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Scooters India Ltd.

BSE: 505141 Sector: Auto
NSE: N.A. ISIN Code: INE959E01011
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NSE 05:30 | 01 Jan Scooters India Ltd
OPEN 29.00
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VOLUME 1577
52-Week high 35.95
52-Week low 26.00
P/E 19.79
Mkt Cap.(Rs cr) 247
Buy Price 0.00
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Sell Price 0.00
Sell Qty 0.00
OPEN 29.00
CLOSE 28.40
VOLUME 1577
52-Week high 35.95
52-Week low 26.00
P/E 19.79
Mkt Cap.(Rs cr) 247
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Scooters India Ltd. (SCOOTERSINDIA) - Auditors Report

Company auditors report

TO THE BOARD OF DIRECTORS SCOOTERS INDIA LIMITED

REVISED REPORT ON THE AUDIT OF THE STANDALONE FINANCIAL STATEMENTS

This Audit Report is in supersession of our earlier Audit report Dated 28thJune 2021 on the standalone financial statements as at 31st March 2021 of Scooters IndiaLimited has been revised to give effect to the provisional comments on the SupplementaryAudit conducted by the Office of the Principal Director of Audit Industry and CorporateAffairs New Delhi vide Letter No. A.M.G-IN/2(8)/A/cs Audit-SIL(2020-21)/2021-22/22 Dated13th August 2021.

Qualified Opinion

We have audited the standalone financial statements of Scooters India Limited("the Company") which comprise the standalone balance sheet as at 31stMarch 2021 and the standalone statement of profit and loss (including other comprehensiveincome) the standalone statement of changes in equity and the standalone statement ofcash flows for the year then ended and notes to the standalone financial statementsincluding a summary of significant accounting policies and other explanatory information(together referred to as "standalone financial statements").

In our opinion and to the best of our information and according to the explanationsgiven to us except for the matters described under Basis for Qualified Opinion paragraphthe aforesaid standalone financial statements give the information required by theCompanies Act 2013 ("Act") in the manner so required and give a true and fairview in conformity with the accounting principles generally accepted in India of thestate of affairs of the Company as at 31st March 2021 and its profit and othercomprehensive income changes in equity and its cash flows for the year ended on thatdate.

Basis of Qualified Opinion

We conducted our audit in accordance with the Standards on Auditing (SAs) specifiedunder section 143(10) of the Companies Act 2013. Our responsibilities under thoseStandards are further described in the Auditor's Responsibilities for the Audit of theFinancial Statements section of our report. We are independent of the Company inaccordance with the Code of Ethics issued by the Institute of Chartered Accountants of

India together with the ethical requirements that are relevant to our audit of thefinancial statements under the provisions of the Companies Act 2013 and the Rulesthereunder and we have fulfilled our other ethical responsibilities in accordance withthese requirements and the Code of Ethics. We believe that the audit evidence we haveobtained is sufficient and appropriate to provide a basis for our opinion.

> Attention has been invited to Note No. 51 of Notes to Financial Statements wherewe have come across the of Letter of Shutting down the operation (term as "ClosureLetter") of the company issued on 28th January 2021 through Letter No.3(1)/ 2020- PE-VI by (Department of Heavy Industry (PE-VI Section) Ministry of HeavyIndustry & Public Enterprises.

The above letter includes the proper directions and assistance towards of closure ofcompany. However the said letter may be strictly adhered to guidelines of DPE on timebound closure of sick/ loss making CpSes vide Om dated: 14-06-2018.

With effect from the above Closure Letter -

a) All the operation of the company has been suspended and permanently closed downw.e.f. 28-01-2021.

Comment: Going Concern Assumption ceased to exist with certainty w.e.f. the date28-01-2021 in relation to the company.

As per Para 25 of Ind AS 1 Preparation of Financial Statement "When preparingfinancial statements management shall make an assessment of an entity's ability tocontinue as a going concern. An entity shall prepare financial statements on a goingconcern basis unless management either intends to liquidate the entity or to ceasetrading or has no realistic alternative but to do so. When management is aware in makingits assessment of material uncertainties related to events or conditions that may castsignificant doubt upon the entity's ability to continue as a going concern the entityshall disclose those uncertainties. When an entity does not prepare financial statementson a going concern basis it shall disclose that fact together with the basis on which itprepared the financial statements and the reason why the entity is not regarded as a goingconcern. "

We have observed that company has prepared the financial statement on going concernbasis but not properly disclosed the fact together with the basis relating to assessmentof entity's ability as a going concern.

b) Loan of Rs.65.12 crore (with interest) will be disbursed for closure of the company.

Comment: In pursuance to the same Government of India has disbursed the amount ofRs.41 crore out of sanctioned amount Rs.65.12 crore (with interest) on Dated 29-03-2021.

We have observed that the sanctioned letter for this amount has not been produce beforeus for application of amount Rs.41.00 crore in accordance with Department of HeavyIndustries. /

c) Separation of regular employees through the implementation of VRS/ VSS schemes overa period of three months with the completion of assigned tasks to them and that theyfinish all the ground work required for closure operations before leaving.

Comment: We have observed that company has planned to provide VRS/ VSS schemes in onego for all the existing employees and accounted for the provision amounting toRs.145103968.87 for the same.

While reviewing the details for the closure operations along with relevant minutes ofBoard Meeting (Dated 11/02/2021) the company has launched the VRS/ VSS Scheme even beforecompletion of necessary operations require for smooth closure of company there are stillmany necessary ground works required to be done.

d) Return of Land about 147.499 acres to UPSIDA at the mutually agreed rates.

Comment: The company (lessee) has outstanding Lease Liability amounting toRs.318479.65 company shall made reassessment of Lease Liability.

As per Para 39 of Ind AS 116 Leases "After the commencement date a lessee shallapply paragraphs 40-43 to remeasure the lease liability to reflect changes to the leasepayments. A lessee shall recognise the amount of the remeasurement of the lease liabilityas an adjustment to the right-of-use asset. However if the carrying amount of theright-of-use asset is reduced to zero and there is a further reduction in the measurementof the lease liability a lessee shall recognise any remaining amount of the remeasurementin profit or loss."

We have observed that company has not initiated the process for returning the leaseholdland to UPSIDA. Further the company should initiate the process in priority thereafterremeasurement of lease liability according to lease agreement with UPSIDA.

e) Delisting of the company shares from listed BSE Stock Exchange

Comment: We reviewed the relevant minutes of Board Meeting relating to process of thedelisting of shares of the company in accordance and consolation with Department of HeavyIndustries.

During the audit no information has been provided to us relating to initiation ofprocess of delisting from the stock exchange.

f) Monetization of Trademarks & Brands of SIL

Comment: According to Closure Notice on 28-01-2021 and as per the notice the companyshould monetize the Trademark & Brand and utilise the proceeds for closure processotherwise if company fails to monetize the brand/ trademark it will be vested to GoI.

In pursuance to the same we observed that company has floated the Expression ofInterest for Brand Valuation of Vikram and Lambretta on 10-09-2020. Further company hasextended the dates through subsequent corrigendum up to 30-11 - 2020 thereafter no actionhas been taken in this regard. The company should assess the valuation of IntellectualProperty in priority and thereafter takes in account in Books.

g) Funds received from the sale proceeds proceeds of return of land to UPSIDA and saleof Brands & Trademarks shall be utilized to pay back interest free loan of Rs. 16crore from GOI and the loan with interest of Rs. 65.12 crores.

