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BGR Energy Systems Ltd.

BSE: 532930 Sector: Engineering
NSE: BGRENERGY ISIN Code: INE661I01014
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OPEN 66.70
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VOLUME 9090
52-Week high 76.60
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Buy Price 65.75
Buy Qty 420.00
Sell Price 65.95
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OPEN 66.70
CLOSE 66.25
VOLUME 9090
52-Week high 76.60
52-Week low 31.10
P/E
Mkt Cap.(Rs cr) 474
Buy Price 65.75
Buy Qty 420.00
Sell Price 65.95
Sell Qty 126.00

BGR Energy Systems Ltd. (BGRENERGY) - Auditors Report

Company auditors report

TO THE MEMBERS OF BGR ENERGY SYSTEMS LIMITED

REPORT ON THE AUDIT OF THE STANDALONE IND ASFINANCIAL STATEMENTS

OPINION

We have audited the accompanying standalone Ind AS financial statementsof BGR ENERGY SYSTEMS LIMITED ("the Company”) which comprise the BalanceSheet as at March 31 2020 the Statement of Profit and Loss (including OtherComprehensive Income) the Statement of Changes in equity and the Statement of cash flowsfor the year then ended and notes to the standalone Ind AS financial statementsincluding a summary of significant accounting policies and other explanatory information.

In our opinion and to the best of our information and according to theexplanations given to us the aforesaid standalone Ind AS Financial statements give theinformation required by the Companies Act 2013 (the "Act”) in the manner sorequired and give a true and fair view in conformity with the accounting principlesgenerally accepted in India of their state of affairs of the Company as at March 312020 the Profit and total comprehensive income changes in equity and its cash flows forthe year ended on that date.

BASIS FOR OPINION

We conducted our audit in accordance with the Standards on Auditing(SAs) specified under section 143(10) of the Companies Act 2013. Our responsibilitiesunder those Standards are further described in the Auditor's Responsibilities for theAudit of the Standalone Ind AS Financial Statements section of our report. We areindependent of the Company in accordance with the Code of Ethics issued by the Instituteof Chartered Accountants of India together with the ethical requirements that are relevantto our audit of the standalone Ind AS financial statements under the provisions of theCompanies Act 2013 and the Rules thereunder and we have fulfilled our other ethicalresponsibilities in accordance with these requirements and the Code of Ethics. We believethat the audit evidence we have obtained is sufficient and appropriate to provide a basisfor our opinion.

KEY AUDIT MATTERS

Key audit matters are those matters that in our professional judgmentwere of most significance in our audit of the standalone Ind AS financial statements ofthe current period. These matters were addressed in the context of our audit of thestandalone Ind AS financial statements as a whole and in forming our opinion thereon andwe do not provide a separate opinion on these matters.

We have determined the matters described below to be the Key Auditmatters to be communicated in our report.

