To the Members of Bedmutha Industries Limited Report on the Standalone FinancialStatements
We have audited the accompanying standalone financial statements of Bedmutha IndustriesLimited ("the Company") which comprise the Balance sheet as at March 31 2020and the statement of Profit Comprehensive Income) statement of changes in equity andstatement of cash flows for the year then ended and notes to the standalone financialstatements including significant accounting policies and other explanatory information.In our opinion and to the best of our information and according to the explanations givento us except for the effects of the matters described in Basis for Qualified opinion theaforesaid standalone Ind AS 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 of the state of affairs of the Company as at March31 2020 and its losses total comprehensive income its cash flows and the changes inequity for the year ended on that date.
Basis for Qualified Opinion
We refer to following matters: a. In respect of preparation of financial statements ofthe Company on going concern basis for the reasons stated therein. During the year theCompany has incurred a Net Loss of Rs. 71.33 Crores resulting into accumulated losses ofRs. 269.60 Crores. The company's current liabilities exceed current assets. These mattersrequire substantial debt reduction in the company. Also additional cash flow is requiredto fund the operations as well as other obligations b. In respect of investment of Rs.51.21 lakhs in subsidiary Kamalasha Infrastructure & Engineering Pvt. Ltd. which havesignificant accumulated losses as at March 31 2020. In absence unable to comment upon thecarrying value of these investments and its impacts if any.
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.
|Key Audit Matters ||How our audit addressed the key audit matter |
|A. Assessment of the valuation of investment in equity instruments of unlisted companies: ||Our procedures in relation to management's valuation of investments in equity instruments of unlisted companies included: |
|The Company has investments amounting to Rs. 369.40 lakhs in equity instruments of certain unlisted companies which are valued at Historical Cost at each reporting date. ||Evaluating the reasonableness of the policy adopted by the management to measure investment in subsidiaries and associates according to cost model as per para D14 and D15 of Ind AS 101 "First Time Adoption of Indian Accounting Standards". |
|(Refer Note 3 to the standalone financial statements) || |
|This is a key audit matter because of the significance of the carrying value of these investments to the total assets and the extent of management judgement involved in the valuation of such investments. ||Review of the disclosure made by the Company in the financial statements in this regard. |
|B. Litigation Matters: || |
|The Company has open following legal proceedings in respect of disputed claim / levies under various tax and legal matters: ||Our audit procedures included and were not limited to the following: |
|a. Disallowance of CENVAT credit on Capital Goods. ||Discussion with the management on the development in these litigations during the year ended March 31 2020. financial statements in this regard. |
|b. Obligation on manufacturer or producer of final products Review of the disclosures made by the Company in the for reversal of credit. (Refer Note 39 to the standalone financial statements) ||Obtained representation letter from the management on the assessment of these matters. |
Responsibilities of management and those charged with governance for the financialstatements
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 preparation ofthese standalone Ind AS financial statements that give a true and fair view of includingother thefinancial comprehensive income statement of changes in equity andpositionfinancial cash flows of the Company in accordance with the accounting principlesgenerally accepted in India including the Indian Accounting Standards (Ind AS) specifiedunder Section 133 of the Act. This responsibility also includes maintenance of adequateaccounting records in accordance with the provisions of the Act for safeguarding theassets of the Company and for preventing and detecting frauds and other irregularities;selection and application of appropriate accounting policies; making judgments andestimates that are reasonable and prudent; and design implementation and maintenance ofadequate internal financial controls that were operating effectively for ensuring theaccuracy and completeness of the accounting records relevant to the preparation andpresentation of the standalone Ind AS financial statements that give a true and fair viewand are free from material misstatement whether due to fraud or error. In preparing thefinancial statements management is responsible for assessing the Company's ability tocontinue as a going concern disclosing as applicable matters related to going concernand using the going concern basis of accounting unless management either intends toliquidate the Company or to cease operations or has no realistic alternative but to doso. Those Board of Directors are also responsible for overseeing the Company's financialreporting process.
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 financial statementswhether due to fraud or error design and perform audit procedures responsive to thoserisks and obtain audit evidence that is sufficient and appropriate to provide a basis forour opinion. The risk of not detecting a material misstatement resulting from fraud ishigher than for one resulting from error as fraud may involve collusion forgeryintentional omissions misrepresentations or the override of internal control.
Obtain an understanding of internal control relevant to the audit in order to designaudit procedures that are appropriate in the circumstances. Under Section 143(3)(i) of theAct we are also responsible for expressing our opinion on whether the company hasadequate internal financial controls with reference to financial statements in place andthe operating effectiveness of such controls.
Evaluate the appropriateness of accounting policies used and the reasonableness ofaccounting estimates and related disclosures made by management.
Conclude on the appropriateness of management's use of the going concern basis ofaccounting and based on the audit evidence obtained whether a material uncertaintyexists related to events or conditions that may cast the Company's ability to continue asa going concern. If we conclude that a material uncertainty significant exists we arerequired to draw attention in our auditor's report to the related disclosures in thefinancial statements or if such disclosures are inadequate to modify our opinion. Ourconclusions 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 financial statementsincluding the disclosures and whether the financial statements represent the underlyingtransactions and events in a manner that achieves fair presentation. We communicate withthose charged with governance regarding among other matters the planned scope and timingof audit findings includingany theauditand significantdeficiencies in internalcontrol 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.