Comment: During the audit along-with the discussion with management company has notyet made any communication with UPSIDA relating return of land till the date of our audit.

We have observed that Government of India has disbursed the loan of Rs.41 crore outsanctioned loan of Rs.65.12 crore (with interest) which is payable from the sale proceedsproceeds of return of land to UPSIDA along with Brand & Trademarks. We suggest thatthe company should initiate the process in priority to avoid the unnecessary interestburden on the loan amount i.e. Rs.41 crore. Further with the availability of the fundscompany may also be able to return the said loans to GoI.

h) Disposal of Plant/ Machinery and movable assets through e-auction by MSTC Ltd. asper the terms of appointment.

Comment: Plant/ Machinery and movable assets should be valued at their RealisableValue. As per Ind AS-16 Property Plant & Equipment the company should have torevalued these assets and charge depreciation on the revalued amount as on 31/03/2021.While discussing this issue with the management it was told to us that such machinescould not be revalued by any valuation officer as these machines were bought from Italywith the name of Innocenti Machines and the size of these machines is very heavy.

We have observed that assets had been shown at their cost in financial statementwithout revaluing the assets at their realisable value. Further no communication relatingto e-auction to MSTC Ltd. has been initiated by company. We suggest that in compliance ofthe above provisions company should revalue their Stock Fixed Assets to accuratelydescribe the true value of the assets at the earliest.

i) Closure in accordance with the Office Memorandum (OM) dated 14.06.2018 and thetimeline as per guidelines of DPE.

Comment: During the audit and as per the discussion with management the company hasconsidered the deviation from timelines as mentioned in above letter due to additionaldelisting process. However the company should specify exactly the proposed date for thecompletion of necessary activities for closure operation.

> Attention has been invited to Note No. 8 of Notes to Financial Statements whereInventory consist of Raw Material Stores & Spares Loose Tools and Spares otherstores WIP & Finished Goods total amounting to Rs. 2654.80 lakhs and at the yearendCompany has made provision for Inventory Obsolescence @ 75% and 100% respectively withoutlegitimate valuation.

Further due to implementation of the Govt. Order "G.S.R. 881(E) 26th November2019 BS VI" where Bharat Stage VI Norms had been applicable from 1st April 2020vehicles manufactured along-with WIP and Raw Material on Bharat Stage IV norms are nolonger marketable with certainty.

In addition to the above it has come to our notice that Closure Notice has been issuedby Department of Heavy Industries (DHI) through Letter No.: 3(1)/2020-PE-VI on Dated28/01/2021 all operation of the company has been permanently shut down and as per theinstruction stated in the said letter Company shall initiate the delisting procedure withBombay Stock Exchange as per procedure prescribed by SEBI (Delisting of Equity Shares)Regulations 2009.

With effect of the above two events the company has held a meeting on 08-06-2021 at11.30 A.M and made the provision in respect Unsold Inventories as follows: -

Inventories Book Value (Rs. in Lakhs) Provision (Rs. in Lakhs)
1. Raw Material @ 75% (approx.) 1130.45 847.84
2. Stores & Spares @ 75% (approx.) 241.24 180.93
3. Loose Tools & Consumables @ 75% (approx.) 450.47 337.85
4. Other Stores @ 75% (approx.) 20.00 15.00
5. Other Stores @ 100% (approx.) 0.34 0.34
6. Finished Goods @ 75% 394.03 295.52
7. Work in Progress @ 75% 415.25 311.43
Total 2651.78 1988.93

Company's assessment and measurement of valuation of the inventories due to events

expected to adversely affect the entity in relation to estimation of provision inrespect of

Inventories.

Comment: Estimation of Net Realisable value without any reliable evidence.

As per Para 30 of Ind AS 2 Inventories "Estimates of net realisable value arebased on the most reliable evidence available at the time the estimates are made of theamount the inventories are expected to realise. These estimates take into considerationfluctuations of price or cost directly relating to events occurring after the end of theperiod to the extent that such events confirm conditions existing at the end of theperiod."

Further as per Para 31 of Ind AS 2 Inventories "Estimates of net realisable valuealso take into consideration the purpose for which the inventory is held."

We have observed that: -

i) Consideration of Net Realisable Value (NRV) in respect of inventories has been madeby the company without taking into account the best possible estimate and has not providedany reliable evidence on such estimate.

ii) Company has not made any proper assessment relating to high value

inventory consisting of Raw Material and Work in Progress along-with effectivecommunication with existing dealer whether the Raw Material component or WIP can beutilised in BS VI Vehicles or saleable at their current market price.

iii) As per the Closure Notice company is planning for disposal on movable assetsthrough e-auction MSTC relating to which has not made any communication to provide us thereliable estimates for provisioning.

iv) Company has made provision without conducting proper Physical Verification ofInventory or valuation of Inventory for the quarter ending 31-03-2021. Finished Goodsconsist of vehicles manufactured on BS-IV norms some of vehicles at Regional Offices(R.O) -South and D&D (Work Shop) relating to which no proper stock verification reporthas been produced before us whether actually the vehicles are existing before provisioningthe same.

Emphasis of Matter

The Emphasis of Matter included in the auditor's report that refers to a matterappropriately presented or disclosed in the financial statements that in the auditor'sjudgment is of such importance that it is fundamental to users' understanding of thefinancial statements. Attention is invited to following notes of the standalone financialstatements:

1. Mismatch in Paid-up-Share Capital

Attention has been invited to Note No. 13 of Notes to Financial Statements wheremismatch has been observed in Paid-up-capital as compared to Books of Account and as perMaster Data on Ministry of Corporate Affair website due to share forfeiture amount ofRs.15637.50.

2. Attention has been invited to Note No. 12 of Notes to Financial Statements where ithas been observed by us that "Advance to LIC" in respect of Leave Encashmentamounting to Rs. 39749669.00 as on 31/03/2020 has been carry forwarded as on 31/03/2021without any change.

Since the Actuarial Valuation has not been carried out by the company for the currentyear as specified in the IND AS-19 "Employees Benefits".

However in the context of employee benefits Indian GAAP mandates that a liability isrecorded in the financial statements in respect of employee benefit schemes in accordancewith AS 15 or Ind AS 19 as applicable. The accounting standards require that a companyshall perform an actuarial valuation to estimate the liability and make other disclosuresas required by the accounting standard. Further Actuarial valuations shall be required atthe end of every accounting period for the purpose of preparation of financial statementswhich depict accurate results and financial position.

3. Attention has been invited to Note No. 12 of Notes to Financial Statements where ithas been observed by us that the Interest Receivable from UPPCL for the FY 202021 has notbeen taken in the books of accounts.

Further Interest Receivable from UPPCL aggregate amount of Rs. 1064758.00 ispertaining to the 02 previous financial years i.e. FY 2018-19 & FY 2019-20 and asper the past practice of company is to settle the amount of interest receivable after oneyear from the end of relevant financial year against the bill of electricity incurredrather than paying the interest directly to the company whereby: -

> Interest Receivable for FY 2018-19 was amounting to Rs.532379.00 should havesettled after one year from the end of relevant financial year i.e. FY 202021. Howeverwe observed that the same has not been settled into their books of account.

> Interest Receivable for F.Y 2019-20 amounting to Rs.532379.00 will be settledafter one year from the end of relevant financial year i.e. in FY 2021-22.

