1. Report on the Audit of Ind AS Financial Statements
We have audited the accompanying Ind A S financial statements of SML Isuzu Limited ("the Company"), which comprise the Balance Sheet as at 31 March 2018, the Statement of Profit and Loss, the Statement of Changes in Equity and the Statement of Cash Flows for the year then ended, and summary of the significant accounting policies and other explanatory information.
2. Management's Responsibility for the Ind AS Financial Statements
The Company's 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 Ind AS financial statements that give a true and fair view of the state of affairs, profit/loss including other comprehensive income, changes in equity and cash flows of the Company in accordance with the accounting principles generally accepted in India, including the Indian Accounting Standards (Ind AS) prescribed 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 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 Ind AS 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 Company's 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.
3. Auditor's Responsibility
Our responsibility is to express an opinion on these Ind AS financial statements based on our audit.
We have taken into account the provisions of the Act, the accounting and auditing standards and matters which are required to be included in the audit report under the provisions of the Act and the Rules made thereunder.
We conducted our audit of the Ind AS financial statements in accordance with the Standards on Auditing specified under Section 143(10) of the Act. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the Ind AS financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and the disclosures in the Ind AS financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the Ind AS financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal financial control relevant to the Company's preparation of the Ind AS financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of the accounting estimates made by the Company's Directors, as well as evaluating the overall presentation of the Ind AS financial statements.
We are also responsible to conclude on the appropriateness of management's 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 entity's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in the auditor's report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify the opinion. Our conclusions are based on the audit evidence obtained up to the date of the auditor's report. However, future events or conditions may cause an entity to cease to continue as a going concern.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the Ind AS financial statements.
4. Opinion
In our opinion and to the best of our information and according to the explanations given to us, the aforesaid Ind AS 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 of the state of affairs of the Company as at 31 March 2018, its profit including other comprehensive income, changes in equity and its cash flows for the year ended on that date.
5. Report on Other Legal and Regulatory Requirements
(i) As required by the Companies (Auditor's Report) Order, 2016 ("the Order") issued by the Central Government in terms of Section 143(11) of the Act, we give in "Annexure A" a statement on the matters specified in paragraphs 3 and 4 of the Order.
(ii) 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, the Cash Flow Statement and Statement of Changes in Equity dealt with by this Report are in agreement with the books of account.
d) In our opinion, the aforesaid Ind AS financial statements comply with the Indian Accounting Standards prescribed under section 133 of the Act.
e) On the basis of the written representations received from the directors as on 31 March 2018 taken on record by the Board of Directors, none of the directors is disqualified as on 31 March 2018 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 effectiveness of such controls, refer to our separate Report in "Annexure B".
g) With respect to the other matters to be included in the Auditor's 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 Ind AS financial statements. Refer Note 32 to the Ind AS financial statements.
ii. The Company has made provision, as required under the applicable law or accounting standards, for material foreseeable losses, if any, on long-term contracts including derivative contracts. Refer Note 16 B to the Ind AS financial statements.
iii. There has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Company.
iv. The disclosures in the Ind AS financial statements regarding holdings as well as dealings in specified bank notes during the period from 8 November 2016 to 30 December 2016 have not been made since they do not pertain to the financial year ended 31 March 2018. However amounts as appearing in the audited financial statements for the period ended 31 March 2017 have been disclosed.
Annexure ‘A’ referred to in paragraph 5 (i) of the Independent Auditors’ Report to the Members of SML ISUZU Limited on the Ind AS Financial Statement for the year ended 31 March 2018, we report that:
(i) (a) The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets.
(b) The Company has a regular programme of physical verification of its fixed assets by which all fixed assets are verified in a phased manner over a period of three years. In accordance with this programme, certain fixed assets were verified during the year and no material discrepancies were noticed on such verification. In our opinion, this periodicity of physical verification is reasonable having regard to the size of the Company and the nature of its assets.
(c) According to the information and explanations given to us and on the basis of our examination of the records of the Company, the title deeds of immovable properties are held in the name of the Company.
(ii) The inventory, except materials-in-transit and stocks lying with third parties, has been physically verified by the management during the year. In our opinion, the frequency of such verification is reasonable. The discrepancy noted on verification between physical stock and book records were not material and have been properly dealt with in the books of account. For stocks lying with third parties at the year-end, written confirmations have been obtained.
(iii) According to the information and explanations given to us, there are no companies, firms, limited liability partnerships or other parties covered in the register required to be maintained under Section 189 of the Companies Act, 2013 ('the Act'). Accordingly, paragraph 3(iii) of the Order is not applicable.
