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Balu Forge Industries Ltd.

BSE: 531112 Sector: Engineering
NSE: N.A. ISIN Code: INE011E01029
BSE 00:00 | 27 Sep 63.40 0.60
(0.96%)
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NSE 05:30 | 01 Jan Balu Forge Industries Ltd
OPEN 63.20
PREVIOUS CLOSE 62.80
VOLUME 22989
52-Week high 276.45
52-Week low 52.00
P/E 15.35
Mkt Cap.(Rs cr) 529
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 63.20
CLOSE 62.80
VOLUME 22989
52-Week high 276.45
52-Week low 52.00
P/E 15.35
Mkt Cap.(Rs cr) 529
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Balu Forge Industries Ltd. (BALUFORGE) - Auditors Report

Company auditors report

To

The Members of

Balu Forge Industries Limited

(Formerly Known as M/s Amaze Entertech Limited))

Report on the Audit of the Financial Statements Opinion

We have audited the accompanying financial statements of M/s Balu Forge IndustriesLimited (Formerly Known as M/s Amaze Entertech Limited) (the "Company") whichcomprise the Balance Sheet as at 31 March 2021 the Statement of Profit and Lossincluding the Statement of Other Comprehensive Income the Statement of Changes in Equityand the Statement of Cash Flows for the year then ended and notes to the financialstatements including a summary of significant accounting policies and other explanatoryinformation (hereinafter referred to as 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 theCompanies Act 2013 as amended (the "Act") in the manner so required and give atrue and fair view in conformity with the Indian Accounting Standards prescribed undersection 133 of the Act read with the Companies (Indian Accounting Standards) Rules 2015as amended ("Ind AS") and other accounting principles generally accepted inIndia of the state of affairs of the Company as at 31 March 2021 its profit and totalcomprehensive income changes in equity and its cash flows for the year ended on thatdate.

Basis for Opinion

We conducted our audit of the financial statements in accordance with the Standards onAuditing ("SA"s) specified under section 143(10) of the Act. Ourresponsibilities under those Standards are further described in the Auditor'sResponsibilities for the Audit of the Financial Statements section of our report. We areindependent of the Company in accordance with the Code of Ethics issued by the Instituteof Chartered Accountants of India ("ICAI") together with the ethicalrequirements that are relevant to our audit of the financial statements under theprovisions of the Act and the Rules made thereunder and we have fulfilled our otherethical responsibilities in accordance with these requirements and the ICAI's Code ofEthics. We believe that the audit evidence obtained by us is sufficient and appropriate toprovide a basis for our audit opinion on the financial statements.

Emphasis of Matter

1) We draw your attention to Note No 43 of the Financial Statements which explains theuncertainties and the management's assessment of the financial impact due to lock-downsand other restrictions and conditions related to the Second Wave of COVID-19 pandemicsituation for which a definitive assessment of the impact in the subsequent period ishighly dependent upon circumstances as they evolve. Our opinion is not modified in respectof this matter.

2) We draw your attention to Note No 42 of the Financial Statements which explains thatthe Company has taken over the running business of M/s Balu India Sole ProprietorshipFirm vide Business Succession Agreement ("the Agreement'') dated 3 August 2020 ofwhich the business was conducted by a proprietor Mr. Jaspalsingh Chandock. In accordancewith the terms and conditions set out in the agreement all the Immovable Properties andLoans and other Statutory compliances for changing of the name and re -registrations arein the process of being transferred/ obtained in the Name of the Company. Therefore thebusiness has been carried out in the name of M/s Balu India as a trustee of the Companywhich is within the transitory period of 360 days allowed by the business successionagreement. Our opinion is not modified in respect of this matter.

Key Audit Matters

Key audit matters are those matters that in our professional judgment were of mostsignificance in our audit of the financial statements of the current period. These matterswere addressed in the context of our audit of the financial statements as a whole and informing our opinion thereon and we do not provide a separate opinion on these matters. Wehave determined the matters described below to be the key audit matters to be communicatedin our report.

We have fulfilled the responsibilities described in the Auditor's responsibilities forthe audit of the financial statements section of our report including in relation tothese matters. Accordingly our audit included the performance of procedures designed torespond to our assessment of the risks of material misstatement of the financialstatements. The results of our audit procedures including the procedures performed toaddress the matters below provide the basis for our audit opinion on the accompanyingfinancial statements.

