhi May 16 2019