The Members of
Marshall Machines Limited
Report on the Audit of the Standalone Financial Statements
We have audited the accompanying Standalone Financial Statements of Marshall MachinesLimited ("the Company") which comprise the Balance Sheet as at March 31 2021the Statement of Profit and Loss and the Statement of Cash Flows for the year ended onthat date 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 Accounting principles generally accepted in India ofthe state of affairs of the Company as at March 31 2021 its profit and its cash flowsfor the year ended on that date.
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 ethicalrequirements that are relevant to our audit of the Standalone financial statements underthe provisions of the Companies Act 2013 and the Rules made there under and we havefulfilled our other ethical responsibilities in accordance with these requirements and theICAI's Code of Ethics. We believe that the audit evidence we have obtained is sufficientand appropriate to provide a basis for our audit opinion on the Standalone FinancialStatements.
EMPHASIS OF MATTERS
Attention is drawn to the following matters:
1. The Company has changed its method of providing depreciation for Fixed Assetseffective from 1st April 2020 from Written Down Value Method to Straight LineMethod. In view of the management of the company the change is aligned with the change inCompany's expectation of the pattern of consumption of the economic benefits arising fromthese assets in future as against the past and technical evaluation. This results onrevaluation of the carrying amounts and depreciation costs.
a. Subject to above and with reference to Note no. 24 of Standalone Financialstatements the Net Block of the Fixed Assets as on 01st April 2020 hasincreased (from Rs. 52.91 Crores to Rs. 62.93 Crores) by Rs. 10.02 Crores andcorrespondingly Deferred Tax Liability has increased (from Rs. 3.00 Crores to Rs. 5.60Crores ) by Rs. 2.60 Crores along with Increase in Reserves & Surplus (from Rs. 15.08Crores to 22.50 Crores) by Rs. 7.42 Crores.
b. Subject to the change of method of depreciation and with reference to Note no. 24 ofStandalone Financial Statements depreciation cost for the year is lowered by Rs. 1.76Crores ( from WDV depreciation of Rs. 6.88 Crores to SLM depreciation of Rs. 5.12 Crores)and to that extent the profits of the company are overstated.
2. As per Note no. 9 of the Standalone Financial Statements Creditors include MSMEcreditors amounting to Rs. 1.40 Crores which have been identified by the company as duebut not paid within stipulated time period under Micro Small and Medium EnterprisesDevelopment Act 2006 ( MSMED).
However in our opinion and as per information and records provided to us the companydoes not have proper records of MSME creditors so reliable estimates of the amount due butnot paid could not be made. Further no provision for Interest on above described delayedpayments has been made in the books of accounts. To that extent the profits of the companyare overstated.
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 do not provide aseparate opinion on these matters.
INFORMATION OTHER THAN THE STANDALONE FINANCIAL STATEMENTS AND AUDITOR'S REPORT THEREON
The Company's Board of Directors is responsible for the preparation of the otherinformation. The other information comprises the information included in the ManagementDiscussion and Analysis Board's Report including Annexures to Board's Report BusinessResponsibility Report Corporate Governance and Shareholder's Information but does notinclude the Standalone Financial 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 materialmisstatement of this other information we are required to report that fact. We havenothing to report in 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 Companies Act 2013 ("the Act") with respect to the preparation ofthese Standalone Financial statements that give a true and fair view of the financialposition financial performance and cash flows of the Company in accordance with theaccounting principles generally accepted in India. 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 Standalone Financial statements that give a true andfair view and are free from material misstatement 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 related to going concern and using the going concern basis of accounting unlessmanagement either intends to liquidate the Company or to cease operations or has norealistic alternative 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 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 to fraudor error and to issue an auditor's report that includes our opinion. Reasonable assuranceis a 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 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 internalcontrols.
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 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 However future events or conditions may cause the Company to cease to continueas 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 consider quantitative materiality and qualitative factors in (i) planning the scopeof our audit work and in evaluating the results of our work; and (ii) to evaluate theeffect of any identified 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 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 account and the Statement ofCash Flow dealt with by this Report are in agreement with the relevant books of accounts.
d) In our opinion the aforesaid Standalone Financial Statements comply with theAccounting Standards specified under Section 133 of the Act read with Rule 7 of theCompanies (Accounts) Rules 2014.
e) On the basis of the written representations received from the directors as on March312021 taken on record by the Board of Directors none of the directors is disqualifiedas on March 312021 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 not disclosed the impact of pending litigations on its financialposition in its Standalone Financial Statements
ii. The Company has made provision as required under the applicable law or accountingstandards for material foreseeable losses if any on longterm 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.
