To The Members of The Motor & General Finance Limited Report on the Audit of theStandalone Financial Statements Opinion
We have audited the accompanying standalone financial statements of The Motor &General Finance Limited ("the Company") which comprise the Balance Sheet as at31st March 2020 and the Statement of Profit and Loss (including OtherComprehensive Income) the Cash Flow Statement the Statement of Changes in Equity for theyear then ended notes to the financial statements including a summary of significantaccounting policies and other explanatory information (hereinafter referred to as thestandalone financial statements).
In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid standalone financial statements give the information requiredby the Companies Act 2013 ("the Act") in the manner so required and give a trueand fair view in conformity with the Indian Accounting Standards prescribed under section133 of the Act read with the Companies (Indian Accounting Standards) Rules 2015 asamended ("Ind AS") and other accounting principles generally accepted in Indiaof the state of affairs of the Company as at 31st March 2020 and its losstotal comprehensive income its cash flows and changes in equity for the year ended onthat date.
Basis for Opinion
We conducted our audit of the standalone financial statements in accordance with theStandards on Auditing (SAs) specified under section 143(10) of the Act. Ourresponsibilities under those Standards are further described in the Auditor'sResponsibility for the Audit of the Standalone Financial Statements section of our report.We are independent of the Company in accordance with the Code of Ethics issued by theInstitute of Chartered Accountants of India (ICAI) together with the ethical requirementsthat are relevant to our audit of the standalone financial statements under the provisionsof the Act and the Rules made there under and we have fulfilled our other ethicalresponsibilities in accordance with these requirements and the ICAI's Code of Ethics. Webelieve that the audit evidence obtained by us is sufficient and appropriate to provide abasis for our audit opinion on the standalone financial statements.
Key Audit Matters
Key audit matters are those matters that in our professional judgment were of mostsignificance in our audit of the standalone financial statements of the current period.These matters were addressed in the context of our audit of the standalone financialstatements as a whole and in forming our opinion thereon and we do not provide aseparate opinion on these matters. We have determined the matters described below to bethe key audit matters to be communicated in our report.
|S.No Key Audit Matters ||Auditor's Response |
|1. Recoverability of carrying amounts of investments in associates and other entities ||Audit Procedure Applied |
|Refer to note no. 5 to the standalone financial statements. The Company has investments in Associates and other entities which are listed on Stock Exchange in India. These investments are valued at fair value based on market information. Therefore the valuation of the investments has a significant impact on the financial results of Company. Management performed assessment at the end of each reporting period whether there is any indication that investments in associates and other entities may be impaired. Should indication of impairment exist an impairment assessment will be performed accordingly. The recoverable amounts of investments in associates are assessed by current market price of the listed entity on stock exchange. Management has concluded that there is a reversal of impairment in respect of investments in associates as at 31" March 2020. This area is significant to our audit because of the significance of the carrying amounts of the investment and results of impairment assessment and the significant management judgement involved in determining the value of investment. ||We obtained an understanding on the Company's policies and procedures to identify impairment indicators on investments in associates and other entities and performed the following procedures in relation to management's impairment assessment: |
| || evaluated the internal sources and external sources of information to identify impairment indications if any; |
| || Recalculation of amounts recognised as impairment on the basis of latest available information from stock exchanges |
| || Testing and assessment of the completeness appropriateness and adequacy of the disclosure in Company's financial statements with regards to the measurement of investment |
|2. Company's Investment in Investment Property ||Audit Procedure Applied |
|Investment Properties is significant to our audit due to their magnitude and their value. Refer to note no. 4 to the standalone financial statements. ||We obtained an understanding on the Company's policies and procedures to identify investments of company in investment properties. |
| || verified accurate and complete initial recognition of the investment property portfolio by agreeing the recorded amounts to external documents such as purchase agreements and transfer deeds |
| || Verification of lease deed executed for lease out of properties for earning rental income |
| || Verified whether the transactions were recorded as required by the applicable accounting principles. |
| || Assessed the appropriateness of the disclosures relating to the assumptions as we consider them likely to be important to users of the financial statements Testing and assessment of the completeness appropriateness and adequacy of the disclosure in Company's financial statements with regards to the measurement of investment |
Information Other than the Financial Statements and Auditor's Report Thereon
The Company's Board of Directors are responsible for the other information. The otherinformation comprises the Director's Report Management Discussion and Analysis andCorporate Governance Report but does not include the standalone financial statements andour auditor's report thereon.
