To The Members of MSR India Limited Report on the Audit of the Standalone FinancialStatements
We have audited the standalone financial statements of MSR INDIA LIMITED ('theCompany') which comprise the Balance Sheet as at 31st March 2019 the Statement ofProfit and Loss (including other comprehensive Income) the Statement of Changes in Equityand Statement of Cash Flows for the year then ended and notes to the financial statementsincluding a summary of the significant accounting policies and other explanatoryinformation.
In our opinion and to the best of our information and according to the explanationsgiven to us except for the effects of the matter described in the Basis for QualifiedOpinion paragraph below read with points mentioned in Emphasis of Matter paragraph theaforesaid standalone financial statements give the information required by the CompaniesAct 2013 (the Act) in the manner so required and give a true and fair view inconformity with the Indian Accounting Standards prescribed under the Section 133 of theAct read with Companies (Indian Accounting Standards) Rules 2015 as amended (IndAS) and other accounting principles generally accepted in India of the state ofaffairs (financial position) of the Company as at March 312019 its profit (includingother comprehensive Income) its cash flows and the changes in equity for the year endedon that date.
Basis for Qualified Opinion:
1. With reference to Note 4 regarding Plant & Machinery situated at one factoryunit of the Company is generally operating at lower capacity. In the absence of futurecash flow projection and information about the value in use we are unable to comment uponits impairment provision if any as perAccounting Standard 28 Impairment of Assets.
2. With reference to Note 10 regarding Trade Receivables of र 19.96 crore as at 31stMarch 2019. Hence in the absence of third-party confirmation reconciliation if any andother supportive audit evide00nce we are unable to comment upon such balances.
3. With reference to Note 12 regarding Capital Advances of Rs.64.73 lacs as at 31stMarch2019 given to various parties the Company has not made any provision during the currentyear. The amount represents balances outstanding for more than five years in respect ofprojects of the Company which have not taken off. In the absence of third partyconfirmation reconciliation if any and other supportive audit evidence we are unable tocomment upon its recoverability in cash or kind if any.
4. With reference to Note 15 regarding borrowings from Banks and NBFCs of Rs.5.15 croreas at 31stMarch 2019.
5. With reference to Note 18 regarding Trade Payables of र 5.66 crore as at 31stMarch 2019 in the absence of third-party confirmation reconciliation if any and othersupportive audit evidence we are unable to comment upon such balances.
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 o 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.
We have determined the matters described to be the key audit matters to be communicatedin our audit report:
|S.No. ||Key Audit Matters ||Substantive Audit Procedures |
|1. ||Refer to items mentioned under Basis for Qualified Opinion paragraph above. ||Our audit procedures include substantive audit procedures pertaining to the matters referred therein. |
Management's Responsibility for the Financial Statements
The Company's board of directors are responsible for the matters stated in section 134(5) of the Act with respect to the preparation of these financial statements that give atrue and fair view of the financial position financial performance and cash flows of theCompany in accordance with the accounting principles generally accepted in Indiaincluding the accounting standards specified under section 133 of the Act.
This responsibility also includes maintenance of adequate accounting records inaccordance with the provisions of the Act for safeguarding of the assets of the Companyand for preventing and detecting frauds and other irregularities; selection andapplication of appropriate accounting policies; making judgments and estimates that arereasonable and prudent; and design implementation and maintenance of adequate internalfinancial controls that were operating effectively for ensuring the accuracy andcompleteness of the accounting records relevant to the preparation and presentation ofthe financial statement that give a true and fair view and are free from materialmisstatement 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 is also responsible for overseeing the Company's financialreporting process.
Our objective is to obtain reasonable assurance as to whether the financial statementsas a whole are free from material misstatement whether due to fraud or error and to issueauditor's report that includes our opinion. Reasonable assurance is a high level ofassurance but is not a guarantee that an audit conducted in accordance with the SAs willalways detect a material misstatement when it exists. Misstatements can arise from fraudor error and are considered material if individually or in aggregate they couldreasonably be expected to influence the economic decision of users taken on the basis ofthese financial statements.
