To Ihe Members of Forca Motors Limited
Report on Iho audit of Standalone Financial Statements Opinion
We have audited the accompanying standalone financial statements of Force MotorsLimited ("the Company") which comprise the Balance Sheet as at March 312019the Statement of Profit and Loss (including Other Comprehensive Income) the Statement ofChanges in Equity and the Statement of Cash Flows for the year ended on that date and asummary of the significant accounting policies and other explanatory information(hereinafter referred to as "the standalone financial statements").
In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid standalone financial statements give the information requiredby the Companies Act 2013 ("the Ad") in the manner so required and give a trueand fair view in conformity with ihe Indian Accounting Standards prescribed under Section133 of the Act read with the Companies (Indian Accounting Standards) Rules 2015 asamended ("Ind AS") and other accounting principles generally accepted in Indiaof the state of affairs of the Company as at March 312019 the profit and totalcomprehensive income changes in equity and its cash flows for the year ended on thatdate.
Basis for Opinion
We conducted our audit of the standalone financial statements in accordance with theStandards on Auditing (SAs) specified underSecUon 143 (10) of the Act. Ourresponsibilities underthose Standards are further described in the AuditorsResponsibilities 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 (ICAI) together with the independence requirements thatare relevantto our audit of the financial statements underthe provisions of the Act andthe Rules made thereunder and we have fulfilled our other ethical responsibilities inaccordance with these requirement and the ICAIs Code of Ethics. We believe that theaudit evidence we have obtained is sufficient and appropriate to provide a basis for ouraudit opinion on the standalone financial statements.
Key Audit Matters
Key audit matters are those matters that in our professional judgment were of mostsignificance in our audit of the standalone financial statements of the current period.These matters were addressed in the context of our audit of the standalone financialstatements as a whole and in forming our opinion thereon we do not provide a separateopinion on these matters. We have determined the matters described below to be the keyaudit matters to be communicated in our report.
|Sr. No. ||Key Audit Matter ||Auditors Response |
|1 ||Accuracy of Revenue Recognition || |
| ||Revenue being an important element of Statement of Profit and Loss and considering the new Accounting Standards and its impact on profits of the Company; it is considered a Key Audit matter. ||We analysed the Company's accounting policies & procedures for revenue recognition including the criteria for the same. Our audit approach consisted evaluation of control environment and substantive testing as follows: |
| || || Reviewed the contract terms in respect of transfer of significant risks and rewards of ownership to customers and performance obligations for revenue recognition. |
| || || Substantive tests on random sampling basis for all Ihe major sale transactions and verification of all document flow involved in the samples selected. |
| || || Reviewed of payment terms with dealers identification of significant financing components and terms of discounts. |
| || || Reviewed accounting for after-sales services in terms of warranty schemes and service coupon systems. |
| || || Reviewed of compliance done with respect to Indirect Taxes Compliances. |
| || || Performed analytical procedures for ensuring overall accuracy. |
|2 ||Accuracy of Cost of Goods Sold || |
| ||We identified Cost of Goods Sold area as a key audit matter because it is the most significant cost to the Company which comprises of the cost of materials and other direct costs of production and the same has significant impact on Hie profitability of the Company. ||We assess the Company's process to verify the Cost of Goods Sold (COGS) Incurred during the year. |
| || ||Our audit approach consisted of testing of the design and operating effectiveness of the internal controls and substantive testing as follows: |
| || || Overall evaluation and testing of controls related to corresponding business processes viz. Procurement to Payment (P2P) Production Process Material Requirement Planning (MRP) Inventory Policy and Stores Procedures. |
| || || Review of overall operations and production process of materials into finished products. |
| || || Review the standard operating procedures for COGS to ensure the correctness and completeness of COGS. |
| || || Physical verification of inventory items on random sampling basis with reference to book inventory for accuracy and controls including review of internal period-end inventory procedures and reconciliations. |
| || || Reviewing completeness and overall accuracy of system generated material consumption and reconciling with General Ledger including manual accounting entries relating to material consumption. |
| || ||* Review of inventory valuation material consumption in accordance with applicable Indian Accounting Standards. |
| || || Review of Reconciliations of Inventory General Ledger and Materials Management Module of SAP System. |
| || || Evaluate the procedures for identifying slow moving items and their accounting estimates made by Management. |
|3 ||Accuracy and Completeness of Capital Expenditure || |
| ||Capital Expenditure (CAPEX) has been considered as a key audit matter in view of the complexity peculiarities of business and being one of the important elements of costs. ||We assessed the Companys process to verify the Capital Expenditure incurred during the year including significant acquisitions of manufacturing facility. Our audit approach consisted of testing of the design and operating effectiveness of the internal controls and substantive testing as follows : |
