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MIC Electronics Ltd.

BSE: 532850 Sector: Engineering
NSE: MIC ISIN Code: INE287C01029
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VOLUME 54354
52-Week high 12.67
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Mkt Cap.(Rs cr) 43
Buy Price 0.00
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OPEN 1.95
CLOSE 1.86
VOLUME 54354
52-Week high 12.67
52-Week low 1.46
P/E
Mkt Cap.(Rs cr) 43
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

MIC Electronics Ltd. (MIC) - Auditors Report

Company auditors report

To

The Members of

M/s. MIC ELECTRONICS LIMITED

Report on the Standalone Financial Statements:

We have audited the accompanying Standalone financial statements of M/s. MICELECTRONICS LIMITED which comprise the Balance Sheet as at March 31 2017 the Statementof Profit and Loss and the Cash Flow Statement for the period ended 31st March 2017 and asummary of significant accounting policies and other explanatory information.

Management's Responsibility for the Financial Statements

The management and Board of Directors of the company are responsible for the mattersstated in section 134(5) of the Companies Act 2013 ("the Act") with respect tothe preparation of these financial statements that give a true and fair view of thefinancial position financial performance and cash flows of the Company in accordance withthe accounting principles generally accepted in India including the Accounting Standardsspecified under Section 133 of the Act read with Rule 7 of the Companies (Accounts)Rules 2014. This responsibility includes maintenance of adequate accounting records inaccordance with the provision of the Act for safeguarding of the assets of the Company andfor preventing and detecting the frauds and other irregularities; selection andapplication of appropriate accounting policies; making judgments and estimates that arereasonable and prudent; and design implementation and maintenance of adequate internalfinancial control that were operating effectively for ensuring the accuracy andcompleteness of the accounting records relevant to the preparation and presentation ofthe financial statements that give a true and fair view and are free from materialmisstatement whether due to fraud or error.

Auditor's Responsibility

Our responsibility is to express an opinion on these financial statements based on ouraudit.

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 Rules made thereunder. We conducted our audit in accordancewith the Standards on Auditing specified under Section 143(10) of the Act. Those Standardsrequire that we comply with ethical requirements and plan and perform the audit to obtainreasonable assurance about whether the financial statements are free from materialmisstatement.

An audit involves performing procedures to obtain audit evidence about the amounts andthe disclosures in the financial statements. 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 of thefinancial statements that give a true and fair view in order to design audit proceduresthat are appropriate in the circumstances but not for the purpose of expressing anopinion on whether the Company has in place an adequate internal financial controls systemover financial reporting and the operating effectiveness of such controls. An audit alsoincludes evaluating the appropriateness of the accounting policies used and thereasonableness of the accounting estimates made by the Company's Directors as well asevaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion.

Basis for Qualified Opinion

(1) Reference is invited to Note 3.07 of the financial statements The Company has notprovided the interest on term loans for Rs.1.17 crores for the year ended 31stMarch 2017 since the company is pursuing the matter for settlement.

Under accounting principles generally accepted in India the company should have made aprovision for interest expense of Rs.1.17crores. Had the company made a provision for thesame the current year profit would have been lower by the said amount.

(2) Reference is invited to Note 3.12 of the financial statements the Company'sCapital Advances to the extent of Rs.9.30 crores "we are unable to ascertain whethersuch balances as at balance sheet date are fully recoverable. Accordingly we are unableto ascertain the impact if any that may arise in case any of these advances aresubsequently determined to be doubtful of recovery. Had the Company made a provision forthe same the profit for the period would have been lower by the said amount." (3)Reference is invited to Note 3.15 of the financial statements the Company's TradeReceivables consists of Rs.9.76 crores that are very old and "we are unable toascertain whether such balances as at balance sheet date are fully recoverable.Accordingly we are unable to ascertain the impact if any that may arise in case any ofthese receivables are subsequently determined to be doubtful of recovery.

Had the Company provided provision for the same the profit for the period would havebeen lower by the said amount." (4) Reference is invited to Note 3.17 of thefinancial statements the Company's Other Advances to the extent of Rs.44.97crores"we are unable to ascertain whether such balances as at balance sheet date are fullyrecoverable. Accordingly we are unable to ascertain the impact if any that may arise incase any of these advances are subsequently determined to be doubtful of recovery. Had theCompany provided provision for the same the profit for the period would have been lowerby the said amount." (5) Reference is invited to Note 3.27 of the financialstatements there are pending litigations against the company not acknowledged by thecompany to the extent of Rs.3.42crores.There are material uncertainties regarding theoutcome of these litigations where in an unfavourable decision could result in a outflowof cash flows for the company.

