To the Members of CMI LIMITED
Report on the Audit of the Standalone Financial Statements
We have audited the financial statements of CMI LIMITED ("the Company")which comprise the balance sheet as at 31st March 2020 and the statement of Profit andLoss(including other comprehensive income) Statement of Changes in Equity and statementof cash flows for the year then ended and notes to the financial statements including asummary of significant accoun ng policies and other explanatory information.
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 accoun ngprinciples generally accepted in India of the state of a airs of the Company as at 31stMarch 2020 its profit/loss (including other comprehensive income) changes in equity andits cash flows for the year ended on that date.
Basis for Opinion
We conducted our audit in accordance with the Standards on Auditing (SAs) specifiedunder section 143(10) of the Companies Act 2013. Our responsibilities under thoseStandards are further described in the Auditor's Responsibili es for the Audit of theFinancial Statements section of our report. We are independent of the Company inaccordance with the Code of Ethics issued by the Ins tute of Chartered Accountants ofIndia together with the ethical requirements that are relevant to our audit of the fifinancial statements under the provisions of the Companies Act 2013 and the Rulesthereunder and we have fulfi lled our other ethical responsibili es in accordance withthese requirements and the Code of Ethics. We believe that the audit evidence we haveobtained is su cient and appropriate to provide a basis for our opinion.
Informa on other than the fi financial statements and auditors' report thereon
The Company's board of directors is responsible for the preparation of the otherinformation. The other information comprises the information included in the Board'sReport including Annexures to Board's Report but does not include the fi financialstatements and our auditor's report thereon.
Our opinion on the financial statements does not cover the other information and we donot express any form of assurance conclusion thereon.
In connec on with our audit of the financial statements our responsibility is to readthe other information and in doing so consider whether the other information ismaterially inconsistent with the financial statements or our knowledge obtained during thecourse of our audit or otherwise appears to be materially misstated.
If based on the work we have performed we conclude that there is a materialmisstatement of this other information we are required to report that fact. We havenothing to report in this regard.
Key Audit Ma er
Key audit ma ers are those ma ers that in our professional judgement were of mostsignifi cance in our audit of the standalone financial statements of the current period.These ma ers were addressed in the context of our audit of the standalone financialstatements as a whole and in forming our opinion thereon and we do not provide aseparate opinion on these ma ers.
|The key audit matter ||How the matter was addressed in our audit |
|Adoption of Ind AS 116 Leases || |
|As described in Note to the standalone financial statements during the current year the Company has adopted Ind AS 116 Leases (Ind AS 116') the new standard on lease accounting. The application and transi on to this accoun ng standard is complex and is an area of focus in our audit. ||Our audit procedures on adop on of Ind AS 116 include the following: |
|Ind AS 116 introduces a new lease accoun ng model wherein lessees are required to recognize a right-of-use (ROU) asset and a lease liability arising from a lease on its balance sheet. The lease liabili es are ini ally measured term as per the contract/ arrangement. Adop on of the standard involves significant judgements and es mates including determina on of the discount rates and the lease term. || Evaluated the design and implementation of the processes and internal controls relating to implementa on of the new lease standard. |
|The Company adopted the modified retrospective approach method to transi on to Ind AS 116 consequently compara ve financial information was not restated. || Based on our evalua on of the contractual agreements entered into and our knowledge of the business assessed the appropriateness of the leases iden fi ed by the Company. the reasonableness of the discount rates used in compu ng the lease liabili es. |
|Addi onally the standard mandates detailed disclosures with respect of transi on. || On transi on to Ind AS 116 with e ect from 1 April 2019: o Evaluated the method of transi on and related adjustments. |
|Taxation related ma ers Determina on of tax provisions and assessment of con ngent liabili es involves judgment with respect to various tax posi ons on deduc bility of transactions tax incen ves/ exemp ons interpreta on of laws and regula ons etc. Judgement is also required in assessing the range of possible outcomes for some of these ma ers. || Tested completeness of the lease data by reconciling the Company's operating lease commitments as at 31 March 2019 to data used in compu ng the ROU asset and related lease liabili es. |
