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Scooters India Ltd.

BSE: 505141 Sector: Auto
NSE: N.A. ISIN Code: INE959E01011
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OPEN 38.00
CLOSE 38.00
VOLUME 2629
52-Week high 48.70
52-Week low 27.10
P/E
Mkt Cap.(Rs cr) 323
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

REPORT ON THE AUDIT OF THE STANDALONE FINANCIAL STATEMENTS

Qualified opinion

We have audited the Standalone financial statements of Scooters India Limited('the

st

company') which comprises the Standalone Balance sheet as at 31 March 2020 and thestatement of Profit & Loss Account (including Other Comprehensive Income) thestandalone Statement of changes in Equity and standalone statement of Cash Flows for theyear then ended and notes to the standalone financial statements including a summary ofSignificant Accounting Policies and other explanatory information. (together referred toas 'standalone financial statements')

In our opinion and to the best of our information and according to explanations givento us except for the matters described in Paragraph (a) of the Basis for QualifiedOpinion paragraph the said standalone Ind AS financial statements give theinformation required by the Companies Act 2013 ("Act") in the manner so requiredand give a true and fair view in conformity with the accounting principles generallyaccepted in India of the state of affairs of st the company as at 31 March 2020 and itsprofit and other total comprehensive income changes in equity and its cash flows for theyear ended on that date.

Basis for 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 ofIndia together with the ethical requirements that are relevant to our audit of thefinancial statements under the provisions of the Companies Act 2013 and the Rules thereunder and we have fulfilled our other ethical responsibilities in accordance with theserequirements and the Code of Ethics. We believe that the audit evidence we have obtainedis sufficient and appropriate to provide a basis for our opinion.

a) Attention is invited to Note No. 8 of 'Significant Accounting Policies &Notes to the Financial Statements' it was observed by us that 194 units of unsold FinishedStock of 3-Wheelers Vehicles on Bs IV Norms amounting to ? 300.43 lakhs as on 31/03/2020.

Considering the impact of the latest Govt. Order "G.S.R. 881(E) 26th November2019 BS VI" where amendment has been made in Central Motor Vehicle Rules 1989.As per the amended rule 115(2)(i) Bharat Stage VI Norms will be applicable from 1stApril 2020. With effect from the above notification vehicles manufactured on BharatStage IV norms will not be saleable within Indian Territory from 1st April 2020 onwards.Discussion of matter with those charged with governance it was informed to us that R&DDept. has purchased 2 Engines on BS VI Norms but production has not yet been started asper BS-VI Norms. In this case we observed that no specific permission has been obtainedfrom the Board/ Ministry towards the production of 3 Wheelers with BS-VI Norms and almosta quarter of F.Y 2020-21 has been ended. As a result company has not yet commenced theproduction as per the new norms. In that case it would be difficult for the company tomaintain the sales as compared to previous quarter of F.Y 2019-20 as a result it couldprobably affect the going concern of Scooter India Ltd.

b) Attention is invited to Note No. 2 of 'Significant Accounting Policies &Notes to the Financial Statements' it was observed that lot of assets are shown in thebooks of accounts of the company under different assets head at its residual value.Further the remaining useful life of those machines was NIL but the assets are still inuse and are being installed in the factory and further no depreciation has been chargedby the company as they are shown at their residual value since Financial Year 2016-17.However as per Ind AS - 16 depreciation can be seized only if the asset is demortized/sale or is held for sale. Moreover as per IND AS-16 the company should have torevalue these assets and charge depreciation on the revalued amount. While discussing thisissue with the management it was told to us that such machines could not be revalued byany valuation officer as these machines were bought from Italy with the name of InnocentiMachines and the size of these machines is very heavy.

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. For detailed atter please refer Attachment-1

Key Audit Matters

Key audit matters are those matters that in our professional judgment were of mostsignificance in our audit of the financial statements of the current period. These matterswere addressed in the context of our audit of the financial statements as a whole and informing our opinion thereon and we do not provide a separate opinion on these matters.For detailed matters please refer Annexure-2.