Key Audit Matter Auditor's Response
Revenue recognition (as described in Note 4(d) of the Ind AS financial statements) Principal Audit Procedures
Revenue from sales is recognised when control of the products has transferred being when the products are delivered to the customer the customer has full discretion over the channel and price to sell / consume the products and there is no unfulfilled obligation that could affect the customer's acceptance of the products. 1. Considered Company's revenue recognition policy and its compliance in terms of Ind AS 115 'Revenue from contracts with customers'.
Delivery occurs when the products have been shipped to the specific location the risks of obsolescence and loss have been transferred to the customer and either the customer has accepted the products in accordance with the sales contract or the acceptance provisions have lapsed. During the year ended 31 March 2021 the Company has recognised revenue amounting to Rs. 68.46 lacs and Rs. 13702.45 lacs from domestic and export sales respectively. Terms of sales arrangements including the timing of transfer of control delivery specifications including incoterms in case of exports timing of recognition of sales require significant judgment in determining revenues. 2. Assessed the design and tested the operating effectiveness of internal controls related to revenue recognition.
The risk is therefore that revenue may not get recognised in the correct period. Accordingly due to the significant risk associated with revenue recognition in accordance with terms of Ind AS 115 'Revenue from contracts with customers' it has been determined to be a key audit matter in our audit of the Ind AS financial statements. 3. Tested samples of individual sales transaction and traced to sales invoices sales orders (received from customers) and other related documents. Further in respect of the samples tested checked recognition of revenue in accordance with the terms / when the conditions for revenue recognitions are satisfied. How our audit addressed the key audit matter
1. Selected sample of sales transactions made pre- and post-year end agreed the period of revenue recognition to underlying documents.
2. Performed procedures to identify any unusual trends of revenue recognition.
3. Assessed the relevant disclosures made within the Ind AS financial statements.

Information Other than the Financial Statements and Auditor's Report Thereon

The Company's Board of Directors is responsible for the other information. The otherinformation comprises the information included in the Management Discussion and AnalysisBoard's Report including Annexures to Board's Report Business Responsibility ReportCorporate Governance and Shareholder's Information but does not include the financialstatements and our auditor's report thereon.

Our opinion on the financial statements does not cover the other information and we donot express any form of assurance conclusion thereon.

In connection with our audit of the financial statements our responsibility is to readthe other information and in doing so consider whether the other information ismaterially inconsistent with the financial statements or our knowledge obtained during thecourse of our audit or otherwise appears to be materially misstated.

If based on the work we have performed we conclude that there is a materialmisstatement of this other information we are required to report that fact. We havenothing to report in this regard.

Management's Responsibilities for the Financial Statements

The Company's Board of Directors is responsible for the matters stated in section134(5) of the Act with respect to the preparation of these financial statements that givea true and fair view of the financial position financial performance including othercomprehensive income changes in equity and cash flows of the Company in accordance withthe Ind AS and other accounting principles generally accepted in India.

This responsibility also includes maintenance of adequate accounting records inaccordance with the provisions of the Act for safeguarding the assets of the Company andfor preventing and detecting frauds and other irregularities; selection and application ofappropriate accounting policies; making judgments and estimates that are reasonable andprudent; and design implementation and maintenance of adequate internal financialcontrols that were operating effectively for ensuring the accuracy and completeness ofthe accounting records relevant to the preparation and presentation of the financialstatements that give a true and fair view and are free from material misstatement whetherdue to fraud or error.

In preparing the financial statements management is responsible for assessing theCompany's ability to continue as a going concern disclosing as applicable mattersrelated to going concern and using the going concern basis of accounting unless managementeither intends to liquidate the Company or to cease operations or has no realisticalternative but to do so.

The Board of Directors are responsible for overseeing the Company's financial reportingprocess.

Auditor's Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the financialstatements as a whole are free from material misstatement whether due to fraud or errorand to issue an auditor's report that includes our opinion. Reasonable assurance is a highlevel of assurance but is not a guarantee that an audit conducted in accordance with SAswill always detect a material misstatement when it exists. Misstatements can arise fromfraud or error and are considered material if individually or in the aggregate theycould reasonably be expected to influence the economic decisions of users taken on thebasis of these financial statements.