|Management makes an assessment to determine the outcome of these ma ers and decides to make an accrual or consider it to be a possible contingent liability in accordance with applicable accoun ng standards. Accordingly taxation and contingent liability related ma ers are areas of focus in the audit. || Selected samples using the sta s cal sampling approach. |
|See notes 3(I) and 12 to the financial statements. || For such samples selected we assessed the key terms and condi ons of each lease with the underlying lease contracts evaluated computa on of lease liabili es and challenged the key es mates such as discount rates and the lease term. |
| || For new / modified leases tested the lease accoun ng and es mates/ judgments used by the Company. |
| || Evaluated the appropriateness of the accoun ng policy disclosures provided under the new lease standard and assessed the completeness and mathema cal accuracy of the relevant disclosures including those related to transi on. |
| ||In view of the signifi cance of the ma er we applied the following key audit procedures: |
| || Tes ng the design and opera ng e ec veness of controls rela ng to taxa on and con ngencies. |
| || We evaluated management's judgements in respect of es mates of provisions exposures and con ngencies. |
| || In understanding and evaluating management's judgements we even considered third party advice received by the Company wherever applicable the status of recent and current tax assessments and enquiries the outcome of previous claims judgmental posi ons taken in tax returns and developments in the tax environment. |
| || Additionally we also evaluated the adequacy of disclosures on provisions and con ngencies made in the financial statements. |
Other Informa on
The Company's management and Board of Directors are responsible for the otherinformation. The other information comprises the information included in the Company'sannual report but does not include the financial statements and our auditors' reportthereon.
Our opinion on the standalone financial statements does not cover the other informationand we do not express any form of assurance conclusion thereon.
In connec on with our audit of the standalone financial statements our responsibilityis to read the other information and in doing so consider whether the other informationis materially inconsistent with the standalone financial statements or our knowledgeobtained in the audit or otherwise appears to be materially misstated. If based on thework we have performed we conclude that there is a material misstatement of this otherinformation we are required to report that fact. We have nothing to report in thisregard.
Responsibili es of Management and Those Charged with Governance for the StandaloneFinancial Statements
The Company's Board of Directors is responsible for the ma ers stated in section 134(5)of the Companies Act 2013 ("the Act") with respect to the prepara on of thesefinancial statements that give a true and fair view of the financial posi on financialperformance and cash flows of the Company in accordance with the accoun ng principlesgenerally accepted in India including the accounting Standards specified under section133 of the Act. This responsibility also includes maintenance of adequate accoun ngrecords in accordance with the provisions of the Act for safeguarding of the assets of theCompany and for preven ng and detec ng frauds and other irregulari es; selection andapplication of appropriate accounting policies; making judgments and estimates that arereasonable and prudent; and design implementa on and maintenance of adequate internalfinancial controls that were opera ng e ec vely for ensuring the accuracy andcompleteness of the accoun ng records relevant to the prepara on and presenta on of thefinancial statements that give a true and fair view and are free from materialmisstatement whether due to fraud or error.
In preparing the financial statements management is responsible for assessing theCompany's ability to con nue as a going concern disclosing as applicable mattersrelated to going concern and using the going concern basis of accoun ng unless managementeither intends to liquidate the Company or to cease opera ons or has no realis c alternave but to do so.
Those Board of Directors are also responsible for overseeing the Company's financialreporting process.
Auditor's Responsibilities for the Audit of the Financial Statements
Our objec ves are to obtain reasonable assurance about whether the financial statementsas a whole are free from material misstatement whether due to fraud or error and toissue an auditor's report that includes our opinion. Reasonable assurance is a high levelof assurance but is not a guarantee that an audit conducted in accordance with SAs willalways detect a material misstatement when it exists. Misstatements can arise from fraudor error and are considered material if individually or in the aggregate they couldreasonably be expected to influence the economic decisions of users taken on the basis ofthese financial statements.