(iv) According to the information and explanation given to us and on the basis of our examination of the records of the Company, the Company has not given any loans, or made any investments, or provided any guarantee, or security as specified under Section 185 and 186 of the Companies Act, 2013. Accordingly, paragraph 3(iv) of the Order is not applicable.
(v) The Company has not accepted any deposits covered under Section 73 to 76 of the Act or other provisions of the Act and rules framed thereunder.
(vi) The Central Government has not prescribed the maintenance of cost records under Section 148(1) of the Act, for any of the products manufactured/ Services rendered by 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, Goods and Service Tax ('GST'), Sales Tax, Service Tax, Duty of Customs, Duty of Excise, Value Added Tax, Cess and other material statutory dues have been regularly deposited during the year by the Company with the appropriate authorities.
According to the information and explanations given to us, no undisputed amounts payable in respect of Provident fund, Employees' State Insurance, Income-Tax, GST, Sales Tax, Service Tax, Duty of Customs, Duty of Excise, Value Added Tax, Cess and other statutory dues were in arrears as at 31 March 2018 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 are no dues of Duty of Customs, Income-Tax, GST , Sales Tax, Service Tax, Duty of Excise and Value Added Tax which have not been deposited by the Company on account of disputes except as mentioned below:
Name of the statute
|
Nature of dues
|
Amount disputed Rs.Lakhs
|
Amount deposited Rs. Lakhs
|
Period to which the amount relates
|
Forum where dispute is pending
|
Central Excise Act, 1944
|
Excise duty
|
4.25 (includes penalty
Rs. 2.12 lakhs)
|
2.13
|
Apr 2000 to Mar 2004
|
Customs Excise and Service Tax Appellate Tribunal (CESTAT)
|
Central Excise Act, 1944
|
Excise Duty
|
1.94
|
Nil
|
Oct 2004 to Mar 2005
|
The Supreme Court of India
|
Finance Act, 1994
|
Service Tax
|
5.70 (includes penalty
Rs. 2.85 lakhs)
|
Nil
|
2005-2006
|
Commissioner (Appeals)
|
Finance Act, 1994
|
Service Tax
|
5.70 (includes penalty
Rs. 2.85 lakhs)
|
Nil
|
2005-2006
|
Customs Excise and Service Tax Appellate Tribunal (CESTAT)
|
Central Excise Act, 1944
|
Excise Duty
|
1.89
|
Nil
|
Oct 2006 to Jun 2008
|
Customs Excise and Service Tax Appellate Tribunal (CESTAT)
|
Finance Act, 1994
|
Service Tax
|
4.26 (includes penalty
Rs. 2.13 lakhs)
|
Nil
|
Apr 2006 to Dec. 2008
|
Customs Excise and Service Tax Appellate Tribunal (CESTAT)
|
Finance Act, 1994
|
Service Tax
|
3.36
|
Nil
|
Apr 2006 to Dec. 2008
|
Customs Excise and Service Tax Appellate Tribunal (CESTAT)
|
Central Excise Act, 1944
|
Excise Duty
|
3.62 (includes penalty
Rs. 1.81 lakhs)
|
Nil
|
Apr 2008 to Jun 2009
|
Customs Excise and Service Tax Appellate Tribunal (CESTAT)
|
Finance Act, 1994
|
Service Tax
|
1.15
|
Nil
|
Jun 2009 to Mar 2011
|
Commissioner (Appeals)
|
Central Excise Act, 1944
|
Excise Duty
|
25.00
|
Nil
|
Dec 2008 to Jul 2009
|
Customs Excise and Service Tax Appellate Tribunal (CESTAT)
|
Finance Act, 1994
|
Service Tax
|
8.66
|
Nil
|
Oct 2009 to Sep. 2010
|
Customs Excise and Service Tax Appellate Tribunal (CESTAT)
|
Central Excise Act, 1944
|
Excise Duty
|
4.05 (includes penalty
Rs. 1.83 lakhs)
|
Nil
|
Apr. 2010 to Sep 2011
|
Customs Excise and Service Tax Appellate Tribunal (CESTAT)
|
|
Sub-Total (A)
|
69.58
|
2.13
|
|
|
Central Sales Tax Act, 1956
|
Sales Tax
|
218.23
|
87.30
|
Apr 2000 to Sep 2000
|
Sales Tax appellate Tribunal, Chandigarh
