The Members of
BIGBLOC CONSTRUCTION LIMITED
Report of the Financial Statements
We have audited the accompanying financial statements of Bigbloc Construction Limited("the Company") which comprise the balance sheet as at 31 March 2017 thestatement of profit and loss and the cash flow statement for the year then ended and asummary of significant accounting policies and other explanatory information.
Management's Responsibility for the Financial Statements
The Company's Board of Directors is responsible for the matters stated in Section134(5) of the Companies Act 2013 ("the Act") with respect to the preparationand presentation of these financial statements that give a true and fair view of thefinancial position financial performance and cash flows of the Company in accordance withthe accounting principles generally accepted in India including the Accounting Standardsspecified under Section 133 of the Act read with Rule 7 of the Companies (Accounts)Rules 2014. This responsibility also includes maintenance of adequate accounting recordsin accordance with the provisions of the Act for safeguarding the assets of the Companyand for preventing and detecting frauds and other irregularities; selection andapplication of appropriate accounting policies; making judgments and estimates that arereasonable and prudent; and design implementation and maintenance of adequate internalfinancial controls that were operating effectively for ensuring the accuracy andcompleteness of the accounting records relevant to the preparation and presentation ofthe financial statements that give a true and fair view and are free from materialmisstatement whether due to fraud or error.
Our responsibility is to express an opinion on these financial statements based on ouraudit.
We have taken into account the provisions of the Act the accounting and auditingstandards and matters which are required to be included in the audit report under theprovisions of the Act and the Rules made thereunder.
We conducted our audit in accordance with the Standards on Auditing specified underSection 143(10) of the Act. Those Standards require that we comply with ethicalrequirements and plan and perform the audit to obtain reasonable assurance about whetherthe financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts andthe disclosures in the financial statements. The procedures selected depend on theauditor's judgment including the assessment of the risks of material misstatement of thefinancial statements whether due to fraud or error. In making those risk assessments theauditor considers internal financial control relevant to the Company's preparation of thefinancial statements that give a true and fair view in order to design audit proceduresthat are appropriate in the circumstances. An audit also includes evaluating theappropriateness of the accounting policies used and the reasonableness of the accountingestimates made by the Company's Directors as well as evaluating the overall presentationof the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the financial statements.
Basis of Qualified Opinion
The company has not provided for Long Term Employee Benefits such as Gratuity and LeaveEncashment on accrual basis but provides the same as and when they become due for payment.This method of accounting of Long Term Employee Benefits is in deviation with AccountingStandard-15 on Employee Benefits in respect of provision for Long Term Employee Benefit& Defined Benefit plans. As there is no actuarial report or basis of calculationavailable with the management of such long term employee benefits the quantum ofdeviation cannot be determined. If the company had followed the method accounting as perAS - 15 then employee benefit expense would have increased and correspondingly long termprovision would have also increased for such employee benefits.
In our opinion and to the best of our information and according to the explanationsgiven to us except for the effects of matter described in the 'Basis of QualifiedOpinion' Paragraph above the aforesaid standalone financial statements give theinformation required by the Act in the manner so required and give a true and fair view inconformity with the accounting principles generally accepted in India of the state ofaffairs of the Company as at 31st March 2017 and its profit and its cash flows for theyear ended on that date.
Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditor's Report) Order 2016 ("the Order")issued by the Central Government of India in terms of sub-section (11) of section 143 ofthe Act we give in the Annexure A a statement on the matters specified in the paragraph3 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 & obtained all the information and explanations which to the bestof our knowledge and belief were necessary for the purposes of our audit.
b) In our opinion proper books of accounts as required by law have been kept by thecompany so far as appears from our examination of such books.
c) The Balance Sheet Statement of Profit & Loss Account and cash flow statementdealt with by this report are in agreement with the books of account.
d) In our opinion the aforesaid standalone financial statements comply with theAccounting Standards specified under Section 133 of the Act read with Rule 7 of theCompanies (Accounts) Rules 2014 except for Accounting Standard-15 on Employee Benefits inrespect of provision for Long Term Employee Benefit & Defined Benefit plans.
e) On the basis of the written representations received from the directors as on 31stMarch 2017 and taken on record by the board of directors none of the directors isdisqualified as on 31st March 2017 from being appointed as a directors in terms ofsection 164(2) of the Act.
f) With respect to the adequacy of the internal financial controls over financialreporting of the Company and the operating effectiveness of such controls refer to ourseparate report in "Annexure B"; and
g) With respect to the other matters to be included in the Auditor's Report inaccordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014 in our opinionand 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 financialposition in its financial statements - Refer Note 24 (i) to the financial statements;
ii. the Company did not have any long-term contracts including derivative contracts forwhich there were any material foreseeable losses;
iii. there were no amounts which were required to be transferred to the InvestorEducation and Protection Fund by the Company.
