TO THE MEMBERS OF BEMCO HYDRAULICS LIMITED
Report on the Audit of the Standalone Financial Statements
We have audited the standalone financial statements of BEMCO HYDRAULICS LIMITED("the Company") which comprise the Balance Sheet as at 31 March 2020 theStatement of Pro t and Loss (including Other Comprehensive Income)Statement of Changes inEquity and Statement of Cash Flows for the year then ended and notes to the standalonefinancial statements including a summary of the signi cant accounting policies and otherexplanatory information (hereinafter referred to as "the Standalone FinancialStatements).
In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid standalone financial statements give the information requiredby the Companies Act 2013 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 31 March 2020 and its pro t changes in equity and its cashows for the year ended on that date.
Basis for Opinion
We conducted our audit in accordance with the Standards on Auditing (SAs) speci edunder section 143(10) of the Companies Act 2013. Our responsibilities under thoseStandards are further described in the Auditor's Responsibilities for the Audit of thestandalone financial statements section of our report. We are independent of the Companyin accordance with the Code of Ethics issued by the Institute of Chartered Accountants ofIndia together with the ethical requirements that are relevant to our audit of thestandalone financial statements under the provisions of the Companies Act 2013 and theRules there under and we have ful lled our other ethical responsibilities in accordancewith these requirements and the Code of Ethics. We believe that the audit evidence we haveobtained is suf cient and appropriate to provide a basis for our opinion.
Emphasis of Matter
Attention is drawn to Note 5.45 of the Standalone Financial Statements which describesthe impact of COVID-19 Pandemic on the financial position as also on business operationsof the Company assessment thereof by the management of the Company based on its internalexternal and macro factors involving certain estimation uncertainties. Our opinion is notmodi ed in respect of this matter.
Key Audit Matters
Key audit matters are those matters that in our professional judgment were of mostsigni cance in our audit of the standalone financial statements of the current period.These matters were addressed in the context of our audit of the standalone financialstatements as a whole and in forming our opinion thereon and we do not provide aseparate opinion on these matters.
Descriptions of Key Audit Matters are given below:-
|SI No. Key Audit Matters ||Auditor's Response |
|1 Appropriateness of the carrying amount of trade receivables ||Our procedures regarding obtaining the balance con rmation of |
|(Unsecured & Considered Good) at amortized cost ||Trade Receivable and verifying the same |
|(Refer Note 5.08 to the standalone financial statements) || |
|Trade receivables aggregating to Rs.1124.31 Lakhs as at March 31 2020 comprise a signi cant portion of the assets of the Company and serve as security for the Company's short-term debts. || Designing the external con rmation procedures to obtain additional corroborative information as a response to address the assessed risks of material misstatement including determining that external con rmation requests are properly addressed and contain return information for responses to be sent directly to the auditor and maintaining control over external con rmation requests |
|Letters have been sent to majority of the debtor for con rmation of balances and reconciliation in case of differences but replies have not been received from all. || l Evaluating whether the results of the external con rmation procedures provide relevant and reliable audit evidence or whether performing further audit procedures is necessary including In the case of each non-response perform alternative audit procedures to obtain relevant and reliable audit evidence |
|This is determined as a key audit matter as balance con rmation is one of the evidences which establishes the authenticity of the receivables which comprise signi cant portion of the Assets of the entity. || l Performing Alternative audit procedures include examining specific subsequent cash receipts transport documentation and sales near the period-end. Based on the above procedures performed we did not nd any signi cant exceptions to the Balances of trade receivables. |
Information Other than the Standalone 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 Annual report but does not includethe standalone financial statements and our auditor's report thereon.
Our opinion on the standalone financial statements does not cover the other informationand we do not express any form of assurance conclusion thereon.
In connection with our audit of the standalone financial statements our responsibilityis to read the other information and in doing so consider whether the other informationis materially inconsistent with the standalone financial statements or our knowledgeobtained in the audit or otherwise appears to be materially misstated. If based on thework we have performed we conclude that there is a material misstatement of this otherinformation; we are required to report that fact. We have nothing to report in thisregard.
Responsibilities of Management and Those Charged with Governance for the StandaloneFinancial 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 preparation ofthese standalone financial statements that give a true and fair view of the financialposition financial performance changes in equity and cash ows of the Company inaccordance with the accounting principles generally accepted in India speci ed undersection 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 of thestandalone financial statements that give a true and fair view and are free from materialmisstatement whether due to fraud or error.
In preparing the standalone financial statements Board of Directors is responsible forassessing the Company's ability to continue as a going concern disclosing as applicablematters related to going concern and using the going concern basis of accounting unlessthe Board of Directors either intends to liquidate the Company or to cease operations orhas no realistic alternative but to do so.
Those Board of Directors are also responsible for overseeing the Company's financialreporting process.
