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Cimmco Ltd.

BSE: 505230 Sector: Engineering
NSE: CIMMCO ISIN Code: INE184C01028
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OPEN 93.15
PREVIOUS CLOSE 93.05
VOLUME 202372
52-Week high 114.00
52-Week low 58.20
P/E
Mkt Cap.(Rs cr) 209
Buy Price 0.00
Buy Qty 0.00
Sell Price 103.90
Sell Qty 382.00
OPEN 93.15
CLOSE 93.05
VOLUME 202372
52-Week high 114.00
52-Week low 58.20
P/E
Mkt Cap.(Rs cr) 209
Buy Price 0.00
Buy Qty 0.00
Sell Price 103.90
Sell Qty 382.00

Cimmco Ltd. (CIMMCO) - Auditors Report

Company auditors report

To the Members of CIMMCO LIMITED Report on the Ind AS Financial Statements

We have audited the accompanying Ind AS financial statements ofCimmco Limited("the Company") which comprise the Balance Sheet as at March 312017 theStatement of Profit and Loss including the statement of Other Comprehensive Income theCash Flow Statement and the Statement ofChanges in Equityfor theyear then ended and asummary ofsignificant accounting policies and other explanatory information.

Management's Responsibility for the Ind AS financial statements

The Company's Board of Directors is responsible for the matters stated in Section134(5) of the Companies Act 2013 ("the Act") with respect to the preparation ofthese Ind AS financial statements that give a true and fair view of the financialposition financial performance including other comprehensive income cash flows andchanges in equity of the Company in accordance with accounting principles generallyaccepted in India including the Accounting Standards specified under section 133 of theAct read with Companies (Indian Accounting Standards) Rules 2015 as amended. Thisresponsibility also includes maintenance of adequate accounting records in accordance withthe provisions ofthe Actforsafeguarding of the assets ofthe Company and for preventing anddetecting frauds and other irregularities; selection and application of appropriateaccounting policies; making judgments and estimates that are reasonable and prudent; andthe design implementation and maintenance of adequate internal financial control thatwere operating effectively for ensuring the accuracy and completeness ofthe accountingrecords relevant to the preparation and presentation of the Ind AS financial statementsthat give a true and fair view and are free from material misstatement whether due tofraud or error.

Auditor's Responsibility

Our responsibility is to express an opinion on these Ind AS financial statements basedon our audit. We have taken into account the provisions of the Act the accounting andauditing standards and matters which are required to be included in the audit report underthe provisions ofthe Act and the Rules made thereunder. We conducted our audit inaccordance with the Standards on Auditing issued by the Institute of CharteredAccountants of India as specified under Section 143(10) ofthe Act. Those Standardsrequire that we comply with ethical requirements and plan and perform the audit to obtainreasonable assurance about whether the Ind AS financial statements are free from materialmisstatement.

An audit involves performing procedures to obtain audit evidence about the amounts anddisclosures in the Ind AS financial statements. The procedures selected depend on theauditor's judgment including the assessment of the risks of material misstatement of theInd AS financial statements whether due to fraud or error. In making those riskassessments the auditor considers internal financial controls relevant to the Company'spreparation ofthe Ind AS financial statements that give a true and fair view in order todesign audit procedures that are appropriate in the circumstances. An auditalso includesevaluating the appropriateness ofaccounting policies used and the reasonableness oftheaccounting estimates made by the Company's Directors as well as evaluating the overallpresentation of the Ind AS financial statements. We believe that the audit evidence wehave obtained is sufficient and appropriate to provide a basis for our qualified auditopinion on the Ind AS financial statements.

Basis for qualified opinion

We draw attention to note no. 6(a) regarding lease rent receivable from Indian Railwaysof Rs. 854.81 lacs (Rs. 759.83 lacs as at March 312016) net of expected credit lossamounting to Rs. 3097.53 lacs measured and recognized as on the date of transition basedon the management's estimate of time for final outcome ofthe matter in Court/Arbitrationproceedings and adjusted with opening retained earnings. Pending outcome of Company'sappeal againstthe arbitration order and final decision ofthe Court we are unable tocomment on recoverability ofthe above and its consequential impact on these financialstatements. Our audit opinion on the financial statements for the year ended March 312016was also modified on this matter.

Qualified opinion

In our opinion and to the best of our information and according to the explanationsgiven to us except for the effects of the matter described in the Basis for QualifiedOpinion paragraph above the aforesaid Ind AS financial statements give the informationrequired by the Act in the manner so required and give a true and fair view in conformitywith the accounting principles generally accepted in India of the state of affairs of theCompany as at March 312017 ofits loss including other comprehensive income its cashflows and the changes in equity for theyear ended on that date.

