To the Members of Innovative Tyres and Tubes Limited
Report on the Audit of the Financial Statements
Qualified Opinion
We have audited the accompanying financial statements of
Innovative Tyres and Tubes Limited ("the Company"), which comprise
the Balance Sheet as at March 31,2023, the Statement of Profit and
Loss and the Statement of Cash Flows for the year then ended, and
notes to the financial statements including a summary of significant
accounting policies and other explanatory information (hereinafter
referred to as "financial statements").
In our opinion and to the best of our information and according to the
explanations given to us, except for the possible effects of the matters
described in the Basis for Qualified Opinion section of our report, the
aforesaid financial statements give the information required by the
Companies Act, 2013 ("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 March 31, 2023, its loss and its cash flows for the year ended on
that date.
BASIS FOR QUALIFIED OPINION
(a) As stated in Note Z(1)(Q) of the financial statement, RP has taken
charge of the affairs of the Company on 28 March, 2022 and that
he is not liable or responsible for any actions and regarding the
information pertaining to the period prior to 28 March, 2022 and
has relied upon the explanations, clarifications, certifications,
representations and statements made by the existing officials of
the Company, who were also part of the Company prior to the
appointment of the RP.
(b) The company is under Corporate Insolvency Resolution Process
(CIRP) under the provisions of Insolvency and Bankruptcy
Code,2016. Resolution professional has received claims of
creditors amounting to '13,216/-lacs as per CIRP, and of which
' 13,121 Lacs-(secured portion is '3,915/-lacs and unsecured
portion is of '9,206/-lacs) have been accepted by RP as of
11th October, 2022. However, the company has not made any
provision for the additional liabilities admitted and accepted
through CIRP process.
(c) The company is under Insolvency Process, the interest of the
financial creditors is accrued but not booked into books of
accounts as the said financial creditors is under moratorium
period due to CIRP process. However, the amount of interest is
not quantifiable.
(d) We draw attention to the Note Z(19) and Note J of the financial
statement with respect to assessment of impairment of
Property, Plant & Equipment, based on internal evidences and
in accordance to AS 28 "Impairment of Asset", the company is
required to determine impairment losses in respect of Property
Plant and Equipment as per the methodology prescribed under
the said Standard. The management has recognized impairment
loss of ' 4922.45 Lacs on the basis of independent valuation
reports. However, since the future projects. has not drawn by
Company as required to compute "Value in Use" as per AS 28,
the financial impact of impairment loss to be provided in annual
financial results is presently not ascertainable.
(e) The company has not appointed an internal auditor as required
under Section 138 of The Companies Act, 2013.
We conducted our audit in accordance with Standards on
Auditing (SAs) specified under section 143(10) of the Act. Our
responsibilities under those Standards are further described
in the Auditor's Responsibilities for the Audit of the 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 ("ICAI") together with
the ethical requirements that are relevant to our audit of the
financial statements under the provisions of the Act and 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 qualified opinion on
the financial statements.
Key Audit Matters
Key audit matters are those matters that, in our professional judgment,
were of most significance in our audit of the financial statements of
the current year. These matters were addressed in the context of
our audit of the financial statements as a whole, and in forming our
opinion thereon, and we do not provide a separate opinion on these
matters. Except for the matters described in the Basis for Qualified
Opinion section above, we have determined that there are no other
key audit matters to communicate in our report.
Other Information
The Resolution Professional (RP), Board of Directors and the
management are responsible for the other information. The other
information comprises the information included in the Management
Discussion and Analysis, Board's Report including Annexures to
Board's Report, Corporate Governance and Shareholder's Information,
but does not include the financial statements and our auditor's report
thereon.
Management Discussion and Analysis, Board's Report including
Annexures to Board's Report, Corporate Governance and Shareholder's
Information are expected to be made available to us
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 with our audit of the financial statements, 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 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 Resolution Professional (RP), Management
and Those Charged with Governance for the Financial Statements
The Resolution Professional (RP) and Company's Board of Directors
are responsible for the matters stated in section 134(5) of the Act with
respect to the preparation of these financial statements that give
a true and fair view of the financial position, financial performance
and cash flows of the Company in accordance with the accounting
principles generally accepted in India, including the Accounting
Standards prescribed under section 133 of the Act, read with
relevant rules issued thereunder. 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 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, the resolution professional (RP)
and the management are 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.
Those Board of Directors are also responsible for overseeing the
Company's financial reporting process.
