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Cimmco Ltd.

BSE: 505230 Sector: Engineering
NSE: CIMMCO ISIN Code: INE184C01028
BSE 00:00 | 22 Mar 34.25 0.25
(0.74%)
OPEN

33.05

HIGH

34.45

LOW

32.55

NSE 00:00 | 22 Mar 33.45 -0.45
(-1.33%)
OPEN

34.05

HIGH

34.05

LOW

33.00

OPEN 33.05
PREVIOUS CLOSE 34.00
VOLUME 191
52-Week high 98.00
52-Week low 28.05
P/E
Mkt Cap.(Rs cr) 94
Buy Price 32.00
Buy Qty 2001.00
Sell Price 35.00
Sell Qty 1.00
OPEN 33.05
CLOSE 34.00
VOLUME 191
52-Week high 98.00
52-Week low 28.05
P/E
Mkt Cap.(Rs cr) 94
Buy Price 32.00
Buy Qty 2001.00
Sell Price 35.00
Sell Qty 1.00

Cimmco Ltd. (CIMMCO) - Auditors Report

Company auditors report

To the Members of CIMMCO LIMITED

Report on the Indian Accounting Standards (Ind AS) Financial Statements

1. We have audited the accompanying Ind AS financial statements of CIMMCO LIMITED("the Company") which comprise the Balance Sheet as at March 312018 theStatement of Profit and Loss (including Other Comprehensive Income) the Cash FlowStatement and the Statement ofChanges in Equityfor the year then ended and a summaryofthe significant accounting policies and otherexplanatory information.

Management's Responsibility for the Ind AS Financial Statements

2. 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 to give a true and fair view ofthe financial positionfinancial performance (including other comprehensive income) cash flows and changes inequity of the Company in accordance with the accounting principles generally accepted inIndia including the Indian Accounting Standards specified in the Companies (IndianAccounting Standards) Rules 2015 (as amended) under Section 133 ofthe Act. Thisresponsibility also includes maintenance ofadequate 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; anddesign implementation and maintenance ofadequate internal financial controls that wereoperating effectively for ensuring the accuracy and completeness ofthe accounting recordsrelevant to the preparation and presentation ofthe Ind AS financial statements that give atrue and fairview and arefree from material misstatement whether due to fraud or error.

Auditors' Responsibility

3. Our responsibility is to express an opinion on these Ind AS financial statementsbased on our audit.

4. We have taken into account the provisions of the Act and the Rules made thereunderincluding the accounting and auditing standards and matters which are required to beincluded in the audit report under the provisions ofthe Act and the Rules made thereunder.

5. We conducted our audit ofthe Ind AS financial statements in accordance with theStandards on Auditing specified under Section 143(10) of the Act and other applicableauthoritative pronouncements issued by the Institute of Chartered Accountants of India.Those Standards and pronouncements require that we comply with ethical requirements andplan and perform the audit to obtain reasonable assurance about whether the Ind ASfinancial statements are free from material misstatement.

6. An audit involves performing procedures to obtain audit evidence about the amountsand the disclosures in the Ind AS financial statements. The procedures selected depend onthe auditors'judgment including the assessment of the risks of material misstatement ofthe Ind AS financial statements whetherdue to fraud or error. In making those riskassessments the auditor considers internal financial control relevant to the Company'spreparation of the Ind AS financial statements that give a true and fair view in order todesign audit procedures that are appropriate in the circumstances. An audit also includesevaluating the appropriateness of the accounting policies used and the reasonableness ofthe accounting estimates made by the Company's Directors as well as evaluating theoverall presentation ofthe Ind AS financial statements.

7. We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our qualified audit opinion on the Ind AS financial statements.

Basis for qualified opinion

8. We draw your attention to Note 6 (a) to the Ind AS financial statements regardingcertain claims amounting to Rs. 854.81 lacs (Rs. 854.81 lacs as at March 312017) netofexpected credit loss of Rs. 3097.53 lacs (Rs. 3097.53 lacs as at March 312017) whichhas been considered good and recoverable by the management. Pending outcome of theCompany's appeal against the arbitration order and final decision ofthe Hon'ble High Courtof Delhi we are unable to comment on the recoverability of the above and itsconsequential impact on these Ind AS financial statements.

Qualified Opinion

9. In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid Ind AS financial statements give the information required bythe Act in the manner so required and except for the indeterminate effects of the matterreferred to in Basis for Qualified Opinion paragraph above give a true and fairview inconformity with the accounting principles generally accepted in India ofthe state ofaffairs ofthe Company as at March 312018 and its total comprehensive income (comprisingof loss and other comprehensive income) its cash flows and the changes in equityfortheyear ended on that date.

