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MMTC Ltd.

BSE: 513377 Sector: Others
NSE: MMTC ISIN Code: INE123F01029
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VOLUME 347371
52-Week high 63.95
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P/E 61.04
Mkt Cap.(Rs cr) 6,593
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OPEN 45.55
CLOSE 45.15
VOLUME 347371
52-Week high 63.95
52-Week low 19.55
P/E 61.04
Mkt Cap.(Rs cr) 6,593
Buy Price 43.80
Buy Qty 2363.00
Sell Price 43.90
Sell Qty 487.00

MMTC Ltd. (MMTC) - Auditors Report

Company auditors report

TO

THE MEMBERS OF

MMTC LIMITED

Report on the Standalone Financial Statements

We have audited the accompanying standalone financial statements of MMTC LIMITED ("theCompany") which comprise the Balance Sheet as at March 312015 the Statement ofProfit and Loss the Cash Flow Statement for the year then ended and a summary of thesignificant accounting policies and other explanatory information in which areincorporated the Returns for the year ended on that date audited by the branch auditors ofthe Company’s branches at Ahmedabad Bhubaneshwar Mumbai Goa Bangalore HyderabadChennaiVizag Kolkata (including MICA division Abhraknagar) Jaipurand Delhi RegionalOffice Corporate Office MICAdivision audited by us.

Management’s Responsibility forthe 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 including the Accounting Standardsspecified under Section 133 of the Act read with Rule 7 of the Companies (Accounts)Rules 2014. This responsibility also includes maintenance of adequate accounting recordsin accordance 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 presentation ofthe financial statements that give a true and fair view and are free from materialmisstatement whether due to fraud or error.

Auditors’ Responsibility

Our responsibility is to express an opinion on these standalone financial statementsbased 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 Rules made thereunder.

We conducted our audit in accordance with the Standards on Auditing specified underSection 143(10)of the Act. Those Standards require that we comply with ethicalrequirements and plan and perform the audit to obtain reasonable assurance about whetherthe financial statements are free from material misstatement.

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 ofthe financial statements whether due to fraud or error. In making those risk assessmentsthe auditor considers internal financial control relevant to the Company’spreparation of the financial statements that give a true and fair view in order to designaudit procedures that are appropriate in the circumstances. An audit also includesevaluating the appropriateness of the accounting policies used and the reasonableness ofthe accounting estimates made by the Company’s Directors as well as evaluating theoverall 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 on the standalone financial statements.

Opinion

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 Act in the manner so required and give a true and fair view in conformity with theaccounting principles generally accepted in India of the state of affairs of the Companyas at March 312015 and its profit and its cash flows for the year ended on that date.

Emphasis of Matter

(a) We draw attention to Note 9(i)& 21 to the standalone financial statementsin-respect of unsecured short term loan facility of INR 8669.90 million (P.Y. 6490.00million)extended to Neelachal Ispat Nigam Limited (NINL) an associate company. In view ofcontinuous losses for the last three years and in accordance with the analyst’sreport NINL requires robust infusion of fund / capital / raising of fresh term loan.

(b) We draw attention to Note 7.5 to the standalone financial statements in-respect ofan amount of INR 3732.90 million which is due for recovery from Govt of India on accountof subsidy against import of edible oil imported into India for the State Governments fromAugust 2012 onwards.

(c) We draw attention to Note 41 to the standalone financial statements in-respect ofBalances under Sundry Debtors/ Claims Recoverable / Loans & Advances / SundryCreditors / Other Liabilities which in many cases have not been confirmed and consequentreconciliation / adjustments if any required upon such confirmation are notascertainable.

(d) The RMS software is not reflecting correct inventory of Sanchi items due to theproblems in the software.

(e) We draw attention to Note 22 to the standalone financial statements in-respect ofnon-provision of liability if any in case of non-extension of time/waiver/write off ofGR-1 forms.

Our opinion is not modified in respect of this matter.