As part of an audit in accordance with SAs we exercise professional judgment andmaintain professional skep cism throughout the audit. We also:
Iden fy and assess the risks of material misstatement of the financialstatements whether due to fraud or error design and perform audit procedures responsiveto those risks and obtain audit evidence that is su cient and appropriate to provide abasis for our opinion. The risk of not detec ng a material misstatement resul ng fromfraud is higher than for one resul ng from error as fraud may involve collusion forgeryinten onal omissions misrepresenta ons or the override of internal control.
Obtain an understanding of internal control relevant to the audit in order todesign audit procedures that are appropriate in the circumstances. Under section 143(3)(i)of the Companies Act 2013 we are also responsible for expressing our opinion on whetherthe company has adequate internal financial controls system in place and the opera ng e ecveness of such controls.
Evaluate the appropriateness of accoun ng policies used and the reasonablenessof accoun ng es mates and related disclosures made by management.
Conclude on the appropriateness of management's use of the going concern basisof accoun ng and based on the audit evidence obtained whether a material uncertaintyexists related to events or condi ons that may cast significant doubt on the Company'sability to con nue as a going concern. If we conclude that a material uncertainty existswe are required to draw a en on in our auditor's report to the related disclosures in thefinancial statements or if such disclosures are inadequate to modify our opinion. Ourconclusions are based on the audit evidence obtained up to the date of our auditor'sreport. However future events or condi ons may cause the Company to cease to con nue as agoing concern.
Evaluate the overall presentation structure and content of the financialstatements including the disclosures and whether the financial statements represent theunderlying transactions and events in a manner that achieves fair presenta on. Wecommunicate with those charged with governance regarding among other ma ers the plannedscope and
ming of the audit and significant audit findings including any significant deficiencies in internal control that we iden fy during our audit. We also provide thosecharged with governance with a statement that we have complied with relevant ethicalrequirements regarding independence and to communicate with them all rela onships andother ma ers that may reasonably be thought to bear on our independence and whereapplicable related safeguards. From the ma ers communicated with those charged withgovernance we determine those ma ers that were of most signifi cance in the audit of thefinancial statements of the current period and are therefore the key audit ma ers. Wedescribe these ma ers in our auditor's report unless law or regula on precludes publicdisclosure about the ma er or when in extremely rare circumstances we determine that ama er should not be communicated in our report because the adverse consequences of doingso would reasonably be expected to outweigh the public interest benefits of such communicaon.
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 Companies Act 2013 we give in the Annexure A' a statement on the ma ersspecifi ed in paragraphs 3 and 4 of the Order to the extent applicable.
A) As required by Sec on 143 (3) of the Act we report 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 examina on of those books.
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 financial statements comply with the Accoun ngStandards specified under Sec on 133 of the Act read with Rule 7 of the Companies(Accounts) Rules 2014.
e) On the basis of the wri en representa ons received from the directors as on 31stMarch 2020 taken on record by the Board of Directors none of the directors isdisqualified as on 31st March 2020 from being appointed as a director in terms of Sec on164 (2) of the Act.
f) With respect to the adequacy of the internal financial controls with reference to fifinancial statements of the Company and the opera ng e ec veness of such controls referto our separate Report in Annexure B'.
B) With respect to the other ma ers 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 of our information and according to the explanations given to us:
i. The Company has disclosed the impact of pending li ga ons on its financial posi on -refer note 45 to the Standalone Financial Statements.
ii. The Company did not have any long-term contracts including deriva ve contracts forwhich there were any material foreseeable losses.
iii. There were no amounts which were required to be transferred to the Investor Educaon and Protec on Fund by the Company.
C) With respect to the ma er to be included in the Auditor's Report under section197(16): In our opinion and according to the information and explanations given to us theremuneration paid by the Company to its directors during the current year is within elevenpercent of the net profits computed in the manner laid down in section 198 of the Act.
