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Modi Rubber Ltd.

BSE: 500890 Sector: Others
NSE: MODIRUBBER ISIN Code: INE832A01018
BSE 00:00 | 14 Oct 88.20 -0.15
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NSE 00:00 | 14 Oct 87.85 0.30
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OPEN 88.45
PREVIOUS CLOSE 88.35
VOLUME 3934
52-Week high 210.90
52-Week low 27.85
P/E 21.20
Mkt Cap.(Rs cr) 221
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 88.45
CLOSE 88.35
VOLUME 3934
52-Week high 210.90
52-Week low 27.85
P/E 21.20
Mkt Cap.(Rs cr) 221
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Modi Rubber Ltd. (MODIRUBBER) - Auditors Report

Company auditors report

To

The Members of Modi Rubber Limited

Report on the Audit of the Standalone Financial Statements Opinion

We have audited the accompanying financial statements of Modi RubberLimited (“the Company”) which comprise the Balance Sheet as at March 312020 the Statement of Profit and Loss (including Other Comprehensive Income) the CashFlow Statement and Statement of Changes in Equity for the year ended and a summary ofsignificant accounting policies and other explanatory information (hereinafter referred toas “the standalone financial statements”).

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 principlesgenerally accepted in India of the state of affairs of the Company as at 31 March 2020and profit (including other comprehensive income) changes in equity and its cash flowsfor the year ended on that date.

Basis for Opinion

We conducted our audit in accordance with the Standards on Auditing(SAs) specified under Section 143(10) of the Act. Our responsibilities under those SAs arefurther described in the Auditor's Responsibilities for the Audit of the FinancialStatements section of our report. We are independent of the Company in accordance with theCode of Ethics issued by the Institute of Chartered Accountants of India together with theethical requirements that are relevant to our audit of the standalone financial statementsunder the provisions of the Act and the Rules thereunder and we have fulfilled our otherethical responsibilities in accordance with these requirements and the Code of Ethics. Webelieve that the audit evidence we have obtained is sufficient and appropriate to providea basis for our opinion on the financial statements.

Emphasis of Matters

Without qualifying our opinion we draw attention to Note 44 of thefinancial statements regarding non provision for diminution in the carrying value ofCompany's long term investment amounting to Rs. 1079.35. lacs and outstanding loansand advances (including interest accrued) of Rs 30.26 lacs in/to its joint venture companyi.e. Modi Marco Aldany Private Limited whose net worth as at the year-end has beensubstantially eroded owing to their strategic nature and projected cashflows. In theopinion of the management the diminution does not represent inherent loss in the valuethereof.

Key Audit Matters

Key audit matters (‘KAM') are those matters that in our professionaljudgment were of most significance in our audit of the standalone financial statements ofthe current period. These matters were addressed in the context of our audit of thestandalone financial statements as a whole and in forming our opinion thereon and we donot provide a separate opinion on these matters.

The key audit matters I How our audit addressed the key audit matter
Evaluation of contingencies & uncertain tax positions
Prior to closure of operations by illegal strikes of the workers in August 2001 and thereafter sanction of Rehabilitation Scheme under the provisions of SICA by BIFR on 21.04.2008 (refer note 41 & 42 of financial statements) the Company operated in multiple jurisdictions and subjected to periodic challenges by local tax authorities income tax authorities labour law authorities & other statutory authorities on a range of various tax & other matters during the normal course of business. These involve significant management judgment to determine the possible outcome of the uncertain tax positions & other contingencies consequently having an impact on related accounting and disclosures in the standalone financial statements. Refer Note 2(m) Note 24(a) & Note 40 to the standalone financial statements. Our audit procedures include the following substantive procedures:
• Obtained understanding of key contingencies & uncertain tax positions and ;
• We along with our internal legal experts -
> Read and analysed select key correspondences external legal opinions / consultations by management for key contingencies & uncertain tax positions;
> Discussed with appropriate senior management and evaluated management's underlying key assumptions in estimating the tax provisions; and
> Assessed managements estimate of the possible outcome of the disputed cases.