Emphasis of Matter

10. The Ind AS financial statements for theyearended March 312017 have been revised bythe management to include thefinancial information ofTitagarh Agrico Private Limitedconsequent to its amalgamation with the Company with effect from April 1 2016 theappointed date pursuant to the Order of National Company Law Tribunal dated October162017 as referred to in Note 41 to the Ind AS financial statements. Our opinion is notmodified in respect ofthis matter.

Other Matter

11. The Ind AS financial statements ofthe Company and Titagarh Agrico Private Limited(amalgamated with the Company with effect from April 12016as referred to in paragraph10above) for theyear ended March 312017 were audited by anotherfirm ofcharteredaccountants under the Companies Act 2013 who vide their reports dated May 182017expressed a modified and an unmodified opinion respectively on those financial statements.Our opinion is not modified in respect ofthis matter.

Report on Other Legal and Regulatory Requirements

12. As required by the Companies (Auditor's Report) Order 2016 issued by the CentralGovernment of India in terms ofsub-section (11)ofsection 143 of the Act ("theOrder") and on the basis of such checks of the books and records of the Company aswe considered appropriate and according to the information and explanations given to uswe give in the Annexure B a statement on the matters specified in paragraphs 3 and 4 ofthe Order.

13. As required by Section 143 (3) of the Act we report that:

(a) We have sought and except for the indeterminate effects of the matter referred toin the Basis for Qualified Opinion paragraph above obtained all the information andexplanations which to the best of our knowledge and belief were necessary for the purposesof our audit.

(b) In our opinion exceptfor the indeterminate effects ofthe matter referred to in theBasis forQualified Opinion paragraph above proper books ofaccount as required by law havebeen kept by the Company so far as it appears from ourexamination ofthose books.

(c) The Balance Sheet the Statement of Profit and Loss (including other comprehensiveincome) the Cash Flow Statement and the Statement ofChanges in Equity dealt with by thisReport are in agreement with the books ofaccount.

(d) In our opinion except for the indeterminate effects of the matter referred to inthe Basis for Qualified Opinion paragraph above the aforesaid Ind AS financial statementscomply with the Indian Accounting Standards specified under Section 133 ofthe Act.

(e) On the basis ofthe written representations received from the directors as on March312018taken on record by the Board of Directors none ofthe directors is disqualified ason March 312018from being appointed as a director in terms ofSection 164 (2) ofthe Act.

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

(g) With respect to the adequacy ofthe internal financial controls with reference tofinancial statements ofthe Company and the operating effectiveness ofsuch controls referto our separate Report in Annexure A.

(h) With respect to the other matters to be included in the Auditors'Report inaccordance with Rule 11 ofthe Companies (Audit and Auditors) Rules 2014 in our opinionand to the best of our knowledge and belief and according to the information andexplanations given to us:

i. The Company has disclosed the impact if any of pending litigations as at March 312018 on its financial position in its Ind AS financial statements - Refer Note 34 to theInd AS financial statements.

ii. The Company has long-term contracts as at March 312018 for which there were nomaterial foreseeable losses. The Company did not have any derivative contracts as at March312018.

iii. There were no amounts which were required to be transferred to the InvestorEducation and Protection Fund by the Company during theyearended March 312018.

iv. The reporting on disclosures relating to Specified Bank Notes is not applicable tothe Company for theyearended March 312018.

For Price Waterhouse & Co Chartered Accountants LLP

Firm Registration Number: 304026E/E-300009 Chartered Accountants Avijit Mukerji

Place: Kolkata Partner

Date: May 292018 Membership No.: 056155

Referred to in paragraph 13(g) ofthe IndependentAuditors'Reportofeven datetothemembersofCimmco Limited on the Ind AS financial

statementsasofandfortheyear ended March 312018

4. Our audit involves performing procedures to obtain audit evidence about the adequacyofthe internal financial controls system with reference to financial statements and theiroperating effectiveness. Our audit of internal financial controls with reference tofinancial statements included obtaining an understanding of internal financial controlswith reference to financial statements assessing the risk that a material weaknessexists and testing and evaluating the design and operating effectiveness of internalcontrol based on the assessed risk. The procedures selected depend on the auditor'sjudgement including the assessment of the risks of material misstatement of the financialstatements whether due to fraud orerror.

5. We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our qualified audit opinion on the Company's internal financialcontrols system with reference tofinancial statements.

