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Cimmco Ltd.

BSE: 505230 Sector: Others
NSE: CIMMCO ISIN Code: INE184C01028
BSE LIVE 12:28 | 18 Jan 70.40 -1.25
(-1.74%)
OPEN

71.15

HIGH

72.90

LOW

70.40

NSE LIVE 13:35 | 18 Jan 70.90 -0.35
(-0.49%)
OPEN

72.90

HIGH

72.90

LOW

70.50

OPEN 71.15
PREVIOUS CLOSE 71.65
VOLUME 398
52-Week high 95.90
52-Week low 56.35
P/E
Mkt Cap.(Rs cr) 141.86
Buy Price 70.40
Buy Qty 100.00
Sell Price 71.30
Sell Qty 30.00
OPEN 71.15
CLOSE 71.65
VOLUME 398
52-Week high 95.90
52-Week low 56.35
P/E
Mkt Cap.(Rs cr) 141.86
Buy Price 70.40
Buy Qty 100.00
Sell Price 71.30
Sell Qty 30.00

Cimmco Ltd. (CIMMCO) - Auditors Report

Company auditors report

To

The Members of

CIMMCO LIMITED

Report on the Financial Statements

We have audited the accompanying financial statements of CIMMCO LIMITED ("theCompany") which comprise the Balance Sheet as at March 31 2016 the StatementofProfit and Loss and Cash FlowStatementfortheyear then ended and a summaryofsignificantaccounting policies and other explanatory information.

Management's Responsibility for the 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 financial statements that give a true and fair view of the financial positionfinancial performance and cash flows of the Company in accordance with accountingprinciples generally accepted in India including the Accounting Standards specified underSection 133 of the Act read with Rule 7 of the Companies (Accounts) Rules 2014. Thisresponsibility also includes maintenance of adequate accounting records in accordance withthe provisions of the Act for safeguarding of 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; andthe design implementation and maintenance of adequate internal financial controls thatwere operating effectively for ensuring the accuracy and completeness of the accountingrecords relevant to the preparation and presentation of the financial statements thatgive a true and fair view and are free from material misstatements whether due to fraudor error.

Auditor's Responsibility

Our responsibility is to express an opinion on these financial statements based on ouraudit. We have taken into account the provisions of the Act the accounting and auditingstandards and matters which are required to be included in the audit report under theprovisions of the Act and the Rules made thereunder. We conducted our audit in accordancewith the Standards on Auditing issued by the Institute ofChartered Accountants of Indiaas specified under Section 143(10) of the Act. Those Standards require that we comply withethical requirements and plan and perform the audit to obtain reasonable assurance aboutwhether the financial statements arefreefrom material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts anddisclosures in the financial statements. The procedures selected depend on theauditor'sjudgment including theassessmentofthe risksofmaterial misstatementofthefinancialstatements whetherdue to fraud or error. In making those risk assessments the auditorconsiders internal financial control relevant to the Company's preparation of thefinancial statements that give a true and fair view in order to design audit proceduresthat are appropriate in the circumstances. An audit also includes evaluating theappropriateness ofaccounting policies used and the reasonableness of the accountingestimates made by the Company's Directors as well as evaluating the overall presentationof the financial statements. We believe that the audit evidence we have obtained issufficient and appropriate to provide a basis forour qualified audit opinion on thefinancial statements.

Basis for qualified opinion

We draw attention to note no. 13(i) regarding certain claims of Rs 3952.35 lacs (Rs3952.35 lacs as at March 312015) which has been considered good of recovery by themanagement. Although the management is hopeful to recover the claims in full pendingfinal decision of the Court we are unable to comment on its recoverability includingconsequential impact that may arise in this regard in these financial statements.This hadalso caused us to qualify our audit opinion on thefinancial statements for theyear endedMarch 312015.