The Company's Board of Directors is responsible for the other information. The otherinformation comprises the information included in the annual report but does not includethe financial statements and our auditor's report thereon. The annual report is expectedto be made available to us after the date of this auditor's report.
Our opinion on the financial statements does not cover the other information and wewill not express any form of assurance conclusion thereon.
In connection with our audit of the financial statements our responsibility is to readthe other information identified above when it becomes available and in doing soconsider whether the other information is materially inconsistent with the financialstatements or our knowledge obtained in the audit or otherwise appears to be materiallymisstated. When we read the annual report if we conclude that there is a materialmisstatement therein we are required to communicate the matter to those charged withgovernance and take appropriate action as applicable under the relevant laws andregulations.
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 B" a statement on the matters specified inparagraphs 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 Statement of Profit and Loss including Other ComprehensiveIncome the Cash Flow Statement and Statement of Changes in Equity dealt with by thisReport are in agreement with the books of accounts.
(d) In our opinion the aforesaid standalone Ind AS financial statements comply withthe Indian Accounting Standards specified under section 133 of the Companies Act 2013read with Rule 7 of the Companies (Accounts) Rules 2014.
(e) On the basis of the written representations received from the directors as on March31 2020 taken on record by Board of Directors None of the directors is disqualified ason March 31 2020 from being appointed as a director in terms of sub-section (2) ofsection 164 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 A".
(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 explanation given to us:
i. The Company has disclosed the impact of pending litigations on its financialposition in its standalone Ind AS financial statements; Refer Note 39 to the StandaloneFinancial Statements.
ii. The Company has made provision as required under the applicable law or accountingstandards material foreseeable losses if any on long-term contracts includingderivative contracts; if any.
iii. There has been no delay in transferring amounts required to be transferred tothe Investor Education and Protection Fund by the Company; if any.
For A. D. Kulkarni & Co. Chartered Accountants
CA Anil D. Kulkarni
No: 049739 Firm Registration
Date : 26-6-2020
UDIN : 20049739AAAABM5033
ANNEXURE - B TO THE INDEPENDENT AUDITORS' REPORT
The Annexure referred to in Independent Auditors' Report to the members of the Companyon the standalone financial statements for the year ended March 31 2020 we report that(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 fixed assets bywhich fixed assets are verified in a phased manner over a period of three years. Inaccordance with this programme certain fixed assets were verified during the year and nomaterial discrepancies were noticed on such verification. In our opinion this periodicityof physical verification is reasonable having regard to the size of the company and thenature of its assets and as per information and explanations given to us no materialdiscrepancies were noticed on such verification.
(c) According to the information and explanations given to us and on the basis of ourexamination of the records of the company the title deeds of immovable properties areheld in the name of the company.
(ii) As explained to us physical verification of inventory has been conducted atreasonable intervals by the Management and no material discrepancies were noticed on suchverification.
(iii) The company has not granted any loans secured or unsecured to companies firmsLimited Liability Partnerships or other parties covered in the Register maintained undersection 189 of the Companies Act 2013.
(iv) In our opinion and according to the information and explanation given to us theCompany has complied with the provisions of Sections 185 and 186 of the Companies Act2013 in respect of grant of loans making investments and providing guarantees andsecurities as applicable.
(v) The company has not accepted any deposits from the public within the meaning ofsection 73 to 76 of the Act and the rules framed there under to the extent notified.
(vi) We have broadly reviewed the books of accounts maintained by the company pursuantto the Companies (Cost Records and Audit) Rules 2014 as prescribed by Central Governmentof India under sub-section (1) of section 148 of the Companies Act 2013 and are ofopinion that prima facie the prescribed accounts and records have been made andmaintained. We have however not made a detailed examination of cost records with theview to determine whether they are accurate or complete.
(vii) (a) According to the information and explanations given to us and the records ofthe company examined by us in respect of statutory dues the Company is regular indepositing with appropriate authorities undisputed statutory dues including providentfund income tax sales tax service tax employees' state insurance custom duty cessgoods and services tax and other material statutory dues applicable to it. There have beenno statutory dues in arrears as on March 31 2020 for a period of more than six monthsfrom the date they became payable.
(b) According to the information and explanation given to us details of dues of salestax income tax customs duty wealth tax excise duty and cess which have not beendeposited on account of any dispute are stated below:-
| || ||(Rs. in Lakhs) |
|Sr. No. Department ||Financial Year ||Amount of Dispute & Possible Impact |
|1 Customs Excise and Service Tax Appellate Tribunal Mumbai ||2012-15 ||210.5 |
(viii) In our opinion and according to the information and explanations given to usthe company has defaulted in repayment of loans and borrowings from banks. The details ofsuch defaults are given in Note No. 48 of the notes to accounts. However as informed andexplained by the company it is in the process of Debt Restructuring which needs to beapproved by the financial institutions.
