The Members of
Bheema Cements Limited.
Report on the Financial Statements
We have audited the accompanying financial statements of Bheema Cements Limited(the Company') which comprise the balance sheet as at 31 March 2015 the statementof profit and loss and the cash flow statement for the year then ended and a summary ofsignificant accounting policies and other explanatory information (collectively referredto as the financial statements').
Management's Responsibility for the Financial Statements
The Company's Board of Directors is responsible for the matters in section 134(5) ofthe Companies Act 2013 ("the Act") with respect to the preparation of thesefinancial statements that give a true and fair view of the financial position financialperformance and cash flows of the Company in accordance with the accounting principlesgenerally accepted in India including the Accounting Standards specified under Section133 of the Act read with Rule 7 of the Companies (Accounts) Rules 2014. Thisresponsibility also includes the maintenance of adequate accounting records in accordancewith the provision of the Act for safeguarding of the assets of the Company and forpreventing and detecting the frauds and other irregularities; selection and application ofappropriate accounting policies; making judgments and estimates that are reasonable andprudent; and design implementation and maintenance of internal financial control thatwere operating effectively for ensuring the accuracy and completeness of the accountingrecords relevant to the preparation and presentation of the financial statements thatgive a true and fair view and are free from material misstatement whether due to fraud orerror.
Our responsibility is to express an opinion on these financial statements based on ouraudit. We have taken into account the provisions of the Act the accounting and auditingstandards and matters which are required to be included in the audit report under theprovisions of the Act and the Rules made thereunder.
We conducted our audit in accordance with the Standards on Auditing specified undersection 143(10) of the Act. Those Standards require that we comply with ethicalrequirements and plan and perform the audit to obtain reasonable assurance about whetherthe financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts anddisclosures in the financial statements. The procedures selected depend on the auditor'sjudgment including the assessment of the risks of material misstatement of the financialstatements whether due to fraud or error. In making those risk assessments the auditorconsiders internal financial control relevant to the Company's preparation of thefinancial statements that give true and fair view in order to design audit procedures thatare appropriate in the circumstances. An audit also includes evaluating theappropriateness of accounting policies used and the reasonableness of the accountingestimates made by Company's Directors as well as evaluating the overall presentation ofthe financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the financial statements.
Basis for qualified opinion
We draw attention to
a) Note No. 25.II which explain the circumstances that lead to accumulated losses andthe circumstances that are mitigating the same and the reasons based on which the accountshave been prepared on Going Concern Basis. Notwithstanding the fact that the company hasincurred cash losses during the current year as well as during the previous year thefinancial statements of the Company have been prepared on Going Concern Basis
b) Note No. 25.III which explain the circumstances leading to non-provision of theinterest on term loans. We are of the opinion that the interest on term loans should havebeen provided till the time a formal communication is received from the lender banksfixing the final liability agreed for settlement. We are unable to quantity the impact ofthe same due to inadequacy of information.
c) Note No.25.III which explains the circumstances leading to reversal of interest onworking capital term loans. We are of the opinion that the interest on working capitalterm loans should have been provided till the time a formal communication is received fromthe lender banks fixing the final liability agreed to settlement. Due to this theliabilities have been understated by Rs. 65.82 lacs and losses understated by anequivalent amount.
d) Note No. 25.IV which explain the background for writing back the excess term loansas per Books in respect of some banks with which the final liability is agreed to befrozen. We are of the opinion that till the time a formal communication is received fromthe lender banks fixing the final liability for settlement the Company should not havereversed the excess amounts carried in the books over the agreed amount. The impact of thereversal is that the term loans are understated by Rs. 1626.42 lacs from Term loansaccounts Additional Term Loans by 431.99 lacs and overstatement of Capital Reserve by anequivalent amount; understatement of Working capital loans by Rs. 693.90 lacs andunderstatement of losses by an equivalent amount
e) Note No. 25.V which explains the reasons for non-provision of depreciation duringthe year. We are of the opinion that though the Company did not carry operations duringthe year depreciation should have been provided due to efflux of time. Non-provision ofdepreciation has resulted in understatement of expenditure by Rs. 1435.74 lacs andoverstatement of fixed assets by an equivalent amount.
f) Note No.25 XVI regarding non-provision of gratuity and provision for leaveencashment the impact of which is not ascertainable for want of details
In our opinion and to the best of our information and according to the explanationsgiven to us except for the possible effect of the matters described in the basis forqualified opinion the financial statements give the information required by the Act in themanner so required and give a true and fair view in conformity with the accountingprinciples generally accepted in India:
(a) in the case of the balance sheet of the state of affairs of the Company as at 31March 2015;
(b) in the case of the statement of profit and loss of the loss for the year ended onthat date; and
(c) in the case of the cash flow statement of the cash flows for the year ended onthat date.
Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditor's Report) Order 2015 issued by the CentralGovernment of India in terms of sub-section (11) of section 143 of the Act we give in theAnnexure a statement on the matters specified in paragraphs 3 and 4 of the Order.
Report on other Legal and Regulatory Requirements
2. 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 appears from our examination of those books
c) The Balance Sheet the Statement of Profit and Loss and Cash Flow Statement dealtwith by this Report are in agreement with the books of account.
d) 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.
e) On the basis of written representations received from the directors as on 31 March2015 taken on record by the Board of Directors none of the directors is disqualified ason 31 March 2015 from being appointed as a director in terms of Section 164(2) of theAct.
f) With respect to the other matters included in the Auditor's Report in accordancewith Rule 11 of the Companies (Audit and Auditors) Rules 2014 in our information andaccording to the best of information provided and explanations given to us:
i. The Company has disclosed the impact of pending litigations on its financialposition in its financial statement as referred to in Note 25.I to the financialstatements;
ii The Company has made provision as required under the applicable law or accountingstandards for material foreseeable losses if any and as required 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
|Place: Hyderabad ||For A.Ramachandra Rao & Co |
|Date: 15.10.2015 ||Chartered Accountants |
| ||ICAI FRN:002857S |
| ||(A. Ramachandra Rao) |
| ||Partner |
| ||Membership No.: 9750 |
ANNEXURE TO THE AUDITORS' REPORT
(Of even date referred to in Para 02 thereof) Re: M/s. Bheema Cements Limited
(i) In respect of its fixed assets:
a) The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets on the basis of available information
b) All the Fixed Assets have not been physically verified by the management during theyear but there is a regular program of verification which in our opinion is reasonablehaving regard to the size of the Company and nature of its assets and to the best of ourknowledge no material discrepancies were noticed on such verification;
(ii) In respect of its inventories:
a) As explained to us physical verification of inventories could not be carried outduring the year as the factory and operations of the company have been suspended sinceMarch 2014;
b) Subject to the above we are not able to comment whether the procedure of physicalverification of stocks followed by the Management is reasonable and adequate in relationto the size of the Company and the nature of its business;
c) Based on the information provided and explanations offered to us the Company hasmaintained proper records of inventories and we are not in a position to comment whetherany material discrepancies noticed as the verification could not be taken up during theyear. We have been explained that the physical verification will be taken up afresh afterresumption of operations and thereupon the effect if needed for any materialdiscrepancies will be given in the books of account;
(iii) a) Based on the information and explanations provided to us the company has notgranted unsecured loans to the companies firms or other parties covered in the Registermaintained u/s Sec. 189 of the Companies Act 2013 and hence clauses 3(iii) (a) and (b)are not applicable to the Company for the accounting year.
(iv) In our opinion and according to the information and explanations given to usthere is an adequate internal control system commensurate with the size of the Company andthe nature of its business for the purchase of inventory and fixed assets and also for thesale of goods and services to the extent applicable. During the course of our audit wehave not observed any continuing failure to correct major weaknesses in internal controlsystem.
(v) Based on the information provided to us the Company has not accepted any depositsduring the year and hence in our opinion the Clause 3(v) is not applicable to thecompany for the year.
(vi) We have broadly reviewed the cost records maintained by the Company pursuant tothe Companies (Cost Records and Audit) Rules 2014 prescribed by the Central Governmentunder Section148(1)(d) of the Companies Act 2013 and are of the opinion that primafacie the prescribed accounts and cost records have been maintained by the Company. Wehave however not made a detailed examination of the cost records with a view todetermine whether they are accurate or complete.
