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Hindustan Motors Ltd.

BSE: 500500 Sector: Auto
NSE: HINDMOTORS ISIN Code: INE253A01025
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NSE 15:29 | 18 Dec 7.60 0
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OPEN 7.55
PREVIOUS CLOSE 7.67
VOLUME 64700
52-Week high 12.80
52-Week low 6.66
P/E
Mkt Cap.(Rs cr) 158
Buy Price 7.55
Buy Qty 249.00
Sell Price 0.00
Sell Qty 0.00
OPEN 7.55
CLOSE 7.67
VOLUME 64700
52-Week high 12.80
52-Week low 6.66
P/E
Mkt Cap.(Rs cr) 158
Buy Price 7.55
Buy Qty 249.00
Sell Price 0.00
Sell Qty 0.00

Hindustan Motors Ltd. (HINDMOTORS) - Auditors Report

Company auditors report

To

The Members of

HINDUSTAN MOTORS LIMITED

Report on the Financial Statements

We have audited the accompanying financial statements of Hindustan Motors Limited ("theCompany") which comprise the Balance Sheet as at 31st March 2017 the Statementof Profit and Loss the Cash Flow Statement for the year then ended and a summary of thesignificant accounting 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 of thesefinancial statements that give a true and fair view of the financial position financialperformance and cash flows of the Company in accordance with the accounting principlesgenerally accepted in India including the Accounting Standards specified under Section133 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 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; anddesign implementation and maintenance of adequate internal financial controls that wereoperating 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 misstatement whether due to fraud orerror.

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 there under.

We conducted our audit in accordance with the Standards on Auditing specified underSection 143(10) of the Act. Those Standards require that we comply with ethicalrequirements and plan and perform the audit to obtain reasonable assurance about whetherthe financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts andthe disclosures in the financial statements. The procedures selected depend on theauditor's judgment including the assessment of the risks of material misstatement of thefinancial statements whether due to fraud or error. In making those risk assessments theauditor considers 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 of the accounting 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 is sufficient and appropriate toprovide a basis for our audit opinion on the financial statements.

Opinion

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 the Actin the manner so required and give a true and fair view in conformity with the accountingprinciples generally accepted in India of affairs of the Company as at 31st March 2017and its loss and its cash flows for the year ended on that date.

Emphasis of Matters

We draw attention to the following Note to the financial statements :

Note 40 to the Notes to the financial statements which indicates that the net worth ofthe Company is fully eroded as at 31st March 2017 leading to a material uncertaintyabout the Company's ability to continue as a 'going concern'. However the financialstatements of the Company have been prepared on a 'going concern Rs.basis for the reasonsstated in the said Note. Our opinion is not modified in respect of the 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) of Section 143 ofthe Act we give in the Annexure a statement on the matters specified in paragraphs 3 and4 of the said Order to the extent applicable.

2. As required by Section 143 (3) of the Act we report to the extent applicable 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 read with Note 42.

c) The Balance Sheet the Statement of Profit and Loss and the Cash Flow Statementdealt with by this Report are in agreement with the books of account.

d) In our opinion the aforesaid standalone financial statements comply with theAccounting Standards specified under Section 133 of the Act read with Rule 7 of theCompanies (Accounts) Rules 2014.

e) The 'going concern Rs.matter described under the Emphasis of Matters paragraphabove in our opinion may have an adverse effect on the functioning of the Company.

f) On the basis of the written representations received from the directors as on 31stMarch 2017 taken on record by the Board of Directors none of the directors isdisqualified as on 31st March 2017 from being appointed as a director in terms of Section164 (2) of the Act.

g) With respect to the adequacy of internal financial controls over financial reportingof the Company and the operating effectiveness of such controls refer our separate Reportin "Annexure A".

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 2014read withCompanies (Audit & Auditors) amendment rules 2017 in our opinion and 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 29 to the financial statements;

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

iii. There has been no delay in transferring amounts required to be transferred to theInvestor Education and Protection Fund by the Company except as indicated in Note 10 tothe financial statements

iv. The Company has provided requisite disclosures in the financial statements as toholdings as well as dealings in Specified Bank Notes during the period from 8th November2016 to 30th December 2016. Based on audit procedures and relying on the managementrepresentation we report that the disclosures are in accordance with books of accountmaintained by the Company. Refer Note 34 to the financial statements.

For RAY & RAY
Chartered Accountants
(Firm's Registration No. : 301072E)
Asish Kumar Mukhopadhyay
Place : Kolkata Partner
Date : 29th May 2017 Membership No. : 056359

Annexure to the Auditor's Report

(Referred to in Paragraph 1 of 'Report on Other Legal and Regulatory Requirements Rs.ofour report of even date)

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

(b) All fixed assets have not been physically verified by the management during theyear but there is a regular programme of such verification in a phased manner to cover allthe items over a period of three years which in our opinion is reasonable having regardto the size of the Company and the nature of its assets. In respect of fixed assets lyingwith third parties the management has a process of obtaining periodic confirmations. Nomaterial discrepancies were noticed on such verification/ confirmations during the period.

