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MMP Industries Ltd.

BSE: 535071 Sector: Metals & Mining
NSE: MMP ISIN Code: INE511Y01018
BSE 05:30 | 01 Jan MMP Industries Ltd
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MMP Industries Ltd. (MMP) - Auditors Report

Company auditors report

To the Members of MMP Industries Limited Report on the StandaloneFinancial Statements Opinion

We have audited the accompanying standalone financial statements of MMPINDUSTRIES LIMITED ("the Company") which comprises the Balance Sheet as at March31 2019 the Statement of Profit and Loss and the Statement of Cash Flows for theyear then ended and notes to the standalone financial statements including a summary ofsignificant accounting policies and other explanatory information.

In our opinion and to the best of our information and according to theexplanations given to us the aforesaid standalone financial statements give theinformation required by the Companies Act 2013 ("the Act") in the manner sorequired and give a true and fair view in conformity with the Accounting Standardsprescribed under section 133 of the Act read with the Rule 7 of the Companies (Accounts)Rules 2014 and other accounting principles generally accepted in India of the state ofaffairs of the Company as at March 31 2019 and its profit and its cash flows forthe year ended on that date.

Basis of Opinion

We conducted our audit of the standalone financial statements inaccordance with the Standards on Auditing specified under section 143(10) of the Act(SAs). Our responsibilities 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 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.

Key Audit Matters

Key audit matters are those matters that in our professional judgmentwere most of significance in or audit of the standalone financial statements of thecurrent period. These matters were addressed in the context of our audit of the standalonefinancial statements as a whole and in forming our opinion thereon and we do not providea separate opinion on these matters. We have determined the matters described below to bethe key audit matters to be communicated to our report.

The Key Audit Matters How was the matter addressed in our Audit
Revenue Recognition
Revenue is one of the key profit drivers and is therefore susceptible to misstatements. Cut-off is the key assertion in so far as revenue recognition is concerned since an inappropriate cut-off can results in material misstatement of results for the years. Our audit procedures with regards to revenue recognition included testing controls automated and manual around dispatches / deliveries inventory reconciliations and circulari- zation of receivable balances substantive testing for cut-off and analytical review procedures.
Capital Work-in-Progress / Property Plants and Equipments
The Company had embarked on the project of setting up the manufacturing plants in "Umred". Value of such plants capitalized during the period is र "NIL". The projects need to be capitalized and depreciated once the assets are ready for use as intended by the management. Inappropriate timing of capitalization of the project and / or inappropriate classification of categories of items of Property Plants and Equipments could results in material misstatement of Capital Work-in-Progress / Property Plants and Equipments with a consequents impact on depreciation charge and results for the period. Our audit procedures included testing the design implementation and operating effectiveness of controls in respect of review of Capital Work-in-Progress particularly in respect of timing of the capitalization and recording of additions to items of various categories of PPE with source documentation substantive testing of appropriateness of the Cut-off date considered for project capitalization.
We tested the source documentation to determine whether the expenditure is of capital nature and has been appropriately approved and segregated into appropriate categories. We reviewed operating expenses to determine appropriateness of accounting. Further through sites visits we physically verified existence of Capital Work-in-Progress / Property Plants and Equipments.
Intangible Assets under Developments
During the period the Company has gone for system Upgradation from Tally 9.0 to SAP S/4 HANA. The Upgradation of the system is in process as at the date of reporting. Migration to SAP is a major upgrade from existing core enterprise application system resulting into a significant change to financial accounting configurations which is the core for financial reporting including preparation of standalone financial statements. Our audit procedures included obtaining detailed project plans and SAP Governance framework for transition to SAP landscape. We involved Information Technology (IT) Specialists as part of the audit team to perform audit procedures in respect of this upgradation.
Audit procedures performed by the IT Specialists involved obtaining User Acceptance Testing ('UAT') sign-off to ensure that the implemented system was configured in line with business requirements performing test of General IT Controls and user access controls in respect of SAP S/4 HANA IT environment and testing the operating effectiveness of the data migration process. The audit procedures also involved testing of critical transactions segregation of duties (SOD) rules to ensure system access was restricted to authorized users and testing of interface controls between new SAP environment and other auxiliary systems.
Risks identified as emanating from the aforesaid change were (i) Inappropriate changes made to the application systems or programs that contain relevant automated controls (i.e. configurable settings automated algorithms automated calculations and automated data extraction) and / or report logic and (ii) Systems not adequately configured or updated to restrict system access to authorized users.

