Mackinnon Mackenzie & Company Ltd.
|BSE: 501874||Sector: Others|
|NSE: N.A.||ISIN Code: N.A.|
|BSE 05:30 | 01 Jan||Mackinnon Mackenzie & Company Ltd|
|NSE 05:30 | 01 Jan||Mackinnon Mackenzie & Company Ltd|
|BSE: 501874||Sector: Others|
|NSE: N.A.||ISIN Code: N.A.|
|BSE 05:30 | 01 Jan||Mackinnon Mackenzie & Company Ltd|
|NSE 05:30 | 01 Jan||Mackinnon Mackenzie & Company Ltd|
TO THE MEMBERS OF MACKINNON MACKENZIE AND COMPANY LIMITED
Report on the audit of Standalone Financial Statements Qualified Opinion
We have audited the accompanying financial Statements of Mackinnon Mackenzie &Company Limited ("the Company") which comprise the Balance Sheet as at March312021 the statement of Profit and Loss (including Other Comprehensive Income) theStatement of Change in Equity and the Statement of Cash Flows for the year then ended onthat date and notes to the financial statements including a summary of the significantaccounting policies and other explanatory information (herein after referred to as the"Financial Statements").
In our opinion and to the best of our information and according to the explanationsgiven to us except for the effects of the matters described in the Basis for QualifiedOpinion section of our report the aforesaid financial statements give the informationrequired by the Companies Act 2013 ("the Act") in the manner so required andgive a true and fair view in conformity with the Indian Accounting Standards prescribedunder section 133 of the Act read with the Companies (Indian Accounting Standards) Rules2015 as amended ("Ind AS") and other accounting principles generally acceptedin India of the state of affairs of the Company as at March 312021 the Loss and totalcomprehensive income changes in equity and its cash flows for the year ended on thatdate.
Basis for Qualified Opinion
1. The Company had borrowed amounts from its bankers aggregating to ' 825.61 Crsincluding interest. Since the said amounts were not repaid Bankers approached DebtRecovery Tribunal. The Hon'able Bombay High Court had approved the application of thebanks for transfer of debts owed to them to a company (hereinafter referred to as"Lending Company") along with securities and mortgage charges in the pastpursuant to the consent terms filed in the Debt Recovery Tribunal. Consequently suitsfiled by the banks before the Debt Recovery Tribunal had transposed the "LendingCompany" in place of the banks. The Hon. Bombay High Court had passed a decree in twoof the suits filed in favour of the said "Lending Company" to dispose of/sellthe immoveable property and flats belonging to the company to recover its dues. Totalamount due to the "Lending Company" as per the decree together with interest is' 3079.55 Crores as on 31st March 2021. The Lending Company has given an unconditionaldeferment of its loans up to March 312023 and accordingly this loan due to the lendingcompany is classified as Non-Current. If Company had accounted for differential liabilityin the books loss would have increased by ' 2317.56 Crs negative net worth would haveincreased by ' 2317.56 Crs and secured borrowings would have increased by ' 2317.56 Crs(Refer Note No. 15 to the Audited Financial Statements)
2. 60 Clerical workers and 35 subordinate staff were retrenched on 4th August 1992under the Industrial Disputes Act at Mumbai. Each one was paid 15 days wages per completedyear of service and one months' notice pay in addition to other dues. The Industrial Courthas given a judgment against the Company on 08-Mar-1996. The company had filed an appealwith the High Court against the said order which has been decided against the company.Special Leave Petition had been admitted for hearing before the Hon. Supreme Court againstthe order of the Hon. Bombay High Court. The Supreme Court dismissed the appeal of thecompany and ordered payment of back wages and terminal dues to the concerned workmen. TheCompany in its Compliance Affidavit then submitted to the Supreme Court has stated that asper the Company concerned workmen are only 7 and has pleaded non-applicability in respectof balance 88 workmen. However there are no further orders on this. The Company haddeposited an ad-hoc sum of ' 32 lakhs with the Registrar Bombay High Court. The saidamount of ' 32 lakhs is included in Advances other than Capital advances. The Company isof the view that it can provide for the said liability only after reconciliation isreceived in respect of sums so held by the Registrar Hon'ble Bombay High Court. Totalamount due to the said 7 concerned workmen aggregating to appx ' 1.42 Crs (includinginterest) as at 31st March 2021 is not provided for. If this liability had been accountedfor then loss would have increased by ' 1.42. Crs negative net worth would haveincreased by ' 1.42 Crs and trade payables would have increased by ' 1.42. Crs (Refer NoteNo. 26 to the Audited Financial Statements).
3. Other Current Assets includes certain old balances amounting to ' 8.19 lakhs forwhich no provision for doubtful items if any has been made in the accounts resulting inoverstatement of other current assets and understatement of loss and negative net worth by' 8.19 lakhs. (Refer Note No. 12 to the Audited Financial Statements).
