To the Members of JMT Auto Limited
Report on the Standalone IND AS Financial Statements Qualified Opinion
We have audited the accompanying standalone IND AS financial statements of JMT AutoLimited (the Company') which comprise the balance sheet as at 31st March2019the statement of profit and loss[including other comprehensive income] the statementof cash flows and the statement of changes in equity for the year then ended and asummary of the significant accounting policies and other explanatoryinformation(hereinafter referred to as "standalone Ind AS financial statements")
In our opinion and to the best of our information and according to the explanationsgiven to us except for the effects of the matters described in Basis for QualifiedOpinion section of our report the standalone Ind AS financial statements give theinformation required by the Companies Act 2013 in the manner so required and give a trueand fair view in conformity with the accounting principles generally accepted in India of the state of affairs of the Company as at 31 March 2019 and its Profit and Loss(including other comprehensive income) Cash Flow Statement and its statement of changesin equity for the year ended.
Basis for qualified opinion
a) As per "Indian Accounting Standard 109" company was required to get theinvestment (र 706.24 Lacs) at fair value but the same has not been done by the companyaccordingly we are unable to ascertain the effect of the same on the Financial statements.
b) Trade receivables & loan & advances include balance from the group entitieswhich are subject to confirmation /reconciliation. Accordingly we are unable to commentupon the recoverability of the same and its consequential impact on the financialstatements.
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 financial statements as awhole and in forming our opinion thereon and we do not provide a separate opinion onthese matters.
We have determined the matter described below to be the key audit matter to becommunicated in our report.
Exceptional items includes income amounting RS 6.99 crore which is due to reversalofdepreciation on account of review of residual life of certain assets as the management. Asper the significant estimates and assumptions of the management certain assets have moreperforming capacity accordingly life of such asset has been changed.
As per management some Inventory amounting र 3.80 crore was not usable because of itsobsolete nature. Hence management has taken the decision to write off the same in books ofaccounts.
Emphasis of matter
We draw attention to the following:
a) Trade receivables Trade payablesand Loan & Advances given which also includesbalances from the group entities are subject to confirmation/reconciliation.
b) The management has decided to discontinue with Dismantling provision on Plant &machinery since they consider the same will not be incurred at the time of dismantlingat the end of the life of the machine.
c) Exceptional Item includes Stock (Rs 380.00 Lacs) written off & Reversal ofExcess Depreciation Charged (र 699.00 Lacs) on account of review of residual life ofcertain Fixed assets. (Refer Note 5).
d) Effects of IND AS 12 "Income Taxes" has not been considered by themanagement. Accordingly we are unable to comment upon the effect of the same on theFinancial Statements. However the Impact of the same was not material.
e) We have relied upon the management for valuation of the inventory taken in the booksof account and we have not verified the same.
f) Refer Note No 6 regarding Netting off of Trade Creditors by the company.
Information other than the financial statements and Auditor's Report thereon
The Company's Board of Directors is responsible for the other information. The otherinformation comprises the information included in the Annual Report but does not includethe financial statements and our auditor's report thereon. Our opinion on the financialstatements does not cover the other information and we do not express any form ofassurance conclusion thereon. In connection with our audit of the financial statementsour responsibility is to read the other information and in doing so consider whether theother information is materially inconsistent with the financial statements or ourknowledge obtained in the audit or otherwise appears to be materially misstated. If basedon the work we have performed we conclude that there is a material misstatement of thisother information we are required to report that fact. We have nothing to report in thisregard.
Management and Those Charged with Governance's Responsibility for the Standalone Ind ASfinancial statements
The management and company's board of directors is responsible for the mattersspecified in section 134(5) of the Companies Act 2013 ("the Act") with respectto the preparation of these standalone IND AS financial statements that give a true andfair view of the financial position financial performance [including other comprehensiveincome] cash flows and changes in equity of the company in accordance with the accountingprinciples generally accepted in India including the Indian accounting standards [Ind AS]prescribed under section 133 of the Act read with companies ( Indian Accounting Standards) rules 2015.
This responsibility also includes the maintenance of adequate accounting records inaccordance with the provisions of the Act for safeguarding of the assets of the companyand for preventing and detecting the 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 control that were operating effectively for ensuring the accuracy andcompleteness of the accounting records relevant to the preparation and presentation ofthe standalone Ind AS financial statements that give a true and fair view and are freefrom material misstatement 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.
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 withStandards 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 Standards on Auditing we exercise professionaljudgment and maintain professional skepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of the financialstatements whether due to fraud or error design and perform audit procedures responsiveto those risks and obtain audit evidence that is sufficient and appropriate to provide abasis for our opinion. The risk of not detecting a material misstatement resulting fromfraud is higher than for one resulting from error as fraud may involve collusionforgery intentional omissions misrepresentations or the override of internal control.
Obtain an understanding of internal control relevant to the audit in order todesign audit procedures that are appropriate in the circumstances. Under Section 143(3)(i) of the Act we are also responsible for explaining our opinion on whether the Companyhas adequate internal financial controls system in place and the operating effectivenessof such controls.
Evaluate the appropriateness of accountingpolicies used and the reasonablenessof accounting estimates and related disclosures made by management.
