The Members of
M M Rubber Company Limited
Report on the Audit of the Financial Statements
We have audited the accompanying financial statements of M M Rubber Company Limited.(The Company) Bangalore which comprise the Balance Sheet as at 31st March 2021 theStatement of Profit & Loss (including Other Comprehensive income) the Cash FlowStatement and the Statement of Changes in Equity for the year then ended and notes to thefinancial statements including a summary of significant accounting policies and the 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 except for disclosure of the information referred to in the Basis forQualified Opinion section of our report the aforesaid financial statements give theinformation required by the Companies Act 2013 ("the Act") in the manner sorequired and give a true and fair view in conformity with the Indian Accounting Standardsprescribed under section 133 of the Act read with the Companies (Indian AccountingStandards) Rules 2015 as amended (Ind AS") and other accounting principlesgenerally accepted in India of the state of affairs of the Company as at March 312021and the loss total comprehensive income its cash flows and the changes in equity for theyear ended on that date.
Basis for Qualified Opinion
As discussed in 1. Note No. 36 to the Ind AS financial statements theCompany's valuation of finished goods for the reasons stated in Note is not valuedas per Indian Accounting Standard No. 2 as at 31 March 2021.
2. Note No.37 to the IndAS financial statementsin the absence of updation ofFixed Asset Register the company is in the process of ascertaining the impairment ifany on any of the fixed assets to this extent Ind AS Accounting Standard No.36(Impairment of fixed assets) has not been complied.
3. In the absence of sufficient appropriate evidence and information we areunable to quantify and comment upon the consequential impact if any on the accompanyingInd AS financial statements.
The financial statements do not adequately disclose this matter. We conducted our auditin accordance with the Standards on Auditing (SAs) specified under section 143(10) of theCompanies Act 2013. Our responsibilities under those Standards are further described inthe Auditor's Responsibilities for the Audit of the Financial Statements section of ourreport. We are independent of the Company in accordance with the Code of Ethics issued bythe Institute of Chartered Accountants of India together with the ethical requirementsthat are relevant to our audit of the financial statements under the provisions of theCompanies Act 2013 and the Rules thereunder and we have fulfilled our other ethicalresponsibilities in accordance with these requirements and the ICAI's Code of Ethics. Webelieve that the audit evidence we have obtained is sufficient and appropriate to providea basis for our audit opinion on the financial statements.
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. Inaddition to the matter described in the Basis for Qualified Opinion section we havedetermined the matters described below to be the key audit matters to be communicated inour report.
|Key Audit Matters ||Auditor's Response |
|1 Accuracy and completeness of related party transactions and disclosures (as described in Note No. 32 of Ind AS Financial Statements. ||Principal Audit Procedures |
| || |
|The Company has undertaken transactions with its related parties in the normal course of business at arm's length. These include lending and borrowing of Inter-corporate deposits and short term loans to or from the related parties. ||Obtained and read the Company's policies processes and procedures in respect of identifying related parties evaluation of arm's length obtaining approval recording and disclosure of related party transactions. |
|We identified the accuracy and completeness of saidrelatedparty transactions andits disclosure as set out in respective notes to the financial statements as a key audit matters due to the significance of transactions with related parties during the year ended 31.3.2021 and regulatory compliance thereon. ||Read minutes of shareholder meetings board meetings and minutes of meetings of those charged with governance in connection with Company's assessment of related party transactions being in the ordinary course of business at arm's length. |
| ||Tested related party transactions with the underlying contracts confirmation letters filing of returns with ROC and other supporting documents Agreed the related party information disclosed in the IndAS financial statements with the underlying supporting documents |
|2 Revenue recognition: Discounts Incentives and Rebates etc.: ||Principal Audit Procedures |
|As disclosed in note 20 to the financial statements Sale of products is measured net of any Sales discounts and note 27 to the financial statements with regard to Turnover discount Commission on sales Prompt payment discount. ||Assessed the appropriateness of the Company's revenue recognition accounting policies those relating to trade allowances and rebates by comparing with applicable accounting standards. |
|Total Amount involved on all the aforesaid head of accounts is quite substantial compared to the turnover Therefore We identified the evaluation of accrual for Commission and discounts as a key audit matter. ||Testing the design implementation and operating effectiveness of Company's general IT controls |
|Material estimation by the Company is involved in recognition and measurement of discounts and commission. This includes establishing an accrual at year end particularly in arrangements with varying terms which are based on shorter-term arrangements. In addition the value and timing of promotions for products varies from period to period and the activity can span beyond the year end. ||Inspecting on a sample basis key customer contracts. Based on the terms and conditions relating to Commission and discounts we assessed the Company's revenue recognition policies with reference to the requirements of the applicable accounting standards; |
| ||Performing substantive testing by selecting samples of Commission and discount transactions recorded during the year including credit notes issued and matching the parameters used in the computation with the relevant source documents; |
| ||Understanding the process followed by the Company to determine the amount of accrual of Commission and discounts. |
| ||Checking completeness and accuracy of the data used by the Company for accrual of Commission and discounts |
Emphasis of Matter
We draw attention to Note No. 39 to the Financial Statement which describes theeconomic and social consequences the entity is facing as a result of Covid-19 which isimpacting operations of the Company supply chains personnel available for work etc.
