You are here » Home » Companies » Company Overview » HMT Ltd

HMT Ltd.

BSE: 500191 Sector: Auto
NSE: HMT ISIN Code: INE262A01018
BSE 00:00 | 23 Jul 23.40 0.45
(1.96%)
OPEN

23.00

HIGH

23.40

LOW

22.15

NSE 00:00 | 23 Jul 23.45 0.45
(1.96%)
OPEN

22.00

HIGH

23.45

LOW

22.00

OPEN 23.00
PREVIOUS CLOSE 22.95
VOLUME 1226
52-Week high 45.50
52-Week low 22.15
P/E
Mkt Cap.(Rs cr) 2,818
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 23.00
CLOSE 22.95
VOLUME 1226
52-Week high 45.50
52-Week low 22.15
P/E
Mkt Cap.(Rs cr) 2,818
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

HMT Ltd. (HMT) - Auditors Report

Company auditors report

TO

THE MEMBERS OF

HMT Limited

Revised Report on the Ind AS Standalone Financial Statements:

On completion of audit of accounts of HMT Limited ("the Company") for theyear 2016-17 we had rendered our audit report dated August 29 2017. Subsequent to ourreport in light of the observations arising from the audit by the Comptroller & AuditGeneral of India the said report has been revised. This supersedes our previousindependent audit report.

We have audited the accompanying Ind AS standalone financial statements of HMT Limited("the Company") which comprise the Balance Sheet as at March 31 2017 theStatement of Profit and Loss (including Other Comprehensive Income) the Cash FlowStatement and the Statement of Changes in Equity for the year then ended and a summary ofthe significant accounting policies and other explanatory information.

Management's Responsibility for the Ind AS Standalone Financial Statements:

The Company's Board of Directors are responsible for the matters stated in Section134(5) of the Companies Act 2013 ("the Act") with respect to the preparation ofthese Ind AS standalone financial statements that give a true and fair view of the stateof affairs (financial position) loss (financial performance including other comprehensiveincome) cash flows and changes in equity of the Company in accordance with the accountingprinciples generally accepted in India including the Indian Accounting Standards (Ind AS)prescribed under section 133 of the Act read with relevant rules issued thereunder.

This responsibility also includes maintenance of adequate accounting records inaccordance with the provisions of the Act for safeguarding the assets of the Company andfor preventing and detecting frauds and other irregularities; selection and application ofappropriate accounting policies; making judgments and estimates that are reasonable andprudent; and design implementation and maintenance of adequate internal financialcontrols that were operating effectively for ensuring the accuracy and completeness ofthe accounting records relevant to the preparation and presentation of the Ind ASstandalone financial statements that give a true and fair view and are free from materialmisstatement whether due to fraud or error.

Auditor's Responsibility:

Our responsibility is to express an opinion on these Ind AS standalone financialstatements based on our audit.

We have taken into account the provisions of the Act the accounting and auditingstandards and matters which are required to be included in the audit report under theprovisions of the Act and the rules made thereunder.

We conducted our audit of the Ind AS standalone financial statements in accordance withthe Standards on Auditing specified under section 143(10) of the Act. Those Standardsrequire that we comply with the ethical requirements and plan and perform the audit toobtain reasonable assurance about whether the financial statements are free from materialmisstatements.

An audit involves performing procedures to obtain audit evidence about the amounts andthe disclosures in the Ind AS standalone financial statements. The procedures selecteddepend on the auditor's judgment including the assessment of the risks of materialmisstatement of the Ind AS standalone financial statements whether due to fraud or error.In making those risk assessments the auditor considers internal financial controlrelevant to the Company's preparation of the Ind AS standalone financial statements thatgive a true and fair view in order to design audit procedures that are appropriate in thecircumstances. An audit also includes evaluating the appropriateness of the accountingpolicies used and the reasonableness of the accounting estimates made by the Company'sDirectors as well as evaluating the overall presentation of the Ind AS standalonefinancial statements.

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 standalone financialstatements.