Conclude on the appropriateness of management'suse 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 financialstatements including the disclosures and whether the financial statements represent theunderlying transactions 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.
From the matters communicated with those charged with governance we determine thosematters that were of most significance in the audit of the financial statements of thecurrent period and are therefore the key audit matters. We describe these matters in ourauditor's report unless law or regulation precludes public disclosure about the matter orwhen 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 the Companies (Auditor's Report) Order 2016 ("the Order")issued by the Central Government of India in exercise of powers conferred by sub section(11) of section 143 of the act we give in annexure A a statement on the mattersspecified in paragraph 3 & 4 of the Order to the extent applicable.
2. As required by section 143(3) of the Act we report that:
(a) Except for the matter described in basis of qualified opinion We have sought andobtained all the information andexplanations which to the best of our knowledge and beliefwere necessary for the purposes of our audit;
(b) Except for the matter described in basis of qualified opinionproper books ofaccount as required by lawhave been kept by the company so far as it appears from ourexamination of those books;
(c) Except for the matter described in basis of qualified opinion The balance sheetthe statement of profit and loss [including other comprehensive income] the cash flowstatement and the statement of changes in equity dealt with by this report are inagreementwith the relevant books of account;
(d) Except for the matter described in basis of qualified opinionthe aforesaidstandalone IND ASfinancial statementscomply with the Indian Accounting Standards specifiedunder section 133 of the Act read with the relevant rules there under;
(e) In our opinion the matters described in the basis for qualified opinion above mayhave adverse effect in the functioning of the group.
(f) On the basisof the written representations received fromthe directors as on 31stMarch2019 and taken on record by theboard of directors none of the directors is disqualifiedas onMarch 312019 from being appointed as a director in termsof Section 164 (2) of theAct; and
(g) 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 B". Our report expresses an unmodified opinion onthe adequacy and the operating effectiveness of the company's internal financial controlsover financial reporting; and
(h) With respect to the other matters to be included in the Auditor's Report inaccordance withRule 11 of the Companies (Audit and Auditors) Rules 2014 as amended inour opinion 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 standalone IND AS financial statements [Refer Note no. 29.5 of financialstatements].
ii. The company did not have any long-term contracts including derivative contracts forwhich there were any material foreseeable losses.
iii. There were no amount which were required to be transferred to the InvestorEducation andProtection Fund by the company.
For Raj Gupta & Co
Firm's registration number: 000203N
Membership Number: 530433
Place : New Delhi Dated : JUNE 4th 2019
ANNEXURE A TO THE INDEPENDENT AUDITORS' REPORT
The Annexure referred to in Independent Auditors' Report to the members of the Companyon the standalone IND AS financial statements for the year ended 31st March 2019.
I. In respect of fixed assets:
a. The company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets.
b. As explained to us fixed assets according to the practice of the company havebeen physically verified by the management at reasonable intervals.According to theinformation and explanations given to us the frequency of physical verification of fixedassets is reasonable having regard to the size of the Company and nature of its assets.According to the information and explanations given to us no material discrepancies werenoticed on such physical verification.
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 of immovable properties areheld in the name of the company.
II. In respect of inventories: We have been informed that the inventories arephysically verified during the period by the Company at reasonable intervals. Thefrequency of physical verification in our opinion is reasonable having regard to thesize of the company and nature of its business. The discrepancies noticed on verificationbetween the physical inventories and the book records were not material in relation to theoperation of the company and the same have been properly dealt with in the books ofaccount.
III. The company during the yearhas not granted any loans secured or unsecured tocompanies firms Limited Liability Partnerships or other parties covered in the registermaintained under section 189 of the Companies Act 2013 (the Act').Accordinglyparagraph 3(iii) of the Order is not applicable to the company.
IV. In our opinion and according to the information and explanations given to us thecompany has complied with the provisions of section 185 and 186 of the Act with respectto the loans investments guarantees and security.
V. Since the company has not accepted any deposit from public the directives issued bythe Reserve Bank of India and the provisions of section 73 to 76 or any other relevantprovisions of the Companies Act 2013 and the rules framed there under with regard to thedeposits accepted from the public are not applicable.
VI. The Central Government has prescribed the maintenance of cost records under section(1) of section 148 of the Companies Act and on the basis of recordsproduced before us forour verification; we are of the opinion that prima facie the prescribed accounts andcost records have been maintained. However we are neither required to carry out nor havecarried out any detailed examination of such accounts & records.
VII. (a) According to the information and explanations given to us and on the basis ofour examination of the records of the company the company has beenregularin depositingundisputed statutory dues including provident fund employees state insurance income-taxsales tax service tax duty of customs duty of excise value added tax cess Goods andServices Tax and other statutory dues with appropriate authorities during the year ended3134 March 2019. The outstanding dues as on the date of the balance sheet i.e.March312019 were 23.39Lakhs. According to information and explanation given to us thereis no arrear of undisputed statutory dues outstanding for a period of more than 6 monthsas on March 312019.
