To the Members of
BGIL Films & Technologies Limited
I. Report on the Audit of the Standalone financial Statements
A. We have audited the accompanying Standalone Financial Statements of BGIL Films &Technologies Limited ("the Company") which comprise the Balance Sheet as atMarch 31 2019 the Statement of Profit and Loss (including Other Comprehensive Income)the Statement of Changes in Equity and the Statement of Cash Flows for the year ended onthat date and a summary of the significant accounting policies and other explanatoryinformation (hereinafter referred to as "the Standalone Financial Statements").
B. 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 Indian Accounting Standards prescribed under section133 of the Act read with the Companies (Indian Accounting Standards) Rules 2015 asamended ("Ind AS") and other accounting principles generally accepted in Indiasubject to confirmation and reconciliation of some of the accounts as furtherdetailed in note no. 32 of the notes on account and note onnon-recognitionprofitfrom jointventure as further detailed in note no. 36 of the notes on account of the state ofaffairs of the Company as at March 31 2019 the profit and total comprehensive incomechanges in equity and its cash flows for the year ended on that date
2. Basis for Opinion
We conducted our audit of the Standalone Financial Statements in accordance with theStandards on Auditing specified under section 143(10) of the Act (SAs). Ourresponsibilities under those Standards are further described in the Auditor'sResponsibilities for the Audit of the Standalone Financial Statements section ofour report. We are independent of the Company in accordance with the Code of Ethics issuedby the Institute of Chartered Accountants of India (ICAI) together with the independencerequirements that are relevant to our audit of the financial statements under theprovisions of the Act and the Rules made thereunder and we have fulfilled our otherethical responsibilities in accordance with these requirements and the ICAI's Code ofEthics. We believe that the audit evidence we have obtained is sufficient and appropriateto provide a basis for our audit opinion on the Standalone Financial Statements.
3. Emphasis of Matters:
We draw attention to the following matters in the notes to financial statements: Note32 which indicates that some of the accounts of the company are subject to confirmationand reconciliation that may have an impact on Net Profits. Note 36-Non-recognition ofprofit/loss from joint venture: The company has entered into a joint venture in an earlieryear for which no profit/loss has been recognized as yet which may impact its revenue.
Our opinion is not modified in respect of these matters.
4. 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 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. We have determined the matters described below to bethe key audit matters to be communicated in our report.
|Key Audit Matters ||How the matter was addressed in our audit |
|Revenue recognition ||Our audit procedures on revenue recognition included the following: |
|Recognition of revenue at a point in time based on satisfaction of performance obligation requires estimates and judgements regarding timing of satisfaction of performance obligation allocation of cost incurred to segment/units and the estimated cost for completion of some final pending works. || We verified performance obligations satisfied by the Company; |
| || We tested sale proceeds received from customers to test transfer of controls; |
|Due to judgement and estimates involved revenue recognition is considered as key audit matter || We verified calculation of revenue to be recognised and matching of related cost; |
|Deferred Tax Liability (DTL) ||Our audit procedures included: |
|The Company has recognised deferred tax Liability (DTL) on unabsorbed depreciation (refer to note 11 to the financial statements) Since recognition of DTL involves significant judgements and estimates it has been considered as key audit matter. || We have discussions with management to understand process over recording and review of deferred tax Liability (DTL); |
| || We had discussion at separate audit committee meeting with independent directors; |
| || We tested the computation of the amount and the tax rate used for recognition of DTL; |
| || We also verified the disclosures made by the Company in Note to the financial statements. |
|Statutory Dues ||Our audit procedures included: |
|The Company is facing tight liquidity situation. As a result there have been delays/defaults in statutory liabilities Defaults in payment of statutory dues and borrowings involves calculation of interest penal interest and other penalties on delayed payments and recording of liabilities. It requires significant estimates hence considered as key audit matter. || We had discussion with management and understood management process for provision of interest and penalties for delays/defaults in payment of statutory dues and repayment of borrowings and interest thereon; |
| || For statutory dues we have verified the schedule of statutory liabilities and due date of payments. We verified calculation of interest on delayed payments; |
| || Defaults in payment of statutory dues is reported in Annexure A to our audit report. |
|Related party transaction and balances ||Our audit procedures included: |
|The Company has transaction with related parties. These includes transaction in nature of Purchases of Goods and services and loans and advances given to its subsidiaries. || Understood Company's policies and procedures for identification of related parties and transactions; |
