TO THE MEMBERS OF BENGAL & ASSAM COMPANY LIMITED
Report on the Audit of the Standalone Financial Statements
We have audited the standalone financial statements of BENGAL & ASSAM COMPANYLIMITED ("the Company") which comprise the Balance Sheet as at 31st March 2019Profitand Loss the Statement of Cash Flows for the year then ended and notes to thefinancial statements including a summary of significant policies and other explanatoryinformation (herein after referred to as "standalone financial statements").
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 ("the Act") in the manner so required and give a trueand fair view in conformity with the accounting principles generally accepted in India ofthe state of affairs of the Company as at 31st March 2019 and its profit and its cashflows for the year ended on that date.
Basis for Opinion
We conducted our audit in accordance with the Standards on Auditing (SAs) specifiedunder Section 143(10) of the Act. Our responsibilities under those Standards are furtherdescribed in the Auditor's Responsibilities for the Audit of the Financial Statementssection of our report. We are independent of the Company in accordance with the Code ofEthics issued by the Institute of Chartered Accountants of India (ICAI) together with theethical requirements that are relevant to our audit of the financialstatements under theprovisions of the Act and the Rules thereunder and we have fulfilled our other ethicalresponsibilities in accordance with these requirements and the ICAI's Code of Ethics. Webelieve that the audit evidence we have obtained is sufficient and appropriate to providea basis for our opinion.
Key Audit Matters
Key Audit Matters are those matters that in our professional judgment were of mostsignificance in our audit of the standalone financial statements for the year ended 31stMarch 2019. These matters were addressed in the context of our audit of the standalonefinancial statements as a whole and informing our opinion thereon and we do not providea separate opinion on these matters.
We have determined the matters described below to be the key audit matters to becommunicated in our report:-
|Description of Key Audit Matter ||Description of Auditor's Report |
|Valuation of Non-Current Investments ||Ourauditproceduresincludedupdatingourunderstanding of the processes employed by the Company for accounting for and valuing their investments. We obtained accounts confirmation of depository participants and mutual funds and carried physical verification of share certificates as applicable. We have verified that the Company was the recorded owner of all investments (except as stated in foot note no. 8 of note no. 12). |
|As disclosed in Note 12 of the standalone financial statements. || |
|As at 31st March 2019 the total carrying amount of non- current investments were Rs. 116092.81 lacs. Non- current investments includes quoted equity shares unquoted equity shares preference shares debentures and mutual funds. Valuation and assessment of impairment of investments involves significant estimation uncertainty subjective assumptions and the application of significant assumptions and the application of significant judgment. ||Valuation/ value assessment exercise is a complex one. |
| ||Valuation assessment/ exercise which includes valuation carried out by an expert takes into account last audited financial statements of the investee company. For this we have also used assessment of internal expert. Our audit procedures over the valuation of the Investments included reviewing valuation of all investments held at March 31 2019. |
|This was an area of focus for our audit and the area where significant audit effort was directed. ||We have also evaluated whether the company has made necessary provision for diminution in the value of investments in its books of accounts. |
| ||Based on the audit procedures we evaluated the existence and valuation of investment and the appropriateness of the disclosures in Note no. 12 which we considered appropriate. |
|Implementation of Scheme of Amalgamation || |
|The Board of Directors of the Company had approved a Scheme of Arrangement (The Scheme) between Florence Investech Ltd. (Florence) BMF Investments Ltd. (BMF) JK Fenner (India) Ltd. (FIL) and Bengal & Assam Company Ltd. (BACL) and their respective shareholders. ||Our audit procedures included analyzing the Scheme and the order passed by the Hon'ble Bench of the National Company Law Tribunal ("NCLT") at Kolkata and Chennai. |
|The Scheme has since been sanctioned by the Hon'ble Bench of the National Company Law Tribunal ("NCLT") at Kolkata and Chennai (note no. 21). ||We have verified the accounting treatment given in the books of the transferee Company as to whether the same are in compliance to the order passed by NCLT. |
|The Scheme has come into effect accordingly due effect of the amalgamation of Florence and BMF with BACL from appointed date i.e. 1st April 2017 have been given in these standalone financial statements of BACL. We focused on this area because of its significance and the degree of judgement required for giving effect of the Scheme. ||We have also evaluated the disclosures given in the standalone financial statements relating the Scheme which we considered appropriate. |
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 Board's Report and Report onCorporate Governance but does not include the standalone financial statements andconsolidated financial statements and our auditor's report thereon. Our opinion on thefinancial statements does not cover the other information and we do not express any formof 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 during the course of audit or otherwise appears to be materially misstated. Ifbased on the work we have performed we conclude that there is a material misstatement ofthis other information we are required to report that fact. We have nothing to report inthis regard.