Other Information

The Company's management and Board of Directors are responsiblefor the other information. The other information comprises the information included in theCompany's annual report but does not include the standalone financial statements andour auditors' 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 in the audit or otherwise appears to be materially misstated. Ifbased on the work we have performed we conclude that there is a material misstatement ofthis other information; we are required to report that fact. We have nothing to report inthis regard.

Management's Responsibility for the Standalone FinancialStatements

The Company's management and Board of Directors are responsible for thematters stated in Section 134(5) of the Act with respect to the preparation of thesestandalone financial statements that give a true and fair view of the financial positionfinancial performance changes in equity and cash flows of the Company in accordance withthe accounting principles generally accepted in India including the Indian AccountingStandards (Ind AS) specified under Section 133 of the Act. This responsibility alsoincludes maintenance of adequate accounting records in accordance with the provisions ofthe Act for safeguarding of the assets of the Company and for preventing and detectingfrauds and other irregularities; selection and application of appropriate accountingpolicies; making judgments and estimates that are reasonable and prudent; and designimplementation and maintenance of adequate internal financial controls that were operatingeffectively for ensuring the accuracy and completeness of the accounting records relevantto the preparation and presentation of the standalone financial

statements that give a true and fair view and are free from materialmisstatement whether due to fraud or error.

In preparing the financial statements management and Board ofDirectors are responsible for assessing the Company's ability to continue as a goingconcern disclosing as applicable matters related to going concern and using the goingconcern basis of accounting unless management either intends to liquidate the Company orto cease operations or has no realistic alternative but to do so.

Board of Directors is also responsible for overseeing theCompany's financial reporting process.

Auditors' Responsibility for the Audit of the Standalone FinancialStatements

Our objectives are to obtain reasonable assurance about whether thefinancial 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. Reasonableassurance is a high level of assurance but is not a guarantee that an audit conducted inaccordance with SAs will always detect a material misstatement when it exists.Misstatements can arise from fraud or error and are considered material if individuallyor in the aggregate they could reasonably be expected to influence the economic decisionsof 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 control.

• Obtain an understanding of internal control relevant to theaudit in order to design audit procedures that are appropriate in the circumstances. UnderSection 143(3)(i) of the Act if applicable we are also responsible for expressing ouropinion on whether the company has adequate internal financial controls with reference tostandalone financial statements in place 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 thegoing concern basis of accounting and based on the audit evidence obtained whether amaterial uncertainty exists related to events or conditions that may cast significantdoubt on the Company's ability to continue as a going concern. If we conclude that amaterial uncertainty exists we are required to draw attention in our auditor'sreport to the related disclosures in the standalone financial statements or if suchdisclosures are inadequate to modify our opinion. Our conclusions are based on the auditevidence obtained up to the date of our auditors' report. However future events orconditions may cause the Company to 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.

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 auditors' report unless law or regulation precludespublic disclosure about the matter or when in extremely rare circumstances we determinethat a matter should not be communicated in our report because the adverse consequences ofdoing so would reasonably be expected to outweigh the public interest benefits of suchcommunication.

Report on Other Legal and Regulatory Requirements

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 Companies Act 2013 we give in the Annexure “A” astatement on the matters specified in paragraphs 3 and 4 of the Order to the extentapplicable.

As required by Section 143(3) of the Act we report 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 (including othercomprehensive income) the Cash Flow Statement and the Statement of Changes in Equitydealt with by this Report are in agreement with the books of account;

d. in our opinion the aforesaid standalone financial statements complywith the Indian Accounting Standards specified under Section 133 of the Act read withrules 7 of the Companies (Accounts) Rules 2014;

e. The matter described in Emphasis of Matter 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 directorsas on 31 March 2020 taken on record by the Board of Directors none of the directors isdisqualified as on 31 March 2020 from being appointed as a director in terms of Section164(2) of the Act.

g. with respect to the adequacy of the internal financial controls overfinancial reporting of the Company and the operating effectiveness of such controls referto our separate report in “Annexure B”; and;

h. In our opinion and according to the information and explanationsgiven to us the remuneration paid by the Company to its directors during the current yearis in accordance with the provisions of Section 197 of the Act. The remuneration paid toany director is not in excess of the limit laid down under Section 197 of the Act. TheMinistry of Corporate Affairs

has not prescribed other details under Section 197(16) which arerequired to be commented upon by us.

i. with respect to the other matters to be included in theAuditor's Report in accordance with Rule 11 of the Companies (Audit and Auditors)Rules 2014. in our opinion and to the best of our information and according to theexplanations given to us:

i. the Company has disclosed the impact of pending litigation on itsfinancial position in its financial statements- Refer Note 40 to the financialstatements;;

ii. the Company did not have any long term contracts includingderivative contracts for which there were any material foreseeable losses;

iii. there is no amount required to be transferred to the InvestorEducation and Protection Fund by the Company.

