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Hindustan Motors Ltd.

BSE: 500500 Sector: Auto
NSE: HINDMOTORS ISIN Code: INE253A01025
BSE 00:00 | 17 May 7.62 0.36
(4.96%)
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7.62

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7.62

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7.62

NSE 00:00 | 17 May 7.75 0.35
(4.73%)
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7.75

HIGH

7.75

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OPEN 7.62
PREVIOUS CLOSE 7.26
VOLUME 14389
52-Week high 10.00
52-Week low 3.60
P/E 84.67
Mkt Cap.(Rs cr) 159
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 7.62
CLOSE 7.26
VOLUME 14389
52-Week high 10.00
52-Week low 3.60
P/E 84.67
Mkt Cap.(Rs cr) 159
Buy Price 0.00
Buy Qty 0.00
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 Audit of the Financial Statements

Opinion

We have audited the accompanying financial statements of Hindustan Motors Limited("the Company") which comprise the Balance Sheet as at 31st March 2020 and theStatement of Profit and Loss (including Other Comprehensive Income) the Statement ofChanges in Equity and the Statement of Cash Flows for the year then ended and notes to thefinancial statements including a summary of significant accounting policies and otherexplanatory information (hereinafter referred to as 'financial statements').

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 theCompanies Act 2013 ("the Act") in the manner so required and give a true andfair view in conformity with the accounting principles generally accepted in India of thestate of affairs of the Company as at 31st March 2020 its loss and total ComprehensiveIncome changes in equity and its cash flows for the year ended on that date.

Basis for Opinion

We conducted our audit of the financial statements in accordance with the Standards onAuditing (SAs) specified under section 143(10) of the Act. Our responsibilities underthose Standards are further described in the Auditor's Responsibilities for the Audit ofthe Financial Statements section of our report. We are independent of the Company inaccordance with the Code of Ethics issued by the Institute of Chartered Accountants ofIndia (ICAI) together with the ethical requirements that are relevant to our audit of thefinancial statements under the provisions of the Act and the Rules issued thereunder andwe have fulfilled our other ethical responsibilities in accordance with these requirementsand the Code of Ethics. We believe that the audit evidence we have obtained is sufficientand appropriate to provide a basis for our opinion.

Material Uncertainty related to 'Going Concern'

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

Note 45 to the Notes to the financial statements which indicates that the currentliabilities exceeded its current assets and it has accumulated losses which has resultedin complete erosion of the net worth of the Company as at 31st March 2020 leading to amaterial uncertainty about the Company's ability to continue as a 'going concern'.However the financial statements of the Company have been prepared on a 'going concern'basis for the reasons stated in the said Note.

Our opinion is not modified in respect of the matter.

Key Audit Matters

Key audit matters are those matters that in our professional judgment were of mostsignificance in our audit of the financial statements of the current period. These matterswere addressed in the context of our audit of the financial statements as a whole and informing our opinion thereon and we do not provide a separate opinion on these matters. Wehave described below the key audit matters to be communicated in our report.

Key Audit Matters Auditors' Response
1. Evaluation of disputed claims including taxes against the Company pending under appeals Principal Audit Procedures
The Company has material amount of disputed claims including taxes and these are at present pending for adjudication which involves significant judgment to determine possible outcome of these disputes as their likely outcome shall be known in future. Obtained detailed list of all pending claims including taxes based on tax assessments and demands upto the year ended 31st March 2020 from Management. We have checked the relevant papers and documents and also verified Management's underlying assumptions in estimating the tax provision and the possible outcome of the pending litigations. In course of our verification we have also considered legal precedence and other rulings in evaluating Management's position on these uncertain tax positions.
Refer Note Nos. 1(o) and 40 to the financial statements.

Other Information

The Company's Management and Board of Directors is responsible for the preparation ofthe other information. The other information comprises the information included in theManagement Discussion and Analysis Board's Report including Annexures to Board's ReportCorporate Governance and Shareholder's Information but does not include the financialstatements and auditors' 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 connection 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 materialmisstatement of this other information we are required to report that fact. We havenothing to report in this regard

Our opinion is not modified in respect of the matter.

Management's Responsibility for the Financial Statements

The Company's Board of Directors is responsible for the matters stated in section134(5) of the Act with respect to the preparation of these financial statements that givea true and fair view of the financial position financial performance total comprehensiveincome changes in equity and cash flows of the Company in accordance with the accountingprinciples generally accepted in India including the Indian Accounting Standards (Ind AS)specified under section 133 of the Act. This responsibility also includes maintenance ofadequate accounting records in accordance with the provisions of the Act for safeguardingthe 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 statement that give a true and fair view andare free from material misstatement whether due to fraud or error.

