You are here » Home » Companies » Company Overview » Rico Auto Industries Ltd

Rico Auto Industries Ltd.

BSE: 520008 Sector: Auto
NSE: RICOAUTO ISIN Code: INE209B01025
BSE 00:00 | 17 Sep 48.10 -1.25
(-2.53%)
OPEN

49.70

HIGH

49.85

LOW

47.70

NSE 00:00 | 17 Sep 48.05 -1.40
(-2.83%)
OPEN

49.65

HIGH

49.85

LOW

47.65

OPEN 49.70
PREVIOUS CLOSE 49.35
VOLUME 40048
52-Week high 62.30
52-Week low 26.60
P/E 45.38
Mkt Cap.(Rs cr) 651
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 49.70
CLOSE 49.35
VOLUME 40048
52-Week high 62.30
52-Week low 26.60
P/E 45.38
Mkt Cap.(Rs cr) 651
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Rico Auto Industries Ltd. (RICOAUTO) - Auditors Report

Company auditors report

To the Members of

Rico Auto Industries Limited

Report on the Audit of the Standalone Financial Statements

Opinion

1. We have audited the accompanying standalone financial statements of Rico AutoIndustries Limited (‘the Company') which comprise the Balance Sheet as at 31 March2020 the Statement of Profit and Loss (including Other Comprehensive Income) the CashFlow Statement and the Statement of Changes in Equity for the year then ended and asummary of the significant accounting policies and other explanatory information.

2. 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 (‘Act') in the manner so required and give a true and fairview in conformity with the accounting principles generally accepted in India includingIndian Accounting Standards (‘Ind AS') specified under section 133 of the Act of thestate of affairs of the Company as at 31 March 2020 and its profit (including othercomprehensive income) its cash flows and the changes in equity for the year ended on thatdate.

Basis for Opinion

3. We conducted our audit in accordance with the Standards on Auditing specified undersection 143(10) of the Act. Our responsibilities under those standards are furtherdescribed in the Auditor's Responsibilities for the Audit of the Financial Statementssection of our report. We are independent of the Company in accordance with the Code ofEthics issued by the Institute of Chartered Accountants of India (‘ICAI') togetherwith the ethical requirements that are relevant to our audit of the financial statementsunder the provisions of the Act and the rules thereunder and we have fulfilled our otherethical responsibilities in accordance with these requirements and the Code of Ethics. Webelieve that the audit evidence we have obtained is sufficient and appropriate to providea basis for our opinion.

Key Audit Matter

4. 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 financial statements as awhole and in forming our opinion thereon and we do not provide a separate opinion onthese matters.

5. We have determined the matter described below to be the key audit matter to becommunicated in our report.

Key audit matter How our audit addressed the key audit matter
Assessment of the realisability of loans from step down subsidiary: Our audit included but were not limited to the following procedures:
As at 31 March 2020 the Company has given loans amounting to Rs 44.83 crores from a step subsidiary company Rico Jinfei Wheels Limited (hereinafter referred to as "Subsidiary") as disclosed in Note 7 and Note 42 to the accompanying standalone financial statements. a) Obtained an understanding from the management with respect to process and controls implemented by the Company to determine recoverability of the amounts receivable from its subsidiary companies;
The subsidiary has incurred losses/ earned low operating profit during the current and previous years. Since the recoverability of the aforesaid amounts is largely dependent on the operational performance of aforesaid subsidiary therefore there is a risk that the subsidiary may not achieve the anticipated business performance leading to an impairment charge that has not been recognized by the management. b) Obtained the valuation model from the management and reviewed their conclusions including reading the report provided by an independent valuation expert engaged by the management;
c) Assessed the professional competence objectivity and capabilities of the third party expert engaged by the management for performing the required valuations to estimate the recoverable value of the amounts receivable from the subsidiary;
d) Tested the inputs used in the Model by examining the underlying data and validating the future projections by comparing past projections with actual results including discussions with management relating to these projections;
Management has assessed the realisability of the aforesaid amounts by carrying out a valuation of the subsidiary's business using the discounted cashflow method ("the Model"). The Model involves estimates pertaining to expected business and earnings forecasts and key assumptions including those related to discount and long-term growth rates. These estimates require high degree of management judgement resulting in inherent subjectivity which is more complex in the current year due to the required assessment of impact of COVID-19 on the aforesaid assumptions. e) Assessed the reasonableness of the assumptions used and appropriateness of the valuation methodology applied by engaging auditor's valuation specialists. Tested the discount rate and terminal growth rates used in the forecast including comparison to economic and industry forecasts considering the impact of Covid-19 where appropriate;
Considering the materiality of the above matter to the financial statements complexities and judgement involved and the significant auditor attention required to test such management's judgement we have identified this as a key audit matter for current year audit. f) Evaluated sensitivity analysis performed by the management and further performed independent sensitivity analysis on these key assumptions to assess potential impact of downside in the underlying cash flow forecasts and assessed the possible mitigating actions identified by management; and
g) Evaluated the appropriateness and adequacy of disclosures made in the financial statements in accordance with the applicable accounting standards.