(ix) In our opinion and according to the information and explanations given to us TheCompany has not raised any moneys during the year by way of term loans and already raisedproceeds have been applied by the Company for the purposes for which they were raised oras per purpose revised with appropriate approvals. The Company has neither raised anymoney by way of initial public offer/ further public offer nor such proceeds were pendingto be applied during the current year.
(x) During the course of our examination of the books and records of the Companycarried out in accordance with the generally accepted auditing practices in India andaccording to the information and explanations given to us we have neither come across anyinstance of material fraud by the Company or on the Companybyitsofficersor employeesnoticed or reported during the year nor have we been informed of any such case by theManagement.
(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 of the CompaniesAct 2013.
(xii) The Company is not a Nidhi Company and hence reporting under Paragraph 3(xii) ofthe Order is not applicable. (xiii) In our opinion and according to the information andexplanations given to us the Company is in compliance with Sections 177 and 188 of theCompanies Act 2013 where applicable for all transactions with the related parties andthe details of related party transactions have been disclosed in the standalone financialstatements as required by the applicable accounting standards.
(xiv) The Company has not made any preferential allotment or private placement ofshares or fully or partly convertible debentures during the year under review.Accordingly the provisions of Clause 3(xiv) of the Order are not applicable to theCompany.
(xv) In our opinion and according to the information and explanations given to us theCompany has not entered into any non-cash transactions during the year with its directorsor persons connected with them.
(xvi) In our opinion and according to the information and explanations given to us theCompany is not required to be registered under Section 45-IA of the Reserve Bank of IndiaAct 1934.
For A. D. Kulkarni & Co. Chartered Accountants
CA Anil D. Kulkarni
Proprietor Membership No: 049739 Firm Registration No: 115959W
Place: Nashik Date : 26-6-2020
UDIN : 20049739AAAABM5033
ANNEXURE - A to the INDEPENDENT AUDITORS' REPORT
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 BedmuthaIndustries Ltd ("the Company") as of March 31 2020 in conjunction with ouraudit of the standalone Ind AS financial ended on that date.
Management's Responsibility for Internal Financial Controls
The Company's management is responsible forestablishingandmaintaininginternalfinancialcontrols based on the established by theCompany considering the essential components of internalcontroloverfinancial internalcontrol stated in the guidance note on audit of internal financial controls over financialreporting issued by the Institute of Chartered Accountants of India ('ICAI'). 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 to company's policies the safeguarding ofits assets the prevention and detection of frauds and errors the accuracy andcompleteness of the accounting records and the timely preparation of reliable financialinformation as required 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 the Institute ofChartered Accountants of India and prescribed under section 143(10) of the Companies Act2013 to the extent applicable to an audit of internal financial controls. Those Standardsand the Guidance Note require that we comply with ethical requirements and plan andperform the audit to obtain reasonable assurance about whether adequate internalfinancials 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 ofinternal financial controls . Our audit of internal financial controls over financialsystem overfinancial reporting assessing the risk that a material weakness exists andtesting and evaluating the design and operating effectiveness of internal control based onthe assessed risk. The procedures selected depend on the auditor's judgment including theassessment of the risks of material misstatement of the financial statements whether dueto 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 Company's internal financial controls systemover financial reporting.
Meaning of Internal Financial Controls over Financial Reporting financialAcompany'sinternalfinancial reporting is a process designed to provide reasonableassurance regarding the reliability of financial reporting and the preparation offinancial statements for external purposes in accordance with generally acceptedaccounting principles. A company's internal financial control over financial reportingincludes 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 authorisations of management and directors of the company; and
(3) provide reasonable assurance regarding prevention or timely detection ofunauthorised acquisition use or disposition of the company's assets that could have amaterial 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.
Basis for Qualified Opinion
We refer to following matters: a. In respect of preparation of financial statements ofthe Company on going concern basis for the reasons stated therein. During the year theCompany has incurred a Net Loss of Rs. 71.33 Crores resulting into accumulated losses ofRs. 269.60 Crores. The company's current liabilities exceed current assets. These mattersrequire substantial debt reduction in the company. Also additional cash flow is requiredto fund the operations as well as other obligations. b. In respect of investmentof Rs.51.21 lakhs in subsidiary Kamalasha Infrastructure & Engineering Pvt. Ltd. which havesignificant accumulated losses as at March 31 2020. In absence unable to comment upon thecarrying value of these investments and its impacts if any.
In our opinion except for the possible effects of material weaknesses described in"basis of qualified opinion" paragraph the Company has in all materialrespects an adequate internal financial controls system over financial reporting and suchinternal financial controls over financial reporting were operating effectively as atMarch 31 2020 based on the internal control over financial reporting criteriaestablished by the Company considering the internal control stated in the Guidance Note onAudit of Internal Financial Controls Over Financial Reporting issued by the Institute ofChartered Accountants of India.
For A. D. Kulkarni & Co. Chartered Accountants
CA Anil D. Kulkarni
Place: Nashik Date : 26-6-2020
UDIN : 20049739AAAABM5033