| || Read minutes of the audit committee and board of directors for recording/approval of related party transactions; |
|These transactions are in ordinary course of business on arm length basis. Due to significance of these transactions considered as key audit matter || Tested Company's assessment regarding related party transactions are being ordinary course of business and at arm's length; |
| || Tested transaction with underlying contracts and supporting documents; |
| || Obtained confirmation for outstanding balances if any; |
| || Verified disclosures made in the financial statements in respect of related party transactions and outstanding balances. |
5. Information Other than the Standalone Financial Statements and Auditor's ReportThereon
A. The Company's Board of Directors is responsible for the preparation of the otherinformation. The other information comprises the information included in the ManagementDiscussion and Analysis Board's Report including Annexures to Board's Report BusinessResponsibility Report Corporate Governance and Shareholder's Information but does notinclude the Standalone Financial Statements and our auditor's report thereon. Our opinionon the standalone financial statements does not cover the other information and we do notexpress any form of assurance conclusion thereon.
B. In connection with our audit of the financial statements our responsibility is toread the other information and in doing so consider whether the other information ismaterially inconsistent with the standalone Financial Statements or our knowledge obtainedduring the course of our audit or otherwise appears to be materially misstated. If basedon the work we have performed we conclude that there is a material misstatement of thisother information we are required to report that fact. We have nothing to report in thisregard.
6. Management's Responsibility for the Standalone Financial Statements
A. 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 totalcomprehensive income changes in equity and cash flows of the Company in accordance withthe Ind AS and other accounting principles generally accepted in India. Thisresponsibility also includes maintenance of adequate accounting records in accordance withthe provisions of the Act for safeguarding the assets of the Company and for preventingand detecting frauds and other irregularities; selection and application of appropriateaccounting policies; making judgments and estimates that are reasonable and prudent; anddesign implementation and maintenance of adequate internal financial controls that wereoperating effectively for ensuring the accuracy and completeness of the accountingrecords relevant to the preparation and presentation of the standalone financialstatements that give a true and fair view and are free from material misstatement whetherdue to fraud or error.
B. In preparing the Standalone Financial Statements management 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 unlessmanagement either intends to liquidate the Company or to cease operations or has norealistic alternative but to do so.
The Board of Directors are responsible for overseeing the Company's financial reportingprocess.
7. Auditor's Responsibilities for the Audit of the Standalone Financial Statements
A. 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.
B. As part of an audit in accordance with SAs we exercise professional judgment andmaintain professional skepticism throughout the audit. We also:
i) Identify and assess the risks of material misstatement of the standalone financialstatements whether due to fraud or error design and perform audit procedures responsiveto those risks and obtain audit evidence that is sufficient and appropriate to provide abasis for our opinion. The risk of not detecting a material misstatement resulting fromfraud is higher than for one resulting from error as fraud may involve collusionforgery intentional omissions misrepresentations or the override of internal control.
ii) Obtain an understanding of internal financial controls relevant to the audit inorder to design audit procedures that are appropriate in the circumstances. Under section143(3)(i) of the Act we are also responsible for expressing our opinion on whether theCompany has adequate internal controls with reference to financial statements in place andthe operating effectiveness of such controls
iii) Evaluate the appropriateness of accounting policies used and the reasonableness ofaccounting estimates and related disclosures made by management
iv) 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 significant doubt on the Company'sability to continue as a going concern. If we conclude that a material uncertainty existswe are required to draw attention in our auditor's report to the related disclosures inthe 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
v) Evaluate the overall presentation structure and content of the Standalone FinancialStatements including the disclosures and whether the Standalone Financial Statementsrepresent the underlying transactions and events in a manner that achieves fairpresentation
C. 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 influenced. Weconsider quantitative materiality and qualitative factors in (i) planning the scope of ouraudit work and in evaluating the results of our work; and (ii) to evaluate the effect ofany identified misstatements in the Standalone Financial Statements.