4. Trade Payables include an amount of ' 26.51 lakhs which represent old balances duefor more than 20 years which are not claimed by the creditors. If these amounts had beenwritten back loss and negative net worth would have reduced by ' 26.51 lakhs and tradepayables would have reduced by ' 26.51 lakhs. (Refer Note No. 18 to the Audited FinancialStatements).
5. Certain old credit balances outstanding in various accounts amounting to '148.53lakhs for which no write back have been made in accounts. If these amounts had beenwritten back loss and negative net worth would have reduced by ' 148.53 lakhs and othercurrent liabilities would have reduced by ' 148.53 lakhs. (Refer Note No. 19 to theAudited Financial Statements).
6. Provision for accrued liability for the year in respect of gratuity and long termcompensated absences has been made on arithmetical basis instead of based on actuarialvaluation as required by the Ind AS 19 Employees Benefits (the Standard). We are not ableto ascertain and comment on the resultant impact of the same on the financial results ofthe Company. (Refer Note No. 25 to the Audited Financial Statements).
7. Investments in Debentures or Bonds aggregating to ' 0.56 lakhs are destroyed in firein the year 1998. In absence of an adequate data no provision is made for loss ofinvestments. If these Investments would have been written off the investments would havereduced by ' 0.56 lakhs and loss and negative net worth would have increased by ' 0.56lakhs. (Refer Note No. 4 to the Audited Financial Statements).
8. Non-availability of confirmations in respect of balances of secured and unsecuredloans debtors certain bank balances deposits and creditors appearing in the accountsrespectively. We are not able to ascertain and comment on the correctness of theoutstanding balances and resultant impact of the same on the financial results of theCompany.
The above basis for qualified opinion referred to in point 1 to 8 were subject matterof the qualification in the Auditors Report for the year ended March 312020
In absence of the information the effects of which can't be quantified we are unableto comment on the possible impact of the items stated in the point numbers 6 and 8 on thefinancial results of the Company for the year ended March 312021.
We conducted our audit in accordance with the Standards on Auditing (SAs) specifiedunder section 143(10) of the Act. Our responsibilities under those Standards are furtherdescribed in the Auditor's Responsibilities for the Audit of the Financial Statementssection of our report. We are independent of the Company in accordance with the Code ofEthics issued by the Institute of Chartered Accountants of India together with the ethicalrequirements that are relevant to our audit of the financial statements under theprovisions of the Act and the Rules thereunder and we have fulfilled our other ethicalresponsibilities in accordance with these requirements and Code of Ethics. We believe thatthe audit evidence we have obtained is sufficient and appropriate to provide a basis forour audit opinion on the financial statements.
Material Uncertainty related to going concern
We draw attention to the Note 31 to the financial statements which indicates that thecompany has incurred a net loss of ' 35.55 lakhs during the year ended 31st March 2021 andas of that date the company's accumulated losses amount to ' 836.25 Crs resulting innegative net worth of the company. The management of the Company is evaluating variousoptions to revive the company. These conditions indicate material uncertainty that maycast significant doubt on the company's ability to continue as going concern. The"lending company" which has taken over in the past debts due by the Company tothe banks has given a support letter to extend for foreseeable future any financialsupport which may be required by the Company. In view of this support letter themanagement has assessed that the company continues to be a going concern.
Our opinion is not modified in respect of the said matter.
Key Audit Matters
Key audit matters are those matters that in our professional judgment were of mostsignificance in our audit of the financial statements of the current period. These matterswere addressed in the context of our audit of the financial statements as a whole and informing our opinion thereon and we do not provide a separate qualified opinion on thesematters. Except for the matters described in the Basis for Qualified Opinion section andmaterial uncertainty related to going concern section we have determined that there are nokey audit matters to communicate in our report.
The Company's Board of Directors is responsible for the preparation of the otherinformation. The Other information comprises the Board's Report including Annexures toBoard's Report but does not include the financial statements and our auditor's reportthereon. The Directors' Report including Annexures to Directors' Report is expected to bemade available to us after the date of this auditor's report.
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. When we read theDirectors' Report including Annexures to Directors' Report if we conclude that there is amaterial misstatement therein we are required to communicate the matter to those chargedwith governance.
Management's Responsibility for the Financial Statements
The Company's Board of Directors is responsible for the matters stated in section134(5) of the Act with respect to the preparation of these financial statements that givea true and fair view of the state of financial position financial performance includingother comprehensive income changes in equity and cash flows of the Company in accordancewith the accounting principles generally accepted in India including Ind AS specifiedunder section 133 of the Act. This responsibility also includes maintenance of adequateaccounting records in accordance with the provisions of the Act for safeguarding theassets of the Company and for preventing and detecting frauds and other irregularities;selection and application of appropriate accounting policies; making judgments andestimates that are reasonable and prudent; and design implementation and maintenance ofadequate internal financial controls that were operating effectively for ensuring theaccuracy and completeness of the accounting records relevant to the preparation andpresentation of the financial statements that give a true and fair view and are free frommaterial misstatement whether due to fraud or error.