(c) The title deed of immovable properties are held in the name of the Company.

(ii) The management has not conducted any physical verification of inventory during theyear and as a result material discrepancies if any were not ascertained and dealt within the books of account.

(iii) According to the information and explanation 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 of theAct. Accordingly provisions of clauses (iii) (a) (b) and (c) of paragraph 3 of theaforesaid Order are not applicable to the Company.

(iv) According to the information and explanation given to us during the year theCompany has not given loans made investments given guarantees and provided securitiescovered by provisions of section 185 and 186 of the Act.

(v) According to the information and explanations given to us the Company has notaccepted any deposits during the year.

(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 asspecified under Sub-Section (1) of Section 148 of the Companies Act 2013 related to themanufacture of Vehicles Spare Parts of Vehicles Steel Products and Components and are ofthe opinion that prima facie the prescribed accounts and records have been made andmaintained.

(vii) (a) According to the information and explanations given to us and on the basis ofchecking the records of the Company we are of the opinion that the Company is generallyregular in depositing undisputed statutory dues including provident fund employeesRs.state insurance income tax sales tax service tax duty of customs duty of excisevalue added tax cess and any other statutory dues with appropriate authorities thoughthere has been delays in respect of sales tax value added tax and municipal tax. Theextent of arrears of outstanding statutory dues as on the last day of the financial yearconcerned for a period of more than six months from the date they became payable are asmentioned below :

Nature of the Statute Nature of dues Amount ( Rs.in lacs) Period to which amount relates Due Date Date of payment
The Central Sales Tax Act 1956 CST 486.43 April 2013 to June 2014 May 2013 to July 2014 Not paid
West Bengal Value Added Tax Act 2003 VAT 1201.32 April 2013 to June 2014 May 2013 to July 2014 Not paid
The Central Sales Tax Act 1956 Sales Tax Deferral credit 1022.52 June 2012 to June 2014 July 2012 to July 2014 Not paid
West Bengal Sales Tax Act 1994 Sales Tax Deferral credit 1959.77 June 2012 to March 2014 July 2012 to April 2014 Not paid
West Bengal Value Added Tax Act 2003 Sales Tax Deferral credit 50.35 April 2014 to June 2014 July 2014 Not paid
The West Bengal Municipal Act 1993 Municipal Tax under Uttarpara Kotrang Municipality 96.60 April 2012 to March 2015 April 2013 to April 2016 Not paid

(b) According to the information and explanations given to us the following dues ofsales tax value added tax duty of custom and duty of excise have not been deposited bythe Company on account of any dispute :

Nature of the Statute Nature of dues Amount ( Rs. in lacs) Period to which amount relates Forum where dispute is pending
The Central Excise Act 1944 Dispute on Account of Classification Cenvat Credit. Assessable Value Differential Excise Duty Input Service Tax Credit Excise duty on PDI 5427.10 1984-2015 CESTAT High Court/Commissioner (Appeals)/Commissioner/Additional Commissioner/Joint Commissioner Assistant Commissioner of Central Excise.
The Central Sales Tax Act 1956 Stock Transfer Non-submission of C/D Forms etc 987.44 1995-2015 High Court/ W.B. Commercial Taxes Appellate and Revisional Board/ Additional Commissioner-Appeal/ Joint Commissioner- Appeal
Tamil Nadu Sales Tax Act 1959 Additional Sales tax etc 2.52 1989-1996 Assistant Commissioner
West Bengal Sales Tax Act 1994 Non Receipt of Sales tax form Interest Penalty Post Return Adjustment etc. 0.37 2003-2004 WB Commercial taxes Appellate & Revision board
West Bengal Value Added Tax Act 2003 Provisional Assessment Enhancement of turnover with wrong calculation and taxed 6005.80 2007-2015 Taxation Tribunal of West Bengal/West Bengal Commercial tax Appellate & Revision Board/Additional Commissioner
The Customs Act 1956 Dispute on account of Classification Duty on inclusion of Technical Knowhow fees on imported goods import of Engines Short Levy etc. 49.89 1990-2006 Commissioner/Assistant Commissioner Appeals/ Tribunal
M.P. Commercial Tax Act 1994 Exemption Notification denied by Commissioner Appeal 12.25 1997-2004 Appellate Board Bhopal
M.P. VAT Act 2002 Ex-party Assessment Order 26.64 2011-2012 Commercial Tax Officer
W.B. Commercial Tax Act Entry Tax 149.09 2012-2014 High Court

(viii) Based on our audit procedures and as per the information and explanations givento us by the management the Company has overdrawn cash credit borrowings from Bank ofBaroda during the year amounting to Rs.3.12 lakhs with an overall delay of less than 90days and Rs.133.39 lakhs from UCO Bank with an overall delay of more than 90 days. Theoverdrawn balance remains Rs.1.78 lakhs and 133.39 lakhs for Bank of Baroda and UCO Bankrespectively as on the balance sheet date.