In preparing the financial statements management is responsible for assessing theCompany's ability to continue as a going concern disclosing as applicable mattersrelated to going concern. In this context attention is drawn to Note 45 to the financialstatements which indicates that the current liabilities exceeded its current assets and ithas accumulated losses which has resulted in complete erosion of the net worth of theCompany as at 31st March 2020 leading to a material uncertainty about the Company'sability to continue as a 'going concern' and the Company continues to prepare its accountson a "Going Concern" basis unless management either intends to liquidate theCompany or to cease operations or has no realistic alternative but to do so.

The Board of Directors are also responsible for overseeing the Company's financialreporting process.

Auditors' Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the financialstatements as a whole are free from material misstatement whether due to fraud or errorand to issue an auditors' report that includes our opinion. Reasonable assurance is a highlevel of assurance but is not a guarantee that an audit conducted in accordance with SAswill always detect a material misstatement when it exists. Misstatements can arise fromfraud or error and are considered material if individually or in the aggregate theycould reasonably be expected to influence the economic decisions of users taken on thebasis of these financial statements.

As part of an audit in accordance with SAs we exercise professional judgment andmaintain professional skepticism throughout the audit. We also:

• Identify 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 sufficient and appropriate to provide abasis for our opinion. The risk of not detecting a material misstatement resulting fromfraud is higher than for one resulting from error as fraud may involve collusionforgery intentional omissions misrepresentations or the override of internal control.

• Obtain an understanding of internal controls relevant to the audit in order todesign audit procedures that are appropriate in the circumstances. Under section 143(3)(i)of the Act we are also responsible for expressing our opinion on whether the company hasadequate internal financial controls system in place and the operating effectiveness ofsuch controls.

• Evaluate the appropriateness of accounting policies used and the reasonablenessof accounting estimates and related disclosures made by management.

• Conclude on the appropriateness of management's use of the going concern basisof accounting and based on the audit evidence obtained whether a material uncertaintyexists related to events or conditions that may cast significant doubt on the Company'sability to continue as a going concern. We conclude that a material uncertainty exists andattention is drawn to Material Uncertainty related to 'Going Concern' paragraph in ourreport herein above with related disclosures in the Note 45 to the financial statements.Our conclusions are based on the audit evidence obtained up to the date of our auditors'report. However future events or conditions may cause the Company to cease to continue asa going 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 presentation.

We communicate with those charged with governance regarding among other matters theplanned scope and timing of the audit and significant audit findings including anysignificant deficiencies in internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have compliedwith relevant ethical requirements regarding independence and to communicate with themall relationships and other matters that may reasonably be thought to bear on ourindependence and where applicable related safeguards.

From the matters communicated with those charged with governance we determine thosematters that were of most significance in the audit of the financial statements of thecurrent period and are therefore the key audit matters. We describe these matters in ourauditors' report unless law or regulation precludes public disclosure about the matter orwhen in extremely rare circumstances we determine that a matter should not becommunicated in our report because the adverse consequences of doing so would reasonablybe expected to outweigh the public interest benefits of such communication.

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 in terms of sub-section (11) of section 143 of the Actwe give in the Annexure a statement on the matters specified in paragraphs 3 and 4 of theOrder to the extent applicable.

2. As required by Section 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 examination of those books.

(c) The Balance Sheet the Statement of Profit and Loss Other Comprehensive Incomethe Statement of Changes in Equity and the Statement of Cash Flows dealt with by thisReport are in agreement with the books of account.

(d) In our opinion the aforesaid financial statements comply with the Ind AS specifiedunder Section 133 of the Act read with relevant rules issued thereunder.

(e) The 'Going Concern' matter described under the Material Uncertainty related to'Going Concern' paragraph herein above in our opinion may have an adverse effect on thefunctioning of the Company.

(f) On the basis of the written representations received from the directors as on 31stMarch 2020 and 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 Section164 (2) of the Act.

(g) With respect to the adequacy of the internal financial controls over financialreporting of the Company and the operating effectiveness of such controls refer to ourseparate Report in "Annexure A".

(h) With respect to the other matters to be included in the Auditors' Report inaccordance with the requirements of section 197(16) of the Act as amended:

According to the information and explanations given to us no managerial remunerationis paid to its directors during the year by the Company.

(i) With respect to the other matters to be included in the Auditor's Report inaccordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014 in our opinionand to the best of our 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 40 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 which were required to betransferred to the Investor Education and Protection Fund by the Company except asindicated in Note 22 to the financial statements.

For RAY & RAY

Chartered Accountants

(Firm's Registration No. : 301072E)
Asish Kumar Mukhopadhyay
Place : Kolkata

Partner

Date : 30th June 2020 Membership No. : 056359

Annexure to the Auditor's Report

(Referred to in paragraph 1 under the heading 'Report on Other Legal and RegulatoryRequirements' of our report of even date)

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

(b) All Property plant and equipment have not been physically verified by themanagement during the year but there is a regular programme of such verification in aphased manner to cover all the items over a period of three years which in our opinionis reasonable having regard to the size of the Company and the nature of its assets. Nomaterial discrepancies were noticed on such verification during the year.

(c) According to the information and explanation given to us and on the basis of ourexamination of the records of the Company the title deed of immovable properties is heldin the name of the Company.

