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VST Tillers Tractors Ltd.

BSE: 531266 Sector: Auto
NSE: VSTTILLERS ISIN Code: INE764D01017
BSE 00:00 | 25 Sep 1701.15 29.35
(1.76%)
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1652.00

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1652.00

NSE 00:00 | 25 Sep 1696.50 25.70
(1.54%)
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OPEN 1652.00
PREVIOUS CLOSE 1671.80
VOLUME 2588
52-Week high 1949.30
52-Week low 601.00
P/E 62.40
Mkt Cap.(Rs cr) 1,470
Buy Price 1701.15
Buy Qty 1.00
Sell Price 1700.00
Sell Qty 1.00
OPEN 1652.00
CLOSE 1671.80
VOLUME 2588
52-Week high 1949.30
52-Week low 601.00
P/E 62.40
Mkt Cap.(Rs cr) 1,470
Buy Price 1701.15
Buy Qty 1.00
Sell Price 1700.00
Sell Qty 1.00

VST Tillers Tractors Ltd. (VSTTILLERS) - Auditors Report

Company auditors report

TO

THE MEMBERS OF

V.S.T. TILLERS TRACTORS LIMITED

Report on the Financial Statements

Opinion

1. We have audited the accompanying Ind AS financial statements of M/s. V.S.T.Tillers Tractors Limited (the "Company") which comprise the BalanceSheet as at 31st March 2019 the Statement of Profit and Loss (including OtherComprehensive Income) the Statement of Changes in Equity and the Statement of Cash Flowfor the year then ended and notes to the financial statements including a summary of thesignificant accounting policies and other explanatory information. (hereinafter referredto as "Ind AS financial statements").

2. In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid Ind AS financial statements give the information required bythe Act in the manner so required and give a true and fair view in conformity with theaccounting principles generally accepted in India of the state of affairs of the companyas at 31st March 2019 and profit changes in equity and its cash flows for the yearended on that date.

Basis for Opinion:

3. 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 thatare relevant to our audit of the Ind AS financial statements under the provisions of theCompanies Act 2013 and the Rules thereunder and we have fulfilled our other ethicalresponsibilities in accordance with these requirements and the Code of Ethics. We believethat the audit evidence we have obtained is sufficient and appropriate to provide a basisfor our opinion.

Key Audit Matters

4. Key Audit Matters are those matters that in our professional judgement were ofmost significance in our audit of the Ind AS financial statements for the year ended March31 2019. These matters were addressed in the context of our audit of the Ind AS financialstatements as a whole and in forming our opinion thereon and we do not provide aseparate opinion on these matters. For each matter below Our description of how our auditaddressed the matter is provided in that context.

5. We have determined the matters described below to be the key audit matters to becommunicated in our report. We have fulfilled the responsibilities described in theAuditors responsibilities for the audit of Ind AS financial statements section of ourreport including in relation to these matters. Accordingly our audit included theperformance of procedures designed to respond to our assessment of the risks of materialmisstatement of the Ind AS financial statements. The results of our audit proceduresincluding the procedures performed to address the matters below provide the basis for ouraudit opinion on the accompanying Ind AS financial statements.

Key Audit Matters How the matters were addressed in our Audit
Internal control over payments Our procedures included:
As reported by the Company in the previous year financial statements (FY 17-18) with respect to lapses in Internal control over payments made through EDI (Electronic Data Interchange) and resulting in fraudulently siphoning of funds by Employees (as mentioned elaborately in note 47). Detailed investigation is conducted by an independent agency appointed by the company during the current financial year in relation to the incidence of fraud committed by certain employees amounting to Rs. 27265175/- /- (after netting of the recovery of Rs. 8217813 ). • assessing the design implementation and operating effectiveness of management's key internal controls over payments made through EDI.
• reconciling the payment entries with the EDI files which are directly obtained from the bank.
• performed analytical procedures for reasonableness of the expenses accounted and periodical payments made.
• reviewed the related disclosure in notes to the financial statements
We have identified the above matter as a key audit matter in view of the significant risks identified. • Enquired with management for any control lapses and obtained written representations relating to the internal controls.
Input Tax Credit (Goods & Service Tax)
For the year ended 31st March 2019 the Company has an asset of Input Tax Credit (ITC) of Rs. 41.25 crores due to higher GST rate on the major inputs purchased as compared to Output Liability. Our procedures included:
• assessing the design implementation and operating effectiveness of management's key internal controls over recognition of Input tax credit.
Accordingly the recognition of Input tax credit as asset is dependent on whether the Company would be able to claim the excess ITC as a refund or adjust it against the future output liability. • Assessed the reasonable of judgements used for recognition of Input tax credit.
We have identified the above matter as a key audit matter as the amount involved is material and in view of complexity and significant judgements. • We have used our specialist to evaluate the stand and judgements considered by the Company for recognition of Input Tax Credit (ITC) as per the prevailing law.

