HMT Ltd Auditor Reports

(Issued consequent to provisional comments by Director, Indian Audit and Accounts Department, office of the Director General of Commercial Audit, Hyderabad vide DGCA/A/C/Desk/2023-24/ HMT/1.19/516 dated 18-09-2024 and it supersedes our Independent Audit report dated 09-082024)

To the Members of HMT Limited -

Report on the Audit of the Standalone Financial Statements

Qualified Opinion:

We have audited the standalone financial statements of HMT Limited ("the Company"), which comprise the Balance Sheet as at 31st March 2024, and the Statement of Profit and Loss (including Other Comprehensive Income) for the year then ended 31 March 2024, the Statement of Changes in Equity and the Statement of Cash Flows for the year ended on that date and notes to the standalone financial statements, including a summary of significant accounting policies and other explanatory information.

In our opinion and to the best of our information and according to the explanations given to us, except for the basis of Qualified Opinion section of our report, the aforesaid standalone financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India, in the case of

(a) Standalone Balance Sheet, of the state of affairs of the standalone as at 31st March, 2024 and

(b) Statement of Profit and Loss (including Other Comprehensive Income), of the profit for the year ended on that date.

(c) Standalone Statement of Changes in Equity, the changes for the year ended on that date.

(d) Standalone Cash flow statement of the flow of cash in the Company for year ended on that date.

Basis for Qualified Opinion:

1. Food Processing Machinery Unit,

Aurangabad

(a) As per information and explanation given to us with regard to Inventory valuation as stated in Note No. 2 (ii) (j) stock of raw material, it is valued by adopting Weighted Average Cost method. However, in the inventory statement provided for verification purpose, the correctness of stock items rates and therefore, cost could not be verified due to absence of sufficient and appropriate audit evidence. Owing to the nature of Companys records and in the absence of sufficient audit evidence, we are unable to ascertain if there is material departure from the Weighted Average Cost Method adopted by the company. We are also unable to ascertain its consequent impact, if any, on the Standalone Ind AS financial statements.

b) The revenue as per the Statement of profit and loss for the year ended March 2024 is Rs 3604.75 lakhs. This includes a sum of Rs 105.88 lakhs being the value of sales invoices accounted in the month of March 2024 (F.Y 2023-24), raised by HMT Limited food processing machinery unit Aurangabad, on its customers. However as per the records, the said invoices were raised during the period, but dispatches were made after 31-3-2024. The customer therefore has not got control of the assets before 313-24. This is in contravention of revenue recognition as per Ind As 115, resulting in

the overstatement of revenue by Rs 105.88 lakhs, with consequent overstatement of profit and understatement of finished goods.

2. Auxiliary Business Division, Bengaluru

(a) Non - receipt of balance Confirmations with regard to Trade Receivables, Trade Payables, Other Current Assets and Other Current liabilities and hence, impact of the same on the standalone financial statements cannot be quantified.

(b) The Company records rental income generated from the buildings situated on the land which is not recorded in the books of accounts of the Company. On examination of records produced for verification, the status of the land and its ownership is in the name of HMT Limited.

(c) Ind AS 40 requires the Company to obtain a fair valuation report of the investment properties from a registered valuer as defined under Rule 2 of Companies (Registered Valuers and Valuation) Rules, 2017. However, we observe that the Company has not complied with the above requirement as prescribed by Ind AS-40.

3. Corporate Head Office and Company as a whole

(a) Non - receipt of balance Confirmations with regard to Trade Receivables, Trade Payables, Other Current Assets and Other Current liabilities and hence, impact of the same on the standalone financial statements cannot be quantified.

(b) IND AS 40 defines Investment Property as property held to earn rentals or for capital appreciation or both. It is observed that Corporate Head Office derives rental income partly from building (owned by the entity) which is not classified as Investment property in the standalone financial statements.

(c) Ind AS 40 requires the Company to obtain a fair valuation report of the investment properties from a registered valuer as defined under Rule 2 of Companies (Registered Valuers and Valuation) Rules, 2017. However, we observe that the Company has not complied with the above requirement as prescribed by Ind AS-40.

(d) Ind-AS 109 requires an entity to apply expected credit loss (ECL) model for measurement and recognition of impairment loss. However, as per the information and explanation given to us no ECL matrix was prepared for the period under audit for creating provision for loss allowance. Hence, we are unable to ascertain its impact, if any, on the Standalone Ind AS financial statements.

(e) As per Ind AS-109, the Company has to recognize loss allowance for expected credit losses on a financial asset. In the instant case, we observe that the Company has long outstanding receivable from HMT Machine Tools Limited in respect of which the Company has not recorded any expected credit losses. In our opinion as HMT Machine Tools Ltd is incurring continuous losses and has a negative net worth, the ability of the Company to recover the amount receivable from HMT Machine Tools Limited remains doubtful.

(f) As per Schedule III of Companies Act, 2013, trade payables include all amounts due on account of purchase of goods and services received in the normal course of business. In the instant case, we observe that an amount of Rs 1510.99 lacs which is presently disclosed as Accrued expenses under the head Other Current Liabilities must be disclosed under Trade Payables. Further, the Company must provide ageing analysis for the amount disclosed under the head Accrued Expenses.