Information Other than the Financial Statements and Auditor's Reportthereon

The Company's Board of Directors is responsible for the otherinformation. The other information comprises the Board's Report Report on Corporategovernance and the Business Responsibility Report but does not include the consolidatedfinancial statements standalone financial statements and our auditor's report thereon.

Our opinion on the standalone financial statements does not cover theother information and we do not express any form of assurance conclusion thereon.

In connection with our audit of the standalone financial statementsour responsibility is to read the other information and in doing so consider whether theother information is materially inconsistent with the standalone financial statements orour knowledge obtained during the course of our audit or otherwise appears to bematerially misstated. If based on the work we have performed we conclude that there is amaterial misstatement of this other information; we are required to report that fact. Wehave nothing to report in this regard.

Management's Responsibility for the Standalone Financial Statements

The Company's Board of Directors is responsible for the matters statedin Section 134(5) of the Companies Act 2013 ("the Act") with respect to thepreparation of these standalone financial statement that give a true and fair view of thefinancial position financial performance and cash flows of the Company in accordance withthe accounting principle generally accepted in India including the Accounting Standardsspecified under Section 133 of the Act read with Rule 7 of Companies (Accounts) Rules2014. This responsibility also includes maintenance of adequate accounting records inaccordance with the provisions of the Act for safeguarding of the assets of the Companyand for preventing and detecting 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 controls that were operating effectively for ensuring the accuracy andcompleteness of the accounting records relevant to the preparation and presentations ofthe standalone financial statements that give a true and fair view and are free frommaterial misstatement whether due to fraud or error.

In preparing the standalone financial statements management isresponsible for assessing the Company's ability to continue as a going concerndisclosing as applicable matters related to going concern and using the going concernbasis of accounting unless management either intends to liquidate the Company or to ceaseoperations or has no realistic alternative but to do so.

The Board of Directors is responsible for overseeing the Company'sfinancial reporting process.

Auditor's Responsibility for the Standalone Financial Statements

Our objectives are to obtain reasonable assurance about whether thestandalone financial statements as a whole are free from material misstatement whetherdue to fraud or error and to issue an auditor's report that includes our opinion.Reasonable assurance is a high level of assurance but is not a guarantee that an auditconducted in accordance with SAs will always detect a material misstatement when itexists. Misstatements can arise from fraud or error and are considered material ifindividually or in the aggregate they could reasonably be expected to influence theeconomic decisions of users taken on the basis of these standalone financial statements.

As part of an audit in accordance with SAs we exercise professionaljudgment and maintain professional skepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of thestandalone financial statements whether due to fraud or error design and perform auditprocedures responsive to those risks and obtain audit evidence that is sufficient andappropriate to provide a basis for our opinion. The risk of not detecting a materialmisstatement resulting from fraud is higher than for one resulting from error as fraudmay involve collusion forgery intentional omissions misrepresentations or the overrideof internal controls.

• Obtain an understanding of internal financial controls relevantto the audit in order to design audit procedures that are appropriate in thecircumstances. Under section 143(3)(i) of the Act we are also responsible for expressingour opinion on whether the Company has adequate internal financial controls system inplace and the operating effectiveness of such controls.

• Evaluate the appropriateness of accounting policies used and thereasonableness of accounting estimates and related disclosures made by management.

• Conclude on the appropriateness of management's use of the goingconcern basis of accounting and based on the audit evidence obtained whether a materialuncertainty exists related to events or conditions that may cast significant doubt on theCompany's ability to continue as a going concern. If we conclude that a materialuncertainty exists we are required to draw attention in our auditor's report to therelated disclosures in the financial statements or if such disclosures are inadequate tomodify our opinion. Our conclusions are based on the audit evidence obtained up to thedate of our auditor's report. However future events or conditions may cause the Companyto cease to continue as a going concern.

• Evaluate the overall presentation structure and content of thestandalone financial statements including the disclosures and whether the standalonefinancial statements represent the underlying transactions and events in a manner thatachieves fair presentation.

Materiality is the magnitude of misstatements in the standalonefinancial statements that individually or in aggregate makes it probable that theeconomic decisions of a reasonably knowledgeable user of the standalone financialstatements may be influenced. We consider quantitative materiality and qualitative factorsin (i) planning the scope of our audit work and in evaluating the results of our work; and(ii) to evaluate the effect of any identified misstatements in the standalone financialstatements.