Management's Responsibility for the Standalone 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 standalone financial statementsthat give a true and fair view of the financial position financial performance and cashflows of the Company in accordance with the accounting principles generally accepted inIndia including the Accounting Standards (AS) specified under Section 133 of the Act readwith Rule 7 of the Companies (Accounts) Rules 2014. This responsibility also includesmaintenance of adequate accounting records in accordance with the provisions of the Actfor safeguarding of the assets of the Company and for preventing and detecting frauds andother irregularities; selection and application of appropriate accounting policies; makingjudgments and estimates that are reasonable and prudent; and designimplementationandmaintenanceofadequateinternalfinancialcontrols that were operatingeffectively for ensuring the accuracy and completeness of the accounting records relevantto the statements that give a true and fair view and arepreparationandpresentationofthestandalonefinancial free from material misstatementwhether due to fraud or error. management is responsible for assessing the Company'sability to Inpreparingthestandalonefinancial continue as a going concern disclosing asapplicable matters related to going concern and using the going concern basis ofaccounting unless management either intends to liquidate the Company or to ceaseoperations or has 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 influence the economic decisions of userstaken on the basis of these Standalone 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 sufficient 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 but not for expressingour opinion on whether the Company has adequate internal Financial controls system inplace and the operating effectiveness 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 significant doubt on the ability ofthe Company to continue as a going concern. If we conclude that a material uncertaintyexists we are required to draw attention in our auditor's report to the relateddisclosures in the inadequate to modify our opinion. Our conclusions arestandalonefinancial 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 overallpresentationstructureandcontentofthestandalonefinancialstatements including thedisclosures and whether the standalone financial statements represent the underlyingtransactions and events in a manner that achieves fair presentation.
Materiality is the magnitude of misstatements in the standalone financialstatements that individually or in aggregate makes it probable that the economicdecisions of a reasonably knowledgeable user of the standalone financial statements may beinfluenced. We consider quantitative materiality and qualitative factors in (i) planningthe scope of our audit work and in evaluating the results of our work; and (ii) toevaluate the effect of any identified misstatements in the standalone financialstatements.
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 standalone financial statementsand are therefore the key audit matters. We describe these matters in our auditor's reportunless law or regulation precludes public disclosure about the matter or when inextremely rare circumstances we determine that a matter should not be communicated in ourreport because the adverse consequences of doing so would reasonably be expected tooutweigh the public interest benefits of such communication.
We did not audit the financial statement of transferor company namely FlorenceInvestech Limited (Florence) (refer note no. 21) for the year ended 31st March2018 and 31st March 2019 included in standalone financial for the year ended 31stMarch 2019 which have been audited by the auditors of the transferor company (Florence)whose report have been furnished to us by the management. Our opinion on the standalonefinancial statements to the extent they have been derived from such annual financialstatement is solely based on the reports of such auditor. Our opinion is not modified inrespect 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 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 the Statement of Profit and Loss and the Statement of Cash Flowsdealt with by this Report are in agreement with the books of account.
d) In our opinion the aforesaid standalone financial statements comply with theaccounting Standards specified under Section 133 of the Act read with Rule 7 of theCompanies (Accounts) Rules 2014.