4. Attention has been invited to Notes No. 4 of Notes to Financial Statements relatingSundry Debtors (unsecured) were: -

i) that the total debtors outstanding (including North East West & South Zones)as on 31.03.2021 amounting to Rs. 393.70 Lakhs against the provision amounting toRs.324.27 lakhs has been running from earlier years.

ii) No external confirmation regarding any Sundry Debtors outstanding more than a yearhas been provided.

iii) No Age wise analysis has been maintained by the company in respect of the debtors.

iv) In respect of one of the debtor's "Maarz Mechatronics Pvt" a vehicle hasbeen given by the company for Research work where the said party has provided a BankGuarantee of Rs.100000 in favour of company. However it was observed by us that the BGprovided expired on 18/12/2019 and no vehicle has been returned by the party.

5. Attention has been invited to the following mentioned Notes to Financial Statementswe couldn't verify the existence of events were: -

i) Notes No. 5 of Notes to Financial Statements Deposit was made with others amountingto Rs.10.74 Lakhs and Deposit with Landlord amounting to Rs.2.43 Lakhs.

ii) Notes No. 12 of Notes to Financial Statements relating to Misc. Advance to Staffrecoverable amounting to Rs.1.59 Lakhs.

iii) Notes No. 17 of Notes to Financial Statements relating to Advance from Customeramounting to Rs.1.89 Lakhs.

6. Attention has been invited to Note No. 18 of Notes to Financial Statements where ithas been observed that SIL Office had transferred 02 Nos. of 3-Wheelers (Electric Vehicle)to Cement Corporation of India on dated 27/01/2021 without receipt of any advance againstthe same. However it is general practice of the company to first receive advance from thesuppliers against the sale. Thus it seems that policy of the company has not beenfollowed.

Further we observed that Cement Corporation of India has returned back the said itemsto SIL Office during the month of April 2021. However SIL Office had booked the transferof 02 Vehicles into their Income as sale by debiting the Sundry Debtors. However the saidtransaction was not reversed while finalising their financials for the FY 2020-2021. As aresult sale along with sundry debtors into their books of account were excessivelybooked.

7. Attention has been invited to Note No. 21 of Notes to Financial Statements wherebyit has been observed that Rs. 1.50 Crores (Approx.) has been provided by the company intotheir books of account. All the payment accounted for comes under the purview of deductionof GST -TDS however company has neither deducted nor accounted for GST TDS into theirbooks of accounts as a result not deposited the same before the specified due date i.e.10/04/2021. For said default Company has to paid penal Interest along GST TDS amount.

8. Attention has been invited to Notes No. 21 of Notes to Financial Statements relatingto

i) Arrears on Wages payable amounting to Rs.39.79 Lakhs are payable in respect ofretired employees which are no more associated with company.

ii) Liability for Adhoc payment amounting to Rs.0.43 lakhs are payable in respect ofretired employees which are no more associated with company.

9. Attention has been invited to Notes No. 21 of Notes to Financial Statements relatingSundry Creditors were: -

i) that the total creditors outstanding as on 31.03.2021 amounting to Rs. 1370.88 lakhsin respect of which no age wise analysis has been maintained by the company.

ii) No external confirmation regarding Sundry Creditors outstanding more than a yearhas been provided.

10. Attention has been invited to Note No. 29 of Notes to Financial Statements where ithas been observed by us that salary register of employees has not been updated by thecompany from January 2021 and only a salary sheet of employees has been provided to usfor the verification. We suggest that Management ensure that salary register should beupdated on timely manner. Further signature of the Account Officer/ Concerned in chargeon the Salary Register was missing.

11. Attention has been invited to Notes No. 31 of Notes to Financial Statementsrelating to payment/ provision for Rent of Warehouse it was observed by us that expensewas charged on approval basis for the region wise warehouse taken on rent against whichno legal deed has been found.

12. Attention has been invited to Note No. 31 of Notes to Financial Statements where ithas been observed by us that total expenditure incurred in respect of Research &Development amounting to Rs. 9545575.81 is mainly in relation to the Testing/ Dying ofEV along with purchase of batteries to be used in production of Electronic Vehicles (EV)the same is not connected to any kind of research & development made by the company.

On further examining the same it has been informed to us by the management that thecompetent appropriate authority has not approved the said Product along with appropriatehead of expenditure has also not been approved for the booking of said expenditurespertaining to Electronic Vehicles (EV) as a result the same has been booked under thehead Research & Development.

13. Mismatch in the Directors/ Signatory details

Attention has been invited to Note No. 42 of Notes to Financial Statements where it hasbeen observed by us that there is a mismatch in the details of the Directors/ signatory ofthe company as per the MCA website and books of accounts. The detail of the same is givenbelow:

As per MCA Website Begin Date As per Note No.42 of FY 2020-2021 Begin Date
Mr. Renati Sreenivasulu (CMD) 06/10/2016 Mr. Rupesh Telang (CMD) 25/04/2021
Mr. Sakthimani Seshmani (DF) 04/06/2018 Mr. Mukesh Kumar (DF) 28/08/2020
Mr. Sunil Kumar Singh 15/01/2018 Mr. Sunil Kumar Singh 15/01/2018
Mr. Mahendra Pratap Singh 28/01/2020 Mr. Mahendra Pratap Singh 28/01/2020
Mrs. Rakesh Sharma 28/01/2020 Mrs. Rakesh Sharma 28/01/2020
Mrs. Ritu Pande 13/11/2018 Mr. Rama Kant 12/11/2020
Mr. Raj Shekhar Tiwari 08/02/2018

In context to the above it has been observed by us that:

a) Rule 8: For the purpose of section 152 for the Companies Act 2013 the companyshould have intimated to the Ministry of Corporate Affairs changes in the management(Managing Director Directors Manager and Secretary) by filing e-Form DIR-12 along withthe applicable Filing fee with the Registrar of Companies (ROC) within thirty (30) daysfrom the date when such change takes place.

b) For the above said non-compliance Registrar of Companies (ROC) may impose penaltyviz. additional fee for the delay in filing of e-Form DIR-12 (Information about Removalor Appointment of Director) based on number of days delayed as follows:

Period of Delay Additional Fees
Up to 30 days 2 times of normal fees
More Than 30 days & up to 60 days 4 times of normal fees
More Than 60 days & up to 90 days 6 times of normal fees
More Than 90 days & up to 180 days 10 times of normal fees
More Than 180 days 12 times of normal fees

Thus we are of the opinion that to avoid further penalty and to comply with the aboverelevant company should file e-form DIR-12 for the change of Directors/ Signatory as soonas possible.

Our opinion is not modified in respect of the matters emphasized above.

Key Audit Matters

Key audit matters are those matters that in our professional judgment were of mostsignificance in our audit of the standalone financial statements of the current period.These matters were addressed in the context of our audit of the standalone financialstatements as a whole and in forming our opinion thereon and we do not provide aseparate opinion on these matters. Attention has been invited to the following points: y

1. Non-Payment/ Deposition of PF and Pension Contribution

Attention has been invited to Note No. 29 of Notes to Financial Statements where whileexamining the Provident Fund and Pension contribution details it has been observed by usthat the same has not been deposited by the company to the respective authorities sinceOctober 2020. Details of the same is as under: -

Sr. Month Employee's PF Pension
1. October-2020 1702714.00 287500.00
2. November-2020 1655331.00 271871.00
3. December-2020 1578879.00 249581.00
4. January-2021 1148730.00 93514.00
5. February-2021 1118456.00 78750.00
6. March-2021 1150801.00 110239.00
Total 8354911.00 1091455.00

Audit Procedures to address the Key Audit Matter

Our audit approach consisted of testing the design and operating effectiveness ofinternal controls and substantive procedures and we conclude that in case the contributionis not deposited by the due date as prescribed under the relevant Acts and is depositedlate the employer is not only liable to pay interest on delayed payment but also incurpenalties.

