TO THE MEMBERS OF BHATIA COMMUNICATIONS & RETAIL (INDIA) LIMITED
Report on the Audit of Standalone Financial Statements:
We have audited the accompanying standalone financial statements of BHATIACOMMUNICATIONS & RETAIL (INDIA) LIMITED ("The Company") which comprises theBalance Sheet as on 31st March 2019 the Statement of Profit and Loss and Cash Flowstatement for the year then ended and notes to financial statements including a summaryof 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 standalone financial statements give the information requiredby the Act in the manner so required and give a true and fair view in conformity with theaccounting principles generally accepted in India of the state of affairs of the companyas at 31st March 2019 and its profit (or Loss) 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 entity in accordancewith the Code of Ethics issued by the Institute of Chartered Accountants of India togetherwith the ethical requirements that are relevant to our audit of the financial statementsunder the provisions of the Companies Act 2013 and the rules thereunder and we havefulfilled our other ethical responsibilities in accordance with these requirements and theCode of Ethics. We believe that the audit evidence we have obtained is sufficient andappropriate to provide a basis for our opinion.
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. Wehave determined the matters described below to be the key audit matters to be communicatedin our report.
- Evaluation of Uncertain Tax Positions
The Company has material uncertain tax position including matters under dispute whichinvolve significant judgment to determine the possible outcome of these disputes. Thedetails of the pending litigations have been reported in point 7(b) of CARO report.
- Auditor's Response
We obtained detail of completed tax assessment and demand for the year ended March 312019 from management. We involved our internal expert to challenge the management'sunderlying assumption in estimating the tax provision and possible outcome of the dispute.We also considered legal precedence and other rulings in evaluating management's positionon these uncertain tax positions
- Branches and Franchise
The company has many franchises and branches and the company receives advances/securitydeposit from its various franchises and the same is adjusted against the amount due fromthem as on the balance sheet date.
The company also receives deposit from branch partner towards security deposit againststock provided to them and same is shown in balance sheet as long term liability
- Auditor's Response
We get the complete list of franchise and branches from the management and check thatthere is no deviation in the security deposit received and stock provided to them. We alsocheck the agreement made with the branch partner and check whether proper disclosure ismade regarding advances received from branch partner and term and conditions oftheagreement
Management's Responsibility for the Standalone Financial Statements
The Company's Board of Directors is responsible for the matters stated in Section134(5) of the Companies Act 2013 (''the Act'') with respect to the preparation andpresentation of these standalone financial statements that give a true and fair view ofthe financial position financial performance and cash flows of the Company in accordancewith the accounting principles generally accepted in India including the AccountingStandards specified under Section 133 of the Act. This responsibility also includesmaintenance of adequate accounting records in accordance with the provisions of the Actfor safeguarding the assets of the Company and for preventing and detecting frauds andother irregularities; 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 financial statements that give a true and fair viewand 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 are also responsible for overseeing the company's financialreporting process
Auditor's Responsibility 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 a 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 theyreasonably be expected to influence the economic decisions of users taken on the basis ofthese financial statements.
As part of an audit in accordance with SAs We exercises professional judgment andmaintain professional scepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of the financialstatements whether due to fraud or error; to design and perform audit proceduresresponsive to those risks; and to obtain audit evidence that is sufficient and appropriateto provide a basis for the auditor's 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 the audit in order todesign audit procedures that are appropriate in the circumstances. Under section 143(3)(i)of the Companies Act2013we are 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 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 financial statements or if such disclosures are inadequate to modify the opinion.Our conclusions are based on the audit evidence obtained up to the date of the auditor'sreport. However future events or conditions may cause an entity to cease to continue as agoing 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 standalone financial statementsthat individually or in aggregate makes it probable that the economics decisions of areasonably knowledgeable user of the financial statement may be influenced. We considerquantitative materiality and qualitative factor in (i) planning the scope of our auditwork and in evaluating the result 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 communicate with them allrelationships and other matters that may reasonably be thought to bear on ourindependence and where applicable related safeguards.