Basis of our Qualified Opinion:

1. Food Processing Machinery Unit Aurangabad:

a) As per information and explanation given to us with regards to the valuation ofinventory as stated in Note No. 1.9) and 3) amounting to Rs. 285.58 lakhs stock of rawmaterial (including stock considered in WIP and FG are valued based on the purchase orderrates which are periodically updated in the inventory software. However we observed manyitems rates for which were not updated in the inventory software thereby valuing therespective stock items as nil. These were later regularised manually based on the PO'savailable. Owing to the nature of the Company's records and in the absence of sufficientappropriate audit evidence we are unable to ascertain if there is a departure from theweighted average cost method of valuation followed by the Company. We are also unable toascertain its consequent impact if any on the Ind AS standalone financial statements.

b) With regards to provision for non-moving inventory as stated in Note No.3) amountingto Rs.62.08 lakhs the Company has relied on the report generated from the inventorysoftware however as discussed in the above paragraph even in this report the rates havenot been updated against many stock items. Accordingly the value of non-moving inventoryis understated consequently affecting the provision for non-moving inventory and therebyprofit of the Company. The effects on the Ind AS standalone financial statements is notascertainable.

2. Tractor Business Group Pinjore (including Hyderabad Assembly Project & Mohaliunit):

a) The unit has sought confirmations of most of Trade Receivables Trade PayablesLoans & Advances although Balances are subject to confirmation and reconciliation ifany.

b) The amount outstanding Rs.132.24 lakhs with respect to provision for contingentliability for the interest payable on additional demand of CST demand. It is the case ofstatutory due pending for more than 6 months. The unit has availed the government schemei.e. onetime settlement scheme during the year FY 17-18 by depositing the 10% of interestcomponent amounting Rs. 13.22 lakhs.

c) As per Ind AS requirement the unit has not obtained actuarial valuation withrespect to provident fund.

3 Corporate Head Office ("CHO"):

a) The Company contributes provident fund to its employees to a provident fund trustwhich is a defined benefit plan. As per Ind AS-19 the Company has not obtained theactuarial valuation report and accounted for employer's contribution.

b) The Company is in the process of obtaining the confirmation of balances from theparties with whom it has transactions. The effect on the revenue is not ascertained.

Qualified Opinion:

In our opinion and to the best of our information and according to the explanationsgiven to us and based on the consideration of the reports of other Branch Auditorsexcept for the effects of the matter described in the " Basis of our QualifiedOpinion" paragraph the aforesaid standalone 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 (financial position) of the Company as at March 312017 and its loss (financialperformance including other comprehensive income) the changes in the equity and thecashflows for the year ended on that date.

Emphasis of Matter:

Attention of the members is invited to note 45 of the standalone financial statementsregarding reasons for preparing thesestandalone Ind AS financial statements of the Companyon going concern basis notwithstanding the fact that the networth of the Company issubstantially eroded. The appropriateness of the said basis is interalia dependent on theCompany's ability to realise from sale of non current assets held for sale support fromGovernment of India and other business plans. We have also relied on the representation ofthe Company in this respect.

Other Matters:

i) Incoming auditor to audit comparative information for adjustments to transitionto Ind AS:

The comparative financial information of the Company for the year ended March 312016and the transition date opening balance sheet as at April 1 2015 included in thesestandalone Ind AS financial statements are based on the previously issued statutoryfinancial statements prepared in accordance with the Companies (Accounting Standards)Rules2006 audited by the M/s Dokania S. Kumar & Co. Chartered Accountants whosereport for the year ended March 312016 and March 31 2015 dated May 30 2016 and July 72015 respectively expressed an Qualified opinion on those standalone financial statementsas adjusted for the differences in the accounting principles adopted by the Company on thetransition to the Ind AS to an extent identified and which have been audited by us.

ii) We did not audit the financial statements/information of 3 units i.e. TractorBusiness Group Pinjore Food Processing Machinery Unit Aurangabad and Common ServicesDivision Bangalore included in the standalone Ind AS financial statements of the Companywhose financial statements/financial information reflect total assets of Rs. 11931.23lakhs as at March 31 2017 and total revenues of Rs. 3728.91 lakhs (including amountincluded in discontinued operations of Rs.2874.20 lakhs) for the year ended on that date.The financial statements/ information of these branches have been audited by the branchauditors i.e. Goel Subhash & Associates Ambala Cantt M R Hundiwala & Co.Aurangabad and S V Jagadeesh & Co. Bangalore Chartered