However the amount paid to its chairman cum managing directoris in excess of Rs.5717313 (Rupees Fi y Seven Lakh Seventeen Thousand Three Hundred Thirteen only) over andabove of permissible limit as specified under section 197 read with schedule V of the Act.
For Krishna Neeraj & Associates Chartered Accountants
CA. Krusshna Neeraj Partner Membership
The Annexure referred to in paragraph 1 of Our Report on "Other Legal andRegulatory Requirements".
We report that:
i. a. The company has maintained proper records showing full par culars including quanta ve details and situa on of its fixed assets.
b. As explained to us fixed assets have been physically verifi ed by the management atreasonable intervals; no material discrepancies were no ced on such verifi ca on.
a. The According to the information and explanations given to us and on the basis ofour examina on of the records of the Company the tle deeds of immovable proper esincluded in fixed assets are held in the name of the Company.
ii. As explained to us inventories have been physically verifi ed during the year bythe management at reasonable intervals. The discrepancies no ced on physical verifi ca onof stocks by the management as compared to book records.
iii. According to the information and explanations given to us and on the basis of ourexamina on of the books of account the Company has not granted any loans secured orunsecured to companies firms Limited Liability Partnerships or other par es listed inthe register maintained under Sec on 189 of the Companies Act 2013. Consequently theprovisions of clauses iii (a) (b) and (c) of the order are not applicable to the Company.
iv. In respect of loans investments guarantees and security provisions of section185 and 186 of the Companies Act 2013 have been complied with.
v. The company has not accepted any deposits from the public covered under sections 73to 76 of the Companies Act 2013.
vi. As per information & explanation given by the management maintenance of costrecords has not been specified by the Central Government under sub-section (1) of section148 of the Companies Act 2013.
vii. a. According to the records of the company undisputed statutory dues includingProvident Fund Investor Educa on and Protec on Fund Employees' State InsuranceIncome-tax Sales-tax Service Tax Custom Duty Excise Duty value added tax cess andany other statutory dues to the extent applicable have generally been regularly depositedwith the appropriate authori es. According to the information and explanations given to usthere were no outstanding statutory dues as on 31st of March 2020 for a period of morethan six months from the date they became payable.
b. According to the information and explanations given to us there is no amountpayable except as shown in below table in respect of income tax service tax salestax customs duty excise duty value added tax and cess whichever applicable which havenot been deposited on account of any disputes:
|Particulars ||Financial Year ||Amount(Rs.) |
|Income Tax Related to Assessment Year 2012-2013. Appeal pending before CIT(Appeals) ||2011-2012 ||79697314 |
viii. In our opinion and according to the information and explanations given by themanagement we are of the opinion that the Company has not defaulted in repayment of duesto a financial ins tu on bank Government or debenture holders as applicable to thecompany. Accordingly paragraph 3(ix) of the Order is not applicable to the Company.
ix. The company has not raised any money by way of ini al public o er or further publico er (including debt instruments) or by way of term loans during the year.
x. According to the information and explanations given to us we report that no fraudby the company or any fraud on the Company by its o cers or employees has been no ced orreported during the year. xi. According to the information and explanations given to usthe remuneration paid by the Company to its directors during the current year is withineleven percent of the net profits computed in the manner laid down in section 198 of theAct. However the amount paid to its chairman cum managing director is in excess of Rs.5717313 (Rupees Fi y Seven Lakh Seventeen Thousand Three Hundred Thirteen only) over andabove of permissible limit as specified under section 197 read with schedule V of the Act.
xii. According to the information and explanations given to us in our opinion theCompany is not a Nidhi Company as prescribed under Sec on 406 of the Act.
xiii. According to the information and explanations given to us all transactions withthe related par es are in compliance with sections 177 and 188 of Companies Act 2013where applicable and the details have been disclosed in the Financial Statements etc. asrequired by the applicable accoun ng standards.
xiv. The company has not made any preferen al allotment or private placement of sharesor fully or partly convertalble debentures during the year under review. Accordinglyparagraph 3(xiv) of the Order is not applicable to the Company.
xv. Provisions of section 192 of Companies Act 2013 have been complied with in case ofnon-cash transactions entered by the company with directors or persons connected with him.Accordingly paragraph 3(xv) of the Order is not applicable to the Company.
xvi. According to the information and explanation given to us the Company is notrequired to be registered under Sec on 45-IA of the Reserve Bank of India Act 1934.
