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
We have audited the accompanying standalone financial Statements of MACKINNONMACKENZIE & COMPANY LIMITED ("the Company") which comprise the balancesheet as at March 31 2019 the statement of profit and loss (including othercomprehensive income) cash flow statement and the statement of change in equity for theyear then ended and a summary of the significant accounting policies and other explanatoryinformation (hereinafter referred to as "the standalone financial statements").
In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid standalone financial statements give the information requiredby the Companies Act 2013 ("the Act") in the manner so required and give a trueand fair view in conformity with the Indian Accounting Standards prescribed under section133 of the Act read with the Companies (Indian Accounting Standards) Rules 2015 asamended ("Ind AS") and other accounting principles generally accepted in Indiaof the state of affairs of the Company as at March 31 2019 the profit and totalcomprehensive income its cash flows and changes in equity for the year ended on thatdate.
Basis for Opinion
We conducted our audit of the standalone 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 Standalone 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 (ICAI) together with the independencerequirements that are relevant to our audit of the standalone financial statements underthe provisions 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 standalone financial statements.
As mentioned in Note 14 of the financial statements the Company's bankers had filedsuit in Bombay High Court for recovery of loans which were transferred to the DebtRecovery Tribunal. The bankers have assigned entire debt due to them to a Company and suitfiled by these banks have been transferred back to Bombay High Court. Suits are forrecovery of Rs.616605621/- outstanding as on 31st March 1991. However loans along withinterest accrued and due to the Company which has taken over the Debt as per the terms ofloans and subsequent understanding with the Company amounting to Rs 8256129338 areoutstanding as on 31st March 2019. The Hon. Bombay High Court has passed a decree infavour of the said company in respect of two suits to dispose off/sell the immovableproperty and flats belonging to the company to recover its dues of Rs 702.79 crorestogether with interest. Total amount due to the company as per the decree together withinterest in respect of the two suits is Rs 2399.62 crores as on 31st March 2019. Noprovision is made in respect of additional amount due to the company as per decreeamounting to Rs1637.62 .crores.
As mentioned in Note 25 and 26 of the financial statements 60 Clerical workers and 35subordinate staff were retrenched on 4th August 1992 under the Industrial Dispute Act atMumbai. Each one was paid 15 days wages as per competed year of service and one months payin addition to other dues. The Industrial Court had given a judgment against the companyagainst which the company had filed an appeal before the Hon. Bombay High Court which toowas decided against the company. The Hon. Supreme Court has dismissed the appeal of thecompany filed against the order of the Hon. Bombay High Court and has directed the companyto comply with the conditions of the award passed by the Industrial Court. The Hon.Supreme Court has dismissed the review and curative petition filed by the company againstthe said order. The company has filed a compliance report as required by the order passedby the Hon. Supreme Court. No further orders have been passed on this. No provision hasbeen made in respect of dues to 7 (Seven) workers amounting to Rs.91.83 lakhs plusinterest upto 31st March 2019 to the retrenched staff as per the order of the Hon. SupremeCourt. In so far as the balance 88 workers are concerned the company has pleaded non-applicability.
We draw attention to Note 30 in the financial statements which indicates that amaterial uncertainty exists that may cast significant doubt on the Company's ability tocontinue as a going concern.
Also following point may be included in Report on Other Legal and Regulatoryrequirements paragraph.
As required by Section 143(3) of the Act we report that: (f) The going concern matterdescribed in material uncertainty related to going concern paragraph above in ouropinion may have an adverse effect on the functioning of the Company.
As mentioned in Note 11 of the financial statements Loans and Advances includes certainold balances amounting to Rs 818785 for which no provision for doubtful items if any hasbeen made in the accounts pending review confirmation of the same.
As mentioned in Note 17 of the financial statements Trade Payables include an amount ofRs.2651925/- which represent old balances for which no write back has been made in theaccounts pending the review/ confirmation of the same.
As mentioned in Note 18 of the financial statements certain old credit balancesoutstanding in various accounts amounting to Rs.14852774 for which no write back hasbeen made in accounts pending the review /confirmation of the same. As mentioned in Note25 of the financial statements provision for accrued liability for the year in respect ofgratuity and long term compensated absences has been made on arithmetical basis instead ofbased on actuarial valuation as required by Accounting Standard -15 "EmployeeBenefits" (the Standard). The effect on the Profit & Loss Account for the yearhad the Company determined the accrued liability for gratuity and long term compensatedabsences based on actuarial valuation has not been ascertained. Accordingly thedisclosure requirement regarding the actuarial assumptions used for actuarial valuation isnot complied with. Further the transitional liability/gain as at April 1 2007 which isrequired to be determined in terms of the transitional provisions of the Standard has notbeen ascertained and accounted for.
As mentioned in Note 4 (c) of the financial statements the investments made at KolkataRs 56000/- are presently not available for verification as the building is destroyed byfire.