Emphasis of Matter

We draw attention to Note 40 to the financial statements in respect of Scheme ofAmalgamation to merge the business of Titagarh Agrico Private Limited with the Companywith effect from 1st April 2016 subject to necessary approvals more fully describedtherein. Pending completion of necessaryapprovals no adjustment has been made in thesefinancial statements. Ouropinion is notqualified in respectofthis matter.

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 sub-section (11) ofsection 143 oftheAct we give in the Annexure 1 a statement on the matters specified in paragraphs 3 and 4ofthe Order.

2. As required by section 143(3) ofthe Act we report that:

(a) We have sought and except for the matter described in the Basis for QualifiedOpinion paragraph obtained all the information and explanations which to the best ofourknowledge and beliefwere necessary forthe purpose ofour audit;

(b) Except for the possible effects of the matter described in the Basis for QualifiedOpinion paragraph In our opinion proper books of account as required by law have beenkept by the Company so far as appears from ourexamination ofthose books;

(c) The Balance Sheet Statement of Profit and Loss including the Statement of OtherComprehensive income Cash Flow Statement and Statement ofChanges in Equity dealt with bythis Report are in agreement with the books ofaccount;

(d) Exceptforthe possible effects ofthe matterdescribed in the Basis for QualifiedOpinion paragraph above in our opinion the aforesaid Ind AS financial statements complywith the Accounting Standards specified under section 133 ofthe Act Companies (IndianAccounting Standards) Rules 2015 as amended ;

(e) The matter described in the Basis for Qualified Opinion paragraph above in ouropinion may have an adverse effect on the functioning of theCompany;

(f) On the basis ofwritten representations received from the directors as on March312017 and taken on record by the Board ofDirectors none of the directors isdisqualified as on March 312017 from being appointed as a director in terms of section164 (2) of the Companies Act 2013;

(g) The qualification relating to the maintenance ofaccounts and other mattersconnected therewith are as stated in the Basis forQualified Opinion paragraph above.

(h) With respect to the adequacy ofthe internal financial controls overfinancialreporting ofthe Company and the operating effectiveness ofsuch controls refer to ourseparate report in "Annexure 2" to this report;

(i) 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 ofour information and according to the explanations given to us:

i. The Company has disclosed the impact of pending litigations on its financialposition in its Ind AS financial statements - Refer Note 15(b)(i)and 33 to the Ind ASfinancial statements;

ii. The Company did not have any long-term contracts including derivative contracts forwhich there were any material foreseeable losses.

iii. There were no amounts which were required to be transferred to the InvestorEducation and Protection Fund by the Company.

iv. The Company has provided requisite disclosures in Note 35 to these Ind AS financialstatements as to the holding of Specified Bank Notes on November 8 2016 and December 302016 as well as dealings in Specified Bank Notes during the period from November 82016 toDecember 302016. Based on our audit procedures and relying on the managementrepresentation regarding the holding and nature of cash transactions including SpecifiedBank Notes we report that these disclosures are in accordance with the books ofaccountsmaintained by the Company and as produced to us by the Management.

For S. R. BATLIBOI & CO. LLP
Chartered Accountants
ICAI Firm Registration No.: 301003E/E300005
per Kamal Agarwal
Place: Kolkata Partner
Date: May 182017 Membership No.: 058652

ANNEXURE 1 TO THE AUDITOR'S REPORT

Referred to in our report of even date to the members of CIMMCO LIMITED as at and forthe year ended March 312017

(i) (a) The Company has maintained proper records showing full particulars includingquantitative details and situation offixed assets.

(b) All fixed assets have not been physicallyverified by the management during the yearbut there is a regular programme ofverifying the fixed assets over a period of three yearswhich in our opinion is reasonable having regard to the size ofthe Company and thenature of its assets. No material discrepancies were noticed on such verification.

(c) According to the information and explanations given by the managementthetitle deedsofimmovable properties included in property plant and equipmentand investment propertyare held in the name ofthe company exceptfor 3 numbers of freehold land aggregating togross blockand net blockof Rs. 5556.07 lacs as at March 312017 forwhich originalregistered sale deed/conveyance deed/transfer deed /assignment deed were not availablewith the Company and we have been provided with the photo copies ofthe same. Hence we areunable to comment on the same. Further above includes freehold land aggregating to Rs.2345.80 lacs for which a dispute was raised by a third party for the title ofthe landwhich is pending resolution in the Hon'ble Supreme Court of India as at March 312017.Also refer note 3(i)(a) and 3(i)(b) ofthe financial statements.

(ii) The management has conducted physical verification of inventory at reasonableintervals during theyear and no material discrepancies were noticed on such physicalverification.

(iii) According to the information and explanations given to us the Company has notgranted any loans secured or unsecured to companies firms Limited LiabilityPartnerships or other parties covered in the register maintained under section 189 oftheCompanies Act 2013. Accordingly the provisions of clause 3(iii)(a) (b) and (c) of theOrder are not applicable to the Company and hence not commented upon.