S. No Key Audit Matters Response to Key Audit Matters
1 Appropriateness of estimation/revision of budgeted cost and contract value including non-cash consideration: Principal Audit procedures:
We have performed the following audit procedures:
a) We have reviewed the cost estimates including subsequent revisions if any as approved by the management for all the contracts in progress.
The Company recognizes revenue from contracts with customers on percentage completion method as specified under Indian Accounting Standards (Ind AS) 115 - Revenue from contracts with customers.
b) We have reviewed the controls placed over the preparation of all relevant information for the purpose of revenue recognition.
Recognition of Revenue under IND AS 115 involves key judgements relating to c) Verified the required documents provisions made etc. for the actual costs incurred up to the year-end date.
a. identification of performance obligations b. determination and allocation of transaction price including non-cash consideration to performance obligation c. recognition of revenue over the period of contract and d. presentation and disclosures of all relevant items in the financial statements. d) Discussed the status of the projects with the company's project management team and evaluated the reasonableness of estimates made by the management on cost to be incurred for completion of the respective projects.
e) We have reviewed the workings provided by the management with reference to revision in the contract value or budgeted cost of all projects along with approvals.
Determination of revenue requires estimation of total contract costs which involves exercise of significant judgment by the management making forecasts and assumptions. f) We further verified the billings made to customers which are in line with the revised contract values.
S. No Key Audit Matters Response to Key Audit Matters
2 Adoption of IND AS 116 - Leases Principal Audit Procedures:
The Company has adopted IND AS 116 from the current year. The Application and transition to this accounting standard is complex and is an area of focus in our audit. We have performed the following audit procedures:
a) We have reviewed the method of transition adopted and related adjustments in the financial statements.
b) Reviewed various judgements and controls applied by the management in classifying the leases based on contractual agreements.
As per IND AS 116 a right of use asset and lease liability were recognized in the balance sheet. Lease liability is initially recognized at the present value of future lease payment during the lease term. This standard requires usage of significant judgements and estimation in recognizing the leases.
c) We have verified the reconciliation prepared between short term or low value leases and leases where IND AS 116 was applied.
d) Verified the recognition of right of use assets and lease liability including the estimates such as discount rates and lease term.
During the first year of transition the standard mandates detailed note on impact of transfer.
e) Assessed and verified the presentation and disclosures of leases as per IND AS 116 including the disclosure requirements of transition period.
Refer note 33 to the financial statements
3 Provision for Receivables: Principal Audit procedures:
The Company has trade receivables (net) of Rs.332697 lakhs and contract assets (net) of Rs.88560 lakhs as at March 31 2020. The Company follows the practice of creating lifetime expected credit loss (ECL) allowance on the overall trade receivables and contract assets. We have assessed the Company's review mechanism guidelines and policies relating to trade receivables and contract assets.
We have reviewed the ageing of trade receivables and contract assets.
We have analyzed the past trend of the trade receivables written off by the company and verified the adequacy of the provisions for loss of trade receivables and contract assets.

EMPHASIS OF MATTER

Without qualifying our report we draw attention to note 39 to thestandalone financial statements where the extent of COVID 19 pandemic's impact oncompany's financial performance depends on future developments which are highly uncertainand as such we are unable to quantify the financial impact.

Our opinion is not modified in respect of the above matter.

INFORMATION OTHER THAN THE STANDALONE IND AS FINANCIAL STATEMENTS ANDAUDITOR'S REPORT THEREON

The Company's Board of Directors is responsible for the otherinformation. The other information comprises the information included in the Board'sReport including Annexures thereto but does not include the standalone Ind AS financialstatements and our auditor's report thereon.

Our opinion on the standalone Ind AS financial statements does notcover the other information and we do not express any form of assurance conclusionthereon.

In connection with our audit of the standalone Ind AS 5financial statements our responsibility is to read the other information identified aboveand in doing so s consider whether the other information is materially ;inconsistent with the standalone Ind AS financial

statements or our knowledge obtained in the audit or otherwise appearsto be materially misstated. If based on the work we performed we conclude that there isa 5 material misstatement of this other information we are required to reportthe fact. We have nothing to report in j this regard.

 

r MANAGEMENT'S RESPONSIBILITY FOR THE STANDALONE IND AS FINANCIALSTATEMENTS

5 The Company's Board of Directors is responsible for the 5matters stated in section 134(5) of the Companies Act 3 2013 with respect to thepreparation of these Standalone

 

5 Ind AS Financial statements that give a true and fair tview of the financial position financial performance Changes in equity and cash flows ofthe Company in l accordance with the accounting principles generally accepted in Indiaincluding the accounting standards t specified under section 133 of the Act. Thisresponsibility also includes maintenance of adequate accounting

records in accordance with the provisions of the Act for safeguardingof the assets of the Company and for preventing and detecting frauds and otherirregularities; selection and application of appropriate accounting policies; makingjudgments and estimates that are reasonable and prudent; and design implementation andmaintenance of adequate internal financial controls that were operating effectively forensuring the accuracy and completeness of the accounting records relevant to thepreparation and presentation of the standalone Ind AS financial statements that give atrue and fair view and are free from material misstatement whether due to fraud or error.

In preparing the standalone Ind AS financial statements management isresponsible for assessing the ability to 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.

The Board of Directors are also responsible for overseeing thecompany's financial reporting process.