(g) We draw your attention to Note No.53 wherein the Company has stated that it has no transactions with struck off companies under section 248 of The Companies Act, 2013. However, Company has not provided appropriate audit evidence to establish that they do not have such transactions.

We conducted our audit in accordance with the Standards on Auditing (SAs) specified under 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 Standalone Financial Statements section of our report. We are independent of the 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 Standalone financial statements 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.

Key Audit Matters:

Key Audit Matters are those matters that, in our professional judgement, were of most significance in our audit of the standalone financial statements for the financial year ended 31st March 2024. These matters were addressed in the context of our audit of the standalone financial statements, and in forming our opinion thereon, and we do not provide a separate opinion thereon, and we do not provide a separate opinion on these matters. For each matter below, our description of how our audit addressed the matter is provided in that context.

We have determined the matters described below to be the key audit matters to be communicated in our report. We have fulfilled the responsibilities described in the Auditors responsibilities for the audit of the standalone financial statements section of our report, including in relation to these matters. Accordingly, our audit included the performance of procedures designed to respond to our assessment of the risks of material misstatement of the standalone financial statements. The results of our audit procedures, including the procedures performed to address the matters below, provide the basis for our audit opinion on the accompanying standalone financial statements.

Key Audit Matters	How our audit addressed the key matter
Revenue Recognition from Operating Leases as per IND AS 116 - Leases
The company earns rental income from leasing out properties on a commercial and residential basis. As the rental income earned forms a significant part of the total income earned, the matter is considered as key audit matter.	Our Audit Procedures include the following -
	• We have obtained the information such as Number of residential quarters and shops, occupancy, Tenant name, Date of occupancy and vacancy.
	• We have verified lease agreements on sample basis
	• We have verified journal entries passed with the rental income to be recognized as per lease agreements.
	• We have verified the impact of Ind AS 116 on the rent received by the entity.
Revenue recognized from Sale of watches
The entity is engaged in sale of watches and earns a major part of revenue. And hence, considered this as a key audit matter.	Our Audit Procedures include the following -
	• We have obtained an understanding of how the invoicing for the sales made at the showrooms and sales made through e-Commerce website is done.
	• We were provided with the transaction log in the e-commerce website against which the invoices are generated.
	• We have obtained an understanding based on recording the income from sale of watches in the books of accounts.
	• The sale of watches recorded in books was selected on sample basis and verified against the invoices generated.
	• We have checked the sequential order for the invoices generated against the sales made. • We have obtained an explanation in respect to the cancelled invoices.
Loan given to HMT Machine Tools Limited
The entity had given loan to its wholly owned subsidiary HMT Machine Tools Limited having a balance of Rs. 30,582.41 lakhs.	Our Audit Procedures include the following -
The amount given as loan to this entity forms a major part of Current Assets and hence, considered as a key audit matter.	• We have obtained the Minutes of Meeting of Board Committee and Board resolutions in respect to the approval of loan given to HMT Machine Tools Ltd.
	• We have verified the rate of interest at which the loan was given.
	• We have verified the sources of funds for the loan given.
	• We have verified the reasons for which the loans were given.
	• We have verified the impact of Section 185 and Section 186 of Companies Act, 2013 on such loan given.
	• We were provided with the interest workings in respect of interest income recorded on such loan.
Inventory valuation
Inventory is considered as a key audit matter as the valuation and determination of its impairment require usage of several key assumptions and estimates that may have a material impact on the Standalone Financial Statements.	Our Audit Procedures include -
	• We have obtained the Inventory Valuation reports from the management.
	• We have obtained the Quantitative details in respect of type of Inventory held by the entity.
	• We have obtained an understanding on the accounting policy followed by the entity to measure the Inventory on the closing date.
	• We have analyzed and verified the disclosure requirements as per Ind AS -2 and Schedule III of Companies Act, 2013.

Emphasis of Matter Paragraph

(a) We draw you attention to Note No. 49 of Standalone Ind AS financial statements for the financial year ended 31st March, 2024 wherein HMT Limited has invested Rs.15 lakh (50% of equity shares) comprising 1,50,000 equity shares of Rs.10 each fully paid up in Sudmo HMT Process Engineers (India) Ltd., Bengaluru (M/s. Sudmo - HMT). M/s. Sudmo-HMT has no operations. The Board of HMT Ltd has approved (February 2020/ July 2021) for closure of the defunct joint venture company (M/s. Sudmo- HMT) and submitted the closure proposal to Administrative Ministry (July 2021) for approval.

(b) We draw you attention to Note No. 50 of Standalone Ind AS financial statements for the financial year ended 31st March, 2024 wherein HMT Limited has invested Rs.20.84 lakh (39% of equity shares) comprising 20,84,050 equity shares of Rs.1 each fully paid up in Gujarat State Machine Tools Corporation Ltd., Bhavanagar (M/s. GSMTC). The Board of HMT Ltd gave (March 2021) in principle approved for liquidation of M/s. GSMTC and issued the consent letter to Gujarat Industrial Investment Corporation Limited (GIIC), GIIC approved (September 2021) liquidation of M/s. GSMTC and submitted (October 2021) the proposal to Industries & Mines Department. HMT Ltd submitted (April 2022) the liquidation proposal to Administrative Ministry.