The Director's Report Management Discussion and Analysis and Corporate GovernanceReport are expected to be made available to us after the date of this auditor's report.
Our opinion on the standalone financial statements does not cover the other informationand we will not express any form of assurance conclusion thereon.
In connection with our audit of the standalone financial statements our responsibilityis to read the other information identified above when it becomes available and indoing so consider whether the other information is materially inconsistent with thestandalone financial statements or our knowledge obtained during the course of our auditor otherwise appears to be materially misstated.
When we read the Director's Report Management Discussion and Analysis and CorporateGovernance Report if we conclude that there is a material misstatement therein we arerequired to communicate the matter to those charged with governance as required under SA720 'The Auditor's responsibilities Relating to Other Information'.
Management's Responsibility for the Standalone Financial Statements
The Company's Board of Directors is responsible for the matters stated in section134(5) of the Act with respect to the preparation of these standalone financial statementsthat give a true and fair view of the financial position financial performance includingother comprehensive income cash flows and changes in equity of the Company in accordancewith the Ind AS and other accounting principles generally accepted in India. Thisresponsibility also includes maintenance of adequate accounting records in accordance withthe provisions of the Act for safeguarding the assets of the Company and for preventingand detecting frauds and other irregularities; selection and application of appropriateaccounting policies; making judgments and estimates that are reasonable and prudent; anddesign implementation and maintenance of adequate internal financial controls that wereoperating effectively for ensuring the accuracy and completeness of the accountingrecords relevant to the preparation and presentation of the standalone financialstatements that give a true and fair view and are free from material misstatement whetherdue to fraud or error.
In preparing the standalone financial statements management is responsible forassessing the Company's ability to continue as a going concern disclosing as applicablematters related to going concern and using the going concern basis of accounting unlessmanagement either intends to liquidate the Company or to cease operations or has norealistic alternative but to do so.
The Board of Directors are also responsible for overseeing the Company's financialreporting process.
Auditor's Responsibility for the Audit of the Standalone Financial Statements
Our objectives are to obtain reasonable assurance about whether the standalonefinancial statements as a whole are free from material misstatement whether due to fraudor error and to issue an auditor's report that includes our opinion. Reasonable assuranceis a high level of assurance but is not a guarantee that an audit conducted in accordancewith SAs will always detect a material misstatement when it exists. Misstatements canarise from fraud or error and are considered material if individually or in theaggregate they could reasonably be expected to influence the economic decisions of userstaken on the basis of these standalone financial statements.
As part of an audit in accordance with SAs we exercise professional judgment andmaintain professional scepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of the standalonefinancial statements whether due to fraud or error design and perform audit proceduresresponsive to those risks and obtain audit evidence that is sufficient and appropriate toprovide a basis for our opinion. The risk of not detecting a material misstatementresulting from fraud is higher than for one resulting from error as fraud may involvecollusion forgery intentional omissions misrepresentations or the override of internalcontrol.
Obtain an understanding of internal financial control relevant to the audit inorder to design audit procedures that are appropriate in the circumstances. Under section143(3)(i) of the Act we are also responsible for expressing our opinion on whether theCompany has adequate internal financial controls system in place and the operatingeffectiveness of such controls.
Evaluate the appropriateness of accounting policies used and the reasonablenessof accounting estimates and related disclosures made by the management.