AUDITOR'S RESPONSIBILITIES FOR THE AUDIT OF THESTANDALONE IND AS FINANCIAL STATEMENTS

Our objectives are to obtain reasonable assurance about whether thestandalone Ind AS financial statements as a whole are free from material misstatementwhether due to fraud or error and to issue an auditor's report that includes our opinion.Reasonable assurance is a high level of assurance but is not a guarantee that an auditconducted in accordance with SAs will always detect a material misstatement when itexists. Misstatements can arise from fraud or error and are considered material ifindividually or in the aggregate they could reasonably be expected to influence theeconomic decisions of users taken on the basis of these standalone Ind AS financialstatements.

As part of an audit in accordance with SAs we exercise professionaljudgment and maintain professional skepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of thestandalone Ind AS financial statements whether due to fraud or error design and performaudit procedures responsive to those risks and obtain audit evidence that is sufficientand appropriate to provide a basis for our opinion. The risk of not detecting a materialmisstatement resulting from fraud is higher than for one resulting from error as fraudmay involve collusion forgery intentional omissions misrepresentations or the overrideof internal control.

• Obtain an understanding of internal control relevant to theaudit in order to design audit procedures that are appropriate in the circumstances. Undersection 143(3)(i) of the Companies Act 2013 we are also responsible for expressing ouropinion on whether the company has adequate internal financial controls system in placeand the operating effectiveness of such controls.

• Evaluate the appropriateness of accounting policies used and thereasonableness of accounting estimates and related disclosures made by management.

• Conclude on the appropriateness of management's use of the goingconcern basis of accounting and based on the audit evidence obtained whether a materialuncertainty exists related to events or conditions that may cast significant doubt on theCompany's ability to continue as a going concern. If we conclude that a materialuncertainty exists we are required to draw attention in our auditor's report to therelated disclosures in the standalone Ind AS financial statements or if such disclosuresare inadequate to modify our opinion. Our conclusions are based on the audit evidenceobtained up to the date of our Auditor's report. However future events or conditions maycause the Company to cease to continue as a going concern.

• Evaluate the overall presentation structure and content of thestandalone Ind AS financial statements including the disclosures and whether thestandalone Ind AS financial statements represent the underlying transactions and events ina manner that achieves fair presentation.

We communicate with those charged with governance regarding amongother matters the planned scope and timing of the audit and significant audit findingsincluding any significant deficiencies in internal control that we identify during ouraudit.

We also provide those charged with governance with a statement that wehave complied with relevant ethical requirements regarding independence and tocommunicate with them all relationships and other matters that may reasonably be thoughtto bear on our independence and where applicable related safeguards.

From the matters communicated with those charged with governance wedetermine those matters that were of most significance in the audit of the standalone IndAS financial statements of the current period and are therefore the key audit matters. Wedescribe these matters in our auditor's report unless law or regulation precludes publicdisclosure about the matter or when

in extremely rare circumstances we determine that a matter should notbe communicated in our report because the adverse consequences of doing so wouldreasonably be expected to outweigh the public interest benefits of such communication.

REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS

As required by the Companies (Auditor's Report) Order 2016 ("theOrder”) issued by the Central Government of India in terms of sub-section (11) ofsection 143 of the Companies Act 2013 we give in Annexure A a statement on the mattersspecified in paragraphs 3 and 4 of the Order to the extent applicable.

As required by Section 143(3) of the Act we report that:

(a) We have sought and obtained all the information and explanationswhich to the best of our knowledge and belief were necessary for the purposes of ouraudit.

(b) I n our opinion proper books of account as required by law havebeen kept by the Company so far as it appears from our examination of those books.

(c) The Balance Sheet the Statement of Profit and Loss (includingother comprehensive income) the Statement of Changes in Equity and the Cash FlowStatement dealt with by this Report are in agreement with the books of account.

(d) I n 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.

(e) On the basis of the written representations received from thedirectors as on March 31 2020 taken on record by the Board of Directors none of thedirectors is disqualified as on March 31 2020 from being appointed as a director in termsof Section 164(2) of the Act.

(f) With respect to the adequacy of the internal financial controlsover financial reporting of the Company and the operating effectiveness of such controlsrefer to our separate Report in "Annexure B”.

(g) With respect to the other matters to be included in the Auditor'sReport in accordance 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 theexplanations given to us the managerial remuneration paid by the Company during the yearis in excess of the limits prescribed under section 1 97 of the Companies act 201 3. Thecompany proposes to place the relevant agenda in the ensuing general meeting to obtain therequisite approval from shareholders.