(c) We draw you attention to Note No. 51 of Standalone Ind AS financial statements for the financial year ended 31st March, 2024 wherein HMT Limited has invested 30,00,000 equity shares of 1 Naira each fully paid up in Nigeria Mchine Tools Limited, Nigeria (M/s. NMTL). The Board of HMT Ltd gave (February 2020) approval for divestment of stake in M/s. NMTL and sought approval from Administrative Ministry.

(d) We draw your attention to Note No. 3C- Additional Information (d)&(e), Note No. 22- Additional Information and Note No. 34 (ii) of Standalone Ind AS financial statements for the financial year ended 31st March, 2024 relating to transfer of land to Raman Research Institute and Government of Uttarakhand (transferee) wherein the Company (transferor) has received entire sale consideration and has given the possession of the land in the earlier years resulting in performance of contract by both the parties. The Company had made a provision for taxation of Rs. 980 lakhs which has been reversed in the current year. However, the recognition of profit/ loss on transfer of land will be considered in the year of registration of sale deed.

Our opinion on the above matters is not modified.

Other Matters

1. The previous year figures in the financial statements of the company were audited by SSB & Associates whose report has been furnished to us in which the auditor have provided a qualified opinion on the Standalone Financial Statements as on 31-03-2024. The Qualified opinion given by the previous auditor is given as "Annexure A".

2. We did not audit the financial statements/ information of Food Processing Machinery Unit, Aurangabad included in these Standalone Ind AS financial statements of the Company whose financial statements/financial information reflect total assets of Rs. 2440.32 lakhs as at March 31, 2024 and total revenues of Rs. 3,682.11 lakhs for the year ended on that date. The financial statements/ information of this standalone has been audited by the branch auditor M/s R.K. Muley & Co, Chartered Accountants, Aurangabad whose report has been furnished to us, and our opinion in so far as it relates to the amounts and disclosures included in respect of this unit, are based solely on the report of such standalone auditor.

3. The physical share certificates of 26,08,99,037 equity shares and 4,43,00,000 preference shares of HMT Machine Tools Limited whose cost is Rs.26,089.90 lakhs and Rs.44,300.00 lakhs respectively are not in possession of the Company as at 31st March 2024.

Information Other than the Financial Statements and Auditors Report Thereon

The Companys Board of Directors is responsible for the other information. The other information comprises the information included in the Annual report but does not include the standalone financial statements and our auditors report thereon.

Our opinion on the standalone financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.

In connection with 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.

Responsibilities of Management for the Financial Statements

The Companys Board of Directors is responsible for the matters stated in section 134(5) of the Companies Act, 2013 ("the Act") with respect to the preparation of these standalone financial statements that give a true and fair view of the financial position, financial performance, of the Company in accordance with the accounting principles generally accepted in India, including the accounting Standards specified under section 133 of the Act. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding of the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that 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 standalone financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

In preparing the standalone 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.

Auditors Responsibilities for the Audit of the Standalone Financial Statements

Our objectives are to obtain reasonable assurance about whether the standalone 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 standalone financial statements.

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

• Identify and assess the risks of material misstatement of the standalone 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. The risk of not detecting a 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.

• 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 responsible for expressing our opinion on whether the company has adequate internal financial controls system in place and the operating effectiveness of 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 companys ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors report to the related disclosures in the standalone 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 standalone financial statements, including the disclosures, and whether the standalone financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we 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.

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 (11) of section 143 of the Companies Act, 2013, we give in the "Annexure B" a statement on the matters specified in paragraphs 3 and 4 of the Order, to the extent applicable.

2. 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, except for the matter described in the Basis for Qualified opinion paragraph above, 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, dealt with by this Report are in agreement with the books of account.

d. In our opinion, except for the matter described in the Basis for Qualified opinion, the aforesaid standalone financial statements comply with the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014.

e. The entity is a government entity and in the terms of notification reference No.G.S.R. 463(E) dated 05th June 2015 issued by Ministry of Corporate Affairs for Government Companies, sub-section (2) of Section 164 of Companies Act, 2013 regarding disqualification for appointment of director is not applicable. Hence, Comment on the same does not arise.

f. With respect to the adequacy of the internal financial controls over financial reporting of the Company and the operating effectiveness of such controls, refer to our separate Report in "Annexure C".

g. 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 litigations on its financial position in its standalone financial statements - Refer Note 32 to the financial statements.

ii. The company did not have any long term contracts as required under the applicable law or accounting standards and also not entered into any derivative contracts, accordingly no provision is required to be made in respect to material foreseeable losses.