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 performedwe conclude that there is a material misstatement of this other information we arerequired to report that fact. We have nothing 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 skepticism throughout the audit. We also:

? Identify and assess the risks of material misstatement of the financial statementswhether due to fraud or error design and perform audit procedures responsive to thoserisks and obtain audit evidence that is sufficient and appropriate to provide a basis forour opinion. The risk of not detecting a material misstatement resulting from fraud ishigher than for one resulting from error as fraud may involve collusion forgeryintentional omissions misrepresentations or the override of internal control.

? Obtain an understanding of internal control relevant to the audit in order to designaudit procedures that are appropriate in the circumstances. Under section 143(3)(i) of theCompanies Act 2013 we are also responsible for expressing our opinion on whether thecompany has adequate internal financial controls system in place and the operatingeffectiveness of such controls.

? Evaluate the appropriateness of accounting policies used and the reasonableness ofaccounting estimates and related disclosures made by management.

? Conclude on the appropriateness of management's use of the going concern basis ofaccounting 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. Wecommunicate with those charged with governance regarding among other matters the plannedscope and timing of the audit and significant audit findings including any significantdeficiencies in internal control that we identify during our audit. We also provide thosecharged with governance with a statement that we have complied with relevant ethicalrequirements regarding independence and to communicate with them all relationships andother matters that may reasonably be thought to bear on our independence and whereapplicable related safeguards. From the matters communicated with those charged withgovernance we determine those matters that were of most significance in the audit of thefinancial statements of the current period and are therefore the key audit matters. Wedescribe these matters in our auditor's report unless law or regulation precludes publicdisclosure about the matter or when in extremely rare circumstances we determine that amatter should not be communicated in our report because the adverse consequences of doingso would reasonably be expected to outweigh the public interest benefits of suchcommunication.

Other Matter

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. For more details refer to Attachment-3.

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 andobtained all the information and explanations which to the best of our knowledge andbelief were necessary for the purposes of our audit.

b) In our opinion proper books of account as required by law have been kept by theCompany so far as it appears from our examination of those books. c) The standalonebalance sheet the standalone statement of profit and loss (including other comprehensiveincome) the standalone statement of changes in equity and the standalone statement ofcash flows dealt with by this Report are in agreement with the books of account.

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

e) On the basis of the written representations received from the directors as on 31March 2020 taken on record by the Board of Directors none of the directors is stdisqualified as on 31 March 2020 from being appointed as a director in terms of Section164(2) of the Act.

f) With respect to the adequacy of the internal financial controls 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 2020 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
UDIN : 20402982AAAADT6526
Sd/-
CA Kamal Kumar Ferwani
(Senior Partner)
(M. No.-402982)
Place: Lucknow th
Date : 29 June 2020

ANNEXURE-A

ANNEXURE A REFERRED TO IN THE INDEPENDENT AUDITOR'S REPORT

TO THE MEMBERS OF SCOOTERS INDIA LIMITED LUCKNOW ON THE ACCOUNTS

ST

OF THE COMPANY FOR THE YEAR ENDED 31 MARCH 2020

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 includingquantitative 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 during theyear by an external Chartered Accountants firm and no material discrepancies were noticedon such verification.

c) According to the information and explanation given to us and on the basis of ourexamination of the records of the company title deeds of immovable properties are held inthe 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 Accountants firmand no material discrepancies were noticed on such verification.

(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 theAct.

(iv) In our opinion and According to the information and explanation given to us theCompany has not granted any loan investments guarantees and security covered undersection 185 or 186 of the Act accordingly clause (iv) of the Order is not applicable tothe Company.

(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 st no undisputed amount wereoutstanding as at 31 March 2020 for a period of more than six months the date of becomingpayable except the following :

S. Name of the Statue Nature of the Period Amount No. dues (Rs. in Lakhs)

1 Kerala Sales Tax Sales Tax 92-93 93-94 & 4.22 94 94-95

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 Annexure 2b.

(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 andremaining two instalments amounting to Rs. 12.00/- Crores (4.00/- Crore each) whichwere due dated 23-07-2017 and 23-07-2018 have not been paid till the end of CurrentFinancial Year.

