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BGR Energy Systems Ltd.

BSE: 532930 Sector: Engineering
NSE: BGRENERGY ISIN Code: INE661I01014
BSE 00:00 | 03 Jul 41.15 6.85
(19.97%)
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41.15

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NSE 00:00 | 03 Jul 41.30 6.85
(19.88%)
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OPEN 34.55
PREVIOUS CLOSE 34.30
VOLUME 225146
52-Week high 54.85
52-Week low 18.95
P/E 22.01
Mkt Cap.(Rs cr) 297
Buy Price 41.15
Buy Qty 87897.00
Sell Price 40.90
Sell Qty 599.00
OPEN 34.55
CLOSE 34.30
VOLUME 225146
52-Week high 54.85
52-Week low 18.95
P/E 22.01
Mkt Cap.(Rs cr) 297
Buy Price 41.15
Buy Qty 87897.00
Sell Price 40.90
Sell Qty 599.00

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 AS FINANCIAL STATEMENTS

OPINION

We have audited the accompanying standalone Ind AS financial statements of BGR ENERGYSYSTEMS LIMITED ("the Company") which comprise the Balance Sheet as at March312019 and the Statement of Profit and Loss (including Other Comprehensive Income) theStatement of Changes in equity and the Statement of cash flows for the year then endedand notes to the standalone Ind AS financial statements including a summary ofsignificant accounting policies and other explanatory information.

In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid standalone Ind AS Financial statements give the informationrequired by the Companies Act 2013 (the "Act") in the manner so required andgive a true and fair view in conformity with the accounting principles generally acceptedin India of their state of affairs of the Company as at March 31 2019 the Profit andtotal comprehensive income changes in equity and its cash flows for the year ended onthat date.

BASIS FOR OPINION

We conducted our audit in accordance with the Standards on Auditing (SAs) specifiedunder section 143(10) of the Companies Act 2013. Our responsibilities under thoseStandards are further described in the Auditor's Responsibilities for the Audit of theFinancial Statements section of our report. We are independent of the Company inaccordance with the Code of Ethics issued by the Institute of Chartered Accountants ofIndia together with the ethical requirements that are relevant to our audit of thestandalone Ind AS financial statements under the provisions of the Companies Act 2013 andthe Rules thereunder and we have fulfilled our other ethical responsibilities inaccordance with these requirements and the Code of Ethics. We believe that the auditevidence we have obtained is sufficient and appropriate to provide a basis for ouropinion.

KEY AUDIT MATTERS

Key audit matters are those matters that in our professional judgment were of mostsignificance in our audit of the standalone Ind AS financial statements of the currentperiod. These matters were addressed in the context of our audit of the standalone Ind ASfinancial statements as a whole and in forming 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.

S. No Key Audit Matters Response to Key Audit Matters
1 Fraud bv an employee of the company: Principal Audit procedures:
During the year the management has identified an occurrence of fraud by an employee of the company over a period of time by transfer of funds to many bank accounts created by him in fictitious names. We have perused the various investigation reports that were made available to us. We have confirmed the amount of fraud and the year of occurrence based on the findings of these reports.
In doing such fraudulent fund transfers he has committed forgery falsification of documents impersonation and other criminal acts. The amount of fraud detected is ' 14.33 Crores which pertains to periods from FY 2013-14 to FY 2017-18. We have also verified the accounting treatment for the same and confirm that it is in line with Indian Accounting Standards (Ind AS) 8 "Accounting Policies Changes in Accounting Estimates and Errors".
Refer note 43 to the standalone Ind AS financial statements.
2 Bank Guarantee Encashment: Principal Audit Procedures:
During the year a client arbitrarily encashed three performance bank guarantees totaling to ' 86.98 Crores. This amount has been grouped under "Other Current Assets" In addition to the above the said client invoked advance bank guarantee amounting to Rs 20.55 Crores for which the company has obtained an interim injunction order from Hon'ble High Court of Delhi. The interim injunction was subsequently extended by Arbitral tribunal. On enquiry it was found that the company has initiated arbitration proceedings. We analyzed and reviewed the nature of amounts recoverable the sustainability and likelihood of recoverability on final resolution.
Refer note 6 to the standalone Ind AS financial statements.
3 Provision for Receivables: The company follows the practice of creating life time expected credit loss (ECL) allowance on the overall trade receivables and contract assets. In addition to ECL an additional provision of ' 21.85 Crores has been made during the year under the head "Provision for contractual obligation" Principal Audit procedures: We have analyzed the past trend of trade receivables written off by the company and concluded that adequate provision for credit loss has been made.
4 Aoorooriateness of estimation of budaeted cost and revision in contract value: Principal Audit procedures:
We have performed the following procedures among others:
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. a) We have reviewed the cost estimates as approved by the management for all the contracts in progress.
b) Verified the required documents provisions made etc. for the actual costs incurred up to the year end date.
Determination of revenue requires estimation of total contract costs which involves exercise of significant judgment by the management making forecasts and assumptions. c) Discussed the status of the projects with the company's project management team and evaluated the reasonableness of estimates made by the management of cost to be incurred for completion of the respective projects.
Post implementation of Goods and Service Tax (GST) the contract values have been revised and are submitted to the customers for approval. d) We have reviewed the management provided workings with reference to revision in the contract value of all the contracts which are in progress due to introduction of GST
e) We further verified the billings made to customers which are in line with the revised contract values.