(iv) In our opinion and according to the information and explanations given to usthere are no loans investments guarantees and securities granted in respect ofwhichprovisions ofsection 185 and 186 ofthe Companies Act 2013are applicable and hence notcommented upon.

(v) The Company has not accepted any deposits from the public.

(vi) We have broadly reviewed the books of account maintained by the Company pursuantto the rules made by the Central Government for the maintenance of cost records undersection 148(1) of the Companies Act 2013 related to the manufacture of wagons andengineering products and are of the opinion that prima facie the specified accounts andrecords have been made and maintained. We have not however done a detailed examinationofthe same.

(vii) (a) The Company is regular in depositing with appropriate authorities undisputedstatutory dues including provident fund employees' state insurance income-taxsales-tax service tax duty of custom duty of excise value added tax cess and othermaterial statutory dues applicable to it.

(b) According to the information and explanations given to us no undisputed amountspayable in respect of provident fund employees' state insurance income-tax service taxsales-tax duty of custom duty of excise value added tax cess and other materialstatutory dues were outstanding at theyear end for a period of more than six months fromthe date they became payable.

(c) According to the records of the Company the dues outstanding of income taxsales-tax service tax customs duty excise duty value added tax and cess on account ofdisputes are as follows:

Name of the Statute Nature of Dues Amount (Rs. in lacs) Periodtowhich the amount relates Forumwhere dispute is pending
The Central Excise Act 1944 Incorrect availment of cenvat credit non-paymentofexcise 2211.47 19861999-2000 and 2011-15 Hon'ble CESTAT Delhi
duty/non- maintenance of separate records for common 126.28 1989-1994 Hon'ble High Court Gwalior
inputs and input services used for production ofexempted and non-exempted excisable products/non- inclusion of value offree supply in the assessablevalue/non-compliance with Rule6(3A) etc. 46.44 2010-2011 and 2011-2015 Additional Commissioner ofCentral Excise Jaipur
The Customs Act 1962 Differential Customs Duty Penalty for non-submission of necessary documents for consumption of imported goods 32.17 2004-2005 Hon'ble CESTAT Delhi
The Customs Act 1962 Differential Customs Duty Penalty for non-submission of necessary documents for consumption of imported goods. 20.00 2000-2001

1986-1987

Additional/Deputy Director of Enforcement
The Rajasthan Sales Tax Act Differential Sales Tax 173.00 1997-1998 Rajasthan Tax Board
The Orissa Sales Tax Act Differential Sales Tax / Entry Tax/Penalty 147.04 1999-2001 to 2000-2001 Deputy

Commissionerof Commercial Taxes

(viii) In our opinion and according to the information and explanations given by themanagement the Company has not defaulted in repayment of loans or borrowings to a bank.The Company did not have any outstanding loans or borrowing dues in respect of a financialinstitution or to government or dues to debenture holders during theyear.

(ix) According to the information and explanations given by the management the Companyhas not raised any money by way of initial public offer / further public offer / debtinstruments and term loans hence reporting under clause (ix) is not applicable to theCompany and hence not commented upon.

(x) Based upon the audit procedures performed for the purpose of reporting the true andfair view of the financial statements and according to the information and explanationsgiven by the management we report that no fraud by the company or no fraud on the companyby the officers and employees ofthe Company has been noticed or reported during theyear.

(xi) According to the information and explanations given by the management themanagerial remuneration has been paid / provided in accordance with the requisiteapprovals mandated by the provisions ofsection 197 read with Schedule Vto the CompaniesAct 2013.

(xii) In our opinion the Company is not a nidhi company. Therefore the provisionsofclause 3(xii) ofthe order are not applicable to the Company and hence not commentedupon.

(xiii) According to the information and explanations given by the managementtransactions with the related parties are in compliance with section 177 and 188ofCompanies Act 2013whereapplicable and the details have been disclosed in the notes tothefinancial statements as required by the applicable accounting standards.

(xiv) According to the information and explanations given to us and on an overallexamination of the balance sheet the company has not made any preferential allotment orprivate placement of shares or fully or partly convertible debentures during the yearunder review and hence reporting requirements under clause 3(xiv) are not applicable tothe company and not commented upon.

(xv) According to the information and explanations given by the management the Companyhas not entered into any non-cash transactions with directors or persons connected withhim as referred to in section 192 ofCompanies Act 2013.

(xvi) According to the information and explanations given to us the provisions ofsection 45-IA of the Reserve Bank of India Act 1934 are not applicable to the Company.