Meaning of Internal Financial Controlswith reference to financial statements

6. A company's internal financial controls with reference tofinancial statements is aprocess designed to provide reasonable assurance regarding the reliability of financialreporting and the preparation of financial statements for external purposes in accordancewith generally accepted accounting principles. A company's internal financial controlswith reference to financial statements includes those policies and procedures that (1)pertain to the maintenance of records that in reasonable detail accurately and fairlyreflect the transactions and dispositions ofthe assets ofthe company; (2) providereasonable assurance that transactions are recorded as necessary to permit preparation offinancial statements in accordance with generally accepted accounting principles and thatreceipts and expenditures of the company are being made only in accordance withauthorisations of management and directors of the company; and (3) provide reasonableassurance regarding prevention or timely detection of unauthorised acquisition use ordisposition ofthe company's assets that could have a material effect on the financialstatements.

Inherent Limitations of Internal Financial Controls with reference to financialstatements

7. Because ofthe inherent limitations of internal financial controls with reference tofinancial statements including the possibility of collusionorimpropermanagementoverrideofcontrols material misstatementsdueto errororfraud mayoccurand not bedetected.Also projections of any evaluation ofthe internal financialcontrols with reference to financial statements to future periods are subject to the riskthat the internal financial controls with reference to financial statements may becomeinadequate because of changes in conditions or that the degree of compliance with thepolicies or procedures may deteriorate.

Basis for Qualified Opinion

8. According to the information and explanations given to us and based on our auditthe following material weakness has been identified in the operating effectiveness oftheCompany's internal financial controls with reference to financial statements as at March312018:

The Company's internal financial controls relating to review of Claims Receivable forappropriate provisioning did not operate effectively which resulted in non-ascertainmentof adequate provision against certain Claims Receivable due from a customer (Refer theBasis for Qualified Opinion paragraph in the main audit report).

9. A'material weakness'is a deficiency ora combination of deficiencies in internalfinancial controls with reference tofinancial statements such that there is a reasonablepossibility that a material misstatement of Company's annual or interim financialstatements will not be prevented or detected on a timely basis.

Qualified Opinion

10. In our opinion except for the effects of the material weakness described in theBasis for Qualified Opinion paragraph above the Company has in all material respects anadequate internal financial controls system with reference to financial statements andsuch internal financial controls with reference to financial statements were operatingeffectively as at March 312018 based on the internal control over financial reportingcriteria established by the Company considering the essential components ofinternalcontrol stated in the Guidance Note on Audit oflnternal Financial Controls Over FinancialReporting issued by the Institute ofChartered Accountants of India.

11. We have considered the material weakness identified and reported above indetermining the nature timing and extent ofaudit tests applied in ouraudit ofthe Ind ASfinancial statements ofthe Companyfortheyearended March 312018 and the material weaknesshas affected our opinion on the Ind AS financial statements ofthe Companyfor theyear endedon that date and we have issued a qualified opinion on the Ind AS financial statements ofthe Company (Refer paragraph 9 of the main audit report).

For Price Waterhouse & Co Chartered Accountants LLP

Firm Registration Number: 304026E/E-300009 Chartered Accountants Avijit Mukerji

Place: Kolkata Partner

Date: May 292018 Membership No.: 056155

Referred to in paragraph 12 of the Independent Auditors'Report of even date to themembers of Cimmco Limited on the Ind AS financial

statementsasofandfortheyear ended March 312018

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

(b) The fixed assets are physically verified by the Management according to a phasedprogramme designed to cover all the items over a period ofthreeyears which in ouropinion is reasonable having regard to the size ofthe Company and the nature ofitsassets. Pursuant to the programme a portion of the fixed assets has been physicallyverified by the Management during the year and no material discrepancies have been noticedon such verification.

(c) The title deeds of immovable properties as disclosed in Note 3(i) on propertyplant and equipment and Note 3(ii) on investment properties to the Ind AS financialstatements are held in the name of the Company except for the following [details ofwhich are set out in Notes 3(i) and 3 (ii) to the Ind AS financial statements]:

No. of Particulars cases Gross Block (Rs. in lacs) Net Block (Rs. in lacs) Remarks
1 Freehold Land 4734.83 4734.83 Original copy oftitle deeds not available with the Company
2 Investment Properties - Freehold Land 821.24 821.24 Original copy of title deeds not available with the Company

ii. The physical verification of inventory (excluding stocks with third parties) havebeen conducted at reasonable intervals by the Management during the year. In respect ofinventory lying with third parties these have substantially been confirmed by them. Thediscrepancies noticed on physical verification of inventory as compared to book recordswere not material.