Conclude on the appropriateness of management's use of the going concern basisof accounting and based on the audit evidence obtained whether a material uncertaintyexists related to events or conditions that may cast significant doubt on the Company'sability to continue as a going concern. If we conclude that a material uncertainty existswe are required to draw attention in our auditor's report to the related disclosures inthe standalone financial statements or if such disclosures are inadequate to modify ouropinion. Our conclusions are based on the audit evidence obtained up to the date of ourauditor's report. However future events or conditions may cause the Company to cease tocontinue as a going concern.
Evaluate the overall presentation structure and content of the standalonefinancial statements including the disclosures and whether the standalone financialstatements represent the underlying transactions and events in a manner that achieves fairpresentation.
We communicate with those charged with governance regarding among other matters theplanned scope and timing of the audit and significant audit findings including anysignificant deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have compliedwith relevant ethical requirements regarding independence and to communicate with themall relationships and other matters that may reasonably be thought to bear on ourindependence and where applicable related safeguards.
From the matters communicated with those charged with governance we determine thosematters that were of most significance in the audit of the standalone financial statementsof the current period and are therefore the key audit matters. We describe these mattersin our auditor's report unless law or regulation precludes public disclosure about thematter or when in extremely rare circumstances we determine that a matter should not becommunicated in our report because the adverse consequences of doing so would reasonablybe expected to outweigh the public interest benefits of such communication.
Report on Other Legal and Regulatory Requirements
1. As required by Section 143(3) of the Act based on our audit we report that:
a. We have sought and obtained all the information and explanations which to the bestof our knowledge and belief were necessary for the purposes of our audit.
b. In our opinion proper books of account as required by law have been kept by theCompany so far as it appears from our examination of those books.
c. The Balance Sheet the Statement of Profit and Loss (including Other ComprehensiveIncome) the Cash Flow Statement and Statement of Changes in Equity dealt with by thisReport are in agreement with the relevant books of account.
d. In our opinion the aforesaid standalone financial statements comply with the IndianAccounting Standards (Ind AS) prescribed under Section 133 of the Act read with Companies(Indian Accounting Standards) Rules 2015 as amended.
e. On the basis of the written representations received from the directors as on 31stMarch 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.
f. With respect to the adequacy of the internal financial controls over financialreporting of the Company and the operating effectiveness of such controls refer to ourseparate report in Annexure A. Our report expresses an unmodified opinion on the adequacyand operating effectiveness of the Company's internal financial controls over financialreporting
g. In our opinion the managerial remuneration for the year ended March 31 2020 hasbeen paid / provided by the Company to its directors in accordance with the provisions ofsection 197 read with Schedule V to the Act;
h. With respect to the other matters to be included in the Auditor's Report inaccordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014 as amended inour opinion and to the best of our information and according to the explanations given tous:
I. The Company has disclosed the impact of pending litigations on its financialposition in its standalone financial statements -Refer Note No- 30 of standalone financialstatements.
II. The Company did not have any long-term contracts including derivative contracts forwhich there were any material foreseeable losses during the year ended 31* March 2020.
III. There has been no delay in transferring amounts required to be transferred tothe Investor Education and Protection Fund by the Company during the year ended 31"March 2020.
2. As required by the Companies (Auditor's Report) Order 2016 issued by the CentralGovernment in terms of sub-section (11) of Section 143 of the Act("the Order")and on the basis of such checks of the books and records of the Company as we consideredappropriate and according to the information and explanations given to us we give inAnnexure B a statement on the matters specified in paragraphs 3 and 4 of the Order to theextent applicable..
ANNEXURE "A" TO THE INDEPENDENT AUDITOR'S REPORT
Referred to in paragraph 1(f) of the Independent Auditors' Report of even date to themembers of The Motor & General Finance Limited on the standalone financial statementsfor the year ended 31st March 2020
Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section143 of the Act
We have audited the internal financial controls over financial reporting of The Motor& General Finance Limited ("the Company") as of 31st March 2020in conjunction with our audit of the standalone financial statements of the Company forthe year ended on that date.
