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MRO-TEK Realty Ltd.

BSE: 532376 Sector: Consumer
NSE: MRO-TEK ISIN Code: INE398B01018
BSE 00:00 | 29 May 19.30 0.90
(4.89%)
OPEN

19.30

HIGH

19.30

LOW

19.30

NSE 00:00 | 29 May 19.20 0.90
(4.92%)
OPEN

18.30

HIGH

19.20

LOW

18.30

OPEN 19.30
PREVIOUS CLOSE 18.40
VOLUME 153
52-Week high 36.25
52-Week low 14.55
P/E
Mkt Cap.(Rs cr) 36
Buy Price 19.30
Buy Qty 47.00
Sell Price 20.10
Sell Qty 10.00
OPEN 19.30
CLOSE 18.40
VOLUME 153
52-Week high 36.25
52-Week low 14.55
P/E
Mkt Cap.(Rs cr) 36
Buy Price 19.30
Buy Qty 47.00
Sell Price 20.10
Sell Qty 10.00

MRO-TEK Realty Ltd. (MRO-TEK) - Auditors Report

Company auditors report

To the Members of MRO-TEK Realty Limited (formerly known as "MRO-TEKLimited")

Report on the Audit of the Financial Statements

Opinion

We have auditedthe financial statements of MRO-TEK Realty Limited ("theCompany") which comprise the Balance Sheet as at March 31 2019 the Statement ofProfit and Loss (including Other Comprehensive Income) the Statement of Changes in Equityand the Statement of Cash Flows for the year ended on that date and notes to thefinancial statement including a summary of the significant accounting policies and otherexplanatory information (hereinafter referred to as "the financial statements").

In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid financial statements give the information required by theCompanies Act 2013 ("the Act") in the manner so required and give a true andfair view in conformity with the Indian Accounting Standards prescribed under section 133of the Act read with the Companies (Indian Accounting Standards) Rules 2015 as amended("Ind AS") and other accounting principles generally accepted in India of thestate of affairs of the Company as at March 31 2019 the loss and total comprehensiveincome changes in equity and its cash flows for the year ended on that date.

Basis for Opinion

We conducted our audit of the financial statements in accordance with the Standards onAuditing specified under section 143(10) of the Act (SAs). Our responsibilities underthose Standards are further described in the Auditor's Responsibilities for the Audit ofthe Financial Statements section of our report. We are independent of the Company inaccordance with the Code of Ethics issued by the Institute of Chartered Accountants ofIndia (ICAI) together with the independence requirements that are relevant to our audit ofthe financial statements under the provisions of the Act and the Rules made thereunderand we have fulfilled our other ethical responsibilities in accordance with theserequirements and the ICAI's Code of Ethics. We believe that the audit evidence we haveobtained is sufficient and appropriate to provide a basis for our audit opinion on thefinancial statements.

Emphasis of Matters

We draw attention to Note 41 of the Ind AS financial statements regarding preparationof the Ind AS financial statements on going concern basis and the reasons stated therein.The accuracy of assumption of going concern is dependent upon various initiatives taken bythe Company in relation to saving cost optimize revenue management opportunities anddiversification into other streams of business andthe Company's ability to generate cashflows in future to meet its obligations.

Our opinion is not modified in respect of this matter.

Key Audit Matters

Key audit matters are those matters that in our professional judgment were of mostsignificance in our audit of the financial statements of the current period. These matterswere addressed in the context of our audit of the financial statements as a whole and informing our opinion thereon and we do not provide a separate opinion on these matters. Wehave determined the matters described below to be the key audit matters to be communicatedin our report.

S r . No. Key Audit Matters Auditor's Response
1. Adoption of Ind AS 115 – Revenue from Contracts with Customers
Audit Procedures
Accuracy of recognition measurement presentation and disclosures of revenues and other related balances in view of adoption of Ind AS 115 "Revenue from Contracts with Customers" (new revenue accounting standard) We assessed the Company's process to identify the impact of adoption of the new revenue accounting standard.
Our audit approach consisted testing of the design and operating effectiveness of the internal controls as follows:
The application of the new revenue accounting standard involves certain key judgements relating to identificationof performance obligations determination of transaction price of the performance obligations the appropriateness of the basis used to measure revenue recognised over a period. Refer Note No: 2.1 • Evaluated the design of internal controls relating to implementation of the new revenue accounting standard.
• Selected samples of continuing and new contracts and tested the operating effectiveness of the internal control relating to identification of the performance obligations and determination of transaction price. And Comparison of these performance obligations with that identified and recorded by the Company.
• Performed analytical procedures for reasonableness of revenues disclosed by type and service offerings with identified parties.
2. Inventory Management
We refer to financial statements' note no 2.10 accounting policy and disclosure on inventories. Audit Procedures
At the balance sheet date the value of inventory is to Rs 18.92 crores representing 39% of total assets and 517% of total equity. Inventories were considered as key audit matter due to size of the balance and because inventory valuation involves management judgement. According to financial statements' inventories are valued at lower of the lower of cost or net realisable value. Our audit approach consisted testing of the design and operating effectiveness of the internal controls as follows:
• Accessing the compliance of Company's accounting policy over inventory with applicable standards.
• Evaluated the design of internal controls relating to assessing the inventory management and valuation process and practices.
• Selected samples and tested the operating effectiveness of the key control.
• Assessing the analyses and assessment made by management with respect to slow and obsolete stock.
• We have assessed the adequacy of the Company's disclosures related to inventories.