Accountants respectively whose reports have been furnished to us and our opinion in sofar as it relates to the amounts and disclosures included in respect of these units arebased solely on the report of such branch auditors.

iii) The financial statements of Lamp Division have been merged with CHO Accounts andour report insofar as it relates to the amounts included in respect of this Division isbased solely on the Closing Balances of Last Year's Financial statements of CHO accountsexcept payment of Rs.183.68 lakhs towards due to Greater Hyderabad Municipal Corporationand Commercial Tax Officer Hyderabad.

iv) The physical share certificates for 260899037 equity shares and 44300000preference shares of HMT Machine Tools Ltd whose costs is Rs.26089.90 Lakhs andRs.44300.00 lakhs respectively are not in the possession of the Company as at March 312017.

V) The Company has discharged the debt of State Bank of India but the discharge ofloan is not reflected in the charge Index of charges registered with Registrar ofCompanies of its Index Number 80046855.

vi) The Company has made a provision for non-moving inventories amounting to Rs.553.82lakhs based on the certificate furnished by the management and relied upon by the auditorsof the respective units.

vii) The Branch Auditors of Tractor Business Group Pinjore ("the Unit") havereported the following other matters:

a) Balance in current maturities of VRS Loan from of India amounting to Rs.10873.60lakhs as reported in note 17 of the financial statements is reported based on thecertificate given by the management.

b) The Unit has made a provision of Rs.5883.39 lakhs for allowance of tradereceivables the Unit auditors have relied based on the certificate furnished by themanagement.

c) During the year the Unit has made a provision for contingencies amounting toRs.204.77 lakhs the Unit auditors have relied based on the certificate furnished by themanagement.

d) During the year the Unit has discontinued its operations and is in the process ofmaking settlement for all its receivables and payables. The Company need to carry outproper review of following balances and take necessary action:

Particulars Amount (Rs. In lakhs) Remarks
Amount due to PWD 22.18 Due for more than 10 years
Modvat Recoverable of Hyderabad Division 7.26 Oustanding since 2005
Claim recoverable from Motokov Ltd 0.11 Outstanding since 1989-90
Customs Duty Deposit 0.22 Old balance
Bombay Port Trust 0.01 Old balance

viii) The Branch Auditors of Food Processing Machinery Division Aurangabad ("theUnit") have reported the following other matters:

a. Inventories of the unit has been valued by the Company and auditors have reliedbased on the certificate furnished by the unit amounting to Rs.285.58 lakhs.

b. Disclosure in respect of contingent liabilities has been furnished based on theinformation and representations received from the management.

Report on Other Legal & Regulatory Requirements:

1. As required by the Companies (Auditor's Report) Order 2016 ("the Order")issued by the Central Government of India in terms ofsub-section (11) of section 143 ofthe Act we give in the "Annexure- A" a statement on the matters specified inparagraphs 3 and 4 of the Order to the extent applicable.

2. As required by the 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 purpose of our audit.

b. Except for the possible effects of the matters described in the Basis for Qualifiedopinion paragraph 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 the Cash Flow Statement andStatement of Changes in the Equity dealt with by this Report are in agreement with thebooks of account.

d. The Company has not obtained the actuarial valuation report in respect of ProvidentFund Trusts accordingly in our opinion the aforesaid Ind AS standalone financialstatements don't comply with the Indian Accounting Standards specified under section 133of the Act.

e. On the basis of the written representations received from the directors as on March312017 taken on the record by the Board of Directors none of the directors isdisqualified as on that date from being appointed as a director in terms of section 164(2)of the Act.

f. 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 B".

g. With respect to other matters to be included in the Auditors report in accordancewith rule 11 of the Companies (Audit and Auditors) Rules 2014 in our opinion and to thebest of our information and according to the explanations given to us

i) The Company has disclosed its pending litigations which would impact its financialposition in note 29 of the Ind AS standalone financial statements.

ii) The Company did not have any long-term contracts as required under the applicablelaw or accounting standards and also not entered into any derivative contractsaccordingly no provision is required to be made in respect of material foreseeable losses.

iii) There were no amounts which were required to be transferred to the InvestorEducation and Protection Fund by the Company.

iv) The Company has provided requisite disclosures in the financial statements as toholdings as well as dealings Specified Banking Notes during the period from November 82016 to December 30 2016. Based on audit procedures and relying on the managementrepresentation we report that the disclosures are in accordance with books of accountmaintained by the Company and as produced to us by the Management-Refer Note-41 of the IndAS standalone financial statements.