As a part of an audit in accordance with the SAs we exercise professional judgment andprofessional skepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of the financialstatements 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 one resulting from error as fraud may involve collusion forgeryintentional 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 Companies Act 2013 we are also responsible for expressing our opinionon whether the Company has adequate internal financial control system in place and theoperating effectiveness of such controls.
Evaluate the appropriateness of the accounting policies used and thereasonableness of accounting estimates and related disclosures made by the management.
Conclude on the appropriateness of the management's use of the going concernbasis of accounting and based on the audit evidence obtained whether a materialuncertainty exists related to events or conditions that may cast significant doubt on theCompany's ability to continue as a going concern. If we conclude that a materialuncertainty exists we are required to draw attention in our auditor's report to therelated disclosures in the standalone financial statements or if such disclosures areinadequate to modify our opinion. Our conclusions are based on audit evidence obtainedupto the date of our auditor's report. However future events or conditions may cause theCompany to cease to continue 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 the matters theplanned scope and timing of 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.
Emphasis of Matter:
1. ) The management has stated that during the year the company is mainlymanufacturing copper water bottles. We conducted our audit only on the copper water bottleproject and the management has stated that during the year a new plant has been set up atIDA Jinnaram Medak District in which commercial production has been started viz. CopperBus Bars Rods and other allied products. Therefore we relied on the management andconducted our audit on test basis and obtained conclusions.
2. ) The Company has not adopted Indian Accounting Standards (Ind AS) for the year thenended 2019 and has followed accounting in old method of Accounting Standards and hencethe company is not in compliance with the requirements of Section 133 of the CompaniesAct 2013.
Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditor's Report) Order 2016 ('the Order') issued bythe Central Government of India in terms of sub-section (11) of Section 143 of the Act wegive in the Annexure-B statement on the matters specified in the paragraph 3 and 4 of theOrder to the extent 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.
c) 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
d) Except for the effects of the matters described in the Basis of Qualified Opinionparagraph and read with points mentioned in Emphasis of Matter paragraph in our opinionthe aforesaid Standalone Financial Statements comply with the Accounting Standardsspecified under Section 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 31stMarch 2019 taken on record by the Board of Directors none of the Directors isdisqualified as on 31st March 2019 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'.
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.
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 Education and Protection Fund by the Company.
Vijay Sai Kumar & Associates
B. Vijay Sai Kumar
ANNEXURE A TO THE INDEPENDENT AUDITOR'S REPORT
(Referred to in paragraph 2 under 'Report on other legal and regulatory requirements'section of our report to the members of MSR INDIA LIMITED of even date)
(i) a. The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets.
b. The Company has a regular programme of verification to cover all the items of fixedassets in a phased manner over a period of three years which in our opinion isreasonable having regard to the size of the Company and the nature of its assets. Pursuantto the program certain fixed assets were physically verified by the management during theyear. According to the information and explanations given to us no material discrepancieswere noticed on such verification.
c. According to the information and explanations given to us the records examined byus and based on the examination of the conveyance deeds provided to us we report thatthe title deeds comprising all the immovable properties of land and buildings which arefreehold are held in the name of the Company as at the balance sheet date.
d. In respect of immovable properties of land and building that have been taken onlease and disclosed as fixed assets in the financial statements the lease agreements arein the name of the Company.
(ii) The inventory has been physically verified by the management during the year. Inour opinion the frequency of such verification is reasonable. According to theinformation and explanations given to us and as examined by us no material discrepancieswere noticed on such verification.
(iii) According to information and explanation given to us the company has not grantedany loan secured or unsecured to companies firms limited liability partnerships orother parties covered in the register required under section 189 of the Companies Act2013. Accordingly paragraph 3 (iii) of the order is not applicable.
(iv) In our opinion and according to information and explanation given to us thecompany complied with the provisions of Section 185 and 186 of the Act with respect toloans and investments made.