Information other than the Financial Statements and Auditor's Report thereon

6. The Company's Board of Directors is responsible for the other information. The otherinformation comprises the information included in the Annual Report but does not includethe standalone financial statements and our auditor's report thereon. The Annual Report isexpected 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 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 Annual Report if we conclude that there is a material misstatementtherein we are required to communicate the matter to those charged with governance.

Responsibilities of Management and Those Charged with Governance for the StandaloneFinancial Statements

7. The accompanying standalone financial statements have been approved by the Company'sBoard of Directors. The Company's Board of Directors is responsible for the matters statedin section 134(5) of the Act with respect to the preparation of these standalone financialstatements that give a true and fair view of the financial position financial performanceincluding other comprehensive income changes in equity and cash flows of the Company inaccordance with the accounting principles generally accepted in India including the IndAS specified under section 133 of the Act. This responsibility also includes maintenanceof adequate accounting records in accordance with the provisions of the Act forsafeguarding of 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.

8. 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.

9. Those Board of Directors is also responsible for overseeing the Company's financialreporting process.

Auditor's Responsibilities for the Audit of the Financial

Statements

10. 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 withStandards on Auditing will always detect a material misstatement when it exists.Misstatements can arise from fraud or error and are considered material if individuallyor in the aggregate they could reasonably be expected to influence the economic decisionsof users taken on the basis of these financial statements.

11. As part of an audit in accordance with Standards on Auditing we exerciseprofessional judgment and maintain professional 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 for one resulting from error as fraud may involve collusionforgery intentional omissions misrepresentations or the override of internal control;

• 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 Companyhas adequate internal financial controls with reference to financial statements in placeand 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 auditor's report to the related disclosures inthe financial statements or if such disclosures are inadequate to modify our opinion.Our conclusions are based on the audit evidence obtained up to the date of our auditor'sreport. However future events or conditions may cause the Company to cease to continue asa going concern; and

• Evaluate the overall presentation structure and content of the financialstatements including the disclosures and whether the financial statements represent theunderlying transactions and events in a manner that achieves fair presentation.

12. We communicate with those charged with governance regarding among other mattersthe planned scope and timing of the audit and significant audit findings including anysignificant deficiencies in internal control that we identify during our audit.

13. We also provide those charged with governance with a statement that we havecomplied with relevant ethical requirements regarding independence and to communicatewith them all relationships and other matters that may reasonably be thought to bear onour independence and where applicable related safeguards.