Management's Responsibility for the Ind AS

Financial Statements:

6. 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 Ind AS financial statements that give a true and fair view of the financialposition financial performance changes in equity and cash flows in accordance with theaccounting principles generally accepted in India including the Indian AccountingStandards (Ind AS) specified under section 133 of the Act read with Companies (IndianAccounting Standards) Rules 2015 as amended. This responsibility also includesmaintenance of adequate accounting records in accordance with the provisions of the Actfor safeguarding of the assets of the Company and for preventing and detecting frauds andother irregularities; selection and application of appropriate accounting policies; makingjudgements and estimates that are reasonable and prudent; and design implementation andmaintenance of adequate internal financial controls that were operating effectively forensuring the accuracy and completeness of accounting records relevant to the preparationand presentation of the Ind AS financial statements that give a true and fair view and arefree from material misstatement whether due to fraud or error.

7. In preparing the financial statements management is responsible for assessing theCompany's ability to continue as a going concern disclosing as applicable mattersrelated to going concern and using the going concern basis of accounting unless managementeither intends to liquidate the Company or to cease operations or has no realisticalternative but to do so.

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

Auditor's Responsibilities for the Audit of the Ind

AS Financial Statements:

9. 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.

10. As part of an audit in accordance with SAs we exercise professional judgment andmaintain professional scepticism throughout the audit. We also:

(i) 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.

(ii) 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.

(iii) Evaluate the appropriateness of accounting policies used and the reasonablenessof accounting estimates and related disclosures made by management.

(iv) 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.

(v) 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.

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

3. 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.

4. 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.

Report on Other Legal and Regulatory Requirements:

11. As required by the Companies (Auditor's Report) Order 2016 ("theOrder") issued by the Central Government of India in terms of sub section (11) ofsection 143 of the Companies Act 2013 we give in "Annexure - A" astatement on the matters specified in paragraphs 3 and 4 of the Order to the extendapplicable.

12. As required by Section 143(3) of the Act we report that:

a) We have sought and obtained all the information and explanations which to the bestof our knowledge and belief were necessary for the purposes of our audit.

b) In our opinion proper books of account as required by law have been kept by theCompany so far as it appears from our examination of those books.

c) The Balance Sheet the Statement of Profit and Loss (Including Other ComprehensiveIncome) Statement of Changes in Equity and the Statement of Cash Flow dealt with by thisReport are in agreement with the books of account.

d) In our opinion the aforesaid Ind AS financial statements comply with the AccountingStandards specified under Section 133 of the Act read with the Companies (IndianAccounting Standards) Rules 2015 as amended.

e) On the basis of written representations received from the directors as on 31st March2019 taken on record by the board of directors none of the directors are disqualified ason 31st March 2019 from being appointed as directors in terms of section 164(2) of theAct.

f) With respect to the adequacy of the internal financial controls with reference tofinancial statements of the Company and the operating effectiveness of such controlsrefer to our separate report in "Annexure B". Our report expresses an unmodifiedopinion on the adequacy and operating effectiveness of the Company's internal financialscontrols with reference to financial statements.

g) With respect to the other matters to be included in the Auditor's Report inaccordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014 as amended inour opinion and to the best of our information and according to the explanations given tous:

i. The Company has disclosed the impact of pending litigations on its financialposition in its Ind AS financial statements - (Refer Note 41 of the Ind AS financialstatements).

ii. The Company did not have long-term contracts including derivative contracts forwhich there were any material foreseeable losses.

iii. There were no amounts which were required to be transferred to the InvestorEducation and Protection Fund by the Company.

For K.S. Rao & Co.
Chartered Accountants
ICAI Firm's Registration No. 003109S
Place : Bengaluru Hitesh Kumar P
Date : May 10 2019 Partner
Membership No. 233734

ANNEXURE - A TO THE INDEPENDENT AUDITORS' REPORT

The Annexure referred to in Independent Auditors' Report to the members of the Companyon the financial statements for the year ended 31st March 2019 we report that:

(i) In respect of the Company's fixed assets

(a) The Company has maintained proper records showing full particulars includingquantitative details and situation of Property Plant and Equipment.

(b) The Company has a program of verification to cover all the items Property Plantand Equipment of in a phased manner over a period of three years which in our opinion isreasonable having regard to the size of the Company and the nature of its assets. Pursuantto the program certain fixed assets were physically verified by the management during theyear. According to the information and explanations given to us no material discrepancieswere noticed on such verification.