Our opinion is not modified in respect of this matter.
Information Other than the Financial Statements and Auditor's Report Thereon
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 ReportBusiness Responsibility Report and Shareholder's Information but does not include thefinancial statements 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 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 a materialmisstatement of this other information we are required to report that fact. We havenothing to report in this regard.
Management's and Board of Directors Responsibility for the Financial Statements
The Company's Management and Board of Directors are responsible for the matters statedin Section 134(5) of the Companies Act 2013(the Act) with respect to the preparation ofthese Ind AS financial statements that give a true and fair view of the financialposition financial performance including other comprehensive income cash flows andchanges in equity of the Company in accordance with the Accounting principles generallyaccepted in India including the Indian Accounting Standards (Ind AS) .
This responsibility also includes maintenance of adequate accounting records inaccordance with the provision 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 the 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 ASfinancial statements that give a true and fair view and are free from materialmisstatements 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 and using the going concern basis of accounting unless managementeither intends to liquidate the Company or to cease operations or has no realisticalternative but to do so.
The Board of Directors are responsible for overseeing the Company's financial reportingprocess.
Auditor's Responsibilities for the Audit of the F inancial 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 auditor's 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 financial controls relevant to the audit inorder to design audit procedures that are appropriate in the circumstances. Under section143(3)(i) of the Act we are also responsible for expressing our opinion on whether theCompany has adequate internal financial controls system in place and the operatingeffectiveness of such controls.
Evaluate the appropriateness of accounting policies used and the reasonablenessof accounting estimates and related disclosures made bymanagement and Board of Directors.
Conclude on the appropriateness of management's and Board of Directors use ofthe going concern basis of accounting and based on the audit evidence obtained whether amaterial uncertainty exists related to events or conditions that may cast significantdoubt on the Company's ability to continue as a going concern. If we conclude that amaterial uncertainty exists we are required to draw attention in our auditor's report tothe related disclosures in the standalone financial statements or if such disclosures areinadequate to modify our opinion. Our conclusions are based on the audit evidenceobtained up to the date of our auditor's report. However future events or conditions maycause the Company to cease to continue as a 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.
Materiality is the magnitude of misstatements in the financial statements thatindividually or in aggregate makes it probable that the economic decisions of areasonably knowledgeable user of the financial statements may be influenced. We considerquantitative materiality and qualitative factors in (i) planning the scope of our auditwork and in evaluating the results of our work; and (ii) to evaluate the effect of anyidentified misstatements in the financial statements.
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 ourauditor's 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 Section 143(3) of the Act based on our audit we report to theextent applicable 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 & Loss including other comprehensiveincome the Cash Flow statement and statement of changes in Equity dealt with by thisreport are in agreement with the relevant books of account maintained for the purposeofpreparation ofthe financial statements.
d) In our opinion the aforesaid financial statements comply with the Indian AccountingStandards specified under section 133 of Act except for disclosure of the informationreferred to in the Basis for Qualified Opinion section of our report read with relevantRules thereunder.
e) On the basis of the written representations received from the directors as on 31stMarch 2021 and taken on record by the Board of Directors we report that none of thedirectors is disqualified as on 31 st March 2021 from being appointed as a director interms of Section 164(2) of the Companies Act 2013.
f) With respect to the adequacy of the internal financial controls over financialreporting of the C ompany and the operating effectiveness of such controls refer to ourseparate Report in"Annexure B". Our report expresses an unmodified opinion onthe adequacy and operating effectiveness of the C ompany's internal financial controlsover financial reporting.