(v) In our opinion and according to the information and explanations given to us thecompany has complied with the directives of the Reserve Bank of India and the provisionsof Sections 73 to 76 or any other relevant provisions of the Act and the rules framedthere under. According to the information and explanations given to us no Order has beenpassed by the Company Law Board or National Company Law Tribunal or Reserve Bank of Indiaor any Court or any other Tribunal on the company in respect of the aforesaid deposits.
(vi) We have broadly reviewed the books of account maintained by the Company pursuantto the rules made by the Central Government for the maintenance of cost records undersection 148 of the Act and are of the opinion that prima facie the prescribed accountsand records have been made and maintained. However we have not carried out a detailedexamination of the same.
(vii) a. According to the information and explanations given to us and on the basis ofour examination of the records of the Company amounts deducted/ accrued in the books ofaccount in respect of undisputed statutory dues including provident fund employees' stateinsurance income-tax sales- tax service tax goods and service tax duty of customsduty of excise value added tax cess and other material statutory dues have beengenerally regularly deposited during the year by the company with the appropriateauthorities.
b. According to the information and explanations given to us no undisputed amountspayable in respect of provident fund employees' state insurance income-tax sales- taxservice tax goods and service tax duty of customs duty of excise value added tax cessand other material statutory dues were in arrears as at March 312019 for a period of morethan six months from the date they became payable
(viii) According to the information and explanation given to us and records examined byus the Company has not defaulted in repayment of dues to banks financial institutionsand government.
(ix) The term loans taken during the year have been applied for the purposes for whichthose are raised. The Company has not raised any money by way of initial public offer orfurther public offer (including debt instruments).
(x) To the best of our knowledge and according to the information and explanationsgiven to us no fraud by the Company or no material fraud on the Company by its officersor employees has been noticed or reported during the year.
(xi) According to the information and explanations given to us and based on ourexamination of the records of the company the Company has paid/provided managerialremuneration in accordance with the requisite approvals mandated by the provisions ofSection 197 read with Schedule V of the Act.
(xii) The Company is not a Nidhi Company and accordingly paragraph 3 (xii) of theorder 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 section 177 and 188 of the Act. Where applicable the details of suchtransactions have been disclosed in the financial statements as required by the applicableaccounting standards.
(xiv) According to the information and explanations given 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.
(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 non-cashtransactions with directors or persons connected with them. Accordingly paragraph 3(xv)of the order is not applicable.
(xvi) According to the information and explanations given to us and based on ourexamination of the records of the company the company is not required to be registeredunder section 45-IA of the Reserve Bank of India Act 1934.
Vijay Sai Kumar & Associates
B. Vijay Sai Kumar
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 MSR INDIA 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 MSR INDIALIMITED as at March 312019 in conjunction with our audit of the financial statements ofthe Company for the 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. Theseresponsibilities include the design implementation and maintenance of adequate internalfinancial controls that were operating effectively for ensuring the orderly and efficientconduct of its business 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.
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.
Those standards and the guidance note require that we comply with ethical requirementsand plan and perform the audit to obtain reasonable assurance about whether adequateinternal financial controls over financial reporting were established and maintained andif 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 in 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 control 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
(i) Pertain to the maintenance of records that in reasonable detail accurately andfairly reflect the transactions and dispositions of the assets of the company;
(ii) Provide reasonable assurance that transactions are recorded as necessary to permitpreparation of financial statements in accordance with generally accepted accountingprinciples and that receipts and expenditures of the company are being made only inaccordance with authorizations of management and directors of the company; and
(iii) Provide reasonable assurance regarding prevention or timely detection ofunauthorized acquisition use or disposition of the company's assets that could have amaterial 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 of 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 and according to the information and explanations given to us theCompany has in all material respects an adequate internal financial control system overfinancial reporting and such internal financial controls over financial reporting wereoperating effectively as at March 31 2019 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.
Vijay Sai Kumar & Associates Chartered Accountants FRN: 004694S
B. Vijay Sai Kumar Proprietor
Hyderabad Date: 28-05-2019