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Bengal Tea & Fabrics Ltd.

BSE: 532230 Sector: Industrials
NSE: BENGALTEA ISIN Code: INE665D01016
BSE 00:00 | 26 Mar 41.05 0.10
(0.24%)
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41.25

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41.25

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41.05

NSE 05:30 | 01 Jan Bengal Tea & Fabrics Ltd
OPEN 41.25
PREVIOUS CLOSE 40.95
VOLUME 15
52-Week high 61.70
52-Week low 37.10
P/E
Mkt Cap.(Rs cr) 37
Buy Price 41.00
Buy Qty 2.00
Sell Price 42.70
Sell Qty 35.00
OPEN 41.25
CLOSE 40.95
VOLUME 15
52-Week high 61.70
52-Week low 37.10
P/E
Mkt Cap.(Rs cr) 37
Buy Price 41.00
Buy Qty 2.00
Sell Price 42.70
Sell Qty 35.00

Bengal Tea & Fabrics Ltd. (BENGALTEA) - Auditors Report

Company auditors report

TO THE MEMBERS OF SHRIRAM EPC LIMITED

1. Report on the Standalone Ind AS Financial Statements

We have audited the accompanying standalone Ind

AS financial statements of Shriram EPC Limited ("the Company") whichcomprise the Balance Sheet as at March 312018 the Statement of Profit and Loss(including Other Comprehensive Income) the Statement of Cash Flow and the Statement ofChanges in Equity for the year then ended and a summary of significant accountingpolicies and other explanatory information (herein after referred to as "standaloneIns AS financial statements").

2. Management's Responsibility for the Standalone Ind AS Financial Statements

The Company's Board of Directors is responsible for the matters stated in Section134(5) of the Companies Act 2013 ("the Act") with respect to the preparation ofthese standalone Ind AS financial statements that give a true and fair view of thefinancial position financial performance including other comprehensive income cash flowsand changes in equity of the Company in accordance with the Indian Accounting Standards(Ind AS) prescribed under section 133 of the Act read with the Companies (IndianAccounting Standards) Rules 2015 as amended and other accounting principles generallyaccepted 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 standalone IndAS financial statements that give a true and fair view and are free from materialmisstatement whether due to fraud or error.

3. Auditors' Responsibility

Our responsibility is to express an opinion on these standalone Ind AS financialstatements based on our audit.

We have taken into account the provisions of the Act the accounting and auditingstandards and matters which are required to be included in the audit report under theprovisions of the Act and the Rules made thereunder and the Order issued under section143(11) of the Act.

We conducted our audit of the standalone Ind AS financial statements in accordance withthe Standards on Auditing specified under Section 143(10) of the Act. Those Standardsrequire that we comply with ethical requirements and plan and perform the audit to obtainreasonable assurance about whether the standalone Ind AS financial statements are freefrom material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts andthe disclosures in the standalone Ind AS financial statements. The procedures selecteddepend on the auditor's judgment including the assessment of the risks of materialmisstatement of the standalone Ind AS financial statements whether due to fraud or error.In making those risk assessments the auditor considers internal financial controlrelevant to the Company's preparation of the standalone Ind AS financial statements thatgive a true and fair view in order to design audit procedures that are appropriate in thecircumstances. An audit also includes evaluating the appropriateness of the accountingpolicies used and the reasonableness of the accounting estimates made by the Company'sDirectors as well as evaluating the overall presentation of the standalone Ind ASfinancial statements.

We believe that the audit evidence obtained by us is sufficient and appropriate toprovide a basis for our qualified audit opinion on the standalone Ind AS financialstatements.

4. Basis of Qualified Opinion

Long term Loans and advances include Rs 3677.28 lakhs (March 31 2017: Rs. 3196.96lakhs) (including interest accrued up to March 312016) and other trade receivablesinclude net amount of Rs 307.21 lakhs (March 31 2017: Rs. 267.08 lakhs) due from relatedparty. Due to unavailability of sufficient appropriate audit evidence to corroboratemanagement's assessment of recoverability of the above said amounts and as these areoutstanding for more than three years we are unable to comment on the recoverability ofthe same. No provision with respect to the same is made in the books of accounts. ReferNote 54 of the standalone Ind AS financial statements.