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

iv. a) The Management of the company has represented that, to the best of their knowledge and belief, that the Company has not advanced or loaned or invested any funds (either from borrowed funds or share premium or any other sources or kind of funds) to or in any other person(s) or entity(ies), including foreign entities ("Intermediaries"), with the understanding, whether recorded in writing or otherwise, that the Intermediary shall, whether, directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the company ("Ultimate Beneficiaries") or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.

b) The Management of the company has represented that, to the best of their knowledge and belief, other than that as disclosed in the notes to the accounts, that the Company has not received any funds from any person(s) or entity(ies), including foreign entities ("Funding Parties"), with the understanding, whether recorded in writing or otherwise, that the Company shall, whether, directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party ("Ultimate Beneficiaries") or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.

c) Based on audit procedures that have been considered reasonable and appropriate in the circumstances, nothing has come to our notice that has caused us to believe that the representations under sub-clause (i) and (ii) of Rule (e), as provided under (a) and (b) above, contain any material misstatement.

v. The Company has not declared or paid any dividend during the year ended 31st March 2024, and therefore, compliance with section 123 of the Companies Act, 2013 is not applicable.

vi. Based on our examination which included test checks, the company has used an accounting software for maintaining its books of account which has a feature of recording audit trail (edit log) facility and the same has not been operated throughout the year for all relevant transactions recorded in the software.

3. As required by Section 143(5) of the Act, our submissions are as under :

We give in the "Annexure D", a statement on the compliance to Directions issued by the Comptroller and Audit General of India.

for N S V M & Associates

Chartered Accountants

Firm registration number: 010072S G C S Mani

Partner

Membership No: 036508

UDIN: 24036508BKDEVL5456

Place: Bengaluru

Date: 20-09-2024

Annexure A to Independent Auditors Report

The Annexure A referred to in the Independent Auditors Report to the Members of HMT Limited (the Company) for the year ended 31 March 2024, the qualified opinion given on the previous year figures in the financial statements as on 31 March 2024 is as follows :

1. Food Processing Machinery Unit, Aurangabad:

As per information and explanation given to us with regard to Inventory valuation as stated in Note No. 2 (ii) (j) stock of raw material, it is valued by adopting Weighted Average Cost method. However, in the inventory statement provided for verification purpose, the correctness of stock items rates could not be verified due to absence of sufficient and appropriate audit evidence. Owing to the nature of Companys records and in the absence of sufficient audit evidence, we are unable to ascertain if there is material departure from the Weighted Average Cost Method adopted by the company. We are also unable to ascertain its consequent impact, if any, on the Standalone Ind AS financial statements.

2. Auxiliary Business Division, Bengaluru

Consequent to Non-receipt of confirmation of balances of Debtors and Creditors, the impact on financial statements cannot be quantified.

3. Corporate Head Office and Company as a whole:

a. Non-confirmation of balances of Trade Receivables, Loans and Advances, Trade Payables and Other Current Liabilities and its consequential impact if any on the Standalone Ind AS financial statements cannot be quantified.

b. The Company has not provided status quo of Nigeria Machine Tools Ltd. and Gujarat State Machine Tools Corporation Ltd as on 31st March, 2023. Consequently, we are unable to comment on the impact of the same on Standalone Ind AS financial statements.

c. We draw your attention to Note No.53 wherein the Company has stated that it has no transactions with struck off companies under section 248 of The Companies Act, 2013. However, Company has not provided appropriate audit evidence to establish that they do not have such transactions.

d. Company for Impairment on Financial Assets as per Ind-AS 109 has to apply expected credit loss (ECL) model for measurement and recognition of impairment loss. However, as per the information and explanation given to us no ECL matrix was prepared for the period under audit for creating provision for loss allowance. Hence, we are unable to ascertain its impact, if any, on the Standalone Ind AS financial statements.

for N S V M & Associates

Chartered Accountants

Firm registration number: 010072S

G C S Mani

Partner

Membership No: 036508

UDIN:24036508BKDEVL5456

Place: Bengaluru

Date: 20-09-2024

The Annexure B referred to in the Independent Auditors Report to the Members of HMT Limited (the Company) for the year ended 31 March 2024, we report that:

(i)a) (A) The Company has maintained proper records showing full quantitative details and the situation of Property, Plant and Equipment.

(B) The Company does not own any Intangible Assets and hence, the reporting under paragraph 3(i)(a)(B) is not applicable to the company.

b) According to the information and explanations given to us, the Property, Plant and Equipment are physically verified once in three years which is considered reasonable considering the size of the company.

The physical verification of Fixed Assets in Auxiliary Business Division was carried out during the FY 2022-23 and the Tractor division which is discontinued and merged with Auxiliary Business Division was carried out during the FY 2016-17. No material discrepancies were found in the case of Property, Plant and Equipment of Auxiliary Business Division.

As we are not provided with the latest Physical verification report of Tractor Division (merged with Auxiliary Business Division, Bengaluru), we are unable to comment on the discrepancy, if any, on Property, Plant and Equipment of Tractor Division.

