THE MEMBERS OF
MACHINO PLASTICS LIMITED
Report on the Audit of the Ind AS Financial Statements
We have audited the accompanying Ind AS financial statements of Machino PlasticsLimited ("the Company") which comprise the Balance Sheet as at March 31 2019the Statement of Profit and Loss (including Other Comprehensive Income) the Statement ofChanges in Equity and the Statement of Cash Flows for the year ended on that date andnotes to the financial statements including a summary of the significant accountingpolicies and other explanatory information.
In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid Ind AS financial statements give the information required bythe Companies Act 2013 as amended ("the Act") in the manner so required andgive a true and fair view in conformity with the accounting principles generally acceptedin India of the state of affairs of the Company as at March 31 2019 the profit andother comprehensive income changes in equity and its cash flows for the year ended onthat date.
Basis for Opinion
We conducted our audit of the Ind AS financial statements in accordance with theStandards on Auditing specified under section 143(10) of the Act (SAs). Ourresponsibilities under those Standards are further described in the "Auditor'sResponsibilities for the Audit of the Ind AS Financial Statements" section ofour report. We are independent of the Company in accordance with the Code of Ethics issuedby the Institute of Chartered Accountants of India (ICAI) together with the ethicalrequirements that are relevant to our audit of the financial statements under theprovisions of the Act and the Rules made thereunder and we have fulfilled our otherethical responsibilities in accordance with these requirements and the ICAI's Code ofEthics. We believe that the audit evidence we have obtained is sufficient and appropriateto provide a basis for our audit opinion on the Ind AS financial statements.
Key audit Matters
Key audit matters are those matters that in our professional judgment were of mostsignificance in our audit of the Ind AS financial statements for the financial staementsfor the financial year ended March 312019. These matters were addressed in the context ofour audit of the Ind AS financial statements as a whole and in forming our opinionthereon and we do not provide a separate opinion on these matters. For each matter belowour description of how our audit addressed the matter is provided in that context.
We have determined the matters described below to be the key audit matters to becommunicated in our report. We have fulfilled the responsibilities described in theAuditors responsibilities for the audit of the Ind AS financial statements section of ourreport including in relation to these matters. Accordingly our audit included theperformance of procedures designed to respond to our assessment of the risks of materialmisstatement of the Ind As financial statements. The results of the audit proceduresincluding the procedures performed to address the matters below provide the basis for ouraudit opinion on the accompanying Ind AS financial statements.
|Key audit Matter ||auditor's response |
contingent Liabilities (as described in note 34 of the Ind As financial statements)
|As of March 31 2019 the Company has disclosed contingent liabilities of Rs.588.34 lakhs relating to tax claims. ||Our audit procedures included the following: |
|Taxation exposures have been identified as a key audit matter due to the uncertainties involved in these tax claims. || Gained an understanding of the process of identification of claims and contingent liabilities and evaluated the design and tested the operating effectiveness of key controls. |
|Due to uncertainty of cases timescales for resolution and need to negotiate with various authorities there is significant judgement required by management in assessing the exposure of each case and thus a risk that such cases may not be adequately provided for or disclosed in the Ind As financial statements. || Obtained the Company's cases summary and critically assessed management's position through discussions with the Tax head and company management on both the probability of success in significant cases and the magnitude of potential loss. |
|Accordingly contingent liabilities were determined to be a key audit matter in our audit of the Ind As financial statements. || Checked the adequacy of the disclosures with regard to facts and circumstances of the matters. |
The Company's Board of Directors is responsible for the preparation of the otherinformation. The other information comprises the information included in the Annualreport but does not include the Ind AS financial statements and our auditor's reportthereon. The annual report is expected to be made available to us after the date of thisauditor's report.
Our opinion on the Ind AS financial statements does not cover the other information andwe do not express any form of assurance conclusion thereon.
In connection with our audit of the Ind AS financial statements our responsibility isto read the other information identified above when it becomes available and in doing soconsider whether the other information is materially inconsistent with the Ind ASfinancial statements or our knowledge obtained during the course of our audit or otherwiseappears to be materially misstated. When we read the annual report if we conclude thatthere is a material misstatement therein we are required to communicate the matter tothose charged with governance.
Management's Responsibility for the ind AS 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 Ind AS financial statementsthat give a true and fair view of the financial position financial performance totalcomprehensive income changes in equity and cash flows of the Company in accordance withthe accounting principles generally accepted in India including the Indian AccountingStandards (Ind As) specified under section 133 of the Act read with the Companies (IndianAccounting Standards) Rules 2015 as amended. This responsibility also includesmaintenance of adequate accounting records in accordance with the provisions of the Actfor safeguarding the assets of the Company and for preventing and detecting frauds andother irregularities; 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 Ind AS financial statements that give a true and fairview and are free from material misstatement whether due to fraud or error.
