|BSE: 517330||Sector: Engineering|
|NSE: CMICABLES||ISIN Code: INE981B01011|
|BSE 12:46 | 07 Dec||20.45||
|NSE 12:32 | 07 Dec||20.45||
|Mkt Cap.(Rs cr)||33|
|Mkt Cap.(Rs cr)||32.78|
CMI Ltd. (CMICABLES) - Auditors Report
Company auditors report
To the Members of CMI LIMITED
Report on the Audit of the Standalone Financial Statements
We have audited the financial statements of CMI LIMITED ("theCompany") which comprise the balance sheet as at 31st March 2022 and thestatement of Profit and Loss (including other comprehensive income) Statement of Changesin Equity and statement of cash flows for the year then ended and notes to the financialstatements including a summary of significant accounting policies and other explanatoryinformation.
In our opinion and to the best of our information and according to theexplanations given to us except for the effects of the matter described in the Basisfor Qualified Opinion paragraph below the aforesaid financial statements give theinformation required by the Act in the manner so required and give a true and fair view inconformity with the accounting principles generally accepted in India of the state ofaffairs of the Company as at 31st March 2022 its profit/loss (including othercomprehensive income) changes in equity and its cash flows for the year ended on thatdate.
Basis for Opinion
The financial statements have been prepared by the management on agoing concern basis notwithstanding the fact that the company's net worth is eroded (NetWorth as on 31st March 2022 is minus Rs. 1693.52 Lakhs whereas its accumulated losses isRs. 3296.59 Lakhs as on that date. The Company suffered loss of Rs. 14266.58 Lakhs duringthe financial year 2021-2022 against total income of Rs. 7092.63 Lakh as against previousyear loss of 19450.04 Lakhs against total income of Rs. 20612.09 Lakhs. The company'sloans have been declared by the Banks / financial institutions as Non Performing Assets(NPA).
We conducted our audit in accordance with the Standards on Auditing(SAs) specified under section 143(10) of the Companies Act 2013. Our responsibilitiesunder those Standards are further described in the Auditor's Responsibilities for theAudit of the Financial Statements section of our report. We are independent of theCompany in accordance with the Code of Ethics issued by the Institute of CharteredAccountants of India together with the ethical requirements that are relevant to our auditof the financial statements under the provisions of the Companies Act 2013 and the Rulesthereunder and we have fulfilled our other ethical responsibilities in accordance withthese requirements and the Code of Ethics. We believe that he audit evidence we haveobtained is sufficient and appropriate to provide a basis for our opinion.
Information other than the financial statements and auditors' reportthereon
The Company's board of directors is responsible for the preparation ofthe other information. The other information comprises the information included in theBoard's Report including Annexures to Board's Report but does not include the financialstatements and our auditor's report thereon.
Our opinion on the financial statements does not cover the otherinformation and we do not express any form of assurance conclusion thereon.
In connection with our audit of the financial statements ourresponsibility is to read the other information and in doing so consider whether theother information is materially inconsistent with the financial statements or ourknowledge obtained during the course of our audit or otherwise appears to be materiallymisstated.
If based on the work we have performed we conclude that there is amaterial misstatement of this other information we are required to report that fact. Wehave nothing to report in this regard.
Key Audit Matter
Key audit matters are those matters that in our professionaljudgement were of most significance in our audit of the standalone financial statementsof the current period. These matters were addressed in the context of our audit of thestandalone financial statements as a whole and in forming our opinion thereon and we donot provide a separate opinion on these matters.
Emphasis of Matter
Attention is invited to Note 22(iii) under Explanatory Notes toFinancial Statements regarding Financial Liabilities-Non Current Borrowings. As loanaccounts with company's lenders had turned NPA during the financial year resultantly theupdated loan account statements after the NPA date are not available in some cases hencethe liabilities has been recognised on the basis of latest available loan accountstatements and balances therein The company has not accounted for liabilities towardsbanks/financial institutions beyond the NPA dates.
Attention is invited to Note 31 under Explanatory Notes to FinancialStatements regarding change in inventories. The company has reduced inventory for Rs.5064.62 Lakhs as exceptional items on the basis of technical report obtained by themanagement as difference in actual stock and book stock.
The Company's management and Board of Directors are responsible for theother information. The other information comprises the information included in theCompany's annual report but does not include the financial statements and our auditors'report thereon.