We communicate with those charged with governance regarding amongother matters the planned scope and timing of the audit and significant audit findingsincluding any significant deficiencies in internal control that we identify during ouraudit.

We also provide those charged with governance with a statement that wehave complied with relevant ethical requirements regarding independence and tocommunicate with them all relationships and other matters that may reasonably be thoughtto bear on our independence and where applicable related safeguards.

From the matters communicated with those charged with governance wedetermine those matters that were of most significance in the audit of the standalonefinancial statements of the current period and are therefore the key audit matters. Wedescribe these matters in our auditor's report unless law or regulation precludes publicdisclosure about the matter or when in extremely rare circumstances we determine that amatter should not be communicated in our report because the adverse consequences of doingso would reasonably be expected to outweigh the public interest benefits of suchcommunication.

Report on Other Legal and Regulatory Requirements

1. 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 of the Act we give in the Annexure "A" a statement on thematters specified in paragraph 3 and paragraph 4 of the said Order.

2. As required by Section 143(3) of the Act based on our audit wereport that:

a. We have sought and obtained all the information and explanationswhich to the best of our knowledge and belief were necessary for the purposes of ouraudit;

b. In our opinion proper books of account as required by law have beenkept by the Company so far as it appears from our examination of those books;

c. The Balance Sheet the Statement of Profit and Loss and theStatement of Cash Flows dealt with by this Report are in agreement with the books ofaccount;

d. In our opinion the Standalone Balance Sheet the StandaloneStatement of Profit and Loss and the Standalone Statement of Cash Flows 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 representation received from thedirectors as on March 31 2019 taken on the record by the Board of Directors none ofdirectors is disqualified as on March 31 2019 from being appointed as a director in termof Section 164(2) of the Act.

f. With respect to adequacy of the internal financial controls overfinancial reporting of the Company and the operating effectiveness of such control referto our separate report in Annexure "B". Our report expresses anunmodified opinion on the adequacy and operating effectiveness of the Company's internalfinancial controls over the financial reporting.

g. With respect to the other matters to be included in the Auditor'sReport in accordance with the requirements of Section 197(16) of the Act as amended;

In our opinion and to the best of our information and explanationsgiven to us the remuneration paid by the Company to its directors during the reportingperiod is in accordance with the provision of Section 197 of the Act.

h. With respect to the other matters to be included in the IndependentAuditor's Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules2014 in our opinion and to the best of our information and according to the explanationsgiven to us;

(i) The Company has disclosed the impact of pending litigations on itsfinancial position in its standalone financial statements "Refer Note No. 32".

(ii) In our opinion and according to the explanation given to us theCompany has not entered into any long term contracts including derivatives contracts forwhich there were any material foreseeable losses.

(iii) There has been no delay in transferring amounts required to betransferred to Investor Education and Protection Fund by the Company.

For MANISH N JAIN & CO.
Chartered Accountants
FRN No. - 138430W
Manish Jain
Place : Nagpur Partner
Date : May 29 2019 Membership No. 118548

Annexure ‘A' to the Independent Auditors' Report

(Referred to in paragraph 1 under "Report on Other Legal andRegulatory Requirements" Section of our report of even date) Report on Companies(Auditor's Report) Order 2016 ("the Order") issued by the Central Government interm of Section 143(11) of the Companies Act 2013 ('the Act') of MMP INDUSTRIES LIMITED("the Company")

1. In respect of the Company's fixed assets:

(a) The Company has maintained proper records in the electronic modeshowing the full particulars including quantitative details and situation of fixedassets.

(b) The fixed assets were physically verified by the management inaccordance with a regular programme of verification which in our opinion provides forphysical verification of all the fixed assets at reasonable intervals. According to theinformation and explanation given to us no material discrepancies were noticed on suchphysical verification. In our opinion this periodicity of physical verification isreasonable having regards to the size of the Company and the nature of its assets.

(c) According to the information and explanation given to us and on thebasis of our examination of the records of the Company produced and verified by us wereport that the title deeds of immovable properties of land and buildings which arefreehold are held in the name of the Company as at the Balance Sheet date.

2. In respect of Company's Inventories:

As explained to us inventories except goods in transits and the stocklying with third parties were physically verified during the year by the management atreasonable intervals. In our opinion the frequency of verification is reasonable. Asexplained to us there was no material discrepancies noticed on such physical verificationof inventories as compared to the book records. However the deficiencies if any noticedon such physical verification have been properly dealt with in the books of accounts.