| || || Review of CAPEX business process flow of documents/information and their controls effectiveness. |
| || ||* Substantive tests on random sampling basis for all the major additions deletions to the assets by applying all the characteristics of capital expenditure proper classification of the same with reference to the Company's policy and accounting standards. |
| || || Scrutiny of relevant general ledger accounts to assess if the expenditure has been correctly accounted for. |
| || || Physical verification of test basis review of physical verification carried out by the Management with respect to book records review of internal audit reports findings relating to Capex if any and implementation of the suggestions of the same. |
| || || We have assessed the competency objectivity and capabilities of management experts and for a sample of valuations we evaluated the adequacy and appropriateness of their work. |
| || || Review of compliance done with respect to Companies Act Income Tax Act Customs Duty and GST Act particularly for accounting of additions deletions depreciation and of carrying amounts thereof. |
Information other than tha Standalone Financial Statements and Auditors Reportthereon
The Companys Board of Directors is responsible for the preparation of the otherinformation. The other information comprises the Management Discussion and AnalysisBoards Report including Annexures to Board's Report Corporate Governance andBusiness Responsibility Report but does not include the financial statements and ourauditors report there on.
Management Discussion and Analysis Boards Report including Annexures to Board'sReport Corporate Governance and Shareholder's Information are expected to be madeavailable to us after the date of this auditor's report hence ou r opinion is based onStandalone Financials Statement only.
Our opinion on the standalone financial statements does not cover the other informationand we do not express any form of assurance conclusion thereon
In connection with our audit of the standalone financial statements our responsibilityis to read the other information and in doing so consider whether the other informationis materially inconsistent with the standalone financial statements or our knowledgeobtained during the course of our audit or otherwise appears Id be materially misstated.
When we read Management Discussion and Analysis Boards Report includingAnnexures to Boards Report Corporate Governance and Business Responsibility Reportif required if we conclude that there is material misstatement therein we are requiredto communicate the matter to those charged with governance.
Managements Responsibility tor the Standalone Financial Statements
The Company's Board of Directors is responsible for the matters stated in Section134(5) of the Actwith respeettothe preparation of these standalone financial statementsthat give a true and fair view of the financial position financial performance totalcomprehensive income changes in equity and cash flows of the Company in accordance withthe Ind AS and other accounting principles generally accepted in India. Thisresponsibility also includes maintenance of adequate accounting records in accordance withthe provisions of the Act for safeguarding the assets of the Company and for preventingand detecting frauds and other irregularities; selection and application of appropriateaccounting policies; making judgments and estimates that are
reasonable and prudent; and design implementation and maintenance of adequate internalfinancial controls tfiat were operating effectively for ensuring the accuracy andcompleteness of the accounting records relevant to the preparation and presentation ofthe standalone financial statements that give a true and fair view and are free frommaterial misstatement whether due to fraud or error.
In preparing the standalone financial statements management is responsible forassessing the Company's ability to continue as a going concern disclosing as applicablematters related to going concern and using the going concern basis of accounting unlessmanagement either intends to liquidate the Company or to cease operations or has norealistic alternative but to do so.
The Board of Directors are responsible for overseeing the Companys financialreporting process.
Auditors Responsibilities for the Audit of the standalone Financial Statements
Our objectives are to obtain reasonable assurance about whether the standalonefinancial statements as a whole are free from material misstatement whether due to fraudor error and to issue an auditors report that includes our opinion. Reasonableassurance is a high level of assurance but is not a guarantee that an audit conducted inaccordance with SAs will always detect a material misstatement when if 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 standalone financial statements.
As part of an audit in accordance with SAs we exercise professional judgment andmaintain professional skepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of the standalonefinancial statements whether due to fraud or error design and perform audit proceduresresponsive to those risks and obtain audit evidence that is sufficient and appropriate toprovide a basis for our opinion. The risk of not detecting a material misstatementresulting from fraud is higher than for one resulting from error as fraud may involvecollusion forgery intentional omissions misrepresentations or the override of infernalcontrol.
Obtain an understanding of internal financial controls relevant to the audit inorder to design audit procedures that are appropriate in the circumstances. Under Section143(3)(i) of the Act we are also responsible for expressing our opinion on whether theCompany has adequate internal financial controls system in place and the operatingeffectiveness of such controls.