INFORMATION OTHER THAN THE STANDALONE IND AS FINANCIAL STATEMENTS AND AUDITOR'S REPORTTHEREON

The Company's Board of Directors is responsible for the other information. The otherinformation comprises the information included in the Board's Report including Annexuresthereto but does not include the standalone Ind AS financial statements and our auditor'sreport thereon.

Our opinion on the standalone Ind AS financial statements does not cover the otherinformation and we do not express any form of assurance conclusion thereon.

In connection with our audit of the standalone Ind AS financial statements ourresponsibility is to read the other information identified above and in doing soconsider whether the other information is materially inconsistent with the standalone IndAS financial statements or our knowledge obtained in the audit or otherwise appears to bematerially misstated. If based on the work we performed we conclude that there is amaterial misstatement of this other information we are required to report the fact. Wehave nothing to report in this regard.

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 with respect to the preparation of these Standalone IndAS Financial statements that give a true and fair view of the financial positionfinancial performance Changes in equity and cash flows of the Company in accordance withthe accounting principles generally accepted in India including the accounting Standardsspecified under section 133 of the Act. This responsibility also includes maintenance ofadequate 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 is responsible forassessing the ability to continue as a going concern disclosing as applicable mattersrelated to going concern and using the going concern basis of accounting unless managementeither intends to liquidate the Company or to cease operations or has no realisticalternative but to do so.

The Board of Directors are also responsible for overseeing the company's financialreporting process.

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

Our objectives are to obtain reasonable assurance about whether the standalone Ind ASfinancial 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 Ind AS 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 standalone Ind ASfinancial 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. Under section 143(3)

(i) of the Companies Act 2013 we are also responsible for expressing our opinion onwhether the company has adequate internal financial controls system in place and theoperating 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 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 Ind AS financial statements or if such disclosures are inadequate tomodify our opinion. Our conclusions are based on the audit evidence obtained up to thedate of our Auditor's report. However future events or conditions may cause the Companyto cease to continue as a going concern.

• Evaluate the overall presentation structure and content of the standalone IndAS financial statements including the disclosures and whether the standalone Ind ASfinancial statements represent the underlying transactions and events in a manner thatachieves fair presentation.

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 Ind AS financialstatements of the current period and are therefore the key audit matters. We describethese matters in our auditor's report unless law or regulation precludes public disclosureabout the matter or when in extremely rare circumstances we determine that a mattershould not be communicated in our report because the adverse consequences of doing sowould reasonably be expected to outweigh the public interest benefits of suchcommunication.

REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS

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 Companies Act 2013 we give in Annexure A a statement on the matters specified inparagraphs 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 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) The Statement of Changes in Equity and the Cash Flow Statement dealt with by thisReport are in agreement with the books of account.

(d) In our opinion the aforesaid standalone Ind AS financial statements comply withthe Accounting 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 terms of Section164(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 opinion and to the best of our information and according to the explanationsgiven to us the managerial remuneration paid by the Company during the year is in excessof the limits prescribed under section 197 of the Companies act 2013. The companyproposes 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'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 nos. 3.c.(i) 3.c.(ii)and 34 to the standalone Ind AS 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. - Refer Note44 to the standalone Ind AS financial statements; The Company did not enter into anyderivative contracts; and

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

For N R Doraiswami & Co
Chartered Accountants
Firm Registration No: 000771S
Suguna Ravichandran
Place : Chennai Partner
Date : May 30 2019 Membership No: 207893

ANNEXURE A TO THE INDEPENDENT AUDITORS' REPORT ON THE STANDALONE IND AS FINANCIALSTATEMENTS

The Annexure referred to in paragraph 1 under the heading "Report on Other Legaland Regulatory Requirements" of our Independent Auditors' Report to the members ofM/s BGR ENERGY SYSTEMS LIMITED for the year ended March 312019 we report that:

(i) (a) The Company is maintaining proper records showing full particulars includingquantitative details and situation of fixed assets;

(b) The Company has a regular program of physical verification of its fixed assets bywhich fixed assets are verified in a phased manner on a rotational basis. In accordancewith this program certain fixed assets were verified during the year and no materialdiscrepancies were noticed on such verification. In our opinion this periodicity ofphysical 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 on the basis of ourexamination of the records of the Company the title deeds of immovable properties areheld in the name of the Company.

