To the Members of K.P. Energy Limited
Report on the Financial Statements
We have audited the accompanying financial statements of K.P. Energy Limited.(the Company) which comprise the balance sheet as at 31st March 2016 thestatement of profit and loss and the cash flow statement for the period 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 there under.
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 but not for the purpose of expressing anopinion on whether the Company has in place an adequate internal financial controls systemover financial reporting and the operating effectiveness of such controls. An audit alsoincludes evaluating the appropriateness of the accounting policies used and thereasonableness of the accounting estimates made by the Company's Directors as well asevaluating the overall presentation of 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.
In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid financial statements give the information required by the Actin the manner so required and give a true and fair view in conformity with the accountingprinciples generally accepted in India
(a) In the case of Balance Sheet of the state of affairs of the Group as at 31stMarch 2016.
(b) In the case of the statement of Profit & Loss of the Profit for the periodended on that date
(c) In the case of Cash flow statement of the Cash flow for the period ended on thatdate
Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditor's Report) Order 2015 ("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 statement on the matters specified in the paragraph 3and 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 bestof 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 theCompany so far as it appears from our examination of those books;
(c) The Balance sheet the statement of profit and loss and the cash flow statementdealt with by this Report are in agreement with the books of account;
(d) In our opinion the aforesaid financial statements comply with the AccountingStandards specified under Section 133 of the Act read with Rule 7 of the Companies(Accounts) Rules 2014;
(e) On the basis of the written representations received from the directors as on 31March 2016 taken on record by the Board of Directors none of the directors isdisqualified as on 31 March 2016 from being appointed as a director in terms of Section164 (2) of the Act; and
(f) 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 does not have any such pending litigation which would impact itsfinancial position.
II. The Company did not have any long term contracts including derivatives contractsfor which 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.
For Bipinchandra J. Modi & Co.
Bipinchandra J. Modi
M. No. 31687
FRN NO. 101521W
TO THE MEMBERS
ANNEXURE TO THE AUDITOR'S REPORT
STATEMENT OF PARTICULARS AS REQUIRED BY THE COMPANIES (AUDITORS REPORT) ORDER. 2016
a) The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets.
b) The company has a regular Programme for Verification of Fixed Asset as per thatprogramme Fixed Assets have been physically verified by the management at reasonableintervals. No material discrepancies were noticed on such verification.
c) All the documents Title deeds of immovable properties owned by the company are heldin the name of company.
a) The inventory has been physically verified during the year by the management. In ouropinion the frequency of verification is reasonable.
b) The procedures of physical verification of inventories followed by the managementare reasonable and adequate in relation to the size of the Company and the nature of itsbusiness.
c) The Company is maintaining proper records of inventory. No material discrepancieswere noticed on verification between the physical stocks and the book records.
3. The Company has not granted secured/unsecured loans to parties listed in theregister maintained U/s. 189 of the Companies Act 2013.
4. In our opinion and according to the information and explanations given to us theCompany has complied with provisions of Section 185 and 186 of the companies Act 2013 inrespect of loans investment guarantees and security.
5. The Company has not accepted any deposit from public.
6. The Central Government has not prescribed the maintenance of cost records undersection 148(1) of the Act for any of the services rendered by the Company.
7. According to the information and explanations given to us and on the basis of ourexamination of the records of the company amounts deducted/accrued in the books ofaccounts in respect of undisputed statutory dues including provident fund income taxsales tax wealth tax service tax duty of customs value added tax cess and othermaterial statutory dues have been regularly deposited during the year by the company withthe appropriate authorities. As explained to us the company does not have any dues onaccount of employees' state insurance and duty of excise. According to the information andexplanation given to us no undisputed amounts payable in respect of provident fundincome tax sales tax wealth tax service tax duty of customs value added tax cess andother material statutory dues were in arrears as at 31st March 2016 for aperiod of more than six months from the date they payable. However in the case of servicetax The Central Board of Excise & Custom vide letter dated March 24 2015 beingreference No. F No. IV/9-HPIU-II/27/2014-15 accepted the request made by the company notto issue show cause notice. The aforesaid letter of the Central Board of Excise &Custom was pursuant to letter dated March 14 2015 sent to it by the company inter-aliarequesting the Central Board of Excise & Custom to waive the issue of Show CauseNotice under section 73 of the Finance Act 1994 as out of an Amount of Rs. 2203163/-(Rupees Twenty Two Lakhs Three Thousand One Hundred And Sixty Three Only)of service taxliability a sum of Rs. 1466715/- (Rupees Fourteen Lakhs Sixty Six Thousand SevenHundred and Fifteen Only) had already been paid by the company and a balance amount of Rs.736448/-(Rupees Seven Lakhs Thirty Six Thousand Four Hundred and Forty Eight Only) waspending In the said letter of the company dated March 142015 the Company has alsointer-alia accepted liability to pay the pending amount of service tax along with aninterest and penalty at 25% p.a. By its letter dated March 172015 the Central Board ofExcise & Custom inter-alia acknowledged the amount of interest payable by the companyto be Rs. 387058/-(Rupees Three Lakh Eighty Seven Thousand and Fifty Eight Only). ThePrincipal amount interest and penalty has been paid by the company.
