The Members of
Bhagwati Autocast Limited
Report on the Audit of the Financial Statements
We have audited the accompanying financial statements of Bhagwati Autocast Limited (theCompany') which comprise the Balance Sheet as at March 31 2021 and the statementof Profit and Loss(including Other Comprehensive Income) Statement of Changes in Equityand Statement of Cash Flow for the year then ended and notes to the 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 the explanationsgiven to us the aforesaid financial statements give the information required by theCompanies Act 2013 (the "Act") in the manner so required and give a true andfair view in conformity with the Indian Accounting Standards prescribed under Section 133of the Act read with the Companies (Indian Accounting Standards) Rules 2015 as amended("Ind AS") and other accounting principles generally accepted in India of thestate of affairs of the Company as at March 312021 and its profit total comprehensiveincome the changes in equity and its cash flows for the year then ended on that date.
Basis for Opinion
We conducted our audit of the financial statements in accordance with the Standards onAuditing (SAs) specified under section 143(10) of the Act. Our responsibilities underthose Standards are further described in the Auditor's Responsibilities for the Audit ofthe Financial Statements section of our report. We are independent of the Company inaccordance with the Code of Ethics issued by Institute of Chartered Accountants of India(ICAI) together with the ethical requirements that are relevant to our audit of thefinancial statements under the provisions of the Act and the Rules made thereunder and wehave fulfilled our other ethical responsibilities in accordance with these requirementsand the ICAI's Code of Ethics. We believe that the audit evidence obtained by us issufficient and appropriate to provide a basis for our opinion on the financial statements.
Emphasis of Matter
We draw attention to note no. 42 of the financial statements regarding pendingconfirmation/ reconciliation and consequential adjustments in respect of tradereceivables creditors and advances.
Our opinion is not modified in respect of above matter.
Key Audit Matters
Key audit matters are those matters that in our professional judgment were of mostsignificance in our audit of the financial statements of the current period. These matterswere addressed in the context of our audit of the financial statements as a whole and informing our opinion thereon and we do not provide a separate opinion on these matters.
|Key Audit Matter ||Response to Key Audit Matter |
|Fair Value Assessment of Trade Receivables ||We have performed the following procedures in relation to the recoverability of trade receivables: |
|The company has trade receivables amounting to Rs. 3295.19 Lakhs (i.e. 58.59% of total assets) at the Balance Sheet Date 31/3/2021. || Tested the accuracy of aging of trade receivablesat year end on a sample basis; |
|All trade receivables of the company are pertaining to tractor industry (OEM). The increasing challenges over the economy and operating environment in the auto industry during the year have increased the risks of default on receivables from the company's customers. In particular in the event of insolvency of customers the company is exposed to potential risk of financial loss when the customers fail to meet their contractual obligations in accordance with the requirements of the agreements. || Obtained a list of outstanding receivables and assessed the recoverability of the unsettledreceivables on a sample basis through our evaluation of management's assessment with reference to the credit profile of the customershistorical payment pattern of customers publicly available information and latest correspondence with Customers |
|Based on historic default rates and overall credit worthiness of customers the company adopted a policy for assessing credit risk as per expected credit loss model for outstanding balances as on balance sheet date as per their ageing bucket and impairment allowance of Rs. 7.92 Lakhs made in respect of outstanding trade receivables as on 31st March 2021. || Tested subsequent settlement of trade receivables after the balance sheet date on sample basis. |
| ||We found the key judgements and assumptions used by management in the recoverability assessment of trade receivables to be supportable based on the available evidence. |
| ||We have drawn attention in Emphasis of Matters on trade receivables which in our judgement are fundamental to the users' understanding of the financial statements. |
Information other than Financial Statements & Auditors Report thereon
The Company's Board of Directors is responsible for the Other Information. The OtherInformation comprises the information included in the Directors' Report includingAnnexures thereto and Management Discussion and Analysis(but does not include thefinancial statements and our auditor's reports thereon).
Our opinion on the financial statements does not cover the Other Information and we donot and will not express any form of assurance conclusion thereon.
In connection with our audit of the financial statements our responsibility is to readthe other information identified above and in doing so consider whether the otherinformation is materially inconsistent with the financial statements or our knowledgeobtained in the audit or otherwise appears to be materially misstated.
If based on the work we have performed we conclude that there is a materialmisstatement of this Other Information; we are required to report that fact. We havenothing to report in this regard.
Management's Responsibility for the Financial Statements
The Company's Board of Directors is responsible for the matters stated in section134(5) of the Act with respect to the preparation of these financial statements that givea true and fair view of the financial position financial performance including othercomprehensive income changes in equity and cash flows of the Company in accordance withthe Ind AS and accounting principles generally accepted in India. This responsibility alsoincludes maintenance of adequate accounting records in accordance with the provisions ofthe Act for safeguarding the assets of the Company and for preventing and detectingfrauds and other irregularities; selection and application of appropriate accountingpolicies; making judgement and estimates that are reasonable and prudent; and designimplementation and maintenance of adequate internal financial controls that wereoperating effectively or ensuring accuracy and completeness of the accounting recordsrelevant to the preparation and presentation of the financial statements that give a trueand fair view and are free from material misstatement whether due to fraud or error.