FOR SURESH SURANA & ASSOCIATES LLP Chartered Accountants

Firm's Registration No. 121750 W / W-100010

(Rahul Singhal)

PARTNER

Membership No. 096570 UDIN:

Place: New Delhi Dated:

ANNEXURE A TO INDEPENDENT AUDITORS' REPORT (Referred to inparagraph 1 under the heading of “Report on other legal and regulatoryrequirements” of our report of even date)

1. (a) The Company is maintaining proper records showing fullparticulars including quantitative

details and situation of fixed assets.

(b) The Company has regular programme of physical verification of itsfixed assets by which all fixed assets (except the assets which the Company has no access)of respective locations are verified in a phased manner over a period of three years.Accordingly physical verification of fixed Assets was carried out in financial year2019-20. In our opinion this periodicity of physical verification is reasonable havingregard to the size of the Company and the nature of its assets. No material discrepancieswere noticed on such verification.

(c) According to the information and explanations given to us and onthe basis of our examination of the records of the Company the title deeds of immovableproperties are held in the name of the Company except the following cases (Refer Note 3).

S. No. Nature of Property Gross Block (Rs. Lacs) Net Block (Rs. Lacs)
1 Building on leasehold land 27.49 22.68
2 Building on freehold land 18.96 15.53

2. As explained to us the physical verification of inventory has notbeen conducted during the year due to no access to such inventory(Refer note 9).

3. The Company has not granted any loans secured or unsecured tocompanies firms Limited Liability partnerships or other parties covered in the registermaintained under Section 189 of the Act. Accordingly paragraph 3(iii) (a) 3(iii) (b) and3(iii) (c) of the Order are not applicable.

4. The Company has not granted any loans investments guarantees andsecurities during the year. Accordingly paragraph 3(iv) of the order is not applicable.

5. In our opinion and according to the information and explanationsgiven to us the Company has not accepted any deposits during the year within the meaningof Sections 73 to 76 of the Act and the rules framed there under to the extent notified.

6. In our opinion and accounting to the information and explanationsgiven to us the requirement for maintenance of cost records pursuant to the companies(cost records and audit) Rules 2014 specified by the Central Government of India underSection 148 of the Act are not applicable to the Company for the year under audit.

7. (a) According to the information and explanations given to us theCompany is generally regular

in depositing with appropriate authorities undisputed statutory duesincluding provident fund employee's state insurance income tax sales tax servicetax goods and service tax duty of customs duty of excise value added tax cess and anyother statutory dues with the appropriate authorities during the year. According to theinformation and explanations given to us there are no undisputed amounts payable inrespect of such statutory dues which have remained outstanding as at 31 March 2020 for aperiod of more than six months from the

date they became payable except sales tax dues of various stateauthorities amounting of Rs.1030.50 lacs. (Refer Note 24(a))

(b) According to the information and explanations given to us thereare no dues in respect of income tax sales tax service tax goods and service tax dutyof customs duty of excise and value added tax which have not been deposited on account ofany dispute other than the following:

Name of the statute Nature of dues Amount ( Rs. lacs) Period to which the amount relates Forum where dispute is pending
Central Excise Act 1944 Excise Duty 77.40 1977-78 Allahabad High Court
Central Excise Act 1944 Excise Duty 69.11 July 2001 Allahabad High Court
Foreign Trade Development and Regulation Act 1992 Custom Duty 200.00 1995-1996 Additional DGFT Commissioner (A)
Income Tax Act 1961 Income Tax 944.73 2003-2004 Delhi High Court
PGST ACT 1948 Sales Tax 17.53 1992 to 2002 Deputy Excise & Taxation Commissioner Jalandhar
Bihar Sales Tax Act Sales Tax 101.23 2001-2001 Commercial Taxes Tribunal Patna
UP Trade Tax Act Sales Tax 29.20 1977-1978 Allahabad High Court
UP Trade Tax Act Sales Tax 54.16 2000-2001 Allahabad High Court
UP Trade Tax Act Sales Tax 36.84 2001-2002 Allahabad High Court
UP Trade Tax Act Sales Tax 70.05 2001-2002 Allahabad High Court