(h) With respect to the other matters to be included in the Auditor'sReport in accordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014 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 itsfinancial position in its standalone Ind AS financial statements - Refer Note nos.3.c.(i) 3.c.(ii) and 35 to the standalone Ind AS financial statements;

ii. The Company has made provision as required under the applicablelaw or accounting standards for material foreseeable losses if any on long-termcontracts. - Refer Note 38 to the standalone Ind AS financial statements; The Company didnot enter into any derivative contracts; and

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

For N R Doraiswami & Co
Chartered Accountants
Firm Registration No: 000771S
Suguna Ravichandran
Partner
Place : Coimbatore Membership No: 207893
Date : June 30 2020 UDIN : 20207893AAAAJB3984

ANNEXURE A TO THE INDEPENDENT AUDITORS' REPORT ON THE STANDALONE IND ASFINANCIAL STATEMENTS

The Annexure referred to in paragraph 1 under the heading "Reporton Other Legal and Regulatory Requirements” of our Independent Auditors' Report tothe members of

M/s BGR ENERGY SYSTEMS LIMITED for the year ended March 31 2020 wereport that:

(i) (a) The Company is maintaining proper records

showing full particulars including quantitative details and situationof fixed assets;

(b) The Company has a regular program of physical verification of itsfixed assets by which fixed assets are verified in a phased manner on a rotational basis.In accordance with this program certain fixed assets were verified during the year and nomaterial discrepancies were noticed on such verification. In our opinion this periodicityof physical verification is reasonable having regard to the size of the Company and thenature of its assets; and

(c) According to the information and explanations given to us and onthe basis of our examination of the records of the Company the title deeds of immovableproperties are held in the name of the Company.

(ii) According to the information and explanations given to us and onthe basis of our examination of the records of the Company we are of the opinion that themanagement has conducted the physical verification of inventory at reasonable intervalsduring the year. There are no material discrepancies noticed between book stock andphysical stock on physical verification conducted by the management.

(iii) The Company has not granted any loans to parties covered in theregister maintained under section 189 of the Act during the year. Accordingly paragraph3(iii)(a) (b) and (c) of the Order is not applicable.

(iv) According to the information and explanations given to us and onthe basis of our examination of the records of the Company the company has not grantedloans and guarantees to any parties covered under Section 185 of the Act. In our opinionand according to the information and explanations given to us the Company has compliedwith the provisions of Section 186 of the Act.

(v) The Company has not accepted any deposits from the public withinthe meaning of sections 73 to 76 of the Act and the rules framed there under to the extentnotified. Therefore the provisions of clause (v) of the Companies (Auditors' Report)Order 2016 are not applicable to the Company.

(vi) We have broadly reviewed the cost records maintained by theCompany as specified by the Central Government under Section 148(1) of the Act and are ofthe opinion that prima facie the prescribed cost records have been maintained. We havehowever not made a detailed examination of the cost records with a view to determinewhether they are accurate or complete.

(vii) (a) In our opinion and according to the information

and explanations given to us and on the basis of our examination of therecords of the Company amounts deducted / accrued in the books of account in respect ofundisputed statutory dues including Provident Fund Employees' State InsuranceProfessional Tax Income-tax Customs Duty Goods and Service tax Cess and otherstatutory dues have generally been regularly deposited during the year by the company withthe appropriate authorities. According to the information and explanations given to us andon the basis of our examination of the records of the Company no undisputed amountspayable in respect of Provident Fund Employees' State Insurance Professional TaxIncome-tax Customs Duty Goods and Service tax Cess were in arrears as at March 312020 for a period of more than six months from the date they became payable; and

(b) As per the information and explanations given to us the followingare the details of statutory dues which have not been deposited by the Company on accountof disputes:

Name of the Statute Nature of Due Disputed Tax Amount (INR Lakhs) Financial Year Forum in which dispute is lying
Central Sales Tax Act 1956 Central Sales Tax 4.20 1997-98 The Honourable High Court Andhra Pradesh
Central Sales Tax Act 1956 Central Sales Tax 35.03 1997-98 The Honourable High Court Andhra Pradesh
Andhra Pradesh Value Added Tax Act 2005 Andhra Pradesh Sales Tax 0.12 1998-99 Commercial Tax Officer Andhra Pradesh
Tamil Nadu General Sales Tax Act 1959 Tamil Nadu Sales Tax 0.11 1999-00 Commercial Tax Officer Tamil Nadu
Tamil Nadu General Sales Tax Act 1959 Tamil Nadu Sales Tax 2.21(3) 2001-02 Sales Tax Appellate Tribunal Chennai Tamilnadu.
Central Sales Tax Act 1956 Central Sales Tax 5.58(3) 2004-05 Sales Tax Appellate Tribunal Vishakhapatnam Andhra Pradesh.
Andhra Pradesh Value Added Tax Act 2005 Andhra Pradesh Sales Tax (Penalty) 2.59(3) 2006-07 Sales Tax Appellate Tribunal Vishakhapatnam Andhra Pradesh.
Kerala Value Added Tax Act 2003 Kerala Sales Tax 2.65(3) 2006-07 The Deputy Commissioner (Appeals) Ernakulum Kerala
Andhra Pradesh Value Added Tax Act 2005 Andhra Pradesh Sales Tax ( Penalty) 7.43(3) 2007-08 Sales Tax Appellate Tribunal Vishakhapatnam Andhra Pradesh.
The Rajasthan Value Added Tax 2003 Rajasthan Sales Tax 9865.96(3) 2009-10 Rajasthan Tax Board Ajmer
The Rajasthan Value Added Tax 2003 Rajasthan Sales Tax 9541.31(3) 2010-11 Rajasthan Tax Board Ajmer
The Rajasthan Value Added Tax 2003 Rajasthan Sales Tax 4333.66(3) 2011-12 Rajasthan Tax Board Ajmer
Central Sales Tax Act 1956 Central Sales Tax 261.76(3) 2014-15 The Appellate Deputy Commissioner (CT) North Chennai
Central Sales Tax Act 1956 Central Sales Tax 95.88 2013-14 The Tamilnadu Sales Tax Appellate Tribunal Chennai -104
Central Sales Tax Act 1956 Maharashtra Value Added Tax 53.85 2013-14 The Joint Commissioner of Sales Tax Appeal VII Mumbai
Chapter V of Finance Act 1994 Service Tax 24482.00(1) 2007-08 to 2014-15 CESTAT Chennai Tamilnadu.
Chapter V of Finance Act 1994 Service Tax 11798.95(1) 2014-15 to 2017-18 CESTAT Chennai Tamilnadu.
Name of the Statute Nature of Due Disputed Tax Amount (INR Lakhs) Financial Year Forum in which dispute is lying
Chapter V of Finance Act 1994 Service Tax 306.45(1) 2007-08 to 2014-15 High Court of Judicature at Madras
Chapter V of Finance Act 1994 Service Tax 77.72(1) 2015-16 to 2017-18 High Court of Judicature at Madras
Tamil Nadu Value Added Tax Act 2006 Value Added Tax 119.23 2013-14 The Appellate Deputy Commissioner (CT) North Chennai.
Tamil Nadu Value Added Tax Act 2006 Value Added Tax 136.44 2014-15 The Appellate Deputy Commissioner (CT) North Chennai.
Tamil Nadu Value Added Tax Act 2006 Value Added Tax 28.27 2015-16 The Appellate Deputy Commissioner (CT) North Chennai.
Uttar Pradesh Value Added Tax Act Value Added Tax 16.46 2014-15 The Additional Commissioner (Appeal) Commercial Tax Prayagraj.
Uttar Pradesh Value Added Tax Act Entry Tax 0.41 2014-15 The Additional Commissioner (Appeal) Commercial Tax Prayagraj.
Central Sales Tax Act 1956 Maharashtra Value Added Tax 58.33 2014-15 The Joint Commissioner of Sales Tax Appeal VII Mumbai
Odisha Value added Tax Act Value Added Tax 40.77 2015-16 to 2017 -18 The Joint Commissioner Commercial Tax Bhubaneswar Range
Central Sales Tax Act 1956 Central Sales Tax 0.23 2015-16 to 2017 -18 The Joint Commissioner Commercial Tax Bhubaneswar Range
The Employee Provident Fund & Miscellaneous Provisions Act 1952 Provident Fund 521.15(3) 2006-2010 The Honourable High Court Hyderabad
Income-tax Act 1961 Income Tax 137.65(2) 2006-07 The Honourable High Court Andhra Pradesh
Income-tax Act 1961 Income Tax 141.55(2) 2007-08 The Honourable High Court Andhra Pradesh
Income-tax Act 1961 Income Tax 192.15(2) 2008-09 The Honourable High Court Andhra Pradesh
Income-tax Act 1961 Income Tax 101.16(2) 2009-10 The Honourable High Court Madras.
Income-tax Act 1961 Income Tax 112.7923) 2010-11 Income Tax Appellate Tribunal
Income-tax Act 1961 Income Tax 83.20(2) 2011-12 Income Tax Appellate Tribunal
Income-tax Act 1961 Income Tax 76.35(2) 2012-13 Income Tax Appellate Tribunal
Income-tax Act 1961 Income Tax 100.07(2) 2013-14 Income Tax Appellate Tribunal
Income-tax Act 1961 Income Tax 38.11(2) 2013-14 Commissioner of Income Tax (Appeals - 19) Chennai
Name of the Statute Nature of Due Disputed Tax Amount (INR Lakhs) Financial Year Forum in which dispute is lying
Income-tax Act 1961 Income Tax 1184.19(2) 2014-15 Commissioner of Income Tax (Appeals - 19) Chennai
Income-tax Act 1961 Income Tax 1468.05(2) 2007-08 to 2013-14 Income Tax Appellate Tribunal
Income-tax Act 1961 Income Tax 72.35(2) 2015-16 Commissioner of Income Tax (Appeals - 19) Chennai
Income-tax Act 1961 Income Tax 84.95(2) 2016-17 Commissioner of Income Tax (Appeals - 19) Chennai