3. As required by Section 143 (5) of the Act we have considered the directions issuedby the Comptroller and Audit General of India the action taken thereon and its impact onthe accounts and financial statements of the Company in "Annexure-C".

For B.K. RAMADHYANI & CO LLP
Chartered Accountants
Firm Registration No. 002878S/S200021
(CA C R Deepak)
Partner
Membership No. 215398
Place: Bangalore
Date: November 10 2017

ANNEXURE-A REFERRED TO IN PARAGRAPH 1 UNDER THE HEADING "REPORT ON OTHER LEGAL ANDREGULATORY REQUIREMENTS" OF OUR REPORT TO THE MEMBERS OF HMT LIMITED.

1. a) The Company has maintained proper records showing full particulars includingquantitative details and situation of Property Plant & Equipment ("PPE").

b) Management during the year has physically verified PPE as per a phased program ofphysical verification except in Food Processing Machinery Unit Aurangabad. Thediscrepancies noticed on such verification were not material and the same has beenproperly dealt with in the books of account.

c) According to the information and explanation given to us by the Company read withfoot note c of note 3A foot note iii) of note 3B and foot notes to note 3C of the Ind ASstandalone financial statements title deed of all immovable properties are held in thename of the Company.

2. The management during the year has physically verified the inventory at reasonableintervals at respective units. The discrepancies that were noticed during the physicalverification of Inventory were not material and the same has been properly adjusted in therespective unit books of account. However it has been reported by the Food ProcessingMachinery unit auditor that documentary evidences to support the same were not availablefor their verification.

3. In respect of the unsecured loans granted by the Company to companies covered in theregister maintained under section 189 of the Act:

a) In our opinion and according to information and explanation furnished to us theterms and conditions of the loan given by the Company is prima facie not prejudicial tothe interest of the Company.

b) According to information and explanation furnished to us by the Company there is nospecific repayment specified by the Company.

c) There is an overdue interest for year 2016 -17 outstanding as at the end of theyear.

4. In our opinion and according to information and explanation furnished to us theCompany has complied with the provisions of Section 185 and 186 of the Act with respectto loans and investment made.

5. The Company has not accepted any deposits as applicable under the directives issuedby the Reserve Bank of India and the provisions of sections 73 to 76 or any otherprovisions of the Act and rules framed under. Accordingly the provisions of clause 3(v)of the said Order are not applicable.

6. In our opinion and according to information and explanations furnished to us theCentral Government has prescribed the maintenance of cost records under clause (d) ofsub-section (1) of section 148 of the Act as the Company to Tractor division. In theopinion of the unit auditor prescribed cost records have been maintained by the Unit.

7. a) According to the records of the Company the Company is generally not regular indepositing undisputed statutory dues including Income Tax service tax duty of customsduty of excise value added tax cess and any other statutory dues to the appropriateauthorities.

b) The following undisputed amounts payable in respect of value added tax cess and anyother statutory dues in arrears as at March 31 2017 for a period of more than six monthsfrom the date they become payable.

In respect of Tractor Division:

Sl. No. Nature of the Statute Nature of Dues Amount (Rs. in lakhs) Period to which Amount related to Due Date Date of Payment
1. VAT/CST Interest on demand 132.25 2001-02 to 2006-07
6.63 2012-13
4.25 2013-14
2. VAT/CST 7.02 1.4.16- 31.3.2017
13.46 2012-13
5.34 2013-14

In respect of Food Processing Machinery Division:

Nature of the Statute Nature of Dues Amount (Rs. in lakhs) Period to which Amount related to Due

Date

Date of Payment
Provident Fund Provident 2580920 2014-15 All due dates are before 30th Sep2016 April 2017
Fund dues (Incl. of interst thereon 12330482 2015-16
5414346 2016-17

In respect of Corporate Head Office:

Sl. No. Nature of the Statute Nature of Dues Amount (Rs. in lakhs) Period to which Amount related to Due Date Date of Payment
1. Greater Hyderabad Municipal Corporation Property tax 4393921 Previous years arrear penalty 1. Greater Hyderabad Municipal Corporation
2 SPF Employees 4299741 Since 31.3.2015 2 SPF
Contribution up to 31.3.2016
3 VPF Employees 5303282 Since 31.3.2015 3 VPF
Contribution (Incl. PF loan) up to 31.3.2016
4 PF Employer's 3840980 Since 31.3.2015 4 PF
Contribution up to 31.3.2016

c) According to the information and explanation given to us by the Company there areno dues outstanding on account of any disputes in respect of income tax service taxcustoms duty or excise duty or value added tax except for the following in respect of FoodProcessing Division.

Nature of the Statute Nature of Dues Amount (Rs. in lakhs) Amount paid under Protest (INR) Period to which Amount related to Forum where dispute is pending
Sales tax Sales tax liability 3.42 Nil 2010-11 Deputy Commissioner of Sales Tax Aurangabad

8. Based on the information and explanations given to us the following amountsborrowed from any banks and government has been defaulted by the Company. However it hasnot borrowed any amount from financial institution or issued the debentures.

i) In respect of Corporate Head Office Tractor Division Food Processing Division andCommon Services Division principal and interest on loan received from the Government ofIndia ("GOI") has been waived based on the letter received from Department ofHeavy Industries GOI.

ii) In respect of Corporate Head Office it has defaulted in repayment of loan takenfrom Dena Bank amounting to Rs.986.50 lakhs and interest of Rs.1862.02 lakhs as at March312017.

9. In our opinion based on the information and explanation given to us the Company ithas not raised any moneys by way of initial public offer or further public offer(including debt instruments and term loans. Accordingly the provisions of clause 3(ix) ofthe said Order are not applicable.

10. According to the information and explanation given to us there are no fraudsreported by the Company or any fraud on the Company by its officers or employees has beennoticed or reported during the year. Accordingly the provisions of clause 3(x) of thesaid Order are not applicable.

11. According to the information and explanation given to us the Company haspaid/provided for managerial remuneration in accordance with the requisite approvalsmandated by the provisions of Section 197 read with Schedule V of the Act.

12. The Company is not a Nidhi Company. Accordingly the provisions of clause 3(xii) ofthe said Order are not applicable.

13. In our opinion and according to the information and explanation given to us and asrepresented to us by the management all transactions with the related parties are incompliance with section 177 and 188 of the Act and the details have been disclosed in theInd AS financial statements as required by the applicable accounting standards.

14. The Company has not made any preferential allotment or private placement of sharesor fully or partly convertible debentures during the year under review. Accordingly theprovisions of clause 3(xiv) of the said Order are not applicable.

15. As represented to us by the management and according to the information andexplanation given to us the Company has not entered into any noncash transactions withdirectors or persons connected with him. Accordingly the provisions of clause 3(xv) ofthe said Order are not applicable.

16. According to the information and explanation given the Company is not required tobe registered under section 45-IA of the Reserve Bank of India Act 1934. Accordinglyclause 3(xvi) of the Order is not applicable to the Company.

For B.K. RAMADHYANI & CO LLP
Chartered Accountants
Firm Registration No. 002878S/S200021
(CA C R Deepak)
Partner
Membership No. 215398
Place: Bangalore
Date: November 10 2017

ANNEXURE-B REFERRED TO IN PARAGRAPH 2 (f) UNDER THE HEADING "REPORT ON OTHER LEGALAND REGULATORY REQUIREMENTS" OF OUR REPORT TO THE MEMBERS OF HMT LIMITED.

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

We have audited the internal financial controls over financial reporting of HMT Limited("the Company") as of March 31 2017 in conjunction with our audit of thefinancial 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 Reportingissued by the Institute of Chartered Accountants of India". These responsibilitiesinclude the design implementation and maintenance of adequate internal financial controlsthat were operating effectively for ensuring the orderly and efficient conduct of itsbusiness including adherence to company's policies the safeguarding of its assets theprevention and detection of frauds and errors the accuracy and completeness of theaccounting records and the timely preparation of reliable financial information asrequired under the Companies Act 2013 ("the Act").