3. In respect of the loan secured or unsecured granted by the Companyto the companies firms limited liabilities partnerships or other parties covered in theregister maintained under section 189 of Companies Act 2013.

According to information and explanation given to us there are no suchcompanies firms limited liabilities partnership and other parties covered in theregister maintained under section 189 of the Companies Act 2013 to whom Company hasgranted any kind of loan whether secured or unsecured.

4. In our opinion and according to information and explanations givento us the Company has complied with the provisions of Section 185 and Section 186 of theAct in respect to grant of loans making investments and providing guarantees andsecurities as applicable.

5. The Company has not accepted any deposits from public during theyear and does not have any unclaimed deposits as at March 31 2019 and thereforeReporting under Clause 3(v) of the Order are not applicable to the Company.

6. We have broadly reviewed the cost records maintained by the Companypursuant to the Companies (Cost Records and Audit) Rules 2014 as amended prescribed bythe Central Government under section 148(1) of the Companies Act 2013 and are of theopinion that prima facie the prescribed cost record have been made and maintained.

7. According to the information and explanations given to us and on thebasis of our examination of the records of the Company in respect of statutory dues wereport that :

(a) The Company has generally been regular in depositing undisputedstatutory dues including provident fund employees' state insurance income tax salestax value added tax service tax duties of custom duties of excise goods and servicetax cess and other material statutory dues applicable to it with the appropriateauthorities.

According to the information and explanations given to us noundisputed amounts payable in respect of provident fund employees' state insuranceincome tax sales tax value added tax service tax duties of custom duties of excisegoods and service tax cess and other material statutory dues were in arrears as at March31 2019 for a period of more than six months from the date they became payable.

(b) According to the information and explanation given to us there areno material dues of duties of custom income tax sales tax duties of excise servicetax goods and service tax and value added tax which have not been deposited on account ofany dispute except the following cases:

Name of the Statue Nature of the Dues Forum where dispute is pending Period to which the amount relates Amount involved (in Lakhs )
Central Sales Tax Act & Sales Tax Act of State. Value Added Tax & Central Sales Tax Act Appellate Authorities up to Commissioner's level Financial year 2003-2004 4.36
Income Tax Act 1961 Income Tax Commissioner of Income Tax (Appeals) Financial year 2012-13 1.83
Central Excise Act 1944 Excise Duty Central Excise April 2004 to March 2009 174.00

8. In our opinion and according to the information and explanationgiven to us the Company has not defaulted in any repayment of any loans or borrowingsfrom any financial institution banks and Government or has not issued any debenturesduring the reporting period.

9. In our opinion and according to the information and explanationgiven to us during the year the Company raised money by way of Initial Public Offer(IPO) through the Book Building process in the designated Stock Exchange National StockExchange of India Limited on its SME Platform namely "NSE SME EMERGE". In ouropinion and according to the information and explanation given to us the Company hasutilized the raised fund for the purpose for which they raised except the funds deployedtemporarily elsewhere. The Company has not taken any term loan during the reportingperiod.

10. According to the information and explanation given to us and on thebasis of examinations of records of Company we report that no fraud by the Company ormaterial fraud on the Company by its officers or employees has been noticed or reportedduring the year.

11. The Company has paid or provided the Managerial Remuneration duringthe year in accordance with the requisite approvals mandated by the provisions of Section197 read with the Schedule - V of the Companies Act 2013.

12. The Company is not a Nidhi Company and hence reporting under clause3(xii) of the Order is not applicable to Company.

13. According to information and explanations given to us and based onour examination of the records of the Company all transactions with related parties arein compliance with Section 177 and Section 188 of the Act wherever applicable and detailsof such transactions have been disclosed in the Standalone financial statements under"Note No. - 29 - the Transactions with the Related Party" as required underAccounting Standard (AS) 18 "Related Party Disclosure" specified under Section133 of the Act read with Rule 7 of the Companies (Accounts) Rule 2014.

14. During the year the Company has not made any preferentialallotment or private placement of shares or fully or partly convertible debentures andhence reporting under clause 3(xiv) of the said Order is not applicable to Company.

1. In our opinion and according to the information and explanationgiven to us during the year the Company has not entered into any non - cash transactionswith its directors or the person connected with him and hence provisions of Section 192 ofAct are not applicable. Thus reporting under clause 3 (xv) of the Order is not applicableto the Company.