(ix) The Company has not raised moneys 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 year 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 thenCMD without the authority of the board and after due consideration the Board decided torefer the matter to the appropriate authority for the future action however no action onthe same was reported to us.the

(xi) Being a Government Company pursuant to Notification no.G.S.R. 463(E) dated 5June 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) of the order is not applicable.

The Company is not required to be registered under section 45-IA of the Reserve Bank ofIndia Act 1934.

ANNEXURE B TO THE INDEPENDENT AUDITORS' REPORT

To The Members Of Scooters India Limited Lucknow On The Accounts Of The

st

Company For The Year Ended 31 March 2020

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

Opinion

We have audited the internal financial controls over financial reporting of ScootersIndia Limited ("the Company") as of 31 March 2020 in conjunction with ouraudit of the financial statements of the Company for the year ended on that date.

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 2020 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.

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 maintenance of adequateinternal financial controls that were operating effectively for ensuring the orderly andefficient conduct of its business including adherence to company's policies thesafeguarding 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.

TO THE INDEPENDENT AUDITORS REPORT

TO THE MEMBERS OF SCOOTERS INDIA LIMITED LUCKNOW ON THE ACCOUNTS

ST OF THE COMPANY FOR THE YEAR ENDED 31 MARCH 2020

Directions under section143(5) of the Companies Act 2013

1. Whether the company has system in place to process all the accountingtransactions through IT system? If yes the implications of processing of accountingtransactions outside IT system on the integrity of the accounts along with the financialimplications if 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/writeoff of 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 F.Y 2019-20.

However during the F.Y 2018-19 an existing loan of Rs.1.89 crores given by theGovernment of India has been converted into equity through letter dated 5 June 2018. Thefinancial impact of this conversion was that Equity of the company has been increased byRs.1.89 crores and GOI loan has been decreased by Rs.1.89 crores. Further interest on theabove loan also been freezed through the above-mentioned letter but there was no financialimpact of freezing of interest as the same was not accounted for in the FinancialStatements of Scooters India Limited.

3. Whether funds received/receivable for specific schemes from central/ stateagencies were properly accounted for/ utilized as per its term and conditions? List thecases of deviation.

No such cases of deviations observed.

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

Attachment-1

Description of Emphasis of Matter

1. Mismatch in Paid-up-Share Capital

Attention has been invited to Note No. 13 of Significant Accounting Policies &Notes to Financial Statement were mismatch has been observed in Paid-up-capital ascompared to Books of Account and as per Master Data on Ministry of Corporate Affairwebsite due to share forfeiture amount of ? 15367.5.

2. Attention has been invited to the following mentioned Notes of SignificantAccounting

Policies & Notes to Account were we couldn't verify the existence of events were: -

i) Notes No. 5 of Significant Accounting Policies & Notes to Financial Statementwere Deposit made in relation to Post Office amounting to ` 2.01 Lakhs and Deposit withLandlord amounting to ? 5.40 Lakhs

ii) Notes No. 12 of Significant Accounting Policies & Notes to Financial Statementrelating to Rent Advance recoverable amounting to ` 1.23 Lakhs and Staff Advance amountingto ` 0.14 Lakhs

Notes No. 17 of Significant Accounting Policies & Notes to Financial Statementsrelating to Advance from Customer amounting to ` 1.89 Lakhs

3. Attention has been invited to Notes No. 17 of Significant Accounting Policies &Notes to

Financial Statement relating to payment for Rent of Warehouse it was observed by usthat expense was charged on approval basis for the region wise warehouse taken on rentagainst which no legal deed has been found.

4. Attention has been invited to Notes No. 21 of Significant Accounting Policies &Notes to

Financial Statement relating to

i) Arrears on Wages payable amounting to `19.23 lakhs are payable in respect of retiredemployees which are no more associated with company.

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

5. Attention has been invited to Notes No. 11 of Significant Accounting Policies &Notes to

Financial Statement relating Sundry Creditor's Debit Balance (unsecured) amounting to `0.706 lakhs against such additional provisioning has been made.

6. Attention has been invited to Notes No. 4 of Significant Accounting Policies &Notes to

Financial Statement relating Sundry Debtors (unsecured) were: -

i) No external confirmation regarding any Sundry Debtors outstanding more than year hasbeen provided.

ii) 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 ` 100000 in favour of company. However in was observed by us that the BGprovided expired on 18/12/2019 and no vehicle has been returned by the party.