In preparing the financial statements management is responsible for assessing theCompany's ability to continue as a going concern disclosing as applicable mattersrelating to going concern and using the going concern basis of accounting unlessmanagement either intends to liquidate the Company or cease operations or has norealistic alternative but to do so.
The Board of Directors is responsible for overseeing the Company's financial reportingprocess.
Auditor's Responsibility for the Audit of Financial Statements
Our objectives are to obtain reasonable assurance about whether the financialstatements as a whole are free from material misstatement whether due to fraud orerror and to issue an auditor's report that includes our opinion. Reasonable assurance isa high level of assurance but is not a guarantee that an audit conducted in accordancewith SAs will always detect a material misstatement when it exists. Misstatements canarise from fraud or error and are considered material if individually or in theaggregate they could reasonably be expected to influence the economic decisions of userstaken on the basis 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 an 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 financial statements or if such disclosures are inadequate to modify our opinion.Our conclusions are based on the audit evidence obtained up to the date of our auditor'sreport. However future events or conditions may cause the Company to cease to continue asa going concern.
Evaluate the overall presentation structure and content of the financialstatements including the disclosures and whether the financial statements represent theunderlying transactions and events in a manner that achieves fair presentation.
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 the Companies ( Auditor's Report ) Order 2016 ( theOrder" issued by the Central Government of India in terms of Section 143(11) of theAct we give in " Annexure A" s statement on the matters specified in paragraphs3 and 4 of the Order to the extent applicable .
2. As required by Section 143(3) of the Act we Report that
(a) We have sought and obtained all the information and explanations which to the bestof our knowledge and belief were necessary for the purposes of our audit.
(b) In our opinion proper books of account as required by law have been kept by theCompany so far as it appears from our examination of those books.
(c) The Balance Sheet the Statement of Profit and Loss (including Other ComprehensiveIncome) Statement of Changes in Equity and the Statement of Cash Flow dealt with by thisReport are in agreement with the books of account.
(d) Except for the possible effects of the matters described in point 6 related toprovision for accrued liability for the year in respect of gratuity and long termcompensated absences in the basis for qualified opinion section of our report theaforesaid financial statements comply with the Ind AS specified under Section 133 of theAct and the rules made thereunder as applicable.
(e) On the basis of the written representations received from the directors as on March312021 and taken on record by the Board of Directors none of the directors isdisqualified as on March 312021 from being appointed as a director in terms of Section164 (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 the matter to be included in the Auditor's Report under section197(16) as the company has not paid any remuneration to its Director during the currentyear the said clause is not applicable.
(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 impact of pending litigation on its financial position inits financial statements. Refer Note 15 26 and 27 to the Financial Statements.
ii. The Company did not have long-term contracts including derivative contracts forwhich there were any material foreseeable losses.
iii. There were no amount which were required to be transferred to the InvestorEducation and Protection Fund by the Company.
ANNEXURE - A TO THE INDEPENDENT AUDITORS' REPORT
(Referred to in paragraph 1 under "Report on Other Legal and RegulatoryRequirements" of Independent Auditors Report on the financial statements of evendate)
i. In respect of the Company's fixed assets
(a) The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets.
(b) The Company has a program of verification to cover all the items of fixed assets ina phased manner which in our opinion is reasonable having regard to the size of theCompany and the nature of its assets. Pursuant to the program certain fixed assets werephysically verified by the management during the year. According to the information andexplanations given to us no material discrepancies were noticed on such verification.
(c) According to the information and explanations given to us the records examined byus and based on the examination of the records provided to us we report that the titledeeds comprising all the immovable properties of land and buildings which are freeholdare held in the name of the Company as at the balance sheet date. In respect of immovableproperty of land and building taken on lease and disclosed in PPE in the financialstatements we have relied on the copy of the letter issued by the Bombay Port Trustapproving the assignment as the original letter is not in possession of the company. Theground lease of the premises of the company has expired on 22nd May 2017. The company hasmade an application for renewal of the lease.
ii. As the company is carrying on agency business paragraph 3(ii) of the order is notapplicable.
iii. According to the information and explanations given to us the Company has notgranted any loans secured or unsecured to companies firms limited liabilitypartnerships or other parties covered in the register maintained under section 189 of theCompanies Act 2013 (the "Act"). Consequently sub-clauses (a) (b) & (c) ofclause (iii) of paragraph 3 of the Order are not applicable to the Company.