Qualified Opinion

In our opinion and to the best of our information and according to the explanationsgiven to us except for the possible effect of the matter described in the Basis forQualified Opinion paragraph above thefinancial statements give the information requiredby the Act in the manner so required and give a true and fairview in conformity with theaccounting principles generally accepted in India of the state ofaffairs of the Companyas at March 312016 its loss and its cash flows fortheyearended on that date.

Emphasis of Matter

We draw attention to note no. 29(A) regarding certain claims raised by a Sub-contractoragainst the Company which has been upheld by the arbitration tribunal and a demand of Rs2525.85 lacs (including interest of Rs. 1721.63 lacs) has been awarded against theCompany. The Company has filed an appeal against the said award with the Hon'ble HighCourt of Delhi in respect of which a stay has been granted by the Hon'ble High Court.Pending final decision of the Hon'ble High Court the Company has not given any effect tothe above demand in these financial statements. Our opinion 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 ofthe Act we give in the Annexure 1 a statement on the matters specified in paragraphs 3and 4 of the Order.

2. As required by Section 143(3) of the 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 effect 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 it appears from ourexamination ofthose books;

c) The Balance Sheet Statement of Profit and Loss and Cash Flow Statement dealt withby this Report are in agreement with the books ofaccount;

d) Exceptforthe possible effectofthe matter described in the Basis forQualified Opinionparagraph in ouropinion the aforesaid financial statements comply with the AccountingStandards specified under Section 133 of the Act read with Rule 7 of the Companies(Accounts) Rules 2014;

e) The matterdescribed 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 March312016 and taken on record by the Board of Directors none of the directors isdisqualified as on March 312016 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 matters connectedtherewith are as stated in the Basis forQualified Opinion paragraph above.

h) With respect to the adequacy of the internal financial controls overfinancialreporting of the Company and the operating effectiveness of such 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 financial statements - Refer Note 6(b)(i) and 29 to thefinancialstatements;

ii. The Company did not have any long-term contracts including derivative contractsfor which 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.

For S. R. BATLIBOI & CO. LLP
Chartered Accountants
ICAI Firm Registration No.: 301003E/E300005
per Kamal Agarwal
Place: Kolkata Partner
Date: May 252016 Membership No.: 58652

ANNEXURE 1 TO THE AUDITOR'S REPORT

Referred to in our report of even date to the members ofCimmco Limitedasatandfortheyearended March 312016

(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 of the Company and thenature of its assets. No material discrepancies were noticed on such verification.

(c) According to the information and explanations given by the management the titledeeds of immovable properties included in fixed assets are held in the name of the Companyexcept for 3 numbers of freehold land aggregating to gross block and net block of Rs.4713.30 lacs as at March 312016 for which original registered sale deed / conveyancedeed / transfer deed /assignment deed were not available with the Company and we have beenprovided with the photo copies of the same. Hence we are unable to comment on the same.Further above includes freehold land aggregating to Rs. 2728.60 lacs for which a disputewas raised by a third party for the title of the land which is pending resolution in theHon'ble Supreme Court of India as at March 31 2016. Also refer Note 9(b) of the financialstatements.

(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 orother parties covered in the register maintained under Section 189 of theCompanies 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 of the 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 made a detailed examinationof the same.

(vii) (a) Undisputed statutory dues including provident fund employees'stateinsurance income-tax sales-tax service tax duty ofcustom duty of excise value addedtax cess and other material statutory dues have generally been regularly deposited withthe appropriate authorities though there has been a slight delay in a few cases.

(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 ofcustom 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 ofdispute are as follows:

Name of the Statute Nature of Dues Amount (Rs. in lacs) Period towhich the amount relates Forumwhere dispute is pending
The Central Excise Act 1944 Incorrect availment of cenvat credit non-paymentofexcise 2157.68 1999-2000 and 2011-12 Hon'ble CESTAT Delhi
duty non- maintenance of separate records for common 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. 126.28 46.44 1989-1994 2010-2011 and 2011-2015 Hon'ble High Court Gwalior 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 Rajasthan Sales Tax Act / Central Sales Tax Act 1956 Differential Sales Tax and Non-submission ofstatutoryforms 37.27 (net of of Rs. 483.36 lacs paid under protest) 1998-99 to 2000-01 Hon'ble High Court Rajasthan

(viii) In our opinion and according to the information and explanations given by themanagement the Company has not defaulted in repayment of loans or borrowing 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 of the 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 of Section 197 read with Schedule V to the CompaniesAct 2013.