As mentioned in Note 31 of the financial statements non-availability of confirmationsin respect of balances of secured and unsecured loans debtors certain bank balancesdeposits and creditors appearing in Schedule 4 7 8 9 14 17 and 18 of the accountsrespectively.
Key Audit Matters
Key audit matters are those matters that in our professional judgment were of mostsignificance in our audit of the standalone financial statements of the current period.These matters were addressed in the context of our audit of the standalone financialstatements as a whole and in forming our opinion thereon and we have provide a separatequalified opinion on these matters.
The Company's Board of Directors is responsible for the preparation of the otherinformation. The other information comprises the information included in the Report onCorporate Governance Shareholder information and Management Discussion and AnalysisBoard's Report including Annexures to Board's Report Business Responsibility ReportCorporate Governance and Shareholder's Information but does not include the standalonefinancial statements and our auditor's report thereon.
Our opinion on the standalone financial statements does not cover the other informationand we do not express any form of assurance conclusion thereon.
In connection with our audit of the standalone financial statements our responsibilityis to read the other information and in doing so consider whether the other informationis materially inconsistent with the standalone financial statements or our knowledgeobtained during the course of our audit or otherwise appears to be materially misstated.If based on the work we have performed we conclude that there is a material misstatementof this other information we are required to report that fact. We have nothing to reportin this regard.
Management's Responsibility for the Standalone 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 standalone financialstatements that give a true and fair view of the financial position financialperformance total comprehensive income changes in equity and cash flows of the Companyin accordance with the Ind AS and other accounting principles generally accepted in India.This responsibility also includes maintenance of adequate accounting records in accordancewith the provisions of the Act for safeguarding the assets of the Company and forpreventing 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 standalonefinancial statements that give a true and fair view and are free from materialmisstatement whether due to fraud or error.
In preparing the standalone financial statements management is responsible forassessing the Company's ability to continue as a going concern disclosing as applicablematters relating 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 Standalone Financial Statements
Our objectives are to obtain reasonable assurance about whether the standalonefinancial statements as a whole are free from material misstatement whether due tofraud or error and to issue an auditor's report that includes our opinion. Reasonableassurance is a high level of assurance but is not a guarantee that an audit conducted inaccordance with SAs will always detect a material misstatement when it exists.Misstatements can arise from fraud or error and are considered material if individuallyor in the aggregate they could reasonably be expected to influence the economic decisionsof users taken on the basis of these standalone 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 standalonefinancial statements whether due to fraud or error design and perform audit proceduresresponsive to those risks and obtain audit evidence that is sufficient and appropriate toprovide a basis for our opinion. The risk of not detecting a material misstatementresulting from fraud is higher than for one resulting from error as fraud may involvecollusion forgery intentional omissions misrepresentations or the override of internalcontrol.
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 standalone 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 standalonefinancial statements including the disclosures and whether the standalone financialstatements represent the underlying transactions and events in a manner that achieves fairpresentation.
Materiality is the magnitude of misstatements in the standalone financial statementsthat individually 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 standalone financial statementsof the current period and are therefore the key audit matters. We describe these mattersin our auditor's report unless law or regulation precludes public disclosure about thematter or 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 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 Cash Flow Statement and Statement of Change in Equity dealt with by this Reportare in agreement with the books of account.
(d) In our opinion the aforesaid standalone financial statements comply with theIndian Accounting Standards specified under Section 133 of the Act as applicable.
(e) On the basis of the written representations received from the directors as on March31 2019 and taken on record by the Board of Directors none of the directors isdisqualified as on March 31 2019 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 A". Our report expresses an unmodified opinion onadequacy 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 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 does have pending litigations which would impact its financial positionwhich are as follows:
a. The Company's bankers had filed suit in Bombay High Court for recovery of loanswhich were transferred to the Debt Recovery Tribunal. The bankers have assigned entiredebt due to them to a Company and suit filed by these banks have been transferred back toBombay High Court. Suits are for recovery of Rs.616605621/- outstanding as on 31stMarch 1991. However loans along with interest accrued and due to the Company which hastaken over the Debt as per the terms of loans and subsequent understanding with theCompany amounting to Rs 8256129338 are outstanding as on 31st March 2019. The Hon.Bombay High Court has passed a decree in favour of the said company in respect of twosuits to dispose off/sell the immovable property and flats belonging to the company torecover its dues of Rs 702.79 crores together with interest. Total amount due to thecompany as per the decree together with interest in respect of the two suits is Rs 2399.62crores as on 31st March 2019.