Other Matter

We did not audit the financial statements/information often branches included in thestandalone financial statements of the Company whose financial statements / financialinformation reflect total assets of INR 30922.02 million as at March 312015 and totalrevenues of INR 105580.13million for the year ended on that date as considered in thestandalone financial statements. The financial statements / information of these brancheshave been audited by the branch auditors whose reports have been furnished to us and ouropinion in so far as it relates to the amounts and disclosures included in respect ofthese branches is based solely on the report of such branch auditors.

Our opinion is not modified in respect of this matter.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor’s Report) Order 2015 ("theOrder") issued by the Central Government of India in terms of sub-section (11) ofSection 143 of the Act based on the comments in the auditors’ reports of thecorporate office &branch auditors of the company we give in the "AnnexureA" a statement on the matters specified in paragraphs 3 and 4 of the Order to theextent applicable.

2. As required by Section 143(3)of the Act we report that:

(a) We have sought and obtained all the information and explanations which to the bestof our knowledge and belief were necessary for the purposes of our audit.

(b) In our opinion proper books of account as required by law have been kept by theCompany so far as it appears from our examination of those books and proper returnsadequate for the purposes of our audit have been received from the branches not visited byus.

(c) The reports on the accounts of the branch offices of the Company audited underSection 143 (8) of the Act by branch auditors have been sent to us and have been properlydealt with by us in preparing this report.

(d) The balance sheet the statement of profit and loss and the cash flow statementdealt with by this Report are in agreement with the books of account and with the returnsreceived from the branches not visited by us.

(e) 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.

(f) On the basis of the written representations received from the directors as on March312015 taken on record by the Board of Directors none of the directors is disqualifiedas on March 312015 from being appointed as a director in terms of Section 164 (2) of theAct.

(g) With respect to the other matters to be included in the Auditor’s Report inaccordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014 in our opinionand to the best of our information and according to the explanations given to us:

i. The Company has disclosed the impact of pending litigations on its financialposition in its financial statements - Refer Note 19 to the standalone financialstatements

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

iii. There were no amounts which were required to be transferred to the InvestorEducation and Protection Fund by the Company.

3. As required by C&AG of India through sub-directions dated March 23 2015 issuedunder Section 143(5) of the Act we give our report in the attached "AnnexureB".

For JAIN KAPILA ASSOCIATES

Chartered Accountants

(Firm Registration No. 000287N)

D.K. Kapila

Partner

M. No. 016905

Place: New Delhi

Date: May212015

ANNEXURE-A

TO THE INDEPENDENT AUDITORS' REPORT

(Referred to in paragraph 1 under ‘Report on Other Legal and RegulatoryRequirements’ section of our report of even date)

i. In respect of its fixed assets:

a. The MMTC Ltd. has maintained proper records showing full particulars includingquantitative details and situation of fixed assets.

b. The fixed assets were physically verified during the year 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.

ii. In respect of its inventories:

(a) As explained to us the inventories were physically verified during the year by theManagement.

(b) In our opinion and according to the information and explanations given to us theprocedures of physical verification of inventories followed by the Management needs to bestrengthened in relation to the size of the MMTC Limited and the nature of its business.

(c) In our opinion and according to the information and explanations given to us theCompany has maintained proper records of its inventories and material discrepancies werenoticed on physical verification.

iii. Company has granted unsecured loan to company covered in the Register maintainedunder Section 189 of the Companies Act 2013.

iv. In our opinion according to the information/explanations given to us receipt ofthe principle amount and interest are not regular.

v. In our opinion according to the information/explanations given to us The overdueamount is more than INR 0.1 million. Company has taken the reasonable steps to recover theamount.

vi. In our opinion and according to the information and explanations given to us thereis an adequate internal control system commensurate with the size of the Company and thenature of its business for the purchase of inventory and fixed assets and for the sale ofgoods and services. As regards the purchases and sale of goods inventories and stocksthat are dealt with by the company including domestic bullion transactions it needsfurther strengthening in such a manner so as to avoid delay in updation in ERP systemvis-a-vis actual date of transaction and similarly manual generation of invoices could beavoided.

