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Mackinnon Mackenzie & Company Ltd.

BSE: 501874 Sector: Others
NSE: N.A. ISIN Code: N.A.
BSE 05:30 | 01 Jan Mackinnon Mackenzie & Company Ltd
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Mackinnon Mackenzie & Company Ltd. (MACKINNONMACKEN) - Auditors Report

Company auditors report

TO THE MEMBERS OF M/s. MACKINNON MACKENZIE AND CO. LIMITED Report on the StandaloneFinancial Statements

We have audited the accompanying standalone financial statements of MACKINNONMACKENZIE AND CO. LIMITED ("the company") which comprise the Balance Sheetas at March 312018 the Statement of Profit and Loss (including other comprehensiveincome) Cash Flow Statement and the statement of changes in equity for the year thenended and summary of significant accounting policies and other explanatory information.

Management's Responsibility for the Standalone Financial Statements

The Company's Board of Directors is responsible for the preparation of these financialstatements that give a true and fair view of the financial position including othercomprehensive income cash flows and change in equity of the company financialperformance and cash flow of the Company in accordance with the accounting principlesgenerally accepted in India including the Indian Accounting Standards specified underSection 133 of the Act read with relevant rules thereunder. This responsibility alsoincludes maintenance of adequate accounting records in accordance with the provisions ofthe Act for safeguarding the assets of the Company and for preventing and detecting fraudsand other irregularities; selection and application of appropriate accounting policies;making judgments and estimates that are reasonable and prudent; and design implementationand maintenance of adequate internal financial controls that were operating effectivelyfor ensuring the accuracy and completeness of the accounting records relevant to thepreparation and presentation of the financial statement that give a true and fair view andare free from material misstatement whether due to fraud or error.

Auditor's Responsibility

Our responsibility is to express an opinion on these standalone financial statementbased on our audit.

We have taken into account the provisions of the Act the accounting and auditingstandards and matters which are required to be included in the audit report under theprovisions of the Act and the Order under section 143(11) of the Act.

Ws conducted our audit of the financial statements in accordance with the Standards onAuditing specified under Section 143(10) of the Act. Those Standards require that wecomply with ethical requirements and plan and perform the audit to obtain reasonableassurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts andthe disclosures in the financial statement. The procedures selected depend on theauditor's judgment including the assessment of the risks of material misstatement of thefinancial statements whether due to fraud or error. In making those risk assessments theauditor considers internal financial control relevant to the Company's preparation offinancial statements that give a true and fair view in order to design audit proceduresthat are appropriate in the circumstances..An audit also includes evaluating theappropriateness of the accounting policies used and the reasonableness of the accountingestimates made by the company's Directors as well as evaluating the overall preparationof the financial statements.

Ws believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the financial statements.

Basis for Qualified Opinion

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 2018. 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 2121.46 crores as on 31st March 2018. Noprovision is made in respect of additional amount due to the company as per decreeamounting to Rs1359.46 .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 the Industrial Court. The Hon. SupremeCourt has dismissed the

review and curative petition filed by the company against the said order. The companyhas filed a compliance report as required by the order passed by the Hon. Supreme Court.No further orders have been passed on this. No provision has been made in respect of duesto 7 (Seven) workers amounting to Rs.91.83 lakhs plus interest upto 31st March 2018 to theretrenched staff as per the order of the Hon. Supreme Court. In so far as the balance 88workers are concerned the company has pleaded non- applicability.

As mentioned in Note 30 of the financial statements despite continued huge lossesresulting in total erosion of the net worth of the company the accounts for the year havebeen prepared on the assumption of going concern basis. Should the company be unable tocontinue as a going concern the extent of effect the resultant adjustments would have onthe net worth at the year end as the losses for the year is not ascertainable. As such weare unable to express an opinion as to the effect of financial statements for the year.

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 a result the effectof non-provision on the loss for the year cannot be ascertained. As such we are unable toexpress an opinion as to the effect of financial statements for the year.

As mentioned in Note 16 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 a result the effect of suchwrite back if any on the loss for the year cannot be ascertained. As such we are unableto express an opinion as to the effect of financial statements for the year.

As mentioned in Note 17 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 a result theeffect of such write back if any on the loss for the year cannot be ascertained. As suchwe are unable to express an opinion as to the effect of financial statements for the year.

As mentioned in Note 24 of the financial statements provision for accrued liability forthe year in respect of gratuity and long term compensated absences has been made onarithmetical basis instead of based on actuarial valuation as required by AccountingStandard -15 "Employee Benefits" (the Standard). The effect on the Profit &Loss Account for the year had the Company determined the accrued liability for gratuityand long term compensated absences based on actuarial valuation has not been ascertained.Accordingly the disclosure requirement regarding the actuarial assumptions used foractuarial valuation is not complied with. Further the transitional liability/gain as atApril 12007 which is required to be determined in terms of the transitional provisionsof the Standard has not been ascertained and accounted for. As a result the effect of onthe loss for the year and debit balance of Surplus in Statement of Profit & LossAccount as at 31st March 2018 cannot be ascertained As such we are unable to express anopinion as to the effect of financial statements for the year.

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 such we are unable to express an opinion as to the effect of financialstatements for the year.

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 16 and 17 of the accountsrespectively. As such we are unable to express an opinion as to the effect of financialstatements for the year.

Qualified Opinion

In our opinion and to the best of our information and according to the explanationsgiven to us except for the possible effects of the matter described in the Basis forQualified Opinion paragraph the aforesaid financial statements give the informationrequired by the Act in the manner so required and give a true and fair view in conformitywith the accounting principles generally accepted in India

i. in the case of the Balance Sheet of the state of affairs of the Company as at March312018

ii. in the case of Statement of Profit & Loss Account of the Loss for the yearended on that date

iii. in the case of the Cash Flow Statement of the cash flows for the year ended onthat date and

iv. in the case of Statement of Change in Equity the change in equity for the yearended on that date

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 purpose 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 Changes in Equity dealt with by this Reportare in agreement with the books of account

d. Except for the possible effects of the matter described in the Basis for QualifiedOpinion paragraph in our opinion the aforesaid financial statements comply with theIndian Accounting Standards specified under section 133 of the Act as applicable

e. The matter described in the Basis for Qualified Opinion paragraph above in ouropinion may have an adverse effect on the functioning of the company.

f. On the basis of written representation received from the directors as on March312018 taken on record by the Board of Directors none of the Directors is disqualifiedas on March 312018 from being appointed as a director in terms of Section 164(2) of theAct.

g. The qualification relating to the maintenance of accounts and other mattersconnected therewith are as stated in the Basis for Qualified Opinion paragraph above.

h. 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.

i. With respect to the other matter to be included in the Auditor's Report inaccordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014 in our opinionand to the best of our information and according to the explanations given to you

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 2018. 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 2121.46crores as on 31st March 2018.

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.

c. The Company did not have any long-term contracts including derivative contracts forwhich there were any material foreseeable losses.

d. There were no amount which were required to be transferred to the Investor Educationand 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 of thematters specified in paragraphs 3 and 4 of the Order.

For S.M. BHINGARDE & Co
Chartered Accountants
Firm's Registration Number: 101418W
S. M. Bhingarde
Proprietor
Membership Number:40170
Place: Mumbai
Date: 20th August 2018