iii. The Company has not granted any loans secured or unsecured to companies firmsLimited Liability Partnerships or other parties covered in the register maintained underSection 189 ofthe Act. Therefore the provisions ofClause 3(iii) (iii)(a) (iii)(b) and(iii)(c) ofthe said Order are not applicable to the Company.

iv. In our opinion and according to the information and explanations given to us theCompany has complied with the provisions ofSection 185 and 186 ofthe Companies Act 2013in respect ofthe loans and investments made and guarantees and security provided by itas applicable.

v. The Company has not accepted any deposits from the public within the meaningofSections 73 74 75 and 76 ofthe Act and the Rules framed there under to the extentnotified.

vi. Pursuant to the rules made by the Central Government of India the Company isrequired to maintain cost records as specified under Section 148(1) of the Act in respectof its products. We have broadly reviewed the same and are of the opinion that primafacie the prescribed accounts and records have been made and maintained. We have nothowever made a detailed examination ofthe records with a view to determine whether theyare accurate or complete.

vii. (a) According to the information and explanations given to us and the records ofthe Company examined by us in our opinion the Company

is generally regular in depositing undisputed statutory dues in respect ofincome taxservice tax value added tax provident fund duty of customs and goods and service taxwith effect from July 12017 though there has been delay in a few cases and is regularin depositing undisputed statutory dues including employees'state insurance sales taxduty of excise cess and other material statutory dues as applicable with theappropriate authorities.

(b) According to the information and explanations given to us and the records of theCompany examined by us there are no dues of service- tax value added tax and goods andservice tax which have not been deposited on account of any dispute. The particulars ofdues of income-tax sales tax duty ofcustoms duty ofexcise and as at March 312018whichhave not been deposited on account ofadispute are as follows:

Name of the Statute Natureof Amount Periodtowhich Forum where
Dues (Rs. in lacs) the amount relates dispute is pending
The Central Excise 126.27 1989-1994 High Court
Excise Act 1944 duty 19.68 1999-2001 CESTAT
42.96 January2011 to March 2015 CommissionerofCentral Excise (Appeal)
4.86 2011-12 CommissionerofCentral Excise
5.93 April 2015 to December 2016 Assistant Commissioner Central Excise
The Customs Customs 32.17 2004-2005 CESTAT
Act 1962 duty 20.00 2000-20011985-1987 Additional/Deputy Director of Enforcement
30.63 1992-93 Additional Commissioner Customs
The Rajasthan Sales tax 154.25 2013-2014 Appellate Authority
Sales Tax Act Commercial Taxes
The Orissa Sales Tax Act Sales tax 117.60 1999-2001 High Court
The Income-tax Income 73.98 2004-2005 Income Tax Appellate
Act 1961 tax Tribunal

viii. According to the records of the Company examined by us and the information andexplanation given to us the Company has not defaulted in repayment of loans or borrowingsto any financial institution or bank or Government or dues to debenture holders asapplicable as atthe balance sheet date.

ix. In our opinion and according to the information and explanations given to us themoneys raised by way of term loans have been applied on an overall basis for thepurposes forwhich they were obtained. The Company has not raised any moneys by way ofinitial public offer and further public offer (including debt instruments).

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 material fraud by the Company oron the Company by its officers or employeesnoticed or reported during theyear nor have we been informed ofany such case by theManagement.

xi. The Company has paid/ provided for managerial remuneration in accordance with therequisite approvals mandated by the provisions of Section 197 read with ScheduleVtotheAct.

xii. As the Company is not a Nidhi Company and the Nidhi Rules 2014are not applicableto it the provisions ofClause 3(xii) ofthe Order are not applicable to the Company.

xiii. The Company has entered into transactions with related parties in compliance withthe provisions of Sections 177 and 188 of the Act. The details of related partytransactions have been disclosed in the Ind AS financial statements as required underIndian Accounting Standard (Ind AS) 24 Related Party Disclosures specified under Section133 of the Act.

xiv. The Company has not made any preferential allotment or private placement ofsharesorfully or partly convertible debentures during theyear under review. Accordingly theprovisions ofClause 3(xiv) of the Order are not applicable to the Company.

xv. The Company has not entered into any non cash transactions with its directors orpersons connected with him. Accordingly the provisions ofClause 3(xv) of the Order arenot applicable to the Company.

xvi. The Company is not required to be registered underSection 45-IA ofthe ReserveBankofIndia Act 1934. Accordingly the provisions ofClause 3(xvi) of the Order are notapplicable to the Company.

For Price Waterhouse & Co Chartered Accountants LLP

Firm Registration Number: 304026E/E-300009 Chartered Accountants Avijit Mukerji

Place: Kolkata Partner

Date: May 292018 Membership No.: 056155