Further the internal control mechanism needs to be strengthened besides the areasmention hereinbefore in the following areas:

a. Periodic quantitate reconciliation of goods traded by the company (particularlybullion/retail trade) between the ERP and other standalone inventory system (RMS).

b. Risk assessment and Risk Management requires to be constantlyreviewed/strengthened/revamped in the light of changing needs of the business wheneverconsidered necessary as it was noticed that due to certain acts of omissions andcommissions company had to make heavy provisions against debtors/ recoverable/losses.

c. Periodic reconciliation in-respect of sales and purchase input/output VAT as perfinancial records vis-a-vis sales purchases. Input/output VAT as per VAT returns.

vii. According to the information and explanations given to us Company has notaccepted the deposits under directives issued by Reserve Bank of India and the provisionsof Section 73 to 76 or any other relevant provisions of the companies act.

viii. The Government of India has not prescribed the maintenance of cost records underSub section (1) of Section 148 of the Companies Act 2013.

ix. According to the information and explanations given to us in respect of statutorydues:

(a) The Company has been regular in depositing undisputed statutory dues includingProvident Fund Investor Education and Protection Fund Employees’ State InsuranceIncome-tax Sales Tax Wealth Tax Service Tax Customs Duty Excise Duty Value addedTax Cess and other material statutory dues applicable to it with the appropriateauthorities.

(b) There were no undisputed amounts payable in respect of Provident Fund InvestorEducation and Protection Fund Employees’ State Insurance Income-tax Sales TaxWealth Tax Service Tax Customs Duty Excise Duty Cess and other material statutory duesin arrears as at 31 March 2015 for a period of more than six months from the date theybecame payable.

(c) In case of dues of Income Tax or Sales Tax or Wealth Tax or Service Tax or Duty ofCustom or duty of Excise or Value added Tax or Cess have not been deposited on account ofany dispute then the amounts involved and a forum where is pending shall be mentioned:

According to the records of the company dues of Income Tax Sales Tax Custom DutyExcise Duty and Cess which have not been deposited on account of disputes are statedbelow:

CHENNAI REGIONAL OFFICE

Name of the Statue Nature of the dues Amount (In Rs.) Period Forum of Dispute
TNGST ACT Sales Tax Penalty & Interest 863114 1998-99 Madras High Court
TNGST ACT Sales Tax Penalty & Interest 443416 2000-01 Sales Tax Appeals Tribunal
TNGST ACT Sales Tax Penalty & Interest 1152785 1999-2000 Madras High Court
TNGST ACT Sales Tax Penalty & Interest 178566 2001-02 Asst. Commissioner (Comm. Tax)Chennai
TN VAT Act VAT & Penalty 35508765 2008-09 Joint Commissioner of Comercial Taxes Appeals

MUMBAI REGIONAL OFFICE

Name of the Statue Nature of the dues Amount (In Rs.) Period Forum of Dispute
BST ACT Sales Tax 308644 1986-87 Joint Comm of Sales Tax
BST ACT Sales Tax 149606778 1989-90 Joint Comm of Sales Tax
BST ACT Sales Tax 233046478 1990-91 Joint Comm of Sales Tax
BST ACT Sales Tax 2898738 1991-92 Joint Comm of Sales Tax
BST ACT Sales Tax 4503961 2001-02 Joint Comm of Sales Tax
BST ACT Sales Tax 14213373 2008-09 Joint Comm of Sales Tax
BST ACT Sales Tax 5181978 2008-09 Joint Comm of Sales Tax

 

Nameofthe Statue Nature of the dues Amount (In Rs.) Period Forum of Dispute
APGST Sales Tax 149770 1989-90 STAT
APGST Sales Tax 2961551 1990-91 STATVizag
APGST Sales Tax 2402576 1991-92 STAT Vizag
APGST Sales Tax 1396269 1992-93 STAT Vizag
APGST Sales Tax 1762687 1992-93 STAT Vizag
APGST Sales Tax 630615 1993-94 STAT Vizag
CST Central Sales Tax 441446 1993-94 ADC(CT)
CST Central SalesTax 204481 1994-95 AC(LTU)
CST Central SalesTax 597266 1995-96 ADC(CT)
APGST SalesTax 3803875 1995-96 STAT Vizag
APGST SalesTax 2880309 1995-96 STAT Vizag
CST Central SalesTax 2134306 1996-97 STAT Vizag
APGST SalesTax 5843100 1997-98 STAT Vizag
CST Central Sale Tax 635504 1997-98 ADC(CT)
APGST SalesTax 5565147 1998-99 STAT Vizag
APGST SalesTax 3904454 1999-2000 STAT Vizag
APGST SalesTax 252926 2000-2001 STAT Vizag
APGST SalesTax 212176 2001-02 AC (LTU)
APGST SalesTax 68901 2002-03 AC (LTU)
APGST SalesTax 34856 2003-04 AC (LTU)
APGST SalesTax 126000 2004-05 AC (LTU)
VAT VAT 676058 2006-07 STAT
VAT VAT 71000 2007-08 AC(LTU)
VAT VAT 500000 2008-09 STAT Vizag
VAT VAT 1190100 2008-09 STAT Vizag
Central Excise & Customs Custom Duty 241079065 2008-09 Comm of Customs& Excise