Fixed Asset Verification report was not provided for verification in case of Food Processing Unit, Aurangabad and we are unable to comment on the discrepancy, if any, on the Property, Plant and Equipment of Food Processing Unit, Aurangabad.

c) The title deeds of all the immovable properties (other than properties where the Company is the lessee and the lease agreements are duly executed in favor of the lessee), as disclosed under Property, Plant and Equipment in the financial statements are held in the name of the Company except in the following cases:

Description of Property	Gross carrying value	Held in name of	Whether held by promoter, director, or their relative or employee	Period held	Reason for not being held in the name of the Company
Leasehold Land from CIDCO	Rs. 5,00,000	CIDCO	No		The said land is encroached, and the matter is pending with the Honorable High Court

d) The Company has not revalued its Property, Plant and Equipment or Intangible Assets during the year.

e) According to the information and explanations given by the management, no proceedings has been initiated or are pending against the Company for holding any benami property under the Benami

Transactions (Prohibition) Act, 1988 and the rules made thereunder.

(ii) a) As explained to us, inventory of the company has been physically verified during the year by the management at regular intervals. In our opinion, the frequency of such verification is reasonable. No material discrepancies were noticed on such physical verification.

b) According to the information and explanations given to us by the management and based on our examination of the books of accounts in the normal course of audit, the Company has not been sanctioned working capital limits in excess of five crore rupees in aggregate, from bank or financial institutions on the basis of security of current assets. Thus, paragraph 3(ii)(b) of the Order is not applicable to the Company.

(iii) According to the information and explanation given to us and based on the audit procedures performed by us, during the year the Company has not made any investments in, nor provided any loans or advances in nature of loans or stood guarantee or provided security to any entity. Thus, paragraph 3(iii) of the Order is not applicable to the Company.

a) (A)According to the information and explanations given to us and based on the audit procedures performed by us, during the year the Company has not provided any loans or advances in nature of loans, or stood guarantee or provided security to its subsidiaries, joint ventures and associates other than that disclosed below:

Particulars	Loans	Advances in nature of Loan	Guarantee	Security
Aggregate amount during the year
- Subsidiaries	Rs.3m.98 lakhs	Rs.154.31 lakhs	-	-
- Associate	-	-	-	-
- Joint Venture	-	Rs.3.40 lakhs	-	-
Balance outstanding as at the year end:
- Subsidiaries	Rs.30582.41 lakhs	Rs.1599.53 lakhs	-	-
- Associate	-	-	-	-
- Joint Venture	-	Rs.3.40 lakhs	-	-

(B) According to the information and explanations given to us and based on the audit procedures performed by us, during the year the Company has not provided any loans or advances in nature of loans, or stood guarantee or provided security to any parties other than subsidiaries, Associate and joint venture.

b) According to the information and explanations given to us and based on the audit procedures conducted by us, we are of the opinion that the investments made, guarantee provided and the terms and conditions of loans granted by the Company are prima facie not prejudicial to the interest of the company.

c) According to the information and explanation provided to us and based on the audit procedures conducted by us, the principal and interest of the loans granted by the Company, the repayment of loan is over due as on 31st March 2024. The details for which are as below:

Name of Entity	Amount (Rs.)	Due date	Extent of Delay	Remarks, if any
HMT Machine Tools Limited	Rs.506.99 lakhs	31-03-2019	1827 days	-
HMT Machine Tools Limited	Rs.1,345.47 lakhs	31-03-2020	1461 days	-
HMT Machine Tools Limited	Rs.1,640.73 lakhs	31-03-2021	1096 days	-
HMT Machine Tools Limited	Rs.1,828.65 lakhs	31-03-2022	731 days	-

In respect of advances in the nature of loans, there is no stipulation as to repayment of principal and interest amount relating to such advances and hence, we are unable to comment on the same.

d) According to the information and explanation provided to us and based on the audit procedures conducted by us, in respect of loans and advances in the nature of loans, there is an amount which is overdue for more than ninety days as at the balance sheet date in respect of loans given it to its wholly owned subsidiary i.e., HMT Machine Tools Limited as indicated in below table-

Number of Cases	Principal Amount Overdue	Interest Overdue	Total Overdue	Remarks(if any)
HMT Machine Tools Limited	Rs.30,582.41 lakhs	Rs.5,321 lakhs	Rs.35,903.41 lakhs	-

e) According to the information and explanation provided to us, there is no loan given falling due during the year, which has been renewed or extended or granted fresh loans to settle the over dues of existing loans given to the same party.

f) According to the information and explanation provided to us and based on the audit procedures conducted by us, the Company has granted loan or advance in nature of loan to any parties under a agreement which does not stipulate the terms and period of repayment which are as follows

	All Parties	Promoters	Related Party
Aggregate of loans/advances in nature of loan
- Repayable on Demand	Rs.3,266.29 lakhs	-	Rs.3,266.29 lakhs
- Agreement does not specify any terms or period of repayment	-	-	-
Percentage of loans/advances in nature of loan to the total loans	9.86%		9.86%

(iv) In our opinion and according to the information and explanations given to us, the Company has complied with the provisions of section 185 and 186 of the Act with respect to the loans, deposit and investments made.

(v) The Company has not accepted any deposits or has any amounts which are deemed to be deposits to which the provisions of Section 73 to 76 or any other relevant provisions of the Companies Act rules framed thereunder and the directions issued by the RBI are applicable. Hence paragraph 3 (v) of CARO is not applicable to the company.

