To the Members of Omax Autos Limited Report on the Audit of the Financial StatementsOpinion
We have audited the accompanying financial statements of Omax Autos Limited ("theCompany") which comprise the Balance Sheet as at March 312019 the Statement ofProfit and Loss (including other comprehensive income) Statement of changes in equity andthe Statement of Cash Flows for the year then ended and notes to the financial statementsincluding a summary of significant accounting policies and other explanatory information.
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 theCompanies Act 2013 ("the Act") in the manner so required and give a true andfair view in conformity with the accounting principles generally accepted in India of thestate of affairs of the Company as at March 312019 its profit and other comprehensiveincome changes in equity and its cash flows for the year ended on that date.
Basis for Opinion
We conducted our audit in accordance with Standards on
Auditing (SAs) specified under section 143(10) of the Act. Our responsibilities underthose Standards are further described in the Auditor's Responsibilities for the Audit ofthe financial statements section of our report. We are independent of the Company inaccordance with the Code of Ethics issued by the Institute of Chartered Accountants ofIndia ("ICAI") together with the ethical requirements that are relevant to ouraudit of the financial statements under the provisions of the Act and Rules thereunder andwe have fulfilled our other ethical responsibilities in accordance with these requirementsand the Code of Ethics. We believe that the audit evidence we have obtained is sufficientand 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. Wehave determined the matters described below to be the key audit matters to be communicatedin our report.
|Key Audit Matter ||Audit Response |
|Key Audit Matter || |
|Inventory ||Principal Audit Procedures |
|The Company has large quantities of inventory at different plants. The Company produces large number of products for which variety of raw material is acquired and stored at different locations. || We attended inventory counts at some locations which we selected based on financial significance and risk for which we have: |
| ||o Selected a sample of inventory items and compared the quantities we counted to the quantities recorded |
|The entity is in a customer specific industry and it may have slow moving/damaged inventory due to model discontinuation or excess production accumulated at different locations. ||o Made enquiries regarding obsolete inventory items and inspected the condition of items counted and proper provision has been made wherever necessary. |
|Different products have various variants due to which there is a possibility of gap in actual and recorded consumption of raw materials resulting in shortage/ excess of quantities of raw material inventory. For these reasons inventory has been considered as key audit matter. || We obtained reports of physical verification of inventory conducted by the management including for locations not visited by us; |
| || Our audit procedures included testing of the inventory provisions made by the Company and also the basis of management assumptions with the understanding and challenging the key assumptions. |
| || Evaluate the future usage of inventory in case of discontinued models based on past experience of movement of material and products used in other plants; |
| || We have also evaluated a selection of controls over inventory existence across the Company. |
|Key Audit Matter ||Audit Response |
|Taxation matters (GST) ||Principal Audit Procedures |
|The company operates across a large number of GST jurisdictions and has multiple GST registrations. The company has decentralized accounting across the plants in the normal course of business including the plants which are covered under a single registration. The volume of transactions is very huge and significant. || We evaluated the design and implementation of controls in respect of recording of proper GST input & liabilities in the books of accounts on the test check basis. |
| We reviewed the reconciliations of financial statements and returns filed by the Company as required by GST Act at the Plant level as well as the Company as a whole. |
|This together with multiple tax rates and exemptions make the process of reconciliation of data as per GST Returns with financial records very complex. Proper accounting of GST is significant as it's the statutory reporting obligation of the Company.. ||We assessed the appropriateness of recording of Input tax credit as well as output liability by verification of different transactions on test check basis. |
|Valuation of Trade Receivables ||Principal Audit Procedures |
| || We assessed the validity of material outstanding receivables by obtaining third-party confirmations and reconciliations of amounts to assure the completeness and recording of all claims filed by the customers. |
|The nature of company's operations requires periodic revision in rates charged from customers as well as various claims in the normal course of business. Such price revisions and claims are affected both prospectively and retrospectively. Such claims are also recorded on provisional basis subject to confirmation by customers. Considering overall low operating margins in the industry such revisions and claims have a significant impact on company's profitability. || We also considered payments received subsequent to year-end past payment history and unusual patterns to identify potentially unacknowledged/ unconfirmed balances |
