Independent auditors of state-owned Scooters India Ltd (SIL) have pointed out discrepancies in renting of warehouses by the three-wheeler maker, according to a regulatory filing by the company.
Asija & Associates LLP, the independent auditors of the company, also pointed out delayed IGST payment of Rs 1,68,928 since September 2019, which as per provisions of IGST Act 2017, should have been paid by October 20, 2019.
In their report to the board of directors of the company, the auditors pointed out that "during the course of audit, certain discrepancies related to the rent has been observed by us".
These related to the warehouses taken by SIL in five regions -- Pune, Chennai, Hyderabad, Kolkata and Patna.
"Lease/Rent Agreement of only one region, Chennai has been provided to us and the payment of rent for all the remaining warehouses are made on the approval basis," the report said.
It further said, "However, we are of the opinion that there must exist a lease/rent agreement between the parties for the adequate information about the lease such as -- timely renewal of rent agreement in case of expiry of periodicity of the lease, to determine the accurate lease rent of the premises and to serve as a legal evidence in the court of law in case of future disputes."
Referring to pending rent payment of Patna warehouse, the auditors said while verifying the approval for release of the same for a period from July 1, 2017 to September 30, 2018, "it has been observed by us that pending rent of Rs 2,94,000 has been released on the basis of request letter from (one) Mr Sanjeev Ghosh, which has not been furnished to us. Thus we could not verify the authenticity of the payment made by the company".
They also said, "While further scrutinising, it has been observed by us that the payment of rent for warehouses located in different regions made by the company on irregular basis."
On scrutinising payment of rent, the auditors said, "We observed that the accounting treatment of the same has been done once the payment is actually being made by the company, i.e., on the cash basis as a result organisation is not following the significant accounting policies."
They said as per Clause 8.5 of Significant Accounting Policy there are specified items which are to be accounted for on receipt and does not cover the accounting of rent.
On delayed IGST payment, Asija & Associates in its report to the company's board said, "During the course of audit it has been observed that the IGST payable amounting to Rs 2,77,576.11 out of which amount of Rs 1,68,928.11 is standing since September 2019. However, as per provisions of IGST Act, 2017 the same should be paid by the 20th of the subsequent month, i.e. October 2019..."
The auditors also said an expenditure of Rs 7,92,454.77 has been incurred by the company in the development of "electronic vehicle (EV), which is not launched by the company so far. In the context of the same, we are of the opinion that the same should not appear in the head of R&D and be treated as Deferred Revenue Expenditure".
Scooter India Ltd on Wednesday reported a standalone net loss of Rs 2.13 crore in the third quarter ended December 31, 2019. It had posted standalone net loss of Rs 6.65 crore in the year-ago period.
The company's revenue from operations stood at Rs 20.01 crore in the third quarter as compared to Rs 13.69 crore in the same period last fiscal.
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