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 matters described in the Basis forQualified Opinion paragraph the financial statements give the information required by theAct in the manner so required and give a true and fair view in conformity with theaccounting principles generally accepted in India: a) in the case of the Balance Sheet ofthe state of affairs of the Company as at March 31 2017; b) In the case of the Statementof Profit and Loss of the profit for the year ending 31st March 2017; c) In the case ofthe Cash Flow Statement of the cash flows for the year ended on that date.

Report on Other Legal and Regulatory Requirements:

1. As required by the Companies (Auditor's Report) Order 2016 ("the Order")as amended issued by the Central Government of India in terms of sub-section (11) ofsection 143 of the Act we give in the "Annexure A" a statement on the mattersspecified in paragraphs 3 and 4 of the Order.

2. As required by section 143(3) of the Act we further 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 appears from our examination of those books;

c) The Balance Sheet and Statement of Profit and Loss dealt with by this Report are inagreement with the books of account;

d) In our opinion the aforesaid financial statements do not comply with the applicableaccounting Standards specified under Section 133 of the Act read with Rule 7 of theCompanies (Accounts) Rules 2014; because of the matters specified in basis for qualifiedopinion paragraph.

e) The matters 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 representations received from the directors as on March 312017 and taken on record by the Board of Directors none of the directors is disqualifiedas on March 31 2017 from being appointed as a director in terms of Section 164(2) of theAct;

g) 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".

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 in our opinionand to the best of our information and according to the explanations given to us

i. The Company has pending litigations and in our opinion the company has disclosedthe impactof pending litigations on its financial position in the financial statements asgiven in note 3.27.

ii. The Company did not have any long-term contracts including derivative contracts; assuch the question of commenting on any material foreseeable losses thereon does not arise.

iii. There have been no occasions in case of the company during the year under reportto transfer any sums to the Investor Education and Protection Fund.

iv. The company had provided requisite disclosures in its financial statements as toholdings as well as dealings in specified bank notes during the period 08thNovember 2016 to 30th December 2016 and they are in accordance with the booksof accounts maintained by the company.

For PAVULURI & Co.

Chartered Accountants

Firm Reg. No:012194S

Sd/-

Place : Hyderabad

(CA N. RAJESH)

Date : 10/05/2017

PARTNER

M.No : 223169

MIC Electronics Limited

ANNEXURE A TO THE INDEPENDENT AUDITORS' REPORT

Referred to in paragraph 1 under the heading ‘Report on Other Legal &Regulatory Requirement' of our

report of even date to the financial statements of the Company for the year ended March31 2017:

1) (a) The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets;

(b) The Fixed Assets have been physically verified by the management in a phasedmanner designed to cover all the items over a period of three years which in ouropinion is reasonable having regard to the size of the company and nature of itsbusiness. Pursuant to the program a portion of the fixed asset has been physicallyverified by the management during the year and no material discrepancies between the booksrecords and the physical fixed assets have been noticed.

(c) The title deeds of immovable properties are held in the name of the company.

2) (a) The management has conducted the physical verification of inventory atreasonable intervals.

(b) The discrepancies noticed on physical verification of the inventory as compared tobooks records have been properly dealt with in the books of account and were material.

3) 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. Accordingly the provisions of clause 3 (iii) (a) to (C) of theOrder are not applicable to the Company and hence not commented upon.

4) In our opinion and according to the information and explanations given to us thecompany has complied with the provisions of section 185 and I86 of the Companies Act 2013In respect of loans investments guarantees and security.

5) The Company has not accepted any deposits from the public and hence the directivesissued by the Reserve Bank of India and the provisions of Sections 73 to 76 or any otherrelevant provisions of the Act and the Companies (Acceptance of Deposit) Rules 2015 withregard to the deposits accepted from the public are not applicable.

6) As informed to us the maintenance of Cost Records has been specified by the CentralGovernment under subsection (1) of Section 148 of the Act in respect of the activitiescarried on by the company however such accounts and records have not been properlymaintained.

7) (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 not been regular indepositing undisputed statutory dues including Provident Fund Employees State InsuranceIncome-Tax Sales tax Service Tax Duty of Customs Duty of Excise Value added Tax Cessand any other statutory dues with the appropriate authorities.

