CMI Ltd Auditors Report.
To the members of Cmi limited
Report on the Audit of the Standalone Financial Statements
We have audited the financial statements of CMI LIMITED ("the Company"), which comprise the balance sheet as at 31stmarch2019, Profitand thestatement Loss(including other comprehensive income), Statement of Changes in Equity and statement of cash flows for year then ended, and notes to the financial statements, including a summary of significant accounting policies other explanatory information.
In our opinion and to the best of our information and according to the explanations financial statements give the information required the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India, of the state of affairs of Company as at 31st March, 2019, its profit/loss(including other comprehensive income), changes in equity and its cash flows for the year ended on that date.
Basis for 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 those Standards are further described in the Auditors
Responsibilities for the Audit of the Financial Statements section of our report. We are independent of Company in accordance 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 the financialstatements under the provisions of the Companies Act, 2013 and the Rules thereunder, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the Code of Ethics. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Information other than thefinancialstatements and auditors report thereon
The Companys board of directors is responsible for the preparation of the other information. The other information comprises the information included in the Boards Report including Annexures to Boards Report but does not include the financial statements and our auditors report thereon. And Our opinion on the financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.
In connection financialstatements, withourauditofthe our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained during the course of our audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.
Key Audit matter
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the standalonefinancialstatements of the current period. These matters were addressed in the context of our audit of the standalone financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
|The key audit matter||How the matter was addressed in our audit|
|Revenue recognition under new accounting standard indour audit procedures on adoption of Ind AS 115, AS 115: Revenue from Contracts with Customers||Revenue from contracts with Customers (Ind AS 115), Which is the new revenue accounting standard, include|
|The Company has adopted Ind AS 115 - Revenue from Contracts with Customers (Ind AS 115) which is the new Revenue accounting standard.||Evaluated the design and implementation of The processes and internal controls relating to Implementation of the new revenue accounting Standard;|
|Ind AS 115 is effective for the year beginning April 1, 2018 and establishes a comprehensive framework for Determining and identifying whether a contract with The customer exists, how much and when revenue is Recognized. This involves certain key judgments relating to Identification of contracts with customers, identification Of distinct performance obligations, determination of Transaction price, appropriateness of the basis used to Measure revenue recognized over a period or at a point in Time. Revenue is recognized when (or as) a performance Obligation is satisfied, i.e. When control of the goods or performance obligations and determination of distinct Services underlying the particular Is transferred to the customer.||Verifying managements assessment of contractual Arrangements including those relating to income from Supplier rebates, terms of contract and commercial Substance thereof in order to assess the adherence to Revised accounting policies in light of the Of Ind AS 115.|
|Selecting samples of contractual|
|Testingmanagements assessment of the applicability Of the standard to such arrangements, identification of Transaction prices.|
|In view of the above, the application and transitionto this Accounting standard is an area of focus in the audit. See notes 3(c) to financial statements. Taxation related mattersdeterminationof taxprovisions In view of the significance of the matter, we applied the And assessment of contingent liabilitiesinvolves judgment With respect to various tax positions on deductibility of Transactions,||Additionally, Disclosures made in the financial statements.|
|Following key audit procedures:|
|Of laws and regulations etc. Judgement is also required In assessing the range of possible outcomes for some of These matters. Tes of provisions, exposures and contingencies. Estima Management makes an assessment managements to determine the Outcome of these matters and decides to make an accrual Or consider it to be a possible contingent liability in Accordance with applicable Accounting standards.||Testing the design and operating effectiveness of Controls relatingto taxation and contingencies. Taxincentives/exemptions,|
|Accordingly, taxation and contingent liability related||We evaluated managements judgements in respect of In understanding and evaluating Judgements, we even considered third party advice Received by the Company, wherever applicable, the Status of recent and current tax assessments and Enquiries, the outcome of previous claims, judgmental Positions taken in tax returns and developments in the Tax environment.|
|See notes 3(I) and 12 to the financial statements.||Disclosures on provisions and contingencies made in The financial statements.|
Emphasis of matter
We draw attention to Note 1 of the financial which describes that CMI Energy India Private Limited ("CMIE"), an erstwhile wholly owned subsidiary, was merged with CMI Limited with an appointed date of March 1, 2016 vide order of National Company Law Tribunal, Principal Bench, New Delhi dated April 3, 2019.
The financial statements of CMI Limited ("Merged Entity") for the financial year 2018-19 has been prepared giving effect of order of the Honble NCLT and the comparative financialinformation of the Company for the year ended March 31, 2018 has been restated to give effect to merger of an erstwhile wholly owned subsidiary CMIE.
Moreover, all the accumulated losses and depreciations of CMIE as standing on March 1, 2016 become losses and depreciation of the merged entity. Considering this fact, tax expenses has been recognized in the books of accounts for the financial year 2018-19.
Our opinion is not modified in
The Companys management and Board of Directors are responsible for the other information. The other information comprises the information included in the Companys annual report, but does not include the financial statements and our auditors report thereon.