iv. In our opinion and according to the information and explanations given to us theCompany has complied with the provisions of Sections 185 and 186 of the Act in respect ofinvestments made. The Company has not granted any loans or provided guarantees andsecurities. Consequently clause (iv) of paragraph 3 of the Order is not applicable to theCompany.
v. According to the information and explanations given to us the Company has notaccepted any deposit during the year. Consequently clause (v) of paragraph 3 of the Orderis not applicable to the Company.
vi. To the best of our knowledge and as explained the Central Government has notspecified the maintenance of cost records under Section 148 (1) of the Companies Act2013 for the product/services of the company.
vii. In respect of statutory dues:
(a) According to information and explanations given to us and on the basis of ourexamination of the books of account and records the Company has been generally regularin depositing undisputed statutory dues including Income-Tax Goods and Service Tax andany other statutory dues with the appropriate authorities. According to the informationand explanations given to us except for Service Tax Rs 0.56 Lakhs no undisputed amountspayable in respect of the above were in arrears as at March 312021 for a period of morethan six months from the date on when they became payable.
(b) According to the information and explanations given to us and the records of thecompany examined by us there are no dues of income tax and sales tax or service tax orduty of custom or duty of excise or value added tax that have not been deposited withappropriate authority on account of dispute.
viii. In our opinion and according to the information and explanations given to us theCompany has not taken any loan either from banks financial institutions or from thegovernment and has not issued any debentures.
ix. Based upon the audit procedure performed and the information and explanations givenby the management the company has not raised moneys by way of initial public offer orfurther public offer including debt instruments and Term Loans.
x. To the best of our knowledge and according to the information and explanations givento us no material fraud by the Company or on the Company by its officers or employees hasbeen noticed or reported during the year.
xi According to the information and explanations given to us and based on ourexamination of the records of the Company the Company has paid for managerialremuneration in accordance the provisions of Section 197 read with Schedule V to the Act.
xii. In our opinion and according to the information and explanations given to us theCompany is not a Nidhi Company. Consequently clause (xii) of paragraph 3 of the Order isnot applicable to the Company.
xiii. In our opinion and according to the information and explanations given to us alltransactions with the related parties are in compliance with section 177 and 188 ofCompanies Act 2013 and corresponding details have been disclosed in the FinancialStatements as required by the applicable Indian accounting standards.
xiv. In our opinion and according to the information and explanations given to us theCompany has not made any preferential allotment or private placement of shares or fully orpartly convertible debentures during the year. Consequently requirement under clause(xiv) of paragraph 3 of the Order is not applicable to the Company.
xv. In our opinion and according to the information and explanations given to us theCompany has not entered into noncash transactions with its directors or persons connectedwith him and hence provisions of section 192 of the Act are not applicable. Consequentlyrequirement under clause (xv) of paragraph 3 of the Order is not applicable to theCompany.
xvi. To the best of our knowledge and belief the Company is not required to beregistered under section 45-IA of the Reserve Bank of India Act 1934.
ANNEXURE "B" TO THE INDEPENDENT AUDITORS' REPORT
(Referred to in paragraph 2(f) under "Report on Other Legal and RegulatoryRequirements" of Independent Auditors Report on the financial statements of evendate)
Report on the Internal Financial Controls Over Financial Reporting under Clause (i) ofSub-section 3 of Section 143 of the Companies Act 2013 ("the Act")
We have audited the internal financial controls over financial reporting of MackinnonMackenzie & Co Limited ("the Company") as at March 31 2021 in conjunctionwith our audit of the financial statements of the Company for the year ended on that date.
Management's Responsibility for Internal Financial Controls
The Company's management is responsible for establishing and maintaining internalfinancial controls based on the internal control over financial reporting criteriaestablished by the Company considering the essential components of internal controlstated in the Guidance Note on Audit of Internal Financial Controls Over FinancialReporting issued 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 company's policies the safeguarding ofits assets the prevention and detection of frauds and errors the accuracy andcompleteness of the accounting records and the timely preparation of reliable financialinformation as required under the 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 Guidance Note on Audit of Internal Financial Controls Over Financial Reporting(the "Guidance Note") and the Standards on Auditing issued by the ICAI anddeemed the prescribed under section 143(10) of the Act to the extent applicable to anaudit of internal financial controls. Those Standards and the Guidance Note require thatwe comply 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 with Reference to theseFinancial Statement
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 ofunauthorized 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 controlover financial reporting may become inadequate because of changes in conditions or thatthe degree of compliance with the policies or procedures may deteriorate.
We draw your attention on paragraph "Basis for Qualified Opinion" given inour Independent Auditors Report on the financial statements of even date consequentlysuch departures from applicable IND AS which in our opinion could be considered asinadequacies of operative effectiveness of internal control over financial reporting inrelation to generally accepted accounting principles given in those IND AS.
In our opinion except for the possible effects of the material weakness described inthe paragraph above 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 2021 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 CharteredAccountants of India.