(xii) In our opinion the Company is not a nidhi company. Therefore the provisionsofclause 3(xii) of the 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 188 ofCompanies Act 2013 where applicable and the details have been disclosed in the notes tothe financial 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 252016 Membership No.: 58652

ANNEXURE 2 TO THE INDEPENDENT AUDITOR'S REPORT OF EVEN DATE ON THE FINANCIAL STATEMENTSOF CIMMCO LIMTED Reporton the Internal FinancialControlsunderClause (i) ofSub-section3ofSection 143oftheCompaniesAct 2013("theAct")

We have audited the internal financial controls over financial reporting of CIMMCOLIMITED ("the Company") as of March 312016 in conjunction with our audit ofthe financial statements of the Company for the year ended on that date.

Management's Responsibility for Internal Financial Controls

The Company's management is responsible for establishing and maintaining internalfinancial controls based on the internal control over financial reporting criteriaestablished by the Company considering the essential components of internal control statedin the Guidance Note on Audit of Internal Financial Controls Over Financial Reportingissued by the Institute of Chartered Accountants of India. These responsibilities includethe design implementation and maintenance of adequate internal financial controls thatwere operating effectively for ensuring the orderly and efficient conduct of its businessincluding adherence to the Company's policies the safeguarding of its assets theprevention and detection of frauds and errors the accuracy and completeness of theaccounting records and the timely preparation of reliablefinancial information asrequired 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 control based on the assessed risk. The proceduresselected depend on the auditor's judgement including the assessment of the risks ofmaterial 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 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 overfinancialreporting including the possibility of collusion or improper managementoverrideofcontrols material misstatements due to erroror fraud may occurand notbedetected. Also projections ofany evaluation of the internal financial controlsoverfinancial reporting to future periods are subject to the risk that the internalfinancial control overfinancial reporting may become inadequate because ofchanges inconditions or that the degree of compliance with the policies or procedures maydeteriorate.

Qualified Opinion

According to the information and explanations given to us and based on our audit thefollowing material weakness has been identified in the operating effectiveness of theCompany's internal financial controls overfinancial reporting as at March 312016:

Attention is drawn to Basis for qualified opinion paragraph of Auditors'Report onFinancial Statements more fully described therein regarding certain claims of Rs 3952.35lacs (Rs 3952.35 lacs as at March 312015) which has been considered good of recovery bythe management. Although the management is hopeful to recover the claims in full pendingfinal decision of the Court we are unable to comment on its recoverability. This couldpotentially result in misstatement of Company's Other 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 ordetected on a timely basis. In our opinion the Company has in allmaterial respects maintained adequate internal financial controls over financialreporting as of March 31 2016 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 of the material weakness described above on the achievement of theobjectives of the control criteria the Company's internal financial controlsoverfinancial reporting were operating effectively as of March 312016.

Explanatory paragraph

We also have audited in accordance with the Standards on Auditing issued by theInstitute ofChartered Accountants of India as specified under Section 143(10) of the Actthe financial statements of Cimmco Limited which comprise the Balance Sheet as at March31 2016 and the related Statement of Profit and Loss and Cash Flow Statement for theyear then ended and a summary of significant accounting policies and other explanatoryinformation. Material weakness as described above was considered in determining thenature timing and extent ofaudit tests applied in our audit of the March 312016financial statements of Cimmco Limited and this report does not affect our report datedMay 25 2016 which 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 252016 Membership No.: 58652