(vii) In respect of statutory dues:
(a) According to the records of the company undisputed statutory dues includingProvident Fund Employees State Insurance Income Tax VAT Wealth Tax Service Tax Dutyof Customs Duty of Excise and other statutory dues have been generally regularlydeposited with the appropriate authorities. According to the information provided andexplanations given to us no undisputed amounts payable in respect of the aforesaid dueswere outstanding as of March 31 2015 for a period of more than six months from the dateof they becoming payable except to the extent shown below:
|Name of the Statute ||Nature of Dues ||Amount - Rs ||Period to which it relates |
|1 Central Excise Act ||Excise Duty ||26020374 ||March 2013 and April 2013 |
|2 Central Excise Act ||Service Tax ||9000493 ||From 1.4.2013 onwards |
|3 Income Tax Act ||TDS Provident Fund ||14183113 ||1/4/2013 to 31/3/2015 oct-13 to 31-03-2015 |
|4 EPF Act || ||9391511 || |
|5 Professional Tax Act ||Professional Tax ||411100 ||1/12/2013 to 31/3/2015 |
|6 ESI Act ||ESI ||597426 ||November 2013 to March 2-15 |
|7 Mines & Mineral Development Act ||Royalty on Limestone ||46312194 ||01/08/2012 to 31/3/2015 |
|8 APVAT Act ||VAT ||159309830 ||01/08/2012 to 31/3/2015 |
|9 Central Sales Tax Act ||CST ||23710534 ||01/08/2012 to 31/3/2015 |
|10 Karnataka VAT Act ||VAT ||268925 ||01/08/2012 to 31/3/2015 |
|11 Maharashtra VAT Act ||VAT ||1477845 ||01/08/2012 to 31/3/2015 |
|12 Orissa VAT Act ||VAT ||117487 ||01/08/2012 to 31/3/2015 |
(a) Details of dues of Income Tax Sales Tax Wealth Tax Service Tax Duty of CustomsDuty of Excise VAT which have not been deposited as on 31st March 2015 on account ofdisputes are as given below:
|Name of the Statute ||Nature of Dues ||Amount - Rs ||Period to which it relates ||Forum where the dispute is pending |
|1 Central Excise Act ||Excise Duty ||41288113/- ||04/06 to 9/10 ||CESTAT Bangalore |
|2 Customs Act ||Customs Duty ||5048700/- ||17-3-12 to 28-02- 13 ||Commissioner C&CE Guntur |
|3 Income Tax Act ||Income Tax ||3156000 ||AY 1994-95 ||Hon'ble High Court of Andhra Pradesh |
Since the Central Government has not issued any notification as to the rate at whichthe cess is to be paid under section 441A of the Companies Act 1956 nor has it issued anyRules under the said section prescribing the manner in which such cess is to be paid nocess is due and payable by the Company.
(c) According to the information provided and explanations offered to us the companyis not required to transfer to Investor Education and Protection Fund any amounts inaccordance with the relevant provisions of the Companies Act 1956 (1 of 1956) and rulesmade there under and hence this clause is not applicable to the Company.
(viii) In our opinion the accumulated losses of the Company are more than 50% of thenet worth as of the Balance sheet date. The company has incurred cash losses during thecurrent year and the immediately preceding financial year.
(ix) Based on the information provided and explanation given to us we are of theopinion that the Company has defaulted in repayment of dues to Banks or FinancialInstitutions as per details given below:
|Term Loan Capacity ||Amount in Rs ||Period to which relates |
|Expansion ||Lacs || |
|ICICI Bank ||140.45 ||QE Sept'13 QE Dec'13QE Mar'14 and FY 2014-15 |
|State Bank of Hyderabad ||559.80 ||QE Jun'13 QE Sept'13 QE Dec'13 QE Mar'14 and |
|United Bank of India ||440.48 ||FY 2014-15 |
|Total ||1140.73 || |
|Additional Term Loans || || |
|Corporation Bank ||9.50 ||QE Dec'13 QE Mar'14 FY 2014-15 |
|ICICI Bank ||63.75 ||QE Sept'13 QE Dec'13QE Mar'14 and FY 2014-15 |
|Oriental Bank of Commerce ||8.74 ||QE Dec'13 QE Mar'14 FY 2014-15 |
|State Bank of Hyderabad ||108.51 ||QE Jun'13 QE Sept'13 QE Dec'13 QE Mar'14 and |
|United Bank of India ||89.60 ||FY 2014-15 |
|Total ||280.10 || |
|Grand Total ||1420.83 || |
(x) Based on the information provided and explanations offered to us the Company hasnot given guarantee for loans taken by others from Banks or Financial Institutions
(xi) According to the information and explanations given to us the company did notreceive any term loans during the year and hence clause 3(xi) is not applicable to thecompany for the year under report.
(xii) In our opinion and according to the information provided and explanations offeredto us no fraud on or by the Company has been noticed or reported during the year.
| ||For A.RAMACHANDRA RAO & CO. |
| ||Chartered Accountants |
| ||ICAI FRN : 002857S |
| ||Sd/- |
|Place: Hyderabad ||(A. RAMACHANDRA RAO) |
|Date: 15.10.2015 ||Partner |
| ||Membership No. 9750 |