BHUBANESHWAR REGIONALOFFICE

Name of the Statue Nature of the dues Amount (In Rs.) Period Forum of Dispute
Orissa Sales; Tax Interest Penalty 2650388 1978-79 High Court of Orissa
Orissa Sales; Tax Odisha Sales Tax 3400919 1978-79 — do —
Orissa Sales; Tax Odisha Sales Tax 170046 1978-79 — do —
Orissa Sales Tax Interest Penalty 653452 1979-80 — do —
Orissa Sales; Tax Central Sales Tax 3483020 1982-83 — do —
Orissa Sales; Tax Interest 35742030 1978-79 — do —
Orissa Sales; Tax DEPB 149822308 2006-09 Addl. Commissioner of Sales Tax Odisha
Orissa Sales Tax DEPB 50843080 2010-12 Addl. Commissioner of Sales Tax Odisha
OVAT 2009-10 & 2010-11 142818841 2013-14 Addl. Commissioner of Sales Tax Odisha
CST(ODISHA) 2009-10 & 2010-11 580705822 2013-14 Addl. Commissioner of Sales Tax Odisha
ET(ODISHA) 2009-10 & 2010-11 526310091 2013-14 Addl. Commissioner of Sales Tax Odisha
Central Excise Act Service Tax 41704374 2003-05 Customs Excise & Service Tax Appellate Tribunal
Central Excise Act Service Tax 155524520 2003-07 Customs Excise & Service Tax Appellate Tribunal
Central Excise Act Service Tax 35584190 2007-08 Customs Excise & Service Tax Appellate Tribunal
Central Excise Act Service Tax 76064279 2008-10 Customs Excise & Service Tax Appellate Tribunal
Central Excise Act Service Tax 37581878 2010-11 Comm. Customs excise & service tax. Bhubaneswar
Central Excise Act Service Tax 35943529 2011-12 Comm. Customs excise & service tax. Bhubaneswar
Central Excise Act Service Tax 284957172 2009-12 Comm. Customs excise & service tax. Bhubaneswar
Central Excise Act Service Tax 6520157 2009-11 Comm. Customs excise & service tax. Bhubaneswar
Central Excise Act Service Tax 3127912 2012-13 Comm. Customs excise & service tax. Bhubaneswar
Central ExciseAct Service Tax 34469468 2012-13 Comm. Customs excise & service tax. Bhubaneswar

JAIPUR REGIONAL OFFICE

Name of the Statue Nature of the dues Amount (In Rs.) Period Forum of Dispute
R.S.T ACT Sales Tax 14946540/- 2003-04 Rajasthan Kar Board Ajmer Rs. 3549446/- has been deposited under protest. Sales Tax Dept has appealed against the order of DC(Appeals) in Kar Board
R.S.T ACT Sales Tax 2607605/- 1999-00 Rajasthan Kar Board Ajmer Pending with Kar Board against demand on account of 4767 MT DAP u/s 84 of RST Act
RAJ VAT ACT VAT 32647269/- 2010-11 Against the Appeal of Sales Tax Deptt. Rajasthan Kar Board decided in favour of MMTC Limited.
CST ACT CST 5992494/- 2010-11 Against the Appeal of Sales Tax Deptt. Rajasthan Kar Board decided in favour of MMTC Limited.
R.S.T ACT VAT 1801941/- 2010-11 Required documents have been submitted in Sales Tax Dept. Rectification pending with A.O.
ST TurnoverTax 532992/- 2003-04 High Court Sales Tax Dept has filed an appeal in High Court against Kar Board order.