14. From the matters communicated with those charged with governance we determinethose matters that were of most significance in the audit of the financial statements ofthe current period and are therefore the key audit matters. We describe these matters inour auditor's report unless law or regulation precludes public disclosure about the matteror 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

15. As required by section 197(16) of the Act based on our audit we report that theCompany has paid remuneration to its directors during the year in accordance with theprovisions of and limits laid down under section 197 read with Schedule V to the Act. 16.As required by the Companies (Auditor's Report) Order 2016 (‘the Order') issued bythe Central Government of India in terms of section 143(11) of the Act we give in theAnnexure A a statement on the matters specified in paragraphs 3 and 4 of the Order. 17.Further to our comments in Annexure A as required by section 143(3) of the Act based onour audit we report to the extent applicable that:

a. we have sought and obtained all the information and explanations which to the bestof our knowledge and belief were necessary for the purpose of our audit of theaccompanying standalone financial statements;

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 standalone financial statements dealt with by this report are in agreement withthe books of account;

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

e. on the basis of the written representations received from the directors and taken onrecord by the Board of Directors none of the directors is disqualified as on 31 March2020 from being appointed as a director in terms of section 164(2) of the Act;

f. we have also audited the internal financial controls with reference to financialstatements of the Company as on 31 March 2020 in conjunction with our audit of thestandalone financial statements of the Company for the year ended on that date and ourreport dated 17 June 2020 as per Annexure B expressed unmodified opinion; and

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 (as amended) inour opinion and to the best of our information and according to the explanations given tous:

i. the Company as detailed in note 36 to the standalone financial statements hasdisclosed the impact of pending litigations on its financial position as at 31 March 2020;

ii. the Company has made provision as at 31 March 2020 as required under theapplicable law or Ind AS for material foreseeable losses if any on long-term contractsincluding derivative contracts;

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 March2020; and

iv. the disclosure requirements relating to holdings as well as dealings in specifiedbank notes were applicable for the period from 8 November 2016 to 30 December 2016 whichare not relevant to these standalone financial statements. Hence reporting under thisclause is not applicable.

For Walker Chandiok & Co LLP
Chartered Accountants
Firm's Registration No.: 001076N/N500013
Arun Tandon
Partner
Place: New Delhi Membership No.: 517273
Date : June 17 2020 UDIN No.: 20517273AAAACO1264

Annexure A

Based on the audit procedures performed for the purpose of reporting a true and fairview on the financial statements of the Company and taking into consideration theinformation and explanations given to us and the books of account and other recordsexamined by us in the normal course of audit and to the best of our knowledge and beliefwe report that:

(i) (a) The Company has maintained proper records showing full particulars includingquantitative details and situation of property plant and equipment.

(b) All property plant and equipment have not been physically verified by themanagement during the year however there is a regular program of verification once inevery three years which in our opinion is reasonable having regard to the size of theCompany and the nature of its assets. No material discrepancies were noticed on suchverification.

(c) The title deeds of all the immovable properties (which are included under the head‘Property plant and equipment') are held in the name of the Company. In respect ofimmovable properties in the nature of land and building that have been taken on lease anddisclosed under the head property plant and equipment in the standalone financialstatements the lease agreements are in the name of the Company where the Company is thelessee as per the agreement.

(ii) In our opinion the management has conducted physical verification of inventory atreasonable intervals during the year except for goods-in-transit and no materialdiscrepancies were noticed on the aforesaid verification.

(iii) The Company has granted long term unsecured loans to companies covered in theregister maintained under Section 189 of the Act; and with respect to the same:

(a) in our opinion the terms and conditions of grant of such loans are not primafacie prejudicial to the Company's interest;

(b) the schedule of repayment of principal and payment of interest has been stipulatedand the principal amount is not due for repayment currently; and

(c) there is no overdue amount in respect of loans granted to such companies.

(iv) In our opinion the Company has complied with the provisions of Sections 185 and186 of the Act in respect of loans investments guarantees and security.

(v) In our opinion the Company has not accepted any deposits within the meaning ofSections 73 to 76 of the Act and the Companies (Acceptance of Deposits) Rules 2014 (asamended). Accordingly the provisions of clause 3(v) of the Order are not applicable.