This matter was also qualified in the report of the predecessor auditors on thestandalone Indian GAAP financial statements for the year ended March 312017.

5. Qualified Opinion

In our opinion and to the best of our information and according to the explanationsgiven to us except for the possible effects of the matter described in the Basis forQualified Opinion paragraph above the aforesaid standalone Ind AS financial statementsgive the information required by the Act in the manner so required and give a true andfair view in conformity with the accounting principles generally accepted in Indiaincluding the Ind AS of the state of affairs of the Company as at March 312018 and itsprofit (including other comprehensive income) its cash flows and the changes in equityfor the year ended on that date.

6. Emphasis of Matters

We draw attention to the following matters in the Notes to the standalone Ind ASfinancial statements:

i. Note no 55 regarding dues amounting to Rs 7106.46 lakhs (March 31 2017: Rs6624.57 lakhs) in respect of project which is stalled due to statutory delays faced bythe customer. As the customer has put in efforts to identify alternate options to completethe project management is of the view that it will be able to realize such dues.

ii. Note no 56 regarding dues amounting to Rs 28642.33 lakhs (March 31 2017: Rs24901.11 lakhs) due from an associate and a subsidiary of the associate which has beenoutstanding for more than three years. Based on the undertaking given by the associatewith respect to divestment in its subsidiary and projected operations of mines cashflowsthe above stated dues are considered to be realizable by the management

Our opinion is not qualified in respect of these matters.

7. Other Matter

The comparative financial information of the Company for the year ended March 31 2017and the transition date opening balance sheet as at April 01 2016 included in thesestandalone Ind AS financial statements are based on the statutory financial statementsprepared in accordance with the Companies (Accounting Standards) Rules 2006 audited bythe predecessor auditor whose report for the year ended March 31 2017 and March 31 2016dated May 30 2017 and May 23 2016 respectively expressed an qualified opinion on thosestandalone financial statements and have been restated to comply with Ind AS. Adjustmentsmade to the previously issued said financial information prepared in accordance with theCompanies (Accounting Standards) Rules 2006 to comply with Ind AS have been audited byus.

Our opinion on the standalone Ind AS financial statements is not modified in respect ofthis matter.

8. Report on Other Legal and Regulatory Requirements

1. As required by Section 143 (3) of the Act based on our audit we report to theextent applicable that:

(a) We have sought and except forthe matters described in Basis for Qualified Opinionparagraph above obtained all the information and explanations which to the best of ourknowledge and belief were necessary for the purposes of our audit.

(b) Except for the possible effects of the matter described in the Basis for QualifiedOpinion paragraph above in our opinion proper books of account as required by law havebeen kept by the Company.

(c) The Balance Sheet the Statement of Profit and Loss the Statement of Cash Flow andthe Statement of Changes in Equity dealt with by this Report are in agreement with therelevant books of account.

(d) Except for the possible effects of the matter described in the Basis for QualifiedOpinion paragraph above in our opinion the aforesaid standalone Ind AS financialstatements comply with the Accounting Standards specified under Section 133 of the Actread with Rule 7 of the Companies (Accounts) Rules 2014 and the Companies (IndianAccounting Standards) Rules 2015 as amended.

(e) The matter described in Basis of Qualified Opinion paragraph above in our opinionmay have an adverse effect on the functioning of the Company.

(f) On the basis of the written representations received from the directors as on March31 2018 taken on record by the Board of Directors none of the directors is disqualifiedas on March 31 2018 from being appointed as a director in terms of Section 164 (2) of theAct.

(g) The qualification relating to the maintenance of accounts and other mattersconnected therewith are as stated in the Basis for Qualified Opinion paragraph above.

(h) 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". Our report expresses a qualified opinion on theoperating effectiveness of the Company's internal financial controls over financialreporting.