Annexure A to the Independent Auditor's Report
(Referred to in paragraph 1(f) under 'Report on Other Legal and RegulatoryRequirements' section of our report to the Members of Marshall Machines Limited 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 MarshallMachines LIMITED ("the Company") as of March 31 2021 in conjunction with ouraudit of the Standalone Financial statements of the Company for the year ended on thatdate.
MANAGEMENT'S RESPONSIBILITY FOR INTERNAL FINANCIAL CONTROLS
The Board of Directors of the Company is responsible for establishing and maintaininginternal financial controls based on the internal control over financial reportingcriteria established by the Company considering the essential components of internalcontrol stated 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 respective company's policies thesafeguarding of its assets the prevention and detection of frauds and errors theaccuracy and completeness of the accounting records and the timely preparation ofreliable Financial information as required under the Companies Act 2013.
Our responsibility is to express an opinion on the internal financial controls overfinancial reporting of the Company based on our audit. We conducted our audit inaccordance with the Guidance Note on Audit of Internal Financial Controls Over FinancialReporting (the "Guidance Note") issued by the Institute of Chartered Accountantsof India and the Standards on Auditing prescribed under Section 143(10) of the CompaniesAct 2013 to the extent applicable to an audit of internal Financial controls. ThoseStandards and the Guidance Note require that we comply with ethical requirements and planand perform the audit to obtain reasonable assurance about whether adequate internalfinancial controls over financial reporting was established and maintained and if suchcontrols operated 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 internal Financial controls system overFinancial reporting of the Company.
MEANING OF INTERNAL FINANCIAL CONTROLS OVER FINANCIAL REPORTING
A company's internal financial control over financial reporting is a process designedto provide reasonable assurance regarding the reliability of financial reporting and thepreparation of financial statements for external purposes in accordance with generallyaccepted accounting principles. A company's internal Financial control over Financialreporting includes those policies and procedures that
(1) pertain to the maintenance of records that in reasonable detail accurately andfairly reflect the transactions and dispositions of the assets of the company;
(2) provide reasonable assurance that transactions are recorded as necessary to permitpreparation of Financial statements in accordance with generally accepted accountingprinciples and that receipts and expenditures of the company are being made only inaccordance with authorizations 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.
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 explanations 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 2021 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
(Referred to in paragraph 2 under 'Report on Other Legal and Regulatory Requirements'section of our report of even date)
i. In respect of Fixed Assets
a) The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets.
b) All the fixed assets have been physically verified during the year by theManagement. According to the information and explanation given to us no materialdiscrepancies were noticed on such verification. The company has capitalized an amount ofRs. 23.50 Crores under Plant & Machinery Head. The same has also been Physically &Technically Evaluated by the Company's appointed Valuer M/s Sekhon & Associates videhis report dated 19th June 2021.
c) As per the information & explanation given to us and the examination of recordsof the company the title deeds of immovable properties are held in the name of thecompany.
ii. In respect of Inventory
Physical Verification of Inventory has been conducted at reasonable intervals by themanagement of the company. The discrepancies noticed on verification between the physicalstocks and book records were not material and have been properly dealt with in the booksof accounts. Except for the Work in Progress Inventory where the quantity & valuationof WIP has been taken & relied on the basis of the Statement Prepared and Certified bythe Managing Director of the Company. Since the details are not complete we are unable tocomment on the correctness of the same.
iii. Compliance under section 189 of The Companies Act 2013
The Company has not granted any loans secured or unsecured to companies firmsLimited Liability Partnerships or other parties covered in the register maintained undersection 189 of the Act.
iv. Compliance under section 185 and 186 of The Companies Act 2013
In our opinion and according to the information and explanations given to us thecompany has complied with the provisions of section 185 and 186 of the Companies Act 2013with respect to loans and investments made.
v. Compliance under section 73 to 76 of The Companies Act 2013 and Rules framed thereunder while accepting Deposits
In our opinion and as per information available to us the company has not accepted anyDeposits within the meaning of provisions of section 73 to 76 of the Companies Act 2013and the rules framed there under.