Total amount deposited under protest- Rs 3549446.00

VIZAG REGIONAL OFFICE

Name of the Statue Nature of the dues Amount (In Rs.) Period Forum of Dispute
A.P.G.S.TACT Sales Tax 1856325 1968-69 STAT HYD.
A.P.G.S.TACT Sales Tax 2639647 1981-82 ADC Vizag
A.P.G.S.TACT Sales Tax 688552 1982-83 ADC Vizag
A.P.G.S.TACT Sales Tax 1766784 1983-84 ADC Vizag
A.P.G.S.TACT Sales Tax 3000436 1984-85 ADC Vizag
A.P.G.S.TACT Sales Tax 2505806 1985-86 STATVizag
A.P.G.S.TACT Sales Tax 27083841 1986-87 STAT Vizag
A.P.G.S.TACT Sales Tax 3645076 1987-88 ADC
A.P.G.S.TACT Sales Tax 1934139 1991-92 AC LTU
A.P.G.S.TACT Sales Tax 479000 1989-90 STAT
CST Sales Tax 841695 1994-95 AC LTU
CST Sales Tax 4862340 1995-96 STAT Hyderabad
CST Sales Tax 3358889 1996-97 STAT Hyderabad
A.P.G.S.TACT Sales Tax 2527960 1997-98 STAT Hyderabad
CST Sales Tax 104614 2007-08 ADC
Central Excise & Customs Service Tax 126526554 2003 -06 STAT Bangalore

KOLKATA REGIONAL OFFICE

Name of the Statue Nature of the dues Amount (In Rs.) Period Forum of Dispute
CST ACT 1956 Central Sales Tax 1130858 2005-06 Appellate Board
CST ACT 1956 Central Sales Tax 7760971 2006-07 D C Appeal

CORPORATE OFFICE

Name of the Statue Nature of the Dues Amount (Rs.) AY Forum of Dispute
Income Tax Act Income Tax 561821 1993-94 AO
Income Tax Act Income Tax 5481338 1996-97 CIT(A)/ITAT
Income Tax Act Income Tax 10293042 1993-94 AO
Income Tax Act Income Tax 26066476 1999-00 ITAT
Income Tax Act Income Tax 18463021 2000-01 ITAT
Income Tax Act Income Tax 11765008 2001-02 CIT(A)/ITAT/HIGH Court
Income Tax Act Income Tax 7304915 2002-03 ITAT
Income Tax Act Income Tax 1116907 2003-04 AO
Income Tax Act Income Tax 41985746 2004-05 ITAT
Income Tax Act Income Tax 69485393 2005-06 AO
Income Tax Act Income Tax 7350191 2007-08 CIT(A)/ITAT
Income Tax Act Income Tax 27966209 2008-09 AO
Income Tax Act Income Tax 106492947 2009-10 CIT(A)
Income Tax Act Income Tax 39372128 2010-11 CIT(A)
Income Tax Act Income Tax 101750890 2011-12 CIT(A)