| || We assessed the appropriateness of the allowance of doubtful receivables considering a variety of audit procedures across the plants including: |
|Due to these reasons valuation of trade receivables has been considered a key audit matter. || Consideration and concurrence of the agreed payment terms; |
| || Verification of receipts from trade receivables subsequent to year-end; |
| || Where there were indicators that trade receivables were unlikely to be collected we assessed the adequacy of the allowance for impairment of trade receivables. We assessed the ageing of trade receivables disputes with customers and the past payment history of the customer |
|Recognition of revenues ||Principal Audit Procedures |
|The Company manufactures different kind of products for different customers at various plants || We examined all key contracts and enquired with the entity for each of these contracts to understand the specific terms and risks which in turn allowed us to assess the recognition of revenue. |
|The delivery time of products to customersvaries from 1 day to 20 days depending on location of customer. As per terms of underlying contract control is transferred upon delivery at agreed location. || We evaluated and assessed the operating effectiveness of internal controls over the accuracy and timing of revenue recognized in the financial statements; |
| || For the material contracts with a delivery schedule of greater than 2 days we performed the following procedures: |
| || |
|This requires proper cut-off procedures regarding recognition of revenue from sale of goods. Considering large number of locations and customers cut-off testing has been considered as a significant audit matter. ||o Understood the process of performance and transfer of control to the other party. |
| ||o Assessed the actual position of transactions recorded including inventory in transit at the end of the reporting period by verifying their delivery dates; |
| ||o Assessed the Entity's accounting policies and the adequacy of its related disclosure in the financial statements |
The Company's Board of Directors is responsible for the other information. The otherinformation comprises the information included in the Management Discussion and AnalysisBoard's Report including Annexure to Board's Report Business Responsibility ReportCorporate Governance and Shareholder's Information but does not include the financialstatements and our auditor's report thereon.
Our opinion on the financial statements does not cover the other information and we donot express any form of assurance conclusion thereon.
In connection with our audit of the financial statements our responsibility is to readthe 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 state of affairs profit/loss and other comprehensive incomechanges in equity and cash flows of the Company in accordance with the accountingprinciples generally accepted in India including the Accounting Standards specified undersection 133 of the Act read with relevant rules issued thereunder. This responsibilityalso includes maintenance of adequate accounting records in accordance with the provisionsof the Act for safeguarding of the assets of the Company and for preventing and detectingfrauds and other irregularities; selection and application of appropriate accountingpolicies; making judgments and estimates that are reasonable and prudent; and designimplementation and maintenance of adequate internal financial controls that were operatingeffectively forensuring the accuracy and completeness of the accounting records relevantto the preparation and presentation of the financial statements that give a true and fairview and are free from 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.
The 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 with SAswill always detect a material misstatement when it exists. Misstatements can arise fromfraud or error and are considered material if individually or in the aggregate theycould reasonably be expected to influence the economic decisions of users taken on thebasis of these financial statements. As part of an audit in accordance with SAs weexercise professional judgment 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 expressing our opinion on whether the company hasadequate internal financial controls with reference to financial statements in place andthe operating effectiveness 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 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.
Obtain sufficient appropriate audit evidence regarding the financial informationof the entity or business activities within the Company to express an opinion on theannual Financial Statements.
Materiality is the magnitude of misstatements in the annual financial statements thatindividually or in aggregate makes it probable that the economic decisions of areasonably knowledgeable user of the financial statements may be influenced. We considerquantitative materiality and qualitative factors in (i) planning the scope of our auditwork and in evaluating the results of our work; and (ii) to evaluate the effect of anyidentified misstatements in the 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 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 terms of section 143(11) of the Act we givein "Annexure 1" a statement on the matters specified in paragraphs 3 and 4 ofthe Order to the extent applicable.