|
Punjab VAT Act, 2005
|
Valued Added Tax
|
1.57
|
0.39
|
Aug 2007
|
Deputy Excise and Taxation Commissioner-cum-Joint Director Enforcement, Patiala
|
U P Trade Tax Act, 1948
|
Sales Tax
|
15.94
|
7.20
|
1993-1994
|
Additional Commissioner (Appeals), Lucknow
|
U P Trade Tax Act, 1948
|
Sales Tax
|
5.80
|
0.87
|
2005-06
|
Assistant Commissioner Grade-II
|
Gujarat Sales Tax Act
|
Sales Tax
|
161.68
|
Nil
|
2008-09
|
Joint Commercial Tax Commissioner (Appeals)
|
The West Bengal Value Added Tax Rules, 2005
|
Value Added Tax
|
5.80
|
Nil
|
2008-2009
|
Assistant Officer Sales Tax
|
The West Bengal Value Added Tax Rules, 2005
|
Value Added Tax
|
8.51
|
Nil
|
2009-2010
|
W.B.C.T. Appellate & Revisional Board
|
The West Bengal Value Added Tax Rules, 2005
|
Sales Tax
|
5.70
|
Nil
|
2009-2010
|
W.B.C.T. Appellate & Revisional Board
|
Kerala Value Added Tax Rules, 2005
|
Value Added Tax
|
1.42
|
0.43
|
2010-2011
|
Assistant Commissioner Special Circle-Trivandrum
|
Kerala Value Added Tax Rules, 2005
|
Value Added Tax
|
93.40
|
28.02
|
2011-2012
|
Assistant Commissioner Special Circle-Trivandrum
|
Kerala Value Added Tax Rules, 2005
|
Value Added Tax
|
2.56
|
0.76
|
2011-2012
|
Assistant Commissioner Special Circle-Trivandrum
|
The West Bengal Value Added Tax Rules, 2005
|
Entry Tax
|
1.13
|
Nil
|
2012-2013
|
W.B.C.T. Appellate & Revisional Board, Bench-VI
|
Central Sales Tax Act, 1956
|
Sales Tax
|
3.17
|
Nil
|
2012-2013
|
Sr. JCCT/LTO-W.B.
|
U P Trade Tax Act, 1948
|
Sales Tax
|
6.88
|
4.98
|
2016-2017
|
Assistant Commissioner Ghaziabad
|
AP VAT Act 2005
|
Value Added Tax
|
3.55
|
0.44
|
2016-2017
|
Assistant Officer and Deputy Commercial Tax Officer Vijayawada
|
AP VAT Act 2005
|
Value Added Tax
|
210.25
|
26.28
|
2013-2014 to 2015-16
|
The Appellate Joint Commissioner
|
|
Sub-Total (B)
|
745.59
|
156.67
|
|
|
Income-tax Act, 1961
|
Income-tax
|
101.55
|
88.61
|
FY 2004-05
|
Income-tax Appellate Tribunal
|
Income-tax Act, 1961
|
Income-tax
|
94.79
|
94.79
|
FY 2005-06
|
Income-tax Appellate Tribunal
|
Income-tax Act, 1961
|
Income-tax
|
137.10
|
137.10
|
FY 2006-07
|
Income-tax Appellate Tribunal
|
Income-tax Act, 1961
|
Income-tax
|
50.88
|
50.88
|
FY 2005-06
|
Income-tax Appellate Tribunal
|
Income-tax Act, 1961
|
Income-tax
|
476.33
|
476.33
|
FY 2007-08
|
Income-tax Appellate Tribunal
|
Income-tax Act, 1961
|
Income-tax
|
42.41
|
Nil
|
FY 2008-09
|
Income-tax Appellate Tribunal
|
Income-tax Act, 1961
|
Income-tax
|
82.82
|
82.82
|
FY 2006-07
|
Income-tax Appellate Tribunal
|
Income-tax Act, 1961
|
Income-tax
|
39.30
|
Nil
|
FY 2009-10
|
Income-tax Appellate Tribunal
|
Income-tax Act, 1961
|
Income-tax
|
55.94
|
Nil
|
FY 2010-11
|
Income-tax Appellate Tribunal
|
Income-tax Act, 1961
|
Income-tax
|
31.86
|
15.44
|
FY 2011-12
|
Income-tax Appellate Tribunal
|
Income-tax Act, 1961
|
Income-tax
|
146.00
|
Nil
|
FY 2007-08
|
Income-tax Appellate Tribunal
|
Income-tax Act, 1961
|
Income-tax
|
55.75
|
Nil
|
FY 2012-13
|
Income-tax Appellate Tribunal
|
Income-tax Act, 1961
|
Income-tax
|
34.16
|
Nil
|
FY 2013-14
|
Commissioner of Income-Tax (appeals)
|
Income-tax
|
Income-tax Act, 1961
|
189.58
|
25.00
|
FY 2014-15
|
Commissioner of Income-Tax (appeals)
|
|
Sub Total (C)
|
1,538.47
|
970.97
|
|
|
|
Total (A B C)
|
2,353.64
|
1,129.77
|
|
|
(viii) According to the information and explanations given to us, the Company has not defaulted in repayment of dues to banks. Further, the Company did not have any outstanding dues to any financial institutions, government or debenture holders during the year.