Amount Deposited in respect of the Income Tax cases = 373705142/-

DELHI REGIONAL OFFICE

Name of Statute Nature of Dues Amount (in Rs. ) Period to which the amount relates Forum where dispute is pending
Delhi VAT CST/LST/ln terest/Penalty (Gold - Commemorative Medallions) 3745290 2002-03 Commissioner DVAT
Delhi VAT LST 1165303 1984-85 D.C. Appeal
Delhi VAT LST/CST 65732207 1986-87 Additional Commissioner
Delhi VAT LST/CST 43186549 1987-88 Additional Commissioner
Delhi VAT LST/CST 40296672 1988-89 Additional Commissioner
Delhi VAT LST 6187340 1989-90 Additional Commissioner
Delhi VAT LST 2223198 1990-91 Additional Commissioner
UP-VAT LST/CST 617588 1990-91 Moradabad Allahabad High Court
UP-VAT LST 470578 1991-92 Moradabad Allahabad High Court
UP-VAT LST 264037 1992-93 Moradabad Allahabad High Court
UP-VAT LST 195000 1994-95 Sales Tax Authorities Moradabad
UP-VAT LST 185100 1993-94 Moradabad Allahabad High Court
UP-VAT LST 1635160 1987-88 Kanpur Joint Commissioner
UP-VAT VAT 921383 1993-94 Commissioner UP-VAT
UP-VAT VAT 1223616 1996-97 Commissioner UP-VAT
UP-VAT VAT+Interest for Non - submission of Form-3B (Gold) & Non-submission of Form 3C1 (Mentha Oil) 249828 2007-08 Commissioner UP-VAT
Haryana VAT LST 424587 1992-93 Faridabad Punjab & Haryana High Court Chandigarh
MP-VAT LST 150004 1999-00 SalesTax Authority Indore
MP-VAT LST 4730692 1998-99 Assessing Authority Indore
Custom & Central Excise Customs Duty & Interest on non-export of Gold Jewellery against Gold Loan by Associates 27267919 1999-2000 Pending before Hon'ble Delhi High Court as per directions of Hon'ble Supreme Court of India
Custom & Central Excise Custom Duty 20000000 2006-07 Dy. Commissioner of Customs
Custom & Central Excise Custom Duty 15050000 2007-08 Dy. Commissioner of Customs
Custom & Central Excise Custom Duty 6180000 2008-09 Dy. Commissioner of Customs
Custom & Central Excise Custom Duty 6180000 2009-10 Dy. Commissioner of Customs
Custom & Central Excise Excise Duty/ Interest/Penalty 1820878 2010-11 Commissioner of Central Excise
Custom & Central Excise Excise Duty/ Interest/Penalty 191353780 2011-12 Commissioner of Central Excise

An amount of INR 84.83 Lacs has been deposited.

(d) As per information/ explanations given to us no amount required to be transfer toInvestor Education & Protection Fund accordance with the relevant provisions of theCompanies act 1956.

x. The Financial Statements of the Company as at March 31 2015 do not show anyaccumulated losses. The company has not incurred any cash losses during the financial yearcovered by our audit and in the immediately preceding financial year and company has notincurred any cash losses during the financial year and immediately preceding financialyear.

xi. In our opinion and according to the information and explanations given to us theCompany has not defaulted in the repayment of dues to financial institutions banks anddebenture holders.

xii. According to the information and explanations given to us the Company has notgiven any guarantees for loans taken by others from banks and financial institutions whichis prejudicial to the interest of the company.

xiii. In our opinion and according to the information and explanations given to us theCompany has not taken any term loans during the year.

xiv. During the course of our examination of the books and records of the Companycarried out in accordance with generally accepted auditing practices in India andaccording to the information and explanation given to us there are no fraud on/or by thecompany has been noticed or reported during the year.

ANNEXURE-B

REPORT ON THE DIRECTIONS ISSUED BY C&AG UNDER SECTION 143(5) OF THE COMPANIES ACT2013 FORTHE FINANCIAL YEAR2014-15

(As referred to at para of Independent Auditor’s Report of Standalone FinancialStatements of MMTC Ltd.)

Particulars Response
1 If the company has been selected for disinvestment a complete status report in terms of valuation of Assets (including in tangible assets and land) and liabilities (including committed & General Reserves) may be examined including the mode and presentstage of disinvestment process. According to information and explanation given to us by management the company has not received any communication from the department of disinvestment regarding selection of MMTC for disinvestment process during this year.
2 Place report whether there are any cases of waiver/write off debts/loans/interest etc. if yes the reasons there for and the amount involved. Total write off / claims etc. INR 299.96 million debited to Statement of Profit & Loss (Refer to note 15 B). Further Branch Auditor of RO Chennai have reported charging of INR 5.14 million to revenue consequent upon reconciliation of final account with company’s subsidiary M/s MTPL.
3 Whether proper records are maintained for inventories lying with third parties & assets received as gift from Government or other authorities. As per the information and explanation given to us the company has maintained proper records for inventories lying with third parties. During the year there are no assets received as gifts from Government or other authorities
4 A report on age wise analysis of pending legal/ arbitration cases including the reasons of pendency and existence / effectiveness of a monitoring mechanism for expenditure on all legal cases (foreign and local) mat be given. As informed to us the details of pending legal / arbitration cases is attached (Annexure- B1). In respect of Branches other than Delhi Regional Office and Corporate Office is based on the report of respective Branch Auditors. As informed to us the company has legal department which closing monitoring the legal expenses as well as pending cases.