Auditor's Responsibilities for the Audit of the Standalone Financial Statements
Our objectives are to obtain reasonable assurance about whether the standalonefinancial statements as a whole are free from material misstatement whether due to fraudor error and to issue an auditor's report that includes our opinion. Reasonable assuranceis a high level of assurance but is not a guarantee that an audit conducted in accordancewith SAs will always detect a material misstatement when it exists. Misstatements canarise from fraud or error and are considered material if individually or in theaggregate they could reasonably be expected to in uence the economic decisions of userstaken on the basis 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 standalonefinancial statements whether due to fraud or error design and perform audit proceduresresponsive to those risks and obtain audit evidence that is suf cient and appropriate toprovide a basis for our opinion. The risk of not detecting a material misstatementresulting from fraud is higher than for one resulting from error as fraud may involvecollusion forgery intentional omissions misrepresentations or the override of internalcontrol.
Obtain an understanding of internal control relevant to the audit in order todesign audit procedures that are appropriate in the circumstances. Under section 143(3)(i)of the Companies Act 2013 we are also responsible for expressing our opinion on whetherthe company 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 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 signi cant 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 standalone financial statements or if such disclosures are inadequate to modify ouropinion. Our conclusions are based on the audit evidence obtained up to the date of ourauditor's report. However future events or conditions may cause the Company to cease tocontinue as a going concern.
Evaluate the overall presentation structure and content of the standalonefinancial statements including the disclosures and whether the standalone financialstatements represent the underlying transactions and events in a manner that achieves fairpresentation.
Materiality is the magnitude of misstatements in the standalone financial statementsthat individually or in aggregate makes it probable that the economic decisions of areasonably knowledgeable user of the standalone financial statements may be in uenced. Weconsider quantitative materiality and qualitative factors in
(i) planning the scope of our audit work and in evaluating the results of our work; and
(ii) to evaluate the effect of any identi ed misstatements in the standalone financialstatements. We communicate with those charged with governance regarding among othermatters the planned scope and timing of the audit and signi cant audit ndings includingany signi cant de ciencies in internal control that we identify during our audit. We alsoprovide those charged with governance with a statement that we have complied with relevantethical requirements regarding independence and to communicate with them allrelationships 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 signi cance in the audit of the standalone financial statementsof the current period and are therefore the key audit matters. We describe these mattersin our auditor's report unless law or regulation precludes public disclosure about thematter or when 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.
Due to Complete lockdown imposed by the Government to restrict the spread of COVID-19the audit nalization process for the year under report was carried out from remotelocations i.e. other than the of ce of the Company based on the data/ details madeavailable and based on financial information/records remitted by the management throughdigital medium. Our report is not modi ed in respect of this matter.
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 speci ed in theparagraph 3 and 4 of the Order to the extent applicable.
2. As required by Section 143 (3) of the Act we report that:
i) 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.
ii) 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.
iii) The Balance Sheet the Statement of Pro t and Loss including Other ComprehensiveIncome the Statement of Changes in Equity and the Statement of Cash Flows dealt with bythis Report are in agreement with the books of account.
iv) In our opinion the aforesaid standalone financial statements comply with theIndian Accounting Standards speci ed under section 133 of the Act read with Rule 7 of theCompanies (Accounts) rules 2014.
v) On the basis of the written representations received from the directors as on 31March 2020 taken on record by the Board of Directors none of the directors is disqualied as on 31 March 2020 from being appointed as a director in terms of Section 164(2) ofthe Act.
vi) 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".
vii) With respect to the other matters to be included in the Auditor's Report inaccordance with the requirements of section 197(16) of the Act as amended: In our opinionand to the best of our information and according to the explanations given to us theremuneration paid by the Company to its directors during the year is in accordance withthe provisions of section 197 of the Act.
viii) 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:
a. The Company has disclosed the impact of pending litigations on its financialposition in its financial statements Refer Note No. 5.27 to the standalone financialstatements;
b. The Company did not have any long-term contracts including derivative contracts forwhich there were any material foreseeable losses.
c. There were no amounts which were required to be transferred to the InvestorEducation and Protection Fund by the Company.
Annexure 'A' to Independent Auditor's Report referred to in Paragraph 1 under theheading of "Report on Other Legal and Regulatory Requirements" of our report ofeven date.
(I) In respect to company's xed assets:
(a) The Company is maintaining proper records showing full particulars includingquantitative details and situation of xed assets.
(b) The Company has a regular programme of physical veri cation of its xed assets bywhich xed assets are veri ed in a phased manner over a period of three years. In ouropinion this periodicity of physical veri cation is reasonable having regard to the sizeof the Company and the nature of its assets. Pursuant to the programme a portion of thexed assets has been physically veri ed by the Management during the year and no materialdiscrepancies have been noticed on such veri cation.
(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) Physical veri cation of inventories has been conducted at reasonable intervals bythe management. No material discrepancies were noticed on physical veri cation as comparedto book record.