(i) 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 financialposition in its standalone Ind AS financial statements - Refer Note 53 to the standaloneInd AS financial statements.

ii. Except for the possible effect of the matters described in the Basis of Qualifiedopinion above the Company has made provision as required under the applicable law oraccounting standards for material foreseeable losses if any on longterm contractsincluding derivative contracts

iii. There has been no delay in transferring amounts required to be transferred tothe Investor Education and Protection Fund by the Company.

2. As required by the Companies (Auditor's Report) Order 2016 ("the Order")issued by the Central Government in terms of sub-section 11 of section 143 of the Act wegive in the ‘Annexure B' a statement on the matters specified in paragraphs 3 and 4of the Order.

For MSKA & Associates

(Formerly known as MZSK & Associates)

Chartered Accountants

ICAI Firm Registration No.105047W

Geetha Jeyakumar
Place: Chennai Partner
Date: June 07 2018 Membership No.: 29409

Annexure "A" to the Independent Auditor's Report of even date on theStandalone Ind AS Financial Statements of Shriram EPC Limited

[Referred to in paragraph 8 - 1(h) under ‘Report on Other Legal and RegulatoryRequirements' in the Independent Auditors' Report]

Report on the Internal Financial Controls under Clause

(i) of Sub-section 3 of Section 143 of the Companies Act 2013 ("the Act")

We have audited the internal financial controls over financial reporting of Shriram EPCLimited ("the Company") as of March 31 2018 in conjunction with our audit ofthe standalone Ind AS financial statements of the Company for the year ended on that date.

Management's Responsibility for Internal Financial Controls

The Company's Management is responsible for establishing and maintaining internalfinancial controls based on the internal control over financial reporting criteriaestablished by the Company considering the essential components of internal control statedin the Guidance Note on Audit of Internal Financial Controls Over Financial Reportingissued by the Instituteof Chartered Accountants of India (ICAI) (the "GuidanceNote"). These responsibilities include the design implementation and maintenance ofadequate internal financial controls that were operating effectively for ensuring theorderly and efficient conduct of its business including adherence to Company's policiesthe safeguarding 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 underthe Companies Act 2013.

Auditors' Responsibility

Our responsibility is to express an opinion on the Company's internal financialcontrols over financial reporting of the Company based on our audit. We conducted ouraudit in accordance with the Guidance Note and the Standards on Auditing issued by ICAIand deemed to be prescribed under section 143(10) of the Act to the extent applicable toan audit of internal financial controls. Those Standards and the Guidance Note requirethat we comply with ethical requirements and plan and perform the audit to obtainreasonable assurance about whether adequate internal financial controls over financialreporting was established and maintained and if such controls operated effectively in allmaterial 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 qualified audit opinion on the Company's internal financialcontrols system over 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 ofrecords that in reasonable detail accurately and fairly reflect the transactions anddispositions of the assets of the company; (2) provide reasonable assurance thattransactions are recorded as necessary to permit preparation of financial statements inaccordance with generally accepted accounting principles and that receipts andexpenditures of the company are being made only in accordance with authorizations ofmanagement and directors of the company; and (3) provide reasonable assurance regardingprevention or timely detection of unauthorized acquisition use or disposition of thecompany's assets that could have a material effect on the financial statements.

Inherent Limitations of Internal Financial Controls over Financial Reporting

Because of the inherent limitations of internal financial controls over financialreporting including the possibility of collusion or improper management override ofcontrols material misstatements due to error or fraud may occur and not be detected.Also projections of any 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

According to the information and explanations given to us and based on our auditmaterial weaknesses have been identified in the operating effectiveness of the Company'sinternal financial controls over financial reporting as at March 312018 in respect ofprovisioning of overdue receivables and provisioning of advances which have beenoutstanding for a considerable period of time which could potentially result in theCompany not recognizing a provision for the said receivables and advances.

A ‘material weakness' is a deficiency or a combination of deficiencies ininternal financial control over financial reporting such that there is a reasonablepossibility that a material misstatement of the company's annual or interim financialstatements will not be prevented or detected on a timely basis.