(1) Excludes Interest and penalty.

(2) Excludes Interest and penalty which are not

ascertainable.

(3) Represents gross tax liability. Out of this a sum of INR 1598.39lakhs was paid as deposit.

(viii) According to the information and explanations given to us and onthe basis of our examination of the books of account the Company has not defaulted inrepayment of loans or borrowings to any financial institutions or banks.

(ix) During the year the Company did not raise any money by way ofinitial public offer or further public offer (including debt instruments) and term loan.Accordingly paragraph 3(ix) of the order is not applicable.

(x) To the best of our knowledge and according to the information andexplanations given to us we report that no material fraud by the Company or on theCompany by its officers or employees has been noticed or reported during the year.

(xi) According to the information and explanations given to us andbased on our examination of the records of the Company the Company has paid managerialremuneration in excess of the limits prescribed under section 197 of the Companies Act2013. The company proposes to get requisite approval in the ensuing general meeting incompliance with Section 197 of the Companies Act 2013.

(xii) In our opinion and according to the information and explanationsgiven to us the Company is not a Nidhi company. Accordingly paragraph 3(xii) of theOrder is not applicable.

(xiii) According to the information and explanations given to us andbased on our examination of the records of the Company transactions with the

related parties are in compliance with sections 177 and 188 of the Actwhere ever applicable.

The details of transactions with related parties have been disclosed inthe standalone Ind AS financial Statements as required by the applicable accountingstandards.

(xiv) According to the information and explanations given to us andbased on our examination of the records of the Company the Company has not made anypreferential allotment or private placement of shares or fully or partly convertibledebentures during the year. Accordingly paragraph 3(xiv) of the Order is not applicable.

(xv) According to the information and explanations given to us andbased on our examinations of the records of the Company the Company has not entered intonon-cash transactions with directors or persons connected with them. Accordinglyparagraph 3(xv) of the Order is not applicable.

(xvi) I n our opinion and according to the information and explanationsgiven to us the company is not required to be registered under Section 45-IA of theReserve Bank of India Act 1934. Accordingly paragraph 3(xvi) of the Order is notapplicable.