(c) According to the information and explanations given to us and on the basis of ourexamination of the records of the Company the title deeds of immovable properties areheld in the name of the Company.

(ii) The management has conducted physical verification of inventory at reasonableintervals during the year and any material discrepancies noticed have been properly dealtin the books of account.

(iii) According to the information and explanations given to us the Company hasgranted unsecured loan to the company covered in the Register maintained under Section 189of the Companies Act 2013 in respect of which

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

(b) The schedule of repayment of principal and payment of interest has been stipulatedand repayments or receipts of principal amounts and interest have been regular as perstipulations.

(c) There is no amount overdue for more than 90 days as at the balance sheet date.

(iv) In our opinion and according to the information and explanations given to us theCompany has complied with the provisions of section 185 and 186 of the Act in respect ofgrant of loans making investments and providing guarantees and securities as applicable.

(v) According to the information and explanations given to us the Company has notaccepted deposits within the meaning of Section 73 to 76 of the Act and the Companies(Acceptance of Deposits) Rules 2014 (as amended). Accordingly the provisions of theclause 3 (v) of the Order are not applicable.

(vi) We have broadly reviewed the books of account maintained by the Company pursuantto the rules made by the Central Government for the maintenance of cost records undersection 148(1) of the Act related to the products manufactured by the Company and are ofthe opinion that prima facie the specified accounts and records have been made andmaintained. However we have not conducted a detailed examination of the same.

(vii) a) Undisputed statutory dues including provident fund employees' stateinsurance income tax sales tax service tax value added tax goods and service taxcustoms duty excise duty cess and other material statutory dues applicable to it havegenerally been regularly deposited with the appropriate authorities.

b) According to the information and explanations given to us there were no undisputedstatutory dues in respect of provident fund employees' state insurance income tax salestax service tax value added tax goods and service tax customs duty excise duty cessand other material statutory dues which were outstanding as at 31st March 2019 for aperiod of more than six months from the date they became payable.

c) According to the information and explanations given to us there are no dues inrespect of Sales Tax Income Tax Customs Duty Wealth Tax Service Tax Excise Duty andCess which have not been deposited on account of dispute except for the below:

Statute Nature of dues Forum where Dispute is pending Period to which the amount relates Amount involved (In Rupees)
The Income Tax Act 1961. Disallowance of Marketing expenses Income Tax Appellate Tribunal. April 2011 - March 2012 34494802
The Income Tax Act 1961. Disallowance of expenditure incurred in connection with earning exempted income Commission of Income Tax (Appeals) April 2012 - March 2013 405486
The Income Tax Act 1961. Disallowance of Marketing expenses ACIT (TDS) April 2012 - March 2013 19668882
The Income Tax Act 1961. Disallowance of expenditure incurred in connection with earning exempted income Income Tax Appellate Tribunal April 2013 - March 2014 1645492
The Income Tax Act 1961. Disallowance of expenditure incurred in connection with earning exempted income deduction claimed for expenditure incurred on R&D and deduction of 80G donation Income Tax Appellate Tribunal April 2016 - March 2017 23290910
The Customs Act 1962 Disallowance of Concessional Custom Duty availed under Customs Notification No. 12/2012 for Reaper Combinder Appellate Tribunal April 2014 - March 2017 2568156

(viii) The Company has not taken any loan or borrowings from financial institution orbank and the Government or has not issued any debentures. Hence reporting under clause 3(viii) of the Order is not applicable to the Company.

(ix) The Company did not raise any money by way of initial public offer or furtherpublic offer (including debt instruments) and term loans during the year. Accordinglyparagraph 3 (ix) of the Order is not applicable.

(x) According to information and explanations given to us no fraud by the Company oron the Company by its officers or employees has been noticed or reported during the courseof the audit except a fraud committed by certain employees of the Company on the Companywhich was reported as part of the audited accounts for the year ended 31st March 2018.Consequent to a detailed investigation by an independent agency in relation to theincidence of fraud the amount is quantified to Rs. 27265175/- (after netting of therecovery of Rs. 8217813/-) as explained in Note 47 of the financial statements.

(xi) According to the information and explanations give to us and based on ourexamination of the records of the Company we report that managerial remuneration has beenpaid /provided in accordance with the provisions of Sec 197 read with Schedule V to theAct.

(xii) The Company is not a Nidhi company. Accordingly paragraph 3 (xii) of the Orderis not applicable.