Evaluate the appropriateness of accounting policies used and the reasonablenessof accounting estimates and related disclosures made by management
Conclude on the appropriateness of management's use of the going concern basisof accounting and based on Die audit evidence obtained whether a material uncertaintyexists related to events or conditions that may cast significant doubt on theCompanys ability to continue as a going concern. If we conclude that a materialuncertainty exists we are required to draw attention in our auditor's report to therelated disclosures in the standalone financial statements or if such disclosures areinadequate to modify our opinion. Our conclusions are based on the audit evidenceobtained up to the date of our auditor's report. However future events or conditions maycause the Company to cease to continue as a going concern
Evaluate the overall presentation structure and content of the standalonefinancial statements including the disclosures and whether the standalone financialstatements represent the underlying transactions and events in a manner that achieves lairpresentation.
Materiality is the magnitude of misstatements in the standalone financial statementsthat individually or in aggr egate makes it probable that the economic decisions of areasonably knowledgeable user of the standalone financial statements may be influenced. Weconsider quantitative materiality and qualitative factors in (i) planning the scope of ouraudit work and in evaluating the results of our work; and (ii) to evaluate the effect ofany identified misstatements in the standalone financial statements.
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 ouraudit.
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.
From the matters communicated with those charged with governance we determine thosematters that were of most significance in the audit of the standalone financial statementsof the current period and are therefore the key audit matters. We describe these mattersin our auditor's report unless law or regulation precludes public disclosure about thematter or when in extremely rare circumstances we determine that a matter should not becommunicated in our report because the adverse consequences of doing so would reasonablybe expected to outweigh the public interest benefits of such communication.
Report on Other Legal and Regulatory Requirements
1. As required by Section 143(3) of the Act based on our audit we report that:
(a) We have sought and obtained ail the information and explanations which to the bestof 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 theCompany so far as it appears from our examination of those books
(c) The Balance Sheet the Statement of Profit and Loss including Other ComprehensiveIncome Statement of Changes in Equity and the Statement of Cash Flow dealt with by thisReport are in agreement with the relevant books of account.
(d) I n our opinion the aforesaid standalone financial statements comply with the IndAS 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 March312019 taken on record by the Board of Directors none of the directors is disqualifiedas on March 312019 from being appointed as a director in terms of Section 164 (2) of theAct.
(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". Our report expresses an unmodifiedopinion on the adequacy and operating effectiveness of the Companys internalfinancial controls overfinancial reporting.
(g) With respect to the other matters to be included in the Auditor's Report inaccordance with the requirements of Section 197 (16) of the Act as amended:
In our opinion and to the best of our information and according to the explanationsgiven to us the remuneration paid by the Company to its directors during the year is inaccordance with the provisions of Section 197 of the Act.
(h) 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 as amended inouropinion and to the best of our information and according to the explanations given tous:
(i) The Company has disclosed the impact of pending litigations on its financialposition in its financial statements - Refer Note 30(a) to the standalone financialstatements
(ii) The Company did not have any long-term contracts including derivative contractsfor which there were any material foreseeable losses.
(in) There has been no delay in transferring amounts required to be transferred tothe Investor Education and Protection Fund by the Company. - Refer Note 42 to standalonefinancial statements.
2. As required by the Companies (Auditors Report) Order 2016 ("theOrder") issued by the Central Government in terms of Section 143 (11) of the Act wegive in "Annexure B" a statement on the matters specified in paragraphs 3 and 4of the Order.
| ||For Kirtane & Pandit LLP |
| ||Chartered Accountants |
| ||Firm Reg. No. 105215W/ W100057 |
|Place: Pune ||SuhasDeshpande |
|Date :27th May 2019 ||Partner |
| ||Membership No.: 031787 |
ANNEXURE "A" TO THE INDEPENDENT AUDITORS REPORT
(Referred to in paragraph 1 (f) under Report on Other Legal and RegulatoryRequirements section of our report to the Members of Force Motors Limited of evendate)
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 overfinancial reporting of Force MotorsLimited ("the Company') as of March 31 2019 in conjunction with our audit ofthe standalone financial statements of the Company forthe yearended on that date.
Managements Responsibility for Internal Financial Controls
The Board of Directors of the Company is responsible for establishing and maintaininginternal financial controls based on the internal control over financial reportingcriteria established by the Company considering the essential components of internalcontrol stated in the Guidance Note on Audit of Internal Financial Controls Over FinancialReporting issued by the institute of Chartered Accountants of India These responsibilitiesinclude the design implementation and maintenance of adequate internal financial controlsthat were operating effectively for ensuring the orderly and efficient conduct of itsbusiness including adherence to respective companys policies the safeguarding ofits assets the prevention and detection of frauds and errors the accuracy andcompleteness of the accounting records and the timely preparation of reliable financialinformation as required underthe Companies Act 2013.