(vi) The Central government has not prescribed maintenance of cost records under section 148(1) of the Act for any of the products/services of the Company. Thus paragraph 3(vi) of CARO is not applicable to the Company.

(vii) a) According to the information and explanations given to us and on the basis of our examination of the records of the Company, amounts deducted/ accrued in the books of account in respect of undisputed statutory dues including Provident Fund, Employees State Insurance, Income- tax, Duty of Customs, Goods and Services tax, Cess and other material statutory dues have not generally been regularly deposited during the year by the Company with the appropriate authorities though there have been serious delays in case of filing GST Returns and payment of taxes.

According to the information and explanations give to us, no undisputed amounts payable in

respect of Provident Fund, Employees State Insurance, Income tax, Duty of Customs, Goods and Services tax, cess and any other material statutory dues were in arrears as at 31 March 2024 except the following, for a period of more than six months from the date they became payable -

Statement of Undisputed Dues

Sl.No	Nature of Statute	Nature of Dues	Amount (Rs. In Lakhs)
1	Greater Hyderabad Municipal Corporation	Property Tax	723.65
2	Employee State Insurance	Employee State Insurance	2.34
3	VAT/CST	Interest on VAT/CST	1.24
4	GST	Interest on GST	0.16
5	Bruhat Bengaluru Mahanagara Palike	Property Tax	19.98
6	Excise Duty	Excise Duty	59.14

In the case of Food Processing Machinery Unit, Aurangabad, there were lapses in co lection of TCS, non

deduction of TDS and short deduction of TDS. The amount of undisputed statutory dues arising from such cases is not quantifiable.

b) According to the information and explanations given to us and based on the audit procedures conducted by us, there are no dues of income tax, Goods and Service Tax, custom duty, and cess which have not been deposited of account of any dispute other than that stated below:

Statement of Disputed Dues

Name of the statute	Nature of Dues	Amount ()	Period to which the amount relates	Forum where the dispute is pending	Remarks, if any
Haryana Local Area Development Tax Ordinance, 2000	Haryana Local Area Development Tax	486.17	From 2005 to 2017	Honourable High Court of Punjab and Haryana
GST	GST under Appeal before Tribunal	62.72	For the year 2019-2020	Appelate Tribunal	-
GST	GST under Assessment	25.35	For the year 2020-2021	GST Department	-
Professional Tax	Professional Tax	0.04	For the year 2023-2024	Professional Tax Department	-
Employee Provident Fund	Provident Fund	1210.48	Various years	Employee Provident Fund Appellate Tribunal

(viii) Based on our audit procedure and on the information and explanation given to us by the management, no transaction has been surrendered or disclosed as income during the year in the tax assessments under the Income Tax Act, 1961.

(ix) (a)Based on our audit procedure and on the information and explanation given by the management, we are of the opinion that the company has not defaulted in repayment of loans or other borrowing to its lender other than that stated below:

Nature of Borrowing including debt securities	Name of lender	Amount not paid on due date	No of days of delay or unpaid
Government of India Loan (Interest Free) dated 21.01.2017	Government of India	Rs.6,073.60 lakhs sue since 21.01.2018	2261 days
		Rs.6,073.60 lakhs sue since 21.01.2019	1896 days
		Rs.6,073.60 lakhs sue since 21.01.2020	1531 days
		Rs.6,073.60 lakhs sue since 21.01.2021	1165 days
		Rs.6,073.60 lakhs sue since 21.01.2022	800 days
Government of India Loan (Interest Free) dated 16.02.2017	Government of India	Rs.4,800.00 lakhs sue since 16.02.2018	2235 days
		Rs.4,800.00 lakhs sue since 16.02.2019	1870 days
		Rs.4,800.00 lakhs sue since 16.02.2020	1505 days
		Rs.4,800.00 lakhs sue since 16.02.2021	1139 days
		Rs.4,800.00 lakhs sue since 16.02.2022	774 days
Government of India Loan (Interest Free) dated 29.04.2017	Government of India	Rs.1,958.00 lakhs sue since 29.04.2018	2163 days
		Rs.1,958.00 lakhs sue since 29.04.2019	1798 days
		Rs.1,958.00 lakhs sue since 29.04.2020	1432 days
		Rs.1,958.00 lakhs sue since 29.04.2021	1067 days
		Rs.1,958.00 lakhs sue since 29.04.2022	702 days

(b) According to the information and explanation given to us by the management, the Company is not declared as willful defaulter by any bank or Financial Institution or other lenders.

(c) According to the information and explanation given to us by the management, the Company has not obtained any term loan during the year and hence comment on the same does not arise.

(d) According to the information and explanations given to us and on an overall examination of the balance sheet of the company, we report that no funds raised on short-term basis have been used for longterm purposes by the company.

(e) According to the information and explanations given to us and on an overall examination of the balance sheet of the company/ examination of the cash flow statement of the Company, we report that the company has not taken any funds from any entity or person on account of or to meet the obligations of its subsidiaries, associates or joint ventures as defined under Companies Act, 2013.