e) On the basis of the written representations received from the directors as on 31stMarch 2019 taken on record by the Board of Directors none of the directors isdisqualified as on 31st March 2019 from being appointed as a director in termsof Section 164 (2) of the Act.
f) With respect to the adequacy of the internal financial controls over financialreporting of the Company and the operating effectiveness of such controls refer to ourseparate Report in "Annexure B".
g) 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 according to the information and explanation given to us the managerial remunerationpaid/ provided during the current year by the Company is in accordance with the provisionsof Section 197 of 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 disclosed the impact of pending litigations on its standalonefinancialposition in its standalone financial statements -Refer note no-22 of thestandalone financial statements;
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.
ANNEXURE TO THE AUDITORS' REPORT
Annexure "A" referred to in paragraph 1 under the heading "Report onother legal and regulatory requirements" of our report of even date on the standaloneFinancial Statements of BENGAL & ASSAM COMPANY LIMITED for the year ended 31st March2019
1. (a) The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets.
(b) The fixed assets have been physically verified by the management according to theprogramme of periodical physical verification in phased manner which in our opinion isreasonable having regard to the size of the company and the nature of its fixed assets.The discrepancies noticed on such physical verification were not material.
(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 except as stated in footnote of Note No. 11 of thestandalone financial statement.
2. The Company does not have any inventory. Accordingly we are not offering anycomments under clause 3(ii) of the Order.
3. The company has granted loan to one company covered in the register maintained undersection 189 of the Companies Act 2013 (the Act').
(a) In our opinion the rate of interest and other terms and conditions on which theloan had been granted to the company covered in the register maintained under section 189of the Act were not prima facie prejudicial to the interest of the Company.
(b) In respect of aforesaid loan granted the borrower has been regular in the paymentof the principal and interest as stipulated.
(c) There are no overdue amounts in respect of the loan granted to the company coveredin the register maintained under section 189 of the Act.
4. According to the information explanations and representations provided by themanagement and based upon audit procedures performed we are of the opinion that inrespect of loans and investments the Company has complied with the provisions of section185 and 186 of the Companies Act 2013. The Company has not given any guarantees orsecurity under the provisions of section 185 and 186 of the Companies Act 2013.
5. In our opinion and according to the information and explanations given to us theCompany has not accepted deposits from public within the provision of section 73 to 76 ofthe Act or any other relevant provisions of the Act and the rules framed there under (tothe extent applicable). Therefore the provisions of the clause 3(v) of the order are notapplicable to the company. We have been informed that no order has been passed by theCompany Law Board or National Company Law Tribunal or Reserve Bank of India or any Courtor other Tribunal in this regard.
6. In our opinion and according to information and explanation given to us the companyis not required to maintain cost records pursuant to section 148(1) of the Companies Act2013.
7. (a) According to the records of the Company and information and explanations givento us the Company is generally regular in depositing undisputed statutory dues includingprovident fund employees' state insurance income tax goods and service tax cess andother material statutory dues with the appropriate authorities to the extent applicableand there are no undisputed statutory dues payable for a period of more than six monthsfrom the date they become payable as at 31st March 2019. As per the information andexplanations provided to us duty of customs are not applicable to the Company.
(b) According to the records and information & explanations given to us there areno material dues in respect of Income tax service tax goods and service tax that havenot been deposited with the appropriate authorities on account of any dispute except asstated below. Further as per the information and explanations provided to us Sales taxduty of excise duty of customs and value added tax are not applicable to the Company.
|Name of Statute ||Nature of Dues ||Amount (Rs. In Lacs) ||Period to which the amount relates (Financial Year) ||Forum where dispute is pending |
|Income Tax Act ||Income Tax ||27.00 ||2007-08 ||ITAT |
|1961 || ||37.34 ||2009-10 ||Commissioner |
| || ||1.77 ||2011-12 ||(Appeal) |
8. In our opinion on the basis of audit procedures and according to the informationand explanations given to us the Company has not defaulted in repayment of loans andborrowings to financial institutions banks and Government. The Company has not issued anydebentures.