Our responsibility is to express an opinion on the internal financial controls overfinancial reporting of the Company based on our audit. We conducted our audit inaccordance with the Guidance Note on Audit of internal Financial Controls Over FinancialReporting (the Guidance Note") issued by the Institute of Chartered Accountantsof India and the
Standards on Auditing prescribed under Section 143(10) of the Companies Act 2013 tothe extent applicable to an audit of internal financial controls. Those Standards and theGuidance Note require that we comply with ethical requirements and plan and perform theaudit to obtain reasonable assurance about whether adequate internal financial controlsoverfinancial 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 overfinancial reporting includedobtaining an understanding of internal financial controls over financial reportingassessing the risk that a material weakness exists and testing and evaluating die designand operating effectiveness of internal control based on the assessed risk. The proceduresselected depend on the auditors judgment including the assessment of the risks ofmaterial misstatement of the standalone financial statements whether due to fraud orerror.
We believe that ilie audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the internal financial controls systemoverfinancial reporting of the Company.
Meaning of Internal Financial Controls Over Financial Reporting
A companys internal financial control over financial reporting is a processdesigned to provide reasonable assurance regarding the reliability of financial reportingand the preparation of financial statements tor external purposes in accordance withgenerally accepted accounting principles. A companys internal financial control overfinancial reporting includes those policies and procedures that (1) pertain to the
maintenance of records that in reasonable detail accurately and fairly reflect thetransactions and dispositions of the assets of the company; (2) provide reasonableassurance that transactions are recorded as necessary to permit preparation of financialstatements in accordance with generally accepted accounting principles and that receiptsand expenditures of the company are being made only in accordance with authorisadons ofmanagement and directors of the company; and (3) provide reasonable assurance regardingprevention ortimely detection of unauthorised acquisition use or disposition of thecompanys assets that could have a material effect on the financial statements.
Limitations of Internal Financial Controls Over Financial Reporting Because of theinherent limitations of internal financial controls over financial reporting includingthe possibility of collusion or improper management override of controls materialmisstatements due to error or fraud may occur and not be detected. Also projections ofany evaluation of the internal financial controls over financial reporting to futureperiods are subject to the risk that the internal financial control over financialreporting may become inadequate because of changes in conditions or that the degree ofcompliance 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 internal controlover financial reporting criteria established by the Company considering the essentialcomponents of infernal control stated in the Guidance Note on Audit of Internal FinancialControls Over Financial Reporting issued bythe Institute of Chartered Accountants ofIndia.
| ||For Klrtane & Pandit LLP |
| ||Chartered Accountants |
| ||Firm Registration No. 105215W/W100057 |
|Place: Pune ||Suhas Dethpande |
|Date :27th May 2019 ||Partner |
| ||Membership No. 031737 |
ANNEXURE "B" TO THE INDEPENDENT AUDITORS REPORT
(Referred to in paragraph 2 under Report on Other Legal and RegulatoryRequirements' section of our report to the Members of Force Motors Limited of even date)
(i) In respect of the Companys property plant and equipment:
(a) The Company has maintained proper records showing full particulars includingquantitative details and situation of property plant and equipment.
(b) As explained to us considering the nature of the Fixed Asset tee same have beenphysically verified by the management at reasonable intervals during the year as perverification plan adopted bythe Company which in our opinion is reasonable havingregards to size of the Company and the nature of its assets. According to information andexplanations given to us and the records produced to us for our verification thediscrepancies noticed during such physical verification were not material and same havebeen properly dealt with in the books of account;
(c) According to the information and explanations given to us and on the basis of ourexamination of the records of the Company the title deeds comprising all the immovableproperties of land and buildings which are freehold are held in tee name of the Company.
In respect of immovable properties been taken on lease and disclosed as property plantand equipment in the standalone financial statements the lease agreements are in the nameof tee Company.
(ii) As Informed to us tee physical verification of inventory has been conducted bythe management at reasonable intervals and the discrepancies noticed during such physicalverification were not material. The discrepancies noticed on physical verification ofInventory as compared to tee book records have been properiy dealt with tee books ofaccount.