Qualified Opinion

In our opinion to the best of our information and accordingly to the explanationsgiven to us based on our audit in all material respects maintained adequate internalfinancial controls over financial reporting as of March 31 2018 based on the internalcontrol over financial reporting criteria established by the Company considering theessential components of internal control stated in the Guidance Note and except for thepossible effects of the material weaknesses described above on the achievement of theobjectives of the control criteria the Company's internal financial controls overfinancial reporting were operating effectively as of March 312018.

We have considered the material weaknesses identified and reported above in determiningthe nature timing and extent of audit tests applied in our audit of the March 31 2018standalone Ind AS financial statements of the Company and these material weaknessesaffects our opinion on the standalone Ind AS financial statements of the Company.

For MSKA & Associates

(Formerly known as MZSK & Associates)

Chartered Accountants

ICAI Firm Registration No.105047W

Geetha Jeyakumar
Place: Chennai Partner
Date: June 07 2018 Membership No.: 29409

Annexure "B" to the Independent Auditors' Report of even date on theStandalone Financial Statements of Shriram EPC Limited for the year ended March 312018

[Referred to in paragraph 2 under ‘Report on Other Legal and RegulatoryRequirements' in the Independent Auditors' Report]

(i) (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 during the year by the management inaccordance with a regular program of verification which in our opinion provides forphysical verification of all the fixed assets at reasonable intervals. According to theinformation and explanation given to us no material discrepancies were noticed on suchverification.

(c) In respect of immovable properties of land and building that have been taken onlease and disclosed as Fixed Assets in the financial statements the lease agreements arein the name of the Company where the Company is the lessee in the agreement.

(d) Immovable properties of land and buildings whose title deeds have been pledged witha bank as security for term loans are held in the name of the Company based on theMortgage deed executed between the bank and the Company for which confirmation has beenobtained from the bank.

(ii) The Company does not have any inventory and hence reporting under clause (ii) ofthe CARO 2016 is not applicable.

(iii) According to the information and explanation given to us the Company has grantedloans secured or unsecured to Companies Firms Limited Liability Partnerships or otherparties covered in the register maintained under section 189 of the Companies Act 2013in respect of which:

(a) The terms and conditions of loans granted by the Company are in our opinion primafacie not prejudicial to the Company's interest.

(a) The schedule of repayment of principal and payment of interest have not beenstipulated and in the absence of such schedule we are unable to comment on the regularityof repayments or receipts of principal amounts and interest.

(c) There are no overdue amounts remaining outstanding as at the Balance Sheet dateexcept for an amount of Rs. 3984.49 Lakhs as referred to in Basis of Qualified opinionparagraph above which have been outstanding for a considerable period of time and asexplained to us the Management has taken reasonable steps for recovery of the principalamounts and interest.

(iv) In our opinion and according to the information and explanations given to us theCompany has complied with the provisions of section 185 and 186 of the Act in respect ofgrant of loans making investments and providing guarantees and securities asapplicable.

(v) In our opinion and according to the information and explanations given to us theCompany has not accepted any deposits during the year.

(vi) We have broadly reviewed the books of account relating to materials labour andother items of cost maintained by the Company pursuant as specified by the CentralGovernment for the maintenance of cost records under sub-section (1) of section 148 of theAct and we are of the opinion that prima facie the prescribed accounts and records havebeen made and maintained. We have not however made a detailed examination of the recordswith a view to determine whether they are accurate or complete.

(vii) According to the information and explanations given to us in respect ofstatutory dues:

(a) The Company has generally been regular in depositing undisputed statutory duesincluding provident fund employees' state insurance income-tax goods and service taxsales-tax service tax duty of customs duty of excise value added tax cess and othermaterial statutory dues applicable to it to the appropriate authorities.

(b) There were no undisputed amounts payable in respect of provident fund employees'state insurance income-tax goods and service tax sales-tax service tax duty ofcustoms duty of excise value added tax cess and other material statutory dues inarrears as at March 312018 for a period of more than six months from the date they becamepayable.