Our opinion on the standalone financial statements does we do not express notcover the other information any form of assurance conclusion thereon.
In connectionwith our audit of the standalone financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the standalone financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.
Identify and assess the risks of material misstatement
Responsibilities management and those Charged with Governance for the Standalone Financial Statements
The Companys Board of Directors is responsible for the matters stated in section 134(5) of the Companies Act, of these 2013 ("the Act") with respect to the preparation financial statements that give a true and fair view of the financial position, performance and cash flows of the Company in accordance with the accounting generally accepted in India, including the accounting Standards specified under section 133 of the Act. This responsibility also includes maintenance of adequate accounting the Act for safeguarding of the assets of the Company and for preventing and detectingfrauds and other irregularities; selection and application of appropriate accounting are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, management is responsible for assessing the Companys ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.
Those Board of Directors are also responsible for overseeing the Companys financial reporting process.
For the Audit of the Auditors Responsibilities Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with sas will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
As part of an audit in accordance with sas, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:
Of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion.Theriskofnotdetectinga material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Principles
Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances. Under section 143(3)(i) of the Companies Act, 2013, we are also records in accordance with the provisions of responsible for expressing our opinion on whether the company has adequate internal financial controls system in place and the operating effectiveness of policies; making judgments and estimates that such controls.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
Conclude on the appropriateness of managements use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the as a going concern. If Companysabilitytocontinue we conclude that a material uncertainty exists, we are required to draw attention in our auditors report to the related disclosures in the 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 auditors report. However, future events or conditions may cause the Company to cease to continue as a going concern.
Evaluate the overall presentation, structure and content of the financial disclosures, and whether the financial represent the underlying transactions and events in a manner that achieves fair presentation.
We communicate with those charged with governance regarding, among other timing of the audit and any identify during our audit.
We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.
From the matters communicated with those charged with governance, we determine those matters that were of statements mostsignificance in the audit of the financial of the current period and are therefore the key audit matters. We describe these matters in our auditors report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.
Report on other legal and Regulatory Requirements
1. As required by the Companies (Auditors Report) Order, 2016 ("the Order"), issued by the Central Government of India in terms of sub-section 143 of the Companies Act, 2013, we give ofsection in the Annexure A, a statement on the matters specified in paragraphs 3 and 4 of the Order, 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 best of 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 the Company so far as it appears from our examination of those books.
C) The Balance Sheet, the Statement of Profit and Loss and the Cash Flow Statement dealt with by this Report are in agreement with the books of account.
D) In our opinion, the aforesaid financial statements comply with the Accounting Standards specified theplannedscopeand the Act, read with Rule 7 of the Companies audit findings, (Accounts) Rules, 2014.deficiencies in internal control that we
e) On the basis of the written representations received from the directors as on 31st March, 2019 taken on record by the Board of Directors, none of the directors is disqualified as on 31st March, 2019 from being appointed as a director in terms of Section 164 (2) of the Act.
F) With respect to the adequacy of the internal financial controls with reference to financial statements of the Company and the operating of such refer to our separate Report in Annexure B.
B) With respect to the other matters to be included in the Auditors Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules, 2014, in our opinion and to the best of our information and according to the explanations given to us: i. The Company has disclosed the impact of pending litigationson its financial position - refer note 45 to the Standalone Financial Statements.
Ii. The Company did not have any long-term contracts including derivative contracts for (11) which there were any material foreseeable losses.
Iii. There were no amounts which were required to be transferred to the Investor Education and Protection Fund by the Company.
C) With respect to the matter to be included in the Auditors Report under section 197(16):
In our opinion and according to the information and explanations given to us, the remuneration paid by the Company to its directors during the current year is in accordance with the provisions of section197 of the Act. The remuneration paid to any director is not in excess of the limit laid down under section197 of the Act. The Ministry of Corporate Affairs has not prescribed other details under section197(16) which are required to be commented upon by us.
The Annexure referred to in paragraph 1 of our Report on "other legal and Regulatory Requirements". Opinion
We report that:
I. A. The company has maintained proper records showing full particulars, including quantitative details and situation of its fixed assets.
B. As explained to us, fixed assets have been physically verified by the management at reasonable intervals; no material discrepancies were noticed onsuchverification.
C. The According to the information and explanations records of the Company, the title deeds of immovable properties included in fixed assets are held in the name of the Company.
Ii. As explained to us, inventories have been physically verified during the year by the management at reasonable intervals. The discrepancies noticed on physical verification of stocks by the records.
Iii. According to the information and explanations given to us and on the basis of our examination of the books of account, the Company has not granted any loans, secured or unsecured, to companies, firms, Limited Liability Partnerships or other parties listed in the register maintained under Section 189 of the Companies Act, 2013. Consequently, the provisions of clauses iii (a), (b) and (c)of the order are not applicable to the Company.
Iv. In respect of loans, investments, guarantees, and security, provisions of section 185 and 186 of the Companies Act, 2013 have been complied with.