Auditors' 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 on Audit of Internal Financial Controls Over Financial Reporting(the "Guidance Note") and the Standards on Auditing issued by ICAI and deemedto be prescribed under section 143(10) of the Act to the extent applicable to an audit ofinternal financial controls both applicable to an audit of Internal Financial Controlsand both issued by the Institute of Chartered Accountants of India. Those

Standards and the Guidance Note require that we comply with ethical requirements andplan and perform the audit to obtain reasonable assurance about whether adequate internalfinancial controls over financial reporting was established and maintained and if suchcontrols operated effectively in all material respects.

Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal financial controls system over financial reporting and their operatingeffectiveness. Our audit of internal financial controls over financial reporting includedobtaining an understanding of internal financial controls over financial reportingassessing the risk that a material weakness exists and testing and evaluating the designand operating effectiveness of internal control based on the assessed risk. The proceduresselected depend on the auditor's judgement including the assessment of the risks ofmaterial misstatement of the financial statements whether due to fraud or error.

We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the 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 financial statements for external purposes in accordance with generallyaccepted accounting principles. A company's internal financial control over financialreporting includes those policies and procedures that (1) pertain to the maintenance ofrecords that in reasonable detail accurately and fairly reflect the transactions anddispositions of the assets of the company; (2) provide reasonable assurance thattransactions are recorded as necessary to permit preparation of financial statements inaccordance with generally accepted accounting principles and that receipts andexpenditures of the company are being made only in accordance with authorizations ofmanagement and directors of the company; and (3) provide reasonable assurance regardingprevention or timely detection of unauthorized acquisition use or disposition of thecompany's assets that could have a material effect on 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.

Disclaimer Opinion:

In case of Food Processing Machinery Unit Aurangabad the branch auditor has reportedin the following manner:

The Company did not have an appropriate internal control system for inventory withregard to inventory valuation as the process of mutual updating the purchase rates in theinventory software are not adequately getting updated in the system. Further the internalcontrol system for identification and allocation of overheads to inventory was also notadequate. These could potentially result in material misstatements in the company'sconsumption inventory and expense account balances.

The Physical verification of assets was carried out for the FY 2015-16 however wecould not find a reconciliation of such verification with the fixed assets register thusan effective internal financial control may be evolved to ensure that there should not beany mismatch between the fixed asset register and physical assets with respect to the makeof the asset serial number and location which could potentially result in a materialweakness in the process of verification of fixed assets.

The Company did not have adequate appropriate internal controls for reconciling andobtaining balance confirmation from sundry debtors sundry creditors and other parties.This could potentially result in a material weakness in the financial reporting processof debtors and creditors.

The Company did not have appropriate internal controls for reconciliations andconfirmations of Earnest Money Deposits Security Deposits and other Deposits which couldpotentially result in a material weakness in financial reporting process of currentassets and current liabilities.

A "Material weakness" is a deficiency or a combination of deficiencies ininternal financial control over financial reporting such that there is a reasonablepossibility that a material misstatement of the company's annual or interim financialstatements will not be prevented or detected on a timely basis.

In our opinion because of the possible effects of the material weaknesses describedabove on the achievement of the objectives of the control criteria the company hasmaintained in all material respects adequate internal financial controls over financialreporting were operating effectively as of 31 March 2017 based on the internal controlover financial reporting criteria established by the company considering the essentialcomponents of internal control stated in Guidance Note on Audit of Internal FinancialControls Over Financial Reporting issued by the Institute of Chartered accountants ofIndia.

We have considered the material weaknesses identified and reported above in determiningthe nature timing and extent of audit tests applied in our audit of the financialstatements of the company as at and for the year ended 31 March 2017 and these materialweaknesses have affected our opinion on the financial statements of the company and wehave issued a qualified opinion on the financial statements.

In respect of Common Services Division Bangalore:

The branch auditor has reported that in all material aspects internal financialcontrols system over financial reporting and such internal financial controls overfinancial reporting were operating effectively as at 31 March 2017 based on the internalcontrol over financial reporting criteria established by the company considering theessential components of internal control stated in Guidance Note on Audit of InternalFinancial Controls over Financial reporting issued by Institute of Chartered Accountantsof India.