For S. R. BATLIBOI & CO. LLP
Chartered Accountants
ICAI Firm Registration No.: 301003E/E300005
per Kamal Agarwal
Place: Kolkata Partner
Date: May 182017 Membership No.: 058652

ANNEXURE 2 TO THE INDEPENDENT AUDITOR'S REPORT OF EVEN DATE ON THE FINANCIAL STATEMENTSOF CIMMCO LIMTED

Reporton the Internal FinancialControlsunderClause

(i) ofSub-section 3ofSection 143oftheCompaniesAct 2013("theAct")

We have audited the internal financial controls over financial reporting of CIMMCOLIMITED ("the Company") as of March 312017 in conjunction with our audit ofthe standalone financial statements of the Company for the year ended on that date.

Management's Responsibility for Internal Financial Controls

The Company's management is responsible for establishing and maintaining internalfinancial controls based on the internal control over financial reporting criteriaestablished by the Company considering the essential components of internal controlsstated in the Guidance Note on Audit of Internal Financial Controls Over FinancialReporting issued by the Institute of Chartered Accountants of India. 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 the Company's policies the safeguardingof its assets the prevention and detection of frauds and errors the accuracy andcompleteness ofthe accounting records and the timely preparation of reliablefinancialinformation as required under the Companies Act 2013.

Auditor's Responsibility

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 as specified under section143(10) of the Companies Act 2013 to the extent applicable to an audit of internalfinancial controls both applicable to an audit of Internal Financial Controls and bothissued by the Institute of Chartered Accountants of India. 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 ifsuch controls operatedeffectively in all material respects.

An audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal financial controls system overfinancial reporting and their operatingeffectiveness. Our audit of internal financial controls overfinancial reporting includedobtaining an understanding of internal financial controls overfinancial reportingassessing the risk that a material weakness exists and testing and evaluating the designand operating effectiveness of internal controls 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 qualified audit opinion on the internal financial controlsoverfinancial reporting.

Meaning of Internal Financial Controls Over Financial Reporting

A company's internal financial control overfinancial reporting is a process designed toprovide 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 overfinancialreporting includes those policies and procedures that (1) pertain to the maintenanceofrecords that in reasonable detail accurately and fairly reflect the transactions anddispositions of the assets ofthe 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 ofthe 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 managementoverrideofcontrols material misstatements due to erroror fraud may occurand notbedetected. Also projections ofany evaluation ofthe internal financial controls overfinancial reporting to future periods are subject to the risk that the internal financialcontrol over financial reporting may become inadequate because ofchanges in conditions orthat the degree of compliance with the policies or procedures may deteriorate.

Qualified Opinion

According to the information and explanations given to us and based on our auditthefollowing material weakness has been identified as at March 312017:

Attention is drawn to Basis for qualified opinion paragraph of Auditors' Report onStandalone Financial Statements more fully described therein regarding lease rentreceivable from Indian Railways of Rs 854.81 lacs (Rs 759.83 lacs as at March 312016)net of expected credit loss amounting to Rs. 3097.53 lacs measured and recognized as onthe date of transition based on the management's estimate of time for final outcome ofthematter in Court/Arbitration proceedings and adjusted with opening retained earnings.Pending outcome of Company'sappeal against the arbitration order and final decision of theCourt we are unable to comment on the recoverability of the above and its consequentialimpact on these financial statements. This could potentially result in misstatementofCompany's otherfinancial assets.

A'material weakness'is a deficiency ora combination of deficiencies in internalfinancial control over financial reporting such that there is a reasonable possibilitythat a material misstatementofthe company's annual or interim financial statements willnot be prevented or detected on a timely basis. In our opinion the Company has in allmaterial respects maintained adequate internal financial controls over financialreporting as of March 31 2017 based on the internal control over financial reportingcriteria established by the Company considering the essential components of internalcontrol stated in the Guidance Note on Auditof Internal Financial Controls Over FinancialReporting issued by the Institute ofChartered Accountants of India and except for thepossible effects ofthe material weakness described above on the achievement oftheobjectives ofthe control criteria the Company's internal financial controls overfinancialreporting were operating effectively as of March 312017.

We also have audited in accordance with the Standards on Auditing issued by theInstitute ofChartered Accountants of India as specified under Section 143(10) ofthe Actthe financial statements of Cimmco Limited which comprise the Balance Sheet as at March312017 the Statement of Profit and Loss including the statement of Other ComprehensiveIncome the Cash Flow Statement and the Statement of Changes in Equity for the year thenended and a summary of significant accounting policies and other explanatory information.Material weakness as described above was considered in determining the nature timing andextent of audit tests applied in our audit of the March 312017 standalone financialstatements ofCimmco Limited and this report does notaffectour report dated May 182017which expressed a qualified opinion on thosefinancial statements.

For S. R. BATLIBOI & CO. LLP
Chartered Accountants
ICAI Firm Registration No.: 301003E/E300005
per Kamal Agarwal
Place: Kolkata Partner
Date: May 182017 Membership No.: 058652