Information Other than the Financial Statements and Auditor's Report Thereon

The Company's Board of Directors is responsible for the preparation of the otherinformation. The other information comprises the information included in the ManagementDiscussion and Analysis Board's Report including Annexures to Board's Report BusinessResponsibility Report Corporate Governance and Shareholder's Information but does notinclude the financial statements and our auditor's report thereon.

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

In connection with our audit of the financial statements our responsibility is to readthe other information and in doing so consider whether the other information ismaterially inconsistent with the financial statements or our knowledge obtained during thecourse of our audit or otherwise appears to be materially misstated.

If based on the work we have performed we conclude that there is a materialmisstatement of this other information we are required to report that fact. We havenothing to report in this regard.

Management's Responsibility for the 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 financial statements that givea true and fair view of the financial position financial performance total comprehensiveincome changes in equity and cash flows of the Company in accordance with the Ind AS andother accounting principles generally accepted in India. This responsibility also includesmaintenance of adequate accounting records in accordance with the provisions of the Actfor safeguarding the assets of the Company and for preventing and detecting frauds andother irregularities; selection and application of appropriate accounting policies; makingjudgments and estimates that are reasonable and prudent; and design implementation andmaintenance of adequate internal financial controls that were operating effectively forensuring the accuracy and completeness of the accounting records relevant to thepreparation and presentation of the financial statements that give a true and fair viewand are free from material misstatement whether due to fraud or error.

In preparing the financial statements management is responsible for assessing theCompany's ability to continue as a going concern disclosing as applicable mattersrelated to going concern and using the going concern basis of accounting unless managementeither intends to liquidate the Company or to cease operations or has no realisticalternative but to do so.

The Board of Directors are responsible for overseeing the Company's financial reportingprocess.

Auditor's Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the financialstatements as a whole are free from material misstatement whether due to fraud or errorand to issue an auditor's report that includes our opinion. Reasonable assurance is a highlevel of assurance but is not a guarantee that an audit conducted in accordance with SAswill always detect a material misstatement when it exists. Misstatements can arise fromfraud or error and are considered material if individually or in the aggregate theycould reasonably be expected to influence the economic decisions of users taken on thebasis of these financial statements.

As part of an audit in accordance with SAs we exercise professional judgment andmaintain professional skepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of thefinancialstatements whether due to fraud or error design and perform audit procedures responsiveto those risks and obtain audit evidence that is sufficient and appropriate to provide abasis for our opinion. The risk of not detecting a material misstatement resulting fromfraud is higher than for one resulting from error as fraud may involve collusionforgery intentional omissions misrepresentations or the override of internal control.

• Obtain an understanding of internal financial controls 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 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 significantdoubt on the cast Company'sability to continue as a going concern. If we conclude that a material uncertaintyexistswe are required to draw attention in our auditor's report to the related disclosures inthefinancialstatements or if such disclosures are inadequate to modify our opinion. Ourconclusions are based on the auditevidence obtained up to the date of our auditor'sreport. However future events or conditions may cause theCompany to cease to continue asa going concern.

• Evaluate the overall presentation structure and content of the financialstatements including thedisclosures and whether the financial statements represent theunderlying transactions and events inamanner that achieves fair presentation.

We communicate with those charged with governance regarding among other matters theplanned scope and timing ofthe audit and significant audit findings includingdeficiencies in internal control that we any significant identify duringour audit.

We also provide those charged with governance with a statement that we have compliedwith relevant ethicalrequirements regarding independence and to communicate with them allrelationships and other matters that mayreasonably be thought to bear on our independenceand where applicable related safeguards. From the matters communicated with those chargedwith governance we determine those matters that were of mostsignificance in the audit ofthe financial statements of the current period and are therefore the key auditmatters.

We describe these matters in our auditor's report unless law or regulation precludespublic disclosure about thematter or when in extremely rare circumstances we determinethat a matter should not be communicated in our reportbecause the adverse consequences ofdoing so would reasonably be expected to outweigh the public interest benefits ofsuchcommunication.