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

(iii) According to the information and explanation given to us during the year theCompany has not granted any loans secured or unsecured to companies firms LimitedLiability Partnerships or other parties covered in the register maintained under section189 of the Act. Accordingly provisions of clauses (iii) (a) (b) and (c) of paragraph 3of the aforesaid 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 within the meaning of the directives issued by theReserve Bank of India provisions of section 73 to 76 of the Act any other relevantprovisions of the Act and the relevant rules framed thereunder.

(vi) The Company is not required to maintain cost records as specified undersub-section (1) of section 148 of the Act.

(vii) (a) According to the information and explanations given to us and on the basis ofour examination of the records of the Company we are of the opinion that the Company isgenerally regular in depositing undisputed statutory dues including provident fundemployees' state insurance income tax goods and service tax sales tax/ value added taxservice tax duty of customs duty of excise cess and any other statutory dues withappropriate authorities though there has been delays in respect of sales tax/value addedtax and municipal tax. The extent of arrears of outstanding statutory dues as on the lastday of the financial year concerned for a period of more than six months from the datethey became payable are as mentioned below:

Nature of the Statute Nature of dues Amount (Rs in lacs) Period to which amount relates Due Date Date of payment
West Bengal Deferment Tax STDC 1791.50 June 2012 to June 2014 July 2012 to July 2014 Not paid
The West Bengal Municipal Act 1993 Municipal Tax under Uttarpara Kotrang Municipality 48.27 April 2018 to March 2020 April 2018 to April 2020 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 3996.95 1984-2015 High Court CESTAT 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. 518.32 1995-2014 High Court/ W.B. Commercial Taxes Appellate and Revisional Board/ Joint Commissioner- Appeal
Tamil Nadu Sales Tax Act 1959 Additional Sales tax etc. 2.52 1989-1996 Assistant Commissioner
West Bengal Value Added Tax Act 2003 Provisional Assessment Enhancement of turnover with wrong calculation and taxed 2422.86 2007-2015 Taxation Tribunal of West Bengal/West Bengal Commercial tax Appellate & Revisional Board
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. 49.88 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) The Company has no borrowings from financial institution bank government andthe Company has no debenture holders. Accordingly clause (viii) of paragraph 3 of theaforesaid Order is not applicable to the Company.

(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 (xi) of paragraph3 of the 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 Notes to the financial statements as required by theapplicable Accounting Standards (Ind AS).

(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 : 30 th June 2020 Membership No. : 056359

Annexure A to the Independent Auditors' Report

(Referred to in paragraph 2(g) under the heading "Report on Other Legal andRegulatory Requirements" of our report of even date)

Report on the Internal Financial Controls Over Financial Reporting under Clause (i) ofSub-section 3 of Section 143 of the Companies Act 2013 ("the Act")

We have audited the internal financial controls over financial reporting of HindustanMotors Limited ("the Company") as of 31st March 2020 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 establishing and maintaining internalfinancial controls based on the internal control over financial reporting criteriaestablished by the Company considering the essential components of internal control statedin the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting (the"Guidance Note") issued by the Institute of Chartered Accountants of India("ICAI"). These responsibilities include the design implementation andmaintenance of adequate internal financial controls that were operating effectively forensuring the orderly and efficient conduct of its business including adherence tocompany's policies the safeguarding of its assets the prevention and detection of fraudsand errors the accuracy and completeness of the accounting records and the timelypreparation of reliable financial information as required under the 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 Guidance Note issued by ICAI and the Standards on Auditing prescribed undersection 143(10) of the Companies Act 2013 to the extent applicable to an audit ofinternal financial controls. Those Standards and the Guidance Note require that we complywith ethical requirements and plan and perform the audit to obtain reasonable assuranceabout whether adequate internal financial controls over financial reporting wasestablished and maintained and if such controls operated effectively in all materialrespects.

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 judgment 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 Company's internal financial controls systemover financial 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 the financial statements for external purposes in accordance with generallyaccepted accounting principles including the Indian Accounting Standards (Ind AS). Acompany's internal financial control over financial reporting includes those policies andprocedures 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 as necessary topermit preparation of the financial statements in accordance with generally acceptedaccounting principles and that receipts and expenditures of the company are being madeonly in accordance with authorisations of management and directors of the company; and (3)provide reasonable assurance regarding prevention or timely detection of unauthorisedacquisition use or disposition of the company's assets that could have a material effecton the financial statements.

Inherent Limitations of Internal Financial Controls Over Financial Reporting

Because 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 to the best of our information and according to the information andexplanations given to us 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 31st March 2020 based on theinternal control over financial reporting criteria established by the Company consideringthe essential components of internal control stated in the Guidance Note issued by theICAI.

For RAY & RAY

Chartered Accountants

(Firm's Registration No. : 301072E)
Asish Kumar Mukhopadhyay
Place : Kolkata

Partner

Date : 30th June 2020 Membership No. : 056359

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