(xiii) According to the information and explanations given to us and based on ourexamination of the records of the Company transactions with the related parties are incompliance with sections 177 and 188 of the Act where applicable and details of suchtransactions have been disclosed in the financial statements as required by the applicableaccounting standards.

(xiv) According to the information and explanations give to us and based on ourexamination of the records of the Company the Company has not made any preferentialallotment or private placement of shares of fully or partly convertible debentures duringthe year.

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

(xvi) According to the information and explanations given to us the provisions ofsection 45-IA of the Reserve Bank of India Act 1934 are not applicable to the Company.

For K.S. Rao & Co.
Chartered Accountants
ICAI Firm's Registration No. 003109S
Place : Bengaluru Hitesh Kumar P
Date : May 10 2019 Partner
Membership No. 233734

ANNEXURE - B TO THE INDEPENDENT AUDITORS' REPORT

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 with reference to financial statementsof V.S.T. Tillers Tractors Limited ("the Company") as at 31st March 2019 inconjunction with our audit of the financial statements of the Company for the year endedon that date.

Management's Responsibility for Internal Financial Controls

The Company's management is responsible for establishing and maintaining internalfinancial controls based on the internal control with reference to financial statementscriteria established by the Company considering the essential components of internalcontrol stated in the Guidance Note on Audit of Internal Financial Controls over FinancialReporting issued by the Institute of Chartered Accountants of India (‘ICAI'). Theseresponsibilities include the design implementation and maintenance of adequate internalfinancial controls that were operating effectively for ensuring the orderly and efficientconduct of its business including adherence to company's policies the safeguarding ofits assets the prevention and detection of frauds and errors the accuracy andcompleteness of the accounting records and the timely preparation of reliable financialinformation as required under the Companies Act 2013.

Auditors' Responsibility

Our responsibility is to express an opinion on the Company's internal financialcontrols with reference to financial statements based on our audit. We conducted our auditin accordance with the Guidance Note on Audit of Internal Financial Controls overFinancial Reporting (the "Guidance Note") and the Standards on Auditing issuedby ICAI and deemed to be prescribed under section 143(10) of the Companies Act 2013 tothe extent applicable to an audit of internal financial controls. Those Standards and theGuidance Note require that we comply with ethical requirements and plan and perform theaudit to obtain reasonable assurance about whether adequate internal financial controlswith reference to financial statements was established and maintained and if such controlsoperated effectively in all material respects.

Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal financial controls system with reference to financial statements and theiroperating effectiveness. Our audit of internal financial controls with reference tofinancial statements included obtaining an understanding of internal financial controlswith reference to financial statements assessing the risk that a material weaknessexists and testing and evaluating the design and operating effectiveness of internalcontrol based on the assessed risk. The procedures selected depend on the auditor'sjudgment including the assessment of the risks of material misstatement of the financialstatements whether due to fraud or error.

We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the Company's internal financial controls systemwith reference to financial statements.

Meaning of Internal Financial Controls with reference to financial statements.

A company's internal financial control with reference to financial statements is aprocess designed to provide reasonable assurance regarding the reliability of financialreporting and the preparation of financial statements for external purposes in accordancewith generally accepted accounting principles. A company's internal financial control withreference to financial statements 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) providereasonable assurance that transactions are recorded as necessary to permit preparation offinancial statements in accordance with generally accepted accounting principles and thatreceipts and expenditures of the company are being made only in accordance withauthorizations of management and directors of the company; and (3) provide reasonableassurance regarding prevention or timely detection of unauthorized acquisition use ordisposition of the company's assets that could have a material effect on the financialstatements.

Inherent Limitations of Internal Financial Controls with reference to financialstatements.

Because of the inherent limitations of internal financial controls with reference tofinancial statements including the possibility of collusion or improper managementoverride of controls material misstatements due to error or fraud may occur and not bedetected. Also projections of any evaluation of the internal financial controls withreference to financial statements to future periods are subject to the risk that theinternal financial control with reference to financial statements may become inadequatebecause of changes in conditions or that the degree of compliance with the policies orprocedures may deteriorate.

Opinion

In our opinion the Company has in all material respects an adequate internalfinancial controls system with reference to financial statements and such internalfinancial controls with reference to financial statements were operating effectively as at31st March 2019 based on the internal control with reference to financial statementscriteria established by the Company considering the essential components of internalcontrol stated in the Guidance Note on Audit of Internal Financial Controls over FinancialReporting issued by the Institute of Chartered Accountants of India.

For K.S. Rao & Co.
Chartered Accountants
ICAI Firm's Registration No. 003109S
Place : Bengaluru Hitesh Kumar P
Date : May 10 2019 Partner
Membership No. 233734

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