(c) Details of dues of Income tax Service tax and Value added tax which have not beendeposited as on March 312018 on account of disputes are

given below:

Name of the statute Nature of dues Period to which the amount relates Forum where dispute is pending Amount involved (Rs. In Lakhs) Amount Unpaid (Rs. In Lakhs)
IncomeTaxAct 1961 Income Tax Interest and Penalty 2012-13 Income Tax Appellate Tribunal 4.56 4.56
Service Tax (Chapter V of the Finance Act 1994) Service Tax and Penalty 2006-07 to 2012-13 Customs Excise and Service Tax Appellate Tribunal 694.28 694.28
Service Tax (Chapter V of the Finance Act 1994) Service Tax and Penalty 2009-10 to 2011-12 Commissioner of Service Tax (Appeals) 114.53 114.53
Andhra Pradesh Value Added Tax Act Value Added Tax 2008-09 and 2009-10 Supreme Court 223.33 223.33
Tamil Nadu Value Added Tax Act Value Added Tax 2008-09 to 2014-15 High Court 1357.62 1357.62
West Bengal Value Added Tax Act Value Added Tax 2007-08 West Bengal Commercial Taxes Appellate & Revisional Board 558.45 558.45
West Bengal Value Added Tax Act Value Added Tax 2008-09 to 2012-13 Joint Commissioner (Appeals) 871.20 871.20
West Bengal Value Added Tax Act Value Added Tax 2012-13 Joint Commissioner (Appeals) 263.07 263.07
Maharashtra Value Added Tax Act Value Added Tax 2010-11 Deputy Commissioner (Appeals) 246.13 246.13
Orissa Value Added Tax Act Value Added Tax 2011-12 and 2012-13 High Court 6700.75 6700.75

(viii) In our opinion and according to the information and explanations given to usthe Company has been regular in repayment of dues to banks except for default of principaland interest to an extent of Rs. 1435.99 Lakhs which is outstanding as at March 312018.Also Refer to Note 21.2 and 21.3 of the financial statements. The Company has notdefaulted in repayment of loans and borrowings to financial institutions. The Company hasnot issued any debentures during the current year.

(ix) The Company did not raise any money by way of initial public offer or furtherpublic offer (including debt instruments) and term loans during the year. Accordingly theprovisions stated in paragraph 3 (ix) of the Order are not applicable to the Company.

(x) To the best of our knowledge and according to the information and explanationsgiven to us no fraud by the Company and no material fraud on the Company by its officersor employees has been noticed or reported during the year.

(xi) According to the information and explanations given by the management themanagerial remuneration has been paid/provided in accordance with the provisions ofsection 197 read with Schedule V to the Companies Act 2013. However the increase inmanagerial remuneration from July 2017 to March 2018 is subject to the shareholdersapproval.

(xii) In our opinion and according to the information and explanations given to us theCompany is not a Nidhi Company. Accordingly the provisions stated in paragraph 3(xii) ofthe Order are not applicable to the Company.

(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 where applicable and details of suchtransactions have been disclosed in the financial statements as required by the applicableaccounting standards.

(xiv) According to the information and explanations given to us and based on ourexamination of the records of the Company the Company has made preferential allotment ofequity shares during the year to banks and financial institutions. Refer Note 19 tofinancial statements. These allotments were made against the secured loans from banks andfinancial institutions borrowed in the earlier years to meet the working capitalrequirements of the company and accordingly the compliance of the requirement of section42 of the Companies Act 2013 do not prima facie appear to be applicable to thepreferential allotment made during the year.

(xv) According to the information and explanations given to us and based on ourexamination of the records of the Company during the year the Company has not enteredinto non-cash transactions with directors or persons connected with him and henceprovisions of Section 192 of the Companies Act 2013 are not applicable.

(xvi) In our opinion the Company is not required to be registered under section 45 IAof the Reserve Bank of India Act 1934 and accordingly the provisions stated in paragraphclause 3 (xvi) of the Order are not applicable to the Company.

For MSKA & Associates

(Formerly known as MZSK & Associates)

Chartered Accountants

ICAI Firm Registration No.105047W

Geetha Jeyakumar
Place: Chennai Partner
Date: June 07 2018 Membership No.: 29409