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Munjal Auto Industries Ltd.

BSE: 520059 Sector: Auto
NSE: MUNJALAU ISIN Code: INE672B01032
BSE 11:21 | 29 Jul 65.85 0.75
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66.10

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NSE 11:14 | 29 Jul 65.90 0.75
(1.15%)
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66.15

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66.15

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OPEN 65.55
PREVIOUS CLOSE 65.10
VOLUME 6051
52-Week high 72.80
52-Week low 46.10
P/E 31.36
Mkt Cap.(Rs cr) 659
Buy Price 65.85
Buy Qty 898.00
Sell Price 65.95
Sell Qty 116.00
OPEN 65.55
CLOSE 65.10
VOLUME 6051
52-Week high 72.80
52-Week low 46.10
P/E 31.36
Mkt Cap.(Rs cr) 659
Buy Price 65.85
Buy Qty 898.00
Sell Price 65.95
Sell Qty 116.00

Munjal Auto Industries Ltd. (MUNJALAU) - Auditors Report

Company auditors report

To

THE MEMBERS OF

MUNJAL AUTO INDUSTRIES LIMITED

Report on the Audit of the Standalone Financial Statements

Opinion

We have audited the accompanying standalone financial statements of Munjal AutoIndustries Limited ("the Company") which comprise the Balance Sheet as atMarch 312020 the Statement of Profit and Loss including Other Comprehensive Income theStatement of Changes in Equity and the Statement of Cash Flows for the year then ended andnotes to the standalone financial statements including a summary of significant accountingpolicies 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 specified 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 March 31 2020 and total comprehensiveincome (comprising of profit and other comprehensive income) changes in equity and itscash flows for the year ended on that 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 Auditors'Responsibilities for the Audit of the standalone financial statements section of ourreport. We are independent of the Company in accordance with the Code of Ethics issued bythe Institute of Chartered Accountants of India together with the ethical requirementsthat are relevant to our audit of the standalone financial statements under the provisionsof the Act and the Rules made thereunder and we have fulfilled our other ethicalresponsibilities in accordance with these requirements and the Code of Ethics. We believethat the audit evidence we have obtained is sufficient and appropriate to provide a basisfor our audit opinion.

Emphasis of Matter

We draw your attention to Note 54 of the standalone financial statements whichdescribes the impact of Coronavirus disease 2019 (COVID19) on the operations andfinancials of the Company.

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 these standalone financial statements of the current year.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.

Sr. No. Key Audit Matters How our audit addressed the key audit matters
1. Recognition and Measurement of Deferred Taxes including Minimum Alternate Tax (MAT) credit: Principal Audit Procedures
(Refer to note 4 (xiii) 12 41 to the standalone financial statements) Our audit procedures included the following:
- Evaluating management's assessment on the sufficiency of future taxable profits in support of the recognition of deferred tax asset by comparing management's forecasts of future profits to historical results and evaluating the assumptions used in those forecasts.
The recognition and measurement of deferred tax items requires at the level of the tax entity the complete determination of all differences between the recognition and the measurement of tax base of assets and liabilities. This requires significant calculations on account of the tax regulations most of which are complex. The effects and the measurement of deferred tax assets and liabilities require detailed knowledge of the applicable tax law. - Inquiry and critical analysis of the management judgement on recognition of deferred tax asset.
- Assessing the adequacy of the deferred tax disclosures to the financial statements.
We have considered the recognition and measurement of deferred tax assets including MAT credit as Key Audit Matter as recognition of these assets involves judgement by management as to the likelihood of the realization of these deferred tax assets which is based on a number of factors including whether there will be sufficient taxable profits in future periods to support recognition. Conclusion:
Based on the procedures described above we did not identify any material exceptions to the management's assertions and treatment presentation and disclosure of the subject matter in financial statements.
2 Adoption of Ind AS 116 – Leases Principal Audit Procedures
(Refer to note 4 (ix) 9 26 30 and 39 to the financial statements) Our audit procedures on adoption of Ind AS 116 include:
The Company has adopted Ind AS 116 - Leases w.e.f. April 1 2019. The application and transition to this Ind AS is complex and is an area of focus in our audit since the Company has a number of leases with different contractual terms. - Assessing the Company's evaluation on the identification of leases based on the contractual agreements and our knowledge of the business.
Ind AS 116 introduces a new lease accounting model wherein lessees are required to recognize a right-of-use (ROU) asset and a lease liability arising from a lease on the balance sheet. - Evaluating the method of transition and relatedadjustments the reasonableness of the discount rates applied in determining the lease liabilities.
The lease liabilities are initially measured by discounting future lease payments during the lease term as per the contract/ arrangement. Adoption of the standard involves significant judgements and estimates including determination of the discount rates and the lease term. - Assuring completeness of the lease data by reconciling the Company's operating lease commitments to data used in computing ROU asset and the lease liabilities.
- Assessed and tested the presentation and disclosures relating to Ind AS 116 including disclosures relating to transition.
Additionally the standard mandates detailed disclosures in respect of transition.
Conclusion:
Based on the procedures described above we did not identify any material exceptions to the management's assertions and treatment presentation and disclosure of the subject matter in financial statements.