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 in terms of Section 143(11) of the Act we give in "AnnexureA" a statement on the matters specified in paragraphs 3 and 4 of the Order.

2) 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 andbelief 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 appearsfrom our examination of those books.

c) The Balance Sheet the Statement of Profit and Loss including Other ComprehensiveIncome Statement ofChanges in Equity and the Statement of Cash Flow dealt with by thisReport are in agreement with the relevantbooks of account.

d) In our opinion the aforesaid financial statements comply with the Ind AS specifiedunderSection 133 of the Act read with Rule 7 of the Companies (Accounts) Rules 2014.

e) On the basis of the written representations received from the directors as on March31 2019 taken on recordby the Board of Directors none of the directors is disqualifiedas on March 31 2019 from being appointed asa director in terms of Section 164 (2) of theAct.

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 B". Our report expresses anunmodifiedopinion on the adequacy and operating effectiveness of the Company'sinternalfinancial controls over financial reporting.

g) With respect to the other matters to be included in the Auditor's Report inaccordance with the requirementsof section 197(16) of the Act as amended:

In our opinion and to the best of our information and according to the explanationsgiven to us the remuneration paid by the Company to its directors during the year is inaccordance with the provisions of section 197 of the Act.

h) With respect to the other matters to be included in the Auditor's Report inaccordance with Rule 11 of theCompanies (Audit and Auditors) Rules 2014 as amended inour opinion and to the best of our informationand according to the explanations given tous:

i) the Company has disclosed the impact of pending litigations on its financialposition in its financial statements Refer Note 33 to the financial statements.

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

iii) There has been no delay in transferring amounts required to be transferred tothe Investor Educationand Protection Fund by the Company.

For K. S. Aiyar & Co.
Chartered Accountants
ICAI Firm Registration No. 100186W
Ramamohan R Hegde
Place: Bengaluru Partner
Date: 22rd May 2019 Membership No: 23206

ANNEXURE A TO THE INDEPENDENT AUDITOR'S REPORT – 31 MARCH 2019

(Referred to in paragraph 1 under ‘Report on Other Legal and RegulatoryRequirements' section of ourreport to the Members of MRO-TEK Realty Limited of even date)

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

(b) The fixed the year by the Management during the year. In our opinion the frequencyof such verification is reasonable having regards to the size of the Company and thenature of it's fixed assets. No material discrepancies were noticed on such physicalverifications.

(c) According to the information and explanations given to us and on the basis of ourexamination of the records of the Company the title deeds of immovable propertiesincluded in the fixed assets are held in the name of the Company.

(ii) The inventory has been physically verified management during the year. In ouropinion the frequency of such verification is reasonable. In respect of stocks lying withthird parties at the year-end written confirmations have been obtained. The discrepanciesnoticed on verification between the physical stocks and the book records were not materialand have been dealt with in books of account.

(iii) According to the information and explanations given to us the Company has notgranted any loans secured or unsecured to companies firms limited liabilitypartnerships or other parties covered in the register maintained under Section 189 of theCompanies Act 2013 (‘the Act'). Accordingly paragraphs 3 (iii) (a) (b) and (c) ofthe Order are not applicable to the Company.

(iv) In our opinion and according to the information and explanation given to us theCompany has complied with the provisions of Section 185 and 186 of the Act with respectto loans and investments made.

(v) In our opinion and according to the information assets are physicallyverifiedduring and explanations given to us the Company has not accepted deposits as perthe directives issued by the Reserve Bank of India and the provisions of Sections 73 to 76or any other relevant provisions of the Act and the rules framed there under. Accordinglyparagraph 3(v) of the Order is not applicable to the Company.

(vi) The Central Government has not prescribed the maintenance of cost records underSection 148(1) of the Act for any of the products manufactured/services rendered by theCompany.

(vii) (a) According to the information and explanations by the given to us and on thebasis of our examination of the records of the Company amounts deducted/ accrued in thebooks of account in respect of undisputed statutory dues including Provident fundEmployees' State Insurance Income-tax Goods and Service tax duty of customs duty ofexcise value added tax cess and other material statutory dues have generally beenregularly deposited during the year with the appropriate authorities.

(b) According to the information and explanations given to us there are no dues ofIncome-tax Sales tax Service tax GST Duty of customs Duty of excise and Value addedtax as at 31 March 2019 which have not been deposited with the appropriate authorities onaccount of any dispute except as provided below:

Name of the Statute Nature of dues Amount (Rs in Lacs) Period to which amount relates Forum where the dispute is pending
Central Excise Act 1944 Central Excise Duty 46690550/- FY 2010-11 Customs Excise & Service Tax Appellate Tribunal Bengaluru

(viii) In our opinion and according to the information explanations given to us theCompany has not defaulted in repayment of dues to the banker. The Company did not have anyoutstanding debentures and loans from financial institutions and Government during theyear end.