Our opinion on the standalone financial statements does not cover theother information and we do not express any form of assurance conclusion thereon.
In connection with our audit of the standalone financial statementsour responsibility is to read the other information and in doing so consider whether theother information is materially inconsistent with the standalone financial statements orour knowledge obtained in the audit or otherwise appears to be materially misstated. Ifbased on the work we have performed we conclude that there is a material misstatement ofthis other information we are required to report that fact. We have nothing to report inthis regard.
Responsibilities of Management and Those Charged with Governance forthe Standalone Financial Statements
The Company's Board of Directors is responsible for the matters statedin section 134(5) of the Companies Act 2013 ("the Act") with respect to thepreparation of these financial statements that give a true and fair view of the financialposition financial performance and cash flows of the Company in accordance with theaccounting principles generally accepted in India including the accounting Standardsspecified under section 133 of the Act. This responsibility also includes maintenance ofadequate accounting records in accordance with the provisions of the Act for safeguardingof the assets of the Company and for preventing and detecting frauds and otherirregularities; selection and application of appropriate accounting policies; makingjudgments and estimates that are reasonable and prudent; and design implementation andmaintenance of adequate internal financial controls that were operating effectively forensuring the accuracy and completeness of the accounting records relevant to thepreparation and presentation of the financial statements that give a true and fair viewand are free from material misstatement whether due to fraud or error.
In preparing the financial statements management is responsible forassessing the Company's ability to continue as a going concern disclosing as applicablematters related to going concern and using the going concern basis of accounting unlessmanagement either intends to liquidate the Company or to cease operations or has norealistic alternative but to do so.
Those Board of Directors are also responsible for overseeing theCompany's financial reporting process.
Auditor's Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether thefinancial statements as a whole are free from material misstatement whether due to fraudor error and to issue an auditor's report that includes our opinion. Reasonable assuranceis a high level of assurance but is not a guarantee that an audit conducted in accordancewith SAs will always detect a material misstatement when it exists. Misstatements canarise from fraud or error and are considered material if individually or in theaggregate they could reasonably be expected to influence the economic decisions of userstaken on the basis of these financial statements.
As part of an audit in accordance with SAs we exercise professionaljudgment and maintain professional skepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of thefinancial statements whether due to fraud or error design and perform audit proceduresresponsive to those risks and obtain audit evidence that is sufficient and appropriate toprovide a basis for our opinion. The risk of not detecting a material misstatementresulting from fraud is higher than for one resulting from error as fraud may involvecollusion forgery intentional omissions misrepresentations or the override of internalcontrol.
Obtain an understanding of internal control relevant to theaudit in order to design audit procedures that are appropriate in the circumstances. Undersection 143(3)(i) of the Companies Act 2013 we are also responsible for expressing ouropinion on whether the company has adequate internal financial controls system in placeand the operating effectiveness of such controls.
Evaluate the appropriateness of accounting policies used and thereasonableness of accounting estimates and related disclosures made by management.
Conclude on the appropriateness of management's use of the goingconcern basis of accounting and based on the audit evidence obtained whether a materialuncertainty exists related to events or conditions that may cast significant doubt on theCompany's ability to continue as a going concern. If we conclude that a materialuncertainty exists we are required to draw attention in our auditor's report to therelated disclosures in the financial statements or if such disclosures are inadequate tomodify our opinion. Our conclusions are based on the audit evidence obtained up to thedate of our auditor's report. However future events or conditions may cause the Companyto cease to continue as a going concern.
Evaluate the overall presentation structure and content of thefinancial statements including the disclosures and whether the financial statementsrepresent the underlying transactions and events in a manner that achieves fairpresentation.
We communicate with those charged with governance regarding amongother matters the planned scope and timing of the audit and significant audit findingsincluding any significant deficiencies in internal control that we identify during ouraudit.
We also provide those charged with governance with a statement that wehave complied with relevant ethical requirements regarding independence and tocommunicate with them all relationships and other matters that may reasonably be thoughtto bear on our independence and where applicable related safeguards.
From the matters communicated with those charged with governance wedetermine those matters that were of most significance in the audit of the financialstatements of the current period and are therefore the key audit matters. We describethese matters in our auditor's report unless law or regulation precludes public disclosureabout the matter or when in extremely rare circumstances we determine that a mattershould not be communicated in our report because the adverse consequences of doing sowould reasonably be expected to outweigh the public interest benefits of suchcommunication.
Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditor's Report) Order 2020("the Order") issued by the Central Government of India in terms of sub-section(11) of section 143 of the Companies Act 2013 we give in the 'Annexure A' a statementon the matters specified in paragraphs 3 and 4 of the Order to the extent applicable.
A) As required by Section 143 (3) of the Act we report that:
a) We have sought and obtained all the information and explanationswhich to the best of our knowledge and belief were necessary for the purposes of ouraudit.
b) In our opinion proper books of account as required by law have beenkept by the Company so far as it appears from our examination of those books.
c) The Balance Sheet the Statement of Profit and Loss and the CashFlow Statement dealt with by this Report are in agreement with the books of account.
d) In our opinion the aforesaid financial statements comply with theAccounting Standards specified under Section 133 of the Act read with Rule 7 of theCompanies (Accounts) Rules 2014.
e) On the basis of the written representations received from thedirectors as on 31st March 2022 taken on record by the Board of Directorsnone of the directors is disqualified as on 31st March 2021 from being appointed as adirector in terms of Section 164 (2) of the Act.
f) With respect to the adequacy of the internal financial controls withreference to financial statements of the Company and the operating effectiveness of suchcontrols refer to our separate Report in 'Annexure B'.
B) With respect to the other matters to be included in the Auditor'sReport in accordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014 inour opinion and to the best of our information and according to the explanations given tous:
i. The Company has disclosed the impact of pending litigations on itsfinancial position - refer note 42 to the Financial Statements.
ii. The Company did not have any long-term contracts includingderivative contracts for which there were any material foreseeable losses.
iii. There were no amounts which were required to be transferred to theInvestor Education and Protection Fund by the Company.
C) With respect to the matter to be included in the Auditor's Reportunder section 197(16):
In our opinion and according to the information and explanations givento us the remuneration paid by the Company to its directors during the current year iswithin eleven per cent of the net profits computed in the manner laid down in section 198of the Act.
ANNEXURE A TO THE INDEPENDENT AUDITORS' REPORT
Report as required by the Companies (Auditor's Report) Order 2020("the Order") issued by the Central Government of India in terms of sub-section(11) of section 143 of the Companies Act 2013 (Refer to in paragraph 1 under 'Report onOther Legal and Regulatory Requirements' section of our report of even date) Withreference to the Annexure A referred to in the Independent Auditors' Report to the membersof the Company on the financial statements for the year ended March 31 2022 we reportthe following:
(i)a) A. The Company has proper records related to full particularsincluding quantitative details and situation of property plant and Equipment.
B. The Company has maintained full particulars of Intangible Assets.
b) The management of the company has physically verified propertyplant and equipment of the company at regular interval. No material discrepancies werenoticed on such verification during the year.
c) Based on our examination of documents produced by the managementthe title deeds of all the immovable properties (other than properties where the companyis lessee and the lease agreements are duly executed in favour of lessee) disclosed in thefinancial statements are held in the name of the company.
>d) The Company has not revalued its property Plant and Equipmentduring the year. Therefore the provisions of Clause (i)(d) of paragraph 3 of the orderare not applicable to the company.
e) No proceeding has been initiated or are pending against the companyfor holding any benami property under the Benami Transactions (Prohibition) Act 1988 (45of 1988) and rules made there under Therefore the provisions of Clause (i) (e) ofParagraph 3 of the order is not applicable to the company.
(ii) a) The company has program of physical verification of inventoryfor conducting physical verification of inventory at reasonable intervals and the coverageand procedure of such verification by the management is appropriate. No materialdiscrepancies were noticed on such verification.
b) During any point of time of the year 2021-2022 the company had notbeen sanctioned any working capital limits in excess of Rs. five crores in aggregatefrom anks or financial institutions on the basis of security of Current assets. Thereforethe provisions of Clause (ii) (b) of Paragraph 3 of the order are not applicable to thecompany
(iii) During the year the company has not made any investments inprovided any guarantee or security or granted any loans or advances in the nature ofloans secured or unsecured to companies firms Limited Liability Partnerships or anyother parties. Therefore the provisions of clause 3(iii) of the said Order are notapplicable to the company.
(iv) The company has not made any loans investments guarantees andsecurity on which provisions of section 185 and 186 of the Companies Act 2013 areapplicable. Therefore the provisions of clause 3(iv) of the said Order are not applicableto the company.