Report on Other Legal and Regulatory Requirements:
As required by the Companies (Auditor's Report) Order 2016 (order dated 29.03.2016)issued by the Central Government of India in terms of section 143(11) of the CompaniesAct 2013 (hereinafter referred to as 'order') and on the basis of test check as weconsidered appropriate and according to information and explanation provided to us weenclose in the Annexure "A" statement on the matters specified in paragraphs 3and 4 of the said Order.
As required by section 143(3) of the Act we report that:provided to us we enclose inthe Annexure "A" statement on the matters specified in paragraphs 3 and 4 of thesaid .Order
:As required by section 143(3) of the Act we report that
2.1 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
2.2 In our opinion proper books of account as required by law have been kept by thecompany as far as appears from our examination of those books.
2.3 The Balance Sheet Profit and Loss statement and Cash Flow Statement dealt with bythis report are in agreement with the books of account.
2.4 In our opinion the aforesaid financial statements comply with the accountingstandards specified under section 133 of the Act read with Rule 7 of the Companies(Accounts) Rules 2014
2.5 On the basis of written representations received from the directors as on March31 2019 taken on record by the Board of directors none of the directors aredisqualified as on March 31 2019 from being appointed as a director under section 164(2)of the Act
2.6 With respect to the adequacy of financial controls over financial reporting of thecompany and the operative effectiveness of such controls refer to our separate report in"Annexure B"; and
2.7 With respect to the others 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) There were pending litigations which would impact the financial position of thecompany. The details of the pending litigations have been reported in point 7(b) of CAROreport forming integral part of this audit report.
(ii) The company did not have any material foreseeable losses on long term contractsincluding derivative contracts.
(iii) There were no amounts which were required to be transferred to the InvestorEducation and Protection fund by the company.
Annexure to Auditors' Report
(Referred to in of our report of even date to the members of BHATIA COMMUNICATIONS& RETAIL (INDIA) LTD as on the financial statements for the year ended March 31 2019)
On the basis of such checks as we considered appropriate and according to theinformation and explanations given to us during the course of audit we state that:
1 Fixed Assets
|(a) Whether the company is maintaining proper records showing full particulars including quantitative details and situation of fixed assets; ||YES |
|(b) Whether these fixed assets have been physically verified by the management at reasonable intervals; whether any material discrepancies were noticed on such verification and if so whether the same have been properly dealt with in the books of account; ||The management conducted physical verification of certain fixed assets in accordance with its policy of physical verification in a phased manner. In our opinion such frequency is reasonable having regard to the size of the Company and the nature of its fixed assets. As explained to us the discrepancies noticed on physical verification as compared to book records maintained were not material and have been properly dealt with in the books of account. |
|(c) Whether title deeds of immovable properties are held in the name of the company. If not provide details thereof. ||NA |
|2 Inventories || |
|Whether physical verification of inventory has been conducted at reasonable intervals by the management and whether any material discrepancies were noticed and if so how they have been dealt with in the books of account; ||The management conducted physical verification of inventory in accordance with its policy of physical verification in a phased manner. In our opinion such frequency is reasonable having regard to the size of the Company and the nature of its inventory. As explained to us the discrepancies noticed on physical verification as compared to book records maintained were not material and have been properly dealt with in the books of account. |
|3 Loan Granted || |
|Whether the company has granted any loans secured or unsecured to companies firms LLPs or other parties covered in the register maintained u/s 189 of the Companies Act 2013. If so ||NO |
|(a) Whether the terms and conditions of the grant of such loans are not prejudicial to the company's interest; ||NA |
|(b) Whether receipt ofthe principal amount and interest are regular. If not provide details thereof; and ||NA |
|(c) If overdue amount is more than rupees five lakhs whether reasonable steps have been taken by the company for recovery of the principal and interest; ||NIL |
|4 Loans. Investments and aurantees || |
|In respect of loans investments and guarantees whether provisions of Section 185 and 186 of the Companies Act 2013 have been complied with. If not provide details thereof. ||Yes |
|5 Deposit || |