V. The company has not accepted any deposits from the public covered under sections 73 to 76 of the Companies Act, 2013.
Vi. As per information & explanation given by the management, maintenance of cost records has not been specified by thecentralgovernmentundersub-section(1) .2013 ofsection 148of the companiesact,
Vii. A. According to the records of the company, undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Employees State Insurance, Income-tax, Sales-tax, Service Tax, Custom Duty, Excise Duty, value added tax, cess and any other statutory dues to the extent applicable, have generally been regularly deposited with the appropriate authorities. According to the information and explanations given to us there were no outstanding statutory dues as on 31st of March, 2019 for a period of more than six months from the date they became payable.
B. According to the information and explanations given to us, there is no amount payable in respect of income tax, service tax, sales tax, customs duty, excise duty, value added tax and cess whichever applicable, which have not been deposited on account of any disputes.
Viii. In our opinion and according to the information and explanations given by the management, we are of the opinion that, the Company has not defaulted in repayment of dues to a financial institution, bank, Government or debenture holders, as applicable to the company. Accordingly, paragraph 3(ix) of the Order is not applicable to the Company
Ix. The company has not raised any money by way of initialpublic offer or further public offer (including debt instruments) or by way of term loans during the year.
Given to us, we report that no fraud by the company or any fraud on x. According totheinformation the Company by its officers or employees has been noticed or reported during the year. Xi. According to the information and explanationsgiventous,wereportthatmanagerialremunerationhas been paid in accordance with the requisite approvals mandated by the provisions of section 197 read with Schedule V to the Companies Act. Xii. According to the information and explanations given to us, in our opinion, the Company is not a Nidhi Company as prescribedundersection 406 ofthe Act
Xiii. According to the information and explanations given to us, all transactionswith the related parties are in compliance with sections 177 and 188 of Companies Act, 2013 where applicable and the details have been disclosed in the Financial Statements etc. As required by the applicable accounting standards.
Xiv. The company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures during the year under review. Accordingly, paragraph 3(xiv) of the Order is not applicable to the Company.
Xv. Provisions of section 192 of Companies Act, 2013 have been by the company with directors or persons connected with him. Accordingly, paragraph 3(xv) of the Order is not applicable to the Company.
Xvi. According to the information and explanation given to us, the Company is not required to be registered under Section 45-IA of the Reserve Bank of India Act 1934.
Annexure B to the Independent Auditors Report
(Referred to in paragraph 1(A)(f) under Report on Other Legal and Regulatory Requirements section of our report of even date)
Report on the Internal Financial Controls under Clause (i) of Sub-section Section143 of the Companies of Act, 2013 ("the Act")
We have audited the internal financial controls over financial reporting of CMI LIMITED ("the Company") as of March 31, 2019 in conjunction with our audit of the financial statements of the Company for the year
Managements Responsibility for Internal Financial Controls
The Companys management is responsible for establishing and maintaining internal financial controls based on the internal control over financialreportingcriteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issued by the Institute of Chartered Accountants of India. These responsibilities include the design, implementation and of adequate internal financial controls that were operating effectively for ensuring the orderly and efficient conduct of its business, including adherence to companys policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information, as required under the Companies Act, 2013.
Our responsibility is to express an opinion on the Companys internal financial controls over financial reporting based on our audit. We conducted our audit in accordance with the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting (the "Guidance Note") and the Standards on Auditing, issued by ICAI and deemed to be prescribed under section 143(10) of the Companies Act, 2013, to the extent applicable to an audit of internal financial controls, both applicable to an audit of Internal Financial Controls and, both issued by the Institute of Chartered Accountants of India. Those Standards and the Guidance Note require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether adequate internal financial controls over financial reporting was established and maintained and if such controls operated effectively in all material respects.
Our audit involves performing procedures to obtain audit evidence about the adequacy of the internal financial controls system over financial reporting and their operating effectiveness. Our audit of internal financial controls over financial reporting included obtaining an understanding of internal financial controls over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. The procedures selected depend on the auditors judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the Companys internal financial controls system over financial
Meaning of Internal Financial Controls over Financial Reporting
A companys internal financialcontrol over financial reportingisa process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A companys internal financial control over financial reporting includes those policies and procedures that
1. Pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;
2. Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and
3. Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the companys assets that could have a material effect
Inherent limitations of Internal Financial Controls over Financial Reporting
Because of the inherent limitations of internal financialcontrols over financial collusion or improper management override of controls, material misstatements due to error or fraud may occur and not be detected. Also, projections of any evaluation of the internal financial periods are subject to the risk that the internal financial control of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
In our opinion, the Company has, in all material respects, an adequate internal financial controls system over financial reporting and such internal financial controls over financialreporting were operating effectively as at March 31, 2019, based on the internal control over financial reporting criteria components of internal control stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issuedby the Institute of Chartered Accountants of India.
|For Krishna neeraj & Associates|
|Place : new Delhi||CA. Krishna K neeraj|
|Date: 28th may 2019||Partner|
|Membership no. 506669|