The Company has outstanding debentures as on the Balance Sheet date. The Company hasdefaulted in repayment of dues to debenture holders which includes overdue principalamount of Rs. 684.33 lakhs and interest amount of Rs. 172.53 lakhs as on Balance Sheetdate due since September 29 2016.

(ix) According to the information and explanations given to us the Company has notraised money by way of initial public offer or further public offer including debtinstruments and term loan during the year. Accordingly clause (ix) of paragraph 3 of theaforesaid Order is not applicable to the Company.

(x) According to the information and explanations given to us no fraud by the Companyor on the Company by its officers or employees has been noticed or reported during theyear.

(xi) According to the information and explanations given to us no managerialremuneration is paid during the year by the Company. Accordingly clause of paragraph 3 ofthe aforesaid Order is not applicable to the Company.

(xii) The Company is not a Nidhi Company. Accordingly clause (xii) of paragraph 3 ofthe aforesaid Order is not applicable to the Company.

(xiii) On the basis of our examination of the books of account of the Company andaccording to the information and explanations given to us the transactions entered intowith the related parties are in compliance with section 177 and 188 of the Act and thesame has been disclosed in the Financial Statements as required by the applicableAccounting 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.

(xv) On the basis of our examination of the records of the Company and according to theinformation and explanations given to us the Company has not entered into any non-cashtransactions with directors or persons connected with him.

(xvi) According to the information and explanations given to us the Company is notrequired to be registered under section 45-IA of the Reserve Bank of India Act 1934.

For RAY & RAY
Chartered Accountants
(Firm's Registration No. : 301072E)
Asish Kumar Mukhopadhyay
Place : Kolkata Partner
Date : 29th May 2017 Membership No. : 056359

ANNEXUREA

ANNEXURE TO THE INDEPENDENT AUDITOR'S REPORT OF EVEN DATE ON THE FINANCIAL STATEMENTSOF HINDUSTAN MOTORS LIMTED

Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section143 of the Companies Act 2013 ("the 2013 Act")

Report on the Financial Statements

We have audited the internal financial controls over financial reporting of HindustanMotors Limited ("the Company") as of March 31 2017 in conjunction with ouraudit of the 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 laying down and maintaining internalfinancial controls based on the essential components of internal control stated in theGuidance Note on Audit of Internal Financial Controls Over Financial Reporting issued bythe Institute of Chartered Accountants of India. These responsibilities include thedesign implementation and maintenance of adequate internal financial controls that wereoperating effectively for ensuring the orderly and efficient conduct of its businessincluding adherence to company's policies the safeguarding of its assets the preventionand detection of frauds and errors the accuracy and completeness of the accountingrecords and the timely preparation of reliable financial information as required underthe 2013 Act.

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 Standards on Auditing to the extent applicable to an audit of internal financialcontrols and the Guidance Note on Audit of Internal Financial Controls Over FinancialReporting (the "Guidance Note") both issued by the Institute of CharteredAccountants of India. 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 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 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 audit opinion on the internal financial controls system overfinancial 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 of records that in reasonable detail accurately andfairly reflect the transactions and dispositions of the assets of the company;

2) provide reasonable assurance that transactions are recorded as necessary to permitpreparation of financial statements in accordance with generally accepted accountingprinciples and that receipts and expenditures of the company are being made only inaccordance with authorisations of management and directors of the company; and

3) provide reasonable assurance regarding prevention or timely detection ofunauthorised acquisition use or disposition of the company's assets that could have amaterial effect on the financial statements.

Inherent Limitations of Internal Financial Controls over Financial Reporting

In view 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.

Opinion

In our opinion the Company has in all material respects an adequate internalfinancial controls system over financial reporting and such internal financial controlsover financial reporting were operating effectively as at March 31 2017 based on theessential components of internal control stated in the Guidance Note on Audit of InternalFinancial Controls Over Financial Reporting issued by the Institute of CharteredAccountants of India.

For RAY & RAY
Chartered Accountants
(Firm's Registration No. : 301072E)
Asish Kumar Mukhopadhyay
Place : Kolkata Partner
Date : 29th May 2017 Membership No. : 056359