(ii) According to the information and explanations given to us and on the basis of ourexamination of the records of the Company we are of the opinion that the management hasconducted the physical verification of inventory at reasonable intervals during the year.There are no material discrepancies noticed between book stock and physical stock onphysical verification conducted by the management.

(iii) The Company has not granted any loans to parties covered in the registermaintained under section 189 of the Act during the year. Accordingly paragraph 3(iii)(a)(b) and (c) of the Order is not applicable.

(iv) According to the information and explanations given to us and on the basis of ourexamination of the records of the Company the company has not granted loans andguarantees to any parties covered under Section 185 of the Act. In our opinion andaccording to the information and explanations given to us the Company has complied withthe provisions of Section 186 of the Act.

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

(vi) We have broadly reviewed the cost records maintained by the Company as specifiedby the Central Government under Section 148(1) of the Act and are of the opinion thatprima facie the prescribed cost records have been maintained. We have however not made adetailed examination of the cost records with a view to determine whether they areaccurate or complete.

(vii) (a) In our opinion and according to the information and explanations given to usand on the basis of our examination of the records of the Company amounts deducted /accrued in the books of account in respect of undisputed statutory dues includingProvident Fund Employees' State Insurance Professional Tax Income- tax Customs DutyGoods and Service tax Cess and other statutory dues have generally been regularlydeposited during the year by the company with the appropriate authorities. According tothe information and explanations given to us and on the basis of our examination of therecords of the Company no undisputed amounts payable in respect of Provident FundEmployees' State Insurance Professional Tax Income-tax Customs Duty Goods and Servicetax Cess were in arrears as at March 312019 for a period of more than six months fromthe date they became payable; and

(b) As per the information and explanations given to us the following are the detailsof statutory dues which have not been deposited by the Company on account of 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 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 2006-07 Sales Tax Appellate Tribunal Vishakhapatnam Andhra Pradesh.
Kerala Value Added Tax Act 2003 Kerala Sales Tax 2.65 2006-07 The Deputy Commissioner (Appeals) Ernakulum Kerala
Andhra Pradesh Value Added Tax Act 2005 Andhra Pradesh Sales Tax ( Penalty) 7.43 2007-08 Sales Tax Appellate Tribunal Vishakhapatnam Andhra Pradesh.
The Rajasthan Value Added Tax 2003 Rajasthan Sales Tax 9865.96 2009-10 Rajasthan Tax Board Ajmer
The Rajasthan Value Added Tax 2003 Rajasthan Sales Tax 9541.31 2010-11 Rajasthan Tax Board Ajmer
The Rajasthan Value Added Tax 2003 Rajasthan Sales Tax 4333.66 2011-12 Rajasthan Tax Board Ajmer
Central Sales Tax Act 1956 Central Sales Tax 261.76 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 43.56(1) 2013-14 The Joint Commissioner of Sales Tax Appeal VII Mumbai
Chapter V of Finance Act 1994 Service Tax 24482(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.
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
Gujarat Value Added Tax Act 2003 Value Added Tax 4.33 2014-15 The Deputy Commissioner Appeal Ahmedabad.
Tamil Nadu Value Added Tax Act 2006 Value Added Tax 116.72(1) 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 Refer Footnote 4.
The Employee Provident Fund & Miscellaneous Provisions Act 1952 Provident Fund 521.15 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 22.17(2) 2007-08 Income Tax Appellate Tribunal
Income-tax Act 1961 Income Tax 27.25(2) 2008-09 Income Tax Appellate Tribunal
Income-tax Act 1961 Income Tax 119.38(2) 2007-08 The Honourable High Court Andhra Pradesh
Income-tax Act 1961 Income Tax 164.90(2) 2008-09 The Honourable High Court Andhra Pradesh
Income-tax Act 1961 Income Tax 61.48(2) 2009-10 The Honourable High Court Madras.
Income-tax Act 1961 Income Tax 112.79(2)(3) 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 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

(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 ' 1598.39 lakhs was paid asdeposit.

(4) The company is in the process of filing the appeal before The First AppellateAuthority and the appeal is not lapsed as on the date of report.

(viii) According to the information and explanations given to us and on the basis ofour examination of the books of account the Company has not defaulted in repayment ofloans or borrowings to any financial institutions or banks.