Further as per Section 7Q "An employer who fails to pay the contribution withinthe limit specified in the regulation shall be liable to pay simple interest at the rateof 12% p.a. in respect of each day of delay or default in payment of contribution.

Moreover under Section 14B certain penalties need to be incurred in case of failure inpayment of contribution viz

• 5% interest p.a. for a delay up to 2 months

• 10% interest p.a. for a delay up to 2-4 months

• 15% interest p.a. for a delay up to 4-6 months and

• 25% interest p.a. for a delay of more than 6 months

2. Non-Capitalisation of Assets under inspection

Attention has been invited to Note No. 2 of Notes to Financial Statements regardingnon-capitalisation of capital work in progress amounting to Rs.174.07 Lakhs pending sinceF.Y 2016-17 as assets under inspection.

There is the risk over the company's estimation about capitalisation of Assets underInspection were:

• Inherent challenges with accurately predicting the future economic benefit whichmust be assessed as probable for capitalisation

Audit Procedures to address the Key Audit Matter

Our audit approach consisted of testing the design and operating effectiveness ofinternal controls and substantive procedures where we have: -

• Evaluated the design of internal control relating to assets under inspection.

• Carried out a combination of procedure involving enquiry and observationreperformance and inspection of evidence in relation to these controls obtained that:

i. Assets purchased from HMT International Ltd. dated: 31/03/2017 are specializedassets which required specialised training to company employees to operate the asset. Forthis HMT International Ltd. would be sending his experts to excel the employees ofcompany to operate the assets. However till the date of our audit no expert has beensent by HMT International Ltd.

3. Material Uncertainty relating to Interest Tax & Penalty

Attention has been invited to Note No. 31 of Notes to Financial Statements wereInterest and penalties on taxes amounting to Rs. 116.72 Lakhs relating to materialuncertainty regulatory matters under dispute.

There is the risk over the company's estimation about the provisioned amount ofInterest on Taxes & Penalty were:

Uncertainties relating appropriate documentation relating to legal precedence forthe disputed cases pending at adjudication.

Uncertainties relating to management estimation involves significant judgement todetermine the possible outcome.

Audit Procedures to address the Key Audit Matter

Based on our audit procedure we reviewed and challenged the management underlyingassumption about the provisioning relating to Taxes & Penalty accordingly we have beeninformed that: -

• no such notices/ Communication/ or letter (in any kind) relating to cases hasbeen issued to company from the date of filing of such cases by the concerned authoritiesaccordingly nor the files relating to cases have been produced before us.

4. Non-Payment of Long-Term Loan from Government of India

Attention has been invited to Note No. 15 of Notes to Financial Statements wherepayment has overdue relating to outstanding long-term loan received from Government ofIndia amounting to Rs.5300 lakhs (Plan Loan of Rs. Rs.1200 lakhs and loan for VRS/ VSSscheme amounting to Rs. 4100 lakhs).

5. Non-Compliance of SEBI (LODR) Regulation 2015

Attention has been invited to Note No. 35 of Notes to Financial Statements were penaltyimposed on the company under regulation 30 of SEBI (Listing Obligation and DisclosureRequirements) amounting to 57.29 Lakhs.

Refer Note No. 35 "Contingent Liabilities and Commitments". The Company hasmaterial uncertain positions related to penalty imposed which involves significantjudgment to determine the possible outcome of these disputes provisions required if

Audit Procedures to address the Key Audit Matter

We evaluated the design and tested the operating effectiveness of internal controlsrelated to the assessment of the likely outcome of uncertain positions related to thepenalty imposed the provision made if any.

We verified the appropriateness of the accounting policies disclosures related toprovisions for subjudice matters and details of contingent liabilities in note no. 35respectively in the standalone financial statements.

6. Recoverability from disputed and long pending cases from Consumer Forum

Attention has been invited to Note No. 12 along with Note No. 35 of Notes to FinancialStatements were recoverability of deposit with Consumer Forum made regarding disputedcases pending at adjudication amounting to Rs.8.94 Lakhs.

There is the risk over the company's estimation about the recoverability of withholdingamount of deposit with authorities were:

Uncertainties relating appropriate documentation relating to legal precedence forthe disputed cases pending at adjudication.

Uncertainties relating to management estimation involves significant judgement todetermine the possible outcome.

Audit Procedures to address the Key Audit Matter

Based on our audit procedure we reviewed the nature of the amount recoverable and thesustainability and the likelihood of recoverability upon final resolution accordingly wehave been obtained/ informed that: -

• no such notices/ Communication/ or letter (in any kind) relating to cases hasbeen issued to company from the date of filing of such cases by the concerned authoritiesaccordingly neither the letter has been shown before us which has been issued by companyfor the release of Security Deposit nor the files relating to cases have been producedbefore us.

7. Recoverability from disputed and long pending cases from Sales Tax Department

Attention has been invited to Note No. 12 along with Note No. 35 Notes to FinancialStatements there are some accounts of previous Indirect tax Regime and deposit with otherswhich are still being reflected on the Assets side of Balance Sheet. While discussing thematter with appropriate authority it was told to us that the cases under these accountsare pending with concerned tax authorities and therefore these accounts are stillreflecting in the books of accounts. For details of such accounts please refer the tablementioned below:

Sl. No

Ledge r Head No.

Ledger Name

Date of Deposit

Amount as per Financials

Management Reply Regarding the Deposits
1

30510

DEPOSIT WITH SALES TAX
Deposit with Assam Sales Tax Authority for Dibrugarh Warehouse Security

1997-98 (17-041997)

50000.00

The case is under Trial. Latest updation is awaited. However this is not pertaining to the FY 2020-21
Deposit with Rajasthan as Security (NSC) for Reg. under Entry Tax

2005-06

2015.00

The case is under Trial. Latest updation is awaited. However this is not pertaining to the FY 2020-21
Deposit with J&K as Security

2010-11

45000.00

The case is under Trial. Latest updation is awaited. However this is not pertaining to the FY 2020-21
Total

97015.00

2

30520

DEPOSIT WITH OTHERS
State Consumer Redressal Commission Haryana

2005-06

25000.00

The case is under Trial. Latest updation is awaited. However this is not pertaining to the FY 2020-21
Secretary SCBRC Balasor

2005-06

25500.00

The case is under Trial. Latest updation is awaited. However this is not pertaining to the FY 2020-21
Sl. No

Ledge r Head No.

Ledger Name

Date of Deposit

Amount as per Financials

Management Reply Regarding the Deposits
District Consumer Forum Osmanabad

2005-06

5000.00

The case is under Trial. Latest updation is awaited. However this is not pertaining to the FY 2020-21
Kalyani Steel Products

2003-04 & 2015-16

838303.00

FD is deposited in court and case is not yet settled.
Consumer Dispute Redressal Forum Ahmedabad

2005-06

25000.00

The case is under Trial. Latest updation is awaited. However this is not pertaining to the FY 2020-21
ADSL Internet Alambagh

2005-06

1700.00

No record available since this is pertaining to FY 2005-06.
Voice Stream

2003-04

1500.00

No record available since this is pertaining to FY 2003-04.
Prabhagiya Vanadhikari (P7145)

2009-10

49000.00

Deposited as security money in Forest Department in FY 200910.
BSNL

2010-11 2011-12 2017-18

3000.00

Deposited in BSNL as Security money.
Hon'ble High Court (H-7091) W.P. No. 1835/M.S.