As part of an audit in accordance with SAs we exercise professional judgment andmaintain professional skepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the financialstatements whether due to fraud or error design and perform audit procedures responsiveto those risks and obtain audit evidence that is sufficient and appropriate to provide abasis for our opinion. The risk of not detecting a material misstatement resulting fromfraud is higher than for one resulting from error as fraud may involve collusionforgery intentional omissions misrepresentations or the override of internal control.

• Obtain an understanding of internal financial control relevant to the audit inorder to design audit procedures that are appropriate in the circumstances. Under section143(3)(i) of the Act we are also responsible for expressing our opinion on whether theCompany has adequate internal financial controls system in place and the operatingeffectiveness of such controls.

• Evaluate the appropriateness of accounting policies used and the reasonablenessof accounting estimates and related disclosures made by the management.

• Conclude on the appropriateness of management's use of the going concern basisof accounting and based on the audit evidence obtained whether a material uncertaintyexists related to events or conditions that may cast significant doubt on the Company'sability to continue as a going concern. If we conclude that a material uncertainty existswe are required to draw attention in our auditor's report to the related disclosures inthe 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'sreport. However future events or conditions may cause the Company to cease to continue asa going concern.

• Evaluate the overall presentation structure and content of the financialstatements including the disclosures and whether the financial statements represent theunderlying transactions and events in a manner that achieves fair presentation.

Materiality is the magnitude of misstatements in the financial statements thatindividually or in aggregate makes it probable that the economic decisions of areasonably knowledgeable user of the financial statements may be influenced. We considerquantitative materiality and qualitative factors in (i) planning the scope of our auditwork and in evaluating the results of our work; and (ii) to evaluate the effect of anyidentified misstatements in the financial statements.

We communicate with those charged with governance regarding among other matters theplanned scope and timing of the audit and significant audit findings including anysignificant deficiencies in internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have compliedwith relevant ethical requirements regarding independence and to communicate with themall relationships and other matters that may reasonably be thought to bear on ourindependence and where applicable related safeguards.

From the matters communicated with those charged with governance we determine thosematters that were of most significance in the audit of the financial statements of thecurrent period and are therefore the key audit matters. We describe these matters in ourauditor's report unless law or regulation precludes public disclosure about the matter orwhen in extremely rare circumstances we determine that a matter should not becommunicated in our report because the adverse consequences of doing so would reasonablybe expected to outweigh the public interest benefits of such communication.

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 Companies Act 2013 we give in the 'Annexure A' a statement on the matters specifiedin 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 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 including Other ComprehensiveIncome the Statement of Changes in Equity and the Cash Flow Statement dealt with by thisReport are in agreement with the books of account;

(d) In our opinion the aforesaid financial statements comply with the IndAS specifiedunder Section 133 of the Act read with Companies (Indian Accounting Standards) Rules2015 as amended;

(e) On the basis of the written representations received from the directors as on 31March 2021 taken on record by the Board of Directors none of the directors isdisqualified as on 31 March 2021 from being appointed as a director in terms of Section164(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' to this report;

(g) In our opinion the managerial remuneration for the year ended 31 March 2021 hasbeen paid / provided by the Company to its directors in accordance with the provisions ofsection 197 read with Schedule V to the Act;

(h) 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 no pending litigation which are required to be disclosed in thefinancial statement.

ii. The Company has made provision as required under the applicable law or accountingstandards for material foreseeable losses if any on long-term contracts includingderivative contracts.

iii. There were no amounts which were required to be transferred to the InvestorEducation and Protection Fund by the Company.

For M.B. Agrawal and Co. Chartered Accountants (Firm's Registration No.100137W)
Place: Mumbai

Date: 30 June 2021

Sd/- Leena Agrawal Partner (Membership No.061362) UDIN: 21061362AAAAAM6182

ANNEXURE ‘A'

(Referred to in paragraph 1 under ‘Report on Other Legal and RegulatoryRequirements' section of our report to the Members of Balu Forge Industries Limited ofeven date)

i. In respect of fixed assets:

a. The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets.

b. As explained to us all the assets have been physically verified by the managementduring the year and there is a regular program of verification to cover all the items offixed assets in a phased manner which in our opinion is reasonable considering thesize and the verification having regard to the size of the company and the nature of itsassets. Pursuant to the program the fixed assets were physically verified by theManagement during the year. No material discrepancies have been noticed on such physicalverification.