1) Branches Audited by us

List of pending detail Legal / Arbitration cases as at 31.3.2015

Branches Pendency Filed by MMTC Filed against MMTC
Number Amount Involved fin million] Number Amount Involved (in million
Upto 3 years 6 36.13 3 (Counterclaim of Rs. 45.70
1300.30 10180.90
1 Corporate Office (Counterclaim Rs. 506.10) (Counterclaim Rs.190.40)
4735.40 193.70
More than 5 years 48 (Counterclaim Rs. 524.30) 34 (Counterclaim Rs.25.00)
Upto 3 years 8 48.80 1 15.56
2 Delhi Regional Office 3 to 5 years 2 30.76 - -
More than 5 years 83 400.45 1 44.34
3 MICA Division More than 5 years - - 4 -

Branches not Audited by us the information is complied based upon the individualreports received from the ' Branch Auditors

List of pending detail Legal / Arbitration cases as at 31.3.2015

Branches Pendency

Filed by MMTC

Filed against MMTC

Number Amount Involved fin million) Number Amount Involved fin million
1 Chennai 27 2197.44 9 8.78
Upto 3 years 1 - - -
2 Ahmedabad 3 to 5 years - - - -
More than 5 years 8 449.37 9 1709.62
1-2 years 1 2.10 - -
3 Vizag 2-3 years 2 249.50 2 -
More than 3 years 3 28.93 12 1149.37
0-1 years 1 6.98 2 -
1-5 years 7 5.00 2 -
1 $0.54 -
4 Mumbai 5-10 years 2 0.00 4 3.72
More than 10 years 33 129.06 13 150.18
2 $0.22 -
Arbitration Cases 7 150.89 - -
Upto 3 years 21 4473.00 4 0.72
5 Hyderabad 3 to 5 years 1 7.32 - -
More than 5 years 1 14.37 1 0.15

Note: The information in respect of Jaipur Kolkata Bhubaneswar Banglore &Goa branches has not been received by us in the Audit Reports of the respective branchauditors.