For N R Doraiswami & Co
Chartered Accountants
Firm Registration No: 000771S
Suguna Ravichandran
Partner
Place : Coimbatore Membership No: 207893
Date : June 30 2020 UDIN : 20207893AAAAJB3984

ANNEXURE B TO THE INDEPENDENT AUDITOR'S REPORT ON THE STANDALONE IND ASFINANCIAL STATEMENTS

REPORT ON THE INTERNAL FINANCIAL CONTROLS UNDER CLAUSE (I) OFSUB-SECTION (3) OF SECTION 143 OF THE COMPANIES ACT 2013 (“THE ACT”)

We have audited the internal financial controls over financialreporting of BGR Energy Systems Limited (“the Company”) as of March 31 2020in conjunction with our audit of the standalone Ind AS financial statements of the Companyfor the year ended on that date.

MANAGEMENT'S RESPONSIBILITY FOR INTERNAL FINANCIALCONTROLS

The Company's management is responsible for establishing andmaintaining internal financial controls based on the internal control over financialreporting criteria established by the Company considering the essential components ofinternal control stated in the Guidance Note on Audit of Internal Financial Controls overFinancial Reporting issued by the Institute of Chartered Accountants of India(“ICAI”). These responsibilities include the design implementation andmaintenance of adequate internal financial controls that were operating effectively forensuring the orderly and efficient conduct of its business including adherence tocompany's policies the safeguarding of its assets the prevention and detection offrauds and errors the accuracy and completeness of the accounting records and the timelypreparation of reliable financial information as required under the Act.

AUDITORS' RESPONSIBILITY

Our responsibility is to express an opinion on the Company'sinternal financial controls over financial reporting based on our audit. We conducted ouraudit in accordance with the Guidance Note on Audit of Internal Financial Controls OverFinancial Reporting (“the Guidance Note”) and the Standards on Auditing issuedby ICAI and deemed to be prescribed under section 143(10) of the Act 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 aboutthe adequacy of the internal financial controls system over financial reporting and theiroperating effectiveness. Our audit of internal financial controls over financial reportingincluded obtaining an understanding of internal financial controls over financialreporting assessing the risk that a material weakness exists and testing and evaluatingthe design and operating effectiveness of internal control based on the assessed risk. Theprocedures selected depend on the auditors' judgment including the assessment of therisks of material misstatement of the standalone Ind AS financial statements whether dueto fraud or error.

We believe that the audit evidence we have obtained is sufficient andappropriate to provide a basis for our audit opinion on the Company's internalfinancial controls system over financial reporting.

MEANING OF INTERNAL FINANCIAL CONTROLS OVER FINANCIAL REPORTING

A company's internal financial control over financial reporting isa process designed to provide reasonable assurance regarding the reliability of financialreporting and the preparation of standalone Ind AS financial statements for externalpurposes in accordance with generally accepted accounting principles. A company'sinternal financial control over financial reporting includes those policies and proceduresthat:

(i) pertain to the maintenance of records that in reasonable detailsaccurately and fairly reflect the transactions and dispositions of the assets of thecompany;

(ii) provide reasonable assurance that transactions are recorded asnecessary to permit preparation of standalone Ind AS financial statements in accordancewith generally accepted accounting principles and that receipts and expenditures of theCompany are being made only in accordance with authorizations of management and directorsof the Company; and

(iii) provide reasonable assurance regarding prevention or timelydetection of unauthorized acquisition use or disposition of the company's assetsthat could have a material effect on the standalone Ind AS financial statements.

INHERENT LIMITATIONS OF INTERNAL FINANCIAL CONTROLS OVER FINANCIALREPORTING

Because of the inherent limitations of internal financial controls overfinancial reporting 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.

OPINION

In our opinion the Company has in all material respects an adequateinternal financial controls system over financial reporting and such internal financialcontrols over financial reporting were operating effectively as at March 31 2020 basedon the internal control

over financial reporting criteria established by the Companyconsidering the essential components of internal control stated in the Guidance Note onAudit of Internal Financial Controls Over Financial Reporting issued by the Institute ofChartered Accountants of India.

For N R Doraiswami & Co
Chartered Accountants
Firm Registration No: 000771S
Suguna Ravichandran
Partner
Place : Coimbatore Membership No: 207893
Date : June 30 2020 UDIN : 20207893AAAAJB3984

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