D. We communicate with those charged with governance regarding among other mattersthe planned scope and timing of the audit and significant audit findings including anysignificant deficiencies in internal control that we identify during our audit.
E. 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.
F. From the matters communicated with those charged with governance we determine thosematters that were of most significance 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
II. Report on Other Legal and Regulatory Requirements
1. As required by Section 143(3) of the Act based on our audit we report that:
A. We have sought and obtained all the information and explanations which to the bestof our knowledge and belief were necessary for the purposes of our audit
B. In our opinion proper books of account as required by law have been kept by theCompany so far as it appears from our examination of those books.
C. The Balance Sheet the Statement of Profit and Loss including Other ComprehensiveIncome Statement of Changes in Equity and the Statement of Cash Flow dealt with by thisReport are in agreement with the relevant books of account
D. In our opinion the aforesaid standalone financial statements comply with the Ind ASspecified under Section 133 of the Act read with Rule 7 of the Companies (Accounts)Rules 2014
E. On the basis of the written representations received from the directors as on March31 2019 taken on record by the Board of Directors none of the directors is disqualifiedas on March 31 2019 from being appointed as a director in terms of Section 164 (2) of theAct.
F. With respect to the adequacy of the internal financial controls with reference tofinancial statements of the Company and the operating effectiveness of such controlsrefer to our separate Report in "Annexure A". Our report expresses anunmodified opinion on the adequacy and operating effectiveness of the Company's internalfinancial controls with reference to financial statements.
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 opinion and to the best of our information and according to the explanationsgiven to us the remuneration paid by the Company to its directors during the year is inaccordance with the provisions of 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 as amended inour opinion and to the best of our information and according to the explanations given tous:
i) The Company has disclosed the impact of pending litigations on its financialposition in its Standalone 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 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 Section 143(11) of the Act we give in "AnnexureB" a statement on the matters specified in paragraphs 3 and 4 of the Order.
| ||For SNMG & Co. |
| ||Chartered Accountants |
| ||Firm Regn No.: 004921N |
|Place: New Delhi ||Neeraj Gupta |
|Date : 29.05.2019 ||Partner |
| ||M. No.: 087004 |
Annexure - A to the Auditors' Report
The Annexure referred to in Independent Auditors' Report to the members of the Companyon the financial statements for the year ended 31 March 2019 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 its fixed assets bywhich fixed assets are verified in a phased manner over a period of two 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.
(c) According to the information and explanations given to us and on the basis of ourexamination of the records of the Company there is no immoveable property in the name ofthe Company. Hence the sub clause (c) is not applicable.
(ii) (a) The management has conducted the physical verification of inventory atreasonable intervals.
b) The discrepancies noticed on physical verification of the inventory as compared tobooks records which has been properly dealt with in the books of account were notmaterial.
(iii) The company has not granted any loans secured or unsecured to companies firmsor other parties covered in the register maintained under Section 189 of the CompaniesAct 2013.
(iv) In our opinion and according to the information and explanations given to us theCompany has not made any loan investments guarantees and security as per the provisionsof section 185 and 186 of the Companies Act 2013 (the Act') with respect to theloans and investments made. Hence the sub clause (iv) of the order is not applicable.
(v) The Company has not accepted any deposits from the public within the meaning ofsection 73 to 76 of the company act 2013 and rule framed there under.
(vi) The Central Government has not prescribed the maintenance of cost records undersection 148(1) of the Act for any of the services rendered by the Company.