c. According to the information and explanations given to us the records examined byus and based on the examination of the conveyance deeds / registered sale deed provided tous we report that the title deeds comprising all the immovable properties of land andbuildings plant and machinery which are freehold are held in the name of the ProprietorMr Jaspalsingh Chandock of M/s Balu India from whom the running business was acquired bythe Company and the said are in the process of being transferred in the name of theCompany in accordance with the terms set out in the Business Succession Agreement dated 3August 2020.

ii. In respect of inventories:

a. The inventory has been physically verified by the management at reasonable intervalsduring the year.

b. The Company has maintained proper records of inventory. As explained to us thediscrepancies between the physical inventory and the book records were not material.

iii. According to the information and explanations given to us there are no amounts ofloans granted to companies firms or other parties listed in the register maintained undersection 189 of the Companies Act 2013 which are overdue for more than ninety days.

iv. According to the information and explanation provided to us the Company has.Complied with the provisions of section 185 and 186 of the Companies Act 2013 in respectof loan investments guarantees and security.

v. According to the information provided to us the Company has not accepted depositsfrom public as defined according to the provisions of Section 73 to 76 of the CompaniesAct 2013 and Rules framed thereunder.

vi. We have broadly reviewed the books of accounts maintained by the company inpursuance to the rules made by the Central Government for maintenance of cost recordsunder sub-section (1) of section 14 of the Act for the certain products of the companyand are of the opinion that prima facie the prescribed accounts and records have beenmaintained. We have not however made a detailed examination of the records with a viewto determine whether they are accurate or complete.

vii. According to the information and explanations given to us in respect of statutorydues:

a. The Company has generally been regular in depositing undisputed statutory duesincluding Provident Fund Employees' State Insurance Income Tax Goods and Service TaxCustoms Duty Cess and other material statutory dues applicable to it with the appropriateauthorities with delays in some instances.

b. According to the information and explanations given to us and audit proceduresperformed by us undisputed dues in respect of provident fund employees' state insuranceincome tax duty of custom goods and service tax cess and other statutory dues whichwere outstanding at the year end for a period of more than six months from the date theybecame payable are as follows:

Statement of arrears of statutory dues outstanding for more than six months:

Name of the Statute Nature of the Dues Amount (Rs) Due date Date of Payment Amount
Employee State Insurance ESIC 130921 15/10/2020 03/05/21 04/05/21 52014 78907
Profession Tax Profession Tax (Employee) 8800 30/06/2021 Not Paid
Provident Fund Provident Fund (Belgum) 825678 15/10/2020 03/05/2021 825678
Tax Collected at Source TCS- Scarp Sales 2970 Not Paid
Tax Deducted at Source 194A- Interest 86387 07/10/2020 Not Paid
Tax Deducted at Source 194C- Contractors 380074 07/10/2020 Not Paid
Tax Deducted at Source 194H- Commission/ Brokerage 7311 07/10/2020 Not paid
Tax Deducted at source 194I- Rent 12375 07/10/2020 Not Paid
Tax Deducted at source 194J-Professional/ Technical fees 47214 07/10/2020 Not paid

c. According to the information and explanation given to us there are no disputed duespending with respect to provident fund employees' state insurance income tax duty ofcustom goods and service tax cess and other statutory dues at the year end.

viii. In our opinion and according to the information and explanations given to us thecompany has not defaulted in repayments of any loans or borrowings to financialinstitutions banks and Government.

ix. In our opinion and according to the information and explanations given by themanagement and audit procedures performed by us the Company has utilized the moniesraised by way of preferential issue of equity shares and Convertible warrants and termloans for the purposes for which they were raised. The Company does not have anyunutilised money out of initial public offer / further public offer.

x. Based upon the audit procedures performed for the purpose of reporting the true andfair view of the financial statements and according to the information and explanationsgiven by the management we report that no material fraud by the Company or no materialfraud on the Company by the officers and employees of the Company has been noticed orreported during the year.

xi. In our opinion and according to the information and explanations given to us theCompany has paid/ provided managerial remuneration in accordance with the requisiteapprovals mandated by the provisions of section 197 read with Schedule V to the Act.