(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 undersub-section (1) of Section 148 of the Act in respect of Company's products and are of theopinion that prima facie the prescribed accounts and records have been made andmaintained. However we have not made a detailed examination of the cost records with aview to determine whether they are accurate or complete.

(vii) (a) The Company is regular in depositing undisputed statutory dues includingprovident fund employees' state insurance income-tax sales-tax service tax duty ofcustoms duty of excise value added tax cess and other material statutory dues asapplicable to the appropriate authorities. Further no undisputed amounts payable inrespect thereof were outstanding at the year-end for a period of more than six months fromthe date they become payable.

(b) The dues outstanding in respect of income-tax sales-tax service-tax duty ofcustoms duty of excise and value added tax on account of any dispute are as follows:

Statement of Disputed Dues

Name of the statute Nature of dues Amount (Rs) Amount paid under Protest (Rs) Period to which the amount relates Forum where dispute is pending
Income Tax Act 1961 Errors and Mismatch of challans in returns filed to Income Tax Department 0.03 Nil Assessment year 2009-10 to 2019-20 Assessing Officer Income Tax Department.
Haryana VAT Act 2003 Disallowance of certain expenses 0.04 Nil Financial year 2007-08 Joint Commissioner
Gujarat VAT 2003 Disallowance of input on rejected goods 0.04 0.009 Financial year 2017-18 Gujarat Sales tax tribunal
Finance Act 1994 Claim of cenvat on construction & other repair & maintenance service 0.64 Nil Financial year 2005-06 to 2010-11 Custom Excise & Service Tax Appellate Tribunal
Finance Act 1994 Denial of credit taken on services of insurance catering tent house and taxi 0.52 Nil Financial year 2004- 05 to 2008-09 Custom Excise & Service Tax Appellate Tribunal
Finance Act 1994 Denial of cenvat credit on tax paid on marine insurance catering tent house and taxi 0.01 Nil Financial year 2014-15 and 2015- 16 Custom Excise & Service Tax Appellate Tribunal
Finance Act 1994 Denial of cenvat credit on insurance of plant & machinery and stock. 0.51 Nil Financial year 2011-12 to 2013-14 Custom Excise & Service Tax Appellate Tribunal
Finance Act 1994 Deposit of inadmissible cenvat credit availed on the capital goods destroyed in fire 0.39 Nil Financial year 2012-13 Commissioner Central Excise (Appeal)
Finance Act 1994 Denial of credit taken on outward freight 0.07 Nil Financial year 2012-13 Commissioner Central Excise (Appeal)
Finance Act 1994 Denial of credit taken on credit taken 0.10 Nil Financial year Commissioner
on Service of insurance and tour and 2015-16 to 2017-18 Central Excise
travelling services (Appeal)
Haryana Local Area Development Tax Act 2000 Applicability of local area development tax on items purchased 0.01 Nil Financial year 2001-02 to 2003-04 Joint Commissioner (Appeal)
Central Excise Act 1944 Supply of components without adding cost of designs/drawings/ specifications 3.15 Nil Financial year 2013-14 to 2017-18 Commissioner of CGST
Central Excise Act 1944 Non-payment of excise duty on amount of sales tax retained by the assessee 0.56 Nil Financial year 2011-12 to 2013-14 GST Appellate tribunal
Central Excise Act 1944 Short reversal of cenvat credit on clearance of capital Goods during slump sale. 1.07 Nil Financial year 2017-18 Additional Commissioner Central Goods & Service tax

(viii) The Company has not defaulted in repayment of loans or borrowings to any bank orfinancial institution during the year. The Company has no borrowings to the government anddid not have any outstanding debentures during the year.

(ix) The Company did not raise moneys by way of initial public offer or further publicoffer (including debt instruments). In our opinion the term loans were applied for thepurposes for which the loans were obtained.