2. The Company is not required to be registered under Section 45 - IAof the Reserve Bank of India Act 1934.

For MANISH N JAIN & CO.
Chartered Accountants
FRN No. - 138430W
Manish Jain
Place : Nagpur Partner
Date : May 29 2019 Membership No. 118548

Annexure ‘B' to the Independent Auditors' Report

(Referred to in paragraph 2(f) under "Report on the OtherRegulatory Requirements" Section of our report of even date)

Report on the Internal Financial Controls over the Financial Reportingunder Clause (i) of Sub-section 3 of Section 143 of the

Companies Act 2013 ("the Act")

We have audited the Internal Financial Controls over the FinancialReporting of "MMP INDUSTRIES LIMITED" ("the Company") as of March31 2019 in conjunction with our audit of the standalone financial statements of theCompany for the year ended on that date.

Management's Responsibility for Internal Financial Controls

The Company's management is responsible for establishing andmaintaining internal financial controls based on the internal control over financialreporting criteria established by the Company considering the essential components ofinternal control stated in the Guidance Note on Audit of Internal Financial Controls overFinancial Reporting issued by the Institute of Chartered Accountants of India("ICAI"). These responsibilities include the design implementation andmaintenance of adequate internal financial controls that were operating effectively forensuring the orderly and efficient conduct of its business including adherence toCompany's policies the safeguarding of its assets the prevention and detection of fraudsand errors the accuracy and completeness of the accounting records and the timelypreparation of reliable financial information as required under the Companies Act 2013.

Auditors' Responsibility

Our responsibility is to express an opinion on the Company's internalfinancial controls over financial reporting based on our audit. We conducted our audit inaccordance with the Guidance Note on Audit of Internal Financial Controls over FinancialReporting (the "Guidance Note") and the Standards on Auditing issued by ICAIand deemed to be prescribed under Section 143(10) of the Companies Act 2013 to theextent applicable to an audit of internal financial controls both applicable to an auditof internal financial controls and both issued by the Institute of Chartered Accountantsof India. 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 were established andmaintained and if such controls operated effectively in all material respects.

Our audit involves performing procedures to obtain audit evidence aboutthe adequacy of the internal financial controls system over financial reporting and theiroperating effectiveness. Our audit of internal financial controls over financial reportingincludes obtaining an understanding of internal financial controls over financialreporting assessing the risk that a material weakness exists and testing and evaluatingthe design and operating effectiveness of internal control based on the assessed risk. Theprocedures selected depend on the auditors' judgment including the assessment of therisks of material misstatement of the standalone financial statements whether due tofraud or error.

We believe that the audit evidence we have obtained is sufficient andappropriate to provide a basis for our audit opinion on the Company's internal financialcontrols system over financial reporting.

Meaning of Internal Financial Controls over Financial Reporting

A Company's internal financial control over financial reporting is aprocess designed to provide reasonable assurance regarding the reliability of financialreporting and the preparation of standalone financial statements for external purposes inaccordance with generally accepted accounting principles. A Company's internal financialcontrol over financial reporting includes those policies and procedures that (1) pertainto the maintenance of records that in reasonable detail accurately and fairly reflectthe transactions 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 withauthorizations 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 effect on the standalonefinancial statements.

Inherent Limitations of Internal Financial Controls over the FinancialReporting

Because of the inherent limitations of internal financial controls overfinancial reporting including the possibility of collusion or improper managementoverride of controls material misstatements due to error or fraud may occur and not bedetected. Also projections of any evaluation of the internal financial controls overfinancial reporting to future periods are subject to the risk that the internal financialcontrol over financial reporting may become inadequate because of changes in conditionsor that the degree of compliance with the policies or procedures may deteriorate.

Opinion

In our opinion to the best of our information and according to theexplanation given to us the Company has in all material respects an adequate internalfinancial controls system over financial reporting and such internal financial controlsover financial reporting were operating effectively as at March 31 2019 based on theinternal control over financial reporting criteria established by the Company consideringthe essential components of internal control stated in the Guidance Note on Audit ofinternal financial controls over financial reporting issued by the Institute of CharteredAccountants of India.

For MANISH N JAIN & CO.
Chartered Accountants
FRN No. - 138430W
Manish Jain
Place : Nagpur Partner
Date : May 29 2019 Membership No. 118548

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