b. 60 Clerical workers and 35 subordinate staff were retrenched on 4th August 1992under the Industrial Dispute Act at Mumbai. Each one was paid 15 days wages as percompeted year of service and one months pay in addition to other dues. The IndustrialCourt had given a judgment against the company against which the company had filed anappeal before the Hon. Bombay High Court which too was decided against the company. TheHon. Supreme Court has dismissed the appeal of the company filed against the order of theHon. Bombay High Court and has directed the company to comply with the conditions of theaward passed the Industrial Court. The Hon. Supreme Court has dismissed the review andcurative petition filed by the company against the said order. The company has filed acompliance report as required by the order passed by the Hon. Supreme Court. No furtherorders have been passed on this. In so far as the balance 88 workers are concerned thecompany has pleaded non- applicability.
ii. The Company did not have any material foreseeable losses on long-term contractsincluding derivative contracts.
iii. There were no amount which were required to be transferred to the InvestorEducation and Protection Fund by the Company.
2. 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.
3. As required by the Companies (Auditor's Report) Order 2016 ("the Order")issued by the Central Government of India in terms of sub section (11) of section 143 ofthe Companies Act 2013 we give in the "Annexure B" a statement on the mattersspecified in paragraph 3 and 4 of the Order.
ANNEXURE A - TO THE INDEPENDENT AUDITORS' REPORT OF EVEN DATE ON THE STANDALONEFINANCIAL STATEMENTS OF MACKINNON MACKENZIE & CO LIMITED
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 2019 in conjunctionwith our audit of the standalone financial statements of the Company for the year ended onthat 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. 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 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") issued by the Institute of Chartered Accountants of Indiaand the Standards on Auditing prescribed under section 143(10) of the Companies Act 2013to the extent applicable to an audit of internal financial controls. Those Standards andthe Guidance Note require that we comply with ethical requirements and plan and performthe audit to obtain reasonable assurance about whether adequate internal financialcontrols over financial reporting was established and maintained and if such controlsoperated 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 standalone financial statements for external purposes in accordance withgenerally accepted accounting principles. A company's internal financial control overfinancial reporting includes those policies and procedures that (1) pertain to themaintenance of records that in reasonable detail accurately and fairly reflect thetransactions and dispositions of the assets of the company; (2) provide reasonableassurance that transactions are recorded as necessary to permit preparation of standalonefinancial Statements in accordance with generally accepted accounting principles and thatreceipts and expenditures of the company are being made only in accordance withauthorisations of management and directors of the company; and (3) provide reasonableassurance regarding prevention or timely detection of unauthorized acquisition use ordisposition of the company's assets that could have a material on the financialStatements.
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.
In our opinion to the best of our information and according to the explanation givento us the Company has in all material respects an adequate internal financial controlssystem over financial reporting and such internal financial controls over financialreporting were operating effectively as at March 31 2019 based on the internal controlover financial reporting criteria established by the Company considering the essentialcomponents of internal control stated in the Guidance Note on Audit of Internal FinancialControls Over Financial Reporting issued by the Institute of Chartered Accountants ofIndia.
ANNEXURE B - TO THE INDEPENDENT AUDITOR'S REPORT OF EVEN DATE ON THE STANDALONEFINANCIAL STATEMENTS OF MACKINNON MACKENZIE AND CO. LIMITED
(Referred to in Paragraph 3 under the heading of "Report on Other Legal and ofeven date)
i. (a) The Company has maintained proper records showing full particulars includingquantitative details and situation of Property Plant & Equipment (PPE).
(b) The Company has a program of verification to cover all the items of fixed assets inphased 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 PPE were physicallyverified by the management during the year. According to the information and explanationsgiven 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 standalonefinancial statements we have relied on the copy of the letter issued by the Bombay PortTrust approving the assignment as the original letter is not in possession of the company.The ground lease of the premises of the company has expired on 22nd May 2017. The companyhas made 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. We have broadly reviewed the cost records maintained by the Company pursuant tothe Companies (Cost Records and Audit) Rules 2014 as specified by the Central Governmentunder sub-section (1) of Section 148 of the Companies Act 2013 and are of the opinionthat prima facie the prescribed cost records have been made and maintained. We havehowever not made a detailed examination of the cost records with a view to determinewhether they are accurate or complete.
vii. According to the information and explanations given to us and on the basis of ourexamination of the books of account 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 Provident Fund Income-Tax Sales TaxService Tax Duty of Customs Value added Tax Cess and any other statutory dues with theappropriate authorities. According to the information and explanations given to us noundisputed amounts payable in respect of the above were in arrears as at March 31 2019for a period of more than 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 the particulars of income tax service tax as 31st March 2019which have not been deposited on account of any dispute pending are as under:
Except for the above there are no dues in respect of Income-tax Customs Duty Goodsand Service Tax and Cess which have not been deposited with the appropriate authoritieson account of any 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 As the company has not paid any Managerial Remuneration during the year provisionsof paragraph 3(xi) of the Order are not applicable.
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 StandaloneFinancial Statements 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 non-cash 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.