According to the information and explanations given to us the following are theundisputed amounts payable in respect of Provident Fund Income Tax Wealth Tax ServiceTax Sales Tax Duty of Customs Excise Duty Value added tax and Other material statutorydues were in arrears as at March 31 2017 for a period of more than six months from thedate they became payable.

Name of the statue Nature of the dues Amount Period to which the amount relates Due date date of pay ment
Finance Act 1994 Service Tax 8836681 From 2011 onwards Various dates Nil
Employees Provident Fund & Miscellaneous provisions act 1952 Provident Fund 18547728 From 2009 onwards Various dates Nil
Employees State Insurance Act 1948 Employee State Insurance 2146910 From 2011 onwards Various dates Nil
APPT Act 1987 Professional Tax 1230160 From 2011 onwards Various dates Nil
Income Tax Act 1961 TDS 9222902 From 2012 onwards Various dates Nil
AP Value Added Tax Act 2005 VAT 10075036 From 2015 onwards Various dates Nil
The Central Sales Tax Act 1956 CST 16577380 From 2013 onwards Various dates Nil

(b) According to the information and explanations given to us the following aredisputed dues relating to Wealth tax Duty of Customs and Cess which have not beendeposited with the appropriate authorities on account of any dispute.

Name of the Statue Nature of the Dispute Amount (Rs) Period to which the amounts relate (F.Y) Forum where the dispute is pending and amount deposited
Central Excise Act 1944 Excise Duty 3896982/- 2008-2009 Customs Excise & Service Tax Appelate tribunal south zonal bench Bangalore vide appeal no.C/2303 of 2010. Amt. deposited : Rs.2896982/-
Central Excise Act 1944 Excise Duty 588850/- Jan11-Mar15 O/o.The Commissioner of Customs & Central Excise (Appeals) Hyderabad vide appeal no.62/2016 H-III of 2016. Amount deposited : Rs.44200/-
Customs Act 1962 Customs Duty 1801111/- 2008-2009 O/o. The Commissioner of Customs Central Excise and Service Tax Hyderabad III Commissionerate vide Appeal No.C/2302 of 2010.
The A.P.VAT Act 2005 APVAT 840705/- 2008-2009 Appelate Deputy Commissioner (CT) Secunderabad Division vide Appeal No.S/23/ 09-10/V. Amt. deposited :Rs. 840705/-
The A.P.VAT Act 2005 APVAT 545677/- 2007-2008 Appelate Deputy Commissioner (CT) Secunderabad Division. Amt. deposited : Rs.545677/-
The A.P.VAT Act 2005 APVAT 1809145/- 2005-2006 WP No.14764/2009 filed with High Court AP. Amt. deposited : Rs.1809145/-

8) In our opinion and according to the information and explanations given to us theCompany has defaulted in the repayment of dues to banks and financial institutionsincluding interest and principal as on 31st March 2017.

Sl. No. Name of the bank/institution Amount of default (Rs.) Period of default
1. UCO Bank 72044205/- Since June 2013
2. Technology Development Board 173100753/- Since January 2013
3. State Bank of India 130345247/- Since September 2016
4. Reliance Capital Limited 36602000/- Since March 2013

9) Based upon the audit procedures 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. Accordingly theprovisions of clause 3 (ix) of the Order are not applicable to the Company and hence notcommented upon.

10) Based upon the audit procedures performed and the information and explanationsgiven by the management we report that no fraud by the Company or on the company by itsofficers or employees has been noticed or reported during the year.

11) Based upon the audit procedures performed and the information and explanationsgiven by the management the managerial remuneration has been paid or provided inaccordance with the requisite approvals mandated by the provisions of section 197 readwith Schedule V to the Companies Act; 12) In our opinion the Company is not a NidhiCompany. Therefore the provisions of clause 4 (xii) of the Order are not applicable tothe Company.

13) In our opinion all transactions with the related parties are in compliance withsection 177 and 188 of Companies Act 2013 and the details have been disclosed in theFinancial Statements as required by the applicable accounting standards.

14) Based upon the audit procedures performed and the information and explanationsgiven by the management the company has made preferential allotment or private placementof shares during the year under review according to the requirement of Sec 42 of theCompanies Act 2013 and the amount raised have been used for the purposes for which thefunds were raised.