(ix) During the year the Company did not raise any money by way of initial public offeror further public offer (including debt instruments) and term loan. Accordingly paragraph3(ix) of the order is not applicable.

(x) Based on the audit procedures performed and on the basis of information given tous we report that no fraud by the company has been noticed or reported during the year.An instance of fraud on the company by an employee has been reported and the company hastaken necessary action in this regard - reference is drawn to note number 43 of Notes tostandalone Ind AS Financial Statements.

(xi) According to the information and explanations given to us and based on ourexamination of the records of the Company the Company has paid managerial remuneration inexcess of the limits prescribed under section 197 of the Companies Act 2013. The companyproposes to get requisite approval in the ensuing general meeting in compliance withSection 197 of the Companies Act 2013.

(xii) In our opinion and according to the information and explanations given to us theCompany is not a Nidhi company. Accordingly paragraph 3(xii) of the Order is notapplicable.

(xiii) According to the information and explanations given to us and based on ourexamination of the records of the Company transactions with the related parties are incompliance with sections 177 and 188 of the Act where ever applicable except fortransactions in the nature of sales amounting to INR 1708 Lakhs (having order value of INR4821 Lakhs) with Enexio Power Cooling Solutions India Private Limited related to theCompany through common directorship for which prior approval of the audit committee asrequired by Section 177 of the Act was not taken.

The details of transactions with related parties have been disclosed in the standaloneInd AS financial Statements as required by the applicable accounting standards.

(xiv) According to the information and explanations given 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. Accordingly paragraph 3(xiv) of the Order is not applicable.

(xv) According to the information and explanations given to us and based on ourexaminations of the records of the Company the Company has not entered into non-cashtransactions with directors or persons connected with them. Accordingly paragraph 3(xv)of the Order is not applicable.

(xvi) In our opinion and according to the information and explanations given to us thecompany is not required to be registered under Section 45-IA of the Reserve Bank of IndiaAct 1934. Accordingly paragraph 3(xvi) of the Order is not applicable.

For N R Doraiswami & Co
Chartered Accountants
Firm Registration No: 000771S
Suguna Ravichandran
Place : Chennai Partner
Date : May 30 2019 Membership No: 207893

ANNEXURE B TO THE INDEPENDENT AUDITOR'S REPORT ON THE STANDALONE IND AS FINANCIALSTATEMENTS

Report on the Internal Financial Controls under Clause (i) of sub-section (3) ofSection 143 of the Companies Act 2013 ("the Act")

We have audited the internal financial controls over financial reporting of BGR EnergySystems Limited ("the Company") as of March 312019 in conjunction with ouraudit of the standalone Ind AS financial statements of the Company for the year ended onthat date.

MANAGEMENT'S RESPONSIBILITY FOR INTERNAL FINANCIAL CONTROLS

The Company's management is responsible for establishing and maintaining internalfinancial controls based on the internal control over financial reporting criteriaestablished by the Company considering the essential components of internal control statedin the Guidance Note on Audit of Internal Financial Controls over Financial Reportingissued by the Institute of Chartered Accountants of India ("ICAI"). 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 Act.

AUDITORS' RESPONSIBILITY

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 Act to the extent applicable to an audit ofinternal financial controls both applicable to an audit of Internal Financial Controlsand both issued by the Institute of Chartered Accountants of India. Those Standards andthe Guidance Note require that we comply with ethical requirements and plan and performthe audit to obtain reasonable assurance about whether adequate internal financialcontrols over financial reporting was established and maintained and if such controlsoperated 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 auditors' judgment including the assessment of the risks ofmaterial misstatement of the standalone Ind AS financial statements whether due to fraudor 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

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 standalone Ind AS financial statements for external purposes in accordancewith generally accepted accounting principles. A company's internal financial control overfinancial reporting includes those policies and procedures that:

(i) pertain to the maintenance of records that in reasonable details accurately andfairly reflect the transactions and dispositions of the assets of the company;

(ii) provide reasonable assurance that transactions are recorded as necessary to permitpreparation of standalone Ind AS financial statements in accordance with generallyaccepted accounting principles and that receipts and expenditures of the Company arebeing made only in accordance with authorizations of management and directors of theCompany; and

(iii) provide reasonable assurance regarding prevention or timely detection ofunauthorized acquisition use or disposition of the company's assets that could have amaterial effect on the standalone Ind AS 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.

OPINION

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 March 312019 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 N R Doraiswami & Co
Chartered Accountants
Firm Registration No: 000771S
Suguna Ravichandran
Place : Chennai Partner
Date : May 30 2019 Membership No: 207893