Management's Responsibility for Internal Financial Controls
The Board of Directors of the Company is responsible for establishing and maintaininginternal financial controls based on the internal control over financial reportingcriteria established by the Company considering the essential components of internalcontrol stated in the Guidance Note on Audit of Internal Financial Controls over FinancialReporting issued by the Institute of Chartered Accountants of India (ICAI). Theseresponsibilities include the design implementation and maintenance of adequate internalfinancial controls that were operating effectively for ensuring the orderly and efficientconduct of its business including adherence to company's policies the safeguarding ofits assets the prevention and detection of frauds and errors the accuracy andcompleteness of the accounting records and the timely preparation of reliable financialinformation as required under the Act.
Our responsibility is to express an opinion on the Company's internal financialcontrols over financial reporting based on our audit. We conducted our audit in accordancewith the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting(the "Guidance Note") and the Standards on Auditing deemed to be prescribedunder section 143(10) of the Act to the extent applicable to an audit of internalfinancial controls. Those Standards and the Guidance Note require that we comply withethical requirements and plan and perform the audit to obtain reasonable assurance aboutwhether adequate internal financial controls over financial reporting was established andmaintained and if such controls operated effectively in all material respects.
Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal financial controls system over financial reporting and their operatingeffectiveness. Our audit of internal financial controls over financial reporting includedobtaining an understanding of internal financial controls over financial reportingassessing the risk that a material weakness exists and testing and evaluating the designand operating effectiveness of internal control based on the assessed risk. The proceduresselected depend on the auditor's judgment including the assessment of the risks ofmaterial misstatement of the financial statements whether due to fraud or error.
We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the Company's internal financial controls systemover financial reporting.
Meaning of Internal Financial Controls over Financial Reporting
A company's internal financial control over financial reporting is a process designedto provide reasonable assurance regarding the reliability of financial reporting and thepreparation of financial statements for external purposes in accordance with generallyaccepted accounting principles. A company's internal financial control over financialreporting includes those policies and procedures that (1) pertain to the maintenance ofrecords that in reasonable detail accurately and fairly reflect the transactions anddispositions of the assets of the company; (2) provide reasonable assurance thattransactions are recorded as necessary to permit preparation of financial statements inaccordance with generally accepted accounting principles and that receipts andexpenditures of the company are being made only in accordance with authorizations ofmanagement and directors of the company; and (3) provide reasonable assurance regardingprevention or timely detection of unauthorized acquisition use or disposition of thecompany's assets that could have a material effect on the financial statements.
Inherent Limitations of Internal Financial Controls over Financial Reporting
Because of the inherent limitations of internal financial controls over financialreporting including the possibility of collusion or improper management override ofcontrols material misstatements due to error or fraud may occur and not be detected.Also projections of any evaluation of the internal financial controls over financialreporting to future periods are subject to the risk that the internal financial controlover financial reporting may become inadequate because of changes in conditions or thatthe degree of compliance with the policies or procedures may deteriorate.
In our opinion to the best of our information and according to the explanations givento us the Company has in all material respects an adequate internal financial controlssystem over financial reporting and such internal financial controls over financialreporting were operating effectively as at 31st March 2020 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.
ANNEXURE "B" TO THE INDEPENDENT AUDITOR'S REPORT
Referred to in paragraph 2 of the Independent Auditors' Report of even date to themembers of The Motor & General Finance
Limited on the Standalone Financial Statements as of and for the year ended 31stMarch 2020
i. (a) The Company is maintaining proper records showing full particulars includingquantitative details and situation of fixed assets.
(b) The fixed assets of the Company have been physically verified by the Managementduring the year. The discrepancies noticed on such verification were not material and havebeen properly dealt with in the books of account. In our opinion the frequency ofverification is reasonable.