(v) In our opinion and according to the information and explanationsgiven to us the Company has not accepted any deposits from public. Therefore theprovisions of Clause (v) of paragraph 3 of the order are not applicable to the Company.
(vi) As explained to us the Central Government of India has notspecified the maintenance of cost records under sub-section (1) of Section 148 of the Actfor any of the products of the Company. Therefore the provisions of Clause (vi) ofparagraph 3 of the order are not applicable to the Company.
(vii) (a) The Company is generally regular in depositing undisputedstatutory dues including Provident Fund Employees State Insurance Income tax Sales TaxWealth tax Service tax Duty of Customs duty of Excise Value Added Tax GST Cess andother statutory dues with the appropriate authorities to the extent applicable to it.There are no undisputed amounts payable in respect of income tax wealth tax service taxsales tax value added tax duty of customs duty of excise or cess which have remainedoutstanding as at March 31 2022 for a period of more than 6 months from the date theybecame payable except as mentioned below:
(b) According to the information and explanations given to us thereare not any statutory dues referred in sub- clause (a) which have not been deposited onaccount of any dispute. Therefore the provisions of Clause (vii)(b) of paragraph 3 of theorder are not applicable to the Company.
(viii) In our opinion and according to the information and explanationsgiven to us there is no any transaction not recorded in the books of account have beensurrendered or disclosed as income during the year in the tax assessments under the IncomeTax Act 1961 (43 of 1961).
(a) (ix).(a) In our opinion and according to the information andexplanations given to us the Company has defaulted in repayment of its loans or otherborrowings or any interest due thereon to any lender. Details of such defaults are asbelow:
(b) In our opinion and according to the information and explanationsgiven to us the company has not been a declared wilful defaulter by any bank or financialinstitution or other lender.
(c) In our opinion and according to the information and explanationsgiven to us the loans were applied for the purpose for which the loans were obtained.
(d) In our opinion and according to the information and explanationsgiven to us there are no funds raised on short term basis which have been utilised forlong term purposes.
(e) In our opinion and according to the information and explanationsgiven to us the company has not taken any funds from any entity or person on account ofor to meet the obligations of its subsidiaries associates or joint ventures.
(f) In our opinion and according to the information and explanationsgiven to us the company has not raised loans during the year on the pledge of securitiesheld in its subsidiaries joint ventures or associate companies.
(ix) (a) The Company has not raised money by way of initial publicoffer or further public offer (including debt instruments). Therefore the provisions ofClause (x)(a) of paragraph 3 of the order are not applicable to the Company.
(b) In our opinion and according to the information and explanationsgiven to us the company has not made preferential allotment or private placement ofshares during the year Therefore the provisions of Clause (x)(b) of paragraph 3 of theorder are not applicable to the Company.
(x) (a) We have not noticed any case of fraud by the company or anyfraud on the Company by its officers or employees during the year. The management has alsonot reported any case of fraud during the year.
(b) During the year no report under sub-section (12) of section 143 ofthe Companies Act has been filed by the auditors in Form ADT-4 as prescribed under rule 13of Companies (Audit and Auditors) Rules 2014 with the Central Government.
(c) As auditor we did not receive any whistle- blower complaint duringthe year.
(xi) The company is not a Nidhi Company. Therefore the provisions ofClause (xii) of paragraph 3 of the order are not applicable to the Company.
(xii) As per the information made available to us all transactionswith the related parties are in compliance with sections 177 and 188 of Companies Actwhere applicable and the details have been disclosed in the financial statements etc.as required by the applicable accounting standards. Identification of related parties weremade and provided by the management of the company.
(xiii) (a) The company has an internal control system commensurate withsize and nature of its business
(b) internal auditors report for the period under audit were consideredby the statutory auditor.
(xiv) The Company has not entered into any non-cash transactions withdirectors or persons connected with him for the year under review. Therefore theprovisions of Clause (xv) of paragraph 3 of the order are not applicable to the Company.
(xv) (a) The Company is not required to be registered under section45-IA of the Reserve Bank of India Act 1934.
(b) The company has not conducted any Non-Banking Financial or HousingFinance activities during the year.
(c) The company is not a Core Investment Company (CIC) as defined inthe regulations made by the Reserve Bank of India.
(d) As per the information and explanations received the group doesnot have any CIC as part of the group.