vi. Maintenance of cost records
We have broadly reviewed the books of accounts relating to materials labour and otheritems of cost maintained by the company pursuant to the Rules made by the CentralGovernment for the maintenance of cost records under sub-section (1) of section 148 of theCompanies Act 2013 and we are of the opinion that prima-facie the prescribed accounts andrecords have been made and maintained. We have not made however a detailed examination ofthe record with a view to determine whether they are complete or accurate.
vii. Deposit of Statutory Dues
According to the information and explanations given to us in respect of statutorydues:
a) The Company is regular in depositing with appropriate authorities undisputedstatutory dues including Provident Fund Employees' State Insurance Service Tax Cess andother material statutory dues applicable to it. The Company did not have dues in arrearsas at 31st March 2021 for a period of more than six months from the date theybecame payable except for "Income Tax payable on self assessment (u/s 140A of IncomeTax Act1961) of Rs. 78.89 Lacs for A.Y 2020-21 and Interest thereon which is outstandingfor more than six months.
b) There are no dues of Income Tax and Service Tax which have not been deposited as on31st March 2021 on account of disputes.
viii. Repayment of Loans and Borrowings
In our opinion and according to the information and explanations given to us theCompany has not defaulted in the repayment of loans or borrowings to banks financialinstitutions or debenture holders except in cases where the installments of bank loanshave been delayed as on 31.03.2021. Company has availed the benefit of Moratorium Schemegiven by the Govt. of India in respect of repayment of Loans and Interest their on.
|Name of Financial Institution ||Amount of Emi ||Due date of Payment ||Actual Date of Payment |
|Hero Fincorp Ltd. ||190660.00 ||03.03.2021 ||30.04.2021 |
|Hero Fincorp Ltd. ||341581.00 ||03.03.2021 ||30.04.2021 |
|Siemens Factoring P Ltd. ||88500.00 ||03.03.2021 ||03.04.2021 |
|Edelweiss ( ECL) Financial Ltd. ||110145.00 ||05.03.2021 ||30.04.2021 |
ix. Utilization of Money Raised by Public Offers and Term Loan For which theyRaised
During the year ended 31.03.2021 The Company has not raised moneys by way of initialpublic offer or further public offer (including debt instruments) but the company hastaken term loans from the Financial Institutions during the year. The company has appliedthe loans for their business for which they have been raised.
x. Reporting of Fraud During the Year
To the best of our knowledge and according to the information and explanations given tous no fraud by the Company and no material fraud on the Company by its officers oremployees has been noticed or reported during the year.
xi. Managerial Remuneration
In our opinion and according to the information and explanations given to us theCompany has paid / provided managerial remuneration in accordance with the requisiteapprovals mandated by the provisions of section 197 read with Schedule V to the Act.
xii. Compliance by Nidhi Company Regarding Net Owned Fund to Deposits Ratio
The Company is not a Nidhi Company and hence reporting under clause 3(xii) of the Orderis not applicable to the Company.
xiii. Related party compliance with Section 177 and 188 of companies Act - 2013
Based on the explanations provided to us all transactions with the related parties arein compliance with section 177 and 188 of Companies Act 2013 where applicable and thedetails have been disclosed in the Financial Statements etc. as required by theapplicable accounting standards.
xiv. Compliance under section 42 of Companies Act - 2013 regarding Privateplacement of Shares or Debentures
During the year the Company has not made the preferential allotment and privateplacement of shares. In our Opinion & as per explanation given to us the company hascomplied with the requirements of Section 42 of the Companies Act 2013.
xv. Compliance under section 192 of Companies Act - 2013
In our opinion and according to the information and explanations given to us duringthe year the Company has not entered into any non-cash transactions with its directors orpersons connected with them and hence provisions of section 192 of the Act are notapplicable.
xvi. Requirement of Registration under 45-IA of Reserve Bank of India Act 1934
The Company is not required to be registered under section 45-IA of the Reserve Bank ofIndia Act 1934.
| ||For S. Sood & Co Chartered Accountants |
| ||Firm Registration No.010801N |
| ||Sanjay Sood Partner |
|Place: Ludhiana ||Membership No. 089457 |
|Date: 08th July 2021 ||UDIN : 21089457AAAABB5068 |