(x) No fraud by the Company or on the Company by its officers or employees has beennoticed or reported during the period covered by our audit.

(xi) Managerial remuneration has been paid and provided by the Company in accordancewith the requisite approvals mandated by the provisions of Section 197 of the Act readwith Schedule V to the Act.

(xii) In our opinion the Company is not a Nidhi Company. Accordingly provisions ofclause 3(xii) of the Order are not applicable.

(xiii) In our opinion all transactions with the related parties are in compliance withSections 177 and 188 of Act where applicable and the requisite details have beendisclosed in the financial statements etc. as required by the applicable Ind AS.

(xiv) During the year the Company has not made any preferential allotment or privateplacement of shares or fully or partly convertible debentures.

(xv) In our opinion the Company has not entered into any non-cash transactions withthe directors or persons connected with them covered under Section 192 of the Act.

(xvi) The Company is not required to be registered under Section 45-IA of the ReserveBank of India Act 1934.

For Walker Chandiok & Co LLP
Chartered Accountants
Firm's Registration No.: 001076N/N500013
Arun Tandon
Partner
Place: New Delhi Membership No.: 517273
Date : June 17 2020 UDIN No.: 20517273AAAACO1264

Annexure B

Independent Auditor's Report on the internal financial controls with reference to thestandalone financial statements under Clause (i) of Sub-section 3 of Section 143 of theCompanies Act 2013 (‘the Act')

1. In conjunction with our audit of the standalone financial statements of Rico AutoIndustries Limited (‘the Company') as at and for the year ended 31 March 2020 wehave audited the internal financial controls with reference to financial statements of theCompany as at that date.

Responsibilities of Management and Those Charged with Governance for Internal FinancialControls

2. The Company's Board of Directors is responsible for establishing and maintaininginternal financial controls based on the internal financial controls with reference tofinancial statements criteria established by the Company considering the essentialcomponents of internal control stated in the Guidance Note on Audit of Internal FinancialControls over Financial Reporting (‘the Guidance Note') issued by the Institute ofChartered Accountants of India (‘ICAI'). These responsibilities include the designimplementation and maintenance of adequate internal financial controls that were operatingeffectively for ensuring the orderly and efficient conduct of the Company's businessincluding adherence to the Company's policies the safeguarding of its assets theprevention and detection of frauds and errors the accuracy and completeness of theaccounting records and the timely preparation of reliable financial information asrequired under the Act.

Auditor's Responsibility for the Audit of the Internal Financial Controls withReference to Financial Statements

3. 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 Standards on Auditing issued by the ICAI prescribed under Section143(10) of the Act to the extent applicable to an audit of internal financial controlswith reference to financial statements and the Guidance Note issued by the ICAI. 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 with reference to financial statements were established and maintainedand if such controls operated effectively in all material respects.

4. Our audit involves performing procedures to obtain audit evidence about the adequacyof the internal financial controls with reference to financial statements and theiroperating effectiveness. Our audit of internal financial controls with reference tofinancial statements includes obtaining an understanding of such internal financialcontrols assessing the risk that a material weakness exists and testing and evaluatingthe design and operating effectiveness of internal control based on the assessed risk. Theprocedures selected depend on the auditor's judgement including the assessment of therisks of material misstatement of the financial statements whether due to fraud or error.

5. 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

6. 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 include 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

7. 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 controls 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

8. In our opinion the Company has in all material respects adequate internalfinancial controls with reference to financial statements and such internal financialcontrols over financial reporting with reference to these financial statements wereoperating effectively as at 31 March 2020 based on the internal financial controls withreference to financial statements criteria established by the Company considering theessential components of internal control stated in the Guidance Note issued by the ICAI.

For Walker Chandiok & Co LLP
Chartered Accountants
Firm's Registration No.: 001076N/N500013
Arun Tandon
Partner
Place: New Delhi Membership No.: 517273
Date : June 17 2020 UDIN No.: 20517273AAAACO1264

.