2015-16

100000.00

Deposited in High Court. Date of Filing - 27.01.2016. Last Listed on - 20.05.2019
Total

1074003.00

3 30525 DEPOSIT WITH EXCISE 2001-02

6500.00

This appeal is pertaining to FY 2000-01 & No record is available in this regard.
4 30538 DEPOSIT WITH EXCISE AUTHORITIES (APPEAL)
Deposit with Excise Authorities for filing appeal in Tribunal Allahabad 2015-16

11000.00

Deposited in Jan-2016. Case is still pending as per latest update.
Deposit with Excise Authorities for filing appeal in Tribunal Allahabad 2017-18

8050.00

Deposited with Service Tax Authority in FY 2017-18. However case is still pending.
Total

19050.00

5 30530 DEPOSIT WITH CONSUMAR FORUM
Deposit with State Consumer Dispute Redressal Commission Patna. 2006

25000.00

Case decided in favour of SIL. Advocate was asked for withdrawing the said amount in favour of SIL. However the amount is still with the court.
Deposit with Consumer Forum Untraced

12736.00

Not Traceable
Sl. No Ledge r Head No. Ledger Name Date of Deposit

Amount as per Financials

Management Reply Regarding the Deposits
Deposit with District Consumer Dispute Redressal Forum Bhopal. 2014

25000.00

Appeal is still pending.
Deposit with State Consumer Dispute Redressal Commission Patna. 2009

12500.00

Revision is still pending before National Consumer Forum.
Deposit with Bihar Consumer Dispute Redressal Commission Patna 2011

25000.00

Appeal is still pending.
Deposit with State Consumer Dispute Redressal Commission Muzaffarpur 2015

50000.00

Revision is still pending.
Total

150236.00

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 and Corporate Governance Report but does notinclude the standalone financial statements and our auditor's report thereon. Our opinionon the standalone financial statements does not cover the other information and we do notexpress any form of assurance conclusion thereon. In connection with our audit of thestandalone financial statements our responsibility is to read the other information andin doing so consider whether the other information is materially inconsistent with thestandalone financial statements or our knowledge obtained during the course of our auditor otherwise appears to be materially misstated.

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.

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 Companies Act 2013 ("the Act") with respect to the preparation ofthese standalone financial statements that give a true and fair view of the financialposition financial performance (changes in equity) and cash flows of the Company inaccordance with the accounting principles generally accepted in India including theIndian Accounting Standards specified under section 133 of the Act. This responsibilityalso includes maintenance of adequate accounting records in accordance with the provisionsof the 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 financial statements thatgive a true and fair view and are free from material misstatement whether due to fraud orerror.

In preparing the financial statements the Board of Directors 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 unlessthe Board of Directors either intends to liquidate the Company or to cease operations orhas no realistic alternative but to do so.

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

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 scepticism 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 Companies Act 2013 we are also responsible for expressing our opinion on whetherthe company 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 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.

• 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.

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 financial statements of thecurrent period and are therefore the key audit matters. We describe these matters in ourauditor's report unless law or regulation precludes public disclosure about the matter orwhen 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.

Other Matters

The Other Matter in the auditor's report that refers to a matter other than thosepresented or disclosed in the financial statements that in the auditor's judgment isrelevant to users' understanding of the audit the auditor's responsibilities or theauditor's report. Attention has been invited to the following points:

1) Detail of Charges (Assets) on MCA Website

During the audit based on our audit procedure it was observed by us that Chargecreation on assets is showing on MCA Website. A snapshot details from MCA Website were asfollows: -

Assets under charg e Charge Amount Date of Creation Date of Modification Status
Book debts Rs.60000000 03/04/2007

-

CLOSED
NA Rs.120000000 31/07/1975 28/03/2007 OPEN

According to information and explanation given us company has cleared its mortgagedebts as of now no such assets under charge exists over the company.

However in the context to the same it has been observed by us that: -

a) As per Sec. 82(1) of Companies Act 2013

A company shall give intimation to the Registrar in the prescribed form of the paymentor satisfaction in full of any charge registered within a period of thirty days from thedate of such payment or satisfaction and the provisions of sub-section.

b) Rule 8 (1)

For the purposes of sub-section (1) of section 82 a company shall within thirty daysfrom the date of the payment or satisfaction in full of any charge registered underChapter VI give intimation of the same to the Registrar in e-form CHG-4 along with thefee.

Thus we are of opinion that company should file e-form CHG-4 for the satisfaction ofCharge as soon as possible.

2) During the course of Audit it was observed that SEBI has imposed a penalty fornoncompliance of Regulation 6(1) of SEBI (LODR) Regulations 2015 amounting to Rs.36580.00and company has not accounted for said penalty provision in their Books of Accounts. Incontact to the same officials inform us that company has made a request to SEBI forexemption of fees on the ground on closure notice issued.

3) Income Tax/ Tax deducted at Source

1. While checking the records relating to Advance Income Tax we observed that SILOffice had deposited the fund of INR 311000.00 in the form of Demand Draft with IncomeTax Department against the matter of re-opening of seized bank account of SIL Officeduring the FY 2017-18 on Dated 12/02/2018. However SIL Office accounted for the value ofINR 311000.00 under the head of Advance Income Tax. Further we observed that the saiddeposit with Income Tax Department was not showing the Form 26AS of SIL Office and IncomeTax Dept. will only accept the credit once the same should be reflected on the face of26AS of SIL. While filing the representation it was mentioned that there was norequirement of such type of deposit as a result we fail to understand why the same fundhas been deposited with Income Tax Department.

2. While reviewing the Income Tax proceedings we observed that Income Tax Departmenthas raised the huge value of demand in respect of several financial years and SIL OfficeManagement has shown the said demand as their contingent liabilities in to the foot noteof their financial statement. Details of year wise demand is as under:

Sl. Financial Year O/S Demand Accrued Interest Total
1 FY 2012-13 (AY 2013-14) 119805553.00 13377562 133183115.00
2 FY 2013-14 (AY 2014-15) 8299080.00 2655680.00 10954760.00
3 FY 2014-15 (AY 2015-16) 16958220.00 5426624.00 22384844.00
TOTAL 145062853.00 21459866.00 166522719.00

3. While reviewing the Income Tax TDS proceedings we observed that Income TaxDepartment has raised the good value of demand in respect of several financial years andSIL Office Management has shown the said demand as their contingent liabilities in to thefoot note of their financial statement. Details of year wise TDS demand is as under: -

Financial Year Manual demand Processed demand
2009-10 0 Rs. 154020
2007-08 0 Rs. 9520
Total 0 Rs. 163540

Further while examining the TDS proceedings certain defaults related to prior-periodhas also been observed by us. The detail of the same is given below:

Particulars (Defaults) Amount
Short Payment Rs. 92444.00
Short Deductions Rs. 11404.35
Int. on payment default u/s 201 Rs. 72160
Int. on deduction defaults u/s 201 Rs. 6952
Late filing fee u/s 234E Rs. 28400
TOTAL Rs. 211360.35

4) As per Rule 12A of the Companies (Appointment and Qualification of Directors) Rules2014 "Every individual who holds a Director Identification Number (DIN) as on 31stMarch of a financial year as per these rules shall submit e-form DIR-3-KYC for the saidfinancial year to the Central Government on or before 30th September of immediate nextfinancial year. If director fails to comply with the afore-mentioned s provision Penaltyof Rs. 5000/- shall be levied on the expiry of the due date

While checking the director's details on the MCA Website it was observed by us that incase of one Mrs. Rakesh Sharma (DIN: 08695154) currently DIN has been deactivated due tonon-filling of DIR-3 KYC within the specified time.