8. In our opinion and according to the information and explanationgiven to us the Company has not defaulted in repayments of loans and borrowings from anyfinancial institution banks government or debenture holders during the year.

9. The Company did not raise any money by way of initial public offeror further public offer (including debt instruments). The term loan raised by the companywas applied for the purpose for which it was raised.

10. During the course of our examination of the books and records ofthe Company carried out in accordance with the generally accepted auditing practices inIndia and according to the information and explanations given to us no fraud by theCompany or fraud on the Company by its officers or employees has been noticed or reportedduring the year. .

11. The Company has paid/provided for managerial remuneration inaccordance with the requisite approvals mandated by the provisions of section 197 readwith Schedule V of the Act.

12. In our opinion and according to the information and explanationgiven to us the Company is not a nidhi company. Accordingly paragraph 3(xii) of theOrder is not applicable.

13. Based on our audit procedures and as per the information andexplanations given by the management transactions with the related parties are incompliance with sections 177 and 188 of the Act where applicable and details of suchtransactions have been disclosed in the financial statements as required by the applicableaccounting standards.

14. According to the information and explanations given to us and basedon our examination of the records of the Company the Company has not made anypreferential allotment or private placement of shares or fully or partly convertibledebentures during the year.

15. Based on our audit procedures and as per the information andexplanations given by the management the Company has not entered into non-cashtransactions with directors or persons connected with them. Accordingly paragraph 3(xv)of the Order is not applicable.

16. The Company is not required to be registered under section 45-IA ofthe Reserve Bank of India Act 1934.

FOR SURESH SURANA & ASSOCIATES LLP

Chartered Accountants

Firm's Registration No. 121750 W / W-100010

(Rahul Singhal)

PARTNER

Membership No. 096570

UDIN:

Place : New Delhi

Dated :

ANNEXURE B TO INDEPENDENT AUDITORS' REPORT

Report on the Internal Financial Controls under Clause (i) ofSub-section 3 of Section 143 of the Companies Act 2013 (“the Act”)

We have audited the internal financial controls over financialreporting of Modi Rubber Limited (“the Company”) as on 31 March 2020 inconjunction with our audit of the financial statements of the Company for the year endedon 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 offrauds and 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 was 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 reportingincluded 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 auditor's judgment including the assessment of therisks of material misstatement of the financial statements whether due to fraud 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 internalfinancial controls 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 financial statements for external purposes in accordancewith generally accepted accounting principles. A company's internal financial control overfinancial reporting includes those policies and procedures that (1) pertain to themaintenance of records that in reasonable detail accurately and fairly reflect thetransactions and dispositions of the assets of the company; (2) provide reasonableassurance that transactions are recorded as necessary to permit preparation of financialstatements in accordance with generally

accepted accounting principles and that receipts and expenditures ofthe company are being made only in accordance with authorisations of management anddirectors of the company; and (3) provide reasonable assurance regarding prevention ortimely detection of unauthorised acquisition use or disposition of the company's assetsthat could have a material effect on the financial statements.

Inherent Limitations of Internal Financial Controls Over 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 the Company has in all material respects an adequateinternal financial controls system over financial reporting and such internal financialcontrols over financial reporting were operating effectively as at 31 March 2020 based onthe internal control over financial reporting criteria established by the Companyconsidering the essential components of internal control stated in the Guidance Note onAudit of Internal Financial Controls Over Financial Reporting issued by the Institute ofChartered Accountants of India.

FOR SURESH SURANA & ASSOCIATES LLP Chartered Accountants

Firm's Registration No. 121750 W / W-100010

(Rahul Singhal)

PARTNER

Membership No. 096570 UDIN:

Place: New Delhi Dated:

.