(xvi) The company has incurred cash loss in current financial year aswell in immediately
preceding financial year.
(xvii) There has been no resignation of the previous statutory auditorsduring the year.
(xviii) On the basis of the financial ratios ageing and expected datesof realization of financial assets and payment of financial liabilities other informationaccompanying the financial statements the auditor's knowledge of the Board of Directorsand management plans we are of the opinion that no material uncertainty exists as on thedate of the audit report that company is capable of meeting its liabilities existing atthe date of balance sheet as and when they fall due within a period of one year from thebalance sheet date.
(xix) There is not liability of the company under the provisions ofsection 135 of the Companies Act relating to Corporate Social Responsibility. Thereforethe provisions of Clause (xx) of paragraph 3 of the order are not applicable to theCompany.
(xx) The provisions of Clause (xxi) of paragraph 3 of the order are notapplicable to the Company.
Annexure B to the Independent Auditors' Report
(Referred to in paragraph 1(A)(f) under 'Report on Other Legal andRegulatory Requirements section of our report of even date)
Report on the Internal Financial Controls under Clause (i) ofSub-section 3 of Section 143 of the Companies Act 2013 ("the Act")
We have audited the internal financial controls over financialreporting of M/s CMI LIMITED ("the Company") as of March 31 2022 in conjunctionwith our audit 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 establishing andmaintaining internal financial controls based on the internal control over financialreporting criteria established by the Company considering the essential components ofinternal control stated in the Guidance Note on Audit of Internal Financial Controls OverFinancial Reporting 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 company's policies the safeguarding ofits assets the prevention and detection of frauds and errors the accuracy andcompleteness of the accounting records and the timely preparation of reliable financialinformation as required under the Companies Act 2013.
Our responsibility is to express an opinion on the Company's internalfinancial controls over financial reporting based on our audit. We conducted our audit inaccordance with the Guidance Note on Audit of Internal Financial Controls Over FinancialReporting (the "Guidance Note") and the Standards on Auditing issued by ICAIand deemed to be prescribed under section 143(10) of the Companies Act 2013 to theextent applicable to an audit of internal financial controls both applicable to an auditof Internal Financial Controls and both issued by the Institute of Chartered Accountantsof India. Those Standards and the Guidance Note require that we comply with ethicalrequirements and plan and perform the audit to obtain reasonable assurance about whetheradequate 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 aboutthe adequacy of the internal financial controls system over financial reporting and theiroperating effectiveness. Our audit of internal financial controls over financial reportingincluded obtaining an understanding of internal financial controls over financialreporting assessing the risk that a material weakness exists and testing and evaluatingthe design and operating effectiveness of internal control based on the assessed risk. Theprocedures selected depend on the auditor's judgment 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 andappropriate to provide a basis for our audit opinion on the Company's internal financialcontrols system over financial reporting.
Meaning of Internal Financial Controls Over Financial Reporting
A company's internal financial control over financial reporting 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 control overfinancial reporting includes those policies and procedures that
1. pertain to the maintenance of records that in reasonable detailaccurately and fairly reflect the transactions and dispositions of the assets of thecompany;
2. provide reasonable assurance that transactions are recorded asnecessary to permit preparation of financial statements in accordance with generallyaccepted accounting principles and that receipts and expenditures of the company arebeing made only in accordance with authorizations of management and directors of thecompany; and
3. provide reasonable assurance regarding prevention or timelydetection of unauthorized acquisition use or disposition of the company's assets thatcould have a material effect on the financial statements.
Inherent Limitations of Internal Financial Controls Over FinancialReporting
Because of the inherent limitations of internal financial controls overfinancial reporting including the possibility of collusion or improper managementoverride of controls material misstatements due to error or fraud may occur and not bedetected. Also projections of any evaluation of the internal financial controls overfinancial reporting to future periods are ubject to the risk that the internal financialcontrol over financial reporting may become inadequate because of changes in conditionsor that the degree of compliance with the policies or procedures may deteriorate.
In our opinion the Company has in all material respects an adequateinternal financial controls system over financial reporting and such internal financialcontrols over financial reporting were operating effectively as at March 31 2021 basedon the internal control over financial reporting criteria established by the Companyconsidering the essential components of internal control stated in the Guidance Note onAudit of Internal Financial Controls Over Financial Reporting issued by the Institute ofChartered Accountants of India.