AUDITORS' OBSERVATION MANAGEMENT'S REPLY
1 Emphasis of Matter
a. We draw attention to Note 9(i) & 21 to the standalone financial statements in-respect of unsecured short term loan facility of INR 8669.90 million (P.Y. 6490.00 million) extended to Neelachal Ispat Nigam Limited (NINL) an associate company. In view of continuous losses for the last three years and in accordance with the analyst’s report NINL requires robust infusion of fund / capital / raising of fresh term loan. 1. Stage-I Environment Clearance from MOEF New Delhi is awaited and Operationalization of Iron Ore Mines of NINL is expected to commence from 2nd Quarter of 2016. By operationalization of Iron Ore Mines NINL will save substantial amount towards purchase of essential raw materials i.e. Iron Ore and hence cost of production shall get reduced.
2. By reduced raw material cost and improved net sales realization through value added products like Steel Billets TMT Re-Bars etc. through stabilization of steel melting shop profitability of NINL is expected to increase.
3. MMTC and NINL are also trying for finalization of re-financing of existing Term Loans of NINL with the help of SBI as a lead banker SBI CAPs as a Financial Advisor and MECON as a Technical Economic Viability (TEV) Consultant in compliance with 5/25 Re-Financing Scheme of RBI as per RBI Circular dated 15.12.2014.
By taking multi-pronged initiatives as elaborated above we are hopeful that NINL will become profitable.
b. We draw attention to Note 7.5 to the standalone financial statements inrespect of an amount of INR 3732.90 million which is due for recovery from Govt of India on account of subsidy against import of edible oil imported into India for the State Governments from August 2012 onwards. An amount of Rs.373.29 crore is due from Govt of India towards subsidies out of which Rs.177 crore is payable to APSCSCL. Our claim is valid and has never been repudiated by Government. Due to lack of budgetary provision this amount is not being settled by Department of Food. Matter was taken up at level of Secretary Department of Commerce with Secretary Food and Public Distribution. A request has also been made to Hon’ble Minister to seek intervention of Hon’ble Finance Minister.
c. We draw attention to Note 41 to the Standalone Financial Statements in respect of Balances under Sundry Debtors / Claims Recoverable / Loans & Advances / Sundry Creditors / Other Liabilities which in many cases have not been confirmed and consequent reconciliation / adjustments if any required upon such confirmation are not ascertainable. Letters are issued to parties seeking confirmation of balances outstanding in the books of MMTC to confirm the balances. In the letter it is also mentioned that in case no communication is received before stipulated date the balance indicated shall be treated as confirmed. However the parties generally do not send specific confirmation. Regional Offices have not reported receipt of adverse communication.
d. The RMS software is not reflecting correct inventory of Sanchi items due to the problems in the software. In view of the various problems pointed out by the Auditors in RMS a decision was taken to stop all retail sales on All India basis and carry out physical verification of Sanchi silverware gold & silver medallions etc. as per the available physical inventory. Accordingly all retail sales were closed wef 20th Feb 2015. Systems Division was also directed to carry out Third Party RMS Audit. The System Auditors pointed out eight problems which were duly rectified and compliance check done by System Auditors. RMS was restarted and the duly physically verified inventory was uploaded in the system. The uploading of the inventory of DRO Main Store is in progress due to large inventory.
e. We draw attention to Note 22 to the Standalone Financial Statements in respect of Non-provision of liability if any in case of non-extension of time / waiver / write off of GR-1 forms. This relates to GRs pending since 199192. Liability if any will be provided as and when any demand is raised and settled by the company. At present the liability if any on this account is unascertainable.
Para vi of Annexure to main Audit Report:- As regards the purchases and sales of goods inventories and stocks that are dealt with by the Company including domestic bullion transactions it needs further strengthening in such a manner so as to avoid delay in updation in ERP system viz-a-viz actual date of transaction and similarly manual generation of invoices could be avoided. Further the internal control mechanism needs to be strengthened besides the areas mentioned hereinbefore in the following areas: Measures have been taken to ensure that no manual invoice / challan are allowed in the bullion transactions. Even MPIPL bullion transactions are being done through ERP (logistic module). However if there is technical failure in the ERP line or any force majure condition which is beyond control Regional Head and RO Finance Head along with concurrence of R.O. Systems Incharge may seek specific approval of Director (PMD) and Director (Finance).
a) Periodic quantity reconciliation of goods traded by the Company (particularly bullion / retail trade) between the ERP and other standalone inventory system (RMS). Delhi Regional Office is maintaining stock records manually. Stocks are reconciled monthly.
b) Risk assessment and risk management requires to be constantly reviewed / strengthened / revamped in the light of changing needs of the business whenever considered necessary as it was noticed that due to certain acts of omissions and commissions company had to make heavy provisions against debtors / recoverable / losses. In the light of changing business scenario and needs MMTC has already introduced and implemented Risk Management Policy in the Financial Year 2014-15. Risk Management within the company has been further strengthened by way of setting up Committees at the level of both Board and below Board level (at Corporate Office and all Regional Offices). The Internal Audit Division role and function has been expanded by introducing concurrent and special audits by professional chartered accountant firms. All business processes are accomplished within the parameters defined in the various Company manuals on Internal Audit Business and Accounting. These manuals can be accessed through our Company website. While transacting any business proposal the concerned business division is required to give an undertaking to Functional Committee of Directors (FMCOD) that ‘all risks have been divulged and nothing is concealed’.
c) Periodic reconciliation in respect of sales and purchases input / output VAT as per financial records vis-a-vis sales purchases input / output VAT as per VAT returns. During the year instructions have been reiterated to reconcile the financial records with VAT and CST returns and Internal Auditors have been advised to check the same from time to time to ensure compliance. During the financial year 2014-15 except from one branch auditor no such comments given by all other auditors.

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