7. Attention has been invited to Note No. 8 of Significant Accounting Policies &Notes to

Financial Statement were Inventory consist of WIP of 3Wheelers on Bharat Stage IV Normsamounting to 495.89 Lakhs regarding which valuation couldn't be verified by us.

Attachment-2 Description of Key Audit Matter

1. Overvaluation of Finished Stock of 3 Wheelers Vehicles on Bharat Stage IVNorms.

Attention has been invited to Note No. 8 of Significant Accounting Policies & Notesto Financial Statement were Inventory consist of Finished Stock of 3Wheelers on BharatStage IV Norms amounting to ? 300.43 Lakhs.

This matter is considered to be Key Audit Matter given that due to implementation ofthe latest Govt. Order "G.S.R. 881(E) 26th November 2019 BS VI" whereamendment has been made in Central Motor Vehicle Rules 1989. As per the amended rule115(2)(i) Bharat Stage VI Norms will be applicable from 1st April 2020. With effect fromthe above notification vehicles manufactured on Bharat Stage IV norms will not besaleable within Indian Territory from 1st April 2020 onwards.

There is the risk over the company's assessment and measurement of valuation ofvehicles due to changes in law and regulation made by government that expected to beadversely affect the entity were:

1. Uncertainties relating to forecasting the future sales of these of BS IV Normsvehicles

2. Uncertainties involved in identifying the appropriate market recoverable value.

Audit Procedures to address the Key Audit Matter

Identification: Obtain the understanding about the relevant industry regulatoryand other external factors affecting the normal operation of the entity.

Control Environment: Tested the management control environment whether entity hasas process for identifying and estimating the significance of risk relevant to financialreporting objectives. We have obtained that: -i. for the sale of manufactured vehicles onBS IV Norms the letter received from Shree Laxmi Motors of Nepal dated 20/02/2020 asshown before us where the said party has agreed to lift approx. 110 units of 1000CGVehicle till March 2021 and it has been clearly mentioned in letter that said party willprovide Scooter India Limited a Bank Guarantee for the lifting of said Vehicles. Inpursuance to the same it has been observed by us that neither such Bank Guarantee hasbeen yet provided by Shree Laxmi Motors of Nepal in favour of Scooter India Limited norany up liftment of vehicles has been done from the date of above letter issued till thedate of our audit. ii. Since due to cessation of BS IV Norms Vehicles on BS IV Norms willno longer be saleable at Current Market Rate method adopted by the entity due to whichInventory of Finished Goods of BS IV Norms has been overstated.

2. Obsolescence's in Work-in-Progress relating to manufacturing of BS IV NormsVehicles

Attention has been invited to Note No. 8 of Significant Accounting Policies & Notesto Financial Statement were Inventory consist of WIP of 3Wheelers on Bharat Stage IV Normsamounting to 495.89 Lakhs.

This matter is considered to be Key Audit Matter given that due to implementation ofthe latest Govt. Order "G.S.R. 881(E) 26th November 2019 BS VI" whereamendment has been made in Central Motor Vehicle Rules 1989. As per the amended rule115(2)(i) Bharat Stage VI Norms will be applicable from 1st April 2020. With effect fromthe above notification vehicles manufactured on Bharat Stage IV norms will not besaleable within Indian Territory from 1st April 2020 onwards.

There is the risk over the company's assessment and measurement of valuation of WIPrelating vehicles due to changes in law and regulation made by government that expectedto be adversely affect the entity were:

i. Uncertainties relating to the collation of items which are obsolete items carryingon BS

IV Norms.

ii. Uncertainties involved in identifying the appropriate valuation of obsolete itemsin WIP.

Audit Procedures to address the Key Audit Matter

Our audit approach consisted was a combination of test of internal controls andsubstantive procedures which include: -Selected the sample of items consisting of WIP toobtained the operating effectiveness of the internal controls we have observed that: 1. itis impossible for management to bifurcate WIP into model wise production of vehicles.