iv. The company has provided requisite disclosures in its financial statements as toholdings as well as dealings in Specified Bank Notes during the period from 8th November2016 to 30th December 2016. Based on audit procedures and relying on the managementrepresentation we report that the disclosures are in accordance with the books ofaccounts maintained by the Company (Refer Note 34 to the financial statements).
| ||For RKM & CO. |
| ||Chartered Accountants |
| ||Firm Registration No.: 108553W |
| ||(Ramesh Kumar Malpani) |
|Place : Surat ||Partner |
|Date : 17th May 2017 ||Membership No. 33840 |
Annexure "A" to the Independent Auditor's Report of Even date on theFinancial Statements of Bigbloc Construction Limited for year ended on 31st March 2017
(Referred to in Paragraph '1' under "Report on Other Legal and RegulatoryRequirements' of our report of even date)
i. (a) The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets.
(b) The Company has a regular programme of physical verification of its fixed assets bywhich fixed assets are verified at reasonable intervals. In accordance with thisprogramme certain fixed assets were verified during the year and no materialdiscrepancies were noticed on such verification.
(c) The immovable properties are vested in the company in pursuance of Scheme ofArrangement (De-merger) of AAC Block Division of Mohit Industries Limited in the company.Though the scheme has become effective and according to order of the Gujarat High Courtthe immovable properties are vested in the company however the procedure of the transferof titles in name of the company is pending as on date of audit report.
ii. Physical verification of inventory has been conducted by the management atreasonable intervals. The company has not maintained quantitative records of purchase andconsumption of Flyash (which is one of main Raw Materials) Stores & Spares and OtherConsumable items. In the absence of such records it is not possible to ascertain thediscrepancy if any on such physical verification.
iv. In our opinion and according to the information and explanations given to us theCompany has complied with the provisions of section 185 and 186 of the Act with respectto the loans and investments made.
v. According to information & explanation given to us the company has not acceptedany deposits.
vii. (a) According to the information and explanations given to us and on the basis ofour examination of the records of the Company amounts deducted/ accrued in the books ofaccount in respect of undisputed statutory dues including provident fund income-taxsales tax value added tax duty of customs duty of excise cess and other materialstatutory dues (except service tax and dividend distribution tax) have generally beenregularly deposited during the year by the Company with the appropriate authorities. Thecompany has not deducted employees' state insurance and thus question of payment does notarise. However there has been delay in depositing the service tax and dividenddistribution tax by the company.
According to the information and explanation given to us no undisputed outstandingamounts in respect of provident fund income tax sales tax duty of customs duty ofexcise value added tax cess were in arrears as at 31st March 2017 for a period of morethan six months from the date they became payable. However undisputed service taxoutstanding of Rs 26.87 Lakhs were in arrears as at 31st March 2017 for period of morethan six months from the date they became payable.
(b) According to the information and explanation given to us there are no dues ofincome tax sales tax service tax duty of customs duty of excise value added taxcess which have not been deposited on account of any dispute.
viii. In our opinion and according to the information and explanations given to us thecompany has not defaulted in repayment of loans or borrowing to the financialinstitutions banks or government. As explained to us no debenture has been issued by thecompany.
ix. The Company did not raise any money by way of initial public offer or furtherpublic offer (including debt instruments). According to information and explanations givento us we are of the opinion that the term loans have been applied for the purposes forwhich they were raised.
x. According to the information and explanations given to us no fraud by the Companyor on the Company by its officers or employees has been noticed or reported during thecourse of our audit.
xi. According to the information and explanations give to us and based on ourexamination of the records of the Company the Company has paid/provided for managerialremuneration in accordance with the requisite approvals mandated by the provisions ofsection 197 read with Schedule V to the Act.
xii. In our opinion and according to the information and explanations given to us theCompany is not a nidhi company. Accordingly paragraph 3(xii) of the Order is notapplicable.
xiii. According to the information and explanations given to us and based on ourexamination of the records of the Company transactions with the related parties are incompliance with sections 177 and 188 of the Act where applicable and details of suchtransactions have been disclosed in the financial statements as required by the applicableaccounting standards.
xiv. According to the information and explanations give to us and based on ourexamination of the records of the Company the Company has not made any preferentialallotment or private placement of shares or fully or partly convertible debentures duringthe year.
xv. According to the information and explanations given to us and based on ourexamination of the records of the Company the Company has not entered into non-cashtransactions with directors or persons connected with him. Accordingly paragraph 3(xv) ofthe Order is not applicable.
xvi. The Company is not required to be registered under section 45-IA of the ReserveBank of India Act 1934.
Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section143 of the Companies Act 2013 ("the Act")
We have audited the internal financial controls over financial reporting of BigblocConstruction Limited ("the Company") as of 31 March 2017 in conjunction with ouraudit of 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 internalfinancial controls based on the internal control over financial reporting criteriaestablished by the Company considering the essential components of internal control statedin the Guidance Note on Audit of Internal Financial Controls over Financial Reportingissued by the Institute of Chartered Accountants of India ('ICAI'). These responsibilitiesinclude the design implementation and maintenance of adequate internal financial controlsthat were operating effectively for ensuring the orderly and efficient conduct of itsbusiness including adherence to company's policies the safeguarding of its assets theprevention and detection of frauds and errors the accuracy and completeness of theaccounting records and the timely preparation of reliable financial information asrequired under the Companies Act 2013.
Our responsibility is to express an opinion on the Company's internal financialcontrols over financial reporting based on our audit. We conducted our audit in accordancewith the Guidance Note on Audit of Internal Financial Controls over Financial Reporting(the "Guidance Note") and the Standards on Auditing issued by ICAI and deemedto be prescribed under section 143(10) of the Companies Act 2013 to the extentapplicable to an audit of internal financial controls both applicable to an audit ofInternal Financial Controls and both issued by the Institute of Chartered Accountants ofIndia. Those Standards and the Guidance Note require that we comply with ethicalrequirements and plan and perform the audit to obtain reasonable assurance about whetheradequate internal financial controls over financial reporting was established andmaintained and if such controls operated effectively in all material respects.
Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal financial controls system over financial reporting and their operatingeffectiveness. Our audit of internal financial controls over financial reporting includedobtaining an understanding of internal financial controls over financial reportingassessing the risk that a material weakness exists and testing and evaluating the designand operating effectiveness of internal control based on the assessed risk. The proceduresselected depend on the auditor's judgment including the assessment of the risks ofmaterial misstatement of the financial statements whether due to fraud or error.
We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our Qualified opinion on the Company's internal financial controlssystem over financial reporting.
Meaning of Internal Financial Controls over Financial Reporting
A company's internal financial control over financial reporting is a process designedto provide reasonable assurance regarding the reliability of financial reporting and thepreparation of financial statements for external purposes in accordance with generallyaccepted accounting principles. A company's internal financial control over financialreporting includes those policies and procedures that (1) pertain to the maintenance ofrecords that in reasonable detail accurately and fairly reflect the transactions anddispositions of the assets of the company; (2) provide reasonable assurance thattransactions are recorded as necessary to permit preparation of financial statements inaccordance with generally accepted accounting principles and that receipts andexpenditures of the company are being made only in accordance with authorisations ofmanagement and directors of the company; and (3) provide reasonable assurance regardingprevention or timely detection of unauthorised acquisition use or disposition of thecompany's 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 financialreporting including the possibility of collusion or improper management override ofcontrols material misstatements due to error or fraud may occur and not be detected.Also projections of any evaluation of the internal financial controls over financialreporting to future periods are subject to the risk that the internal financial controlover financial reporting may become inadequate because of changes in conditions or thatthe degree of compliance with the policies or procedures may deteriorate.
According to the information and explanations given us and based on our audit thefollowing material weakness has been identified as at March 31 2017:
i) The Company did not have an appropriate internal control system for inventory withregard to purchase and consumption of Flyash (which is one of main Raw Materials) Stores& Spares and other consumables. The physical verification of inventory is carried outby the management at reasonable interval but quantitative records of inventory of purchaseand consumption of Flyash Stores & Spares and other consumables are not maintained bythe company. This could potentially result in discrepancy in inventory not prevented ordetected in timely manner.
A 'material weakness' is a deficiency or a combination of deficiencies in internalfinancial control over financial reporting such that there is a reasonable possibilitythat a material misstatement of the company's annual or interim financial statements willnot be prevented or detected on a timely basis.
In our opinion considering the nature of business size of operation andorganizational structure of the entity except for possible effects of the materialweakness described above on the achievement of the objectives of the control criteria theCompany has maintained in all material respects adequate internal financial controlsover financial reporting and such internal financial controls over financial reportingwere operating effectively as of March 31 2017 based on the internal control overfinancial reporting criteria established by the Company considering the essentialcomponents of internal control stated in the Guidance Note on Audit of Internal FinancialControls Over Financial Reporting issued by the Institute of Chartered Accountants ofIndia.
We have considered the material weakness identified and reported above in determiningthe nature timing and extent of audit tests applied in our audit of the March 31 2017financial statements of the Company and the material weakness does not affect our opinionon the financial statements of the Company.