(c) The title deeds of immovable properties as disclosed in Note 3 & 4 on fixedassets to the financial statements are held in the name of the Company.
ii. The physical verification of inventory comprising of stock in trade of commercialproject has been conducted at reasonable intervals by the Management during the year.There were no discrepancies noticed on physical verification of inventory as compared tobook records.
iii. The Company has not granted any loans secured or unsecured to companies firmsLimited Liability Partnership or other parties covered in the register maintained underSection 189 of the Act. Therefore the provisions of Clause 3(iii) (iii)a (iii)b and(iii)c of the said Order are not applicable to the Company.
iv. The Company has not granted any loans or made any investments or provided anyguarantees or security to the parties covered under Section 185 and 186. Therefore theprovisions of Clause 3(iv) of the said Order are not applicable to the Company.
v. In our opinion and according to the information and explanations given to us theCompany has not accepted any deposits during the year and had no unclaimed deposits at thebeginning of the year within the meaning of Sections 73 to 76 of the Act and the Companies(Acceptance of Deposits) Rules 2014 (as amended). Accordingly the provisions of clause3(v) of the Order are not applicable.
vi. Pursuant to the rules made by the Central Government of India the Company isrequired to maintain cost records as specified under Section 148(1) of the Act in respectof its products/ Services. We have broadly reviewed the same and are of the opinion thatprima facie the prescribed accounts and records have been made and maintained. We havenot however made a detailed examination of the records with a view to determine whetherthey are accurate or complete.
vii. (a) According to the records of the Company and information and explanations givento us and the records of the Company examined by us the Company has been regular indepositing the undisputed statutory dues including provident fund employees stateinsurance income tax Investor education and protection fund goods and service taxservice tax and other material statutory dues applicable to it with the appropriateauthorities.
According to the information and explanations given to us and the records of theCompany examined by us the particulars of dues of employees state insurance Income Taxgoods and service tax service tax as at 31st March 2020 which have not beendeposited on account of a dispute are as follows:
|Name of the Statute ||Nature of the Due ||(Rs) ||Period to which the amount relates ||Forum where dispute is pending |
|Employees State Insurance Act ||Employees State Insurance ||7475606/- ||1989-90 to 2012-2013 ||Civil Court Delhi |
|NDMC Act ||Property Tax ||16215990/- ||1999-00 to 2016-17 ||Hon'ble High Court Delhi |
|DMC Act ||Property Tax ||6278831/- ||2004-05 to 2009-10 ||Hon'ble Municipal Taxation Tribunal |
viii. According to the records of the Company examined by us and the information andexplanation given to us the Company has not defaulted in repayment of loans or borrowingsto any financial institution or bank or Government. The company has not issued anydebentures during the year.
ix. The Company has not raised any moneys by way of initial public offer furtherpublic offer (including debt instruments). Term loans have been applied for the purposesfor which they were obtained.
x. During the course of our examination of the books and records of the Companycarried out in accordance with the generally accepted auditing practices in India andaccording to the information and explanations given to us we have neither come across anyinstance of material fraud by the Company or on the Company by its officers or employeesnoticed or reported during the year nor have we been informed of any such case by theManagement.
xi. The Company has paid/ provided for managerial remuneration in accordance with therequisite approvals mandated by the provisions of Section 197 read with Schedule V to theAct.
xii. As the Company is not a Nidhi Company and the Nidhi Rules 2014 are not applicableto it the provisions of Clause 3(xii) of the Order are not applicable to the Company.
xiii. The Company has entered into transactions with related parties in compliance withthe provisions of Sections 177 and 188 of the Act. The details of such related partytransactions have been disclosed in the financial statements as required under IndianAccounting Standard (Ind AS) 24 Related Party Disclosures specified under Section 133 ofthe Act read with Rule 7 of the Companies (Accounts) Rules 2014.
xiv. The Company has not made any preferential allotment or private placement of sharesor fully or partly convertible debentures during the year under review. Accordingly theprovisions of Clause 3(xiv) of the Order are not applicable to the Company.
xv. The Company has not entered into any non-cash transactions with its directors orpersons connected with him. Accordingly the provisions of Clause 3(xv) of the Order arenot applicable to the Company.
xvi. The Company is not required to be registered under Section 45-IA of the ReserveBank of India Act 1934. Accordingly the provisions of Clause 3(xvi) of the Order are notapplicable to the Company.