g) With respect to the other matters to be included in the Auditor s Report inaccordance with the requirements of section 197(16) of the Act as amended: In our opinionand to the best of our information and according to the explanations given to us theremuneration paid by the Company to its directors during the year is in accordance withthe provisions of section 197 ofthe Act.
h) 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 as amended inour opinion and to the best of our information and according to the explanations given tous:
a) The Company has disclosed the impact of pending litigations on its financialposition in its financial statements as of March 312021.
b) The Company did not have any long-term contracts including derivative contracts forwhich there were any material foreseeable losses.
c) There has been no delay in transferring amounts required to be transferred to theInvestor Education and Protection Fund by the Company.
2. As required by the Companies (Auditor's Report) Order 2016 ("the Order")issued by the Central Government in terms of Section 143(11) of the Act based on thecomments in the Auditor's Report of the Company and on the auditor's reports issued inaccordance with the Order we give in the annexure 'A' a statement on the mattersspecified in paragraphs 3 and 4 ofthe Order to the extent applicable.
| ||For M/s. Vandana Rao And Company |
| ||Chartered Accountants |
| ||FRNNo.011628S |
| ||(CA. VANDANA. P.RAO) |
|Place : Bangalore ||Proprietrix |
|Date : 28-06-2021 ||Mem No.218797 |
ANNEXURE 'A TO THE AUDITOR'S REPORT
Annexure referred lo in Independent Auditor's Report to the members of the company onthe financial statements for the year ended 31 st March 2021 we report that:
i) (a) The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets; however such Fixed Asset records donot show updated value both in respect of Gross Block and Net Block.
(b) The Fixed assets were physically verified by the management in accordance with aregular programme of verification which in our opinion provides for physicalverification of all the fixed assets at reasonable intervals. Accordingly to theinformation and explanations given to us no material discrepancies were noticed on suchverification.
(c) According to the information and explanations given to us and on the basis of ourexamination of the records of the comp any the title deeds of immovable properties areheld in the name of the company.
ii) The Inventory has been physically verified during the year by the management atreasonable intervals. There were no material discrepancies noticed on such physicalverification.
iii) The Company has not granted any loans secured or unsecured to companies firmsLimited Liability Partnerships or other parties covered in the register maintained underSection 189 of the Companies Act2013. Hence sub clauses (a) (b) and (c) are notapplicable.
iv) In our opinion and according to the information and explanations given to us thecompany has complied with the provisions of section 185 and 186 of the Companies Act 2013with respect to loans making investments and providing guarantees and securities made.
v) According to information and explanations given to us the Company has not acceptedany public deposit during the year and does not have any unclaimed deposit. There havebeen no instances where order has been passed by C ompany Law Board or National CompanyLaw Tribunal for any contravention.
vi) Having regard to the nature of the Company's business/activities reporting underclause (VI) of the order with regard to cost records is not applicable.
vii) (a) According to the information and explanations given to us and on the basis ofour examination of the records of the company amounts deducted/accrued in the books ofaccount in respect of the undisputed statutory dues including Provident Fund InvestorEducation & Protection Fund Employees State Insurance Income-tax Vat Customs DutyExcise Duty GST Cess and other statutory dues with the appropriate authorities.
(b) According to the information and explanations given to usThere were no undisputedamounts payable in respect of Provident Fund Investor Education & Protection FundEmployees State Insurance Income- tax Vat Customs Duty Excise Duty GST Cess andother statutory dues were in arrears as at 31st March 2021 for aperiod of more than sixmonths from the date they became payable.
viii) In our opinion and according to information and explanations given to us thecompany has not defaulted in repayment of dues to any financial institutions banks. TheCompany has not issued any debentures.
ix) The company did not raise any money by way of initial public offer including Debtinstrument or further public offer or term loans during the year.
x) According to the information and explanations given to us no material fraud by thecompany or on the company by its officers or employees has been noticed or reported duringthe course of our audit nor have been informed of any such case by the management.
xi) According to the information and explanations given to us and based on ourexamination of the records of the company the Company has paid/provided managerialremuneration in accordance with the requisite approvals mandated by the provisions of thesection 197 read with schedule 5 to the Act.
xii) In our opinion and according to the information and explanations given to us thecompany is not a Nidhi company. Accordinglyparagraphs (xii) of the order is notapplicable.