(2) 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 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 Flows dealt with bythis 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 relevant rules issuedthereunder;
e. On the basis of the written representations received from the directors as on March312019 and taken on record by the Board of Directors none of the directors isdisqualified as on March 31 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 with reference tofinancial statements of the Company and the operating effectiveness of such controls wegive our separate report in "Annexure 2";
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 read with schedule V 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 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 financial statements - Refer Note 38on Contingent Liabilities to thefinancial statements;
ii. The Company did not have any long-term contracts including derivative contracts.Hence the question of any material foreseeable losses does not arise;
iii. There has been no delay in transferring amounts required to be transferred tothe Investor Education and Protection Fund by the Company.
For BGJC & Associates LLP
ICAI Firm Registration No.: 00304N
| ||Pranav Jain |
| ||Partner |
| ||Membership No.: 098308 |
|Date : May 30 2019 || |
|Place : Gurugram || |
ANNEXURE 1 TO THE INDEPENDENT AUDITOR'S REPORT
[Referred to in paragraph 1 under Report on Other Legal and RegulatoryRequirements' in the Independent Auditor's Report of even date to the members of OmaxAutos Limited on the Financial Statements for the year ended March 312019]
(i) (a) The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets.
(b) The Company has a regular programme of physical verification of its fixed assets bywhich all fixed assets are verified in a phased manner over a period of three years. Inour opinion the periodicity of physical verification is reasonable having regard to thesize of the Company and nature of its assets. Pursuant to the programme a portion of thefixed assets has been physically verified by the management during the year. According tothe information and explanation given to us no material discrepancies are noticed on suchverification.
(c) The title deeds of immovable properties recorded as fixed assets in the books ofaccount of the Company are held in the name of the Company.
(ii) The inventory has been physically verified by the management during the year. Asinformed discrepancies noticed on physical verification carried out during the year havebeen properly dealt with in the books of account.
(iii) The Company has in earlier years granted unsecured loans to companies covered inthe register maintained under Section 189 of the Act.
(a) According to the information and explanations given to us and based on the auditprocedures conducted by us there was no loan granted or renewed during the year to theparties covered in register maintained under section 189 of the Act.
(b) The schedule of repayment of principal and payment of interest in respect of suchloans has been stipulated and the repayments or receipts are regular
(c) In respect of the aforesaid loans there is no overdue amount of loans granted tocompanies listed in the register maintained under Section 189 of the Act.
(iv) According to the information and explanation given to us in respect of loansinvestments guarantees and securities the Company has complied with the provisions ofSection 185 and 186 of the Act.
(v) In our opinion and according to the information and explanations given to us theCompany has not accepted any deposits from public within the provisions of section 73 to76 of the Act and the rules framed thereunder.
(vi) We have broadly reviewed the books of account maintained by the Company in respectof products where the maintenance of cost records has been specified by the CentralGovernment under subsection (1) of Section 148 of the Act and the rules framed there underand we are of the opinion that prima facie the prescribed accounts and records have beenmade and maintained. We have not however made a detailed examination of the records witha view to determine whether they are accurate or complete.
(vii) (a) The Company is generally regular in depositing with appropriate authoritiesundisputed statutory dues including provident fund employees' state insurance incometax sales tax service tax value added tax customs duty excise duty cess goods &service tax and any other material statutory dues applicable to it.
According to the information and explanations given to us no undisputed amountspayable in respect of provident fund employees' state insurance income tax sales taxservice tax value added tax customs duty excise duty cess and any other materialstatutory dues applicable to it were outstanding at the year end for a period of morethan six months from the date they became payable.
(b) According to the information and explanation given to us the dues outstanding withrespect to income tax sales tax service tax value added tax customs duty excise dutyon account of any dispute are as follows:
|Nature of the Statue ||Nature of dues ||Amount Disputed (Rs. in Lakhs) ||Amount paid under protest (Rs. in Lakhs) ||Period to which dispute is pending ||Forum where dispute is pending |
|Central Excise Act 1944 ||Disallowance of CENVAT credit ||408.44 ||57.28 ||2004-05 onwards ||CESTAT |
|Central Excise Act 1944 ||Disallowance of CENVAT credit ||230.68 ||0.00 ||2004-05 onwards ||Commissioner/Dy. Commissioner/Asst. Commissioner |
|VAT ||Rejections of Sales Returns ||3.74 ||0.00 ||2007-08 onwards ||Joint Commissioner (Appeal) |
|VAT ||Sales tax deferment ||86.81 ||0.00 ||2008-09 ||Joint Commissioner (Appeal) |
|VAT ||CST & VAT ||8.87 ||0.00 ||2014-15 ||Assessing Officer |
|VAT ||Input Tax Credit ||12.80 ||0.00 ||2009-10 ||High Court |
(viii) According to the information and explanations given to us the Company has notdefaulted in repayment of loans or borrowings to financial institutions banksgovernment. There are no debenture holders.