In preparing the financial statements management is responsible for assessing theCompany's 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 is also responsible for overseeing the Company's financialreporting process.
Auditor's Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financialstatements as a whole are free from material misstatement whether due to fraud or errorand to issue an auditor's report that includes our opinion. Reasonable assurance is a highlevel of assurance but is not guarantee that an audit conducted in accordance with SAswill always detect a material misstatement when it exists. Misstatements can arise fromfraud or error and are considered material if individually or in the aggregate theycould reasonably be expected to influence the economic decisions of users taken on thebasis of these 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 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.
Obtain an understanding of internal financial control 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 financial controls system in place and the operatingeffectiveness of such controls.
Evaluate the appropriateness of accounting polices used and the reasonablenessof accounting estimates and related disclosures made by the 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 financial statements or if such disclosures are inadequate to modify our opinion.Our conclusions are based on the audit evidence obtained up to the date of our auditor'sreport. However future events or conditions may cause the Company to cease to continue asa going concern.
Evaluate the overall presentation structure and content of the financialstatements including the disclosures and whether the financial statements represent theunderlying transactions and events in a manner that achieves fair presentation.
Materiality is the magnitude of misstatements in the financial statements thatindividually or in aggregate makes it probable that the economic decisions of areasonably knowledgeable user of the financial statements may be influenced. We considerquantitative materiality and qualitative factors in (i) planning the scope of our auditwork and in evaluating the results of our work; and (ii) to evaluate the effect of anyidentified misstatements in the financial statements.
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 withthose charged with governance we determine those matters that were of most significancein the audit of the financial statements of the current period and are therefore the keyaudit matters. We describe these matters in our auditor's report unless law or regulationprecludes public disclosure about the matter or when in extremely rare circumstances wedetermine that a matter should not be communicated in our report because the adverseconsequences of doing so would reasonably be expected to outweigh the public interestbenefits of such communication.
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 subsection (11) of Section 143 ofthe Companies Act 2013 we give in the "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 explanations which to the bestof our knowledge and belief were necessary for the purpose 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 Statement of Cash Flow dealt with bythis Report are in agreement with the books of account.
(d) In our opinion the aforesaid financial statements comply with the IndianAccounting Standards (Ind AS) specified under Section 133 of the Act read with Rule 7 ofthe Companies (Accounts) Rules 2014 (as amended).
(e) On the basis of the written representations received from the directors as on 31stMarch 2021 and taken on record by the Board of Directors none of the directors isdisqualified as on 31st March 2021 from being appointed as a director in terms of Section164(2) of the Act.
(f) With respect to the adequacy of internal financial controls over financialreporting of the Company and the operating effectiveness of such controls refer to ourseparate report in "Annexure B".
(g) With respect to the other matters to be included in the Auditor's Report inaccordance with the requirements of Section 197(16) of the Act as amended in our opinionand to the best of our information and according to the explanations given to us theremuneration paid/provided 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 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 the financialposition of its financial statements (Refer Note 35)to the financial statements;
ii. The Company did not have any long-term contracts including derivative contracts forwhich there were any material foreseeable losses.
iii. There has been no delay in transferring the amounts required to be transferred tothe Investor Education and Protection Fund by the Company.
Annexure "A" to the Independent Auditors' Report
(Referred to in paragraph 1 under the heading Report on Other Legal &Regulatory Requirements' of our report of even date to the financial statements of theCompany for the year ended March 31 2021)
1. In respect of Fixed Assets :
(a) The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets;
(b) The Fixed Assets have been physically verified by the management in a phasedmanner designed to cover all the items over a period of three years which in ouropinion is reasonable having regard to the size of the Company and nature of itsbusiness. According to information and explanations given to us no material discrepancieswere noticedon such verification.
(c) The title deeds of immovable properties are in the name of the Company.
2. In respect of Inventories:
According to information and explanation given to us physical verification ofinventories has been conducted in reasonable interval by the management and no materialdiscrepancies were noticed on physical verification during the year.
3. According to information and explanation given to us the Company has not grantedany loans secured or unsecured to companies firms Limited Liability partnerships orother parties covered in the Register maintained under Section 189 of the Act.
4. In our opinion and according to the information and explanations given to us theCompany has not granted loan or made investment or given guarantee or provided security asprovided in theSection 185 and I86 of the Companies Act 2013.
5. According to information and explanation given to us the Company has not acceptedany deposits from the public and hence the directives issued by the Reserve Bank of Indiaand the provisions of Sections 73 to 76 or any other relevant provisions of the Act andthe Companies (Acceptance of Deposit) Rules 2015 with regard to the deposits acceptedfrom the public are not applicable.