Information Other than the Standalone Financial Statements and Auditors' 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 Board'sReport including Annexures to Board's Report Management Discussion and AnalysisCorporate Governance Report and Shareholder's Information but does not include thestandalone financial statements and our auditors' report thereon.

Our opinion on the standalone financial statements does not cover the other informationand we do 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 in doingso consider whether the other information is materially inconsistent with the standalonefinancial statements or our knowledge obtained in the audit or otherwise appears to bematerially misstated.

When we read the information if we conclude that there is a material misstatementtherein we are required to communicate the matter to those charged with governance andtake appropriate actions necessitated by the circumstances and the applicable laws andregulations.

Responsibilities of Management and Those Charged with Governance for the StandaloneFinancial 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 totalcomprehensive income 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 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 is also responsible for overseeing the Company's financialreporting process.

Auditors' Responsibilities 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 auditors' 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 skepticism 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 control relevant to the audit in order todesign audit procedures that are appropriate in the circumstances. Under section 143(3)(i)of the Act we are also responsible for expressing our opinion on whether the Company hasadequate internal financial controls with reference to standalone financial statements inplace and the operating effectiveness 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 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 auditors' 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 ourauditors' 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 auditors' report unless law or regulation precludes public disclosure about thematters 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 the Companies (Auditor's Report) Order 2016 ("the Order")issued by the Central Government of India in terms of subsection (11) of section 143 ofthe Act we give in "Annexure -A" a statement on the matters specified inparagraphs 3 and 4 of the Order to the extent applicable.

2. As required by Section 143(3) of the Act we report that: a. we have sought andobtained all the information and explanations which to the best of 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 appears from our examination of those books;

c. the Balance Sheet the Statement of Profit and Loss including other comprehensiveincome the Statement of Changes in Equity and the Statement of Cash Flows dealt with bythis Report are in agreement with the books of account;

d. in our opinion the aforesaid standalone financial statements comply with the Ind ASspecified under Section 133 of the Act;

e. on the basis of the written representations received from the Directors as on March312020 taken on record by the Board of Directors none of the Directors is disqualifiedas on March 31 2020 from being appointed as a director in terms of Section 164(2) of theAct;

f. with respect to the adequacy of the internal financial controls with reference tostandalone financial statements of the Company and the operating effectiveness of suchcontrols refer to our separate report in "Annexure B";

g. with respect to the other matters to be included in the Auditors' Report inaccordance with the requirements of 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 Auditors' 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 standalone financial statements – Refer Note 42 to the standalonefinancial statements;

ii. the Company did not have any material foreseeable losses on long-term contractsincluding derivative contracts as at March 31 2020;

iii. there has been no delay in transferring amounts required to be transferred tothe Investor Education and Protection Fund by the Company.

For K. C. Mehta & Co.
Chartered Accountants
Firm's Registration No. 106237W
Vishal P. Doshi
Place : Vadodara Partner
Date : June 30 2020 Membership No.101533
UDIN: 20101533AAAACE3363

ANNEXURE A TO INDEPENDENT AUDITOR'S REPORT

(Referred to in paragraph 1 under ‘Report on Other Legal and RegulatoryRequirements' section of our report of even date to the Members of Munjal AutoIndustries Limited)

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 physical verification of its fixed assets bywhich fixed assets are verified in a phased manner over a period of two years. The assetswhich were to be covered as per the said programme have not been physically verified bythe management during the year. As the management has not carried out any verificationduring the year we are unable to comment whether the discrepancies if any are material.