9. On the basis of information and explanations given to us term loans were appliedfor the purpose for which the loans were obtained. No moneys have been raised during theyear by way of initial public offer or further public offer.
10. Based on the audit procedure performed and on the basis of information andexplanations provided by the management no material fraud by the Company or on theCompany by its officers or employees has been noticed or reported during the course of theaudit.
11. According to the information and explanations give to us and based on ourexamination of the records of the Company the Company has paid or provided for themanagerial remuneration in accordance with the requisite approvals mandated by theprovisions of section 197 read with schedule V to the Act.
12. 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.
13. According to the information and explanations and records made available by themanagement of the Company and audit procedure performed for transactions with the relatedparties during the year the Company has complied with the provisions of Section 177 and188 of the Act where applicable. As explained and as per records details of relatedparty transactions have been disclosed in the financial statements as per the applicableAccounting Standards.
14. According to the information and explanations given to us and based on the auditprocedure performed the Company not entered made any preferential allotment or privateplacement of shares or fully or partly convertible debentures during the year.
15. On the basis of records made available to us and according to information andexplanations given to us the Company has not entered into non-cash transactions with thedirectors or persons connected with him. Accordingly we are not offering comment withrespect to compliance of Section 192 of the Act.
16. The Company is registered under section 45-IA of the Reserve Bank of India Act1934.
Annexure B' to the Independent Auditor's Report of even date on the StandaloneFinancial Statements of BENGAL & ASSAM COMPANY LIMITED
Report on the Internal Financial Controls over Financial Reporting under Clause (i) ofSubsection 3 of Section 143 of the Companies Act 2013 ("the Act")
We have audited the internal financial controls over financialreporting of BENGAL &ASSAM COMPANY LIMITED ("the Company") as of March 31 2019 in conjunction withour audit of the standalone financial statements of the Company for the year ended on thatdate.
Management's Responsibility for Internal Financial Controls
The Company's management is responsible for establishing and maintaining internalfinancial internal control over financial reporting criteria established by the 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 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 financialcontrols 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 judgments 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 Company's internal financial controls systemover financial reporting.
Meaning of Internal Financial Controls Over Financial Reporting
assurance Acompany's internal financial regarding the reliability of financialfinancialstatements for external purposes in reportingandthepreparationof accordance withgenerally accepted accounting principles. A company's internal financial includes thosepolicies and procedures that (1) pertain to the maintenance of records that in reasonabledetail dispositions of the assets of the company; (2) provide reasonableaccuratelyandfairly reflect assurance that transactions are recorded as necessary topermit preparation of financial statements in accordance with generally acceptedaccounting principles and that receipts and expenditures of the company are being madeonly in accordance with authorizations of management and directors of the company; and (3)provide reasonable assurance regarding prevention or timely detection of unauthorizedacquisition use or disposition of the company's assets that could have a material effecton 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 projectionsofanyevaluationoftheinternalfinancialcontrols over financial reporting tofuture periods are subject to the risk that the internal financial control over financialreporting may become inadequate because of changes in conditions or that the degree ofcompliance with the policies or procedures may deteriorate.
In our opinion the Company has in all material respects an adequate internalfinancial controls system over financial rep reportingandsuchinternalfinancial controlsover financial orting were operating effectively as at March 31 2019 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.
Our aforesaid reports under section 143(3)(i) of the Act on the adequacy and operatingeffectiveness of the internal financial controls over financial reporting insofar as itrelates to transferor company namely Florence Investech Limited is solely based on thecorresponding report of the respective auditor of such company.
Our opinion is not modified in respect of this matters with respect to our reliance onthe work done and the report of the other auditor.
| ||For LODHA & CO |
| ||Chartered Accountants |
| ||Firms Registration No.301051E |
| ||N. K. Lodha |
|Place: New Delhi ||Partner |
|Date: 30th May 2019 ||Membership No. 085155 |