(iii) The Company has not granted any loans secured or unsecured to Companies rmslimited liability partnerships or other parties covered in the register maintained underSection 189 of the Companies Act 2013 ('the Act'). Accordingly paragraphs 3(iii)(a)3(iii)(b) &3(iii)(c) of the Order are not applicable to the Company.
(iv) In our opinion and according to the information and explanations given to us theCompany has not given any loan/guarantee/security to or on behalf of any party referred toin Section 185 of the Companies Act 2013. The Company has complied with Section 186 inrespect of investments made. The Company has not given any loan guarantee or provided anysecurity in connection with a loan to any body corporate or any other person.
(v) On the basis of our examination of books and records of the Company in our opinionand according to the information and explanations given to us the company has notaccepted deposits during the year and therefore the directives issued by the Reserve Bankof India and the provisions of Sections 73 to 76 or any other relevant provisions of theCompanies Act 2013 and the rules framed there under are not applicable to the Company.
(vi) We have broadly reviewed the cost records maintained by the Company pursuant tothe Companies (Cost Records and Audit) Rules 2014 prescribed by the Central Governmentunder Section 148(1) of the Companies Act 2013 and are of the opinion that prima faciethe prescribed cost records have been maintained. We have however not made a detailedexamination of the cost records with a view to determine whether they are accurate orcomplete.
(vii) a) The Company is generally regular in depositing undisputed statutory duesincluding Income Tax and other statutory dues applicable to it with the appropriateauthority. There are no undisputed amount payable in respect of applicable statutory dueswhich were in arrears as at 31.03.2020 for a period of more than six months from the datethey became payable.
b) According to the information & explanation give to us there are no dues ofIncome tax Sales tax Service Tax Custom duty Excise duty or Goods and Services Taxwhich have not been deposited on account of any dispute except as stated as below:
|Name of the Statute ||Nature of the Dues ||Amount (Rs.) ||Period to which the amount relates (Financial year) ||Forum where dispute is pending |
|Karnataka Tax on Entry of Goods 1979 ||Entry Tax ||75755/- ||2006-07 ||Joint Commissioner of Commercial Taxes (Appeals) |
|Karnataka Tax on Entry of Goods 1979 ||Entry Tax ||28666/- ||2007-08 ||Joint Commissioner of Commercial Taxes (Appeals) |
|Karnataka Tax on Entry of Goods 1979 ||Entry Tax ||34580/- ||2008-09 ||Joint Commissioner of Commercial Taxes (Appeals) |
|Karnataka Tax on Entry of Goods 1979 ||Entry Tax ||70632/- ||2009-10 ||Joint Commissioner of Commercial Taxes (Appeals) |
Note: Out of the total amount of Rs. 209633/- 50% of the amount has been deposited.
(viii) Based on our examination of books and records and according to the information& explanations given to us the Company has not defaulted in repayment of loans orborrowings to financial institution or Banks or Government. The Company has not issued anydebentures.
(ix) The Company has not raised any money by way of initial public offer or furtherpublic offer (including debt instruments) during the year. Terms Loans were applied forthe purposes for which those were raised.
(x) On the basis of our examination of books and records of the Company and accordingto the information and explanations given to us no material fraud by the company or onthe Company by its of cers or employees has been noticed or reported during the year.
(xi) According to the information and explanations given 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 Companies Act 2013.
(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 and details of related party transactionshave been disclosed in the standalone 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 and therefore paragraph 3(xiv) of the Order is not applicable.
(xv) In our opinion and according to the information and explanations given to us thecompany has not entered into any non-cash transaction with directors or persons connectedwith him and therefore paragraph 3(xv) of the Order is not applicable.
(xvi) The Company is not required to be registered under section 45-IA of the ReserveBank of India Act 1934.
Annexure - 'B' 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 BEMCOHYDRAULICS LIMITED("the Company") as of 31st March 2020 in conjunction with ouraudit of the standalone Ind AS Financial Statements of the Company for the year ended onthat 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 ef cient 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 standalone financial statements whether due to fraud orerror.
We believe that the audit evidence we have obtained is suf cient 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
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 re ect 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 standalone 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.
In our opinion the Company has in all material respects an adequate internalfinancial controls system over financial reporting and such internal financial controlsover financial reporting were operating effectively as at 31st March 2020 based on theinternal control over financial reporting criteria established by the Company consideringthe essential components of internal control stated in the Guidance Note on Audit ofInternal Financial Controls Over Financial Reporting issued by the Institute of CharteredAccountants of India.
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For S JAYKISHAN
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Firm's Registration No. 309005E
| ||Vivek Newatia |
| ||Partner |
|Place: Kolkata ||Membership No. 062636 |
|Date: 29-06-2020 ||UDIN : 20062636AAAACV1435 |