(ix) According to information and explanations given to us in our opinion the termloans raised during earlier years have been applied for the purpose for which they wereobtained. The Company has not raised any money by way of public issue offer.
(x) During the course of our examination of the books and records of the Companycarried out in accordance with the generally accepted auditing practices in India andaccording to the information and explanations given to us we have neither come across anyinstance of fraud by the Company or any fraud on the Company by its officers or employeesnoticed or reported during the year nor have we been informed of any such instance by themanagement.
(xi) According to the information and explanations given to us managerial remunerationhas been paid / provided in accordance with the requisite approvals mandated by theprovisions of Section 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. Accordingly paragraph 3(xii) of the Order is notapplicable to the Company.
(xiii) According to the information and explanation given to us all transactionsentered into by the Company with the related parties are in compliance with Sections 177and 188 of Act where applicable and the details have been disclosed in the FinancialStatements etc. as required by the applicable accounting standards.
(xiv) The Company has not made any preferential allotment or private placement ofshares or fully or partly convertible debentures during the year under review.Accordingly paragraph 3(xiv) of the Order is not applicable to the Company.
(xv) According to the information and explanations given to us the Company has notentered into any noncash transactions with directors or persons connected with him.
(xvi) According to the information and explanation given to us the Company is notrequired to be registered under Section 45-IA of the Reserve Bank of India Act 1934.
| || ||For BGJC & Associates LLP |
| || ||Chartered Accountants |
| || ||ICAI Firm Registration No.: 00304N |
| ||Pranav Jain || |
|Date : May 30 2019 ||Partner || |
|Place : Gurugram ||Membership No.: 098308 || |
ANNEXURE 2 TO THE INDEPENDENT AUDITOR'S REPORT
[Referred to in paragraph 2under Report on Other Legal and RegulatoryRequirements' in the Independent Auditor's Report of even date to the members of OmaxAutos Limited on the standalone*financial statements for the year ended March 312019.
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 Omax AutosLimited ("the Company") as of March 312019 in conjunction with our audit of thefinancial 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 the Institute of Chartered Accountants of India ("ICAI"). Theseresponsibilities include the design implementation and maintenance of adequate internalfinancial controls that were operating effectively for ensuring the orderly and efficientconduct of its business including adherence to company's 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 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 specified under section143(10) of the Act to the extent applicable to an audit of internal financial controlsboth issued by the ICAI. Those Standards and the Guidance Note require that we comply withethical requirements and plan and perform the audit to obtain reasonable assurance aboutwhether adequate 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 included obtaining anunderstanding of internal financial controls over financial reporting assessing the riskthat a material weakness exists and testing and evaluating the design and operatingeffectiveness of internal control based on the assessed risk. The procedures selecteddepend on the auditor's judgement including the assessment of the risks of materialmisstatement 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 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 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 the Company has in all material respects an adequate internalfinancial controls system over financial reporting and such internal financial controls
over financial reporting were operating effectively as at March 31 2019 based on theinternal control over financial reporting criteria established by the Company consideringthe essential components of internal control stated in the Guidance Note on Audit ofInternal Financial Controls Over Financial Reporting issued by the ICAI.
For BGJC & Associates LLP
Chartered Accountants ICAI Firm Registration No.: 00304N
| ||Pranav Jain |
| ||Partner |
| ||Membership No.: 098308 |
|Date : May 30 2019 || |
|Place : Gurugram || |