In respect of Corporate Head Officer Bangalore and Tractor Division Pinjore:

The system of internal financial controls over financial reporting with respect ofTractor Division Pinjore and Corporate Head Office Bangalore were not made available tous to enable us to determine if the Company has established the adequate internalfinancial control over financial reporting at the aforesaid divisions and whether suchinternal financial controls were operating effectively as at 31 March 2017.

We have considered the disclaimer reported above in determining the nature timing andextent of audit tests applied in our audit of the Ind AS standalone financial statementsof the Company and the disclaimer doesn't affect our opinion on the Ind AS standalonefinancial statements of the Company.

For B.K.RAMADHYANI & CO LLP
Chartered Accountants
Firm Registration No. 002878S/S200021
(CA C R Deepak)
Partner
Membership No. 215398
Place: Bangalore
Date: November 10 2017

ANNEXURE-C REFERRED TO IN PARAGRAPH 3 UNDER THE HEADING "REPORT ON OTHER LEGAL ANDREGULATORY REQUIREMENTS" OF OUR REPORT DIRECTIONS INDICATING THE AREARS TO BEEXAMINED BY STATUTORY AUDITORS DURING THE COURSE OF AUDIT OF ANNUAL ACCOUNTS OF HMTLIMITED FOR THE YEAR 2016-2017 ISSUED BY THE COMPTROLLER & AUDITOR GENERAL OF INDIA("C&AG") UNDER SECTION 143 (5) OF THE COMPANIES ACT 2013

Sl. No. Directions Audit Observations
1. Whether the Company has clear title/ lease deeds for freehold and leasehold land respectively? If not please state the area of freehold and leasehold land for which title/ lease title/ lease deeds are not available. According to the information and explanation given to us by the Company the Company holds the clear title of all freehold and leasehold land except for the cases referred in additional information para 3A (c) and 3B (iii) of the standalone financial statements.
2. Please report whether there are any cases of waiver write off debts/loans/interest etc. if yes the reasons there for and the amount involved. Based on the information and explanations furnished to us by the Company there are no cases of waiver/ written off of loans interest etc. given by the Company. However the Company has made a provision of Rs.40.85 lakhs for obsolescence for inventories Rs.1034.85 lakhs for trade receivables Rs.9.1 lakhs for loans & advances and Rs.4395.87 lakhs for investments.
3. Whether the Proper records are maintained for inventories lying with the third parties & assets as gift from Govt. or other authorities No inventories are maintained at CHO Level. Proper records have been maintained for the assets received from Govt. or other authorities.
As per the report of branch auditors proper records have been maintained for inventories lying with the third parties and assets received as gift from Govt. or other authorities.

COMMENTS OF THE COMPTROLLER AND AUDITOR GENERAL OF INDIA UNDER SECTION 143(6)(b) OF THECOMPANIES ACT 2013 ON THE FINANCIAL STATEMENTS OF HMT LIMITED BANGALORE FOR THE YEARENDED 31 MARCH 2017

The preparation of financial statements of HMT Limited Bangalore for the year ended 31March 2017 in accordance with the financial reporting framework prescribed under theCompanies Act 2013 (Act) is the responsibility of the management of the Company. TheStatutory Auditor appointed by the Comptroller and Auditor General of India under Section139(5) of Act is responsible for expressing opinion on the financial statements underSection 143 of the Act based on the independent audit in accordance with the Standards onAuditing prescribed under Section 143(10) of the Act. This is stated to have been done bythem vide their Audit Report dated 10 November 2017.

I on behalf of the Comptroller and Auditor General of India have conducted asupplementary audit under Section 143(6)(a) of the Act of the financial statements of HMTLimited Bangalore for the year ended 31 March 2017. This supplementary audit has beencarried out independently without access to the working papers of the Statutory Auditorsand is limited primarily to inquiries of the Statutory Auditor and company personnel and aselective examination of some of the accounting records. On the basis of my audit nothingsignificant has come to my knowledge which would give rise to any comment upon orsupplement to Statutory Auditor's report.

For and on behalf of the
Comptroller and Auditor General of India
(L. Tochhawng)
Director General of Commercial Audit & Ex-Officio Member Audit Board
Place: Hyderabad Hyderabad
Date: 14 November 2017