(f) According to the information and explanations given to us and procedures performed by us, we report that the company has not raised loans during the year on the pledge of securities held in its subsidiaries, joint ventures or associate companies.

(x) (a) According to the information and explanation given to us and based on audit procedure performed, no money was raised by the way of public issue/follow-on-offer (including debt instruments).

(b) According to the information and explanations given to us and on the basis of our examination of the records of the Company, the Company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures during the year. Accordingly, clause 3(x)(b) of the Order is not applicable.

(xi) (a) Based upon audit procedure performed and information and explanation given by the management, we report that no fraud by the company or any fraud on the company has been noticed or reported during the year.

(b) Based upon audit procedure performed and information and explanation given by the management, no report under sub-section (12) of section 143 of the Companies Act has been filed by us or by other auditors of the Company.

(c) As represented to us by the management, there are no whistle blower complaints received by the company during the year.

(xii) The company is not a Nidhi Co. and therefore clause 3(ix) of the order is not applicable to the company.

(xiii) In our opinion, all transactions with the related parties entered into by the Company during the year are in compliance with section 177 and section 188 of the Companies Act of 2013 and the details thereof have been disclosed in the Financial Statement as required by the Accounting standards and Companies Act, 2013.

(xiv) (a) In our opinion, the Company has an internal audit system commensurate with the size and nature of its business.

(b) We were unable to obtain Internal Audit Reports of the two branches i.e., Auxiliary Business Division, Bengaluru and Food Processing Machinery Unit, Aurangabad, hence the Internal Audit Reports have not been considered by us. In case of Corporate Head office, We have obtained amd considered the Internal Audit Reports.

(xv) On the basis of the information and explanations given to us, in our opinion during the year the company has not entered into any noncash transactions with its directors or persons connected with its directors and hence provisions of section 192 of the Companies Act, 2013 are not applicable to the Company.

(xvi) (a) According to the information and explanation given to us and in our opinion, the Company is not required to be registered under Section 45-IA of the Reserve Bank of India Act, 1934.

(b) Based on the audit procedure performed, the Company has not conducted any NonBanking Financial or Housing Finance activities as per the Reserve Bank of India Act, 1934.

(c) Based in audit procedure performed, the company is not a Core Investment Company (CIC) as defined in the regulations made by the Reserve Bank of India.

(d) Based in audit procedure performed, the Company or any of the companies in the group are Core Investment Company (CIC) as defined in the regulations made by the Reserve Bank of India.

(xvii) The Company has not incurred any cash losses in the financial year and in the preceding financial year.

(xviii) There has been no resignation of the statutory auditors during the year and accordingly clause 3(xviii) is not applicable.

(xix) According to the information and explanations given to us and on the basis of the financial ratios, ageing and expected dates of realization of financial assets and payment of financial liabilities, other information accompanying the financial statements, our knowledge of the Board of Directors and management plans, we are of the opinion that no material uncertainty exists as on the date of the audit report that company is capable of meeting its liabilities existing at the date of balance sheet as and when they fall due within a period of one year from the balance sheet date.

(xx) (a) The company does not have unspent amount in respect of other than ongoing projects in the financial year in compliance with second proviso to sub-section (5) of section 135

(b) In respect of ongoing projects, the company has transferred unspent amount to a Special Account, within a period of 30 days from the end of the financial year in compliance with Sec.135(6) of the said Act, as per the details given below:

Financial Year	Amount unspent on CSR activities for "On going Projects"	Amount Transferred to Special Account within 30 days from the end of the Financial Year	Amount Transferred after the due date (specify the date of deposit)
(a)	(b)	(c)	(d)
2023-2024	27,80,000	27,80,000	-

for N S V M & Associates

Chartered Accountants

Firm registration number: 010072S

G C S Mani

Partner

Membership No: 036508

UDIN:24036508BKDEVL5456

Place: Bengaluru

Date: 20-09-2024

Annexure - C to the Independent auditors report of even date on the financial statements of "HMT LIMITED" on the financial statements for the year ended 31 March 2024.

Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section 143 of the Companies Act, 2013 (herein referred as "the Act")

We have audited the internal financial controls over financial reporting of "HMT Limited" as of March 31, 2024, in conjunction with our audit of the Standalone financial statements for the year ended on that date.

Managements Responsibility for Internal Financial Controls

The management is responsible for establishing and maintaining internal financial control based on the internal control over financial reporting criteria 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 maintenance 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.

Auditors Responsibility

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") issued by the Institute of Chartered Accountants of India, and the Standards on Auditing, as prescribed under section 143(10) of the Companies Act, 2013, to the extent applicable to an audit of internal financial controls, with reference to the financial statement.

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 judgment, 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 reporting.

Meaning of Internal Financial Controls Over Financial Reporting

A companys internal financial control over financial reporting is a 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 on the financial statements.