For Krishna Neeraj & Associates Chartered Accountants
CA. Krusshna Neeraj Partner Membership
Place: New Delhi
Annexure B to the Independent Auditors' Report
(Referred to in paragraph 1(A)(f) under Report on Other Legal and RegulatoryRequirements'section of our report of even date)
Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Sec on143 of the Companies Act 2013 ("the Act")
We have audited the internal fi financial controls over fi financial reporting of M/sCMI LIMITED ("the Company") as of March 31 2020 in conjunc on 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 essen al components of internal control statedin the Guidance Note on Audit of Internal Financial Controls Over Financial Repor ngissued by the Ins tute of Chartered Accountants of India. These responsibili es includethe design implementa on and maintenance of adequate internal financial controls thatwere opera ng e ec vely for ensuring the orderly and e cient conduct of its businessincluding adherence to company's policies the safeguarding of its assets the preven onand detec on of frauds and errors the accuracy and completeness of the accoun ng recordsand the mely prepara on of reliable financial information as required under the CompaniesAct 2013.
Our responsibility is to express an opinion on the Company's internal fi financialcontrols over fi financial reporting based on our audit. We conducted our audit inaccordance with the Guidance Note on Audit of Internal Financial Controls Over FinancialRepor ng (the "Guidance Note") and the Standards on Audi ng issued by ICAI anddeemed to be prescribed under section 143(10) of the Companies Act 2013 to the extentapplicable to an audit of internal financial controls both applicable to an audit ofInternal Financial Controls and both issued by the Ins tute of Chartered Accountants ofIndia. 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 e ec vely in all material respects.
Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal fi financial controls system over financial reporting and their opera ng e ecveness. 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 tes ng and evalua ng the designand opera ng e ec veness 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 su cient and appropriate toprovide a basis for our audit opinion on the Company's internal financial controls systemover financial reporting.
Meaning of Internal Financial Controls Over Financial Repor ng
A company's internal financial control over financial reporting is a process designedto provide reasonable assurance regarding the reliability of financial reporting and theprepara on of financial statements for external purposes in accordance with generallyaccepted accoun ng principles. A company's internal fi financial control over fi financialreporting includes those policies and procedures that
1. pertain to the maintenance of records that in reasonable detail accurately andfairly reflect the transactions and disposi ons of the assets of the company;
2. provide reasonable assurance that transactions are recorded as necessary to permitprepara on of financial statements in accordance with generally accepted accoun ngprinciples and that receipts and expenditures of the company are being made only inaccordance with authoriza ons of management and directors of the company; and
3. provide reasonable assurance regarding preven on or mely detec on of unauthorizedacquisi on use or disposi on of the company's assets that could have a material e ect onthe financial statements.
Inherent Limita ons of Internal Financial Controls Over Financial Repor ng
Because of the inherent limita ons 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 projec ons of any evalua on of the internal financial controls over financialreporting to future periods are subject to the risk that the internal fi financial controlover fi financial reporting may become inadequate because of changes in condi ons or thatthe degree of compliance with the policies or procedures may deteriorate.
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 opera ng e ec vely as at March 31 2020 based on theinternal control over financial reporting criteria established by the Company consideringthe essen al components of internal control stated in the Guidance Note on Audit ofInternal Financial Controls Over Financial Repor ng issued by the Ins tute of CharteredAccountants of India.
For Krishna Neeraj & Associates Chartered Accountants
CA. Krusshna Neeraj Partner Membership
Place: New Delhi