xiii) According to the information and explanations given to us and based on ourexamination of the records of the company transactions with the related parties are incompliance with section 177 and 188 of the Act where applicable and details of suchtransactions has been disclosed in the financial statements as required by the applicableaccounting standards.
xiv) According to the information and explanations given to us and based on ourexamination of the records of the company the company has not made any preferentialallotment or private placements of shares or fully or partly convertible debentures duringthe year.
xv) According to the information and explanations given to us and based on ourexaminations of the records of the company the company has not entered into non -cashtransactions with directors or persons connected with them and hence provisions ofsection 192 of the companies Act 2013 are not applicable to the Company.
xvi) The company is not requiredto be registered under section 45-1A of the ReserveBank of India Act 1934.
| ||For M/s. Vandana Rao And Company |
| ||Chartered Accountants |
| ||FRNNo. 011628S |
| ||(CA.VANDANA.P.RAO) |
|Place: Bangalore ||Proprietrix |
|Date: 28-06-2021 ||Mem No. 218797 |
ANNEXURE 'B 'TO THE AUDITOR'S REPORT
Report on the Internal Financial Controls over Financial reporting under clause (i) ofsub section 3 of section 143 ofthe Companies Act 2013 (the Act)
We have audited the internal financial controls over financial reporting of M M RubberCo Ltd (the Company) as of 31st March 2021 in conjunction with our audit of the financialstatements of the company for the year ended on that date.
In our opinion the Company has in all material respects adequate internal financialcontrols with reference to financial statements and such internal financial controls wereoperating effectively as at 31 March 2021 based on the internal financial controls withreference to standalone financial statements criteria established by the Companyconsidering the essential components of internal control stated in the Guidance Note onAudit of Internal Financial Controls Over Financial Reporting issued by the Institute ofChartered Accountants of India (the "Guidance Note").
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 ("ICAI"). Theseresponsibilities include the design implementation and maintenance of adequate internalfinancial controls that were operating effectively for ensuring the orderly and efficientconduct of its business including adherence to the company's policies the safeguardingof its assets the prevention and detection of frauds and errors the accuracy andcompleteness of the accounting records and the timely preparation of the reliablefinancial information as required under the companies act 2013 (hereinafter referred toas "Act")
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 Standards on Auditing prescribed under Section 143(10) of the Act and theGuidance Note on Audit of Internal Financial Controls over Financial reporting issued bythe Institute of Chartered Accountants of India to the extent applicable to an audit ofInternal Financial controls. Those Standards and the Guidance Note require that we complywith the ethical requirements and plan and perform the audit to obtain reasonableassurance about 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 auditors' judgment including the assessment of the risks ofmaterial misstatement of the financial statements whether due to fraud or error. Webelieve that the audit evidence we have obtained is sufficient and appropriate to providea basis for our audit opinion on the Company's internal financial controls system overfinancial 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 of records that in reasonable detail accurately andfairly reflect the transactions and dispositions of the assets of the company;
(2) provide reasonable assurance that transactions are recorded as necessary to permitpreparation of financial statements in accordance with generally accepted accountingprinciples and that receipts and expenditures of the company are being made only inaccordance with authorisations of management and directors of the company; and
(3) provide reasonable assurance regarding prevention or timely detection ofunauthorised acquisition use or disposition of the company's assets that could have amaterial 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 controlsover financial reporting may become inadequate because of changes in conditions or thatthe degree of compliance with the policies or procedures may deteriorate.
Basis for Qualified Opinion
a) The Company has in its books fixed assets with Gross block to the tune of Rs.214552564/- and net block of Rs.117298345/-. However both these values does notreflect the values from the date of incorporation of the Company and it is only for alimited period andLimited items of fixed assets.
In our opinion to the best of our information and according to the explanations givento usthe Company has in all material respects an Internal Financial Controls withreference to financial statements over financial reporting subject to qualified opinionabove and such internal financial controls with reference to financial statements wereoperating effectively as at March 31 2021 based on the internal control over financialreporting criteria established by the Company considering the essential components ofinternal control stated in the Guidance Note on audit of Internal Financial Controls overfinancial reporting issued by the Institute of Chartered Accountants of India.
| ||For M/s. Vandana Rao And Company |
| ||Chartered Accountants |
| ||FRNNO.011628S |
| ||(CA. VANDANA. P.RAO) |
|Place: Bangalore ||Proprietrix |
|Date: 28-06-2021 ||Mem No. 218797 |