Auditor's Responsibilities for the Audit of the 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 auditor's 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 this financial statements. As part of an audit in
accordance with SAs, we exercise professional judgment and maintain
professional skepticism throughout the audit. We also:
• I dentify and assess the risks of material misstatement 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. 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 Act, we are
also responsible for expressing our opinion on whether the
Company has adequate internal financial controls with reference
to financial statements 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 resolution professional (RP)
and 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 Company's ability to continue as a going
concern. If we conclude that a material uncertainty exists, we are
required to draw attention in our auditor's 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 auditor's
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 statements, including the disclosures, and whether the
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.
From the matters communicated with those charged with
governance, we determine those matters that were of most
significance in the audit of the financial statements of the current
year and are therefore the key audit matters. We describe these
matters in our auditor's 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.
Other Matter
a) The audit of financial statements for the year ended March 31,
2022, was carried out and reported by M/s Maloo Bhatt & Co.,
vide their unmodified audit report dated 19th May, 2022, whose
report has been furnished to us by the management and which
has been relied upon by us for the purpose of our audit of the
financial statements.
Our opinion is not modified in respect of this matter.
Report on Other Legal and Regulatory Requirements
(1) As required by the Companies (Auditor's Report) Order, 2020
("the Order") issued by the Central Government of India in
terms of section 143(11) of the Act, we report in "Annexure 1", 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 except for the matters described in
the Basis for Qualified Opinion section above, obtained all
the information and explanations which to the best of our
knowledge and belief were necessary for the purposes of
our audit;
b. Except for the possible effects of the matters described in
the Basis for Qualified Opinion section above, 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 Statement of Cash Flows dealt with by this report are in
agreement with the books of account;
d. Except for the possible effects of the matters described
in the Basis for Qualified Opinion section above, in our
opinion, the aforesaid financial statements comply with the
Accounting Standards prescribed under section 133 of the
Act read with relevant rules issued thereunder;
e. The matters described under the Basis for Qualified Opinion
above, in our opinion, may have an adverse effect on the
functioning of the Company;
f. On the basis of the written representations received from the
directors as on March 31, 2023, and taken on record by the
Board of Directors and resolution professional (RP), none of
the directors is disqualified as on March 31,2023 from being
appointed as a director in terms of section 164(2) of the Act.
However, Since the Company is under Corporate Insolvency
Resolution Process (CIRP), all the directors of the Company
are suspended and powers of the board of directors are
vested in the hands of Resolution Professional (RP).
g. The qualification relating to the maintenance of accounts
and other matters connected therewith are as stated in the
Basis for Qualified Opinion section above.
h. 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 2" and we have
expressed disclaimer of opinion for the reasons stated in the
said report;
i. With respect to the other matter to be included in the
Auditor's Report in accordance with the requirements of
section 197(16) of the Act, as amended:
In our opinion and to the best of our information and
according to the explanations given to us, since the
Company is under CIRP and RP has taken charge of the
affairs of the Company, No remuneration has been paid and
provided by the Company to its directors during the year.
j. 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, as amended,
in our opinion and to the best of our information and
according to the explanations given to us:
(i) Except for the matters described in the Basis for
Qualified Opinion section above, The Company has
disclosed the impact of pending litigations on its
financial position in its financial statements - Refer
Note Z(3) on Contingent Liabilities to the financial
statements;
(ii) The Company did not have any long-term contracts
including derivative contracts for 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;
(iv) (a) The management has represented that, to the
best of its knowledge and belief, no funds have
been advanced or loaned or invested (either from
borrowed funds or share premium or any other
sources or kind of funds) by the Company 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;
(iv) (b) The management has represented that, to
the best of its knowledge and belief, no funds
have been received by the Company 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;
(iv) (c) Based on the audit procedures that are 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 11(e), as provided
under (a) and (b) above, contain any material
misstatement.
(v) The Company has not declared nor paid any dividend
during the year. Hence, reporting the compliance with
section 123 of the Act is not applicable.
(vi) As proviso to rule 3(1) of the Companies (Accounts)
Rules, 2014 is applicable for the company only w.e.f.
April 1, 2023, reporting under this clause is not
applicable.
For Haribhakti & Co. LLP
Chartered Accountants
ICAI Firm Registration No. 103523W / W100048
Yash Bhatt
Partner
Place: Mumbai Membership No. 117745
Date: July 6, 2023 UDIN: 23117745BGYEKQ7113
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