Inherent Limitations of Internal Financial Controls Over Financial Reporting

Because of the inherent limitations of internal financial controls over financial reporting, including the possibility of 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 controls over financial reporting to future periods are subject to the risk that the internal financial control over financial reporting may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Qualified Opinion

According to the information and explanations given to us and based on our audit, the Company has not established its internal control over financial reporting criteria considering the essential components of internal control stated in the Guidance Note on Audit of Internal Controls over Financial Reporting issued by the Institute of Chartered Accountants of India. As a result, we are unable to obtain sufficient and appropriate audit evidence to provide a basis for our opinion whether the company has adequate internal control over financial reporting and whether such internal control was operating effectively as on 31st March, 2024.

Based on the limited audit procedures performed by us during the course of our audit, the following material weakness has been identified in the operating effectiveness of the Companys internal financial control over financial reporting as at 31st March, 2024:

1. Food Processing Machinery Unit, Aurangabad

(a) The branch does not have an appropriate internal control system for inventory as there is no integration between the financial accounting module and inventory module.

(b) The branch does not have adequate internal controls reconciling and obtaining balance confirmation from Sundry Debtors, Sundry Creditors and other parties. This could result in material weakness, in the financial reporting process of debtors, creditors and other parties.

(c) The branch has not maintained proper records and reconciliations of GST, TDS on GST Liability, which have a material impact on the financial reporting of such amounts in the financial statements. Further, the branch does not have adequate internal control on the payments of statutory dues i.e., GST, TDS, PF, PT ESIC etc. within due dates.

2. Auxiliary Business Division, Bengaluru

(a) The Branch does not have an appropriate internal control system to reconcile the financial accounts pertaining to Goods and Services Tax etc. with the relevant tax records and returns which can possibly result into under/over statement of such amounts in the financial statements. Such non-reconciliation also raises the possibility of not properly accounting the purchases/ procurements.

(b) The Branch does not have appropriate internal control with respect to Inventory and valuation of inventory.

(c) The Branch does not have a proper system of control over invoicing, sales and inventory from different outlets.

3. Corporate Head Office and Company as a whole

(a) The company does not have an adequate internal control system for obtaining balance confirmations from Sundry Debtors, Sundry Creditors and other parties. This may result in material misstatement in the standalone financial statements.

A material weakness is a deficiency, or a combination of deficiencies, in internal financial control over financial reporting, such that there is a reasonable possibility that a material misstatement of the companys annual or interim financial statements will not be prevented or detected on a timely basis.

We have considered the material weaknesses identified and reported above in determining the nature, timing, and extent of audit procedures applied in our audit of the financial statements of the Company, and these material weaknesses have affected our opinion on the financial statements of the Company, and we have issued a qualified opinion on the financial statements.

for N S V M & Associates

Chartered Accountants

Firm registration number: 010072S

G C S Mani

Partner

Membership No: 036508

UDIN: 24036508BKDEVL5456

Place: Bengaluru

Date: 20-09-2024

"ANNEXURE D" referred to in paragraph 3 under the heading "report on other legal and regulatory requirements" of our report directions indicating the arears to be examined by statutory auditors during the course of audit of annual accounts of HMT limited for the financial year 2023-24 issued by the comptroller & auditor general of India ("C&AG") under section 143 (5) of the Companies Act, 2013

Sl.No	Directions	Audit Observations
1	Whether the Company has system in place to process all the accounting transactions through IT system? If yes, the implications of processing of accounting transactions outside IT system on the integrity of the accounts along with financial implications, if any, may be stated.	Based on the information and explanation provided to us by the management, it has a system where accounting vouchers are processed and prepared manually, due authorizations are obtained which are later entered into IT System i.e., the accounting software maintained by the company. The company has adequate control to ensure the integrity of the accounting transactions.
2	Whether there is any restructuring of an existing loan or cases of waiver/ write off of debts/ loans/ interest etc. made by a lender to the Company due to the Companys inability to repay the loan? If yes, the financial impact may be stated. Whether such cases are properly accounted for? (In case, lender is a Government company, then this direction is also applicable to statutory auditor of lenders company).	Based on the information and explanation furnished to us by the Company, there is no restructuring of loan/ waiver off of debts/ loans/ interest etc from its lenders.
3	Whether funds (grants/subsidy etc.) received/ receivable for specific schemes from central/ state Government or its agencies were properly accounted for/ utilized as per its term and conditions? List the cases of deviation.	Based on the information and explanation furnished to us by the Company, it has received an amount of Rs.13.74 Lakhs from Department of Heavy Industries towards reimbursement expenses incurred by the Company for Financial & Strategic Review of Consolidation & Restructuring Plan of the Company paid to IIM, Bangalore. Since the communication from Department of Heavy Industries states as onetime interest free loan the same has been treated as current liabilities. Management has informed that it is in process of getting ratification for same. Accordingly, we are unable to comment whether it is loan or grant given by the Central Government. Further, the Company has an unspent balance of Rs.28.24 crores as on 31.03.2024 out of the Loan received from GOI of Rs. 641.58 crores.

for N S V M & Associates

Chartered Accountants

Firm registration number: 010072S

G C S Mani

Partner

Membership No: 036508

UDIN:24036508BKDEVL5456

Place: Bengaluru

Date: 20-09-2024