|In case the company has accepted deposits whether the directives issued by the Reserve Bank of India and the provisions of sections 73 to 76 or any other relevant provisions of the Companies Act 2013 and the rules framed thereunder where applicable have been complied with? If not the nature of such contraventions be stated; If an order has been passed by Company Law Board or National Company Law Tribunal or Reserve Bank of India or any court or any other tribunal whether the same has been complied with or not? ||NA |
|6 Cost Records || |
|Whether maintenance of cost records has been specified by the Central Government under sub-section (1) of section 148 ofthe Companies Act 2013 and whether such accounts and records have been so made and maintained; ||NA |
|7 Statutory dues || |
|(a) whether the company is regular in depositing undisputed statutory dues including provident fund employees' state insurance income-tax sales-Lax service tax duty of customs duty of excise value added tax and any other statutory dues with the appropriate authorities and if not the extent of the arrears of outstanding statutory dues as at the last day of the financial year concerned for a period of more than six months from the date they became payable shall be indicated by the auditor. ||According to the information and explanations given to us and the record examined by us the company is generally regular in depositing with appropriate authorities undisputed statutory dues including Provident Fund Employee's State Insurance Income-tax Sales-tax and other material Statutory Dues applicable to it. There were no arrears as at 31st March 2019 for a period of more than six months from the date they became payable. |
|(b) Where dues of income tax or sales tax or service tax or duty of customs or duty of excise or value added tax have not been deposited on account of any dispute then the amounts involved and the forum where dispute is pending shall be mentioned. (A mere representation to the concerned Department shall not be treated as a dispute). ||YES |
|Particulars F.Y. ||AMOUNT (In Rs.) STATUS |
|Demand of Rs 2554800 rasied by 2012-13 ||Rs. 2554800 Appeal pending |
|DCIT circle1(1)(1) u/s 143(3) of IT act 1961 ||before CIT(A) |
|8 Default in Reoavment || |
|Whether the company has defaulted in repayment of dues to a financial institution or bank or debenture holders? If yes the period and amount of default to be reported (in case of banks and financial institutions lender wise details to be provided). ||NO |
|9 Term Loan/ Monev raised || |
|Whether moneys raised by way of public issue/ follow-on offer (including debt instruments) and term loans were applied for the purposes for which those are raised. If not the details together with delays / default and subsequent rectification if any as may be applicable be reported; ||YES |
|10 Fraud || |
|Whether any fraud by the company or any fraud on the Company by its officers/ employees has been noticed or reported during the year; If yes the nature and the amount involved be indicated. ||To the best of our knowledge and according to the information and explanations given to us there have been no cases of fraud on or by the Company noticed or reported during the year under report |
|11 Manaaerial Remuneration || |
|Whether managerial remuneration has been paid / provided in accordance with the requisite approvals mandated by the provisions of section 197 read with schedule V to the Companies Act? If not state the amount involved and steps taken by the company for securing refund of the same. ||YES |
|12 Nidhi Comoanv || |
|Whether the Nidhi Company has complied with the Net Owned Fund in the ratio of 1: 20 to meet out the liability and whether the Nidhi Company is maintaining 10% liquid assets to meet out the unencumbered liability. ||NA |
|13 Related Parties Transactions || |
|Whether all transactions with the related parties are in compliance with Section 188 and 177 of Companies Act 2013 where applicable and the details have been disclosed in the Financial Statements etc as required by the accounting standards and Companies Act 2013. ||As per the information and explanation provided to us and records produced before us the company has generally complied with the provisions. |
|14 Preferential allotment / Private placement || |
|Whether the company has made any preferential allotment / private placement of shares or fully or partly convertible debentures during the year under review and if so as to whether the requirement of Section 42 of the Companies Act 2013 have been complied and the amount raised have been used for the purposes for which the funds were raised. If not provide details thereof. ||NA |
|15 Non-cash Transactions || |
|Whether the company has entered into any non-cash transactions with directors or persons connected with him and if so whether provisions of Section 192 of Companies Act 2013 have been complied with. ||NA |
|16 Reaistration with RBI || |
|Wheteher the company is required to be registered under section 45-IA of the Reserve Bank of India Act 1934 and if so whether the registration is obtained. ||NA |
For R Kejriwal & Co.
M No: 427019
Date : 30.05.2019