In preparing the Ind AS financial statements management is responsible for assessingthe Company'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 ind AS Financial Statements
Our objectives are to obtain reasonable assurance about whether the Ind AS 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 Ind AS 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 Ind AS financialstatements whether due to fraud or error design and perform audit procedures responsiveto those risks and obtain audit evidence that is sufficientand 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 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. If we conclude that a material uncertainty existswe are required to draw attention in our auditor's report to the related disclosures inthe Ind AS financial statements or if such disclosures are inadequate to modify ouropinion. Our conclusions are based on the audit evidence obtained up to the date of ourauditor's report. However future events or conditions may cause the Company to cease tocontinue as a going concern.
Evaluate the overall presentation structure and content of the Ind AS financialstatements including the disclosures and whether the Ind AS financial statementsrepresent the underlying transactions and events in a manner that achieves fairpresentation.
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 Ind AS financial statements ofthe current period and are therefore the key audit matters. We describe these matters inour auditor's report unless law or regulation precludes public disclosure about the matteror when 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 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 including Other ComprehensiveIncome Statement of Changes in Equity and the Statement of Cash Flow dealt with by thisReport are in agreement with the relevant books of account.
d) In our opinion the aforesaid Ind AS financial statements comply with the Ind ASspecified under Section 133 of the Act read with Rule 7 of the Companies (Accounts)Rules 2014.
e) On the basis of the written representations received from the directors as on March31 2019 taken on record by the Board of Directors none of the directors is disqualifiedas on March 31 2019 from being appointed as a director in terms of Section 164 (2) of theAct.
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 A". Our report expresses an unmodified opinion onthe adequacy and operating effectiveness of the Company's internal financial controls overfinancial 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 opinion and to the best of our information and according to the explanationsgiven to us the remuneration paid by the Company to its directors during the year is inaccordance with the provisions of section 197 of the 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:
i. The Company has disclosed the impact of pending litigations on its financialposition in its Ind AS financial statements. Refer Note 41 to the financial statements;
ii. The Company has made provision as required under the applicable law or accountingstandards for material foreseeable losses if any on long-term contracts includingderivative contracts.
iii. There has been no delay in transferring amounts required to be transferred tothe Investor 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 we give in"Annexure B" a statement on the matters specified in paragraphs 3 and 4 of theOrder.
For KMGS & Associates
(Firm's Registration No. 004730N)
(Membership No. 091100)
Place of Signature: Gurugram
Date: 30th May 2019.
Annexure A' to the independent auditor's report of even date on the Ind ASfinancial statements of MACHINO PLASTICS 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 MachinoPlastics Limited ("the Company") as of March 31 2019 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 maintain 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 responsibilities includethe design implementation and maintenance of adequate internal financial controls thatwere operating effectively for ensuring the orderly and efficient conduct of its businessincluding adherence to company's policies the safeguarding of its assets the preventionand detection of frauds and errors the accuracy and completeness of the accountingrecords and the timely preparation of reliable financial information as required underthe Companies Act 2013.
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 Companies Act 2013 to the extentapplicable to an audit of internal financial controls both issued by the Institute ofChartered Accountants of India. Those standards and the Guidance Note require that wecomply with 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 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 details 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 authorisations ofmanagement and directors of the company; and (3) provide reasonable assurance regardingprevention or timely detection of unauthorised 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 over financial reporting tofuture periods are subject to the risk that the internal financial control over financialreporting may become inadequate because of changed in conditions or that the degree ofcompliance with the policies or procedures may deteriorate.
In our opinion the Company has in all material respects an adequate internalfinancial controls system over financial reporting and such internal financial controlsover financial reporting were operating effectively as at March 31 2019 based on theinternal control over financial reporting criteria established by the Company consideringthe essential components of internal control stated in the Guidance Note on Audit ofInternal Financial Controls Over Financial Reporting issued by the Institute of CharteredAccountant of India.
For KMGS & Associates
(Firm's Registration No. 004730N)
(Membership No. 091100)
Place of Signature: Gurugram
Date: 30th May 2019
ANNEXURE B' TO THE INDEPENDENT AUDITOR'S REPORT
(Referred to in paragraph 1 of Report on Other Legal and Regulatory Requirements of theauditors' report of even date to the members of Machino Plastics Limited on the financialstatements for the year ended 31st March'2019)
In terms of information and explanations given to us and the books and records examinedby us we report that:
(i) (a) The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets.
(b) According to the information and explanations given to us the fixed assets werephysically verified during the year by the management in accordance with the programme ofverification which in our opinion is reasonable having regard to the size of the companyand the nature of its assets. To the best of our knowledge no material discrepancies werenoticed on verification conducted during the year as compared with the book records.
(c) Based upon the audit procedures performed the title deeds of the immovableproperty are held in the name of the company.
(ii) The management has conducted physical verification of inventory at reasonableintervals during the year. No material discrepancies were noticed on physical verificationcarried out at the end of the year.
(iii) As informed the Company has not granted any loans secured or unsecured tocompanies firms Limited Liability Partnerships or other parties covered in the registermaintained under section 189 of the Companies Act 2013. Accordingly sub-clause (a) and(b) are not applicable.