(ix) According to the information and explanations given to us, the term loan taken by the Company has been applied for the purposes for which it was raised. However, pending utilization of term loan, the funds amounting to Rs. 1,135 lakhs were temporarily invested in fixed deposits. Also, refer to note 10 to the financial statements. According to the information and explanation given to us, the Company has not raised any money by way of initial public offer (including debt instruments) or further public offer during the year.
(x) According to the information and explanations given to us, no significant fraud by the Company or on the Company by its officers or employees has been noticed or reported during the course of our audit for the year.
(xi) According to the information and explanations given to us and based on our examination of the records of the Company,the Company has paid managerial remuneration in excess of amounts as laid down under the provisions of Section 197 read with Schedule V to the Act to its Managing Director & CEO and Whole-time Director & CFO. As informed to us, approval from shareholders will be sought in the ensuing Annual General Meeting ('AGM') and if the shareholder approval is not received then the excess amount will be recovered by the Company from such directors, as also confirmed by the respective directors.
(xii) According to the information and explanations given to us, the Company is not a nidhi Company. Accordingly, paragraph 3(xii) of the Order is not applicable.
(xiii) According to the information and explanations given to us and based on our examination of the records of the Company, transactions with the related parties are in compliance with sections 177 and 188 of the Act where applicable and details of such transactions have been disclosed in the Ind AS financial statements as required by the applicable accounting standards.
(xiv) According to the information and explanations give to us and based on 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, paragraph 3 (xiv) of the order is not applicable.
(xv) According to the information and explanations given to us and based on our examination of the records of the Company, the Company has not entered into non-cash transactions with directors or persons connected with them. Accordingly, paragraph 3(xv) of the Order is not applicable.
(xvi) The Company is not required to be registered under section 45-IA of the Reserve Bank of India Act 1934.
Annexure B referred to in paragraph 5 (ii)(f) of the Independent Auditor's Report of even date to the Members of SML Isuzu Limited being report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section 143 of the Companies Act, 2013 ("the Act")
We have audited the internal financial controls over financial statements with reference to financial statements of SML Isuzu Limited ("the Company") as of 31 March 2018 in conjunction with our audit of the Ind AS financial statements of the Company for the year ended on that date.
Management's Responsibility for Internal Financial Controls
The Company's management is responsible for establishing and maintaining internal financial controls based on the internal control over financial statement 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 ('ICAI'). 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 company's 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 Act.
Auditors' Responsibility
Our responsibility is to express an opinion on the Company's internal financial controls over financial statements with reference to financial statements 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 Act, 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 with reference to financial statements 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 with reference to the financial statements and their operating effectiveness. Our audit of internal financial controls with reference to financial statements included obtaining an understanding of internal financial controls with reference to financial statements, 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 auditor's judgement, including the assessment of the risks of material misstatement of the Ind AS 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 Company's internal financial controls system over financial statements.
Meaning of Internal Financial Controls with reference to Financial Statements
A company's internal financial control with reference to financial statements is a process designed to provide reasonable assurance regarding the reliability of financial statements and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal financial control with reference to financial statements 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 authorisations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorised acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.
Inherent Limitations of Internal Financial Controls with reference to Financial Statements
Because of the inherent limitations of internal financial controls with reference to financial statements, 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 with reference to Financial Statements to future periods are subject to the risk that the internal financial control with reference to financial statements may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Opinion
In our opinion, the Company has, in all material respects, an adequate internal financial controls system with reference to the Ind AS financial statements and such internal financial controls with reference to the Ind AS financial statements were operating effectively as at 31 March 2018, based on the internal control with reference to financial statements 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.
For B S R & Associates LLP
Chartered Accountants
Firm Registration No.: 116231W/W-100024
Rajesh Arora
Place: New Delhi Partner
Date : 23 May, 2018 Membership No. 076124
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