(vii) (a) There have been significant delays in deposit of undisputed statutory dues inrespect of Tax deducted at Source and delays in deposit of Provident Fund Employees'State Insurance Income-tax Sales Tax Service Tax Value Added Tax Goods and ServiceTax (GST) Cess and other material statutory dues applicable to it to the appropriateauthorities. We are informed that the Company's operations during the year did not giverise to any liability for Customs Duty and Excise Duty.
(b) According to the information and explanations given to us no undisputed amountspayable in respect of provident fund income tax sales tax value added tax duty ofcustoms service tax cess and other material statutory dues were in arrears as at 31stMarch 2019 for a period of more than six months from the date they became payable.
|Name of the Statute ||Nature of Dues ||Amount (in Rs.) ||Period to which amount relates |
|Income Tax Act 1961 ||Tax Deducted at Source ||1202390 ||01.04.2015 to 31.03.2018 |
|Income Tax Act 1961 ||Interest on late payment of TDS ||67282 ||01.04.2009 to 31.03.2018 |
|Income Tax Act 1961 ||Late filing of TDS Returns ||249912 ||01.07.2012 to 31.03.2018 |
|Service Tax Act ||Service Tax ||23999 ||01.04.2016 to 31.03.2017 |
|Maharahshtra VAT ||VAT ||9430 ||01.04.2016 to 31.03.2017 |
(c) According to the information and explanations given to us there are no materialdues of duty of customs excise sales tax service tax and value added tax which have notbeen deposited with the appropriate authorities on account of any dispute. Details of duesof Income Tax which have not been deposited as on March 31 2019 on account of disputesare given below:
|Name of the Statute ||Nature of Dues ||Forum where disputes are pending ||Amount (Rs.) ||Period to which amount relates |
|Income Tax Act 1961 ||Income Tax ||DCIT Circle 4(1) New Delhi ||1405200 ||AY 2010-11 |
|Income Tax Act 1961 ||Income Tax ||DCIT Circle 4(1) New Delhi ||476640 ||AY 2013-14 |
|Income Tax Act 1961 ||Income Tax ||DCIT Circle 4(1) New Delhi ||296560 ||AY 2014-15 |
|Income Tax Act 1961 ||Income Tax ||DCIT Circle 4(1) New Delhi ||809260 ||AY 2017-18 |
(viii) The company has not made any loan or borrowing from any financial institutionbank government and debenture holder during the year. Accordingly paragraph 3 (viii) ofthe order is not applicable.
(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. Accordinglyparagraph 3 (ix) of the Order is not applicable.
(x) According to the information and explanations given to us no fraud by the Companyor on the Company by its officers or employees has been noticed or reported during theyear under our audit.
(xi) According to the information and explanations give to us and based on ourexamination of the records of the Company the Company has not paid/provided for anymanagerial remuneration. Accordingly Paragraph 3(xi) of the order is not applicable.
(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 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 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 under our audit.
(xv) According to the information and explanations given to us and based on ourexamination of the records of the Company the Company has not entered into any non-cashtransactions with directors or persons connected with him. Accordingly paragraph 3(xv) ofthe Order is not applicable.
(xvi) The Company is not required to be registered under section 45-IA of the ReserveBank of India Act 1934.
| ||For SNMG & Co. |
| ||Chartered Accountants |
| ||Firm Regn No.: 004921N |
| ||Sd/- |
| ||Neeraj Gupta |
|Place: New Delhi ||Partner |
|Date : 29th May 2019 ||M. No.: 087004 |
Annexure - B to the 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 BGIL Films& Technologies Limited ("the Company") as of 31 March 2019 in conjunctionwith our audit of the 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 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 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 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 systemwith reference to financial statements.
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 authorisations 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.
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 31 March 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.
| ||For SNMG & Co. |
| ||Chartered Accountants |
| ||Firm Regn No.: 004921N |
| ||Sd/- |
| ||Neeraj Gupta |
|Place: New Delhi ||Partner |
|Date : 29th May 2019 ||M. No.: 087004 |