15) Based upon the audit procedures performed and the information and explanationsgiven by the management the company has not entered into any non-cash transactions withdirectors or persons connected with him. Accordingly the provisions of clause 3 (xv) ofthe Order are not applicable to the Company and hence not commented upon. 16) In ouropinion the company is not required to be registered under section 45 IA of the ReserveBank of India Act 1934 and accordingly the provisions of clause 3 (xvi) of the Order arenot applicable to the Company and hence not commented upon.

For PAVULURI & Co.
Chartered Accountants
Firm Reg. No:012194S
Sd/-
(CA N. RAJESH)
Place : Hyderabad PARTNER
Date : 10/05/2017 M.No : 223169

ANNEXURE B TO THE INDEPENDENT AUDITORS' REPORT

"Annexure B" to the Independent Auditor's Report of even date on theStandalone Financial Statements of MIC ELECTRONICS LIMITED

Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section143 of the Companies Act 2013 ("the Act")

We have audited the internal financial controls over financial reporting of MICELECTRONICS LIMITED("the Company") as of March 31 2017 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 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 control statedin the Guidance Note on Audit of Internal Financial Controls over Financial Reportingissued by the Institute of Chartered Accountants of India". These responsibilitiesinclude the design implementation and maintenance of adequate internal financial controlsthat were operating effectively for ensuring the orderly and efficient conduct of itsbusiness including adherence to company's policies the safeguarding of its assets theprevention and detection of frauds and errors the accuracy and completeness of theaccounting records and the timely preparation of reliable financial information asrequired under the Companies Act 2013.

Auditors' Responsibility

Our responsibility is to express an opinion on the Company's internal financialcontrols over financial reporting based on our audit. We conducted our audit in accordancewith the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting(the "Guidance Note") and the Standards on Auditing issued by ICAI and deemedto be prescribed under section 143(10) of the Companies Act 2013 to the extentapplicable to an audit of internal financial controls both applicable to an audit ofInternal Financial Controls and both issued by the Institute of Chartered Accountants ofIndia. Those Standards and the Guidance Note require that we comply with ethicalrequirements and plan and perform the audit to obtain reasonable assurance about whetheradequate internal financial controls over financial reporting was established andmaintained and if such controls 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 judgment including the assessment of the risks ofmaterial misstatement of the financial statements whether due to fraud or error.

We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the Company's internal financial controls systemover financial reporting.

Meaning of Internal Financial Controls over Financial Reporting

A company's internal financial control over financial reporting is a process designedto provide reasonable assurance regarding the reliability of financial reporting and thepreparation of financial statements for external purposes in accordance with generallyaccepted accounting principles. A company's internal financial control over financialreporting includes those policies and procedures that (1) pertain to the maintenance ofrecords that in reasonable detail accurately and fairly reflect the transactions anddispositions of the assets of the company; (2) provide reasonable assurance thattransactions are recorded as necessary to permit preparation of financial statements inaccordance with generally accepted accounting principles and that receipts andexpenditures of the company are being made only in accordance with authorisations ofmanagement and directors of the company; and (3) provide reasonable assurance regardingprevention or timely detection of unauthorised acquisition use or disposition of thecompany's assets that could have a material effect on the financial statements.

Inherent Limitations of Internal Financial Controls over Financial Reporting

Because of the inherent limitations of internal financial controls over financialreporting including the possibility of collusion or improper management override ofcontrols material misstatements due to error or fraud may occur and not be detected.Also projections of any evaluation of the internal financial 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.

Disclaimer of Opinion

According to the information and explanation given to us the Company is still in theprocess of establishing internal financial control over financial reporting on criteriabased on or considering the essential components of internal control stated in theGuidance Note on Audit of Internal Financial Controls over Financial Reporting issued bythe Institute of Chartered Accountants of India.Because of this reason we are unable toobtain sufficient appropriate audit evidence to provide a basis for our opinion whetherthe Company had adequate internal financial controls overfinancial reporting and whethersuch internal financial controls were operating effectively as at March 31 2017.

We have considered the disclaimer reported above in determining the nature timing andextent of audit tests applied in our audit of the financial statements of the Company andthe disclaimer has affected our opinion on the financial statements of the Company and wehave issued qualified opinion on the financial statements.

For PAVULURI & Co.
Chartered Accountants
Firm Reg. No:012194S
Sd/-
(CA N. RAJESH)
Place : Hyderabad PARTNER
Date : 10/05/2017 M.No : 223169