(ix) According to the information and explanations given to us and based on ourexamination of the records of the Company the Company has not raised any moneys by way ofinitial public offer or further public offer (including debt instruments) and has notobtained any term loans during the year. Accordingly paragraph 3(ix) of the Order is notapplicable to the Company. (x) During the course of our examination of the books andrecords of the Company carried out in accordance with the generally accepted auditingpractices in India and according to the information and explanations given to us we haveneither come across any instance of material fraud by the Company or on the Company by itsofficers or employees noticed or reported during the year nor have we been informed ofany such case by the Management.

(xi) In our opinion and according to the information explanations given to us theCompany has paid/ provided managerial remuneration in accordance with the requisiteapprovals mandated by the provisions of section 197 read with Schedule V to the Act.

(xii) In our opinion and according to the information and explanations given to us theCompany is not a Nidhi company and the Nidhi Rules 2014 are not applicable to it.Accordingly paragraph 3(xii) of the Order is not applicable to the Company.

(xiii) According to the information and explanations given to us and based on ourexamination of the records of the Company 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 standalone financial statements as required byapplicable Ind AS.

(xiv) According to the information and explanations given and to us and based on ourexamination of the records of the Company the Company has not made any preferentialallotment or private placement of shares or fully or partly convertible debentures duringthe year. Accordingly paragraph 3(xiv) of the Order is not applicable to the Company.

(xv) According to the information and explanations given to us and based on ourexamination of the records of the Company the Company has not entered into any non-cashtransactions with directors or persons connected with them. Accordingly paragraph 3(xv)of the Order is not applicable to the Company.

(xvi) In our opinion and according to the information and explanations given to us theCompany is not required to be registered under Section 45-IA of the Reserve Bank of IndiaAct 1934. Accordingly paragraph 3(xvi) of the Order is not applicable to the Company.

For K. S. Aiyar & Co.
Chartered Accountants
ICAI Firm Registration No. 100186W
and Ramamohan R Hegde
Place: Bengaluru Partner
Date: 22rd May 2019 Membership No: 23206

ANNEXURE B TO THE INDEPENDENT AUDITOR'S REPORT – 31 MARCH 2019

ANNEXURE "B" TO THE INDEPENDENT AUDITOR'S REPORT

(Referred to in paragraph 2(f) under ‘Report on Other Legal and RegulatoryRequirements' section of our report to the Members of MRO-TEK Realty Limited of even date)

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

We have audited the internal financial controls over financial reporting of MRO-TEKREALTY LIMITED ("the Company") as of March 31 2019 in conjunction with ouraudit of the financial statements of the Company for the year ended on that date.Management's Responsibility for Internal Financial Controls The Board of Directors of theCompany is responsible for establishing and maintaining internal financial controls basedon the 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. These responsibilities include the design implementationand maintenance of adequate internal financial controls that were operating effectivelyfor ensuring the orderly and efficient conduct of its business including adherence torespective company's policies the safeguarding of its assets the prevention anddetection of frauds and errors the accuracy and completeness of the accounting recordsand the timely preparation of reliable financial information as required under theCompanies Act 2013.

Auditor's Responsibility

Our responsibility is to express an opinion on the internal financial controls overfinancial reporting of the Company based on our audit. We conducted our audit inaccordance with the Guidance Note on Audit of Internal Financial Controls Over FinancialReporting (the "Guidance Note") issued by the Institute of Chartered Accountantsof India and the Standards on Auditing prescribed under Section 143(10) of the CompaniesAct 2013 to the extent applicable to an audit of internal financial controls. ThoseStandards and the Guidance Note require that we comply with ethical requirements and planand perform the audit to obtain reasonable assurance about whether adequate internalfinancial controls over financial reporting was established and maintained and if suchcontrols 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 judgement 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 internal financial controls system overfinancial reporting of the Company.

Meaning of Internal Financial Controls Over Financial Reporting

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

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.

Opinion

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 March 31 2019 based on the internal controlover financial reporting criteria established by the Company considering the essentialcomponents of internal control stated in the Guidance Note on Audit of Internal FinancialControls Over Financial Reporting issued by the Institute of Chartered Accountants ofIndia.

For K. S. Aiyar & Co.
Chartered Accountants
ICAI Firm Registration No. 100186W
Ramamohan R Hegde
Place: Bengaluru Partner
Date: 22rd May 2019 Membership No: 23206