(iv) In our opinion and according to the information and explanations given to us thecompany has not given any loan made any investment given any guarantee and provided anysecurity which is covered by Section 185 and 186 of the Companies Act 2013. Accordinglythe provisions of clause 3(iv) of the Companies (Auditor's Report) Order 2016 are notapplicable to the Company.
(v) The Company has not accepted any deposits from the public. Accordingly theprovisions of clause 3(v) of the Companies (Auditor's Report) Order 2016 are notapplicable to the Company.
(vi) To the best of our knowledge and as explained the Central Government has notprescribed maintenance of cost records under clause (d) of sub-section (1) of section 148of the Companies Act 2013 for the products of the Company.
(vii) (a) According to the information and explanations given to us and the records ofthe company examined by us in our opinion the company is regular in depositing withappropriate authorities undisputed statutory dues including provident fund employees'state insurance income tax sales tax service tax duty of customs duty of excisevalue added tax cess and other statutory dues as applicable with the appropriateauthorities. There was no undisputed amounts payable in arrears as at March 31st2019 for period of more than six months from the date they became payable except for theSales Tax the details of which is as under:
|Name of the statute ||Nature of dues ||Financial Year ||Amount (Rs.) ||Due Date |
|The Sales Tax Act ||Sales Tax ||2017-18 ||989951 ||15th July 2017 |
|The Income Tax Act ||Interest ||2000-01 ||107415 ||29th July 2017 |
|The Income Tax Act ||Interest ||2006-07 ||88242 ||29th July 2017 |
|The Income Tax Act ||Interest ||2007-08 ||49087 ||29th July 2017 |
|The Income Tax Act ||Interest ||2008-09 ||22350 ||31st Jan 2019 |
|The Income Tax Act ||Interest ||2009-10 ||252740 ||31st Jan 2019 |
|The Income Tax Act ||Interest ||2010-11 ||289420 ||13th March 2014 |
|The Income Tax Act ||Interest ||2014-15 ||245540 ||26th July 2016 |
(b) According to the information and explanations given to us particulars of dues ofIncome tax sales tax wealth tax service tax duty of customs duty of excise valueadded tax and cess as at March 31st 2019 which have not been deposited onaccount of a dispute have been stated below:
|Name of the Statute ||Nature of dues ||Amount (rs.) ||Amount deposit under protest ||Period ||Forum where dispute is pending |
|The Central Excise Act1944 ||Excise Duty ||2258355 ||Nil ||F.Y 2003-04 & 2004-05 ||Commissioner Of Central Excise Delhi- III |
|The Central Excise Act1944 ||Excise Duty ||55953527 ||Nil ||F.Y 2013-14 to 2017-18 ||Directorate General of Goods and Services Tax-Intelligence Gurgaon |
(viii) In our opinion and according to the information and explanations given to usthe company has not defaulted in repayment of dues to any bank.
(ix) Based on information and explanations given to us by the management term loanswere applied for the purpose for which the loans were obtained. The company has not raisedany money by way of initial public offer or further public offer (including debtinstruments).
(x) Based upon the audit procedures performed for the purpose of reporting the true andfair view of the financial statements and as per the information and explanations given bythe management we report that no fraud by the company or any fraud on the Company by itsofficers or employees has been noticed or reported during the course of our audit.
(xi) Based upon the information and explanations given to us by the management theCompany has paid or provided the managerial remuneration in accordance with the requisiteapprovals mandated by provisions of section 197 read with Schedule V to the Companies Act.
(xii) In our opinion the Company is not a Nidhi Company. Accordingly the provisionsof clause 3(xii) of the Companies (Auditor's Report) Order 2016 are not applicable to theCompany.
(xiii) Based on information and explanations given to us by the management alltransactions with the related parties are in compliance with section 177 and 188 of theCompanies Act 2013 where applicable and the details have been disclosed in the Ind ASfinancial Statements as required by the applicable Indian Accounting Standards.
(xiv) Based on information and explanations given to us by the management the Companyhas not made any preferential allotment or private placement of shares or fully or partlyconvertible debentures during the period under review. Accordingly the provisions ofclause 3(xiv) of the Companies (Auditor's Report) Order 2016 are not applicable to theCompany.
(xv) In our opinion and according to the information and explanations given to us thecompany has not entered into any non-cash transaction with directors or person connectedwith him which is covered by Section 192 of the Companies Act 2013. Accordingly theprovisions of clause 3(xv) of the Companies (Auditor's Report) Order 2016 are notapplicable to the Company.
(xvi) In our opinion and according to the information and explanations given to us thecompany is not required to be registered under section 45 IA of the Reserve Bank of IndiaAct 1934. Accordingly the provisions of clause 3(xvi) of the Companies (Auditor'sReport) Order 2016 are not applicable to the Company.
For KMGS & Associates
(Firm's Registration No. 004730N)
(Membership No. 091100)
Place of Signature: Gurugram
Date: 30th May 2019.