(lii) The Company has not granted any loans secured or unsecured to Companies FirmsLimited Liability Partnerships or other parties covered in the register maintained underSection 189 of the Companies Act. Accordingly paragraph 3(iii) of the Order is notapplicable.
(iv) In our opinion and according to information and explanations given to us theCompany has complied with the provisions of Sections 185 and 186 of the Companies Act2013 in respect of investments made. Further the Company has not granted any loans givenany guarantee or security in connection with a loan to any other body corporate or person.
(v) In our opinion and according to the information and explanations given to us theCompany has complied with tee directives of the Reserve Bank of India and the provision ofSections 73 to 76 of the Companies Act 2013 and the rules framed there under whereverapplicable. As informed to us no order has been passed against the Company bythe CompanyLaw Board the National Company Law Tribunal RBI or any court or any tribunal.
(vi) The Central Government has specified maintenance of cost records under Sub-section (1) of Section 148 of the Act and we are of the opinion that prima-facie suchrecords are made and maintained We have not however made a detailed examination of therecords with a view to determine whether they are accurate or complete.
(vii) According to the information and explanations given to us in respect ofstatutory dues:
(a) The Company has generally been regular in depositing undisputed statutory duesincluding Provident Fund Employees State Insurance Income Tax Goods and ServicesTax Customs Duty Cess and other material statutory dues applicable to it with teeappropriate authorities.
There were no undisputed amounts payable in respect of Provident Fund Employees' StateInsurance income Tax Goods and Services Tax Customs Duty Cess and other materialstatutory dues in arrears as at March 312019 for a period of more than six months fromthe date they became payable.
(b) Details of dues of Income Tax Sales Tax Service Tax Excise Duly and Value AddedTax which have not been deposited as at March 312019 on account of dispute are givenbelow:
|Sr No. ||Name of the Statue ||Nature of the Dues ||Amount* (Rsin Lakhs) ||Period(s) to which the amount relates(Various year covering the period) ||Forum where such dispute is pending |
|1 ||Central Excise Act1944 ||Excise Duty ||222.87 ||1907-1991 1990-1991 1998-2000 2008-2015 ||Customs Excise & Service Tax Appellate Tribunal (CESTAT) |
| || || ||0.23 ||1995-1996 ||Appellate Authority upto Commissioners level |
|2 ||Sales Tax Laws ||Sales Tax ||289.65 ||1995-1998 2003-2012 2015-2016 ||Appellate Authority upto Commissioner's level |
| || || ||30.04 ||2003-2004 2006-2008 ||Commercial Tax Appellate Board |
|3 ||Custom Act19G2 ||Custom Duty ||16.83 ||2004-2005 2012-2013 ||Customs Excise A Service Tax Appellate Tribunal (CESTAT) |
* amount as per demand orders Including penalty wherever quantified In the Order.
(viii) In our opinion and according to the information and explanations given to usthe Company has not defaulted in the repayment of loans or borrowings to banks. TheCompany did not have any outstanding loans or borrowings from financial institutions orgovernment and there are no dues to debenture holders during the year.
(ix) In our opinion and according to the information and explanations given to us theterm loan taken by the Company has been applied for the purpose for which they wereraised. The Company had not
raised money by way of further public offer (including debt instruments) during theyear.
(x) According to the information and explanations given to us no fraud by the Companyor on the Company by its officers or employees has been noticed or reported during theyear.
(xi) In our opinion and according to the information and explanations given to us theCompany has paid/provided managerial remuneration in accordance with the requisiteapprovals mandated by the provisions of Section 197 read with Schedule V to the Act.
(xii) The Company is not a Nidhi Company and hence reporting under paragraph 3 (xii) ofthe Order is not applicable to the Company.
(xiii) In our opinion and according to the information and explanations given to usthe Company is in compliance with Sections 177 and 168 of the Companies Act 2013 whereapplicable for ail transactions with the related parties and the details of related partytransactions have been disclosed in the standalone financial statements as required by theapplicable 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 underparagraph 3(xiv) of the Order is not applicable to the Company.
(xv) In our opinion and according to the information and explanations given to usduring the year the Company has not entered Into any non-cash transactions with itsdirectors or persons connected with him. Accordingly paragraph 3(xv) of the Order is notapplicable to the Company.
(xvi) The Company is not required to be registered under Section 45-I of the ReserveBankof India Act 1934.
| ||For Kirlana & Pandit LLP |
| ||Chartered Accountants |
| ||firm Registration No. 105215W/W100057 |
|Place: Pune ||Suhai Deshpande |
|Date :27th May 2019 ||Partner |
| ||Membership No. 031787 |