5) While examining the particulars about the company on MCA website it has beenobserved that the Date of last AGM and Balance Sheet Dated 27/09/2019 & 31/03/2019respectively was updated on the website. Thus it is reflecting on the website that thecompany has not filled the Annual Filing in Form AOC-4 (Filing of Audited FinancialStatements) and Form MGT-7 (Filing of Annual Return) for the FY 2019-20.

However as per section 137(1) of Companies Act 2013 every company is required tofile with the Registrar a copy of its Financial Statements in e-Form AOC-4 along with thefiling fee within thirty days of its annual general meeting and in case of any delay infiling the concerned form additional fee for amount of Rs. 100.00 per day is levied as apenalty on defaulting company.

Further as per section 92 of Companies Act 2013 every company is required to preparethe Annual Return in Form MGT-7 and file with the Registrar within sixty days from thedate on which Annual General Meeting (AGM) is actually held or from the last day on whichAGM should have been held and if a company fails to file its annual return under section92 before the expiry of the period specified under section 403 with additional fee thecompany shall be punishable with fine which shall not be less than fifty thousand rupeesbut which may extend to five lakh rupees and every officer of the company who is indefault shall be punishable with imprisonment for a term which may extend to six months orwith fine which shall not be less than fifty thousand rupees but which may extend to fivelakh rupees or with both.

6) The attention has been invited regarding the assessment of the current position ofassets and liabilities no actions such as external confirmation age wise analysisphysical verification reconciliation etc. has been undertaken by the management tilldate.

CURRENT POSITION OF ASSETS AND LIABILITIES:

By taking into consideration the current position of the company as the closure of thecompany has been approved by the competent authority hence the attention has been invitedon the position of the assets and liabilities as on 31.03.2021.

It has been brought to our notice that regarding the assessment of the currentposition of assets and liabilities no actions such as external confirmation age wiseanalysis physical verification reconciliation etc. has been undertaken by the managementtill date. As per our suggestion appropriate actions shall be taken by the managementregarding the same.

Further for the true and fair presentation of the financial position of the entitythe management should make assessment of the probable future economic inflows/ outflowsfrom Assets and Liabilities undertake physical verification reconciliation aginganalysis and external confirmation in respect of the below mentioned assets andliabilities as per their nature.

ASSETS
A/C Code Particulars Amount (in Rs.)
SECURITY DEPOSITS
30506 Custom Duty Deposit Rs. 8256.00
30507 Port Trust Rs. 12733.15
30508 Octroi Deposit Rs. 21377.85
30511 Deposit with St Authorities (Fan) Rs. 286608.00
30519 Deposit with Export Inspection Rs. 10398.00
CAPITAL WORK IN PROGRESS
10909 Capital Work In Progress Rs. 1730317.00
10911 Assets Under Inspection Rs. 17406978.00
OTHER LOANS AND ADVANCES
30350 Recoverable from Workmen (Wage Revision 2002) Rs. 7789051.55
30351 Deferred Interest on Employee Benefit Rs. 200816.36
TRADE RECEIVABLE
30305 S. Debtors Three Wheeler Rs. 3702706.47
30306 S. Debtors Two Wheeler Rs. 2577333.59
30320 S. Debtors South Zone Rs. 1308066.13
30322 S. Debtors Others Rs. 2523338.93
30801 S. Debtors North Zone Rs. 5807564.62
30802 S. Debtors East Zone Rs. 1264104.67
30803 S. Debtors West Zone Rs. 2812175.25
30340 S. Debtors (South Zone II) Rs. 13940856.38
30347 Royalty Receivable Rs. 9156977.64
OTHER CURRENT ASSETS
30301 Vehicle Advance (Secured) Rs. 1835.33
30321 Vehicle Advance (3 Wh) Rs. -1162.00
30510 Deposit with Sales Tax Rs. 1441363.00
30520 Deposit with Others Rs. 1074003.00
30525 Deposit with Excise Rs. 6500.00
A/C Code Particulars Amount (in Rs.)
30538 Deposit with Excise Authorities (Appeal) Rs. 19050.00
30530 Deposit with Consumer Forum Rs. 141882.61
30548 ITC on RO Inputs Rs. 549757.50
OTHER ADVANCES
30302 Staff Advance Rs. 159085.18
30701 UPIL General Advance Rs. 1512000.00
30402 Interest Recoverable On UPIL 3 Rs. 2444849.68
30314 Salary Advance Rs. 1500.00
30315 Recoverable Advance Rs. 548925.26
30312 Claims Recoverable Rs. 1400000.00
30317 Pre-paid Expenses Rs. 1006507
30323 Wages Advance Rs. 300.00
30533 Input Tax Recoverable Account Rs. 1153483.00
30363 Recoverable from Sales Tax Authorities Rs. 1400109.00
30364 Subsidy Receivable Rs. 2592000
30352 Extra Coin Recovery Rs. 1106.72
30362 Professional Tax Recoverable Rs. 17421.40
00519 S. Creditors (ANC) Debit Balance Rs. 234364.42
30537 Int. Receivable A/C Consumer Forum Rs. 2131.00
TERM DEPOSITS WITH BANK
30258 SBI STDR (CAPEX) Rs. 41471953.00
30535 Term Deposit S.B.I. (COURT ORDER) Rs. 126829.00
30531 Deposit with Welfare Fund Rs. 129621.00
30268 PN B/TN/CAPEX/STDR Rs. 21261649.00
30245 Short Term Deposit IOB MAIN Rs. 5999436.00
30253 Short Term Deposit I.O.B. GAURI Rs. 41921.00
30269 PNB/CK/CAPEX/STDR Rs. 15564509.00
LIABILITIES
A/C Code Particulars Amount (in Rs.)
ADVANCES RECEIVED FROM CUSTOMERS
00550 Advance from Customers (EV) Rs. 189850.00
DEPOSITS
00510 Deposits from Others Rs. 280000.00
00522 From Dealers Rs. 27928606.64
00535 From Stockist Rs. 483606.86
TRADE PAYABLES
00501 CR. Bal. Sundry Creditors (Civil) Rs. 5029914.76
00514 CR. Bal. Sundry Creditors (Gen) Rs. 42543113.48
00559 CR. Bal. Sundry Creditors 3WH. Rs. 12128520.47
OTHER CURRENT LIABILITIES
00630 Own Your House Rs. 571350.00
30302 Credit Balance Staff Ledger Rs. -159085.18
- Cr. Balance Sundry Debtors Rs. 1085050.18
00509 Earnest Money Rs. 2266720.00
00534 From Others Rs. 35491.50
27624 Factory Workers Colony Rs. - 10604458.88
OTHER PAYABLES
00511 Salary Payable Rs. 20020292.74
A/C Code Particulars Amount (in Rs.)
00525 Wages Payable (Regular) Rs. 3215165.80
00503 Salary Payable (Contractual) Rs. 12017315.89
00561 Arrears on Wages Payable Rs. 3979197.75
00562 Recovery for Amortized Die (Cipet) Rs. 336384.70
00507 Liability for Expenses Rs. 27724610.38
00640 Rec. for Canteen Coop Society Rs. 39427.50
00560 Liability Towards Adhoc Payments Rs. 43200.00
00506 Bonus Payable Rs. 3298680.04

Report on Other Legal and Regulatory Requirements

As required by the Companies (Auditors' Report) Order 2016 ("the Order")issued by the Central Government in terms of section 143 (11) of the Act we give in the‘Annexure A" a statement on the matters specified in paragraphs 3 and 4 of theOrder to the extent applicable.