2. WIP consisting of such items which cannot be used further in manufacturing ofvehicles on BS-VI Norms.

3. Non-Capitalisation of Assets under inspection

Attention has been invited to Note No. 2 of Significant Accounting Policies & Notesto Financial Statement regarding non-capitalisation of capital work in progress amountingto ` 174.06 Lakhs pending since F.Y 2016-17 as assets under inspection.

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

i. 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 were we have: -i. Evaluated the design ofinternal control relating to assets under inspection. ii. Carried out a combination ofprocedure involving enquiry and observation reperformance and inspection of evidence inrelation to these controls obtained that: i. Assets purchased from HMT International Ltd.dated: 31/03/2017 are specialized assets which required specialised training to companyemployees to operate the asset. For this HMT International Ltd. would be sending hisexperts to excel the employees of company to operate the assets. However till the date ofour audit no expert has been sent by HMT International Ltd.

4. Material Uncertainty relating to Interest Tax & Penalty

Attention has been invited to Note No. 21 of Significant Accounting Policies &Notes to Financial Statement were Interest on taxes & penalty amounting to ? 128.53Lakhs relating to material uncertainty 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 precedencefor the disputed cases pending at adjudication.

• Uncertainties relating to management estimation involves significant judgementto determine 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.

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

Attention has been invited to Note No. 15 of Significant Accounting Policies &Notes to Financial Statement were payment has overdue relating to outstanding long-termloan received from Government of India amounting to ` 1200 lakhs.

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

Attention has been invited to Note No. 33 of Significant Accounting Policies &Notes to Financial Statement were penalty imposed on the company under regulation 30 ofSEBI (Listing Obligation and Disclosure Requirements) amounting to 57.28 Lakhs.

Refer Note No. 33 "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 any.

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 theaccounting policies disclosures related to provisions for sub judice matters and detailsof contingent liabilities in notes 33 respectively in the standalone financial statements.

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

Attention has been invited to Note No. 12 of Significant Accounting Policies &Notes to Financial Statement were recoverability of deposit with Consumer Forum maderegarding disputed cases pending at adjudication amounting to ? 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 precedencefor the disputed cases pending at adjudication.

• Uncertainties relating to management estimation involves significant judgementto determine 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 (inany kind) relating to cases has been issued to company from the date of filing of suchcases by the concerned authorities accordingly neither the letter has been shown before uswhich has been issued by company for the release of Security Deposit nor the filesrelating to cases have been produced before us.

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

Attention has been invited to Note No. 12 of Significant Accounting Policies &Notes to Financial Statement there are some accounts of previous Indirect tax Regime anddeposit with others which are still being reflected on the Assets side of Balance Sheet.While discussing the matter with appropriate authority it was told to us that the casesunder these accounts are pending with concerned tax authorities and therefore theseaccounts are still reflecting in the books of accounts. For details of such accountsplease refer Annexure-1(a)

Sl. No. Ledger Head No. Ledger Name Date of Deposit Amount as per Financials Management Reply Regarding the Deposits
1 30510 DEPOSIT WITH SALES TAX Total

The case is under Trial. Latest updation is awaited. However this is not pertaining to the FY 2019-20.

Deposit with Assam Sales Tax Authority for Dibrugarh Warehouse Security 1997-98 (17.4.97) 50000
Deposit with Rajasthan as Security (NSC) for Reg. under Entry Tax 2005-06 2015 The case is under Trial. Latest updation is awaited. However this is not pertaining to the FY 2018-19.
Deposit with J&K as Security 2010-11 45000 The case is under Trial. Latest updation is awaited. However this is not pertaining to the FY 2018-19.
97015
2 30520 DEPOSIT WITH OTHERS
State Consumer Redressal Commission Haryana 2005-06 25000 The case is under Trial.Latest updation is awaited. However this is not pertaining to the FY 2018-19.
Secretary SCBRC Balasor 2005-06 25500 The case is under Trial. Latest updation is awaited. However this is not pertaining to the FY 2018-19.
District Consumer Forum Osmanabad 2005-06 5000 The case is under Trial. Latest updation is awaited. However this is not pertaining to the FY 2018-19.
Kalyani Steel Products 2003-04 & 2015-16 838303 FD is deposited in court and case is not yet settled.
Consumer Dispute Redressal Forum Ahmedabad 2005-06 25000 The case is under Trial. Latest updation is awaited. However this is not pertaining to the FY 2018-19.
ADSL Internet Alambagh 2005-06 1700 No record available since this is pertaining to FY 2005-06.
Voice Stream 2003-04 1500 No record available since this is pertaining to FY 2003-04.
Prabhagiya Vanadhikari (P-7145) 2009-10 49000 Deposited as security money in Forest Department in FY 2009-10.
BSNL 2010-11 3000 Deposited in BSNL as Security
2011-12 money.
& 2017-18
1074003 Date of Filing - 27.01.2016.
3 30525 DEPOSIT WITH EXCISE 2001-02 6500 6500 Last Listed on - 20.05.2019
2000-01 & No record is
available in this regard.
4 30538 DEPOSIT WITH EXCISE AUTHORITIES (APPEAL)