xii. The Company is not a Nidhi Company and hence reporting under clause 3 (xii) of theOrder is not applicable to the Company.

xiii. In our opinion and according to the information and explanations given to us theCompany is in compliance with Section 177 and 188 of the Companies Act 2013 whereapplicable for all transactions with the related parties and the details of related partytransactions have been disclosed in the financial statements as required by the applicableaccounting standards.

xiv. During the year the Company has acquired the business of M/s Balu India SoleProprietorship concern and 47840000 Equity shares of Rs. 10/- were allotted to theproprietor without cash consideration. The Company has made preferential allotment of20425000 Equity shares of Rs. 10/- to its non-promoters. The terms of Issue are notprejudicial to the interest of the company. Further the Company has complied with section42 of Companies Act 2013 wherein the amount raised has been used for the purpose forwhich the funds were raised.

xv. In our opinion and according to the information and explanations given to usduring the year the Company has not entered into any non-cash transactions with itsDirectors or persons connected to its directors and hence provisions of section 192 of theCompanies Act 2013 are not applicable to the Company.

xvi. The Company is not required to be registered under section 45-IA of the ReserveBank of India Act 1934.

For M.B. Agrawal & Co. Chartered Accountants (Firm's Registration No.100137W)
Sd/-
Leena Agrawal
Partner
Place: Mumbai (Membership No.061362)
Date: 30 June 2021 UDIN: 21061362AAAAAM6182

ANNEXURE ‘B'

(Referred to in paragraph 2(f) under ‘Report on Other Legal and RegulatoryRequirements' section of our report to the Members of Balu Forge Industries Limited ofeven date)

Report on the Internal Financial Controls Over Financial Reporting under Clause (i) ofSub-section 3 of Section 143 of the Companies Act 2013 ("the Act")

We have audited the internal financial controls over financial reporting of Balu ForgeIndustries Limited ("the Company") as of 31 March 2021 in conjunction with ouraudit of the financial statements of the Company for the year ended on that date.

Management's Responsibility for Internal Financial Controls

The Board of Directors of the Company is responsible for establishing and maintaininginternal financial controls based on the internal control over financial reportingcriteria established by the Company considering the essential components of internalcontrol stated in the Guidance Note on Audit of Internal Financial Controls Over FinancialReporting issued by the Institute of Chartered Accountants of India. Theseresponsibilities include the design implementation and maintenance of adequate internalfinancial controls that were operating effectively for ensuring the orderly and efficientconduct of its business including adherence respective company's policies thesafeguarding of its assets the prevention and detection of frauds and errors theaccuracy and completeness of the accounting records and the timely preparation ofreliable financial information as required under the Companies Act 2013.

Auditor's Responsibility

Our responsibility is to express an opinion on the internal financial controls overfinancial reporting of the Company based on our audit. We conducted our audit inaccordance with the Guidance Note on Audit of Internal Financial Controls Over FinancialReporting (the "Guidance Note") issued by the Institute of Chartered Accountantsof India and the Standards on Auditing prescribed under Section 143(10) of the CompaniesAct 2013 to the extent applicable to an audit of internal financial controls. 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 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 judgement 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 audit opinion on the internal financial controls system overfinancial reporting of the Company.

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 of records that in reasonable detail accurately andfairly reflect the transactions and dispositions of the assets of the company;

(2) provide reasonable assurance that transactions are recorded as necessary to permitpreparation of financial statements in accordance with generally accepted accountingprinciples and that receipts and expenditures of the company are being made only inaccordance with authorizations of management and directors of the company; and

(3) provide reasonable assurance regarding prevention or timely detection ofunauthorized acquisition use or disposition of the company's assets that could have amaterial effect on the financial statements.

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.

Opinion

In our opinion to the best of our information and according to the explanations givento us the Company has in all material respects an adequate internal financial controlssystem over financial reporting and such internal financial controls over financialreporting were operating effectively as at 31 March 2021 based on the internal controlover financial 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.

For M.B. Agrawal & Co.
Chartered Accountants
(Firm's Registration No. 100137W)
Sd/-
Leena Agrawal
Partner
Place: Mumbai (Membership No. 061362)
Date: 30 June 2021 UDIN:21061362AAAAAM6182

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