6. The Central Government has prescribed maintenance of Cost Records under section148(1) of the Companies Act 2013 in respect of manufacturing activities of the Company.We have broadly reviewed the accounts and records of the Company in this connection andare ofthe opinion that prima facie the prescribed accounts and records have been madeand maintained. We have however not made a detailed examination of the said records witha view to determine whether they are accurate or complete.
7. According to information and explanations given to us in respect of statutory duesand on the basis of our examination of the books of accounts and records of the Company
a) the Company has been generally regular in depositing undisputed statutory duesincluding Provident Fund Employees State Insurance Income Tax Goods & Service TaxDuty of Customs Cess and any other statutory dues with the appropriate authorities.According to the information and explanations given to us no undisputed amounts payablein respect of the aforesaid dues were in arrears as at March 31 2021 for a period of morethan six months from the date on when they become payable.
b) According to the information and explanations given to us there are no materialdues of Income Tax Sales Tax Service Tax Goods & Service Tax and Customs Duty whichhave not been deposited with the appropriate authorities on account of any dispute exceptdemand for excise duty and service tax as mentioned below:
|Name of the Statute ||Nature of dues ||Amount Rs in (lakhs) ||Period to which the amount relates ||Forum where the dispute is pending |
|Central Excise Act 1944 ||Excise ||11.53 ||FY 2002-03 to FY 2005-06 ||CESTAT |
|Central Excise Act 1944 ||Service Tax ||47.22 ||FY 2012-13 to FY 2013-14 ||Commissioner (Appeals) CGST |
8. In our opinion and according to information and explanations given to us theCompany has not defaulted in repayment of loans or borrowing to a financial institutionbank Government or dues to debenture holders.
9. According to the information and explanations given by the management the Companyhas not raised moneys by way of initial public offer or further public offer includingdebt instruments and term loans during the year. Accordingly the provisions of clause3(ix) of the Order are not applicable to the Company.
10. According to the information and explanations given by the management no fraud bythe Company or on the Company by its officers or employees has been noticed or reportedduring the year.
11. In our opinion and according to the information and explanations given to us themanagerial remuneration has been paid or provided in accordance with the requisiteapprovals mandated by the provisions of Section 197 read with Schedule V to the CompaniesAct.
12. In our opinion the Company is not a Nidhi Company. Therefore the provisions ofclause 3(xii) of the Order are not applicable to the Company.
13. In our opinion and according to information and explanations given to us alltransactions with the related parties are in compliance with Section 177 and 188 ofCompanies Act 2013 and the details of related party transactions have been disclosed inthe Ind AS financial statements as required by the applicable accounting standards.
14. According to the information and explanations given by the management the Companyhas not made any preferential allotment or private placement of shares or fully or partlyconvertible debentures during the year under review. Accordingly the provisions of clause3(xiv) of the Order are not applicable to the Company and hence not commented upon.
15. According to the information and explanations given by the management the Companyhas not entered into any non-cash transactions with directors or persons connected withhim. Accordingly the provisions of clause 3(xv) of the Order are not applicable to theCompany and hence not commented upon.
16. In our opinion and according to information and explanations given to us theCompany is not required to be registered under section 45IA of the Reserve Bank of IndiaAct 1934.
Annexure B' to the Independent 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 BhagwatiAutocast Limited ("the Company") as of March 31 2021 in conjunction with ouraudit 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. These responsibilities includethe design implementation and maintenance of adequate internal financial controls thatwere operating effectively for ensuring the orderly and efficient conduct of its businessincluding adherence to company's policies the safeguarding of its assets the preventionand detection of frauds and errors the accuracy and completeness of the accountingrecords and the timely preparation of reliable financial information as required underthe Act.
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 systems 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. Webelieve that the audit evidence we have obtained is sufficient and appropriate to providea basis for our audit opinion on the Company's internal financial controls system overfinancial reporting.
Meaning of Internal Financial Controls over Financial Reporting.
A company's internal financial control over financial reporting is a process designedto provide reasonable assurance regarding the reliability of financial reporting and thepreparation of financial statements for external purpose 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 of records that in reasonable detail accurately andfairly reflect the transactions and dispositions of the assets of the company.
(2) provide reasonable assurance that transactions are recorded as necessary to permitpreparation of financial statements in accordance with generally accepted accountingprinciples and that receipts and expenditures of the company are being made only inaccordance with authorizations of management and directors of the company and
(3) 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 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 of procedures may deteriorate.
In our opinion the Company has in all material respects an adequate internalfinancial control system over financial reporting and such internal financial controlsover financial reporting were operating effectively as on March 31 2021 based on theinternal control over financial reporting criteria established by the Company consideringthe essential components of internal controls stated in the Guidance Note on Audit ofInternal Financial Controls Over Financial Reports issued by the Institute of CharteredAccountants of India.
| ||Mahendra N. Shah & Co. |
| ||Chartered Accountants Firm's registration No. : 105775W |
| ||CA Chirag M. Shah |
|Date : 26/05/2021 ||Partner Membership No. : 045706 |
|Place : Ahmedabad ||UDIN: 21045706AAAAHA2516 |