(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 properties otherthan self-constructed propertiesare held in the name of the Company.

ii. The inventories of finished goods work-in-progress stores spare part and rawmaterials have been physically verified by the management. In our opinion the frequency ofverification is reasonable. On the basis of our examination of the records of inventorywe are of the opinion that the discrepancies noticed on verification between the physicalstocks and book records were not material and have been properly dealt with in the booksof account.

iii. The Company has not granted any loans secured or unsecured to companies firmsLimited Liability Partnerships or other parties covered in the register maintained undersection 189 of the Companies Act 2013 and therefore reporting under clause (iii) (a) toclause (iii) (c) of the Order is not applicable to the Company.

iv. The Company has not granted any loans or provided any guarantees or security to theparties covered under section 185 of the Act. In our opinion and according to theinformation and explanation given to us the Company has complied with the provisions ofsection 186 of the Act in respect of the Investments made.

v. According to the information and explanations given to us the Company has notaccepted any deposits during the year from the public within the meaning of provisions ofsection 73 to 76 of the Act and the rules framed thereunder or under the directivesissued by the Reserve Bank of India and therefore reporting under clause (v) of the Orderis not applicable to the Company.

vi. In our opinion and according to the information and explanations given to us theCentral Government has not prescribed maintenance of cost records under sub-section (1) ofsection 148 of the Companies Act 2013 and rules 3 of the Companies (Cost Records andAudit) Amendment Rules 2014 for any of the products of the Company and thereforereporting under clause (vi) of the Order is not applicable to the Company.

vii. (a) According to the information and explanations given to us and on the basis ofour examination of the records the Company has been regular in depositing withappropriate authorities undisputed statutory dues including provident fund employee'sstate insurance income-tax sales-tax service tax duty of customs duty of excisevalue added tax goods and service tax cess and any other statutory dues applicable toit. Further no undisputed amounts payable in respect of income tax sales tax servicetax duty of customs duty of excise value added tax goods and service tax cessandother statutory dues were in arrears as at March 31 2020 for a period of more than sixmonths from the date they become payable.

(b) According to the information and explanations given to us there are no disputeddues in respect of Income Tax Goods and Service Tax Service tax and Duty of Customs.According to the information and explanations given to us the followings are theparticulars of Sales Tax and Duty of Excise as at March 31 2020 which have not beendeposited on account of dispute:

Name of the statute Nature of disputed dues Amount in Period to which the amount relates Forum where pending
The Gujarat Sales Act 1969 Sales Tax 2549704 Financial Year 2002-2003 Commissioner of Commercial Tax Tax (Appeals)
The Central Excise Act 1944 Duty of Excise 5876332 June 2008- March 2009 Commissioner of Customs Excise and Service Tax (Appeals)

viii. In our opinion and according to the information and explanations given to us theCompany has not defaulted in repayment of loans or borrowings to any bank. The Company hasnot taken any loans from financial institution or Government. It has not issued anydebentures.

ix. In our opinion and according to information and explanation given to us the termloans taken by the Company have been applied for the purpose for which they were raised.The company has not raised any money by way of initial public offer or further publicoffer (including debt instruments) during the year.

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 of the Company.

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 for managerialremuneration in accordance with the requisite approvals mandated by the provisions ofSection 197 read with Schedule V to the Act.

xii. In our opinion the Company is not a Nidhi company and therefore reporting underclause (xii) of the Order is not applicable to the Company.

xiii. In our opinion and according to the information and explanations given to ustransactions with the related parties are in compliance with sections 177 and 188 of theAct where applicable and the details of such transactions have been disclosed in thefinancial statements as required by the applicable Indian accounting standards.

xiv. According to the information and explanations given to us and based on ourexamination of the records the Company has not made any preferential allotment or privateplacement of shares or fully or partly convertible debentures during the year andtherefore reporting under clause (xiv) of the Order is not applicable to the Company.

xv. In our opinion and according to the information and explanations given to us theCompany has not entered into non-cash transactions with directors or persons connectedwith him and therefore reporting under clause(xv) of the Order is not applicable to theCompany.