Deposit with Excise Authorities for filing aapeal in Tribunal Allahabad

2015-16

11000

Deposited in Jan-2016. Case is still pending as per latest update.

Deposit with Excise Authorities for filing aapeal in Tribunal Allahabad

2017-18

8050

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

19050
5 30530 DEPOSIT WITH CONSUMAR FORUM

Deposit with State Consumer Dispute Redressal Commission Patna.

2006

25000

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 District Consumer Dispute Redressal Forum Bhopal.

2014

25000

Appeal is still pending.

Deposit with State Consumer Dispute Redressal Commission Patna.

2009

12500

Revision is still pending before National Consumer Forum.

Deposit with Bihar Consumer Dispute Redressal Commission Patna

2011

25000

Appeal is still pending.

Deposit with State Consumer Dispute Redressal Commission Muzaffarpur

2015

50000

Revision is still pending.

Deposit with Consumer Forum

Untraced

12736

Not Traceable
150236

Disputed Statutory Dues

Sl. Name of the No. 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 Assistant 2014-15 0.74 & 0.74
Service Tax Commissioner Penalty & Indeterminate Interest
c) Central Excise and Central Excise Assistant April 2010- 0.74 & 0.74
Service Tax Commissioner September 2010 Penalty & Indeterminate Interest
d) Central Excise and Central Excise Assistant 2005-06 to 2.48 & 2.48
Service Tax Commissioner 2008-09 Penalty & Indeterminate Interest
e) Central Excise and Central Excise Tribunal August 2008- 1.10 & 1.10
Service Tax Allahabad March 2013 Penalty & Indeterminate Interest
f) Central Excise and Service Tax Appeal Pending 2015-2016 8.87 & 0.88
Service Tax Penalty & Interest
g) Central Excise and Service Tax Appeal Pending 2016-17 4.49 & 0.44
Service Tax Penalty & Interest
3 Income Tax Act Income Tax Dy. Commissioner of Income Tax Range VI Lko. FY 2001-02 to 2008-092013-14 & 2015-16 1508.71
Total 1667.54 Penalty

& Indeterminate

Interest

COMMENTS OF THE CONTROLLER AND AUDITOR GENERAL OF INDIA UNDER SECTION 143(6) (B) OF THECOMPANIES ACT 2013 ON THE FINANCIAL STATEMENTS OF SCOOTERS INDIA LIMITED FOR THE YEARENDED 31 MARCH 2020.

The preparation of financial statements of Scooters India Limited for the year ended 31March 2019 in accordance with the financial reporting framework prescribed under theCompanies Act 2013 (Act) is the responsibility of the management of the Company. Thestatutory auditor appointed by the Comptroller and Auditor General of India under Section139(5) of the Act is responsible for expressing opinion on the financial statements undersection 143 of the Act based on independent audit in accordance with the standards onauditing prescribed under section 143(10) of the Act. This is stated to have been done bythem vide their Audit Report dated 26th June 2020.

I on behalf of the Comptroller and Auditor General of India have decided not toconduct the supplementary audit of the financial statements of Scooters India Limited forthe year ended 31st March 2020 under section 143(6)(a) of the Act.

.