A) 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 standalone balance sheet the standalone statement of profit and loss (includingother comprehensive income) the standalone statement of changes in equity and thestandalone statement of cash flows dealt with by this Report are in agreement with thebooks of account.

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

e) Being a Government Company pursuant to Notification No. GRE. 463(E) dated05.06.2015 issued by the Government of India provisions of Section 164(2) of theCompanies Act 2013 regarding disqualification of directors is not applicable to thecompany.

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".

B) 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 as at 31 March 2021 onits financial position in its standalone financial statements - Refer Note 34 to thestandalone financial statements;

ii. According to the information and explanation given to us the Company did not haveany long-term contracts including derivative contracts for which there were any materialforeseeable losses;

iii. According to the information and explanation given to us there has been no delayin transferring amounts required to be transferred to the Investor Education andProtection Fund by the Company;

C) We are enclosing our report in terms of section 143(5) of the Act on the basis ofsuch checks of the books and records of the company as we consider appropriate andaccording to the information and explanation given to us in the ‘Annexure C' on thedirections and sub-directions issued by Comptroller and Auditor General of India.

For & Behalf of:
Asija & Associates LLP
Chartered Accountants Lucknow
FRN: 003155C/C400011
CA Kamal Kumar Ferwani
(Sr. Partner) Date: 31/08/2021
(M. No.-402982) UDIN: 21402982AAAAFH9832 Place: Lucknow

ANNEXURE A REFERRED TO IN THE INDEPENDENT AUDITOR'S REPORT

To The Members of Scooters India Limited Lucknow On The Accounts Of The Company ForThe Year Ended 31st March 2021

On the basis of such checks as we considered appropriate and according to theinformation and explanation given to us during the course of our audit we report that:

(i) In respect of company's fixed assets:

a. ) The Company has maintained proper records showing full particulars including

quantitative details and situation of fixed assets.

b. ) The company has regular program of physical verification of its fixed assets i.e.

on quarterly basis. In accordance with this program fixed assets were verified duringthe year by an external Chartered Accountants firm but Physical Verification of fixedassets has not been conducted by the company for the quarter ended 31-03-2021.

c. ) According to the information and explanation given to us and on the basis of our

examination of the records of the company title deeds of immovable properties are heldin the name of the company as at Balance sheet.

(ii) As explained to us the Company has a regular program of physical verification ofinventories i.e. on quarterly basis the physical verification of inventory (excludingInventory with third parties) have been carried out by external Chartered Accountantsfirm. However Physical Verification of Inventory has not been conducted by the companyfor the quarter ended 31 -03-2021.

(iii) According to the information and explanation 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. Therefore clause (iii) of the Order is not applicable to theCompany.

(iv) According to the information and explanation given to us the Company has notgranted any loan investments guarantees and security covered under section 185 or 186of the Companies Act accordingly clause (iv) of the Order is not applicable to theCompany.

(v) According to the information and explanation given to us the Company has notaccepted any deposit during the year in terms of section 73 to 76 or any other relevantprovisions of the Companies Act 2013.

(vi) The Central Government has not prescribed the maintenance of cost record undersection 148(1) of the Act for the goods manufactured by the company.

(vii) According to the information and explanations given to us in respect ofstatutory dues:

(a) As per the records the Company is regular in depositing undisputed statutory duesincluding Provident Fund Employee State Insurance Sales Tax Service Tax Customs DutyExcise Duty Value Added Tax Cess and any other statutory dues to the extent applicableto it with the appropriate authorities and as informed no undisputed amount wereoutstanding as at 31st March 2021 for a period of more than six months thedate of becoming payable except the following: -

Sl. No. Name of the Statue Nature of the dues Period Amount (Rs. in Lakhs)
1 Kerala Sales Tax State Sales Tax 92-93 93-94 & 94-95 4.22
Total 4.22

(b) The disputed statutory dues aggregating Rs.1667.54 Lakhs that have not beendeposited on account of matters pending before appropriate authorities. For details ofsuch amounts please refer the below mentioned table:

Disputed Statutory Dues
Sl. No Name of the Statute Nature of the Dues Forum where disputes are pending Period Amount (in Lakhs)
1 a) State Sales Tax Act Entry Tax & Penalty Tax Commissioner of Commercial taxes 97-98 to 06-07 113.77
b) State Sales Tax Act Entry Tax & Penalty Tax Tribunal 03-04 04-05 & 05-06 10.55
2 a) Central Excise and Service Tax Service Tax Commissioner (Appeals) October 2002- March 2017 3.22 & 6.49 Penalty & Indeterminate Interest
b) Central Excise and Service Tax Service Tax Assistant Commissioner 2014-15 0.74 & 0.74 Penalty & Indeterminate Interest
c) Central Excise and Service Tax Central Excise Assistant Commissioner April 2010- September 2010 0.74 & 0.74 Penalty & Indeterminate Interest
d) Central Excise and Service Tax Central Excise Assistant Commissioner 2005-06 to 2008-09 2.48 & 2.48 Penalty & Indeterminate Interest
e) Central Excise and Service Tax Central Excise Tribunal Allahabad August 2008- March 2013 1.10 & 1.10 Penalty & Indeterminate Interest
f) Central Excise and Service Tax Service Tax Appeal Pending 2015-2016 3.87 & 0.88 Penalty & Interest
g) Central Excise and Service Tax Service Tax Appeal Pending 2016-17 4.49 & 0.44 Penalty & Interest
3 ncome Tax Act ncome Tax Dy. Commissioner of Income Tax Range VI Lucknow = 2001-02 to 2008-09 2013-14 & 2015-16 1508.71
Total 1667.54 Penalty & Indeterminate Interest

(viii) In our opinion and according to the information and explanations given to usthe Company has not defaulted in the repayment of dues to financial institution or banksor debenture holders except for the Interest Free Plan loan amounting to Rs.20.00/-Crores provided by the Government of India through sanction letter dated 23-07-2013 whichthe company has to repay in five equal instalments commencing from 23-07-2016 however onlyfirst instalment of Rs.4.00/- Crores has been paid by the company till now and remainingfour instalments amounting to Rs. 16.00/- Crores (interest free) (4.00/- Crore each) whichwere due dated 23-07-2017 and 23-072018 and 23-07-2019 and 23-07-2020 have not been paidtill the end of Current Financial Year.

Further during the current year Government of India has disbursed the fresh loan ofRs.41.00 Crore (with Interest) on 29-03-2021 for the closure of company's operationsthrough Closure Notice issued on Dated 28-01-2021 which shall be re-payable from theproceeds of sale as specified in the letter.

(ix) The Company has not raised money by way of initial public offer or further publicoffer (including debt instruments) and term loans during the year however the company hasraised term loan in earlier years which has been applied for the purpose for which theyhave been raised.