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.

For K. C. Mehta & Co.
Chartered Accountants
Firm's Registration No. 106237W
Vishal P. Doshi
Place : Vadodara Partner
Date : June 30 2020 Membership No.101533
UDIN: 20101533AAAACE3363

ANNEXURE B TO THE INDEPENDENT AUDITOR'S REPORT

(Referred to in paragraph 2(f) under ‘Reporton Other Legal and RegulatoryRequirements' section of our report to the Members of Munjal Auto Industries Limited onthe standalone financial statementsof even date)

Report on the Internal Financial Controls with reference to financial statements underClause (i) of Sub-section 3 of Section 143 of the Act.

We have audited the internal financial controls with reference to financial statementsof Munjal Auto Industries Limited ("the Company") as of March 31 2020 inconjunction with our audit of the standalone financial statements of the Company for theyear ended on that date.

Management's Responsibility for Internal Financial Controls

The Company's management is responsible for establishing and maintaining internalfinancial controls based on the internal control over financial reporting criteriaestablished by the Company considering the essential components of internal control statedin the Guidance Note on Audit of Internal Financial Controls over Financial Reportingissued 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.

Auditors' Responsibility

Our responsibility is to express an opinion on the Company's internal financialcontrols with reference to financial statements based on our audit. We conducted our auditin accordance with the Guidance Note on Audit of Internal Financial Controls overFinancial Reporting (the "Guidance note") and the Standards on Auditing issuedby ICAI and deemed to be prescribed under section 143(10) of the Companies Act to theextent applicable to an audit of internal financial controls both applicable to an auditof Internal Financial Controls and both issued by the ICAI. Those Standards and theGuidance Note require that we comply with ethical requirements and plan and perform theaudit to obtain reasonable assurance about whether adequate internal financial controlswith reference to financial statements were 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 with reference to financial statements and their operatingeffectiveness. Our audit of internal financial controls with reference to financialstatements included obtaining an understanding of internal financial controls withreference to financial statements assessing the risk that a material weakness exists andtesting and evaluating the design and operating effectiveness of internal control based onthe assessed risk. The procedures selected depend on the auditor's judgement includingthe assessment of the risks of material misstatement of the financial statements whetherdue 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 withreference to financial statements.

Meaning of Internal Financial Controls with reference to financial statements

A Company's internal financial controls with reference to financial statements 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 controlswith reference to financial statements includes those policies and procedures that (1)pertain to the maintenance of records that in reasonable detail accurately and fairlyreflect the transactions and dispositions of the assets of the company; (2) providereasonable assurance that transactions are recorded as necessary to permit preparation offinancial statements in accordance with generally accepted accounting principles and thatreceipts and expenditures of the company are being made only in accordance withauthorisations of management and directors of the company; and (3) provide reasonableassurance regarding prevention or timely detection of unauthorised acquisition use ordisposition of the company's assets that could have a material effect on the financialstatements.

Inherent Limitations of Internal Financial Controls with reference to financialstatements

Because of the inherent limitations of internal financial controls with reference tofinancial statements 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 withreference to financial statements to future periods are subject to the risk that theinternal financial control with reference to financial statements may become inadequatebecause of changes in conditions or that the degree of compliance with the policies orprocedures may deteriorate.

Opinion

In our opinion the Company has in all material respects an adequate internalfinancial controls with reference to financial statements and such internal financialcontrols with reference to standalone financial statements were operating effectively asat March 31 2020 based on the internal control over financial reporting criteriaestablished by the Company considering the essential components of internal control statedin the Guidance Note on Audit of Internal Financial Controls over Financial Reportingissued by the Institute of Chartered Accountants of India.

For K. C. Mehta & Co.
Chartered Accountants
Firm's Registration No. 106237W
Vishal P. Doshi
Place : Vadodara Partner
Date : June 30 2020 Membership No.101533
UDIN: 20101533AAAACE3363

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