(b) According to the information and explanation given to us and as per ourverification of records of the company the company has not paid/deposited followingstatutory dues on account of disputes:
|S.No. ||Name of Statute ||Period to which it pertains ||Forum where dispute is pending ||Amount (र in Lakh) |
|1 ||Excise ||2012-13 ||Hon. High Court of Karnatka Dharwad Bench. ||4.44 Cr |
VIII. According to the records of the Company examined by us and the information andexplanations given to us the Company has not defaulted in repayment of loans orborrowings to a banks and financial institution and also has not issued debentures duringthe year and has not taken any fresh loans or borrowings from Government.
IX. According to the information and explanations given to us and as per ourverification of the records of the company the company during the year has not raisedmoneys by way of initial public offer or further public offer(Including debt instruments).The term loans availed by the company have been applied for the purpose for which theloans were obtained.
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 ended 31st March 2019.
XI. According to the information and explanations give to us and based on ourexamination of the records of the company the company has paid/provided for managerialremuneration in accordance with the requisite approvals mandated by the provisions ofsection 197 read with Schedule V to the Act.
XII. In our opinion and according to the information and explanations given to us thecompany is not a Nidhi company. Therefore the provisions of Clause 3 (xii) of the Orderare not applicable to the company.
XIII. According to the information and explanations given to us and as per ourverification of the records of the company all transactions with the related parties arein compliance with the Sections 177 and 188 of the Companies Act 2013 where applicableand the details have been disclosed in the IND AS financial statements as required by theapplicable accounting standards.
XIV. According to the information and explanations given to us and as per ourverification of the records of the company the company has not made any preferentialallotment of shares.
XV. According to the information and explanations given to us and as per ourverification of the records of the company the company has not entered into any non-cashtransactions with directors or persons connected with him. Accordingly the provisions ofClause 3 (xv) of the order are not applicable to the company.
XVI. In our opinion the company is not required to be registered under section 45-IAof the Reserve Bank of India Act 1934. Accordingly the provisions of Clause 3 (xvi) ofthe order are not applicable to the company.
For Raj Gupta & Co
Firm's registration number: 000203N
Membership Number: 530433
Place : New Delhi
Dated : JUNE 4th 2019
Annexure - B to the Independent Auditors' Report
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") of JMT AutoLimited
We have audited the internal financial controls over financial reporting of JMT AutoLmited ("the Company") as of 31st March 2019 in conjunction with ouraudit of the standalone IND AS financial statements of the company for the year ended onthat date.
Management's Responsibility for Internal Financial Controls
The management and company's board of directorsare responsible for establishing andmaintaining internal financial controls based on the internal control over financialreporting criteria established by the company considering the essential components ofinternal control stated in the Guidance Note on Audit of Internal Financial Controls overFinancial Reporting issued by the Institute of Chartered Accountants of India ("theGuidance Note"). These responsibilities include the design implementation andmaintenance of adequate internal financial controls that were operating effectively forensuring the orderly and efficient conduct of its business including adherence tocompany's policies the safeguarding of its assets the prevention and detection of fraudsand errors the accuracy and completeness of the accounting records and the timelypreparation of reliable financial information as required under the Companies Act 2013.
Our responsibility is to express an opinion on the company's internal financialcontrols over financial reporting based on our audit. We conducted our audit in accordancewith the Guidance Note on Audit of Internal Financial Controls over Financial Reporting(the "Guidance Note") and the Standards on Auditing issued by ICAI and deemedto be prescribed under section 143(10) of the Companies Act 2013 to the extentapplicable to an audit of internal financial controls both applicable to an audit ofInternal Financial Controls and both issued by the Institute of Chartered Accountants ofIndia. Those Standards and the Guidance Note require that we comply with ethicalrequirements and plan and perform the audit to obtain reasonable assurance about whetheradequate internal financial controls over financial reporting was established andmaintained and if such controls operated effectively 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 the risk that a material weakness exists and testing and evaluating the designand operating effectiveness of internal control based on the assessed risk. The proceduresselected depend on the auditor's judgment including the assessment of the risks ofmaterial misstatement of the standalone IND AS financial statements whether due to fraudor error. We believe that the audit evidence we have obtained is sufficient andappropriate to provide a basis for our audit opinion on the company's internal financialcontrols system over 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 authorisations ofmanagement and directors of the company; and (3) provide reasonable assurance regardingprevention or timely detection of unauthorised 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 detected. Also projections of any evaluation of the internal financial controlsover financial reporting to future periods are subject to the risk that the internalfinancial control over financial reporting may become inadequate because of changes inconditions or that the degree of compliance with the policies or procedures maydeteriorate.
In our opinion to the best of our information and according to the explanations givento us the company except for the matters described in basis for qualified opinion has inall material respects an adequate internal financial controls system over financialreporting and such internal financial controls over financial reporting were operatingeffectively as at 31stMarch 2019 based on the internal control over financialreporting criteria established by the company considering the essential components ofinternal control stated in the Guidance Note on Audit of Internal Financial Controls OverFinancial Reporting issued by the Institute of Chartered Accountants of India.
For Raj Gupta & Co
Firm's registration number: 000203N
Membership Number: 530433
Place : New Delhi Dated : JUNE 4th 2019