(x) Based upon the audit procedures performed and information given to us we reportthat no fraud on by the company has been noticed or reported during the year bymanagement. However as explained to us by the management that in the financial year2008-09 Board of Directors revealed that a commercial agreement was executed by the CMDwithout the authority of the board and after due consideration the Board decided to referthe matter to the appropriate authority for the future action however no action on thesame was reported to us.

(xi) Being a Government Company pursuant to Notification No. G.S.R. 463(E) dated 5thJune 2015 issued by Government of India Provisions of section 197 of the Act is notapplicable to the company.

(xii) In our opinion and according to information and explanation given to us theCompany is not a Nidhi Company. Accordingly paragraph 3(xii) of the order is notapplicable.

(xiii) According to the information and explanations given to us the Company is incompliance with Section 177 every listed company shall have to constitute an AuditCommittee which as per Rule 6A provide approval to all the related party transactionsproposed to be entered in the company audit committee has been reconstituted on13/02/2020. Further the company is in compliance of section 188 of the Companies Act2013.

(xiv) According to the information and explanation given to us and based on ourexamination of the company the Company has not made any preferential allotment or privateplacement of shares or fully or partly convertible debentures during the year.

(xv) According to the information and explanation given to us and based on ourexamination of records of the company the company has not entered into non-cashtransactions with directors or persons connected with him. Accordingly paragraph 3(xv) ofthe order is not applicable.

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

For & Behalf of: Asija & Associates LLP Chartered Accountants Lucknow FRN: 003155C/C400011
CA Kamal Kr. Ferwani
(Sr. Partner) Date: 31/08/2021
M. No.: - 402982 UDIN: - 21402982AAAAFH9832 Place: Lucknow

ANNEXURE B TO THE INDEPENDENT AUDITORS' REPORT

To The Members of Scooters India Limited Lucknow On The Accounts Of The Company ForThe Year Ended 31st March 2021

Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section143 of the Companies Act 2013 ("the Act")

We have audited the internal financial controls over financial reporting of ScootersIndia Limited ("the Company") as of 31st March 2021 in conjunctionwith our audit of the financial statements of the Company for the year ended on that date.

Management's Responsibility for Internal Financial Controls

The Company's management and Board of Directors are responsible for establishing andmaintaining internal financial controls 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(‘ICAI'). These responsibilities include the design implementation and maintenanceof adequate internal financial controls that were operating effectively for ensuring theorderly and efficient conduct of its business including adherence to company's policiesthe safeguarding of its assets the prevention and detection of frauds and errors theaccuracy and completeness of the accounting records and the timely preparation ofreliable financial information as required under the Companies Act 2013.

Auditors' Responsibility

Our responsibility is to express an opinion on the Company's internal financialcontrols over financial reporting based on our audit. We conducted our audit in accordancewith the Guidance Note on Audit of Internal Financial Controls over Financial Reporting(the "Guidance Note") and the Standards on Auditing issued by ICAI and deemedto be prescribed under section 143(10) of the Companies Act 2013 to the extentapplicable to an audit of internal financial controls both applicable to an audit ofInternal Financial Controls and both issued by the Institute of Chartered Accountants ofIndia. Those Standards and the Guidance Note require that we comply with ethicalrequirements and plan and perform the audit to obtain reasonable assurance about whetheradequate internal financial controls over financial reporting was established andmaintained and if such controls operated effectively in all material respects.

Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal financial controls system over financial reporting and their operatingeffectiveness. Our audit of internal financial controls over financial reporting includedobtaining an understanding of internal financial controls over financial reportingassessing the risk that a material weakness exists and testing and evaluating the designand operating effectiveness of internal control based on the assessed risk. The proceduresselected depend on the auditor's judgment including the assessment of the risks ofmaterial misstatement of the financial statements whether due to fraud or error. Webelieve that the audit evidence we have obtained is sufficient and appropriate to providea basis for our audit opinion on the Company's internal financial controls system overfinancial reporting.

Meaning of Internal Financial Controls Over Financial Reporting

A Company's internal financial control over financial reporting is a process designedto provide reasonable assurance regarding the reliability of financial reporting and thepreparation of financial statements for external purposes in accordance with generallyaccepted accounting principles. A company's internal financial control over financialreporting includes those policies and procedures that

(1) Pertain to the maintenance of records that in reasonable detail accurately andfairly reflect the transactions and dispositions of the assets of the company.

(2) 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 authorisations of management and directors of the company; and

(3) Provide reasonable assurance regarding prevention or timely detection ofunauthorised acquisition use or disposition of the company's assets that could have amaterial effect on the financial statements.

Inherent Limitations of Internal Financial Controls Over Financial Reporting

Because of the inherent limitations of internal financial controls over financialreporting including the possibility of collusion or improper management override ofcontrols material misstatements due to error or fraud may occur and not be detected.Also projections of any evaluation of the internal financial controls over financialreporting to future periods are subject to the risk that the internal financial controlover financial reporting may become inadequate because of changes in conditions or thatthe degree of compliance with the policies or procedures may deteriorate.

Opinion

In our opinion the Company has in all material respects an adequate internalfinancial controls system over financial reporting and such internal financial controlsover financial reporting were operating effectively as at 31 March 2021 based on theinternal control over financial reporting criteria established by the Company consideringthe essential components of internal control stated in the Guidance Note on Audit ofInternal Financial Controls Over Financial Reporting issued by the Institute of CharteredAccountants of India.

For & Behalf of: Asija & Associates LLP Chartered Accountants FRN: 003155C/C400011
CA Kamal Kr. Ferwani (Partner) M. No.: - 402982 UDIN - 21402982AAAAFH9832 Date: 31/08/2021 Place: Lucknow

ANNEXURE C TO THE INDEPENDENT AUDITORS REPORT

To The Members Of Scooters India Limited Lucknow On The Accounts Of The Company ForThe Year Ended 31st March 2021

Directions under section 143(5) of the Companies Act 2013

1. Whether the company has system in place to process all the accounting transactionsthrough IT system? If yes the implications of processing of accounting transactionsoutside IT system on the integrity of the accounts along with the financial implicationsif any may be stated.

No accounting transactions has been made outside IT system.

2. Whether there is any restructuring of an existing loan or cases of waiver/write offof debts /loans/interest etc. made by a lender to the company due to the company'sinability to repay the loan? If yes the financial impact may be stated.

No such cases have been observed during the FY 2020-21.

However during the F.Y. 2018-194 an existing loan of Rs.1.89 crores given by theGovernment of India has been converted into equity through letter Dated 5thJune 2018. The financial impact of this conversion was that Equity of the company hasbeen increased by Rs.1.89 crores and GOI loan has been decreased by Rs.1.89 crores.Further interest on the above loan also been freezed through the above-mentioned letterbut there was no financial impact of freezing of interest as the same was not accountedfor in the Financial Statements of Scooters India Limited.

3. Whether funds received/ receivable for specific schemes from central/ state agencieswere properly accounted for/ utilized as per its term and conditions? List the cases ofdeviation.

No such cases of deviations observed.

Sub-Direction under section 143(5) of the Companies Act 2013- Nil

For & Behalf of: Asija & Associates LLP Chartered Accountants FRN: 003155C/C400011
CA Kamal Kr. Ferwani
(Sr. Partner) Date:31/08/2021
M. No.: - 402982 Place: Lucknow
UDIN- 21402982AAAAFH9832

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