8. In our opinion and according to the information and explanations given to us theCompany has not defaulted in repayment of dues to a financial institution and bank.
9. In our opinion and according to the information and the explanations given to usthe Company has raised Rs.6.44 Crore through Initial Public offer for the purpose ofsetting up 2.1 MW Wind Turbine at Village Matalpar Dist. Bhavnagar. The Company hasutilized Rs.5.92 Crore till 31st March 2016 Balance amount of Rs.0.52 Crore isin the Public issue account at 31st March 2016.
10. According to the information and explanations given to us no fraud on or by theCompany has been noticed or reported during the course of our audit.
11. The company has paid Managerial Remuneration in accordance with provisions ofSection 197 read with Schedule V of the companies' act 2013.
12. The provisions of Nidhi Rules 2014 is not applicable to the Company.
13. The Related party transactions are in compliance with section 177 and 188 ofCompanies Act 2013.
14. The Company has not made any preferential allotment or private placement of sharesor fully or partly paid debentures during the year. The company has issued bonus shares (3shares for every 2 shares) by capitalizing Reserve and Surplus of the company.
15. According to the information and explanation given to us the Company has notentered into any non-cash transactions with directors or persons connected with him.
16. The Company has not required to registered under section 45-IA of the Reserve Bankof India Act 1934.
For Bipinchandra J. Modi & Co.
Bipinchandra J. Modi
M. No. 31687
FRN No. 101521W
ANNEXURE-B TO THE INDEPENDENT AUDITOR'S REPORT
Report on the Internal Financial Control under clause (i) of subsection-3 of section143 of the Companies Act 2013("the Act) and as referred to as "Annexure B"in point (f) of the paragraph 2 under the heading "Report on other legal and otherregulatory requirements" of our Independent Auditor's Report of even date on theaccounts for the year ended on 31st March 2016.
We have audited internal financial control over financial reporting of K.P.ENERGYLIMITED ("The Company) as on 31st March 2016 in conjunction with our auditof the 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 controlthat were operating effectively for ensuring the orderly and efficient conduct of itsbusiness including adherence to company's policies the safeguarding of its asserts 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 conduct our audit in accordancewith the Guidance Note on Audit of Internal Financial Controls over financial Reporting(the "Guidance Note) and the standard on Auditing issued by ICAI and deemed to beprescribed under Section 143(10) of the companies Act 2013 to the extent applicable to anaudit of internal financial controls both applicable to an audit of Internal FinancialsControls and both issued by the Institute of Chartered Accountants of India. Thosestandards and the Guidance note require that we comply with ethical requirements and planand perform the audit to obtain reasonable assurance about whether adequate internalfinancial controls over financial reporting was established and maintained and if suchcontrols operated effectively in all material respects. Our Audit involves performingprocedures to obtain audit evidence about the adequacy of the internal financial controlssystem over financial reporting and their operating effectiveness.
Our audit of internal financial controls over financial reporting include obtaining andunderstanding of internal financial controls over financial reporting assessing the riskthat a material weakness exists and testing and evaluating the design and operatingeffectiveness of internal control based on the assessed risk. The procedures selecteddepend on the auditor's judgment including the assessment of the risk of materialmisstatement of the financial statements whether due to fraud or error.
We believe that the audit evidence we have obtain is sufficient and appropriate toprovide a basis for our audit opinion on the company's internal control system overfinancial 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 purpose in accordance with generallyaccepted accounting principles. A company's internal financial control over financialreport 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 authorizations ofmanagement and directors of the company; and (3) provide reasonable assurance regardingprevention or timely detection of unauthorized 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 evaluations 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 polices or procedures may deteriorate.
In our opinion the company has in all material respects an adequate internalfinancial control system over financial reporting and such internal financial control overfinancial reporting were operating effectively as at 31st March 2016 based onthe company considering the essential Components of internal control stated in theGuidance Note on Audit of Internal Financial Control Over Financial Reporting issued byThe Institute Of Chartered Accountants of India.
For Bipinchandra J. Modi & Co.
Bipinchandra J. Modi
M. No. 31687
FRN No. 101521W